In Remote Town, Company Must Train a Workforce Before Digging for Ore
CONCEICAO DO MATO DENTRO, Brazil—One key to controlling the wage inflation that bedevils mining companies is finding a captive labor force that’s willing to be trained, such as the one in this remote town, where cows outnumber residents almost two to one.
Nineteen-year-old Augusto Alonso Silva is eager to earn $600 a month as an industrial mechanic at an Anglo American AAL.LN +3.70% PLC iron-ore mine here. The pay is about half what mining wages are elsewhere in Brazil, but Mr. Silva says it is twice as much as he dreamed of earning as a soldier. “Now I have a different dream,” says the 19-year-old, during a break in a basic engineering class.
While rising labor costs have become almost routine for global mining firms—a drill operator in Australia can earn $200,000 a year and a truck driver in Chile $70,000—locals here have been willing to take lower-level jobs such as operating a conveyor belt or maintaining machines for less than $10,000 a year.
Instead of money, the big issue has been lack of skills. The illiteracy rate in this town of 17,000 is close to 18% for people 15 and over.
“There are lots of people in this area who were simply unemployable” when Anglo American arrived in 2007, says Pedro Borrego, the company’s Brazil director of human resources.
As mining companies dig in previously untapped areas, using automated equipment, they are having to train entire work forces and create mining-specific training academies, says Ryan Montpellier, director of the Mining Industry Human Resources Council, an industry-funded consultancy that advises Canadian miners.
While it costs money up front to establish the academies, grooming a local workforce can benefit companies in terms of retention and loyalty. “A company would always rather hire locally,” he says. “It’s about leaving a legacy.” In the Canadian outback, he adds, companies will often partner to fund a training program at a local community college.
Anglo American didn’t have that option here. Instead, it renovated a crumbling grade school near the center of town and filled the classrooms with control panels resembling those on its equipment and a scale model of the mine. The company also distributed flyers all over town and ran ads to recruit young workers.
“It’s not like in Australia and Canada where mining is in the DNA,” says Denise Retamal, director of RHIO’S, a mining human-resources company in Rio de Janeiro.
“People here think you can only work in mining if you’re a geologist or engineer,” she says.
The company was drawn to Minas Gerais in 2007 by the region’s rich reserves of iron ore, the key ingredient for making steel, which it plans to mine and start shipping, mostly to China, in late 2014.
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