After a long trip nearly all the way around the world visiting mines and consultants to the mining industry, the fellow in the office next to me, is pessimistic. His thesis is that the mining boom is bust; we have rough times acoming; and we should all hunker down before the storm hits. He bases his opinion on impressions, discussions, and numbers. Here are a few.
Consultants to the mining industry are light on work, and do not see a full work load next year. Some are even laying off staff. The word is on the street that an international consulting company here in Vancouver is about to announce a round of layoffs. The projects the consultants are working on now are for 2012 budgets, but the 2013 mining budgets, currently being compiled, will, he believes, be cut, cut, cut.
Then there were those discussions with executives in the mining industry to whom he presented recommendations for tailings operations. One executive told him: “Our shareholders are unhappy. They say the price of gold is going up, but dividends are not following the trend. It is not enough to say the cost of operation is increasing. The shareholders are after our blood—we are vulnerable. That is why I am cutting everything I can, and in particular new projects and expansions. But don’t worry, we can’t and won’t cut the tailings team. As you tell us, the problems there are tough and unforgiving.”
Yet he concedes times are funny. There is still enormous pent-up demand in the developing world. There are still millions who want a better life. Thus the mining industry is on edge: how to survive price declines, yet be ready to produce when demand picks up? That may be why we are still seeing new work coming through the door faster than we can accept it. He turned down a few jobs this week alone.
And that is where the catch comes: there is still great demand for specialists, the skilled, the experienced, and those who can produce much fast and at low cost. That is how you cut costs, yet stand prepared for the upturn.
I know this in no consolation to the young and those still honing their skills. But it is a fact, and all we can say is hang in, upgrade your eduction, take the tough jobs with fast experience returns, go where the work is rather than stay at home, and work more than 40 hours a week. Let us know how this turns out for you.
I think consulting firms have been staffing up like crazy over the past few years and we all know that bubbles cannot continue. That doesn’t mean the mining industry is in demise just the overheating is cooling down, as one would naturally expect it to.
What it might mean is that the mining companies will be more efficient with their spending and force consultants to lower their costs to competitively bid jobs (no more sole sourcing since only one firm had people available to do the job).
Gee, we might going back to the way it was before.
One of my economic signals is copper inventory. I add the inventory on LME with Shanghai, then track it. Over the last few weeks it’s gone from 350 thousand tonnes to about 440 thousand tonnes. If it rolls over we’ll probably be OK, but if it continues upward………
Go where the jobs are is good advice. Several days ago I was speaking with my father who grew up in the ’30′s on a farm in Saskatchewan. He was in the air force for the war, and then went to university, graduating in mining in 1949. That was the first year of post war grads, and there were more grads in all areas in that year than in any other before or after up until the baby boom. I asked him why mining? He said he had debts to pay and mining paid better money than other jobs. He never worked as an engineer, as he would only have made about $150 per month. Instead he went mining and made double the money.
Canada is rich in resources and that’s where the jobs will be for the next few years, assuming we don’t wind up with an NDP government…federally or provincially.
[...] Caldwell writes on his blog that a close colleague has just completed a global sojourn spent visiting mines and meeting with [...]
This is why in spring of 2012, we decided to switch strategy from junior mining to health wellness and high tech health ventures. In boom or bust, people need to stay healthy, live longer productive years. We have ageing population globally, and even kids becoming obese at an earlier age, hence the rising health care costs.
http://www.healthycrowdfunder.com
I think mining boom is far from over. People mix few different problems, global economic meltdown which means job loss in EVERY industry in every country and the problems in the mining industry itself, like the lack of good projects/ grades, safe geographies..etc
In general, mining is doing much better than other industries. The global financial crisis made invertors more picky and miners/explorers more careful when they chose the next project. People don’t just buy a good story anymore, you have to do lots of work now before you raise a penny in the city.
There is a huge skill shortage in our industry as well, the young and ambitious graduates want unreasonable salaries while not willing to go and work in remote areas for at least 5 years to get the necessary experience. The senior mining engineers, geologists, H&S and environmental professionals cannot resign sometime at the age of 70, simply because there is no good quality replacement for them.
So, in my opinion, we are far from over, but we do live in a slightly different world now for obvious reasons.
Hello everyone;
inflation booms ends always in the same way…
——
something nice from china:
http://www.zerohedge.com/news/2012-11-03/guest-post-china-addicted-credit
Alessio.