Global Silver Supply Collapse on Its Way: Mexico Mining Suspension to Hit Silver Supply
The comments below are an edited and abridged synopsis of an article by SRSRocco
Mexico has issued an Executive Order for suspension of non-essential activities until April 30, and its mining industry has come to an abrupt halt. Companies are now suspending production and putting their mines on care and maintenance.
With Mexico shutting down its mines, including the continued closure of Peru’s Mining Industry announced on March 15, 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 to work.
In 2018, Mexico and Peru accounted for 342 million ounces of silver production. If mines in those countries remain shut down for a month, that will cut silver production by 28 million ounces, and so on for each month they are closed. We will likely see more countries shut down their mines for an extended period as the global contagion spreads.
Newmont is shutting down production at its massive Penasquito Mine in Mexico, which produced 18 million ounces of silver in 2018.
Pan American Silver is shutting down production at its La Colorada and Dolores mines in Mexico. These two mines produced 13.3 million ounces of silver in 2019.
With Mexico, the largest silver-producing country in the world, on lockdown, the collapse of global silver mine supply is underway. The shutdown of silver mines throughout the world is occurring at a time when investors are buying a record amount of physical silver bullion. This has become a perfect storm for the silver price going forward.
