EQUIPMENT FINANCE, RENTAL AND LEASING
Among the package of “strategic core assets”
was 240-t haul trucks and Cat D10/D11 dozers.
Emeco paid a A$20 million deposit to secure
this haul truck and dozer fleet, with the recently
acquired Force Equipment workshops playing a
pivotal role in getting these assets ready for
work, it said.
The company said: “Emeco currently has very
high utilisation in these asset classes – demand
outweighs supply,” it said, adding that rental
agreements were in place for most of these
assets prior to them arriving in Australia.
Contractors
It is no longer just mining companies receiving
new equipment today.
In specific markets, mine contractors have
made a comeback as mine owners have realised
the dearth of new operational talent that is
available on the market and the amount that it
costs to build up and retain their own in-house
mining teams.
This was evident in Bennes’ breakdown of Cat
sales: “Generally, about 15-25% of Cat Mining
Equipment sales are related to greenfield/
brownfield projects with the remainder being
expansions of existing mines as well as
replacement business. Mining contractors are a
significant portion of the market…[they] can be a
higher portion…in some countries, such as in
Australia and Indonesia.”
Companies like Thiess and PT Pamapersada
Nusantara have significant open-pit mining
contracts in Indonesia with the big coal miners,
for instance.
van den Berg had a similar perception of
underground mining contractors, which, he said,
often have a “totally different cash position to
mines”.
“That’s one of the reasons why we see
increased demand for different types of finance
options – a trend we have seen occurring over a
mining companies, contractors or rental
companies, is technology and, specifically, the
pace of change going on in that space.
“It has had a significant impact and requires a
different perspective from our side,” van den
Berg said.
“I mentioned an example before where a
customer might be operating a mine with an
older fleet and we come in, as Sandvik, and
evaluate the situation with a plan for new
equipment.
“That often also includes software,
automation, remotely-operated vehicles, for
example. Then it is not just a machine we are
financing; we are financing the plan that Sandvik
has proposed to improve the mine.
“From a financing perspective, we need to
have a different look at the collateral compared
with the past. In the past, it was one machine
and one financial product. Now, it is becoming a
much more complex financial product,” he said.
It is the speed of change that is causing the
complexity. With many companies acquiring or
looking to acquire ‘automation-ready’ equipment,
the finance providers must be prepared to use
financing packages that can adapt to the clients’
longer period of time,” he said.
And, he agreed with Bennes that one of the
markets where contractor demand was high was changing technology needs.
For example, if a company paying off a finance
package for a drill rig based on metres drilled per
Australia.
“Australia is our second largest market (after
the US and Canadian market) – the main reason
there being it is a contractor-focused market and month were to shift a machine from manual to
autonomous mode, the finance package would
need amending to account for the expected
contractors are often in need of financial support
for the purchase of products.”
This complicates the equipment finance issue
again, as contractors generally receive term
contracts at mine sites where they carry out
particularly services over a set period. The
equipment finance package to be provided needs
to reflect that reality.
Technology gaining traction
But the biggest change for all these companies
providing finance, rental or leasing solutions to
34 International Mining | APRIL 2019
increase in productivity.
There is also a complicating transition taking
place underground – and to a lesser degree on
surface – with fleet electrification. How does an
OEM’s financing arm design a package for a
company looking to immediately buy diesel-
fuelled LHDs with a plan to eventually transition
to battery-electric loaders?
It is a difficult question to answer and a
complicated change to plan for.
While popular opinion may indicate the OEMs
and their captive finance arms are much better
prepared to deal with this changing technology
Cat D11 dozers were among the package of
“strategic core assets” Emeco Holdings recently
acquired
environment, National Group’s Ackroyd clearly
thinks rental companies like the one he fronts
can continue to compete.
“National Group plans to keep pace with
mining’s ever-expanding automation push with a
pivot towards new technologies and innovations
in 2019. That’s a big focus of ours going forward.
We want to position ourselves in the market
going into technology and innovation,” he said.
The company’s aim is backed up by plans to
acquire a contractor that offers a variety of
dozer push, excavation and rehabilitation
services in Queensland and New South Wales,
he added.
“Adding this contractor to the National Group
will allow us to deliver additional services in
autonomous operations; it is the direction the
mining industry and the National Group is
heading into the near future,” he said.
While finance, leasing and rental packages
may be complicated by the ongoing technology
evolution, Epiroc’s McGill can see it paying off for
his company.
“Obviously, there is a price for that and, with
that, the addition of investment needed to
provide this latest technology. In the end, these
innovative solutions are going to help the mine in
terms of better use of equipment, less downtime,
a better safety record, better fuel efficiencies,
better use of its money, etc. But, unfortunately,
there is an upfront cost for that.
“I have seen more customers enquiring
because of the costs involved in that technology,
asking for finance or leasing in order to delay
having to put the cash up front for that. They will
stream the cost of the technology out to afford it,
which in the long run – five to 10 years out – will
save them a lot of money.”
Against this backdrop, finance, leasing and
rental companies are now being asked for more
than just funding; they are required to provide
solutions. IM