According to a recent article in the Wall Street Journal, the booming development of the solar energy industry has driven a surge in demand for silver, and this precious metal has always been an important raw material for the production of photovoltaic panels.

With its excellent conductivity, thermal efficiency, and optical reflectivity, silver has become an indispensable part of the solar field. As the price of silver climbs to its highest level in a decade, mining companies are working to increase production.

According to a report released by the International Energy Agency (IEA) on Monday, global investment in the solar photovoltaic manufacturing industry more than doubled to around 80 billion US dollars last year, accounting for about 40% of global investment in clean technology manufacturing. China's investment in the solar photovoltaic manufacturing industry more than doubled between 2022 and 2023.

The agency said in a January report that the world's installed renewable energy capacity increased by 50% last year to nearly 510 gigawatts, the fastest growth rate in 30 years, with three-quarters of it coming from solar photovoltaics.

Sprott, a management company specializing in precious metals investment, said that according to current trend forecasts, demand for silver from solar photovoltaic panel manufacturers (especially Chinese manufacturers) is expected to grow by 170% by 2030, reaching about 273 million ounces, accounting for about one-fifth of the total demand for silver.

Mitchell J. Krebs (Mitchell J. Krebs), CEO of Coeur Mining (Coeur Mining), said: “Industrial demand for silver has soared, driven by photovoltaics and other electrification end uses, while supply has leveled off or declined.”

According to the IEA, the spot price of solar photovoltaic panels plummeted by nearly 50% last year, mainly as a result of Chinese supply flooding the market.

The agency pointed out that China's PV installed capacity last year was equivalent to the global PV installed capacity in 2022. It is expected that China will maintain an 80% to 95% market share in the global supply chain. By the end of 2024, its production capacity is expected to double again, thus greatly increasing oversupply.

“China's growing PV installed capacity is expected to continue to be the main driver of silver demand growth,” Krebs said.

The Chicago-based mining company wants to profit from growing demand for silver. Krebs said the company recently completed a large-scale expansion of a mine in Nevada, which will become the largest producer of silver in the US.

London-based Hochschild Mining (Hochschild Mining) is also looking to expand its silver business. Later this year, Hawkshield Mining wants permission for a silver project in southern Peru. The project is scheduled to be put into operation in 2027, which will increase the company's annual production by 50 million ounces, mainly silver.

Eduardo Landin (Eduardo Landin), CEO of Hawkshield Mining, said: “Given the potential industrial demand dynamics and existing supply constraints, we may usher in the beginning of a silver bull market.”

Over the past few months, a surge in demand has driven the price of silver to soar. Last month it hit $28.84 an ounce, the highest closing price in more than a decade.

Not surprisingly, this boosted silver miners' stock prices. Since silver prices began to rise, London-listed Fresnillo (Fresnillo) shares have risen 17%, helping the world's largest silver producer to narrow the 25% decline over the past 12 months. Since the end of February, Hawkshield Mining's shares have surged 61%, while Kohl's shares have almost doubled.

Hamlet Tunyan (Hamlet Tunyan), CEO of French solar panel manufacturer Recom Technologies, said that if silver prices continue to rise, solar PV panel makers may be forced to raise prices in the second half of this year.

“However, the price increase will not affect demand because the current price level of solar PV panels is relatively low,” Tunian said.

Sprott market strategist Paul Wong said in a recent report that he believes silver may show an upward trend similar to gold. Gold hit a record high for eight consecutive trading days in April. He said that although silver is not as popular as gold among central banks and sovereign institutions, the correlation between silver and gold has not disappeared.

Wong said, “Just as the price of gold has soared due to a new wave of purchases by central banks and sovereign entities, silver has and is likely to usher in greater buying in the PV industry.”