A surge in demand tied to electrification, data centers and automation is tightening the market for one precious metal, says the CEO of a Vancouver-based mining firm.
In a CNBC interview, Pan American Silver CEO Michael Steinmann lays out the case for why he believes silver’s role in the modern economy is becoming more central, as the metal moves deeper into the supply chains powering solar, electronics and AI infrastructure.
Steinmann says silver has recently been elevated on US strategic lists, while industrial demand now accounts for a majority of usage.
“It’s a really important metal for the economy. It’s a critical metal right now, declared in the US as a critical metal and added to the critical strategic list for metals in November. So you have a lot of uptake on the industrial side, about 65% of the silver is used up for that. The biggest use is solar panel production. But any electronic you use has silver in it.”
He points to the metal’s electrical properties as a key driver of its long-term relevance, tying silver directly to the buildout of high-speed computing systems.
“Silver is the best electrical conductor in the world. So any fast connection you need in your computer, in your cell phone, AI comes to mind, data centers, you need a lot of silver for that. So that’s a big use where silver is used up.”
Steinmann adds that the metal is also being supported by investor demand, which he compared to the motivations behind gold buying.
“And then obviously the investors come to mind here as well who buy silver for the same reason people buy gold right now. And so together, those two uses really push the silver price up to these levels.”
On the supply side, Steinmann said the silver market has been running a structural deficit for multiple years, with mine output failing to keep up with accelerating demand.
“We see really a deficit here, a structural deficit in silver for the last five years. We just don’t see increased production from the mining side. But a huge increase in offtake on the industrial and investor side.”
He notes that the supply problem is difficult to solve quickly because 75% of silver production does not come from primary silver mines, but instead is produced as a byproduct of copper production. Steinmann says that dynamic limits the market’s ability to respond to higher prices with a rapid increase in supply, especially if copper output is already running at full tilt.
“So we see copper at full production. We don’t have any really, very, very big projects coming on over the next few years on the copper side either.”
Looking ahead, Steinmann says the same forces driving global electrification are likely to keep pressure on silver availability, naming emerging technologies that could materially increase demand.
“We obviously all know where we’re going. This will go towards more electrification in the world. And then we’re seeing starting [with] self-driving cars, et cetera, et cetera. So that will require a lot of silver in the coming years.”
Silver has been running red-hot this year, surging from a low of $28.94 in January to as high as $66.89 this month, an over 131% explosion.
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