Contract mining and equipment group Eqstra Holdings would cease distributing Terex mining equipment at the end of 2013, said Eqstra CEO Walter Hill on Tuesday.

Reporting on the company’s financial results for the year ended June 30, he noted that Eqstra had a contract in place until the end of 2013, and that Caterpillar would have to negotiate with Eqstra should it want to terminate this agreement earlier.

“Be aware that our service contracts will continue past 2013,” he added.

Questions had been raised about Eqstra’s Terex distributorship since last year, when Caterpillar said it would acquire Bucyrus, which owned Terex mining equipment.

The local complexity of this acquisition rested on the fact that Barloworld was the South African distributor of Caterpillar earth-moving machines, generator sets and engines. Barloworld had then also already indicated that it was keen to expand its product pipeline through the global acquisition, especially into the mining industry.

Terex mining equipment was responsible for 40% of Eqstra’s R1.33-billion turnover in its construction and mining equipment distributorships (CMED) division for the 2011 financial year.

Hill said Eqstra was not looking for a new distributorship deal to replace the Terex portfolio.

“We will wait for the dust to settle on this. The big issue is to recover the CMED division.”

While Eqstra was not shopping for newcomers to the CMED division, the same was not true for the company’s three other divisions, Hill told Mining Weekly Online.

These divisions were contract mining and plant rental, passenger and commercial vehicles, and industrial equipment.

“We have identified some acquisition opportunities and will inform the market as and if they come to fruition,” noted Hill.

Hill announced on Tuesday that Eqstra had returned to profitability, with profit for the year at R299-million, up from the R55-million loss recorded in the previous financial year.

Revenue increased 9.3% to R7.6-billion, with group margin at 11.9%, up from 10.3% in the previous financial year.

The CMED division saw a turnaround in margin from –10.7% to 7.7%, with contract mining at 10.1% (down from 11.4%), passenger and commercial vehicles at 16.5% (17.9%) and industrial equipment at 12.6% (13.8%).

Hill noted that CMED’s resurgence was based largely on an improved mining sector, as the construction industry remained depressed.

The CMED division had also rationalised the Terex and New Holland product ranges, stocking only those machines that moved quickly and were in high demand.

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