With the results finally out, the top Silver Mining Industry’s average yield fell to the lowest level ever. While the pandemic shutdowns reduced overall silver production significantly, it didn’t impact the ore grades all that much. Since 2005, the top seven silver mining companies and mines saw their average yield fall by 55%.
Before we look at the LOWEST AVERAGE SILVER YIELD EVER, here are the top producers’ total production and processed ore from 2005-2020.
In 2005, these top producers processed 9.4 million tons of ore to supply 123 million oz (Moz) of silver. Over the next 15 years, even though total production increased to 140 Moz in 2019, the processed ore jumped to a record 23.2 million tons. Total silver production fell 16% from 140 Moz in 2019 to 118 Moz in 2020.
Falling mine supply last year due to the pandemic shutdowns negatively impacted the silver supply but was positive for the price. Interestingly, the U.S. imported silver from a country that it hadn’t done so for quite a while.
I believe U.S. silver imports will continue to remain strong in 2021.
Getting back to the issue of falling ore grades, the top seven mining companies and mines saw their average yield fall to a record low of 5.8 ounces per ton (oz/t).
In just 15 years, these top silver producers’ average yield fell from 13 oz/t to 5.8 oz/t. Thus, the total processed ore increased by 10.8 million tons while production increased by 5 Moz. Typical underground haul trucks can move 20-65 mt of ore in one load. If we assume an average of 40 mt of ore per haul truckload, that would be an additional 270,000 loads to produce the same, or even less, silver. With more than a quarter-million truckloads of ore to produce the same amount of silver, no wonder the cost to produce silver is going up.
At some point, maybe already, the world will reach Peak Silver Production. When that occurs, investors will begin to wake up because there aren’t many assets that can protect wealth. One of the most important RESEARCH PROJECTS that I have done is explained in my newest Gold Member video on the “MISSING LINK” regarding the Collapse of the Roman Empire by Peak Silver Production. This is a MUST WATCH VIDEO.
The coming Perfect Silver Storm will occur as global silver mine supply contracts while demand goes up exponentially. This will be something for the history books.
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It gives a good picture what would happen continuation to Roman empire article..
Silver fireworks in near future ..
Thank you Steve..
Dear Steve,
could we see a price move in Silver like the moonshot in the Iridium and Rhodium market?
If yes, than we have a problem…in using to much energy. Nonrelevant consumption have to shutdown.
https://www.resilience.org/stories/2018-05-29/new-data-reveal-the-hidden-mechanisms-of-the-collapse-of-the-roman-empire/
Fascinating article. He writes “Of course, the debasing of the denarius was not a choice” well, there is always a choice. I guess then, just like now, the politicians took the easy way out.
Shays,
While the Roman Emporers debased the Silver Denarius, this wasn’t a “POLITICAL CHOICE,” but rather, one made for them by the lack of WOOD FUEL. If you watched my video on the MISSING LINK: Collapse of the Roman Empire By Peak Silver Production, you would have seen that it was the LACK OF READY AVAILABLE WOOD FUEL to continue growing silver production.
The decline of HIGH-QUALITY WOOD STOCK from Forests close by the Silver Mines in Spain (Iberia), caused Roman Silver Production to decline. Thus, to continue business as usual, they made up the difference in falling silver production with other cheaper metals to continue coining the Denarius.
Again, it wasn’t the Roman Emporers deciding to DEVALUE the Silver Denarius, it was the FALLING EROI & Decline of Wood Energy that forced their hand.
steve
Steve,
If I’m not mistaken this links directly to the energy cliff also. Decreasing silver yield from increasing ore loads. This has to start affecting EROI for the mining companies. Something has to give.
I think the music is stopping and there are not enough chairs for everyone.
The current increase in energy price is going to cut into mines’ profits as well.
JohninMK,
Totally agreed. The Gold and Silver Miners enjoyed a BANNER year in 2020 due to HIGH METAL PRICES & RECORD LOW OIL PRICES. In the last several months, we have seen quite the opposite. Metals prices are falling while the oil price has gone above $60. I estimate at current metal-oil price levels, the miners will see profits decline by 25-30%.
steve
I wouldn’t be surprised if global silver production declines even more as energy disruptions in silver producing nations like Mexico become more common. Mexico produces roughly 20% of global silver.
PEMEX Total Debt: $107 Billion in debt. The most of any Petrol company. 90% of the debt is $ denominated and owed to foreign bond holders.
PEMEX oil production: 2020 marked 16 consecutive years of oil declines.
In 2020 PEMEX reported a $23 Billion loss.
It happened to the Romans and as they say history doesn’t repeat but it does rhyme.
thumbs up
I would agree that energy in the form of food, wood, coal or oil drives the economy. The availability of a surplus, plus human factors, allows an empire to rise, exist, and then fall.
What is interesting to me is how all the empires reach a certain point where imports of cheaper foreign goods and/or foreign luxuries become favored over domestic production. At about the same time, government and military expenditures also become an unsustainable drain on money and resources.
I’ve read that in later years the Roman Empire developed a huge trade deficit with – guess who? India and China. Much of that silver mined in Spain ended up in those two areas in exchange for TVs and computers, er…I mean spices and porcelain.
Excellent article (as usual). Thank you very much, Steve.
In addition to relentlessly falling ore grades, I believe rising oil prices and the eventual Energy Cliff, along with slowed economic activity, will hit base metal (ie, zinc, lead, copper, ..) miners very hard. Which happen to produce more than half of global silver supply.
Days of silver scarcity are not far away.
Dear Steve,
Please check the total 7 top silver mines production averaging about 137 million oz per year over the 2005-2020 period. Other records indicate the ballpark total annual silver mine production is about 800 million oz. That is they only produce about 1/6 of the world production ?
Wyman
Generally, total world silver production is around 800 million ounces per year. However, about 60-70% of NEW production comes from base metal mining/refining, not silver mining. But before you start, you have to subtract RECYCLING from that 800 million. It’s a significant component. Give or take.
So, if only 20-30% of production comes from actual silver mining, it might make sense that the top seven mines only produce about 1/6th.
That’s the way I understand it, at least.
There is reportedly more shortage of platinum than silver.
Even though it’s not reflected in the price, Platinum is 14 times more rare than gold.