Minsur felt the full impact of COVID-19 during the second quarter, its recent earnings report revealed, with tin production falling over 35%. Combined with lower gold and ferro-alloy output, this saw the company’s revenue fall by some 45%.
During the quarter, the Peruvian government forced mines and smelters in the country to close in order to help stop the spread of COVID-19. At the same time, the company also stopped operations at its Brazilian subsidiary Taboca as a preventative measure. Although Minsur gradually restarted in May, new health and safety protocols and a ramp-up period saw production at Minsur’s tin operations reach full capacity by June.
In Peru, tin production in the second quarter halved compared to Q2 2019. Fewer working days for staff resulted in less ore treated (-71%), which combined with a lower head grade, saw tin contained output fall. Refined tin output from the Pisco smelter, however, declined by around 30% as some stockpiled concentrate was processed to make up for the lower mine output. For the first half of the year as a whole, tin concentrate production was 31% lower than H1 2019, with refined tin output down 10%.
Across the border in Brazil, operations were halted slightly later than in Peru. However, this still resulted in tin concentrate production falling by 37% year-on-year (YoY). Refined production at Pirapora fell by 62% YoY. Although the Pirapora smelter came back online in late April, it was forced to stop again in late May for maintenance that could not be carried out while it was stopped due to the coronavirus. This caused output numbers to look worse than last year, as maintenance was carried out during the first quarter. Over the entire first half of the year, which more accurately reflects the impact of the coronavirus, Taboca’s refined tin production fell by 38% YoY.
Our view: Having halted its Peruvian operations on 19 March, it is unsurprising that Minsur’s production numbers fell so dramatically in the second quarter. However, with new measures in place to prevent the spread of COVID-19, Minsur and Taboca are now operating at usual volumes. Plans to attempt to close the gap to the company’s annual tin production guidance are being developed, although demand for tin remains weak. We expect both companies to show improved production figures in the third and fourth quarters.