Mexico silver sector sees cautious recovery despite regulatory challenges

Mon Apr 20 2026

Mexico's silver mining industry is navigating a complex intersection of declining output, tightening global market fundamentals, and an uncertain regulatory environment that continues to weigh on investment and project development, according to the World Silver Survey 2026 by The Silver Institute and Metals Focus, as well as industry executives.

The country remains the world's top silver producer, but its performance has deteriorated in recent years, reflecting both operational and policy-related challenges.

Declining output

Mexico's silver production fell for a third consecutive year in 2025, dropping 5% year-on-year to 172.9 million ounces (Moz), driven by a combination of declining ore grades, operational disruptions, and government policy changes.

At the global level, this downturn has been significant enough to drag North American output to a decade low, even as other regions posted gains. The survey highlights that Mexico "continued to weigh on North American output" despite global mine supply increasing overall.

Operationally, lower grades have been a key factor. Major assets such as Peñasquito saw reduced silver head grades, offsetting throughput gains, while other large operations also processed lower-quality ore. This aligns with Metals Focus' broader observation of "operational disruptions, policy shifts and declining grades" affecting Mexican production.

Sarah Tomlinson, director of mine supply at Metals Focus, reinforced this point.

"There's been operational pressures at some of the operations. We saw that Peñasquito was processing lower grade. We've seen lower grades processed at other operations as well," Tomlinson told BNamericas.

Beyond geology, structural issues are also emerging. A sustained decline in exploration activity is limiting the pipeline of new deposits, a critical concern for a mature mining jurisdiction such as Mexico.

"We've seen a lack of exploration over the past few years, and that has had an impact on the pipeline," Tomlinson said.

A key bottleneck

Industry participants increasingly point to Mexico's regulatory and legislative framework as a central constraint on future growth.

Tomlinson was explicit about the impact.

"With the current climate in terms of the current legislation, will that happen? That remains a question at the moment. In terms of the legislation, it's not encouraging investment."

A particularly contentious issue is the restriction on private exploration activity.

"The exploration ban on private companies and private individuals is a key stage in the mining pipeline... By removing that, it has the potential to severely limit the mining pipeline."

This constraint is critical in the context of silver's long-term supply outlook. The survey underscores that new project contributions globally remain limited due to long development timelines and capital intensity, making exploration even more essential to sustain production.

Project pipeline: limited but strategic

Despite these headwinds, Mexico still hosts a portfolio of silver and polymetallic projects at various stages, though many are stalled or progressing slowly.

Tomlinson pointed to a limited number of projects currently shaping Mexico's silver pipeline, including Fresnillo's Rodeo, an open-pit development; Orisyvo, a more advanced project that has already secured permits; and Guanajuato, which remains in the permitting phase.

However, she stressed that many projects are "waiting for positive investment decisions," reflecting both financing constraints and regulatory uncertainty.

The survey confirms that Fresnillo - the world's largest primary silver producer - holds several advanced and exploration-stage assets in Mexico, including Orisyvo, Rodeo and Guanajuato, alongside other prospects.

Cautious optimism on permitting

From an operator's perspective, there are early signs of improvement in permitting, though uncertainty remains high.

Octavio Alvidrez, CEO of Fresnillo, noted:

"It's quite uncertain right now... but there are very good positive signs on the permitting side. Even with the open-pit mining ban and for gold, we have started to see some of those permits being approved," he said when asked by BNamericas.

He added that authorities appear increasingly aware of mining's economic role. "I'm hopeful... that the authorities have identified in the mining industry the number of projects that can go ahead and that coincide with the needs of the country to benefit from larger economic growth."

Still, project timelines remain uneven. Within Fresnillo's portfolio:

"The more advanced one is Orisyvo... in pre-feasibility... Rodeo is the one that can be brought into operations sooner rather than later... the others are still to be explored," the CEO said.

Structural risks

The regulatory slowdown in Mexico comes at a time when the global silver market is tightening structurally. The survey notes that 2025 marked the fifth consecutive annual deficit, with another shortfall expected in 2026.

At the same time, Mexico's declining output is occurring alongside a broader trend: increasing reliance on by-product silver from polymetallic operations in lead, zinc, copper and gold, which now account for nearly three-quarters of global supply.

This shift makes new polymetallic projects - many of which are in Mexico - even more strategically important.

However, without a stronger exploration pipeline and a clearer permitting framework, the country risks losing its ability to capitalize on rising silver demand, particularly from industrial applications such as energy transition technologies.

Outlook

Looking ahead, Metals Focus expects Mexican output to recover modestly in 2026, supported by operational improvements and project ramp-ups.

The sector's broader trajectory will depend largely on how the regulatory framework evolves.

A combination of declining ore grades, reduced exploration activity and ongoing permitting uncertainty is weighing on both near-term production and the longer-term outlook for supply.

As Alvidrez summarized, progress is likely - but gradual: "I believe that will come somehow... slowly but surely."

For Mexico, the challenge will be translating that gradual improvement into a stable investment environment capable of unlocking its next generation of silver and polymetallic projects.

(The original version of this content was written in English)

Source: https://www.bnamericas.com/