According to the most recently released data from Chile’s Ministry of
Mining, the country’s silver production declined a stunning 26% in the first
quarter of 2017. This is a big deal as Chile is the fourth largest
silver producing country in the world. The majority of Chile’s silver
production comes as a by-product of copper production.
Chile is the largest copper producer in the world, by a long shot.
Last year, Chile produced 5.5 million tons of copper compared to Peru, who
took a distant second place at 2.3 million tons.
Regardless, Chile’s silver production declined to 283.4 metric
tons (mt) Q1 2017 versus 383.8 mt during the same quarter last year.
Again, this is a huge 26% decline in the first three months of the year:
Chile’s silver production declined 101 mt (3.2 million oz) Q1 2017, due to
a strike at the country’s largest copper mine, Escondida, as well as a drop
off in copper production from many other producers.
For example, of the 20 copper producing mines (& companies) listed on
the Chile’s Ministry of Mining Report, 12 of them stated lower copper
production Q1 2017 compared to the same period last year. Thus, the
strike at Escondida only accounted for a portion of the overall decrease in
by-product silver production experienced across the entire industry.
The majority of the Chile’s silver production decline took place in March:
According to the COCHILCO’s data, silver production fell 16% in
January, 29% in February, and 34% in March. In just the month of March,
Chile’s silver production declined 45 mt. That is a huge drop
off in just one month.
Even though Chile’s Ministry Of Mining forecasts that copper (and
by-product silver) production will recover by the second half of the year,
the world economy continues to stagnate under a massive amount of debt and
derivatives. I believe we will see falling copper prices as overall
demand for the king base metal continues to weaken during the latter part of
2017, and into 2018.
This will put a great deal of stress on many of Chile’s copper mining
companies ability to make profits. So, we may soon experience PEAK
GLOBAL COPPER PRODUCTION… once and for all.
For those individuals who want to make sure that I am not pulling these
figures off the top of my head, here is the actual table of gold and silver
production from Chile’s Ministry of Mining website:
Not only is Chilean silver production (plata) down 26% in the first three
months of the year, gold mine supply (oro) is also down 22%. While a
22% decline in Chile’s gold production is substantial, the country only
produced 43.3 mt (1.4 million oz) in 2016, compared to 1,496 mt (48.1 million
oz) of silver.
Chile isn’t the only country suffering from falling silver production this
year. As I stated in a previous article, Huge Decline In Peru’s Silver Production Suggests
Future Production At Risk, Peru’s silver production declined
12% FEB 2017 versus the same month last year:
So, what were are witnessing here is that world’s top two copper producers
are suffering large declines in their by-product silver production. This
to me is a WARNING SIGN that the situation for by-product silver production
will likely continue to deteriorate in the future as base metal prices trend
lower as economic activity slows.
Clarification On Silver Supply & Demand Forces
There seems to be many precious metals investors (on my site and on other
blogs) who believe that all these supply and demand figures are meaningless
because the price of silver hasn’t really performed all that well since
2012. I agree. However, my focus on silver supply and
demand forces is not to determine a SHORT TERM SILVER PRICE, rather I look at
what is taking place over an ongoing trend.
For example, I have published articles on the huge increase in physical
silver investment demand since the 2008 U.S. Housing and Banking
Crisis. My focus was not to state that the silver price was going to be
determined upon a single year’s worth of rising silver investment demand,
rather it was to show that the world is waking up the SILVER STORY.
Furthermore, putting out articles on what it taking place as it pertains
to world silver supply isn’t to forecast what the change will do to the price
of silver in 2017, but rather how the declining trend will impact the price
going forward.
So, for those who precious metals investors who continue to BELLY-ACHE
that all these supply and demand figures don’t really change the silver
current price that much, I KNOW THAT fer pete sakes… LOL. I am more
concerned about the ongoing trend and what it going to happen over the mid to
longer term.
Lastly the Silver Institute just released their 2017 World Silver Survey,
and I have been looking over it. I will be publishing a few interesting
articles on some of the data from the report as I believe they are a
tell-tale sign that owning physical silver will benefit those immensely in
the future.
Check back for new articles and updates at the SRSrocco Report.
