Silver Supply Craters in Mexico, Peru, and Chile Amid Mine Closures and Disruptions

Silver production in Mexico, Peru, and Chile plummeted by 12%, 9%, and 7% respectively in Q1 2025 due to mine closures, declining ore grades, and operational disruptions. The decline is attributed to temporary suspensions of operations at key mines, including Newmont's Peñasquito in Mexico, lower ore grades at mature operations like Fresnillo's Fresnillo and Saucito mines, and stricter environmental enforcement in Peru. Chile reported a 7% drop due to planned maintenance at major copper operations and reduced ore throughput.

The simultaneous decline has tightened the physical silver market, pushing prices up by 18% year-to-date to near $32 per ounce. The supply shortfall is expected to persist through 2025 as several new projects are still in development and existing mines face challenges in maintaining output. The Silver Institute predicts a third consecutive annual market deficit in 2025, with demand exceeding supply by around 150 million ounces.

For mining companies, the decline has led to downward revisions in annual production guidance, while local economies dependent on mining employment and tax revenues are also affected. Analysts warn that further disruptions could exacerbate the supply deficit and influence prices through the rest of 2025.