How to ensure that your refining returns match your expectations.With the volatility of metals prices, jewelry manufacturers are paying even closer attention to their refining returns. If you’re relying on returns for cash flow or counting on the metal you get back for future production, the last thing you want is to fall short of your expectations.“Due to the higher metal prices, customers have become more sensitive when they compare assay differences to their initial expectations,” says Jack Brill, supply chain manager for Johnson Matthey PGM Refining at the company’s West Deptford, New Jersey, refinery. The sharp jump in metals prices means that a 1 percent difference between what you expected and what the refiner found could translate into tens of thousands of dollars. “The value is so much greater,” Brill adds. “And it points out even clearer that you have to tightly control and collect all precious metal-bearing waste you generate.”
The settlement on a lot is based on results of sample tests conducted before the lot is refined. The better you understand the metals analysis methods used to estimate purity and composition, and the more proactive you are about knowing what actually went into your lot, the more effectively you’ll be able to manage your financial expectations.
Preparing the Sample
The first step in determining the value of your refining lot is preparing a sample. In a melt, there are three methods that can be used to do this: drill, pin, or dip. To obtain a drill sample, the refining lot is melted down and formed into a bar. A small section is then drilled out of each end of the bar and used as the sample. For a pin sample, the lot is melted down and a glass tube is dipped into the molten metal to draw the sample, which then cools into a pin shape. For a dip sample, the lot is melted down and a small amount is collected and poured into water to create a granulated sample.Obtaining a sample may seem simple, but it is a critical step in the analysis process. “All of the analysis technologies require one thing—a contiguous, well-blended sample,” says Daniel Ballard, national sales manager for Precious Metals West/Fine Gold in Los Angeles.
Refiners and independent assayers may have their own preferences for which type of sample to use, but the consensus is that the pin and dip samples tend to be more representative, as they gather a more thorough mix of metals while the sample is still molten. As the mix cools into a bar or ingot, there is a greater chance that the elements present will separate, making it difficult to ensure that the sample is representative of the entire lot. That said, a drill sample may be appropriate for a smaller lot, such as less than 100 oz., suggests Ballard, because the larger the sample, the more likely it is to begin to separate as it cools into a bar.
At Academy Corp. in Albuquerque, New Mexico, a drill sample is taken from both the top and bottom of the bar to improve accuracy, says Matt Spellman, general manager of refining, but the company uses dip samples if requested or for larger lots of 10,000 oz. or more. Johnson Matthey always uses pin sampling when melting platinum group metal-based (PGM-based) materials, says Charles Cerveny, analytical services manager for Johnson Matthey’s Catalyst, Chemical, and Refining site in West Deptford, New Jersey.
ANALYZING THE SAMPLE
Once the sample is prepared, it’s ready to be analyzed for content. A variety of factors go into determining which analysis method to use on a particular lot—everything from the metals present in the sample and their concentration to the preferred time table to what instrumentation refiners have available. In most cases, refiners will have a preferred method or methods of analysis that they employ faithfully. Ask them which method they will use to test your lot, so you can better understand the steps taken to arrive at your return. “The method used to analyze the sample will not affect the customer’s cost, insofar as the refiner’s fees,” says Brill. “Although several methods can generally be used to complete the analysis, if followed properly they should yield statistically equivalent results. The overall value returned to the customer should be very close, no matter which effective method is used.”
Summaries of the most common metals analysis methods used, and facts that you should know about each as a manufacturer, are included below.
Gravimetric analysis. When a sample is thought to contain several metals, it will often be put through a series of fire or chemical assays, with each step removing a different element until only the gold, silver, platinum, or palladium content remains and can be determined by weight. This is the most common method of analyzing precious metal content for settlement purposes used in the jewelry industry. The two types of gravimetric analysis are fire assay and wet chemical analysis.
Fire assay. The most accepted test for samples that are predominantly gold or silver, the fire assay method involves wrapping the sample in lead foil and heating it in a furnace to oxidize the lead and any other base metals into a slag, leaving behind a gold-silver alloy. The alloy is placed in nitric acid to dissolve out the silver. The residue of pure gold is weighed to calculate the gold content of the sample.
Wet chemical analysis. Wet chemical analysis. Used for a variety of materials that have a mixture of elements, including base metals and PGMs, wet chemical analysis can provide very accurate values when performed by skilled chemists. “The analysis proceeds through a series of chemical reactions that can isolate the individual PGMs from the rest of the sample contents so they can be weighed individually in their pure elemental form,” describes Cerveny. Often a single sample may be put through a series of such tests, including a combination of fire assay and wet chemical, depending on how many metals (precious or base) are thought to be present.
Both fire assay and wet chemical analysis can be time- and labor-intensive—taking up to a week at times—because of the various steps involved.
Inductivity Coupled Plasma (ICP). The ICP method involves converting the sample into a mist form and injecting it into a plasma flame. Any solids in the sample break down into atoms, which are analyzed with a mass spectrometer or optical detector to determine the amount of each element present. The test is faster than gravimetric analysis and can determine all of the elements present in a sample in one shot, as opposed to isolating one element at a time. “Operated properly, with a set of standards that has been carefully prepared and verified for accuracy, ICP approaches the accuracy of gravimetric analysis in many instances,” says Cerveny. “It has the significant advantage of being able to determine all elements simultaneously, once they have been put in solution, in about 15 minutes. However, if the ICP is not set up properly…errors can be generated.”
X-ray Fluorescence (XRF). In this method, the surface of a sample is bombarded with X-rays, which causes the components to give off their own radiation in particular wavelengths. The XRF machine detects the radiation and identifies the metals and amounts present based on the spectrum of emitted radiation. Because its accuracy is limited when working with samples of differing alloys, and results can be affected by factors such as the surface of the sample, XRF is generally used as an initial step to discern which elements are present as opposed to determining the value of a settlement.
At some refineries or metal testing facilities, samples will be analyzed first with XRF for a quick ballpark estimate, and then re-tested with another, more precise measurement. “We offer customers a quick estimate of the metals present in an X-ray test, then use a longer method such as fire assay,” says Gary Daghlerian, president of Daniel & Son Assayers in Los Angeles.
The main challenges of using ICP and XRF is that results are derived by comparing them to a known standard, as opposed to having an isolated amount of pure material to weigh, such as in gravimetric analysis. That means the instruments need to be calibrated regularly to ensure they haven’t drifted. “You’re pretty much relying on a source of accuracy that’s based on the confidence you have in that standard,” says Cerveny.
As with any business relationship, trust is a key element in the assay process. In some cases, customers simply send their refining lots with no questions asked, but in others, a carefully outlined procedure is in place to ensure that both customer and refiner are satisfied that the results of the assay accurately reflect what was in the scrap bucket.For example, in most cases, Academy’s customers rely on Aca-demy for the assay. If asked, the company will “split” samples with customers, who will have their portions tested themselves, Spellman says. If the results of the two tests differ by a certain margin, they’ll turn to an “umpire”—an independent assayer that both parties have agreed on, usually in advance.
In Johnson Matthey’s case, the company will also split a sample, and the results of such parallel tests are presented at the same time, says Brill. Exchanging samples or using a third party on occasion is a way to develop a sense of security and trust, Brill adds. “I think customers should take advantage of this the first few times they work with a refiner, and then do it occasionally at random.”
In addition, you may also send a representative from your company, or an outside observer, to watch the process at the refinery. Most refineries are open to accommodating their customers in this way.
MAKING THE MOST OF YOUR LOT
As the saying goes, garbage in, garbage out. The lots that jewelry manufacturers send in can vary greatly—mixtures of different alloys of gold, silver, and platinum; base metals from grinding and buffing processes; and the occasional gemstone. The more complex your lot is, the more time-consuming the testing will be, and the more likely your rough guesstimate may be off be-cause something unexpected is hiding in your bucket of scrap.Here are some tips for helping to ensure that you know what you are sending to your refiner:
Don’t mix metals. The bigger mix of base metals you have, the harder it may be to achieve an accurate result. Start by keeping gold and PGMs separate. If you have the option of separating gold by karat quality and keeping your platinum and palladium separate, so much the better. In addition, combining white gold, rose gold, and green gold will bring a variety of other elements, including copper and zinc, into the mix, making the testing that much more complex. So the bottom line is, separate as best you can.
Waste not. Buffing and grinding materials may add up to a greater percentage of your scrap than you expect. Try to isolate this low-grade scrap from your clean scrap, and have the refiner test it separately rather than having it mixed in with your higher grade gold, PGMs, and silver.
Know the weight. When you send in your lot, take the time to write down the weight for your own records. In some cases, “people trust us and they just give us a bucket, but they don’t know the weight,” says Amy Hlad, sales manager at Academy. “We don’t melt anything until there’s agreement with the weights,” she says, adding that Academy photographs lots when they come in as a record-keeping measure.
Track your inventory. One of the best ways to estimate what you’ve got contained in your lot is to simply keep close track of your own inventory, Ballard suggests. If you bought X ounces, sold Y, and have Z in stock, and have fully accounted for metals held at outside locations (such as fabricators, on consignment, and in salesperson’s lines), the difference should be contained in your scrap. “Should” being the operative word. Poor ventilation, a careless step, or sloppy clean-up can let precious gold dust slip through your fingers, so keep a tight lid on your facilities and procedures to reduce this possibility. “It’s not just crucibles and torches and expensive analysis equipment,” says Ballard. “The other essential tool in all of this is a simple calculator.”
Know your history. Keep close records of past refining lots to get a sense of patterns. “By working with one specific refiner, you can create a history and measure against previous samples,” Hlad says.
Ship safely. When shipping to a refiner, Brill advises manufacturers to “package your scrap like it’s the valuable material it is.” Use hard, sealed containers that are rated strong enough for the weight they will hold. Also, check the rates of different armored companies to transport your scrap to the refinery. “It’s more expensive than a common carrier, but much better insured,” says Brill.
The more you understand about the process of metals analysis, the better you’ll be able to work with your refiner and accurately predict your return. “At the end of the day, especially now when the pressure is on, we want the best result,” says Ballard.
© 2008 MJSA Journal – October 2008