MEXICO: World’s Number One Silver Producer Slips In 2014

Mexico Silver Production 2013 vs 2014Mexico is the largest silver producer in the world.  The only two countries that come remotely close to Mexico’s number one ranking are Peru and China.  However, these countries trail Mexico by more than 50 million ounces.
According to the INEGI, Mexico produced a record 186 million ounces (Moz) of silver in 2013, but this declined to 184 Moz in 2014. 

 

From the SRSRocco Report

On the other hand, Peru’s silver production increased from 118 Moz in 2013 to 121 Moz in 2014.   If we combine the total of these top two producers, total production only increased slightly from 304 Moz in 2013 to 305.6 Moz in 2014.

Mexico Silver Production 2013 vs 2014

While some regions in Mexico, such as the historic Zacatecas, saw increases in silver production, the Sonora region suffered large declines.

In Mexico’s recent INEGI statistics of the mining metallurgical industry, the Zacatecas region saw a 15.5% increase (33 metric tons) of silver production in December, while the Sonora region suffered a 64% decrease (56 metric tons).

INEGI Dec 2014 Table

To find the silver production in the table below look at PLATA, which is silver in Spanish.  As you can see, silver production increased in the Zacatecas region, but declined in Sonora.  Two of the largest Mexican silver mines are located in the Zacatecas region.

These two mines are the Fresnillo mine owned by Fresnillo LLC, and the Penasquito mine run by Goldcorp.  The Fresnillo mine used to be one of the largest primary silver mines in the world.  However, ore grades have declined significantly over the past several years, resulting in much lower production at Fresnillo.

NOTE:  The company, Fresnillo LLC has several silver and gold mines.  Their top primary silver mine is Fresnillo and the second is Saucito.

In 2014, Goldcorp’s Penasquito gold mine, produced 25.8 Moz of by-product silver, while Fresnillo’s production fell to 20.1 Moz.  Thus, Mexico’s largest silver producer is now a gold mine which produced a little more than a half million ounces of gold in 2014.

This wasn’t the case just a few years ago.  Here is the Fresnillo mine’s silver production since 2010:

Fresnillo Mine Silver Production

2010 = 35.9 Moz

2011 = 30.3 Moz

2012 = 26.4 Moz

2013 = 22.8 Moz

2014 – 20.1 Moz

Tahoe Resources new Escobal mine in Guatemala (first full year production) produced 20.3 Moz in 2014, and now surpasses Fresnillo’s 20.1 Moz as the larger primary silver producer of the two.

I believe Mexico’s silver production will continue to increase in the next several years as Fresnillo LLC plans to increase its production from 40 Moz in 2014 to 65 Moz by 2018.  However, with the current low price of silver, that forecast may take a few more years to reach.

Regardless, the peak and decline of Global Silver Production will occur soon after the world experiences a peak in world oil production.  It’s hard to tell when this will occur, but we can certainly guarantee it will first take place in the base metal mining industry… where the majority of silver is produced.

Which is why I try to educate the precious metals investors about energy.  ENERGY is the key to understanding how the world unfolds going forward.  I believe the safest assets to own in a peak oil environment will be gold and silver.