The coronavirus Covid-19 pandemic has caused global stock markets to drop, commodity prices to tumble, and mine production outputs globally to take severe hits. With the outbreak likely to disrupt the global economy for several months, Mining Technology investigates the countries where a hit to the mining industry could be disastrous for the wider economy.
The Mining Contribution Index (MCI), compiled by the International Council of Mining and Minerals (ICMM), ranks the significance of the mining sector’s contribution to national economies. The most recent MCI was released in 2018 and shows that low to middle-income economies are largely dependent on the mineral sector.
According to the ICMM, MCI scores and rankings indicate the relative importance of mining to the economic life of a country; they are not a measure of success for the mining sector in those countries.
Suriname rose 46 places over the previous edition of the MCI, topping the ranking in 2018, caused by large increases in mineral rents and in metals and minerals production value since the 2016 edition of the report. Combined with a 38% decline in Suriname’s GDP, Suriname was able to overtake countries that historically held a greater role for mining in their economies.
Suriname’s main export commodities are gold and oil. There is one large-scale gold mine in Suriname, Rosebel, in which Canadian Iamgold owns a 95% stake, the remaining stake being held by the government of Suriname. The Rosebel gold mine began production in 2004, and by 2016 had produced 4.4Moz of gold.
Since 14 March 2020, Suriname’s borders and airports have been closed, following the first confirmed Covid-19 case in the country the day before. There are currently eight confirmed cases in the South American country.
The New York Times reports that falling prices for Suriname’s two main commodities over the past month has left the country without enough hard currency to pay off its debt and import basic goods. Iamgold announced this week that its Rosebel mine continues to operate but the site is moving to self-confinement to reduce the risk of Covid-19 spreading to the mine site.
The Democratic Republic of the Congo
The DRC is perhaps more famous for its mineral industry than Suriname, and indeed the Central African country is one of the largest contributors to global mining production when ranked by the sheer monetary value of the mining sector, rather than the sector’s significance to the national economy.
In 2009, the DRC had an estimated $24tn in untapped mineral deposits, and the country is a significant player in the world’s production of cobalt, copper, diamond, and gold. It also holds the world’s largest reserves of coltan, which is a source of the tantalum used in many electronic devices including mobile phones. The country’s mining sector enjoys an abundance of foreign involvement, with at least 25 international mining companies operating in the DRC as of 2011.
On 24 March 2020, President of the DRC Félix Tshisekedi imposed a state of emergency and closed the nation’s borders in response to the Covid-19 pandemic. There have been 48 confirmed cases in the country since the first confirmed patient on 10 March. The governor of Haut-Katanga province, Jacques Kyabula, issued a lockdown order on 22 March. Haut-Katanga is a copper and cobalt heartland and combined with Lualaba province accounts for almost all of the DRC’s cobalt production. In Lualaba province, Glencore’s Kamoto Copper Company mine, a copper and cobalt operation, repatriated 26 foreign workers this week in response to the DRC’s outbreak, according to Reuters.
Perhaps unsurprisingly, China contributes the most to the global mining industry through sheer volume, dwarfing countries like Australia and Russia, with the country’s metal and coal production valued at $626.3bn in the 2018 MCI. China is the world’s largest gold producer, and also contributes large portions of the world’s coal production, as well as being a significant source of income for mining and mineral companies worldwide.
The Covid-19 outbreak was first identified in Wuhan, in China’s Hubei province, in December 2019. While China’s response to the outbreak has now seemingly ‘flattened the curve’ – reducing daily case numbers and reducing overall strain on the country – the wider economic impact of China’s outbreak, both domestically and internationally, is not yet understood.
Nonetheless, a decline in manufacturing in China has made global mining companies nervous. China’s manufacturing index fell to its lowest reading since the survey began, dropping to 35.7 in February from 50 in January. A slowdown in manufacturing, both during the outbreak and in its aftermath, means that China will be importing fewer metals and minerals. Major PGM producer Nornickel was cautious in its annual results announcement at the end of February but warned that its 2020 outlook could be undermined depending on the severity of the coronavirus outbreak.