Dear Members
Miner statue with lamp, Dahlonega, GA, USA
©Vagrant Dragon,Shuttlestock
Good Afternoon!
Once again, a Sunday afternoon here in Cleveland Heights, Ohio. We have been so lucky. Maybe a few warm days (92°F or so), but nothing like elsewhere in the US, for example Arizona. And, having travelled every month this year, it has been wonderful actually to spend July “At Home”.
I wanted to touch on a couple of things before looking at the current talent shortage faced by the mining industry.
First: one thing that really gets my goat is the sloppy use of the term “rare earths” in the press. This term, that originally came about as a description of their oxides, now commonly applies to the series of transition metals called lanthanides that run in the periodic table from lanthanum to lutetium, plus scandium and yttrium that have similar properties. Yet you often see reports that misuse the term to describe almost any metal that is valuable to modern technology and may be “rare” (sometimes not even that, e.g. titanium). Even respectable business press can get this wrong. I was so taken aback recently when I saw the Financial Times using the phrase in the title of an article on Ukraine which did not once mention any rare earth, that I wrote to suggest they might revise it. Lo and behold, I got the most gracious email back from the editor apologizing for the sloppy use of language and saying that the piece’s title would, indeed, be changed. It was! For all members who get equally as annoyed as I when this error turns up, please do write to the publication to express your annoyance. They might, then, start to get things right. OK, sorry. Rant over!
Second: I took note the other day of Saudi’s foray into the world of mining with its proposed acquisition of an equity stake in Vale’s base metals division1. It will be interesting to see if this now leads other Gulf State to make similar investments — both in the interest of diversification and to keep up with Saudi Arabia. I can see Qatar, perhaps, making a similar foray. We’ll have to see.
Way back in November, 2010, following the spat over rare earths between China and Japan, my pal Bob Latiff (then chairman of the National Materials Advisory Board of the National Academies here in the US) and I penned a piece for Defense News entitled Strategic Materials and the West: Solve the Right Problem.2 One of the points we made in it was that: “When China acted as an export cornucopia for raw strategic materials and many goods manufactured from them, domestic processing and production of those products dwindled or ceased. In many instances, the ability to manufacture domestically has been lost.” We went on to note that: “The problem is even worse when one considers that, along with the retreat from processing and manufacturing, the US and its allies lost much of their materials and manufacturing education and know-how.”
Fast forward to 2019. In a couple of conversations in June of that year, I discussed the whole issue of education and innovation with (amongst others) Mark Bristow, President and CEO of Barrick Gold Corporation, and the then SVP, Finance and CFO of Teck Resources Limited, Ron Millos. Nine years later, the same message came through loud and clear from both. Dr Bristow saw the mining industry, amongst other things, as being not only “bureaucratic”, but also bad at both recruiting and developing human resource assets and, hence, there being a real problem with skills. And Mr Millos talked about the challenges of convincing young people about the opportunities to be found in mining.3
And now, here we are in 2023, amidst the energy transition (the success of which is so dependent on the availability of mined materials), with the problem appearing only to persist. When I asked him about it last week, John Gladston, Director Corporate Affairs at First Quantum Minerals, said that the company places “a huge emphasis” on the recruitment and management of talent. “There is,” he said, “a shrinking pool across the board, in all jurisdictions, of appropriately motivated and qualified STEM graduates.” In addition:
“When you have mine schools closing, that doesn’t help.”
He went on to say that, whilst there are “top level graduates” out there, “… you’ve just got to put more effort into finding them.”
As well as being highlighted, once again, in conversation with participants in the mining industry, the problem’s severity was flagged in an interesting piece from McKinsey & Company published in February this year and picked up by the mainstream press, for example, the Wall Street Journal (WSJ). Entitled Has mining lost its luster? Why talent is moving elsewhere and how to bring them back 4, the article paints a pretty bleak picture of where things currently stand.
When I asked Mr Gladston about the McKinsey piece, he said that it really does ring true.
I think just a couple of the figures to be found in the piece should be illustrative of this. For example, quoting findings from the McKinsey Survey of Mining Senior Leaders and Executives, 2022, the piece noted : … mining companies are experiencing a talent squeeze: 71 percent of mining leaders are finding the talent shortage is holding them back from delivering on production targets and strategic objectives. And … 86 percent of mining executives said it was “harder to recruit and retain the talent they need versus two years ago.5
This is, perhaps, not surprising when you look at enrollment and graduation figures for mining-related degrees. It appears that, in Australia, according to McKinsey, mining engineering enrollment has fallen 63% since 2014. While “mining graduations” in the US have fallen 39% since 20166, according to the Wall Street Journal, in 2020, in Canada, “geology and earth-sciences graduates were nearly 25% less than in 2015” and its “mining and mineral-engineering enrollment was down 10% in 2020 compared with 2016.”7
As if the difficulty in recruiting talent were not bad enough, the industry’s predicament is made only worse by the fact that an already old work force is both getting older and retiring, with invaluable experience lost when those workers hang up their boots. According to Rohitesh Dhawan, CEO of the International Council on Mining and Metals (ICMM), quoted in the WSJ, with less than half of the US’ mine workers being 45 years old or younger: “’[t]he people we have in the industry now are typically older and closer to retirement.’” This means that the industry is “’being squeezed on both sides.’”8
So, what’s the solution? McKinsey identifies four areas for mining companies to consider. They are:
- “Treat talent as a strategic pillar, alongside safety, production, and cost;
- “Double down on what matters to employees;
- “Understand which skills matter and invest in them; and
- “Make bold moves on the social agenda.”
All of which not only figure, but also just make such common sense—they also seem to me to be applicable to just about any industry. Not just mining.
And, with that, as I rush off to batten down the hatches before an imminent and serious thunderstorm, I should like to bid you farewell from Cleveland Heights for another month.
And I remain, as always
Yours
Tom Butcher
13 August 2023
1 The Financial Times: Saudi Arabia makes mining bet with stake in Vale’s base metals division, July 27, 2023
2 Defense News: Strategic Materials and the West: Solve the Right Problem, November 15, 2010
3 VanEck: VanEck Natural Resources Conference 2019: CEOs On Innovation and Education, August 12, 2019
4 McKinsey & Company: Has mining lost its luster? Why talent is moving elsewhere and how to bring them back, February 2023
5 Ibid.
6 Ibid.
7 Wall Street Journal: A ‘Dirty’ Job That Few Want: Mining Companies Struggle to Hire for the Energy Transition, June 1, 2023
8 Ibid.
©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.
