Silver: Always present in Argentina’s mining supply

Regardless of having lower values ​​compared to other metals, silver retains its appeal.

Written by Alejandro Colombo

Supply and demand – deficit market

Historically, the behavior of silver has had some correlation with the behavior of gold: traditionally, the price of an ounce of silver follows the price of the yellow metal. In this regard, and in parallel with gold, the price of silver for 2024 started at around 22 US dollars. In May, the lows and highs were US$26 and US$32, and from September to the time of writing (2nd half of November 2024) they have not fallen below US$30, reaching record highs of around US$35; Since January, the value of silver has risen by more than 40%.

A precious metal with various applications, demand for it is primarily driven by industrial uses. With a total demand of 1,021 ounces of silver in 2014, it rose to 1,208 ounces in 2023: the industrial sector increased from 450 ounces in 2014 to 655 ounces in 2023, which clearly shows that this metal is finding more and more specific applications in the field. Technological. In this sense, green economies are reported from the PV sector, as well as the automotive sector, especially due to advances in vehicle technology, coupled with continued investments in charging stations. Beyond industrial applications, silver demand is also influenced by the investment and jewelry sectors. In the first case, a decrease was observed compared to previous years: 246 million ounces in 2023 versus 337 million ounces in 2022, due to a combination of lower consumption in the United States and Europe, offset by consumption from India. In the jewelry sector, the Asian giant is a crucial player when monitoring consumption trends, as registered values ​​exceed all other countries combined.

In light of this, a market deficit of 189 million ounces was observed last year, in line with 261 million ounces in 2022 and 93 million ounces in 2021. According to Silver Institute forecasts, the current year will also end with a deficit. . In terms of supply, no increases in mining production have been observed in the past five years: 2023 ended with a total of 829 million ounces versus 839 million ounces in 2022, reaching a decade low of 784 million ounces in 2020.

The show – key players and new actors

With the sole exception of 2020, when production was affected by the pandemic, production has remained between 830 million ounces and 900 million ounces (about 23,500 and 25,500 tons) over the past decade. Regarding 2023, the Silver Institute reported a mine production of 829 moz, a slight decrease of 10 moz compared to the previous year. The increase in production from countries such as Chile, Bolivia, India, Brazil and Kazakhstan has outpaced the decline in other major producers such as Mexico and China – the world’s leading producers – as well as Australia, Russia, the United States, and also Argentina. .

Chart 1 shows that Mexico and China have increased their production significantly over the past decade, while historical producers such as the United States and Australia have seen declines, or stabilized in the cases of Poland, Chile and Peru.

Chart 1 – 2003 – 2023 Comparison of Leading Silver Producers, Measured in Tons – (Source: USGS)

Argentina – present and near future

The Argentine Mining Minister reported that silver production in 2023 decreased by 12.5% ​​compared to 2022, from 29.6 moz to 25.9 moz, equivalent to about 100 tons, due to the cessation of operations at the Manantial Espejo mine (owned by Pan American Silver). ).

It is important to note that in the mid-1990s, silver production in Argentina was limited to the Aguilar mine, as a by-product of zinc and lead, with a production of less than 100 tons. The enactment of the Mining Investment Law allowed increased production of silver, both as a primary metal – from the San Jose Mine (Hochschild Mining Company) and the now-depleted Manantial Espejo Mine (Pan American Silver) in Santa Cruz Province, and the Puna (SSR Mining) operations in Jujuy Province – as well as by-products Secondary gold mining centers such as those in Santa Cruz (Cerro Vanguardia, Cerro Moro, Cerro Negro) and in San Juan (Veladero and Gualcayo).

Argentina has many projects where silver is the base metal; Regardless of the stage of development of each project (Table 1), the Diablillos project stands out, ranking among the top 10 undeveloped silver projects in Latin America. Already in its third drilling campaign, expanding existing resources and showing encouraging mining results, the project located in the province of Salta presents itself as one of the great mining promises in Argentina, especially in the silver sector.

Table 1 – Key Silver Projects – Source: Argentine Minister of Mining (September 2024)

A potential increase in silver production in Argentina could come from the production of some of the projects listed in Table 1, as well as byproducts from the commissioning of gold and copper deposits.

In terms of foreign trade, silver represented 17% of the total ($695 million out of a total of $4.060 billion), recording a noticeable decline compared to previous years (20% in 2022, equivalent to $802 million out of the total in 2022). National total $3.857 billion 24% in 2021, representing $805 million of a national total of $3.243 billion; In 2020, at US$591 million out of a national total of US$2.620 billion).

What does silver mean in the context of exploration in Argentina? Silver represents the lowest percentage among the four main pillars of Argentina’s mining sector – gold, copper, lithium, and silver – a trend that has been observed throughout the past decade. In 2023, it accounted for only 9%, equivalent to about 38.6 million US dollars.

The National Mining Authority announced a resource of 2,296 million ounces of silver, identified from 7 projects, some of which are in advanced stages of development. The total estimated capital expenditures for developing, building and starting new projects, as well as expanding existing operating centers, are estimated at approximately US$1.3 billion.