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Business risks facing mining and metals 2011 - 2012 - 2. Skills shortage - EY - Global

Business risks facing mining and metals 2011 - 2012

2. Skills shortage

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“The skills shortage is continuing to be a major threat to mining and metals businesses. The long term impact could mean increased costs, a reduction in productivity and difficulty in meeting contractual obligations.”Louise Rolland, Executive Director, Advisory, EY

Summary: Strong commodity prices and confidence in the long-term sector fundamentals have reinvigorated investment in mining and metals to quickly develop new projects or to ramp up production from existing ones. This increased investment is in turn driving demand for skilled workers around the world. The risk is that a skills shortage could slow growth and increase costs.

Skills shortage, which was number two in our list for 2010, remains the second biggest business risk for mining and metals this year and next. Indeed, we believe it may become a bigger risk in both developed and developing countries as we move into 2012.

At the moment the mining and metals sector is utilizing staff from other sectors where upturn is yet to happen, but this is a short-term approach only. There’s the demographic challenge to consider as large numbers of near-retirement age workers in developed countries have left the sector while others have been made redundant due to the global financial crisis.

According to the report ‘Skills Australia’, the Australian minerals industry alone will need an additional 86,000 workers over the next 10 years just to maintain its current international market share1.

This phenomenon is not limited to Australia, with skills shortages apparent in South Africa, Canada and South America. Projects are being cancelled or deferred due to the inability to staff up construction and operations. The tight labor markets also provide an environment for greater industrial disputes as organized labor seek to increase wages.

Steps mining and metals companies can take to respond to this risk:
  • Using alternative skills sourcing from aligned skills and a broader demographic
  • Accounting for demographic factors when making investment decisions
  • Initiating programs that encourage semi-skilled and retired workers to re-enter the work-force

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1’Mining to need 86,000 extra workers’, Business Day, 27 July 2008

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