Deloitte Access Economics Skill shortages in the resources sector

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Deloitte Access Economics

Skill shortages in the resources sector

Skills Australia

2 May 2011.


Lindy Ingham

Acting Director

Labour Market Information Section

Skills Australia

Deloitte Access Economics Pty Ltd

ACN: 149 633 116

Level 1, 9 Sydney Ave

Barton ACT 2600

PO Box 6334

Kingston ACT 2604

Tel: +61 2 6175 2000

Fax: +61 2 6175 2001

2 May 2011

Dear Lindy

Skill shortages in the resources sector

Deloitte Access Economics has been commissioned to undertake research into the current and future skills needs in the resources sector in Australia. This includes a scan of Australian resource sector reports published in the past 12 months and the skill needs they identify.

This report is structured as follows:

The overview provides a summary of key findings on skill needs in the resources sector based on the reports examined.

  • Chapter 1 provides individual summaries of the primary sources examined, where primary sources are those where the main purpose of the report Or article is in relation to skill needs in the resources sector.

  • Chapter 2 provides individual summaries of the secondary sources examined, where secondary sources are those which include some discussion of skill needs in the resources sector, but the report itself has a broader coverage.

  • Finally, a bibliography lists reference details for the reports which have been reviewed and other relevant literature.

We hope this report provides assistance in Skills Australia's reporting on the status of skill shortages in the resources sector.

Yours sincerely,

David Rumbens


Deloitte Access Economics Pty Ltd

Liability limited by a scheme approved under Professional Standards Legislation.

© 2011 Deloitte Access Economics Pty Ltd


Overview i

Primary Sources 6

1.1Birrell and Healy 6

1.2Briggs 7

1.3Energy Skills Queensland "Industry Skills Plan 9

1.4Energy Skills Queensland - Workforce Planning report 10

1.5Energy Skills Queensland - Addendum of workforce planning report 13

1.6Energy Skills Queensland - Workforce & Competency Development Plan 14

1.7Grad (article in Engineering and Mining Journal) 15

1.8Institute for Minerals and Energy Resources 18

1.9Institute for the Study of Labour 19

1.10Mining Industry Skills Centre 19

1.11National Institute of Labour Studies 21

1.12National Resources Sector Employment Taskforce 23

1.13Piper (article in Australia's Paydirt) 25

1.14Resource Engineering Skills Alliance 26

1.15Technology and Industry Advisory Council 27

Secondary Sources 31

1.1Australian Industry Group 31

1.2Australian Industry Group / Deloitte 32

1.3Australian National Engineering Taskforce 32

1.4Australian Petroleum Production and Exploration Association 34

1.5Chamber Of Commerce and Industry of Western Australia 35

1.6Chamber of Minerals and Energy of Western Australia 36

1.7ElectroComms & Energy Utilities Industry Skills Council 37

1.8Queensland Treasury 39

1.9SkillsDMC 40

1.10Tolhurst 43

1.11Western Australian Department of Mines and Petroleum - Prospect 43

1.12Western Australian Department of Training and Workforce Development 44

1.13Women in Mining Network 46

Appendix A: Bibliography 49

Limitation of our Work 47

Liability limited by a scheme approved under Professional Standards Legislation.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www, for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

© 2011 Deloitte Access Economics Pty Ltd


Deloitte Access Economics has been commissioned to undertake research into the current and future skills needs in the resources sector in Australia. This includes a scan of Australian resource sector, reports published in the past 22 months and the skill needs they identify.

This report provides individual summaries of key reports examined, split into primary sources (where the main purpose of the report or article is in relation to skill needs in the resources sector), and secondary sources (which include some discussion of skill needs in the resources sector, but the report itself has a broader coverage).

The current macroeconomic challenge

Australia faces a set of economic challenges to maximise the opportunities the country has available to it at present.

In late 2008 when the global financial crisis (GFC) hit, unemployment in Australia was rising rapidly. At that time, the level of investment in the mining sector was still strong, as work on major projects approved prior to the GFC continued. However, new project approvals weren't occurring at that time, and some marginal mining operations were closing down.

However, by late 2009 it was a different Story - Australia's economic climate had significantly improved. Jobs growth had returned and, thanks to continued industrial growth out of China, new resources investment projects were once again being approved and proceeding forward.

This change in the economic climate was typified by the approval granted for the Gorgon LNG project. Skating through the worst global downturn since the 1930s, there was suddenly a private consortium willing to invest 543 billion into the Australian economy for the one project.

since that time, macroeconomic conditions for the resources sector in Australia have continued to improve. One of the best measures of that improvement can be seen in Australia's terms of trade, as shown in Figure 2.1.1, along with the value of engineering construction work yet to be done in Australia (but approved).

Figure 1.1.1: Australia’s terms of trade and engineering construction work yet to be done

The challenge now is to accommodate the various resources projects which are underway or seeking approval.

The Deloitte Access Economics-Amp Investment Monitor for March 2011 shows some 18 billion of mining projects underway in Australia and committed to start soon. Beyond that there are a further $236 billion of mining projects in the planning pipeline at present. Investment Monitor notes:

Some 46% of projects in the Investment Monitor database by value are from the mining sector, and it has clearly dominated investment growth over recent years.

Clearly, commodity prices are very supportive for new investment decisions at present. That's providing mining companies with a powerful motivation to invest, as well as the cash to do so from internal financing. Commodity prices won't stay this strong forever, "but nor would they need to for the vast bulk of investment projects being considered at present to generate a decent return. The key driver here is the rate of economic growth .from China which has potential for at least another good 15 years of strong economic growth on the path to industrialisation. The key constraint is likely to come from a lack of workers.

Key themes

A clear key theme across the reports is that the resources sector will have a high demand for additional workers over the coming years, Those reports which also examine the expected supply of new' workers to the sector point to shortfalls in supply relative to demand.

Some other key themes which are seen across reports include:

  • While the resources sector is experiencing high demand, there is also strong competition for workers from other sectors.

  • A likely greater rate of retirement over the years ahead will compound the problem of a lack of workers.

  • How to supply the required skilled labour to regional areas is a key issue.

  • Concerns that generic competency based training packages don't align with the needs of the resources sector at present.

  • Inadequate capacity of training organisations to respond to a sharp pick-up in student numbers.

  • High wages in the resources sector are encouraging school leavers (particularly in WA) straight into the workforce, rather, than pursuing further training.
Techniques used

Several of the reports seek to quantify the likely Scale of the problem, and/or report on particular occupations where shortages are apparent or expected. Essentially this reporting stems from either consultation with those in the Sector; some form of economic modelling, or a combination of the two.

The consultation approach is led by the National Resources-Sector Employment Taskforce (NRSET) which conducted a public consultation 'process, received 97 submissions on an initial discussion paper and met with key industry stakeholders.

NRSET conclude that construction jobs on new Projects could peak at 45,000 in 2012 and 2013 with strong jobs growth for technicians and tradespeople and machinery operators' and drivers.
Modelling based approaches include:

  • Use of the Access Economics projections developed for Skills Australia in 2009, and used as part of the Workforce Futures strategy.

  • Queensland Treasury which use the Monash model to project demands On an industry and occupational basis.

  • Modelling undertaken by ACIL Tasman for the Technology and Industry Advisory Council, which estimates that Western Australia's (WA) total job openings will be at least 460,.000 over the next 9-10 years.

  • Modelling undertaken by the National Institute of Labour Studies for the Minerals Council of Australia, based On projected mining production levels in 2020. The report finds that the mining sector will need to employ 86,000 more workers between 2008 and 2020 - an increase of 68 per cent. WA's growth in demand will represent 55 per cent of the increase in national demand - making it the State that will contribute the most to demand for labour.

  • The Chamber of Commerce and Industry in Western Australia undertake modelling which suggests an additional 69,000 workers will be required in the WA mining sector by 2020. Given supply trends, this would result in an overall shortfall of 30,000 mining workers. Similarly, an additional 130,000 workers are projected to be required in Skill shortages in the resources sector construction in WA by 2020, with a predicted shortfall of 56,000 construction workers based on current trends.

  • The Western Australian Chamber of Minerals and Energy modelling Which looks at workforce growth required to meet current growth plans in the minerals and energy sector. That study predicted an additional 43,800 workers would be required in minerals and energy in WA by 2012 (above 2009 employment levels).

  • The Western Australian Department of Training & Workforce Development refers to both Access Economics and Monash University modelling to suggest a shortage of between 133,000 to 150,000 workers in WA by 2017 across all sectors).

  • The Energy Skills Queensland modelling considers different workforce scenarios based on different scenarios for the level of mining production over time in Queensland. Within five years the modelling found a shortfall of skilled labour for LNG in Queensland of between 2,083 and 4,394 workers. Energy Skills Queensland also uses a consultation approach for occupation specific information.
Occupations at risk

Several of the studies provide detailed information of key occupations at risk of shortage in the resources sector. This is generally seen as most severe in the relevant trade qualified areas. Key trade qualified occupations that are reported to be most in demand are:

  • Electricians

  • Drillers

  • Production technicians

  • Mechanical fitters

  • Boilermakers.

Significant shortages are also reported or projec.ted for some professional/tertiary qualified staff. These are most notable for a range of engineering related occupations but also include several other roles. These include:

  • Engineers - mining; mechanical; civil; petroleum; chemical; electrical

  • Occupational health and safety professionals

  • Environmental scientists

  • Geologists

  • Mine surveyors.

In addition, there is also strong demand for unskilled labour such as construction labourers, particularly for regional WA.

Note that the reporting of occupations at risk across reports is not necessarily on a consistent basis, either in terms of classification, or across time or geographic dimensions.

The key studies which do report on skill shortages by occupation are:

  • Energy Skills Queensland, which reports on priority occupations for trades and professionals in Queensland based on industry consultations.

  • Energy Skills. Queensland, in a separate study using a modelling based approach, reports key occupations by 4-digit ANZSCO code, with these led by production technicians, driller's assistants and maintenance technicians. An addendum highlights a range of engineering roles in shortage, noting that filling such roles in the LNG sector in Queensland may be particularly difficult given that is a new sector within the State.

  • The Mining Industry Skills Centre has identified five critical skill sets in shortage for the resources sector; geoscientists; mine surveyors; mining engineers; fitter mechanics and electro-technical trades. It also identified a range of occupations which have been difficult to fill, led by diesel mechanic/ diesel fitter mechanic,, mining engineer and geologist.

  • NRSET noted that emerging present shortages are mainly for engineers and. other I professional` staff with more than five years experience. They warned that the" domestic supply of mining engineers and geoscientists will not be sufficient to meet demand over the next five years with a shortfall of around 1,700 and 3,000 workers respectively.

  • Resource Engineering Skills Alliance noted that shortages in South Australia are being experienced at the technical level for technicians, draftspersons, technical document specialists, schedulers, planners and estimators, and at the professional level for engineers, senior project engineers and managers, metallurgists and geoscientists (preferably experienced).

  • SkillsDMC identify priority workforce requirements by sector within mining, covering drilling, the quarry sector and the coal sector. Key occupations facing recruitment difficulty by 4 digit ANZSCO code are identified.

  • The Western Australian Department of Training & Workforce Development identify priority occupations by 6-digit ANZSCO code.
Policy implications

Several of the reports draw out policy implications, resulting from the analysis of skill shortages. These include calls for a greater investment in relevant training for the resources sector, though concerns are also raised over the capacity of training providers.

In his report, Grad highlights the long lead time for training and hence there is a greater call for increased overseas migration of skilled employees to fill the predicted gap. The Australian Industry Group has also called for an increase in planned migration to at least 190,300, the same level determined in 2008. Birrell and Healy separately focus on the migration program as a whole and conclude that high migration has little to do with the resources industry's skill needs. They argue for a more targeted migration program that is focused on skill shortages in industries which are export-market focused.

Several reports also note that mining companies are looking at more flexible and innovative approaches to attract and retain workers. These include fly-in fly-out (FIFO) rotation rosters and increased parental leave.

Briggs focuses on the FIFO workforce, and the fact that the adoption of such practices leave a relatively limited benefit from mining activity for the local region.

Deloitte Access Economics

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