After a few grim years where the big miners were scaling back production and sacking workers in their Queensland mines, the same companies are now frantically ramping up their output and putting on more staff on to take advantage of record prices. Coal is back in business.
Queensland mining jobs have increased by 10,157, or 17 per cent, to 68,778 in the past year, while mining hubs such as Mackay and mining towns such as Moranbah, Nebo and Dysart are now buzzing again with workers in high-vis vests.
“We don’t like to call it a boom any more,” Mackay Regional Council Mayor Greg Williamson told The Australian Financial Review.
“This is more solid, sustainable growth. It’s not the GFC [global financial crisis] any more. We call it the ‘Good Sustainable Future’, or GSF.”
At the height of the last coal boom, there was a chronic shortage of workers in Mackay as teachers, police officers and council workers headed west to earn six-figure salaries driving trucks at mines in the Bowen Basin, about two to three hours away.
It was so bad at one point, the local McDonald’s in Mackay shut down its drive-through because it was unable to find enough staff.
Mr Williamson said the latest upsurge has been manageable so far, with Mackay’s unemployment rate falling to 3.34 per cent as the North Queensland city – down from 10 per cent just after the global downturn – as the mining service city comes back to life.
There are currently 3000 job vacancies in Mackay, including 548 mining jobs, with council approving another 300 new housing lots this year, compared to zero for the previous year.
“Business confidence has returned to the region and it’s been underpinned by a resurgence particularly in the resources sector, but there’s also been a burgeoning in the tourism sector which we probably haven’t seen for 15 years,” Mr Williamson said.
“We could probably accommodate another 5000 to 10,000 people in our community tomorrow without having a blip on our infrastructure provision. But our worst fear is the pressure on not being able to fill enough jobs.”
Hastings Deering Central Queensland area manager Daniel Viero said the company – which supplies big Caterpillar trucks and other equipment to mining companies – had hired up to 100 new staff in the past year. There are still another 80 vacancies in their Mackay, Emerald, Rockhampton and Gladstone work sites.
“We scaled back our work significantly after the last boom, but we have vacancies now for mechanically-minded trade assistance, diesel fitters and auto-electricians. It’s challenging to fill the roles now,” Mr Viero said from his Mackay headquarters.
Wages have, so far, been kept under control with Hastings Deering staff recently securing a new enterprise agreement of a 11.5 per cent increase over the next three years. But employers around the region are worried about a repeat of the worker drain again to the mines.
“This EBA is market-leading, it’s exceptional. But we had to do this to remain competitive in the market to reward and recognise staff that were here during the downturn when wages were on old,” Mr Viero said.
The big miners are also scrambling to hire more staff to make the most of the favourable market conditions. Coal exports have increased by $3.3 billion to $33.5 billion, or almost 11 per cent, according to the latest trade data from the Queensland government.
Metallurgical coal – used to make steel – topped $US207 last week, while lower-quality thermal coal, burned to produce electricity, is still sitting above $US1.12 – well up on prices from 12 months ago.
The coal sector landscape has also changed since the last boom, with mining giant Rio Tinto divesting its coal assets and a range of new players coming onto the scene.
Anglo American, which was looking to sell its Australian coal assets between 2015 and 2017, is now reaping the benefits of its decision to hold onto its five metallurgical coal mines. (It divested its three thermal coal mines, Foxleigh, Callide and Drayton).
Since May 2017 when the company announced it was ditching its divestment processes in Australia, Anglo has increased its workforce in its metallurgical coal business in Australia by 850. It currently employs about 4800 people in Queensland and plans to employ a few hundred more this year.
Ango American metallurgical coal business chief executive Tyler Mitchelson said the company had cranked out record production from its mines over the past few years.
“Moranbah North five years ago was producing about 5 million tonnes per year and with the same equipment and mine it recently produced over 10 million tonnes over a 12-month consecutive period,” he said.
“Our focus is on creating more value from our high-quality assets, including through leveraging our scale in underground coal mining and growing our position in the Metcoal market with low-capital options.”
While the big miners perhaps lost focus on efficiencies in the last boom, they sharpened their pencils and boosted productivity during the downturn – traits they want to keep going as the sector experiences its next upsurge.
Mr Mitchelson said Anglo had 239 vacancies at its five metallurgical coals mines (the Grosvenor, Moranbah North, CapCoal, Grasstree and Dawson) and were looking to employ more trainees, apprentices and graduates to help meet demand.
BHP Mitsubishi Alliance (BMA) in Queensland has more than doubled in the past two years, according to BMA Asset President Rag Udd.
“This solid growth has meant that we have been able to increase our investment in Queensland, more than doubling our intake of apprentices in the past two years and investing in our local communities,” he said.
“A healthy resource industry is good for the Queensland economy. It’s vital for the ongoing prosperity of the resources industry that we can maintain reliable relationships with our suppliers.”
Fellow coal miner Peabody Energy has hired over 200 new employees in Queensland this year, to match the 180 new employees in its NSW operations.
Peabody’s Australian president George J Schuller Jr said the mining sector, known for paying above-average salaries, was powering jobs growth back to regional Australia.
He said the company’s mine recruiting activity this year had focused on increasing the diversity of the workforce with several campaigns opening up opportunities to people who were new to the industry as well as targeting unskilled workers.
“We know a diverse workforce makes for a stronger team and employing people from different industries by targeting unskilled workers and people from non-mining backgrounds, we are bringing fresh eyes and new ideas to how we approach our work,” he said.
“Peabody tries to hire locally whenever we can. We know that over time people have moved away from smaller regional areas and we are proud to be bringing families back to experience the best country life can offer while earning decent income.”
Mr Williamson said fly-in, fly-out workers from Brisbane directly to mines in Moranbah was still a sore point in the region which wants its workers to live locally.
Queensland Resources Council chief executive Ian Macfarlane said the resources sector had well and truly bounced back in the past year. The sector has been creating a job an hour last financial year, which was not just in the mines in the Bowen Basin, but trickled down to professional services such as law and accountancy firms in Brisbane.
“The rate of job growth has sped up over the last quarter. We are now creating a job every 40 minutes,” he said. “The jobs are not just in the resource region at the mine sites. The jobs are flowing through Queensland, particularly in Brisbane and the south-east.”
Regional property prices rebound
The increased activity in the mining towns of Moranbah, Nebo and Dysart is also helping property prices which crashed after the global downturn.
While they are a long way from recovering from the stratospheric highs of 2012-13 – when house prices more than doubled in some towns – they are starting to move in the right direction again.
Interstate investors who dived into property investments during the giddy heights of the last coal boom are steering clear this time, according to local real estate agents, with recent sales being for miners and their families who want to live close to where they work, rather than drive-in/drive-out from Mackay.
Moranbah’s media house price in August was $217,661, up 5.6 per cent in the past year, but still a fair way off recovering the 71.7 per cent it fell from the market peak, according to information provided by CoreLogic.
Other mining towns such as Emerald (up 10.4 per cent to $278,630), Nebo (up 13.5 per cent to $215,182) and Dysart (up 1.5 per cent to $102,860) also were moving in the right direction.
Mackay’s house prices may fallen by almost a quarter since the market peak in October 12, but it was growing at a more manageable 3.4 per cent in the 12 months to August, CoreLogic said.
“Rents are once again rising across each of these regions, albeit from a low base,” it said. “Asking rents are up 25 per cent over the past 12 months in Nebo and 20 per cent higher in Moranbah. With rental markets tightening, gross yields are looking very healthy, at 6 per cent or higher across the mining township but lower in the major centres of Mackay and Gladstone.”
Other mining cities are not so lucky, with Gladstone – the home of the $80 billion liquefied natural gas industry – where median house values have fallen by 7.9 per cent, or down almost 42 per cent since the peak of July 2012, mostly due to the wrapping up of the construction phase of the gas projects on Curtis Island.
The surge in the coal price – which has been both metallurgical and coking coal reach record peaks – will also deliver an expected budget bonus for the cash-strapped Palaszczuk Labor government.
Treasurer Jackie Trad is expected to deliver a windfall in coal royalties in the mid-year budget update in December, with Treasury basing its revenue estimates on a price of $US161 a tonne for metallurgical or coking coal and $US89 for thermal coal.
Even a long-running dispute between rail haulage company Aurizon, big miners and the Queensland Competition Authority over how much Aurizon can charge its customers to use its lucrative coal networks has not completely dampened the enthusiasm in the sector.
While 12 months ago Indian company Adani’s controversial $16.5 billion Carmichael mine was seen as the potential saviour of Queensland’s mining industry and economy, the resurgence of the Bowen Basin has taken off some of the pressure for the mega-mine to go ahead.
Adani’s new coal boss Lucas Dow has sharpened the project to give it a better shot to reach final investment decision, but Adani is no longer the centre of the universe for the coal sector.
“The feeling locally is we’d love Adani to get going because we know there will be a trickle-down effect for us,” Mackay Mayor Greg Williamson said.
“But we can see a resurgence in the resources sector and there is less reliance on the hope Adani might get going. A lot less. If it went ahead it would be tremendous, but if it doesn’t there won’t be too many people who will lose a lot of sleep about it in our region.”