April 14, 2009 / 8:05 PM / in 9 years

Canada mining sector seen facing labor shortage

TORONTO (Reuters) - Despite thousands of layoffs by Canadian mining companies in recent months, the industry will likely face a severe labor shortage over the next decade as retirements shrink an aging workforce, according to data released on Tuesday.

Research by the Mining Industry Human Resources Council, a non-profit agency jointly funded by the Canadian government and the mining industry, projects a labor shortfall of between 60,000 and 90,000 by 2017, said the council’s executive director, Ryan Montpellier.

“The mining industry’s quite cyclical ... but the demographics of the industry don’t change, regardless of where you are in that cycle,” Montpellier said in an interview.

Tight labor has hardly been the mining industry’s biggest issue of late, as a sharp year-on-year drop in metal prices, combined with a freeze-up of credit markets, has prompted mine closures and delays of construction projects.

Coming into 2008, soaring labor costs had been a big concern, as soaring metal prices drove mining companies to offer increasingly lucrative pay packages to attract miners, geologists and engineers.

“The path we were down was not sustainable because the labor market was just heating up so much,” said Montpellier.

“The fact that it’s cooled over the past 10 to 12 months, -- while people would argue it’s not an ideal situation -- it certainly has made the cost of labor more affordable.”

Canadian government data shows that payrolls in the coal, metal and nonmetallic mineral sector fell 11.5 percent in the second half of 2008 alone.

Montpellier said those jobs should quickly come back when the economy rebounds.

But even if the industry sees no growth over the next several years, it will still find itself short of workers as retirements take effect, he said.

“What we’re seeing is that there’s still a massive amount of people that will be leaving the sector over the course of the next five to 10 years,” he said.

“Maybe not all of them will need to be replaced, but a significant amount will.”

Montpelier said the industry currently employs about 147,000 people.

Reporting by Cameron French; editing by Rob Wilson

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