Source: The Mining Weekly                      Date: 15 June, 2011

The mining industry is facing a shortfall of available and experienced drill rig operators, as cashed-up juniors and growth-hungry majors ramp up their exploration plans, Major Drilling CEO Francis McGuire has said. “Everywhere is busy, there is no area that's not busy. It's causing strain, and the real choke point is drillers,” he said.

Major mining companies have announced huge increases in exploration spending and junior firms have also now come back strongly in terms of exploration activity, he said. The good news for the company, though, is that the increased demand is also translating into higher contract prices for its services, and Mr. McGuire expects that should continue into the second half of this year.

Major Drilling is boosting wages to attract and retain experienced drillers, as well as increasing the number of trainees. However, the increased percentage of inexperienced drillers inevitably has an effect on productivity, Mr. McGuire said. The company is also buying new rigs that should help improve productivity and safety and cut training time for crews. The firm bought 25 rigs in the three months ended April 2011, and plans to buy another 40 over the next 12 months, 30 of which will replace older, less productive equipment.

Major Drilling reported fourth quarter net earnings of USD9.4 million for the three months ended April 30, compared with USD3.2 million a year earlier. On contract pricing, Mr. McGuire said the market has not returned to the levels experienced during the height of the market in 2008, but that there is definitely “substantial progress” in pricing for new contracts. Rates for specialized drilling will probably move up more quickly than for conventional drilling services, Mr. McGuire said.