COVID-19 has greatly impacted the Australian mining sector and the wider capital equipment industry. State lockdowns and the threat of COVID-19 forced many mining companies to make tough decisions regarding health screening and sanitisation, as well as face external pressures such as travel restrictions, fieldwork interruptions and contractual or joint venture obligations.
Despite this, the sector mostly remained in a position of strength throughout the pandemic with consistently high levels of equipment demand felt on online platforms.
Trends around the resources sector have emerged among the chaos of COVID-19, where gold and iron ore mines showcased a level of robustness and stood out as high performers throughout 2020.
Gold mines increased production during COVID outbreak
Faced with unprecedented challenges, many gold mines across Australia continued to increase their levels of production, even during the initial COVID-19 outbreak period. Just a few examples of high production achievers throughout 2020 include: Newmont Corporation, Northern Star Resources and Kirkland Lake Gold.
Despite the complications of COVID-19, Newmont Corporation increased its gold reserves by six million ounces to 94.2 million during 2020. While lower than 2019’s 95.7 million ounces, Newmont still retains the highest gold reserves in the industry.
Similarly, Northern Star Resources ended 2020 strong with record gold sales, while Kirkland Lake Gold recorded strong production results at the end of the June 2020 quarter. Overall, gold exports saw a 12 per cent increase to its revenue at a record $27 billion, which meant gold remained in high demand throughout the pandemic.
With such an uptake in production, it’s no surprise that mining machinery saw great growth in demand online throughout 2020, such as sand washing plant equipment increasing by 69 per cent* in demand year on year (Source: https://www.machines4u.com.au).
The positive increase in mining equipment demand and production from key companies in the industry is great news for anyone working in the sector, especially considering the increase in employment rates within the resources sector.
Iron ore in high demand throughout 2020 and beyond
Iron ore was also in high demand throughout 2020, with many Australian iron ore mines boasting strong operation despite the pandemic.
Mining juggernauts Rio Tinto and BHP both declared strong portfolios for their iron ore operations, with BHP achieving record production in its Western Australian iron ore mine.
This was largely led by high demand across Asia, with China importing 1.17 billion tonnes of iron ore in 2020, meaning their steel usage has surpassed 1 billion tonnes per year. The growing appetite for iron ore has resulted in heightened prices as China eats into their own iron ore reserves. Even with Rio Tinto, BHP and Fortescue Metals Group shipping iron ore to China at record pace, it seems demand continues to outgrow supply. Where this will lead with current trade tensions between Australia and China remains to be seen.
These trade tensions have the potential to cause a decrease in demand for iron ore machinery in the future, but for now the demand remains strong. There was a recorded 38 per cent increase year-on-year in demand for crushing and screening equipment used in iron ore mining during 2020, which is sure to have helped the industry deliver to the high demand seen from major industry leaders. This increase in demand for crushing and screening equipment is in line with what the industry has experienced in the last 12 months, and could be an indicator of a promising 2021.
How a strong resources industry impacted Australian capital equipment markets
These record production levels across the resources industry have had a ripple effect into the capital equipment market, with more demand for mining machinery felt on online marketplaces in 2020.
“There was certainly a boom in online demand for mining gear. We saw buyer demand for mining machines increase by 78 per cent during March to May 2020; the initial COVID outbreak period,” Machines4U founder Steve Krebs said. “It then remained above pre-COVID numbers for the rest of 2020, despite demand declining slightly,” he added.
“A number of factors could have caused this; buyers being forced online thanks to COVID-19 lockdowns, event cancellations, or the need for more machinery onsite thanks to high production levels within mine sites,” Krebs said.
The demand for mining machinery also increased largely year on year by 24 per cent between March and May, showcasing the need for continuous mining production and support onsite.
Overall 2020 was a year that hit many industries hard, and while the resources sector was dealt many blows throughout the year, it remains a solid backbone of the Australian economy.
*Data sourced from online platform Machines4U.