Issue 8

The Art and Science of Silver Refining an Interview with Barry Wayne, President & CEO, Handy & Harman Refining Group Inc

Handy & Harman Refining Group Inc. is a new company with a legacy of over 100 years in the precious metals industry. What are the company's origins?

Handy & Harman was formed in 1867, originally as a partnership between Mr Parker Handy and Mr John F. Harman. They fabricated silver and gold alloys, such as sterling silver and carat gold for the arts industries - silversmithing, sterling silver ornaments for saddles and, of course, jewellery manufacture. As time went on, they began processing the scrap they generated and realised they had a business opportunity in marketing precious metals refining services, as well as alloys and products. They developed various carat gold alloys and some brazing alloys which were used in the war effort. The Company went public in 1967 on the NYSE.

What led to the formation of Handy & Harman Refining Group Inc?

Starting in the 1960s the Company began a diversification program. It expanded into a variety of businesses - automotive, stainless steel, wire, tubing and electronic materials. This was followed by the divestiture of most of its precious metal activities in the 1990s, leading to the closed of the platinum refinery, as well as the gold and platinum fabrication plants. The Refining Division was sold to an Australian publicly-owned company, Golden West Refining Corporation Ltd., in 1996. The new entity, Handy & Hannan Refining Group Inc. (HHRG), has refining operations in the US in Connecticut, Massachusetts, Illinois and Arizona. The parent company, Golden West, has operations in Australia and Papua New Guinea. A refinery in Canada has now been transferred to HHRG.

If not the largest worldwide refiner of silver, HHRG / Golden West certainly ranks among the top. We have an annual output of 60,000,000 ounces of silver - and growing. Additionally, the Group has the capacity to refine over 8,000,000 ounces of gold, as well as platinum group metals.

What are some of the main sources of silver and gold today?

Our primary source of feed metal is, of course, mined ore. Reclaimed, or secondary, silver comes from a variety of sources: primarily photographic scrap, followed by industrial and electronic scraps, such as circuit boards, silver contacts and grazing alloys, scrap from the arts industries, and recovery from US and foreign coins.

Gold comes from primary mine sources as well as industrial, electronic and jewellery scrap - most of the primary silver, dare, that we refine contains recoverable gold.

How is the metal actually reclaimed?

The process used to reclaim and refine silver is a function of the type of feed material. The primary process has two stages, involving pyrometallurgy (which is the use of heat and fluxes to refine and upgrade) and electrochemistry. The pyrometallurgical process upgrade s the silver content to approximately 98% and the electrochemical process produces 99.99% pure silver. In addition, several specialised chemical processes may be used.

What forms can the refined silver take?

The process results in crystals of pure metallic silver. The crystal can be sold as-is, it can be melted into bars, most commonly of 1,000 ounces, it can also be cast into the grain, small spheres of approximately 1/4 to 3/8-inch es in diameter. To form grain, molten silver is poured into a ceramic or graphite box with holes drilled in it. From there, it flows into a large vat of chilled water. When it hits the water, small pellets are formed. After the grain is dried the very fine and very large pieces - normally only about I% of the total - are screened out, and the balance of the grain is ready for sale.

What different forms of processed silver appeal to different end-users?

The 1,000-ounce bars are good delivery material, accepted by exchanges and depositories in the United States, Europe e and the Far East, and arc the form preferred by investors. There is growing industrial interest in the use of grain for some applications, and crystal for others, as both allow the precious measure of small amount s of silver. Crystal is used as the catalyst for the manufacture of formaldehyde. The spherical shape of silver grain enhances its ability to flow, making it ideal for automated processes. It is also easier to handle than the more irregularly shaped crystal.

What are some of the challenges facing the refining industry today?

Some of the challenges facing the industry are common to many businesses today, notably the issue of providing customer s with highest quality service, while maintaining competitive pricing. In many ways, the refining of precious metals is a unique industry: we are dealing with raw materials which ultimately are refined into financial commodities. In order to maximise available opportunities, these products need to be marketed on a global basis to meet constantly shifting world demand in very different market centres. In addition, refiners today are faced witl1 handling new combinations of materials, never seen before in nature, that need to be handled using processes that grow ever more complex. These processes must comply with environmental regulations and concerns.

How can some of these challenges be met?

On environmental issues, HHRG has taken a very proactive role. We have on-staff engineers capable of ensuring compliance with existing and anticipated regulations. We also have a staff member who participates with government agencies to develop effective and responsible regulations for the industry. This individual was the representative for the International Precious Metals Institute for the Basel Convention, which covers the trans-boundary movement of waste materials. By taking a leadership role, we can provide our customers with information on the latest environmental regulations followed by a complete and environmentally safe service.

There is a growing need for expertise in developing economies which were once centrally planned and are now moving towards market systems. As laws become more Liberalised, new opportunities in precious metals mining and reclamation are constantly opening up. We monitor exploration and mining developments in Central Europe, South America and other regions. In many cases, we undertake technology transfer programs - forming "partnerships" for refining that provides the opportunity to develop ongoing relationships.

To see how far HHRG has come, it is interesting to make a quantitative comparison between our capacity 20 years ago and today. In I 977, we refined between 5 and 6 million ounces of silver. Last year, that amount stood at 60 million. During the same period, our gold refining more than tripled. Looking toward the not too distant future, within the next several months, we will have tl1e capacity to handle over 70 million ounces of silver and close to 10 million ounces of gold - ensuring our continued place as one of the world's top refiners.