Many developing countries are yet to see significant increases in the spread of COVID-19, but should the pandemic take hold on the scale experienced by Europe and North America, the effects could be devastating. This is partly because millions in these developing countries live in informal settlements where social distancing will be impossible, and are served by weak institutions and limited health infrastructure.
The economic crisis of COVID-19 is already significantly impacting resource-dependent countries in Africa and Latin America. And unlike the developed economies of Europe and North America, they will not be able to finance a large fiscal stimulus. Overall, more than one in three of the countries, areas or territories where COVID-19 has a foothold are resource-dependent, generating in excess of 20 per cent of their export revenues from minerals and metals or hydrocarbons, and where resource rents (ie the difference between revenues and extraction costs) amount to more than 10 per cent of GDP. These resource-dependent countries are home to almost 30 per cent of the global population based in some of the world’s poorest nations, with 230 million people living in extreme poverty on less than $1.90 a day. How industry supports communities and workers during the crisis and beyond will be pivotal.
ICMM company members have donated more than US$315 million to global response efforts through COVID-19 funds and individual company donations to national relief efforts. This figure only scratches the surface of work being undertaken by members and does not include costs for donations of goods in kind (eg care packages, medical equipment and personal protective equipment [PPE]), provision of company facilities or support for emergency critical infrastructure. It also does not include financial contributions from joint ventures and salary sacrifices made by senior management teams.
As the world sets out on the road to recovery, the mining and metals industry can, by coming together with government, civil society and the private sector, help communities to persevere and rebuild, and in doing so build back better. In striving for this end, industry can be at the forefront of endeavours to upskill workers, strengthen services and develop infrastructure to ensure local resilience in a changing world.
Resource-dependent countries are particularly vulnerable to shocks to the global economy as they are reliant on strong commodity prices to finance their budgets and service their debt burden. Since the start of the outbreak oil prices have declined by more than 50 per cent, and most metals and minerals by 20 per cent, as a result of economic lockdowns and job losses sharply contracting demand for consumer goods.
While many resource-dependent countries have been able to manage historical financial crises by taking advantage of low interest rates and significantly increasing government debt – particularly between 2008 and 2019 – this is unlikely to be the case this time round. They are entering this crisis with already high debt levels and significant refinancing risk.
Even if the pandemic is contained, it is unlikely that many commodity prices will rebound very quickly amid growing stockpiles of metals and minerals and a deceleration of economic growth in China, which accounts for half of global metal demand.
In this context, it has never been more important that the mining and metals industry helps to build local and national resilience through its actions. As the global community responds to the COVID-19 pandemic, ICMM members have actively supported community services and needs, both in making significant donations to COVID-19 funds and in delivering practical support.
For more information on the actions taken by ICMM company members – visit the ICMM website or download our briefing paper COVID-19: MINING WITH PRINCIPLES TO ADDRESS A HEALTH AND SOCIAL CRISIS.