Buyers finding bargains in mining equipment glut

By Anthony Esposito and Rod Nickel
SANTIAGO/WINNIPEG, April 6 (Reuters) - As slumping metals
prices force miners to scale back production, the scramble by
some to sell idled equipment at a discount is producing bargains
for healthier players.
Mantos Copper, a unit of investment firm Audley Capital,
which bought two Chilean copper mines last year from Anglo
American AAL.L , is among those reaping the benefits.
Mantos recently bought idled loading equipment "at a
competitive price" to replace rented equipment, helping to
reduce costs, said executive chairman John MacKenzie.
At the height of the commodities boom around 2011,
specialized mining equipment was in short supply and companies
often had to wait as long as 18 months for a new truck or even
tires.
That is no longer the case. Inventory of used equipment is
piling up with dealers from Australia to North and South
America.
Chile's state-owned copper miner Codelco COBRE.UL noted
that a shortage of new mining equipment ended with the end of
the copper price boom.
Some mining equipment has been snapped up by companies in
other industries, such as road construction or gravel, said Jake
Lawson, group senior vice-president of the eastern U.S. for
Ritchie Bros Auctioneers RBA.TO .
Quarry and gravel companies have been eyeing equipment from
shuttered U.S. coal mines, said Jon Hager, who manages heavy
equipment for Colas SA COLP.PA . The French company engineers
and builds roads and other transportation infrastructure.
A used front-end loader could cost $1 million less than a
new model, Hager said.
"People are picking and choosing what's coming out of the
mining sector, and putting some of it back in play, but a lot of
it is just being auctioned off in South America" to miners and
construction companies, Hager said.
But Lawson said mining machinery tends to be more
specialized than in other industries and much of it stays within
the sector, unlike oil drilling equipment, which can sell for
logging, construction and farming.
For those looking to sell, the options are limited.
"Either you lower prices, which on occasion happens, or you
wait," said Eduardo Bennett, business manager for used equipment
seller Copal, based in Chile. "You need to be patient."