Silver production set to record first annual rise in half a decade

Global silver production is forecast to rise by 8.1% to 918.3 million ounces in 2021, according to data analysts GlobalData. It says global silver mine production fell by an estimated 2.4% in 2020, down to 850 million ounces, thanks to the impacts of the ongoing COVID-19 pandemic. The world’s top three silver producers - Mexico, Peru and China - were all hit by the pandemic and suffered lockdowns and restrictions that impeded mining work. But GlobalData expects a significant increase in 2021 and says more than 1 billion ounces will be produced by 2024, a 3.2% compound annual growth rate. Driving factors The three aforementioned countries are expected to lead the silver revival, with combined production in Mexico, Peru and China alone expected to increase from a forecast of 393.9 million ounces in 2021 to 443.9 million ounces by 2024. GlobalData associate project manager Vinneth Bajaj says several major projects in these countries are expected to lead the charge. “Projects with potential to commence operations during the forecast period include the Corani project in Peru, which is wholly-owned by Bear Creek Mining Corp,” he says. “It has received all the regulatory approvals and permissions, with construction scheduled to commence in the second quarter of 2021 and production in 2024. “In addition, the Fenix Gold Project in Mexico, wholly-owned by McEwen Mining, is currently undergoing a definitive feasibility study, with construction work scheduled to start by the end of 2021, and operations to begin in 2022.” COVID-19 impact Eight of the top 10 silver producers reported a collective 13.9% year-on-year fall in their output due to COVID-19, Bajaj says. “In Mexico, output was estimated to have fallen by 1.8% in 2020, with mining activities suspended for almost two months through to the end of May. “Major silver producers in the country temporarily suspended their mining operations during this period and production losses were registered at Pan American’s La Colorada and Dolores mines, Fortuna Silver’s San Jose mine, Industrias Penoles’ Saucito mine and Hecla Mining Company’s San Sebastian project, among others. “Production in Peru fell more significantly, down by an estimated 16% over the course of 2020, having declined by 29.1% year-on-year in the first seven months of the year. The Uchucchacua mine, owned by Buenaventura, was the biggest contributor towards this decline and silver output dropped by around 4 million ounces in the first nine months of 2020 versus the same period of 2019. “Further, operational suspensions at Pan American’s Huaron and Morococha mines between May and September also contributed towards the decline.” Australia holds the cards Also contributing to the silver industry’s concerns are slowly depleting ore reserves. A 2014 study estimated that around half of the world’s silver supplies have already been mined, with peak production looming in 2034, and complete, worldwide silver supply exhaustion by 2240. According to Statista, Australia is the world’s seventh-largest silver producer but it has reserves of around 90,000 tonnes, third only to Peru and Poland. It bodes well for ASX-listed silver plays, including Silver Mines Ltd (ASX:SVL), which in January reported assays, including 26.1 metres at a grade of 252 g/t silver equivalent from 229 metres at a feeder structure, with another eye-catching result of 1-metre at 923 g/t silver equivalent from 282.9 metres. Other companies have strong silver components within their projects. In February, PolarX Ltd (ASX:PXX) verified the presence of high gold and silver grades up to 37 g/t gold and 1,590 g/t silver at several sites following assay results from its due-diligence sampling program at the Humboldt Range Gold-Silver Project in Nevada, USA. White Rock Minerals Ltd (ASX:WRM) (OTCQX:WRMCF) recently entered into a binding and exclusive term sheet with Thomson Resources Ltd (ASX:TMZ) for a three-stage earn-in and option to a joint venture agreement to progress the Mt Carrington Gold and Silver Project in northeast NSW. Rumble Resources Ltd (ASX:RTR) (FRA:20Z) has upcoming news flow from impending assays on four drill programs at a range of its projects, several of which have strong silver mineralisation. King River Resources Ltd (ASX:KRR) reconnaissance exploration at Kurundi Project in the Tennant Creek/Davenport region of the Northern Territory recently returned high-grade gold, silver and copper rock chip samples. - Daniel Paproth