The sharp decline in emerging market currencies combined with a collapse in oil prices are providing a twin saving grace for many metals and mining companies during the Covid-19 pandemic.
For producers of energy-intensive metals like aluminium, and in particular the low-cost ones, the benefit is even greater.
It's an emerging trend that is starting to be reflected in the earnings of corporates in the current round of their quarterly results, leaving them in better shape than they might otherwise have expected.
It all started when the coronavirus spread around the globe, sending risky asset prices lower and in particular the currencies of commodity exporters such as Brazil, Norway and South Africa. This depreciation is being compounded because the US dollar is a haven asset.
The pandemic has also
created unprecedented oil demand destruction at a time of oversupply, leading to a market awash with physical oil and a technical move by prices into negative territory, albeit briefly.
For miners, this is a big deal. On average, energy expenses make up around 15% of total costs in the mining...