First, the more innocuous: yes, we do have a coin shortage. And that's due to both a deflationary crunch relating to lack of circulation and slowed activity at the U.S. Mint.
Federal officials have continued to acknowledge the issue and say they're in the process of addressing the shortages in the nation's coin supply.
A June 11 news release from the Fed confirmed that coin deposits to the reserve had declined, and that the U.S. Mint had decreased coin production. The Federal Reserve, which supplies commercial banks with coins, announced it would begin allocating available coins to financial institutions based on their historical coin orders to manage its inventory.
The Mint also returned to full staffing and began working to "maximize coin production capacity."
So hopefully that will be a short-term problem."Although the Federal Reserve is confident that the coin inventory issues will resolve once the economy opens more broadly and the coin supply chain returns to normal circulation patterns, we recognize that these measures alone will not be enough to resolve near-term issues," the June 11 release said.
But maybe not.
We also have a guns-and-ammo shortage, and the latter is more worrying because what it says about the world's copper production:
“As far as the ammo is concerned, the number one thing you have to have in order to make ammunition is raw materials, being lead and copper,” [gun shop materials manager Phillip] Kastner said. “So all of the lead mines in the United States are in the state of Missouri; Missouri shut them down the first of March. All of the copper mines are in South America; South America shut them down in April. … The lead mines are now open in Missouri, but getting copper for the casings is one of the choking points.”And while Chile's mines are still open, there are strikes--and coronavirus is surging among the workers.
But cracks are beginning to show, union leaders told Reuters. Patricio Elgueta, president of Chile’s Federation of Copper Workers (FTC), an umbrella group for Codelco’s unions, said miners are exhausted and scared of falling ill but keep working to make ends meet.
Elgueta said unions were weighing a proposal from a regional roundtable of healthworkers, politicians and social groups to draw down production to a “minimum” at all of the mines around the hard-hit city of Calama in order to sanitize them.
The Antofagasta region, where Calama is located, accounts for more than half of Chile’s mine production, according to state copper agency statistics.
Meanwhile, Elgueta said emphasis at the major mines had necessarily shifted to processing ore as companies have scaled back staffing by around 40%. Contract work has already largely been slashed.
“You focus on production and neglect maintenance... it’s not sustainable,” Elgueta said in a phone interview. “First you exhaust the workers, then you cause damage to the equipment, then come delays.”
Juan Carlos Guajardo, head of Santiago-based consultancy Plusmining, told Reuters the industry was coming “dangerously close to the edge.”Loss of copper supplies would be...not good for the economy, to indulge in understatement. Not as bad as the loss of lives...but economic hard times kill, too.
He said an industry-wide policy of “buying time” by trimming staff and tightening safety measures had been successful, wowing the market even as Peru’s mines were hit by weeks of inactivity. These measures were now catching up with Chile’s miners, he added.
“We’re in the worst moment of the health crisis with respect to the mining industry,” he said. “(Chile) bet that the sanitary crisis would be manageable, but that’s not what’s happened.”
The outbreak has exploded in Chile, with cases surpassing those in Italy and cresting 275,000 this week. The pandemic has spread northward to cities like Antofagasta and Calama dedicated to servicing the northern desert region’s sprawling mines.
Just another reminder that the metal isn't called "Doctor Copper" for nothing.