EXCLUSIVE: All that glistens isn't gold

The excitement generated by the mining boom might have a dark side, with little promise of long term contracts

EXCLUSIVE: All that glistens isn't gold
<b><font color=red> EXCLUSIVE:</b></font> All that glistens isn’t gold

By David Goeldner | September 7, 2011

This time last year the talk around the bus industry was the potential impact the mining boom might have on vehicle deliveries.

While the re-invented BCI is yet to make the expected comeback towards the top of the league table, most of its 9 units for August made their way into Western Australia’s mining industry.

Similarly Daewoo continues to place its Malaysian-built buses into mining through Go West and Adams Coachlines, among others.

Asia Motors founding Director Bruce Campbell, an experienced Daewoo distributor, says the mining industry’s vehicle of choice – the BH117L – has been specced up to cater for the conditions.

"These buses are carrying big blokes so they have a few less seats in them that we would normally put in a school bus," says Campbell.

Campbell’s builder Chiron has put a lot of effort into getting the right spec of vehicle for harsh mining environments, dust and smoke proofing each bus before it leaves the Malaysia factory.

Engine bays are enclosed with fine mesh to prevent damage to fan belts, and flashing rotating lights, heavy duty air-conditioning and sturdy bullbars form part of the Daewoo mining kit.

"It’s a good sector for us," Campbell says.

But whether it’s a sector that can be sustained over the long term appears in doubt, and is running into trouble elsewhere with at least two mining-orientated bus businesses for sale in central Queensland, handily located to the Bowen Basin coal fields.

The life of a mine varies widely with some mineral deposits geologically surveyed as productive for between five and eight years, sometimes less.

That means mining companies will either buy new buses, treated as a disposable asset, then discard after a few years when a mine shuts down.

Given the shortage of heavy vehicle drivers in the mining industry, the big miners are opting to procure charter companies with the right gear to ferry its mine-site staff about.

Procuring the operator’s services on this basis could fall well short of a typical city contract which might otherwise see a bus extend its working life between 12 and 25 years.

A bus business based on a guarantee of just a handful of years doesn’t make for a sound financial case.

While the boom lasts, expect a continued foray into the sector from suppliers with chassis and bodies engineered for the task, and operators prepared to dabble.

But it will inevitably end, and then the fight moves back to the cities and the shires where sales have been slow over the past few months.

Even with a slight rise in bus deliveries during August after a poor start to the financial year, the 112 units delivered across Australia appear low.

Volvo appear to have corrected a dip in sales, returning to similar 2010 levels after delivering 47 units last month, just seven fewer than August 2010.

Other August 2011 results show Mercedes-Benz hovering at 19, Higer continuing to hold down third spot with 12 units and Scania nipping away on 11.

During September last year the major chassis suppliers delivered 158 units to the industry, and right now the industry is well short of this mark 12 months later.

A big uplift is needed from somewhere – mining notwithstanding.

Exclusive bus delivery data for August 2011 is available here.

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