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Supply & Demand
Silver Supply

Silver mine production rose by 2.5 % to 735.9 Moz in 2010 aided by new projects in Mexico and Argentina. Gains came from primary silver mines and as a by-product of lead/zinc mining activity, whereas silver volumes produced as a by-product of gold fell 4 % last year. Mexico eclipsed Peru as the world’s largest silver producing country in 2010, and Peru is followed by China, Australia and Chile. Global primary silver supply recorded a 5 percent increase to account for 30 percent of total mine production in 2010.


Top 20 Silver Producing Countries in 2010

(millions of ounces)
1. Mexico 128.6
2. Peru 116.1
3. China 99.2
4. Australia 59.9
5. Chile 41.0
6. Bolivia 41.0
7. United States 38.6
8. Poland 37.7
9. Russia 36.8
10. Argentina 20.6
11. Canada 18.0
>12. Kazakhstan 17.6
13. Turkey 12.3
14. Morocco 9.7
15. India 9.7
16. Sweden 9.2
17. Indonesia 6.9
18. Guatemala 6.3
19. Iran 3.4
20. South Africa 2.8

Primary silver mine cash costs remained relatively flat year-on-year, falling by less than 1 percent to $5.27/oz. from a revised $5.29/oz. in 2009.

Net silver supply from above-ground stocks increased to 142.9 Moz in 2010, primarily due to higher scrap supply, a shift of net-producer hedging to the supply side, and a considerable rise in net-government stock sales. Regarding scrap supply, 2010 witnessed a 14 % increase over 2009 as gains in industrial and jewelry recycling exceeded an ongoing decline in recovery from photographic sources.

The swing to net-producer hedging of 61.1 Moz ended a four-year run of de-hedging and is attributed to higher silver prices and was limited to a group of by-product, rather than primary silver producers.

Net government sales of silver rose to 44.8 Moz, primarily the result of increased sales from Russia, with China and India remaining relatively silent for the second consecutive year.


Supply from Above-Ground Stocks

(Million ounces) 2009 2010
Bullion
Implied Net Disinvestment -120.7 -178.0
Net Producer Hedging -22.3 61.1
Net Government Sales 15.5 44.8
Sub-total Bullion -127.5 -72.1
Old Silver Scrap 188.4 215.0
Total 60.9 142.9
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