- Global ambitions to achieve net zero status will necessitate a near tripling in annual clean energy investment
- Silver has emerged as a critical component of clean energy infrastructure due to its exceptional electric and thermal conductivity
- Nevertheless, a decrease in global silver production coupled with rising demand has left the precious metal in deficit – with the market undersupplied by nearly 238mn tonnes in 2022
- Eloro Resources’ Iska Iska deposit may be poised to emerge as a rare greenfield silver project with the company set to publish its inaugural NI 43-101 compliant mineral resource estimate
Global warming has become an undeniable force around the globe, with news of widespread droughts, record temperatures, forest fires, and ravaged agricultural harvests increasing in frequency. In response, global leaders came together during 2021’s COP26 event in Glasgow to propose a global Net Zero initiative, aimed towards achieving a balance between global greenhouse gas (“GHG”) emissions and those being removed from the atmosphere. Whilst a number of countries have since published their own legislation, detailing the measures and timeframes through which they expect to achieve a net zero status, there is a common consensus amongst all – the change will not be easy. Forecasts by the International Energy Agency now suggest that to reach global net zero emissions by 2050, annual clean energy investment around the globe will need to more than triple to approximately $4 trillion per annum by 2030.
The shift away from fossil fuels and towards renewable energy sources is resulting in a spending surge that is set to directly benefit businesses entrenched within the global renewable energy supply chain; in particular, commodities such as silver – a critical component within green energy technologies – are poised to witness a dramatic uptick in demand.
The average electric vehicle (“EV”) today contains anywhere between 25 and 50 grams of silver depending on the model, with hybrid cars using between 18 to 34 grams of silver. The precious metal’s electric and thermal properties combine to make silver an increasingly crucial constituent within electric vehicle batteries; today, the automotive sector uses 55 million ounces of silver annually, with demand anticipated to swell to as much as 90 million ounces by 2025 (https://ibn.fm/d1Z1I). Coupled with growing demand from solar panel manufacturers – a solar panel measuring approximately 2 square meters can use up to 20 grams of silver – the global silver market has now operated at a net deficit dating back to early 2021.
Global demand for silver rocketed by 18% last year to a record high of 1.24 billion ounces, resulting in a significant supply deficit, according to the Silver Institute (https://ibn.fm/pc6fv). The silver market was undersupplied by 237.7 million ounces in 2022, the institute said in its latest World Silver Survey, calling this “possibly the most significant deficit on record”.
“As demand associated with the electrification of the global economy grows, in order to fight climate change, it looks like the world will face persistent primary silver deficits over the long term. Silver uptake by the emerging EVs industry, smart devices, electrical grids, solar power generation and the conventional industrial products looks set to outpace the quantities produced by miners and recyclers,” explained Bart Melek, Head of Commodity Strategy at TD Securities. “If deficits persist for a prolonged period as expected, the inventory of above-ground stocks will diminish to levels which will be too low to consistently provide the buffer against deficits. This implies very high prices, as the silver sector will operate above the conventional supply curve.”
Although an approximate 1.3 billion oz in silver inventories may help stopgap the ongoing supply shortfall, the need for new, longer-term supplies of mined silver is gaining increased urgency. With its sights set on developing its promising Iska Iska project, Eloro Resources (TSX: ELO) (OTCQX: ELRRF) (FSE: P2QM), an exploration and mine development company with a portfolio of gold and base-metal properties in Bolivia, Peru and Quebec, has emerged as one of the key potential beneficiaries from the global boom in silver demand.
Nestled in the foothills of Bolivia’s Cerro Rico de Potosi, Eloro Resources’ Iska Iska deposit is situated deep within a region renowned for its prolific silver deposits. Despite accounting for nearly 80% of the world’s silver supply between the 16th and 18th centuries, the Potosi region was recently estimated to hold a world-class silver and tin reserve amounting to over 500 million tonnes grading ~100g/t Ag and 0.2 Sn.
Silver prices to date have not fully reflected the underlying supply-demand imbalance affecting the precious metal – with a combination of rising interest rates, inflationary pressures, and a deteriorating global macroeconomic environment weighing on investor sentiment. Nevertheless, growing expectations of a ‘dovish’ monetary policy tilt by the FOMC, alongside prospects of a ‘soft’-landing in the United States have led to rising longer-term price forecasts for the commodity.
“As it becomes clear that the Fed and other central banks will start to pivot to a more dovish monetary policy stance in the early months of 2024, boosting the prospects for an economic recovery on the horizon, we expect the white metal will set its sights towards $26/oz in the final days 2023,” commented TD Securities’ Melek.
Eloro Resources’ initial exploratory drilling work within the Iska Iska deposit thus far has revealed the existence of a “magnificent core, which is remarkably consistent, continuous, and high grade at 90g/t silver equivalent and greater”. With Eloro on track to publish its inaugural NI 43-101 compliant mineral resource estimate (“MRE”) in the coming months, it may be fair to presume that Bolivia’s rich veins of silver may begin flowing again in the not-too-distant future.
For more information, visit the company’s website at www.EloroResources.com.
NOTE TO INVESTORS: The latest news and updates relating to ELRRF are available in the company’s newsroom at https://ibn.fm/ELRRF
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