Decline in mining production?

[vw1972]

APMEX writes that: "The Wall Street Journal reported that Silver mining companies, affected by the recent low Silver price history, won’t have enough capital to fund new mining ventures to keep up with coming demand. “Silver minesupply lagged demand by 4.9 million ounces last year,” which means the gap between supply and demand is only going to grow."

 

https://www.apmex.com/education/history/the-history-of-silver-prices?utm_source=facebook&utm_medium=social&utm_campaign=7312019educationcenter&utm_content=awareness

 

What do they mean by "recent low silver prices". Silver prices has been around the current level since 2013, so wouldnt the mining-companies had been affected years ago by the low prices? 

 

Does anybody have any other news about silver mining companies that struggles with low silver prices, wich means they cant expand their mining ventures?

[HawkHybrid]

hochschild decided to close/put on maintenance

one of their older mines that have been struggling

in recent years.(arcata mine)

 

'2(nd) highest half of attributable production in Hochschild's history'

from their recent q2 report after the mine closure.

 

by comparison mine production from fresnillo's

report shows ~7-10% decline from the same

period last year (without a mine closure).

 

there is a lot more to mine production than what

sellers of physical silver are suggesting.

 

I suggest listening to david morgan when he says

that silver prices are much more about silver

demand then silver supply.

 

HH

[Branman1986]

This is all my conjecture, if someone has more info with mining operations, please correct me.

 

My guess is that there has to be a lot of lag between pricing and mining company operations.  There is a cost to idling mines and hiring and firing of workers and management, so you can't just turn them on and off.  Same with most commodities, when power prices drop, you don't immediately mothball your power plants.

 

Also they would have forward hedged sales years out, so that buys them a lot of time to mothball mines without taking a huge financial hit, but it would eventually catch up as hedges fall off.

[KDave]

That is correct logically, mining companies, oil companies, ect will continue to produce at a loss to pay creditors and meet obligations for as long as it is possible to do so (meaning for as long as further credit or cash reserves allow), in the hopes that prices rise back into profit when the alternative is bankruptcy - though eventually low prices will force mine/fracking company closures. Some of the bigger companies have enough diversification to allow the luxury of closure of higher cost mines during the hard times with intent to reopen later.

The main issue as far as my understanding with silver mining and supply information goes is that officially, there has been a supply deficit for years and yet the prices do not reflect that. There are likely many factors involved but the main one being that a large portion of total silver supply is as a by product of base metal mining, thus meaning it is mined alongside profitable metals (lead/zinc, copper, gold). The actual number of silver ounces involved and how much of the silver is sold or even how profitable such a lottery of silver supply are questions I have not answered, maybe someone else here has done the research?

I have read that primary mining supply of silver is as low as a third of total, meaning that silver is largely a by-product of base metal mining and supply will always be available. Closure of unprofitable primary silver mines which represent a small percentage from only one third of total supply will not have much influence on the supply nor will it have much influence on the price. 

[Au79]

If production is not going up then it must be coming down. If it is not going up anymore, we look back and say the summit is the peak. That’s the narrative from the producers.

[vand]

2 things to point out:

1- The data shows that silver ore is degrading in concentration over time. That means they need to blast more rock to extract the same quantity of metal.

2- Mining is very energy intensive business; the bounce in oil prices since it hit <$30 a few years ago will inevitably have pushed costs up

[vw1972]

Interesting to know That silver is mined along other metals, with means low silverprices Will have little influence on the mining companys overrall financial status. 

 

That means apmex and Wall street journal Are not to be trusted, when they forget to mention the above. 

[HawkHybrid]

simple facts are:

 

hochschild aisc on silver mined ~$11-13

 

fresnillo had a bad 1st half with

higher costs

lower ore grades

lower production(compared to same period

last year)

fresnillo's still managed to turn a profit at

current prices.

 

combined hochschild and fresnillo makes up

something like 8% of global silver production.

so might be a reasonable representation of

what we might expect from the others.

 

people can say all they want about silver mine

supply, but it's unlikely to be a factor any time

soon in moving the silver prices up.

 

HH

[KDave]

The silver institute annual silver supply/demand reports have reported some 100 million ounce annual supply deficits for decades - yet real supply has been meeting demand otherwise higher prices would reflect the shortage. Why is there this discrepancy? Base metal mines not reporting their silver production perhaps?

[vw1972]

17 hours ago, KDave said:

The silver institute annual silver supply/demand reports have reported some 100 million ounce annual supply deficits for decades - yet real supply has been meeting demand otherwise higher prices would reflect the shortage. Why is there this discrepancy? Base metal mines not reporting their silver production perhaps?

True. The only other explanation i can come up with, is that silver prices Are manipulated to keep Price low. Why, i dont know. 

[vand]

On 04/08/2019 at 08:53, vw1972 said:

Interesting to know That silver is mined along other metals, with means low silverprices Will have little influence on the mining companys overrall financial status. 

 

That means apmex and Wall street journal Are not to be trusted, when they forget to mention the above. 

Yes, silver is a byproduct of copper and zinc mining for industry.

this gives silver the interesting property that it's supply acts as it its an industrial material, yet its demand will act like its a precious metal at times.

When this becomes interesting is when the economy goes into turmoil. You will get a massive contraction of supply as industrial demand for zinc/copper completely collapse, but at the same time you will have a massive explosion in demand for physical silver as a safehaven. This is why silver always goes completely bananas when the SHTF. It's guaranteed bythe laws of supply and demand in the way silver is extracted and coveted.

[vw1972]

2 hours ago, vand said:

Yes, silver is a byproduct of copper and zinc mining for industry.

this gives silver the interesting property that it's supply acts as it its an industrial material, yet its demand will act like its a precious metal at times.

When this becomes interesting is when the economy goes into turmoil. You will get a massive contraction of supply as industrial demand for zinc/copper completely collapse, but at the same time you will have a massive explosion in demand for physical silver as a safehaven. This is why silver always goes completely bananas when the SHTF. It's guaranteed bythe laws of supply and demand in the way silver is extracted and coveted.

But remember when SHTF silver-demand in the industry will fall because production fall, because people stop buying like they use to. Also i predict jewelry production and demand will fall in a recession, wich mean the jewelry production-sector will demand less silver. 
So in a crisis demand will fall in the industry and jewelry-sector, and demand will rise in the investment/coin/bar sector.

[vand]

7 minutes ago, vw1972 said:

But remember when SHTF silver-demand in the industry will fall because production fall, because people stop buying like they use to. Also i predict jewelry production and demand will fall in a recession, wich mean the jewelry production-sector will demand less silver. 
So in a crisis demand will fall in the industry and jewelry-sector, and demand will rise in the investment/coin/bar sector.

 

Yes.. it becomes a question of how much they offset each other.

 

we know that Industrial usage usually accounts for about 2/3rds of silver usage and this would decline in an economic contraction.

but we also know the volume silver for investment/safehaven has the capacity to increase 4-fold as measured by ASE sales: