John Steen is a EY Distinguished Scholar in Global Mining Futures, University of British Columbia.
Some have called the COVID-19 crisis a black swan event. It has had an extreme impact and the world was unprepared for what has transpired, even though, in hindsight, it was not unexpected.
The mining industry has also been caught up in the turmoil. While previous global economic downturns hold clues as to what will happen next, there are several aspects to this crisis without similarities to the other economic collapses that have affected the mining industry.
A mining downturn like no other
Mining industry downturns are usually due to a decrease in demand. When economic growth slows down there is a decline in general industrial activity and this slows the demand for mined products, which causes falling prices.
For example, metal prices fell dramatically following the 2007-08 global financial crisis. In the preceding years, Chinese growth fuelled consumption of industrial metals, expanding production and driving prices upward. When the global financial crisis spread from the United States to the rest of the world, demand declined and metal prices fell in response.
This coronavirus crisis is different. Yes, demand for mined products is falling as economic activity slows down, but for the first time falling demand is accompanied by significant supply-side upheaval.
For the rest of this article: https://theconversation.com/how-the-coronavirus-pandemic-has-disrupted-the-global-mining-industry-137384?utm_source=baytoday.ca&utm_campaign=baytoday.ca&utm_medium=referral