Slowing mining activity supports metal prices

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Published on : 04/08/2020 – 00:35

Copper, zinc, nickel … Mining activity is greatly slowed down by the coronavirus. This prevents metal prices from plunging as much as they should due to the global economic slowdown.

After plunging 15 to 20 percent since the coronavirus outbreak in China, metal prices have held steady since the middle of March. The consumption of these raw materials is however in decline with the slowdown in economic activity which is spreading all over the planet, and which is preventing Chinese exports from restarting. Car manufacturing, construction, steelworks are now idling.

But this weakness in demand is partly offset by an unprecedented shock on the supply of metals, which is itself very affected by the coronavirus. Between the confinements imposed by the authorities and the capacity reductions decided by companies, in Canada, in the United States, in Chile, and in Peru, in South Africa, in Indonesia, in Madagascar, and henceforth in Mexico… is 20% of the global mining industry that would be in parentheses, according to UBS. In particular 15% of copper mines, 20% of zinc mines and just as much nickel.

Congestion of ore transport and shortages of chemical reagents

As for the mines which are still in operation, they face major logistical problems. With fewer trucks and more sanitary controls, it takes much longer to transport copper or cobalt concentrate from the Democratic Republic of the Congo to Zambia and then to South Africa, whose ports are congested.

Finally, if certain mining groups have made reserves of fuel to continue mining activities, Zambia and Namibia have just launched an appeal because their deposits are on the verge of a shortage of chemical reagents to treat minerals. Products that are expected from China.

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