Two-Thirds Of The Top Primary Silver Miners Suffered Production Declines In 2017

SRSrocco's picture

SRSrocco

By the SRSrocco Report,

It has been a rough year for many primary silver miners as two-thirds have suffered declines in production.  Also, many high ranking silver producing countries are also experiencing a pronounced reduction in their domestic silver mine supply.  According to the data put out by World Metal Statistics, Chile's silver production is down 20% in the first eight months of the year, while Australia is down 19%, Mexico declined 2% and Peru lower by 1%.

The Silver Institute will be releasing their 2017 Silver Interim Report shortly which will provide an update on current silver production and forecasts for the remainder of the year.  However, I believe global silver production will take a big hit this year due to several factors including, falling ore grades, mine closures, and strikes at various projects.

For example, Tahoe Resources was forced to shut down its Guatemalan Escobal Mine in July due to a temporary suspension of its operating license by the country's Supreme Court.  However, even after the Guatemalan Supreme Court reinstated Tahoe Resources Escobal Mine's license in early September, an ongoing road blockade has hampered the ability of the project to continue mining.  Regardless, Tahoe's silver production declined a stunning 6.7 million oz Q1-Q3 2017 versus the same period last year.

Now, on the other hand, silver production at Fresnillo's operations in Mexico jumped by nearly six million oz during the first three-quarters of 2017 primarily due to the start-up of its San Julian Mine phase II expansion and a ramp-up of its phase I:

While the gain in silver production at Fresnillo's operations helped to offset the significant decline at Tahoe's Escobal Mine, two-thirds of the top primary silver companies in the group experienced a reduction in mine supply this year.  Hecla's silver production fell by 3.7 million oz in the first three-quarters this year due to an ongoing strike at its Lucky Friday Mine in Idaho.  Moreover, output at Silver Standard's Puna operations in Argentina fell by 3.2 million oz due to a 36% decline in ore grade at is open-pit Pirquitas Mine.  Silver Standard's Pirquitas Mine is one of the few open-pit silver operations in the world.  The overwhelming majority of primary silver mines in the world are underground operations.

Overall, production at these top primary silver miners fell 9 million oz in 2017 compared to the same period last year:

Now, if Tahoe Resources Escobal Mine was not forced to shut down or if Hecla's Lucky Friday Mine's strike was resolved, overall production at these top primary silver miners would have likely increased by approximately one million oz this year.  Unfortunately for Tahoe's Escobal Mine and its investors, it may be quite some time before full production resumes.  As I have mentioned in previous articles about the troubles plaguing the Escobal Mine by the local and indigenous peoples living by the operation, there are two very different opinions on the underlying problems.

While I have stated that the negative issues put forth by the local and indigenous peoples about the Escobal Mine are likely more valid than the pro-western stance taken by the Tahoe Managment or the Mainstream financial media, time will tell how this is resolved.  However, the notion put forth by Tahoe Management that the problems are stemming from "non-locals" who are supposedly radicalizing the locals around the plant, is unfounded when we understand that it is a huge ground-roots movement led by a large percentage of the inhabitants surrounding the mine.

According to the article, Tahoe Resources’ Social Licence in Guatemala Non-Existent, as Uncertainty Plagues Escobal Permits:

Tahoe CEO Ron Clayton is also wrong when he states in a recent press release that community opposition comes from “non-locals”. Lack of social license has dogged Tahoe Resources since the beginning of its project. Since 2011, tens of thousands of residents in eight municipalities around the Escobal mine have voted in municipal plebiscites demonstrating their opposition to the project, or any mining in the area, out of concern for their water supplies, health, and local agriculture. Five municipalities refuse to receive any royalty payments from Tahoe’s mine operations and are now parties to the legal proceedings over discrimination of the Xinka Indigenous population and the Ministry of Energy and Mines’ failure to consult with them.

As the article states, five municipalities refuse to receive any royalty payments from Tahoe's mine operations and are now supporting legal proceedings.  This does not sound like a small group of non-locals instigating trouble.  Rather, this has been an ongoing issue ever since the Escobal Mine was initially planned, during its construction phase and ever since it produced its first ounce of silver in 2014.

Lastly, it looks like global silver production will take a big hit this year.  We could see world silver mine supply fall by 40-50 million oz in 2017 if the trend continues for the remainder of the year.  One country that I did not report on about silver production was China.  According to the World Metals Statistics, they show Chinese silver production down by a stunning 25% in the first eight months of 2017.  However, I don't believe the decline is that high.  Even though the World Gold Council stated that Chinese gold production was down 10% so far this year, I doubt their silver production fell 25% this year.

We will have to wait and see what production figures the Silver Insitute will release in their 2017 Silver Interim Report when it's published in the next few weeks.  Regardless, the world's economies are being propped up by a massive amount of debt, derivatives and money printing.  When the markets finally crack, global silver production will fall considerably as for demand for base metals will drop like a rock.  We must remember, 58% of world silver production is a by-product of copper, lead and zinc production.  So, when base metal demand falls, so will base metal production.

Thus, as the market and economy continue to disintegrate, global silver supply will fall right at the very same time investment demand surges.

Check back for new articles and updates at the SRSrocco Report.

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LoneCapitalist's picture

Production numbers are irrelevant. Give us an article on ore grades.

HenryHall's picture

Silver will do extremely well after the apocalypse. Not so much before then. So whether buying silver is a good move depends on what you are preparing for.

The article is largely irrelevant to silver's prospects; most silver mining is byproduct - not primary - production.

wattie's picture

Join the Global Class action fightback against gold/silver manipulation!

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Investors from 18 countries around the world have signed up so far...will you?

Together we can end this.

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Dragon HAwk's picture

WTB ( want to Buy ) striker Dye, that cuts a silver round into pieces of Eight.. asking for a friend.

Lost in translation's picture

I like silver.

I like gold, better.

I like an SKS best of all.

HedgeJunkie's picture

I like silver.

I like gold, better.

I like FMJ lead best of all.

I keep stacking .45, and .30 carbine (and silver and gold).

  

Silver Savior's picture

Here is a little handy fact. There is perhaps 8x more physical gold available for investment than physical silver. This small silver market would not take much to go parabolic. That's why even though I can afford gold I buy 500 ounces of silver to every ounce of gold. 

So you guys say silver is everywhere supposedly. Why do we have a physical silver shortfalls year after year. What is this silver you speak of? Is it the silver in the Earth's crust that is so spread out that it's uneconomical or impossible to mine at any cost? 

Pull my finger. You guys are halarious. I guess mainstream media does a good job keeping you from buying it so you will buy their stocks. 

Automatic Choke's picture

Silver is indeed volatile.   You own it for all the same reasons as gold, but expect more craziness...more risk, more potential gain.   I've accumulated gold over the decades and sold very little of it.   Silver, on the other hand, comes and goes.   Bought from the mid '90s at $4 to $5, sold all in 2011 above $40, then started buying again soon after in the $15-20 range.  It is like a volcano -- appears to be dead for long stretches, then wakens up and everybody notices.

 

WSP's picture

These production reports are useless - the Banksters can print unlimited amounts of paper Silver and as long as we have paper silver and their derivatives who cares - "physical silver" is so 20th century' - who needs physical silver when you can hold it in paper - paper rules because we can create it out of nothing and it trades easy - no energy to produce, etc., etc.

silverer's picture

I traded my baseball cards for silver. I'm now silverer.

Rex Andrus's picture

We deeg when the price ees right, pendejo.

Clock Crasher's picture

No one wants silver.  It's all about bitcoin, stocks and bonds.  Period.  

Silver Savior's picture

Thats funny, I liquidated my stocks to buy silver, never cared about bonds and I got out of Bitcoin too. All I want is silver and a little gold. Everything else is shit investing because the dollar will be worthless thus making all paper investments worthless.  

I am feeling very good right about now. 

SRSrocco's picture

Clock Crasher,

hehe.... you need to tell that to those silly Indians as they imported 567 metric tons of silver just in September.

steve

MrSteve's picture

There is zero investment demand for silver in China. I asked a Chinese friend about silver and he said the Chinese have no interest in silver, their interest is in gold. PERIOD. The USA demand for silver went over the hill with Dorothy and Toto going down the yellow brick road, ending in the gold standard. The whole Wizard of Oz story is a metaphor for the gold standard. India uses silver for storing wealth in bangles on their forearms and that's it. The demand for USA Silver Eagles??? check this report:

https://www.silverdoctors.com/silver/silver-coins/breaking-us-mint-halts...

Precious metals are gold, gold and gold. People don't even use silver for eating utensils anymore. Sterling is a small city in Illinois:

https://en.wikipedia.org/wiki/Sterling,_Illinois

I spent several decades working with a sales force full of silver bulls, collectors and dealers. Our favorite joke was Q: "how do you make small fortune in silver" A: "Start with a large one!"    That joke is still true, like it or not.

 

 

 

 

 

 

 

Silver Savior's picture

So your Chinese friend is just a video game player who has no concept of metals? 

Anonymous_Beneficiary's picture

Look, shiny rock! Me want!!

But seriously..silver is extremely useful and beneficial but it only takes an ounce to make a very pure lifetime supply of what I need to solve a wide range of medical issues. Colloidal silver is some truly amazing stuff...mixed it with some DMSO and cured my carpal tunnel in two days, for example. I've even used it to knock out a viral eye infection overnight...the hebrew eye doctor Moshe informed me it would take months to go away because modern medicine has nothing to deal with viruses.

How many people hoarded silver but never were aware or availed themselves of its' amazing powers?

Stuck on Zero's picture

One ounce times six billion is a lot of silver.

MrSteve's picture

If 6 billion people wanted one ounce, the US Mint would not ever be shutting down coining of silver, EVER!!  Your supposition is irrational as many people have no practical or financial use for an ounce of silver. Your logic is what is needed to make a small fortune in silver.

What per cent of American households can't cover a $400 unexpected bill? You expect them to spend 5% of what they don't have on an ounce of silver?

 

Anonymous_Beneficiary's picture

Hadn't thought of it that way..thanks ;)

SuperVinci's picture

correct. srsnumbnut loves to promote this crap. As markets and currencies die, who will have excess money to invest in silver? no one, they will be too busy looking for food.

there is also plenty of above ground silver. once this market dies, there will be a zillion silver fanboys trying to pay for stuff and otherwise unload (use) their silver stacks and no one will want it. that will be a hard enough lesson for them to learn and tools like Steve SRS keep trying to profit off these fools. shame on you Steve.