A global economic slump: what will it mean for metals and mining?

The recovery from the corona-induced recession is assumed by many, including Wood Mackenzie, to be -U-shaped with a quick return to normality whatever the “new” normality turns out to be. But what if the world, excluding China, enters a slump with a sharper downturn and a slow, anaemic recovery with global economic activity taking five years to return to 2019 levels? Demand for mined commodities, costs and prices will all be impacted. Revenues for the industry will fall by a cumulative US$0.9 trillion compared with our base case. This will lead to cost cutting, corporate restructuring and capex deferral or cancellation. Well-capitalised companies may take the opportunity to buy their growth rather than take on uncertain, expensive and risky expansions. Perhaps a slump offers these same companies an opportunity to optimise their portfolios? As is often the case, fortune will favour the brave, or well capitalised.