On the plane from Santiago to Dallas, I sat next to an Australian from Newcastle. He told me that he was on a round-the-world trip to promote his product. He explained that his company makes the wire ropes used on the big shovels so common in open-pit mining.
“Why go round the world to sell wire rope?” I asked. “Surely the market is big enough in Australia?”
His reply: “Not really. We foresee a downturn in the Australian mining market; plus the Chinese can make it cheaper than we can. Those terribly high salaries, you see.”
“How do you compete with the Chinese?” was my next question.
His reply: “We offer an integrated, personal service. We work with the mines to make sure they get the right product; that they get ongoing service; that replacements are there when needed; and we do reliability engineering to avoid breaks and interruption of mining. That type of personal service is just not in the Chinese equation.”
He told me he was on his way to coal mines in Texas and Pennsylvania, then on to MinExpo in Las Vegas. I asked him if he had thought of the Canadian oil sands mines. Ruefully he replied that the Canadian market is very closed–almost impossible to break into unless you buy a local company.
And so we parted, and I was left cogitating on the fact that there are three great sectors to the mining industry: suppliers like the fellow from Newcastle, consultants, and those in the mining companies working for mines.
I reflected on a conversation I had had a day earlier with an Australian mining consultant from Perth. He told me that his very large consulting company had just laid off four hundred people in Australia.
“Wow that is bad,” I replied. “But surely they will get new jobs easily?”
“Not so,” he replied. “Fact is there is a distinct downturn in consulting to the mining industry in Australia and for that matter world-wide.”
“But not in Chile?” I ventured.
He answered quickly: “Look at the cost of labor in Chile as compared to Peru, and you must wonder why anybody would want to open a new mine in Chile if they could open a similar mine in Peru or Mexico. It continues to amaze me that the big mining companies are not focussing entirely on Africa and those parts of South America where wages are still low.”
And so we parted, and I was left to ponder the fate of consultants to the mining industry.
Today I chatted with folk who count the number of resumes put on the web on a weekly basis. They told me there are some 500 new resumes hitting the web each week, up significantly from average. Most are from Australia and are of non-degreed people. Apparently no measurably upturn in resumes from Australian engineers.
Yet the big mining companies are still looking for qualified people, and cannot find them. I know one that is seeking many geotechnical engineers who just do not seem to exist.
These stories, recountings of short, casual conversations, do not make a statistic or even capture a trend. But! The point is as always, it is best to have a degree. It is probably best to work with a mining company if you want to minimize career disruption in the event of a downturn. Even though the money in good times is probably greater in the supply and the consulting part of the mining industry.
Let us have your thoughts. Please comment.
I’ve always maintained that education opens the door to employment, particularly when times are tough. When job markets are depressed a degree is an advantage over a high school diploma.
Why don’t the big miners just focus on Africa? I think risk is most of the answer. No one wants to invest in infrastructure that will be eventually nationalized. Of all the places to work, Africa is the only place on my “no go” list. Why do companies invest in Chile over Peru? Probably because of better orebodies and greater ROR. Some obvious advantages….trained workforce, good infrastructure and easy market access. The big negative in Chile is power cost.
I’m surprised at the wire rope guy’s opinion of the Canadian market. I doubt that shovel ropes form a significant part of the rope market. Hoists in underground mines likely form the biggest part. Last time I worked in an underground operation our ropes came from SA because they had the strongest ropes. Could be different now though.
My gut sense of the Oz mining scene is that it was badly overheated, thanks to their proximity to Chinese markets. With the Chinese economy cooling a bit it has had a damping effect on capital expenditures, which would affect onsultants. As an example, BHP announced a delay in capital for Olympic Dam, (I think) due to soft markets. I also think that was a $20 billion expansion. That’s more on one mine than all capital expenditures in BC for the last 20 years or so!
Interesting comment on Canada being a closed market. I can certainly say the same with dealing with the Australian market from North America. If you don’t have an Australian partner with the right accent, it is hard to sell your products. Prices and wages in Australia are out of control and will have to moderate before Australian mining companies will get serious about developing new mines. The situation is like working in the Arctic, the deposit has to be exceptional before it can even be considered for development.
Methinks we are heading to tougher times.
I enjoyed your article and i must confess that it’s an eye opener to me. This is my first time of visiting a miner’s blog, am a geologist (B.sc geology and mining, M.sc environmental geology) from reputable Universities in Nigeria. From the look of things, Canada have a huge market and good jobs for geologists and miners and i have always dreamed of working in Canada. I also got some skills and experience through learning, training and working. My email address is onyengo@gmail.com incase anyone wants to help.