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Third quater 2015 Industry comment

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“In spite of tough conditions in South Africa’s mining and construction industries throughout this year and further deterioration of activity in the third quarter, there are signs that give a glimmer of hope for a more stable economy in 2016.”

 

This is the view of Stefan Otto, chairman of the Construction and Mining Equipment Suppliers’ Association – CONMESA.

 

“Members of CONMESA believe the Government’s recent launch of Operation Phakisa should provide new business prospects and kick-start an upturn in 2016. Operation Phakisa, derived from a Sesotho word meaning ‘hurry up’, is an initiative aimed at accelerating the delivery of economic transformation priorities, encompassed in the National Development Plan (NDP).

 

“CONMESA also recognises new business opportunities that have been generated from Bauma Conexpo Africa 2015 – an international trade fair held in Johannesburg recently for construction machinery, building material machines and mining and construction vehicles.

 

“Over 14 000 visitors from approximately 75 countries attended this four day event, which provided the ideal platform to stimulate trading between African and international companies.”

 

Other positive trends recognised by CONMESA in the third quarter include a rise in sales in the plant hire sector and the continued growing trend towards ‘rental with option to purchase’ options, rather than the investment in new equipment, as was previously the case. There is also a shift by end users to commission OEM’s to maintain equipment through formal service and maintenance contracts, as opposed to in-house maintenance teams.

 

Association members have identified that weak economic growth in the third quarter of 2015 is a consequence of extended labour strikes, high wage demands, lethargic investor confidence and ongoing power shortages.

 

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A further concern is the negative impact of Government policy on the Rand which members acknowledge should not be ignored, as affordability is becoming a serious constraint to OEM’s.

 

The significant decrease in activity in neighbouring countries, which rely on stable commodity prices, has also had a negative impact within South Africa. Commodities, including coal, copper, cobalt, zinc, nickel, chromium and manganese, are key exports of Zambia, Namibia, Botswana, DRC and Mozambique, which have seen a drastic downturn in equipment sales.

 

CONMESA members are however cautiously optimistic, that if union issues are resolved ahead of pending strike action and if Operation Phakisa delivers on its promises,this should be sufficient to prod the start of an economic upswing in 2016. In addition, a boost to worldwide commodity prices and energisedinvestor confidence would certainly help.

 

Addition information

 

CONMESA – the Construction and Mining Equipment Suppliers’ Association – is an Association which seeks to establish and maintain a sound public image, through the cohesive action of a membership which is representative of the construction and mining equipment industry, in the best interests of the South African construction and mining industry.

 

For further information

Mr Stefan Otto, Chairman, CONMESA

Email        stefan_otto@global.co.za

 

or

 

Dr Jim Rankin, Secretary, CONMESA

Telephone (011) 453 7249

Email        jim.rankin@agfacts.co.za

Web          www.conmesa.co.za

 

Released on behalf of CONMESA by Lindy Morton, Festivitas 083 268 6666 festivitas@dbnmail.co.za

 

 

 

November 2015

on November 17 | by