How to Inspect — surveyors, samplers, assayers, umpire procedure
Independent inspection governs every transfer of title in the metals supply chain — from the pre-shipment survey that establishes the weight and grade of a concentrate parcel at mine gate, through the loading and sealing of containers or bulk hatches, to the discharge outturn survey and, where parties disagree, the formal umpire assay before an accredited third laboratory. This reference covers each phase of the lifecycle, the international standards that govern each activity (ISO 12743, ISO 11648, ISO/IEC 17025), the bodies that accredit and oversee inspection agencies (TIC Council, formerly IFIA), and the arbitral frameworks used when disputes reach formal resolution — CIETAC, LCIA, HKIAC, SCC.
01Phases of the metals inspection lifecycle
Phase 1 — Pre-shipment survey
The independent inspection agency attends the loading point before the cargo is committed to a vessel or container. Key activities: draft survey (weight by vessel displacement per ISO 12743), mechanical or manual sampling of concentrates per ISO 12743 / ISO 11648, division of the composite sample into shipper / receiver / umpire splits, and despatch of splits to the assay laboratories. The pre-shipment Certificate of Sampling and Certificate of Weight form the contractual basis for provisional payment.
Phase 2 — Loading and sealing
For containerised metals and concentrates, the container is sealed with a tamper-evident tag after loading; the seal number is recorded jointly by shipper and inspector — the procedure known as "tag-and-seal" mandated by LME warehousing rules post-Qingdao 2014. For bulk vessels, the surveyor conducts a hatch survey: hold cleanliness inspection, stow condition, ullage / draft readings, tally of loaded units. Joint tallying sheets are signed by both shipper and vessel master.
Phase 3 — In-transit and joint survey
For long ocean voyages an outturn superintendent may be appointed to attend the vessel at the port of discharge before hatches are opened. If the cargo shows evidence of moisture ingress, cargo shift or external damage the surveyor issues a Note of Protest against the vessel. Joint surveys — where both shipper and receiver inspectors attend simultaneously — reduce the scope for disputed findings. The P&I club surveyor may also attend if a cargo claim is likely. Demurrage trigger times are logged from the vessel's Notice of Readiness.
Phase 4 — Discharge and outturn
The discharge outturn survey establishes the weight and condition of the cargo as it leaves the vessel or warehouse. For refined metal lots, each bundle, coil or pallet is tallied against the shipping marks. For concentrates, a separate outturn sample is taken and split (receiver's lab / umpire retention). The final Certificate of Weight, Certificate of Sampling and Certificate of Assay are issued after lab turnaround (typically 5–15 business days). Any shortfall in weight or out-of-specification assay triggers notice of reservation of umpire rights within the contractual window (commonly 30–90 days).
Phase 5 — Post-dispute and umpire assay
Where the shipper's assay and the receiver's assay diverge beyond the contractual tolerance, a formal umpire procedure is invoked. The retained umpire split is sent to a mutually agreed third laboratory accredited under ISO/IEC 17025. The umpire result is binding. If the umpire lab result falls outside both principals' results, some contracts use a three-lab averaging procedure. Where the entire inspection methodology is disputed, or where fraud is alleged, the matter proceeds to arbitration under CIETAC (Shanghai / Beijing), LCIA (London), HKIAC (Hong Kong) or SCC (Stockholm) depending on the governing law clause.
02RACI matrix — who does what across the inspection lifecycle
| Role | P1 Pre-shipment | P2 Load & seal | P3 In-transit | P4 Discharge | P5 Umpire |
|---|---|---|---|---|---|
| Shipper / Seller | A | A | I | C | C |
| Independent Surveyor (inspection co.) | R | R+A | R | R+A | I |
| Inspection / Assay Laboratory | R | I | I | R | C |
| Vessel Master / Carrier | C | C | A | C | I |
| Receiver / Buyer | C | C | C | A | C |
| Insurer / P&I Club | I | I | C | C | I |
| Umpire Laboratory | I | I | I | I | R+A |
| Qualified Person (QP) | C | I | I | C | C |
R Responsible · A Accountable · C Consulted · I Informed
03Lines of inspection — pick the right service
Weight and volume
- ISO 12743 — draft survey weight procedures for non-ferrous concentrates
- Weighbridge / belt-weigher calibration (OIML R 76 / OIML R 51)
- Ullage measurement — tank oil equivalent for liquid metals (e.g. molten zinc, lead)
- Silo / stockpile volume survey by photogrammetry or laser scanning
Statistical and mechanical sampling
Analytical methods
- Fire assay — standard for gold and silver; detection limit ~0.01 g/t
- ICP-OES / ICP-MS — multi-element base-metal concentrates
- XRF (X-ray fluorescence) — rapid screening at port; non-destructive
- LBMA Good Delivery proficiency testing — gold and silver bar specification
- ISO/IEC 17025 lab accreditation — mandatory for umpire labs
Marine and warehouse surveys
- P&I club surveys — International Group of P&I Clubs
- IUMI Hull & Cargo guidance — IUMI
- Pre-shipment commodity inspection — SGS, Cotecna, Bureau Veritas, Intertek
- Container condition survey — CSC plate, ISO 6346 marking
Umpire and referee assay
- Three-lab procedure: shipper's lab / receiver's lab / umpire lab
- Umpire lab must hold ISO/IEC 17025 accreditation
- CIETAC Technical Expert procedures — CIETAC
- ASTM lot-acceptance sampling plans (ASTM E2234 series)
Reporting codes for reserves
- JORC Code 2012 — Australia / Asia-Pacific
- SEC S-K 1300 — United States (effective 2021)
- NI 43-101 — Canada, requires Qualified Person sign-off
- CIM Estimation Best Practices — Canadian Institute of Mining
Precious metals custodianship
- LBMA Good Delivery list — approved refiners for gold and silver bars
- LBMA Responsible Sourcing Programme
- LME-approved warehouses — warrant-eligible storage
- LPMCL vaulting — London Precious Metals Clearing Limited
Container integrity and marking
- ISO 6346 — container marking and identification
- CSC (Convention for Safe Containers) plate inspection
- Post-loading seal verification — LME tag-and-seal procedure
- CTU Code (IMO/ILO/UNECE) — packing of cargo transport units
04Detailed phases
Phase 1Pre-shipment survey — draft, sampling, weight, assay split
The pre-shipment survey is commissioned by either the seller (common in FOB / FCA trades) or both parties jointly (in CIF / DAP trades). The independent surveyor attends the loading facility before or during loading. For bulk concentrates, the primary duties are:
- Draft survey: measuring vessel displacement at fore and aft draft marks before and after loading; weight derived from the vessel's hydrostatic tables per ISO 12743
- Mechanical sampling: automatic samplers installed in the concentrate feed belt extract increments at defined intervals; minimum number of increments, increment mass and variogram requirements specified in ISO 12743 Annex A
- Sample preparation: crushed and rolled composite split into three labelled and sealed containers — shipper's primary, receiver's primary, umpire retention
- Moisture determination: ISO 10251 (copper), ISO 1988 (iron ore) — critical because moisture above contract tolerance gives the buyer a right to reject or renegotiate price
- Document produced: Certificate of Sampling (method, number of increments, gross and dry weight) and Certificate of Weight signed by the surveyor and loading facility
- Trigger for dispute: moisture above contract maximum, sample integrity seals broken, draft reading variance >0.5% against belt-weigher
Phase 2Loading and sealing — tag-and-seal, container counts, hatch survey
The tag-and-seal procedure for containerised LME-warranted metal (copper cathode, aluminium billets, zinc, lead, nickel) was introduced following the Qingdao port fraud of 2014, in which duplicate warrants were issued against the same physical metal. Under the current LME warehousing rules, an approved warehousing company must apply a unique tamper-evident seal to each container, with the seal number recorded on the LME warrant and the load list. The surveyor's duties at this phase:
- Container count and tally against the Bill of Lading draft; verification that ISO 6346 container numbers match the shipping documents
- Application or witnessing of tamper-evident seal; seal number logged on joint tally sheet signed by the warehouse and the surveyor
- For bulk vessels: hatch survey — hold cleanliness certificate confirming absence of prior cargo residue; stow condition; trimming procedure; hatch-sealing record
- CSC plate inspection — confirms the container is roadworthy for the gross weight declared
- Document produced: Load List (container numbers, seal numbers, gross weights); Hatch Survey Report for bulk; countersigned by the vessel master or stevedore foreman
- Trigger for dispute: missing or broken seal at discharge; variance in container count vs Bill of Lading
Phase 3In-transit and joint survey — outturn supervision, vessel hold inspection, demurrage
For major bulk shipments (e.g. iron ore, copper concentrate) the inspection agency may appoint a port-of-discharge superintendent, who boards the vessel on arrival at the anchorage to inspect hold condition before hatches are broken. If there is visible cargo shift, moisture damage, or evidence of contamination, a Note of Protest is issued against the vessel master and served on the P&I club correspondent at the discharge port. Key activities:
- Notice of Readiness (NOR) receipt and timestamp — the formal trigger for demurrage laytime under the charter party
- Pre-discharge hold condition inspection — photograph all four holds; log any water ingress, unusual compaction, or odour
- Joint survey option: shipper nominates its own inspector; buyer nominates its inspector; both attend discharge together to reduce evidentiary disputes
- For containerised lots: seal integrity check on container arrival — broken or tampered seals noted on an Exception Report before devanning
- Document produced: Notice of Protest (if damage found); Hold Condition Certificate; Outturn Supervision Report
- Trigger for dispute: seal broken without explanation; water-damaged concentrate above specified moisture tolerance; cargo-shift indicating inadequate stowage under the Hague-Visby Rules
Phase 4Discharge and outturn — joint survey, sealed samples, certificate issuance
The outturn survey at the port of discharge produces the certificates on which final settlement is calculated. For concentrates under a pricing-formula offtake contract, the outturn assay (rather than the loading assay) is typically the basis for final provisional or final invoice. The receiver's inspector and, where applicable, the shipper's inspector jointly supervise discharge, tallying, and re-sampling:
- Weighbridge or draft survey of the discharge quantity — compared against the load Certificate of Weight to identify any shortage; shortage noted on a Short-Landing Certificate
- Outturn sampling in accordance with ISO 12743 — increments taken from discharge belt or grab discharge; three-split division (receiver's primary, shipper's counter-sample, umpire retention stored sealed and frozen)
- Assay turnaround: receiver's lab returns Certificate of Assay within 5–15 business days (depending on contract)
- Shipper's counter-assay: shipper's split analysed by a separate ISO/IEC 17025-accredited lab; results exchanged
- Umpire reservation: if assay variance exceeds the contractual tolerance (often ±0.2% Cu, ±1 g/t Au), receiver must formally notify the shipper in writing and invoke the umpire clause within the notice window
- Document produced: Certificate of Sampling, Certificate of Assay, Certificate of Weight / Outturn, Short-Landing Certificate if applicable
- Trigger for dispute: assay variance beyond tolerance; refusal of shipper to accept outturn weight; unsealed or contaminated umpire sample
Phase 5Post-dispute and umpire — referee assay, third-lab umpire, arbitration
The umpire procedure is a contractual mechanism to resolve assay disputes without immediate recourse to litigation. The retained umpire split — which must have been stored sealed and under recognised chain-of-custody since the outturn — is despatched to the agreed umpire laboratory. That laboratory must hold ISO/IEC 17025 accreditation for the relevant analyte and method, and must not have any prior relationship with either party.
- Three-result procedure: if the umpire result falls between the two principal results, the contract average determines final value; if outside both, some contracts discard the outlier and average the remaining two
- Umpire lab selection: mutually agreed from a pre-approved list maintained in the offtake contract, or by reference to the local assay association (e.g. TIC Council member labs)
- CIETAC Technical Appraisal: the China International Economic and Trade Arbitration Commission provides a commodity-specialist technical appraisal service used in Sino-foreign concentrate trades — CIETAC rules
- Full arbitration: where the umpire result is itself disputed, or where procedural fraud is alleged, arbitration proceeds under the governing law clause — LCIA (London), HKIAC (Hong Kong), SCC (Stockholm), or CIETAC (Shanghai / Beijing)
- Document produced: Umpire Certificate of Assay (binding on the parties); Final Invoice / Debit Note recalculated on umpire result; arbitral award if escalated
- Trigger for escalation to arbitration: umpire lab result contested on procedural grounds; allegation of sample salting or substitution; refusal to honour umpire certificate
05Case precedents
Event
In mid-2014 it emerged that a commodities financing scheme at Qingdao Dagang port had used the same physical stocks of copper and aluminium as collateral for multiple financing arrangements, generating duplicate warehouse warrants. Estimated financing exposure was reported at approximately US$2–3bn. The fraud was possible because warehouse operators were not subject to the independent seal-and-tag verification the LME subsequently imposed.
Regulatory and inspection outcome
The LME introduced mandatory tag-and-seal requirements for all LME-approved warehouse operators, requiring independent surveyor attendance at loading and unloading, with tamper-evident seal numbers recorded against each warrant. The reforms are set out in the LME warehousing rules updated from 2014 onwards. The case remains the reference point for why independent warrant-level inspection is essential in any warehouse-financing structure.
Inspection lesson
The absence of independent, warrant-level physical inspection — specifically seal verification at the individual container or lot level — enabled the fraud to persist for an extended period. The post-Qingdao LME regime requires that the seal number on the physical container match the electronic warrant record, verified by an approved independent inspector at each movement. Banks providing metal-backed financing now routinely require TIC Council member inspection agencies to conduct periodic random audits of warehoused collateral.
Event
Bre-X Minerals, a Canadian company listed on the Toronto Stock Exchange, announced a gold discovery at Busang, East Kalimantan, Indonesia in 1993. Reported resource estimates reached approximately 70 million ounces of gold before a due-diligence review in March 1997 by Strathcona Mineral Services determined that the drill core samples had been salted — that is, placer gold was added to core samples to inflate assay results. The Busang deposit contained no economic gold.
Assay and sampling failures
The mechanism of the fraud was sample substitution during the core preparation stage — gold-bearing riverbed material was mixed into crushed drill core before despatch to the assay laboratory. Standard QA/QC procedures (field duplicates, blank samples, certified reference materials inserted blind into the sample stream) were not systematically applied. After the fraud was exposed, the independent assay firm Strathcona resampled using coarse reject material held at the lab and found negligible gold.
Regulatory and standards outcome
Bre-X was the primary impetus for the introduction of NI 43-101 (Technical Reports for Mineral Projects) by the Canadian Securities Administrators in 2001, requiring a Qualified Person to take responsibility for resource estimates and mandating chain-of-custody disclosure for sampling. The JORC Code's QA/QC requirements and the SEC S-K 1300 standard adopted similar Qualified Person accountability requirements. The case remains the reference point for why independent assay verification and blind insertion of control samples are non-negotiable.
Event
In June 1996, Sumitomo Corporation of Japan disclosed that its chief copper trader, Yasuo Hamanaka, had conducted unauthorised copper trades on the London Metal Exchange over approximately ten years, accumulating losses subsequently reported at approximately US$2.6bn. At the peak of the scheme Hamanaka controlled a significant proportion of the LME copper market, a position that was not detected by internal or exchange inspection of physical inventory versus open positions.
Inspection and audit failures
The Sumitomo case demonstrated that LME warrant inspection at that time focused on physical quality and quantity of warranted metal, not on the match between physical inventory held in LME warehouses and the open futures/forward positions of individual traders. No standard commodity inspection procedure covers position-level cross-reference. The case led to regulatory changes in how exchanges monitor large concentrations of long positions relative to available physical inventory.
Regulatory outcome
The UK Securities and Investments Board (predecessor to the FCA) and the US Commodity Futures Trading Commission (CFTC) conducted investigations. Sumitomo paid US$150m to settle CFTC charges. The LME strengthened position-reporting requirements and large-position disclosure rules. The case is a reference point for the boundary between physical inspection (quantity and quality of metal in store) and market-integrity surveillance of trading positions — two separate regulatory functions that must operate in parallel.
Event
On 5 November 2015, the Fundão tailings dam at the Samarco Mariana complex (a joint venture between Vale and BHP Billiton) failed in Minas Gerais, Brazil. Approximately 43 million m³ of iron-ore tailings were released into the Rio Doce, reaching the Atlantic Ocean 650km downstream. Nineteen people died. The failure was attributed to static liquefaction of a specific zone of the dam — a mechanism that prior sampling and stability analyses had not adequately characterised.
Sampling and monitoring failures
The post-failure investigation identified deficiencies in the geotechnical sampling and monitoring programme for the Fundão dam: piezometric data indicating rising pore-water pressures were not acted upon, and the sampling programme for undrained shear strength did not capture the weaker zones that liquefied. The failure led directly to the creation of the Global Industry Standard on Tailings Management (GISTM, August 2020), which mandates independent monitoring, sampling and review by a specialist Independent Tailings Review Board (ITRB).
Standards and inspection outcome
GISTM Requirement 6 specifies that the tailings facility operator must commission an independent engineer to review and report on the monitoring data, including geotechnical sampling and instrumentation, at defined intervals. The Brazilian National Mining Agency (ANM) Resolution 13/2019 imposed additional sampling and reporting requirements for upstream-method dams. The Samarco case is the primary reference for why geotechnical sampling programmes must be designed by a Qualified Person and reviewed by an independent panel.
Event
The OK Tedi copper-gold mine in Papua New Guinea, operated by Ok Tedi Mining Limited (OTML), produced a high-moisture copper concentrate from a mountainous, high-rainfall environment. Disputes between OTML and its smelter customers over measured moisture content — and consequently over the payable weight of dry copper — recurred through the 1990s, escalating to formal umpire and arbitration proceedings. The disputes were structurally created by the difficulty of obtaining representative moisture samples from a concentrate that could segregate and change moisture profile during voyage.
Sampling and assay dispute mechanics
The core dispute concerned the adequacy of the moisture-sampling procedure applied at the loading port (Port Moresby) versus the receiver's re-measurement at the smelter port. The OTML concentrate had a naturally high and variable moisture content (sometimes exceeding 10%), and the increment extraction method and drying protocol under what was then the applicable standard were disputed. The arbitrations established that both the mechanical sampling equipment design and the drying temperature protocol must be explicitly specified in the offtake contract, not left to local practice.
Industry and standards outcome
The OK Tedi disputes contributed to the revision and tightening of moisture determination procedures in ISO 12743 and its predecessor standards, particularly for high-moisture concentrates from tropical-environment mines. The cases are a reference in the concentrate trading community for the principle that the sampling method, increment extraction design, sample preparation protocol, and drying conditions must all be specified in the contract — and that a generic reference to "ISO standards" is insufficient without specifying the clause-level detail. The TIC Council and its member inspection agencies now routinely audit moisture procedures as a distinct scope item.
06Reference standards and bodies
ISO 12743:2021
Sampling procedures for copper, lead, zinc and nickel concentrates — mechanical and manual, falling-stream and cross-belt methods, moisture.
ISO 11648
Statistical aspects of sampling bulk materials — Part 1: general principles; Part 2: sampling of particulate materials.
ISO/IEC 17025
General requirements for the competence of testing and calibration laboratories. Mandatory for umpire labs in metals concentrate disputes.
JORC Code 2012
Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Sets QA/QC requirements for sampling and assay data.
SEC S-K 1300
US Securities and Exchange Commission modernised mining disclosure rules, effective February 2021. Requires Qualified Person sign-off on sampling and resource estimates.
NI 43-101
Canadian standards for disclosure for mineral projects. Requires a Qualified Person to certify sampling procedures and chain of custody.
CIM Estimation Best Practices
Canadian Institute of Mining, Metallurgy and Petroleum — best-practice guidelines for mineral resource and reserve estimation, including sampling and QA/QC.
LBMA Good Delivery
London Bullion Market Association Good Delivery list — specification for gold and silver bars, including fineness, dimensions and assay method proficiency testing.
LBMA Responsible Sourcing Programme
Annual third-party audit of LBMA Good Delivery refiners against OECD Due Diligence Guidance and conflict-minerals standards.
TIC Council
Testing, Inspection and Certification industry body — formerly IFIA (International Federation of Inspection Agencies). Represents SGS, Bureau Veritas, Intertek, CCIC and others.
ITSCI
International Tin Supply Chain Initiative — due diligence and traceability programme for tin, tantalum and tungsten (3T) from conflict-affected and high-risk areas.
IRMA
Initiative for Responsible Mining Assurance — independent third-party mine site auditing standard covering social, environmental and governance aspects including sampling transparency.
IMIA
International Marine Insurance Association — provides guidance on cargo survey, hull inspection and risk-engineering standards relevant to metals-cargo claims.
ASTM E105
Standard practice for probability sampling of materials. General statistical framework used where ISO 11648 does not specify a particular bulk material.
LME warehouse rules
London Metal Exchange warehousing regulations including tag-and-seal requirements for LME-warranted metal, introduced post-Qingdao 2014.
Live metals inspection, assay and survey news
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