In mining slump, used equipment dealers stockpile in rebound bet

Wed Apr 6, 2016 1:00am EDT
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By Rod Nickel and Anthony Esposito

WINNIPEG/SANTIAGO, April 6 (Reuters) - Dealers of used mining equipment, from the United States to Chile and Australia, are making a risky bet that an end to the industry's four-year slump may be in sight, stocking up on a glut of crushers and conveyors.

Inventory is piling up as mines close or production slows. Buyers are especially scarce for highly specialized mineral-processing equipment, dealers say.

"We're being flooded with machinery," said Eduardo Bennett, business manager for Chilean used equipment seller Copal.

The equipment glut is depressing prices as much as 20 percent, Bennett said.

A used 20-ton Komatsu Ltd bulldozer that sold for nearly $130,000 a few years back, now leaves the lot for $100,000, for example.

Executives from across the global copper industry are meeting in Chilean capital Santiago this week for the annual Cesco/CRU conference, where concerns about China's slowing growth and subdued global metal demand are prevalent.

But some veterans of the used equipment industry, who have survived decades of commodity booms and busts, note that such deep pessimism tends to mark the bottom of the cycle. They expect the closing of high-cost mines and cuts to exploration budgets to tighten supply and reverse falling metals prices.

Used mining machinery dealers tend to be small and privately held, and some also deal equipment for construction and agriculture. Much of the equipment goes straight to auction, where it is sold to the highest bidder by companies including Ritchie Bros Auctioneers Inc and Iron Planet.   Continued...