Random Analytica

Mining continues to play an important part in the overall economy of Australia. For all of the discussion about the sector many people don’t realise that mining only employs 264,400 (source: ABS). This is just a fraction of Australia’s total labour force and even that number is often conflated given that many who work in mining are employed on infrastructure or services activities rather than directly in operations.

Each month I spend some time collating stories from a wide range of industry and media sources to build some analytics around the current state of mining employment in Australia. The month of August 2014 was quieter than previous months when more than 3,000 jobs were lost in June and another 1,000+ in July yet at the end of August we still saw more jobs lost than gained.

Here are the charts for Australian Mining Employment through to the end of August 2014.

The opening infographic looks at total job gains and losses by State or Territory for the month of August. Where a job cannot be affixed to a certain site then the losses or gains are attributed to Australia (Non Specified).

Data-Points: Queensland was the only state to lose more jobs than it gained, while New South Wales and Western Australia picked up a small amount each. Two Australian companies, ResCo and Bluestone Global, cut 330 staff across the country.

The first employment chart looks at the previous 24-months from a total 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 then split into operational (red) and mining services (maroon). Mining services can include mining specific service centres, distribution, back-office functions and transport (thanks to learitee from the Australian Mining online community for the suggestion).

Data-Points: All of the 520 job gains in August were operational including the Baralaba North Coal expansion (QLD, Coal, 200); Maules Creek (NSW, Coal, 100) and I’ve included the 120 staffers at the recently opened QCLNG Gas Operations Hub. On the minus side Peabody Energy cut 350 staff from Burton Coal (QLD) including 100 contractors by text message and Glencore cut another 100 from its Newlands Coal (QLD) site.

The next employment chart looks in more detail at the main resource types (Iron Ore, Coal, Gold/Copper, Zinc/Lead/Nickel, CSG/LNG and Uranium) by either a job gain or a loss.

Data-Points:

• Although Coal gained 300-jobs it also lost 466 making this the 26^th consecutive month of losses in that resource type;
• Across the six resource types there was actually a gain of 6-jobs overall.

The last chart tracks employment gains and losses sentiment and is now back dated to October 2011.

Data-Points: Sentiment took a slightly negative turn this month even with a lot of positive news including final approvals for Adani’s Carmichael Coal (QLD) and other smaller sites. With iron ore now touching on $80pmt during the month it has been hard to generate much good news in the West and Venture Minerals Riley Iron Ore (TAS) has deferred its project claiming approvals delays on top of poor pricing.

Another interesting point is that now I’ve pushed back the sentiment to Q4 2011 you can now see a lengthy period of good sentiment. That period of positive sentiment represented the sustained period of growth following the global recession stimulus package implemented by the Chinese several years before.

Juking the Stats (August 2014)

WorleyParsons again cut a significant amount of jobs across its global network. Recent news reports are stating they cut 1,700 jobs this year yet my research tells me the number is more likely to be 1,900. Furthermore this is the latest in a tranche of cuts and I believe they are close to cutting 4,800 since late 2012. WorleyParsons always discuss global job-cuts but given that most of their losses are currently occurring in Australia I suspect the bulk of recent layoffs would be amongst Australian employees. No journalist that I can see has put that question to them.

Summary

Not the best month but neither was it the worst. I continue to see trouble brewing if the iron ore price remains at $80pmt so I would be keeping a weather-eye on that over the next couple of months.

Mining continues to play an important part in the overall economy of Australia. For all of the discussion about the sector many people don’t realise that mining only employs a fraction of Australia’s workforce (currently just 264,400 source: ABS) and that many in the industry work on the construction rather than the operational side.

Each month I spend some time collating stories from a wide range of industry and media sources to build some analytics around the current state of mining employment in Australia. Here are the charts for Australian Mining Employment through to the end of July 2014.

The opening infographic looks at job gains and losses by State or Territory for the month of July.

Data-points: After a horror month in June when 1,592 jobs were lost Western Australia has picked up some employment this month with announcements by Atlas Iron (+200) and Transalta (LNG +250). For the rest of the country the numbers were all in the negative, even in New South Wales which gained 450 (Whitehaven Coal) but lost 915 overall including big numbers in the Hunter Valley. Overall the nation gained 920 and lost 2,043 mining jobs.

The second employment charts looks at the previous 24-months from a total 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 biggest data-point for July 2014 was that the big numbers seen last month reduced slightly as those some of those jobs finalised in July and that we are now in the third month of 1,000+ job losses and the second consecutive month of 2,000+ job losses. The last day of the month was especially bad with 400 Hastings Deering jobs going in Queensland and another 95 coal positions being axed by BHP in NSW.

It wasn’t all bad news as some large operational announcements, like the Whitehaven Coal announcement of 450 jobs at its Maules Creek mine offset some of the big losses being announced in the Hunter Valley.

The next employment chart looks in more detail at the main resource types (Iron Ore, Coal, Gold/Copper, Zinc/Lead/Nickel, CSG/LNG and Uranium) by either a job gain or a job loss.

Two key data points:

• Although there were some gains in both coal and iron ore they were much smaller than the operational jobs lost in both resource types;
• Coal has lost operational jobs now for 18 consecutive months (the last recording of no job losses was in Jan 2013).

The last chart tracks employment gains and losses sentiment and is now updated back to December 2011.

Although the employment news is quite bad the sentiment is actually positive. I’ve seen this occur before. If you look at the difference between Jul 2013 (-24) and August 2013 (+3) you see a big jump in sentiment. This occurred during last year’s commodity crash as government pushed through mining approvals (which is a positive indicator even though it might not include any immediate employment outcomes). So although there are continued job cut announcements they are being largely offset (in terms of sentiment) by positive future announcements, such as the Adani announcement for the build of Carmichael Coal in Queensland.

Juking the Stats (July 2014)

Silver Lake Resources is set to cut more jobs as the gold miner closes its Lakewood Mill but didn’t announce how many would go or when.

Summary

It’s been another bad month for mining employment which came as a surprise as often the first month in a Financial Year is a chance for companies and governments to highlight some good news or to make positive announcements. This is reflected in the data where job losses outweigh job gains but sentiment is improving.

Saying that governments don’t create jobs, businesses do and with so much infrastructure finalising and the narrative squarely fixed on productivity I’ll suggest that you will see more negative than positive news in coming months.

Some years ago while working within the Workforce Planning fraternity I quickly understood that June was a tough month for employment, no matter what sector you either guided or worked in. It might have something to do with the seasons given that companies traditionally cut staff in the coldest months. Alternately it might be impacted on the business cycle. After more than a decade in Workforce Planning I’ve found that, whatever your view, business reflects more pragmatic ends.

Last month I suggested that June is often a horror month for mining employment.

My prediction was borne out (no matter the reason). What I didn’t guess was that the job gains versus the job losses would be the worst in more than two-years, potentially making June 2014 the worst month in mining employment since the commencement of the Global Recession (effectively Nov/Dec 2008).

Here are the charts for Australian Mining Employment through to the end of June 2014.

The opening infographic looks at job gains and losses by State or Territory for the month of June 2014.

Data-points: All key mining states (with the exception of the Northern Territory) have lost significant numbers of operational mining (human) capital. The only positive is that Tasmania picked up an additional 50-positions.

The first of my mining employment charts looks at the previous 24-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 biggest data-point for June 2014 is that the losses in employment are the greatest in two-years, effectively making June 2014, officially, the worst month for two years but, in effect, the worst month for mining employment since the Global Recession which kicked off in Nov/Dec 2008.

The next employment chart looks in more details at the main resource types (Iron Ore, Coal, Gold/Copper, Zinc/Lead/Nickel, CSG/LNG and Uranium) by either a job gain or a job loss.

Of the 3,939 job losses for the month of June the key points are:

• 100% were operational job losses (effectively, zero in construction);
• 79% were included in my tally of key resources;
• 37.5% of the total operational losses in June were in the Coal sector, the 24^th month of consecutive losses in that sector;
• 0% of the losses were in mining construction.

It should also be noted that the figures above do not include projected job cuts from BHP Billiton who are currently reviewing their iron ore business in West Australia.

The last chart tracks employment gains and losses sentiment.

Given that I haven’t commented on this chart for some time the key points are that August –November 2012 and Q4 FY 2012/2013 plus July 2013 were very negative times for mining employment (effectively corresponding with declining commodity prices). We are currently undergoing a similar period with soft mineral pricing from late 2013 through to even more depressed prices in the last six weeks of the financial year.

One last point on the uptick in June 2014. There were lots of positive announcements for mining in June from government (i.e. positive EIS announcements) but little in the way of immediate positive employment benefits.

Juking the Stats (June 2014)

Whitehaven Coal is cutting jobs at its coal handling and preparation plant at Gunnedah in response to “tough” coal market conditions. At the same time they are not releasing much in the way of details or numbers of the people they are putting out of work and potentially on the bench for an extended time. I look forward to a future update.

Even Money Prediction

After two years of consecutive coal mining employment losses due to depressed thermal and metallurgical coal prices the continued low iron ore pricing will see a similar (and consecutive) drip feed of employment decline in that resource group.

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.

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.

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.