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Gold concentrate marketing 101

Albert de Sousa MAusIMM Director and Principal Consultant, AFX Commodities
ยท 1500 words, 6 min read

An overview of gold markets and an insight into a significant supply channel for this important precious metal

Gold remains a vital metal for the world, used in jewellery, technology, financial institutions and even more recently in medicine and aerospace engineering. According to the World Gold Council, over the last five decades the amount of gold produced each year has increased threefold, with buyers and consumers being more diverse than at any other period in history (World Gold Council, 2021). In this context, understanding the processing and selling of gold concentrates can help get a clearer sense of modern gold markets.

Gold ore may be transformed to concentrates for one of several reasons. If the ore is refractory (not free-milling) and the capex of a pressure oxidation (POX) or (bio-oxidation) BIOX plant cannot be justified, a mine’s only recourse may be the production of a concentrate. Even free-milling ore may be channelled to a concentrate stream if permitting for a cyanidation process is problematic or impossible. In some cases, production of concentrate over doré is selected due to security considerations.

Classification is critical for access to certain markets; however, classification of a gold-bearing concentrate as a ‘gold concentrate’ can be subjective. Generally, should the main revenue source of the concentrate be gold, then the miner and relevant authorities may classify the material as a ‘gold concentrate’.

Metals Focus' in-depth research in this area shows that approximately 12 per cent of global primary gold production is carried in concentrates. Absolute quantities are shown below, including forecasts to 2025.

Some mines may produce a copper-gold concentrate, with significant levels of both metals. If sufficient levels of copper are contained, then the commercial terms for the sale of the concentrate can often follow the market for copper concentrates. This market was addressed in a previous contribution: Copper concentrate marketing 101.

In the absence of meaningful amounts of contained copper, the sale of gold concentrate becomes more complex. Whereas with copper concentrates global benchmarks are set by major players and reported widely in industry journals, no such benchmarks exist for gold concentrates. Spot or short-term sales agreements are also frequently reported in the case of copper concentrates, but not for gold concentrates. In the absence of reference points, commercial terms for gold concentrates are typically negotiated on a stand-alone basis. Miners are therefore required to embark on a journey of discovery to assess the various permutations of commercial terms which, together, determine the Net Smelter Return (NSR).

Aurelia Metals produces gold concentrate from its Dargues Mine in New South Wales. Photo courtesy Aurelia Metals.

Most gold concentrate produced is in the form of arseno-pyrite gold concentrate. Consequently, levels of arsenic will be elevated.

Potential customers for sales of gold concentrates include copper smelters, lead smelters, gold roasting plants or hydrometallurgical processes such as POX or BIOX plants.

In practice, the majority of traded gold concentrates (that is gold concentrate production which is not processed through integrated facilities) are ultimately purchased by copper smelters. Mines can sell to these smelters either under direct contracts or via traders.

At present, the key purchasers for gold concentrates are in China. The overwhelming majority of gold concentrate and high-gold copper concentrates imported into China are processed by copper smelters. The balance is processed by roasters.

Chinese gold roasters will roast sulphide concentrates prior to the recovery of contained gold through cyanidation. High levels of arsenic-in-concentrate will have a detrimental effect on gold recovery, which will be reflected in payment terms for the concentrate. Roasters will typically consume concentrate with lower levels of contained gold, whereas concentrate with higher levels of gold will be destined for copper smelters.

These roasters are mostly located in the provinces of Hunan, Henan and Shandong. Originally constructed to process local concentrates, they now also purchase imported feed.

Over recent years, Chinese copper smelters seem to have improved the process control and metal accountability in their smelters (they have also built new, state-of-the-art smelters), therefore raising the rate they are willing to pay for gold-in-concentrate.

Copper smelters blend the gold concentrate with the copper concentrate feed but must always maintain acceptable levels of copper units in their smelting processes. They then capture the gold at the end of the smelting process, through the refining of copper anodes. In the solvent extraction process of the copper anodes, the gold is not transferred to the cathode, but is instead captured at the bottom of the tank-house vessels in what is known as the ‘slimes’. These slimes are further processed to fine gold.

Generally, pyro-metallurgical smelters (both in and outside China) will achieve a higher recovery rate on gold (and therefore pay the suppliers of the concentrate at a higher percentage rate), but they will also be more sensitive to a range of deleterious elements.

The market scenario with respect to copper smelters is not always straightforward. A copper smelter will not want to drop below its desired copper feed grade (and lose recovery), so there must be ample copper units to facilitate blending of non-copper-bearing feed (gold concentrates). If there are too many copper units available in the market (that is, the market is in surplus and treatment charges charged to miners are high), then gold concentrates could become displaced. In a high gold price environment, purchase of gold concentrate will also tie-up significant amounts of working capital for a smelter. Anecdotally, some buyers of gold concentrate have been unable to perform their obligations due to insufficient credit lines.

Traders will purchase gold concentrate for on-sale to smelters and roasters. Some traders have also established blending facilities, enabling them to purchase a variety of concentrates and blend to a quality specification that will provide them with a favourable economic outcome upon on-sale. Considering the issues with deleterious elements discussed above, blending is a critical option for some concentrates.

The market for gold concentrate is dynamic. It is influenced not only by the prevailing gold price (and hence the value of ‘free-metal’ achieved by each smelter), but also by the availability of competing materials and materials to facilitate blending. One overriding factor which will determine a gold concentrate’s NSR will be it deliverability into China. Chinese import regulations focus upon the contained gold grade as well as levels of deleterious elements, in particular arsenic. Consideration must also be given to particle size.

Chinese regulations have not been static and in fact have changed over recent months. Elevated levels of arsenic may necessitate a higher gold grade to ensure deliverability. At a very high level (>6.5 per cent) it may be non-deliverable or may attract punitive import taxes.

Therefore, for the miner, the grade-recovery curve becomes more difficult to manage when the pull on deleterious elements must also be limited.

Where the NSR deductions applied to copper and other base metal concentrates are generally uniform across the market, no such uniformity exists in the market for gold concentrates. At one end of the spectrum, we may see conformity with typical copper concentrate NSR deductions, namely:

  • Treatment Charge (TC) in US$ per dry metric ton (DMT)
  • Payable rates – in percent – applied to payable metals (ie gold and silver)
  • Refining charge (RC) for gold in US$ per payable ounce of gold (ie analytical gold x the payable rate [%])
  • Refining charge (RC) for silver in US$ per payable ounce of silver (ie analytical silver x the payable rate [%])
  • Deductions for impurities or elements considered deleterious to the smelting and refining process.

At the other end, there could simply be a percentage deduction applied to the gold content (bearing in mind that other deductions may also apply in certain cases). There are also a number of permutations to the NSR structure between these two examples.

In all cases, silver may or may not be payable and absolute payability will be related to the grade of silver in the concentrate.

Purchases by Chinese smelters tend to favour the latter method.

Pricing is overwhelmingly on a ‘cost, insurance, freight’ (CIF) or ‘cost and freight’ (CFR) basis, where the seller arranges and pays for freight. Therefore, detailed assessment of freight options is critical to a robust NSR analysis. The method of shipment may also vary from bulk shipment to concentrate loose or bagged in containers.

Finally, as is the case with all concentrates, due consideration must be given to contractual pricing conventions for payable metals, and the determination of weights and assays. Significant ‘leakage’ to the NSR may occur if best-practice protocols are not followed. The ‘industry standard’ often cited is entirely subjective.


World Gold Council, 2021. ‘About gold’ [online]. Available from:


With thanks to Metals Focus (UK) for their excellent data and to Aurelia Metals Ltd.

About the author:

Albert de Sousa is a Director and Principal Consultant of AFX Commodities. After almost 30 years working for two large Australian mining houses, he now consults to the broader base-metals and gold industries ( /

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