What’s causing mining’s skills shortage (and why it’ll get worse)

Is the last mining bust coming back to haunt us? Here’s why the skills shortage isn’t going away, and what we need to do about it.

If mining’s skills shortage is biting hard, the worst could be yet to come if recent reports are to be believed.

Analysts at McKinsey recently found that 71% of mining leaders believed the talent shortage was stopping them delivering on production targets and strategic objectives, while 86% said it was harder to recruit and retain the talent they needed compared to just two years ago.

So, what’s going on?

The talent pipeline is running dry

A recent report from Mining News, based on Minerals Council of Australia data, provides some insight. Their analysis claims the seeds for the shortages the industry has been experiencing since mid-2021 had been sown the decade before, when the last big mining boom burst. They argue that, as capital spending plummeted in 2011-12, graduate job opportunities in mining sharply declined.

“Between 2008 and 2012, 68% of graduates from Australian mining engineering degrees found work at mining companies or in adjacent roles with consultancies, government bodies or research organisations,” Mining News’ report explains. “But from 2013-17, only 38% of graduates found employment in roles within or related to the industry—and the remaining 62% were presumably lost to the mining sector forever.”

Naturally, that had a detrimental impact on university enrolments for relevant courses for the next decade, as McKinsey identified.

“There has been around a 63% drop in mining engineering enrolment in Australia since 2014, and a 39% drop in mining graduations in the United States since 2016,” McKinsey found. “We expect this trend to continue. Mining is not currently an aspirational industry for young technical talent to join.”

Why the skills shortage is going to get tighter yet

So, part of the current squeeze is a long-term problem in the pipeline of talent. And there’s no easing up in sight.

“Australia has seen mining job vacancies more than double since February 2020, while Australian labor demand for mining operations and projects will require around 24,400 new workers by 2026,” McKinsey found. “However, the market is forecast to supply only about 16,000 workers in that time frame, indicating that vacancies will likely continue to rise for Australian miners.”

Pain points across the industry

Where will the pain come? Potentially across the board, but former Northern Star Resources boss Bill Beament also recently warned that underground mining was facing a particular crisis.

He told The Australian Financial Review that most of the available talent has been trained for open pit mining by the big miners, like BHP, Rio Tinto and Fortescue. Most of those with underground experience work for contractors, like Barminco and Byrnecut, and those contractors were being squeezed by the harsh realities of the way the industry currently operates.

“I worry that Australia’s underground industry is at a crossroads,” Beament said. “If we don’t keep that productivity, keep that innovation and that advancement of being the world’s best, most productive miners, then we’re going to suffer domestically and abroad.”

What’s the solution to mining’s skills shortage?

Clearly, there’s no simple single solution to fix mining’s skills shortage, and any solution will take time to get talent coming through the pipeline. Much of that is beyond the scope of any mining company’s HR team. But McKinsey recommends mining companies reprioritise the recruitment task and invest in new talent strategies.

“Talent is often treated as an ‘HR problem’, which we believe fails to appreciate the complexity and value being left on the table by not making it an all-executive agenda item,” McKinsey’s analysts said.

“We heard from one global miner HR lead, who said, ‘Miners spend enormous time, focus, and energy on optimizing production by 2 percent, while talent topics rarely get the same level of urgency, except in a crisis’.”

What does that look like?

“This means shifting from a short-term workforce plan (typically one to three years) to a truly long-term strategic workforce plan aligned with the long-term mine plan (often ten to 20 years), harnessing the formidable amount of information available in the various asset plans (such as technology shifts, new assets, large capital projects), and translating it into a people plan,” McKinsey recommends.

MPI has almost 30 years’ specialist experience helping mining companies find the best candidates across every job category. Find out more here or get in touch today.

Dan Hatch
Mining People International