Metal shipments are grounded by COVID-19

May 4, 2020

It’s not just mining professionals who are not travelling during the COVID-19 pandemic, the metals produced by mines is also having a difficult time travelling from point A to point B.

Before the pandemic took hold, shipments of gold and other metals, sometimes worth millions of dollars, travelled the world in the cargo holds of commercial aircraft. Since the onset of the pandemic, Bloomberg reported that the logistics of transporting gold, silver and other metals across the world has been severely impacted.

The business is dominated by companies including Brink’s, G4S, Loomis and Malca-Amit, which link miners and refiners with gold trading and consumption hubs around the world.

With global travel at a standstill, the precious metals industry is scrambling for alternative ways to keep the market moving.

The grounding of flights has had a chaotic effect on an industry that’s used to relying on instantaneous delivery: prices in key markets have diverged dramatically, and the London gold market has even started talking about allowing delivery in other cities around the world.

Now, with global travel at a standstill, the precious metals industry is scrambling for alternative ways to keep the market moving. Even when space can be found on a plane, packages are often turned away if essentials like medical supplies need to travel instead.

“The limited commercial flights, charters or freighters we are using must prioritize personal protection equipment, medical, food and other essential products over our requirements to move bullion,” said Baskaran Narayanan, vice president at Brink’s Asia Pacific.

Another big name in the business, Malca-Amit could deliver within 24 hours before the health crisis, said managing director of Malta-Amit Singapore Ariel Kohelet. Now it’s more like 48 to 72 hours, and costs have risen.

“We’ve widened our use of cargo-only aircraft that are not dependent on passengers to fly and we’ve also chartered aircraft,” he said.

Some in the market say they’re managing to keep operating without delays. However, it’s been particularly difficult to get metal in and out of Asia, said Robert Mish, president of precious-metals dealer Mish International Monetary Inc.

It’s even getting more expensive to move gold that doesn’t typically travel by airplane.

German refiner C. Hafner used to send gold bars to neighboring Poland in security trucks.

After road borders closed and its contractor stopped operating, the company has started flying the metal with FedEx, said Torsten Schlindwein, deputy head of precious metals trading.

Transportation costs have surged about 60 percent as a result.

Lockdown regulations and red tape have contributed to the delays, said Peter Thomas, a senior vice president at Chicago-based broker Zaner Group.

When he tried to fly some silver out of Peru in early April, authorities initially refused to approve loading documents or allow union workers to load the plane. The metal was eventually moved on private aircraft, he said.

“It was expensive but it got done,” he said.

“I think that as the virus subsides and as we get rolling again, we’re going to see a lot of product that has been sitting around, especially in smaller refineries, hit the market.”

 

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