South Africa goes on total lockdown from Thursday midnight in what authorities believe will be a major step forward in curbing the new coronavirus pandemic after witnessing a jump in the number of people infected. Cases stood at 709 as of Wednesday.
South African mining firms are expected to get a heavy hit from the 21-day lockdown as operations in mines go silent a move seen necessary to protect thousands of labourers who often work in confined spaces from rampant infections in an industry that is labour-intensive.
“This would be unprecedented in the history of mining in South Africa,” said Roger Baxter, the chief executive officer of the Minerals Council South Africa, the main industry group.
“There were certain times when components of the industry were closed, for example during the second world war, but this is unprecedented,” he told Bloomberg.
The Minerals Council said it was exploring what would be required to prevent permanent damage of the sector.
“There are marginal and loss-making mines that would likely be unable to reopen should they be required to close fully, without remedial measures,” it said.
Harmony Gold said the shutdown would “negatively impact” its annual production guidance of 1.4 million ounces and its full-year earnings.
“This is an unprecedented time in the history of the mining industry and our country,” said Chief Executive Peter Steenkamp.
Palladium prices surged as much as 12.7% on Tuesday for the biggest daily gain since 2000, spurred partly by concerns over supply. Spot gold and platinum also rose sharply.
“The country accounts for some 70% of global platinum mined supply and 35% of palladium, with a 21-day lockdown possibly resulting in a 4% and 2% of 2020 supply reduction,” said Dmitry Glushakov, head of metals and mining research at VTB Capital.
“We believe that this might provide significant support to PGM (platinum group metals) prices in the short term.”
President Cyril Ramaphosa on Monday imposed a 21-day lockdown from midnight on Thursday after a surge in coronavirus cases.
Furnaces and underground mines will have to be put on care and maintenance, which means operations would stop but are kept in a condition to reopen in future.