This year BDO has been running regular roundtable events with senior mining executives to discuss the opportunities and challenges that face the industry. With the final turnaround of activity and optimism high, it’s a welcome change to finally shift the discussion from survival strategies to growth stories. BDO’s latest Explorers Quarterly Cash Update which tracks the cash position of Australian-listed explorers indicates continued momentum. The report states ‘exploration expenditure increased by 15%, from $366 million for the March 2018 quarter to $420 million for the June 2018 quarter which represents the second highest spend on exploration during a single quarter since March 2015. The positive industry sentiment displayed was not isolated to exploration companies, but includes a number of large producing companies, such as Fortescue, BHP and Rio Tinto all committing significant funds to development and expansion strategies’. See our full report: Explorer Quartly Cash Update.
But in the face of strong growth comes the challenge of how to resource it. Without finding and accessing the right people, both greenfield and expansion projects will be challenged. In the past, Western Australia has had the ability to tap a variety of talent pools using pay and 457 visas as levers. In the last construction boom companies tapped both local and global markets thanks to the crushing effects of the global financial crisis. With little competition, it wasn’t difficult to attract people to one of the few growing sectors at that time. But many left when the construction cycle finished and only operations and maintenance crew were left.
But we see this expansion cycle as different, and as we listen to those charged with equipping their business for growth it’s apparent that supply of labour for upcoming projects will be challenged. Even now in the early stages of the mining recovery we are hearing anecdotal evidence of companies finding it extremely difficult to find and attract staff – particularly in the trades / specialist skills roles. One example being a mining services company in Perth that currently has 55 vacancies in their head office alone.
So there are executives questioning their traditional recruitment strategies realising that the talent pool is just not there. All of those we spoke to agreed that they had to ‘think differently’ about how they resource and structure their teams, not just for the current up-turn, but thinking more strategically around weathering the classic boom-bust cycle.
Below are the pain points we’ve identified via a number of discussions with clients that are contributing to the difficulties in attracting and retaining mining talent in the WA market.
Changes in China, being the largest global influence, has a direct impact almost everywhere. So the announcement by China to shift demand to higher grade iron ore/coal has had a reverberation effect down the supply line impacting processes, technology and people.
National Infrastructure Boom
Business is good in WA, but it’s also good over East. NSW, Victoria and Queensland, to a lesser extent, are all experiencing an infrastructure boom, predominately driven by lack of spending in the past and a surge in population growth for each of the state’s capitals. This infrastructure spend is forecast to continue well into 2020, meaning that competition for talent in the construction/infrastructure space is already tight making it almost an impossible task to entice people to relocate to the West.
Abolishing the 457 visa has essentially closed the door on importing new talent. The controversy around the visa was made quite public in 2017 with the official program ceasing in March of this year. It has been replaced by the Temporary Skills Shortage (TSS) which includes only 200 of the previously approved 600 occupations. But despite the tightening of visas, the bigger deterrent is the initial start-up cost of importing those people.
Shrinking Talent Pool
According to an article published earlier this year, enrolments in mining related courses are at a 17-year low. Large advertised layoffs of the last downturn and risks around entering a ‘boom-bust’ industry have been cited as two of the reasons the industry is struggling to attract new entrants. Clients we’ve spoken to believe that it goes beyond this saying there is a problem around how the industry presents itself to the public. Introducing the mining industry to high school students was viewed as almost too late to influence young people and that the education process has to start earlier at the primary level.
Somewhat leading from the above pain point is around the educational piece. Mining is seen to have an image problem. Coal, oil & gas and mining in general are largely seen as the culprit to climate change and few of the youth of today probably understand that our burgeoning digital lifestyles are highly dependent on, and linked to, the resources sector. But saying that, BHP has released a number adverts talking to this point exactly. But is it enough to come from just one?
Consensus from our discussion is that more needs to be done around updating the sector’s image and refreshing it with good-news stories around the capacity building of rural and remote communities, job and training opportunities for indigenous people, adoption of new technology for smarter/cleaner mining, research and development into new minerals and the adoption of renewables to power mining. Like all other industries today, the convergence of technology is creating new and exciting opportunities in the industry. But the question is whether these stories are being communicated effectively within and beyond the industry walls.
Talking more on technology is the continued impact that the ‘Fourth Industrial Revolution’ will have on markets and people. The growth of internet / technology based companies is creating increased competition for talent. Young people are looking for companies with purpose and are seen as more socially conscious. Of recent surveys published, there were few if not any mining/mining services companies listed as a preferred place to work. Information technology companies continue to top most surveys.
There needs to be a re-think on how the industry ‘sells’ it-self acknowledging that the audience has changed and so should the message.
Whilst having a strong pipeline of work is a good problem to have, understanding the external, structural and competitive influences likely to impact the supply of talent will be essential to formulating a go-to-market strategy for people. Without even mentioning ‘automation’ above, and it does need a mention, what is evident here is an industry well and truly in flux. But it is precisely this environment where new opportunities arise, where organisations are forced to “re-think” their options and look at alternative recruitment strategies.
Are there ways mining companies can turn these pain points into a competitive advantage?