The used mining equipment market is witnessing an influx of supply compared to a year ago which is driving prices down.
Ben Gibson, head of advisory for auction house Pickles, says this is largely being driven by the resolution of supply chain issues that emerged during Covid and a shrinking pool of buyers.
“During Covid, obviously, there was a real shortage of supply. Equipment was hard to get. Essentially, secondary equipment, used equipment was very, very popular,” he told attendees at a gathering in West Perth on Wednesday (20 November).
“Ten-year-old equipment sometimes was making close to new prices. But as we’ve come out of Covid, and those supply chain issues have worked themselves out, most of the big OEMs now have got an abundance of equipment.
“There’s no real wait times apart from quite specialised equipment.”
This has meant a flood of second-hand equipment entering the market at the same time as demand has significantly reduced.
“The pool of buyers for used equipment has also gotten smaller because it was artificially inflated,” Gibson explained.
“Because people couldn’t get new equipment, they were forced into the used market. They’re now going back to buying new equipment and there’s less buyers for the used stuff. So it’s really pushed prices down.”
Gibson notes that during Covid auction clearance rates were up around 90-95%, but are now back at around 60-70%.
“We’re finding at the close of an auction, when we’re selling via auction, our clearance rate might be 40% off the hammer, but we’re having to work really hard afterwards to negotiate with buyers and get up to that 60-70%,” he said.
The other factor impacting the market is the rapid change in technology, which has resulted in the shift to the electrification and automation of mining equipment.
“A lot of equipment used to be able to be bought for parts, for example dozers or Caterpillar dozers or other things like that, and you could transfer some of those parts into similar models,” Gibson noted.
“With the technology revolution that’s really going on, being driven in the mining industry around emissions and the rest of it, it’s not as easy to do that now.
“Some of the new equipment that’s coming out is not compatible with our drive shafts and other pieces of equipment. Again, that also means the secondary market is getting smaller.”
Pickles remarkets assets across the industrial, motor vehicles, salvage, general goods, mining, oil and gas, and agriculture sectors.
major clients include the Australian Government, state governments, local councils, fleet and lease companies, insurance companies, financial institutions, banks and not-for-profit organisations.
Gibson tells this news service Pickles is one of the largest auction houses in the Southern hemisphere, with 25 locations across Australia and an emerging footprint in Asia. The company employs over 900 people.
Write to Angela East at Mining.com.au
Images: Stock
