WesTrac beefs up China operation with $143m Caterpillar deal Westrac's deal with Caterpillar for the China market will allow it to tap into opportunities in underground mining. Photo: Seth Perlman Mining services company WesTrac has announced the purchase of Caterpillar Global Mining's distribution and support businesses operations in northeastern China for $US130 million ($142.7 million). The wholly owned Seven Group Holdings subsidiary estimates annual revenue from the acquired operations with be in the range of $US210 million to $US250 million for financial 2015. The purchase is not expected to impact WesTrac's earnings per share in the current financial year. The company said it would add to earnings from next year. Seven Group's were up 1.4 per cent at $7.13 at 12:15pm AEDT. The acquisition of Caterpillar's former Bucyrus assets is consistent with Seven Group's move into underground mining services, as WesTrac moves to cover both above- and underground mining services. Last year, Seven Group purchased the equivalent Bucyrus assets from Caterpillar in Australia for $US400 million. Future growth in China Seven Group had been in discussions with Caterpillar over the Chinese assets since that time. The Kerry Stokes-owned Seven Group, last month, sold down part of its stake in Agricultural Bank of China in order to free up capital for further acquisitions. The stake was last valued at $229.7 million. In an announcement to the ASX, Seven Group said the transaction would be financed through a new five-year debt facility. The deal applies to Chinese provinces that WesTrac already operates in. ""As underground mining accounts for more than 80 per cent of all coal production in China, the acquisition of this business will significantly increase the opportunities for WesTrac's future growth in China,"" said Seven Group Holdings chief executive Don Voelte. Upon completion of the deal, WesTrac said it would increase staff numbers by approximately 80 employees, including 37 Caterpillar employees and contractors in China. Tremendous opportunity ""Because China produces almost half the world's coal - with a forecast to grow - there is tremendous opportunity for both Caterpillar and WesTrac to partner and grow alongside our mining customers in the country,"" said Caterpillar resources industries group president Steve Wunning. The acquisition will be subject to to Chinese regulatory approval and is expected to be completed on June 30. ""This acquisition will allow WesTrac China to sell and support CAT heavy mining gear, formerly branded Bucyrus, into the region which includes a significant underground coal mining industry,"" said Deutsche Bank analyst Dominic Rose. ""This product mix shift should be positive for WesTrac China which has been materially impacted by the downturn in the Chinese construction sector with the excavator market particularly hard-hit."" Last month, WesTrac outlined plans to cut a further 630 jobs on top of the 350 it announced in June. The company also issued a profit downgrade with earnings expected to come in between 30 and 40 per cent lower than the last financial year. Tightening capital expenditure from both junior and major miners over the last several years have forced WesTrac to look for savings.