Silver is evolving from money to techno metal

Silver is usually considered a precious metal used to make coins, jewelry, tableware, and other shimmering items.

Approximately 28% of the 8,000 tons (257.2 million ounces) of silver used in the United States in 2020 went to electrical and electronic equipment; 26% in jewelry and silverware; 19% for coins and medals; and 3% for photography. The remaining 24% was used in a variety of other applications such as antimicrobial dressings, clothing, and pharmaceuticals; Batteries; Brazing and soldering; Catalytic converters for automobiles; Mirrors; and photovoltaic solar cells.

“The demand for silver has moved from monetary ornamental use to photography, digital and now to energy,” said Phillips Baker, Jr., President and CEO of Hecla Mining Company, during a presentation earlier this year.

Hecla, which has mined silver for 130 years, has seen firsthand the shift in silver demand from coins and jewelry to solar panels and electric vehicles.

In fact, the Idaho-based mining company traces its founding back to a time when silver lost its 4,000-year status as the metal of choice for making coins and the rise of a revolutionary technology that spurred silver demand for the entire 20 camera for the masses.

Century of silver photography

In 1900, Eastman Kodak introduced the Brownie Camera, an affordable camera that enabled ordinary people to capture precious moments and pictures for posterity.

“It was a very inexpensive camera when it first launched in 1900 – it was $ 1, which is about $ 31 in today’s dollars,” said Baker.

While the brownie itself did not contain silver, this was the film the pictures were taken on. Photography was a major consumer of silver throughout the 20th century. In 1999, around 250 million ounces of silver were used in photography annually.

When Baker joined Hecla in 2001, most silver analysts believed that photography would continue to fuel demand for silver. However, the advent of the digital camera and then the smartphone almost completely ended the centuries-long era of silver film. By 2019, the photographic demand for silver had dropped to just 34 million ounces / year.

Despite this 86% drop in photographic demand, total silver consumption rose from 875 million ounces / year to 1.07 billion ounces / year over the same period. This is due to the rise of silver as an investment metal and the steady growth in industrial use outside of photography.

The techno metal era begins

The very advances in technology that should tarnish demand for silver have lit the future of this shiny metal.

However, it isn’t the sheen of silver that drives the metal’s technological demand. Instead, it is physical properties such as very high electrical conductivity, reflectivity, ductility (extensibility) and malleability that have turned silver into a technometal.

In fact, silver is the best metallic conductor there is. Because of this exceptional quality, silver beats cheaper copper in building a powerful computer that you can put in your pocket.

The same properties that make silver invaluable for your smartphone also make this precious metal an important component in renewable energies and electric vehicles.

Photovoltaic solar cells use both the high electrical and thermal conductivity properties of silver.

Approximately 0.7 ounces of silver goes into making each photovoltaic solar panel. That currently equates to approximately 90 million ounces of silver needs per year, and Goldman Sachs predicts that need will increase to between 105 million and 150 million ounces by 2023.

“So strong, strong demand growth for photovoltaics,” said Baker.

The transition to electromobility is driving a similar growth in demand in the automotive industry.

This is because virtually every electrical connection in a modern car is activated with silver-plated contacts, and EVs naturally contain many more electrical connections than a traditional internal combustion engine car.

While an average ICE vehicle uses about 0.64 ounces of silver, an electric vehicle needs about 1.25 ounces of the highly conductive precious metal.

As a result, Bank of America predicts the automotive sector will need about 90 million ounces / year by 2026, a 64% increase from the current roughly 55 million ounces / year. And that demand is expected to continue to grow as EVs overtake ICE vehicles to dominate the market.

In addition to the technological demands being driven by solar and electric vehicles, a report recently released by the Silver Institute predicts that the global roll-out of 5G networks will require an additional 16 million ounces / year by 2025 and as much as 23 million ounces / year by 2030 will .

In search of balance

Worldwide silver production is currently around 840 million ounces / year and consumption is around 1 billion ounces / year. The approximately 170 million ounces of silver that are recycled annually fill the gap between supply and demand. However, the emerging technological demand for silver is expected to upset this balance.

According to very conservative estimates, the demand for newly mined silver is expected to increase by 95 million ounces per year over the next ten years.

This is nearly ten times more than Hecla’s Greens Creek Mine in Alaska, which accounted for about a third of total US silver production in 2020 alone.

“Our largest mine, Greens Creek, produces 10 million ounces of silver a year. By 2030 … you would need 10 more Greens Creeks,” said Baker.

Although silver prices have soared, from around $ 16 / oz to around $ 28 / oz in 2020, the CEO of Hecla Mining says that even higher silver prices will likely be needed to spur the investments to build the silver mines that are needed are to meet the emerging demand for this metal that continues to evolve over time.

Most analysts predict silver will rise above $ 30 / ounce this year, and some predict the techno-precious metal will hit highs of $ 50 / ounce in the next two years, between industrial demand and a hedge against inflation .