Owing to the continued global and local economic challenges that the local mining industry faces, several mining houses are shifting their focus from growth and expansion to efficiency and cost control, says online mining and construction equipment auctioneering company Clear Asset.

The slowdown in China’s and global economic growth reduced mining project activity, with low commodity prices and potential liquidation risks prompting many mines to sell underused and redundant assets, or mining equipment, on online auctioneering platforms, thereby fuelling a definite increase in volumes of assets to be auctioned, says Clear Asset MD Ariella Kuper.

She further highlights the freefall of the scrap metal price, down R1 200/t since January; China’s implementation of import duties of 3% to 6% on coal, which resulted in a decrease in demand; the retrenchments that several mining giants executed, such as those of mining major Anglo American and Glencore, as well as recent mine closures, such as that of the Blue Chip mine.

“Consequently, mines are eager to dispose of redundant assets, free up working capital and recover funds, as well as drive productivity,” Kuper avers.

Asset Interest Increase
She further believes that the online auctioneering platform has become the preferred means of selling equipment, as Clear Asset’s performance in the past three years indicates.

Since the launch of the online auctioneering platform in 2012, the company has sold more than R500-million worth of redundant mining and construction equipment belonging to most of the South African mining houses.

Regular assets on auction include dozers, graders, excavators and commercial trucks, as well as lower-value obsolete assets, such as cables, hoppers, locomotives, shovels, valves, pipes and drill rigs.

Kuper notes that Clear Asset sells nearly 50% to 55% of the assets to the international market, with interested buyers from the US, India, Saudi Arabia, Zimbabwe, Australia, Peru, England, Germany and Dubai, as well as Southern Africa development community countries.

Key Performance
Various assets from mining majors, such as Anglo American, AngloGold Ashanti, Exxaro, Gold Fields, Lonmin and Northern Platinum were auctioned last month. These assets included two CAT 16H graders, CAT 777D water tankers, a low-hour, well-maintained Vermeer trencher, a Liebherr mobile crane, P&H 2300 rope shovels, Demag H 285 shovels, redundant locomotives and hoppers, as well as Mercedes-Benz, Nissan and Toyota light-duty vehicles.

Clear Asset further sold a Liebherr 1996 LTM 1090-4.1 mobile crane, which had been listed online at R165 000, for R1.75-million last month. This indicates the demand for certain equipment, Kuper says.

A key sale and the largest South African online construction equipment auction to date, took place in February, following the liquidation of construction and engineering company Protech Khuthele Holdings subsidiary Pela Plant. This auction achieved sales of more than R52-million.

Meanwhile, in 2014, Clear Asset facilitated the sale of a 3 300 t, 1 570 W Bucyrus dragline machine for close to R200-million – the most expensive piece of second-hand mining equipment and the first time that such an asset had been sold in South Africa in 20 years, Kuper adds.

New Market
Despite mining companies needing to sell their assets, Kuper believes that “from this adversity stems significant opportunity – the opening of a market for junior miners and smaller industry players”.

The online platform offers an opportunity for smaller mining and construction companies to acquire quality equipment without having to pay the hefty fees of new items, she reiterates.

Kuper notes that smaller companies, which cannot always afford new equipment, will buy the auctioned equipment to assist in increasing their market value and support their operations in the future.

Additionally, there is increasing interest from the refurbishment and rebuild industry, as the machines are often bought for spare parts, Kuper explains.

Auction Advantage
Kuper reiterates the key advantages of an online mining auctioneering platform, which include overall market intelligence, anonymous bidding – thereby breaking the rings (a formation of bidders who agree to control the bids they place and then sell between each other resulting in the seller losing out on best achievable price) – and increasing buyer participation, as there are no geographic or time zone barriers.

“By Clear Asset bringing information to the table for potential sellers and buyers, there is the creation of increased awareness and interest, more so as Clear Asset conducts and provides the due diligence for potential buyers,” she says.

Further, sellers have the advantage of continued machine use throughout the auction campaign, with no downtime to the mine. They can also sell multiple assets from multiple locations simultaneously, reducing the need for asset stockpiling and logistics costs.

Kuper concludes that, most importantly, online bidding saves time – a precious resource in a challenging economy, as sellers and buyers aim to reduce time, costs and logistics when acquiring new assets.