Natural Rubber Price Sensitivity on Conveyor Belt Industry: Cost Variation & Procurement Solution

Conveyors form an integral part of material handling and are being predominantly used in transport of bulky material over horizontal distances in an un-interrupted manner. Material handling is a part and parcel of mining value chain and forms a critical spend category for any mining company. Manufacturing and Mining industries accounts for about 55% and 15% of total conveyor belt end use respectively and as the global mining industry is set to grow from the current value of $1.3 trillion to $1.8 trillion by 2018 at 7% CAGR, the USD 4.4 billion conveyor belt industry to grow at over 8% CAGR globally from 2013-18. Raw materials account for about 68% of total cost of production of Conveyor Belts, a variation in the prices of rubber can alter the current scenario. This whitepaper reflects on sensitivity of natural rubber price on conveyor belt pricing through a financial model. It quantifies the possible change in conveyor belt price based on change in rubber price. This will help in increasing bargaining power of mining companies