How it is calculated
- Excess = assay − limit, or zero if the assay is at or below the limit
- Steps over = excess ÷ step size
- Deduction per dry tonne = steps over × rate per step
- Total deduction = sum of the deductions for each element × dry tonnes
Worked example
Arsenic plus antimony assays 0.9% against a limit of 0.7%, with a deduction of $3.00 per dry tonne for each 0.10%. Excess = 0.2%. Steps over = 0.2 ÷ 0.1 = 2. Deduction = 2 × $3.00 = $6.00 per dry tonne. On 4,850 dry tonnes the deduction is $29,100. The rate is taken from one published sample purchase contract and is an illustration, not a market rate.
Frequently asked questions
How are ore penalties calculated?
The amount by which the assay exceeds the contract limit is divided by the step size in the contract, and the result is multiplied by the rate per step. Part-steps are normally charged pro rata.
Are penalty rates the same in every contract?
No. The limits, step sizes and rates are written into each contract or set by the smelter's terms, and they differ by ore, buyer and market.
Do penalties apply to the wet or dry weight?
Normally the dry weight, matching the basis on which the price is paid. Check the contract.
Which elements are usually penalised?
Phosphorus, silica and alumina in manganese ore, silica, alumina, phosphorus and sulphur in iron ore, and arsenic, antimony, mercury and cadmium in lead and zinc concentrates.