The Green Economy Needs Silver but Where Does it Come From?

With climate change in the news almost every day, there has been a concerted effort in recent years to “green” the global economy by moving away from high-carbon fossil fuels to low-carbon renewable energy sources. Because energy sources like solar and wind are not constant, energy storage in batteries has also become a focus of research. In the same way, there is major move underway to replace all forms of transportation fueled by hydrocarbons with electric vehicles that run on batteries.

This has put a lot of public attention on battery metals, such as lithium, cobalt and nickel, and electrical conductors like copper and silver. President AMLO recently asked the Minister of Economy to evaluate the potential importance of lithium mining to the economy of Mexico, notwithstanding the fact that the few known lithium deposits in the country are small, low grade and metallurgically complex.

Mexico is not endowed with world-class lithium deposits like those in the Andes Mountains of South America but it is endowed with world-class silver deposits.

Silver is essential for a green economy. You cannot have electric vehicles (EVs) without silver coating every electronic circuit, nor can you have solar power without silver coating each photovoltaic cell (PCs). Silver is the best natural conductor of electricity on planet Earth and because it can be manufactured as microscopic films and wires, there is not enough silver in EVs or PCs to affect their manufacturing costs but the forecasted growth of EVs and PCs is most definitely enough to affect the price of silver. So where does silver come from and how is it used?

Where Does Silver Come From?

Around 80 percent of the 30,365 ton (976 million oz) total silver supply came from mines in 2020. The balance of annual supply typically originates from recycling and inventories. However, over 70 percent of mine supply does not come from silver mines; it typically is produced as a by-product of other metal mines, such as copper, lead, zinc and gold. Only 27 percent of mine supply came from primary silver mines in 2020.

Mexico is the largest silver mining country in the world, producing 5,541 tons (178 million oz) of silver, or 23 percent of total mine production in 2020. Even though silver mining in Mexico goes back thousands of years to the Mayans, and it has dominated modern silver production for hundreds of years, Mexico continues to have some of the best exploration potential worldwide for the discovery of new silver orebodies and the development of new mines.

The reasons for this are threefold:

1. Plate Tectonics – Mexico is situated on the silver-enriched North American crust and when the Cocos plate under the Pacific Ocean was subducted below the North American plate, it partially melted both plates and the magmas rose up to form one of the longest volcanic belts in the world. These volcanoes heated the surrounding rocks, and the ground water contained within them also heated up.  Since hot water rises, as these waters moved up in the crust, they started dissolving metals out of the rocks they were passing though. When these waters rose within 1-2km of the then surface (now eroded), the drop of pressure caused these waters to deposit their dissolved minerals in fractures. After erosion removed the overlying rocks, these orebodies were exposed to the surface and discovered by people, both ancient and modern.
2. Modern Exploration – Once outcropping orebodies have been discovered and mined, the main challenge for modern day exploration geologists is how to see below the Earth’s surface in order to discover buried orebodies hiding below the surface. Many new technologies have been developed over the past 70 years to help geologists discover blind orebodies, including detailed geological models of what orebodies look like, advanced geochemical sampling to detect metals that may have leaked upward from orebodies below into surficial sediments, soils and rocks, and complex geophysical surveys to measure the magnetic, electrical and other effects of buried orebodies. Mexico has enjoyed a resurgence of mineral discoveries and the development of new mines in recent years as a result of modern exploration.
3. Free Trade – From 1961 to 1993, Mexico was effectively closed to foreign investment in the mining sector because of legislation restricting foreign ownership to 49 percent of Mexican mining companies and mining concessions. This changed to 100 percent ownership when Mexico joined NAFTA. Therefore, the Mexican mining sector prior to 1993 was dominated by a few very large Mexican companies that did not have easy access to either international sources of financing or modern exploration technologies, so there was very little investment in exploration to discover new orebodies. Since 1993, there has been a boom of foreign investment into exploration and mining in Mexico, which has resulted in several new silver discoveries and mine expansions, such as Peñasquito, Fresnillo and many more.

Once silver ore has been mined, it must be processed to separate the silver from the rest of the rock it occurs in. Once the silver ores are crushed and ground down to clay-size particles, two different methods are used to recover the silver, depending on the type of silver ore:

1. Oxide ores can be leached using chemicals to recover the silver into a precipitate that is smelted on site to produce raw silver bars, called dore. Dore bars normally contain over 95 percent silver plus any gold that occurs with the silver and impurities, such as lead, zinc or copper, so they require refining to produce pure silver bars. 
2. Sulfide ores can be concentrated using chemical flotation to form silver concentrates, usually with lead, and these concentrates are then sold to smelters who separate the silver into pure silver bars.

The pure silver bars are then sold to metal traders, wholesalers, manufacturers and bankers who warehouse them for sale to users of silver. In my next article, I will talk about how silver is used in a green economy.