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Construction

Komatsu takes hybrid excavators to Indonesia, fending off China rivals

Decarbonization and rising fuel costs offer chance to stand out from competition

Komatsu's hybrid excavator is 20% to 30% more fuel-efficient than standard models.

TOKYO -- Komatsu has brought its hybrid construction equipment to Indonesia, aiming to stand out with more environmentally friendly offerings in a region where lower-priced Chinese competitors threaten its hold on the market.

The hybrid excavator rolled out in the country this spring is 20% to 30% more fuel-efficient than standard models, which has become a bigger selling point as fuel costs soar. Komatsu is marketing the machine to nickel miners -- a major industry in Indonesia, Southeast Asia's largest market for construction equipment.

The excavator features a Komatsu-developed system that harnesses kinetic energy from the rotation of its top half. Energy is captured in deceleration and converted to electricity, which is then used to help reduce fuel consumption when the engine accelerates.

This is especially beneficial in nickel mining, which involves frequent rotation as excavators pick up and load ore into dump trucks.

The 30-ton model on offer in Indonesia costs about 20% to 30% more than its diesel counterparts. But "when the current surge in fuel prices is considered, the additional cost can be recouped in a few years," according to Komatsu President Hiroyuki Ogawa. The company looks to sell 100 units this fiscal year.

Komatsu is also expanding its maintenance network in Indonesia with nickel miners in mind. The company opened two service centers in 2021 via distributor United Tractors on the island of Sulawesi, a major mining hub, and plans to add one more as early as this year.

Indonesia leads the world in nickel output. The country's mine production reached about 1 million tons in 2021, nearly tripling from the 2017 level, in figures from the U.S. Geological Survey.

Demand has been rising for the metal, a key material in electric-vehicle batteries, creating a need for more mining equipment as production ramps up. The country accounts for about half the expected demand for construction equipment in Southeast Asia in fiscal 2022, which is projected to grow 20% to roughly 40,000 vehicles.

Though Indonesia has long been Komatsu's turf, its lead has grown less secure amid intensifying competition from Chinese rivals like Sany Heavy Industry that offer lower prices. The country's nickel mining sector has seen an inflow of Chinese capital. Komatsu is estimated to hold more than a 20% share of the Indonesian market, with Sany believed to have climbed to a similar level.

The hybrid excavators are part of an effort by Komatsu to differentiate itself. Last summer, the company began offering 20-ton excavators tailored to urban development, priced 10% lower than standard models.

Komatsu rolled out hybrid excavators in China last year. It looks to eventually bring them to other Southeast Asian markets, where it also faces stiffer competition from Chinese players. These rivals have less of a presence in such advanced economies as the U.S. and Europe.

The introduction of hybrid excavators in Southeast Asia comes amid growing attention to climate issues in emerging markets, including Indonesia, which aims to achieve net-zero greenhouse gas emissions by 2060.

Komatsu has sold more than 5,000 hybrid excavators, mainly in Japan and Europe, since debuting the world's first in 2008. Hybrids make up about 40% of its sales of 30-ton excavators in Europe.

The company aims to halve carbon dioxide emissions from its products' manufacturing and use from 2010 levels by 2030, and achieve carbon neutrality by 2050. "Hybrid machinery plays an important role" in achieving the 2030 goal, Ogawa said.

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