Through its independent online auction platform, auction solutions provider Clear Asset is opening up the inter- national market for the auctioning of mining, construction, scrap metal and related assets, while reducing the time and effort required from the mining companies that are selling the assets.

The company had its first auction in September last year and has already con- ducted R60-million worth of confirmed business, of which more than 50% was international sales, Clear Asset cofounder and MD Ariella Kuper says.

“At our last auction, 71% of the sales were international, with buyers from Zimbabwe, Europe and Canada, and at the previous one, 46% comprised inter- national sales, including buyers from Dubai, Europe and Zimbabwe,” she tells Mining Weekly.

Mining companies are currently under pressure and are considering ways to free up working capital and monetise dead assets as quickly as possible to boost their balance sheets, Kuper says.

Stock that mines generally dispose of include equipment that has been idle and redundant; equipment that, upon its arrival at the mine, did not meet the required speci- fications; or equipment that has passed its warranty period.

“Some companies feel that, in the original-equipment manufacturer life cycle, after three or five years, depending on the asset, the warranty and liability become too onerous and that it would make more financial sense to sell the equipment and invest in a new fleet,” she explains.

Buyers at the auctions vary between traders and dealers who rebuild and refurbish equipment and junior or second-tier mining companies that cannot afford new equipment and, therefore, prefer to buy equipment from a listed mining company with a good service record.

“However, previously, mining companies did not have a proper structure through which to dispose of old equipment without their attention being diverted from their core business – mining – for too long,” Kuper explains.

Clear Asset eases this process, she states.

A traditional, physical auction will entail groups of people having to visit the mine site to participate, which is a serious breach of security and logistically challenging, Kuper explains, adding that a mining company might also have multiple pieces that it wishes to dispose of, which are scattered across several sites. These pieces would have to be transported to a single site for the auction, which is costly.

With an online auction, however, there is no need to stockpile the assets, and assets from multiple sites can easily be included.

Further, mining companies can also continue using the equipment during the auction period, if necessary, as long as all technical information relating to the asset can be provided, along with service issues and images, Kuper says.

This online auction format still enables buyers to inspect the assets at the mine site should they wish to do so.

“We find that new buyers would visit the mine with a technical expert to inspect the equipment before bidding, after which they might feel comfortable enough to allow Clear Asset to arrange for an independent inspection on their behalf for the next auctions,” she says.

Clear Asset also obtains and posts inspection comments from mine technical directors or independent consultants on the Web to assist buyers in making informed choices.

Meanwhile, online auctions also eliminate the possibility of auction rings trying to keep the prices down. The bidding is anonymous; therefore, the bidders do not know who they are bidding against and the playing field is neutralised, she adds.

Further, Clear Asset has found that international buyers are looking for additional hands-on support to get the equipment to port and then shipped.

“For this reason we have a panel of transporters that can be used to assist buyers. Clear Asset actually coordinates with the transporters on the buyer’s behalf to ensure that the equipment gets to port and that all the export documentation is compliant,” Kuper explains.

Meanwhile, Clear Asset’s systems allow for the tracking and time stamp of each and every bid logged.

“Our detailed back-end reporting provides comprehensive snapshots and market intelligence preauction and postauction. This includes tracking every asset viewed during the campaign, the number of people visiting our site, where they come from globally, the time at which they viewed the asset online and their pattern of bidding for future sales and auctions. All this data is captured in our system and used to intelligently market client assets for maximum targeted outreach,” Kuper says.

Challenges
Challenges that Clear Asset has expe- rienced include having to prove to inter- national buyers that it is a reputable company, and local buyers often being more traditional and not familiar with the online system.

“As many South African buyers are not familiar with the process, it takes a bigger campaign of education and human tele- phonic interaction to remove their fear of the online process,” says Kuper.

To accommodate these persons, if there is bid activity in the last five minutes of an auction, the clock will automatically extend by another five minutes, for up to 60 minutes.

“Those extra five minutes will give those who are less familiar with the online format, or those who have slower bandwidth, enough time to think about whether they would like to make another bid. This extra time removes some of the pressure, but the timeframe is still tight enough to be fair,” she explains.

“This has worked really well, with some assets going up as much as R250 000 during those extensions,” she concludes.

Clear Asset’s next auction, which features assets from diversified miners Xstrata and Anglo American, opencast mining services provider Diesel Power and civil engineering and plant hire company Teichman, will close at 15:00 on May 9.