Commodity sector faces exodus

An exodus of expertise from the natural resources sector following the collapse in commodities prices mean banks and industry could face a shortage of seasoned professionals when demand eventually recovers.

Recruitment agencies think the headcount in commodity divisions within banks and producers could eventually plunge by between 10 and 20 percent.

Bonus and salary cuts also mean some people will head for the world of fund management, which is still looking for commodity experience, while many others will leave the sector, probably for good.

People will leave an industry that is already short of experience, we've seen this before, it's cyclical, said Jakob Bloch, managing director at UK-based Commodity Appointments.

Bloch was referring to the skills shortage seen in recent years after commodity prices surged on expectations that supplies would fail to keep up with ever rising demand.

But the bubble has burst and the crisis facing banks could persuade some people to retire, while others who try to return to commodity producing companies may find the door is shut.

Crude oil is down by more than 65 percent since a record high above $147 a barrel last July and copper, down about 55 percent from an all-time high of $8,940 in the same month.

HORRIBLE

Banking collapses such as Lehman Brothers last year and mergers such as those between U.S.-based Merrill Lynch and Bank of America (BAC.N) have added to unease in a jobs market that has been shrinking for some months now.

Probable rationalisation after the sale of Swiss bank UBS's (UBSN.VX) commodities business to Barclays (BARC.L) is also likely to weigh on the market, recruiters say.

The situation is the worst I've seen in 20 years...There is very little happening on the mining and metals side. There is a little activity in the oil and gas side, Stephen McCarty, managing director at BlackSheep Selection, said.

People realising the market is going to be horrible for the next couple of years could retire ... Salaries are down already, no one, as far as I know, is giving guaranteed bonuses or signing on bonuses.

The years of plenty are over. Recruiters estimate that about 30 percent of people employed in commodity divisions in banks will not get a bonus, while another 30 to 40 percent will feel the pinch in lower payouts.

Some bonuses for last year were contractual and so could not be cut. But discretionary bonuses have faced the axe.

This despite traders in the commodity sector having a bonanza year in 2008 because of volatility as prices hit record highs and then tumbled as growth and demand collapsed.

A lot of traders made money on the way up and on the way down, a metals trader at a bank in London said.

But bonuses have been cut, some by up to 70 percent ... Some people have yet to hear what their bonuses will be ... Some people are just scared they won't have a job next week.

Many of these people disillusioned with the hire and fire culture of banks are looking at jobs in fund management.

We're actually hiring ... There are an awful lot of talented people available, said Kimberly Tara, chief executive at fund manager FourWinds Capital.

People from oil & gas are going into private equity... It's a cross fertilisation and makes better professionals. It means they bring new skills into our area.