2021-2026 Workforce Forecast

ABOUT AMMA

AMMA’s vision is to assist resources and energy employers in creating a brighter future for all Australians.

A proud member-based organisation, AMMA’s work in policy and advocacy drives positive outcomes for members and the broader industry.

For more than a century, AMMA has delivered high quality and valuable workforce services to Australia’s resources and energy industry.

AMMA provides expertise, influence, leadership and support in key workforce areas including workplace relations, human resources, diversity, training, government relations and public affairs.

FOREWORD

Despite all the curveballs of 2020, the future of Australia’s resources and energy industry remains extraordinarily bright. A global health pandemic, commodity price challenges and issues in the international marketplace have barely put a dent in the industry’s growth prospects.

This AMMA forecasting report shows there are 98 new or expansion projects in the national resources and energy investment pipeline scheduled to enter production by the end of 2026.

Should all proceed as presently expected, the industry could see an uptick of more than 24,400 new operational roles over the next six years.

This growth - just over 10% in total - comes as Australia’s resources and energy operators are already experiencing a number of resourcing and workforce challenges.

In AMMA’s daily conversations with our members right across the nation, it is not short-term uncertainties of the COVID-19 pandemic nor global disruption causing the greatest anxieties, but planning for the skills of the future and nurturing the next generation of talent.

METHODOLOGY

Resources and Energy Workforce Forecast (2021-2026) estimates the likely workforce and skills demands of prospective mining and oil and gas projects in Australia’s development pipeline.

Only projects that have been committed by the proponents / investors, or have been assessed by AMMA’s analysts as advanced and likely to proceed, are included in this forecast series.

Further, this forecast is for the long-term operational phase of these projects, with workforce demand listed in the year they are scheduled to enter full production. It does not include the short-term construction workforces involved in building the projects in the years prior.

A variety of modelling techniques are applied to present as accurate a forecast as possible, including:

» Applying average productivity ratios (commodity volume produced per employee) from official State Government production and reported employee figures.

» Applying workforce planning formulas and occupation breakdown ratios provided to AMMA by employers in each commodity group.

» Cross-referencing workforce estimates in company issued ASX statements, press releases, media comments, project documents or via direct feedback from company representatives.

» Verification of forecasts by key industry participants in each commodity.

Formulas have been applied consistently within each commodity group to average out variances in project design, quality of resource, terrain and locality, technology and the other myriad of factors which can impact total workforce numbers.

Across all modelling AMMA has been very conservative. It is assumed new resources and energy projects will sit at the higher end of current industry productivity levels, and improving technology may reduce the ratio of on-site operators to centralised white collar roles.

For expansion projects, only the actual increase on current workforce numbers is included in the forecasts. Therefore, expansions designed to maintain current production and workforce numbers have new workforce demand listed as nil.

It has also been noted where new projects are intended to replace ageing assets, such as in the iron ore sector. However, if mine closures have not been announced or expected to coordinate with openings, workforce requirements are listed in full.

AMMA thanks the various member representatives who assisted in this industry forecasting project.

Despite leading the nation’s economic performance and offering exceptional career opportunities, difficulties in attracting the right skilled employees in the scale required presents a real very risk.

AMMA is proud to continue this series of workforce forecasting to assist in addressing these challenges and to add value to the industry’s efforts. Through this project AMMA seeks to:

» Inform industry of expected resources and energy workforce demand, assisting employers with workforce planning strategies.

» Inform government of expected workforce, including specific occupations where shortages may emerge, to help direct VET reforms and other skilling initiatives.

» Inform the nation broadly, including regional communities, job-seekers and school leavers, of sustainable career opportunities within the resources and energy industry.

To support the industry’s continued success, employers, peak industry bodies and state and federal governments must remain united in our collective goals: to heed the lessons of the past, be better prepared and more strategic about meeting our industry’s future workforce demands.

Resources and Energy Workforce Forecast (2021-2026) will add great value and practical insights for this journey.

THE AMMA TEAM

STATE OF PLAY: WORKFORCE IMPACTS OF COVID-19

The impacts of the COVID-19 global health pandemic on the Australian economy and labour market have been pervasive – a sudden and devastating event the likes of which may never again be experienced.

Despite the Australian Government’s JobKeeper subsidy softening the impact, national unemployment still rose from 5.7% to 6.9% between March and October 2020, reflecting 360,000 jobs lost in a seven-month period.

In the Australian resources and energy industry, employers and employees have faced an unprecedented level of disruption. Over many decades the industry has perfected complex systems for continuous people movement – around the country, to and from remote sites, seamless swing changeovers and integration of dozens of roster patterns.

The effects of COVID-19, from state border closures and grounded aircraft to on-site hygiene, testing and tracing practices, represented enormous challenges and change for resources and energy workforces.

On balance, however, the resources and energy industry has proven to be Australia’s most resilient sector during 2020. Australian Bureau of Statistics (ABS) employment data shows the various mining and oil and gas segments of the national labour force contributed almost nothing to overall job losses.

In some sectors, those with record high commodity prices and global resource demand, employment has even grown over the past 12 months.

As a precursor to our workforce growth forecasts for 2021-2026, AMMA provides the following quantitative analysis of workforce impacts throughout the 2020 pandemic year.

Of course, analysis of national employment statistics only tells a small part of the story. There is simply no way to quantity the huge efforts of all the people within the Australian resources and energy industry to keep it in extraordinarily strong health.

NATIONAL WORKFORCE FLUCTUATIONS

The November 2019 quarter saw a significant uptick in the recorded national resources workforce – 16,500 jobs or 7% growth. This was mostly corrected in the February quarter (-5%).

The quarter in which COVID-19 had the greatest impact, May 2020, saw a 4.5% workforce decline, or around 11,000 jobs. Testament to the industry’s rapid response, this decline proved temporary with around 12,500 jobs (+5.5%) created in the August quarter.

With the November 2020 data due in early 2021, it is expected the national resources and energy workforce will have ended the year showing little signs of the COVID-19 pandemic, statistically at least, and sit at its three-year average levels of around 240,000 direct employees.

COMMODITY BREAKDOWN

A breakdown of labour data in the various commodities shows sporadic fluctuations across 2020, many of which balance or partly corrected themselves over time.

» The metal ore industry has been the star performer economically, with October setting a record high iron ore export value of $10.9bn. Despite this, workforce numbers have slightly declined (-3.9%) over 2020, possibly due to site manning efficiencies due to pandemic measures.

Pending labour data may show an upward trend in the November quarter as Chinese iron ore demand continues and record high gold prices sees a resurgence in gold mining activity.

» The non-metallic minerals sector has seen the widest workforce fluctuations in 2020, with a 56% decline from November 2019 to May 2020, followed by a 45% correction in the August quarter. The only possible explanation is instability within turbulent market conditions.

» Despite exploration being considered a “non-essential business activity” during state COVID-19 shutdowns, the exploration and support services workforce has grown by an average of 11% each quarter over the past year. A partial explanation could be the large number of diversified services employers moving employees displaced from other sectors, into their mining and resources businesses.

» Confidence in the coal sector has been hit equally by COVID-19 and a sustained decline in the commodity price (from March, coal slid from $70USD/t to ~$50USD/t). After some significant quarterly rises and falls, the coal industry workforce is back to its November 2019 levels (circa 50,000 employees).

» The oil and gas sector has been similarly rocked by COVID-19 and an ongoing six-year slump in the price of crude oil. ABS statistics suggest the oil and gas sector has shed about 8,000 jobs, or 31% of its workforce between August 2019 – August 2020.

AMMA urges some caution in interpreting this data, with feedback from its oil and gas members indicating real direct workforce reductions have been at far lower levels. This may indicate a slight anomaly in the data and/or that most of the employment impacts have been within contractors / service sector workforces.

COMMENTARY

As of August 2020 the Australian resources and energy industry directly employed 240,500 people. Despite fluctuations in 2020, this is 2% (5,000 employees) larger than August 2019, and more than 10% greater than the average levels across the most recent downward cycle in 2015-2017.

Looking forward the 98 mining, oil and gas projects either committed or considered likely to proceed by 2026, would demand approximately 24,433 production roles and grow the workforce by an estimated 10.2%. This would see Australia’s direct resources and energy workforce exceed 260,000 employees for the first time since February 2014.

Coal will be the largest driver of growth, with 22 projects forecast to create around 8,000 new production jobs. Iron ore has nine projects forecast to create just under 5,000 jobs. The bulk of growth in these two commodities will occur across 2021-2024.

With a sustained commodity price surge, new and expansion gold projects are forecast to demand around 3,318 new production jobs in the modelled period. Nickel, lead, silver and copper have more modest forecast growth.

The ‘Other Commodities’ category, which includes a range of rare earths and critical minerals, has 18 mostly new projects dispersed around the country, forecast to require about 2,600 production phase employees over the next six years.

Struggling with a depression in the oil price, growth in Australia’s oil and gas sector is far more subdued compared to past years. However, 15 projects are expected to create an additional 2,280 production jobs by the end of 2026, which should still fuel fierce competition for skilled operators and trade technicians.

Should Australia be in a position to lock-down further investment, there are huge additional opportunities on the horizon. An additional 192 projects, worth some 35,000 jobs to the nation, are listed as being early in feasibility stages and not included in this forecasting data.

COMMENTARY

Western Australia’s resources and energy industry directly employed 114,000 people in August 2020, or 47.5% of the industry’s national workforce.

The state has 47 projects in its development pipeline until year-end 2026. These would create an additional forecast demand for 11,628 employees, lifting the state’s direct workforce by 10.2% to approximately 126,000.

According to AMMA’s modelling, WA should equal its previous high point of direct resources and energy employment (121,000 in August 2012) by the end of 2022, before growing by about another 4,000 direct employees over 2023-2026 inclusive.

The iron ore industry will account for 38% (4,438 employees) of new workforce demand, with eight new/expansion projects set to enter production between 2021 and 2023. Some demand may be filled by those already in the market (e.g. at least three of Rio Tinto’s 16 Pilbara iron ore mines are nearing end of life).

These iron ore projects will compete for labour with a raft of other minerals projects entering production at the same time.

‘Other commodities’ including rare earths, gemstones and sulphates, are forecast to demand 1,980 new employees, the bulk of which will come by 2023.

The gold sector is forecast to demand 1,983 new employees; nickel 1,040; uranium 490; and lithium 175. Almost all of these new or expansion projects will be operational by 2024.

The latter stages of the modelled period belong to the LNG, gas and petroleum sector. Six projects, led by Woodside’s Scarborough and Browse LNG projects, are forecast to account for 1,525 additional production phase employees by the end of 2026. This should see WA’s LNG industry grow by 15% in direct workforce terms over this period.

Looking beyond what is advanced in the pipeline, an additional 75 new projects have been identified in earlier feasibility stages, with potential for 6,000+ additional jobs.

COMMENTARY

Queensland’s resources and energy industry directly employed 63,700 people at August 2020, representing 26.5% of the industry’s national workforce.

There are 20 new or expansion projects either already committed or considered ‘likely’ to proceed in Queensland between 2021 and 2026 year-end. Collectively these projects are forecast to create demand for 6,240 production-phase employees, lifting the state’s direct resources workforce by 9.8% to about 70,000.

This would be around 10% greater than Queensland’s most recent three-year average (2017-2020), and just short of the state’s highest ever recorded number of direct resources employees – 71,000 in May 2019.

New workforce demand will be driven overwhelmingly by coal projects. In total the 10 coal projects advanced in the development pipeline (eight of which are new projects), will account for 74% of the state’s total forecast new workforce demand to 2026 (4,640 direct employees).

Seven of these projects (2,950 employees) are expected to be operational by end of 2023, another one by the end of 2024 (290 employees) and one large new project – Whitehaven Coal’s Winchester South – scheduled to reach production beyond that (950 employees in 2026).

In the non-coal commodities, the Sconi nickel mine and Eva Copper Projects are forecast to demand 300 and 280 new employees, respectively, by 2023. Three gold projects, all expansions and scheduled to be fully operational in 2021/22, will demand around 560 new direct employees.

Further investments by Arrow Energy and Senex Energy in Queensland’s natural gas sector are forecast to demand around 260 new operating employees. The largest – Surat Gas Project – is scheduled for commissioning in 2026.

While current forecast growth is modest, Queensland has huge potential – possibly 22,000 new jobs - sitting with the circa 51 projects in earlier stages of development. Predominantly coal, these projects tentatively await further feasibility studies and/or an uptick in investor confidence.

COMMENTARY

South Australia employed 15,600 resources and energy employees as of August 2020 - the fourth largest of Australia’s states / territories with 6.5% of the industry’s national workforce. Despite this market share, there are just three new projects considered likely to proceed in SA at this stage.

Two copper/gold mines, Hillside and Kalkaroo, are scheduled to enter production in 2023, forecast to demand 430 and 260 new employees respectively. Siviour graphite is scheduled for 2024 and would require 100 operating phase employees.

Collectively these projects would grow the state’s direct resources workforce by 5% over those two years.

South Australia’s real growth prospects rely on converting 12 more speculative projects in the state’s development pipeline, mostly in iron ore, that would demand at least 2,000 new employees (likely many more), between 2022 and 2026.

The Northern Territory represents a far smaller portion of the national resources and energy workforce – 2,600 employees or just 1%. However, the territory has solid growth forecasted between 2021 and 2024, with four projects (two new, two expansions), set to enter production.

These projects would demand a forecast 750 new operating phase employees, which would lift NT’s direct resources and energy workforce by around 29%.

Copper and gold mines are responsible for over half of this forecast demand, with 480 new employees (the largest being Jervois at 300 employees).

The Santos Barossa backfill to Darwin LNG project is the only oil / gas / energy development scheduled for completion in NT (or SA) over the next six years. The expansion is expected to be fully operational in 2024 and require 105 new direct employees.

The Northern Territory has an additional 15 possible projects in earlier development stages, estimated to contain circa 1,700 production jobs.

COMMENTARY

New South Wales is Australia’s third largest resources and energy state, with 36,700 direct employees or about 15% of the national workforce (August 2020).

The state has 20 projects (11 new, nine expansions) either committed or considered likely to enter production between 2021 and 2026. These projects are forecast to create demand for 4,850 new operating phase employees, potentially growing the workforce by 13.2%.

Twelve coal projects (five new, seven expansions) are forecast to drive 1,250 of these jobs and would add 68mtpa to NSW’s coal output. Glencore’s Mount Owen expansion will add capacity but utilise the company’s existing workforce for operations.

McPhillamy’s (gold) and Hawsons (iron ore) are forecast to add 260 and 500 further direct operating jobs in 2022 and 2026, respectively. Santos’ Narrabri CSG Project will create demand for 200 employees in 2023, and Port Kembla Gas Terminal may require 50 employees in 2022.

Further underpinning its potential, NSW has an additional 17 prospective projects earlier in development, mostly in coal and critical minerals, that could roughly double this jobs forecast if committed.

Victoria, with 5,800 employees, represents 2.4% of the national workforce. The state has just two projects advanced in its pipeline – AGL’s LNG import terminal and APA’s Orbost Gas Plant, forecast to require 70 employees combined to operate by 2023.

Tasmania, with 1,900 employees, represents less than 1% of the national resources and energy workforce. It has two expansion projects (Dolphin and Renison), scheduled in the modelled period (100 employees).

To grow resources and energy jobs both states will need to convert new projects from early feasiblity into committed investment.

Victoria has 11 projects early in feasibility, which could create around 900 new jobs. Tasmania has two new mines and one expansion considered possible. However it is too early to predict workforce demand.