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The mining industry prepares for the crisis

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Electricity crisis’ effect on the mining industry Description video: Eskom’s inability to keep the lights on dealt a major set back to the mining industry. Henk Langenhoven, Chief Economist from the Minerals Council South Africa weighs in on how mining […]

Electricity crisis’ effect on the mining industry

Description video:
Eskom’s inability to keep the lights on dealt a major set back to the mining industry. Henk Langenhoven, Chief Economist from the Minerals Council South Africa weighs in on how mining companies want to solve the problem. Courtesy #DStv403

The mining industry prepares for the crisis

Large mining companies are better prepared for the current crisis than in previous downturns. However, small market participants can experience significant problems as their capital gradually dries up.

International Monetary Fund predicted pandemic could trigger biggest recession since the Great Depression of the 1930s.

The entire mining industry is facing difficult times. An exception may be large companies that already have agreements on development projects, plans to increase investments and search for new deposits..

«By and large, mining companies are now much more resilient than they used to be. Huge amounts of debt have been written off and a significant amount of cash returned to shareholders. History shows that in times like these, having a strong partner in your registry or at the project level through a joint venture is key.», – said Justin Mannolini, partner of Gilbert and Tobin in Perth.

«If you are on your own, you have serious problems as the market will potentially be closed to most newbies for a very long time.», – he added, assessing that the stagnation could stretch until 2022.

The mining industry prepares for the crisis

Gold miners are well equipped to weather the crisis given the attractiveness of the precious metal as a safe haven for investment.

But the electricity and part of the mining industry may face big problems in finding funding, said James Eginton, Senior Investment Analyst at Tribeca Global Natural Resources Fund in Sydney.

Nevada Copper Corp opened the first U.S. copper mine in 40 years last December, then froze production in April due to coronavirus. 

Young and small companies can be saved by having a worthy project in the center of attention of larger players.

Since business development teams and geologists are forced to work remotely, all their forces are now being thrown into the search for new projects and investors..