Mining projects threatened: Deloitte

Capital project risk and labour shortages are just two of the top 10 challenges that will face the mining industry this year, according to the Tracking the Trends 2012 report issued by leading professional services firm Deloitte.

Tim Richards, Deloitte’s Australian Mining Leader, acknowledged that the number of capital projects in the mining sector was increasing worldwide but said completing these projects was becoming correspondingly harder.

“Escalating costs, talent shortages and competing infrastructure builds will make it very difficult for mining companies to complete their capital projects on time and on budget. These types of cost and time overruns can create significant risks for miners, including the danger of scaring off potential investors,” he noted.

The risks tended to feed a cycle where the requirement for a company to find funding would exacerbate cost and schedule overruns. “In the face of missed project deadlines and cost overruns, those funds are becoming increasingly difficult to come by,” said Richards.

He added that a skills shortage was already apparent, and feared for the future of finding workers in the industry. “There are not enough workers to meet the demands of our projected industry growth. Given the acute shortage of key talent, delivering on all these projects may prove impossible.”

Deloitte recognised that there is a significant skills gap, now distinct in a number of functions, from capital project designers and mining geologists to truck drivers and machine operators.

Richards advised the industry to reach for more innovative solutions. “It’s time for mining companies to tackle this issue in a more systematic fashion and pursue longer-term, farther-reaching and perhaps less conventional solutions or they risk the chance of imminent operational disruptions.”

Deloitte offered solutions such as the introduction of a skills visa and more community oriented infrastructure.

“Our biggest mines are located in more remote regions and the industry needs to find a way to give these locations more family appeal. There are many workers who are prepared to fly in/fly out of a mine site for a period of time, but most won’t be prepared to do it forever,” Richards said.

“As our recent discussion paper Where is your next worker? suggested, if the industry starts working with these remote communities to provide things like schools, hospitals, reasonable housing and the infrastructure families need and expect, they are more likely to achieve a stable workforce.”

To view all 10 mining industry challenges, download Tracking the Trends 2012.