Geologists in the Age of Commodity Turmoil

(As published in Australian Institute of Geoscientists (AIG) News, No. 123, February 2016)

By: Erik Ronald
Mining Geology HQ

6 February 2016

Being a mining geologist, whether with a junior explorer, major producer, mid-tier company or a private consultant, tends to be a challenge even when the global economy is firing on all cylinders. Unfortunately, the bad news keeps rolling in these days with the recent data including AIG stating 42% of Australian geoscientists are unemployed or under-employed (Waltho, 2016) and the AusIMM publishing their annual employment survey stating 20% of exploration geologists in Australia are currently unemployed (AusIMM, 2015). It’s no better in other parts of the world evidenced by stating the U.S. is experiencing its worst year for mining since 1986 (Els, 2016). So the facts are: jobs are scarce, most commodities are in over-supply, and investment is non-existent. It’s certainly not a pretty picture for mining or being a mining geologist in 2016.

Not to be too pessimistic, but geologists, especially exploration geologists, tend to be the first staff let go when times get tough. If you stop and think about it, geologists should be one of the key roles kept in tight times as they have the unique skill set to truly add value to the company or operation. It’s the Mining Geologist’s role to help a business when prices plunge by optimising mining areas and grade to maximise NPV. It’s the Exploration Geologist’s role to ensure successful discovery and generate a robust project pipeline for future business development. It’s the Resource Geologist’s role to ensure grades, tonnages, and Mineral Resources are sound to allow for optimisation of the mine plan. So with that said, why are geologists the first to get the boot?

There are likely some conspiracy theories out there (personally, I like The Brotherhood of Evil Mine Engineers theory) but the reality appears to come down to a few items: 1) Geologists are not trained to think in business terms, 2) they rarely have a true appreciation of how they contribute to the mining value-chain, and 3) there are not enough professional geologists at the executive level in mid- to major mining companies resulting in a de-emphasis of orebody knowledge in decision making and lack of mentoring opportunities for company geoscientists.

On the first point, when browsing university curriculum for a Bachelor’s or even Master’s in Geology, you’ll be hard-pressed to find an economics or management course. This is in stark contrast to most Mining Engineering programs let alone Business schools. Some may argue that Geology is a science therefore the courses need to be focused on the maths, chemistry, physics and upper-level geology courses, which is certainly true. Unfortunately as a result of the pure science requirements, there are a lot of very bright young geologists in industry who honestly don’t have a clue about business drivers, capital management, macro- and micro-economics nor a clear understanding of how a geologist directly impacts a company’s bottom line.

To my second point, I find it the unfortunate exception when a mine geologist understands exactly how the geology of an ore deposit impacts saleable product and how it affects customers’ processes or end-products. This is true for coal, industrial minerals, iron ore and even in the base and precious metals world. Understanding and communicating the downstream impacts geology has on the value-chain can make or break a business when commodity prices fall and margins tighten. A base metals example would be the geologic understanding of a porphyry copper deposit in which small increases in anhydrite/gypsum or talc can have major detrimental effects on concentrate processing and flotation recoveries (added cost per unit). Additionally, the distribution of fluorine and arsenic in the orebody is critical in smelting as concentrations above a set threshold will yield incremental penalties (lost revenue) or product rejection (more lost revenue and unhappy customers). These deposit attributes can and should be clearly understood at the exploration and evaluation stage, not first realised after the ore enters the mill.

Lastly, the lack of geoscientists at upper management levels across the industry is worrying to say the least. During the past boom, we witnessed numerous operational issues and acquisition errors that were likely understood by on-the-ground geologists but not effectively communicated to the ultimate decision-makers at the executive level. The lack of geological understanding at the executive and board-levels has resulted in the de-emphasis of geology in mining along with creation of a “chicken and the egg” scenario for future leaders. An increase in executive-level mentors could assist junior or mid-career geologists navigate into management and potentially help balance the engineers and finance personnel which traditionally dominate leadership roles due to their better understanding of the business. I believe success in the mining game is achieved when a diverse set of experiences including geoscience, engineering, finance, corporate law and operations all hold equal voices in board-level discussions.

In summary, I encourage all the mining and exploration geologists out there to continue to excel in mineralogy, mapping, modelling, ore control and reporting, and appreciate this is your expertise and why you were hired. But, without sound business understanding, market context and the ability to communicate the value you bring to your company, we’ll likely see a growing number of geologists left on the sidelines until the next boom when the industry comes screaming for more discoveries. So go spend time at the mill with your Mets, talk to the accountants, visit your sales department, befriend your business analyst, challenge management and most importantly understand your business. Hopefully we can help change this trend for the better and come out the other side of this downturn a little wiser this time around.

References cited:

AusIMM, 2016, “The AusIMM Professional Employment Survey Report 2015 – An Analysis of Professional Employment in the Mineral Sector”, AusIMM, Oct., 2015.

Els, F., 2016, “The Worst year for mining in the U.S. since 1986”,, Jan. 2016

Waltho, A. 2016, “Geoscientist Employment in Australia Continues its Slide”, Australian Institute of Geoscientists (AIG) News, Feb. 2016.

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Posted in Mine Geology, Mineral Exploration, Resource Geology.

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