Companies that service the resources industry are declaring a deadly disease from Asia was an unforeseeable circumstance that prevented them from delivering on their promise, a global mining giant has said.
Rio Tinto has predicted mining projects across the sector could face delays if the Chinese novel coronavirus (covid-19) outbreak keeps stopping several suppliers from meeting their contractual agreements.
Force majeure
“There could be an impact on all projects across industry because a lot of fabrication is coming from China,” Rio CEO Jean-Sebastien Jacques said according to News Limited. “We know some suppliers across the supply chain have already declared force majeure.”
The mining giant said covid-19 will impact on resources projects around the world including its US$2.6 billion (A$4B) Koodaideri Iron Ore Project, $1B Tom Price Iron Ore Expansion and US$7B (A$10.7B) Oyu Tolgoi Copper and Gold Mine Expansion.
“We could see an impact but the impact will be across all the industry, and not just the mining industry here,” Jacques said.
The company said it was prepared for a “volatile environment” and expected difficult market conditions ahead.
“We are closely monitoring the impact of the covid-19 virus and are prepared for some short-term impacts, such as supply-chain issues,” Rio said in its latest annual report. “Our world-class portfolio and strong balance sheet serve us well in all market conditions, and are particularly valuable in the current volatile environment.”
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The mining giant echoed earlier concerns from competitor BHP that if covid-19 continues to spread beyond March it would increase the likelihood of an industry wide downturn.
“We are currently evaluating the impact of the covid-19 virus, which could create significant uncertainty for our business in the near term,” the company said. “All our operations are looking at opportunities to adjust to the impact of the covid-19 virus on market conditions.”
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