China’s silver shortage is very serious!

In the eyes of modern people, "bank" is almost synonymous with money. Most of your savings are in banks, and you may have to repay loans to banks. Five of the top ten Chinese A-share market capitalizations are banks. But everyone knows that the most important physical reserve in a bank is gold. So why is it called a "bank" instead of a "gold bank"?

Because China used a silver-based currency for nearly 500 years , which was established during the Zhengtong period of the Ming Dynasty (1436) and was not abolished until the Republic of China period (1935).

Silver "dollars" and "dollars" were mainly made of silver and were the currency in circulation when China implemented the silver standard.

China is short of silver

China is not short of people, but it is very short of silver. This leads to our high material output, but the corresponding large-scale currency is highly dependent on foreign trade. The destructive power of the shortage of silver is huge. At the very least, the national treasury will be depleted and the people will suffer. At worst, there will be chaos in the country and the rebel king will enter Beijing.

The silver standard was even more vulnerable in the face of modern financial wars and was exploited by the great powers until the United States passed the Silver Act in 1934 to drive up the price of silver and shift the losses of the Great Depression to China. After learning the lesson, China decided to get rid of the silver standard.

But even in modern times, silver remains the second most valuable precious metal after gold , with China holding more than 2,000 tons of gold and around 3,000 tons of silver.

Moreover, in the industrial field, silver is also an indispensable strategic resource based on its electrical conductivity, thermal conductivity, flexibility and ductility.

But China is really short of silver! In recent years, the external dependence of silver has reached about 50%. It is easy to be controlled by others in related industries.

In the periodic table, silver (Ag) is located in the 11th column from the left, belonging to the same family as copper and gold. These three are all famous metal currency materials, and the rarity of silver is between copper and gold. In every ton of crustal material, there is only 0.07 grams of silver, 60 grams of copper, and 0.0011 grams of gold.

The physical and chemical properties of the silver element determine where it is hidden.

On the one hand, the atomic radius and covalent radius of silver are very close to those of gold, which leads to the formation of gold-silver metallic intermetallic compounds, that is, "natural alloy minerals" containing gold and silver, such as silver-gold mines.

On the other hand, silver can form sulfides and sulfide-like elements, and coexist with sulfur-loving elements such as lead, zinc, and copper, so silver can be found in sulfide deposits.

There are more than 150 kinds of silver minerals on the earth, mainly "gold-silver intermetallic compounds" and "silver sulfides". Silver coexists with various metals, the most common of which are silver-lead-zinc combinations, copper-gold-silver combinations and silver-tin combinations.

There are many small mines and few large mines; there are many poor mines and few rich mines.

According to data from the United States Geological Survey, in 2022, the world's silver mine reserves were approximately 550,000 metal tons, mainly distributed in the Pacific Rim tectonic belt. The top three are Peru, Australia and China, which account for half of the world's reserves.

Horizontal screen - Schematic diagram of the main distribution of silver mines in the world, map: Earth Knowledge Bureau

China accounts for 13%, so it should not be short of silver. However, this problem is the same as the lack of iron and copper we talked about before. In terms of the total amount of metal elements, there is indeed no shortage, but the quality of the ore is not good , that is, the tonnage, grade and production capacity of the ore deposit.

China's silver reserves change trend year by year, map: Earth Knowledge Bureau

There are a large number of silver mines in China, nearly 1,500 in total, mainly in Inner Mongolia, Yunnan and Jiangxi. Yunnan and Jiangxi are both traditional silver producing areas in history, and Inner Mongolia is the largest current increase, but most of these are small, scattered mines, accounting for more than 80%, and large silver mines account for less than 4%. There are very few independent silver mines, and most of them are co-existing with copper, lead and zinc.

Silver reserves in various provinces of China, Inner Mongolia leads the way

Moreover, there are more poor ores than rich ores, and only a quarter of them have a grade greater than 50 grams per ton.

Characteristics of China's Silver Mineral Resources

Although the grade of the mine is not very good, as a strategic metal, it must be produced. In 2022, global silver production will be 822.4 million ounces, or 25,578 tons. Mexico, China and Peru together account for 50%.

Among them, China produced 3,476 tons of silver, accounting for 13.5% of the world's total.

Map: Earth Knowledge Bureau

This output is actually built up by a large number of small and medium-sized mines. Among the world's top 20 silver mines in 2022, none of them are from China.

In comparison, the mines of the Polish Copper Group produce 42.3 million ounces of silver per year, about 1,300 tons, equivalent to 37% of China's national production, while the silver mine with the highest production in China, Henan Fanende Mining, produced only more than 190 tons last year. The Potosi mine, which once imported countless silver to the Ming Dynasty, still produces silver today, with a total production of more than 40,000 tons of silver in history, making it a real "gold mine and silver mine".

What we want most is this kind of super-large, high-productivity rich mine.

Horizontal screen - The world's top 20 silver producing mines in 2022. Map: Earth Knowledge Bureau

The demand for silver is increasing

Moreover, the demand for silver in the industrial field is increasing, and cost advantage is becoming more and more important.

Currently, silver has four major uses: industrial use, photosensitive materials, jewelry crafts and precious metal investment. Ordinary people may be exposed to jewelry and precious metal investment, such as buying silver futures. However, the largest and fastest growing use is still industrial silver.

The widespread use of silver in industry has led to huge consumption. As consumption cannot keep up with consumption, the price has naturally risen. Map: Earth Knowledge Bureau

Silver's excellent electrical and thermal conductivity make it widely used in the electronics, chemical, and pharmaceutical industries, especially in areas that require high reliability, precision, and safety. For example, silver is used in conductors, switches, contacts, fuses, and thick film pastes.

Silver has many more uses than we thought. Map: Earth Knowledge Bureau

In recent years, global industrial silver has grown steadily, reaching 17,309 tons in 2022. The largest increase comes from batteries, especially photovoltaic cells.

For example, making a mobile phone requires 0.2 to 0.3 grams of silver, a laptop requires 0.75 to 1.25 grams of silver, but a photovoltaic cell requires about 20 grams of silver.

According to statistics, from 2014 to 2022, the use of silver in photovoltaics has increased from 1,500 tons to more than 4,000 tons, and the World Silver Association predicts that it will exceed 5,000 tons this year.

Photovoltaic silver paste is an indispensable material in photovoltaic cells. Copyright image of the library, reprinting and using may cause copyright disputes

The reason why so much silver is used in photovoltaics is that the latest photovoltaic cells require the use of silver paste .

Photovoltaic silver paste is a viscous paste composed of high-purity silver powder, glass oxide, organic materials, etc. Silver powder is the main material, accounting for about 98%, and its quality is directly related to the photoelectric performance of photovoltaic cells.

Photovoltaic silver paste, Image source: Heraeus

This not only depends on whether you have silver, but also requires consideration of materials science technology. my country's photovoltaic silver paste started late, and there was no technological breakthrough before 2011, so in the early days it was mainly imported, especially Japanese photovoltaic silver paste, which accounted for an absolute proportion.

Distribution of sources of photovoltaic silver paste in mainland China. Map: Earth Knowledge Bureau

With the rapid rise of the domestic photovoltaic industry, the photovoltaic silver paste market has gradually begun to be localized. Since last year, China's imports of silver paste have been greatly reduced, domestic supply has increased, and even reverse exports have begun. However, the process of silver paste has been solved, but the problem of silver mines remains unsolved .

If my country wants to transform its energy structure, the proportion of photovoltaic power generation will continue to increase. As silver is the basic material of photovoltaic cells, its consumption will certainly increase.

This indirectly pulled up the price of silver. From 2014 to 2020, the supply of silver in the international market exceeded demand, and the price was sluggish. However, since 2020, the international demand for silver has risen rapidly, and it has been in short supply.

For example, in 2022, the world needs 38,000 tons of silver, but the total supply is only 31,000 tons, with a gap of more than 7,000 tons. According to the World Silver Association, the global silver gap this year is also 4,400 tons.

The global demand for silver is growing rapidly in 2021-2022. Not only China is short of silver, but the whole world is short of silver. Map: Earth Knowledge Bureau

Since China's photovoltaic industry accounts for an overwhelming proportion of the world's total, and silver is a basic consumable, the shortage is even more serious. Even during the period from 2014 to 2020 when global silver supply exceeded demand, my country's silver was in short supply. In short, it was not enough.

The main reason is the huge gap in industrial silver. Map: Earth Knowledge Bureau

According to statistics from China Customs, from 2017 to 2022, my country's imports of silver ore and its concentrates increased from more than 500,000 tons to more than 1.4 million tons, and the import value also increased from US$1.2 billion to US$3.2 billion.

Map: Earth Knowledge Bureau

The source of this silver is mainly South America, with Peru, Mexico and Bolivia accounting for 80% of the import value.

The top 10 sources of China's silver imports in 2022 (accounting for 93% of total imports). Map: Earth Knowledge Bureau

In short, the huge demand of the photovoltaic industry has brought long-term support to silver consumption, and China needs more and more silver. In a short period of time, my country's dependence on foreign silver resources will be difficult to change, and may even become more serious.

In terms of prospecting, there are many polymetallic mines containing silver in China, but they are basically small mines , and it is still very difficult to find super-large mines; on the other hand, it is also particularly important to improve the mining and recycling capabilities of silver and further increase the proportion of "recycled silver" in China's silver production . It is best that a piece of silver can be recycled many times, which is also applicable to other metals such as copper and aluminum.

Fortunately, there are many silver-producing countries in the world, and it is unlikely to be strangled by a single country. If we rely on the huge photovoltaic industry, increase our efforts in scientific research, tap the added value of silver, and become stronger and stronger in the silver industry chain, it will also be a very feasible strategy.

References

[1] Overview of global silver mine resources and supply and demand analysis

[2] Research on the Current Status of Global and Chinese Silver Mine Resources and Quantitative Forecast of Silver Demand

[3] Summary of the resource characteristics and mineralization laws of China’s silver mines

[4] World-Silver-Survey-2023

[5] World-Silver-Survey-2022

[6] A Preliminary Review of Metallogenic Regularity of Silver Deposits in China

[7] USGS Silver Statistics and Information

[8] China Customs Data Online Query System

Planning and production

Source: Earth Knowledge Bureau

Author: Boyue

Editor: Cui Yinghao

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