Silver demand has outpaced supply for five straight years, and the gap is expected to widen as electric vehicles, AI data centers, and green energy technologies consume ever more of the metal. The Silver Institute reports that 2025 marked the fifth consecutive year of a supply/demand imbalance, with global mine production forecast to remain flat in 2026. The shortage has become serious enough that some governments, including the United States, have classified silver as a critical mineral.
Several factors are driving the deficit. Silver is essential to EVs and data centers, but new mines are slow to come online due to lengthy permitting and declining ore grades. Most silver is also extracted as a byproduct of copper and zinc, so production cannot easily be ramped up when prices rise. Without a stable supply, manufacturers could face soaring material costs, delayed rollouts, or costly workarounds.
New Pacific Metals Corp. (TSX:NUAG) (NYSE-A: NEWP), a Vancouver-based exploration and development company, is working to prevent that scenario. The company owns two of the world’s largest undeveloped open-pit silver projects, Silver Sand and Carangas, which together have the potential to produce nearly 23 million ounces of silver annually. Silver Sand, in Bolivia’s Potosí department, holds a mineral resource of over 200 million ounces and is projected to produce 12 million ounces per year. Carangas also contains over 200 million ounces and is estimated to produce 15.5 million ounces annually.
Late last month, New Pacific signed the Administrative Mining Contracts for Carangas, securing a 30-year fixed term and marking a key milestone in advancing the project from exploration to production. The contracts will now be submitted for ratification and approval. Following legislative approval, the company expects to proceed with environmental categorization and an Environmental Impact Assessment.
Drilling at Carangas began in the first half of September, with about 25,000 metres of the 30,000-metre program aimed at upgrading mineral resources in both the silver and gold zones. The remaining metres will focus on step-out drilling for potential extensions and new targets. The company says Carangas is planned as an open-pit mine, which is generally cheaper and safer to operate. During the first eight years, production costs are expected to be about $12 per ounce of silver after byproduct credits. With silver prices having hit an all-time high early this year, J.P. Morgan predicts prices will reach $63 per ounce in Q4 2026 and average $70/oz for the year. The project is expected to pay back its setup costs in less than two and a half years and operate for nearly two decades.
If Carangas meets its targets and produces more than 15 million ounces annually in the first eight years, it alone would represent about 1.8% of 2025’s global mine production. At 25 million ounces per year, that contribution could rise to around 3%. For more details on the Carangas project, click here. This content was originally published on Benzinga. Read further disclosures here.
