31/10/2006 - 21:00

Skills search prompts lateral shift

31/10/2006 - 21:00

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When nickel producer Minara Resources decided last year to pursue the development of a $25 million heap leach demonstration plant, it ran into an unexpected problem.

Skills search prompts lateral shift

When nickel producer Minara Resources decided last year to pursue the development of a $25 million heap leach demonstration plant, it ran into an unexpected problem.

 

It couldn’t find any engineering firms in Perth that wanted to tender for the work because they were all so busy on other projects.

 

This incident provides a stark example of the challenge facing the business community in Western Australia, which is struggling to find sufficient staff.

 

Speaking at a Deloitte function last week, Minara chief executive Peter Johnston said he had been “living with the nightmare” of skills shortages for the past 18 months.

 

Mr Johnston also explained how Minara, like many businesses, has found new ways of doing things to cope with the problem.

 

It was able to convince two east coast engineering firms to tender for the heap leach work, which was eventually awarded to Brisbane company Ausenco.

 

Mr Johnston said the skills shortage had hit Minara directly, with mine workers, tradesmen and engineering staff all being difficult to retain and recruit.

 

The company has responded by boosting its staff retention programs and introducing new training programs, for instance by retraining rural sector workers to become mine workers.

 

Mr Johnston said this added to the up-front cost but had given the company a very flexible group of workers.

 

The Chamber of Minerals and Energy WA issued a report last month predicting that shortages of skilled workers were likely to get even worse over the next decade.

 

It concluded that an extra 70,000 workers will be needed over the next decade in Australia, including 42,000 in WA, to meet expected growth in output.

 

Whether the demand for workers reaches the projected level is far from certain.

 

The CME study assumed a constant link between output and employment levels, when in practice there are likely to be big changes over the next decade in response to technology developments and movements in the relative cost of labour and capital.

 

This dynamic response is already apparent from projects currently under development.

 

For instance, iron ore miners BHP Billiton and Rio Tinto have traditionally bought their rail cars from Australian manufacturers United Rail, which operates the former Goninan plant at Bassendean, and east coast supplier Bradken.

 

The manufacturers are flat out keeping up with demand, and consequently new iron ore miners have turned to overseas suppliers.

 

Fortescue Metals Group, Mt Gibson Iron and Midwest Corporation have all announced plans to buy rail cars from China South Locomotive and Rolling Stock Industry Corporation.

 

The oil and gas industry provides another example of how work previously performed in Australia is being undertaken overseas.

 

When the North West Shelf venture proceeded with its $1.6 billion train 4 expansion a few years ago, the engineering contract was awarded to a joint venture led by US firm Kellogg Brown & Root.

 

The Kellogg joint venture assembled an engineering team in Perth and all of the design and procurement was run locally.

 

When the North West Shelf venture proceeded with its $2 billion phase 5 expansion, project operator Woodside awarded the engineering contract to a different joint venture led by US firm FosterWheeler.

 

In this case, FosterWheeler has undertaken the design and procurement work from its office in Reading in the UK.

 

The train 4 and phase 5 expansion projects have also adopted different construction strategies, in response to the skills shortage and rising costs in Australia.

 

Train 4 was ‘stick built’ on site, resulting in a peak workforce on the Burrup Peninsula of 2,000 people.

 

Phase 5 is being built in modules at Asian construction yards and will be assembled on site, meaning the workforce is expected to peak at a much lower 1,500 people.

 

Woodside has adopted a similar strategy for development of its Angel gas field, which involves construction of a new offshore oil platform.

 

The topside module is being built in Malaysia while the jacket is being fabricated in China.

 

Mining and construction contractor Macmahon is using a graduate program, apprenticeships and overseas recruitment to try and overcome the shortage of engineers and tradesmen.

 

It has also focused on retention strategies for its existing workforce, which has grown rapidly to 2,700 people.

 

The company anticipates further growth in its workforce over the next 12 months and is hoping its long-term contracts with blue-chip clients will prove attractive to potential employees.

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