Bucyrus International Inc. entered into a preliminary agreement Tuesday with Huainan Mining Industry Group for a possible joint venture in the Huainan mining area of China's Anhui Province.

The preliminary agreement lays groundwork for Bucyrus' potential controlling interest in a joint venture for a new manufacturing plant that would initially build belt systems and armored face conveyors for resale on a preferential basis to Huainan Mining and to other third parties. The joint venture could eventually manufacture and sell additional underground mining equipment as well, Bucyrus said in a news release.

"The first step in a resulting joint venture will extend our market coverage and provide us with a low-cost manufacturing base in China," said Tim Sullivan, president and CEO of South Milwaukee-based Bucyrus International. "Huainan Mining will benefit from the higher technology of our products, and the region will gain through the development of a high-technology manufacturing base."

With both companies emphasizing the preliminary agreement is an initial first step, it's expected that equipment manufacturing and sales could begin within about nine months of completion of the joint venture. Huainan Mining's coal production was 42 million tons in 2007, Sullivan said, adding: "This moves us away from a buyer versus seller, western-style relationship that is typical in China to one that allows us to apply our technology to the benefit of both parties."

Bucyrus International (NASDAQ: BUCY) designs and manufactures mining equipment for the surface and underground mining industries. 



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