Longer-term planning needed as pandemic disrupts machinery supply, demand.
- Rising demand for mining equipment expected in 2022
- Covid-induced equipment supply shortages could pose problems
- More companies starting to secure equipment rentals for next year
- Sales of old equipment, demand for heavy haulage, likely to increase
Mining companies need to plan their equipment-rental needs further in advance to safeguard against potential supply shortages when Covid restrictions ease, says Mark Ackroyd, Managing Director of National Group.
As founder of National Group – a leading provider of heavy-earthmoving equipment rental – Ackroyd has watched machinery demand ebb and flow during commodity cycles. He believes the mining industry faces unique challenges this time around because of Covid. He says:
“In 12 months, we expect stronger equipment demand as mining activity ramps up after Covid. The feedback we’re getting on the ground is that some miners see July 2022 as the kick-off for big projects that were put on hold during the pandemic.”
As demand rises, there could be supply problems because less equipment has been manufactured, particularly in countries with high rates of Covid. Ackroyd says:
“Order times for mining equipment have increased. Across manufacturing this year, it’s taking longer to get everything from a car to a shed. It’s no different with mining equipment.”
The result, says Ackroyd, could be a looming shortage of top-tier equipment.
“Provided commodity prices remain elevated, there will be a lot of mining companies wanting extra equipment all at the same time next year, as they expand production or re-start mines.”
Ackroyd says mining companies should plan up to three years ahead for equipment rental in this environment.
“It’s a balancing act. Understandably, miners want more flexibility through shorter-term contracts, given Covid uncertainties. But they must ensure they have access to enough of the right equipment next year and beyond, when demand increases.”
Working with agile, flexible equipment suppliers is vital, says Ackroyd.
“National Group has done a lot of work to ensure clients benefit from better terms in longer-term contracts, while at the same time ensuring clients have sufficient flexibility if conditions change during Covid.”
More National Group clients, says Ackroyd, are planning further out.
“We’ve had clients reserving equipment for a year’s time. In an industry where supply is often about next week or month, it’s pleasing to see some companies taking a longer-term view with equipment rental.”
Ackroyd expects rising demand for National Group’s machinery sales and auctions service in 2022, through its National Machinery Xchange (NMX) business. Ackroyd says:
“During Covid, some mining companies have stretched the usual lifespan of their equipment to get more out of it. The result will be an increase in older mining equipment that can be sold to other companies through face-to-face or online auctions. And more equipment that is no longer viable to refurbish and needs disposal.”
NMX provides valuation and auction services for mining companies that want to sell equipment, as well as disposal services. Ackroyd says:
“It could be a good time to sell equipment in 2022 if equipment-supply shortages continue to drive second-hand prices higher.”
NMX also helps clients buy equipment. Ackroyd says:
“Mining companies need to work with equipment suppliers that can source machinery for them at short notice, particularly if supply shortage emerges. Again, this gets back to planning equipment needs well in advance.”
Ackroyd expects demand for heavy haulage of mining equipment to rise over the next 12 months.
“As mining activity ramps up in 2022, companies will look to move more equipment around to where it is needed, particularly as State borders open up.”
National Heavy Haulage specialises in transporting mining equipment of any size, nationwide. That includes some of the largest, most complex hauls to Australia’s most remote sites. Ackroyd says:
“Let’s hope we see more trucks on the road in 2022 hauling large pieces of mining equipment. That will be a sign of a great Australian industry getting back into full swing after Covid – and a symbol of rising demand for mining equipment.”
Source: National Group