Random Analytics: Mining Workforce Planning Scan (Feb 2013)

In January I raised the prospect that mining had returned to Business-As-Usual (BAU), although its return heralded a much more ‘leaner and meaner’ approach. With the second month of data for 2013 completed, the trend around employment which commenced in November has continued, confirming that we had commenced a new normal. What is more interesting is that current producers are emphasising cost cutting, while future projects or producers are trying to complete works as fast as possible. Thus the slight negativity we are seeing in employment sentiment is not reflected in the employment gains, even when like this month the employment losses recorded neared 2000.

An obvious example of this was the Rio announcement of the $3.1-billion dollar Pilbara expansion program that will employ 1,500 this year in the infrastructure phase and another 700 ongoing positions when it moves into its operations phase. 2,200 new positions sounded great but it’s a shadow of its 2012 program which had started to recruit for 6,000 expected roles but was quietly axed without explanation. In the same month Rio announced 350 positions would be going at the Argyle diamond mine, mainly from its contracting staff. There are no mixed messages here, Rio is repositioning out of Africa expanding only where it can be assured of good margins, while any of its assets that are marginal (I’ve been aware of Argyle being marginal for about a decade) are being cut or cutback.

While the producers continue to increase production while driving down costs, those that are not producing or have assets that are not in play are looking to get them completed ASAP. In this case though, it’s the lack of stories that I find interesting.

So, in terms of employment I’ll be interested in following updates (or lack thereof) from small to medium operators who are not producing at the moment, anything in Queensland that is not producing and as an aside, the highly leveraged FMG assets which are still in an expansion phase. Given all the cuts to mining staff across Australia I will also be following stories about mining contractors, given the amount of movement in the market currently. Contractors squeezed profits due to a retraction from these services has me guessing that we might see some go to the wall over the next quarter or two. Like a game of musical chairs, those who don’t have a chair when the music stops will be out of business permanently!

The last item of note for February was the publishing of the FIFO ‘Cancer of the bush or salvation for our cities’ Report by the Standing Committee on Regional Australia, chaired by the Independent Member for New England, Tony Windsor. As the name suggests, the Committee were not big fans, making 21 recommendations to government and 14 to industry to improve the practice. Although I cannot say that this report is as even handed as it should have been (there are both issues and opportunities presented by FIFO/DIDO practice) it does reflect some negativity in the reporting that I’ve been able to capture over the past 14-months of data (see Figure 3).

Now, let’s look at the data. The three dominant mining Workforce Planning stories for January were Employment (22.9%) closely followed by WH&S (19.3%) and IR (14.5%).

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Figure 1: Australian Mining Workforce Planning Scan (Jan – Feb 2013). Source: Australian Mining. Some stories have been verified against primary resources.

Diversity and Engagement both received a (+2) positive reading while IR received a (-6), WH&S (-5) followed by Employment and FIFO/DIDO both received a (-4) negative sentiment.

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Figure 2: Australian Mining Workforce Planning Positive/Negative Index (Jan – Feb 2013). Source: Australia Mining.

The Employ category which tracks employment gains, losses and general sentiment was the leading Workforce Planning indicator for February but only just at 19-stories (22.9% +1.6%mom/+4.5%yoy). There was a 4210-jobs gain but a spike in jobs lost which sat at 1,994 which goes some way to explain a slightly higher negative sentiment (-4 or -1mom). As previously mentioned, Rio’s revised announcement of 2,200 new positions was the best employment gain for the month but a newly approved Venture Minerals proposal in an opened Tarkine could provide up to 1,000 positions in the depressed Tasmanian economy. UGL announced 1,000 positions will go globally with 700 to be cut from its Australian operations alone, while Bradken, a mining and rail manufacturer posted a $46.7-million half-yearly profit (up from $43-million the previous year) after cutting its staff by 500.

WH&S which tracks Work, Health and Safety incidents and initiatives came in as the second leading indicator for February with 16-stories (19.3%, -19%mom/-8.3%yoy). Only one Australian was reported injured when after a Mount Isa underground incident required an aero evacuation. Near misses and complaints of conditions ensured WH&S finished the month with a (-5) negative sentiment. One story that is worth reading and highlights the dangers of the sector is of the 4th mining related death in just a fortnight in West Virginia. (For the record, injuries or deaths that occur outside of Australia do not count toward the positive/negative index).

IR or Industrial Relations was the third leading indicator for February at 12-stories (14.5%, +8.1%mom/steady from 2012). Ongoing industrial disputes with Pacific National Coal, lockouts at BHP and a walkout at Hanson Quarry gave IR a (-6), the most negative index reading for February.

Diversity which looks at female, indigenous and disabled participation (although other subject groups would not be ruled out) finished the month with 2-stories (2.4%, -1.9%mom/+0.2%yoy). Both stories looked at the sectors female participation this month. The need for mining to increase its female participation from the current 15% to the 25% by 2020 is my pick for the month.

FIFO/DIDO (or Fly-In Fly-Out/Drive-In Drive-Out) is a mining specific engagement indicator. As previously mentioned FIFO/DIDO with just five stories for February had a negative reading of (-4). Looking at 14-months of data, this negative sentiment has only been reached once before, in June 2012 when the sector was still (for all intents and purposes) booming and the FIFO enquiry was in full swing. Generally the indicator has been negative, averaging 1.5 over the past 14-months although the stories softened from September through to November, which corresponds to last year’s commodity crisis.

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Figure 3: Australian Mining Workforce Planning FIFO/DIDO Positive/Negative Index (Jan 2012 – Feb 2013). Source: Australia Mining.

Here is a closer look at the February data.

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Table 1: Data for Australian Mining Workforce Planning Scan (Feb 2013). Source: Australian Mining.

Finally, here is a look at the Mining Employment Gains/Losses tracker for 2013.

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Table 2: Mining employment gains and losses for 2013. Source: Australian Mining.

Update 1 (5/03/2013): The Commonwealth Bank released an economics update on the 25th February which I only had a chance to read today (many thanks to Andrew Duffy (@ajduffs) for passing it on). Its findings, especially in relation to cancelled projects for 2012 and CAPEX decisions for 2013 are most interesting.

Update 2 (6/03/2013): New infographic. Rather than more information via a table or a graph I thought I might show the breakdown of Australian stories via a map of Australia. I’ll include this as a standard graph from March onwards.

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Figure 4: Australian Mining Workforce Planning Australian stories by State (Feb 2013). National stories represented by the AUS figure. Source: Australia Mining and ABS. Software utilised: Stat Planet (non-commercial).