Caterpillar (CAT.NYSE), the world’s largest maker of earth-moving equipment, plans to sign an US$887 million deal to buy ERA Mining Machinery (8043.HKG), China’s third largest manufacturer by sales of hydraulic roof supports for underground mines, in an effort to strengthen its presence in China’s ongoing modernization of its coal mines, The Wall Street Journal reported. Caterpillar will pay HK$0.88 cash per share, a 33% premium to ERA’s trading price as of Monday. Citigroup will advise Caterpillar on the deal, while The Blackstone Group will advise ERA. ERA reported first-half sales of US$101.3 million, up 86% year-on-year, and net profit of US$2.7 million. China’s coal industry has seen surging demand as rapid development drives expansion of coal-fired power-generating plants. Beijing is speeding up industry consolidation and mine mechanization to improve production efficiency, but industry observers say that China’s mining companies are still strongly loyal to domestic machinery makers.