South32 boss Graham Kerr says mining boom is pushing up wages

Cost are rising across the mining industry as the renewed boom in the iron ore and gold sectors puts pressure on other sections of the industry.

South32 chief executive Graham Kerr: ‘There is no doubt we are seeing a jump in salaries for highly technical roles.’ Picture: Colin Murty

Cost are rising across the mining industry as the renewed boom in the iron ore and gold sectors puts pressure on other sections of the industry, according to South32 boss Graham Kerr.

Speaking after delivering South32’s half-year results, which included a stronger outlook for the diversified miner’s base metals output, Mr Kerr told The Australian cost escalation in wages — particularly in technical and specialist roles — was again on the rise, putting pressure on costs across the Australian industry.

“There is no doubt we are seeing a jump in salaries for highly technical roles. If you’re an iron ore or gold producer you’re making lots of money and you can spend more. So we are starting to feel the pressure in that space,” he said.

Despite the fact that WA was the epicentre of the gold and iron ore boom, Mr Kerr said South32’s alumina operations in WA’s South West were not yet feeling the pinch, as its drive-in, drive-out workers were as much focused on lifestyle as the money on offer.

But he said fly-in, fly-out operations across the country were feeling the pinch from wage competition from WA miners, as well as bulk coalmines in Queensland and NSW.

“If you’re running fly-in, fly-out operations you’re a little more exposed, because people only do it for a period of time — and they also can just fly from one place to another,” he said.

“For highly technical roles like mine planning, or on-the-ground engineering capability, you’re probably feeling that pressure across Australia as people like Fortescue, Rio and BHP have large sustaining or new growth projects they’re bringing into play. So that is a concern for us — those technical roles are certainly being targeted.”

South32 declared an improved US1.4c-a-share dividend on Thursday despite profits at the diversified miner slumping 46 per cent in the first half of the financial year.

The company declared a $US53m ($68.4m) net profit for the half, with underlying earnings before interest and tax off 32 per cent to $US170m in the face of the pandemic’s impact on base metals markets.

Revenue for the half fell 8 per cent to $US2.94bn, compared with the first half of the previous financial year.

Mr Kerr said the company was poised for a strong finish to the 2021 financial year, however, as its markets improve on the back of talk of the arrival of a new commodities super cycle.

“We are off to a strong start in 2021, as we continue to build on our recent operating performance. Our net cash has increased from $US275m on 31 December to $US452m at the end of January, and we are now seeing a rebound in demand from markets outside of China for some of our key commodities, that is underpinning a recovery in prices,” he said.

“With this, our business is well placed to benefit as the global economy recovers, enabling us to deliver value for all our stakeholders.”

South32 shares closed down 1c to $2.70 on Thursday.