Australia allows migrant workers for mining projects

Labour shortage sending wages surging
By James Grubel
||Last Updated: 05/25/2012

CANBERRA (Reuters) — Australia will open its booming natural resources sector to short-term foreign workers for the first time under a new scheme aimed at easing a chronic labour shortage that has sent wages, and companies' costs, soaring.

Australia's economy is riding high on strong demand for its natural bounty from the world's biggest commodities consumer, China, and other markets.

At a time of global economic gloom, immigrants are flocking to Australia's mines and oilfields. The Enterprise Migration Agreement (EMA) announced on Friday specifically clears the way for resources companies to use foreign workers to develop major projects as they struggle to find skilled labourers.

The EMA allows companies with projects worth more than A$2 billion to recruit skilled workers from overseas on fixed contracts.

The first agreement was granted to mining magnate Gina Rinehart's A$9.5 billion Roy Hill iron ore project, in the remote Pilbara region of northwestern Australia. Hancock Prospecting, a company owned by Rinehart, Asia's richest woman, will bring in 1,715 construction workers for a three-year period.

"There is no doubt the Roy Hill Project is one of national significance," Immigration Minister Chris Bowen told the National Press Club, adding that workers brought in under the EMA will have the same workplace rights as Australians.

With a population of 22 million and unemployment at 4.9 per cent, Australia does not have the skilled workforce to exploit its enormous metals and energy reserves quickly enough to satisfy its major customers.

The government estimates the resources industry will need an extra 89,000 workers by 2016 to meet demand, with a peak of 49,000 short-term construction jobs in 2014.

Sky-high wages

Edwina Shanahan, marketing director at Visa First in Ireland, which provides migration support, said the changes would likely boost interest, not least in Ireland, where unemployment is running at around 14 per cent, its highest level since 1993, and local wages are a fraction of those now on offer in Australia.

"Some of our guys out there are earning (A$)1,000, (A$)1,500 a day. To me, this is colossal money," she said.

"There will be people coming to us — the drivers, the scaffolders, who couldn't apply before. Now they will be eager to get going and work out there for a few years."

The Australian government has held immigration roadshows in the United States, India and Europe to ease a shortage that has meant mining workers earn A$155,000 a year, more than double the national annual average. Truck drivers in remote regions can command a six-figure salary.

Despite the lucrative wages, most Australians are reluctant to move to remote locations. This has led mining companies to rely on flying in workers from big cities for several weeks at a stretch before flying them out again, at great expense.

The EMAs will help reduce such costs, and Australia's Mines and Metals Association said around a dozen projects would be able to take advantage of the scheme.

Rinehart has long called for easier access to foreign temporary workers to help fill shortages.

Latest government figures show projects worth A$450 billion are planned for Australia, with A$260 billion worth of projects already under way.

The Roy Hill project, one of the biggest in the iron ore sector, plans to start shipping ore in 2014, with production expected to peak at 55 million tonnes a year, a level that would match production rates of Australia's third-biggest producer, Fortescue Metals Group.

In March, Japan's Marubeni Corp and South Korea's steelmaker POSCO and shipbuilder STX Corp said they would buy 30 per cent of the Roy Hill project for A$3.5 billion.

"The EMA provides an essential bridge of temporary workers to quickly take our project from the construction phase to the production phase," said a spokesman for the project.

Australia's labour unions, however, said the EMA would give foreigners jobs at the expense of Australian workers who are losing jobs in manufacturing industries.

"This is just sheer lunacy, sheer lunacy, that in a week when so many jobs have been cut, to give Gina Rinehart the massive pat on the back and free Christmas present they did today," Australian Workers Union boss Paul Howes told reporters.

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