Report finds silver hurt the most by COVID-19 pandemic

April 30, 2020

According to a report from GlobalData, the COVID-19 pandemic impacted silver more than other major mining sectors while the gold sector has fared the best.

In response to the pandemic, more than 1,600 mines in 32 countries had issued temporary shutdowns as of April 3. As the spread of the curve has slowed the number of shutdowns has been reduced to 729, according to GlobalData.

Silver production was hit the hardest by temporary shutdowns. As of April 27, there were an equivalent of 65.8 percent of yearly global silver production still on hold, GlobalData identified.

Companies that withdrew production guidance included First Majestic, Hochschild, Hecla and Endeavour Silver.

In comparison, 32 percent of uranium production, 23.8 percent of zinc, 19.5 percent platinum, 14.6 percent of nickel, 14.4 percent of diamonds and 12.7 percent of copper, 12 percent of lead, 10 percent of manganese and 9 percent of gold were placed on hold, said GlobalData senior mining analyst Vinneth Bajaj.

KitcoNews reported that lockdowns remain in place in Peru (until May 10), Mexico (May 30), Bolivia (April 30), and Namibia (May4).
CPM Group also ran calculations to see how badly the silver mining sector was hurt, estimating that 21 million ounces of output was lost so far.
“At the very least, based on the current duration of mine closures and the daily output in 2019, the mine closures in South Africa, Peru and Mexico should result in lost output of at least 21.1 million ounces of silver,” CPM Group said in its Silver Yearbook 2020.

From a price perspective, silver has been lagging behind gold this year. Panic mass sell-off triggered by COVID-19 dragged silver prices to 11-year lows in March. Since then, the precious metal has recovered but is still trading well below February highs. Spot silver last traded at $15.16, up 0.07 percent on the day while May silver Comex prices were last at $15.25, up 0.52 percent on the day.

Analysts see a lot of potential in silver as demand is expected to pick up as the precious metal embraces a new position in the commodity world — an 'infrastructure' precious metal.

“While gold naturally gets most of the attention in a macro environment of aggressive monetary support, we feel there is an opportunity emerging in silver. As governments seek to further bolster economic recovery, we anticipate silver-intensive areas such as 5G and solar technology could well benefit from any fiscal impulse, making silver increasingly the 'infrastructure' precious metal,” Colin Hamilton, head of commodities research at BMO Capital Markets, wrote in a report in April.


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