1. EMERGING SKILLS SUMMIT 2020 AND BEYOND A Critical National Challenge “SUSTAINABILITY OF THE MINERALS SECTOR IN AUSTRALIA, SKILLS NEEDS IN A GLOBAL INDUSTRY” Don Larkin, CEO, The AusIMM Tuesday 22 November 2005, Sydney NSW

2. “DISCIPLINE AREAS OF NATIONAL IMPORTANCE WILL BE PROTECTED WHERE THEY ARE OF CONTINUING RELEVANCE” Draft National Strategic Principles for Higher Education – September 2006 Department of Education, Science and Training

3. 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

4. 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 Commodity GroupsCentralisation of Ownership with World Wide Commodity Groups Emerging Sources of Supply – Increasing CompetitionEmerging Sources of Supply – Increasing Competition Increasing Demand from China, India, AsiaIncreasing Demand from China, India, Asia Corporate and Social Responsibility – High on the AgendaCorporate and Social Responsibility – High on the Agenda

5. PROFILE OF THE MINERALS SECTOR IN AUSTRALIA 2003-4 – 8% of GDP - $500 Billion directly to Australia’s wealth over the past 20 years2003-4 – 8% of GDP - $500 Billion directly to Australia’s wealth over the past 20 years Exports - $42 Billion ($67 Billion 2004/5) representing 35% (37% 2004/5) of (Australia’s total merchandise exports and 28% of total exports of goods and servicesExports - $42 Billion ($67 Billion 2004/5) representing 35% (37% 2004/5) of (Australia’s total merchandise exports and 28% of total exports of goods and services Exports of mining technology, equipment and services of approx. $2 Billion (60% of the mining software used in operations around the world)Exports of mining technology, equipment and services of approx. $2 Billion (60% of the mining 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 1967 – built 26 towns, 17 ports, 26 airfields and over 2000 km of railway line.Significant infrastructure development – since 1967 – built 26 towns, 17 ports, 26 airfields and over 2000 km of railway line. Source: MCA Annual Report 2004

6. 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

7. 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?

8. 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.

9. Implications of an Ageing Australia, Productivity Commission April 2005 THE CHANGING STRUCTURE OF AGE

10. 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

13. New entrants to the labour market Diminishing Access to Labour 1980’s & 1990’s 2020’s and beyond Access Economics

14. Potential to maintain engagement of older workers Need to engage more younger workers. Source: ABS, 2001 CURRENTPROJECTED

15. 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

16. THE MINERALS SECTOR AND HUMAN CAPITAL Impact of Cyclicity, Increasing Technology and Economies of Scale There is Little Forecasting of Skills Needs – What the Mine of the Future May Look Like Number of Minerals Related Courses Decreasing Increase in Demand then Increase Price for Labour Total Demand only Small Proportion of SET Graduates.

17. Current Shortages Review of Attraction and Retention Strategies Providers of Tertiary Education Ageing, Age Heaping, Knowledge Management Increasing Number of Contractors and Consultants who also Need to Plan and Diversify. THE MINERALS SECTOR AND HUMAN CAPITAL (cont.)

18. IMPLICATIONS Minerals Sector is Nationally Important Global Industry – Global Choices – Competition Blind Faith in a Perfect Market Unrealistic Market Failures – Market Interventions Need to Build on our Strengths Attract Global Investment for Sustainability Skills Base Essential

19. SKILLS SHORTAGES GOVERNMENT -Embrace Minerals Sector -Improve Incentives for SET Opportunities in Primary and Secondary (Teaching and Attraction) -Move SET Minerals Related Courses to Higher Clusters for Funding (at least equivalent to Agriculture). -Catalyst and Support for Breakthrough R&D Through the CSIRO, CRC’s, Universities, etc. - Exploration through Cover - Mineral Processing – Resources to Reserves - Mining Autonomous Mining Systems -Continue Highlighting Ageing Workforce

20. INDUSTRY -Target Under Employed Sectors -International Recruitment -Understanding and Catering for New Generations, Flexibility and Diversity. -Provide Career Opportunities Information into Government Initiatives -Research into Future Skills Needs -Longer Term Commitment to Human Resources and Visioning for the Future -Research and Understand Implications of Ageing Workforce SKILLS SHORTAGES (cont.)

21. EDUCATION SECTOR -Provide National Solutions – R&D, Curriculum, Teaching (ie. MTEC) -Same as for Industry above with regard to Attraction and Retention. ALL – INCREASE PARTICIPATION RATES -Improving Educational Attainment -Delaying Retirement -Improving Childcare Facilities -Undertaking Welfare Reform -Improving Health SKILLS SHORTAGES (cont.)

22. 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.

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