When market conditions turn unpredictable, Australian business owners face tough decisions about their assets. Instead of selling up or letting valuable equipment sit idle and deteriorate, many are turning to mothballing—a strategic way to pause operations without pulling the plug for good.
What is Mothballing and Why Is It Relevant in 2026?
Mothballing is the process of placing assets, facilities, or even entire businesses into a state of temporary suspension. This goes beyond simply shutting the doors—it involves preparing, preserving, and maintaining assets so they can be efficiently reactivated when market conditions improve.
With the Australian economy still navigating post-pandemic adjustments, global supply chain disruptions, and evolving climate policies, many sectors are seeing fluctuating demand. Industries like mining, manufacturing, and hospitality have all embraced mothballing as a practical alternative to full closure or fire-sale liquidation.
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In 2026, new tax and depreciation rules allow for more flexibility in asset write-downs for mothballed equipment, reducing the immediate tax burden for businesses.
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Environmental regulations have tightened, requiring more robust preservation plans—especially for sites with hazardous materials or significant ecological impact.
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Access to government grants and low-interest loans for asset preservation (rather than disposal) has expanded, particularly for regional businesses and those in renewable energy transition zones.
How Does Mothballing Work? Key Steps and Real-World Examples
Effective mothballing is not a one-size-fits-all process. It’s about preserving value, minimising ongoing costs, and ensuring assets remain compliant and ready for future use.
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Assessment: Identify which assets or operations make sense to mothball. For example, a mining company in the Pilbara might pause extraction at a remote site, while keeping processing facilities on standby.
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Preparation: Clean, decommission, and protect equipment—such as draining fluids, covering sensitive machinery, and upgrading security.
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Compliance: File the necessary documentation with regulators (e.g., the Australian Securities & Investments Commission for businesses, or state environment agencies for industrial sites).
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Ongoing Maintenance: Schedule periodic inspections, run equipment as required, and update insurance coverage to reflect the mothballed status.
Case in point: In 2024, a major Victorian winery mothballed two of its smaller vineyards to cope with drought and falling export demand. By investing in soil preservation and pest management, the business avoided costly replanting when market conditions improved, reactivating those vineyards in early 2026.
Risks, Rewards, and Key Considerations
Mothballing is not without its challenges. The upfront costs of proper preservation, ongoing insurance, and potential compliance headaches can add up. However, for many businesses, these are outweighed by the advantages:
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Preserves Asset Value: Machinery, vehicles, or buildings are kept in usable condition, protecting resale or restart potential.
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Reduces Immediate Losses: Avoids the need for hasty sales in a down market, which often lead to asset devaluation.
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Maintains Strategic Flexibility: Businesses can quickly ramp up when demand returns, gaining a head start over competitors who closed or sold off assets.
However, business owners should weigh:
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Changes in 2026 to asset depreciation schedules and capital gains tax treatment for mothballed assets
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Insurance policy fine print—some providers now require detailed mothballing plans for continued coverage
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Staff retention: Skilled workers may need to be let go, so consider strategies for rehiring or upskilling
Is Mothballing Right for Your Business?
Whether you run a regional manufacturer, a seasonal tourism venture, or a resource extraction operation, mothballing offers a way to protect your investments and stay ready for the next upswing. In 2026, with supportive policies and more sophisticated preservation options, the approach is more viable than ever for Australian businesses looking to weather economic cycles without sacrificing long-term potential.