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A combination of mass retirements and increasing natural resource demand from emerging economies has created a crisis in the resource extraction sector – one which is definitely not on investor’s radar screens.
Currently there is a “massive talent gap” that is going to get worse because the global mining industry is experiencing the biggest wave of workforce retirements in 70 years – the oldest baby boomers turned 65 years old in 2011.
The Mining Industry Human Resources Council (MIHRC) has recently said that about 40% of the resource extraction industry’s workforce is at least 50 years old and one third of them are expected to retire by 2022.
The organization also forecasts that the Canadian mining industry will face a shortage of 140,000 workers by 2021 – this number of workers being needed just to maintain current levels of production.
The Petroleum Human Resources Council of Canada warned a severe oil patch labor shortage is looming and that the “patch” will need to hire 24,000 new employees by 2014. Increased resource demand is driving demand for skilled workers. A shortage of skilled workers was the second biggest business risk for mining in 2011 (as it was in 2010) and is forecast to be the number two risk (resource nationalism/country risk is the number one risk) for miners again in 2012. In the coming years a lack of skilled workers is going to be the major cause for concern in the resource extraction industry.
“Government or industry reports in the past few years in Australia, the U.S. and South Africa all highlight growing skills shortages in the mining industry.” Recent HSBC commodities report
“A lot of people ask me what is my biggest concern. What keeps me awake? Having skilled people available to do the job… That is one of the biggest challenges. We are looking to build a whole lot of mines in the future. And getting the right skills to build those mines is a challenge, not only for us, but for the various engineering companies… The baby boomers are starting to get to retirement age. And there is a whole lot of them that are going to disappear very quickly… If you look at the youngsters coming through, they are looking at other industries.” Gold Fields CEO Nick Holland at the Reuters Global Mining and Metals Summit
The skills shortages are global, shortages are happening in South Africa, Australia, Canada and South America. Costs are increasing, projects are being deferred or perhaps even cancelled outright due to the inability to staff operations – tighter labor markets also provide unions with greater bargaining powers when dealing with companies over wage settlements and other disputes.
“Given the ageing profile of the current workforce and a lack of engineers and geologists with enough experience, the labour resourcing requirements for new mining projects at various stages of development across the globe are simply not going to be met. Production targets and project deadlines are inevitably going to slip. The time taken to train a mining professional can be up to five years, but it is the candidate with around ten years experience who is in particularly short supply. A failure by the mining industry to recruit and train during the tough times in the 1990s, when the price of metals plummeted, has led to particular shortages of mid-career professionals.” Mining Global Employment Review 2011, Faststream Recruitment
For the rest of this article, please go to the aheadoftheherd.com website: http://aheadoftheherd.com/Newsletter/2012/Crisis-in-Mining.html