Resources & Mining Sector Commentary

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Market changes

During the first half of the financial year there was continued growth and investment in Australia’s resources and mining market. A number of major Greenfield developments within the iron ore sector continued to plough ahead, whilst Rio Tinto and BHP Billiton maintained their drive to increase production infrastructure in the Pilbara.

A turnaround then came in late 2008 which saw Nickel prices drop dramatically. Waning global demand drove down production in all other commodities and many of the planned development and expansion projects were put on hold.

Despite this shadow looming over the industry, Western Australia's gold producers have had a brighter second half to the year. With gold prices at all time highs, junior gold producers have a positive outlook for the new financial year.

Major producers have maintained consistent production levels and aim to maximise returns by improving site efficiency and cost effectiveness.

With the belief that Chinese demand for raw materials will return in the medium term, major Greenfield iron ore developments have continued as planned to ensure completion for the "upswing" when it returns. This has provided a much-needed foundation for the state's heavy industrial construction market that should last well into 2010.

Darwin’s position as the closest major port to South East Asia has been a catalyst for strengthening relationships with both Japanese and Chinese investors. This has prompted port expansion and LNG project development in the Northern Territory.

Long-term growth in uranium and rare earths should soon be realised. As such, there are a number of high-grade projects up for consideration in the next 12 months.

Queensland has also been feeling the effects of an uncertain market however many have been distracted over this period by state elections and the return to labour, coal prices being determined and demand established.

As we look forward there is confidence returning to the commodity markets and whilst caution remains, many companies are starting to understand their skill needs for the next financial year.

Positions in demand

Mining engineers, particularly in open cut, remain in strong demand. Process and chemical engineers are also in demand while electrical engineers with extensive PLC programming experience combined with a strong materials handling background are highly sought after.

There is an increase in demand in production-based geology positions and across a number of skilled-labour roles, including auto-electricians. Senior construction project managers also continue to be in short supply, although demand has certainly reduced.

Profit margins in the gold mining industry remain high creating continued demand within this sector. In the coal sector, statutory roles remain the most difficult to source as higher salaries that persist in Queensland make it difficult for applicants to transition to NSW.

During the change from dry to wet seasons in the Northern Territory, there is a small but obvious surge in exploration activity, creating demand for geologists and field technicians. As water tables rise, there is an inevitable push for plant maintenance. This is also true of both mechanical and electrical engineering in the power generation plant market.

Salary movements

Any salary holds will likely impact graduate level roles the most due to the significant increases that these roles experienced over the last 2 years.

Salary expectations of candidates have dropped between 5 and 15%. Hourly rates amongst contractors have been forced down as employers renegotiate supplier arrangements with all agencies and onsite contractors.

Japan’s recession and China’s economic slowdown may impact salaries within the coal mining industry this year. Thermal coal producers’ salaries however should not be affected.

Changes to employer recruitment practices

The recruitment process is taking longer as employers are holding off until they find the perfect fit amongst an increasing choice of candidates. Some employers are seeking a recruitment service simply to manage the level of applicants.

Employers are taking on more contract workers in an effort to manage reduced budgets and provide flexibility within their workforces.

Advice to candidates

Candidates should adopt a more flexible approach to their employment search and broaden the range of preferences wherever possible. This may include considering residential positions, different commodity groups or taking a step back to join a new organisation.

Research the organisation you would like to join as many of the companies in the market can still offer long-term career growth.

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