Precious Metal Mentality
November 7, 2018
Metals price volatility. Owning versus leasing. Insurance and liability. Environmental concerns. The complexity of international shipping. Lengthy payment terms. Complicated contracts.
As if the oil refining business didn’t have enough to worry about … your company now has a full turnaround of a unit containing precious metals catalyst coming up and you have all of the above to contend with as well.
Many responsible parties around the world believe that the first decision to be made is whether it would be best to send the catalyst to a precious metals refiner or simply sell it outright by the kilo. When you get past all of the ‘fake news’, REFINING is the only smart choice.
The problem usually begins when someone assumes that they could sell the catalyst by the kilo to a broker to “save money” or “save the trouble” of international shipping, etc. This is a huge risk, as brokers are offering 50 to 60% of the PGM value at best. Refining, including international shipping and all costs, still returns a net average over 90% on petroleum catalysts true precious metals value.
One metric ton of catalyst (2205 lbs.) is about $70K, so that means that selling to a broker by the kilo is the equivalent of losing between $28K and $35K on every metric ton you sell. In addition, many countries enforce a “Grandfather Clause” regarding the liability of a corporation indefinitely into the future. The bottom line: if you sell your catalyst to a company who disposes of it improperly, your company may still be responsible for the pollution fines, the clean-up, the lawsuits, etc.
Advantages of Refining:
- Net return after all costs typically over 90% of precious metals value contained
- Only requires lease or purchase of “make up” ounces for replacement catalyst
- With proper documentation and good standing, metal advance available
- Zero liability: fully insured from point of Sabin possession; certificate of destruction at finish
Disadvantages of Direct Sale:
- Net return after all costs typically less than 60% of precious metals value contained
- Assets sold at over 30% loss can trigger corruption investigation
- Replacement catalyst now require full new lease or purchase of platinum
- Unending liability: uninsured transport and final treatment; no traceability of proper environmental disposal
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 www.sabinmetal.com.
The Sabin Metal group of companies is celebrating their 75th Anniversary in 2020. Based in the United States and with sales/service offices around the world, Sabin is the largest privately owned precious metals refining organization in North America. Sabin provides customers with logistical support, precious metal financial services, pre-reclaim kilning and some of the most sophisticated facilities in the world for safely and responsibly processing, sampling and refining precious metal-bearing catalysts.