Resources & Mining Sector Commentary
Market changes
How long will the resources boom last? The key to answering this question, at least in the short to medium term, lies in the amount of investment in Australia and New Zealand's market. Total minerals exploration expenditure in Australia over 2006 rose by 21 per cent to $2.5 billion, around 13 per cent above average figures over the last 25 years. Oil & gas exploration experienced similar growth and was at its highest since 1985/86. The Chinese demand for iron ore, the $166m spent on coal exploration in 2005-2006 (source ABARE) and the doubling over the past year of uranium exploration also reflects ongoing strength in the local market.
Over 35 advanced resources and energy projects are due to be completed before the end of 2007, however national and global competition for skilled labour and equipment, coupled with increasing fuel and material costs may lead to not just completion delays but new projects being reassessed for feasibility or even shelved - especially if any significant changes occur in the economic climate.
Given this, we certainly do not expect any slowdown in the demand for skills, but we may see an acceptance that there is a finite amount of labour available and projects will be planned accordingly.
The situation is similar in New Zealand where the energy sector is particularly buoyant with oil & gas experiencing strong growth driven by established contributors and major operators cementing their presence in the local market. In addition, the New Zealand Ministry of Economic Development and Crown Minerals is actively encouraging further exploration and major fields are either moving towards or commencing production.
The supply from fossil fuels will potentially expose the Maui gas field to significant falls in output. Increased potential for renewable power generation, in addition to closer cooperation and partnerships between generator and oil and gas operators will attempt to overcome this loss.
Positions in demand
Given the market strength, it is no surprise that demand for skills across all levels remains high. With six large advanced oil & gas projects and two natural gas pipeline projects, Western Australia's demand for experienced petroleum candidates is acute. Towards the end of 2006 there were advanced minerals mining projects across Australia totalling nearly $15 billion. With nearly half of these located in Western Australia the demand for skills in the state shows no sign of slowing. Significant development in coal mine and infrastructure developments across Queensland and NSW has sustained demand for labour across the sector, particularly at the deputy and undermanager levels. High potential mining engineers with three to five years experience are also attractive to a wide employer base. Planned projects in South Australia will also increase demand for skills.
Given the large number of projects in the early stages of development, demand for design engineers and drafters remains high, particularly for candidates with structural or piping experience. Skilled tradespeople with experience in fixed and mobile plant continue to command impressive rewards.
Similarly in New Zealand technical specialists, project managers, specialist tradespeople and intermediate level geologists and engineers are in particular demand. New Zealand faces tough competition in a global energy and resources market to secure the services of these professionals.
Salary movements
Metalliferous geology specialists were the big salary winners across Australia and New Zealand. For example, the salary range for a Queensland exploration manager rose from $110,000 - $130,000 to $120,000 - $155,000 over the last 12 months and for a Western Australian mine geologist it rose from $70,000 - $90,000 to $90,000 - $110,000.
Metalliferous mining engineering also experienced big salary increases in NSW and New Zealand. For example the salary of a NSW mine manager increased from $125,000 - $150,000 to $165,000 - $220,000. New Zealand's underground/quarry managers and project managers were also big winners.
Western Australia, Queensland and South Australia saw mobile plant salary movements, particularly for underground specialists such as workshop supervisors, HD fitters and auto electricians.
In the industrial design market it was Victoria and South Australia's specialists who were the big salary winners. For example, the salary range for a senior project engineer (EPCM) increased from $90,000 - $110,000 to $110,000 - $150,000 in Victoria and from $90,000 - $115,000 to $110,000 - $135,000 in South Australia.
Fly-in-fly-out (FIFO) roles continue to offer larger salaries than residential mine sites, and so candidates are still required to choose between lifestyle or financial benefits. Many New Zealand candidates are attracted to the highly paid FIFO positions available in Australia, thus further impacting the skills shortage in New Zealand.
While salaries have increased steadily over the past 12 months, employers are recognising there is a limit to how much they can compete based purely on dollars. Many employers provide non-cash benefits with even time rosters becoming more frequent.
Changes to employer recruitment practices
Despite the demand for skills many companies remain reluctant to compromise on staff quality, preferring to factor in staff shortages or utilise the existing workforce by offering significant overtime hours. However it is worth noting that despite the shortage of skills, a candidate in demand still needs to be the right person for the right job.
Increasing numbers of employers are open to recruiting candidates from overseas. While cost, visa approval time delays, health and safety practices and language requirements need considering, Hays Resources & Mining have completed several overseas recruitment campaigns which mitigates these risks. Employers that recruit internationally themselves have also said their success rates have improved through rigorous vetting procedures.
In a market with increasing demand, New Zealand companies are promoting the potential lifestyle benefits to attract candidates. Higher holiday entitlements and non-salary remuneration benefits have become common. Targeting professionals with young families looking for work/life balance has proven to be a successful method to secure employees in both the major cities and rural locations.
Advice to candidates
Candidates should be aware of their initial motivations for applying for a new job. Counter offers are commonplace and candidates should be prepared to face a counter offer and remember the reason they sought a new role to begin with. Regional variations present candidates with increasing choices that are not necessarily fuelled by salary package alone. Both the employer and the potential employees should be flexible regarding non-traditional benefits, while promoting the interesting projects that are available.
