Inside Dental Technology
The Art of Refining
Turn your scrap into extra money for your laboratory with the right refining company. Explore your options and see if one of our featured companies could be the right fit for you.
As a consumer, you have felt the pinch of gas prices that over the past few years have become nearly as volatile as the fuel you are purchasing. And as an experienced business owner you know the same principle applies to the unpredictability of the metals market. Precious metals (gold, platinum, and palladium in particular) skyrocketed to unprecedented heights a year ago only to fall precipitously in subsequent months. Now, in the third quarter of 2012, the price of gold has found new footing and is climbing steadily back from its low this past April to its dizzying September 2011 levels. According to Thomson Reuters GFMS 2012 Gold Survey1, gold is predicted to challenge the $1,800 mark by the end of the year and trade above $2,000 in the first quarter of 2013 with other precious metals such as platinum and palladium riding its coat tails. For the majority of dental laboratories using high noble and noble alloys in the manufacture of metal-based products, the recovery of precious metal scrap from the casting and subtractive production practices used to manufacture metal-based dental devices is a critical business management issue. From purchase and inventory control to strict oversight during the production process and the collection of scrap for refining, the precious metal cycle runs full circle from the outlay of cash to purchase the metals for manufacturing to receiving financial rewards for metal recovery efforts from your precious metals refining partner. At today’s prices, the cost of inventorying precious metals for the production of metal-based restorations requires a sharp business eye on historical usage patterns and knowing the exact amount needed for each restorative situation. The ability to maximize a return on that investment through scrap recovery becomes ever more important.
Because scrap collection and the refining processes are so critical and impact the bottom line of laboratory businesses, IDT is devoting this entire Business Insider section to best practices in precious metals management. On the following pages, you will find sound business advice from experts in the field as well as an inside look at four specialty refining companies and the processes they use to recover precious metals from your floor sweeps, carpets, and grindings. You will also hear from individual laboratory owners who benefitted from listening to the advice of their refining partners and acted on their guidance. We urge you to read these stories and carefully consider the important information these companies offer to help you better understand best practices refining processes and ways you too can maximize your returns.
1. Klapwijk P. Gold Survey 2012. Thomson Reuters. Available at: http://www.gfms.co.uk/media_advisories/Gold%20Survey%202012%20Launch%20Presentation%20client%20version.pdf. Updated April 11, 2012. Accessed September 3, 2012.
Assay and Refining of Dental Scrap in the 21st Century
Understand precious metals before choosing a scrap refiner.
Dental gold refining has been an important asset for dental laboratories for many years. Many external factors cause fluctuations in the value of scrap materials. However, overall refining remains an important asset for laboratories to generate additional revenue. Although many of the variables that influence scrap’s value cannot be controlled, an understanding of the influences broken down below can help you make the most optimal decision when it comes to your scrap management.
Gold Price at a Record High
As Figure 1 shows, there has been a steady rise in the price of gold since the beginning of the 21st century. The main reason for the increase has little to do with industrial demand but rather the creation of financial instruments allowing anyone to own gold without taking physical possession of it. The funds maintain the physical gold bars. The popularity of these instruments, or funds, resulted in a large number of gold bars sitting in vaults. During certain periods of time, the activity of the price of gold may feed on itself. As the gold price rises, the demand for gold shares increases, requiring the funds to purchase more gold, which then increases the price further. Total gold investment demand (ie, coins and bars) rose from 379 tons in 2000 to 1,487 tons in 2011. The higher price is certainly good news for the seller.
Less Gold in Dental Scrap
For dental laboratories, the increased price of gold has resulted in less gold in dental scrap. This happens for two reasons: first, the move to less costly alloys results in a decrease in the gold content of the alloys; and second, the increased use of all-ceramic restorative materials means no alloy is used at all. Surprisingly, the use of non-precious alloys has not increased in the United States over the last 10 years, even with the elevated price of gold.
The change in restorative material choices impacts the laboratories’ income, because there is less profit from alloy charges and, for zirconia units, no profit from residual alloy scrap. Replacing a full-cast gold molar with zirconia is especially painful for dental laboratories. Therefore, as laboratories decide which alloys to use, it becomes important to recognize the impact your choice will have on your refining returns.
Varying Palladium Usage
With a reduced amount of gold found in dental scrap, the price of palladium plays a more important role in determining the value of dental scrap from laboratories. To understand the roller coaster ride of the price of palladium, we need to go back to the 1990s. Figure 2 shows the ups and downs of this commodity. The “artificial” shortage during 1996 to 1999 drove the price of palladium to new heights, only to fall back to earth when the supply was released again. The creation of investment funds for palladium did not spark the same demand as seen in gold, so this metal’s price is still primarily driven by industrial demand (mostly automotive), as shown by the large drop in price in 2008. Most industry experts expect palladium to remain in a $500 to $800 per troy ounce range for the foreseeable future.
Historically, the price of gold was the bellwether for the value of scrap. The change in alloy composition over the last 10 years may be an indication that perhaps it is time to focus on the price of palladium instead of gold.
Precious versus Non-Precious Alloys
The 21st century saw the introduction of hybrid alloys in the noble classification combining palladium with cobalt-chrome. While these hybrid alloys benefit dental laboratories with a reduced cost for a noble alloy, they change the landscape of traditional assay and refining operations. The old advice to keep precious and non-precious metals separate becomes nearly impossible for laboratories when using these alloys.
The refiner must now be particularly astute to ensure that the sample of each scrap lot they receive is homogenous; otherwise, the precious metal content will be understated. The usual procedure for homogenizing a mix of precious and non-precious scrap is to add copper. This works well when the non-precious component is a nickel-based alloy, but not when the non-precious component is cobalt-chrome, as in today’s hybrid alloys.
The secret for homogenizing a mix of precious metals with cobalt-chrome adds an additional challenge, so the refiner must be especially knowledgeable about these alloys in order to ensure an accurate assay. Specifically, their procedure for determining palladium content must be exact—not comparative—for laboratories to receive the true value of their scrap materials.
Challenges with Dental Sweeps
With the reduction of alloy use and, in particular, the reductions of gold content in the alloys that are used, dental sweeps have decreased in value. In addition to the decrease in value, the challenges associated with analyzing sweeps have increased as well. As the concentration of precious metals goes down, the difficulty in processing the material increases for the refiner because certain metals—specifically platinum and palladium—are very difficult to extract in such low quantities. It is important to ensure that your refiner has the technology to recover these small values with a high level of accuracy.
Paul Cascone is the senior vice president of technology at The Argen Corporation.
Refining the Trust Relationship
The best practices for establishing a partnership with your vendors.
Sweeping advances in technology over the years mean that business success requires more savvy and sophistication than ever. While this is certainly true of the dental laboratory business, it is also true that ours is still in large part a “relationship” business. Dental laboratories must develop, maintain, and nurture relationships with their dental practices, most of which have been owned by individual dentists for 20, 30, or 40 years or more.
Of equal importance are the relationships dental laboratories must also maintain with their vendors, upon whom they rely to deliver materials and other products and services that they can count on case after case, day after day, year after year. This means that dental laboratories must be able to trust their vendors implicitly.
There is perhaps no vendor for which trust is a more important issue than your precious metals refiner. This is not something to treat lightly, particularly when you consider that the refining process could well be taking place hundreds or even thousands of miles away. Among other things, you need to trust that your refiner will:
• Process your scrap correctly.
• Recover 100% of the precious metals.
• Give you an accurate report.
• Pay you a fair price.
As you ask prospective refiners the right questions (see sidebar on left), their answers will give you some powerful insights into just how trustworthy they are. As you go through this process, you should be wary of anyone who:
• Proposes to serve as a middleman between you and the refiner. You want to deal directly with the refiner.
• Offers to pay cash-on-the-spot deals. There is no way anyone can accurately estimate the precious metal content of scrap when they are in your facility. The only one of the four precious metals that is noticeable at all is gold, which means that any cash offer could not take into account the other three metals. In addition, if they are in that much of a hurry to “do a deal,” it is probably because they do not want to give you time to find a better deal.
• Makes outrageous turnaround promises. A scrap melt and complete assay take 5 to 7 days.
• Uses contracts and settlement statements with extensive fine print. Deal only with someone who has nothing to hide.
While understanding the refining process and identifying a reputable company to provide fair value for your scrap may be a challenging and time-consuming task, be assured that there is enough money at stake to make it worth your while. As you investigate potential refiners, the following questions should be asked:
Exactly what will you collect from us? (Their list could include any or all of the following: grindings from finishing benches and drawers, spills and slag from casting wells, floor sweeps from casting and finishing departments, suction system debris, platinum foil scrap, buttons, sprues, remakes and crucibles, platinum muffles, thermocouples, and more.)
Are you capable of performing all the processing from start to finish at a single location or facility and within the same company?
Do you pay for all four precious metals—gold, platinum, palladium, and silver?
Do you provide free scrap audits?
Do you provide assay reports or a certification of the assay?
What kind of assaying technology do you use? (Inductively coupled plasma (ICP) atomic emission spectroscopy is considered state-of-the-art.)
Will you provide a fire assay when needed?
How and when do you set your settlement prices? (Setting prices based on London Metal Exchange prices the day of assay is one accepted approach.)
Do you assess any charges? (Make sure they will not assess treatment charges, assay charges, freight charges, weight charges, accountability charges, minimum lot charges, or low-grade lot charges.)
What are your refining fees? (The industry standard is around 15%.)
What kind of settlement payment options do you offer?
Do you keep careful customer records and monitor trends closely?
Do you offer tours of your refinery?
Can you provide several customer references?
Tony Circelli is the precious metals refining manager at Heraeus Kulzer and has been with the company since 1976.
How to Maximize Your Scrap
Maximizing return on dental scrap is an important component of any successful business model. Implementing best practices for scrap collection and adhering to some basic, yet critical, shipment preparation steps will increase the amount of dental scrap that is collected, which translates into an increased return on investment (ROI). Researching precious metal refineries to determine their level of expertise in the dental industry and their ability to provide optimal returns on dental scrap is also critical to increased ROI.
When collecting dental scrap, keep precious and nonprecious materials separate. Use separate work stations and dust collectors for precious and nonprecious alloys; a quality dust collection system will quickly pay for itself when used in this capacity. Vacuum daily, inspect collection equipment weekly, and store collected scrap securely under lock and key. Stored scrap is not insured, so insurance companies do not cover loss in the event of theft or fire.
Save everything that comes into contact with precious metal scrap, including paper towels, disposable floor mats, carpet, vacuum bags, filters, crucibles, torch tips, and pan liners. All of these items can and do contain valuable precious metal materials and should be included with each scrap shipment.
Conduct an audit of laboratory practices and identify areas in need of improvement. Map out a strategy and a realistic timeline to make any necessary changes to current practices, and follow up with quarterly reviews of processes and procedures to ensure that best practices are being sustained. Collect scrap often and ship scrap regularly to average out market fluctuations.
Keep high-grade material separate from low-grade material. Separate solids, grinds, and sweeps into separate heavy-duty resealable plastic bags. Each bag should be further secured with packaging tape to ensure the integrity of the seal. Vacuum bags and filters should also be placed into heavy-duty resealable plastic bags and secured with packaging tape. If a vacuum bag splits open during transit, there is no way to quantify the amount of valuable and irreplaceable precious metal material that has escaped during transit. Carpet should be cut into manageable segments and tightly rolled. Each roll should then be placed into a heavy-duty plastic bag and carefully sealed. A precious metal refinery with a strong background in the dental industry can further advise on optimizing the laboratory’s scrap collection procedures.
When all dental scrap materials have been properly bagged and sealed, place the bags into sturdy shipping containers, such as fiberboard drums. Before carefully sealing the shipping containers with lid locks or heavy-duty shipping tape, include a business card and detailed inventory list of the items in each container in the event that packages are separated during transit. This will ensure that the packages arriving at the refinery are clearly identifiable and can be easily traced back to the proper laboratory. The detailed inventory list should identify the materials that are included in each container, as well as approximate weights for each type of scrap, which will further enhance the traceability and accuracy of the scrap lot.
In addition to implementing scrap collection best practices and standardizing shipment procedures, research precious metal refineries to determine their level of expertise within the refining industry as well as the dental industry. Dental scrap is among the most difficult scrap to refine, and therefore a refinery’s ability to provide optimal returns on dental scrap is directly related to its knowledge of the dental industry.
After the scrap has been properly collected, carefully shipped, and the settlement received, calculate the precious metal content consumption to scrap ratio. This will provide a baseline for evaluating how well laboratory procedures are working. Implement changes as needed to further improve laboratory practices and loss prevention.
Taking steps to optimize the collection, shipment, and refining of valuable dental scrap is not a difficult process, but it is an important process that can greatly increase ROI.
Leslie A. R. Mularski is the communications director at Atlantic Precious Metal Refining in Pittsburgh, Pennsylvania.
The Changing Face of Refining
Making the most of the scrap refining-dental laboratory partnership.
Our industry is changing rapidly, and while there are more material choices today in manufacturing dental restorations, alloy remains an important part of a laboratory’s workflow. As long as precious metals are part of a laboratory’s product offerings, a trusted and competent dental refining partner is crucial to its bottom line.
Even with the addition of all-ceramic materials, dental laboratories depend on alloys for porcelain-fused-to-metal (PFM), full-cast restorations, removable partial dentures, and other types of dental restorations. Gold and palladium are by far the highest scrap metal sent in by dental laboratory owners. Today’s high gold prices means returns on gold-containing dental scrap is very rewarding for laboratory owners and their dentists. However, palladium pricing has historically been more volatile than gold—all the more reason to refine regularly.
The increased use of metal-free dental options and dental laboratory CAD/CAM technology has impacted the refining business in a number of ways. For laboratories that have moved primarily to digital output, and thus rely to a lesser degree on precious metals for their restorative processes, the frequency, and total annual refining proceeds of the laboratory can change as a result. The use of more non-precious and non-metal materials across the board means that a refiner must be capable of effectively handling increasingly complex scrap that is a mix of precious and non-precious alloys and other materials, such as investment or aluminum oxide.
The value of refining dental scrap regularly cannot be emphasized enough, even if dental laboratory owners are using less alloy than they did a few
years ago. Those refining checks add up.
Building a Relationship
The relationship between a dental laboratory and its refiner is extremely important for both parties. Refiners can become better partners with their dental laboratory customers by doing the following: Taking the time to understand the unique business requirements each laboratory has to be successful; consistently providing the best possible refining yields; and offering the highest level of services and accountability. Integrated dental alloy and refining companies that combine complete systems, materials, and dental education offer scrap customers the best of all worlds.
The best partnership between a laboratory and a refiner comes with a long-term relationship and the availability of historical scrap data. For example, if a laboratory owner consistently
refines the same amount of scrap at the same times each year, and is using the same alloy mix from year-to-year, the percentage-returns can be compared over time as an extra form of checks and balances. If there is any abnormality, it can bring to light some internal controls that need to be implemented in the laboratory.
Getting the Most Out of Alloy Use
A scrap-refining partner should work directly with dental laboratories to get the most out of their alloy use in addtion to the greatest monetary return on their scrap. There are three things that every dental laboratory should do to accomplish this.
1. Strive to maintain the lowest scrap-to-alloy ratio possible. Ratios typically range between 15% and 30%, which is consistent with studies on fabrication loss and reflects the average range of scrap generation. The amount of precious metal scrap that a laboratory generates in relation to its dental alloy consumption is a perpetual indicator of a laboratory’s efficiency and, ultimately, its profitability.
2. Implement inventory controls designed to track alloy purchases; movements to and from fabrication activities; and depletion of precious metals. This can establish a clear relationship between scrap and alloy use. When the scrap-to-alloy ratio falls well below 10% or rises above 25%, corrective actions can be taken.
3. Use good housekeeping practices, such as weighing grindings and filings after every shift and installing natural-backed, work-area carpet that can be refined. Inadequate scrap collection is one of the primary reasons for unaccounted metal losses.
One of the biggest changes in dental laboratory scrap refining has been the entrance of non-dental scrap-handlers because of the high gold prices. However, many dental laboratories have had poor results with refiners not experienced in the dental industry.
Despite non-dental entities entering the dental refining arena, dental laboratory owners can be assured that there are qualified, financially healthy dental refining companies upon whom they can rely. Experienced dental refiners have dental metallurgists and chemists who can ensure dental laboratory scrap is refined correctly and can provide the specific services to help laboratory owners increase laboratory efficiency and profits.
Dental laboratories and refiners have had a strong connection for as long as there have been alloy-based dental restorations. Despite the changes in dentistry, this relationship will continue because when a laboratory owner chooses a refiner, he or she picks a partner who can help increase that laboratory’s bottom line.
Kevin Mahan is the vice president of sales at Jensen Dental in North Haven, Connecticut.
Find a local refiner near you:
Accurate Metals & Refining
Albar Precious Metal Refining
Pompano Beach, FL
Santa Ana, CA
The Argen Corporation
San Diego, CA
Atlantic Precious Metal Refining
Aurum Precious Metals
Pompano Beach, FL
New Hyde Park, NY
DDS Refining, a Division of Medidenta
Ann Arbor, MI
General Refining Corporation
North Haven, CT
Maguire Refining, Inc.
Northeastern Metals & Chemicals
Pease & Currens
Precious Metal Refining Servies, Inc.
West Bloomfield, MI
So Accurate Group, Inc.
Long Island City, NY