The used mining equipment market is undergoing a seismic shift, and the implications are reverberating across the industry. With an influx of supply compared to just a year ago, prices are taking a nosedive. Ben Gibson, head of advisory for auction house Pickles, recently laid bare the driving forces behind this trend during a gathering in West Perth. He pointed to the resolution of supply chain issues that plagued the industry during the COVID-19 pandemic, coupled with a shrinking pool of buyers as the key culprits.
During the height of the pandemic, scarcity ruled the day. Equipment was hard to come by, and the secondary market for used gear flourished. “Ten-year-old equipment sometimes was making close to new prices,” Gibson noted, reflecting on the inflated demand that characterized that period. Fast forward to today, and the landscape has dramatically changed. The major original equipment manufacturers (OEMs) are now sitting on a surplus of machinery, effectively eliminating the wait times that used to plague buyers—except for highly specialized equipment.
This oversupply coincides with a notable drop in demand. As buyers who were once forced into the used market during the pandemic return to purchasing new equipment, the demand for second-hand gear has plummeted. “The pool of buyers for used equipment has also gotten smaller because it was artificially inflated,” Gibson explained. The result? Prices are being pushed down, and auction clearance rates have taken a hit. Where clearance rates soared to around 90-95% during the pandemic, they’ve now settled between 60-70%. Gibson candidly shared that even after an auction concludes, they often find themselves negotiating hard to bump those rates up to the 60-70% range.
Adding another layer of complexity to this evolving market is the rapid pace of technological advancement. The mining sector is shifting towards electrification and automation, which has rendered many older models less desirable. Gibson pointed out that the ability to repurpose parts from older equipment is dwindling as new technologies emerge. “Some of the new equipment that’s coming out is not compatible with our drive shafts and other pieces of equipment,” he noted. This further constricts the secondary market, limiting options for buyers and sellers alike.
Pickles, a major player in the auction landscape, is strategically positioned to navigate these turbulent waters. With a presence across various sectors and a burgeoning footprint in Asia, they are well-equipped to adapt to the changing dynamics of the used equipment market. As the industry grapples with these shifts, the question remains: how will companies adapt to a landscape where used equipment is becoming less viable, and new technology is the name of the game? The answers will undoubtedly shape the future of mining, compelling stakeholders to rethink their strategies in an increasingly competitive environment.
