ACCORDING TO FIGURES
from Standard Bank’s Vehicle and Asset Finance division, sales of
mining and construction equipment fell 12% between January 2013 and May 2013 compared
to the same period the year before. The decline in sales of yellow metal equipment is a
consequence of a waning construction sector, labour uncertainty on South Africa’s mines and a
Chinese economic slowdown that has undermined commodity prices.
“Many distributors of yellow metal equipment are now looking northwards to other African
markets to try and counter the challenging conditions in South Africa,” says Sydney Soundy,
head of Vehicle and Asset Finance at Standard Bank. “While the South African economy has
been negatively influenced by developments in the mining sector, a drop in demand for some
commodities, and operational cost increases that have reduced demand for capital equipment,
sales into Africa are continuing at satisfactory levels.”
Higher import prices owing to a decline in the Rand, together with the rising cost of labour
and electricity and increased uncertainty, has prompted some local miners to extend their
replacement cycles and to postpone or cancel major projects.
However, even with the slowdown locally, international suppliers of heavy capital equipment
such as graders, bulldozers and earthmoving gear, are still using South Africa as a springboard
into the rest of the continent where demand for machines remains strong.
Increased demand for surface and underground mining equipment is being experienced in
Namibia, Botswana, Angola, Zambia and Mozambique where major infrastructure projects like
the building of refineries, dams, mining infrastructure, ports, roads and railways are providing the
impetus for equipment sales.
“Many emerging economies are intent on addressing backlogs which previously made logistics,
and therefore expansion, difficult. With major projects on the drawing board for developments
from energy to transport and telecommunications, the market is open for capital equipment
manufacturers and suppliers prepared to meet the challenges that are still endemic to many
African countries,” says Andrew Robertson, Standard Bank Head of Business Banking Africa.
He notes that established suppliers of yellow metal equipment still have the upper hand in
Africa, with the dealer networks and technical support needed to service clients in many areas
of the continent.
Sydney Soundy believes that competition for market share will intensify as new entrants with
cheaper products move in and begin establishing supplier networks of their own. The arrival
of new players in the local market has given South African buyers of yellow metal equipment
an opportunity to purchase from non-traditional suppliers in Asia and other parts of the globe.
This allows local suppliers to provide cheaper options that can compete on price against long
established brands.
“Major suppliers of equipment see the demand for new yellow metal growing steadily for at
least the next five years. This translates into orders worth several billion Rand filling future
order books. “Generally, the size of major mining and civil engineering projects dictates
that, in many cases, fleets of equipment are delivered as various milestones are reached
on projects. This means that orders are placed for yellow metal up to three years in
advance, offering a boost to the order books of equipment suppliers working in these
areas,” he says in conclusion.
Standard Bank, Head of Vehicle & Asset
Finance,
Sydney Soundy
, believes that
competition for market share will intensify as
new entrants with cheaper products move in
and begin establishing supplier networks of
their own.
South Africa’s yellow metal
distributors look north
South African distributors of
heavy earthmoving equipment
are looking northwards to
other African markets, as half
the country’s platinum mines
and nearly 40% of its gold
producers find themselves in a
loss-making position.
opion piece
