6 Tips for Refining Returns
13 Minute Read
When it comes to your shop, cleanliness is next to godliness. At least it should be when you're dealing with high value materials. But whether you're a neat freak or fall a little more on the slob side, it's imperative that you have a system in place to keep track of and collect all of the materials you work with in your shop. There's nothing worse than learning that you've literally been flushing away thousands of dollars worth of material down your sink.
6 Tips for Refining Returns
Luckily, refiners are in the business of helping you collect and refine those precious materials. And this month, several experts in the industry have offered up their advice on the best things you can do not only to collect all of the high value waste in your shop, but also how you can choose a refiner that will help you get the best return on your materials.
Start at the Beginning
The road to good returns starts in your shop. Although refiners have been saying it since the dawn of the trade, it never hurts to be reminded to separate your scraps. This isn't just a good practice that helps your refiner process your materials; it also helps you keep better track of all of the materials leaving your shop.
You should aim to separate your materials both by metal and, in the case of gold, by karatage. The reason to separate your karated gold is so that you will have a better sense of what to expect for your return. "Write it all down and keep a record," says Daniel Ballard of Precious Metals West/Fine Gold in Ontario, California. But there's no need to ship the gold karats separately. "Some refiners will charge for one karat versus another, but most of the time, it's all going into the same batch, so throw it in together and send it off," he says. "Just make sure you keep your records, and that the results match your expectations."
When you're separating your metals, it's also important to keep out the materials that shouldn't be refined. "Everything you can do to ensure you've removed as much of the non-precious metal as possible is going to make your expectations as accurate as possible," says David Farnum of Pease & Curren in Warwick, Rhode Island. "If someone sends in a watch, taking off the glass and any stainless steel pieces helps the refining process."
Once you've collected and separated your precious metal scrap, one of the easiest ways you can calculate your expected return is to melt scrap and take a sample. "It's easy to get a thief [a pencil-size Pyrex glass vacuum tube] and immerse [it] into the molten metal," says Ballard. "It'll give a more accurate sample than by drilling."
This isn't something that's limited to larger companies with casting and melting equipment, Ballard adds; smaller companies can purchase an inexpensive melter or, if they send out their casting, ask a subcontractor to do it for them. "Leverage your resources, whether they're under your roof or not," he says.
When you have your metal sample, send it to an independent assayer not affiliated with your refiner. "That way their only vested interest is in giving you accurate results," says Ballard. Then you can see if the results from your refiner are close to your assay number. "Sometimes if the numbers are off by a fraction, refiners will just go with the assay."
Look Beyond Scrap
Many jewelers know the value of refining their metal scraps, but it's important to remember that anything that touches metal in your shop could potentially be refined.
"Jewelers should go through a process flow: how they get the precious metal, where it is formed, what different things touch it, and how metals leave the shop," says Viren Pathare of Heraeus in Newark, New Jersey. "Jewelers should look at every process and anything that may have come in contact with precious metal," he says.
"Virtually anything and everything used in your manufacturing process can be turned in to a refiner for recovery," says Dan Kapler of David H. Fell & Co. Inc. in Los Angeles. "This includes sandpaper, buffs, brushes, rags, polishing wheels, filters, sludge, carpet, flooring, dedicated work clothes and shoes, and even the baby wipes or paper towels you use to wipe your hands."
Farnum agrees on the importance of looking everywhere in your shop for potential returns. "Anywhere dust and air can go, precious metals can go when you're working at a bench," he says. "Look at sink traps, air filters, carpets, and even air conditioning return vents."
"Nothing from your shop should be thrown out before you check it for precious metals," confirms Cynthia Hewison of Umicore Precious Metals in Attleboro, Massachusetts. "Keep anything and everything, and eventually when you accumulate enough of it, send it in for refining. You'd be surprised at how much you can get back."
But before you toss all these materials into a drum to send off to the refinery, there are some additional steps you can take that will further help your bottom line.
Since many refiners base a part of their cost on the weight of the incoming materials, "it's best to let any sink waste sludge dry out before you send it in," recommends Farnum. In addition to the lower weight costing less to ship and refine, drying it out will also give you a better sense of the return you can expect.
Also, when cleaning up your shop to ready materials for refining, you're likely to have materials you don't want to refine caught up in your sweeps. "You can use a high power rare earth magnet to detect iron, steel, or other ferric content," says Kapler. "Cover your magnet with a piece of copy paper so it doesn't become cluttered with metal shavings. You can mount it on a stick for fishing into tight spots, or attach it to a small gem scoop with sharp edges for use in cleaning out collection trays. You can even tie it securely to hang from brooms and brushes when sweeping."
If you don't have a floor that can be swept, vacuum. "If you have carpeting, invest in a vacuum that uses a water filter because it helps eliminate dust, [it] allows for heavier particles to separate from lighter ones and sink to the bottom, and its fast agitation helps separate buffing compounds from some of the metals," says Kapler. "After vacuuming, allow materials in the tank to settle, and then skim any material off the top and dispose of it. You can pour the remaining slurry of metals and dirt through a fine mesh filter or into a container to evaporate."
And if you're worried that you may be missing something in your shop, contact your refiner. Many will offer to do an audit of your facility. "We can come in and spot any potential problem areas," says Farnum. "Before scrap is melted, we can do a spot check to help determine if the customer is doing a good job in separating materials. If we spot something sorted incorrectly, we'll let you know so you can adjust your process."
Once you have everything cleaned out and sorted, "don't wait to send it in," says Pathare. "Collect on a regular basis, depending on your size and the value of the materials. Work with your refiner to determine lot size minimums." Once you have the minimum, ship it out for refining.
"Refiners will base the value of the precious metal content on the current price, which is always fluctuating," Pathare explains. "If you do it on a regular basis, the price differences are regularized." In addition, he says, sending your scraps in regularly will give you the best sense of the amount of metal you're using: "If you wait two or three years, you lose that knowledge."
Do Your Research
Before settling on a refiner, it is imperative that you do your research. "Make sure the company you're using is financially strong," says David Siminski of United Precious Metal Refining in Alden, New York.
"Refining is not FDIC-insured," he says. This is why it's important to know that the company you're sending your precious metals to is financially sound. While it's no guarantee that a refinery won't go bankrupt, Siminski adds, "make sure your refiner has been around and can handle the ups and downs of the financial marketplace.
"Also," he continues, "find out what associations they belong to and what certification programs a refiner has in place." There are organizations such as SCS Global Services, the Electronic Industry Citizen Coalition, and the Responsible Jewellery Council that will certify refiners. They have stringent criteria that require certified companies to be both financially and environmentally sound.
Pathare concurs. "Choose a refiner who's been around," he says. "You also want to make sure they have robust assaying processes and are transparent in their operation. Anyone can just quote a number. You want someone who's been doing this for a while, because they wouldn't still be around if they didn't have robust processing procedures."
In addition to being financially sound, the refiner you choose should be environmentally responsible—especially since hazardous materials are involved. "If a refiner did something environmentally unfriendly and went out of business, if cleanup is then necessary, the government can go to the refiner's customers and make it their financial responsibility to clean up the property," says Josh Michaels of Metallix in Shrewsbury, New Jersey. "This is why responsible refiners will talk about their pollution control equipment and how green they are. We're very much aware of our responsibilities and liabilities and how what we do could affect our customers."
And don't be afraid to ask if you can visit the facility before sending in your materials. "We welcome customers in," says Farnum. "They can take a tour and see how their lot is being processed."
It's also important to know a refiner's policy regarding who owns the scrap and when the title transfers. "Sometimes the title transfers to the refiner upon receipt of the scrap," says Michaels. "This doesn't matter too much until there's a problem and the jeweler asks for their scrap back. The refiner can say no because they own it. [Other times,] jewelers retain ownership until the refiner pays them for the lot. Either way, it's important to know your rights."
Finally, when choosing a refiner, it's always wise to first make sure it can handle hazardous materials, and then research related state and local laws. California, for instance, considers sweeps to be hazardous, and a California-based company that ships its polishing sweeps to an out-of-state refiner can be fined. "It doesn't happen a lot," says Ballard, "but it's possible." Check your local regulations regarding handling and shipping, as well as those where your refiner is based, to avoid any unpleasant (and possibly expensive) surprises.
Understand the Fees
In addition to making sure the refiner you choose is financially and environmentally responsible, it's also important to know what your charges and fees will be.
"Everyone has different fee structures," says Siminski, and those differences can make a direct comparison difficult. To make sure you're comparing apples to apples, he says, look at the bottom line and read the fine print: "Never assume you're being paid for all the precious metals contained in your material. Make sure everything is spelled out."
Kapler agrees. "Get your settlement terms up front and in writing before you ship out your first lot," he says. Also, beware of hidden fees. Your refiner will have a lot of legitimate fees (processing, assay, hazardous waste, etc.), but transparency is the key. Everything should be listed clearly for your review; if you don't know what the fees are for, ask the refiner to explain.
Also, ask about the return percentage, which is the percent of your fine metal that will be paid to you. "This is often the first question jewelers ask: What do you pay?" says Kapler. "But beware of simply going with the highest number, as it's not always going to get you the highest return. Any precious metal business entity can promise to return 99.9 percent of the value of your metal scrap, but if their assays (or estimates) of the fine content are low, then the promise of a higher percent return can be misleading. The refiner with the lowest settlement rate might well end up yielding you more of a return on your metal than the party with the higher quote."
And, as with anything in life, "beware of any quote that sounds too good to be true," says Conor Dullaghan of Ohio Precious Metals in Jackson, Ohio. "It may be in your best interest to keep looking."
Ship It Securely
Before sending off any material to be refined, check with your refiner's shipping department for containers and specific instructions. "See if they have any instructions in terms of packaging or labeling," says Dullaghan, and make sure you include detailed instructions in with your lot.
"Let us know if you have any special requests, what's contained in the lot, how many metals you want it tested for, and which metals," he says. "Provide as much information as possible."
In addition to any special instructions, "communicate the estimated value of your scrap," says Kapler. "And always include your detailed contact information."
While some refiners will take care of the freight costs and insurance, it's important that you have a good understanding of the company's shipping insurance program. "If there's a problem, you want to know how long it will take to get paid," says Siminski. Also, customers will often have to follow certain rules to obtain the insurance coverage; make sure you're aware of and follow those rules.
And insurance is important since many couriers will not cover shipments of precious metals. "It doesn't matter what value you put on the package," says Hewison. "If you incur a loss and don't have separate insurance, there's a good chance your courier will not cover the loss."
When packing up your shipment, place clean, dry scrap in clean, sealable containers after enclosing it in tied double plastic bags, recommends Kapler; this will ensure against loss in case of a rupture during shipping. Also, he says, "because filings stick to everything, keep them separate in a metal filings/scrap bag." He advises against using sealable baggies or securing bags with tape, as smaller metal particles can catch on the bag's lip or get stuck to the adhesive.
In addition, "refrain from using any words that might draw unwanted attention or highlight the value of the contents such as 'gold scrap' or 'precious metal'," says Kapler. "You can abbreviate your company's name as well as that of the refiner, so your package doesn't hint as to its contents."
When all of that is done, "weigh your refining lot before shipping and report it on the packing slip," says Kapler. "If the received weight shows a variance, the refiner should contact you immediately before they proceed with any processing."
In the End… it all Boils Down to Trust
At the end of the day, it all boils down to trust—not only because the refining process involves high value materials, but also because those materials are destroyed in the process. "As a refiner, the worst conversation is to have to tell a customer that we destroyed their jewelry and we don't know why it doesn't meet their expectations," says Farnum.
And if you get your return back and it's less than what you were expecting, don't be afraid to call your refiner and ask why.
"Anyone can make a mistake," Dullaghan says. "When my phone rings, my first assumption is that we may have screwed something up," he says. "So I'll say let's look at the data and talk about it. We photograph everything so we can go back and look at footage and see if we made a mistake. We always try to do the right thing."
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