Demand for silver has risen rapidly due to growing industrial demand, while mining production has remained stable for nearly a decade. According to Metals Focus (a leading independent precious metals research consultancy with a team spread across eight countries, dedicated to providing world-class statistics, analysis, and forecasts for the global precious metals market), the trajectory of the silver mining sector is “uncertain.”
In 2024, silver mine production increased by 2%, breaking a downward trend. However, production peaked in 2016 at 900 million ounces and has declined by an average of 1.4% annually through 2023.
Reasons for the decline include depletion of reserves, mine closures, and a 20% drop in ore grades. Although the price of silver has increased significantly, between 70% and 80% of mined silver is produced as a by-product of mining other metals, meaning that revenue from silver by-products does not determine the economics of a mining operation.
Industrial demand for silver is expected to reach a record high in 2024, exceeding 700 million ounces. Despite a 2% increase in mining production, it will not be enough to meet growing demand, resulting in a fourth consecutive market deficit.
The mining industry faces an uncertain path to closing the gap between silver supply and demand. Mining production is expected to increase to a peak of 856 million ounces in 2027, but then stabilize. Production from existing mines will decline in 2029, making production dependent on new projects under development, which face significant challenges.
Metals Focus projects a decline in production from the largest silver producers, such as Mexico, Peru, China, Chile, and Bolivia, which together will produce 62% of total supply in 2024. By 2029, production from these countries could fall by 19 million ounces, driven by a 13% decline in Mexican mining production.