Sector guide · Mining services & supply
The deal killers when you sell a mining services business
These five issues sink or discount more mining services sales than everything else combined. All fixable, all needing lead time.
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These five issues sink or discount more mining services sales than everything else combined. All fixable, all needing lead time.
01One mine is the businessThe big oneConcentration
A single client or single site at 70 per cent of revenue makes your business an extension of theirs, and buyers price the risk that a contract change, a site closure or a new procurement manager takes the business with it. Even meaningful movement in concentration over 18 months changes the conversation, and a second vendor registration is the first step.
02The owner holds the site relationshipsOwner dependence
If the maintenance managers and site supervisors deal with you personally, and only you, the buyer is purchasing a hope that loyalty transfers. Spreading client relationships across your supervisors and putting a second face in front of every key contact is slow, trust moves at its own pace on mine sites, which is exactly why it starts a year or more before sale.
03Safety or certification skeletonsCompliance
Expired certifications, patchy training records or an incident history left unexplained do not stay hidden, because mining clients audit and buyers verify. Discovered problems cost far more than disclosed and fixed ones. Clean it up now, document the fix, and the story becomes good management rather than hidden risk.
04Selling the bottom of the cycle without a storyCycle timing
This industry moves with commodities, and buyers buy trend lines. If your commodity or region has softened, the answer is rarely to dump the business into the weakness. Strengthen the contracted base, diversify where you can, and sell the resilience story, or time the market with someone who watches it. Panic exits at the bottom are where value goes to die.
05A working capital surpriseWorking capital
A debtor book stretched across slow paying clients, retentions forgotten in the drawer, or gear quietly run down on the way out all surface at settlement and land on your price at the worst moment. Know your debtor days, chase the book down before market, and keep investing in the gear like you are staying, right up until you leave.
Approved vendor and prequalified supplier status, change of control, novation, and what gets renegotiated
Prequalification in the Australian resources sector runs through commercial contractor management platforms rather than through a government register. Rio Tinto names its systems publicly. SAP Business Network handles supplier master data, purchase orders and invoicing, SAP Ariba Sourcing handles sourcing events, SAP Fieldglass handles independent external contractors, and TRACK handles site contractor timesheets. For safety prequalification and onboarding, Rio Tinto names Avetta, SafeContractor and ISNetworld. BHP uses MyPass with a Digital Worker Passport at some operations. Peabody and Whitehaven Coal both run Avetta programmes. Avetta acquired the Australian worker management company Pegasus, formerly Onsite Track Easy, consolidating a large share of Australian resources sector contractor compliance management into one platform.
The mechanism that matters to your sale is simple to state. Prequalification records are held against the legal entity. The entity’s own insurances, licences, policies and safety management system are what get verified, and the record lives against that entity’s registration. Rio Tinto requires suppliers to undergo a pre-screening process to demonstrate they meet or exceed minimum standards, including ethical and anti-corruption practices. After award, a supplier must provide information to the contractor management system covering health and safety practices, insurance coverage, and company and personnel qualifications, plus periodic environmental, social and governance performance data. BHP states that adherence to its minimum requirements for suppliers is a pre-requisite for doing business with BHP. Glencore Coal Assets Australia requires suppliers to undergo Glencore prequalification and to comply with the Glencore Code of Conduct and Responsible Sourcing Policy.
Because the record attaches to the entity, structure decides the outcome. In a share sale the contracting entity, its ABN, its prequalification records, its insurances and its site accreditations are all unchanged. Legally the contracts continue and the platform registrations continue. In an asset sale nothing continues, because the buyer is a different legal person with a different ABN and different insurance policies.
The exposure in a share sale is not the prequalification, it is the contract. Master service agreements and panel agreements commonly contain a change of control clause that lets the principal terminate, or requires prior written consent, where there is a change in the ownership or control of the counterparty. That clause converts a transaction that is legally seamless into a commercial negotiation with every principal you have. Read every contract for it before you go to market, and plan the order and the timing of those conversations rather than letting the buyer’s solicitor discover the clause in diligence.
The exposure in an asset sale is novation. Contracts do not transfer automatically on an asset sale. Each contract must be novated, which requires the principal’s agreement, because novation extinguishes the old contract and creates a new one between the principal and the buyer. A principal being asked to sign a novation is being asked to accept a new counterparty, and it can use that moment to reprice, shorten the term, tighten terms or decline outright. Assume every novation is a negotiation, because commercially it is one.
What typically has to be redone on an asset sale, based on the requirements those platforms publish, is a long list with real elapsed time in it. New entity registration in Avetta, ISNetworld or MyPass. New certificates of currency for workers compensation, public and product liability, professional indemnity, motor vehicle, and plant and equipment insurance. Re-verified trade licences. A re-approved safety management system. A new labour hire licence, which cannot be transferred. A new WorkCover Queensland policy. Re-issued coal mine worker health assessments for every transferring coal mine worker. Re-issued site access cards.
Some of that carries a published price. Peabody’s Avetta programme charges contractor company registration of $150 plus GST annually. It requires uploads of workers compensation, public and product liability, professional indemnity, motor vehicle, and plant and equipment insurances, plus trade licences and a Peabody risk assessment. Worker registration and induction bookings follow approval. Whitehaven Coal’s system, which integrates Workforce by Avetta, charges worker fees of $90 plus GST in the first year, $45 plus GST on annual renewal and $30 plus GST for a replacement card. Whitehaven also requires an independent safety management system or manual audit by a qualified work health and safety professional, and states plainly that you will not be compliant unless your audit has been approved. That audit is an external engagement, not a form, and it is the item that sets the critical path.
Two more commercial points that get missed. The BHP and BMA Local Buying Program in Queensland, delivered by C-Res, is open to businesses with annual turnover under A$10 million and a significant presence near BHP assets. It pays on 7 day terms from invoice receipt. A buyer whose group turnover pushes the acquired business over that threshold loses the programme and those payment terms, which is a working capital change, not just a marketing one. Separately, being on a panel is eligibility rather than volume. The Queensland Government defines a panel as an arrangement under which a number of suppliers agree to supply goods or services for a set period of time and usually for a set price. A standing offer arrangement is defined as one under which a business agrees to supply an undefined volume of goods or services for a specified period. Panel membership means you can be invited to price work. It does not mean work.
An honest limit on all of this. No major miner publishes an explicit written rule stating whether prequalified or approved vendor status survives a change of control. The research behind this page could not locate one. What is documented is that prequalification is held against the legal entity, with entity-specific insurances, licences and audited safety systems. Everything above is the commercial consequence of that documented fact, not a quoted rule. Treat it as the working assumption to plan around, and get the position confirmed in writing by each principal before you commit to a completion date.
The 12 to 24 month preparation window
The owners who get the strongest result began preparing well before they had a date in mind. Here is the one I take mining services clients through.
Know where you stand
Start hereGet a confidential market appraisal covering the business, the vendor position and the equipment at honest market values, with a clear picture of which levers would lift the number.
Clean the engine room
12 to 24 months outSeparate business and personal spending, build the normalised earnings schedule, complete the equipment register with service histories and payout figures, bring the vendor and safety files up to audit standard, chase the debtor book down, and get client arrangements into written terms wherever they are not already.
Build the premium
6 to 18 months outPursue a second and third vendor registration, grow the contracted and scheduled share of revenue, spread site relationships across your supervisors, invest in crew retention, and work concentration down across client, site and commodity. This is the phase where the business stops being one relationship with a workshop and becomes an enterprise buyers compete for.
Go to market from strength
Going to marketTimed with the shutdown calendar booked and the vendor position clean, the business goes confidentially to qualified buyers, approached directly rather than advertised, and several of them at once. Two acquirers who both want the vendor status and the inducted crew will pay more than one acquirer negotiating alone.
Don't wait until you think you're ready
That is the ideal run up, not an entry requirement for the market. Mining services is consolidating, and contractors and investors are actively acquiring established businesses for their vendor status, their inducted crews and their specialised capability, because the onboarding queue and the labour market make building those from scratch painfully slow. A business holding registrations with the majors, a place in the shutdown calendar, or capability that is scarce in its region can attract strategic buyers today.
Others can fast track: if your financials are already clean, your revenue is already contracted and your supervisors already hold the site relationships, the two year plan collapses into months.
Ask what it is worth
Free, in writing, and nobody finds out you asked. Tell me the trade and the suburb and I will do the rest.
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