Tavistock Mining Blog 2020: A year to forget or a year to remember?

In Insight by Tavistock Resources

London remains a ghost-town, but the vaccine is hoped to provide the City a much needed ‘shot in the arm’

Well, where do we start. How does one describe 2020 in a nutshell?

Easy, if you’re allowed to curse. But this has always been a clean blog, so we’ll behave ourselves. Given this is one of those rare occasions where the entire globe went through the same experience… the rise and fall of Zoom quizzes, formal shirts with scruffy shorts, weight gain and Vitamin D deficiencies… we will stick to mining.

It is easy to forget that 2020 was set to be dominated by the US election and Brexit (again) but these important events were demoted to the back seats when compared to coronavirus.

Digital communications embedded in day to day business life

From a communications perspective, mining CEO’s adapted well, demonstrating their ability to implement business continuity working from their own homes. Executives that were once required to be on a plane every other week visiting operations, stakeholders and investors alike have embraced video and webcast technologies. This has brought new time efficiencies and importantly wider global audiences that were previously untapped – particularly for online site visits. In addition, many clients are enjoying the tangible results that digital analytics can bring to benchmark the inbound traffic to their websites and social media campaigns.

The mining sector has long been an industry that recognises the value of relationships and so while we have seen many successful ‘virtual’ events, the loss of in-person conversations on the side-lines of these events is clearly irreplaceable and something to look forward to when normal service returns.

A good year for commodities but iron ore up 77% outshines gold and silver

It has been a good year for metals prices. Gold’s rise as the ultimate investment of fear has been no surprise. However, it is base metals and certain bulk commodities that have really taken off at the backend of 2020. Perhaps it is Dr Copper giving the world economy the “all clear” after spending the last several years with a ‘do not disturb’ sign outside its door.

In March, copper was heading for US$2/lb as an almost global lockdown was announced. Now we are almost at US$3.50/lb with speculation prices will return to where they were seven year ago. For copper to get to an all-time high, think plus-$4.50/lb, where it briefly went in 2011.

Then, of course there is the gold price. Unsurprisingly the yellow metal hit a new high of over US$2,000/oz at the peak of the lock-down. This was the gold bug’s ultimate fantasy, a world gone mad, nowhere to hide and no signs of it getting better any time soon.

At the time of writing we are seeing good commodity prices that few mining companies will complain about which provides an excellent foundation for strong cash flows in 2021. Gold at US$1867/oz, silver at $24.75/oz, nickel at $16373/t and a very strong iron ore price of $150/t.

ESG and green energy

And of course, out of all of this chaos there has been some clear positives, such as the push for green technologies and stronger ESG commitments. The green energy transition has experienced several “false dawns” until now but there is no doubt this has accelerated at least 3-4 years. If you want a sneak peek into the future, then you only have to look at Norway where last month 90% of all new car sales were either EV or hybrids.

Similarly, investors continue to impress the importance of miners leading the way in the ESG narrative. Rio Tinto felt the consequences of any company that falls short of investor expectations leading to a departure in senior management.

Investors are right to set high-bars for the industry and our team has participated in numerous ESG panels this year on the topic. There are clear and consistent takeaways from communications with investors, be transparent with your objectives and demonstrate that ESG is part of how you operate rather than trying to retrofit a new ESG policy. It is what CEOs are doing beyond the P&L and importantly the road they are laying out to achieve this. No investor expects a company to achieve this overnight.

London remains a ghost town and we lament the closing of 2 iconic restaurants

As we enter the last big push before the Christmas close, a light has appeared at the end of the tunnel. A vaccine which some may have thought only available next year at best, has arrived and is being rolled out as we speak in the UK.

London remains quiet and the City a ghost town. Our beloved coffee shops and restaurants are on their knees and at the time of writing The Don restaurant had announced its intention to close forever….An extremely sad tale for one of the financial district’s most stalwart eateries.

A year to forget or a year to remember?

And as one politician put it – 2020 will be the “Beginning of the end for Covid”. Fingers crossed.