With limits on travelling and COVID-19 lockdown restrictions, exploration activities were severely hampered in 2020.
Just how great has this impact been and what is the way forward, particularly for junior miners? GERARD PETER finds out more from MSA Group’s CRAIG BLANE and DAVE DODD.
According to Blane, exploration services manager at The MSA Group, COVID-19 has had a significant impact on their clients exploration activities, in no small part due tos travel restrictions around the continent.
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Not only has there been an enforced barrier to cross-border travel, but Dodd, geology HOD at The MSA Group states that the threat of COVID-19 is also putting the brakes on exploration projects because of logistical challenges.
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For example, when a team is mobilised and travel together and one team member contracts the coronavirus, the entire team will have to self-isolate, thereby delaying operations.
What’s more, even though most borders have opened up, some companies remain reluctant to resume exploration.
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“For example, even if we can travel to project sites, if there are large numbers of COVID cases in the domicile of the exploration company they are sometimes still reticent for us to start work on their projects” states Dodd
While this has all negatively impacted MSA’s ability to mobilise geologists to the field, many of MSA’s clients have still made every effort to use the time progress their projects in other ways.
Blane notes that there has been an increase demand in other service offerings that did not necessarily require a physical presence on site, including commodity studies, exploration data management, laboratory services, mineral resource estimates and environmental consulting.
In addition to travel restrictions, Dodd, geology HOD at The MSA Group, avers that another key factor hindering exploration at present is due to to uncertainty around the medium to long term impact of Covid 19 on global economic growth and commodity demand.
“When you look at the various commodity prices, we saw a dramatic crash around March and April 2020, particularly for base metals. And while they have recovered remarkably well, especially in the latter part of last year, we’ve seen that there’s been a little bit of a hesitancy in committing large amounts of money to exploration programmes,” he states.
“The concern is that we could end up with a surplus of certain commodities if economies don’t pick up to the extent that we are hoping for,” he explains.
Focus on rebuilding
Dodd adds that over 40% of the African exploration industry has suffered as a result of COVID-19 with a large portion of these companies being junior miners. He puts this down to two reasons – the ability to raise money and the ability to operate.
“We are doing some work on behalf of junior companies where we can and provide oversight on their operations, however, many junior companies are battling with liquidity to keep operations going.”
“And even now that we are seeing an increase in many of the metal prices, a lot of these companies have had to use much of their cash reserves and have also retrenched staff. So there is going to be a recovery period where companies try and regroup.
On a positive note, Blane states exploration is heading into a growth phase.
“We have seen many companies aggressively deal with the constraints and restrictions around COVID-19. From our stance as consultants, we are thus seeing many enquiries coming through, particularly in the gold space and I expect that this will continue.”
Dodd explains that already the company has got a few projects in Nigeria lined up and now that travel restrictions have been lifted, they can focus on finishing these projects.
When it comes to the battery metals sector, Blane has noted a decline in activity in this space in line with most other commodities and as countries try to restart their economies.
There has been a a decrease in pursuing lithium exploration projects but, on the other hand, MSA Group is seeing an increasing number of enquiries in other battery and green energy metals including nickel and REE’s.
As the industry comes to terms with mining in the new normal, the key question is whether the pandemic is going to have a lasting impact on the junior mining sector in particular.
According to Blane, COVID-19 has thus far has been a relatively short cycle, compared to some of the super cycles previously experienced.
“However, in spite of the remarkable progress in developing vaccines the impacts of Covid-19 are far from over. We are seeing the second wave in Europe and other parts of the world, resulting in very high numbers of active cases and that will continue to negatively impact the main markets driving commodity demand. So I do think we are going to have a challenging year in 2021,” he concludes.