Commission in copper deals: how splits work, and how they go wrong

Intermediaries are paid by commission, and commission is where many copper deals quietly die. The problem is rarely the size of a single fee. It is fees that nobody declared, or that add up to more than the price can carry.

Gross and net

• Seller's net price: what the seller receives, for example LME −10%.
• Buyer's price: what the buyer pays, for example LME −8%.
• The gap between them, here 2%, is all the commission there can be, for everyone on both sides.

If the people in the chain want more than the gap, the deal can't close, however good it looks.

Per tonne or per cent

Copper commissions are quoted both ways: a percentage of the invoice, or a fixed amount per tonne. Per tonne is clearer, because it doesn't move with the LME. Whatever you choose, write down exactly what it applies to: which invoice, which quantity, and whether it applies to the trial.

A hidden structure (names removed)

A seller offered DRC cathode at LME −18% and said there was "no commission, because the factory does not pay commission". A few messages later, a third company appeared, described as a lawyer's firm that would sign the contract and receive payment on the factory's behalf, and "distribute the commission". The suggestion was to tell the buyer the price was LME −15%.

The buyer would have been told one price and paid another, with 3% going to people nobody had declared. When structures like this come out mid-deal, trust collapses and the deal dies.

How to set commission properly

1. Declare it early. Everyone in the chain should know every commission before documents are exchanged.
2. Fit it inside the gap. Agree the seller's net price and the buyer's price first, then split the difference.
3. Write it in an IMFPA that names every payee and is signed by the party who pays. See NCNDA and IMFPA.
4. Pay through a paymaster or the seller's bank on each shipment, not later as a favour.
5. Never accept a contract with a company you didn't expect receiving the money.

On Copper Supply

Each party in a deal room records who they represent and their commission, visible to the others in the room. Copper Supply itself takes no commission on deals.