As the financial world braces for more volatility in the wake of the ongoing Coronavirus (COVID-19) pandemic, precious metal mining operators in South Africa are focused on operations. In North America, precious metals like gold and silver are on the decline — though some mining operations like VanEck Vectors Gold Miners ETF (NYSEArca: GDXJ) and VanEck Gold Miners ETF (NYSEArca: GDX) are surging on the equity side.
While the sharp declines in gold, uranium, silver, and platinum markets are likely temporary in North America, the impacts of the novel coronavirus on mining operations in sub-Saharan Africa may present itself as a long-term threat for precious metal mining productivity in the region.
While production has been decreasing steadily since 2008 (with 2013 as the exception), South Africa is still a major source of gold production (~130 tons per year).
In addition, South Africa is a primary source of Platinum (110,000 kilograms per year) and a minor source of Uranium and Bauxite.
Sub-Saharan operations like American Platinum Ltd. and Sibanye Stillwater Ltd. are already preparing for the very real potential of COVID-19 community spread, which could ripple through the South African precious metals industry — giving wake to a shift in precious metal trade dynamics.
The State of COVID-19 in South Africa
On Sunday, March 15th, South African President Cyril Ramaphosa declared that COVID-19 was a "national disaster," saying South Africa had never "been confronted by such a severe situation."
As of today, there are no known cases of coronavirus community spread in South Africa. Salim Abdool Karim,Director at the Centre for the AIDS Programme of Research, notes that there haven't been any upticks in respiratory illness among South Africa's most AIDS-dense populations.
But that could change — fast.
Italy's coronavirus timeline shows just how rapidly respiratory illnesses like COVID-19 can overtake a population. From March 1st to March 22nd, Italy saw their cases rise from 1,694 to 59,138. If community spread takes hold in Africa, the situation could be even more severe.
While the average age of Africa is much lower than many other areas of the world (a mere 3% of sub-Saharan Africa's population is over 65), the national HIV epidemic and high rates of tuberculosis make the South African population particularly vulnerable to respiratory illnesses.
Cramped Mines May Be a Ticking Time Bomb
For mining operators, age isn't necessarily an advantage. Thuthula Balfour, Head of Health for the Minerals Council South Africa, told Bloomberg that many of the precious metals miners are in their 50s and suffer from chronic health conditions.
Given the cramped, confined spaces of mines, any spread of the novel virus could be catastrophic for production.
Precious metal mining companies in the sub-Saharan are attempting to prevent COVID-19 spread in those cramped quarters. According to Bloomberg, Anglo American Platinum Ltd. and Sibanye Stillwater Ltd. are both implementing temperature checks in their South African mine shafts.
In fact, the mining operations have a few advantages over the general population. Most major mining companies in South Africa have created a robust health network to prevent tuberculosis spread in mining shafts, and contract-tracing and case mitigation are commonplace.
A week ago, the Minerals Council said that they were "putting in place risk-mitigating measures to rapidly identify any cases of the coronavirus." They also hinted that they would be willing to "mobilize large-scale medical facilities" if necessary to combat any community outbreaks.
But will it be enough?
South Africa is a vulnerable population; the close quarters of mining shafts are ideal environments for virus spread. The CDC and WHO are still unsure if hotter temperatures will slow down the spread, and South Africa is preparing for the worst.
In the immediate, things may be looking up. Xi Jinping says that China is still on course to meet production goals, and the slow down of precious metal exports from Africa to China may be coming to an end.
However, if the novel coronavirus hits community spread in the sub-Saharan, finding buyers may be the least of mining operations concerns. Productivity could stall.
Weathering the Storm With Resource Erectors
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