Major Shortage of Workers in the Mining Industry

2. August 2022 | Economy

There is currently a shortage of personnel in many sectors, including mining, which is already facing major challenges due to the increasing demand for critical minerals.

Rare earths for wind turbines, lithium for storage technologies: the energy transition is also a resource transition that is reshuffling the cards in the global supply of raw materials. At present, everything seems to indicate that this is happening in favor of China, as the country is the largest producer of rare earths and also plays a significant role in lithium supply. For some time now, this strong position has led to concerns on the economic side, and more recently also on the political side, about excessive dependence on China. In the USA, but also in the European Union, efforts are therefore being made to establish their own supply chains for critical raw materials.

Pandemic exacerbates labor shortage

In the search for new raw material suppliers, great hopes are being placed in Australia, which is rich in mineral resources. The know-how of local companies such as Lynas, one of the most important producers of rare earths outside China, is therefore in corresponding demand internationally. Even established mining groups, which have so far played no role in the mining of neodymium, cobalt and other strategic materials, will have to reinvent themselves, at least in part, judged management consultants PwC some time ago (we reported). But easier said than done, the covid pandemic has seen numerous job losses in the industry, which was already struggling with a skills shortage, according to S&P Global. The financial services group points to mining’s poor image among young and potential workers, making it difficult to compensate for older workers leaving. In Australia alone, 24,000 additional workers will be needed within the next five years, according to the Australian Employers’ Association (AREEA) (PDF). Not surprisingly, the management consultancy EY also lists the lack of young talent as one of the biggest risks for the sector.

No way around China for the time being

Meanwhile, extracting critical raw materials outside China can only be part of the solution, because processing them into oxides or end products such as permanent magnets requires extensive know-how. At this point, a chicken-and-egg problem arises, as the business portal Quartz writes: Without a sufficiently large-scale mining industry for critical minerals, there would be little incentive for university studies in this field. In turn, the development of the industry would fail due to the lack of graduates.

As a solution, Luisa Moreno, CEO of the Canadian mining company Defense Metals, points to China, of all places, in an interview with Quartz. Cooperation could accelerate the company’s own capacity development, Moreno said. Defense Metals itself had signed a memorandum of understanding with China’s Sinosteel last year, which included a feasibility study on rare earth mining in Canada. However, Moreno pointed out to the trade magazine Forbes that China’s ambitions are far greater and also include the acquisition of raw material deposits in Africa and South America. In this regard, the country would have to be preempted, otherwise its influence would become even greater.

In view of the fact that, according to S&P Global, it takes an average of 16 years from the first explorations to the extraction of raw materials, while at the same time the demand for critical minerals is increasing significantly, the Western economies are facing a difficult balancing act between cooperation and raw material autonomy. Additional challenges, such as a massive shortage of personnel, are therefore inconvenient in this situation.

Photo: iStock/Maksim Safaniuk

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