The price of second-hand mining equipment has dropped 20 to 30 per cent over the last 12 months, and services companies are finding it difficult to move stock, according to an insolvency specialist.
PPB Advisory told the Financial Review second-hand equipment traders were starting to fall on tough times as the prices for new equipment came down.
“A couple of years ago second-hand equipment was very hard to find and, even when you could find it, you were paying near-new prices,” PPB partner Campbell Jaski said.
“It was just because so many mines were wanting to expand at the same time and there were so many contract mining companies increasing their fleets. Now things have really started to quieten down.”
Jaski said as the prices and lead times for new equipment fell miners were increasingly looking away from the second-hand market.
He also said that in some cases the payments being made on second-hand equipment were now worth more than the asset.
Jaski said companies caught still using second-hand equipment were going to have to make “significant write-downs” due to the fall in prices.
Earlier this year heavy equipment manufacturer Caterpillar cut its earnings forecast for 2015 and warned of a slowdown in commodity prices and “modest global economic growth”.
Last month Seven executive chairman Kerry Stokes also said he was considering reducing the WesTrac business in China and offloading a stake in Coates Hire due to an uncertain business environment.