Specifications for LPPM Accredited Sponge and Application Procedures

New Applicants

Specifications for LPPM Accredited Sponge and Application Procedures

Introduction
Criteria
Procedure for Submission of an Application
Technical Assessment Procedure
Results
Charges and Accounting
General Specifications for a Sponge Accreditation
Proactive Monitoring
Retesting of Sponge Samples
Transfer to list of Former Refiners

1. Introduction

Due to requests from Good Delivery (GD) refiners the LPPM has introduced Platinum and Palladium Sponge Accreditation lists to run alongside the current GD bar lists. All refiners currently on the GD bar lists will be entitled to be added to the Sponge Accreditation lists if they so wish.

Refiners not currently on the GD bar list can apply for sponge accreditation. The process for sponge accreditation is similar to the full GD bar application process. This will require successful completion prior to the applicant being added to the sponge accreditation list.

The LPPM has been working on a set of standards for the accreditation of Platinum and Palladium sponges – such accreditation having been requested by multiple major GD Platinum and Palladium primary producers and secondary refiners and deemed very beneficial for the market by the Management Committee.

The objective is to facilitate and streamline the trade in these sponges and increase the confidence of all market participants when dealing with these materials. For practical and security reasons, it will not be possible to have sponges accepted for Good Delivery by clearing banks and vaults.

To maintain their inclusion on the LPPM Sponge Accreditation lists, GD refiners must pass a process very similar to the current GD Proactive Monitoring (PAM) and repeat that every three years. They will be required to provide sponge samples that will be analysed against the LPPM standards, full details are set out in these rules.

A lot of work has been done by the LPPM referees during 2019 and 2020, including two major round robin analysis exercise of sponge samples and method comparison. This has resulted in a set of standards detailed below.

The Sponge Accreditation Lists are the copyright of the LPPM. Reproduction and dissemination of the Lists is permitted only with the express written permission of the LPPM and an acknowledgement of the LPPM’s copyright.

New Applicants for LPPM Sponge Accreditation Refiners

Refiners not currently on the GD bar list can apply for sponge accreditation. The process for new applicants for sponge accreditation is similar to the full GD bar application process. This will require successful completion prior to the applicant being added to the LPPM Sponge Accreditation List.

Full details of this application process are set out below and in the annexes.

2. Criteria

The LPPM is unlikely to give favourable consideration to an application for listing unless the following criteria are met:

(a) The applicant has been in existence for not less than five years and has been involved in refining / manufacturing operations of the metal for which it is applying for Good Delivery status for not less than three years prior to the application. An applicant will be required to indicate to what extent their business is refining and / or straight through conversion processing and also in what form their platinum / palladium production is sold. For the avoidance of doubt an applicant must be able to demonstrate that they have the ability to produce sponge of an acceptable standard.

(b) The applicant has an established annual refining production (which need not be just in the form of sponge but can be the platinum and palladium products) of not less than five hundred kilograms.

(c) The applicant has a tangible net worth of not less than the equivalent of 15 million pounds Sterling or such figure as the LPPM may from time to time determine.

The LPPM believes that the long-term viability of a refinery as well as its ability to meet the required standards of the Sponge Accreditation List depend on it having a certain volume of production as well as a minimum tangible net worth. If a refinery suffers a substantial and sustained fall in refined / manufactured production relative to the minima mentioned in paragraph (b) above or if its tangible net worth falls significantly below that indicated in paragraph (c) above, it should inform the LPPM of the reasons for the fall and, if appropriate, the likely future development. The Management Committee of the LPPM will then determine whether the refiner’s brand should remain on the List and if so what further action, if any, is required or be moved to the Former Refiners List.

3. Procedure for Submission of an Application

An applicant company wishing to apply for Sponge Accreditation status for its refinery must submit an application to the LPPM Chairman using the application form given in Annex A.

The application must be accompanied by a number of documents (which are described in detail in Annex A). These should give a clear description of the ownership, operating history and financial position of the refinery, together with details of the Sponge and other products produced.

These documents are required firstly to provide a general description of the operations at the refinery and the standing of the applicant company and secondly to ascertain the ownership structure and in particular to meet the compliance requirements for the setting up of a customer account for the applicant to facilitate the subsequent provision of sponge samples for testing and the settlement of the troy ounce content thereof upon completion of the application process.

The Application Form also includes declarations relating to the applicant’s willingness to (a) respond to any complaints from the market about the quality of its Sponge and (b) have the quality of its refining tested from time to time by the LPPM (by means of the proactive monitoring system).

Documents must be provided in English. In the case of documents originally published in the applicant’s local language, an English translation must be provided. Where copies of official documents are to be provided the LPPM may at its discretion require such documents to be notarised by a public official.

The LPPM Management Committee will treat the production data as confidential. This information will normally only be examined by the LPPM Management Committee and its consultant.

It should be noted that the application fee of £2,000 + VAT at the current rate where applicable, must be paid at the time of the application, either in the form of an accompanying cheque in favour of the London Platinum and Palladium Market or by direct bank transfer to the LPPM’s bank account including all bank charges. Details of the LPPM’s bank account are given in Annex A. The LPPM will issue a corresponding invoice/receipt when the payment has been received (or if required, an invoice in advance). The application fee is non-refundable in the event that an application is unsuccessful, irrespective of the stage reached. Details of the other charges involved are given in Section 6.

The LPPM will normally acknowledge receipt of the application within ten working days. As soon as possible after receipt of the application, the LPPM Management Committee will decide whether the application should be accepted for technical assessment.

The LPPM reserves the right, where this is considered necessary, to arrange a short inspection visit before accepting an application for technical appraisal. The costs of the inspection visit, including business class flights, local subsistence and travel, must be paid for by the applicant. The inspectors will be nominated by the LPPM Management Committee.

If, having considered all the information submitted, the LPPM Management Committee agree that the application meets all the relevant criteria and should therefore be processed further, the applicant will be so advised and will be required to pay the balance of the application fee namely £23,000 plus VAT where applicable and submit Sponge Sample for inspection, assaying and testing.

Throughout the application process, the LPPM will act as the intermediary between the applicant and the referees (see list in Annex B) that will be used in the technical assessment stage. The LPPM will also keep accounts in respect of the charges for the technical assessment stage of the application and the sponge samples that the applicant supplies for testing and any other costs involved. The applicant will not be informed of the identities of the referees carrying out the technical assessment and the referees will only be informed of the identity of the applicant when the application has been successfully completed and the applicant advised of the result.

4. Technical Assessment Procedure

4.1 Testing the applicant's assaying capability.

The applicant will be required to assay the Sponge Samples that it submits to the LPPM for inspection and testing and provide the LPPM with a copy of its detailed spectrographic analysis report showing the level of individual trace elements present.

Oxygen shall be determined in addition to core impurities, using the GD refiners’ normal method (Gas analysis, Loss on Reduction); the maximum content permitted of oxygen shall be of 0.5 parts per thousand (but this value is not taken into consideration for the purity determination)

A separate assay report should be produced for each individual Sponge Sample and show the assay determined for one. Each assay report should be prepared in accordance with the procedure set out in Annex F – Proactive Monitoring – Procedures and Criteria which apply equally to Good Delivery applications.

For the purpose of rounding five-figure assays to four figures for the Sponge Samples, the following principle should be observed (except in the two instances shown below).

If the fifth significant figure is a six or greater, then the fourth significant figure should be rounded up by one.

The exceptions are as follows:

a) an assay determination of between 99.946% and 99.949% should not be rounded up to 99.95% but should be reported as 99.94%.

b) an assay of 99.996% or above should not be rounded up and should be reported as 99.99%.

The assay report should also provide full details of the assaying method that has been used. If a different assaying method is used in respect of some elements then the assay report should indicate the alternative method used and the elements to which the alternative method has been applied.

The criteria used to determine whether an applicant has passed or failed the assaying test are set out in Annex F.

4.2 Submission of Sponge Samples for Testing

To meet the standards for Sponge Accreditation, the GD refiners are asked to produce a homogeneous sponge of each metal to be accredited, and follow those steps:

Take 4 samples of 20 g each from that sponge; 2 samples are to be sent to the LPPM, the 3rd one is to be kept as reserve sample by the refiner, and the 4th one is to be used for analysis by the refiner.
Oxygen – Oxygen shall be determined in addition to core impurities, using the GD refiners’ normal method (Gas analysis, Loss on Reduction); the maximum content permitted of oxygen shall be of 0.5 parts per thousand (but this value is not taken into consideration for the purity determination)
Send the results obtained for the sponge (including purity, concentration of each impurity and oxygen content).

The sample material produced as above should be divided in to 4 separate containers. Each individual sample must be a minimum of 20 grams.

The containers must be unmarked except for the LPPM code and the net weight of the sponge contained as they will not be re-packed before sending to the referees

The applicant will be required to ship two Sponge Samples, free of all charges, to the LPPM.

(a) The two sample containers should only be marked with the net weight and the identifying code provided by the LPPM, for example PT-SP-2021-1-1 and PT-SP-2021-1-2.
(b) The two samples should be accompanied by a weight list showing in respect of each samples, the weight in grams expressed to two decimal places. The weight list should also show the four-figure assay of each sample.

Usually, the Sponge Samples must be received by the LPPM within four weeks of the applicant being requested to submit them. Failure to submit the Sponge Samples within this timeframe may, in the absence of specific agreement by the LPPM, result in an application being rejected with the forfeiture of the fees paid.

All transportation and insurance costs are payable by the applicant.

The LPPM should be shown on the airwaybill as the Consignee and the LPPM’s nominated vault as the Notify Party.

The LPPM will send one each of the Sponge Samples to two referees for testing. The referees will generally use spectrographic analysis when checking the assay of the samples, conducting not less than three trials on each sample. Each referee will then take the average of all trial results to produce and overall assay determination. In order to pass the assaying test, the applicant’s five figure assay determination (which must not be less than 99.950%) of the sponge samples, must agree with the referee’s assay determination. The LPPM does not set maximum acceptable levels for impurities but seeks to ensure that they are within appropriate limits and the referees’ reports will include their evaluation of the impurities found in this regard.

The Referee’s will also measure Oxygen using their normal method.

5. Results

An applicant must satisfy the Management Committee of the LPPM that it has met all the above criteria and testing requirements before it can be included in the list of Sponge Accredited refiners.

When the Management Committee has approved an application for listing, the LPPM will inform the applicant. The Chairman will arrange for the applicant’s details to be included on the Sponge Accreditation List and will prepare and send to the applicant a certificate marking its acceptance onto the List.

6. Charges and Accounting

Fees are levied by the LPPM for a Good Delivery application to cover the costs of the LPPM and the work of the referees. Such fees may be reviewed by the LPPM at any time but not retrospectively once an application has commenced. Currently the total fee, excluding VAT, amounts to £25,000.00 for each of platinum and palladium. The fees are payable in two tranches:

Fees Payable by Good Delivery Applicants (in £ sterling – plus VAT at the then current rate)

Fees (all fees are payable to the LPPM)	Platinum	Palladium
On Application (plus VAT at the applicable rate)	2,000	2,000
Stage 1: Testing of Applicant’s sponge samples (plus VAT at the applicable rate)	23,000	23,000
Total	25,000	25,000
Current Sponge Accredited refiner applying for GD listing	5,000	5,000

The above-mentioned fees are payable in advance at each stage. In the event of an applicant not progressing to the next stage, for whatever reason, no part of the fees already paid is refundable. However, in such situations, no fees are payable for the next stage.

7. General Specifications for LPPM Accredited Sponge

Fineness: The minimum acceptable fineness is 99.95%

Physical: The sponge should be homogeneous and free flowing

Oxygen: The Oxygen content should be less than 0.5 parts per thousand

Package: The sponge should be packed in the refiners normal secure packaging

8. Proactive Monitoring (PAM)

The LPPM operates a system of monitoring the quality of the production and assaying ability of refiners on the LPPM Sponge Accredited Lists. The PAM will necessitate refiners providing on request samples from a normal production run which will be check-assayed by two of the LPPM’s referees. Normally refiners will be subject to monitoring once every three years. A newly listed refiner would not normally be monitored within the first three years of being listed. A separate paper “Proactive Monitoring Procedures and Criteria” for the proactive monitoring of Sponge Accredited refiners describes the operation of the system in detail and is included as Annex F.

8.1 Annual Monitoring Fee

In order to pay for the costs involved in the testing required for sponge PAM each refiner on the Sponge Accredited List must pay an annual monitoring and testing fee to the LPPM (currently £580.00 per metal plus VAT where applicable). This is in addition to the annual monitoring fee for Good Delivery plates and ingots.

9. Retesting of Sponge

The LPPM reserves the right when appropriate to ask refiners on the Sponge Accredited List to submit sponge samples for testing if, in its opinion, a refiner is unable to demonstrate the required competence in assaying (as revealed by the PAM system). At its discretion, the LPPM may request a refiner to send sponge samples to LPPM Referees for testing.

10. Transfer to List of Former Refiners

If at any time the Management Committee of the LPPM deems that the quality of a Sponge Accredited refiner’s sponge falls short of the standards set out in these Rules and the refiner concerned either refuses or is unable to rectify the problem identified by the Management Committee then the LPPM Management Committee reserves the absolute right to transfer the refiner from the LPPM Sponge Accredited List of Former Refiners

Further Information

Any questions or requests for further information about the Sponge Accredited List, specifications or application procedures should be addressed to the Chairman of the LPPM.