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Mining industry facing major hurdles.

The mining industry, in Canada and elsewhere, is facing major challenges --now brought into sharp focus by weak demand and low prices. But the problems within the mining industry have been developing for some time and it is naive to think that increased metal prices, through increased demand, will solve this. And although 'cost-cutting' that most companies are using may limit some damage in the very short term, it will make it all the more difficult to go on to address the real issues--deep-seated issues that have been ignored for too long. There are essentially five issues the mining industry Canada needs to address: people, mine productivity, environmental performance, exploration, and new mine development. Each of these will be discussed in turn over the next few issues and I believe that collective action by the industry is the only real way forward. But--first things first--people.

The demographics of the mining industry are reaching crisis proportions. For several years, the federal Mining Industry Human Resources Council (MiHR) has issued reports projecting the future demand and supply of every category of employee, highlighting the developing chasm of a shortfall of well over 100,000 over the next 10 years. There are simply not enough qualified people graduating from universities and colleges to fill the gaps being created by retirements from mines in Canada. Over the last few years, a great deal has been said about the opportunities for more women and Aboriginals in mining, and although there are some successes in Thunder Bay and Saskatoon, generally there are no incentives to promote initiatives for either group, and nothing has fundamentally changed.

Despite this, we still have one of the strongest educational systems in the western world for creating the professional geologists, mine engineers and mineral processing engineers the industry needs, as well as the technicians and technologists to keep it all running. But the maximum output of our system is unable to replace more than 25 per cent of the people employed by industry today. And it is no use looking abroad for more than a few individuals; the numbers simply cannot be made up. The professors in mining departments across the country have done stalwart work to keep the system going, but they have little support from industry. Many are unable to get companies to agree to mine visits to introduce students to the work environment, far less have companies take on summer students to give them work experience before they graduate. Many mining students now graduate without ever having visited a mine.

One view is that it is up to the government to fund the courses the economy needs. But it is very difficult for governments to continue to fund industry-specific disciplines when the industry shows little collective will to support student education. The mining industry is the only consumer of mining engineers, process engineers and metallurgical specialists. It is still very important to the national economy, and although its share of the economy has been shrinking, this is because the rest of the economy has been growing much faster than mining and the range of career options for young people has expanded.

The first impact of the skill shortage is already with us: the escalation of new project construction costs well beyond material cost inflation--something that has also been evident in the oil and gas industry for some time--major cost over-runs, and failure to meet initial performance targets. The growing skill shortage will mean existing mines operating with many fewer qualified and experienced professionals. Remember, the MiHR projections are simply numerical replacements; a great deal is lost when a 35-year experienced veteran is replaced by a new graduate. The result will mean big changes in the way things are done, but this will take more time, effort, money, and experience to achieve, not less.

So what do we do? Well, mining companies need to act collectively to offer experience work terms to students as well as visits to mining operations. But there is an example of how a highly specialized workforce can be effectively recruited. The Canadian military offers educational subsidies to attract employees, in return for a fixed time commitment. Of course, the gamble is that people will buy in to the culture and stay on beyond the minimum contract period. Just like the military, mining has a very distinct culture and many people stay in mining because of the culture --just like the military. This may be more than the mining industry can contemplate right now, but some aspects of this model should be considered if it is to secure its future.

Douglas Morrison president and CEO, Centre for Excellence in Mining Innovation; network director, Ultra-Deep Mining Network in Sudbury
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Title Annotation:Guest Columnist
Author:Morrison, Douglas
Publication:Northern Ontario Business
Date:Oct 1, 2015
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