Jobs Report: Can mining recover?

For years, job seekers saw the mining industry as flush with promise. A skills shortage made for plentiful job opportunities, generous salaries and lots of chances to travel. “That’s actually what attracts them: money first and travel second, by a huge proportion,” says Scott Dunbar, the interim head of the University of British Columbia’s mining engineering department, citing frequent inter-program surveys. “The actual interest in the work involved seems not to play a big role,” he adds, laughing.

But in the last year, Canadian mining has gone from riches to, if not rags, then at least extreme restraint. In early December, Potash Corp. laid off 18 per cent of its workforce—more than 1,000 people—with about half of those cuts coming from its home province of Saskatchewan. Earlier in the year, Barrick Gold said it would lay off 30 per cent of its office staff. Other companies are joining in the cuts. At the same time, Statistics Canada data show the job market in resources has become far less favourable over the past two years. The agency’s unemployment-to-job-vacancies ratio for the mining and energy sector—a measure of the number of unemployed people for each available job—reached 3.5 in October, the most recent month for which data are available. That’s slightly higher than the average for all industrial sectors. By contrast, during the same month in 2011, the figure was 1.1, giving mining the tightest job market of any sector at the time. It all portends an increasingly difficult-to-crack marketplace for job seekers.

Greg Dobbelsteyn can speak first-hand of that difficulty. He found a job in mineral exploration right after graduating from McGill University in 2011, and says almost all his classmates found work immediately, too. But when he helped to staff his company’s booth at a major mining convention in March, he saw a stark difference. “The atmosphere was pretty grim,” he says. “Only a handful of companies were actively looking to hire, and many companies that looked healthy just a year earlier were looking desperate. I know a lot of my friends have struggled to find jobs over the past year, though most seem to have landed something eventually.”

The employment drought is due to a number of factors. According to a 2013 report by Ernst & Young, mining investment in Canada flatlined in 2012, with the industry’s eye turning firmly toward developing countries, where the political risks may be higher, but so, too, are potential rewards. Weaker commodity prices have also buffeted the industry. Talan Iscan, a professor of economics at Dalhousie University, says oil, potash, copper and other metals—Canada’s primary resource exports—have a huge exposure to fickle global markets, and commodities are subject to regular boom-or-bust cycles. “We seem to be going through another phase of declining commodity prices, and we’re not exactly sure how long it’s going to last,” he says.

But all is not lost. For his part, Dunbar says he’s seen “a bit of uncertainty” from his UBC students, but believes this is a short-term problem that will correct itself “in a few years, at most.” Mining insiders and analysts agree that the commodities market will eventually recover, making this but a blip in an ongoing narrative of continued and urgent demand for specialized tradespeople. “We might see some shortages,” says Byrne Luft, vice-president of operations at Manpower, a human resources consulting firm. “But rest assured, in the coming months, and certainly coming years, we’re going to see this wound of skill shortages get deeper.”

Most jobs are still occupied by Baby Boomers, but those workers are beginning to retire. Ryan Montpellier, the executive director of the Mining Industry Human Resources Council—which foresaw the commodities slump—says the industry will still need at least 145,000 workers over the next 10 years, just to replace outgoing workers. On top of that, roughly $140 billion worth of new projects is currently awaiting government approval, including developments in northern Ontario’s Ring of Fire mineral belt. “If even a small fraction of those new mines comes on board, it will mean a significant increase in the number of people. If you start overlaying employment growth on top of replacement, we’re going to go right back to the very challenging years in 2007 and 2008, when there was a significant skill shortage and when you had mining engineers graduating with six-figure salaries.”

Still, there are things that can be improved in the meantime. Schools and employers need more information to help them avoid a skill mismatch, experts say, so that graduates can leave school with the talents that are being sought. Industry strategists are looking to countries such as Australia for examples of how to manage the inevitable volatility of mining, because that country uses more temporary foreign workers. And newcomers need to be more willing to relocate, says Luft, suggesting there is still plenty of work available, though it’s in more remote locales.

So, Montpellier and Luft’s advice to recent mining graduates? Be agile, keep an open mind and dig in for the long haul. It will be worth it.