Coronavirus Threatens Project Spending in Metals & Minerals Industry

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The COVID-19 coronavirus is stunting economic activity in Asia, and the Metals & Minerals Industry is one of several feeling the impact of the global epidemic, which has sickened more than 90,000 and killed more than 3,000 to date. Speaking in a Wednesday webinar, Joseph Govreau, Industrial Info's vice president of research for the Metals & Minerals Industry, said COVID-19 is only one of several headwinds facing that industry, joining a slowing global economy and supply concerns.

"The main focus recently has been on decarbonization and electrification, which I believe are the most important trends impacting project spending these days after GDP/Commodity price fundamentals," Govreau said March 4.

At this point, six of the world's largest mining concerns -- including Barrick Gold Corporation (NYSE:GOLD) (Toronto, Canada), BHP Limited (NYSE:BHP) (Melbourne, Australia), Glencore plc (Baar, Switzerland), Newmont Goldcorp Corporation (NYSE:NEM) (Denver, Colorado), Rio Tinto (NYSE:RIO) (London, England) and Vale SA (NYSE:VALE) (Rio de Janeiro, Brazil)-- plan to increase project spending in 2020 and 2021, to about $28 billion for each year, marking continued growth following the market bottom of 2017, Govreau said.

Click on the image at right to see planned capital outlays for the world's six largest mining companies.

Industrial Info is tracking more than 14,000 metals and minerals projects, valued at about $992 billion that are scheduled to begin construction by the end of 2021, Govreau said. "Roughly $521 billion, about half of the overall project value, is in the global mining segment, while non-mining companies like steel mills and smelters have scheduled about $471 billion of projects to begin construction around the world by yearend 2021," he continued.

Within the mining segment, project spending is concentrated in coal, copper, gold & silver and iron ore production.

Coal: Roughly $121 billion of projects are scheduled to begin turning dirt in 2020 and 2021. Regions with the largest dollar value of scheduled capital project activity include China ($50.9 billion), South Asia ($20.5 billion), Oceania ($19 billion) and Africa ($14.1 billion). North America has only $2.9 billion of project starts scheduled for 2020 and 2021.

Click on the image at right to see a graph of scheduled capital project spending by country for coal projects over the 2020-2021 period.

Copper: Roughly $85.8 billion of copper projects are scheduled to begin construction in 2020 and 2021. By project value, the largest regions for copper projects are South America & Mexico ($38.9 billion), North America ($10.7 billion), Southeast Asia ($9.4 billion) and Oceania ($5.7 billion).

Gold & Silver: Roughly $70 billion of gold and silver mining projects are scheduled to begin by the end of 2021. The regions with the greatest level of project activity include Africa ($16.9 billion), South America & Mexico ($14.5 billion), North America ($11.1 billion) and Oceania ($8 billion).

Iron Ore: About $63 billion of iron ore projects are slated to begin construction by the end of 2021. Regions with the largest expected spend over that time include Oceania ($18.7 billion), South America & Mexico ($15.7 billion), Africa ($7.8 billion) and South Asia ($4.5 billion).

Planned non-mining capital project activity within the metals and minerals industry totals about $471.4 billion over 2020 and 2021, Govreau said. Steel mill spending, at an estimated $175.5 billion, tops the list in this segment, followed by smelters ($91.2 billion), cement plants ($85.4 billion) and metals rolling, processing & fabrication ($45.3 billion).