Focus By Ben Gibson, WA Director, Gordon Brothers
The transport industry is a beneficiary of a more buoyant mining sector in Western Australia
T
he past two years has seen steady and positive growth within the mining and related transport equipment sector as a result of a turnaround in a once heavily depressed resources market. Large participants are posting record export numbers off the back of increasing commodity prices and developments in mining technology. OEM lead times for large yellow equipment such as Off Highway Dump Trucks, Excavators, Wheel Loaders and Bull Dozers have seen an increase depending on customer requirements according to various market participants. It is evident that tier one brands such as Caterpillar and Komatsu remain in high demand, particularly in these periods of increased activity.
2
WATM • April 2019
Mining remains the pillar of the West Australian economy, with renewed confidence as larger projects from the major miners such as BHP’s South Flank, Rio’s Koodaideri and Fortescue’s Eliwana combined $8 billion get under way. Gold, Nickel and Lithium will also be contributors as will Oil and Gas with the likes of Wheatstone, Greater Enfield and Greater Western Flank. Queensland remains strong in coal with plenty of new coal exploration licenses and a recently approved a royalty framework which actively encourages the development of new coal tenements in the Galilee and Surat basins. These heavy capital investments require an enormous transport and logistical component commitment not only during
the construction phase but well after completion into production. Whilst caution is still being exercised regarding transactions and capital expenditure, an emerging trend was the rise of mining mergers and acquisitions in the first quarter of 2018 where figures indicated an 86% rise year over year according to a recent a report published by Ernst Young. It has been reported that investors have been attracted to the decreasing financial risk and improved margins. Strong cash generation within the sector has resulted in easier security funding which is no longer limited to traditional lenders with the inclusion of new bank syndicates, private equity firm and global asset based lenders such as Gordon Brothers which has recently opened its Perth office.
