VIEW FROM NORTH AMERICA

Miners Face Talent Shortage—Part 2

 

Dear MMTA Members

Good afternoon, once again Cleveland Heights, Ohio.

Before continuing my look at the talent shortage facing the mining industry, here in the U.S. in particular, I want to note a recent (encouraging) news release from the U.S. Department of State. It announced that the Minerals Security Partnership (launched in June 2022 “to bolster supply chains to ensure a more sustainable future for us all”¹) had now added Norway, Italy and India as partners. They join Australia, Canada, Finland, France, Germany, Japan, the Republic of Korea, Sweden, the U.K., the U.S. and European Union (represented by the European Commission).

On to talent shortage in the mining industry. Wanting to understand a bit better the recruitment problem faced by the mining industry here in the U.S., I telephoned the National Mining Association in Washington D.C. to ask them about it.

I was informed that, yes, they are more than just cognizant of the problem and that it is currently high on their agenda. Indeed, only on September 12, the association’s president and CEO, Rich Nolan had penned an OpEd piece on the subject. Entitled “American mining needs Generation Z”, it is, essentially, an appeal to this generation to think about mining. Not least as, perhaps, a way of satisfying their “longing to get out from behind the desk, to find a place where collaboration is key and where the work is impactful”². The association, in addition, has launched a series of videos on YouTube (I think there are about 11 of them), “providing a new perspective on what modern mining looks like and the opportunities available in the industry.”

But I kept asking myself: “How can things have come to such a pass?” After a bit of digging around, I started to get a better idea: on a couple of fronts.

Last month, in the context of an aging workforce, I mentioned that less than half of the U.S. mine workers are 45 years old or younger. Flipping things around (much easier to understand then) and adding a bit of context, according to Walter Copan, VP, Research and Technology Transfer at Colorado School of Mines (in what has been described as a “grey tsunami”), “… we are anticipating a retirement of more than half of the U.S. mining workforce over the next six years, that’s 221,000 [my italics!] workers are expected to retire by 2029”³

So, if we are going to see that number in U.S. resulting just from retirement , what about the likes of Canada and Australia? Well, it appears that, by 2030, Canada will be facing an estimated shortage for somewhere between 80,000 and 120,000 workers, while, by 2026, Australia will need some 24,400 new workers.⁴ The figures are astounding!

In my search for answers, I had the chance to chat with our Gold Strategy team here at VanEck:  Ima Casanova (portfolio manager), Joe Foster (gold strategist) and Adam Graf (senior analyst). While Ima trained as a mechanical engineer, Joe and Adam were both trained as geologists (with Adam working in the copper industry in the ‘90s and Joe in the gold mining industry).

Following up on something that both John Gladston of First Quantum Minerals and Adam Graf said about mining schools closing and the number of mining engineering graduates falling, I discovered that, in the U.S. alone, the number of mining engineering graduates has decreased by around 43% since 2015 alone.

And also, importantly, concurrently, “the number of accredited mining engineering programs has decreased from 25 in 1982 to 14 in 2020,”⁵ with most of those remaining also experiencing a decrease in state funding. In addition, 12 schools have actually closed their mining programs. (Amongst these was Columbia University, which, in the ‘50s, had received some $16 million from mining magnate Henry Krumb to “make the School of Mines one of the best known and largest schools of its kind in the world”⁶.  The story in the New York Post in 2013 is still worth reading!) According to David L Kanagy, executive director and CEO of the Society for Mining, Metallurgy, and Exploration: “This corresponds with a decline in the U.S. faculty, to about 112 in mining engineering in 2020.”⁷

ABET Accredited Programs in Mining, Metallurgical and Geological Engineering in 2020.

This contrasts strikingly with China which boasts “over 38 mineral processing schools and upwards of 44 mining engineering programs”⁸ and whose China University of Mining and Technology alone has “more engineering students than all U.S. mining engineering programs combined.”⁹

The Call  of the Wild

Here in the U.S., in his call to American Gen Zers, Mr Nolan, in addition to mentioning both work that is impactful and the importance of collaboration, mentions their “longing to get out from behind the desk.”¹⁰

Whilst this last may be attractive domestically here in the U.S., echoing what Mr. Gladston had to say when I chatted to him about working in mines in remote places, both Ima Casanova and Joe Foster said that, from what they have seen, many young graduates and post-graduates appear just not to be interested in going off into the wilds to work in a mine, preferring the bright lights and proximity to other people.

(The same could not be said for either of them: Ima Casanova, who said she “loved the challenge” worked on an offshore oil rig in her native Venezuela and Joe Foster spent quite some time in the “depths” of Nevada—not Las Vegas!)

Perennial Problems?

As to further reasons why there’s currently such an obvious dearth of talent available, both Adam Graf and Joe Foster mentioned two in particular: 1) a lack of job security (tied to the cyclicality of the industry); and 2) historically poor pay (except in “boom” times).

Vis-à-vis 1), Ima Casanova said she hoped that this might, now, be becoming a thing of the past. And, while it remains to be seen if it persists, according to Mr Nolan: “Mining jobs are also great paying jobs. The average wage in the mining workforce is more than $85,000 per year—well above the national average for other industries.” ¹¹(But perhaps not when it comes to graduate pay!)

Finally, everybody I interviewed agreed that there is always the issue of ignorance, with perceptions of mining that are “dated, often cartoonish and that must change.”¹² In some respects, the mining industry has only itself to blame: it has been, and remains, woefully inept not only at “selling itself”, but also, especially now, at explaining just how vital mining is, especially to the success of energy transition.  As Mr. Gladston succinctly put it: “There is a fundamental lack of understanding of what the extractive industries are about. And their value: everything is either farmed, fished or mined!”

Possible Ways Forward

It could be argued that things really aren’t all that bad and that, surely, more automation is the answer. OK, as Adam Graf pointed out to me, “… some skilled labor is being replaced/thrifted by technology.” But the operative word here is “some”. Certainly not all. There will always be a need for humans who think, not machines that just do. (And I am not quite sure yet just how AI fits in here!)

An approach taken by First Quantum, particularly in jurisdictions without a mining “legacy”, is to create courses at their universities — something it has done in Panama — to help develop skills locally. E.g. by creating a master’s program that can “convert” a civil engineer into a mining engineer.

One thing I believe is certain, however. If mining companies are to attract the talent they seek, they need to do at least four things: 1) continue to pay competitively — if that is now the norm; 2) provide job security; 3) recognize the importance of training — and provide it; and 4) work so much harder at conveying their narrative and, especially, dispelling the ignorance and misinformation around the “evils” of mining and the extractive industries.

In his commentary for the Center for Strategic & International Studies (see footnotes), Thomas Hale mentions a number of further considerations. He offers the following three suggestions. (All of them eminently sensible.)

• “First, there must be an emphasis on early education and the way young people engage with natural resources and mining.
• “Second, there needs to be an investment in developing new mineral-security courses and training throughout government and international affairs programs across the country, especially in Washington.
• “Third, civil society will be critical for connecting with current voters and communities across the country.”

While these may be great for going forward, the good news is that at least some people in government are thinking now about the problem. Back on March 22 this year, U.S. Senators Joe Manchin (D-WV), Chairman of the Senate Energy and Natural Resources (ENR) Committee, and John Barrasso (R-WY), Ranking Member of the ENR Committee, introduced the Mining Schools Act of 2023.

“This bipartisan legislation will increase and improve opportunities for university and college mining and geological programs, like those at West Virginia University, to prepare students to meet America’s future energy needs.” ¹³

According to the release from The Senate Committee on Energy & Natural Resources, “[t]he Mining Schools Act of 2023 would:

1. Establish a grant program for mining schools to receive funds in order to recruit students and carry out studies, research projects, or demonstration projects related to the production of minerals; and

Establish the Mining Professional Development Advisory Board to evaluate applications and recommend recipients to the Secretary of Energy, as well as conduct oversight to ensure that grant funds are appropriately used.”

Afterword

It is, perhaps, worth my noting (and not surprising) that, in the pieces I have read, little, if any, blame has been apportioned to the industry itself for its current predicament.  

I know, from conversations I had back in 2019, that mining industry leaders with mining engineering/geology degrees, on a personal and individual basis, have provided funding to support their mining school/university alma matres. However, despite digging, I’ve not been able to find much about mining companies themselves supporting either particular mining schools or universities offering the relevant programs. But, then, maybe I’ve not looked hard enough.

Yours

Tom Butcher

September 17, 2023  ©2023 Tom Butcher

Tom Butcher is Director of ESG at Van Eck Associates Corporation (“VanEck”). The views and opinions expressed herein are the personal views of Tom Butcher are not presented by or associated with VanEck or its affiliated entities. Please note that VanEck may offer investments products that invest in the asset class(es) or securities mentioned herein. This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities/financial instruments mentioned herein.

Citations:

1.  S. Department of State: The Minerals Security Partnership Continues to Expand with Norway, Italy, and India, September 16, 2023
2. Gillette News Record: American mining needs Generation Z, September 12, 2023
3. Canadian Mining Journal: Colorado School of Mines warns of ‘grey tsunami’ of mining industry retirements, August 30, 2023
4. Center for Strategic & International Studies: The United States Needs More than Mining Engineers to Solve its Critical Mineral Challenges, May 8, 2023
5. Society for Mining, Metallurgy & Exploration (“SME”): MAINTAINING THE VIABILITY OF U.S. MINING EXUCATION, June 2022. It is worth noting, too, that, as far back as March 2013, in its paper “Federal Support for U.S. Mining Schools, the society was addressing the same issue. (Since this was published, with the addition of the New Mexico Institute of Mining & Technology, 15 schools are now accredited.)
6. New York Post: Magnate’s missing millions: Columbia University mining program runs dry, August 25, 2013
7. American Coal Council: Crisis in the Resource Industry: America’s Shortage of Mining Engineers, December 19, 2022
8. Center for Strategic & International Studies: The United States Needs More than Mining Engineers to Solve its Critical Mineral Challenges, May 8, 2023
9. Society for Mining, Metallurgy & Exploration: MAINTAINING THE VIABILITY OF U.S. MINING EDUCATION, June 2022.
10. Gillette News Record: American mining needs Generation Z, September 12, 2023
11. Gillette News Record: American mining needs Generation Z, September 12, 2023 10. Ibid.
12. Senate Committee on Energy & Natural Resources: Manchin, Barrasso Introduce Bipartisan Legislation to Boost Domestic Mining Workforce, March 22, 2023
13. Ibid.