Assay Sampling Protocols for Industrial Metal Scrap Valuation
Assay sampling protocols establish true dry weight and payable metal content, directly governing settlement values, working capital allocations, and lender borrowing base limits.
Splitting Limits
Meaning
Acceptable variance thresholds represent the maximum allowable difference between the buyer’s and seller’s assay results for a metal shipment. Establishing splitting limits is a standard feature of concentrate sales contracts to determine if a referee analysis is required. This mechanism keeps trade transactions moving by avoiding referee assays for small differences.
Tolerance Threshold
The limits are usually expressed as a percentage or a set weight of metal per dry tonne. If the difference between the buyer’s and seller’s assays is within the limit, the settlement is based on the average of the two results. This allows quick payment for most shipments.
The limit is adjusted based on the value and typical variance of the metal being traded. It ensures that the transaction does not stall over minor assay differences.
Dispute Protocol
If the difference exceeds the limit, the parties must submit the remaining sample to a referee laboratory. This independent test resolves the disagreement. The referee assay is final and binding on both parties.
Settlement Rule
The final price is calculated based on the referee’s result according to specific contract terms. If the referee’s result is between the original assays, it often becomes the final settlement value. This rule discourages either party from submitting extreme values during the initial trade negotiations.
It ensures a fair and balanced transaction.