Assay, Title and Port Access: What Kills a Producer's Deal
Deals between genuine producers and genuine buyers collapse for a small number of repeated reasons. All three are fixable before you approach anybody.
Transactions between real producers and real buyers fail more often than either side expects, and rarely over price. The recurring causes are narrow enough to list, and every one of them can be dealt with before a first conversation rather than during a live negotiation.
One. The assay does not hold
A producer offers on the strength of an in house plant assay or a certificate that is eighteen months old. The buyer tests on delivery and the result is different. Now there is a loaded truck or a part loaded vessel and two parties arguing about who carries the difference.
The fix is unglamorous. Test with a recognised independent laboratory, SGS, Intertek or Control Union depending on the product, before you offer. Test again if the stockpile has been added to or has sat through a wet season. And make sure the contract names the inspection body, states where determination is final, and carries a written schedule of premiums and penalties so that a result off the base grade produces an arithmetic answer instead of an argument.
A producer who arrives with a current independent assay and a proposed premium schedule is signalling competence more clearly than any amount of company presentation.
Two. Title is not what it appeared to be
This is the most expensive one. Work proceeds for weeks on the basis that the party circulating the material controls it, and it emerges at contracting stage that they hold no title, the mandate has expired, or the actual owner has already committed the tonnage elsewhere.
If you are the producer, this is easy: say so plainly and be ready to evidence it. If you are mandated, say that instead, name the principal and have the mandate document available, with its expiry date. If you are further from the material than that, be honest about it, because the buyer will establish it eventually and finding out late destroys the relationship rather than just the deal.
Ambiguity is read as concealment even when it is only untidiness. Buyers do not investigate, they disengage.
Three. There is no route to a vessel
Tonnes at a mine gate are not a cargo. Between them sits rail allocation, terminal entitlement, port services, handling and stockpiling, and in Southern Africa that leg is where most deals actually die.
In coal it is Richards Bay entitlement or a Maputo arrangement. In manganese and iron ore it is rail capacity and a port services agreement at Coega, Port Elizabeth or Saldanha. In chrome moving out of Zimbabwe it is the border crossing and the run to Beira, Maputo or Durban. In copper it is the Dar es Salaam corridor, Beira or Durban and the bonded warehousing at the end of it.
You do not have to own that leg. Plenty of successful producers sell free on truck at the plant and let the buyer or an intermediary arrange the rest. What you cannot do is imply that you have a route you have not secured, because the buyer will plan a vessel around it.
The pattern underneath all three
Each of these is a case of a seller offering on the basis of what they expect to be true rather than what they have confirmed. That is understandable, because confirming costs money and time before there is any certainty of a sale. It is also the difference between an offer that a working desk will act on and one it will delete.
If you fix only one of the three, fix the assay. It is the cheapest, it is the fastest, and it is the one that most immediately marks you out as somebody worth a serious conversation.
You have the material. We have the buyers.
Tell us the commodity, roughly what grade, how much you hold and where it sits. You will know inside a trading day whether we have a buyer for it.
