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

Published: Mar 31, 2016 | Pages: 38 | Publisher: Timetric | Industry: Mining | Report Format: Electronic (PDF)

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.
 Table of Contents
1 Executive Summary 2 Future Spending Predictions 2.1 The Majority of Miners Expect No Change to Spending Levels 2.1.1 Underground mines more likely to decrease spending in the next 12 months 2.1.2 Coal producers to cut costs even further 3 Centralization and Preferred Suppliers 3.1 Decision Making Location for the Purchase of Equipment and Consumables 3.1.1 Mid-tier companies more likely to make final purchasing decisions away from the mine site 3.1.2 Many base metals and iron ore producers finalize purchasing decisions away from the mine site 3.2 Greater Centralization Expected Over the Next Two Years 3.2.1 Coal and iron ore sectors most likely to witness greater centralization over the next two years 4 Changes in Supplier Relationships 4.1 Number of Suppliers Expected to Stay the Same over the Next 12 Months 4.1.1 Large mining companies more likely to reduce their number of supplier relationships 4.1.2 Supplier relationships more likely to decrease in the iron ore and coal sectors 5 Global Preferred Supplier Arrangements 5.1 Preferred Arrangements for Supply of Plant, Equipment and Supplies 5.1.1 Preferred supplier arrangements in direct correlation with company revenue 5.1.2 Global supplier arrangements more common in the iron ore and coal sectors 6 Challenges In Sourcing Products 6.1.1 Lead times and parts availability provide the biggest challenge for smaller companies 6.1.2 Delivery, parts and after-sales support are major challenges for precious metals mines 6.1.3 Since 2014 quality has become a greater concern when sourcing products 7 Current Purchasing Preferences 7.1 Purchasing Methods for Heavy Mobile Equipment 7.1.1 Base metals and coal sectors more likely to use operating leases to purchase equipment 7.1.2 Comparing results from Q1 2014 and Q4 2015 8 Service Contract Preferences 8.1 Service Contracts for Heavy Mobile Equipment 8.1.1 Operation and maintenance contracts preferred by larger companies 8.1.2 Life-cycle management contracts have greater penetration in coal and iron ore sectors 9 Conclusion 10 Appendix I 10.1 Selected Data Tables 11 Appendix II 11.1 Survey Background 11.2 Analysis of the Survey Sample 12 Appendix III 12.1 What is this report about? 12.2 Methodology 12.3 Contact Timetric 12.4 Primary Research 12.5 Definitions 12.6 About Timetric 12.7 Timetric's Services 12.8 Disclaimer
List of Tables
Table 1: Service Contract Preferences by Company Revenue (%), Q4 2015 Table 2: Expected Changes in Expenditure Over the Next 12 Months by Category (%), Q4 2015 Table 3: Location of Final Purchasing Decisions (%), Q4 2015 Table 4: Location of Final Purchasing Decisions by Category (%), Q4 2015 Table 5: Changes in Centralization Over the Next Two Years by Category (%), Q4 2015 Table 6: Changes to the Number of Supplier Relationships Over the Next 12 Months (%), Q4 2015 Table 7: Changes to the Number of Supplier Relationships Over the Next 12 Months by Category (%), Q4 2015 Table 8: Those Who Have Global Preferred Supplier Arrangements for Plant, Equipment or Supplies (%), Q4 2015 Table 9: The Biggest Challenges in Sourcing the Right Products by Category (%), Q4 2015 Table 10: Preferences in Service Contract Structures (%), Q4 2015


List of Figures
Figure 1: Changes in Average Expenditure Over the Next 12 Months by Company Revenue (%), Q4 2015 Figure 2: Changes in Average Expenditure Over the Next 12 Months by Mine Type (%), Q4 2015 Figure 3: Changes in Average Expenditure Over the Next 12 Months by Commodity (%), 2016 Figure 4: Current Location of Decision Making by Company Revenue (%), Q4 2015 Figure 5: Current Location of Decision Making by Commodity (%), Q4 2015 Figure 6: Changes in Purchasing Centralization Over the Next 24 Months by Company Revenue (%), Q4 2015 Figure 7: Changes in Purchasing Centralization Over the Next 24 Months by Commodity (%), Q4 2015 Figure 8: Changes in the Number of Supplier Relationships Over the Next 12 Months by Company Revenue (%), Q4 2015 Figure 9: Changes in the Number of Supplier Relationships Over the Next 12 Months by Commodity (%), Q4 2015 Figure 10: Average-Preferred Supplier Arrangements In Place by Company Revenue (%), Q4 2015 Figure 11: Average Preferred Supplier Arrangements In Place by Commodity (%), Q4 2015 Figure 12: Biggest Challenges in Sourcing Equipment, Q4 2015 Figure 13: Biggest Challenges in Sourcing Equipment by Company Revenue (%), Q4 2015 Figure 14: Biggest Challenges in Sourcing Equipment by Commodity (%), Q4 2015 Figure 15: Product-related Attributes Have Become A Greater Challenge When Sourcing Products (%), Q1 2014 to Q4 2015 Figure 16: Purchasing Methods Used (%), Q4 2015 Figure 17: Companies Using Outright Purchases And Rentals, Q4 2015 Figure 18: Other Purchasing Methods used in Combination with Outright Purchase (%), Q4 2015 Figure 19: Other Purchasing Methods Used by Commodity (%), Q4 2015 Figure 20: Purchasing Methods: Comparing Q1 2014 to Q4 2015 (%), Q1 2014 to Q4 2015 Figure 21: Preferences for Service Contracts (%), Q4 2015 Figure 22: Service Contract Preferences by Commodity (%), Q4 2015 Figure 23: Australian Respondent Locations by State and Territory (%), Q4 2015 Figure 24: Australian Respondents by Mine Type (%), Q4 2015 Figure 25: Australian Respondents by Commodity Group (%), Q4 2015 Figure 26: Australian Respondents by Company Revenue (%), Q4 2015

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