Mining companies around the world are facing disruptions in supply chain, parts and consumables, and as a result of government mandated actions following the ongoing COVID-19 pandemic.
Canadian mining firms have taken a number of measures to protect their employees and to ensure business continuity. Agnico Eagle and Yamana Gold’s Canadian Malartic mine, the country’s largest gold mine, has been temporarily shut down to reduce the spread of the virus.1 Newmont Corporation and IAMGOLD have put their Musselwhite, Cerro Negro and Westwood Gold mines into care and maintenance.2 Furthermore, companies such as First Quantum Minerals and Teck Resources have been operating with reduced workforces, with only critical activities being performed.3
Suspension or reduction of mining activity is expected to lead to lower guidance from companies, but the scale of the impact remains unclear as the pandemic continues.
The COVID-19 crisis has also impacted base metal prices, with copper being affected the most. Copper prices have reached their lowest level since 2016, mainly because of a slowdown in China’s construction activity; the country accounts for approximately half of global copper consumption. GlobalData, an analytics and research firm, now expects copper demand in China to grow by 3.8% in 2020, as compared to its previous forecast of 5.8%.4
Nickel prices have declined approximately 20% over the last three months due to lower demand from the stainless-steel industry following temporary production shutdowns. Furthermore, nickel production may also decline due to virus-related delays expected in the development of Indonesian nickel projects worth nearly US$11b.5 Zinc prices declined to July 2016 levels due to a reduction in automotive and construction industry demand.6
Gold prices, on the other hand, have been volatile over the past few months. Gold prices reached a seven-year high of approximately US$1,670 per ounce in the second week of March, declining to around US$1,478 per ounce in the third week and then bouncing back to US$1,660 towards end of the month. The recent rebound in prices was driven by the Federal Open Market Committee’s decision to reduce the Fed rate to the 0.00% to 0.25% range in response to the growing economic threat from the spread of the COVID-19.7