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Silver Mining and Exploration Hotspots

Posted on 2012-11-05, By A-Best Staff

By Michelle Smith–Exclusive To Silver Investing News

Silver mining hotspot

Silver mining is a diverse affair as the metal is extracted around the globe from a long list of countries. But, despite the number of sources, there are three nations which are silver hotspots because their production volumes exceed the others by great lengths and there are no apparent threats that they will be robbed of their top ranking statuses.

Mexico

Dr. Thomas Chaize, a raw materials specialist, described Mexico and Peru as the two pillars of world silver production. He stated that the countries are to silver what South Africa is to gold and Saudi Arabia is to oil.

Of them, Mexico has now become the dominant pillar. The nation’s silver production surpassed that of Peru in 2010 according to Sergio Almazan Esqueda, Director of the Mexican Mining Chamber.

Last year’s figures credit Mexico with the production of nearly 129 million ounces of silver. In the first half of 2011, Mexico’s silver output had reportedly already surpassed 66 million ounces, showing that production has grown and providing support for projections of further growth.

Fresnillo (LSE:FRES) is recognized as a playing a prominent role in the expansion of Mexican silver mining. The company opened the Saucito mine this year, which it now operates in addition to the Fresnillo silver mine, one of the world’s largest.

Mexico is considered a location ripe for further growth in silver production. It has an impressive record of attracting foreign investment, especially from Canadian interests. Between 2010 and 2012, over $13 billion in mining investments is expected and a significant portion is projected to be spent on silver mining projects.

Peru

Despite being stripped of its heavyweight title, Peru’s silver mining sector would have to experience a severe, almost unimaginable, decline for it to lose its silver hotspot status. Last year, the nation produced 116 million ounces of the white metal. From January to August of this year, Peru’s production was reported at approximately 71 million ounces.

In conjunction with being a silver-rich nation, Peru is considered a mining friendly nation, with a pro-mining president, Ollanta Humala. The recent declines in silver mining have been blamed on factors such as bureaucracy, labor strikes and community outlashes against miners. The government recognizes the positive contributions of the mining sector and has announced its commitment to cracking down on violent protests.

Declines were also attributed to reductions from Volcan, a mining major, which was busy implementing an optimization program. In post-Q1 2011 correspondence, Volcan said the outcome of these efforts, designed to lower costs and boost efficiency, and the company’s investments in production growth were good. Volcan said volume reductions were compensated by higher grades and greater recovery. And, the company also claimed the title of the first Peruvian silver producer to exceed output of 20 million ounces.

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