Silver's unique industrial role in solar panels, electric vehicles (EVs) and grid infrastructure is pushing demand to record highs, but miners and analysts are at odds over how to address the growing supply deficit.
Demand is forecast to hit around 1.15 billion oz. this year, a moderate decrease from the previous year, according to data from the Washington, D.C.-based Silver Institute, an industry body of miners and manufacturers. Meanwhile, supply is anticipated to increase around 2% to 1.03 billion oz., buoyed by mine production. This leaves a 117.6-million oz. deficit for the year, part of an unsustainable five-year trend that has amounted to an 800 million oz. erosion of silver supply.
Mine production, projected to contribute 835 million oz. to supply this year, may not be a solution to the green transition-fuelled deficit as production peaks in 2026 and several projects near end-of-life.
Production has hovered in the 800-milion-to-850-million oz. range for the last decade, Keith Neumeyer, CEO of First Majestic Silver (TSX, NYSE: AG), said in an interview with The Northern Miner.
"If miners could supply more metal, they would but you know, there are no new big mines coming, and it takes a lot to affect the price," Neumeyer said. "There are some juniors out there that are working on getting small mines up and running...that's great, but it's not going to be enough, you need a hundred of these mines coming up to really affect the supply."
Silver plays a critical role in the green transition, particularly as a key material in photovoltaic cells, the building block of solar panels. It is also used to produce EV batteries, electronic devices like computers and mobile phones, and sensors for green grid development. The continued growth of data centres is expected to contribute to demand.
However, China's solar generation investment declined by 30% in the first quarter compared with the 2024 period, creating a risk for copper, aluminium and silver, according to Beijing-based economics adviser PRC Macro.
The Asian giant has dropped or suspended 13 solar projects in the last 12 months as the country shifts from building larger power plants to using what it has more efficiently. Also, officials are changing the way they price electricity from June 1. They're moving to a market-based system for on-grid electricity prices for renewable energy projects, according to PRC Macro.
"This move is likely to result in a substantial decrease in solar deployments in the second half of the year," BMO Capital Markets said in a note on Friday citing the consultant. "Trials of market-based pricing have already led to significant on-grid power price cuts, with average on-grid power prices in a sample of 11 provinces falling 14% below thermal power benchmark prices in 2024, and some provinces reporting a discount of greater than 30-40%."
Around 70-80% of the silver mined globally is a byproduct, often produced while mining metals such as copper, gold, lead and zinc. Recycling, including silverware, photographic equipment, industrial scrap and electronics, contributes a moderate amount to supply, accounting for 193.9 million oz. in 2024, a 12-year high.
However, the recycling sector relies on high prices to remain attractive, Neumeyer said. Refineries are having a hard time finding supply, and the electronic waste they do find is not cheap to extract the metal from.
"I've invested in three recycling companies myself - two are bankrupt and one is basically bankrupt."
"There was a spike in 2011 when silver hit $50 an oz. and recycling hit 250 million ounces.".
Silver started 2025 under $29 per oz., climbing to $34 in mid-March before sliding back down to $32 in May. Alongside demand from the green economy, geopolitical uncertainty is also expected to increase interest in silver as a safe haven investment.
"Whether it's industrial demand only or industrial demand and increased monetary demand, we're going to push the silver price higher because there's just not enough being mined and recycled to meet the total demand," said Spokane, Wash.-based David Morgan, precious metals analyst and publisher of The Morgan Report.
For miners, the price of silver would have to be $35 per oz. or higher to make starting a new project attractive, Morgan said.
"No one's interested, they're not funded, there's not enough margin in the business, and they're kind of the underdog."
Blue Lagoon Resources' (CSE: BLLG; US-OTC: BLAGF) sees it differently. The junior miner, which recently completed permitting for its Dome Mountain gold-silver mine in British Columbia with production slated for July, sees itself as the front line to meeting silver demand.
"In reality, it's the junior miners who take the risk, right? We make the discoveries, we advance the projects that majors eventually rely on, we're the ones who go where others won't, and we're the first to spot the resources that basically power the future," Rana Vig, president and CEO of Blue Lagoon, said in an interview.
However, to meet the green transition's appetite for silver, Vig said governments should improve the permitting process for responsible precious metal projects like Dome Mountain.
"We got our permit in five years, which I thought was four years too long."
Yannis Tsitos, chair of the mining committee for Blue Lagoon, said more consolidation in the fragmented silver sector could help fast-track the pathway from discovery to permitting to production.
"(The combination of) higher input prices and higher demand creates an environment where there's increased M&A activity," Tsitos, with 35 years of industry experience, including 19 with BHP (NYSE, LSE, ASX: BHP), said in the same interview.
Future demand, led by the green transition, is already driving consolidation. Theo Yameogo, EY Americas' metals and mining lead, points to First Majestic's acquisition of Gatos Silver's primary silver projects in September, Coeur Mining's (NYSE: CDE) US$1.7-billion deal for SilverCrest in October, and Pan American Silver's (TSX, NYSE: PAAS) $2.1-billion cash and stock deal for MAG Silver (TSX, NYSE: MAG).
Pan American Silver's acquisition of MAG gives it access to both the Juancipio high-grade silver mine in Mexico and Deer Trail Exploration, a silver-rich carbonate replacement deposit project in Utah, positioning the company for future demand.
Yameogo sees it as a signal of progress toward managing the deficit.
"Companies are trying to improve their reserve base and also get more production," Yameogo said. "Obviously, the market participants believe in the longer-term view of silver."