GLOBAL SILVER SUPPLY COLLAPSE ON ITS WAY: Mexico mining suspension to hit silver supply


Steve St. Angelo Steve St. Angelo

Steve St. Angelo

April 3rd, 2020 Comments

Due to Mexico’s Ministry of Health issuing an Executive Order for the immediate suspension of non-essential activities until April 30th, the mining industry in the country has now come to an abrupt halt. The mining industry was hoping for an exemption to the Executive Order but was not granted one. So, companies are now suspending production and putting their mines on care and maintenance.

Mexico Mining Suspension to hit Silver Supply

According to the article on the Mining Journal website, Mexico mining suspension to hit silver supply:

Under the government decree, non-essential activities are to be suspended immediately until April 30.

The decision is expected to have a significant impact on the supply of silver at a time when demand for silver coins is high. Mexico is the world’s largest silver producer at some 23% of world production and produced more than 200 million ounces in 2019, up from 196.6 million ounces in 2018.

With Mexico shutting down its mines, including the continued closure of Peru’s Mining Industry announced on March 15th, nearly 40% of global silver production is offline. Peru’s government stated that the national quarantine would last 15 days. However, we have passed that point, and there is no announcement of a return back to work.

Here are the top ten silver-producing countries in the world in 2018:

Top 10 Silver Producing Countries in the World in 2018

In 2018, Mexico and Peru accounted for 342 million oz of silver production. If mines in Mexico and Peru remain shut down for a month, that will cut silver production by 28 million oz. So, each month that Mexico and Peru are offline, would reduce the silver mine supply by 28 million oz. However, I believe we are going to see more countries shut down their mines for an extended period as the global contagion continues to spread.

Today, Newmont and Pan American Silver announced closures of mines in Mexico. Newmont is now ramping down production at its massive Penasquito Mine, which produced 18 million ounces of silver in 2018:

Newmont Ramping down Peñasquito Mine due to Mexico's Covid-19 Rules

Also, Pan American Silver announced the shutdown of its La Colorada and Dolores mines in Mexico. These two mines produced 13.3 million ounces of silver in 2019:

Pan American Silver Provides Operations Update in Response to Covid-19

As we can see, the mining industry is now being shut down due to the global contagion. It will be interesting to see when Peru’s government announces a return-to-work policy. Again, it has been more than 15 days since Peru announced a national quarantine with no indication yet of a return to work.

With Mexico, the largest silver-producing country in the world now on lockdown, the collapse of the global silver mine supply is underway. The shutdown of silver mines throughout the world is taking place when investors are buying a record amount of physical silver bullion. This has now become a PERFECT STORM for the silver price going forward.

Steve St. Angelo

About the Author:

Independent researcher Steve St. Angelo started to invest in precious metals in 2002.  In 2008, he began researching areas of the gold and silver market that the majority of the precious metal analyst community has left unexplored.  These areas include how energy and the falling EROI – Energy Returned On Invested – stand to impact the mining industry, precious metals, paper assets, and the overall economy.