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Is spongolite a mineral for the purposes of determining what constitutes 'mining operations' as defined in section 11 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?

Yes. Spongolite is a mineral for the purposes of determining what constitutes 'mining operations' as defined in section 11 of the EGCSA.

An entity operates a business extracting spongolite from old sea beds.

Spongolite is formed from the remains of sponges deposited on the seabed hundreds of millions of years ago. Spongolite is made up of disordered non-crystalline alpha-cristobalite with 10% quartz, and a similar amount of kaolinitic clay. Traces of Feldspar, mica, hematite, goethite, carbonates minerals (calcite and/or dolomite), zircon and tourmaline can also be found. Most of the quartz in the granules is present as fine sand-size particles.

The spongolite consists predominantly of the dismembered skeletons of sponges which are composed of a form of hydrated silica variously described as opal, amorphous silica, opal-cristobalite or alpha-cristobalite. The most accurate description is disordered alpha-cristobalite. A typical chemical analysis would show as follows: SiO 2 82.5% Al 2 O 3 2.6% Fe 2 O 2 2.3% MgO 0.4% H₂O - 3.5% H₂O + 2.8% Alkalis 2.4%

SiO 2 | 82.5%

Al 2 O 3 | 2.6%

Fe 2 O 2 | 2.3%

MgO | 0.4%

H₂O - | 3.5%

H₂O + | 2.8%

Alkalis | 2.4%

'Mining operations' is an eligible activity for the purposes of the Energy Grants (Credits) Scheme. Paragraph (b) of the definition of 'mining operations' in subsection 11(1) of the EGCSA defines the term as meaning 'operations for the recovery of minerals'.

Section 20 of the EGCSA provides the following definition of minerals: The expression minerals means minerals in any form, whether solid, liquid or gaseous and whether organic or inorganic, except: (a) sand, sandstone, soil, slate, clay (other than bentonite or kaolin), basalt, granite, gravel or water; or (b) limestone (other than agricultural use limestone).

The above definitions contain two tests that must be satisfied in order for spongolite to be considered a mineral for the purposes of the Energy Grants (Credits) Scheme.

The first test is whether spongolite is a 'mineral' as that term is commonly understood. The Courts have taken the view that the ordinary meaning of the term 'minerals' is substances which can be won by mining. This view is reinforced by the definition of mining operations in the EGCSA, which includes, amongst other things, the recovery of minerals by mining for those minerals and the beneficiation of those minerals or of ores bearing those minerals.

The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW defines 'mineral' as 'a substance obtained by mining'. Therefore, a factor to be considered in determining if a substance is a mineral is whether the extraction or recovery process would correspond to the normal understanding of the term 'mining'.

Spongolite clearly meets this definition.

The second test is whether spongolite is excluded from being a mineral by any of the specific exclusions in the definition.

Spongolite is formed from the remains of sponges deposited on the seabed hundreds of millions of years ago. Spongolite is made up of disordered non-crystalline alpha-cristobalite with 10% quartz, and a similar amount of kaolinitic clay. Traces of Feldspar, mica, hematite, goethite, carbonates minerals (calcite and/or dolomite), zircon and tourmaline can also be found. Most of the quartz in the granules is present as fine sand-size particles.

The spongolite consists predominantly of the dismembered skeletons of sponges which are composed of a form of hydrated silica variously described as opal, amorphous silica, opal-cristobalite or alpha-cristobalite. The most accurate description is disordered alpha-cristobalite. A typical chemical analysis would show as follows: SiO 2 82.5% Al 2 O 3 2.6% Fe 2 O 2 2.3% MgO 0.4% H₂O - 3.5% H₂O + 2.8% Alkalis 2.4%

SiO 2 | 82.5%

Al 2 O 3 | 2.6%

Fe 2 O 2 | 2.3%

MgO | 0.4%

H₂O - | 3.5%

H₂O + | 2.8%

Alkalis | 2.4%

Given the nature and characteristics of spongolite, it is accepted that it is clearly not sand, sandstone, soil, slate, clay, basalt, granite, gravel or limestone. Therefore, spongolite is a mineral for the purposes of determining what constitutes 'mining operations' as defined in section 11 of the EGCSA.