Mining After COVID: The South African Case
While the fight against COVID-19 continues, it is inevitable that the pandemic will have significant impacts on the global economy. As many countries continue to practice social distancing, impose business restrictions, and limit travel, assessments of the economic impacts of COVID-19 are continually shifting. The International Monetary Fund’s midyear assessment predicts that 2020 will see global economic activity contracting by about 5%, with varying degrees of impact across industries and geographies. From our own work with mining players, it is clear that mining will be impacted along at least three dimensions. First, mining received a direct hit in certain geographies where mines were forced to shut due to COVID-19 outbreaks or general lockdowns. In South Africa, this impact was particularly acute, with our current scenario modeling estimating that 15% to 25% of South Africa’s 2020 output will be lost due to lockdown and resultant ramp-up of production. Second, the medium-term will hold significant uncertainty for commodity demand and prices as the recovery of end-use sectors continue to unfold with uncertainty. Third, mining companies in South Africa and abroad will have to adapt their operating models to ensure safety and sustainability.