3 minute read
2020 in review
from RGN Vol 7 Iss 7
2020
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The year 2020 started with the identification of a flu-like virus emerging out of China. Within months it had escalated into a pandemic, sparking a worldwide public health emergency. By mid-year the global economy was in tatters as entire populations were quarantined for sustained periods to reduce person-toperson transmission of the deadly COVID-19 virus.
So, how has the commodities sector fared throughout this year of shocking developments that have led to seismic - and probably permanent - changes to the very functioning of societies and the global economy?
Well, the gold price was already on a gallop prior to the widespread shutdown of all major business sectors (including mining) around the world in the second quarter. The subsequent injection of huge monetary stimulus to prevent total economic collapse boosted ‘safe haven’ gold investment to record levels.
Record gold prices
The bull run reached a crescendo in August when the gold price hit US$2,068 per ounce, before cooling off in the last quarter of the year. Gold’s little brother silver enjoyed a similar meteoric rise in 2020, nearing $30 per ounce before settling at the $24 mark by year-end.
Thanks to a supportive macroeconomic environment, many precious metals producers delivered record revenues this year while maintaining balance sheet responsibility – a lesson learned from the previous bull market. The near-term future remains bright for firms exposed to gold and silver.
Another key trend emerging out of the pandemic was an acceleration of the global transition to low carbon energy. Even the oil majors are leading the charge into clean power after crude prices crumpled to historic lows in April, with the long-mooted ‘peak oil demand’ moment already reached in 2019 according to BP.
This hastening shift away from environmentally degrading
fossil fuels has placed an even stronger spotlight on the plethora of strategic metals needed to sustain the world’s growing energy demand. US President-elect Joe Biden pledged to kickstart the energy transition with a $2 trillion ‘green infrastructure’ plan, following his election victory over Donald Trump.
Energy metals in focus
Copper - perhaps the single most important metal to the world’s hopes for a green future, owing to its extensive usage in a range of clean tech applications from wind farms to solar plants and electric vehicles – made a strong recovery from the COVID-19 crisis to reach a seven-year price high in December.
Meanwhile, the lithium market rebounded as EV sales hurtled to a record annual figure. Tesla – whose share price has risen nearly 600% this year – told investors it will enter the lithium mining business during its highly anticipated Battery Day in September. The clean energy giant also lifted the nickel mining sector with its plans to build high nickel content batteries moving forward.
Elsewhere in the industry, iron ore made an impressive late dash to become the best performing commodity of 2020, with Australia’s top three producers – BHP, Rio Tinto and Fortescue Metals Group - the major beneficiaries of rising global demand projections.
All of the above serves to paint a very rosy picture for the sector going into the new year, especially given the extraordinary levels of disruption faced by all levels of the mining supply chain throughout a tumultuous 2020
A strong COVID-19 response
Overall, the mining industry can hold its head high with regards to its reaction to the COVID-19 pandemic. Companies from the junior end of the spectrum right through to the majors moved to protect their people and communities, providing relief packages where they were sorely needed and implementing COVID-19 safety protocols across mine sites when employees were deemed safe to return.
Our 2020 ‘best of’ issue puts forward 10 companies from across the industry that we believe have excelled in their commitment to all stakeholders in these uncertain times, while also delivering consistent returns to their investors. Thank you to all our featured companies, contributors and readers over the course of the year - stay safe and see you in 2021.
Jacob Ambrose Willson
Editor
