# Silver Refining Chokepoint China refines 60-70% of the world's silver despite producing only 13% of mine supply. This created a single point of failure in the global [[Silver Value Chain]]. ## How China Became Dominant China imports doré bars (95% pure from mines) from South America, Australia, Africa. Then refines to .999 fine (industrial) or .9999 fine (investment). Scale economics made China dominant over 20 years: Massive refineries in Hunan, Jiangxi provinces, lower labor/energy costs, laxer environmental regulations (refining is polluting), proximity to manufacturing demand, strategic government policy. ## The Normal Flow Peruvian mine → Doré bar → Ship to China → Chinese refinery → .999 fine bar → Ship to Europe/US → Industrial manufacturer. Timeline: 90-120 days from mine to installation. Cost: Highly efficient due to scale. ## The Broken Flow (Post-January 1, 2026) Peruvian mine → Doré bar → Ship to China → Refinery → **Export license application (45+ days)** → IF APPROVED → Ship to US → Manufacturer. Timeline: Now 150-200+ days (if approved at all). Alternative: Find non-Chinese refiner (limited capacity, higher cost). ## Why Western Capacity Atrophied Over 20 years, silver refining work moved to China. Western refiners either closed (couldn't compete on cost), downsized to specialty/small batch, or converted to other metals. Current state: **U.S. silver refining is clogged, with one major refiner turning away ultra-pure silver because capacity just isn't there.** ## Why You Can't Rebuild Quickly Building modern refinery requires 3-5 years construction, environmental permits (very difficult in West), skilled labor force (doesn't exist, was offshored), $100M+ capital investment, economies of scale (small refineries uneconomic). Even with fast-track permitting, new Western capacity wouldn't come online until 2028-2030. ## The [[China Silver Export Restrictions 2026]] Impact Starting January 1, 2026: Only 44 companies approved, requires proof of annual exports from 2022-2024, minimum 80 tonnes production required, 45+ days approval, first approvals February earliest. This removed 60-70% of global refining capacity from accessible supply. ## The Math Global mine production: 835M oz/year. Chinese refining capacity: 500-585M oz/year (60-70%). Western refining capacity: 250-335M oz/year (30-40%). If China restricts exports, world loses access to 500-585M oz of refining capacity. Cannot be replaced in under 3-5 years. Western refiners already at capacity. Creates structural shortage. This is why [[Silver Swap Rates and Forward Curve|swap rates are -7.9%]]. Industrial users know they cannot secure refined silver for future delivery at any rational price. Links: [[Silver MOC]] | [[Silver Value Chain]] | [[China Silver Export Restrictions 2026]] --- #silver #china #systems #deeptech