Issue 45
Good Delivery Rules and Recommendations
The LBMA Physical Committee is seeking the views of Good Delivery refiners on a number of proposed changes to its Good Delivery Rules, which govern the process of admitting refiners to the Good Delivery List. The Rules document (which can be downloaded from the LBMA website under the Good Delivery section) includes both actual rules (e.g., requirements about technical and non-technical criteria that have to be satisfied in order for a refiner to be included on the List) and also recommendations about matters such as bar size, marks and packing etc, where the LBMA (or its member vaults) may exercise a degree of latitude in enforcing them.
The Rules and associated procedures that are followed when processing applications have evolved over a number of years, and there have been no fundamental changes in the basic requirements for testing applicants’ abilities to assay accurately and produce well marked bars of good appearance. The changes that have been made were for a number of reasons, such as clarifying the requirements for listing; ensuring that the LBMA has full information about an applicant refinery; and finally to take account of the vaults’ experience in the physical handling of bars.
When changes are made, the LBMA will require any subsequent Good Delivery applicants to abide by the new Rules, but it has not always been thought essential or practicable to impose them retroactively on refiners already on the Good Delivery List. Thus, for instance, some specifications for bars are described in the Rules, as the LBMA’s recommendations for best practice rather than being mandatory on all listed refiners.
Changes to the Good Delivery Rules that are mandatory can become an issue for the vaults, particularly in relation to old bars coming out of deep storage and that do not now comply with the current specification for Good Delivery bars – but that did comply when the bars were produced. In some cases, the issue is very clear-cut and decisive action can be taken.
For example, in June 2006 the LBMA announced that bars that did not bear the original refiner’s assay mark and fineness, but were accompanied by an assay certificate, would no longer be considered Good Delivery. Although this kind of change has no impact on current Good Delivery refiners, others may have done – such as the change to the rounding rule in respect of four-nines metal (whereby assays of 999.86 to 999.89 could not be rounded up to 999.9 per the normal LBMA rounding rules). An earlier example of a rule change that affected many refiners was the narrowing of the acceptable range of bar weights for silver Good Delivery bars that was introduced in January 2000.
Changes Under Consideration
The following specific issues are under consideration.
Silver Bar Weight Range
The permitted weight tolerance on silver bars, in percentage terms, has always been significantly greater than with gold bars, which can make the physical handling of silver bars more inconvenient, particularly if bars from different producers with widely different weights are packed on the same pallet. In January 2000, the LBMA recommended that the weight range for Good Delivery silver bars be narrowed from 500 / 1250 to 750 / 1100 troy ounces, but in order to recognise the preference of some markets in the Far East, continuing production in the 500 / 1250 troy- ounce range remained acceptable as Good Delivery.
The LBMA is now considering amending the specification of a Good Delivery silver bar to make the 750 / 1100 troy-ounce range mandatory with effect from 1 January 2008. After that date, refiners could, of course, continue producing bars in the old 500 / 1250 troy-ounce range to meet particular client demand, but such bars would not be deemed acceptable as Good Delivery. Likewise, old bars in the 500 / 1250 troy-ounce weight range produced prior to 1 January 2008 and coming out of deep storage would continue to be acceptable as Good Delivery bars.
Tracking Changes: The March Seminar
The LBMA Physical Committee is currently discussing a number of proposed changes in the mandatory rules. Needless to say, any changes that may require refiners to make significant modifications to their operating procedures must be handled with appropriate consideration for the costs and time involved at the refinery. The changes, which are described in the main text, will therefore be discussed with refiners at the LBMA’s Assaying and Refining Seminar – to be held at Armourers’ Hall, London, on 20th and 21st March, 2007 – before the Physical Committee makes any final recommendations to the LBMA Management Committee. Details of the seminar are available on the website in the Good Delivery section. Registration is free to all refiners on the Good Delivery List. In the meantime, refiners are invited to submit any comments on the LBMA’s proposals to the LBMA Executive by fax to +44 (0) 20 7796 2112 and/or email toStewart.Murray@lbma.org.uk or Douglas.Beadle@lbma.org.uk.
Bar Stamping
Consideration is being given to allowing bar marks on silver bars to be put on the end of bars using dot matrix (pneumatic punching) or laser marking. It is not intended to allow this type of marking method on the main face of the bar, as it is felt that such marks would be more prone to becoming indecipherable due to normal handling and stacking. Conventional stamping on the end of bars would not be allowed, as the undercut of the bar may result in the mark being less clear or the opposite end of the bar being damaged.
The current requirement is that bar marks should generally be placed on the top (the large surface) of the bar rather than the bottom. The undercut of the bar is used to facilitate easier handling, and bottom stamping is considered to make handling more difficult, with greater risk of injury. The LBMA is therefore considering no longer permitting the bottom stamping of Good Delivery bars from some future specified date.
Although the Good Delivery Rules state that the year of manufacture should be stamped as a separate four digit number, some refiners still incorporate the date of production within the bar number, and the LBMA is considering making a separate four- digit number for the year mandatory – again, with effect from some future specified date.
Although the minimum height of individual characters is specified as 12.5mm, no minimum depth of characters is specified, and the LBMA is giving thought to whether a minimum depth should be specified and, if so, what that that depth should be.
Casting
Casting using closed or gated moulds leaves a residual sprue, which needs to be guillotined off. Over the last year it has come to the LBMA’s attention that insufficient care has been devoted to this, with the result that bars are coming on to the market with a prominent ledge (the residual sprue), which can have razor-sharp and / or jagged edges. This poses a significant risk of injury to handlers, bearing in mind that the undercut of the bar is usedto assist lifting. The LBMA is therefore considering insisting that all Good Delivery bars must be produced using individual open moulds from a specified future date.
Thought is also being given as to whether a minimum and maximum undercut should be specified to enhance safe stacking and safer handling. Likewise, the LBMA is considering whether the maximum depth of permitted shrinkage should be specified to make stacking safer and make bar marks easier to read.
Some old bars, particularly those coming out of deep storage, have cracks or holes in them, and the LBMA is considering formally declaring such bars as being non-Good Delivery because impurities can enter the bar and distort the weight, as can water, which poses a very real risk of explosion if such bars are added to a molten bath in a furnace.
As indicated above, any mandatory rule changes would only be introduced after a sufficient period of notice to allow existing Good Delivery refiners to make the requisite changes to their manufacturing processes.