Penalties and Bonuses
Penalties and bonuses are standard for base metal concentrates and semi-refined metals. Penalties may apply in case the content of a particular analyte or combined content of a set of analytes exceeds a predefined limit.
Example: Iron: 1.00 USD each 1% > 8%. This specifies that if the iron content is greater than 8%, there is a penalty of 1.00 USD for each percent over 8%. If the iron content were 10.5%, the charge would be 2.50 USD/t.
Penalties and bonuses can have escalating tiers, so that the higher the content of a specific analyte in a material, the higher the penalty or bonus.
Example: Copper concentrates contract with an arsenic penalty
- As of 2.5 USD/dmt for each 100 ppm (the step) if As between 2000 ppm and 4000 ppm and 3 USD/dmt for each 100 ppm if As over 4000 ppm. Therefore:
- As = 1500 ppm incurs a penalty = 0 (The range including 0 ppm is considered by default to be the penalty-free range.)
- As = 2500 ppm incurs a penalty = 12.5 USD/dmt = 2.5 * (2500 - 2000) / 100
- As = 4500 ppm incurs penalty = 65 USD/dmt = 2.5 * (4000 - 2000) / 100 + 3 * (4500 - 4000) / 100
Penalties and bonuses can also be used to calculate hedging profit and loss made by hedging despatch orders.
Example: A company has a sales contract with a customer where the despatch orders are hedged. The hedging profit or loss at settlement is calculated using the HedgingProfitOrLoss() calculated expression.
Penalties and bonuses can be used to calculate linked hedging profit and loss made by hedging despatch orders of linked contracts.
Example: A producing company provides a commodity to a marketing company who then on-sells it to a customer organisation. A sales contract is raised for the customer organisation by the marketing company. A transfer contract is raised for the marketing company by the producing company. If the marketing company hedges the despatch orders to the customer organisation, the settlement profit and loss can affect the amount charged for the commodity to the marketing company by the producing company. This amount is entered into the transfer contract as a penalty/bonus contract charge. The linked hedging profit or loss at settlement is calculated using the LinkedHedgingProfitOrLoss() calculated expression.
