Dearth of Explosive Experts to Drivers Hurt Top Australia Miners

(Bloomberg) -- From explosives experts to truck drivers, labor shortages are becoming an increasing challenge for mine operators across Western Australia after the state abandoned plans to end Covid-related border controls.

The state's resources industry, which is a crucial source of revenue for Australia, relies on flying in workers to remote sites. Many of the workers come from other states and it has become increasingly difficult for them to travel given border restrictions enforcing quarantine on arrival in Western Australia, which is more than three times the size of Texas and comprises mainly of barren Outback.

The impact is also being felt beyond the mining and energy industries, with some top executives based in the Western Australian capital Perth signaling they intend to leave the state permanently. They're exasperated by Premier Mark McGowan's decision this month to back-flip on a plan to reopen domestic and overseas borders on Feb. 5, extending an isolation from the rest of the world that began at the pandemic's start two years ago.

Read: Australia's Last Covid-Zero State Scraps Plan to Finally Reopen

McGowan raised the ire of companies suffering labor shortages and cost rises due to supply-chain blockages by saying he will keep the state isolated from the rest of Australia indefinitely. He says that's needed to support his bid to keep out the omicron outbreaks that are hitting eastern cities such as Sydney and Melbourne.

“It's definitely having an impact,” Elizabeth Gaines, chief executive officer of Fortescue Metals Group Ltd., said in an interview last week about the border closure. The iron ore miner reported a 20% rise in costs over the past 12 months, driven in part by increased labor overheads.

Many east coast-based workers had delayed returning to work for Fortescue on the expectation the Western Australian border would reopen on Feb. 5. There was some uncertainty on when they would now return, she added.

Other miners are also getting hurt. BHP Group Ltd., the world's largest, reported that temporary rail labor shortages caused by the border restrictions had been a headwind to production in the December quarter.

Gold Road Resources Ltd., which shares the giant Gruyere gold mine in a 50:50 joint venture with Gold Fields Ltd., said December quarter production missed expectations partly as a result of “labor availability-related scheduling delays.” Specifically, Gold Road referred to difficulty in sourcing key personnel for blast work at the mine.

Another gold producer, Ramelius Resources Ltd., singled out shortages in the haulage industry as hampering its activities. Its costs also rose more than 3% in the December quarter.

And on Monday, lithium producer Pilbara Minerals Ltd. said its guidance for production in fiscal 2022 was under review after December quarter output missed expectations.

Key Personnel

The extended border closure was “exacerbating the ability of all mining companies in Western Australia to access key personnel in construction, production, and maintenance roles,” Pilbara Minerals said in a statement.

Meanwhile, national carrier Qantas Airways Ltd. has said it will reduce its planned domestic capacity by about 10% from Feb. 5 through to March 31 due to McGowan's border decision. There have also been reports of pilot shortages at the ports servicing the Pilbara iron ore region.

Some top executives are voting with their feet. Rob Scott, head of Perth-based conglomerate Wesfarmers Ltd. which owns retailers such as Coles and Bunnings Warehouse, has signaled his intention to leave the state.

And Richard Goyder, chairman of Qantas and Woodside Petroleum Ltd., told the Australian Financial Review in an interview that he plans to leave the state indefinitely, adding: “I just feel I want to take control of my life.”