Dec '12/Jan '13

HR Outlook

Is technological innovation the solution to the skills crunch?

By Ryan Montpellier

In 2012, Canadian mining companies continued to struggle to recruit and retain the right people to operate their mines. The skills shortage facing companies today is real and is having a significant impact on majors, juniors, contractors and suppliers. For the past two years, it has held the second spot on the risk agenda in Ernst & Young’s annual report, Business risks facing mining and metals. Despite these challenges, the last 12 months were relatively easy for most recruiters. Commodity prices stagnated and in some cases receded significantly, so employment growth in the sector was tepid. Thus, the majority of recruitment efforts in 2012 were focused on replacement, not on expansionary demand.

Historically, commodity price increases translated to development of new projects, and to ramped-up production at existing operations. According to the Mining Association of Canada (MAC), there are currently over $140 billion of new or expansion projects in the environmental assessment and permitting phase. As the market improves, a number of these projects will get the green light, significantly driving up staffing demand.

This will undoubtedly lead to increased labour costs, as the race to secure talent continues. The skills shortage warning has started to lose its effect, as companies have been hearing the same message for years. But the fact remains that we need to act now before we find ourselves facing an uptick in the market and no workers to sustain it. In fact, 2012 has already seen several large potential mining projects delayed or outright cancelled due to rising costs. But what can industry players do?

Labour shortages are not easily solved. From a purely economic point of view, whenever a resource becomes scarce, the cost of that resource increases and ultimately, through capital substitution, is replaced with another input. Academic papers on this topic, published by MIT and other institutions, show that the scarcity of an input factor encourages investment in innovation and the adoption of technology. Consequently, the labour scarcity we are currently facing in mining will likely lead to significant technological advances and/or step-change innovation.

For 2013 and beyond, I fully expect to see this phenomenon take place. Already, at several mines in Australia, where the scarcity of labour is more acute than in Canada, we are seeing GPS-guided, driverless haul trucks. For example, the Komatsu Autonomous Haulage System is being deployed at Rio Tinto’s West Angelas mine. In Canada and around the world, we have several examples of remote mining – mines that operate certain types of equipment from a distance, and even, in some cases, from the surface.

In my opinion, the industry will see increasingly larger investments in technology and innovation. According to Statistics Canada, the minerals and metals industry is already spending over $500 million per year in research and development (R&D), and seven of the top 100 R&D companies in Canada are mining companies. The investments are taking place and impacts on the workforce are inevitable. We will continue to be more efficient, more productive and less reliant on labour as the main production input. The industry will still obviously need people, but the skill sets required will be very different.

Although technology will play a big part in the long-term solution, companies are still faced with pressing HR needs in the short-to-medium term. There is clearly no silver bullet, but some companies are faring better than others.

Four ways to find and keep top employees

Consultations with over 30 mining HR leaders help MiHR identify initiatives to attract and retain staff.

1. Diversify your workforce: develop key attraction, recruitment and retention strategies for women, Aboriginals, and Canadian immigrants.

2. Identify the highly qualified or high-potential employees and fast track or mentor their development.

3. Recognize the knowledge, skills and abilities of your workforce through formal credentialing programs like the Canadian Mining Certification program.

4. Introduce flexible work arrangements and customizable schedules to suit the needs of your employees. A one-size-fits-all philosophy does not work.


Ryan Montpellier is the executive director of the Mining Industry Human Resources Council (MiHR) in Canada. Most recently, Ryan was awarded the 2011 Canadian Institute of Mining Bedford Young Leadership Award, which recognized his achievements in addressing the industry’s human resources and labour market challenges.

 

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