Santacruz Silver (SCZM): Bolivia's Currency Float Cuts Dollar Mining Costs

On August 12 and August 20, 2026, Andean Precious Metals (ANPMF) and Santacruz Silver (SCZM) each told their second-quarter earnings calls that Bolivia had ended its fixed exchange rate, and that the resulting depreciation of the local currency works in favor of a company that keeps its books in US dollars [1][2].

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Metal Sells in Dollars, Wages and Power Are Paid in Bolivianos

Both companies' main producing assets are silver mines in Bolivia. The metal they dig up is sold into international markets and settled in dollars, but the money the mines pay out every day is in a different currency: wages, underground and plant power, local contractors and consumables are all paid in bolivianos, Bolivia's own currency. An exchange rate sits between the two sets of books, and for fifteen years that rate was pinned at 6.96 bolivianos to the dollar [1]. Bolivia moved to a float on June 29, 2026; the official rate reached 9.77 by quarter end, and the July 31 fixing was 12.13 [1][3]. The same local spending, converted into dollars, is roughly 40% cheaper than it was under the peg. That conversion applies at once to every mine in Bolivia that hires local labor and buys local power, regardless of ore grade or throughput, so comparable companies move together.

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85% of Costs Are Local, but the First Quarter Printed a Tax Charge

Santacruz's CEO put a size on it on August 20: roughly 85% of the company's Bolivian costs are denominated in bolivianos while all of its metal revenue is in dollars, so the devaluation directly eases its dollar working-capital requirement [1]. On the same call, the CFO separated out the $36.1 million income tax expense booked in the second quarter. It is a provision caused by the change in exchange-rate regime rather than a cash payment, and its largest component came from remeasuring US dollar cash held by Bolivian subsidiaries at the official rate into a taxable exchange gain. That charge pushed reported net income down to about $2 million from roughly $28 million in the first quarter, in a quarter when revenue grew 55% year over year and adjusted EBITDA grew 74% [1]. Management said the reference point has now been reset and that it does not expect a charge of that size to repeat, while the cost benefit continues [1].

Andean was far more guarded. On August 12 it said the continued depreciation of the boliviano against the dollar is currently working in favor of a company whose reporting currency is the dollar, then immediately said it does not expect any material impact on itself [2]. The reason sits in its own margin bridge: San Bartolome processes ore bought from third parties at prices linked to spot silver, and its second-quarter gross margin ratio fell to 33% from 46% [2]. Taken together, the two disclosures support a narrower claim. The currency benefit reaches operators that hire their own people and buy their own power, and it does not reach a business model built on purchased ore.

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The Dollar Margin on the Same Ounce Gets Reranked

Once the conversion rate changes, an ounce produced in Bolivia carries more dollar margin than the same ounce produced in Mexico or Peru, so Bolivian projects still under construction and modeled on the old official rate understate their own margins. Santacruz expects Soracaya permits in the third quarter and about 300 tonnes per day by the end of the fourth [1]. This reading rests on direct disclosure from only two companies, and it holds only for owner-operators. The test is whether third-quarter unit cash costs in the Bolivian operations actually fall when volumes and grades have not changed much. There is also a record pointing the other way. Pan American Silver (PAAS), the largest covered holder of a Bolivian mine, did not mention the currency at all on its August 13 call; its only Bolivian content was a national road blockade that delayed a tailings expansion contractor, and it attributed part of its higher group-level silver all-in sustaining cost to unfavorable exchange rates [4].

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Which Companies This Change Touches

• United States Antimony (UAMY): It funded a Bolivian antimony processing plant and takes its entire output, saying on August 11 that the first shipment was on the water and that the plant will come fully online at roughly 150 tons per month. That plant's labor, power and reagents are paid in bolivianos while UAMY pays and sells in dollars, which places it on the same conversion, though it has not commented on the currency [5].
• Kennametal (KMT): The toolmaker has itemized transaction gains from preferential Bolivia exchange rates in its earnings-per-share bridge for three straight quarters, at $0.02 each on February 4 and May 6, 2026 and $0.04 on August 5. The float removes exactly the two-tier preferential system those gains came from, so the same event may run the other way for it. It has not commented either [6].

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Sources

[1] Drillr - Santacruz Silver (SCZM) - 2026-08-20 - Q2 2026 earnings call

"If you allow me, actually, let's remember that about 85% of our costs in Bolivia are in Bolivianos. So this will be beneficial for us in the working capital requirements based in US dollars."

[2] Drillr - Andean Precious Metals (ANPMF) - 2026-08-12 - Q2 2026 earnings call

[3] WanderWallet - Bolivia Exchange Rate: One Month After the Reform - 2026-08-03 - exchange-rate data - https://wanderwallet.io/guides/bolivia/bolivia-exchange-rate-one-month-later-august-2026/

[4] Drillr - Pan American Silver (PAAS) - 2026-08-13 - Q2 2026 earnings call

[5] Drillr - United States Antimony (UAMY) - 2026-08-11 - Q2 2026 earnings call

[6] Drillr - Kennametal (KMT) - 2026-08-05 - FY2026 Q4 earnings call

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