Mining and mineral processing (Word)

Part 1 Industry background and directions

Industry trends

Growth

As with any boom-bust industry, it is very easy to map trends retrospectively but extremely difficult to predict them. The State’s minerals industry is facing a period of growth over the next two to three years, with stakeholders suggesting the industry is currently experiencing a boom which could continue for another 25-30 years. Such optimism is not unanimous, with many stakeholders unable to accurately predict recruitment intakes (and therefore training numbers) due to life-of-mine uncertainty. However, the case for growth is supported by both government and industry, as seen in the following three statements:

A boom in the Tasmanian mining industry has been predicted, with a growth in China’s demand of metal expected. Fifty exploration licences were granted in Tasmania during the first half of 2004 and two mining companies spent $40 million in restoring Renison Tin Mine and a new nickel venture. ¹

The 2003/2004 year was marked by significantly stronger prices for base metals, most of which improved markedly in Australian dollar, as well as US dollar, terms. This translated into markedly stronger performances by the operating mines, with a number reporting record production, and signs of a recovery in the level of mineral exploration. …The Australian Bureau of Statistics (ABS) reported a 77% increase in Tasmanian mineral exploration expenditure to $7.6 million for the year, compared with $4.3 million in 2002/03. Tasmania’s share of Australian expenditure increased from 0.59% to 0.97% during the year. …For the first time in more than a decade, a number of factors are combining to reinvigorate the mining and mineral exploration sectors and the outlook has improved significantly over the past year. ²

It’s been a year of favourable change. At the same time, there have been challenges and they will remain in the year ahead. The favourable change has been underpinned by one word – price. The price for our products began to rise in the third quarter of 2003 and continued through 2004. Most metals have seen significant gains and they have held. …In summary, it was the year that our mines and smelters began to swing out of the very deep and prolonged bottom of the cycle. ³

The above forecasts are comparable to (and confirmed by) the national industry outlook. In an industry report titled Mining in Australia, IBISWORLD suggests mining industry revenue (at a national level) is expected to average growth of approximately 7% per year during the period 2005 to 2009. ⁴

Minimal Workforce

The State’s minerals industry is experiencing an apparent policy shift in recruitment, where contracting firms are being favoured over direct employment (which in turn is giving rise to a mobile workforce). Many stakeholders believe that this failure of industry to commit to apprenticeships is a contributing factor to the critical shortage of tradespeople currently facing the mining sector at both a State and national level.

The following figures validate the trend towards a minimal mining workforce.

Tasmanian Minerals Industry

Employment Trend 1999 - 2003

Number of employees at year end Number of full time contractors

1999/2000 2646 988

2000/2001 2532 964

2001/2002 2288 934

2002/2003 2248 878

% change four years -15% -11%

Source: Tasmanian Minerals Council – Annual Report 2004, p 7

Employment numbers for the period 2003/2004 are currently being compiled by the Tasmanian Minerals Council, and an assumption can be made that these will trend upwards (based on new business estimates provided overleaf). Employment in the State’s mining industry is coming off a low base and is expected to mirror national employment growth (depicted overleaf).

In its report titled Mining in Australia, IBISWORLD confirms the shift in recruitment practices:

Mining companies are introducing more flexible work practices that reduce the overall demand for labour. In addition, newer technologies…require a smaller workforce than the technologies they replaced. The growth of contract mining has also reduced the overall demand for labour. Not only do contract mining firms tend to have more flexible workplace agreements, but they are also able to more readily redeploy workers from one job to another. ⁵

As can be seen in the following chart (generated from employment data published in its Industry Report), IBISWORLD confirms the current upward trend in employment.

Source: IBISWORLD Pty Ltd, Industry Report: Mining in Australia (March 2005), p 19

It is difficult to forecast State-based employment trends from incomplete data. However, the coupling of industry growth with the move to a minimal workforce must be monitored. Evidence would suggest employment in the State’s mining industry is trending upwards, and this increase in workforce numbers must be complemented with relevant skill development initiatives. Industry growth will not be fully realised if it is underpinned by an unskilled (or under-skilled) workforce.

New businesses and operators

Along with the revival of exploration (expenditure increased by 77% in 2003/2004), the following new businesses and operators have been identified in Mineral Resources Tasmania’s Mineral Exploration Opportunities in Tasmania – February 2005 under the heading 2004/2005 – A Year of Significant Mineral Sector Growth in Tasmania.

New businesses

• 
  Allegiance Mining
  Plans for a nickel processing plant have been approved by the West Coast Council. The Plant will be established to process ore from the Avebury nickel mine 10km west of Zeehan and is expected to create up to 150 jobs (Department of Employment and Workplace Relations, Trends – The Tasmanian Labour Market Review, June 2005, p5)
  
• 
  Bemax Resources
  Plans to process zircon and rutile from King Island at its Western Australian minerals separation plant. The ore will be shipped from several proposed mines within Tasmanian Titanium's King Island leases, which have an estimated combined mine life of eight years. The operation is scheduled to start in 2006 and is reportedly worth $15 million over the first 18 months (19/07/05 www.miningnews.net).
  
• 
  GTN Resources Limited
  Commenced a full feasibility study into resuming scheelite production on King Island and believes that there is potential for a ten-year project by extending the open cut. Australian Tungsten (acquired by GTN Resources in August 2004) had previously predicted the project could employ about 50 people (Department of Employment and Workplace Relations, Trends – The Tasmanian Labour Market Review, March 2003, p5)
  
• 
  Intec Hellyer Metals
  Completed successful pilot plant testing into the recovery of zinc, lead, copper and gold from the Hellyer tailings and is constructing a demonstration plant to enable a full feasibility study to be conducted on the tailings (possibly in conjunction with recovering metals from the Zeehan smelter slag and electric arc furnace dusts). Anecdotal employment forecasts are in the vicinity of 100 people.
  
• 
  Van Dieman Mines
  Plans to commence operations at two alluvial tin-sapphire operations in the North East within 12 months and is expected to employ up to 20 people (Department of Employment and Workplace Relations, Trends – The Tasmanian Labour Market Review, January 2005, p5 / The Saturday Mercury, July 16 2005, p 19)
  

New operators

• 
  Bluestone Tin Limited
  Purchased and redeveloped the Renison Bell Tin Mine, announced plans to undertake a feasibility study for a tailings project (Rentails) and plans to mine the Mount Bischoff deposit. Anecdotal employment forecasts are in the vicinity of 160 people. A MiningNews.net article (08/07/05) suggested the planned revival of the Renison mine looked to be in danger, with the company reevaluating its options in response to mining/processing underperformance and a falling tin price. However, a follow-up article (12/07/05) saw the company reassuring the market that there was no current plan to close or reduce production at Renison (www.miningnews.net).
  
• 
  Stemcor Holdings Ltd
  Purchased the Savage River magnetite mine and has advertised for staff to investigate the feasibility of extending the life of the operation beyond 2009 by mining underground.
  

New technology

In its recently published Industry Skills Report, the Resources and Infrastructure Industry Skills Council implies that while the trend of technological change will always continue into the future, the need to upskill staff in response to technological change is not a factor that impacts strongly across the industry. ⁶ This would suggest technology is not a major driver of training demand. More often than not, new technology is introduced as a strategic approach to increasing productivity and reducing labour costs, with examples including:

• 
  Software development (e.g. minerals exploration/mining software)
  
• 
  Smart drilling technology / coal bed methane (CBM) drilling
  
• 
  Underground robotics.
  

The recent NCVER/CMEWA report Prospecting for Skills: The Current and Future Skill Needs of the Minerals Sector suggests that technological change is actually altering the skills required in the mining workforce, with a shift towards people who can diagnose and solve problems. The example used is that of electrical trades workers, who are now primarily involved in diagnosis and problem-solving (once primarily involved in equipment installation). The report goes on to suggest:

It is anticipated that the introduction of more technically advanced and capital intensive mining projects will increase the demand for trade workers, but lower demand for less skilled workers (trades assistants and operators). ⁷

In its report titled Mining in Australia, IBISWORLD suggests the life cycle stage of the industry is mature, citing established technology as a contributing factor. However, the report goes on to suggest there is an industry emphasis on utilising new techniques and that the rate of technology change is high. Examples of key changes in technology include:

• 
  Growth in the use of contract mining services (including exploration services)
  
• 
  Increased automation in materials handling and process control
  
• 
  Greater emphasis on environmental protection
  
• 
  Product specific changes, such as heap leaching (copper/gold). ⁸
  

Strategic priorities/directions

Strategic Focus

The Tasmanian Minerals Council is the representative organisation for the exploration, mining and mineral processing industries in Tasmania (counting among its members all of the main mines and mineral processing operations). The Council has identified three key strategic focuses for the State’s minerals sector:

• 
  Health and Safety
  A paramount priority in keeping with the Minerals Council of Australia’s vision to ensure “…an Australian minerals industry free of fatalities, injuries and disease.”
  (www.tasminerals.com.au/health.htm)
  

• 
  Sustainable Development
  There is a community expectation that the principles of good environmental management underlie mining activity in Tasmania.
  (www.tasminerals.com.au/development.htm)
  

• 
  Exploration and Land Management
  Exploration is a vital part of sustaining our mining industry. Ore bodies are finite – once mined, new ore bodies need to be found.
  (www.tasminerals.com.au/exploration.htm)
  

Impact of Proposed Pulp Mill

Consideration of training demand for any State-based industry sector cannot be made in isolation from the proposed pulp mill for Bell Bay. Monash University's Centre of Policy Studies estimates a pulp mill, slightly smaller than the one proposed by Gunns, would create up to 8000 direct/indirect jobs during the construction phase. The Centre also estimates 1500 direct/indirect permanent jobs will be created when the mill is operational. ⁹ Indicative employment projections for the construction phase (2006) include:

• 
  Electricians 300
  
• 
  Fitters 250
  
• 
  Metal fabricators/welders 600
  
• 
  Riggers 150 ¹⁰
  
  
  

Source: The Pulp Mill Project website (www.pulpmill.tas.gov.au/Business.htm) accessed 31/07/2005

With critical shortages already facing Tasmania’s minerals industry in these areas, the impact of the pulp mill’s construction cannot be underestimated or ignored. Contracting firms currently servicing mining operations on the West Coast may well consider committing 100% of their workforce to the pulp mill project if remuneration levels are sufficiently enticing. This will not only be disturbing for the minerals industry; it will also have a impact on the domestic electrical market as well as on other industry sectors.

Diminishing areas/skills

Throughout the consultation and research phases informing this Training Demand Profile, no diminishing areas or skills were identified.