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INSIGHTS | Solving the talent challenge in mining requires doing mining the right way

By 6th March 2024March 7th, 2024No Comments

The mining sector is not new to challenges around attracting and retaining talent. Except during supercycle periods, the mining sector has often been starved for talent.

However, competitive renumeration along with exciting opportunities for global travel and long-term career prospects generally ensured that sufficient talented professionals and workers found their way into the sector. Rooted in the crucial role mining plays in the world economy to provide materials for all other industries, mine executives were confident about the inherent attractiveness of the sector and talent management was neither considered core business nor a strategic issue.

Yet, an intricate array of factors has dramatically intensified the challenges of finding and attracting the right talent to ensure the successful continuation and transformation of the mining industry. In fact, the numbers on the talent squeeze are so startling that it seems surprising to find that the issues around attracting, retaining, and training future talent, while often talked about, is ranked comparatively low or not at all as a main business risk for mining companies.

Talent squeeze a startling reality
A recent survey by McKinsey & Company revealed that 71 percent of mining leaders stated that talent shortages are holding them back from delivering on production targets and strategic objectives. PwC’s 2023 annual global chief executive survey came to a similar conclusion stating that almost two-thirds of mining CEOs said skills shortages will have a large or very large impact on profitability over the next 10 years.

On a company level, Australian miner Freeport McMoRan stated in its annual report that talent shortages and increased competition among employers represented strategic challenges, affecting the company’s ability to expand mining rates while lithium producer Pilbara Minerals reported that labor shortages were one of the main factors in increased operating costs in the first half of 2023.

It does not take an expert to extrapolate the losses in productivity and the significant costs incurred by this obvious talent squeeze. The question lends itself how the industry got here and what can be done to change it.

To unpack the complex factors behind the talent squeeze, it is worth taking a closer look at four significant dynamics that are interconnected and culminate in an unprecedented situation forcing the industry to literally reimagine itself.

These four dynamics are: 1) declining attractiveness of mining as a place to work in the eyes of the younger generation; 2) a mismatch of values between traditionally held values of mining companies and those of the new generation of talent; 3) changing skill requirements linked to a competition for technical talent, in 4) an increasing disconnect in what workers expect from their workplace and what mining companies and managers are perceived to provide.

This article will explore these intersecting dynamics to then look at possible levers to turn these dynamics into opportunities.

Declining attractiveness of mining as a place to work
A stunning 86% of mining executives told McKinsey & Company in a recent survey that is harder to find and retain talent even compared to two years ago, especially in specialized fields such as mine planning, process engineering, and data science.

In addition, a significant shortage of geotechnical engineers has been observed by industry experts. Without having the data to prove it, these shortages could well be linked to a recent spike in demand for geotechnical experts after the catastrophic tailings dam failures in Brazil in 2015 and 2019 lead to the adaptation and implementation of new standards in tailings management, with ICMM’s GISTM being the main one. This brings in sharp relief that catastrophic events in the mining industry, which ideally would have been prevented in the first place, are not only responsible for contributing to negative public perception and poor reputation of the mining industry but can even contribute to the ongoing talent squeeze in some areas of the mining industry.

The talent squeeze is expected to continue and considering the findings from PWC’s 2023 report on top mining sector trends and challenges this doesn’t come as a surprise. The report showed that 70% of young people (polled in Canada) would definitely or probably not consider a career in mining. Similarly, a global survey by McKinsey & Company revealed that 70% of respondents between 15 and 30 years of age said they “definitely wouldn’t” or “probably wouldn’t” consider working in the mining industry. This ranked the mining sector as the least popular career choice for all those surveyed.

Concurrently, this coincides with a shrinking pipeline of graduates coming out of traditional mining programs, such as mining engineering. Australia has seen a 63% drop in graduations since 2014, while in the US, 39% fewer graduates came out of mining programs since 2016.

In the US, the Society for Mining, Metallurgy & Exploration is forecasting that by 2029, half the US mining workforce, or 221,000 workers, will retire.

Generational (value) shifts
The generation that strongly identified with the traditional values of the mining sector and concurred with the existing employee value proposition is expected to retire and thus leave the sector over the next decade. In the US, the Society for Mining, Metallurgy & Exploration (SME) is forecasting that by 2029, half the US mining workforce, or 221,000 workers, will retire. Australia expects a shortage of 80,000 to 120,000 workers by 2030 and the situation in Canada is similar.

The young generation now entering the labor market, also called Generation Z, however, is entering the labor market with quite a different set of values, posing significant challenges for the sector. The most defining characteristic of “Gen Z” is the quest for purpose and for generating a positive impact on the future, the environment, climate change, or the entire planet. This means that priorities have shifted from prioritizing stability and renumeration to choosing an occupation based on the perceived impact they can have on their community or the planet. In addition, work-life balance and flexible work options have moved high up on the priority list of young professionals.

While the mining industry, as an important enabler for the green energy transition and an industry with a large impact on many other industries and supply chains, has the potential to meet those demands for purpose and impact, the talent squeeze speaks for itself in that the industry has, if nothing else, failed at successfully communicating its crucial role in a green economy to the young generation and the public.

In addition, digital natives and younger tech talent tend to not feel attracted to hierarchical and siloed organizational structures and non-diverse and traditional company cultures that are often still prevailing in resource companies despite progress being made in this area over the past five years. Especially if they gained their first professional experience in the tech world with flat hierarchies, high levels of flexibility, as well as high degrees of diversity and inclusion, they may find their values clash with the often still prevailing cultures in the resource sector.

Changing skill requirements and competition for technical talent
Attracting and training digitally savvy talent, however, becomes a necessity for mining companies in their quest to optimize productivity through digital and automation solutions.

In their Future of Jobs Report 2020, the Word Economic Forum took a survey of close to 300 companies, ten percent of which were from the mining sector. The results of the survey revealed that with the average employee’s skillset expected to change by 40% over the next four years, 73% of companies identified skills gaps in the local labor market as the biggest barrier to the adoption of new technology. This implies that, on average, 48% of existing employees would require reskilling/upskilling in the next four years to meet the evolving skills required for the tasks they would have to perform.

Top ranked roles that will become increasingly important to organizations in the next four years are listed alongside. These are clearly not roles traditionally associated with the mining sector.

In addition to these technical roles, the mining sector requires non-technical talent that can handle the complex tasks of implementing ESG agendas and build sustainable long-term relationships with communities.

Top ranked roles that will become increasingly important to organizations in the next four years

  1. AI and Machine Learning Specialists
  2. Data Analysts and Scientists
  3. Process Automation Specialists
  4. Robotics Engineers
  5. Software and Application Developers
  6. Digital Transformation Specialists
  7. Remote Sensing Scientists and Technologists

The widening gap of expectations between workers and managers
Tying all these dynamics together brings into sharp relief a disconnect between what employees expect and what mining companies provide. A 2023 survey by McKinsey & Company confirms that there is a startling disconnect between what managers believe their employees want and what is truly valued by employees. Similarly, there is a disconnect between why people leave the company and what their managers thought the cause was.

For example, employees prioritize relational factors, including feeling valued by their manager and organization, and having a sense of belonging, while employers tend to focus on transactional factors, such as compensation and work-life balance, a 2021 McKinsey & Company survey showed.

The numbers on the talent squeeze are so startling that it seems surprising to find that the issues around attracting, retaining and training future talent, while often talked about, is ranked comparatively low or not at all as a main business risk for mining companies.

Considering the enormous time, focus and energy companies spend on optimizing production by two percent, while leaving the talent strategy to the HR department, brings this disconnect into sharp relief and shows that talent is rarely viewed as a strategic lever. Consequently, investing in a regularly updated and validated employee value proposition is not perceived as a priority.

Reversing the Trend I: Mining with Purpose
Given these intertwining dynamics and resulting challenges, the question lends itself what mining companies should focus on to set themselves up for success and overcome the talent squeeze.

The biggest lever for reversing the dwindling interest in mining as a place to work is, undoubtedly, a fundamental rebranding of the industry and changing the way that mining as an industry is perceived by the public. Mining as an industry needs to get better and, ultimately, succeed in communicating a compelling story to the public and the next generation of talent about its critical role in the economic transition and the positive impact in can create for the future – and, of course, walk the talk along with it.

Considering that the mining industry is not only the driving force for the materials required for the energy transformation but that it underpins nearly half of all global economic activity by extension also means it is positioned to create an immensely positive impact that even stretches beyond the confines of the extractive processes.

Ironically, while mining is fundamentally a traditional industry, for those who want to affect change in the world, there's no better place to work.

Ironically, while mining is fundamentally a traditional industry, for those who want to affect change in the world, there’s no better place to work. Getting an opportunity to make a difference to the planet by helping to combat climate change, restore biodiversity and lift people out of poverty by helping to transform mining could be a strong appeal to the young professionals of Gen Z. Consequently, mining could and should make for an exciting and meaningful place to work for young purpose-driven talent.

Thus, this is about a fundamental shift in how mining defines its role in the economic transition and can communicate the true value it creates to stakeholders, communities, society, and prospective employees. In fact, this is probably the strongest unique selling point the mining industry has today and it must be communicated to the public much more assertively while building confidence and trust among stakeholders and society This is certainly no easy task and demands talent that can successfully build trust and communicate the value of mining to the world in a fresh narrative.

Mining companies, such as Anglo American, have taken steps in this direction and are now calling themselves “material providers”, thereby reflecting a changing narrative, underpinned by a redefinition of the role they play as a resource company to enable the low carbon economic future. Other companies have started to show products and lifestyle commodities in their external relations materials and adverts, linking the purpose of mining with people’s everyday lives.

Reversing the Trend II: Strategy for Talent
If miners want to not only attract but retain good talent, they also need to create analytics of what employees want and elevate the priority of these investments to underpin inclusivity, flexibility, and a positive workplace culture. As McKinsey & Company summarize the point: “Ultimately, cost cutting on site infrastructure may provide short-term budget relief but drives long-term pain if only the “B team” is attracted to the site” (McKinsey & Company 2023). Thus, knowing what matters to employees and connecting with their values becomes indispensable for successful talent management.

Talented young professionals expect to be presented with a clear picture of their career development opportunities, particularly if they are joining the industry from outside of traditional mining studies.

Obviously, finding and transporting a new narrative for mining to solve the talent squeeze must also translate into actions with respect to what is cultivated and communicated inside the companies.

One aspect that stood out from a survey by McKinsey & Company is that uninspiring leadership and unsupportive colleagues are significant drivers behind people resigning. This underpins the importance of a cultural shift inside mining companies addressing the importance of leadership and supportive and positive relations among colleagues as two aspects valued highly by employees.

In addition, talented young professionals expect to be presented with a clear picture of their career development opportunities, particularly if they are joining the industry from outside of traditional mining studies. A computer scientist joining a mining company will want to know what his career path will look like and, most probably, whether working in mining is compatible with his expected lifestyle. Adopting a transparent model for career progression, comparable to what can be found in the consulting business, could present valuable orientation to young professionals across disciplines and increase the attractiveness of mining companies as a place to work.   

Adjusting work models around flexibility and remote work is thus becoming crucial, too, to respond to shifting values around work-life balance and flexibility.

In addition, challenges around camp infrastructure, for example, such as connectivity issues and non-inclusive amenities are immediate turnoffs for young and mature talent, even though they don’t require huge investments to fix.

These issues can be addressed by developing and implementing an updated talent strategy that reflects what employees truly want and value, adapting the company culture and making the necessary investments to increase workplace attractiveness. After all, a talented metallurgist, and outstanding mine planner, or a gifted data analyst can have a significant impact on the company value with comparatively low investment. Thus, talent should be considered a strategic issue with the potential to drive significant value within the company.

Reversing the Trend III: Looking beyond the mine
With shifting skills requirements due to technological transformations in the context of digitalization and automation, mining companies have three main options to address the changing capabilities employees need to bring to the mine.

To date, most companies expect existing employees to pick up skills on the job and pursue this as their main strategy to address the shifting skills demand. In addition, specific training programs for upskilling and reskilling can support employees building new skills and capabilities and adapt to changing work environments.

Capability, however, should not be defined too narrowly, focusing only on role-specific technical competence, but rather more holistically to include leadership skills, cross-functional expertise, and digital savviness, for example. This can shift the perspective towards lifelong learning and address some of the disconnect that leave employees frustrated, like lack of career development opportunities or meaningless work.

In addition, mining companies can start diversifying not only who they look for but also where they seek out new talent. Rather than clinging to the concept of certain roles to be filled, like machine operators, it would be more beneficial to focus on the skills required to fulfill that role. This would allow mining companies to widen the talent pool and not just search inside the industry for candidates that can fill the role of, say, a heavy equipment operator. Maintenance skills can be found in the automotive industry as well and transfers between industries could be an attractive option for mining.

Especially with fast changing skills through digital technologies, systems, and analytics and remote capabilities, being part of the mining and metals workforce does not necessarily even imply working in a mine anymore, opening possibilities for attracting yet other pools of talent, such as women.

Finally, mining companies can play an important role in building new and bolstering existing skills by offering training and employment for people in host communities. To this end, ICMM’s Skills for our Common Future initiative, for example aims to build skills for host communities to fully participate in the economy of the future in partnerships between the mining sector, communities, government and civil society.

SENAI group photo

Picture: With an investment of around R$250,000, the initiative by Atlantic Nickel together with Sesi/Senai, results in the installation of a SENAI mobile teaching unit, around the company’s operations.

Appian’s commitment to local talent development: SESI School Management Program
Appian has also recognized the pivotal role mine operators can play in fostering, training, and educating local talent to build a talent pipeline while contributing to community development and strengthening community relationships. Its commitment to local talent development is exemplified through its active participation in the SESI School Management Program, a collaborative initiative with SESI/SENAI, Craíbas City Hall, and Mineração Vale Verde. This tripartite partnership is dedicated to enhancing municipal basic education, encouraging school involvement in local problem-solving, and establishing a digital and technological learning environment. Key courses offered by SENAI include ongoing programs for Chemical Technicians and Construction Technicians, along with upcoming sessions for Motorcycle Mechanics (scheduled for February 2024) and Industrial Mechanics (slated for April 2024).

In 2023, the SESI School Management Program created a significant impact, benefiting 1009 students, as well as 111 teachers and administrative staff. Additionally, 35 technicians were trained, and two notable events — an Art and Culture Festival and an Entrepreneurship Fair
were successfully organized. Looking across 2024, the anticipated impact is set to reach 1,200 individuals.

In parallel, Appian plays a crucial role in the “Training of Plant Operators” through the Operational Apprentice Program. This initiative aims to hire 50 operational apprentices and further underscores Appian’s dedication to fostering local talent, sustainable practices and positive community impact in the realm of mining operations.

This proactive engagement in local talent development not only contributes to community well-being but also strategically addresses the challenge of talent shortages at Appian’s operations. By investing in the education and training of local individuals, Appian establishes a sustainable pipeline of skilled workers tailored to the specific needs of its mining operations.

Moreover, the emphasis on social innovation and community involvement creates a positive feedback loop. As local individuals are empowered through education and training, they are more likely to stay and contribute to the community, further reducing the likelihood of talent shortages in the long term. Appian’s commitment to local talent development serves not only as a social responsibility but also as a strategic initiative to fortify their workforce and safeguard against potential talent gaps, ensuring the sustained success of its mining operations.

The Operational Apprentice Program at Atlantic Nickel in action

Picture: The Operational Apprentice Program at Atlantic Nickel in action

Conclusion: Redefined Value(s) for Future Mining
What is becoming obvious is that while traditionally, value in mining has been thought about in terms of safety, commodity prices, ore quality, reliability of equipment and physical assets, talent is moving into the spotlight as a true value driver. In fact, rethinking the way in which they value people is probably one of the greatest opportunities that most mining organizations haven’t tapped into yet.

While the mining industry has focused a lot of time and energy in recent years on technology to make its operations safer, more cost effective and productive it is now time to shift focus towards investing in human talent, because the talents and specific kinds of emotional and cognitive intelligence that individual people can bring to an organization are irreplaceable and critical to success.

What’s more is that for mining companies to differentiate themselves in a socially and environmentally focused future they require people, and they require the right people to drive environmental, social, and governance (ESG) targets, circularity and community relations.

It is therefore no understatement that the approach mining companies will take to talent management will determine their future trajectory. There is an increasingly strong imperative to create best-in-class work environments, where people can feel valued, invested in and fulfilled, and bring their best selves to work every day to deliver on the expectations of shareholders, policy makers and society.

To succeed in attracting young talent in the first place, though, the mining industry must redefine its purpose. Once the industry becomes valued as a key provider for the green energy revolution and people start to understand the direct link between products and purpose the attraction of the sector will increase for a broader and more diverse range of talent. Investing in sustained positive performance around ESG targets and going beyond the status quo to demonstrate how mining can be done the right way is one of the best ways to start this journey.

Sources: it

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