Mining equipment market

    29 Nov

    Though mining and exploration can be conducted by smaller players and individual merchants, the global mining equipment market is populated by large multinational companies with huge financial backing. The industry is a capital intensive one, requiring massive investment and long term commitment, not only to business partners but to personnel safety and the environment as well, not to mention the aftermarket. The players who succeed in this difficult playing field are those who recognize the conditions for success and have the financial clout to pull it off. Those who do so are liable to make huge profits in the quarter of a billion dollar mining industry.
    The demand for materials like copper and iron ore has increased over the last few years, raising the demand for mining machinery. The reserves of coal for most countries are slowly but surely reducing; in these times of high gas and oil prices, the demand for alternative energy like coal is rising.
    The main producers of mining equipment are located in the United States, the industrialized countries of Western Europe and Japan. These countries have developed markets for mining equipment owing to their long history and proficiency in the equipment development market.
    Apart from these traditionally strong markets, and Brazil among Latin American countries, Russia too commands interest in the mining equipment market.
    The major players in the Asian market are China, India and Australia. China’s energy requirements have soared - coal production in China nearly doubled from 2001 to 2006 - and the country has been investing heavily in the mining industry in recent years, enabling it to emerge as a major market for mining equipment. India too has increased its coal output due to a greater energy requirement. Australia is one of the leading producers of iron ore and bauxite.
    These gains in the Asia Pacific region market, and the fact that larger reserves of natural resources are located in developing countries such as India and China, have led to the trend of large mining equipment producers moving production to these parts of the world to take advantage of the huge market for mining equipment.
    Until 2008 the forecast for mining equipment demand were fantastically positive, and the demand was expected to grow by 5% annually through 2011 to more than $30 billion. After the recession struck and global markets went into free fall in 2009, the industry has had to face up to the reality of the markets. Economies were down, and this translated into lack of spending and slowdown in sales. The mining equipment markets in America forecast a sales and production decline of 15 to 20 percent, European sales are expected to decline by 20 to 25 percent in 2009 and Latin America and the Rest of the World sales might also fall up to 20 to 25 percent.
    Reports indicate that the markets should start to improve by the end of the year, and this should translate into an improvement in the mining equipment market as well, but it will be some time, if ever, before the markets reach the frenetic pace which we have witnessed in the last few years.
    Mining equipment prices
    Although mining has been around since pre-historic times, it wasn’t until the Romans developed large scale mining methods that used aqueducts to bring large volumes of water to the minehead that mining began to develop a level of sophistication.
    Mining today has reached high levels of sophistication with precision machines weighing hundreds of tones and some worth $20 million apiece. Some of these machines include bulldozers, drills, explosives and trucks. With the increase in demand for mined minerals and ore bodies, investments in mineral exploration and new mining projects have soared to unprecedented levels with more than $300 billion is being invested in mining projects worldwide. Mining equipment prices have been steadily increasing across the years.
    On the other side, however, the mining industry has to deal with increasing costs for diesel fuel, natural gas, and steel. This reduces profit margins. In order for mining equipment manufactures to stay ahead of the game, they need to come up with smart strategies to sell their equipment though this cannot compromise the mining equipment prices.
    Depending on your budget, you can either buy mining equipment or lease it. You can buy equipment directly from manufacturers such as J.C.B or Caterpillar who offer a gamut of after-sales services as well as providing maintenance on the bought machinery.
    Leasing mining equipment has many benefits, but the most important is that it offers better cash flow for your company as it carries little in the way of up-front costs. Leasing is also easier and faster than bank financing as it allows you to have the latest equipment. The downside is that it is more expensive than bank financing in the long run, and you have to pay even if you stop using the equipment. You’ll also need to guarantee the lease payments personally.
    There are three main types of leases. The first is a capital (or finance) lease, which is like more like a loan. The lease spans the entire expected life of the equipment and is preferred if you plan to keep the equipment at the end of the lease as it lets you treat the gear as a depreciable asset. The second type of lease is an operating (or true) lease, which is more like a contract, tying up less of your cash even though the lease is shorter than the life of the equipment. And lastly, a skip lease lets you skip payments during slow months, which is ideal for seasonal businesses.
    Another option is to buy used or refurbished equipment (or Rebuilds). Used equipment can offer the same reliability as buying machinery directly off the assembly line, but at a fraction of the cost. Buying pre-owned mining equipment and tools can perform first-rate jobs for a low price. Buying used machinery also allows you to try out certain brands or manufacturers without making a substantial investment. In fact, used machinery and tools can help your business save money on start-up and expansion costs. Pre-owned equipment also increases productivity, business assets and net worth, as well as providing additional tax benefits.
    Mining Equipment Sale
    The market for mining equipment is massive since the mining industry is a cornerstone of human progress. As Joy Global, one of the world’s leading providers of mining equipment and services puts it: everything is grown or mined. An industry worth billions of dollars annually has a lot to offer for companies which manufacture or distribute mining equipment. Mining equipment sale can be hugely profitable business and the cost has been steadily increasing over the years.
    A mining company with a demand for mining equipment has a few options at its disposal: It can either buy equipment either new or refurbished. New equipment is advantageous, not least since manufacturers offer aftermarket support on their products, which is essential, considering that the equipment can get worn quickly or require frequent service depending on the kind of mining process which is being followed.
    One of the problems related to sale of mining equipment is that industry costs have been increasing, that for diesel fuel, natural gas, and steel. Higher production cost adversely affects the bottom line and profits are greatly reduced. This pushes manufacturers into developing smart strategies to sell their equipment if they want maintain their market position. This is even more so considering the current market environment.
    Another option for the buyer is used or refurbished mining equipment. The advantage of buying used equipment is that at a fraction of the cost, the same reliability is achieved as buying machinery directly off the assembly line. The job can be carried out efficiently with pre-owned mining equipment and tools, and at a low price. Purchase of used machinery also allows mining companies to test the waters with a brand or manufacturer without making a substantial investment. In fact, used machinery and tools help businesses save money on start-up and expansion costs. In addition to some tax benefits, pre-owned equipment also increases productivity, business assets and net worth.
    Rebuilds are usually according to stringent OEM guidelines and are available for up to 60% of the price of a new machine, with the same productivity. But as with new mining equipment sale, companies selling rebuilds also offer extended warranties which can be serviced around the world.
    Another option for sellers is to offer mining equipment on lease. This is quicker and simpler than bank financing and allows mining companies to avail of the latest equipment, though it does have its drawbacks. Equipment is more expensive in the long run, payments have to be guaranteed personally and have to be made even if use of the equipment is discontinued.
    The range of mining equipment available for sale is vast, and the kind of equipment depends on the type of mining process being undertaken. Even though the world economy is in a recessionary period, there is still a demand for mining equipment, though reduced. The world demand for natural resources is such though, that it will only be a matter of time before the markets recover.