Well it is interesting times with the whole Global Financial Crisis we are currently experiencing. At work February was a record month for sales (sales to us equals jobs we invoice in a month ie we finished a job and invoiced it in February which was ordered about 6 months ago) which is quite astounding considering the plight of the mining industry at the moment. Why did we do so well and will it continue these are very big and important questions.

Why? We had a major job finally completed which I believe was about 16% of total sales for the month but even without that sale we would still have had a month which would have been in the top 3 months of recent times (last 4 years of records I have).

Will it continue? Yes and no, we are pretty much in a niche market, we service sections of the large mining trucks that are used mainly in open cut mining operations. We have customers including OZ Minerals, BHP, Rio Tinto and others. I mention those three because they are regularly in the news. Many of our customers have made announcements that projects are being put on hold including construction, exploration and some have even started to reduce the amount of ore they are digging up. They are doing this because the current price of many of the metals they are digging up has reduced so much that it is costing more to dig holes than they are getting on the market for their product. If they are stopping the actual mining process this is where we start to get hit. If they used to run 20 trucks 24 hours a day, and now they are running 10 trucks 12 hours a day that is a significant reduction is hours the trucks are doing therefore their maintenance schedules are being extended. To add to that they have trucks parked up which have parts on them they can remove and replace once maintenance is due further extending our maintenance schedules. Luckily for us we are able to be very price competitive against the OEMs which makes us a better proposition than the OEMs – also as we manufacture many of our own parts our costs aren’t really increasing but as the OEMs import into Australia and the reduction in the value of the AU$ vs US$ we are able to further stretch the $$ savings we are passing onto our customers.

I believe we will continue through this current greed driven mess and come out a stronger better performing company through the processes we are currently implementing. We are currently in the process of integrating one of the other companies within our group within our systems to be able to seamlessly compare data and grow both of our businesses beyond our current scope. It is going to be a fairly major focus shift for us from a service driven company to also focus on general parts sales, but I believe with the correct planning and people in place we will be able to significantly grow our business to within 5 years double sales – but only if the right people are recruited to drive the parts sales side of the business. However we can’t let our service drop or else within 5 years our sales could stagnate which isn’t a good thing either.

As a side note, OZ Minerals are in an interesting situation at the moment, they are $1billion+ in debt and due to markets crashing and in turn base metals pricing crashing they cant afford to repay their debts, they are currently awaiting the outcome of the Financial (or Federal I cant remember which) Investment Review Board (FIRB) investigation into a total purchase by Minmetals (a Chinese government owned company). Of course this will release OZ Minerals of the debt but will also hand ownership of one of the biggest mines (Prominent Hill) to overseas ownership.

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