A survey by global law firm White & Case of senior mining and metals decision-makers has revealed that the fear of a global recession was the top concern in the post Covid-19 economy.
The survey, which included responses from a record 67 senior decision-makers, also saw 39% of respondents citing global market weakness as the largest threat to the industry, in stark contrast to the sentiment in January, where trade tensions were deemed the biggest risk.
“After an encouraging start to the year, the global economy has been struck by the unprecedented force of the coronavirus pandemic. Given most mineral commodities’ dependence on global growth, combined with mine-level shutdowns and the sector’s reliance on functioning global supply chains to bring products to market, much of the mining and metals space was hard hit early on,” the report stated.
“Responses to our survey illustrate the sheer scale of the shock to the market, and how Covid-19 has impacted investor expectations. While 39% cite global market weakness as their biggest concern, trade tensions, which had been deemed the biggest risk in January, have dropped from 26% to just 5%.
“While the US and Chinese governments have signed a preliminary deal, much of this was widely anticipated toward the end of 2019, with our respondents expecting tensions to drag as the two countries worked their way through a ‘phase two’ deal in an election year,” the report read.
The report also found that China’s control of the coronavirus and its appetite for significant spending measures has put much of the mining and metals sector at ease.
Meanwhile, precious metals were the standout performers in 2020 so far, but also the most likely to be the subject of mergers and acquisitions activity, while traditional metals were expected to show the strongest resilience.
Post the pandemic, more than a quarter of the respondents stated that building resilience would be the main priority in the second half of the year, with efficiencies and productivity gains coming in second at 18% each.
Furthermore, 80% of respondents were of the opinion that environmental, social and corporate governance would play a greater part in investors’ decision-making and lure more generalist investors, bringing a potential ‘green recovery’.