Payability
A smelter or refinery does not pay for all the metal it receives. Payability is the share it pays for, and it differs widely between metals.
3 min read
Payability is the share of the metal in a mine's product that the buyer actually pays for.
What it is
Most base-metal mines do not sell pure metal. They sell a concentrate: ground ore upgraded to, say, 50% zinc or 25% copper. A smelter turns the concentrate into metal and keeps part of the metal as part of its fee. The miner is paid only for the share.
Gold and silver mines often produce doré, bars that are already mostly precious metal. Refineries pay for almost all of it.
How it is set
Payability is set in the sales contract with the smelter or trader. For base metals, terms usually have two parts:
- A payable percentage, such as 85% of the zinc in the concentrate.
- A minimum deduction, in units. One unit is one percentage point of concentrate grade, so an 8-unit deduction on a 50% zinc concentrate takes it to 42%.
The two are alternatives, not steps. The smelter works out both deductions and applies whichever is larger. The payable percentage is not applied again after the minimum deduction.
For zinc, the two deductions are equal at a concentrate grade of about 53%. Below that, the minimum deduction decides and effective payability falls below 85%. Above it, the 85% decides. A 40% zinc concentrate, for example, is paid for 32 units, only 80% of its zinc. That is why concentrate grade matters, not just recovery.
Typical payability
| Product | Payable % | Minimum deduction | Effective payability at a typical concentrate grade |
|---|---|---|---|
| Zinc concentrate | about 85% | about 8 units | about 84% at 50% zinc; 85% above about 53% |
| Copper concentrate | about 96–97% | about 1 unit | about 96% at 25% copper |
| Lead concentrate | about 95% | about 3 units | about 95% at 60% lead |
| Gold or silver doré | 99.5–99.9% | none (refining charges apply instead) | 99.5–99.9% |
| Gold in copper concentrate | about 90–97%, by gold grade | often about 1 g/t | varies with gold grade |
| Silver in base-metal concentrates | about 90–95% | often 30–50 g/t | varies with silver grade |
| Minor metals in concentrates | often low | varies | often low, sometimes nothing |
Why it matters
Payability works like recovery: it scales revenue directly. Zinc is the clearest case. About 15% of the recovered zinc earns the miner nothing, before any other charge. Payability is separate from the treatment and refining charges covered under cost of sale.
Ranges are indicative and vary widely by deposit. This is educational material, not investment advice.
Key terms
Next in this track
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Educational material only. Nothing here is investment advice or an offer to buy or sell any security or mineral interest.