{"id":1168895,"date":"2020-03-02T14:42:45","date_gmt":"2020-03-02T20:42:45","guid":{"rendered":"https:\/\/www.mining.com\/?p=1015752"},"modified":"2020-03-02T14:42:45","modified_gmt":"2020-03-02T20:42:45","slug":"pdac-2020-coronavirus-weighs-on-mining-outlook","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1168895","title":{"rendered":"PDAC 2020: Coronavirus weighs on mining outlook"},"content":{"rendered":"<p>It\u2019s usually difficult to find a seat at the commodities session on the opening day of the Prospectors and Developers Association of Canada (PDAC) convention held in early March in Toronto, but there was a noticeably smaller crowd at this year\u2019s Sunday afternoon talks.<\/p>\n<div class='d-flex justify-content-center d-xs-block d-sm-block d-md-none'>\n<div id='div-gpt-ad-1561499308230-0'><script>googletag.cmd.push(function() {googletag.display('div-gpt-ad-1561499308230-0');});<\/script><\/div>\n<\/div>\n<p>At the start of his talk on the outlook for metals and mining in 2020, Paul Robinson, a director at CRU Group, noted the unusually sparse attendance \u2013 and the reason why.<\/p>\n<p>\u201cWe can\u2019t not talk about Covid-19 \u2013 coronavirus,\u201d Robinson said. <\/p>\n<p>\u201cAt the moment, there is no real change in global demand\u2026 Some travel is hit \u2013 you can see how empty this room is compared to normal, but we haven\u2019t got any sort of level of significant hit like we\u2019ve seen in China and South Korea.\u201d<\/p>\n<p>CRU Group is a London, U.K.-based company that specializes in commodities research, and Robinson shared some of CRU\u2019s insights into the current and coming drivers of change and uncertainty in the mining and metals sector \u2013 including Covid-19.<\/p>\n<p>As an example of the virus\u2019s effects in China, Robinson noted that CRU employees in Beijing have been working from home for the last three and a half weeks \u2013 self-isolating, ordering food in, and also not buying consumer goods or booking holidays. <\/p>\n<figure class=\"wp-block-pullquote alignright\">\n<blockquote>\n<p> \u201cThe longer this continues, the bigger the impact on the Chinese economy \u2013 and it\u2019s starting to have an impact on the global economy\u201d <\/p>\n<p><cite> Paul Robinson, director at CRU Group <\/cite><\/p><\/blockquote>\n<\/figure>\n<p>Empty streets in the normally bustling capital of China show that they\u2019re not the only ones.<\/p>\n<p>\u201cThe longer this continues, the bigger the impact on the Chinese economy \u2013 and it\u2019s starting to have an impact on the global economy,\u201d Robinson said.<\/p>\n<p>Important factors that will determine how big the impact will be include: how the virus is contained over next three to four weeks, how consumers react, and the type of stimulus the Chinese government applies to counter the negative economic effects of the virus.<\/p>\n<p>\u201cA lot about the second half of 2020 depends on the stimulus \u2013 there will definitely be a stimulus in China, that is guaranteed.\u201d<\/p>\n<p>If the government stimulus is aimed at encouraging consumer spending and subsidizing the green economy, copper, cobalt and nickel would see a boost, and things could start to pick up in the second half of the year.<\/p>\n<p>If that doesn\u2019t work, and the government reverts to \u201cold school\u201d infrastructure -type stimulus, it would be good for iron ore, steel and copper, but the impact would be \u201cfar less sustainable,\u201d Robinson says.<\/p>\n<p>CRU\u2019s current forecast for a basket of 38 commodities sees a 5% price decline for 2020 overall. Palladium is expected to do the best this year, with prices increasing at least 15% over 2019, and lithium is expected to perform the worst, with prices falling at least 15%. <\/p>\n<p>There is downside risk to the forecasts as they assume that the coronavirus effects will largely be contained to China and that the country will apply effective economic stimulus.<\/p>\n<p>In December 2019, CRU\u2019s view was that the commodity price cycle was at a bottom; however, there\u2019s now less certainty about metals demand, Robinson said.<\/p>\n<figure class=\"wp-block-pullquote alignleft\">\n<blockquote>\n<p> In December 2019, CRU\u2019s view was that the commodity price cycle was at a bottom; however, there\u2019s now less certainty about metals demand, Robinson said. <\/p>\n<\/blockquote>\n<\/figure>\n<p>\u201cAs long as the rest of the world isn\u2019t affected this year (by coronavirus) we should see a return to positive growth\u2026 But we need to see a return to sustainable demand growth before we\u2019re going to see the bottom of the price cycle.\u201d<\/p>\n<p>Because the larger mining companies are currently in a positive free cash flow position after having tackled cost inflation in the industry over 2013-2018, they are well positioned to control their own destiny \u2013 and can choose how to best deploy their cash, whether through share buybacks, M&amp;A or other investment.<\/p>\n<p>However, there is a risk that over the longer term, investors who are looking for \u201ccleaner,\u201d low-carbon investments may start to write off the mining industry entirely.<\/p>\n<p>\u201cThat\u2019s not a challenge for us today because we\u2019re in a positive free cash flow territory and there\u2019s not a lot of debt being raised,\u201d he said. \u201cBut if we don\u2019t start to address that challenge now and why that thinking is wrong \u2013 if you don\u2019t invest in base metals mining now, there isn\u2019t going to be the metals and minerals to actually have that less carbonized world \u2013 when we need the money it\u2019s not going to be there.\u201d<\/p>\n<p>Robinson also touched on another growing theme \u2013 the fair distribution of wealth from mining.<\/p>\n<p>\u201cWe have to get on top of fair wealth distribution. And you can add two challenges from technology that are coming \u2013 automation costs jobs and remote working costs (local) salaries.&#8221;<\/p>\n<p>&#8220;That\u2019s not a bad thing, but if you then also try to go forward with local partners on existing mine distribution models on existing head count models, there\u2019s going to be a gap in expectations. So in a mine that employs 50% less staff and has them all remote working 500 km away, how do I make sure that the local communities (benefit)?\u201d<\/p>\n<p>PDAC 2020 continues through Wednesday, Mar. 4 at the Metro Toronto Convention Centre.<\/p>\n<p><em>(This article first appeared in the&nbsp;<\/em><a rel=\"noreferrer noopener\" href=\"http:\/\/www.canadianminingjournal.com\/\" ><em>Canadian Mining Journal<\/em><\/a><em>)<\/em><\/p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Sparse attendance in Toronto convention shows impact of the virus outbreak.<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[2648,624,369,4],"tags":[],"class_list":["post-1168895","post","type-post","status-publish","format-standard","hentry","category-careers","category-education","category-miningcom","category-news"],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1168895","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1168895"}],"version-history":[{"count":1,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1168895\/revisions"}],"predecessor-version":[{"id":1168896,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1168895\/revisions\/1168896"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1168895"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1168895"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1168895"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}