EMERGING SKILLS SUMMIT 2020 AND BEYOND

A Critical National Challenge

““SUSTAINABILITY OF THE MINERALS SUSTAINABILITY OF THE MINERALS SECTOR IN AUSTRALIA, SKILLS NEEDS SECTOR IN AUSTRALIA, SKILLS NEEDS

IN A GLOBAL INDUSTRYIN A GLOBAL INDUSTRY””

Don Larkin, CEO, The AusIMM

Tuesday 22 November 2005, Sydney NSW

“DISCIPLINE AREAS OF NATIONAL IMPORTANCE WILL BE PROTECTED WHERE

THEY ARE OF CONTINUING RELEVANCE”

Draft National Strategic Principles for Higher Draft National Strategic Principles for Higher Education – September 2006 Education – September 2006

Department of Education, Science and TrainingDepartment of Education, Science and Training

TODAY’S PRESENTATION

• Profile of the Minerals Sector – National Importance

• Human Capital Availability and Changing Structure of Workforce

• The Minerals Sector and Human Capital

• Implications

• Suggestions to Address Skills Shortages

PROFILE OF THE MINERALS SECTOR

• Global Industry – Global OptionsGlobal Industry – Global Options

• Cyclical Industry – Currently BuoyantCyclical Industry – Currently Buoyant

• Centralisation of Ownership with World Wide Centralisation of Ownership with World Wide Commodity GroupsCommodity Groups

• Emerging Sources of Supply – Increasing Emerging Sources of Supply – Increasing CompetitionCompetition

• Increasing Demand from China, India, AsiaIncreasing Demand from China, India, Asia

• Corporate and Social Responsibility – High on the Corporate and Social Responsibility – High on the AgendaAgenda

PROFILE OF THE MINERALS SECTOR IN AUSTRALIA

•2003-4 – 8% of GDP - $500 Billion directly to 2003-4 – 8% of GDP - $500 Billion directly to Australia’s wealth over the past 20 yearsAustralia’s wealth over the past 20 years

•Exports - $42 Billion ($67 Billion 2004/5) representing Exports - $42 Billion ($67 Billion 2004/5) representing 35% (37% 2004/5) of (Australia’s total merchandise 35% (37% 2004/5) of (Australia’s total merchandise

exports and 28% of total exports of goods and exports and 28% of total exports of goods and servicesservices

•Exports of mining technology, equipment and Exports of mining technology, equipment and services of approx. $2 Billion (60% of the mining services of approx. $2 Billion (60% of the mining software used in operations around the world)software used in operations around the world)

•24% of private new capital expenditure in Australia24% of private new capital expenditure in Australia

•Total government revenue payments of $4.6 billionTotal government revenue payments of $4.6 billion

•Significant infrastructure development – since Significant infrastructure development – since 1967 – 1967 – built 26 towns, 17 ports, 26 airfields and over built 26 towns, 17 ports, 26 airfields and over 2000 2000 km of railway line.km of railway line. Source: MCA Annual Report 2004

GLOBAL SIGNIFICANCE OF THE AUSTRALIAN MINERALS SECTOR

• Largest exporter of iron ore and black coal

• Largest producer of bauxite, alumina, diamonds (by volume), ilmenite, rutile and zircon

• Fifth largest producer of aluminium and coal

• Second largest exporter of uranium with the world’s largest resources of low cost uranium

• Second largest producer of zinc ore

• Third largest producer of iron ore, nickel and gold.

Source: MCA Annual Report 2004

MORE PROFILE ON AUSTRALIAN MINERALS SECTOR

• High Technology/Capital Costs – Low Labour• Current Contribution to GDP per Employee is

$359,000 compared with average all Industries approx. $70,000.

• Homogeneous Culture with Low Level of Diversity – Causes Retention Problems

• Breakthroughs Imperative to find Next Generation’s Resources, Increasing Value (Recovery) of Existing Resources whilst ensuring Economic Efficiency, Protection of Environment and Social Development.

• Where will the Investment Come From?

HUMAN CAPITAL AVAILABILITY

• Science and maths teaching in primary and secondary is decreasing (geoscience) and quality of teaching is declining.

• Students are attracted to “easier” options• Attractiveness of career in remote or regional

Australia is low• Greater awareness of impacts of cyclicity.• “Demographic Destiny” – ageing population –

sellers market.

Implications of an Ageing Australia, Productivity Commission April 2005

THE CHANGING STRUCTURE OF AGETHE CHANGING STRUCTURE OF AGE

Successfully Managing Age in your Organisation

As the population ages a fault line is emerging that separates the past

and future landscapes of the Australian workforce. For the foreseeable

future, growth in the supply of labour will be firmly concentrated in the

group aged 45 years and over.

For every new young person entering the labour market today, there

are seven people aged 45 years and over available. By 2010 this will

create permanent shortages in the Australian Labour Market forcing

organisations to dramatically re-think their employment practices.

The Age Chasm – Drake White Paper Volume 2, No. 5

Expectation of Life from Birth 1920 to 2051

55

60

65

70

75

80

85

90

Years1920-

22

Years1932-

34

Years1946-

48

Years1953-

55

Years1960-

62

Years1970-

72

Years1980-

82

Years1990-

92

Year1998

Year2005

Year2041

Year2051

Years (Red are projections only)

ABS: Deaths - 3302.0 - 1920-98

Exp

ect

atio

n o

f Life

fro

m B

irth

(Y

ea

rs)

Females Males

Fertility Rates within Australia - 1921 to 2051

1.5

1.8

2.1

2.4

2.7

3

3.3

3.6

Years1921-

25

Years1932-

34

Years1946-

48

Years1953-

55

Years1960-

62

Years1970-

72

Years1980-

82

Years1990-

92

Year1998

Year2005

Year2006-

51

Years (Red are projections only)

ABS: Births - 3301.0 - 1998

Fe

rtili

ty R

ate

s

New entrants to the labour marketNew entrants to the labour marketDiminishing Access to LabourDiminishing Access to Labour

1980’s & 1990’s

2020’s and beyond

Access Economics

Mining

Workforce and Population Age Profile: Year 2014

0%

5%

10%

15%

20%

25%

30%

35%

15-19 20-24 25-34 35-44 45-55 55+

Age Group

Mining Workforce Australian Population

Potential to maintain engagement

of older workers

Need to engage more younger

workers.

Source: ABS, 2001

CURRENT PROJECTED

Key Risks (Drake)Key Risks (Drake) Increased competition for labour

Expansion of skills shortages

Increased competition for younger people

Increasing mismatch between the available labour pool and the competencies and characteristics required

Loss of operational knowledge, due to low retention rates and exit to retirement

Loss of executive knowledge, due to exit to retirement

Impaired productivity consequences

Falling or stagnating growth

A shifting landscape of health and well being

Limited capacity amongst the organisations managers and leaders to assess and respond to the changed environment

FINALLY

From The AusIMM’s point of view

Seize the Opportunity in Tertiary Education by Focusing on Discipline Areas of National Importance as Outlined in the National Strategic Principles for Higher Education to Ensure the Sustainability of the Minerals Sector in Australia by Backing a Winner and this does Require Some Interventions.

www.ausimm.comwww.ausimm.com