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Booming international demand for SA preowned equipment

THERE is a thriving international market for local preowned construction and mining equipment. This is considering the long lead times for new gear due to the significant impact that the Covid-19 pandemic has had on global supply chains. Mining contractors are having to wait up to between 12 months for certain brands, while many prominent suppliers of articulated-dump trucks have a full order book until mid-2023.

“We are currently supplying locally sourced construction and mining equipment to top mining destinations all over the world and to countries that are investing heavily into developing their infrastructure. There has been a notable spike in demand for quality preowned mining equipment over the past two years due to the ramifications of the lockdowns that were implemented to contain the spread of the virus. It is going to take time for supply chains to normalise again, and quality preowned equipment that is able to get the job done is significantly easier to obtain. This bodes well for us and the preowned-equipment market,” Shane Naude, owner of EarthCon Equipment Sales, says.

However, Naude is watching international developments closely considering the current geopolitical climate. However, this volatility could also fuel preowned equipment sales as businesses take a more cautionary approach to procurement of capital equipment.

EarthCon Equipment Sales sources preowned equipment nationally with about 75% of these machines destined for other countries. The company specialises in sourcing premium preowned equipment brands, namely Caterpillar, Bell Equipment, Hitachi Construction Machinery and Komatsu. This is in addition to a full range of preowned Wirtgen road-construction equipment, which remains the company’s key focus, considering Naude’s previous 15 years’ experience working in the field. These machines all have a good resale value.

The local market for preowned equipment remains flat, largely due to a notable decline in civil-engineering infrastructure spending by government. In fact, the company has sourced many of its machines from large civil-engineering contractors that have gone into business rescue due to the state of the local construction market. For example, the company sold 50% of an ailing large contracting company’s machines while it was in an 18-month-long business rescue process, providing significantly better deals than what was possible through an auction house. EarthCon Equipment sales valued some of these machines at much higher values than what an auction house was willing to offer.

Local mining and civil-engineering contractors that buy preowned equipment are looking for a more affordable solution than imported machines. This is considering the current rand/dollar exchange rate. Preowned equipment can sometimes be up to 50% more cost-effective than new imported equipment.

Clients have also found that purchasing used equipment for a project can be more financially beneficial than renting because the machines can be resold after the contract has been completed.

Considering the state of the local civil-engineering market, more contractors are sweating their assets, pushing operating hours of their fleets to 20 000 and sometimes even 30 000 operating hours. This is opposed to overhauling their fleet at 10 000 operating hours, making it difficult to find low hour plant that is still in a sound working condition.

EarthCon Equipment Sales currently has about 60 different items of plant on its book. These machines have undergone a rigorous inspection process including by original equipment manufacturers to ensure that they are in a sound operating condition. A report on the condition of the machine will include, among other information, ID and ECM serial numbers; operating hours; and the status of the electronic, drivetrain and braking system. This is in addition to an assessment of the condition of the body and tyres, as well as oil and coolant levels.

“The best find are those machines that have 10 000 operating hours and have had adequate work done to them, including to the engine and undercarriage. This is opposed to machines with the same operating hours but have not been adequately serviced and repaired. On the other hand, we have also found machines that have clocked 30 000 operating hours that are still in sound working condition because they have been serviced and maintained,” Naude says.

Considering the demand for preowned equipment, he cautions potential buyers to be on the alert for unscrupulous suppliers.

Enterprising companies will always ensure that they are dealing with a supplier that has a strong track-record in the market. “This includes a team of representatives who have extensive skills and experience working in the construction and mining equipment industry. They also need to be “hands-on”, overseeing the loading of the equipment at the clients’ site. This is in addition to the washing of the equipment according to international import specifications and loading of the machines onto the ships at Durban harbour, KwaZulu-Natal,” Naude concludes.

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