Issue
Does the grinding of talc into a fine powder constitute beneficiation for the purposes of the definition of mining operations in subsection 164(7) of the Customs Act 1901?
Decision
No. The grinding of talc into a fine powder does not constitute beneficiation for the purposes of the definition of mining operations in subsection 164(7) of the Customs Act.
Facts
Talc is a mineral for the purposes of determining 'mining operations'.
Talc is a soft, white to green material. It has the formula Mg3Si4O10(OH)2.
It does not become plastic or swell when wetted. It is formed deep below the surface by metamorphic processes when igneous rocks, such as granite, intrude magnesium rich sediments. When exposed by erosion, or by mining, it is found in large coherent masses, which will not readily break up. Blasting and impact mining are required to separate the talc masses from surrounding rocks. In order to reduce the talc to an ultrafine grainsize, crushing and grinding is required.
The entity extracts raw talc from the ground using large mining excavator equipment.
When extracted, the raw talc is in the form of large rocks and/or small boulders. The raw talc is stockpiled at the top of the mining area within the mining lease for cartage to the processing plant.
The large comminution equipment (grinding mills) reduce the size of the raw materials into very fine powders. These powders are then packaged into individual lots of various sizes, which are palletised and despatched to customers.
Reasons for Decision
'Mining operations' is an eligible activity for the purposes of the diesel fuel rebate scheme. 'Mining operations' is defined in subsection 164(7) of the Customs Act. The paragraph of most relevance to the entity's activities is paragraph (b) which states: (b) operations for the recovery of minerals, being: (i) mining for those minerals including the recovery of salts by evaporation; or (ii) the beneficiation of those minerals, or of ores bearing those minerals ...
The meaning of the term 'beneficiation' was discussed in Abbott Point Bulk Coal Pty Ltd & Anor v. Collector of Customs (1992) 35 FCR 371; (1992) 15 AAR 35 (Abbott Point Case). In the Abbott Point Case, Ryan and Cooper JJ said: It is clear, in our view, that 'beneficiation' is not a term in ordinary English usage. It is a technical term applicable to a range of processes in the mining and metallurgical industries. Accordingly, its meaning is to be determined as a question of fact....Here the Tribunal found,... that 'beneficiation' denotes the processing of minerals or ore-bearing minerals to improve their physical and chemical properties.
Ryan and Cooper JJ went on to find that: The process of recovery includes, in our view, those steps which are taken by a miner before sale, by whatever process, to remove the mineral from that in which it is embedded or with which it is intermixed. Such a process comprehends the refining of minerals or ore to remove impurities naturally occurring in the material as it has been mined. Once the process of separation or refining has been completed, to subject the mineral product to a process or procedure designed purely to facilitate its better use as so separated or refined or to render it more readily or advantageously marketable is not in our view part of the recovery process.
If market forces dictate that a mineral must undergo a certain process to result in a saleable product, this does not necessarily mean that the process will be considered beneficiation. Subsection 164(7C) of the Customs Act states: In determining whether a particular process to which a mineral, or ores bearing a mineral, are subjected constitutes beneficiation of that mineral or those ores, regard is to be had to the nature of the technical process involved but no regard is to be had to any market considerations that might affect the decision to subject that mineral or those ores to that process.
The only processing undertaken is the grinding of the talc to reduce it to very fine powder. The talc powder is then packaged into individual lots of various sizes, palletised and despatched to customers. The grinding of the talc does not constitute beneficiation as this process does not remove unwanted constituents or improve the quality, purity or assay grade of the talc. Rather, adopting the words of Ryan and Cooper JJ., the grinding of talc is undertaken '...to facilitate its better use as so separated or refined or to render it more readily or advantageously marketable...'.
Therefore, the grinding of talc into a fine powder does not constitute beneficiation for the purposes of the definition of mining operations in subsection 164(7) of the Customs Act.