Fitch Solutions sees increasing downside risk to mineral production as the Covid-19 pandemic raises the chances of persistent operational disruptions.
In their latest report, Fitch analysts point out that although mining operations tend to be in more remote locations, there is an increasing scope for reduced personnel flow and supply chain disruptions due to government actions leading to a reduction or halt in mine production.
Fitch notes that while relatively few firms have announced operational disruptions as of yet, the firm expects this will rise as countries implement quarantine efforts to contain the virus.
Chinese mineral mining operations have reportedly begun to ramp back up following an extended halt in operations in February, while
Italy is not a major mineral producer.
The downside risk to global mineral production remains as the virus has spread outside of China, Fitch said. Within context, the Rest of the World (ROW) outside of China produces 92% of the world’s copper concentrates, 86% of iron ore and 67% of total zinc concentrate.
Analysts already reduced mineral production forecasts for Peru by 4% y-o-y each from previous levels as the government announced emergency measures on March 15.
Chinese miner MMG said on Thursday that operations at its Las Bambas copper mine had been reduced temporarily after Peru declared a state of emergency and imposed restrictions in response to the coronavirus pandemic.
The world’s top miner, BHP, has said its operations had not been materially impacted so far by the coronavirus pandemic and that it had implemented additional procedures to prevent the spread of the disease among its employees. BHP said its supply chains are still open and it currently has adequate supplies to operate and maintain critical equipment.
Peru recently implemented 15-day emergency isolation measures and some miners have released statements in response.
Freeport McMoRan placed Cerro Verde mine on care and maintenance, Anglo American announced it would slow construction at the Quellaveco copper project for 15 days and Newmont announced it would scale down mining operations at its Yanacocha gold mine with production from leach pads continuing. MMG said on Thursday that operations at its Las Bambas copper mine had been reduced temporarily.
In Chile, Anglo-American decided to scale down operations at its Los Bronces copper mine.
The virus’ spread to other major mineral producers, including Australia, could lead to additional quarantines if the spread overwhelms the country’s healthcare system which could force governments to implement more restrictive personnel measures, Fitch notes.
While mining operations are facing increasing risks to operations which could hamper output and lead analysts to revise 2020 production forecasts lower, Fitch is maintaining downside risks to its 2020 forecasts as events remain fluid.
Read the full report here.