James Anderson
Chairman and CEO
Guanajuato Silver
/
Expert Contributor

Mexican Silver is Needed to Enable the Green Revolution

By James Anderson | Fri, 08/19/2022 - 11:00

Silver is a critical component in solar power-producing photovoltaic cells, and Mexico produces more silver than any other country on Earth. Yet according to PV Magazine, Mexico gets only 5.4 percent of its current electrical needs from solar energy.

In comparison, let’s look around the rest of the globe. Have you spent much time recently on Google Earth? The next time you go looking to see what’s new in your neighbourhood, spin the globe around and have a look at China’s expanding solar park industry. The numerous solar parks in China are visible from space. They are very big and getting bigger – much bigger.

Although they are already huge, the current size of China’s solar parks is inconsequential to their potential. China’s colossal solar parks like those at Longyangxia Dam, Qinghai Golmud, and the Tengger Desert, are among the world’s largest and currently trap and convert sunlight over thousands of acres, but it is easy to see from a quick fly-over that these solar parks have the space to grow exponentially – and that is exactly what energy-obsessed China plans to do. Total solar power capacity now stands at over 340 GW, which is up 25 percent compared to last year; and China is adding 75-90 GW before the end of 2022. China is expected to double capacity to 700 GW by 2025. President Xi Jinping has said that China is committed to pushing through 1,200 GW of solar and wind power capacity by 2030 in order to lower CO2 emissions, and he  added: “China always honours its commitments.” From dams to railways to mega-cities, China has consistently demonstrated its commitment to completing large infrastructure projects; the expansion of its solar parks will be no different.

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Datong Solar Park, China

However, China’s plans for solar parks of the size and scale that are capable of helping solve their energy demands hinge on the available supply of one element: silver. Powders used in the manufacturing of photovoltaic cells contain silver that allows for effective conversion and transmission of electricity within the cells. Silver is so good at transmitting electricity that it is the benchmark for the scale upon which all other metals are measured for conductivity. Because silver is the planet’s most conductive metal, it is the primary enabler of not just solar panels but the entire green energy revolution.

As the largest silver producer in the world, Mexico is well positioned to benefit from the global transition to green energy solutions. Mexico’s silver mining industry is the envy of the world; with over 400 years of mining history, Mexico has been the leading producer of silver for centuries.  Today, the country provides almost a quarter of global silver demand through mines like those that Guanajuato Silver Co. Ltd. operates in Guanajuato. Mexico’s production in 2021 was 5,600 tonnes, which was higher than last year, as Mexico continues to rebound to pre-COVID levels of over 6,000 tonnes per annum. Ch

ina’s expanding solar parks will happily take every ounce Mexico can produce … but it will not be enough. Today, photovoltaics account for approximately 12 percent of industrial demand and Chinese solar parks are only in their infancy. What will happen to the silver price as global solar capacity doubles? Triples? Quadruples … and more?

Now is the time for all industrial applications in Mexico, especially the mining industry, to embrace the solar revolution. According to the online publication Gecko Solar, “The Mexican Republic is considered one of the most promising countries in the field of solar photovoltaics, due to its high solar radiation (5.2 kWh / m2) - Mexico receives high levels of solar radiation in most of its territory. The cost of installing and generating your own energy in Mexico has declined significantly, we have reached a point where it is cheaper to generate electricity by photovoltaic technology means rather than to buy it from CFE. In Mexico and around the world the price of electricity has skyrocketed and will continue to rise in parallel with oil prices. With a solar panel system, you will ‘freeze’ the price of the electricity you consume over the lifetime of the PV solar system (40 years average).”

The solar industry journal PV Magazine details some of the other huge solar projects recently completed or soon to be completed in Mexico: Already in the construction phase is the Guaymas plant in Sonora, with a capacity of 500 MW and a capital expenditure of $475 million, being built by Proyecto Alternativa Energética de México. This company is also constructing the Laborcilla park in Zacatecas, with a capacity of 695 MW and a capital expenditure of $474 million. And there is the Palma Loca plant, built by Desarrollo de Fuerzas Renovables. Palma Loca will have a capacity of 400 MW and a capital expenditure of around $419 million.

And it is not just solar panels: the entire transition to green energy requires hundreds of millions of silver ounces each year. For example, every electrical action in a modern automobile requires silver-coated contacts; Elon Musk’s Teslas are not going anywhere without silver. With every modern switch requiring silver content, the pivot to green energy can only mean greater industrial demand for silver. Today’s silver miners produce around 800 million ounces per year, which is 200,000 million ounces less than what the world demands. The difference is made up through recycling but this cannot continue indefinitely. No one believes that the momentum driving the push to green energy is going to pause, so that means that the future has to be one of rising silver prices. Such an environment would benefit Mexico more than any other country. 

Now is the time for Mexico to continue this rapid expansion of solar parks, proudly using the silver produced in Mexican silver mines.

By the way, Mexico is not only the world’s largest miner of silver but the country also has one of the world’s largest solar parks. The Enel Villanueva Solar Park located near Villa Hidalgo produces over 800 MW; enough to power over 150,000 homes.

Photo by:   James Anderson
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