Source: The Financial Times                        Date: 13 April, 2011

Splashed over half a page on a recent Sunday edition of the Chilean newspaper El Mercurio was an advertisement attempting to entice Chilean mining engineers to Mongolia to work on Rio Tinto’s flagship Oyu Tolgoi project. The timing couldn’t have been more appropriate: that day, several hundred bankers, traders and miners descended on Santiago for the largest annual gathering of the copper industry.

On the tightness of the copper market, the delegates disagreed; on the tightness in the labor market, they were unanimous. “I think the number one tightest area that I experience regularly is in the supply of talented, experienced mining industry professionals,” said Mr. Andrew Harding, head of Rio’s copper division. The trend is more than just a boon for anyone with a degree in mine engineering (and a boon it is: in some parts of the world, salary inflation is running well in excess of 10 per cent). More importantly for investors in metals and mining, it underscores the challenges miners are finding as they attempt to respond to record copper prices.

The difficulties obtaining engineers and, increasingly, equipment such as large trucks and mills, will only prolong the tightness in the market. In particular, with prices of other minerals such as iron ore and coal also at record levels, it sets up a competition between different commodities to secure resources. While that is unlikely to be a big issue for the likes of Rio or BHP, it is making life difficult for smaller miners.