Mining is an industry famous for its cyclical booms and busts. Unfortunately in many ways it doesn't ride these out very well from a personnel aspect. But before we consider the effects of these booms and busts on the availability of skilled mining staff, let's take a look at the nuts and bolts of the boom and bust cycle.
It starts with demand. Using the most recent boom during the 2000's as a simplistic model, we can see that it started with China's growing requirement for raw minerals, notably iron ore (and coal). This rising demand created a shortfall in the supply of iron ore, which drove up the price of the commodity. As the prices rose and demand grew, exploration activities commenced to find new iron ore deposits to meet the growing demand whilst existing suppliers expanded their operations to increase output. The result was a boom the likes of which Australia in particular has probably not seen since the gold rush era of the 1850's.
Sooner or later though there comes a point when even the most voracious demand for a commodity is satiated, at least temporarily, and the pendulum begins to swing back the other way. We go from a shortfall to an oversupply of the commodity, which drives prices back down again. Miners that can no longer sell enough iron ore to remain viable in this oversupplied market close down sites that are not economical, lay off staff to preserve their bottom line and in some cases wind up the company itself. Either that or they're bought out by bigger concerns that can afford to sit on their assets and wait for the next boom.
Eventually enough mines close down that stockpiles of iron ore dwindle to create another shortfall. The shortage begins to increase prices again, making it viable for some of the old mines to be reopened or previously reduced operations to be expanded again. If this fails to meet demand, prices rise still further and we enter another boom period as the industry once again scrambles to try and meet demand.
I use the word 'scramble' here deliberately for a number of reasons. The mining industry in general is notoriously short sighted when it comes to managing one of its most important resources – its skilled workforce.The knee jerk reaction amongst many players in the industry to a pending bust is to downsize staffing levels to reduce costs. It's an age-old management technique when faced with declining revenue that almost immediately improves the bottom line and 'looks' good. For the mining industry in general though it's a short-term fix and one that could be thought of as throwing the baby out with the bath water!
The Problem With Downsizing Staffing Levels During A Bust
Mining does not have a particularly good reputation as a stable long-term employer. The volatile nature of its booms and busts, and the subsequent laying off of employees, and not just at the lower levels either, has given it a reputation for fickleness. Combine this with the remote locations of most mine sites and you have an industry image that is not attractive to younger generations looking for a stable long-term career. This is despite the extremely good salaries on offer, particularly as you start to climb the executive ladder. This in turn creates a number of problems.
At executive and management levels in particular the mining workforce is aging and there are not enough knowledgeable younger professionals with the right skills coming up through the ranks to replace them.Some of the potential executive and management stars may have been retrenched early in their careers by downsizing due to a bust and left the industry, never to return. Others will have seen the writing on the wall and moved of their own volition into other industries with a more stable future. Combine this with the fact that
- Employment prospects during a bust are not good for mining graduates
- There is no guarantee for people entering mining courses during a boom that by the time they graduate the boom will still be happening and there will be work available
- Younger generations often don't want to work away from home or overseas in remote locations, even with the lure of big pay cheques,
and you begin to see the recruitment problems facing the mining industry.Especially in middle and upper management where experience and knowledge gained on the job are vital.
When No One Wants A Career In Mining….
When school leavers don't see any attraction or long-term future in a mining career they choose other career paths.If tertiary institutions are having trouble filling places in their mining degree courses because not enough people want to do them, the courses get cut. And even if someone does want to get into the industry, they may find there simply aren't any courses available in their own location. Are they prepared to relocate?Some are, some aren't. Every potential mining recruit that chooses not to relocate to pursue his or her education but opts for another industry instead is a recruit the mining industry loses. That recruit could well have been a future mining CEO! It creates a vicious cycle and one that often has to be addressed at industry level by bringing in mining talent from other countries.
There are other solutions of course and the majors have already begun to implement some of these. It's a big part of why they've been able to successfully weather the talent shortfalls that are a part of the boom and bust cycle of mining. It's also not coincidence that these are the companies leading the way with new technologies that are the future of mining.
You Have To Take A Good Look At Those Who Already Have A Career In Mining
There is little doubt that mining employees of the future need to be skilled in ways that mining employees of the past were not required to be.One of the solutions to lack of available new talent, particularly talent with the right skill sets to meet the future of mining, is to retain existing talent and up-skill the valuable employees a company already has. This is not a new concept but it is one that many mining companies have failed to capitalise on. Syed and Hathaway-Smith mentioned it as far back as 2007 and 2009 respectively when they pointed out companies need to identify, retain and develop ie up skill internal talent. It's since been mentioned many times over by other authors.Has the mining industry paid attention? The majors like BHP Billiton, Rio Tinto and Fortesque certainly have.