The dwindling ranks of geosciences professionals has impaired mining companies’ ability to quickly respond to surges in precious metals prices.
RENO (MINEWEB) – “A well-established feature of the precious metals market is the apparent inability for producers to raise production levels when demand and prices rise,” said HSBC analysts James Steel and Howard Wen.
“The paucity of trained professionals’ expertise helps explain—along with other factors—the weak supply response by producers to the surge in precious metals prices in 200-2012,” observed HSBC. “This is important to investors because it arguably contributed to the height and longevity of the precious metals rally; it also implies that future rallies are unlikely to be cut short by a rapid increase in mine output.”
An important component in our relatively positive long-term outlook for precious metals generally is the fact that demand exceeds supply in all four metals,” said the analysts, who suggest that lack of professional skilled and technical labor may be a key factor in the ability of mining companies to meet demand.
“If precious metals rallies are not be reversed by rapid increases in mine output, in part due to shortages of professional expertise, then prices may have to rise sufficiently to mobilize aboveground stocks, or deter demand,” they advised.
AGING MINING WORKFORCE, LACK OF NEW GRADUATES
“50% of U.S. geoscience professionals, including engineers, are just 10-15 years from retirement; data show similar trends in Canada, South Africa and Australia,” HSBC observed.
Data from the Canadian Mining Industry Human Resources Council indicates that 40% of the professional and technical component of the mining workforce is at least 50 years old, and that one-third of these workers are eligible to retire next year. The Mineral Council of Australia says mining labor shortages have become a permanent feature of the Australian mining sector. The council has predicted the need for an additional 86,000 mining professionals and skilled mine workers by 2020.
A report from the South African Institute of Mining and Metallurgy found that while South African unemployment rate is high, the mining industry faces a skills shortage in many disciplines necessary for its long-term sustainability. The paper said the shortages in many mining-related fields and chronic and that shortages in these areas “will continue to hamper development of the South African mining industry, a large component of which is precious metals.”
Meanwhile, large numbers of well-educated and skilled South African mining professionals have emigrated to other mining nations, including Canada, Australia, the U.S. and Chile.
The HSBC report also observed that specialized geoscience programs at U.S. colleges and university have fallen from a high of 25 in 1982 to 14 in 2014. Only 11% of those recent undergraduates and 4% of postgraduates have chosen to go into mining.
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