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Miners adapt to COVID-19 while focusing on long-term metals demand

Global miners, including Vale and BHP, are adapting quickly to new safety regimes in continuing to operate iron ore, coking coal and metals mines during the COVID-19 pandemic, while maintaining a focus on long-term demand for steel and metals led by Asia.

At a Bank of America investor event this week, BHP CEO Mike Henry and Teck Resources CEO Don Lindsay were among industry leaders demonstrating their focus on support services, and implementing social distancing and enhanced checks at operations.

Rio Tinto CEO Jean-Sebastien Jacques said all its assets are operating, after a “tactical response” with roster changes and screening.

Vale CEO Eduardo Bartolmeo said the company worked with world class safety operations, including “massive testing and GPS-based contact tracing.”

While supplies may be assured, demand for iron ore, ferroalloys and coking coal has weakened as steel mills outside China cut output, and slower auto output and disruption among components crimped base metals demand.

The outsize role of Asia, and China, in driving longer-term demand for steel raw materials and metals continues supporting projects such as expansions in Vale’s northern iron ore mines, and an upgrade to port and coking coal mines at Teck, the second largest seaborne met coal supplier.

BHP remains focused on the underlying demand drivers of population growth, urbanization, industrialization and increased standards of living, its CEO said, adding that it is too early to see the longer-term impacts of COVID-19 on its markets.

“The fundamental need for our commodities remains,” Henry told the Bank of America Global Metals, Mining and Steel Conference on Tuesday, according to a transcript.

“We anticipate that global steel and primary energy demand will both grow slightly faster than population growth for decades to come, while copper, nickel and potash will do a little better than that.”
Recovery

However, BHP does not foresee a V-shaped recovery from here.

At the end of 2021, a 4% contraction in the global economy due to COVID-19’s impact is its base case, he said.

Rio Tinto, the largest iron ore supplier to China, showcased access to growth markets for iron ore and aluminum, and highlighted geopolitics as the dominant factor shaping scenarios, as the world’s economy recovers from the pandemic.

Miner Fortescue Metals Group, which implemented roster changes and screening around its iron ore mines in Western Australia, said it plans to start construction its 22 million mt/year Iron Bridge magnetite project in the second half of this year.

Detailed engineering on the project to supply a 67% Fe concentrate is over half way through.

FMG’s Eliwana iron ore project with an associated new rail link is progressing on schedule and budget with a $1.275 billion capex, CEO Elizabeth Gaines said in a presentation.
China, iron

China may see slight pig iron demand growth in 2020, while the rest of the world may see a pig iron fall in the double digits, BHP estimates.

Copper demand may fall, while it will be more resilient than steel, as supplies are affected by the pandemic.

Some mines have adapted to a lower workforce and capacity, with temporary idling in South American copper mines and projects, based on local directives, and in response to weaker demand.

Antamina operations were idled in April, while Teck said its Quebrada Blanca copper project in Chile suspended construction temporarily in March and site activities remain on hold. The project was currently 29% complete, Teck CEO Lindsay said in a presentation at the conference.

Teck said it completed 13,266 inspections related to COVID-19 at its coking coal operations in Western Canada, with a 50% reduction in related workforce.

Teck said its upgrade to Neptune coal terminal in Vancouver was advancing with no substantial impact from COVID-19 related issues.

The company expects to commission a new ship loader and related facilities around year-end, increasing terminal capacity, with completion expected in Q1 2021.

Teck has just completed a $135 million expansion at Elkview Plant to increase coking coal capacity at the site by 2 million mt to 9 million mt/year, along with additional work at Fording River and Elkview mines.

Teck has three other coal projects to consider as overall annual production capacity reaches 27 million mt in 2021.
Source: Platts

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