ATO Interpretative Decision

ATO ID 2010/137 (Withdrawn)

Excise

• This ATO ID is withdrawn from 1 July 2012, the date the Energy Grants (Credits) Scheme Act 2003 was repealed.
  Despite its withdrawal, this ATO ID continues to be a precedential ATO view in respect of the period the Act was in force, 1 July 2003 up to and including 30 June 2012.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is coarse grained vermiculite (being vermiculite with particle sizes not less than 300 microns), a mineral for the purposes of section 20 of the Energy Grants (Credits) Scheme Act 2003 (Energy Grants Act)?

Decision

Yes. Coarse grained vermiculite is a mineral for the purposes of section 20 of the Energy Grants Act.

Facts

An entity mines vermiculite for sale.

Vermiculite is the mineralogical name given to hydrated laminar magnesium-aluminium-iron silicate which resembles mica in appearance.

Many of the common commercial uses of vermiculite stem from its exfoliation (expansion) properties. When rapidly heated, vermiculite becomes a low density material with excellent insulation properties.

The vermiculite mined by the entity has a minimum particle size of 300 microns and ranges up to 4750 microns.

The plasticity of vermiculite is dependent on particle size: It has some plasticity in its fine grained form and none when it occurs as large macroscopic flakes (coarse grained).

Reasons for Decision

Section 20 of the Energy Grants Act defines minerals as:

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).

This definition encompasses two tests that must be satisfied for vermiculite to be considered a mineral for the purposes of the Energy Grants Act. Firstly, it must be a mineral and secondly, it must not be excluded from being a mineral by any of the specific exclusions in the definition.

It is well accepted that vermiculite is a mineral in the ordinary and technical sense (refer to the definition of mineral in the Macquarie Dictionary and the Dictionary of Mining, Mineral and Related Terms).

What remains at issue is whether vermiculite is excluded from being a mineral by virtue of being considered a clay.

The Dictionary of Mining, Mineral and Related Terms defines clay as

An extremely fine-grained natural earthy material composed primarily of hydrous aluminium silicates. It may be a mixture of clay minerals and small amounts of non-clay materials or it may be predominantly one clay mineral. The type is determined by the predominant clay mineral. Clay is plastic when sufficiently pulverized and wetted, rigid when dry, and vitreous when fired to a sufficiently high temperature.

Whilst the term 'fine grained' is used in a relative sense, it is generally accepted that the technical definition of clay limits the particle sizes to a range of 1 to 4 microns, whilst the most generous commercial usage accepts particle sizes not exceeding 100 microns.

Most mineralogists consider vermiculite to be a clay mineral. However, in determining whether vermiculite is in fact clay, some mineralogists consider this depends on the size of the particular vermiculite particles.

This view is premised on the extent to which particular minerals contribute to a clay's plastic properties when mixed with water. The plasticity of vermiculite is dependent on particle size: it has some plasticity in its fine grained form and none when it occurs as large macroscopic flakes (coarse grained).

It is, therefore, accepted that:

•

fine grained vermiculite would be considered clay; and

•

coarse grained vermiculite would not be considered clay.

Generally, the smallest size vermiculite mined for commercial purposes has a particle size around 300 microns. In this case, the entity mines vermiculite ranging from 300 to 4750 microns. Vermiculite particles of this size are considered to have a low plasticity level.

Therefore, if the classification of a mineral as clay hinges on its plasticity, vermiculite mined by the entity for commercial purposes (which is coarse grained) is not clay.

Therefore, regardless of whether the classification of a mineral as clay is determined based on particle size or its plasticity (which is influenced by its particle size in any event), coarse grained vermiculite mined by the entity is not considered clay for the purposes of section 20 of the Energy Grants Act. It follows that the vermiculite mined by the entity is a mineral for the purposes of section 20 of the Energy Grants Act.

Legislative References:
Energy Grants (Credits) Scheme Act 2003
   section 20

Other References:
The Macquarie Dictionary 1997, 3rd edn, The Macquarie Library Pty Ltd, New South Wales
Dictionary of Mining, Mineral and Related Terms, 1997, compiled by the American Geological Institute

Keywords
EGCS minerals
EGCS recovery of minerals
Energy grants (credits) scheme
Excise

Business Line:  Indirect Tax

Date of publication:  16 July 2010

ISSN: 1445-2782