Sandvik Mining and Construction and Shandong Energy Machinery Co. in Xintai, Shandong Province, China, have signed an agreement to form a 50/50 owned joint venture for the production and sales of coal mining equipment.

The joint venture is expected to be established within six months, following customary regulatory approvals. It is planned to be operational by the end of 2011, and will be fully consolidated in the Sandvik reporting.

One of the business focuses of Shandong Energy Machinery is to design and manufacture equipment for the Chinese underground coal mining market. It is a subsidiary of Xinwen Mining group, one of China’s top 15 coal-mining companies. Shandong Energy Macinery has approximately 4,400 employees.

The joint venture will focus on sourcing, assembly, sales and service of roadheaders for the large Chinese coal-mining market. Sandvik will contribute with the product know-how and technology, while Shandong Energy Machinery will contribute with local sourcing skills and customer application knowledge. The products are premium Sandvik roadheaders, and will be sold under the Sandvik brand. While the initial focus will be to supply roadheaders to Shandong Energy Machinery’s mother company, Xinwen Mining group, the goal of the JV is to become the leading premium roadheader supplier to the Chinese coal mining market.

“This joint venture agreement is in line with Sandvik’s long-term strategy of continued profitable growth and our aim to become a leading equipment supplier to the Chinese coal-mining market. It gives us a great opportunity to further develop our well-proven underground coal-mining equipment in close cooperation with our Chinese customers, as well as expanding our local set up to provide the best service and support to our customers,” says Lars Josefsson.