Mining: 'maintenance only’ is the preferred service contract in North America

Paul Boughton

Timetric’s recent survey of more than 100 mine managers and decision-makers working within Canada and the US has found that suppliers hoping to increase their customers through the provision of ‘life cycle management’ contracts for equipment should target US coal companies.

Comprehensive support structures such as life cycle management seem to be most popular in the US coal industry, with 40% of coal respondents in the survey nominating that this was their preferred choice. This was much higher than other commodities; for instance, not one iron ore respondent indicated their preference for life cycle management contracts.

Outside of US coal operations, the dominant aftermarket service contract was maintenance only. Nearly half (44%) of Timetric’s respondents prefer a maintenance only service contract for their equipment, when they purchase aftermarket services. 

Timetric’s research shows that different target markets prefer different types of contracts for aftermarket services. For instance; after coal, the US precious metals industry is most keen for life cycle manager contracts. Moreover, there is a much greater trend for mine managers preferring life cycle management contracts in the US, rather than Canada, due in part to the much larger coal industry in the US. These preferences were largely independent of company size; therefore, the choice to offer different contracts should primarily be based on commodity type.

According to Clifford Smee, Lead Analyst at Timetric’s Mining Intelligence Center (MIC): “Life cycle management is a growing area for mining equipment suppliers that are facing reductions in new sales due to a global slump in commodity markets. This is one area of their business that can be grown.”

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