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REPORT: Australia’s mining equipment value in serious decline

REPORT: Australia’s mining equipment value in serious decline

For the mining sector the hits just keep coming.

A new report by Enrst & Young reveals the value of Australia’s mining equipment market has fallen 46 percent over the past 12 months--and 64 percent since 2013--due to plunging commodity prices and mine closures. The value of mining equipment like dozers, excavators and trucks are now at decade-low prices.  

Paul Murphy, EY Ocenania mining and metals transactions leader said the “free fall” in value is expected to continue.

“Further declines in commodity prices make it ­extremely unlikely the yellow goods market for mining equipment will see any recovery this year,” Murphy said in EY’s 2016 Australian Yellow Goods Report.

The “yellow goods” market indicates the strength of the market and is based on an average fleet of 20 haul trucks, three excavators, two wheel loaders and three dozers.

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The report said there is approximately $600 million to $1 billion of mining equipment currently unutilized and indicated about 1500 haul trucks lay idle in Queensland alone with few signs of improvement since September 2015.

"At the end of the day it's capacity utilization and demand for that equipment," said Murphy.

"So it is no surprise, given the low commodity prices for bulk operations like iron ore and coal, that there's as not much demand, and a bit more supply, for that fleet, than there was two or three years ago."

Murphy added, “Values are at historical lows so for anyone with scale, finances and nerve, there is the potential to opportunistically assemble a mining equipment fleet at once-in-a-lifetime prices.” 

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