Silver as a future metal: Why Canada is now in the spotlight

Last Updated: 6. Februar 2024By

Silver is still often referred to in the same breath as gold. No wonder, as both precious metals are considered assets. But over the past few decades, silver has clearly outgrown gold. This means that the metal is no longer just an asset, but also an important component of industrial production.

Why silver is so important for the future

51% of silver demand is for industrial products. The reason for this is that silver is a crucial component of capacitors, switches, circuit boards, batteries, and other electronic components. At the same time, the metal is used in solar cells, wiring, and inverters of PV systems. Last but not least, silver is also used in batteries for electric cars, as well as in heat pumps and nuclear power plants.

So you can see that silver plays an important role in many products and machines – especially for technologies of the energy transition. Silver is therefore, alongside copper and other metals, another fundamental element not only of the present but above all of the future.

Canada: Mining executives call for inclusion as a critical mineral

This importance is now to be recognized – in Canada, that is. A few days ago, leading mining companies sent a letter to the Ministry of Energy and Natural Resources in Ottawa, making an urgent appeal. According to this, the Canadian government should declare silver a critical mineral.

Background: For a raw material to be classified as a critical mineral, it must be essential for Canada’s economic and national security and play a crucial role in digitizing or decarbonizing Canada’s economy or its allies. Lastly, critical minerals must meet two additional criteria: a precarious supply outlook and the fundamental possibility that the raw material can be mined in Canada.

Silver on the rise in Canada

The mining executives emphasize in their letter that silver fulfills all the mentioned criteria. The most important criterion is the metal’s importance for decarbonization. The signatories highlight the long history of silver mining in Canada, dating back to the early 19th century. In recent decades, technological advances and new discoveries have continued to drive the industry’s growth, according to the managers.

In fact, despite the managers‘ emphasis on growth, Canada plays a relatively small role on a global level – at least not so far. According to data provider GlobalData, in 2022, the North American country was only the 13th largest silver producer in the world. However, production volume increased by a whopping +32% compared to 2021. And GlobalData continues to expect relatively high growth rates for the coming years.

Mega-deficit: Managers push the alarm button

In any case, the mining executives are warning of the urgency of the situation. They are already experiencing a tightening market. In 2022, there was a silver deficit of around 6,740 tonnes – according to the managers, a record level. For comparison: World production in 2022 was around 26,000 tonnes. The signatories of the letter blame the strong demand for high-tech products and energy transition technologies. The mine production cannot keep up with this, warn the managers.

The calculation is likely clear: The mining companies want to persuade the Canadian government to support future silver projects more strongly by including them on the list of critical minerals. The companies hope that this will lead to shorter approval processes and even state subsidies.

Among the signatories are, among others:

Keith Neumeyer (First Majestic Silver), Dan Dickson (Endeavour Silver), Michael Rowley (Stillwater Critical Minerals), Greg Crowe (Silver One Resources), Dale Andres (Gatos Silver), and last but not least, the president of the influential industry association The Silver Institute, Michael DiRienzo.

My conclusion for you

In my opinion, the importance of silver for the future is still underestimated. It is still primarily seen in the public perception as a component of jewelry or as a pure investment. But that is a misconception – and not just since yesterday.

In fact, silver is highly interesting – also for you as an investor. Its dual role (investment + industrial metal) provides inherent diversification in this one commodity. One could even say that silver is both gold and copper at the same time. In my opinion, as a diversifier, this unique and versatile metal belongs in every commodity portfolio.