October 2019

Mining sector update: the year so far

  • By Richard Fortune MAusIMM, Director, Alto Partners

How the industry is faring in 2019

Overall sentiment for the mining sector is strong. Yet, as many of you know, the industry is currently experiencing ‘the best of times, and the worst of times.’ Many producers are debt free and enjoying record prices, while many explorers and developers are languishing as they wait for equity market sentiment to swing their way.

Despite shaky global markets, coal and iron ore have powered ahead, with gold the standout performer. Battery metals are experiencing a sharp correction, while base metals are subdued by global growth concerns. Some specialty metals, industrial minerals and fertilisers are garnering niche interest.

One of the big issues facing the industry is a shortage of suitably qualified and experienced mining professionals. Discussing this with a range of companies, large and small, some trends have emerged.

Age compression

It’s no secret the age of mining leadership is dropping, particularly in the majors. For example, it’s not uncommon for 30-somethings with commercial backgrounds and limited operational experience to be promoted to General Manager (GM), taking responsibility for substantial operations.

The GM role is a good example, because it is often the crossover point into executive leadership, where the leader transitions from managing areas they know well to recruiting and relying upon competent managers in areas outside their domain experience. The quality of the GM’s downline is crucial to their success.

One of the pressing challenges facing this new generation of GMs is that these downline roles are getting harder to fill. The pool of suitably experienced operational and technical managers atrophied in the downturn, and there is a mere trickle of graduates in the university pipeline.

Yet ageism persists, with young leaders wanting to recruit even younger managers. This is further limiting the pool of desired candidates, which is amplifying the experience shortage and leading to wage inflation in middle management (data and trends outlined in Alto Partner’s recent Executive Remuneration Report).

Experience on the bench

There is a growing pool of underutilised executives in their 50s and 60s; some there by choice, but many through restructures and the simple reality that there are less spots at the top of the organisation. Many of these candidates are consulting but looking for opportunities.

Underutilised, they wonder why the industry is screaming out for help, yet they are met with ‘sorry, you are overqualified’. It’s true that some will never work effectively under a younger leader, but there are many more who have retired their ego and would be excellent advisors or mentors.

Fresh thinking in a safe set of hands

A new generation of leaders are championing innovation, technological advantage and positive cultural change. Yet their success relies upon domain experience they may not have had time to accumulate.

I use the term ‘experience shortage’ rather than ‘skills shortage’. Experience is not something that can be microwaved and served up on demand. Skills can be developed quite quickly, but experience is forged in the furnace of operational pressures, challenging relationships, ambiguous data and difficult decisions. Experience keeps people safe, avoids costly errors and imparts success to the next generation.

It’s worth considering how the new leader should best access this experience, and how organisations can retain this experience in-house. Perhaps we need to think laterally with advisory boards, new roles and organisation structures that enable ‘fresh thinking in a safe set of hands’. 

A version of this article originally appeared at www.altopartners.com.au

AltoPartners provide executive search and leadership advice to boards through 54 offices across 34 countries. Richard Fortune is a Director of AltoPartners Australia, and he is a leader of the firm’s Natural Resources Practice.

Image: Mike Charlesworth/Shutterstock.com

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