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AUSTRALIAN VENTURE CONSULTANTS PTY LTD

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Western Australian Resources Industry

Construction to Operations Phase

Workforce Study

An investigation into the workforce dynamics and implications for skills,

training and education as major projects transition from a construction

phase to an operational phase

June 2014

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CONTENTS

Executive Summary ................................................................................................................................... 5

Background and Purpose ...................................................................................................................... 10

Background ........................................................................................................................................... 10

Study Limitations ................................................................................................................................... 12

Current Resource Project Construction Pipeline and Workforce Estimates ................................. 14

Transition from Construction to Operations......................................................................................... 16

Project Development Cycle .............................................................................................................. 16

Impact on Resources Company Workforce ................................................................................... 19

Impact on the Construction Workforce ........................................................................................... 21

Resources Project Construction Workforce Dynamics ..................................................................... 24

Demand and Supply ........................................................................................................................... 24

Nature of the Resources Construction Workforce ......................................................................... 25

Relationship between the Mining and Construction Industry Workforces .................................... 35

Revenue and Employment ................................................................................................................ 35

Demographic Comparison ................................................................................................................ 43

Education and Training Comparison ................................................................................................ 45

Key Occupations .................................................................................................................................. 50

Assessment of Workforce Commonality .......................................................................................... 53

Lessons from the Recent Construction Phase..................................................................................... 55

Implications for Skills, Training and Education .................................................................................... 57

Conclusions ............................................................................................................................................... 58

Appendix 1 Overview of Western Australian Resources Industry Construction Projects ......... 59

Oil and Gas Projects ............................................................................................................................ 59

Iron Ore Projects ................................................................................................................................... 61

Ammonium Nitrate, Nitrate and Urea Projects ............................................................................... 64

Gold Projects ......................................................................................................................................... 64

Resources Infrastructure Projects ....................................................................................................... 65

Appendix 2: Construction and Operational Workforce Estimate .................................................. 67

Appendix 3: 2012-13 Submissions to Infrastructure Australia ............................................................ 69

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Disclosure and Disclaimer

This document has been prepared by Australian Venture Consultants Pty Ltd (ACN: 101 195 699) (AVC). AVC

has been commissioned to prepare this publication by the Resources Industry Training Council (RITC) and has

received a fee from the RITC for its preparation.

While the information contained in this publication has been prepared by AVC with all reasonable care from sources

that AVC believes to be reliable, no responsibility or liability is accepted from AVC for any errors, omissions or

misstatements however caused. Any opinions or recommendations reflect the judgment and assumptions of AVC

as at the date of the document and may change without notice. AVC, its officers, agents and employees exclude

all liability whatsoever, in negligence or otherwise, for any loss or damage relating to this document to the full extent

permitted by law. Any opinion contained in this publication is unsolicited general information only. AVC is not aware

that any recipient intends to rely on this document or of the manner in which a recipient intends to use it. In preparing

this information it is not possible to take into consideration the information or opinion needs of any individual

recipient. Recipients should conduct their own research into the issues discussed in this document before acting

on any recommendation.

AUSTRALIAN VENTURE CONSULTANTS PTY LTD

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Interviewees

While this study was based primarily on the review of published data and literature, the

following experts provided key input and guidance to the study.

Andrew Blitz, Business Development Manager, Western Australian Local Government

Association

John Galvin, Executive General Manager, Georgiou Group

Bindi Gove, Government and External Affairs Manager, BHP Billiton Petroleum

Kiersten Gregg, General Manager Human Resources, Rio Tinto Iron Ore

Kapila Karunaratna, GM Technical, Mitsubishi Development

John Phillips, Executive Manager Workplace Business Solutions, Western Australian

Local Government Association

Jeanette Roberts, Australian Chair, Kvaerner

Justin Willis, Practice Leader Rail and Crawler Mounted Mobile Machines, SKM

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Executive Summary

Background

The recent resources industry investment phase has involved a total investment of A$457 billion

(at current prices) in new resources industry capital in Australia since 2004, an average of

approximately A$40 billion per annum over that period. Approximately 55.5 percent of this

investment has been associated with Western Australian resources projects, particularly in the

iron ore and oil and gas sectors. Presently, there remains a pipeline of 48 new resources

projects with an associated capital investment of A$229 billion that are currently under

construction or have been committed to by their proponents.

This has had a dramatic impact on demand for a range of skills from the project proponents,

EPCMs managing the construction of those projects and their contractors, which have been

sourced from construction labour markets across Australia and overseas.

The resources industry is now passing through peak investment phase, with many large

resources industry construction projects transitioning into an operational phase. As such, the

size of the total workforce associated with these projects as well as the occupational structure

of that workforce will change, focusing on the operational human resource requirements.

Transition from Construction to Operations

When a new resources project transitions from the construction phase to the operational

phase the size of the total workforce associated with the project decreases dramatically. The

degree to which the size of the workforce decreases is unique to the nature of the construction

project and the operational specifics of the project. Anecdotally, the operational workforce

can be:

As low as 4 percent of the size of the construction workforce in the case of oil and gas

projects;

Around 35 percent of the size of the construction workforce in the case of iron ore

projects;

Approximately 10 percent of the size of the construction workforce in the case of

ammonium, ammonium nitrate and urea projects;

Around 7 percent of the size of the construction workforce in the case of gold projects;

and

15 precent of the size of the construction workforce for port oriented resources

infrastructure projects.

In most cases, the skills profiles have limited commonality, particularly in the case of the oil and

gas industry. In the mining industry, occupational skills are skewed heavily toward specialist

skills such as drillers and shot-firers, metal fitters and machinists and truck drivers). In

occupational skills where there is commonality such as electricians, the operational resources

industry needs in terms of workforce numbers are very small compared to those o