Labour shortage at Mount Milligan pushes costs up
Thompson Creek Minerals says the additional expense will be between $ 100 million and $ 200 million
Construction costs at Thompson Creek Minerals’ $ 1.3 billion Mount Milligan copper- gold project have surged 10 to 20 per cent because of a shortage of skilled labour, Thompson Creek chief executive officer Kevin Loughrey said Tuesday.
“It is going to cost us between 10 and 20 per cent more than we originally had planned. While this is unfortunate it is, in fact, what is happening in the mining community right now. We haven’t seen any projects get done at the numbers people have projected,” Loughrey said in a telephone interview.
The Mount Milligan mine, 145 kilometres northwest of Prince George, has been under construction since 2011 and now employs 800 people.
Thompson Creek is now saying the cost of the mine will jump from $ 1.3 billion to 1.4 billion or $ 1.5 billion.
Most of that additional cost — $ 100 million to $ 200 million — is directly attributable to a shortage of skilled labour and professional engineers. Thompson Creek shares dropped 15 per cent on the Toronto stock exchange Tuesday, from $ 8.66 a share to $ 7.30 over the increased cost of developing Mount Milligan.
“Equipment has escalated somewhat, but what has really made it a problem is labour availability,” Loughrey said. “There are many mining projects throughout Canada and the world. The workforces for these kinds of construction projects are worldwide. You get your employees from all over the world and there is competition from all over the world.
The mining industry has been forecasting a shortage of workers for several years and in December, Energy and Mines Minister Rich Coleman said educational institutes need to shift their curricula to skilled jobs and professions to meet the “explosion” of jobs in the province’s developing resource sector.
Loughrey said the shortage is here already.
Worker turnover at the mine is 30 to 40 per cent, he said. Higher- paying jobs elsewhere in the world lure them away.
“Everybody is working hard but that kind of turnover and the scarcity of labour makes your productivity less than it might otherwise be,” he said.
To finance the cost over- run, he said Thompson Creek is going to require an additional $ 100 million to $ 200 million.
“The financing markets are attractive right now. We have a number of alternatives we could go,” Loughrey said. “We will explore all those alternatives and select the best one.”
Nowhere is the demand for skilled workers more evident than at the University of B. C.’ s Norman B. Keevil Institute of Mining Engineering, the largest mining engineering school in Canada. Department head Bern Klein said enrolment at the institute has doubled for both undergraduates and postgraduates. Demand is so high that engineers are scooped up as quickly as they graduate.
“There are more mining jobs than we have students,” he said. “It’s great for our students to have those choices but I know our mining companies are stressed by this.”
In Canada, an engineering grad can expect a salary ranging from $ 60,000 a year to $ 110,000 a year, he said. But Australian mines are offering starting salaries of $ 120,000 a year, which is luring some grads away from Canada.
He said the institute, which has 54 students enrolled in its undergraduate program, could easily take another 20 a year if it had the financial resources to hire more instructors. Teaching loads are high, he said.
Jobs, Tourism and Innovation Minister Pat Bell said the demand for skilled workers is hitting more than just the mining sector.
“If you talk to Canfor, West Fraser, Tolko or Conifex, or the folks up in the oilpatch, they will all tell you the same thing,” Bell said. “It extends beyond mining engineers to other areas as well, tradespeople, welders, electricians, those sorts of skills.”
He said the province is working with educational institutions to shift training resources from subjects where there are few jobs upon graduation to those where job demand is high. But even if education programs can be shifted by this September, it will be another two to four years before the new students are in the workforce, he said.
“In the meantime. we are going to have to rely on up- skilling of existing employees and in- migration from other provinces.”
One outcome from the jobs shortage is that a number of the workers who lost their jobs when the Babine Forest Products sawmill exploded and burned last month at Burns Lake, have found employment.
Thompson Creek has hired some of them at its nearby Endako molybdenum mine, which is in the final stages of completed a $ 650- million mill replacement. The new mill has reached commercial production in terms of throughput and the company anticipates it will have reached its mineral recovery target by the end of this quarter, Loughrey said.