In its Tracking the Trends 2009 report on top mining issues released in December, Deloitte forecasted equipment shortages will remain chronic this year.
“Although demand for trucks, tyres and even port capacity may slow in light of recent market conditions, the underlying factors that caused these challenges are not going away,” Deloitte said.
“Equipment manufacturers and suppliers still lack the capacity to ramp up production to meet evolving mining industry requirements.
“Some mining companies indicate that wait times for draglines for coal mines and large haul trucks are as long as three years.
“Unable to meet even current requirements, one manufacturer closed its books until 2014.”
Deloitte warned mining companies should do more than wait out the market, and said they need to explore new supply relationships and partnerships to ensure access to the equipment required for both the short and long term.
Waratah Engineering managing director Mark Kingshott said demand looks strong for the first half of this year, for both new machines and rebuilds, while a softer second half is likely to be followed by a rebound in deliveries for 2010.
“There remains strong demand for underground machinery at the moment, with a good level of enquiries for 2010 deliveries,” he said.
“There appears to be a more rigorous assessment of the requirement for replacement machines which may result in some of these enquiries not being converted into orders.
“However, at the moment there is no pessimism being sensed in the new machinery market.”
Kingshott added lead times for steel and manufactured components had improved significantly over the past months, improving Waratah’s ability to deliver both machines and parts.
While acknowledging Waratah was experiencing a significant increase in rebuild activity, Kingshott said much of this was driven by the age and condition of the machines rather than the cancellation of new machine purchases.
“We are anticipating a strengthening of the rebuild market in the next couple of years due to deferment of new equipment purchases.”
When asked about what customers should do in the present economic environment, Kingshott said they should continue to evaluate the cost versus benefit of new equipment purchase compared to rebuilding older machines.
“Many recent developments in machine design have significantly improved productivity and safety and can offer very good returns on investment.
“The price of coal has a big impact on these equations and each of our customers will view the situation differently.”
Although job cuts have hit most of Australia’s coal sector and notably Xstrata Coal’s Oaky Creek No. 1 mine which has suspended production, Kingshott said he was aware of more stringent scrutiny of capital expenditure at this time and added BHP Billiton appears to be continuing investment in its underground mines in New South Wales.
Amongst its new machinery, Waratah supplies the Waracar 16 tonne shuttle car, McLanahan FeederBreaker and Wirth continuous miner and roadheaders.
