Mining Companies in Global Talent War

Bruno Rizzuto’s father, Cesare, was 19 when he got off a boat in Halifax from southern Italy in 1951. With no coat, and “5 cents in his pocket” he headed for the gold mines of Timmins, Ontario, where he worked underground for 41 years.

Six decades later Rizzuto, a Calgary-based recruiter, is looking for people like his father, with a proposal to bring 10 to 20 miners to Canada from South America as companies scour the world to find workers for the latest mining boom.

“There are just simply not the people there, and I think it’s going to be the Achilles heel of the industry,” said Rizzuto, 38, managing partner at Cadre Staffing Inc. “A lot of these projects will not be able to get off the ground because they will not have either the management capacity to do so or the operational workforce.”

Mining companies such as Barrick Gold Corp. (ABX) are struggling to fill vacancies amid a skills shortage that stretches from the iron-ore pits of Western Australia to Chile’s copper mines and the gold deposits of Quebec. Producers of commodities including gold, copper and coal are building mines to feed demand from countries like China just as geologists, engineers and miners begin to retire en masse, pushing up wages and crimping productivity.

Lost Generation

Enrollment in mining graduate programs slumped in the 1980s and 1990s after commodity prices fell and hiring stalled. The sector also lost people to the technology boom from 1999 to 2001, said Aaron Regent, chief executive officer of Barrick, the world’s biggest gold-mining company by revenue.

“At that point we were basically in a depression as an industry; we were an irrelevant industry,” Regent said in an interview. “So we lost a generation of people.”

About 61,550 to 71,740 mining workers in Canada, or more than a third of the industry, may retire in the next 10 years, according to forecasts by the Mining Industry Human Resources Council.

The council estimates Canada’s mining industry will need about 141,540 new hires until 2021 if activity continues to accelerate. Even if growth slows and hiring recedes, the sector will have to find 112,020 new workers to replace retirees and other departures in the next 10 years, according to council estimates.

Newmont Mining Corp. (NEM), based in Greenwood Village, Colorado, and the world’s second-largest gold miner by revenue, expects about 500 mine engineers will retire in the next five to 10 years, Chief Executive Officer Richard O’Brien said in a Bloomberg Television interview March 27. The company currently has about 650 mine engineering positions.

All Levels

“We could hire every mining graduate in America and we couldn’t replace them,” O’Brien said. “Whether it’s northern Nevada, Australia, Ghana, Indonesia, we are looking for people at all levels of employment.”

Wages have risen with demand. In Canada, average weekly wages for workers in the mining, quarrying, oil and gas industries, the country’s highest paid industry, rose 8.2 percent to C$1,842.59 ($1,846.28) in January from a year ago, according to Statistics Canada. That compares with a national average of C$888.89, which was 2 percent higher than a year earlier.

Compensation packages for skilled mining professionals in Canada have doubled in five years, said Chris Stafford, president of Toronto-based C.J. Stafford & Associates, which specializes in recruitment for the mining, engineering and construction industries.

Mining companies are building large in-house recruiting departments, and using new sweeteners to find and keep skilled employees, he said.

Doubled His Salary

“That ranges from signing-on bonuses, which were unheard of 10 years ago, to all types of other bonuses, incentives and stock options,” Stafford said. Skilled mining professionals are being offered sign-on bonuses of as much as 20 percent of salaries, he said.

Geologist Marc-Andre Brulotte left a position at a consulting company in Montreal in December for a job in Queensland, Australia. He almost doubled his salary.

“It’s a really good time to be a qualified professional, there are lots of good opportunities for us,” Brulotte said.

“It’s another story for the fresh out of school geologists or engineers, they will get a job for sure,” Brulotte said. “But chances are they will not get well trained, simply because there won’t be any experienced staff to teach them how to work.”

Projects in the industry will take longer to complete and costs will be higher because inexperienced workers are less productive and need to be supervised, Barrick’s Regent said.

Supply-Chain Guy

“It’s not just wage inflation, but turnover and productivity: they all have a knock-on effect in terms of what your overall labor cost profile looks like,” he said in a Feb. 16 interview.

Barrick has a 25 percent turnover rate at its Australian operations, Regent said.

“We had a supply-chain guy, a young guy, who was making $100,000 a year and he just got bid away for $150,000,” he said. “Labor is a big issue.”

Barrick said in July the price estimate for its Pascua-Lama project, which straddles the Chile-Argentina border, had jumped to as much as $5 billion from an earlier forecast of $3.6 billion due to higher labor, equipment and materials expenses.

Gold futures for June delivery slid less than 0.1 percent to $1,643.20 on the Comex in New York today. The metal has climbed 4.7 percent this year.

Poaching Mentality

Copper Fox Metals Inc. (CUU), studying a copper and gold mine in northwest British Columbia, said March 19 it would miss a month- end target for a feasibility study on its Schaft Creek project because of “manpower shortages” at the contractor it hired.

“I would say that it’s completely universal from company to company, whether it be a junior or an intermediate or a major, I think there’s a general delay in terms of shortages,” said Shane Uren, the Vancouver-based company’s vice-president of environment and permitting.

For its part, North American Palladium Ltd. (PDL), a precious- metals company with operations in Quebec and Ontario, has bought advertising in the regional airport in Thunder Bay, Ontario, which serves several fly-in, fly-out operations in the region.

“There is clearly a bit of a poaching mentality in the sector,” Trent Mell, corporate development and human resources vice-president, said in an interview. “We’re really fighting a global war.”

New Rules

Canada will introduce new rules to make it easier for skilled tradesmen to enter the country, Citizenship and Immigration Minister Jason Kenney said April 10. The changes will help address growing labor shortages in the natural resources and construction sectors, he said.

Rizzuto, the recruiter, said his proposal to bring a group of miners from South America is more likely to succeed if friends and family move together, he said.

“What the Canadians are selling is the prospect of Canadian citizenship, education for their kids, social benefits, health care,” he said.

Still, the struggle for workers is ongoing, he said. Mining still isn’t seen as a “glamorous” profession.

“You can make good money, six-figures money, but how many kids are coming out of school today saying ‘Hey, I want to be a miner’?” he said. “I’m proof of that. My father, the last thing he wanted me to be was a miner.”

To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net

To contact the editor responsible for this story: Jacqueline Thorpe at jthorpe23@bloomberg.net

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