LAWRIE WILLIAMS: World Top 20 Silver producers 2017

The latest analysis from GFMS for global silver supply and demand points to a 4% drop in new mined production last year.  This was put down largely to years of Capex reductions in combination with supply disruptions, particularly in the Americas.   The consultancy is looking for something of a supply recovery in the current year.

Particularly big falls were seen in Guatemala in 2017 with the suspension from July of mining at Tahoe Resources’ very large Escobal property, one of the world’s largest silver mines, due to an ongoing dispute with elements of the local population.  Virtually on its own Escobal had propelled Guatemala into 11^th place among the world’s silver producing nations in 2016, but the production shutdown in the latter part of 2017 dropped it back into 15^th place last year and unless the dispute is soon settled and Tahoe allowed to mine again, Guatemala will disappear altogether from next year’s top 20 listing. 

Other significant silver production falls were seen in the U.S. where an ongoing dispute at Hecla’s Lucky Friday mine continues and in Chile, where most silver is produced as a byproduct of copper mining, and in Australia as a result of sharply reduced output at the country’s largest silver mine, Cannington, due to lower grades and lower throughput caused by an underground fire in April.  Mining rates are expected to recover in the current year following the commissioning of the new crusher and the resumption of mining activities on a high grade stoping section. Adding to the Australian losses, a substantial production decrease was also seen at the big Mount Isa silver/base metals operation, where output fell due to scheduled maintenance at its smelter.

Argentina also saw a fall in output. Production at Puna, a newly formed joint venture between SSR Mining’s Pirquitas and Golden Arrow Resources’ Chinchillas, fell by 4.2 million ounces (132 tonnes) as mining activities at the San Miguel open pit ceased in January 2017. As a result, lower grade stockpiles were processed throughout the year.  However Yamana’s Cerro Moro silver/gold mine is due to come on stream about now and should add around 3.8 million ounces (117 tonnes) of silver to this year’s total.

Source: GFMS, Lawrieongold.com   

Note:  Differences in % figures and global tonne totals shown due to rounding of more detailed stats.

The big output positives in 2017 were in production in Mexico. India and Kazakhstan.  In the former, silver output rose by around 10.1 million ounces (311 tonnes), or 5%, led by higher production at San Julián and Peñasquito. Fresnillo’s San Julián operation, which was commissioned in Q3 2016, accounted for the majority of the growth in the country, producing a total of 10.5 million ounces (328 tonnes) and in combination these increases offset production losses elsewhere, particularly in the primary gold mining sector.  San Julian commissioned its Phase 2 during the second half of the year which should result in further production growth in 2018.

India, which is a big silver consumer too for its jewellery sector, processed higher silver grades and ore volumes at Hindustan Zinc’s operations. Similarly, further gains were noted in the zinc sector in Kazakhstan, with silver production from Kazzinc’s assets higher by 28%, or 1.3 million ounces (30 tonnes). Kazakhstan continues to step up efforts to promote its domestic precious metals refining capacity, treating mine doré and scrap from several international sources, most notably from Russian mines.

There were output falls in China where the silver mining sector was also subjected to stricter environmental controls, and also a decline in byproduct output from the lead/zinc mining sector.  Russia, the world’s fourth largest producer, also saw a substantial output fall extending the losses reported in the previous year.

Looking ahead to the current year, though, GFMS is anticipating something of a pick-up in mined production of silver with mining rates returning to normal and output from gold and primary silver mines in the Americas increasing.  At the country level, GFMS estimates that Mexican production will post the largest gain and grow by as much as 6 million ounces (187 tonnes) led by Fresnillo. Higher grades at Cannington in Australia will also provide support to the global balance and it also expects to see some growth from the copper sector in Peru.

The big unknown remains Guatemala should the Escobal shutdown be reversed.  That decision remains with the courts and the country is not seen as being particularly mining-friendly, despite the positive economic advantages that might result from a resumption of production at one of the world’s largest, and potentially most profitable, silver mines.

18 Apr 2018 | Categories: Silver, Mining

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