TOKYO — Yokohama Rubber Co. Ltd. has signed a 10-year, $200 million deal with Canada´s Barrick Gold Corp. to supply off-the-road tires for the firm´s 30 gold mines worldwide.
The deal, which calls for Yokohama Rubber to deliver about 1,300 giant bias-ply OTR tires annually through 2018, includes a $35 million loan from Barrick to help finance an expansion of Yokohama´s OTR tire plant in Japan.
More specifically, Yokohama will supply Barrick with five sizes of bias-ply OTR tires, including loader and haul truck sizes up to the 40.00-57 profile, for the firm´s fleet of 100- to 250-ton class dump trucks used in the firm´s open-pit mines, Barrick said.
Barrick CEO Greg Wilkins said the move is an innovative response to the worldwide tire shortage facing the mining industry.
Barrick mines will receive delivery directly from Yokohama´s plant in Onomichi, Japan, and direct-from-manufacturer pricing for the duration of the contract, Barrick said. In addition, Yokohama will provide technical assistance at each Barrick site to ensure that the proper compound, tread pattern and other characteristics are optimized for the operation.
To meet the demand of the contract, Yokohama will spend $50 million to expand the Onomichi plant with a new building, production line and related equipment, Barrick said. The expansion-a key element of which is the installation of capacity for "super large" tires-those with 45-, 51- and 57-inch rim diameters-is expected on stream late this year.
Barrick said a boom in recent years in the mining and construction industries created high demand and tire shortages as well as upward pressure on prices. At its mine sites, Barrick implemented strategies to maintain tires, including enhanced maintenance, on-site repair capabilities, sharing of inventory among sites, better maintenance of roadways at its mines and reduced vehicle operating speeds.
In addition, Barrick established that bias-ply tires can be cost-effective if applied and maintained properly.
Barrick said it spent $80 million on tires in 2006 for about 3,000 giant tires (rim diameters of 45 inches or greater) and anticipates this demand to hit 4,500 by 2012 as it expands its operations. Barrick said it has negotiated long-term contracts with other, unnamed OTR tire makers and is negotiating additional contracts with others.