Mining rental companies may have to start targetting the civil construction industry, diversifying away from a reliance on mining in an effort to survive the downturn.

A recent analysis by Frost and Sullivan found rental equipment utilisation rates had significantly decreased since 2013 as a direct result of the downturn in mining investment.

The Australian Mining Equipment Repair and Maintenance and Rental Market study found from 2007 to the end of the 2012 financial year, prices for most commodities increased, which triggered a surge in investment in new mining operations and subsequently stimulated the growth of a large mining equipment, technology and services (METS) industry.

Frost and Sullivan Australia and New Zealand Managing Director Mark Dougan said as a dual result of substantial increases in production and suddenly softer markets, the prices of many commodities began to decline in 2013 and more noticeably in mid 2014.

“This led to a significant decline in mining investment which directly impacted the market for equipment rental as it is exposed to the construction phase of mining operations,” he said.

“Consequently, rental equipment utilisation rates have fallen significantly and rental prices have been impacted by cost-control measures from major miners.”

The analysis showed the mining equipment rental market was cyclical and more exposed to the mining cycle than the equipment repair and maintenance market, which had continued to grow as a result of a sizeable increase in the equipment base over 2012 and 2013.

Rental of earthmoving equipment was found to be particularly influenced by fluctuations in construction or expansion work.

Mining production in Australia is forecast to grow over the 2014-15 to 2019-20 period, with commodity prices expected to recover in 2016-17.

Frost and Sullivan expected this would lead to growth in the mining rental market, though margins would be tight.

In Australia the METS sector employs around twice as many workers as the mining industry.