Evaluation Of Net Smelter Returns In The South African PGE Industry By Application Of Base Metal Concentrate Commercial Treatment Terms

Toll and custom treatment of base metal concentrates have been performed for decades as mines and concentrators are developed distant from capital and, energy-intensive smelting and refining facilities. Commercial treatment terms have been developed and refined for over a century, and are negotiated taking into account a complex array of quality and economic factors. Treatment of third-party concentrates in the South African platinum industry is a comparatively recent development, brought about by the opening up of mineral rights and operations being developed that are smaller than the critical size required to sustain capitalization of smelting or refining plant. Published commercial terms have not been demonstrated to reflect the complexities and subtleties of base metal concentrate markets. This paper outlines some key elements and parameter ranges of base metal concentrate treatment contracts, and applies similar principles to typical Merensky and UG2 platinum group element (PGE) concentrates to determine potential value distribution between the mining and treatment parties in tolling arrangements.