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Direct approach beats slump

While low commodity prices are putting the squeeze on margins and operating costs throughout the resource sector, some companies are tackling the problem head on – successfully.

One of these Perth-based mining services and supply groups is Supply Direct which has benefited from the increasing pressure on mining companies to source their supplies and equipment more efficiently and cost effectively.

The Kewdale-located company, which is a subsidiary of listed mining services group Ausdrill Limited, has recently shipped $7 million worth of mining equipment destined for the new Geita gold mine in northern Tanzania, East Africa.

The shipment comprises about 7,000 tonnes of mining equipment ranging from Western Australian-made lighting towers and safety equipment to drilling rigs. The equipment will be used in the construction of the Geita mine, which is owned by African gold mining giant Ashanti Goldfields.

Once in production Geita mine will produce more than 400,000 ounces of gold a year.

Supply Direct general manager Gary Bradford said demand for the company’s services is growing, in sharp contrast to depressed conditions elsewhere in the resource sector and associated supply and service industries.

Supply Direct’s turnover has nearly doubled in the past twelve months alone, from $15 million in the last financial year to an expected $29 million for 1998/99, with further substantial growth expected in the coming year.

“This growth is primarily the result of an industry focus on the supply chain as a strategic area for cost reduction, which has the potential to significantly impact on the bottom line and deliver improved shareholder returns,” Mr Bradford said.

“We offer mining and resource companies a total supply chain management and logistics solution.

“We provide companies with best value equipment and consumables sourced worldwide with delivery to their operations and a full understanding of operational priorities.

“In effect, we are saving companies money by ensuring that the supply of equipment to their operations is more efficient, coordinated and is the most competitive option to them.”

Mr Bradford said growth opportunities at the moment in the mining sector were mainly coming from overseas, with the bulk of the company’s orders emanating from Africa.

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