Canadian Silver Production Down Significantly

Canadian silver production declined significantly in the first two months of 2014 compared to last year.  The huge drop off in production was due to the closure of two base metal mines and one primary silver mine in 2013.

Silver production in Canada declined from 119.5 metric tons (3.84 million oz) in January and February 2013, to 70 metric tons (2.25 million oz) in the first two months of 2014. 

Canadian Silver Production Jan-Feb NEW

Here we can see that overall production declined nearly 50 metric tons or 41% y.o.y. (year over year).  The fall in silver production came from the closure of Glencore Xstrata’s Brunswick and Perseverance zinc mines in Eastern Canada which produced 350,000 metric tons of zinc in 2011.

Furthermore, Canada’s highest grade silver project, Alexco Resources Bellekeno mine, was put on care and maintenance in fourth quarter of 2013 hoping for higher prices in 2014.  Alexco’s break even for its Bellekeno mine was in the $28-29 range last year… according to my estimates.

Alexco Resources took a beating last year when the price of silver fell from an average of $31.14 in 2012 to $23.97 in 2013.  Alexco’s revenues declined from $76.7 million in 2012 to $43.1 million in 2013.  They went from an adjusted net income gain of $3.4 million in 2012 to a loss of $4.3 million.

When Alexco was running out full production, it produced 2.1 million oz of silver in 2012 at a stunning yield of 22.7 ounces per ton.

Canada’s silver production peaked in 2002 at 44.1 million ounces and is estimated to fall to 15 million ounces in 2014:

Canadian Silver Production 2001-2014 Est

The global base mining company Vale, is bringing online its new Totten nickel & copper project this year.  Along with its base metal production of nickel and copper it will have by-products of PGE’s (platinum & palladium) and gold.   Even though there may be some silver production, it will be very little.

Here we can see that Canada lost two-thirds of its silver production in just twelve years.  While Canada isn’t a large global silver producer, it’s still a large percentage decline nonetheless.

Lastly, as the Royal Canadian Mint continues to ramp up sales of its Silver Maples, the country will have to import more silver to make up for the shortfall in domestic production.

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13 Comments on "Canadian Silver Production Down Significantly"

  1. Steve

    Thanks again for another very interesting read. I’m at a loss for how this industry can function given the price setting mechanisms found in the commodity markets. What’s fascinating is that facts such as those presented here on your website carry absolutely no weight with the price setting powers that be.

    Decreases in production, increases in cost, record sales of silver coins and prices are sitting at the lows for 2014 and very near the lows for 2013. Amazing.

    Tas

  2. This means a lot of countries will have less silver, Canada is not alone! Mines are being shut down all over because of this ridiculous manipulated Price!

  3. It’s infuriating that so many miners have actually ramped up production in the face of negative margins. Lose money on every ounce but make it up on volume. Just leave it in the ground! It’s not going anywhere. Selling something as valuable as silver at a loss is like cutting off your leg to lose weight.

    • Silver mining is still above break-even; perhaps well above in some countries. In Mexico and Peru wages are not nearly as high as the U.S. or Canada, there may be no unions, minimal employee benefits, and the biggest factors…government regulations. Some are good or at least some good intentions. But the cost of complying with work comp, OSHA, overly-zealous environmentalism, taxation, Obamacare, etc. makes mining at these manipulated prices increasingly untenable in the U.S. and Canada.

      But these silver producing nations countries should be getting more money for these non-renewable natural resources. In a sense they are being ripped off by manipulated low prices.

      I wonder what would happen to the U.S. and Canada [or what they would do] if big money [like Chinese] buys up more and more mines in silver-producing countries. Right now their interest seems to be in energy and gold.

  4. This would explain the Canadian mint now trying to sell certificates rather than physical PM’s. You know supply is tight when even mints are trying to sell paper.

  5. I love Canadian silver coin. It’s the cheapest and the finest .9999 silver coin. It is crazy the country doesn’t keep some for themselves.

  6. Dennis Lazof | May 9, 2014 at 7:32 am |

    Kudos to Alexco and other miners which at this point are cutting back on production, or holding on to the non-refined product coming out of the ground. Mining companies should do whatever they can to refrain from selling silver at or below the break even point. All signs point to a rebound in silver price coming very soon (next few months at least). Miners can hasten this by withholding their product now.

    For example ask employees for short-term cut in hours and contract for deals of increased benefits in exchange for temporary half-time or two-thirds time status and pay. Pressure execs to invest in the company now and reduce salaries and bonuses. Remember short-term now, hang in there !

  7. the gold assayment guy at ICBC told me an amazing story about an old lady turning in some pre-1949 gold bullions for cash.

    the gold bullion was stamped by pre-communist bank of china and 99.71 purity. after melting down, the purity of gold turned out to be exactly 99.71!

    so before the age of hi-tech, gold bullion can be assayed very accurately!

    in china, gold bullions are favorite form of bribery.

    • lastmanstanding | May 10, 2014 at 9:43 am |

      Everyone thinks that more tech is the answer to everything.

      I prefer the old school with a bit of tech to build necessities.

      Great story other than the woman had to sell that incredible bit of gold for fiat…where it is priced currently.

  8. just the hedge she needed!

  9. I guess it depends on when she bought it, but more than likely she inherited it. None the less if she didn’t have it she couldn’t have sold it. Can some one show me what one ounce of that type of gold goes for?

    • Typically non-numismatic recognizable silver or gold coins have known a market value.

      An ounces of silver or gold that are less than 99.9% will usually be bought to be refined. In that case [like sterling silver flatware or dental gold] one may get an offer of 80% of the gold or silver value. Generally the public can’t sell directly to the refiner, so the jeweler has to make a cut and the refiner has to make a cut.

      She may have had gold with an additional historical value if stamped. “the gold bullion was stamped by pre-communist bank of china and 99.71 purity”.

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