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By Phillip N. Yasnowsky

"In this Bureau of Mines report, the Federal income tax treatment of mineral exploration and development expenditures is summarized, and changes in the tax treatment of these expenditures since 1951 are detailed and analyzed. Although no attempt is made to establish causal relationships, major tax changes favorable to exploration and development activities did occur in 1951 and 1966 when the Nation was engaged in military actions and the economy was expanding. More recent changes have been unfavorable to exploration and development and were parts of major tax reform efforts. INTRODUCTIONThis Bureau of Mines report discusses the Federal tax law provisions relating to mineral exploration and development expenditures. These provisions, contained mainly in sections 616 and 617 of the Internal Revenue Code of 1954 (Title 26 of the U.S. Code), apply specifically to minerals (other than oil and gas), and thus are of interest to the Bureau of Mines.Bureau of Mines involvement in this subject stems from the legislative mandate in the 1913 amendments to the Organic Act of 1910 (the Act creating the Bureau) to conduct economic investigations of the mineral industries. Congressional concern with the financial conditions in the economic and mineral industries was expressed more recently in the Mining and Minerals Policy Act of 1970 and in the National Materials and Minerals Policy, Research, and Development Act of 1980. The General Accounting Office recommended in 1976 that the Department of the Interior ""identify and evaluate laws and agency programs that affect maintaining and developing a sound and stable domestic mining and minerals industry"" (17, p. iii). 2Taxes, a source of revenue to governments, are a cost to private firms. Thus, taxes directly affect private sector profits, and unique tax provisions are designed to encourage (or discourage) activities such as agriculture, construction, or mining. Even the international competitiveness of the domestic mineral industries may be affected by taxes because many minerals are traded in world markets."

Jan 1, 1985

By Sidney Katell

This Bureau of Mines study estimates capital investment, operating costs, and selling prices for three underground bituminous mines producing coal with annual production ranging from 1.03 to 3.09 million tons. It is assumed that the mines have a 20-year life. Wages and union welfare payments are considered as of November 12, 1973, under the Bituminous Wage Agreement of 1971, and costs for material and equipment are based on 1973 indexes. Initial capital investment ranges from $12,938,200 for the 1.03-million-ton-per-year (MJ.Vl tpy) mine to $31,435,500 for the 3.09 MM tpy mine. Total capital investment ranges from $21,607,200 to $51,982,000 for the same mines. Corresponding selling prices for the coal range from $9.11 to $8.06 per ton, assuming a 12-percent discounted cash flow rate of return after Federal income taxes.

Jan 1, 1974

By C. W. Van Noy

The procedure suggested in this report is intended for the use of engineers, esters, accountants, etc., in estimating the cost of chemical-type operations. It is intended to over operating costs, not investment costs, as the latter have been covered numerous other publications. However, as capital investment costs are reflected to a high degree in operating costs, it is important to point out that accuracy of investment costs is highly essential. Therefore, all factors that might be included under plant -capital costs should be considered, such as requirements of shops, employees' housing, etc. The procedure is designed primarily for use in types of chemical oper¬ations, such as the production of synthetic liquid fuels, anhydrous ammonia, and others of like or similar nature. Yet, no attempt has been made to cover the entire chemical industry.

Jan 1, 1949

By H. E. Hilliard

The Bureau of Mines investigated hydrometallurgical procedures for concentrating precious metals from a mechanically processed metal fraction of obsolete military electronic scrap. Feed material for the leaching procedures described in this report was the high-tension-separated metal concentrate obtained as a fraction from mechanically processing partially stripped electronic units. Initial pretreatment with a 20-wt-pct-NaOH solution solubilized most of the aluminum. After washing, the resulting residue was incinerated to destroy any organics attached to metal particles. The incinerated residue was leached with 20-vol-pct H2S04 solution using two methods, countercurrent pressure and ultrasonic-aided leaching to solubilize the base metals, predominantly copper. Silver was recovered from the base metal leach residue using 50-vol-pct HN03, and gold contaminated with several percent palladium was recovered from the silver leach residue using aqua regia. The impure silver and gold plus palladium products represent about 1.5 wt pct of the high-tension-separated metal concentrate. Included is a three-step process evaluation study of mechanical processing of general electronic scrap and two hydrometallurgical procedures for leaching high-tension-separated metallic concentrates obtained from the mechanical processing step. Process evaluation concluded that only mechanical processing is economically viable.

Jan 1, 1985

By John R. Duda

The Bureau of Mines is developing estimates of capital investment, operating cost, and selling price for underground mines producing bituminous coal by various mining methods. This study estimates the required capital investment, operating costs, and selling prices for two hypothetical mines designed to produce 1.3 and 2.6 million tons per year (MM tpy)3 by using a longwall system in conjunction with a continuous-mining system. The coal properties being mined are assumed capable of sustaining a 20-year production period. Wages and union welfare payments used in this study are those in effect as of December 6, 1975, as set forth under the National Bituminous Coal Wage Agreement of 1974. Costs of materials and equipment are based on January 1976 indexes. Initial capital investment is $34.6 million for the 1.3-MM-tpy mine and $63.5 million for the 2.6-MM-tpy mine. Capital requirements, including deferred investments, were estimated to be $50.8 and $92.2 million, respectively. These figures translate into total capital investments of $38.51 and $34.91 per ton of annual production. Assuming a desired 15-percent discounted cash flow (DCF) rate of return, with Federal income taxes at 50 percent, the required selling prices would be $13.41 and $12.27 per ton for the 1.3- and 2.6 -MM- tpy mines.

Jan 1, 1976

By Wilbert J. Huff

For the past 8 years the technical studies conducted by. the Explo- sives Division of this Bureau have been summarized in a series of annual reports.3 This report deals with activities from July 1, 1942, to June 30; 1943. Specific problems have been in immediate charge of section or unit leaders, to whom credit is given.

Feb 1, 1944

By Lotfollah Nahai

India is one of the fortunate countries that has substantial reserves of many raw materials for producing steel; however, for historical and economic reasons these resources have not been aggressively developed until recently. Production of steel on an industrial scale started in 1912, but annual output was below 1 million tons3 in 1938 and about 1,500,000 tons in 1951. Expansion of the steel industry became one of the objectives of India's economic planning after independence in 1947. The Planning Com¬mission's 1951 report emphasized the importance of steel production, but financial obstacles, emphasis on river valley projects, and priority for increased food production in the First 5-Year Plan (1951-56) did not permit large-scale expansion of steel capacity. The 1956 planned target for crude steel, only 1,650,000 tons, was actually exceeded by production of 1,737,900 tons. In the Second 5-Year Plan (1956-61), however, construction of steel plants received a high priority. Currently three new steel plants, each with an annual capacity of approximately 1 million tons of steel, are nearing completion in Rourkela, Dorgapur, and Bhilai. Simultaneously, the two privately owned steel plants and the small State-owned plant in Mysore have been enlarged and modernized. As a result, India's crude steel capacity will be about 6 million tons in 1961, almost evenly divided between Government-owned and privately owned plants. Actual production in 1960 totaled 3,254,000 tons compared with 2,434,000 tons in 1959. Assuming that the population will be 430 million and that capacity production will be achieved, the 1961 per capita steel output will be only 31 pounds compared with 200 pounds for Japan in 1959. Some Indian experts feel that development of steel-consuming industries merits greater emphasis in the Third 5-Year Plan (1961-66) than expanding existing steel-producing facilities. Nonetheless, the Third 5-Year Plan calls for a 10 million ton annual capacity by 1966 to be achieved by expanding the Government-owned plants in Bhilai, Durgapur, and Mysore, and by establishing a new integrated Government plant in Bokaro, in the State of Bihar.

Jan 1, 1961

By Karl E. Starch

This Bureau of Mines report is a background study of severance taxes on mineral production. The rates, bases, and other features of State severance tax legislation as of March 1978 are presented, as are the amounts of State severance tax collections for fiscal year 1977, Some statistical comparisons between severance tax collections, total State tax collections, and total value of mineral production in the States involved are presented to portray the relative importance of severance taxes both in State tax revenue systems and in mineral industry revenues. A general discussion of the purposes and principles of taxation, the unique nature of a mining enterprise, the various types of taxes imposed on mineral production, and the character and rationale of the severance tax and its impacts on mining firms sets the severance tax in perspective. A bibliography of materials on the severance tax is included.

Jan 1, 1979

By Wilbert J. Huff

[This is the fifth of a series of annual reports of the explosives Division, Bureau of Mines, United States Department of the Interior.3/ It deals particularly with work done during the period July 1, 1939, to June 30, 1939. The writer and the respective unit leader to whom credit is indicated have directed the various studies outlined.]

Jan 1, 1940

The Bureau of Mines, through its Minerals Availability Program (MAP), investigates the mineral supply potential of the United States and market economy countries (MEC's) for a number of minerals considered essential to the U.S. industrial base. Major activities include identification of important mines and mineral deposits, estimation of their mineral resources and production costs, and availability and sensitivity analyses. Products include data print-outs of geological and engineering information, discounted- cash-flow rate of return (DCFROR) analyses of individual mining operations, commodity availability appraisals, and analytic services to Government agencies. These products are used in assessing the mineral supply position of the United States: in setting priorities for research aimed at reducing production costs and minimizing adverse environ- mental impacts and regulatory compliance costs of mining and mineral processing operations; and in formulating and evaluating Government policies that affect minerals. Bureau MAP data and analyses have been provided to the executive and legislative branches to aid in consideration of trade, tax, and stockpile policy issues. A study of the economic potential of selected seabed mineral resources supports the regulatory responsibilities of the Department of the Interior in the U.S. Exclusive Economic Zone. Analytic studies of mineral project viability, industry competitiveness, and import dependencies were also undertaken for, or in cooperation with, U.S. and foreign government agencies, industry and trade organizations, and international lending institutions.

Jan 1, 1987

By W. P. Haynes, J. W. Mulvihill, G. B. Taylor, S. Katell

Capital and operating costs have been estimated for separating methane and hydrogen in gas - separating plants designed to produce 90 million scf per day of product gas containing a minimum of 90 percent methane . After a preliminary literature review of various separation techniques , three different processes --moving - bed adsorption using active carbon , oil absorption , and liquefaction -- were chosen for the cost estimates . Three different methane feed gas concentrations , 5 , 20 , and 50 percent ( cases 1 , 2 , and 3 , respectively ) , were chosen as representative methane concentrations for the separation estimates . Capital and operating costs were lowest for the moving - bed adsorption process in all three cases investigated . Operating costs declined from $ 0.24 to $ 0.06 per 1,000 cu ft of product gas , and capital costs declined from $47,490,800 to $7,411,200 as the percentage of methane in the feed gas increased from 5 to 50 percent .

Jan 1, 1964

By D. E. Sullivan

The Bureau of Mines investigated the availability of potash from 68 mines and deposits in 12 market economy countries (MEC's) containing, at the demonstrated resource level, approximately 11.7 billion metric tons (mt) of potash in assay terms of contained K2O; K2O as used by industry as a standard of comparison for the different forms of potash. These resources include almost 190 million mt in the United States, 9.63 billion mt in Canada, approximately 430 million mt in Western Europe (France, Federal Republic of Germany, Italy, Spain, and the United Kingdom), 1.24 billion mt in the Middle East (Israel and Jordan) and over 220 million mt in other countries (Brazil, Chile, and the Congo). This analysis his determined that future production of potash in MEC?s will most likely continue to be from the large resources associated with producing operations in Canada. Based solely on the demonstrated resources included in this study, potash mining in the United States would decline while overseas production from MEC's can continue into the next century at near current production levels. However, timely development of new or inferred resources would offset any such decline. Producing mines in Canada have the resources to increase and maintain increased production well into the next century. For U.S. potash users, Canada is a long-term stable and secure source.

Jan 1, 1986

By E. Chin

Although Japan is a major producer of crude steel, it is poor in industrial raw materials. This Bureau of fines report describes Japan's raw material needs for chromium, cobalt, manganese, nickel, and tungsten to produce ferroalloys and alloy steels. Japanese imports of these ores or metals by quantity and source are given for 1972-81, inclusive, to indicate (1) the changes in the consumption and supply pattern, and (2) the degree of Japan's dependence on foreign sources. This report also describes measures implemented by Japan to reduce the risk- of supply interruption, and discusses the possible implications of supply shortages.

Jan 1, 1983

By S. H. Ash

Unusual mining conditions prevail in the State of Washington because the majority of the coal seams lie on extra steep dips, and the roof and floor of the seams are of such a character as to require an excessive amount of timber- ing. The seams as a rule give off a considerable amount of methane, which makes good ventilation imperative. Due to physical conditions, supervision is costly and travel about the workings is difficult. Because of the facts stated, the accident rate has been above the average, and for some time considerable thought has been given the idea of making promotion of safety in and about the mines a responsibility to be shared equally by the employees and the management. With this idea in mind the legislature of the State of Washington, turing March, 1927, passed laws providing that safety committees be selected to function at the coal mines of the State and at the same time recognizing the fact that first-aid education is an integral part of any safety movement; legislation was passed making it mandatory to have all persons in and about the ines trained in first-aid administration. The provisions of the State mining law3 are as follows: "In every mine a general safety committee shall be selected, composed of the mine superintendent or manager of mines, one man selected by the employees or any association of employees in or around said mine, and a third member selected by these two. "The general safety committee shall elect one of the members to act as chairman and one to act as secretary. The duties of the chairman shall be to preside at all meetings of the general safety committee, enforce its rules and regulations and see that its business is conducted in a prompt and business-like manner. The secretary shall keep an accurate written record of the proceedings of all meetings, conduct its correspondence and post notices of regular and special meetings and other matters pertaining to safety. The duties of the general safety committee shall be to investigate all serious and fatal accidents; make bi-monthly.

Jun 1, 1930

By John E. Conley

Of the three chemical elements most vitally essential for plant growth the United States, before World War I, had developed ample domestic supplies of but one-phosphorus. During and shortly after the war period, the fixation of nitrogen was greatly expanded in this country, as in many others, insuring a supply adequate for agriculture as well as for munitions. However, in spite of a search for sources of the third element, potassium, which began years before the war, attained almost frantic intensity between 1914 and 1919, and continued for 10 years thereafter, it was not until 1921 that the American Trona Corporation put its Searles Lake operations into continuous production. This company in 1926 became The American Potash & Chemical Co. but has never supplied much more than 15 percent of the potash consumed in the American market. Likewise, though discovered in 1921 in drill cuttings from oil wells, it was not until 1926 that domestic deposits of potassium salts adequate to render the United States independent of foreign sources of supply were proved to occur in the Permian Basin of Texas and New Mexico.

Jan 1, 1944

The Anaconda Copper Company reportedly reached an exclusive agreement with Cook Inlet Region, Inc., to explore 24 million acres in south-central Alaska and to share equally with Cook the proceeds of any mineral discovery. According to an Anaconda geologist, "the company is anticipating, based on geologic testing, that it will find significant deposits of copper, lead, and zinc. There is also evidence of the presence of precious metals such as silver and gold, and also strong evidence of strategic minerals such as chrome, platinum, tin, and nickel." Cook Inlet Region, Inc., is owned by 6,500 Alaskan natives. Chile, which has a growing, free-market economy under President Pinochet, reportedly will no longer require companies to obtain prior governmental approval for the exploration and development of new mines.

Jan 1, 1981

By Catherine C. Kilgore

The Bureau of Mines investigated the availability of lead and zinc from 104 domestic mines and deposits. Fourteen primary lead and fifty-three primary zinc operations with in situ demonstrated resources containing 27.3 million metric tons (t) of lead and 53 million t of zinc were subsequently evaluated. Potentially 17.5 million t of lead and 2.4 million t of byproduct zinc could be recovered from 14 primary lead operations. Economic evaluations performed in constant January 1982 dollars determined a long-run total cost per pound of recoverable commodity. Including a 15-pct discounted-cash-flow rate of return (DCFROR), 59 pct of primary lead was potentially available at or below $0.32 per pound of lead. Potentially 40 million t of zinc and 5.6 million t of byproduct lead could be recovered from 53 primary zinc operations. Ninety percent of the recoverable zinc is potentially available from currently nonproducing mines and deposits, and a weighted average of their long-run total costs was determined at $0.98 per pound of zinc. At a breakeven (0-pct) DCFROR, these non producing operations had a weighted average long-run total cost of $0.58 per pound of zinc. Sensitivity analyses illustrated that operations that recover byproducts were most sensitive to fluctuating metal prices, producing operations were more sensitive to increased smelter treatment charges, and nonproducing operations were impacted most by the DCFROR.

Jan 1, 1983

The Leuna Factory of the I. G. Farbenindustrie A. G., situated near Merseburg, is the biggest heavy-chemical plant in Germany and produces a very wide range of products, mainly based on hydrogen or hydrogen and carbon monoxide. Its principal products are ammonia, synthetic petrol derived from the hydrogenation of brown coal, and synthetic alcohols made from hydrogen and carbon monoxide. The plant was first, visited on April 21, 1945, by a team including E. Cotton, V. Haensel, E. B. Peck, P. K. Kuhne, H. M. Weir, L. L. Hirst, W. W. Odell, G. U. Hopton, H. Hollings, J. F. Ellis, and H. G. Simpson. It was again visited on May 8-24, 1945, by a combined British and American team consisting of R, Holroyd, M. A. G, Banks, D. A. Howes, A. J. V. Underwood, R. A. Taylor, W. F. Faragher, H. Schindler, and J. G. Allen. This team was later joined by J. F. Ellis and R. J. Morley. A third visit with particular reference to catalyst manufacture was made by W. F. Faragher and W. A. Horne, and the notes of these latest investigators have been taken into account in preparing the report. This report was edited by Dr. R. Holroyd.

Jan 1, 1946

By J. P. Powell

The importance of recovering more oil from known petroleum reserves has placed increasing emphasis on the application of secondary producing methods. One of the most successful of these has been the injection of water into depleted oil reservoirs. Water flooding is now recognized as a valuable conservation measure that not only prevents the premature abandonment of stripper leases but also is credited with reviving operations in many oil-producing areas previously abandoned. The injection of water into an oil-producing zone as a method of stimulating oil production was legalized in Kansas in 1935. Although water flooding had been attempted previously in other parts of the State, 1935 marked its introduction into the shallow stripper area of eastern Kansas. Two years later flooding was begun in the five-county area that is described in this report. Figure 1 is a map showing the water-flood areas in Allen, Bourbon, Crawford, Labette, and Neosho Counties, Kans. To July 1, 1955, the 77 projects in the oil fields of these 5 counties are credited with recovering an estimated 12.3 million barrels of oil that would not have been produced by methods used previously. These projects are expected ultimately to cover 10,700 acres, of which only 5,400 has been flooded to date.

Jan 1, 1957

By J. W. Thompson

Be if enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That deposits of coal, phosphate, sodium, oil, oil shale, or gas, and lands containing such deposits owned by the United States, including those in national forests, but excluding lands acquired under the Act known as the Appalachian Forest Act, approved March 1, 1911 (Thirty-sixth Statutes, page 9G1), and those in national parks, and in lands Withdrawn or reserved for military or naval uses or purposes, except as heroinafter provided, shall be subject to disposition in the form and manner provided by this Act to citizens of the United States, or to any association of such persons, or to any corporation organized under the laws of the United States, or of ;iny State or Territory thereof, and in the case of coal, oil, oil shale, or gas, to municipalities: Provided, That the United States reserves the right to extract helium from all gas produced from lands permitted, leased, or other- wise granted under the provisions of this Act, under such rules and regulations as shall be prescribed by the Secretary of the Interior: Provided further, That in the extraction of helium from gas produced from such lands, it shall be so extracted as to cause no substantial delay in the delivery of gas produced from the well to the purchaser thereof: And provided further, That citizens of another country, the laws, customs, or regulations of which, deny similar or like privileges to citizens or corporations of this country, shall not by stock ownership, stock holding, or stock control, own any interest in any lease acquired under the provisions of this Act.

Jan 1, 1921