Why Shell Has Soured on The London Stock Exchange

By Alex Kimani - Apr 21, 2024

• British multinational oil & gas giant, Shell Plc has threatened to delist from the London Stock Exchange and list on the New York Stock Exchange.
• 
  
• Sawan has also expressed deep frustration by investors' under-appreciation of the financial performance of the company.
• 
  
• Shell still invested around 20% of its cash capital spending on low-carbon assets, compared to just 2% of cash that Exxon spent on low-carbon solutions.

A couple of days ago, we reported that scores of beleaguered solar companies in Europe are fleeing the continent amid intense competition from China and setting up shop in the U.S., thanks to the latter’s favorable solar and clean energy policies. Notably, Swiss solar module maker Meyer Burger has announced plans to wind up panel production in Germany and move to the United States after failing to garner support from the German federal government. Similarly, battery company Freyr has stopped work at a half-finished plant near the Arctic Circle and plans to relocate to the U.S. These companies hope to benefit from the 45X production tax credit (PTC) under the Inflation Reduction Act (IRA).

The exodus of European companies seeking greener pastures in America is, however, not confined to the solar sector. British multinational oil & gas giant, Shell Plc (NYSE:SHEL) has threatened to delist from the London Stock Exchange (LSE) and list on the New York Stock Exchange (NYSE). Shell CEO Wael Sawan has told Bloomberg that the company is grossly undervalued in London due to shareholder apathy to the oil and gas sector. 

Sawan has also expressed deep frustration by investors' under-appreciation of the financial performance of the company, as well as the British government’s over-taxation of its profits. Sawan has vowed to “look at all options”, including switching the group's listing to New York in a bid to close the valuation gap with American Big Oil companies Exxon Mobil Corp. (NYSE:XOM) and Chevron Corp. (NYSE:CVX). The company’s share price is now close to a record high at £28.51, thanks in part due to geopolitical upheavals of recent years that have supported higher gas and oil prices. Still, Sawan believes the shares are undervalued.

Sawan is not the first Shell executive to adopt this line of thinking. Former Shell CEO Van Beurden has revealed that back in 2021, the company had considered listing in the U.S. when it dropped its dual Anglo-Dutch listing and moved its headquarters to London. However, it decided that leaving Europe was “a bridge too far”.

To be fair, European energy companies, including Shell, have traditionally traded at a discount to their American peers. However, the gap has been widening in recent years. For instance, in 2018, Shell’s value including debt was around 6x EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) while Exxon was valued at 7x EBITDA. Valuations for fossil fuel companies have gone south over the past years thanks to the clean energy transition. Still, Europe’s energy giants have seen their valuations deteriorate faster than their American counterparts: Shell is now valued at 4x EBITDA compared to 6x EBITDA for Exxon. 

Different business strategies could also explain the widening valuation gaps. In 2021, former CEO Van Beurden declared that oil prices would remain low forever, and aimed for an expected reduction in oil production of around 1% to 2% each year until 2030. Whereas his successor ditched that goal last year, Shell’s total oil and gas production in 2030 is expected to be roughly the same as in 2022. In contrast, Exxon’s oil output alone is set to grow at a 7% compound rate thanks to investments in Guyana as well as its recent $60 billion takeover of Pioneer Natural Resources. 

Meanwhile, Shell and its European peers continue investing heavily in renewable energy compared to America’s Big Oil companies. Despite Sawan’s efforts to scale back on green investments, Shell still invested around 20% of its cash capital spending on low-carbon assets, compared to just 2% of cash that Exxon spent on low-carbon solutions that primarily focused on capturing and storing carbon emissions. A big part of that is due to higher levels of climate activism in Europe. For instance,  earlier this year, green activists staged a protest outside Shell’s London headquarters after the company announced annual profit of more than $28bn (£22bn) for 2023, one of its most profitable years on record.

Coming To America

Shell is not alone. American bourses are increasingly proving attractive to European companies. The past couple of years has seen several European heavyweights, including plumbing and heating products company UK-based Ferguson Plc (NYSE:FERG), German chemicals company Linde Plc. (NASDAQ:LIN), Irish building and construction company CRH Plc (NYSE:CRH) and British betting company Flutter Entertainment (NYSE:FLUT), are moving to American exchanges while office co-working solutions group IWG is reportedly heading stateside, too.

More worryingly for the UK and Europe, fewer companies are joining their capital markets. Last year, LSE recorded just 23 IPOs, down from 74 in 2022. In contrast, the Americas saw a 155% surge in total IPO proceeds in 2023, with about 132 deals taking place across U.S. exchanges.

Whereas factors such as investor preferences, onerous policies and regulations in European markets and higher executive salaries have all been playing a part in this shift, NYSE’s vice chair John Tuttle says the biggest reason is simply because the U.S. stock exchange is the most attractive in the world.

“No matter how you look at the data, the United States has the deepest pool of liquidity and capital in the world, which has the broadest investor base. It has a lot of analysts and investors that are focused on growth, not just dividends and value,” Tuttle said at the World Economic Forum (WEF) in Davos.

Tuttle has also pointed out that companies that list in the US are eligible to be included in many indices that they would otherwise not access if listed in other markets, helping to bring in more capital, and a more stable shareholder base and ultimately increase their valuations.

By Alex Kimani for Oilprice.com

 

Venezuela Looks to Crypto for Oil Sales As Sanctions Return

By Charles Kennedy - Apr 22, 2024

With Venezuelan oil sanctions set to be reimposed and state-run PDVSA oil company buyers and suppliers under orders to close out transactions in line with sanctions by the end of May, the country is now working to shift its oil sales to digital currency. 

Using Tether, pegged to the U.S. dollar, PDVSA is seeking to hasten the use of digital currency for oil export transactions to avoid having revenues from oil sales frozen in foreign bank accounts, Reuters reported on Monday, citing three unnamed sources. 

The Venezuelan state-run oil company started experimenting with Tether for oil sales in 2023. 

With the six-month temporary easing of sanctions, which expired on April 15, Venezuela had managed to increase exports to around 900,000 barrels per day in March–a four-year high, according to Reuters, which notes that PDVSA now has a requirement that new customers for oil purchases maintain a digital wallet. 

"USDT transactions, as PDVSA is demanding them to be, don't pass any trader's compliance department, so the only way to make it work is working with an intermediary," Reuters cited a trader as saying, in reference to crypto payments. 

Elections in Venezuela are scheduled for July 28, and Maduro has tirelessly worked to ban opposition candidates by using trumped-up criminal charges to keep them off the ballot, along with arresting many opposition figures for allegedly plotting a coup against him. The continuation of the temporary oil sanctions relief was conditioned upon the holding of free and fair elections, which Maduro has consistently violated. 

The reimposition of sanctions takes place amid new talks between Venezuela and Chevron to expand a joint venture with state-run PDVSA in the Orinoco Belt.  

At the same time, the reimposition of sanctions on Venezuela failed to resonate in oil markets, with prices remaining depressed despite heightened geopolitical tensions and more supply being shut out of the market.

By Charles Kennedy for Oilprice.com

Kurdish Media Allege OPEC Request for Resumption of Oil Exports to Turkey

By Charles Kennedy - Apr 22, 2024

Just a week after the Iraqi federal government announced it was repairing its own oil pipeline to Turkey, which would override a Kurdish oil pipeline that has been offline amidst a three-way diplomatic dispute between Baghdad, Erbil and Ankara, Iraqi media report that OPEC is urging Baghdad to resume Kurdish oil exports to Turkey. 

According to Kurdistan24 news agency, citing an unnamed source in the Iraqi Federal Oil Ministry, OPEC has requested that Iraqi Federal Oil Minister Hayyan Abdul Ghani approve oil exports from Kurdistan to the Turkish port of Ceyhan. 

In what the news agency called a “formal appeal to the Iraqi Oil Minister”, OPEC has allegedly requested that the Kurdistan Regional Government (KRG) be allowed to export 200,000 barrels of oil per day via the Turkish port of Ceyhan. The news agency also claims that the request has now been forwarded to Iraqi Prime Minister Mohammed Shia al-Sudani. The 1.4-million-bpd-capacity Iraq-Turkey pipeline has been offline since March last year, but was pumping around 450,000 bpd just prior to its closure. 

The Iraqi media claims of a request from OPEC have not been independently confirmed. 

Baghdad’s maneuvering here is intended to lead to the revocation of the KRG’s semi-autonomous status, and international oil companies are now being pressured to sign new contracts with Bagdad for their oil and gas operations on Kurdish territory. 

In the meantime, Iraqi officials say the repaired pipeline that will replace the shut-down Kurdish pipeline is set to be operational by the end of this month, signaling a victory for Baghdad and the potential end of Kurdish semi-autonomy, which could prompt additional unrest in the region.

By Charles Kennedy for Oilprice.com

Canada Wildfires Prompt First Evacuation Order in Oil Country

By Charles Kennedy - Apr 23, 2024, 4:00 AM CDT

Alberta authorities have issued the first evacuation order for this year as wildfires spread across Canada’s biggest oil producer.

Per a Bloomberg report, the residents of a First Nation community in the Cold Lake region were ordered to evacuate because of the blaze. Several other communities in the vicinity were put on standby, the report added. The Cold Lake indigenous area is to the north of Edmonton, close to the border with Saskatchewan.

The news comes a day after reports about a wildfire in the vicinity of Fort McMurry that had local authorities issue an evacuation warning in case the blaze spread. Later on Monday, the warning was canceled. A Bloomberg report recalled that eight years ago another wildfire forced the evacuation of tens of thousands of locals and the suspension of some 1 million barrels of oil in daily production.

There were production shut-ins in Canada last year as well, because of wildfires. In March of that year, over 300,000 bpd of daily production were shut in because of the fires, representing 3.7% of total output. At the time, there were 110 active wildfires across Alberta, of which 36 were out of control.

Over 65% of the territory of Canada was unusually dry at the end of March, Bloomberg noted in its most recent report. These were similar conditions to last year’s when the country suffered its worst wildfire season, according to reports. If the situation repeats, there will be oil production outages again.

Alberta produced crude oil at a record rate and there are plans for further growth as the Trans Mountain pipeline expansion project nears completion. In November 2023, the province produced an all-time high of 4.16 million bpd. Planned output expansions in the oil sands could drive an 8% increase in Canada’s total oil production by next year, according to analysts.

By Charles Kennedy for Oilprice.com

Tech Leaders Big Big On Green Energy Startups

By ZeroHedge - Apr 22, 2024

• Sam Altman and Andreessen Horowitz invested $20 million in Exowatt, a clean energy startup.
• 
  
• Exowatt has developed solar modules that convert solar energy into heat, which can be stored for up to 24 hours.
• 
  
• Altman also backs nuclear power startups Oklo and Helion, recognizing the importance of nuclear energy as a reliable source of clean energy.

Sam Altman and venture capital firm Andreessen Horowitz are betting on solar power and energy storage that can supply a low-carbon future to artificial intelligence data centers. Altman, the face of the AI chatbot boom, has also invested in nuclear power technology to fuel America's powering up with clean, reliable energy. 

The Wall Street Journal reports that Altman and the private US venture capital firm are among the investors putting $20 million into Exowatt, a company that aims to solve the clean-energy needs of AI data centers. 

Exowatt declined to provide details about how its technology works. However, WSJ provided a brief understanding: 

Instead of solar panels arrayed across a field, Exowatt has developed modules roughly the size of shipping containers that contain solar lenses. The lenses convert energy from the sun into heat. That heat can then be used to warm up cheap, basic materials much like electricity heats up a toaster, allowing the modules to store energy for up to 24 hours a day.

The goal is to take advantage of the cost reductions from storing energy as heat. To produce electricity, the module passes the heat through an engine. Many other companies are working on different approaches to solar and low-cost heat batteries, but Exowatt says it is unique because it combines them in one unit.

The problem with solar power generation is that the sun only sometimes shines. For grid stability, solar and wind are fine, but nuclear power will have to be the primary reliable source of clean energy. We've been a bull on nuclear power (read: here) and recently showed readers how there's a historic reversal underway in nuclear power in the US (read: here). 

Clearly, Altman understands this. He recently backed nuclear power startup Oklo and Helion. 

"Fundamentally today in the world, the two limiting commodities you see everywhere are intelligence, which we're trying to work on with AI, and energy," Altman told CNBC in 2021. 

It's becoming clear that the aging US power grid won't be able to support the surge in AI data centers and the electrification of the economy. In "The Next AI Trade," we outlined investment opportunities for powering up America. 

Meanwhile, the upfront costs of upgrading the nation's power grid are sparking out-of-control power bill costs for households, as many folks have trouble paying monthly bills.  

By Zerohedge.com 

 

Suriname’s Resource Boom is Back on Track With First Oil Targeted for 2028

By Matthew Smith - Apr 22, 2024

• Suriname aims to replicate Guyana's oil success but faces challenges due to delays, commercial concerns, and global climate change efforts.
• 
  
• TotalEnergies and APA plan to make the final investment decision on the Block 58 project by the end of 2024, targeting first oil in 2028.
• 
  
• Suriname's oil boom could transform the country's economic fortunes, ending its protracted crisis and lifting it out of poverty.

• 
  

Former Dutch colony Suriname shares the offshore Guyana Suriname Basin with the former British colony of Guyana, which is reaping a massive economic windfall from one of South America’s largest oil booms of recent times. Suriname’s government in Paramaribo is hungrily eyeing Guyana’s oil boom, which has propelled the country into the global league of major oil-producing and exporting nations, putting it on track to become one of the wealthiest nations in South America. Deeply impoverished Suriname, which is suffering an extreme economic crisis, hopes to enjoy a similar boom to its neighbor. Nonetheless, time is running out to successfully exploit the vast petroleum resources lying beneath Suriname’s territorial waters as the global battle against climate change and push to net zero emissions gain momentum.

The shock 2022 announcement from TotalEnergies, the operator, and 50% partner APA Corporation that the final investment decision (FID) for Block 58 offshore Suriname was delayed nearly dashed Paramaribo’s plans. The government, which is experiencing significant economic pressure, views Suriname’s substantial offshore petroleum wealth as a silver bullet for the former Dutch colony’s financial woes. This notion emerged after APA announced the first discovery in Block 58 offshore Suriname at the Maka Central-1 wildcat well in early January 2020. By late-2020, analysts were speculating that Block 58 possessed significant petroleum resources, with U.S. investment bank Morgan Stanley stating that its modeling showed the acreage could contain as much as 6.5 billion barrels of oil. An additional four world-class discoveries were made by March 2022, further supporting those claims.

Block 58 Offshore Suriname

Source: APA Corporation Fourth-Quarter & Full-Year 2023 Financial & Operational Supplement.

Those events strengthened the belief that Suriname was on track to experience a mammoth oil boom capable of delivering a major economic windfall, thus ending the country’s protracted economic crisis and lifting it out of poverty. Those events sparked speculation that Block 58 contained petroleum resources on a scale similar to the neighboring Stabroek Block in offshore Guyana, where ExxonMobil has found 11 billion barrels of oil resources. It is the Stabroek Block that is driving Guyana’s epic oil boom and made the former British colony South America’s wealthiest country on a per capita basis. 

Paramaribo’s aspirations were almost dashed when TotalEnergies and APA delayed the FID for Block 58, which was originally expected during 2022, with first oil to be delivered sometime in 2025. TotalEnergies made this decision for several reasons, the key being the high gas-oil ratio and a swathe of poor exploration results that did not match earlier drilling outcomes or seismic data. Concerns over the commerciality of existing discoveries coupled with rising political tensions and a worsening economic crisis, with protestors storming Suriname’s parliament during February 2023, amplified the French supermajor’s uneasiness. Indeed, it those events which prompted TotalEnergies to delay the FID, especially with a substantial investment of $9 billion or more, with some analysts claiming it could take $11 billion, to bring Block 58 to first oil.

It was originally believed that TotalEnergies and partner APA would approve the FID by the end of 2022, with first oil expected during 2025. After a lengthy delay, with TotalEnergies, as operator, continuing to conduct appraisal drilling and assessing the five discoveries made since 2020, the partners announced during 2023 a commitment to undertaking development studies, which is typically a precursor to a FID. TotalEnergies and APA have flagged that this decision will be made by year-end 2024. The partners have identified a 700-million-barrel recoverable resource connected to the Sapakara and Krabdagu discoveries. Once detailed engineering studies are complete and the FID is made, the partners plan to install a floating production storage and offloading (FPSO) vessel in Block 58 with the capacity to lift 200,000 barrels per day. There are indications that TotalEnergies and APA are moving as quickly as possible to ensure the $9 billion project is sanctioned by the end of 2024. 

The oil discovered in Block 58 is particularly attractive to exploit for Big Oil because it is light, with an API gravity of around 34 degrees, and sweet with a low sulfur content making it cheaper and easier to process into high-quality low-emission fuels. Those are particularly important characteristics in a global economy where emissions standards are constantly ratcheted higher because the push to slow global warming and halt climate change gains momentum. If Guyana’s Stabroek Block is any indication, the carbon intensity of lifting oil in offshore Suriname will be relatively low, enhancing its attractiveness for Big Oil at a time when the industry is being forced to implement a net-zero standard. 

Offshore Suriname’s low projected breakeven prices must also be considered. Forecasts vary with analysts indicating that the breakeven price for each barrel lifted could be as high as $45 per barrel or as low as $35, with a consensus average of $40 per barrel for offshore Suriname. While this is higher than offshore Guyana, with an average breakeven price of an industry low of $28 per barrel, it is less than other offshore jurisdictions such as Brazil, where production breaks even at an average of around $50 per barrel for downstream offshore projects. There are claims that Block 58’s breakeven price will fall from an initial $45 per barrel produced to a low of $25 a barrel, which will be among the lowest in South America, as infrastructure is built out and operational synergies implemented.

There is considerable financial and socioeconomic pressure on Paramaribo to exploit the substantial petroleum wealth thought to lie beneath Suriname’s territorial waters. While the global rush to phase out fossil fuel consumption to combat climate change adds a sense of urgency to the former Dutch colony’s plans to extract those resources, time pressures are not as severe as some pundits claim. Suriname’s offshore oil resources are particularly appealing to Big Oil, because of a low carbon footprint to extract as well as refine and favorable costs with a $40 per barrel breakeven price, making production highly profitable in the current environment. Paramaribo has also implemented an appealing regulatory environment that ensures drillers are not only rewarded for investing in offshore Suriname but, through a 10-year contract, have sufficient time to explore and exploit the acreage once production begins.

By Matthew Smith for Oilprice.com

Namibia Racks Up Another Major Offshore Oil Discovery

By Alex Kimani - Apr 22, 2024,

• Galp saw its share price pop 20% on Monday.
• 
  
• Galp says it conducted testing operations at the Mopane-1X well in January and the Mopane-2X well in March, with, "significant light oil columns discovered in high-quality reservoir sands.".
• 
  
• The company announced that the first phase of its exploration in the Mopane field in offshore Namibia could contain at least 10 billion barrels of oil.

Shares of Portuguese integrated energy operator Galp Energia (OTCPK:GLPEF) (OTCPK:GLPEY) have popped more than 20% in Monday’s early trading session after the company announced that the first phase of its exploration in the Mopane field in offshore Namibia could contain at least 10B barrels of oil. Galp says it conducted testing operations at the Mopane-1X well in January and the Mopane-2X well in March, with, "significant light oil columns discovered in high-quality reservoir sands." The Mopane field is located in the Orange Basin, where Shell Plc (NYSE:SHEL) and TotalEnergies SE (NYSE:TTE) have made several oil and gas discoveries. Galp produced an average of just over 122,000 barrels of oil-equivalent per day in 2023.

According to Galp, flows achieved during the tests reached the maximum allowed limit of 14K bbl/day, "potentially positioning Mopane as an important commercial discovery." Citi is bullish on Galp’s discovery, saying the test results are close to a best-case scenario, and has labeled the discovery as "totally transformational" to the company.

From some perspective, Galp’s discovery is comparable to the more than 11 billion barrels of recoverable oil and gas contained in Guyana’s Stabroek block, an 6.6 million acre (26,800 square kilometers) area owned by U.S. oil majors Exxon Mobil Corp.(NYSE:XOM) and Hess Corp. (NYSE:HES), as well as China’s CNOOC Ltd (OTCPK:CEOHF). However, Chevron Corp.(NYSE:CVX) could end up partaking in Guyana’s prized asset if it succeeds in its planned $53 billion merger with Hess. Exxon is the main operator of the block with a 45% stake while Hess and CNOOC own 30% and 25%, respectively.Related: Saudi Aramco Eyes Stake in Chinese Petrochemical Firm

Galp has launched the sale of half of its 80% stake in Petroleum Exploration Licence 83 (PEL 83), which covers almost 10,000 square kilometers in the Orange Basin. Namibia’s national oil company NAMCOR and independent exploration group Custos each holding a 10% stake apiece. 

Galp plans to cede control of the development of the project to the potential buyer, likely to be a major international energy company with a strong track record in project management. Galp has hired Bank of America to run the sale process, with proceeds likely to be in the billions of dollars.

The Mopane discovery--one the largest made in the nascent basin following successful exploration campaigns by rivals TotalEnergies and Shell--could help kickstart the southern African country’s oil industry. In recent years, Namibia has attracted huge interest from international oil companies seeking to grow their production as demand. 

Despite the ongoing clean energy transition, most energy analysts have predicted that oil demand will continue growing for years, if not decades. The U.S. Energy Information Administration (EIA) is the most bullish on long-term oil demand, and has predicted a demand peak will not come before 2050, while the OPEC Secretariat sees it coming in 2045. 

Meanwhile, Standard Chartered has predicted global oil demand will hit 110.2 mb/d in 2030 and increase further to 113.5 mb/d in 2035. 

According to StanChart, a structural long-term peak is very unlikely within 10 years despite a high probability of cyclical downturns over the period. StanChart has argued that the current gulf between demand views creates significant investment uncertainty which that’s likely to force longer-term prices higher.

The oil price rally has continued losing momentum, with crude oil futures posting a second straight weekly loss, marked by big swings with geopolitical risk perception rising and falling in the Middle East. Tradition Energy's Gary Cunningham has told MarketWatch that the oil rally has stalled because there "hasn't been any increased risk to high production countries in the region" with Saudi Arabia, United Arab Emirates and Iraq staying out of the conflict. "Really, only Iran's barrels are at risk, and that would only be if wider hostilities broke out," he added.

Bank of America has tapped Targa Resources Corp. (NYSE:TRGP) and Marathon Oil Corp. (NYSE:MRO) as some of the stocks most sensitive to oil price swings. Meanwhile, Goldman Sachs has picked Targa Resources and Chevron as attractive dividend-paying energy stocks with good prospects for dividend growth. 

With a current dividend yield of 7% and a 51% payout ratio, GS has predicted that Targa will grow its dividend by 30% CAGR through 2025. On the other hand, the analysts have forecast that Chevron, with a current yield 4.0% and 49% payout ratio, will grow its dividend by 6% CAGR through 2025

By Alex Kimani for Oilprice.com

Zoomer trouble: Mining has a Gen-Z problem

Danny Parys| April 22, 2024 | 

PHOTO: ADOBE IMAGES

If you are interested in the future of Canada’s mining labour force (there are dozens of us!) you will most certainly be familiar with one of the industry’s most notorious statistics: 70% of those between the ages of 15 and 30 would not consider a career in mining. The worst of all industries surveyed, below even oil and gas.

And it gets worse. For mining companies that have been able to attract young people into the industry, retention is a growing challenge. According to a recent Deloitte survey, 46% of Gen-Z, individuals born between 1996 and 2012, that are currently working in the mining and energy sectors say that they plan to leave their jobs within two years. That is a problem.

As the projected demand for minerals continues to increase, Canada’s mining industry is expected to see its labour crisis worsen. With over 20% of mining professionals over the age of 55, a wave of retirements is expected to exasperate an already tight labour market and the Mining Industry Human Resources Council estimates that over 80,000 jobs will go unfilled in the sector by 2030. To cope with such drastic labour shortages, mining companies need to get serious about filling the talent pipeline. That means attracting Gen-Z, colloquially known as “Zoomers,” into the industry quickly. Zoomers will make up 30% of the labour force by 2030, and unfortunately for Canada’s miners, they have an overwhelmingly negative view of the mining sector. When it comes to persuading young people to join the industry, miners are losing the PR battle.

For a majority of Zoomers, a career in the mining industry has likely not even crossed their mind. For those that have considered it, typically an erroneous perception of what working in mining looks like prevails. And it is no surprise. A quick glimpse at the news headlines tend to show the worst that the industry has to offer. It is no wonder than when Gen-Z think of mining, they think of an industry that is old-fashioned, with no regard for environmental or social responsibility. Mentioning mining to Gen-Z is more likely to evoke images of pickaxes and coal covered faces rather than autonomous hauling systems, up to date ESG plans, and critical inputs for the green tech revolution.

Those that do enter the industry tend to do so because they have family members that have worked in the sector. Take a quick survey of any mining engineer program student body (of which there are fewer every year), and you will find many second and third generation mining professionals. Rare are those that come to the industry without a nudge from friends and family. Relying on the off chance that someone’s uncle will persuade them to pursue a career in mining will not be a winning talent attraction strategy for Canada’s miners.

So, what can be done?

For miners that are serious about attracting Zoomers into their workforce, it will be important for them to understand how Gen-Z differs from past generations. Expelling negative stereotypes will be critical as millions of Zoomers are expected to enter the workforce in the coming years. Gen-Z is projected to be one of the most educated generations, with the majority expected to complete college or university programs. At the same time, Zoomers are expected to contend with a precarious economic future. Unsurprisingly, Gen-Z tend to place a high value on job security and stability when compared to past generations. Gen-Z are also likely to be one of the most environmentally conscious generations, with 50% of Zoomers saying they want to work in an industry that has a positive impact on climate change. An important statistic for miners to know when they communicate their employee value proposition to students deciding on a career path.

Perhaps one of the most interesting ways Gen-Z may differ from past generations, is regarding how they view work-life balance. As mental health continues to be a growing concern, Zoomers are prioritizing flexible working environments and a strong work-life balance. Miners should take note and look at developing working environments that better reflect Gen-Z’s values. Particularly as studies indicate mine workers struggle with mental health more than the average Canadian worker, a potentially off-putting data point for young people considering a career in mining.

While the content of the message is important when it comes to educating Gen-Z on a career in mining, the mining industry needs to be deliberate regarding when and where they deploy their message. Deemed “digital natives” because of being the first generation that has grown up with digital technology, it should be no surprise that Zoomers are not opening a morning newspaper to learn about the world. Miners need to meet Gen-Z where they are: online. On average, Gen-Z spend six hours a day on their phone. It should come as no surprise that Gen-Z make up 60% of Tik-Tok’s 1 billion users and that 85% of Gen-Z say social media influences their purchasing decisions. If HR leaders want to educate young people about a career in mining, a strong social media presence will be critical. It might not hurt to brush up on the latest Tik Tok dance moves.

While university career fairs have their place, if the first time a student encounters the mining industry is at a post-secondary level, it may already be too late. By then, many students have already began making careers choices. At the post-secondary level, mining companies are likely to just be competing to attract students that have already considered a career in mining. When it comes to attracting young people into the mining industry, education needs to begin earlier. Mining companies should instead take a page out of the tech industries play book. In Canada, the information and technology industry expected critical talent shortages and at one point projected over 180,000 jobs to go unfilled. To combat this, the tech industry organized collaborative efforts to educate school age children about a career in tech. By developing after school programs, industry funded coding summer camps, and actively engaging with students with a predilection for math and science, the industry was able to inform students from an early age about the possibility of a career in tech. By the time students graduate high school, it may be too late to educate them about what a career in mining may look like, and negative preconceptions may already be ingrained. Miners therefore need to get into the classroom earlier if they want Gen-Z to consider a career in mining.

As it stands, the talent pipeline for Canada’s mining industry is weak, and lack of new workers is putting the future of the industry at risk. At the same time, Gen-Z, likely to be the most educated generation, are beginning to make up their minds about their future careers. If Miners want to attract a new generation to consider a career in mining, they will need to take the time to understand what Gen-Z values, and how to best communicate to them. If they do not, Gen-Z may forget about mining altogether, and Canada’s miners will continue to contend with a dwindling talent pool.

Danny Parys is a senior consultant at Calross Consulting, a recruitment and HR consulting firm that specializes in the mining and metals sector.