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‘Wear and tear’ generates sales

21st February 2013


Page 1 of 4

The rapid growth of mining in Australia has accelerated power consumption and subsequently the ‘wear and tear’ of generator sets.
 
New analysis from Frost & Sullivan (http://www.energy.frost.com ), Australian Market for Power Generation in Mining Industry   finds that the market earned revenues of over US$261.50 million in 2010 and estimates this to reach US$413.1 million in 2017. This mature market is likely to grow at a compound annual growth rate (CAGR) of 6.7 per cent from 2010 to 2016.
 
The redevelopment and capacity expansion of existing mines, as well as the opening of new mines, will considerably ramp up demand for power. Further, the remote location of many Australian mine sites makes a case for onsite power generation.

 
"The rising demand for mineral resources from developing countries such as Brazil, Russia, India and China (BRIC) has given a leg up to the Australian mining industry," says Frost & Sullivan Research Analyst Sarah Wang. "Consequently, the power generation market in the Australian mining industry is likely to witness higher influx of participants and revenues."
 
Data from the Australian Statistics Bureau shows that the capital expenditure in the mining industry grew from A$6.50 billion in 2006-2007 to A$10.80 billion in 2009-2010. The income from sales and services of primary commodities has seen a CAGR of 15.2 per cent from 2001 to 2010.
 
While diesel generator sets have the advantage of lower initial costs and the ready availability of fuel, gas generator sets have gained a boost from the development of gas pipelines. The latter also benefit from the use of methane gas at coalmines, lower environmental footprint of gas and the proposed carbon taxation.

 
Mining companies largely rely on diesel to meet energy requirements. In March 2011, the Australian Federal Government proposed a carbon tax - an emission-based tax - in a bid to encourage mining companies to adopt renewable energy resources such as photovoltaic and wind energy. However, this solution to reduce the carbon footprint may considerably restrain demand for generator sets.
 
"Power generation companies can hope to offset the impact of renewable energy on their sales by leveraging Australia’s rich deposit of coal seam gas (CSG)," notes Wang. "Optimal utilisation of CSG is considered an effective way for coal mines to lower the cost of greenhouse gas emission."

 
Apart from the higher uptake of renewable energy, the expansion of power grids and cheaper imports from China are also compelling the market participants to rethink their business strategies. Although of compromised quality, Chinese suppliers’ lower-priced products have found many takers and their popularity could potentially result in a price war.
 
Suppliers can stay afloat in this market by offering energy-efficient generator sets at competitive prices, as well as maintaining close relationships with key project stakeholders, which will help suppliers to gain a competitive edge in the power generation arena. Direct consultative sales will also enable suppliers to establish a sustainable relationship with project owners and stay a step ahead in this highly concentrated market.
 

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