Trust built up in Canada led to winning a major order in Mongolia

“When I heard the news of the success in winning the major order in Mongolia, rather than simply celebrate, I braced myself for the huge upcoming task,” said Mr. Yuki Oka, who is in charge of implementing the global strategy of Sumitomo Corporation’s mining equipment business. This was the moment when he literally trembled with excitement.

In February 2011, Sumitomo Corporation announced that the company had received a major order for Komatsu’s mining equipment for use in Oyu Tolgoi, one of the world’s largest copper-gold mines, through its Mongolian subsidiary, Transwest Mongolia (TM). With this order, TM assumed the role of serving as the dealer of Komatsu, a Japanese mining and construction equipment manufacturer, by selling and providing after-sales services for ultra-large dump trucks, bulldozers, and other mining equipment to the mining company that owns the Oyu Tolgoi mine.

This success of TM in winning the order was also a great surprise to Sumitomo Corporation because TM was a new company, having been established only one and a half years ago in August 2009. Sumitomo Corporation had no experience in the mining equipment business in Mongolia up until then.

Despite these disadvantages, TM won the order. There were 40 equipment sold in total. The contract value amounted to about 10.9 billion yen. In addition, steady revenue can be expected every year through after-sales services and other operations. How could TM, with no track record in the business, achieve this huge success?

The 930E, the world’s largest class electric drive dump truck made by Komatsu.
One of the equipment sold in Mongolia

Formation of a global strategy team

Yuki Oka, a Sumitomo Corporation employee currently on loan to SMS-E

One of the main players who contributed to this success is SMS Equipment (SMS-E), a subsidiary of Sumitomo Corporation, which had been engaged in the mining and construction equipment business in Canada for many years. SMS-E is the parent company of TM, and has been building strong bonds of trust with leading mining companies as well as Komatsu.

The successful order in Mongolia was in fact a part of Sumitomo Corporation’s global strategy aimed at expanding the mining equipment business around the world based on the credibility and sound track record of SMS-E. The unit promoting this strategy is the Global Mining Office (GMO), set up within the Construction & Mining Systems Division of Sumitomo Corporation. The current members of the GMO are Mr. Oka (mentioned above), President and CEO of SMS-E, General Manager of the Construction & Mining Systems Division, and other mining equipment business personnel. The success in Mongolia was brought about by the steady efforts of this small team, who are currently planning the next global strategic step.

But how has SMS-E developed its credibility?

The Oyu Tolgoi mine located in the southern Gobi Desert