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Purchasing Trends and Intentions for Mining Equipment, Parts and Consumables in Australia, 2016

Purchasing Trends and Intentions for Mining Equipment, Parts and Consumables in Australia, 2016

Synopsis

This report provides an understanding of current procurement practices for mining equipment and service suppliers in Australian mining. Areas of analysis include:

  • Future trends in expenditure and expectations for increased or decreased spend in five areas: plant and heavy equipment, equipment parts and components, drilling and blasting consumables, maintenance services and IT software, and hardware and services.
  • The extent to which preferred supplier arrangements are in place, and predictions for increased centralization of procurement.
  • Analysis of location of decision-making practices in Australian mines.
  • Forecast changes to the number of supplier relationships over the next 12 months.
  • Investigation into the biggest challenges facing buyers and decision makers in sourcing the right products.
  • Current methods for acquiring equipment, with developments over time.
  • An insight into the types of service contracts Australian miners prefer for heavy mobile equipment.
Summary

Overall trends in the data revealed:
  • With spending under pressure, Australian respondents expect stability with their expenditure, with just over half predicting similar levels of spending in 2016 as in 2015.
  • Some 84% of respondents expect no change in the number of supplier relationships over the next 12 months. For those expecting changes, 12% expect a reduction in the number of suppliers.
  • On average, 68% of respondents make final decisions concerning the purchase of a range of equipment and consumables at the mine site.
  • Some 62% of respondents indicated they had a preferred global supply agreement for plant, equipment and supplies. Results show that these agreements become less frequent as the size of the mining company decreases.
  • 36% of respondents identified that their biggest challenge when sourcing products were factors related to supplier attributes and capabilities, such as availability of parts, logistics and lead times, after-sales servicing and maintenance, and technical support.
  • Outright purchasing leads the way and was the most common purchasing method, with 75% of respondents nominating this as their desired purchasing method.
  • 40% of respondents nominated 'operation and maintenance' as their favored service contract structure for heavy equipment purchased. 'Maintenance only' and 'lifecycle management' contracts were only chosen by 15% (for both) of the respondents.
Scope

This report provides a detailed analysis of purchasing methods and spending trends for Australian mines across plant and heavy equipment, equipment parts and components, drilling and blasting consumables, maintenance services and IT software, hardware and services.

Survey respondents came from seven different states and territories, with Western Australia, Queensland and New South Wales accounting for 88% of the respondents. This included four main commodity groups and a range of surface and underground mining operations.

Reasons To Buy
  • Compare the methods Australian miners use to acquire equipment.
  • Plan ahead based on general expectations within the Australian mining industry for future expenditure, and how this varies by segment, such as mine type, commodity, company revenue and state.
  • Understand future plans in the Australian mining industry to rationalize or extend their supplier networks.
  • Understand where decision making is located, be that at either the mine site or corporate head office.
  • Identify the major challenges Australian miners face when sourcing equipment, and incorporate solutions to these in your sales, marketing and product strategies.
  • Understand the types of service contract structures Australian miners prefer for their heavy mobile equipment.
Key Highlights
  • With spending under pressure, Australian respondents expect stability with their expenditure, with just over half predicting similar levels of spending in 2016 as in 2015.
  • Some 84% of respondents expect no change in the number of supplier relationships over the next 12 months. For those expecting changes, 12% expect a reduction in the number of suppliers.
  • On average, 68% of respondents make final decisions concerning the purchase of a range of equipment and consumables at the mine site.
  • Some 62% of respondents indicated they had a preferred global supply agreement for plant, equipment and supplies. Results show that these agreements become less frequent as the size of the mining company decreases.
  • Overall, 36% of respondents identified that their biggest challenge when sourcing products were factors related to supplier attributes and capabilities, such as availability of parts, logistics and lead times, after-sales servicing and maintenance, and technical support.
  • Outright purchasing leads the way and was the most common purchasing method with 75% of respondents nominating this as their desired purchasing method.
  • 40% of respondents nominated 'operation and maintenance' as their favored service contract structure for heavy equipment purchased. 'Maintenance only' and 'lifecycle management' contracts were only chosen by 15% (for both) of the respondents.


  • EXECUTIVE SUMMARY
  • FUTURE SPENDING PREDICTIONS
    • The Majority of Miners Expect No Change to Spending Levels
      • Underground mines more likely to decrease spending in the next 12 months
      • Coal producers to cut costs even further
  • CENTRALIZATION AND PREFERRED SUPPLIERS
    • Decision-Making Location for the Purchase of Equipment and Consumables
      • Mid-tier companies more likely to make final purchasing decisions away from the mine site
      • Many base metals and iron ore producers finalize purchasing decisions away from the mine site
    • Greater Centralization Expected Over the Next Two Years
      • Coal and iron ore sectors most likely to witness greater centralization over the next two years
  • CHANGES IN SUPPLIER RELATIONSHIPS
    • Number of Suppliers Expected to Stay the Same over the Next 12 Months
      • Large mining companies more likely to reduce their number of supplier relationships
      • Supplier relationships more likely to decrease in the iron ore and coal sectors
  • GLOBAL PREFERRED SUPPLIER ARRANGEMENTS
    • Preferred Arrangements for Supply of Plant, Equipment and Supplies
      • Preferred supplier arrangements in direct correlation with company revenue
      • Global supplier arrangements more common in the iron ore and coal sectors
  • CHALLENGES IN SOURCING PRODUCTS
    • Lead times and parts availability provide the biggest challenge for smaller companies
      • Delivery, parts and after-sales support are major challenges for precious metals mines
      • Since 2014 product performance has become a greater focus when sourcing products
  • CURRENT PURCHASING PREFERENCES
    • Purchasing Methods for Heavy Mobile Equipment
      • Base metals and coal sectors more likely to use operating leases to purchase equipment
      • Comparing results from Q1 2014 and Q4 2015
  • SERVICE CONTRACT PREFERENCES
    • Service Contracts for Heavy Mobile Equipment
      • Operation and maintenance contracts preferred by larger companies
        • Table Service Contract Preferences by Company Revenue (%), Q4 2015
      • Life-cycle management contracts have greater penetration in coal and iron ore sectors
  • CONCLUSION
  • APPENDIX I
    • Selected Data Tables
      • Table Expected Changes in Expenditure Over the Next 12 Months by Category (%), Q4 2015
      • Table Location of Final Purchasing Decisions (%), Q4 2015
      • Table Location of Final Purchasing Decisions by Category (%), Q4 2015
      • Table Changes in Centralization Over the Next Two Years by Category (%), Q4 2015
      • Table Changes to the Number of Supplier Relationships Over the Next 12 Months (%), Q4 2015
      • Table Changes to the Number of Supplier Relationships Over the Next 12 Months by Category (%), Q4 2015
      • Table Those Who Have Global Preferred Supplier Arrangements for Plant, Equipment or Supplies (%), Q4 2015
      • Table The Biggest Challenges in Sourcing the Right Products by Category (%), Q4 2015
      • Table Preferences in Service Contract Structures (%), Q4 2015
  • APPENDIX II
    • Survey Background
    • Analysis of the Survey Sample
  • APPENDIX III
    • What is this report about?
    • Methodology
    • Contact Timetric
    • Primary Research
    • Definitions
    • About Timetric
    • Timetric's Services
    • Disclaimer

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