A new survey by Timetric’s Mining Intelligence Center (MIC) reveals that mining companies throughout Latin American are unhappy with their original equipment manufacturers (OEMs) due to cost-related factors such as maintenance and servicing costs.
The ‘Winning and Retaining Business in the Mining Equipment Sector in Latin American 2015’ survey asked over 100 key decision-makers at operating mines throughout Latin America to rate their OEMs across 16 different factors relating to cost, product attributes, supplier attributes and capabilities.
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The respondents gave their OEMs low satisfaction ratings for cost-related factors, to maintenance and services costs and price of equipment. Respondents in Chile, Peru and Brazil all gave these factors the lowest satisfaction ratings.
“Timetric’s research demonstrates the current mindset of mining companies in Latin America and the importance placed on minimizing costs throughout the business. This includes costs associated with the maintenance and servicing of heavy mining equipment. Mining companies have outlined their dissatisfaction with these costs and have indicated plans to switch OEMs within the next five years,” said Nez Guevara, senior mining analyst at Timetric’s MIC.
Respondents were asked what areas their OEMs differentiated themselves from the rest of the market during the selection process. According to the results, 94 percent cited ‘better maintenance and service provisions’ as the highest rating differentiating factors. In addition, when asked to nominate areas for their suppliers to improve, 53 percent of respondents in Chile, 44 percent in Peru, and 22 percent in Brazil chose the ‘ability to support cost reduction/minimization’ as one of the top areas for improvement.
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Failure to improve these categories revealed that 26 percent of respondents would likely switch to a different supplier within the next five years. While Brazil, Peru and Chile all had the lowest levels of satisfaction, they also had the highest likelihood of switching, with 33 percent in Brazil, 32 percent in Peru and 26 percent for Chile.
The Timetric’s survey concluded that for suppliers to win and retain business in the future, improvements to maintenance and service costs are critical.