Editor's Note: Mining Journal is making some of its most important coverage of the COVID-19 pandemic freely available to readers. For more coverage, please see our COVID-19 hub. To subscribe to Mining Journal, click here
Despite the fact mining operations tend to be in more remote locations, Fitch sees increasing scope for reduced personnel flow and supply chain disruptions due to government actions leading to a reduction or halt in mine production.
"As countries grapple with how to contain or slow the spread of the virus, we expect this could lead to operational disruptions at mining operations. This inherently raises a downside risk to our mineral production forecasts globally should these disruptions be prolonged," Fitch analysts said in a note.
While relatively few firms have announced operational disruptions, Fitch expects this will rise as countries implement quarantine efforts to contain the virus. "We highlight the Peruvian government's recent announcement below has led us to reduce our mineral production forecasts accordingly for that market."
While countries are implementing measures at their own pace as the severity of infection varies from country to country, Fitch is seeing consistent operational disruptions in the mining sector.
For example, in China some mining operations remained closed for a few additional weeks following the end of the lunar new year as the country implemented strict measures which restricted the flow of workers back to operations. In Italy, where the government recently instituted a country-wide lockdown, similar anecdotal evidence is evident. For example, Alta Zinc shut its Gorno project in order to avoid personnel interaction at the site.
With the rate of infection likely to increase in major mineral producing countries, this raises the likelihood of similar measures to Italy and China being instituted. This would create mounting pressure on firms to reduce personnel interaction or be forced by government decree to do so, which could ultimately hinder output.
Barrick Gold has started putting in place procedures to restrict mine access and screen employees and contractors at each of its operations. Freeport McMoRan announced the temporary work stoppage at the Cerro Verde mine in Peru due to the government's national emergency decree.
Should the virus reach employees within an operation's logistics network, this could prevent the flow of inputs to a mining operation and thus hamper output, Fitch said.
