Modern Quarrying October-November 2015

AROUND THE INDUSTRY

In this article, a panel of members of Conmesa – the Construction and Mining Equipment Suppliers’ Association – reflects on market conditions and takes a look at the period ahead. Flat market conditions for a while

shown a heartening upturn in business, with positive rewards for machinery man- ufacturers and distributors. But not everyone is out of the woods. With banks now offering limited finance options, there is a growing trend to turn away from the purchase of new equip- ment. What’s increasingly popular is the purchase on auction of good quality used assets and more ‘rental-to-purchase’ type of deals. And of course this makes good business sense. This move is enhanced by end users commissioning OEMs to maintain equip- ment through formal service and mainte- nance contracts. Obvious benefits include no excessive purchase costs, extended service life of every machine, reduced maintenance requirements and minimal downtime. The local market also shows a steady increase in demand for compact equip- ment, with more contractors opting to purchase compact wheel loaders and mini excavators, rather than a standard backhoe loader. This has been in vogue globally for many years – South Africa is only now in sync.

A ccording to Conmesa chairman Stefan Otto, the construction and mining sectors in South Africa, which were booming pre-2008, have shown sluggish growth since 2010, and the current flat market conditions look set to stay with us for a while. “We were hoping to see an upturn in the economy in the next quarter, but with depressed worldwide commodity prices, low inves- tor confidence, concerns about further strike action, instability of the workforce and political uncertainty, the crystal ball remains cloudy. There is no rosy picture. “The government’s inability to roll out its much-flaunted capital and infrastruc- ture programmes has delayed the award of tenders and halted potential work. New regulations have increased the costs of doing business and have further inhibited investment in South Africa. Not to men- tion the weakening rand,” he says. “ This is without the impact of

excessive wage demands that result in lower employment and Eskom’s con- straints on power which translates into lost production. Added to this, we can- not count on the recovery of commodity prices any time soon, given the financial bubble in China. The costs of getting commodities out from beneath the South African ground, are simply too high. “We predict conditions to remain low or even decline further, only starting to pick up again at the beginning of 2016.” But it’s not all doom and gloom around the CONMESA table. Members believe if union issues can be resolved ahead of pending strike action, South Africa will see an upturn in the mining sector and if the government’s construc- tion infrastructure development pro- gramme is accelerated, there should be a surge in this sector. And for those who can’t see the wood for the trees, the forestry industry has

Table 1: Overall construction and mining equipment quarterly sales (units) – South Africa (2010 Q1-2015 Q1).

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MODERN QUARRYING October - November 2015