How silver miners can build long-term competitiveness amid transition towards greener economy

With growing demand from clean energy initiatives and looming supply deficits, silver miners need to transition towards more sustainable and efficient operations.

In brief

• Silver demand is on the rise with rising clean energy initiatives. However, supply still needs to catch up.
• Companies strive to navigate regulatory challenges, maintain their sustainability profile and adopt responsible mining guidance.
• Digitalization and new technologies to improve operational efficiency and reduce environmental impact will help miners drive business resilience.

In the global transition towards clean energy initiatives, silver is becoming a critical commodity in the metal basket. In 2023, industrial demand continued to be the dominant driver for new growth, while traditional demand from jewelry declined after reaching record highs in 2022.¹

Though overall demand in 2023 was down by 10%, supply was still tight, leading to a third consecutive year of deficit at 140 Moz.² Consequently, prices have remained much higher over recent years, with 2021-23 prices averaging 33% higher than the 2018-20 average. This uptrend is expected to continue with strong demand outlook while supply gradually catches up.³

Miners need to navigate through rising geopolitical and environmental expectations from stakeholders. As ESG remains a critical focal point, miners need to have a holistic approach to move towards more sustainable methods of production. Adoption of innovation through digitalization and electrification initiatives is expected to drive cost and operational efficiency.

Jewelry demand declined in major Asian markets

After a 29% surge in 2022, jewelry demand is estimated to have declined 22% year over year to 182 Moz in 2023 due to higher prices and the greater lucrativeness of gold as an alternative investment asset during economic uncertainty in some regions.¹⁰

The demand decline was mainly driven by lower sales in the Indian market as the pent-up demand subsided in 2023. Consequently, imports in India fell 63% year over year to 111 Moz.¹¹

Over the coming quarters, Asian regions, especially India and China, will continue to drive jewelry demand growth.

Industrial demand to grow the most, especially from solar capacity requirements

In 2023, demand for silver from the industrial sector grew by an estimated 8% year over year, with continued investments in energy transition initiatives, in particular from demand growth in photovoltaic capacity, which is expected to further grow over the coming years.¹² Growth in demand for EVs and electronic appliances, along with the rise in investments in 5G networks and power generation and distribution systems will also be key in contributing to long-term demand.

Next steps for miners to steer the transition

Miners to focus on ESG initiatives to manage their overall sustainability profile

Water scarcity crisis demands action as more than 50% of the world’s largest producers are located in water-stressed countries

Several mining activities — such as mineral processing, equipment cooling and dust control — are water intensive, leading to significant water extraction from local sources, exacerbating the scarcity in water-stressed regions.

Out of the top mines accounting for 50% of the world’s silver production, more than half lie in regions with high or extremely high water scarcity.¹³ Several miners are implementing measures such as water recycling and reuse methods, responsible mine design and planning, water assessment studies and smart mining to address water management challenges.

For instance, BQE Water, a water treatment solutions company, successfully demonstrated its Selen-IX process at Coeur Wharf Mine, paving the way for selenium treatment implementation in line with mine expansion permits.¹⁴

With growing demand, recycling to gain further traction in the coming years

Silver recycling supply growth is estimated to be flat year over year in 2023, however the total value reached to a 10-year high of 181 Moz, primarily driven by industrial scrap.¹⁵

With rising environmental mandates, overall demand growth and price volatility, recycling activities will further grow. Researchers are investing in developing new technologies to increase the efficiency of silver recovery.

For instance, Chalmers University of Technology in Sweden has developed a silver recovery process from thin-film solar cells which is expected to be greener and having the possibility of 100% recovery.¹⁶ Similarly, the University of New South Wales (UNSW) Sydney has developed a new method for recycling solar panels that can recover silver with greater efficiency.¹⁷

Increased adoption of responsible mining guidance to meet sustainability targets

As silver gains popularity due to the energy transition, miners are increasingly expected to enhance ESG reporting practices. Member companies of the Silver Institute adhere to sustainable mining principles for people, communities and the environment:

Source: The Silver Institute

What will drive business resilience beyond?

Digitalization and automation to create sustained value for miners

Increasing demand for silver from the energy transition is pushing miners to accelerate the adoption of innovative solutions to grow productivity. This surge has prompted miners to invest in automation and digital technologies, aiming to enhance both sustainability and productivity. Through these technologies, mining companies can analyze and monitor extensive data to enhance the efficiency, safety and sustainability of operations.

For instance, Mine Vision Systems, a software company, entered into agreement with Hecla Mining Company to introduce the FaceCapture mapping system into two of its mines, which will help in real-time georeferencing to improve information quality and reduce downtime.¹⁸

Increased renewables power and electrification can reduce the emission intensity of power used in production

Miners are employing renewable energy sources to power mine sites and reduce GHG emissions to combat climate change. In addition to the adoption of renewables, underground mines can benefit from the electrification of their fleets to enhance working conditions by reducing noise, heat and pollution levels. Further, electric vehicles unlock long-term cost benefits for miners, with carbon taxes being levied across jurisdictions.