Impact Of COVID-19 On The Mining Sector

The rapid spread of COVID-19 has disrupted lives operations across industries, and mining sector is no exception. Mining companies in India are among those being hit by weakened demand as the COVID-19 pandemic impacts the global economy. The pandemic has affected the entire value chain, as organizations and companies limit access to offices, mine sites and manufacturing facilities, and restrictions on transportation and shipping increase. Ministry of Home Affairs vide Order No. 40-3/2020-D dated 24.03.2020 issued guidelines for containment of COVID-19 Epidemic in the country whereby barring few industries, it was declared that Industrial Establishments will remain closed.

Further, Odisha one of the nation’s major mining states with reserves of and production in important minerals such as iron ore, manganese ore, chrome ore, bauxite and coal, imposed lockdown in the entire State on 24.03.2020 due to COVID-19. However, vide another Order No. 9015 / H&FW dated 24.03.2020, the restrictions of lockdown were excluded inter alia with resect of operations of mines of iron ore, coking coal, thermal coal, limestone, dolomite, manganese, chromite, etc. as well as operation of ferroalloys, iron ore pellet plants etc.

In order to combat the situation which has arisen due to lockdown, the Ministry of Coal released a press released on 28.03.2020 whereby Coal supplies are declared as an Essential service and the officials of Ministry of Coal are directed to work harder to ensure that critical coal supplies are maintained during the lockdown period due to COVID 19 pandemic so that power and other critical sectors are unaffected due to the current situation. As per Coal Ministry, Coal stocks at power plants stand at 41.8 MT equivalent to 24 days consumption as of 26 March 2020 and various steps have been taken to ensure the easy and adequate availability of coal to every coal dependent industry/Power Sector.

Mining is heavily dependent on the availability of manpower/labour who undertake the groundwork; with operations being scaled back, many such migrant labourers and workforce have retreated to their homebase. In addition, the lockdown has not only restricted access to workforce but also placed constraints on the movement of goods. Despite steel, coal and power production are termed as essential services, mining operations have been hampered due to lack of coordination among law enforcement authorities.

Due to aforesaid reasons which are beyond the reasonable control of Mine Developer and Operators (MDOs), various MDOs are forced to invoke force majeure Event clauses under their respective Agreements due to outbreak of COVID 19 and nationwide lockdown.

Therefore, irrespective of the fact that various measures are being undertaken by the governmental machineries for instance excluding mining activities from the ambit of lockdown, the mining sector remains affected due to unavailability of requisite workforce, movement of materials, etc. and the MDOs are forced to halt their mining activities despite their willingness to undertake mining operations. In the circumstances and keeping in view the present unforeseen situation, it is anticipated that government authorities would address the difficulties currently being faced by the MDOs in terms of financial constraints, lack of manpower and restriction on movement of goods/material.