Komatsu Equipment Ignites New Nevada Gold Rush

Tue February 20, 2007 - West Edition
CEG



Rising gold prices have increased mining operations throughout the middle of Nevada, and Komatsu Equipment Co. — a Sandvik Mining and Construction equipment distributor — is rushing to keep up.

Komatsu Equipment’s Larry Smith, branch manager in Elko, Nev., indicated that as the price of gold increases the efforts to get it out of the ground in an efficient and profitable manner also increases.

“The mining industry is very strong. Most mines are expanding both their mining operations and their exploration efforts, which is resulting in increased reserves and proven gold deposits,” said Smith.

To put this modern-day gold rush in perspective, consider that Nevada is the third largest gold producer in the world, behind only Australia and South Africa. Estimates put the proven and probable gold reserves in the state at 107 million oz. The price of gold has been fluctuating at approximately $700 an oz. In a state where only gambling-inspired tourism is a bigger business, that’s quite a jackpot.

Komatsu Equipment in Elko, 230 mi. west of Salt Lake City, finds itself in the satisfying situation of working both with prospering mining operations and with Sandvik drills in three of its mining customers’ operations.

The Elko-based employees are living their version of the Wild West because the branch supports a small fleet of Sandvik blasthole drills: six at Cortez Gold Mines; four at Pegasus Gold Inc.’s Florida Canyon mine; and one at Newmont Mining Corp.’s Twin Creeks mine; the latter two mines are near Winnemucca, Nev.

Cortez Gold Mines, 75 mi. west and south of Elko, is the state’s leading gold producer and Nevada’s longest continuously running gold operation — it needs Sandvik drills up and running more than ever. It has four Sandvik D75KS drills and two D55SP drills, which it uses to drill and blast gold-bearing ore. The D75KS drills are veterans, working at the site for 11 years; the D55SP drills are two years old. Two more D75KS drills are expected to be delivered by the Elko branch in 2006.

Komatsu Equipment Project Manager Steve Snyder is a familiar visitor at Cortez Gold Mines, as he supervised support of the company’s equipment fleet there, which also includes 18 haul trucks, four loaders, four bulldozers, fuel trucks and skid steers. It’s a long, dusty run from Elko to the gold mines, and Snyder entertains traveling companions with stories of how millions of Mormon Crickets sometimes swarm the highway in an insect version of white line fever.

A wholly owned subsidiary of Komatsu America, Komatsu Equipment has five branches: Salt Lake City; Elko, Reno and Las Vegas in Nevada, and Gillette, Wy. While all are full-service operations that can support the entire Komatsu product line, Gillette and Elko work predominantly with the mining industry. The other branches work with customers in the construction and utility industries. Each branch handles parts, service, product support, product sales and equipment rental for its customers.

In addition to distributing heavy equipment to the construction and mining industries, the company has the capability of remanufacturing components and rebuilding engines for all types of equipment used in mining and construction applications. Parent company Komatsu Ltd., a multi-national firm headquartered in Tokyo, is the second largest manufacturer of tractors and earth-moving equipment in the world.

The history of Komatsu Equipment’s relationship with Sandvik as a blasthole drill distributor goes back to the 1997 merger of Rocky Mountain Machinery, headquartered in Salt Lake City, with Pioneer Equipment, of Reno, to form Komatsu Equipment. Rocky Mountain Machinery was the original distributor for Sandvik’s Driltech drills.

Since then, Smith said the merger has worked well for each company — and for their customers as the gold-driven mining industry has entered a period of glittering prosperity.

“The relationship between Komatsu Equipment and Sandvik is in an expansion mode because of the opportunities in Nevada’s gold mines. Both companies recognize the challenges and the competition, and we’ve worked well together in meeting those challenges,” Smith said.

Those opportunities have lead to a 40-percent increase in the Elko branch’s overall parts and service business in the last four years.

Smith said that Jim Peterson, Sandvik’s Regional Product Line Manager of Blasthole Drills, has supported Komatsu Equipment’s Sandvik drills. He also praised the Sandvik parts department for working closely with his company and customers.

Long a center for Nevada’s mining industry, the city of Elko finds itself busier than ever with the current mining production boom. Komatsu Equipment’s Elko employees, most of whom live in Elko, are no exception.

The office opens at 6:30 a.m. and rarely slows down, as it covers the mid-75 percent of the state of Nevada. The 40 employees include five in the parts department, three in product support, five in administration and 27 in service operations — and the latter are on the road most of the time. Komatsu employees also work at Cortez Gold Mines and the Florida Canyon mine to support the Sandvik drills.

“Almost all mining operations have their own maintenance departments, but they come to us for technical support, to supplement their labor forces during peak times or for help in areas they’re not trained in,” Smith said.

Komatsu Equipment’s main commitment is to support Komatsu equipment. In the gold mines near Elko, this means electric drive trucks, mechanical drive trucks and loaders. These trucks are the big guys — with capacities from 240 to 320 tons (217 to 290 t).

The Elko branch has seen success recently in selling small Komatsu bulldozers, the D39, used in mining operations for ramp and tunnel clean-ups.

Smith said both existing and newly developed mining operations are exploring for new gold deposits, which could lead to additional Komatsu equipment and Sandvik drills sales in the next few years.

In his third year as branch manager, Smith said he enjoys the challenges and opportunities of working with the mining industry. To be successful, he and his fellow employees stay focused on a philosophy:

“We work to establish and maintain good customer relationships. We like to be involved with our customers from the conception of new mines to the implementation of operations. We also try to work with customers in anticipation of their new equipment needs to support those new operations.”