How Refining Fees Are Calculated and What You’re Really Paying For

Whether you're a jeweler reclaiming karat scrap, a recycler processing e-waste, or a miner producing dore bars, refining fees directly impact your bottom line. These fees determine how much payout you receive for your material—and, in many cases, whether the transaction is profitable at all.

Understanding how refining charges are structured is critical to:

• Accurately pricing your metal output or scrap intake
• Negotiating better contract terms with refineries
• Preventing unexpected deductions or hidden costs

In a market where margins can be razor-thin, every ounce and every basis point counts.

Refining is the process of converting impure or mixed-metal material into high-purity bullion that meets market or exchange standards. This includes:

• Assaying the input material to determine metal content
• Melting and chemical separation to isolate pure gold, silver, or PGMs
• Casting the refined output into Good Delivery bars, coins, or other standardized forms

The complexity, yield, and turnaround time of this process vary based on input type (e.g., jewelry scrap, dore, industrial waste), which in turn affects the fees charged by the refinery.

Too often, refining clients focus only on headline payout rates—without considering the layers of costs embedded in the refining process. These may include:

• Treatment charges and lot minimums
• Metal account fees or insurance
• Loss factors, assay discrepancies, or minimum retention clauses

By understanding what you’re actually paying for, you can:

• Benchmark different refineries more accurately
• Forecast returns more precisely
• Spot hidden deductions or negotiate more favorable contract term's

This blog will break down the components of refining fees, explain how they’re calculated, and show you how to optimize your refining agreements for higher net yields.

What Are Refining Fees in the Precious Metals Industry?

Refining fees are a foundational component of the precious metals value chain. They represent the cost of converting impure, mixed-metal materials into high-purity, investment-grade bullion. For anyone dealing in raw or secondary materials—whether it's scrap jewelry, mining output, or industrial residues—understanding these fees is essential to maximize returns and avoid payout surprises.

1. Definition and Functional Purpose

In simple terms, refining fees are the charges imposed by a refinery for the labor, technology, and expertise required to:

• Smelt and process raw materials
• Separate and purify gold, silver, platinum, and palladium from base metals and contaminants
• Perform assays to verify metal content and purity
• Deliver the final product as bullion bars, coins, or credited ounces

This service transforms unusable or semi-processed material into saleable, tradable metal that meets industry or exchange standards (such as LBMA Good Delivery).

These fees are often expressed as:

• A fixed dollar amount per ounce or per lot, or
• A percentage deduction from the metal recovered (commonly used for gold and silver scrap)

The full refining process may involve:

• Initial melting to homogenize the lot
• Sampling and assaying to assess precious metal content
• Chemical or electrochemical refining to achieve market-grade purity
• Settlement and payout, including any metal retained by the refiner as part of the fee structure

Refining fees compensate for this entire workflow and vary depending on input quality, complexity, and volume.

2. Who Typically Pays Refining Fees?

Retail and custom jewelers regularly send in:

• Bench sweeps and polishing dust
• Karat gold scrap (e.g., 14k, 18k)
• Out-of-style or damaged jewelry

Refiners charge based on melt weight, expected yield, and assay outcomes. Lower-purity or dirty lots may result in higher fees and lower recoveries.

Small and mid-size mining operations send dore bars—semi-refined gold/silver bars—directly to refiners for purification.

In this case:

• Fees may be structured as a per-ounce charge, often tiered by lot size
• Settlement is usually in the form of metal credits or cash wire payments

Larger producers may negotiate lower fees due to consistent volume and purity.

Other refining clients include:

• E-waste recyclers recovering metals from circuit boards and components
• Manufacturers and electroplating firms with metal-laden byproducts
• Pawnshops and bullion dealers looking to liquidate mixed lots

These materials often contain a complex metal matrix, requiring additional chemical separation—and thus incur higher refining charges.

Core Components of Refining Fee Structures

Refining fees are rarely just a single line item. They are composed of multiple cost factors, each reflecting a step in the refining process—from metal identification and separation to actual recovery and settlement. Understanding each component helps you decipher your refining statement, negotiate better terms, and ensure you’re getting maximum value from every ounce.

1. Assay Charges

Assaying is the scientific process used to determine the precise content of gold, silver, platinum, or palladium in a submitted lot. It forms the basis for calculating your final payout, making it one of the most critical steps.

Common assay methods include:

X-Ray Fluorescence (XRF): Fast and non-destructive; ideal for preliminary testing

Fire Assay: The industry gold standard for accuracy; involves melting and chemical analysis

Inductively Coupled Plasma (ICP): High-precision lab technique for detailed elemental breakdown

Refiners typically charge a flat fee per assay, which may be waived for large-volume or high-value lots. Some may offer multiple assays (e.g., client vs. refiner assay) to resolve discrepancies.

2. Treatment Charges

Treatment charges cover the physical and chemical processes used to extract pure metal from a complex feedstock. These can include:

• Melting and smelting to homogenize the lot and separate base metals
• Slag treatment to capture residual metal content
• Acid digestion or electrorefining for purity enhancement

Fees vary depending on the input material type:

• Clean karat gold scrap may incur minimal charges
• Bench sweeps, e-waste, and dore bars typically have higher fees due to complexity and contamination

Treatment fees are usually quoted as:

• A flat per-lot fee
• A per-ounce charge
• Or a percentage-based deduction from recovered value

3. Metal Return Rates

The metal return rate is the percentage of recovered metal that is actually credited or paid out to the client. It is often the most scrutinized component of refining terms.

Typical return rates:

Gold: 98%–99.5% depending on source material

Silver: 90%–98%, with lower rates for heavily mixed or industrial feedstock

Platinum & Palladium: 85%–95%, depending on recovery complexity and volume

Return rates reflect expected process losses and the refiner’s built-in margin. Larger, purer, and more homogeneous lots often secure higher returns.

4. Loss Factors and Yield Adjustment

Loss factors represent the percentage of metal that is not recovered due to:

• Evaporation or oxidation during melting
• Entrapment in slag or residues
• Mechanical loss during filtration, settling, or sampling

These losses are factored into the payout model and are inherent to the refining process—but not always clearly disclosed.

Refiners may:

• Deduct a standardized loss rate (e.g., 1% for gold, 2–3% for silver)
• Offer detailed post-assay reports showing actual vs. expected yields
• Include loss factors in the net return percentage

Clients should review these closely and, where possible, negotiate yield floors or performance thresholds in refining agreements.

How Refining Fees Are Actually Calculated

While refining agreements can seem opaque, the math behind them follows a fairly consistent structure. By breaking down each part of the equation, you can better understand how your final payout is determined—and spot areas where hidden costs or underperforming contracts may be eating into your margins.

1. Starting Point: Weight and Purity

Refining calculations always begin with gross weight and an initial assessment of purity. The cleaner and more homogeneous your material, the easier it is to process—and the lower the refining fee.

Clean karat gold scrap (e.g., 18k chains, casting sprues) is easy to assay and yields high returns.

Bench sweeps, polishing dust, or mixed alloys require more effort to homogenize and separate, leading to higher charges and often lower payouts.

Initial purity estimates are made upon intake, but final settlement is based on the official assay conducted after processing. Discrepancies between the two can affect:

• Your net metal yield
• Final settlement value
• Disputes over payout adjustments (many contracts allow for re-assay if results are challenged)

2. Market Value of the Recovered Metal

Once the final purity is determined, the refiner calculates the market value of recovered metal using:

• The spot price (typically LBMA or COMEX)
• A fixed or floating pricing window (e.g., average of 3 days around settlement)
• Optional use of hedging contracts if the seller has locked in a forward price

This ensures your payment reflects real-time market conditions, though delays between delivery and settlement may impact pricing unless hedged.

Some clients use hedging tools to fix the price on their expected yield in advance. Common methods include:

• Forward contracts with the refiner
• A rolling average pricing window to minimize timing risk
• Spot-day settlement for immediate liquidity

These strategies can help reduce exposure to price volatility during long processing windows.

3. Fee Structures

Many refiners charge a fixed fee based on the metal recovered, such as:

• $1.50–$3.00 per troy ounce of gold
• $0.50–$1.00 per ounce of silver
• Higher fixed charges for PGMs due to complexity

Flat-rate models are transparent and often preferred by larger clients with predictable material types.

Smaller clients or mixed-lot materials may fall under a percentage-based deduction, where the refiner retains:

• 1–3% of the recovered gold value
• 5–10% for silver
• Higher percentages for platinum and palladium depending on difficulty
• This model helps refiners offset risk and processing variability.
• Example Scenarios for Both Models

Flat Fee Example:

• 100 oz of recovered gold
• Fee: $2/oz
• Total fee = $200

Percentage Model Example:

• 100 oz of recovered gold
• 2% retained by refiner = 2 oz
• Client receives 98 oz payout

Knowing which model you're on—and whether it's negotiable—can dramatically affect your net returns.

4. Extra Charges Often Added

These are typically billed separately, especially for:

• Out-of-state or international shipments
• Insured transit for high-value lots

Some refiners offer free inbound shipping, but often with minimum lot thresholds.

Applied to:

• E-waste and industrial material with hazardous contents
• Lots requiring neutralization or additional waste treatment

These fees cover compliance with EPA, REACH, or local regulations.

Expect added charges for:

• Mercury-contaminated scrap
• Mixed-metal dental or electronic waste
• Low-purity sweeps or lots below a minimum threshold

These materials require longer processing times, higher risk mitigation, and often yield lower returns—justifying the extra cost.

Understanding the Refiner’s Margin

Refining precious metals is not just a technical process—it’s a business model built on margin, operational scale, and client retention. While refiners provide an essential service, it's important to understand how they generate profit from the difference between what they recover and what they return to clients. This margin can vary widely across facilities, input types, and contract structures.

1. Profitability Through Spread and Efficiency

Refiners earn a profit by capturing the spread between the full market value of the recovered metal and the amount credited or paid out to the client. This spread often includes:

• Retained ounces or percentage deductions
• Flat-rate fees that exceed actual processing costs
• Undisclosed gains from assay variance or rounding

Even small differences (e.g., 0.5% on a 100 oz gold lot) can result in significant revenue over time—especially at scale.

Many refiners advertise high return rates (e.g., “we pay up to 99%!”), but actual payouts may fall short due to:

• Standardized melt losses that aren’t clearly itemized
• Assay discrepancies favoring the refinery
• “Up to” rates that apply only to large-volume, clean, or pre-qualified lots

This makes it essential for clients to verify actual yield vs. quoted yield and understand how their material is categorized.

2. Scaling Refining Operations

Larger refiners benefit from economies of scale, allowing them to:

• Process larger volumes at lower cost per ounce
• Recycle reagents and reduce material loss
• Use automated systems for smelting, sampling, and filtration

As volume increases, overhead costs are spread across more lots, enabling these firms to offer better pricing to high-volume clients while maintaining strong margins.

Advanced facilities leverage:

• Inductively coupled plasma (ICP) for ultra-precise assaying
• AI-driven sorting of materials for faster throughput
• Data analytics to monitor performance and maximize metal recovery

This allows them to extract more metal per batch, further increasing profitability—especially on lower-grade or complex feedstocks.

3. Transparency and Client Trust

Trust is paramount in refining, especially when clients can't directly observe the process. Reputable refiners provide:

• Detailed payout statements listing assay results, deductions, and final returns
• Clear disclosures of fee structures, lot minimums, and loss assumptions
• Optional third-party assay verification for peace of mind

Without transparency, it’s impossible to evaluate whether you’re receiving a fair deal or being underpaid through hidden deductions.

Warning signs of unfair or opaque practices include:

• “Up to” payout rates with no explanation of qualifications
• No option for re-assay or third-party confirmation
• Lack of documentation showing gross metal recovered vs. net paid

If you can’t verify how your return was calculated, the refiner’s margin may be larger than it should be—at your expense.

Hidden Costs to Watch For

Even if a refiner advertises competitive payout rates and low fees, hidden charges can quietly erode your final returns. These costs are often buried in contract fine print or applied selectively depending on the type, size, or timing of your lot. Being aware of these common fees allows you to ask the right questions upfront, compare offers more accurately, and protect your margins.

1. Settlement Delay Fees

Some refiners apply fees if the client:

• Delays providing payment instructions
• Leaves recovered metal in storage for an extended period
• Requests extended pricing windows (e.g., waiting for a favorable spot price)

These charges may be listed as:

“Storage fees,” “delayed settlement premiums,” or “metal holding fees”

Daily or weekly charges (e.g., $0.50 per oz per day after X days)

Percentage-based adjustments tied to volatility risk or opportunity cost

Best practice: Clarify the expected settlement timeline in your refining agreement, and ask whether storage or delay charges apply after a certain grace period.

2. Minimum Lot Fees

Refiners often implement minimum charges for small lots to cover baseline processing costs. These fees apply regardless of the total metal value and can dramatically reduce payout efficiency for small-scale recyclers or jewelers.

Examples include:

Minimum refining fee: $100 per lot.

Extra handling charges for lots under 5 oz of gold or 100 oz of silver.

A fixed percentage floor (e.g., “we retain at least 2 oz per lot”).

While these fees make sense from the refiner’s perspective, they can disproportionately affect clients with frequent but small batches.

3. Non-Standard Material Fees

If your lot contains non-standard or difficult-to-process materials, expect to see additional line-item fees for:

1. Hazardous content (e.g., mercury, cadmium)
2. Multi-metal alloys or plated materials that complicate separation
3. Organic or ceramic contamination (common in dental or e-waste scrap)

These fees are justified by:

• Higher environmental compliance costs
• More time-intensive refining processes
• The need for specialized equipment or disposal

Red flag: Some refiners don’t disclose these charges until after intake. To avoid surprises, request a full list of surcharges during contract negotiation or before shipping.

By identifying and addressing these hidden costs, you can negotiate smarter, better predict your net returns, and ensure your refining partner is delivering fair, transparent value.

How to Compare Refining Offers Like a Pro?

Refining offers can look similar on the surface—until you dig into the fine print, fee structures, and hidden terms. A high advertised return rate means little if it’s accompanied by ambiguous deductions or unverified assays. To get the most out of your refining relationship, you need to evaluate offers using a systematic, apples-to-apples approach that exposes both the value and the risk.

1. Review Agreement Terms in Detail

Start by requesting a copy of the refining contract or intake agreement, and scrutinize the following:

• Metal retention policies (e.g., “minimum 1 oz retained per lot”)
• Terms around settlement timing and whether storage or delay fees apply
• Whether pricing is set at spot on settlement day, or based on a multi-day average
• Any language allowing the refiner to revise yield estimates post-assay

These clauses can significantly impact your final return—especially if you’re working with smaller batches or non-standard materials.

Pro tip: Use a checklist to compare clauses from multiple refiners side by side.

2. Request Itemized Fee Breakdowns

A transparent refining partner will give you a line-by-line breakdown of:

• Assay charges (e.g., per lot, per method)
• Treatment/smelting fees (flat or per-ounce)
• Environmental or hazardous material surcharges
• Freight, insurance, and handling costs

Ask for a sample payout statement or pro forma quote so you can simulate a real-world return based on your typical material profile.

This helps you avoid misleading comparisons based solely on headline return percentages, which may hide deeper cost structures.

3. Work With LBMA-Accredited or ISO-Certified Refiners

Refiners that are LBMA-accredited, ISO-certified, or independently audited tend to operate with:

• Tighter internal controls
• Standardized compliance procedures
• Greater emphasis on client communication and documentation

They also provide:

• Third-party assay options
• Access to secure allocated accounts
• Better integration with hedging or settlement platforms

While they may not always offer the “lowest” fees on paper, the quality, reliability, and trust factor often make them a more profitable partner over time.

Red flag: Avoid operations that lack clear ownership, physical address, or references—even if they promise above-market payouts.

Conclusion

Refining fees are often misunderstood as simple service charges for melting down metal—but in reality, they encompass a complex mix of technical processes, risk premiums, and operational overhead. Whether you’re recycling gold jewelry, delivering dore bars, or processing e-waste, understanding how these fees work is essential to protect your profitability and ensure you’re getting fair market value for your material.

The most important factors influencing your final payout include:

• Accurate and transparent assay results
• The percentage of metal returned vs. recovered
• The structure of the fee model—whether flat-rate or percentage-based
• Hidden costs like minimum lot fees, environmental surcharges, and storage charges

Knowing how each of these components is calculated puts you in a stronger position to negotiate, forecast, and evaluate refining outcomes.

The best way to maximize your returns is to compare refining offers methodically and demand full transparency. Work with reputable, accredited partners, request itemized breakdowns, and question anything unclear or undocumented.

In the refining world, knowledge truly is power. The more you understand what you’re paying for—and what you’re getting back—the more consistently you can convert raw material into real value.