Purchasing Trends and Intentions in Australian Mining, 2014

Mining equipment is one the major areas of expenditure for a mine. With the Australian mining industry currently facing a lack of available capital, pressure is being applied on purchasing decisions, which is resulting in changes in procurement strategies and behavior. Understanding the changes in procurement behaviors is critical for mining equipment and service suppliers. In an effort to gain insight into this issue, in February and March 2014, GlobalData surveyed 110 mine managers, maintenance managers, procurement managers and other key decision-makers currently working in 90 Australian mines. Respondents were asked specific questions about purchasing methods and expectations concerning future expenditure for mining equipment. Key findings include: – Despite being the dominant method of equipment purchase, outright purchase is expected to fall significantly in the next two years; – More respondents see rental agreements increasing than any other method; – Plant and heavy equipment will see the largest expenditure cuts within the next 12 months.

Scope

This report focuses on the Australian mining market and examines trends in purchasing across a range of different categories including plant and heavy equipment; equipment consumables; equipment parts and components, maintenance services; and explosives, blasting materials and chemicals.

Reasons to buy

Compare the methods Australian miners use to acquire equipment, and how this is expected to change.

Analyse the general expectations within the Australian mining industry for future expenditure, and how this varies by segment.

Understand how different customer segments in Australian mining plan to rationalise or extend their supplier networks.

Identify the major challenges Australian miners face when sourcing equipment.

Companies mentioned

Centennial Coal

Peabody Energy

Newcrest

Yancoal

BHP Billiton

Anglo American

Rio Tinto

Fortescue Metals Group

Table of Contents

1 Executive Summary

2 Current Purchasing preferences

2.1 Purchasing Methods for Heavy Mobile Equipment

2.2 Purchasing Methods for Heavy Mobile Equipment

2.3 Rental Agreements

3 Future Spending Predictions

3.1 Capital Items to be Most Affected by Spending Cuts

3.2 Plant and Heavy Equipment to be Cut Back

4 Rationalization of Supplier Relationships

4.1 Anticipated Changes to the Number of Supplier Relationships

5 Challenges In Sourcing The Right Products

6 Conclusion

7 Appendix I

8 Appendix II

8.1 Survey Background

8.2 Analysis of the Survey Sample

9 Appendix III

9.1 What is This Report About?

9.2 Methodology

9.3 Secondary Research

9.4 Primary Research

9.5 Definitions

9.6 Contact GlobalData

9.7 About GlobalData

9.8 GlobalData’s Services

9.9 Disclaimer

List of Tables

Table 1: Expected Change in Use of Purchase Method in Next Two Years (%), 2014

Table 2: Expected Change in Expenditure by Area in Next 12 Months (%), 2014

Table 3: Changes in the Number of Supplier Relationships Expected in Next 12 Months (%), 2014

Table 4: Biggest Challenges in Sourcing the Right Equipment (%), 2014

List of Figures

Figure 1: Purchasing Methods Used (%), 2014

Figure 2: Other Purchasing Methods in Combination with Outright Purchase (%), 2014

Figure 3: Other Purchasing Methods in Combination with Lease (%), 2014

Figure 4: Purchasing Method by Mine Type (%), 2014

Figure 5: Purchasing Method Type by Company Size (%), 2014

Figure 6: Changes in Financing in the Next Two Years (%), 2014

Figure 7: Decrease in Outright Purchase Financing by Company Size (%), 2014

Figure 8: Decrease in Outright Purchase Financing by Commodity (%), 2014

Figure 9: Increase in ‘Outright Purchase’ Financing by Commodity (%), 2014

Figure 10: Use of Rental Agreements by Company Size (%), 2014

Figure 11: Changes in Expenditure by Category over the Next 12 Months

Figure 12: Expected Reduction in Expenditure by Mine Type (%), 2014

Figure 13: Expected Reduction in Expenditure by Company Size (%), 2014

Figure 14: Expected Increase and Decrease for Two Key Categories (%), 2014

Figure 15: Changes in the Number of Supplier Relationships Expected Over the Next 12 Months

Figure 16: Expected Reduction in Number of Supplier Relationships by Mine Type, 2014

Figure 17: Expected Reduction in Number of Supplier Relationships by Mine Type, 2014

Figure 20: Survey Respondents by State (%), 2014

Figure 21: Survey Respondents by Mine Type (%), 2014

Figure 22: Survey Respondents by Commodity (%), 2014

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