Mining New Markets
Man welding mining equipment
Steel production and mining were vital to the industrial revolution that put the North of England on the world map. DavyMarkham Ltd is a heavy engineering company that was established in 1997 through the merger of Sheffield rolling mill steel equipment supplier Davy Co, and Derbyshire-based Markham & Co, a mining equipment manufacturer.
Today, DavyMarkham is located on the Davy Co site in Sheffield, and has a staff of 200 that has remained steady since the merger. The company specialises in the design, manufacture, installation and commissioning of mining equipment. Its larger mining hoists weigh up to 500 tonnes and can safely lift as much as 30 tonnes from three kilometres underground.
“Both Davy Co and Markham & Co were established in the mid-1800s, so we merged with almost 300 years’ combined experience,” says Gordon Scott, Sales and Marketing Director at DavyMarkham Ltd. “The companies realised that UK demand for mining equipment and steel had declined, and what remained was now largely being satisfied by China and the Far East. We focused on what we had available in terms of resources and expertise. Today, 50 per cent of what we manufacture is mining equipment, but our clients appreciate that we were in the steel and mining industries at their peak in the UK.”
Exploring overseas prospects
DavyMarkham realised that its potential client base was overseas and would expect modern equipment. The company has developed a market in Canada, a country with vast mining potential and many active mines. It also began to outsource the electrical, control and computer components of its equipment to power and automation business ABB, based in Montreal.
In 2009, DavyMarkham was ready to expand its overseas efforts and a few of the company’s Canadian clients were beginning to look at Latin America. After exploring the mining industry in the region, DavyMarkham decided to invest in Peru, Mexico and Chile. In 2010, the company contacted UK Trade & Investment (UKTI) and commissioned an Overseas Market Introduction Service (OMIS) report to find suitable companies in each country to act as its sales agents.
UKTI introduced DavyMarkham to a Peruvian agent with mining industry contacts in both Peru and Bolivia. In April 2011, as a result of this connection, the company secured a US$6 million contract to supply its equipment to Volcan Compañia Minera of Peru, the fourth largest zinc and silver producer in the world.
“Our change in focus gave us the push to go overseas to countries that had only mined a fraction of their resource potential,” says Gordon. “We knew our competition had state-of-the-art products, and developing our client base in Canada gave us the opportunity to add the latest technology to our tried and tested manufacturing range. Our expansion into Latin America fit well with the plans of several of our clients, and UKTI found us an agent who covers two Latin American markets.”
Company: DavyMarkham Ltd
Target Market: Mexico
UKTI Services: Overseas Market Introduction Service
Impressive market indicators
DavyMarkham then turned its attention to Mexico, where it is estimated that 70 per cent of the country’s natural deposits have yet to be explored and developed. Since 2007, national and international companies have invested US$17.5 million in Mexico’s mining sector. With such strong indicators that there was a market for its products, the company got back in touch with UKTI for help with its latest venture.
In October 2011, DavyMarkham attended a mining exhibition in Acapulco, where UKTI introduced the UK company to Pesamaq, a manufacturing and trading business with connections throughout Mexico. In the months that followed, UKTI worked with both companies to broker a deal and reach an agency agreement. DavyMarkham met with Pesamaq representatives in the Mexican city of Zacatecas in May 2012, and signed the agreement in time to negotiate a contract with Agnico-Eagle for a project worth US$4 million. A local presence in Mexico assisted in the contract negotiations and DavyMarkham was delighted to win the contract.
“UKTI helped us to find our Mexican agent, and to progress our agreement with perfect timing to negotiate the Agnico-Eagle contract,” says Gordon. “In a little over two years, UKTI has helped us to get a foothold in two Latin American markets, where we have since secured work on projects worth a combined total of US$10 million. We are now planning to work with UKTI in Chile and we will no doubt use their services again when we are ready to expand into other Latin American countries.”
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The UK and Mexico
Mexico is the UK’s second largest trading partner in Latin America and there has never been a better time to consider Mexico as a place to do business. Mexico regularly ranks in the top three emerging markets in which to do business, and is the fourteenth largest economy in the world.
Over the past decade, the country has seen economic growth and stable inflation. With its impressive network of Free Trade Agreements (including North America and the EU) and its strategic location in-between the US and Latin America, Mexico has the potential to act as a springboard into the region as well as being an attractive proposition in its own right.
For further information about business opportunities in Mexico, please go to www.ukti.gov.uk/mexico
Countries: Bolivia, Mexico, Peru, and Yorkshire and Humberside