Treatment Charges

Treatment charges are standard for base metal concentrates, semi-refined metals and iron ore (for example, USD/t for copper concentrate). Treatment charges are associated with the process that the buyer of a raw material (for example, base metal concentrates) performs to refine the metal. The charge is expressed as a charge per tonne of material or, as is standard in concentrates, per dry tonne of material. A treatment charge is a contract charge configured in a set of contract terms.

The treatment charge can be entered as a fixed, calculated or tiered value, or determined from a premium matrix. The treatment charge impacts the invoice value, unit price or payable analyte grade. For treatment charges that impact the unit price, the resulting charge value is based on a mass, such as the wet mass or unloaded dry mass. The configuration of the resulting charge value includes settings for rounding of decimal places, minimum and maximum values, how the treatment charge is applied, and how the treatment charge affects invoices. For example, for a contract with product pricing, the treatment charge may display on the invoice without affecting the total invoice value, or may be included as a separate line item, or included in the calculation of the revenue line item.

The main difference between treatment charges and refining charges is that treatment charges are related to the entirety of the product (the analyte involved is not specified), whereas refining charges relate to a specific analyte (for example, silver) and relate to the metal units (for example, troy ounce).

Tiered Treatment Charge Example

Treatment charges can have escalating tiers, where additional charges are made depending on the base price for the main product.

For a zinc contract:

  • Treatment Charge: 100.00 per USD/dmt
  • Base Price: USD 1000
  • Escalating tier:
    • Below USD 1000: USD -0.145
    • Above USD 1000 but less than USD 1100: USD +0.15
    • Above USD 1100: USD +0.16

In this case, the treatment charge is provided given a base price of zinc of USD 1000 (as given by the price series). The escalating tier specifies that if the average price is below USD 1000, then 14.5 cents will be deducted from the treatment charge per tonne. If the price is between USD 1000 and USD 1100 then 15 cents will be added, and if the price is above USD 1100 then 16 cents per tonne will be added to the treatment charge.