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.