Silver to log fifth straight year of deficits: a look at the top 5 country producers  

2025.03.25

Silver, like gold, is a precious metal that offers investors protection during times of economic and political uncertainty. 

However, much of silver’s value is derived from its industrial demand. It’s estimated around 60% of silver is utilized in industrial applications, like solar and electronics, leaving only 40% for investing.

The lustrous metal has a multitude of industrial applications. This includes solar power, the automotive industry, brazing and soldering, 5G, and printed and flexible electronics.

A report by Oxford Economics commissioned by the Silver Institute found that demand for industrial applications, jewelry production and silverware fabrication is forecast to increase by 42% between 2023 and 2033.

Total silver supply should decrease by 1%, meaning 2024 should see another deficit, amounting to 215.3Moz, the second-largest in more than 20 years. (full-year numbers will appear in The World Silver Survey 2025, to be released on April 16).

2024 is the fourth year in a row that the silver market would be in a structural supply deficit.

As for what’s in store for silver in 2025, UBS financial markets strategist Julian Wee says that silver could enjoy a spillover effect from gold.

He suggested stronger industrial demand could propel silver higher, especially if China lowers interest rates further, sparking a recovery in global manufacturing. The People’s Bank of China lowered its benchmark lending rates by 25 basis points in October.

Wee said on the supply side, mining output should remain constrained in 2025. “We thus expect prices to reach USD$36-38/oz in 2025, and advise investors to stay long the metal or use it for yield pickup opportunities,” he said via Kitco.

Here we take a look at the five largest silver-mining countries in relation to upcoming supply. Sub-titled figures are in metric tons for 2024.

#1 Mexico 6,300 tonnes (+10t)

In 2023, the Mexican government passed an overhaul of mining laws, including shorter concessions and tighter rules for permits. The reforms also reduced the length of mining concessions from 50 to 30 years. The earlier proposal was for 15 years.

Dan Dickson, the CEO of Endeavour Silver, a Canadian firm with two producing silver mines in Mexico, said the changes to concession terms will affect juniors’ ability to secure finance.

“We deplete our resources and need to make new discoveries to replace that supply. It will limit companies coming behind the operators to bring that additional supply on,” Dickson told the Financial Times.

According to the US Geological Survey, Mexico produced 6,300 tonnes of silver in 2024, against world number two China’s 3,300 tonnes, and third-place Peru’s 3,100t.

Silver Academy points out that Latin America is favoring labor and environmental activism, and recent trends in Peru, Chile and Panama have shut down mines, including First Quantum Minerals’ massive Cobre Panama copper-gold-silver operation.

According to Crescat Capital’s Tavi Costa,

Mexico’s silver production is now declining double digits annually for the first time in almost a decade.

Historical trends indicate that substantial contractions in new supply have presented excellent opportunities to invest in the metal. More importantly: Consider that silver is currently at one of its most undervalued levels in history, especially compared to gold, as the gold-to-silver ratio currently stands at 91.

The article says “Mexico is in the process of soft-nationalization of its remaining Silver as well” following the nationalization of its lithium industry in 2022. “The BRICS nations are increasingly restricting G7 access to their remaining resources now.”

Steve Cope of Silver Viper confirmed in a video that the number of Mexico’s silver mines that are running out of reserves and ore are far exceeding the number of mines that are going to come online.

“I would expect those numbers to start coming down further and I would say the same for Chile and Peru because there hasn’t been the level of exploration given the political situations there. I think you’re going to see a decline over the next three-four years in all those countries.”

#2 China 3,300 tonnes (-100t)

Accurate data from China is hard to come by, but according to Shanghai Metals Market, in December 2024 China’s silver production decreased by 1.2% month on month and 2% year on year.

“The slight decline in silver production was mainly due to most enterprises having completed their annual production plans, resulting in stable or slightly reduced output,” the website states.

Chinese mines produced 100 tonnes less silver in 2024 compared to 2023.

The Silver Institute notes the majority of Chinese silver production is a by-product of other metals. Silvercorp Metals is the country’s largest primary silver producer, with a portfolio of producing silver-lead-zinc mines including the multi-mine Ying district and the Gaocheng operations.

#3 Peru 3,100 tonnes (-100t)

The Silver Institute says 2023’s global silver supply decline resulted from lower by-product output from lead/zinc mines, particularly in China and Peru. Production from primary silver mines was almost flat year-on-year, rising by just 0.1 percent to 228.2 Moz. Peru suffered the most significant decline at -8.5 Moz due to mine suspensions, falling grades at several major mines, and disruption due to social unrest.

Peru has the world’s largest silver reserves at 140,000 tonnes. Much of the country’s silver production comes from the Antamina mine, a joint venture between BHP, Glencore, Teck Resources and Mitsubishi. Note that Antamina is primarily a copper mine with silver as a by-product.

#4 Bolivia/ Poland 1,300 tonnes (-50t/-20t)

Bolivia’s silver production of 1,300 tonnes in 2024 was 50 tonnes lower than in 2023. According to INN, Bolivia is home to several silver mines, particularly in its Potosí region, including the San Cristobal zinc-lead-silver mine operated by San Cristobal Mining, and the San Vicente underground silver-zinc mine operated by Pan American Silver.

The Oregon Group notes The discovery of Cerro Rico, or “Rich Mountain”, in Potosí, Bolivia, in 1545, transformed the global silver market. This single mountain produced an astounding 60% of the world’s silver during the second half of the 16th century, making it one of the most significant mineral discoveries in history — and, arguably, the first global commodity.

However, the Cerro Rico mountain may now be largely depleted of its precious metal reserves, according to the article.

Poland’s 2024 silver production of 1,300 metric tons was nearly on par with the previous year. Poland-based KGHM Polska Miedz is consistently one of the world’s top silver-producing companies, according to the Silver Institute’s latest World Silver Survey.

#5 Russia/ Chile 1,200 tonnes (-40t/-60t)

Russia and Chile’s 2024 silver production were both slightly less than in 2023. Russia’s 92,000 tonnes of reserves are the world’s third largest repository of silver behind Peru and Australia. Polymetal International was the country’s largest silver miner, with seven gold and silver mines, until the Kazakh company in early 2024 sold its Russian assets to Russia’s Mangazeya Mining due to the risks of operating in the region.

According to INN, most of Chile’s silver production is a by-product of copper and gold. State-owned copper giant Codelco, for instance, operates two of the country’s five largest silver mines — Chuquicamata and Mina Ministro Hales. The other three largest silver mines are Glencore’s Collahuasi, Kinross Gold’s La Coipa and BHP’s Escondida.

Sizeable deficit in 2025

At the end of January, The Silver Institute reported that industrial demand is on track to post a new record. Supply will increase, but not by enough to avert a 2025 deficit — the fifth year in a row.

Global silver demand is expected to remain broadly stable this year at 1.2 billion ounces, while global supply is forecast to grow 3% to an 11-year high of 1.05Boz. Although this year’s deficit is expected to fall by 19%, it leaves a supply shortfall of 149Moz, “still sizeable historically,” according to SI.

The organization notes that silver mine production is forecast to reach a seven-year high, rising by 2% to 844Moz:

In China, growth will come from base metal and gold operations, while in Canada and Chile, the ongoing ramp-up of Hecla’s Keno Hill and Gold Fields’ Salares Norte will contribute to rising output, respectively…

By-product silver from gold mines is expected to rise in 2025. In contrast, output from base metal mines will likely remain flat year-on-year.

Additional data is provided by the US Geological Survey. The USGS says world silver mine production decreased in 2024 to an estimated 25,000 tonnes compared to 25,500 tonnes in 2023.

Silver was primarily obtained as a by-product of lead-zinc, copper and gold mines, in descending order of production. The polymetallic ore deposits from which silver was recovered account for more than two-thirds of US and world resources of silver.

In 2024, global consumption of silver was an estimated 37,000 tonnes, a slight increase from that in 2023.

Global consumption of silver exceeded supply and was cited as a reason for price increases in 2024.

The estimated average silver price in 2024 was $27.70 per troy ounce, 18% higher than the average price in 2023. (USGS)

Conclusion

Silver is interesting in that there is the same amount of investable silver above ground as there is gold, because 60% of silver goes into industrial uses and 80% of that end up in landfills. Just 40% is used for investing.

Silver is often mined as a by-product of gold, copper and lead-zinc. A lot of silver is going to be taken offline by the closing of copper mines in particular. An example is the forced closure of the Cobre Panama copper mine in the third quarter of 2023.

According to BloombergNEF’s annual Transition Metals Outlook, the industry will need $2.1 trillion by 2050 to meet the raw materials demand of a net-zero-transmissions world. As stated by Mining.com, Despite a decade of growth in metals supply, BNEF reports that current raw material availability remains insufficient to meet the rising demand.

Copper industry needs to invest $2.1 trillion over the next 25 years to meet demand — Richard Mills

The report highlights that critical energy transition metals, including aluminum, copper, and lithium, could face supply deficits this decade — some as early as this year.

Looking at mined silver versus gold, if we take the 60% of silver used for industrial purposes and subtract the 80% that goes into landfills, silver should be more valuable than the current gold-to-silver ratio of 91.

The gold-silver ratio shows how many ounces of silver equal one ounce of gold. The ratio is a good indication of whether silver is under- or over-valued. To find it, simply divide the price of gold by the price of silver.

Undervalued silver poised for explosive move higher — Richard Mills

Spot silver gained 27% in 2024. The white metal benefited mostly from physical buying in India and China. Silver ETFs were also a factor.

More recently, silver has ridden on the coat-tails of gold which has hit record highs of over $3,000 an ounce. Year-to-date silver is up by 13.7%, as of this writing.

In fact there is evidence to suggest that silver could be on the verge of its biggest breakout in history, with projections of $50 an ounce by mid-year.

The Jerusalem Post reports that governments and central banks are taking an increasing interest in silver for both its monetary and industrial purposes. For example, some central banks are considering adding silver to their portfolios, while several countries are stockpiling silver supplies for high-tech and defense applications. Silver’s use in solar power has made it a strategic metal.

As of this writing, the gold-silver ratio sits at 91.4. Historically, when the ratio is this high, silver tends to outperform gold in the following months. The historical average for the gold-to-silver ratio has typically ranged between 50 and 70, meaning silver is significantly undervalued relative to gold at current levels.

The silver market is looking at a fifth consecutive year of deficits, a shortfall of nearly 150Moz, which also bodes well for prices.

Richard (Rick) Mills
aheadoftheherd.com

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