Due to the novel coronavirus pneumonia epidemic, many mining areas have been closed down, various large-scale mining activities have been abolished, mineral products prices have fallen, and the global economy has been hit.

    Recently, mining Weekly reported that S & P global market Intelligence) report shows that at least 275 mining operations around the world have been interrupted, affecting 36 countries. So far, only 36 mines have been reopened to some extent, but some of them have had to close down after a new outbreak in their respective mines.

    The report also said that the three major commodities affected were gold (111 mines), silver (101 mines) and copper (51 mines). Latin America was the most affected area, while Peru, Chile and Mexico were the three countries with high global income risk.

    What what measures have novel coronavirus pneumonia adopted by the local government in the countries affected by the new crown pneumonia? How did the mining enterprises respond to these problems? What impact did the mining industry with such larger influence on the global supply and market demand on gold, silver and copper mines?

    Many measures taken by governments to control the epidemic situation

    The recovery pace of mining industry in Latin America has been hindered by the grim situation of the epidemic situation in Latin America. According to sources, the Peruvian government had predicted that by the end of July, the mines would almost return to their pre epidemic levels. But for now, previous forecasts look too optimistic.

    What measures have been taken by the local governments of several mineral rich countries in Latin America that have been seriously affected by the epidemic?

    In Chile, the government has stepped up its response to the epidemic. As the number of confirmed new coronavirus cases continues to rise, the Chilean government declared a "state of disaster" on March 19. Chile's president Pinera held a press conference on July 19, announcing the country's "step-by-step and flexible implementation" plan.

    In Peru, the government has taken measures to prevent the spread of the new coronavirus throughout the mining industry. Since March 19, mining companies have been asked to move only key employees to the mine, implement contingency plans that adapt to the situation, and ensure health protection for 15 days. But soon after, the Peruvian government suddenly announced that it planned to officially launch the economic recovery plan from May, pointing out that the * * stage of "returning to work and production" will start from May 2020, and mining and industry will be the first to restart.

    In Mexico, Mexico's foreign minister, Marcelo ebard, announced the country's health emergency, saying that individuals or businesses that violate the rules will face administrative or criminal penalties. He also said the state of emergency will be implemented until April 30. In response to the blockade measures taken by the government to prevent and control the epidemic, most of the mine production was suspended in early April. In early June, after the government declared mining a necessary industry, mining companies began to restart mines. Not long ago, Francisco Quiroga fern á ndez, Mexico's Deputy Minister of mining, praised mining companies for their cautious return to work.

    As for the measures taken by local governments, Nick Pickens, research director of wood Mackenzie, said in a report that some measures can enable the government to control the food and medical supply chain and distribution as well as border protection, and implement curfews and social gatherings, which play an important role in controlling the further spread of the epidemic and recovering mining development as soon as possible.

    Reduce the impact of the epidemic situation to a low level

    According to Reuters, novel coronavirus pneumonia deaths in Latin America are now more than 200 thousand cases. The report said that the region has many difficulties in curbing the spread of the virus, and the spread of the virus in many countries is accelerating.

    Novel coronavirus pneumonia is spreading rapidly. What measures have been taken to maintain production after mining enterprises have closed down the mines?

    One is to close the mining area for maintenance. In the case of mine closure, it is indeed a good measure to clean up the mining area and maintain the equipment. Many large mining areas have taken this measure, including: the copper mine in Peru, Cerro Verde of mcmurren copper and gold company in Freeport, and Constancia copper mine under hudbay minerals in Canada. Rio Tinto suspended the production of Richards Bay minerals in South Africa on March 26 to maintain and maintain the mining area. In April, Vale said it would carry out a one month maintenance and maintenance of the copper mine in voisey's Bay, Canada. Silver producer Pan American Silver announced on July 20 that there were workers in huaron and morococha mining areas in Peru, and the epidemic situation was detected to be positive. Therefore, huaron and morococha mining areas were adjusted to "maintenance" status and relevant business was suspended.

    Second, close some mining areas and slow down production. Some mining companies, due to their remote location and ability to ensure the health of their employees, decided to slow down production and continue to operate. For example, Rio Tinto slowed down the production of aluminum assets in Canada; Anglo American slowed down the construction of quellaveco copper mine project in Peru, as Peruvian President piscara declared a state of emergency, requiring people to isolate themselves at home, which will last for 15 days.

The third is to close the mining area, isolate at home and work remotely. For example, Vale has taken different measures for branches or subsidiaries in different regions: in Chile, people with potential health conditions or other risk factors are isolated at home; in London, Singapore, Houston and Melbourne, staff work remotely according to government regulations.

    What is the impact of closed mine supply and demand

    Latin America is currently a hot spot for global mining investment and dominates the world's copper, silver and iron ore production. What is the supply and demand for gold, silver and copper in Latin America?

First of all, the supply of gold has declined. Statistics from the World Gold Council show that despite the closure of Mines due to the global new coronavirus, gold production is only 3% lower than last year's * * quarter. Because gold deposits are scattered around the world, this makes gold mining flexible and helps reduce the impact of the new coronavirus on gold production. Second, the demand for gold has increased. According to the World Gold Council, gold ETFs attract huge amounts of money. Overall, the global gold holdings increased to 3185 tons, a record high, 298 tons more than last year, and the demand for gold coins increased by 36% year on year.

Let's talk about silver mines. In terms of output in 2019, Mexico is still the world's largest producer of silver. In 2019, its output increased from 6120 tons to 6300 tons, far surpassing Peru, which ranks second. The global novel coronavirus pneumonia epidemic has worsened the economic outlook. Silver deposits are as follows: first, the supply of silver has been reduced. Michael dirienzo, executive director of the silver Institute, said production of silver minerals in Latin America is expected to decline by 13% this year and global supply by 7.2%. According to the association, due to the closure of mines in Peru and Mexico at the beginning of this year, this part of production accounts for almost 40% of the world's supply. Although the current market shortage is very small, it is the number of times in five years. In addition, foreign media reported that mining production in Mexico, a big silver producer, will shrink by 17% by 2020. Second, the demand for silver ore has increased. According to the silver Institute, investors' demand for silver has increased by 10%. Silver based exchange traded products (ETPs) have grown significantly, reaching an all-time high so far this year, as well as investment in silver coins and gold bars.

    ***After that, we will talk about the impact of closed copper mines on supply and demand. Chile and Peru have more than 40% of the world's copper reserves, of which Chile's reserves are more than 200 million tons, accounting for about one third of the world's reserves, ranking first in the world. From this we can see that the supply and demand of copper mines in Peru and Chile are of great importance. Chile, as one of the world's largest copper producers, has been infected by more than a quarter of the world's copper producers. In addition, novel coronavirus pneumonia outbreak was affected by global copper production in 2020, according to data analysis GlobalData. The company cut copper production growth this year to 1.9% from its previous forecast of 3.4%. In addition, Nick Pickens said in a report that containment measures against the new coronavirus posed a significant risk to global copper supply and project development. If mines in Peru and Chile are closed for 15 days on a large scale, our global annual supply will be reduced by 1.5% and it will take 45 days to reach the annual mine interruption limit, Pickens said. Second, the demand is reduced. Data analysis GlobalData said novel coronavirus pneumonia and blockade measures were the main factors affecting the construction of 40%-45%, which accounts for the world's copper consumption. The decline in copper demand is mainly due to a slowdown in construction activity in China, a big consumer country, since mid January.

What is the future of the three commodities

    What gold, silver and copper prices will look like in the second half of 2020 and in the future will depend on global economic performance and the rate at which industrial activity in China and the rest of the world begins to recover.

    First, gold's hedging advantage will continue to attract investors. ***Recently, the price of gold continued to refresh, "gold is still in the front of volcanic eruption, has not yet erupted." Wang Lixin, China's managing director of the world gold association, recently commented on the current gold market. Louise street, the market information advisory department of the World Gold Council, said that consumer demand in the global gold market was likely to remain sluggish in the next six months. However, the continued uncertainty and the further spread of the epidemic mean that the safe haven advantage of gold will continue to attract investors in the foreseeable future.

Second, industrial demand for silver may push up platinum prices. Silver demand in the industrial sector accounts for about half of the global silver demand. With the continuous recovery of industry in the second half of the year, silver demand will increase. Due to the continuous impact of overseas epidemic situation, the market's expectation of closing down or stopping production of silver mines in Latin America and copper mines (silver associated minerals) in the main silver producing areas increased. The logic of supply and demand also benefited silver prices. Goldman Sachs said that while the economy recovers, panic demand for gold will decline, but industrial demand for silver will increase, so the future market will be more bullish on spot silver prices than spot gold.

    Third, copper demand will continue to rise, copper prices may rise. In addition to the rebound in China's demand, other signals also indicate that the copper market is recovering, which may also support copper demand. "Supply risk is a strong temporary driver, and on this basis, the upward momentum of copper prices is likely to intensify further," Orey Hansen, head of commodity strategy at Semper, said in an email Smith of commodity market analytics believes that "the road ahead may be bumpy, but in view of the superior fundamentals of copper prices and the improvement of demand environment, copper prices should have an upward trend in 2021".

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