Random Analytics: Australian Mining Employment Update (May 2014)

by Shane Granger

For a number of professional and personal reasons I have not completed, nor updated my Mining Workforce Planning Scan since September 2013 (some ten months ago). As it happens an article by Australian Mining last week reminded me that it is something I should have a look at again, especially given the recent bad news in regard to mining employment. 2014: Mining jobs cut so far… Excerpt:

Shaky commodity prices and the end of the boom have resulted in a bad year for job losses, and BHP and Rio have warned of more to follow. Cutbacks have ranged from small belt-tightening measures, such as 36 job losses at Illawarra Coal, to the level of catastrophic collapse such as when mismanaged contractor Forge Group folded leaving 1300 out of work early this year.

Coal has been the worst hit in mining, with Vale announcing the closure of all operations in the Hunter Valley for care and maintenance, among a series of other cutbacks by BHP and Rio Tinto. Queensland has also suffered, with Queensland Resources Council president Michael Roche saying that 10 per cent of mines in the state are now in a “very precarious position”.

Industry analysts have blamed oversupply on the global market for the plunge in the price of coal, with hard-coking coal having dropped to $US120 per tonne from $US330 in 2011. Iron ore has also suffered price-wise, falling from $US135 per tonne down to $US110 in April; however the industry seems to have escaped any major job losses.

There is no doubt that after that article was written the news got worse with further cuts, especially in New South Wales coal mines. With iron ore falling another $15 to just above $95 at the end of May how long before we see another round of severe job cuts in the Pilbara similar to September 2012?

The Australian article then lists a large number of job losses in 2014. But what do these job losses look like compared to job gains across the last 12-months. Also given that Australia has become so currently reliant on mineral exports such as iron ore, coal and future reliant on growth in exports of LNG and Uranium how are job gains or losses looking for these resource types.

Re-commencing the first of a monthly series in Mining Employment updates here is a look at how that story from Australian Mining translates into two charts.

1 - MiningGainsLosses_Chart_140601

The first chart looks at the previous 12-months from a mining employment gain and loss perspective. The positive employment numbers are split into those that reflect infrastructure (tan) and operational (blue) gains. Job losses are represented in red.

The obvious take away from this chart is that outside of August and September 2013 the losses have far outweighed the gains, with job cuts underrepresented to some extent as some companies chose to supress actual details. The data for May includes:

  • 392 operational jobs added;
  • 1,000 infrastructure jobs added;
  • 1,944 jobs lost.

2 - MiningSectorGainsLosses_Chart_140601

The second chart attempts to breakdown the job gains and losses by key resource types (Iron ore, Coal, Gold, Copper/Zinc, CSG/LNG & Uranium). Similar to the previous chart the only period of overall job growth occurred in these resource types happened between July and September 2013. The May details were:

  • Iron Ore: 120 lost;
  • Coal: 350 added and 828 lost;
  • Gold: Newcrest opened the Cadia East Gold Mine (see Juking the Stats) and 94 lost.

Juking the Stats (May 2014)

The most notable manipulator of employment information in May was Newcrest which opened its Cadia East Gold Mine with the assistance of NSW Premier Mike Baird. The mine is expected to support 1,900 direct and indirect jobs (source: MineWeb). No doubt it has created some employment but given that Newcrest NEVER shares it job loss data (Telfer July 2013 and November 2013 most recently) and its financials have been less than satisfactory I felt that conflating direct and indirect employment might be a way to also conflate its entire Cadia Valley Operations footprint). I have requested further details directly from Newcrest and am awaiting a reply before including Gold employment numbers for May.

Other Jukers include:

  • Perilya who ended their MacMahon contract which will result in job losses but no specifics were provided;
  • BHP Billiton has confirmed that there will be job losses (a source suggests in the hundreds) at Worsley Alumina but have not confirmed details.

Final Observation(s)

May/June tend to be months where companies clean house, especially around employment so June may prove to be another awful month for further job cut announcements. On that note, I will return next month with updated employment charts and a revised employment sentiment chart which will hopefully add another dataset for your consideration.