Covid-19 Executive Briefing

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

Powered by

- ECONOMIC IMPACT -

Latest update: 11 August 

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

Concern over the spread of Covid-19 remains volatile but business optimism remains high.

4.1%

Fitch Ratings reports that the combined GDP of the US, China, and the Eurozone
contracted by 4.1% (QoQ) in Q2 2020.

8.6%

The Swedish economy contracted by 8.6% (QoQ) in Q2 2020, according to
Statistics Sweden.

Impact of Covid-19 on employment

- SECTOR IMPACT: Mining -

Latest update: 12 August

GlobalData analyst view:

"Commodity prices began to stabilise in May, supported by rising demand from China and continued supply constraints, whilst sentiment is improving as lockdowns end."

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 capital expenditure

Original guidance for 20 leading miners’ capex growth was 11% in 2020. However, there is now set to be a fall as majors make significant reductions.

Rio Tinto’s capex for the full year is expected to be $5-6bn, down from the previous guidance of $7bn.

Anglo American is cutting its 2020 capex by $1bn to $4-4.5bn.

Glencore is cutting capex from $5.5bn to between $4-4.5bn.

However, Coal India Limited reported a higher capex for Q2 at Rs8.44bn, versus a plan of Rs7.2bn.

Share this article!