Shortages of labour and equipment are threatening massive cost blowouts on some of Australia’s major projects.

In the midst of buoyant demand conditions, booming commodity prices and escalating share values, it’s unsurprisingly difficult to spot pessimists inside the Australian mining industry right now. Yet despite this, profitability is becoming an ever more urgent issue for some. The unprecedented pull on Australia’s mining resource base is raising the daunting prospect that the industry might bring itself down from within—through a shortage of skilled labour and equipment which are now approaching crisis levels.

“There’s now an across-the-board labour shortage,” says John Davidson of one of Australia’s leading mining recruitment companies, John Davidson Associates. “There are things happening that we’ve never seen. Even surveyors and civil engineers are now working in roles traditionally filled by mining engineers. And two years ago, 60 year olds wouldn’t even get a look-in. Now, no one looks at age.”

The chart below illustrates how dramatic the surge in labour demand has been. Since sinking to a low of 74,000 in May 2000, employment in the mining industry (mining and mining-related services) had almost doubled to 134,000 by November 2005. That’s easily the highest level on record and even more remarkable given the advances in productivity made by the industry over the past two decades.

Article from Engineering & Mining Journal Jan/Feb 2006