While it has always been relatively easy to collate the world’s top 10 gold miners because they are all primary producers (see: Barrick only top gold miner to see output fall in H1 2014), to do the same for silver is not nearly such an easy task as most of the world’s silver is produced as a by- or co-product of gold and base metals mining. Thus in the table of the top 10 global silver producers shown below only four could be classified as primary silver miners – and virtually all those will, in any case, also be producing other metals – notably gold, lead and zinc – as very significant by products without which they would perhaps not be profitable mining companies.
What this tends to mean is that global silver output is not for the most part wholly dependent on the silver price, but is more likely to rise and fall with the fortunes of the base metals miners, and to a lesser extent the gold miners, implying that output is much more subject to global industrial demand than is gold alone which tends to plough its own furrow.
In its latest analysis of the global silver market, UK specialist consultancy Metals Focus sees silver output continuing to rise, mainly through recent primary silver mine openings, although by only a small annual percentage and suggests that demand may increase at a more rapid rate keeping silver in supply deficit.
The report also notes that silver mining costs have fallen so far this year with average all in sustaining costs for silver production now at around $14.09 an ounce down as much as 19% from the $17.42 an ounce it calculated for H1 2013. However it should be noted that much of this fall in costs has been due to a combination of rising production and falling currency values against the U.S. dollar in many of the world’s top silver producing nations. Falling currency parities only tend to have a short term positive effect as they also tend to lead to a balancing increase in inflationary cost elements.
As can be seen from the above table, most major producing countries saw an increase in silver output during the first half of the year with the only decline seen in estimated Chinese production, largely due to a decline in base metals output and thus associated byproduct silver, during the year. But with Chinese metals demand figures apparently picking up in the second half of this year, some of this downturn in production may well be recovered as the year progresses.
The most notable addition to the global Top 10 is Guatemala where the start-up and ramp up of a new primary silver mine, Tahoe Resources’ high grade Escobal property, potentially one of the world’s largest silver mines in terms of production) was mainly responsible for a huge upturn in the country’s silver output – indeed it knocked Argentina (a country whose name is synonymous with silver) out of the 10th spot among global silver producers despite the latter country itself recording a 12% silver production increase to 12.8 million ounces.
As can be seen from the table, silver production from the America’s dominates. Around 70% 0f primary silver production comes from the region, as does a significant amount of byproduct output, particularly from Chile and Peru.
Looking ahead, the analysts at Metals Focus reckons that global silver output may peak this year buoyed by the strong H1 figures. But beyond 2014 production growth is expected to moderate and is seen as plateauing at about 850 million ounces annually. Indeed the cutbacks by mining majors in new project investment and development could see global silver output entering a period of secular decline.