Although compensation levels differ among regions, mining and mineral processing professionals remain loyal

By Steve Fiscor, Editor-in-Chief

Reports of signing bonuses and six figure salaries for recent mining engineering grads make some of the seasoned professionals wonder where they stand. After all, few mining professionals had the good fortune of timing their graduation dates with industry peaks. Even if they did, the inevitable downside of the cycle or the little things that happen in life, usually catch up with them.

table1So in an effort to better understand compensation levels for the mining industry, E&MJ commissioned a readership survey during May 2010. More than 8,600 questionnaires were emailed to readers who worked for mining companies on an nth name basis worldwide. Of that group, 754 surveys were returned and 465 were considered complete and accurate. With only a 5.4% response rate, statistically this survey cannot be considered conclusive.

Setting an industry benchmark based on such a small sampling would not be wise, but the E&MJ Salary Survey does shed some light on the differences in compensation based on job classification, location and the sector.

One of the more difficult tasks in assembling the data was to merge all of the various mid-level management titles into a quantifiable group of job classifications. In fact, a number of well-compensated individuals were unsure of their current job titles. The responses were divided into five categories: Executive Management, Operations Management, Engineering, Specialty and Technical Services. The Executive and Specialty responses were minimal and had little impact on the study. Most of the responses came from mid-level managers, engineers, metallurgists and geologists—what would be the bulk of E&MJ’s readership.

Based on the results of the survey, if one were to generalize, a mid-level manager working for a medium- to large-sized mining company is relatively young (46) male (97.1%). During his 22 years or more in the mining business, he has worked for three or four companies. He holds an advanced degree and has probably been working for his present employer for eight to 10 years. He earns a base salary of at least $100,000 and receives an annual bonus that averages nearly $30,000. Those with more specialized skill sets and experience earn quite a bit more and vice versa.

Obviously executives earn the most money. The salary levels for top executives at publicly-listed mining companies are disclosed in financial statements. The limited number of executive responses did not compare with those levels. They were removed from consideration. Salaries differ by discipline. Managers working at underground mines tend to earn more than their counterparts at open-pit mines. Professionals in minerals processing are compensated similarly, but neither they nor the underground managers make as much as the administrative types working at corporate headquarters.

Compensation levels also vary by region. Salary levels in general are higher in Australia than all of the other regions. The base salaries in Asia are the lowest in general, while the total salaries of Asia and Africa are equally low.

Survey Demographics

The E&MJ Salary Survey divided the mining business into five sectors. The responses represented the industry well with 38.6% at open-pit mining operations, 24.2% at underground mining operations, 18.7% in mineral processing, 9.7% in geology/exploration, and 8.8% administrative. On a regional basis, nearly one-half (47.1%) worked in the U.S. or Canada. The second largest group was Latin America (18.7%), which includes all of countries in North America south of the Texas-Mexico border and South America. The remaining respondents were divided equally among Africa (9.9%), Asia (9.3%), Australia (8.8%), and Europe (6.2%).

table2To quantify the scale of the operations, the survey asked about production levels and mill feed capacities. Most of the responses (34.1%) came from large mining operations or those moving more than 10 million metric tons per year (mt/y). Very small (<1 million mt/y) and small (1-5 million mt/y) were about the same, 24% and 25.3% respectively. The medium range (5-10 million mt/y) was 16.5%. The average mill throughput was a little less than 80,000 mt/d. Most E&MJ readers started their careers as mining engineers, metallurgists or geologists, and then progressed through the ranks to upper management levels. So, it should come as no surprise 91.7% of the respondents have a college degree. With 43.4% earning advanced degrees, mining professionals are a well-educated lot.

The career categories were subdivided into generic titles. The Executive Management category included owner, CEO/COO, president-corporate, president- divisional, vice president-corporate, vice president-divisional, CFO, and accountant. As previously mentioned, only 51 completed surveys were received for eight titles. Similarly, respondents from the Specialty category, which included purchasing managers, sales/ marketing and clerical positions, returned only 15 completed surveys.

The Operations Management, Engineering, and Technical Service categories received the highest number of properly completed surveys, 137, 150, and 113 respectively. Operations Management included mine managers, operations managers, superintendents, general mine foremen, plant managers, and maintenance managers. The Engineering category was subdivided into chief engineer, maintenance engineer, mining/ project engineer, and chief electrician.

The Technical Services category included geological/exploration, special support, health and safety, environmental/reclamation, and R&D. The special support title includes titles, such as technical service manager, manager-GIS, training coordinator, etc. The largest number responses came from mining engineers (92, 19.7%), geologists (48, 10.3%), and chief engineers (43, 9.2%).

Compensation Plans

The survey asked specific questions about compensation, regarding base salaries, most recent pay increase (or decrease), months since the last increase, and bonuses and how they are calculated. The average base salary for the group was $105,403. Most of the respondents (84%) reported receiving an increase in their annual base pay.

The average increase was 6% and it had been awarded within the last 10 months on average. A small group (6%) also reported a decrease in annual pay and the decrease was significant, averaging 18.6%.

Most of the respondents (78%) reported receiving a bonus or a commission related to performance. On average the bonus amounted to $29,128. Overall, that brought the average total salary figure up to $125,930. For the most part, the bonuses were based on merit, safety performance, production, profitability or a combination of the four. Table 1 presents the E&MJ Salary Survey findings sorted by region then sector. The way the data is presented allows a quick comparison on a sectorby- sector basis. The total responses are given to the left. Information based on as little as three responses would be considered weak at best, but the information was included to give an accurate portrayal of the results.

As an example, most CEOs would not want their compensation based on the one executive in Asia reporting $250,000/yr. However, the geologists in Africa can thank the two exploration geologists who reported base salaries that averaged $190,000/yr. On the other hand, the data from the 37 professionals working in mineral processing in the U.S. and Canada is probably fairly reliable, as well as the 28 open-pit responses from Latin America. The Administrative sector includes the executives, which explains the gradual decline in base salary through the ranks. Table 2 presents the same data reorganized by sector then region. It’s easier to see how the pay within the same sector changes on a regional basis. In the three sectors with the most reliable data, mineral processing, open-pit mining and underground mining, Australian professionals received a higher base pay and a higher total salary on average. Tables 3, 4 and 5 delve more deeply into those three sectors by looking at average salaries for each job classification. On the job sites, the mine or plant manager on average earns more money than the chief engineer. Meanwhile, the geologists at the mines and the project engineer at the mill are the lowest paid on average. Had the survey had more usable responses, it would have been interesting to look at job classification on regional basis. With this sampling, the data was just too thin. While none of this information is earth-shattering, it does show where current salaries currently stand on an average worldwide basis.

As a parting question, the readership survey asked the participants to identify their three most critical job-related concerns. They were asked to select from a list of 15 items. Although the answers and priorities differed on a regional basis, the answers could be confined to eight topics. In the U.S. and Canada, the respondents selected government regulations, environmental activism and the economy. For Australia, it was government taxation (topical), finding employees and the economy. Readers in Latin America and Africa were most concerned with metal prices and safety. However, Latin American miners were more worried about environmental activism and African miners were more worried about the economy. In Europe, they are more concerned with limited production, the economy and government regulations. Meanwhile, Asian miners worry about metal prices, safety and government regulations.

A positive takeaway from these responses is that job security and employer relations registered very low response rates. Taking that combined with the amount of years they have worked with their present employers on average, it’s safe to say there is a high level of mutual respect among midlevel mine and plant managers. One that is rewarded with relatively nice compensation plans.