Epiroc, Sandvik & Mining Equipment Competition

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What happens after five years? Do they buy new equipment or refurbish it?

Five years is subjective because most underground mines are deeper which means they are hotter and suffer from ventilation issues. With open pit mines, the equipment can last up to 25 years. Decisions are based on total hours, not a period. The business plan allows you to buy equipment to cover a volume of mining with a set number of hours of drilling or loading. Requests come mainly from senior people on the technical or operations side to the Exco, and they have to show what happened to the equipment against the business planning, whether it completed its purpose or not. If it has, the mine is doing well and the company operator has the money, they will immediately approve the next lot, because their efficiency, availability and utilization is dependent on new fleets. Spares consumption will be lower if you choose a new one, so it's always better to go for a new fleet.

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Like the OEM?

Not OEM, Epiroc do not make filters and buy them from Donaldson Filters, who will supply as at 50% of the cost. Traders were also bringing the same Epiroc parts at much lower prices. We initially thought they were pirated spares, but later found out they were the original Epiroc or Sandvik spares. They opened up their businesses in America and offered country wise pricing because it has become a global market. Before people sign contracts, they benchmark spares prices to see if it makes sense. Mining is done for the world and everybody has hand to mouth cost controls. You need to strategize because sometimes CAT offers better notice so it depends on your mine. Most mines are trying to optimize the cost of spares so there will be more competition.

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