Mining sector show resistance to COVID-19 negative impact
Adnan Adams Mohammed
As almost all sectors of the
economy being shaken by the pandemic COVID-19,
the Ghana mining sector is confident of improving on last year’s
production of over 4 million ounces of gold, according to official information.
The Ghana Chamber of Mines has
said, although data collating of production is ongoing from the various mining
firms, it expects production from member firms to be higher than 2019’s figure.
The assertion, according to its
Chief Executive Officer, Sulemanu Koney, is based on the coming on stream of
AngloGold Ashanti’s Obuasi Mine, a ramp up by some miners and the strong demand
for gold on the international market, as investors seek refuge from the
COVID-19 induced global economic crisis.
Last year, large scale miners –
Chamber members – contributed over 2.8million ounces, with the rest of the
country’s gold output coming from small scale and artisanal miners, according
to industry watchers. However, this year’s production, according to Mr. Koney,
will be higher barring any unforeseen hitches.
“No member company has suspended
production and so we do not expect production to be different from the guidance
that they have given the market,” he said.
Mr. Koney who asked what impact
COVID-19 pandemic has had on the domestic mining sector, explained that gold
remains one of the commodities that has held firm despite the COVID-19 pandemic
which has led to a lockdown of the global economy and a crash in stocks as well
as a collapse in oil prices.
As of press time yesterday, the
precious metal went for about US$1,703.95 per ounce, with a gram also going for
US$54.78, while a kilo sold around US$54,783.26, with experts predicting an
even higher value for it in the coming months.
For instance, Bank of America
lifted its 18-month price target for the precious metal to US$3,000 per ounce
from US$2,000 last week, praising gold as “the ultimate store of value” amid
the severe economic downturn.
After an initial sell-off and
subsequent rebound, analysts at the bank say the safe-haven asset sits near its
highest level in eight years, but Bank of America reckons potent easing
policies around the world will send its value 50 percent higher than its
all-time record
“We all know that in times of
uncertainties, most investors would flock to gold and naturally there will be
high demand for gold because alternative assets are deemed risky – there is so
much uncertainty – if you take for example the various stock markets, they have
done abysmally.
Therefore, most investors would
want to be secured in the outlook of their investments and they would rather
move into gold which is generally deemed as safe haven. That is why the
commodity prices are really holding firm, which is positive for our country,”
Mr. Koney espoused.
Buttressing why COVID-19 will
have no meaningful impact on the sector in the foreseeable future, Mr. Koney
said: “The mining industry is not like a tap where you can decide to switch on
and off depending on circumstances. So, our best bet would be to say that
generally we would expect production to be according to the guidance as
provided by the mining firms.”
On the revenue side, Mr. Koney
was even more bullish that the economic crisis brought upon by the virus bodes
well for the mining sector, particularly the price of gold, cascading into
higher earnings for producers and the country at large.
“For us to benefit from this
firm price of gold, we would want to have a seamless production. Production
should not be halted because revenue is both a function of the price of the
good, as well as, the volume of production in this particular case.
“The next question to ask is,
how is production doing? We don’t foresee a significant change in production as
far as Ghana is concern,” a bullish Mr. Koney assured, adding: “In terms of the
impact as far as revenue is concern, this is positive because we have a
situation where production is holding and the price of gold is also holding
firm.”
Just as the virus spread has
left no aspect of the global economy untouched, Mr. Koney admitted to some
negative impact on the industry’s supply chain, mining support services – firms
that provide support services to miners. “Although we are expecting some
improvement, we have had a little blip by way of uncertainty around the supply
chain. We rely heavily on mine support services,” he indicated.
“The exception given was just
for mining firms, not the supply chain participants and it is something we are
actually in the middle of trying to resolve. So in all, we expect the mining
industry to hold really firm and that you will be good for Ghana,” he
concluded.
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