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How silver miners can build long-term competitiveness

With the highest demand for silver since 2015, mining companies are looking to increase production and do so with sustainability in mind.

In brief

  • Silver miners are investing in exploration to meet higher demand and environmentally sustainable practices for long-term success.
  • In rethinking mining business models, people, planet and profit are top of mind.
  • Miners are looking to digital and electric innovations to drive resilience.

Authored by Alfredo Alvarez Laparte, Energy Lead Partner, EY Latin America North.

The demand for silver in 2021 reached 1,049 million ounces (moz), the highest levels since 2015, owing to significant demand growth in all the key sectors as economies recovered.¹ Green initiatives drove industrial demand, while rising inflation and geopolitical uncertainty supported investment demand as a hedge against a weakened macroeconomic environment.

Due to rising demand, the silver market experienced its first deficit since 2015 at 51.8moz, and the deficit is expected to persist in 2022.² However, elevated commodity prices, including that of copper, zinc-lead, gold and silver, has led to advancement of key projects. The impact of the energy crisis, the higher cost of operations and geopolitical uncertainty around operations will likely be offset by high cash at disposal, driving capital allocation strategies.

Along with increasing production, sustainability continues to be the top priority on miners’ agendas. Companies are investing to comply with ambitious environmental, social and governance (ESG) targets and stringent government regulations. Investments reveal that from 2018 to 2020, the value of total assets in sustainable investment portfolios in major markets of Europe, the US, Japan, Canada, Australia and New Zealand grew by 15% to reach about US$35t, and 82% of those portfolios are based in European and US markets.³


Chapter 1

Current trends

Investment in exploration and sustainability are top of mind for silver mining companies.

Exploration activities on the rise

With the resurgence in metal prices, capital allocation toward exploration activities is on the rise again. In 2021, the overall exploration budget of gold, zinc-lead and copper grew 36% year over year (YOY) to US$8.97b. The silver budget grew 62% YOY to US$644m, the highest growth since 2012.⁴

Latin America (LatAm) continues to remain the focal area, recording the highest silver budget investment, which grew by 63% YOY to US$404.8m.⁵ During 2021, Peru’s silver reserves increased 32% YOY to 4,233moz, while production grew 8% to 106moz. Overall, silver mine production increased slightly in 2021 to 846.6moz, mainly due to increased production from mines in Argentina, Mexico and Peru following shutdowns in 2020.⁶

Companies are also looking for M&A activities, with increased focus on silver as a primary or coproduct in determining intrinsic value of assets. For instance, Hecla Mining plans to acquire Alexco Resource for about US$74m, which has the potential to improve its silver production from 15moz currently to 19moz by 2025.⁷

Focus on improving sustainability

According to the 2021 EY business risk report, ESG and decarbonization remain the top two business risks for miners.⁸ Several major miners have set ambitious targets to achieve net zero emissions and are working across multiple areas of sustainability. Among these, climate change and sustainability, community development, waste and water management, biodiversity development, and diversity and inclusion emerged as the key areas in which miners’ investments increased in 2021.

Source: Company reports, EY Knowledge analysis. Size of words is proportional to frequency of initiatives by miners.

Increased usage of recycled silver

Silver scrap usage is on the rise due to higher metal prices coupled with increased demand expected over the coming years. Global silver recycling grew 7% YOY in 2021 to an eight-year high of 173moz, with industrial scrap supply increasing by 13% YOY.⁹ Due to tighter environmental regulations, demand for scrap will further increase as it reduces both emissions and the need for new produced metals.


Chapter 2

Next steps

Miners are aligning with sustainability frameworks as they prepare for the future of the industry.

Rethinking business models and using green financing alternatives

Mining and refining member companies of the Silver Institute have begun initiatives aligned with the United Nations Sustainable Development Goals. Member companies have aligned to comprehensive environmental management programs to meet regulatory standards and address risk management. Miners have collaborated with the Silver Institute to guide sustainable mining and cover the following key areas:

  1. People: Focus on providing health, safety, competitive wages, benefits, and training and professional development for employees and contractors.
  2. Community: Contribute to economic growth by providing local jobs, internships, education and scholarships; investing in infrastructure; and supporting community organizations and local businesses.
  3. Environment: Follow and aim higher than minimum legal standards while utilizing innovation through leading modern mining practices to control impact, including reducing emissions and energy intensity, preserving biodiversity, and optimizing waste and water management.



  • Emissions and energy consumption
  • Waste and water management
  • Mine closure and reclamation
  • Biodiversity management
  • Mining companies
  • Supply chain partners
  • Investors
  • End consumers
  • Labor rights
  • Gender equality
  • Occupational health and safety
  • Community development

Industrial application in energy transition will drive long-term demand

Compared to gold, silver’s strong dual hold as an investment instrument and a metal with industrial applications is strengthening its demand. Silver has a prominent usage from an industrial standpoint, with demand growing 9.3% YOY to 508.2moz in 2021. Physical investments were also on the rise due to safe-haven and inflationary concerns, especially from North America and Europe, with silver coins and bar demand growing by 36% YOY to reach 278.7moz.¹⁰

Automotive and electronic demand was temporarily impacted due to the chip shortage but is expected to recover in 2022. Interest rate hikes by governments might impact safe-haven buying; however, silver’s industrial usage, especially in energy transition, is expected to support investor sentiment over the next few years.

Demand from energy transition

Energy transition is pushing silver demand in nontraditional sectors, such as renewable power generation and e-mobility. Photovoltaic demand grew by 13% YOY to 113moz in 2021 and is expected to consume 81moz per year through 2030.¹¹, ¹² Though R&D efforts are expected to reduce the amount of silver required per solar cell, the growth in volume of solar installations will likely offset this reduction. Transition toward electric vehicles (EVs) and associated charging infrastructure will continue to drive the demand for silver in batteries and equipment used in charging stations.

Green financing alternatives gain traction

Global issuance of green, social, sustainability and sustainability-linked bonds grew 85% YOY to US$1.1t in 2021.¹³ Miners are also leveraging sustainability-associated bonds and ESG-focused exchange-traded funds in the market to finance specific projects or any corporate activity aimed at reaching ambitious emissions targets. For instance, Newmont introduced the mining industry’s first sustainability-linked bond with net proceeds of US$992m focused on limiting carbon emissions and gender parity in senior leadership positions.¹⁴ Green financing is expected to grow further over coming years as miners continue to seek opportunities to obtain funds for sustainability initiatives.  


Chapter 3

What will drive business resilience?

Mining companies are looking toward digital and electric innovation to drive business going forward.

Digitalization and electrification unlock long-term value for miners

As silver demand grows alongside global advancements in green initiatives, technological developments are expected to fuel the efficiency of mining operations. Innovation is required to allow already-known, lower-grade, complex ores to be mined both economically and in a manner that is environmentally sustainable.

Digitalization has the potential to unlock greater long-term value in mining operations through improved efficiency, decision-making and safety of operations. Miners are increasingly collaborating with mining equipment, technology and services (METS) companies to develop integrated solutions by addressing challenges from construction to capital spending. For instance, Fresnillo has signed contracts for each mining unit to implement fiber connection at distantly located operational sites.¹⁵

Electrification can enable a shift to green energy consumption as miners seek to reduce costs, increase energy efficiency and maintain licenses to operate. By 2028, the market value of EVs in global mining operations is expected to reach US$9b.¹⁶ The continued focus of stakeholders to reduce emission levels is pushing miners toward electrification. In line, miners are adopting cleaner energy sources in fleets and embedding renewable technology to power mine site operations. In addition to reducing greenhouse gas (GHG) emissions, electrification is critical in improving safety levels for employees, as it eliminates the noise, vibration, excess heat and exhaust gases, making for better working conditions at the mine sites.

Disruptions in the base metals industry impact silver output

Silver supply is highly dependent on base metals operations, as 73% of silver is derived from projects where it is a by-product of mining zinc-lead, copper and gold. The share of by-product production is expected to further increase, as declining silver ore grades increases pressure on miners to maintain profitability.

Disruption in production of base commodities can significantly impact the competitiveness of silver. For instance, tax changes and local community protests in Peru impacted production from major copper mines in the region. The Chilean government is also considering a modified version of a 2021 bill to impose a 1% sales tax for copper companies producing less than 200 kilotonnes per annum (ktpa) and up to 3% for companies with output exceeding 200ktpa. The companies producing under 50ktpa are exempted from this tax. This is likely to impact the new project pipeline over the coming years.16 Freshwater usage is another major concern for mines in Chile and Peru. Gold exploration activities are expected to be on the rise with high cash flows; however, illegal mining activities in LatAm and African regions continue to impact profitability of miners.


The silver market is expected to remain robust, as its industrial application remains crucial to implement low-carbon initiatives, while it also gains traction as a financial hedging instrument against macroeconomic uncertainties. Along with increasing exploration activities, sustainability will remain the key focus area for miners as they progress toward net zero emissions. Collaborative efforts will be critical for miners to develop cost-effective solutions to improve efficiency and achieve high economies of scale. Adoption of new and innovative technologies while maintaining supply levels will help them transition toward more sustainable operations and build long-term competitiveness.

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