Riding out the mining cycle

Australia could face a serious shortage of mining engineers, with graduate numbers plummeting and showing no immediate signs of abating.

In a bid to encourage students into mining engineering degrees, the University of New South Wales (UNSW) is offering 25 scholarships worth $1.14 million for 2017.

Four Australian universities that form the collaborative venture Mining Education Australia (MEA) together with two other universities saw a combined total of 260 students graduate from mining engineering in 2015.

Last year that number was anticipated to be much closer to 200 and by 2019 is expected to drop 80 per cent to just 50 graduates.

UNSW Head of School of Mining Engineering Associate Professor Paul Hagan said the drop in graduates was expected to have a dramatic impact on industry as demand was predicted to pick up around the same time.

“Going from a situation of more than 250 graduates to less than 50 graduates in four years time is not sustainable and it’s going to affect the industry,” he said.

“That flow on effect will affect efficiency of operations and it will then start to affect the ability of the Australian?mining industry to deliver mineral commodities to the global market.

“There’s a general disconnect between the public and understanding the role mining plays in the Australian economy, more so in the eastern states than in WA; people underestimate the part it plays in the future of Australia.”

Prof Hagan said despite the mining industry keenly looking for engineers, demand hadn’t yet translated to public perception of the value of holding those qualifications.

However, it’s all part of the cycle and Prof Hagan has journeyed through it five times before.

“Mining is incredibly cyclical and the peaks and troughs are dramatic,” he said. “Downturns are fast and usually last two or three years, which means there’s a peak in enrolments just as demand for jobs collapse. We saw student intake peak in 2013 and enrolments have fallen fast since.

“This is the sixth mining cycle I’ve been through, so I know what happens next; demand for jobs will soar, but there won’t be enough trained engineers to hire.

“Anyone enrolling now will be in top demand in three years, but students don’t perceive it that way.”

UNSW has struggled to fill the current scholarships on offer with only five applicants enrolled in the course for 2017, down from seven the previous year.

At the peak of the course, the university had 107 students accepted in 2013, which has fallen year on year by an average of 58 per cent.

“Enrolments may not get up to that 2013 level again because in some ways that’s a reflection of what was termed ‘the super cycle,” Prof Hagan said. “The cycle lasted a lot longer than what had happened in previous cycles, so the interest just increased year on year from 2006 to 2013 – it’s unlikely to get up to that level again.

“Normally we see the cycles lasting about six or seven years so I’m expecting we should be starting to see a pick up in interest in 2017 and that won’t start to affect the supply of graduates until 2020 because of the four-year delay.”

Typically Australia looks overseas to meet employment shortfalls, however Prof Hagan said in the case of engineers this was not a viable option as many other countries also had a demand for these skilled workers, adding there were potential cultural issues that could come about too.

Australia’s key commodity exports, iron ore and coal, have been on a spectacular rally recently and, for the first time in six years, exports have risen for three successive quarters.
Prices for coking coal have tripled, thermal coal is up 50 per cent and there was a 48 per cent surge in iron ore in China during 2016.

Rising Chinese steel production, driven by government stimulus, is likely to continue, with indications China’s construction sector has ramped up in recent months.

“We are seeing signs of a turnaround in mining activity, a rise in commodity prices and a flow of investment back into the resources sector,” Whitehaven Coal Managing Director Paul Flynn said.

“Based on past cycles, we’ll be short of skills within three years. That’s why we need to attract enrolments now so we have enough engineers graduating when we really need them.”

Prof Hagan admitted UNSW would have to consider the long-term viability of its mining program if low enrolment numbers continued for several years.

He said the viability of having any mining school left in Australia would be thrown into question if current numbers were sustained.

Picture: Paul Hagan

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