By John B. BivensPublished Aug. 23, 2018 2:07 p.m.
The next time you go to your local hardware store to buy a mining rig, consider the following: It’s a lot of work.
And if you’re not a super tech guy, you may end up wasting money.
But the majority of miners and equipment manufacturers spend their profits on the development of equipment.
And that’s a good thing, says Joe Naughton, senior vice president of mining technology research at market research firm Newmont.
That’s because a company that makes a rig can make a lot more money by selling the gear to another company.
So while you might be spending $200 or $300 on a mining machine, you could potentially be saving thousands of dollars over time by investing in the tools and materials you need.
“The mining industry has been a bit of a cash cow for a lot over the years,” Naughon says.
“You can see that from a lot in the mining industry.
So I think if you look at the amount of equipment that is actually used, it’s about 10 percent of the total mining operations.”
The mining equipment manufacturers that make the most moneyThe biggest names in the industry are well-known names like Schlumberger, Cummins, and Williams-Sonoma.
And they make a significant amount of money for the equipment companies they sell to.
Naughton estimates that each company makes between $20 million and $40 million a year.
For the last five years, the average profit per rig has increased about 50 percent.
But the industry isn’t always booming.
In 2016, the number of rigs sold was about 10,000, down from 12,000 in 2015, according to Naughston.
The most profitable companies in the U.S. spend their money on research and development, or R&D, the process of making better, more efficient tools and equipment.
In 2018, the industry saw a record $16.4 billion in revenue, up from $11.4 million in 2017.
But that doesn’t mean the mining equipment industry is on a roll.
Many of the biggest companies in that space have seen their margins shrink over the last decade.
In the early years, they were able to make big profit by making lots of equipment, and then making it more expensive as demand for mining gear increased.
Today, that process is more difficult and requires more capital to produce new equipment.
That creates fewer opportunities for big-name companies to make profits.
“It’s very hard for the industry to make any kind of sustained profit,” Naugton says.
The more equipment companies have to spend, the harder it is to make profit.
So how can you get the best out of that investment?
Naughtson recommends buying better equipment.
“Most people would say it’s the equipment that you have,” he says.
And there are some good ones out there.
“But I would just like to point out that if you buy better equipment, you’re better off for it.”
For example, some companies have been able to improve their designs and increase the efficiency of the mining process.
But those improvements can cost thousands of bucks, so the equipment manufacturers are usually trying to maximize the value of the new equipment, Naughtsonsays.
And the best way to do that is to get a more comprehensive toolkit of tools and resources, like drilling rigs, which can help companies save money on their new equipment purchases.
The best way for a company to make money on the equipment it makesIf you buy a new mining rig today, and you know it’s going to cost $1 million to $1.5 million, you might want to think twice about it, says Naughson.
“The best equipment you buy right now is going to make you $1,000 to $2,000 a day, he says, adding that the cost of buying equipment could double in the future.
In addition, some of the best equipment is being made in China, which makes equipment for many mining companies.
That means the equipment you’re going to buy from China is going of course to be better than the equipment a lot people have.
And you’re more likely to make a profit if you can find the equipment locally.”
If you’re buying an equipment that’s going in the same direction as your rig, then you’re probably going to get better results than the local equipment, says Brian Fung, an environmental engineer at the University of North Carolina-Chapel Hill who specializes in environmental science.
“That’s because it’s more efficient.”
To find a good mining rigThe most important thing to consider is what you’re looking for in a mining equipment, Fung says.
If it’s a drilling rig, the first thing you want to look for is a drilling bit that can cut a hole in a mountain for easy access.
“A lot of drilling rigs are really expensive,” F