Advanced Chemical Blog

What do we mean by hedging? Basically, it means to offset your position to mitigate a risk. Merriam-Webster defines it as “a means of protection or defense (as against financial loss).”

Metal recovery is the perfect place to apply the concept of hedging. The settlement options we offer after recovering your gold, platinum, palladium, silver, and rhodium can protect you against inflation, rising gold prices, and costs of doing business. There are two settlement options you can use to hedge:

1.    Accepting physical metal as payment
2.    Transferring the metal to companies who fabricate your materials

Many manufacturers and electroplaters use potassium gold cyanide, a salt that gets added to plating baths which also contain gold. Rather than take a monetary settlement these companies may take their settlement in potassium gold cyanide. If you choose to get physical metal back instead of dollars, it can reduce your manufacturing costs. Taking a check and buying the same amount of gold when you need it will cost you more than the settlement amount if the price of gold has increased; returning gold to you eliminates the cost of buying that amount of gold later. Effectively, taking metal or PGC as payment is like investing in the metal, protecting (hedging) against increases in cost.

Another way to hedge is to do what we call a “metal transfer.” Physical metal is transferred to a company that you do business with, say a company that fabricates gold sheeting for you. All you need to do is pay them the fabrication fee to turn your metal into the products you’ve ordered. You don’t have to worry about buying gold on top of the fabrication fee so you’ve protected yourself against price fluctuations that make business planning difficult. In other words, you’ve hedged.

Hedging is a great option, but there are other options. You can place your metal in a pool account to be sold later at a higher price. The metal can stay in the pool account until you decide what to do with it. Let’s say the refining we do for you nets you 100 oz. of gold, and you ask us to put it in the pool account. Three months later, the price of gold might have climbed $300. You can then authorize us to sell it, and we’ll complete the sale within 24 hours. It’s a low risk strategy because it’s highly unlikely that the market will drop significantly within that 24 hour period. You can profit from the gold you’ve held.

At Advanced Chemical, we’re always happy to discuss the various options with you so that you can take the course of action that is best for your business. From hedging to pool accounts to using your gold to pay your fees, there are many ways you can reduce costs, protect against rising prices, and manage cash flow.

We had a visit recently from MJSA, the Manufacturing Jewelers and Suppliers of America. They’re planning an upcoming issue of their Journal around a “refining” theme and had a few questions for us. I think they liked what they heard and saw because they made a video of a melt after we showed them around entitled Refining 101.

The MJSA was interested in finding out more about what we believe to be a critical part of the refining process: representation, or “repping” for short. Advanced Chemical believes it is important for customers to participate in repping - to witness their material being processed -because it allows them to learn a lot about the refinery. Witnessing also helps reassure clients when they hand us their material.

All first-time visitors are given our “right to know” training before they rep or even enter the refinery because refining is hazardous. (Being the largest hazardous materials refiner in North America brings with it certain dangers.) They need to know that we ensure their safety and they need to be aware of hazards. The training takes 10 – 15 minutes, and then the client can safely walk through the refinery and watch their material being processed.

We start the repping process by sending them the shipping material and a security seal after they’ve notified us that they want to rep their material. The client packs their material and seals it, record the security seal’s number, notify us when they’ve shipped the material, and schedule a time to rep the processing. We’ll hold their order in our vault until they arrive.

We do not break the seal and check the weight until the rep is there to oversee the process. We record the figures and handle any differences we find.  For example, we once had a client leave a  hammer in the shipping container and it threw the weight off by a couple of pounds.

Another safeguard we provide our clients is the way we conduct our sampling procedure. We draw an assay sample during processing, which is divided into three parts: one for us, one for the customer, and a third sample, the “umpire sample,” to send to a third-party laboratory.  If there’s a discrepancy between our lab’s assay and their lab’s assay and we can’t settle the difference, the middle assay of the three will be used for settlement.

There are secondary benefits to repping. The customer now has the opportunity to learn about other processes the refinery is capable of performing that they might not have known. They learn about our acid digestion and cyanide strip processes, as well as our disposal capability. The latter is nice to know, because some of our customers send us hazardous material such as cyanide solutions or acids. By repping, the customer knows with full confidence that we properly dispose of hazardous materials (cradle to grave) after the valuable metals have been recovered. This gives our customers confidence, because as the generators of the hazardous waste, they are ultimately responsible for proper disposal under EPA regulations regardless of who actually disposes of it. Repping helps us our customers know that their hazardous waste will be handled professionally and ethically when they see our disposal systems and meet our full-time environmental and regulatory manager.

We encourage reps to ask questions about the process and we help them understand how they should segregate their material for a better return.  In addition to our refining operators, our lab personnel and environmental people are always available to answer any questions as well. Having that time with the refining experts is priceless, and we highly encourage our customers to spend time repping a sample to have the opportunity to understand the entire refining process better.

A frequent question we get goes a little something like this:

“I’ve got a bottle of rhodium that I’ve had for the past 10 years. Can I just dump it down the drain?”

Or,

“I need to get some gold and cyanide to you. Our guy will bring it over to you, okay?”

The answer is no on both accounts. The shipping of hazardous, regulated and non-regulated goods is quite involved. Know the rules before you ship. Rhodium, for example, is generally associated with acids. In the past, people would just dump it into their sweeps. From a purely legalistic standpoint, they may be okay, but that’s really not how it should be done. The problem is not only one of accountability but about the damaging effect improper disposal has on the environment.

Whether you are a jewelry or semi-conductor manufacturer, the first thing you need to understand is that responsibility for the safe handling, shipping or disposal of your hazardous materials lies with you, not the refiner or your shipping company.

Regulations from the U.S. Department of Transportation and the Environmental Protection Agency specify the gamut of dealing with dangerous materials: how long they can be stored, how they can be treated or disposed, whether they are an EPA-regulated item, what kind of containers they should be in, what materials can and cannot be shipped on the same truck with them, what information goes on the manifest — even what must be written on the placard on the truck transporting them. The details are quite meticulous.

Even before you ship, your building has to properly be identified by the EPA or your local governing body if you in any way deal with hazardous materials.

Advanced Chemical has a team of experts here who are always available to help you determine how to ship your hazardous materials. Granted, to a lot of small businesses, shipping hazardous materials properly can and do raise your expenses. While it’s true that the many different rules and regulations can be a pain to deal with, the trouble of following them pales in comparison to the nightmare we’ll all experience if something goes wrong as a result of improper shipping. The person generating the shipment can face serious fines for improperly shipping hazardous materials.

We go the extra mile to help each customer with understanding shipping for several reasons. It’s a measure of protection for you and for us. As a refiner, we have a number of regulations we must follow, so, if the paperwork isn’t right or the labeling is done incorrectly, we must refuse the material. Keeping abreast of existing and pending regulatory changes in the shipping of hazardous goods will save us all time and money.

Since our founding in 1972, Advanced Chemical Company has steadily built an outstanding reputation as a leader in the refining of precious metals for a wide variety of industries. The value of precious metals is increasing by leaps and bounds. Our processes include capturing what other refineries may overlook or destroy.

In our burn room, we recapture gold and other precious metals. After a mix is ball milled it will go into a sifter that works similar to a colander for pasta - the water flows out of the bottom and what’s left in the colander is the pasta. After a mix is sifted, what’s left up on top is basically metal that could not be pulverized, which is called oversize. Most oversize contains magnetic material - it could be stainless steel material that was part of the lot that was incinerated that becomes magnetic during the processing.  We take the magnetic material out, leaving the precious metal available for melting.

We can either melt the oversize immediately or store it to melt with another lot. Advance Chemical clients generally know what they’re doing and handle their oversize correctly.  Some know that most of the value may be in their oversize others may know there is only a trace amount of value. If they want to process it, we’ll process it. However, we take the time to look at the variables involved in processing their oversize to ensure that the processing cost doesn’t outweigh any potential return. If the cost is too high, the customer can store the oversize with us until they have a larger batch to make a more cost-effective melt.

Security for the storage of each oversize batch is essential. The oversize is stored in a sealed container with the client name and lot number. Records signify, for example, a specific oversize is seal number 751. When the owner returns, they can check that seal number and they know it has not been opened.  Each client can even provide us their own seal to further ensure the protection of their property.

Under no circumstances is a seal broken unless authorized by the customer. Rarely is the seal broken for any other reason than to process the oversize, although the customer may occasionally need to examine the contents for some reason. We never break a seal without the company’s permission.

Advance Chemical is not just the leader in the precious metals refining industry - we’re also the experts. Our ultimate goal is to satisfy each customer and exceed all expectations by continually improving upon our performance. Processing and storing oversize to retain the best value is only a small part of how we operate to assist our clients in protecting their bottom line.

Advanced Chemical prides itself on being one of the most efficient precious metals refineries in existence, but we are always looking to improve the ways in which we are able to serve our customers. One of the ways we have been able to improve our service for the manufacturers with whom we work is by more efficiently helping them recapture the gold and other precious metals used in their processes.

We work with a variety of manufacturers who use previous metals in their processes. For instance, electroplaters use Gold Plating solutions for decorative colors or electronic products. These solutions, when passing through filters and ion-exchange resins used during the process, capture traces of gold and other precious metals. That’s where our state-of-the-art burn room can make a difference: Our burn room allows us to recapture the gold and other precious metals trapped inside the filters and resins.

The incinerator burns off all of the organic material, leaving ash and metallics. Once the burn process is complete, any metals left will be emptied out of the incinerator tray and put into a ball mill. A ball mill is a very large container filled with about 200 stainless steel balls approximately 2-1/2 inches wide.

During the ball milling process, the metallic material from the incinerator is crushed into a fine powder. The powder from the ball mill is sifted into a drum where it is blended into a good mix so that a reliable sample can be retrieved. The material is sifted through a 70-mesh screen. The finer particulates fall through the mesh, leaving behind the oversize, which, if it still contains precious materials, will be melted in another furnace. Through that sample, Advanced Chemical will be able to determine exactly how much gold or other precious metals can be recaptured from the burn. It’s a very efficient process. The same process can be used for other materials that can be burnt, for example, a rug ,wood flooring, cloths, gloves, and any other burnable material from a jewelry repair shop or semiconductor fabricating facility. This process is known as “sweeps” within the refining industry.

We have one of the most efficient refineries in the industry. In the last year, we increased the capacity of our burn room tremendously, tripling the amount of material that can be burnt. Our burn room allows us to process our client’s materials with no cross-pollution or contamination quickly and reliably.

The biggest benefit to our clients, though, is our ability to process materials more quickly while still maintaining our high yields. There’s no backup because, with our increased capacity, we can process several client orders at once.

Advanced Chemical has always been committed to providing the highest quality services to our customers. We have a variety of gas and induction melters to meet the needs of our customers, and several months ago, we were able to increase our productivity and capacity by purchasing and installing a new melter in our facility. The newest member of the Advanced Chemical family is an Inductotherm 2500 Troy Ounce Melter, otherwise known as a tilt furnace.

The main advantage to induction is efficiency; we can do the same melt in less time. Induction also creates its own mixing current, whereas gas melting requires some manual stirring and mixing. When done correctly, however, gas melting yields the exact same result. We’re excited to add this technology alongside the methods we’ve been using since we started doing business and are pleased to say that the induction furnace won’t represent any sacrifice in the final yield quality that clients expect from us.

The efficiency of the tilt furnace offers a real advantage for customers with large batches who want to watch the melt process. We have an open-door policy at Advanced Chemical, so customers are welcome to come to the facility and watch the whole melt and sample process from start to finish. One of the primary benefits of the Inductotherm 2500 tilt furnace is its size. Precious Metal Refineries with only smaller furnaces at their disposal may have to split up the melt, adding time to the whole process.

When a customer with a large batch is watching the melt, we don’t want to take more time out of their day by having to do the process twice because only a smaller furnace is available. With this larger capacity tilt furnace, we can do large batches all at once, let the customer watch the entire process and take their samples with them in a reasonable amount of time. Our new tilt furnace allows us to better meet our clients’ schedules and needs.

We are very proud of our continued efforts to offer flexible solutions to our customers. We are excited about our new tilt furnace and the commitment it represents to explore new technologies that allow us to provide our customers with the most efficiency and the best possible end product. If you’d like to learn more about our new furnace feel free to email me at jantonacci@advchem.com.

Stay tuned next month for ‘Always Looking to Improve: A look at our new Burn Room’

As of this morning Advanced Chemical has power and phones again. That means we’re back up and running! Thank you for your patience as we waited through the repercussions of the storm.

If you have any questions or concerns, please feel free to contact us.

… but our utilities did not. At Advanced Chemical, the only impact that Irene had is a single downed tree, and even that didn’t damage anything as it fell.

However, we are impacted by the same utilities outages that most of Rhode Island are. We are currently without power and telephones, but have been told that crews are working around the clock to restore systems.

We are ready to begin work again as soon as our utilities are restored and we wanted to let all of our clients know that our facilities are still in the same perfect conditions they were in before the storm hit. We are looking forward to getting back to work soon and want to thank everyone who expressed concern during and after the storm.

On Friday May 6th CNN spent several hours in our facility.  Their focus was for a story on Precious Metal Refining and the applications of Gold in Electronics Manufacturing.   It was probably as much fun for us as it was for the reporter.   His original thought of refining was mainly confined to melts. He was astounded at all of the processing options available to manufactures when reclaiming material. He had no idea material like filters, flooring or cyanide solutions could contain gold never mind that the gold could be reclaimed! Things got better when we dropped multi-layered scrap into our Acid Digestion Kettles! The expression on his face was priceless while he watched the instant reaction as the material started to bubble and boil!

You can watch it too - click on this link and you can watch the whole thing. It’s about 3 minutes long and gives a terrific summary of the what we do. If you have any questions feel free to email me at Jantonacci@advchem.com

http://money.cnn.com/video/smallbusiness/2011/05/11/sbiz_gold_silver_refinery.cnnmoney/

You’ve heard it many times: “They cannot get all of the gold off your material through chemical stripping.  If you do not melt everything, you are getting short changed.” 

This simply is not true.  Ordinary clean base metal scrap will strip very well.  Any gold remaining after the process is usually less than 1 toz/ton.  This may not be the case when the material has plastic encapsulating plated areas or where the material has an oily film.  Encapsulated scrap should indeed be melted or shredded and stream sampled.  However, this is a small percentage of scrap from most customers.  As for oily materials, these can be readily handled with a degreaser along with multiple pass stripping.  The combination of these processes is very effective.

The major benefit of chemical stripping is drastically reduced processing fees.  For example, take a 2,000 lb lot of clean industrial scrap.

Melt fees @ $0.19 / toz =  $5,540  Vs.  Chemical stripping fees @ $0.95 / lb = $1,900

Typically, settlement times for chemical stripping are also much shorter.  On average, chemically stripped materials settle in 20 working days.  On the other hand, melting times are often out months.  Quicker settlement may be offered, but this will usually come with a hefty financing fee.

As with any refining quote, one should be careful to examine all costs.  It is not unusual for refiners to have a variety of fees (sampling, assaying, shipping, etc.).  Keep in mind that if materials are melted, several melts may be required which in turn generate separate assaying fees.  Also, be particularly cautious if the material is not being processed in the United States.  Shipping and insurance costs can quickly exceed expectations.

The bottom line is that customers should compare their net dollar per pound return for similar materials.  If given a fair evaluation, chemical stripping has consistently come out on top for most forms of plated scrap .

With a name like ours, Advanced Chemical Company, this may seem as if we are biased.  The reality is we have the capabilities for both chemical stripping and melting.  If you have any questions feel free to contact us directly - info@advchem.com