With skilled labour in severely short supply, mining companies are paying over the odds for new skills and students are flooding to mining schools in a bid to get a piece of the action.
(Reuters) – When Travis Howard started his degree at the Colorado School of Mines four years ago he decided to pursue a double major in mechanical engineering and metallurgy to give himself the best chance of landing a high-paying job when he graduated.
Turns out he had nothing to worry about. The 21-year-old, who dropped his mechanical classes to focus on mining after his second year, has accepted a job with Kinross Gold Corp at a starting salary of $64,000 a year plus bonuses.
With graduation still a month away, “pretty much everyone is sitting on an offer or two,” said Howard of his classmates, adding that some students were juggling four or five offers.
In fact, students at the Colorado School of Mines are some of the most employable in the country – 94 percent of 2011 graduates from the mining engineering, metallurgy and materials, geological engineering, and geophysics programs have jobs.
The average starting offer across the four departments was $65,868 a year, well above the $42,569 median that the National Association of Colleges and Employers expects first-time job seekers with college degrees to command in 2012.
The sky-high starting wages for fresh graduates highlights the difficulties faced by mining and exploration companies to find and retain skilled labor. In fact, mining CEOs often cite the labor crunch as their No. 1 cost pressure.
The problem is rooted in the low metals prices of the 1990s, when gold was worth $350 an ounce, and mining was the last choice for engineering and science students.
“When the mining industry was not in vogue, the colleges didn’t get the numbers coming in,” said Nick Eastwood, president of MinSouth and a consultant at Hunter Personnel. “So they shut their courses and got rid of the people who taught it.”
Fast-forward two decades, gold is worth more than $1,650 an ounce and there is a yawning shortage of mid-career professionals. The problem will get worse over the next decade, as the current crop of senior engineers, geologists and mining executives retires.
“When they go, the replacements just aren’t there,” said Eastwood, adding that most people working in the industry now are either aged 50 or more, or have less than five years experience. “There’s a leadership problem looming.”
The risk is that companies will end up simply not having enough skilled people to staff their project pipelines, and that could mean some will never come to fruition.
If new mines are shelved, it would put more pressure on the world’s current metal resources, and that could send commodity prices, already near record levels on demand from rapid urbanization in China and India, even higher.
For resource-rich countries such as Canada, Australia and Chile, along with developing nations such as Mexico and Ghana, fewer mines equates to lower royalties, fewer jobs and tax shortfalls, denting public coffers.
The prospect of a fast-tracked career and a hefty starting salary has students flocking to mining schools. The Colorado School of Mines, which also offers a range of non-mining science and engineering degrees, gets more than 11,000 applications each year and accepts less than 1,000 students.
In Canada, admissions to the top mining schools have nearly tripled in three years, helped by salaries that can be even higher for graduates who move abroad. Recruiters say six-figure starting rates are increasingly common in Australia, where mid-career engineers make more than $200,000 a year.
Indeed, the job market there is so hot that Australia has loosened its immigration policy to allow more highly skilled mine workers in on short-term visas, a type of reform that Canada is also considering.
“Ten years ago we were lucky to have one or two students applying,” said Ferri Hassani, a professor of mining engineering at McGill University in Montreal. “In some years it was that bad. But this year alone 250 people have applied to mining.”
But the rising supply of students brings its own problems, as bigger classes means more competition for the limited number of summer jobs in the field.
“We’re all looking for those four-month roles,” said Omar Aboulezz, a third-year mining engineering student at Queen’s University in Kingston, Ontario. “There’s a lot of students here who still don’t have summer jobs.”
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