Understand precious metals before choosing a scrap refiner.

By Paul Cascone

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 scraps 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 metals 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 todays 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 exactnot comparativefor 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 metalsspecifically platinum and palladiumare 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.