Smelter contracts

"IntroductionMost base metal mines sell their concentrate to a custom smelter. The two parties concerned therefore draw up a contract which would detail the conditions under which concentrate sales will take place. The contract will identify treatment and marketing charges (including escalations), deductions for metal losses in the smelter, pricing formula, timing of payments, penalties for deleterious elements, etc.An understanding of the smelter contract is important to the mineral processor, for it will determine how he operates the plant to maximize economic return.Description of Contract ClausesUsing copper concentrate as an example, the smelter contract generally contains the following three basic charges:I. Metal Deductions- as the smelting process does not recover all the metal contained;2. A Smelting Charge- expressed per ton of material to cover costs on the bulk material such as receiving, unloading, thawing in winter, sampling, roasting to drive off sulphur, smelting through the matte and blister stages to recover mostof the copper and precious metals;3. A Refining Charge- expressed per pound of copper.The following is a review in some detail of a number of clauses which could be considered typical of a treatment and marketing type of copper concentrate sales contract. Most normal considerations in an agreement could be covered by the following types of clauses.Terminology- covers definitions, units of measurement to be used (e.g. short tons, troy ounces, etc.), currency (Canadian dollars). The term ""unit"" may be defined - l OJo of a ton of concentrate, e.g. one unit of copper means 20 pounds of copper per short ton of concentrate."