Silver

The Introduction highlighted the significant gap between LBMA and Metals Focus’ global silver production and recycling data, which is due to several factors. First and most important relates to how the recovery of silver from mined base metal concentrates is captured, which in turn reflects three issues.

First, when a GDL refinery takes silver doré produced by a smelter the country-of-origin may change to be where the smelter is based, which may differ from where the concentrate was originally mined. Second, the silver- bearing doré may be categorised as recycled material if it is not sourced directly from the mine-site. Finally, for those GDLs operating a smelter that co-mingles feedstock, it may be difficult to identify what originates from a mine as opposed to industrial scrap. This explains why in the Introduction the combined mine supply/recycling totals for LBMA and Metals Focus were compared, which were a better approximation.

Even though the global totals are not that far apart, it is worth remembering that Metals Focus’ recycling series includes the treatment of ethylene oxide (EO) catalyst change-outs, the bulk of which is treated by non-GDLs. In 2022, this totalled around 2,200t, or around 70% of Metals Focus’ global silver industrial scrap. It is noteworthy that most of the remaining 30%

of industrial end-of-life products will be treated by a GDL. The final, key difference between the two datasets concerns Russian silver mine supply. The 2022 COO data includes just 22t, with the limited coverage a reflection of the Russian GDLs being suspended in March. For context, Metals Focus’ estimate of Russian silver mine production for that year was 1,280t.

[TWO TABLES HERE]

Source: Metals Focus, LBMA

Mine Production

Returning to how some COO respondents classify doré versus a concentrate, this becomes more apparent from looking at the data for silver of the key silver producers (as shown in the table below). Looking first at Mexico, the COO total for 2022 of 4,975t, which is up 28% year- on-year broadly approximates to Metals Focus’ silver total of 5,450t from primary silver and by-product gold mines, which was just 6% higher year-on-year. The ramp-up of Fresnillo and Mag Silver’s Juanicipio and Gatos Silver’s Cerro los Gatos operations accounted for most of this rise. Returning to the COO data, this excludes the 1,296t of silver mined from base metal operations. The COO recycling data does report 373t, in the “unprocessed” category, which could include this feedstock, but otherwise it does suggest that the country-of-origin has changed from being Mexico to where the smelter is based that processed some of Mexico’s base metals concentrate. This may include some silver mine supply being delivered to smelters in Japan, as that country’s GDLs reported a sizeable 1,126t of “unprocessed” recycled silver and 430t of “industrial by-products”, all of Japanese origin.

Source: Metals Focus, LBMA;
*includes Russia

Turning to China, it was revealing that the reported COO silver mine production of 3,797t exceeded Metals Focus’ estimate of 3,514t. It is possible that the former includes some silver recovered from imported base metals concentrates. That said, Chinese GDLs reported 1,245t of unprocessed recyclable and 723t of melted recyclable silver, some of which may also have its origins in the imported concentrates.

The apparent disparity in the US data is also noteworthy. Taken at face value, it suggests that the country’s by-product silver derived from base metal operations, totalling 345t in 2022, may have been classified as recycling as GDLs globally only reported taking 680t of US silver mine supply in 2022, which tallies with Metals Focus’ total for US primary silver and by-product gold mining of 687t (in other words, the country’s high- grade silver mine supply). The most notable increases in production came from Hecla’s Greens Creek and Lucky Friday mines. Looking at the COO recycling data, the 469t reported as being “industrial by-products” may cover some of the silver extracted from US base metal concentrates.

Turning to Peru, the COO data points to a mine supply total of 2,304t, down 23% year-on-year. This compares with a Metals Focus total of 3,330t, which was 7% lower against 2021. Within this, base metals accounted for 72% or 2,387t, which seems to correspond more closely with the COO figure. Silver production from both Buenaventura’s El Brocal and Glencore, BHP and Teck’s Antamina, fell year-on-year. To complete the picture,

the Metals Focus data for primary silver and silver by-product from gold mines dropped by 253t year-on-year to 945t, in large due to the temporary suspension of Buenaventura’s Uchucchacua and Pan American Silver’s Morococha being moved into care and maintenance.

Finally, reviewing the Indian COO data illustrates some of the nuances in interpreting the ASM/LSM and recycling statistics. The COO mine supply total for India stood at just 2t in 2022 against 890t of recycling, dominated by the “industrial by-product” segment of 868t. This compares with Metals Focus’ mine production total of 694t, sourced predominantly from Hindustan Zinc’s base metal mines.