Contract Details

The precious metals transaction and its governing terms and conditions are often confusing because of the unique details within precious metal refining contracts.

The typical life-expectancy of a precious metals catalyst batch is two to five years, so people in charge of purchasing and procuring PGM-related products and services will likely see one or perhaps two catalyst change-outs before they are promoted or move to a new job. It is therefore highly recommended that a program be developed and formalized in-house to preserve the historical data and specialized knowledge learned from every PM reclaim.

Here are just some of the contractual details that can drastically decrease metal value returns and/or increase costs:

Splitting Limits

Once the buyer and seller have their analytical results in hand, the next step is to compare the results with one another. This is known as the “exchange of assays”. The maximum acceptable difference between the sets of analytical figures is known as the “splitting limit”. If the assays are within the splitting limit, the average of the two assays is calculated and the money can change hands. If the two assays outside the splitting limit, a control sample is sent to a third party lab to act as “umpire” to settle the dispute. Standard industry practice on PGM catalyst calls for a splitting limit of 1% relative, but less-than-scrupulous precious metals refiners are trying to up this to 5% or even 10% relative. This splitting limit manipulation forces the compromise of huge amounts of money. For example, in a one million dollar shipment 10% relative would equate to US$100,000 difference between laboratory results…a clear indication that one lab is wrong. Watch your contractual agreements for the industry standard 1% splitting limit to minimize the amount of risk, and to help confirm the analytical accuracy by compelling two separate labs to reproduce each other’s results.

LOI or ‘Loss on Ignition’ Determination

A certain amount of the weight in each drum of catalyst is water, carbon, or occasionally remnants of solvents and other contaminants. For accurate calculation of PM content, it is necessary to know the weight of the actual catalyst alone. LOI samples are therefore taken, weighed and analyzed under carefully controlled parameters to volatize off all that is not catalyst. The percentage of weight lost is called the LOI. Understanding the correct methods and formulas to be used when calculating LOI will protect your best interest and guarantee full precious metal value is received.

Lot Size Limits

Limiting the total monetary value that is represented by each assay lot protects everyone. It is in no one’s best interest to have too much monetary value within any one assay lot, because standard deviation and repeatability must always be taken into account. Laboratory accuracy does not increase simply because more money is at stake. Make sure that your precious metals refiner creates a larger number of small-value assay lots (for example, $500,000 maximum) rather than a lesser number of large-value lots.

Penalties and Hidden Charges

Some PGM reclaimers apply penalties within the ‘fine print’ for powder content, carbon content or even miniscule levels of certain other elements. These penalty charges can exceed $40,000 per instance if the client is not well educated in such hidden risks, and the only way to be fully educated is to read your contract very carefully and seek answers to any and all questions.

The Take-Away

Make sure your precious metals end up with a responsible recycler, root out and eliminate the unethical and the wasteful, and forge global partnerships; allow for fair margins, invest in research and development; discard perceived limitations and challenge what is ‘normal’.

At Sabin, we believe that long-term wisdom and meaningful innovation is best for business, and as a result, it is what is best for the society of Mankind. If you’d like to learn more about this topic, or any of the other Sabin Metal Precious Metal bulletins, please visit us at

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