Fitch Solutions sees increasing downside risk to mineral production as the Covid-19 pandemic raises the chances of persistent operational disruptions.
In their latest report, Fitch analysts point out that although mining operations tend to be in more remote locations, there is an increasing scope for reduced personnel flow and supply chain disruptions due to government actions leading to a reduction or halt in mine production.
Fitch notes that while relatively few firms have announced operational disruptions as of yet, the firm expects this will rise as countries implement quarantine efforts to contain the virus.
Fitch reduced mineral production forecasts for Peru by 4% y-o-y each from previous levels as the government announced emergency measures on March 15
Analysts already reduced mineral production forecasts for Peru by 4% y-o-y each from previous levels as the government announced emergency measures on March 15.
Peru recently implemented 15-day emergency isolation measures and some miners have released statements in response.
Freeport McMoRan placed Cerro Verde mine on care and maintenance, Anglo American announced it would slow construction at the Quellaveco copper project for 15 days and Newmont announced it would scale down mining operations at its Yanacocha gold mine with production from leach pads continuing.
The virus’ spread to other major mineral producers, including Australia, could lead to additional quarantines if the spread overwhelms the country’s healthcare system which could force governments to implement more restrictive personnel measures, Fitch notes.
As such, mining operations are facing increasing risks to operations which could hamper output and lead analysts to revise 2020 production forecasts lower.
Read the full report here.