Our mining industry needs to find 24,000 new workers by 2027

Ever since the pandemic took off, the mining industry has been busy pilferering talent from every corner of the country – adding some 66,000 workers to its frontline, an astonishing growth rate in its workforce of nearly 30%.

The Australian Resources and Energy Employer Association expects over 300,000 people to be employed in the resources industry by some time in 2023 with another 8% growth by 2027.

That will rely on the delivery of some $130 billion in capital investment in 107 major projects likely to proceed across the country, generating an additional 24,000 production based jobs across the sector.

69 projects requiring 15,000 new workers are slated to come online by the end of 2024 alone and the labour market is already so tight some greenhorn jobs are paying six figures.

The big question is, with unemployment at 48 year lows and the industry battling a seemingly endless battle against skilled labour shortages, where on earth are these god damn people going to come from?

“While we will always celebrate the strength of the industry and the jobs and other benefits that come with increased project investment, given the significant skills shortages at present, many would look to these new workforce projections with some trepidation,” ARREA CEO Steve Knott said.

“Our industry is battling the worst skills crisis in a generation.

“This is threatening the continuity of existing operations, resulting in temporary or permanent production downgrades, and driving other workforce issues including historic levels of staff turnover.

“As of May 2022 the national resources sector directly employed more than 295,000 people, its highest ever recorded level. On these projections it will exceed the never-before-seen 300,000 mark sometime in 2023 and grow by another 8% to 2027.”

Vacancies high

Like the Bates Motel (12 cabins, 12 vacancies) the resources sector has plenty of openings right now.

“With vacancy levels also at record highs and not showing any signs of easing, we do not expect the industry’s existing labour force to offer any real relief to this forecasted future demand, for example through planned project closures or reductions. Demand for skilled labour will far outstrip supply,” Knott said.

“Simply, unless industry and government can find some creative solutions, the skills crisis facing not only the resources and energy industry but all sectors of the Australian economy, will persist for years to come.

“The industry is ready and willing to work with government, unions and other stakeholders on a myriad of initiatives, ranging from training and VET system reform to streamlining skilled migration processes. We must front-up to this challenge or risk losing some of these long-term national opportunities.”

According to ARREA, ensuring this investment can go ahead is essential to deliver flow-on benefits to the broader economy.

(Not that all of it will. For example, the stage 1 expansion of the Wiluna gold mine was on the list. That project with its 190 workers is still running, but was put in the hands of administrators FTI Consulting by owner Wiluna Mining Corp (ASX:WMC) yesterday.)

All up ARREA says the resources and energy industry is responsibly for 1 million jobs directly and indirectly, with $420 billion in capital waiting in the wings behind the initial $130b investment planned by the sector.

Employee preference to dictate which projects succeed

We’ve already seen examples of the tight labour market and inflationary pressures hurting projects in WA.

Ahead of earnings season this month RBC’s Kaan Peker noted a number of high capital intensity projects were at risk of being delayed among the market’s top miners, citing developments like Ramelius’ Edna May Stage 3 pit, Regis’ McPhillamys, OZ Minerals’ West Musgrave FID and South32’s Trilogy and Hermosa.

Last year Bardoc Gold dumped plans to develop its project of the same name near Kalgoorlie, choosing instead to be sold to St Barbara (ASX:SBM) after citing rising cost estimates.

Last month Evolution Mining (ASX:EVN) said it would defer a final investment decision on an expansion of its Mungari Mill near Kalgoorlie as well due to WA’s boomtime style construction market.

Other companies have not been perturbed, such as Liontown Resources (ASX:LTR), which yesterday announced a $35 million contract for engineering, procurement, construction management to Lycopodium (ASX:LYL) for its $545m Kathleen Valley lithium mine.

Kathleen Valley will need around 350 staff once operational, but LTR boss Tony Ottaviano told Stockhead in an interview last month lithium’s role in the green energy transition made Liontown an attractive proposition for prospective skilled workers.

“The people we need to operate our mine, I’ve got 18 months to two years to solve that problem and we’re finding a lot of inbound interest because lithium is a new commodity,” he said.

“The younger generation really want to back green energy and therefore we’re getting a lot of interest from people just going to our website and applying for roles.

“I think we’re going to get a lot of people coming from other commodities who don’t want to really work in those old technology type operations and move into future facing things.”