The production costs for miners are based on several socio-environmental factors that vary according to the ores being mined. Verdict has conducted a poll to analyse how the COVID-19 pandemic will impact miners’ production costs in 2021.
Analysis of the poll results shows that COVID-19 will result in increased production costs for miners, as opined by a majority 62% of the respondents. While 32% of the respondents anticipate a slight increase in the production costs, 30% anticipate a significant increase.
Further, 23% of the respondents voted that COVID-19 will decrease miners’ production costs, including 13% who foresee a slight decrease in costs and 10% who anticipate a significant decline.
The remaining 15% of the respondents opined that the pandemic will not impact miners’ production costs at all in 2021.
The analysis is based on 156 responses received from the readers of Mining Technology, a Verdict network site, between 11 August 2020 and 01 March 2021.
Impact of COVID-19 on miners’ production costs
The COVID-19 pandemic has led to delays in the production and development of mining projects due to travel-related and other restrictions. The restrictions also disrupted the supply chain, risking operational activity and production outlook. Last year, the world’s top gold miners such as Newmont, Gold Fields, and Barrick cut back on production despite the surge in gold prices, as they focused on investor returns rather than production growth.
Screening and distancing measures are expected to be in place for many upcoming months, adding to the production costs of miners, although lower crude oil prices due to the pandemic have translated into lower operating costs. Digitalisation and diversifying the mine-to-mill value chain are expected to help miners in optimising their production costs, according to KPMG.