OZ Mining Boss Says Skills Shortage Emerging As Miners Struggle To Attract Talent
By November 24, 2017– Published in on
Jake Klein, the CEO of Evolution Mining. came out with a warning to the world at the company's annual meeting, saying that the mining industry is struggling to attract young people to one of the world's most important industries. While this is an problem for the industry, there are a number of other issues that could severely impact the availability of materials as time goes on.
According to Mr. Klein, young people today are far more interested in working at companies like Facebook and Google. He noted that “It should be of great concern that the University of Western Australia is forecasting only eight students will graduate as mining engineers in 2018 and enrolment in mining engineering at the University of NSW in 2017 was also just eight – the lowest level in 40 years.”
But the risks that the mining industry faces aren't limited to just skills, across the world, governments that are hungry for tax revenue are looking to miners to fill budget gaps. Miners also face ongoing problems with labor, as well as a capital market that has been very rough over the last few years. When all these factors are added up, the world's supplies of vital elements looks more unstable all the time.
No Easy Way Out
Even famed investor Doug Casey has described the mining industry as archaic, and a throwback to the 19th century. For the most part mining resists innovation because of the narrow margins it has to operate on, and also because of the nature of the work. Mining is basically digging up earth, and refining it. There are, of course, some areas that could be improved with modern technology and automation, but in many ways, the archaic nature of mining isn't able to be innovated away.
While the mining industry may not be as sexy as a company like Apple or Tesla, without mining operations the advanced technology that is seducing the younger generations would not exist. From Rare Earth Elements (REE's) to more traditional elements like nickel and copper, without primary supply, all the toys would disappear.
This makes mining companies a vital industry to the entire world, though in recent years they have been treated as one of the most expendable sectors there is. Since 2011 or so miners have had little access to new capital, the equity markets have been terrible to mining shares, and governments are looking to take whatever they can from profitable operations.
New mining engineers might be in short supply, but finding governments that are taking what that can get from mining companies is like shooting fish in a barrel. Freeport McMoRan recently lost control of the Grasberg mega project in Indonesia, which is now controlled by a subsidiary of the Indonesian government.
The government of Western Australia recently tried to up the tax rate on gold miners, even though it would have jeopardized the forth largest export from the nation. China's Sinomines operation's in the Democratic Republic of the Congo have seen ore exports halted, and demands made that they build smelters in the war torn region, so that the government receives a higher tax revenue from the exported materials.
The Philippines has suspended the mining and export of nickel outright, and that decision was recently upheld by their president. All of these areas produce significant amounts of metals like copper and nickel, but today the industry is looking for new supplies.
Unfortunately over the last few years, a number of miners have shuttered operations due to low prices for their commodities, and lack of support from the financial markets. Glencore has the ability to restart nickel and copper mines, but given the losses they had to endure, they would probably like to see margins improve significantly before they do anything to add supply to a market that watched them bleed for years.
Given the situation that the consumers of vital metals are facing, they may learn to appreciate the mining industry the hard way. Facebook and Apple are able to create amazing consumer products because of a complex supply chain, which is based on the mining of natural resources. In the absence of abundant mineral and petroleum supplies, and knowledgeable mining personnel, the price of the elements necessary to make electronic gadgets, electric vehicles, and vital infrastructure will skyrocket.