A large bucket wheel excavator working in an open pit mine against a green landscape.

Why Silver Supply Lags Behind Soaring Demand

Silver price, Silverpundit.com

Silver was $18 in August, 2022. Presently, we are looking at nearly $40. With a 100% rise in 3 years, one would think production would be ramping up to meet the growing silver supply shortage. In this report we’ll be looking into the factors that are keeping silver production at roughly the same levels they’ve been at for the last 15 years, peaking in 2016 at 871 million ounces. (per U.S. Geological Survey)

From Discovery to Delivery: The Silver Mining Process

Discovery (3-10 Years)

Exploration involves geological mapping, geophysical surveys, sampling, and drilling to identify and characterize a silver deposit. This stage determines whether a deposit is economically viable. Silver is often a byproduct of other metals (e.g., lead, zinc, copper), with only 25% of global supply from primary silver mines, complicating targeted exploration.

  • Early-stage exploration (mapping, sampling): 1–3 years.
  • Advanced exploration (drilling, resource definition): 2–7 years.

Challenges include remote locations, environmental restrictions, and the low success rate (only 1 in 10,000 exploration projects becomes a mine). Exploration costs ($10–50 million for advanced drilling) with no guaranteed success.

Permits & Regulations (2-10 Years)

This stage involves securing permits for environmental compliance, land use, water rights, and mining operations. It requires environmental impact assessments, community consultations, and adherence to local, state, and federal regulations. In major silver-producing countries like Mexico, Peru, and the U.S., permitting is a significant bottleneck due to stringent environmental standards.

  • U.S.: 7–10 years (often exceeding 10 years due to National Environmental Policy Act requirements).
  • Canada: 2–5 years, with clearer timelines but still complex stakeholder processes.
  • Mexico: 1–3 years for federal permits, but local and environmental approvals can extend timelines.
  • Peru: 3–7 years, with delays from political instability and community protests.
Financing (1-3 Years)

Financing involves raising capital for mine construction and operations. A feasibility study (FS) is required to demonstrate economic viability to investors. Silver projects face unique challenges due to high capital costs ($500 million–$2 billion for large mines) and market volatility, as silver prices are less predictable than gold or copper.

  • Feasibility study preparation: 1–2 years.
  • Securing financing: 6 months–2 years, depending on market conditions and investor confidence.
  • 75% of silver production is a byproduct of other metal mining which makes financing dependent on other metal prices (e.g., zinc, lead, copper).
Construction (2-5 Years)

Construction involves building the mine infrastructure, including processing plants, roads, power facilities, and worker housing. For silver mines, construction is capital-intensive due to the need for specialized processing and environmental mitigation measures. Remote locations, common for silver deposits, require additional infrastructure like roads and power grids.

  • Small-to-medium mines: 2–3 years.
  • Large or remote mines: 3–5 years.
  • Commissioning (testing equipment, transitioning to operations): 6 months–1 year.
Richard Jones, CC BY-SA 2.0 , via Wikimedia Commons

8-28 years from discovery to production

only 1 in 10,000 exploration projects becomes a mine

New Silver Mines: The Slow Build to Production

Terronera Project (Endeavour Silver, Mexico)

  • Located in Jalisco, Mexico, Terronera is a primary silver-gold mine. Exploration began in 2010, with production expected to start in Q4 2024 or early 2025. The project will produce 4–5 Moz of silver annually.

EC120 Project (Coeur Mining, Mexico)

  • An expansion of the Palmarejo silver-gold mine in Chihuahua, Mexico, EC120 is under construction to extend mine life and boost silver output. Exploration and feasibility studies took 5 years (2018–2023)
  • Construction began in 2023, with production expected in 2025, adding ~2 Moz annually.

Media Luna Project (Torex Gold, Mexico)

  • A copper-gold-silver project in Guerrero, Mexico, Media Luna is under construction as an extension of the El Limón Guajes complex. Exploration began in 2015, with permitting and feasibility completed by 2022 (7 years).
  • Construction started in 2022, with production expected in Q1 2025, contributing ~1.5 Moz of silver annually as a byproduct.

Tahuehueto Project (Telson Mining/Luca Mining, Mexico)

  • A silver-gold-lead-zinc mine in Durango, Mexico. Exploration started in 2008, with permitting delays until 2021 (13 years). Construction began in 2021, taking ~4 years due to supply chain disruptions.
  • Tahuehueto is in the final stages of construction, with commercial production expected in 2025. It will produce ~2 Moz of silver annually.

Prognoz Silver Mine (Polymetal/Solidcore Resources, Russia)

  • Located in Yakutia, Russia, Prognoz is a primary silver mine under construction. Exploration began in 2010, with permitting and feasibility completed by 2023 (13 years).
  • Production scheduled for Q4 2024 or early 2025. It is expected to produce 5–6 Moz annually.

Panuco Project (Vizsla Silver, Mexico)

  • Located in Sinaloa, Mexico, Panuco is a primary silver project. Exploration started in 2018, with permitting expected by 2026 (8 years pre-construction).
  • Construction is estimated at 2–3 years. with construction planned post-feasibility study completion by late 2025. Production is targeted for 2027, with 15–19 Moz annually expected.

Silver Sand Project (New Pacific Metals, Bolivia)

  • A primary silver project in Potosí, Bolivia. Exploration began in 2017, with permitting ongoing (projected 2025–2026, 8–9 years). Construction is estimated at 2–3 years.
  • Silver Sand is in the pre-construction phase, with construction expected to start in 2026 and production by 2028, yielding ~12 Moz annually.

Alamos Silver Project (Minaurum Gold, Mexico)

  • Details: Located in Sonora, Mexico, Alamos is a primary silver project. Exploration started in 2016, with permitting expected by 2026 (10 years). Construction is estimated at 2–3 years.
  • Construction planned post-2025 maiden resource estimate. Production is targeted for 2027–2028, with potential for 10 Moz annually.

Total Projects: The above list identifies 8 specific silver-producing projects under construction or nearing construction (e.g., Panuco, Silver Sand, and Alamos are in late-stage permitting but not yet under construction).

These projects, once operational, are expected to add ~40–50 Million ounces annually by 2028, per the Silver Institute’s World Silver Survey 2025. This is significant but insufficient to close the projected 117.6 Moz deficit, as demand (1.2 Billion oz in 2025) outpaces supply growth.

Can New Mines Meet Rising Solar Demand? Projecting Future Needs

Solar production (2007-2023), Silverpundit.com

In 2023, the solar photovoltaic (PV) industry consumed 193.5 Moz of silver, representing 16–19% of total global silver demand (1,195 Moz). This marked a 64% increase from 2022’s 118.1 Moz.

The Silver Institute projects that solar panel production will consume 232 Moz in 2024, a 20% increase from 2023, accounting for approximately 19% of total silver demand (1,219.1 Moz)

2030 Estimate: Sprott.com predicts up to 273 Moz, and Long-term projections suggest solar could consume 500 Moz annually by 2050 per World Bank.

The solar industry alone could use up the additional supply by new mines and still need more silver by 2030.

For more on silver industrial uses read Why Is The World Running Out of Silver?

The worlds major silver mines are drying up

Cannington Mine (South32, Australia)

Produced 12.66 Moz in 2020, down from a peak of ~30 Moz in the early 2000s, making it one of the world’s largest silver mines.

Operational since 1997, Cannington (a lead-zinc-silver mine) was estimated in 2012 to have an 11-year mine life, suggesting reserves could be exhausted by ~2023–2025 unless new deposits are found. Declining ore grades (from 500 g/t silver in the 1990s to ~200 g/t in 2020) and rising extraction costs signal depletion.

Dukat Mine (Solidcore Resources, Russia)

Produced 18.2 Moz in 2020, one of the largest primary silver mines globally.

Operational since 2002, Dukat has seen a decline in output due to depleting high-grade reserves and regional imbalances. Reserves are estimated to last until ~2027–2030, with lower-grade ores requiring costlier extraction. Geopolitical sanctions further complicate equipment sourcing and expansion.

Uchucchacua Mine (Buenaventura, Peru)

Produced 10.49 Moz in 2024, a key contributor to Peru’s 107.1 Moz.

Operating since 1975, Uchucchacua faces declining ore grades and land use disputes with local communities, reducing output. Reserves are projected to last until ~2028–2032, with deeper, lower-grade deposits increasing costs. Permitting delays (3–7 years) for expansions exacerbate supply constraints.

Saucito Mine (Fresnillo plc, Mexico)

Produced 14.47 Moz in 2024, contributing 25.7% to Fresnillo’s total silver output.

Operational since 2011, Saucito is a primary silver mine with reserves estimated to last until ~2030, based on Fresnillo’s reports. Declining ore grades (from 300 g/t in 2011 to ~200 g/t in 2023) and increasing environmental compliance costs (e.g., water management) signal maturation. Regulatory hurdles in Mexico, including open-pit restrictions, limit expansion potential.

Sindesar Khurd Mine (Vedanta Resources, India)

Produced 17.3 Moz in 2020, India’s largest silver mine.

Operational since 2006, Sindesar Khurd (a lead-zinc-silver mine) has reserves estimated to last until ~2030–2035, with 79 million MT of ore remaining. Declining silver grades and high extraction costs for underground mining signal maturation.

Supply won’t meet demand for the foreseeable future

Many major mines (e.g., Cannington, Dukat, Uchucchacua) report lower silver grades (e.g., 50–60% reductions since peak production), requiring costlier extraction from deeper or lower-quality deposits.

Despite soaring silver prices and demand, particularly from solar panel production consuming 232 million ounces in 2024 and projected to reach 273 million ounces by 2030. Silver producers cannot rapidly increase supply due to the depletion of major mines and lengthy development timelines. Iconic operations like Australia’s Cannington, Russia’s Dukat, and Peru’s Uchucchacua face dwindling reserves, with lifespans ending by 2028–2035, mirroring the U.S.’s 27% production decline since 2015. With only 10–15 new mines under construction, expected to add just 40–50 million ounces annually by 2028, the 117.6 million-ounce deficit projected for 2025 will persist. The 8–28-year timeline for new mine development, compounded by regulatory, financing, and infrastructure hurdles, ensures that the silver supply shortage will continue and markets will face a structural imbalance as industrial demand, driven by green energy, outpaces the industry’s ability to replace maturing mines into the foreseeable future.

Try this article about the silver supply shortage timeline “When Will the Silver Deficit Deplete Above-Ground Stocks“

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