Research firm Fitch Solutions Country Risk and Industry Research expects nickel mine production to contract by 19.60% this year.
In a report, it states that the mining and metals industry will be deeply impacted by the Covid-19 pandemic this year, as the situation continues to evolve and the virus continues to spread.
This will disrupt mining operations and mineral production growth globally.
The firm believes most mining companies will focus on workforce safety and implement measures such as lowering the frequency of fly-in, fly-out arrangements.
Further to a number of companies completely halting production temporarily, some have announced that they are running at reduced capacities to enhance physical distancing of employees.
“We believe these measures will lead mineral production to either show tepid growth in 2020 or to decline. We note that our forecasts will very likely continue to evolve to the downside as we continue to revise individual countries' data in the coming weeks,” the firm says.
Demand for minerals and metals is also expected to be affected this year, largely offsetting if not overcompensating for the losses in supply, it notes.
Most metal markets are therefore expected to move into surplus this year.
Metal prices are expected to continue to see volatility playing in the downside in the second quarter of this year, as investor sentiment remains weak on the back of the pandemic spreading more widely, it states.
The firm, however, expects to see a recovery in the second half of the year.