Commodity demand for mining machinery results in big growth

Rising demand for such vehicles indicates rapidly increasing activity in the mining sector.

'Since early 2010, the mining sector has steadily gathered momentum and this has had a positive impact on the sales of (earth-moving equipment) as local mining conglomerates gear up to produce and deliver huge quantities of coal, chromium, iron ore and other metals,' said Colin Squair, Wesbank's head of finance for heavy machinery.

'Another factor motivating growth is the active replacement of plant (heavy machinery), as during the economic downturn many companies operating in the commercial sector held off on replacing their ageing equipment,' Wesbank said. Mr Squair said from 2009 to last year the market for plant fell off 50% but demand had improved this year.

Digby Glover, CEO of mining contractors TWP, confirmed yesterday that there had been 'delays in the project pipeline' as a result of the financial crisis, and that now 'there's suddenly a big catch-up'.

'Commodity prices are back to pre-2008 levels,' Mr Glover said, and the industry was scrambling to meet demand. In terms of TWP, he said the firm had 'maintained capacity in 2010 perhaps at the expense of short-term profit, but that's paid huge dividends for us. We've hired 300 engineers and technicians this year alone.'

Mr Squair said that 'availability would be the major hindrance' for his division this year, as a result of the contraction of the plant sector during the financial crisis and because of the March 11 earthquake and tsunami disaster in Japan.

Antonie Fourie, Basil Read's MD for mining, blasting and excavating, said yesterday 'tremendous growth' in mining across Africa and the world meant there was huge demand for plant and 'major delays' in supply. 'I have old plant that I need to replace, and if I want to grow I need even more.' Basil Read had spent R480m this year on plant alone, and waiting lists for plant were causing headaches. 'At the start of the year I spent R220m on plant without even having work for it.'
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