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Sandvik to cut more costs as mining slump weighs

* To cut costs by further 500-700 mln SEK

* Cuts lead to one-off charges of 300-400 mln SEK

* CEO: mining demand weak but has hit bottom

* To cut sites to 125 from 150 over 3-4 years

By Johannes Hellstrom

SANDVIKEN, Sweden, Sept 24 (Reuters) - Swedish engineering group Sandvik (Other OTC: SDVKF - news) unveiled a new round of cost cuts on Tuesday as a slump in demand due to deep spending cuts by global mining companies weighed.

The company and its Swedish rival Atlas Copco (Other OTC: ATLCF - news) , which together supply more than half the world market of underground mining equipment, have faced falling order intake in recent quarters as a mining boom turns to bust.

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Sandvik, a top supplier of mining gear, metal-cutting tools and specialty steels, said it would cut costs by a further 500-700 million crowns ($78 million to $110 million), resulting in one-off charges of 300-400 million crowns.

These measures would be implemented by the middle of next year, it added.

The company has been cutting production and spending in its mining business in recent quarters as mining heavyweights such as BHP Billiton (NYSE: BBL - news) and Rio Tinto (Xetra: 855018 - news) slash billions of dollars in spending, hitting sales of new equipment.

"This weak market continues," Sandvik Chief Executive Olof Faxander said at a presentation for investors and analysts.

"But we do feel that at this point in time this drop has levelled off at a low level."

The company has already cut costs by roughly 650 million crowns as part of measures to boost group profits.

Sandvik is also restructuring its business, above all its Materials Technology and Construction units that lag the group in profitability, after a brief loss-making stint during the 2008/2009 financial crisis provided a wake-up call.

Unveiling the next step in the efficiency drive, Faxander said the group would trim its total number of sites to about 125 from 150 over the coming three to four years, a move seen racking up a cost of around 3-4 billion crowns.

"These actions will result in increased capital efficiency, improved delivery performance, reduced complexity and simplified ways of working, thereby enabling us to improve service to our customers from the current level," Faxander said.

Sandvik said in a statement it could offer no more details on which sites in its supply chain might be affected, but noted that its focus lay on investments in regions where growth prospects were the rosiest.

"Sandvik believes that growth will mainly take place in the developing markets and in North America, whereas Europe is likely to play a less prominent role the years to come," said the company, for which Europe is still the biggest market with about 40 percent of orders.