[REPORT] Australian Mining Industry Could Lose 75,000 Jobs
The mining industry in Australia is in danger of losing thousands of resource-related jobs as the industry enters a new phase of mining.
According to a new report by the ANZ bank, Australia’s mining industry could shed up to 75,000 jobs over the next three years as the mining boom shifts gear.
The potential job losses will add to the country’s 5.8 percent unemployment rate and will require the creation of 150,000 new jobs a year to maintain this rate.
"Weaker than expected commodity prices would tilt the risks to more job losses as mining firms seek to cut costs," said Justin Fabo, senior economist for ANZ.
"So we think the unemployment rate will be in spitting distance of 6% over the next 12 months, and for improvement after that to be gradual."
The sector is seeing a switch in position as the job-intensive construction phase moves towards the job-light operation phase.
“Iron ore projects in Western Australia require, on average, one worker during the production phase for every two or three workers directly employed during the investment phase (but the ratio can vary markedly project to project),” Fabo said in his report.
The Australian Workforce and Productivity Agency said the total number of jobs in the industry has increased by 80 percent in the last five years to reach 263,000.
The ANZ expects iron ore exports – Australia’s biggest – to grow from $55 billion in 2012 to $75 billion by 2020. LNG exports should also increase, growing from $15 billion in 2013 to $67 billion by 2020.
The mining industry in Australia is expected to remain profitable as the volume of mineral exports surges.
“This phase of the mining boom, however, will not be as lucrative as Phase I,” ANZ said.
Low carbon world needs $1.7trn in mining investment
According to a new report from consultancy Wood Mackenzie, mining companies need to invest nearly $1.7trn in the next 15 years to help supply enough copper, cobalt, nickel and other metals needed for the shift to a low carbon world.
Cutting carbon emissions
The United States, Britain, Japan, Canada and others raised their targets on cutting carbon emissions to halt global warming at a summit in April hosted by US President Joe Biden.
Meeting those targets will need large-scale deployment of electric vehicles, storage for power generated from renewables and electricity transmission, all of which require industrial materials, such as lightweight aluminium and metals used in batteries such as cobalt and lithium.
Wood Mackenzie analyst Julian Kettle calculated miners needed to invest about $1.7trn during the next 15 years to “deliver a two-degree pathway - where the rise in global temperatures since pre-industrial times is limited to 2°C”.
“At an industry level, there seems to be reticence around investing sufficient capital to develop future supply at the pace and scale demanded by the energy transition (ET),” he said.
Mining firms are wary of making heavy investments after their experience of the last decade when they invested in new capacity just as demand peaked, leading to a collapse in prices and revenues. They also need to please investors, who are unlikely to want to see dividends diverted to capital spending.
Rising demands of investors related environment, social and governance (ESG) issues further add to the challenge.
Australia, Canada and Western Europe carry a low ESG risk but some of the best resources are in high-risk areas, such as Democratic Republic of Congo, which sits on about half the world’s cobalt reserves according to the U.S. Geological Survey. “Given the need to meet tough decarbonisation and ESG targets, Western governments, lenders, investors and consumers will need to get comfortable operating in jurisdictions where ESG issues are more complex,” Kettle said.
Kettle said government support was needed to help miners comply with ESG issues to ensure production from high-risk areas was conducted in an acceptable way to consumers.
“Then, and only then, will the West be able to secure sufficient volumes of the raw materials needed to pursue the energy transition in the timescales envisaged.”