The State of the Geosciences: Minerals and Mining

NOEL WHITE

I am very grateful to the AGI for the opportunity to talk to you this morning on a subject about which I feel very strongly.  While listening to Dodd's talk I was struck by how similar the situation he described was. I have always regarded the oil industry and the minerals industry as being very different. But when he was talking about boon and bust scenarios and some of the things that were driving them, I was thinking this really is the same, very much what we are dealing with, especially right now.

My topic is the future of the geosciences from the minerals and mining perspective.  I am going to stick pretty closely, in general, to the questions that we were asked to address.

What are the current and future employment opportunities? The minerals industry is typically cyclical so we are quite use to having ups and downs, though not downs like we are having at the moment.  We are currently going through a very severe recession so the downs are definitely the order of the day, but the industry will recover. How do we know it will recover?  Well, simply because there is no alternative to mining.  Everything that we use in our civilization is dependent on material products.  You cannot make something out of nothing, and most material resources are mined in some way (and those that are not are grown).  So when economic activity resumes, demand for minerals must inevitably also resume.  Production depletes resources that will require replacement by exploration.  Production and exploration both need geoscientists.  So the outlook is that the demand for geoscientists has not gone away.  It is just suffering a temporary hiccup, although a very painful one.

There will continue to be demand for well-trained geoscientists in the minerals industry, however, the demand will remain cyclical.  The overall growth will remain slow.  We can already see problems, for instance there is already a shortage of well-trained specialist geophysicists and geochemists.  We do not yet see a shortage of geologists for the minerals industry, but if current trends continue, it is not at all out of the question that we may face that in the future.  In fact, at a talk I gave about 12 months ago, I asked whether in the future the North American mining industry would have to get its geoscientists from Russia and China. That could happen  if they are not prepared to put more effort into supporting training and recruiting geoscientists in North America.

What job skills are required?  Well, in looking at the question of what explorers and mine geologists do, I came to the conclusion that what we do has not changed significantly in the past 20 years, but how we do it has changed a great deal.  What this leads to is that the attributes and skills that made someone a good geoscientist 20 years ago are still the same attributes that make them good today.  The critical basic qualities remain the same.
What do we do?  We collect data, we interpret data, we integrate it, we make predictions based on it, and then we test the predictions, and hopefully that leads to success.  More often it does not so we start again and work our way back through the process.  In the most fundamental terms, that is the way we do our jobs.  So the crucial basic qualities that we look for in people are energy, intelligence, imagination, and an entrepreneurial spirit.  Note, I do not mention familiarity with phase diagrams or other esoteric specialist technical issues because the most important qualities always have been and I expect always will be personal attributes.

What do we want in staff?  We want excellent technical skills.  We want people who are well and widely trained in the geosciences.  We want people who have the ability to integrate data; that are multi-skilled. We want them to be able to think across disciplines and across data sets.  We want geoscientists with effective computer skills, but they do not need to be computing experts. Universities ask questions about whether they should include specialized computing courses.  No, teach your students to use the basic, established tools that are already there.  That is 95%, maybe 99% of what is required.
We need people with cultural and language skills because we work in a global industry and people have to be able to deal with different cultures. One of my challenges is I do not have language skills beyond the Australian variety of English and a touch of very bad French.  So while I am telling our people to get out and acquire language skills, I have had to struggle around the world with a lack of that.  I have to say that most of our staff show remarkable tolerance for my lack of language skills.  It is very depressing though when I meet someone from a third-world African country who speaks eight languages, and there are lots of those.  One has to ask who are the advanced people?

We want people who have independence, self-reliance and self-motivation because this is a business where people have to get out and do things.  So it is very important that they have that ability, plus energy, optimism, and commitment.  The minerals industry, and particularly the exploration business lives and dies on optimism.  We want people with intelligence and imagination and entrepreneurial spirit.  So the last three once again are back to personal attributes; most crucial.
So what kind of academic training is required?  When you are recruiting the qualifications that you look for in graduates are determined by the market.  And of course you want the best that are available in the market.  It is difficult to get and keep a job if you are underqualified for the particular market.  In North America, I would say that for a good job that you have any hope retaining, you need at least a master's degree.  Teachers should be getting this message through as clearly as possible to your students: that if they are to get the good jobs and have a reasonable expectation of holding them, then they need to be competitive in the marketplace.  Already this morning people have emphasized, as I emphasize, that when we are recruiting we are looking for the cream. We are not looking for the also-rans; we are looking for the best.  So one of the challenges for students is to demonstrate that they are among the best.  But notice the best is determined not in terms of pure academic criteria, it is determined on personal criteria as well.

There is a major problem that companies and spokesman for companies have quite different views on what they want.  This has been a difficulty for the universities, I think, in dealing with minerals companies.  Some companies say we want you to produce really well trained, broadly trained geoscientists and we will take them and give them the specialized skills that we need for whatever job we give them.  On the other hand, you have other companies that say, "This is terrible, you are sending us students and they don't even know how to take a geochemical sample the way I want it done.  They don't know how to supervise an IP crew the way I want it done.  This is terrible.  This is some kind of failing in the training you are giving."  I think that division in the industry's attitude is a serious problem for the industry and it is one that we have to address because if the universities are to deliver what we need, we have to be sending a much clearer message.

Where will the jobs be located?  It is an international business; the jobs can be anywhere.  What tends to happen is that companies keep a core of trusted staff.  When we are moving into a new area we send those people to establish operations and hire and train recruits in those regions. Ultimately they will move out and operations in that area will be run by the locals.  So mobility is essential.  It used to be, when I was recruiting in Australia, that if we hired out of Queensland, the sunshine state, it was very difficult to get those people to move because they had been trained from birth that this was God's own country and anywhere else had to be worse.  So it became our policy that when we hired a graduate from Queensland, right away they were moved.  Sever the umbilicus immediately, when they are expecting to have to move.  Once you did that, they were okay. I put it to you that there is a significant problem in the U.S.: we see a real dichotomy, that there are American geologists that have a world view and get out very energetically.  There is also a significant proportion that are very reluctant to step out.  They are remarkably parochial and really do not take on the challenges of the global business.  We need people who have that global attitude.

This slide shows the nationality of our BHP Minerals Discovery Group, which elsewhere would be called an exploration group.  There are 33 nationalities for a total of about 240 geoscientists.  This is just our explorers, it does not include geoscientists in our mines or in our research groups and so on.  Note that in the pie diagram you can see that over 50% come from traditional areas, but that is decreasing because those traditional areas of Australia and North America and perhaps Europe, now receive only about 25% of the budget.  So that proportion of staff coming from traditional areas is bound to change.

What are the most important issues that are affecting geoscience employment trends?  Well, of course the long-term decline in commodity prices, even ignoring the short-term falling off a cliff.  There is a very pronounced long-term decline in commodity prices.  Changes in technology and efficiency largely compensate for that, but it has the result that there are lower profits, certainly lower margins, and that leads to lower budgets.  We also see an increasing use of technology, which is designed to speed up the discovery process and to reduce costs.  We see a tendency towards outsourcing all but core activities to reduce costs.  So all that is having an impact on the employment of geoscientists by mining companies.  We also see some major restructuring in the industry involving mergers in the minerals business and also moving towards leveraged exploration.  The question is whether this is a permanent change or a short-term aberration. I think it may be something unpleasant that we have to live with.

What are the positive and negative national and global policies and events that are a problem?  The negative ones: the economic crisis has been disastrous, absolutely disastrous for us.  The consequence is that budgets are being slashed; exploration spending around the world has decreased by at least 40% in 12 months. There is also a problem with short-term economic policies that are driving long-term businesses. People are focusing on the need to survive now, so they do not worry about what they are going to need next year.  How can you have a sensible policy relating to developing future staff if you are only focused on how you survive this year?  We also had a problem throughout society in general, that there are cargo cult mentalities that are driving minerals policy and legislation: “Yes, we want cheap metals, but no, we don't want nasty mines.”  Some people have to realize you cannot have it both ways.
 On the positive side, we are still here.  That was all I could think of.  Don't knock it: it may not be much, but it could be a lot worse.  This diagram shows the distribution of world minerals exploration expenditure, $2.38 billion U.S. dollars in 1998, and that is probably at least 40% to 50% lower than it was 12 months ago.  So it has been a major change.  Notice the traditional areas, as I referred to North America and Australia.  The United States, Canada, and Australia add up to 37%.  They use to be about 75%.  So there has been a major swing in the geographic focus of minerals exploration, and this of course has major implications for future employment.
This slide shows commodity prices normalized for inflation plotted for 1970 to 1997, and here is the big problem we face.  It is very spiky, but nevertheless you can see that the trend over that period is for all commodity prices to go down. I can show you information over 50 years and the message is the same.  All these people who are screaming about how the world is running out of resources, I would like to hear them explain how come we are supposedly running out of resources and yet they get cheaper and cheaper despite the fact that we produce more and more.  Something does not add up.  The consequence of this is that every company struggles to maintain shareholder return, so it is managing its budget more and more carefully.

At this stage I normally would be thumping the table, beating people over the head about what a terrible job they have done.  To have an audience that probably largely agrees with me is a refreshing change.  The fact is that neither industry nor academia has its act together.  We have major problems to face and it is made much worse by such things as a view in industry that we have a right to expect that the universities should give us what want.  But then when you ask industry what industry wants, it cannot really tell you and you get conflicting answers.  Unfortunately, industry does not even take responsibility for its own future by recruiting, by training and planning, by collaborating and supporting.  These are expectations and behaviors that do not connect.  Short-term thinking dominates and this is completely inconsistent with maintaining the long-term viability of the industry.

But problems are not all on the industry side.  There is always a problem in talking about universities because as I go around the world everything is different in different places.  You talk to one university, but then in the next city the outlook and attitude is entirely different.  So there is always a danger of offending people that you do not want to offend, and the people you do want to offend probably are not listening anyway.  But there is a problem that many universities are still ivory towers.  The training offered, in some instances, is too narrow, and in some instances too broad.  There are universities where graduates come out knowing everything about nothing or universities where graduates come out knowing nothing about everything.  Universities have to recognize that education is a preparation.  It is not an end in itself and there is a need to prepare students for their future.  I am not for one moment advocating that universities should be trying to train students for specific jobs.  I am a firm believer that the universities should give the good foundation and it is the responsibility of the company to then make it clear to the graduate exactly what we expect of them and give them the training to allow them to do it.

I have spent a large part of the past ten years giving training courses in many different parts of the world.  In most universities I think there is little awareness of what graduates do when they join the real world.  What is really involved in jobs?  There has been too little discussion between the universities and industry about what real skills are required to be developed.  The universities need to educate themselves.
It is clear that industry and academia need to get together.  They need to discuss and cooperate and mutually support.  Hopefully, together we may survive, because I think that if we stay apart, ultimately we are both going to fall.  It is a particular pleasure to be at this meeting because really that is the issue that this meeting is all about.  I believe very much that these things are extremely important to all of us so I look forward to some very successful outcomes of the discussions over the next couple of days.  Thank you very much.