Maximising value of preciousmetals from spent hydrocarbon
process catalysts
Maximising value of preciousActivities in the Asian hydrocarbon/petrochemical markets have been growing rapidly in the past decade, particularly in China during the past few years. Last year alone, China’s oil imports totaled 70 million metric tons, a 15% increase from the prior year, China imported about 28% (about 60 million metric tons) of its total oil demands in 2001, for example, and about 70 million metric tons in the prior year.
The country also has tremendous oil reserves, totaling approximately 23 billion metric tons, and an annual refined product output that reached 167 million metric tons last year. The numbers for China alone are staggering, with consumption expected to surpass 300 million metric tons by 2010, and energy demands to equal 2 billion metric tons of oil by 2020.
While China is just one example of the huge demand for crude oil in Asia, other countries in the region are not too far behind, at least on a proportional basis. For example, just in the first quarter of 2002 India consumed 108 million metric tons of crude, 33 million of it produced domestically. India also plans to produce up to 3% of the world’s oil supply in the future; the country now supplies about .9%. India’s hydrocarbon reserves total up to 33 million metric tons. Other countries in the region, such as Indonesia, are experiencing similar growth rates, with 11 new oil and gas development areas planned this year alone with an equivalent $160 million dollars (U.S.) investment in sites located in Java, Bali, Tarakan, and Sumatra. South Korea expects to spend $219 million developing its overseas oil fields this year, an expense 45% higher than last year.
At current world prices in the $40/barrel region, refining and processing crude into its thousands of end components has become quite costly. One of the major costs associated with hydrocarbon and petrochemical refining processes are the precious metals incorporated into catalysts used for facilitating production processes to aid reactions as well as lower energy consumption. Most hydrocarbon processors, for example, used fixed-bed reaction catalysts to facilitate hydrogenation of various intermediates. And many processors also use precious metal catalysts to control and/or abate harmful or unlawful exhaust emissions for end-of-pipe applications, Regardless of how you use catalysts (or whether they take the form of monolithic structures, pellets, beads, or extrudates), you most likely depend upon precious metals refiners to reclaim the remaining precious metals from spent catalyst substrates and carriers.
The catalysts used in the refining process are typically referred to as “PGMs”—precious metals of platinum, palladium, and rhodium (although gold and other precious metals may also be used in some catalysts). The metals are used with a variety of carriers depending upon application; these include soluble or insoluble alumina, silica/alumina or zeolites.
Virtually all organisations processing hydrocarbon source materials depend upon precious metals refiners to reclaim the valuable metals from their spent catalysts. In addition to precious metal bearing catalysts, other sources of precious metals include process by-products such as filter cakes, papers, cloths, polishing filters, floor sweepings and protective clothing. However, many catalyst users may not be aware of the legal implications involved concerning effluent or atmospheric discharges at the refiners they select. Picking the wrong refiner can be a costly mistake. There are legal implications that you must be aware of when working with a precious metals refiner. They concern possible effluent or atmospheric discharges at the refiner’s facility since violations are taken quite seriously. Based on these concerns, choosing the wrong refiner could result in a costly mistake. The question is how do you go about choosing the right refiner?
There are many criteria to consider when selecting a precious metals refiner. Before that discussion, however, we should look at the various methods used to help maximise returns for your spent precious metals catalysts. Essentially there are three critical factors that the refiner can control which apply to virtually all precious metal bearing materials. These are sampling, assaying, and processing turnaround time.
To accurately determine the amount of precious metals present in materials for recovery three different sampling techniques are used. These are dry sampling, melt sampling and solution sampling. Each of these techniques offers specific advantages; determining the most appropriate sampling method depends upon the type of material being processed as well as its estimated precious metals content.
Fundamentally, the principle of sampling involves “reducing” large quantities of precious metal bearing material (as much as many tons) into small quantities (as little as a few grams). Samples are then extracted for analysis from different fractions and/or different stages of the resultant sub-lot. The sampling procedure begins by converting precious metal-bearing scrap into a homogenous mass so that molecules of precious metals and other constituents are evenly distributed. Results of sampling the homogenous mass thus represent an accurate ratio of the precious metals content in the overall matrix.
Melt sampling |
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In melt sampling, a carrier metal such as copper is melted along with the precious metal bearing material; the resultant molten metal is poured into ingots which are sampled at the beginning, middle, and end of the pour. Subsequent processing steps yield an extremely high degree of accuracy, with tolerance as close as ± .1 % between samples. |
Solution sampling |
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Solution sampling is used for precious metal bearing solutions, and is cost-effective as well as extremely accurate in determining precious metals content. This technique also involves achieving a homogenous dispersion of precious metals and other constituents to the molecular level with precision comparable to melt sampling. Multiple samples are also taken from different parts of the solution for further analysis. |
Dry sampling |
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Dry sampling is used whenever materials cannot be dissolved in solution or are inappropriate to melt either because of their structure, or because of the cost associated with melting vs. the possible return. Because it is difficult to achieve homogeneity dry sampling is more complex and potentially less precise than melt or solution sampling; in fact, this method requires more judgmental skills than the others. Materials for dry sampling are homogenised, generally by grinding large pieces into smaller and ever finer particles. The material is allowed to free fall in a stream into a crosscut, timed automatic sampler. Representative samples are also taken periodically and sampling accuracy is typically ± 2%. Precious metal-bearing catalysts are usually sampled with this technique. |
Some precious metal bearing materials can be sampled only by one of three methods described; however, others may be processed by more than one method depending upon variables such as the estimated value of their precious metals content, cost-effectiveness of using one method over another for highest possible returns, and practicality (a function of refining costs, materials value, and other factors). Because precious metal bearing catalysts are made in many sizes and configurations (pellets, beads, monolithic structures, and extrudates, for example), determining the best sampling technique is crucial to recovering the most value from your spent catalyst.
Accurate and repeatable assaying procedures, on the other hand, are dependent upon sophisticated instrumentation for measuring precious metals content of materials being reclaimed. A well equipped analytical laboratory utilises advanced X-ray fluorescence equipment, atomic absorption (AA) and inductively coupled plasma (ICP) emission spectroscopy, and also incorporates classic volumetric, gravimetric, and fire assay techniques. When all methods are used together they provide the most thorough and precise approach for determining precious metals content in spent catalyst materials, thus assuring you highest possible returns. In general, the specific techniques used for assaying are determined by the types of materials being processed.
The speed at which catalysts are processed - and their precious metal recovered (reclamation turnaround time) - is the third key factor of the “maximum return” equation. Logically, faster processing turnaround minimises interest charges a user accrues for leasing replacement precious metals to eliminate process downtime. It also avoids the necessity of purchasing PGMs on a volatile spot market for use in the timely manufacture of catalysts, allowing uninterrupted processing or production.
The costs for PGMs have been fluctuating wildly over the past few years, at one point reaching as high as $1100 an ounce for palladium, and up to $700 an ounce for platinum. Obviously these high costs add to the overall expenses for processing and production of virtually all crude oil by-products. While these metal costs have lowered since those highs, there has been an increasingly upward trend over the past year or so - another good reason to seek out a precious metals refiner who will return maximum value to you.
As prices for PGMs rise, recovery/refining processing turnaround time increase, and lease rates (the most common method for financing PGMs) move up, the stage is set for a classic profit squeeze. While any of these factors will decrease profits, the combination of all three can have a dramatically negative effect. At high PGM values users are forced to seek relief in a number of different directions. Since you are not likely to influence metal market prices, the next best place to turn is to your precious metals refiner. The refiner, at least, has some control over precious metals management, certainly as far as your returns are concerned.
Typically, precious metals used in catalytic processes–especially platinum and palladium–are not purchased on an outright basis by their users. Instead, they are held in a “pool account” at one of a number of physical locations where the metal is commingled with other owners’ or lessees’ metal. Owners or lessees of these metals “draw” on this material on an as needed basis or are provided with credit from a pool account from which to draw. From this pool users can request delivery of metals for incorporation into catalyst products.
Leasing PGMs for catalyst production is strictly a financial transaction where the user has no desire to purchase the metal but rather “borrows” it, the same as borrowing money from a bank. In the precious metals industry the practice is known as “leasing metal”, and it is strictly a financial mechanism with widely varying lease rates depending upon supply and demand. In fact, the rate fluctuation is substantially greater than borrowing money from a bank at a fixed rate, which is generally fairly constant and much more predictable. Most businesses can usually borrow money from lending institutions at one or two points above prime. On the other hand, metal leasing rates have been as low as 3% per annum to as high as 200%! That incredible difference is caused by supply and demand - nothing complicated.
In addition to leasing precious metals, there is another practice in the precious metals industry commonly referred to as “banking”. This is where owners of metals will “lend” them to institutions or other businesses who pay interest charges to the owners just as a bank would pay interest on dollar deposits. These institutions, in turn, lease out these metals to users as a method of generating profits. This practice does not appear to be too common with regard to PGMs employed by catalyst users but is more closely associated with metals speculating or accumulation for future consumption. For example, a speculator or consumer may purchase metal today but not require it physically for six or twelve months in the future. In order to defray some of the financing costs, they may “lend” this metal back to the market.
As to when to lease and when to buy precious metals, most users make that determination based upon their perception of prevailing lease rates and their trends over extended time periods. Also, many catalyst users prefer not to “own” precious metals since they do not want their costs to appear on their balance sheet as inventory or as a fixed asset; consequently they are willing to incur added expense by leasing. Typically, people who lease precious metals are not consuming them but instead using them to produce their products or having others fabricate them into catalysts. Since much of the precious metals in catalysts are recoverable, users get their metal back after the recovery and refining process.
Because of these operating practices, it is in the best interest of precious metal catalyst users to first, obtain the highest possible percent recovery for their precious metals and, second, to work with a refiner that offers fastest possible processing turnaround time so as to minimise lease charges.
Typically it could take as long as three months to have a new catalyst fabricated and just as long to have the spent catalyst reclaimed - a period of six months during which new metals may have to be financed. Here’s a simple - and realistic - example to illustrate this point: Take a 40,000 Ib. shipment of 0.6% platinum catalyst with platinum at $650 per ounce, at a lease rate of 12%. Leasing the metal contained in this material would cost in excess of $5000 per week. As a result, if one refiner has a six-week turnaround and another a twelve-week turnaround, the additional six weeks would cost more than $30,000 in lease charges.
Variations in lease rates are governed by worldwide production for primary (mine production) sources and the immediate, local availability of physical metal. For the catalyst user, PGM lease rates usually represent a significant cost, since “new” precious metals are often financed while spent catalysts are being recovered and refined. By providing faster spent catalyst reclamation turnaround times, substantial cost savings may be realised, in many cases translating into thousands or hundreds of thousands of dollars each year. These are serious numbers of course, and because of this, there is a clear trend in industry towards establishing independent asset recovery programs (or departments) functioning as profit centres for the recovery of precious metals within an organisation.
Now that we have covered many of the financial issues with regard to recovering and refining spent catalysts, you also must consider some of the legal implications associated with processing procedures at your precious metals refiner. In addition to choosing the wrong refiner with regard to maximum recovery and fastest possible turnaround, choosing the wrong refiner with regard to possible effluent or atmospheric discharges could become even more costly.
When selecting a refiner, you must not only be aware of how your materials will be processed, but those of the refiner’s other customers as well. It should be your responsibility to determine how any solid, liquid, or gaseous by-product is handled at the processing facility.
Ideally there should be no hazardous waste materials shipped from a precious metals processing facility. Some plants will ship them under approved procedures and conditions; you should learn the difference. In addition, no pollutants should be emitted before, during, or after refining. Exhaust air quality should be managed with state of the art pollution control systems. The process water evaporation procedure should eliminate all causes of pollution. While each of these functions is fundamental, there are many hidden pitfalls surrounding them with regard to environmental compliance.
Requesting detailed documentation on environmental law compliance may also help you determine that the refiner you select does not violate any applicable law or regulation. In the United States, the Superfund Act addresses the direct responsibility of customer and refiner. This law mandates that both the company that is the source of the materials for precious metals recovery and the precious metals refiner share in the “cradle-to-grave” responsibility, as well as futureliability for the proper treatment and/or disposal of any materials. When choosing a precious metals refiner, make sure that the one you select does not violate any applicable environmental laws or regulations. Request that the refiner supply you with copies of all detailed documentation relative to legal compliance. Essentially, the environment must be protected to avoid serious financial and legal consequences and the refiner’s violation of environmental laws or regulations could result in heavy fines and legal costs to you.
One way to determine if a refiner meets these criteria is to check its use of appropriate pollution abatement technology such as afterburners, bag houses, wet scrubbers, and liquid effluent neutralising equipment. Also, evaluate the refiner’s approval status with all applicable agencies at local, state, and federal levels. Most precious metals refiners will be pleased to provide copies of all required documentation which could include permits under the Clean Air and Water Acts and prove that the company qualifies as a bona fide precious metals refiner as specified in the preamble to the Boiler and Industrial Furnace (BIF) Rule and its amendments.
As pointed out at the beginning of this article, Asia is poised for unprecedented growth, with increasing production of hydrocarbon-based products and materials of all kinds. Consumers are hungry for mass market products that are common to most western countries and it is just a matter of time before many Asian countries’ GNPs accelerate even greater than today. In other words, there is going to be need for more hydrocarbon/ petrochemical-based materials as time goes on. Obviously that means more refining, more catalysts, more precious metals, and more refining of recoverable precious metals.
While there are many variables associated with recovering precious metals from spent catalysts, you should be aware that they are generally interrelated. You must consider all of them when evaluating a precious metals refiner for your requirements. It is most important that you adhere to the full compliance issues concerning environmental regulations. All else being equal (i.e., highest possible returns and fastest possible turnaround time), environmental violations at your refiner could create problems for you. In fact, you should consider your relationship with your precious metals refiner as a “partnership”. It must be mutually profitable, and it must be based upon trust and fair treatment. To achieve - and maintain - this kind of relationship, consider the issues discussed here when evaluating and selecting a precious metals refiner.
To insure that your relationship with a precious metals refiner will be mutually profitable and based upon trust and fair treatment, you must address several key questions. Perhaps this checklist will help:
Hydrocarbon Asia thanks Dr Robert Jacobsen, Vice President of Technology, Sabin Metal Corporation, East Hampton, NY, U.S.A., for contributing this paper. Dr. Jacobsen has an extensive background in the precious metals industry, starting from the mid-1960s when he served at Sprague Electric Company in research, development, engineering and production of precious metals and ceramic materials and electronic components. Dr. Jacobsen joined Sabin Metal in 1980 where he has served in a variety of technical and management positions, including general manager of the company’s Scottsville, NY (Rochester) refining facility. Over the years Bob has been involved in development and production of pyro-metallurgical and hydro-metallurgical activities for recovering maximum values from recyclable precious metals. Bob graduated from the University of Rochester with a B.A. in chemistry, a Masters Degree in Education from Columbia University, and a Ph.D. from Clarkson University.
Email: rtj@sabinmetal.com; Tel: 585-538-2194.
HA: We want to provide our readers with an overview of where the catalyst refining business is today. From a technical perspective, what can we discuss with regard to the latest advances and process developments?
RJ: I think the latest development would be that the Sabin Williston, ND plant will be the first one that we know of that has the most complete sampling, pre-burning, and melting facilities on one site.
HA: What’s the advantage there?
RJ: Advantages are that you have the old cliche of one-stop-shopping and you don’t have the transportation costs going from a pre-processor such as is common in the industry and then re-transporting it to a refiner. The transportation itself adds significant costs to everything. But also the advantage is the pre-processing, the burning can be done to fit the particular needs of the smelters because it’s owned by the same people and we know what needs they have rather than adding a third party to it. Of course the most important thing in the petroleum catalyst business is the sampling. The sampling set up at the Williston plant is unlike most others in that it has size adjustment (intermediate to the various sample spreading techniques) which can - and does - provide a more precise determination of what is in your catalyst supply.
HA: How does the Williston refining facility work with regard to Asian customers?
RJ: Their spent catalysts are ocean shipped. It’s convenient to ocean ship spent catalysts into a Canadian port, thereby eliminating the harbour maintenance fees that is put on in American ports. And we can transport over land to a port of entry right in the northern part of North Dakota called Portal. A very convenient and efficient way to get the material to the Williston plant.
HA: As an Asian customer, would that be more advantageous for me to do this vs. finding a precious metals refiner in China? For example, a local Asian refiner is not likely to have the technological capabilities to extract anywhere, near the precious metals values out of the materials.
RJ: The pre-preparation facilities will probably not be there, which will make the sampling more difficult to do and then the sampling devices that are used will probably not have the fully automatic samplers that are necessary for precise sampling. It’s quite an investment to install these kinds of samplers; for example, the Williston, ND sampler cost a million dollars - and that does not include the pre-burning kiln or the smelter.
HA: Does ocean shipment add that much cost to these kinds of transactions?
RJ: Ocean shipment is really quite economical. We find that there’s very little difference competing across the ocean or across the continent. And that’s true of both the Atlantic and Pacific.
HA: What about other technological aspects of Sabin refining here vs. anywhere else?
RJ: The main aspect is that there is no transhipment to another refiner. We take it directly from the generator or the oil/chemical company through to fine palladium, or other fine precious metals to be redelivered to the customer’s factory. We do not have to tranship to an outside or second refiner for a different step. We go right through to the pure PGM stock.
HA: What about the issues of liability and indemnification? In Asia they probably don’t have the kind of laws we have here - the kind of environmental laws in terms of indemnifying a customer with regard to an effluent discharge and atmospheric discharge at the refiner’s.
RJ: One of the problems with Asia, is that in many countries - although the laws are on the books - the laws don’t always seem to be followed. The laws in China are quite stringent, but that is not to say that they’re applied the same in the various regions of China. From the environmental standpoint, that’s another major advantage to Sabin because, right down to the disposition of the smelting slag, we control it. The smelting slags are sent to our fully permitted milling facility in Cobalt, Ontario, Canada, and the last bit of metal is extracted and then the resulting residues are deposited in a fully permitted facility. In Canada the laws are quite distinct from the U.S. If material is placed within a facility that’s permitted, the liability ends. There is no SuperFund in Canada. That doesn’t mean that someday there won’t be, but there is no liability after proper disposal. And of course Sabin is fully insured for environmental impairment as well.
HA: What about the issue of catalyst costs in Asia vs. the U.S. with regard to, for example, the leasing rates. Obviously market prices for the metals are the same all over the world, but are there differences between what it will actually cost someone (an operator in Shanghai, for example) to acquire and perhaps inventory catalysts vs. what it might cost somebody in Texas.
RJ: From what I understand as long as the material is returned to the place of origin, the costs are the same. If, however, you have platinum group metal which is shipped from its place of generation and then the metal that’s refined does not return to it, there may be taxes involved. But I’m certainly not an expert enough to predict what they are. Or vice versa, for instance: I believe there’s a strict set of taxation guidelines that even prohibit movement of platinum in and/or out of China. There’s also prohibitions on the importation into China of precious metal residues and ashes (I don’t quite understand why). They ban the importation of silver ashes or other precious metal ashes or resins. With regard to technical advances that help assure highest possible returns of precious metals in spent catalysts, there are three places to emphasise with regard to our capabilities: 1) Sampling; 2), the closed circuit that Sabin has from receipt to pre-processing, sampling, smelting, refining and slag disposal, without having to go to an outside source or incur liabilities or costs; and 3) in general the environmental affects of that same closed circuit.
HA: Thank you.
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