Impact of Covid-19 on the Mining Industry

The impact of Covid-19 on the metals and mining industry has shifted gears, in which the impact changed from “moderate” towards the end of February 2020 to “high” by the end of March 2020. While the impact has been witnessed across the entire mining value chain, a complete shutdown is still yet to be seen. Companies’ operations have been impacted due to the government-mandated lockdowns in major mining countries such as Peru and South Africa.

The resultant supply cuts is offset by a collapse in demand over the mid-term (from major demand industries across global manufacturing hubs)–thereby creating a supply level for the current commodity prices. Even with the demand coming back online from the manufacturing sector in China, the commodity prices are not expected to witness a significant increase from the current levels until the end of 2020. Gold is the only exception to the falling commodity prices, and has benefitted from uncertainties in the market. Considering these impacts, companies are delaying exploration/new projects, and are also considering revising the operations/financial guidance issued in the year 2020. 

With automation in the cards for the near future, companies will be required to strike a fine balance between automation (such as autonomous trucks and remote operations centers among others) and employment generation. Mining companies could focus on using these turbulent times to consider collaboration or joint ventures to reduce their exposure to project risk, and increase access to core technical capabilities. Some mining majors may also use this as an opportunity to purchase assets that are available at a cheaper price in order to strengthen their portfolio. 

To read the full Covid-19 sector update for the mining industry, click the link below. 

Follow the link to download full insights on the Impact of Covid-19 on Mining Industry

Abhay Singh
Associate Vice President. Corporate and Professional Services Posts
Rampalli Sri Manishankar
Manager, Corporate and Professional Services Posts

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