Auction site moves surplus equipment
Mine Source Auctions serves who’s who of mining industry
Every Wednesday, tens of thousands of people in the mining industry around the world receive an email from Sudbury-based Mine Source Auctions announcing the latest additions to one of the largest online databases of surplus mining equipment.
One recent email blast showcased four new but unused Kone overhead cranes in Sudbury, a rod mill in Fraser Lake, British Columbia, two Sandvik drifters in Leduc, Alberta, and a Tri-Star 300-ton prime mover in Phoenix, Arizona.
Mine Source was launched in 2002 as a spinoff of Mindecon Industrial Contractors, a company specializing in decommissioning and remediating mines.
“That’s how we became familiar with mining equipment,” said Mark Alexander, co-owner and vice-president, sales. “My brother Matt and I worked with dad after school. We were somewhat computer savvy and decided there was more of an opportunity in brokering used equipment than the actual decommissioning, so we shifted gears and started Mine Source.”
For a number of years, it was simply an online listing of surplus equipment, but morphed into an auction site in 2011.
“Vale wanted a system they could use to liquidate surplus equipment in an above board, transparent manner open to a global audience, so we went to them with the idea of an auction site. There’s nothing more transparent than that. It’s competitive and gets you fair market value.”
Vale signed up and before too long, Glencore, Barrick, Goldcorp and dozens of other mining companies, contractors and original equipment manufacturers came onboard.
The equipment sold through Mine Source Auctions is located in North America, but can end up in Mexico, South America, Mongolia, or Burkina Faso.
Here’s how it works.
The vendor puts a reserve price on a piece of equipment and it’s featured in an email blast. The item then sits in the database waiting for an initial bid.
That kicks off the auction process. Bidding continues until the cutoff of 2 pm on the fifth business day and whoever has the highest bid at closing wins.
Mine Source staff go to the mine site themselves to take photos of the equipment and will even courier a camera to the vendor if necessary.
“We take all the specs, the maintenance information, manuals, etc.” said Mark. “A lot of times, people buy equipment sight unseen, so the more information we can provide to them on our website, the better chance we have of selling it and the better chance the vendor has of getting a higher price for it.”
There’s no need to put down a deposit during the bidding process.
“When you sign up for an account, we vet you at that point,” said Mark. “It’s very rare that a winning bidder doesn’t follow through with the purchase.”
The setting of the reserve price is entirely up to the vendor, but Mark and brother Matt are often asked for advice.
“If you want to get rid of the item in five days, you should come in with a lower reserve price. If it’s undervalued, it will get bid up to where the market dictates it should be. If you put your reserve bid too high, it can sit there idle without anyone bidding on it. In that case, we’ll go back to the vendor and say, ‘It’s been viewed 200 times and we haven’t received a bid. It’s overpriced. Why don’t we bring it down five per cent and see if we can get some action on it?’”
There’s also a make-an-offer option that allows buyers to offer less than the reserve price, said Matt. If the vendor is agreeable, the auction starts at that lower price and runs for five days.
Winning bidders are immediately invoiced by Mine Source Auctions and have five days to submit payment by cheque, wire transfer or credit card. Once payment is received, they have 10 business days to arrange for pickup of the equipment.
Mine Source doesn’t provide delivery services itself, but helps buyers obtain a shipping quote from freight forwarders right from its website.
Constrained capital budgets in the current downturn haven’t translated into increased demand for used equipment, observed Matt.
“What we’re seeing is mines holding onto their old stuff and fixing it, so it’s the parts companies that are doing well now. If they’re used to buying new equipment, they’re not too excited about buying (second-hand).”
And if they are going to sell something, they may have to lower their expectations on the price they can get.
Mine Source Auctions isn’t put off by the prolonged slump impacting the mining industry. It recently moved to a new office in Sudbury, is in hiring mode and is in discussions to offer a Spanish language website for buyers in Central and South America.
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