Covid-19 Executive Briefing

Understanding the economic impact of the Covid-19 pandemic and the implications for the mining sector

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- ECONOMIC IMPACT -

Latest update: 14 July 

Many economists have cut their GDP forecasts. The 2020 consensus forecast for GDP growth is currently negative and many predict a recession.

Although concern over the spread of Covid-19 remains volatile, business optimism continues to improve.

-4.5%

Industry body FICCI projects India’s median GDP growth at -4.5% in FY21, a sharp downward revision from its previous forecast of 5.5% growth. 

9.1%

The UN forecasts 9.1% contraction in GDP in Latin America and the Caribbean

impact of covid-19 on employment

- SECTOR IMPACT: Mining -

Latest update: 15 July 

GlobalData analyst view:

"The immediate impact will be hardest for those in commodities most tied to economic growth, such as construction and transport, with the recovery dependent on the bounce back of the global economy"

The latest forecast for global construction output growth is a decline of 3.2%, versus initial expectations of 3.1% for 2020.

A slowdown in construction has impacted copper and steel demand, with copper demand forecast to be down by 3% in 2020 and iron ore demand down by 2.8%.

Suspensions of mining have ended in most countries with mining in Mexico permitted to resume on 1 June.

impact on operations

Mining companies are undertaking a range of measures to minimize the potential for infections and the impact of the virus on mining operations.

However, despite efforts to minimize the spread of the virus, some mines are identifying large numbers of cases as high numbers of tests are carried out.

Following the death of a third worker at the site, Codelco has suspended operations at its Chuquicamata mine and smelter to avoid further infections. The mine accounts for a quarter of the company’s output.

Unions representing Codelco workers have stated that nearly 3,000 workers have been infected with Covid-19 and urged for more safety measures at the company’s operations.

Vale announced a reduction from $5bn to $4.6bn as expenditure will be delayed until 2021.

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