5 Silver Mining Stocks to Watch in a Promising Industry

Madhurima Das
11 min read

In This Article:

The prospects for the Zacks Mining - Silver industry look promising on the back of rising silver prices. Global industrial demand for silver is expected to reach record levels in 2024, driven by photovoltaics. Meanwhile, supply is expected to dip 1%. This suggests a fourth consecutive year of deficit for the silver market, which is likely to bolster prices.
 
We suggest keeping tabs on companies like Fresnillo FNLPF, Hecla Mining HL, First Majestic Silver AG, MAG Silver MAG and Vizsla Silver VZLA, which are poised to benefit from solid projects, improved operational efficiency and disciplined cost management.

About the Industry

The Zacks Mining - Silver industry comprises companies that are engaged in the exploration, development and production of silver. These include big and small players operating mines of widely varying types and scales. Silver-bearing ores are mined by open-pit or underground methods, and then crushed and ground. Miners continually look for opportunities to expand their reserves and resources through targeted near-mine exploration and business development. They strive to upgrade and improve the quality of their existing assets, internally and through acquisitions. Only 20% of silver comes from mining activities, wherein silver is the primary revenue source. The balance comes from projects, wherein silver is a by-product of mining other metals, such as copper, lead and zinc. Thus, several companies in the silver mining industry are engaged in mining other metals as well.

What's Shaping the Future of the Mining-Silver Industry

Demand to Remain Strong: Per the Silver Institute, total industrial demand for silver in 2024 is expected to surpass last year’s record of 654.4 million ounces and rise 9% year over year to 710.9 million ounces. Notably, industrial applications account for more than 50% of the total silver demand. Last year, higher-than-expected photovoltaic demand (which rose 64% year over year) and the faster adoption of new-generation solar cells boosted global electrical and electronics demand by 20%. Other green applications, including power grid construction and automotive electrification, contributed to the improvement. Riding on the same trends, the demand for electrical and electronics is expected to rise 9% year over year in 2024, fueled by 20% growth in photovoltaics. Demand in jewelry is expected to increase 4% year over year to 211.3 million ounces in 2024 and silverware demand is likely to be up 7% to 58.8 million ounces. Both are expected to gain from higher discretionary spending and recover from the declines seen last year. Overall, total demand for the metal is projected to grow 2% to 1,219 million ounces in 2024, indicating a recovery from the 7% decline in 2023. India’s silver imports are expected to double this year due to rising demand from the solar panel industry and investment demand. Increased demand from the world’s biggest silver consumer could boost silver prices.

Rising Silver Prices Bode Well: Silver has seen a solid year-to-date performance, gaining 20.5%. Silver prices have ranged from a low of $22.19 to a high of $33.05. The rally has been fueled by geopolitical uncertainties and increasing bets of U.S. interest rate cuts. Solid demand amid expectations of a tight supply will keep supporting prices. Per the Silver Institute, while demand remains high, mine production is expected to dip 0.8% year over year in 2024, as increased output from Mexico and the United States is expected to be negated by declines in Peru and China. This sets the stage for a deficit of 215.3 million ounces — the second-largest in more than 20 years. This will likely mark the fourth consecutive year of a deficit.

Efforts to Combat Inflationary Costs to Aid Margins: Industry players are facing escalating production costs, including electricity, wages, water and materials. Mining companies are major consumers of energy, with around 50% of their production costs closely linked to energy prices. A shortage of skilled workforce spiked wages. With no control over silver prices, the industry must focus on improving its sales volumes, while being cost-effective. Players are investing heavily in R&D and resorting to technological innovations required at almost every level of operation to increase efficiency, sustain growth and rein in costs.

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