24 PROPERTY PROFESSIONAL Volume 18 Issue 2

Why and how are precious

metals used?
Precious metals are used by DOE ele-
ments to meet research, development, pro-
duction, and other programmatic needs.
2
They are most likely used by other Federal
agencies and commercial companies for the
same reasons. In the following paragraphs, I
will describe some of the characteristics of
the various precious metals and their uses
in the research and development environ-
ment at Sandia National Laboratories
(SNL).
Gold
3
This remarkable metal has an unparal-
leled combination of chemical and physical
properties that makes it invaluable to a
wide range of everyday applications essen-
tial to our modern life. It is indestructible
and is completely recyclable and virtually
immune to the effects of air, water and oxy-
gen. This unique combination of properties
makes it a vital component in many med-
ical, industrial, and electrical applications.
Gold is among the most electrically
conductive of all metals. Since electricity is
essentially the flow of charged particles in a
current, metals that are conductive allow
this current to flow unimpeded. This makes
gold a vital component for electrical con-
nectors in computers and telecommunica-
tions equipment. The electrical connectors
used in older nuclear weapons components
and testing equipment had a very thick
coating of gold. I can only assume the thick
coating was to ensure that it provided a
high level of conductivity.
Gold is also an excellent conductor of
thermal energy or heat. Since many electri-
cal processes create heat, gold is necessary
to transfer it away from delicate instru-
ments. As an example, a 35% gold alloy is
PRECIOUS METALS
What are they, why and how are they used,
and how are they managed?
BY GARY D. SWANSON, CPPM, CF, DUKE CITY CHAPTER
What are precious metals?
Precious metals are defined as follows in the Department of
Energy Property Management Regulations (DOE-PMR).
1
Precious metals means uncommon and highly valuable metals char-
acterized by their superior resistance to corrosion and oxidation.
Included are gold, silver, and the platinum group metals platinum,
palladium, rhodium, iridium, ruthenium, and osmium.
Volume 18 Issue 2 PROPERTY PROFESSIONAL 25
used in the main engine nozzle of the Space
Shuttle, where temperatures can reach
3300 centigrade.
Silver
4
It is a soft white lustrous transition
metal that has the highest electrical and
thermal conductivity of any metal. It
occurs in minerals and in free form. Silver
is a very ductile and malleable (slightly
harder than gold) coinage metal that can
take a high degree of polish.
Although it has a higher level of con-
ductivity than copper, its greater cost and
tarnishability has prevented it from being
widely used in place of copper for electrical
purposes. Pure silver also has the highest
thermal conductivity, whitest color, highest
optical reflectivity, and the lowest contact
resistance of any metal.
Silvers principal use is as a precious
metal. Its salts, especially silver nitrate and
silver halides, are widely used in photogra-
phy, which happens to be the largest single
end use for silver. It is used in electrical and
electronic products because of its superior
conductivity. Printed circuits are made
using silver paint and computer keyboards
use silver electrical contacts. Silver is also
used in high voltage contacts as it is the
only metal that will not arc across contacts.
Silvers catalytic properties make it ideal
for use as a catalyst in oxidation reactions.
It is used to make solder and brazing alloys
and high capacity zinc and silver-cadmium
batteries.
Platinum
5
Platinum group metals (PGMs) con-
tribute to industrial processes in many
ways. Their catalytic properties are vital to
the production of important chemicals and
synthetics. Their durability, hardness, high
melting point, corrosion resistance, and
high temperature stability make them a
crucial part of industrial crucibles and com-
ponents that are used in the fabrication of a
wide range of products including glass fiber
and artificial silk.
As a metal, platinum has some very use-
ful properties; it is hard and extremely
dense. Platinum and its relatives, iridium
and osmium, are the most dense metals
known to man (platinum is nearly twice as
dense as lead and 11 percent more dense
than gold). It has a high melting point and
high temperature stability and corrosion
resistance. It is also a good oxidation cata-
lyst, conductive, and oxidation resistant.
Palladium
6
Palladium has the lowest melting point
of all PGMs and is also the least dense.
However, its melting point is still high
compared with other popular metals (e.g.,
over four and one half times that of lead)
and it has high temperature stability and
corrosion resistance. Other than iridium, it
is the rarest of all PGMs. It is also a good
oxidation catalyst, conductive, oxidation
resistant, and ductile when annealed. Its
most incredible property is the ability to
absorb 900 times its own volume of hydro-
gen at room temperature. This makes it an
efficient and safe hydrogen storage medium
and purifier.
Palladium may also be used in chemical
processes that require hydrogen exchange
between two reactants (e.g., that which
produces butadiene and cyclohexane, the
raw materials for synthetic rubber and
nylon). Because of its catalytic qualities,
palladium plays a key role in catalytic con-
verters and air purification equipment. It is
a more effective and durable plating materi-
al than gold because of its chemical stability
and electrical conductivity.
Rhodium
7
Rhodium has a cool-gray color and is
extremely hard, corrosion resistant, and has
excellent catalytic activity. Rhodium-plat-
inum gauzes are used as catalysts in the
production of nitric acid. Catalysts contain-
ing rhodium are important in vehicle emis-
sion control because of their exceptional
activity and selectivity.
Rhodiums high melting point, high
temperature stability, and corrosion resist-
ance makes it useful to many industrial
processes such as glass and glass fiber pro-
duction. Its hardness makes it an excellent
alloying agent to harden platinum.
Iridium
8
Iridium is the rarest of the PGMs and is
second only to osmium as the densest ele-
ment. It is the most corrosive resistant ele-
ment known. Iridium is white with a yel-
lowish hue. Although brittle, it is extremely
hard (over four times as hard as platinum)
and, with its high melting point, tempera-
ture stability, and corrosion resistance, is
used in high temperature equipment such
as crucibles used to grow crystals for laser
technology.
It also has industrial applications such
as the production of chlorine and caustic
soda. Its biological compatibility enables it
to be used in a range of medical and surgi-
cal applications. Because it is a shiny, oxida-
tion-resistant metal, it adds to the brilliance
and durability of jewelry.
Ruthenium
9
Ruthenium, a cool white metal, is rarely
used by itself as it is extremely difficult to
work. It remains hard and brittle even at
temperatures as high as 1500C. It is a use-
ful addition to platinum and palladium to
impart hardness in certain jewelry alloys
and to improve resistance to abrasion in
electrical contact surfaces.
Ruthenium is used in the electronics
and chemical industries because of its elec-
trical and electrochemical properties, good
catalytic properties and activity, resistance
to corrosion, and stability under varying
Silver has the
highest electrical and
thermal conductivity
of any metal.
26 PROPERTY PROFESSIONAL Volume 18 Issue 2
operating conditions. Its principal use in
the electronics industry is for use in resis-
tors. It is also increasingly being used in
computer hard disks to increase the density
at which data is stored. Ruthenium is being
used in alloys for prototypes for aircraft tur-
bines that will help reduce the CO2 impact
of air travel on the environment. Their
high melting points and high temperature
stability will allow for higher temperatures
that will allow more efficient burning of
aircraft fuel.
Osmium
10
Osmium is the densest substance
known, the hardest of the PGMs, and is 10
times harder than platinum. It also has a
higher melting point than the other PGMs.
Its extraordinary qualities result in its use in
applications in which frictional wear must
be avoided such as fountain pen nibs, sty-
luses, and instrument pivots. It is often
alloyed with platinum and iridium.
Because of its excellent conductivity
characteristics, it can be used as a more
effective and durable alternative to gold as
plating in electronic products. It is also an
extremely efficient oxidation catalyst and
contributes to the environment through its
use in fuel cells. This quality also allows its
use in forensic science for staining finger-
prints and DNA (as osmium tetroxide).
How are precious metals
managed within DOE?
The DOE-PMR Subpart 109-27.51
2
,
Management of Precious Metals, provides
the policies, principles, and guidelines for
the management of purchased and recov-
ered precious metals. DOE organizations
and contractors are required to establish
effective procedures and practices for the
administrative and physical control of pre-
cious metals in accordance with its provi-
sions. In December 2005, DOE approved
DOE Order 580.1, DOE Personal Proper-
ty Management Program
11
and DOE
Guide 580.1-1,
12
DOE Personal Property
Management Guide. DOE is moving its
personal property management regulations
from the DOE-PMR to the new Order and
Guide, except for regulations regarding the
management of high risk property and
vehicles. The Order and Guide will be
effective for SNL when it is incorporated
into its contract. DOEs goal in developing
the new Order and Guide is to include
mandatory procedures that a contractor
must follow in the Order and include guid-
ance that the contractor may follow in the
guide. They did this to allow contractors
the freedom to use more innovation in
their management of various functional
areas. I will explain what effect implemen-
tation of the Order and Guide will have on
precious metals management following
these paragraphs that describe the require-
ments under the DOE-PMR.
Precious Metals Control
Officer
13
Each DOE organization and contractor
holding precious metals must designate a
Precious Metals Control Officer (PMCO)
in writing. The PMCO is responsible for 1)
assuring the organizations precious metals
activities are conducted in accordance with
departmental requirements, 2) maintaining
an accurate list of precious metals custodi-
ans, 3) providing training on precious met-
als to custodians, 4) insuring physical
inventories are performed as required by
the subpart, 5) witnessing physical invento-
ries, 6) performing periodic unannounced
inspections of a custodians account, 7)
conducting an annual review of holdings to
determine excess quantities, and 8) prepar-
ing and submitting an annual forecast of
anticipated withdrawals from and returns
to the DOE Business Center for Precious
Metals Sales and Recovery (DOE Precious
Metals Pool).
Practices & Procedures
14
The DOE Precious Metals Pool must
be contacted regarding availability of pre-
cious metals prior to their being purchased
on the open market. They provide precious
metals free of charge to DOE elements.
Precious metals not in use must be
stored in a noncombustible combination
locked repository with access limited to the
designated custodian or alternate.
Perpetual inventory records are required
to be maintained for precious metals. At
SNL, this is accomplished by using an Ora-
cle Inventory Database that maintains cur-
rent and historical records of transactions.
Physical inventories of precious metals
must be conducted annually by custodians
and witnessed by the PMCO or his/her
designee. At SNL the physical inventory is
normally witnessed by the PMCO or Pre-
cious Metals Clerk, a representative of
Accounting Services, and the custodian or
alternate. During it, precious metals not in
use are weighed on calibrated scales and
compared with weights shown in the Ora-
cle Inventory Database for the sub-account.
Precious metals valued at $200 or less are
considered consumed. Custodians are
required to provide justification memoran-
dums signed by their manager for precious
metals that have had no usage since the last
physical inventory.
At SNL, all precious metals are issued
to custodians and stored in appropriate
containers at their facilities. They are
responsible to ensure that the precious met-
als are stored appropriately and that mini-
mum quantities are withdrawn consistent
with work requirements. When new pre-
cious metals are received, they are weighed
by the Precious Metals Clerk and entered
into the Oracle Inventory Database prior to
being issued to the appropriate custodian.
When custodians have excess or scrap pre-
cious metals, they must have them swiped
for radioactive contamination prior to con-
tacting the Precious Metals Clerk about
turning them in.
At SNL, the Precious Metals Clerk
stores turned in excess or scrap precious
metals in a vault until a sufficient quantity
is accumulated to allow for an economically
viable shipment. The precious metals excess
or scrap is shipped to the DOE Precious
Metals Pool or a refinery designated by
them. SNL normally makes one such ship-
ment a year.
The Precious Metals Control Officers
responsibilities listed above are included in
the DOE G 580.1-1 which means it is not
mandatory for a contractor to follow them.
The only mandatory requirements that
were included in the DOE O 580.1 for the
management of precious metal s is to
require an annual physical inventory of pre-
cious metals. All of the other Practices and
Procedures noted above are included in the
DOE G 580.1-1 and are non-mandatory
for a contractor.
How are precious metals
managed by contractors
required to manage
property using the Federal
Acquisition Regulations
(FAR)?
The two most widely used Government
Property Clauses (FAR 52.245-2, Fixed
Price Contracts, or FAR 52.245-5, Cost
Reimbursement, Time-and-Material, or
Labor-Hour Contracts ), only reference
precious metals in the part of the clause
related to disposal of property.
FAR Subpart 45.5, Government Prop-
erty, which contains detailed property man-
Volume 18 Issue 2 PROPERTY PROFESSIONAL 27
agement requirements, does not mention
precious metals in it.
FAR Subpart 45.6, Reporting, Reuti-
lization, and Disposal, references precious
metals in several places and includes a defi-
nition for them.
In the FAR revision currently being
considered (or possibly published as a final
rule by the time this article is published),
the Government Property Clauses refer-
enced previously are combined into one,
FAR 52.245-1, Government Property, that
includes a definition for precious metals
and also includes them in the definition of
sensitive property. The definition of pre-
cious metals states: Precious metals means
silver, gold, platinum, palladium, iridium,
osmium, rhodium, and ruthenium. This is
the same definition that is currently includ-
ed in FAR Subpart 45.6 (which is not
being revised).
Additionally, the same definition for
precious metals is included in FAR Para-
graph 45.101, Definitions, and precious
metals are also included in its definition of
sensitive property.
The FAR revision also includes addi-
tional references to sensitive property and
precious metals in the part of the Govern-
ment Property Clause related to disposal of
property. The references are basically the
same as those currently included in FAR
Subpart 45.6.
When the FAR revision is published as
a Final Rule and the revised FAR is includ-
ed in their contracts, contractors managing
their property in accordance with the FAR
will have specific regulatory procedures for
the management of precious metals includ-
ed in several additional places.
Summary
In this article, I have written about
what precious metals are, how they are
used, and how they are managed within
DOE and by FAR contractors. Hopefully,
the article has provided you with a better
understanding of precious metals and their
management requirements.
GARY SWANSON, CPPM, CF is a Past Presi-
dent of the NPMA Duke City Chapter. He is a
Senior Property Administrator, under contract
through the Plus Group, at Sandia National
Laboratories and has worked there since Octo-
ber 1997.
Sandia is a multiprogram laboratory oper-
ated by Sandia Corporation, a Lockheed Mar-
tin Company, for the United States Department
of Energys National Nuclear Security Adminis-
tration under contract DE-AC04-94AL85000.
1. Department of Energy Property Management
Regulations (DOE-PMR) (41 Code of Federal Reg-
ulations, Chapter 109, Paragraph 109-27.5101).
2. DOE-PMR, Paragraph 109-27.5100.
3. The Gold Institute web site
(www.goldinstitute.org).
4. Wikipedia, the free encyclopedia
(www.en.wikipedia.org/wiki)
5. The International Platinum Association web site
(www.platinuminfo.net).
6. Ibid.
7. Ibid.
8. Ibid.
9. Ibid.
10. Ibid.
11. Department of Energy Order 580.1, Department
of Energy Personal Property Management Pro-
gram.
12. Department of Energy Guide 580.1-1, Depart-
ment of Energy Personal Property Management
Guide.
13. DOE- PMR, Paragraph 109-27.5103.
14 DOE- PMR, Paragraph 109-27.5104.
15 Federal Acquisition Regulation (48 Code of Fed-
eral Regulations, Part 52).
16. Federal Acquisition Regulation (48 Code of Fed-
eral Regulations, Part 45).
17. Ibid.
18. Federal Acquisition Regulation; Government
Property; Proposed Rule; FAR Case 2004-025;
RIN: 9000-AK30; Federal Register/Vol. 70, No.
180/ Monday, September 19, 2005/Proposed
Rules.
19. Ibid.
20. Ibid.