Peak Jobs: Australian Mining Employment (Half Year 2015)

I have always stated that policy makers and commentators should not get confused between construction and operational mining employment yet the fact remains that even as the mining boom (MkII) ends they still manage to mangle the numbers.

As I pen my first Mining Employment blog for 2015 it was good to see that Greg Jericho has written a very good piece on mining engineering which has seen a massive downturn in the past twelve months. As always there are lots of charts which gives you a very ‘big picture’ look at the mining downturn from the CAPEX perspective.

In terms of operational employment the past six months have been consistently negative.

So far every month there has been a deficit of mining jobs (overall) and the only State or Territory to have recorded a net increase in the first two quarters was the Northern Territory (+125 overall).

The iron ore state of Western Australia saw the biggest decrease with almost 3,000 jobs lost, while New South Wales and South Australia surpassed the other big mining State of Queensland with sub thousand reductions.

As Greg Jericho correctly pointed out spending on mining infrastructure has fallen off a cliff and this is reflected in the employment gains over the past year where construction projects have only featured in three months for a total of 920-jobs.

To give that context there were more than 1,000 construction jobs created in each of the months of April and May 2014 and if you were to go back to September 2013 you saw 6,390 jobs added.

Job losses were consistently higher than any gains and we are starting to see a slight increase in support role announcements as mining companies sharpen their pencils and further offshore mining manufacturing (Caterpillar) cut office staff (BHP and South32) and the gas projects in Queensland wind up (Bechtel).

Overall there were just 270 mining related job gains against a 1,129 loss (a deficit of 859).

Iron ore continued to cut during the first four months of the year but went quiet over May and June.

Of Note: In the months of February and March the Fortescue Metals Group (FMG) effectively laid off 700 operational staff at Christmas Creek when it announced that MacMahon would lose its contract to Downer EDI, however approximately a fortnight later Downer EDI announced that it would keep 400 staff on.

Coal reported losses in five out of the six months and Gold lost 600 workers at Newcrest’s Cadia Valley Operations although the exact numbers between infrastructure and operational were not made clear.

The mining employment sentiment was predictably negative for the first two quarters of 2015 with ongoing job cuts consistently outweighing any positive news stories. As per previous downturns there has been a noticeable increase in government announcements on mining projects as both State and Federal governments push through approvals (treated as positive sentiment).

At the same time there have been numerous discussions around the viability of certain mines in Australia (Carmichael Coal) as well as a lot of corporate refinancing as companies start to come to terms with the decrease in their commodities pricing.

I have also been able to push back the sentiment data to July 2010, a month that was positive and would continue to remain so for a full two years.

Final Thoughts

Interestingly the latest Detailed Labour force data released by the Australian Bureau of Statistics saw a small increase in mining employment to 224,000 in the three months to May (trend figures) and the 220,000 – 230,000 band has been maintained over the past three releases (nine months).

I’m still seeing strong operational employment declines in my data and I know that the ABS conflates construction and operational jobs in its detailed labour force figures so it is my strong view that we will see mining employment move back under 200,000 either by the end of this year or very early next year.

 

This article appears courtesy of Shane Granger's Peak Jobs blog. To read more on the state of employment in Australia, click here.

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