Capital expenditure for the world’s 20 leading mining companies grew by 12% in 2019, reaching $49.1bn. Whilst not as significant a growth as in 2018 (+20%), it signalled a continued steady recovery from the lows of 2016 and 2017.

Initial forecasts for the leading 20 miners pointed at 11% growth in 2020 to $54.7bn, supported by an increase of 28% for Rio Tinto and 24% for Vale. For Rio Tinto, it had deferred $500m of CapEx from 2019 to 2020, with 2020 CapEx expected to be US$7bn versus $5.5bn in 2019.

For Vale, it plans to spend $5bn in both 2020 and 2021, up from just over $4bn in 2019, with significant investment into reducing the use of tailings dams after recent accidents. Together with the other three leading miners, Anglo American, BHP and Glencore, the top five forecast capital expenditure of over $30bn.

Whilst all miners are taking every precaution to avoid the virus impacting their operations, the ongoing spread is leading to a number of actions at the company or country level that are expected to impact mining sector capital expenditure this year.

For example, the recent announcement of a 15-day quarantine in Peru, the world’s second-largest copper producer, has meant miners such as Anglo American, Pan American Silver and Newmont, have had to put a halt to operations, which includes the slowing of work on Anglo American’s major Quellaveco copper project.

In Canada, Vale has decided to ramp down its Voisey’s Bay mining operation, placing it on care and maintenance for four weeks. This is to help to protect the health of the local indigenous communities, even though no employees have yet tested positive. The company reported it will impact the mine’s expansion project underway to transition to underground operations.

Antofagasta announced on 17 March that its CapEx guidance for 2020 was between $1.3-$1.5bn, as opposed to $1.5bn as previously announced and: “In view of the current global situation, the expenditure programme is being reviewed to identify possible savings or deferrals.”

Even where shutdowns are not occurring, restrictions on the movement of people and supplies will inevitably delay development work. This was announced on 16 March by Rio Tinto regarding its Oyu Tolgoi mine in Mongolia where, for the underground development, “progress is being slowed…There is restricted access for teams from Rio Tinto, Oyu Tolgoi and our construction partners to oversee the development and provide specialist technical services”.

These delays are expected to continue as further precautions and lockdowns take place to avoid further spread of the disease, with more 2020 capital expenditure deferred into future years as mine developments are delayed.