After the Primary Silver Mining Industry enjoyed a brief increase
in productivity over the past two years, it fell to the lowest ever in 2016.
The reason the primary silver mining industry’saverage yield increased in
2014 was due to the addition of Tahoe Resources high-grade Escobal Silver
Mine.
Tahoe’s Escobal Silver Mine’s average yield in 2014 was an astonishing
16.3 ounce per ton (oz/t). Not only did Escobal Mine enjoy one the
highest silver yields in the world, it produced over 20 million oz (Moz) in
2014. Thus, the addition of Tahoe to the Top Silver Miners pushed their
average yield to 7.8 oz/t in 2014 versus 7.6 oz/t in 2013:
Now, what is very interesting about adding Tahoe’s Escobal super high-grade
mine to the group, it didn’t move the average yield up that much…. only 0.2
0z/t to 7.8 oz/t.
I didn’t update this chart for 2015. However, I have now added the
data for 2015 and 2016. As we can see in the updated chart below, the
group’s silver production has increased over the past two years from 138 Moz
in 2014 to 158 Moz last year. The majority of this increase was due to
the ramp up of Fresnillo LLC’s Saucito Mine:
Even though the top 7 Primary Silver Mining Companies increased their
production to 158 Moz in 2016, the amount of ore they processed also reached
a record high. For example, these silver mining companies processed a
record 21.3 million tons of ore in 2016 compared to 19.9 million tons in
2015. Furthermore, the top silver miners only processed 9.4 million
tons of ore in 2005 to produce 123 Moz of silver… yielding 13 oz/t.
The falling average yield in the silver mining industry seems to be
overlooked by the majority of analysts. As we can see in the
chart above, the primary silver miner’s average yield has fallen from 13 oz/t
in 2005 to 7.4 oz/t in 2016. This is a 43% decline in just 12
years.
Lastly, Tahoe Escobal Mine’s average silver yield will continue to fall
over the next ten years. Thus, the global silver mining industry will
continue to process more ore to produce the same or less silver in the
future. While the cost of energy has declined over the past few years,
falling ore grades will continue to put pressure on the silver mining
industry going forward.
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