Mineweb: Esoteric uses keep silver demand flying high

Mineweb: Esoteric uses keep silver demand flying high

Although some traditional uses for silver are declining, a number of newer ones are taking their place and hold out great promise for contributing to good demand in the future.
Author: Lawrence Williams
Posted: Friday , 18 May 2007

LONDON - In an address to the World Mining Investment Congress in London, Silver Standard President and CEO, Robert Quartermain, who also is the Vice President of the Silver Institute, devoted most of his address to factors affecting silver supply and demand rather than promoting his own company - which indeed has much going for it - to the audience of bankers, brokers, fund managers, mining company executives and investors.

Like virtually all the base and precious metals, low prices for many years meant that exploration and new mine openings have been rare and silver supply has been falling short of demand - even though its monetary element has diminished, as has the main industrial usage in the photographic sector. Pure silver mining operations are relatively rare in any case and the metal often is produced as a byproduct to gold, copper or lead and zinc - all of which suffered from the exploration malaise from low metal prices - or with one or more of these metals as a co-product, or at least as a significant revenue contributor. Only now are significant new silver producing operations beginning to come on stream, but these are hardly replacing the declining output from many older and declining producers.

Although the photography market may be diminishing, this was also notable for a substantial recycling element, which brought a high proportion of the photographic supply back to the market as ‘scrap'. As the photographic usage dies, then so will the recycling.

But it is silver's bivalency which is perhaps the key, which makes the metal highly reactive to the extent that, among other things, it is a natural biocide which means growing medical usage - and it is being used in clothing too for people in arduous occupations - like the military. It has uses in combating many viruses like legionella - and in the UK perhaps in the fight against hospital borne diseases like MRSA.

In electronics silver is the most efficient conductor of electricity so is finding increasing usage in this sector. Meanwhile legislation in some countries to remove lead from solders is opening up another big cumulative usage area in terms fo silver-tin solders.

So, Quartermain makes an excellent case for continuing strong demand for silver. He feels that any balanced portfolio should contain an element of silver - either as physical metal, ETF or silver mining stocks, and as far as the latter is concerned he would not argue against Silver Standard being a key part of this.

Although the company has existed for many years without mining metal, the big Pirquitas deposit in Argentina is ready to move to the production phase, while there are then a succession of projects in Peru, Mexico Argentina again and Canada waiting for production decisions.

All are primarily silver deposits except Snowfield in British Columbia, Canada, which is a gold deposit which looks to have potential as a big open pit gold operation with decent grades. So far exploration is in the relatively early stages here, but it looks to have the potential to be a major gold resource should big tonnages be proved up which could be of interest to one of the gold majors - which in turn could make it a finance source to be used to continue development of Silver Standard's silver prime targets.