Rev. Proc. 78-19

Section 1. Purpose.

The purpose of this Revenue Procedure is to index and set forth the definitions of certain mining terms that will be used by the Internal Revenue Service in applying sections 613(c)(4) and (5) of the Internal Revenue Code of 1954 and sections 1.613-4(f) and 1.613-4(g) of the Income Tax Regulations.

Sec. 2. Background.

Some mining terms used in the Code or the regulations have sometimes been given different definitions. Some of these terms describe "mining" and "nonmining" processes used in determining gross income from mining. Different definitions may result in an inaccurate computation of the depletion allowance.

Sec. 3. Objective.

The definitions contained in this Revenue Procedure have been compiled from the regulations or from accepted industry definitions obtained from the sources listed in Section 6. These definitions will be used to allocate costs to the taxpayer's operations of mineral extraction and of beneficiation under the provisions of section 613(c)(4) and (5) of the Code and sections 1.613-4(f) and (g) of the regulations.

Sec. 4. Index of Terms

     .01 AMALGAMATION

.01 AMALGAMATION, Section 613(c)(4)(D); Section 1.613-4(f)(2)(i)(d). ¹

Amalgamation is a process of concentration, using mercury, by which native gold, silver, and some other metals are separated from nonmetallic minerals due to preferential wetting of the metallic particles by mercury and the preferential wetting of the nonmetallic particles by water. The amalgamated particles will coalesce, or cling together, forming a gray plastic amalgam. Upon retorting the mercury is distilled off, to be used over again, leaving metallic gold, silver, or other metal.

The process is applicable to free-milling ores in which the metal is coarse and native. Gold ores in which the metal is finely divided in silicates, oxides, or sulphides, and gold ores in which the gold is present as telluride are not treated with success by amalgamation.

Amalgamation is substantially a physical concentration process in which no significant chemical change in the metal occurs (3, 10, 14, 17, 18). ²

.02 BENEFICIATION. Section 613(c)(4)(D); Sections 1.613-4(f)(2)(i)(d), 1.613-4(f)(3)(iv), and 1.613-4(f)(4).

Benefication, in general, constitutes the enrichment of a mineral by separating out the worthless from the valuable components. It includes the dressing or processing of ores for the purposes of: (1) regulating the size of the desired product,

(2) removing unwanted constituents,

(3) improving the quality, purity, or assay grade of the desired product,

(4) concentration or other preparation of ore for smelting, by flotation, magnetic separation, drying, etc. (8, 19, 20, 24, 25).

.03 BLENDING WITH OTHER MATERIALS, Section 613(c)(5); Sections 1.613-4(g)(1) and 1.613-4(g)(6)(iv).

The term "blending with other materials" refers to processes used to blend different kinds of minerals with one another, as, for example, blending iodine with common salt for the purpose of producing iodized table salt.

.04 BREAKING, Sections 613(c)(4)(A) and 613(c)(4)(B); Sections 1.613-4(f)(2)(i)(a) and 1.613-4(f)(2)(i)(b).

Breaking, with respect to coal, is the first stage in preparation subsequent to mining and prior to cleaning.

Breaker: In anthracite mining, the breaker is the structure in which coal is broken, sized, and cleaned for market.

Coal Breaker: A coal breaker is a building containing the machinery for breaking coal with toothed rolls, sizing it with sieves, and cleaning it for market.

Tipple: Originally the tipple was the place where mine cars were tipped and emptied of their coal. The term is still used in that sense, although it is now more generally applied to the surface structures of a coal mine, including the preparation plant and tracks. It also includes the tracks, trestle, screens, etc., used at the entrance of a colliery where coal is screened and loaded.

Breaking with respect to Frasch produced sulfur is the piecemeal destruction of cooled vats of sulfur, by mechanical or explosive means, preparatory to loading for shipment (2, 19).

.05 BURNING OF MAGNESITE, Section 613(c)(4)(E); Section 1.613-4(f)(2(i)(e)(3).

The burning of magnesite constitutes the heating (or firing) of magnesite above 1,450 degrees centigrade long enough to form dead burned magnesite, a dense weather-stable granule suitable for use as refractory or in refractory products (23).

.06 CALCINING, Section 613(c)(5); Sections 1.613-4(g)(1) and 1.613-4(g)(6)(i).

The term "calcining" refers to processes used to expel the volatile portions of a mineral by the application of heat, as, for example, the burning of carbonate rock to produce lime, the heating of gypsum to produce calcined gypsum or plaster of Paris, or the heating of clays to reduce water of crystallization.

.07 CLASSIFIERS, Section 1.613-4(f)(3)(i).

In general, there are five types of mechanical classifiers: rake, spiral, drag, Hardinge countercurrent, and bowl classifiers; two types of nonmechanical classifiers: sand tank and slime tank classifiers; and three types of hydraulic classifiers: free-settling, hindered-settling, and centrifugal classifiers.

In mineral dressing, the classifier is a device that takes the ball-mill discharge and separates it into two portions--the finished portion, which is ground as fine as desired, and oversize material, which is returned to the ball-mill for further grinding (16, 19, 26).

Classification: Generally, classification is an operation in which a mass of grains of mixed sizes and different specific gravities is allowed or caused to settle through a fluid that may be either in motion or substantially at rest.

.08 CLEANING, Sections 613(c)(4)(A) and 613(c)(4)(B); Sections 1.613-4(f)(2)(i)(a) and 1.613-4(f)(2)(i)(b). Also see Section 1.613-4(f)(5)(iv).

Cleaning refers to the removal of slate, bone, and other impurities contained in mine run coal, and also refers to the removal of salt, carbonaceous material and other contaminates contained in mine run Frasch produced sulfur.

.09 CONCENTRATING and CONCENTRATION, Sections 613(c)(4)(C) and 613(c)(4)(D); Sections 1.613-4(f)(2)(i)(1), 1.613-4(f)(2)(i)(d), 1.613-4(f)(3)(i), 1.613-4(f)(3)(iv), and 7.613-4(f)(4).

Concentrating means the process of eliminating substantial amounts of the impurities or foreign matter associated with the ores or minerals in their natural state or of separating two or more valuable minerals or ores, without changing the physical or chemical identity of the ores or minerals. See also .58 SORTING.

.10 CONCENTRATING TABLE, Section 1.613-4(f)(3)(i).

A concentrating table is a device consisting of a riffled deck, usually inclined in two directions to the horizontal, to which a differential reciprocating motion in a substantially horizontal direction is imparted. The material to be separated is fed in a stream of water, the heavy particles collect between the riffles and are there conveyed in the direction of the reciprocating motion while the lighter particles are borne by the current of water over the riffles to be discharged laterally (2, 17, 18, 19). See also .49 SHAKING TABLE.

.11 COOLING (with respect to Frasch produced sulfur), Section 613(c)(4)(B); Section 1.613-4(f)(2)(i)(b).

Cooling refers to the process of allowing Frasch produced sulfur to solidify in vats into large blocks of elemental sulfur.

.12 CRUDE MINERAL PRODUCT, Sections 613(c)(3)(C) and 613(c)(4)(D); Sections 1.613-4(f)(2)(i)(c), 1.613-4(f)(2)(i)(d), and 1.613-4(f)(3)(iv).

Crude mineral product means the production of a mine prior to the alteration of its inherent mineral content by some form of beneficiation, concentration, or ore dressing. An ore or mineral does not lose its classification as a crude mineral product by reason of the fact that, before sale or use in a nonmining process, the ore or mineral may be crushed or subject to other processes which do not alter its inherent mineral content.

.13 CRUSHING, Sections 613(c)(4)(D), 613(c)(4)(G), and 613(c)(4)(H); Sections 1.613-4(f)(2)(i)(d), 1.613-4(f)(2)(ii)(b), 1.613-4(f)(2)(ii)(d), 1.613-4(f)(2)(iii), and 1.613-4(f)(5)(i).

Crushing is an operation or group of operations whereby large pieces of ores or minerals are reduced in size. Crushing is used (1) as a step in further size reduction, (2) for the liberation of the mineral components in order to facilitate the concentration of the ore or mineral, and (3) to meet commercial product requirments (3, 9, 14, 16, 17, 18, 23). See also .25 GRINDING.

.14 CRYSTALLIZATION, Section 613(c)(4)(D); Sections 1.613-4(f)(2)(i)(d) and 1.613-4(f)(4).

Crystallization is a process of solidifying a liquid phase of a mineral into a homogenous solid form (5, 12, 18, 22). See also .42 PRECIPITATION.

.15 CYANIDATION, Section 613(c)(4)(D); Sections 1.613-4(f)(2)(i)(d) and 1.613-4(f)(4).

Cyanidation employs a dilute solution of sodium or potassium cyanide to dissolve gold or silver, after which the metal solution is separated from the undissolved valueless constituent through filtration. The dissolved metal is subsequently deposited on metallic zinc or recovered by other means. Cyanidation is essentially a metal leaching recovery process (2, 8, 12, 19, 22). See also .30 LEACHING.

.16 DECARBONATION OF TRONA, Section 613(c)(4)(E).

Decarbonation of trona is a process added to section 613(c)(4)(E) of the Code by Pub. Law 93-499. The process has not yet been defined in the regulations.

.17 DRYING, Sections 1.613-4(f)(5)(iii) and 1.613-4(g)(6)(viii).

Drying is the removal by evaporation of uncombined water or other volatile substance from the raw material or substance, usually expedited by low temperature heating.

Section 1.613-4(f)(5)(iii) of the regulations provides that drying to remove free water, provided that such drying does not change the physical or chemical identity or composition of the mineral, is a process recognized as mining under section 613(c)(4)(I) of the Code (19).

.18 DUST ALLAYING, Section 613(c)(4)(A); Section 1.613(f)(2)(i)(a).

Dust allaying is the application of a fine oil spray or mist to coal for the purpose of reducing or subduing in intensity or severity the amount of dust. Dust allaying is used principally for coal sold on the domestic homeowners' market.

Electrolytic deposition is the production of a metal from a solution containing its salts by passage of an electric current through the solution. In electrorefining, the operation is carried out in an electrolytic cell in which the pure metal is deposited upon the cathode or starting sheet while the impurities collect as a slime at the bottom of the cell or dissolve in the electrolyte (4, 15, 19, 24).

.19 ELECTROLYTIC DEPOSITION, Sections 613(c)(4)(D) and 613(c)(5); Sections 1 613-4(f)(2)(i)(d) and 1.613-4(g)(1).

.20 ELECTROSTATIC (separation), Section 613(c)(4)(D); Section 1.613-4(f)(2)(i)(d).

Electrostatic separation is a process of ore concentration based upon the electrostatic principle that like charges repel and unlike charges attract one another. In electrostatic separation, dry mineral particles acquire charges as they pass through a high-voltage field. They are deflected from their posite direction. In this process nonrenatural falling path in accordance with the attraction or repulsion due to the influence of their retained charge as they pass over charged bodies. The material is separated by dropping the feed material between two electrodes, positive and negative, rotating in oppelled materials drop in a vertical plane and susceptible materials are deposited in a forward position somewhat removed from the verticle plane (3, 14, 17, 18, 19).

.21 FINE PULVERIZATION, Section 613(c)(5); Sections 1.613-4(f)(5)(i), 1.613-4(g)(1), and 1.613-4(g)(6)(v).

The term "fine pulverization" refers to any grinding or other size reduction process applied to reduce the normal topsize of a mineral product to less than .0331 inches, which is the size opening in a No. 20 Screen (U.S. Standard Sieve Series). A mineral product will be considered to have a normal topsize of .0331 inches if at least 98 percent of the product will pass through a No. 20 Screen, provided that at least 5 percent of the product is retained on a No. 45 Screen (U.S. Standard Sieve Series). Compliance with the normal topsize test may also be demonstrated by other tests which are shown to be reasonable in the circumstances. The normal topsize test shall be applied to the product of the operation of each separate and distinct piece of size reduction equipment utilized (such as a roller mill), rather than to the final products for sale. Fine pulverization includes the repeated recirculation of material through crushing or grinding equipment to accomplish fine pulverization. Separating or screening the product of a fine pulverization process (including separation by air or water flotation) shall be treated as a nonmining process.

.22 FLOTATION (concentration), Section 613(c)(4)(D); Sections 1.613-4(f)(2)(i)(d), 1.613-4(f)(3)(i), and 1.613-4(g)(6)(v). The term "flotation" refers to all processes of concentration in which levitation in water of particles heavier than water is obtained. If some particles are retained in an oil layer or at the interface between an oil layer and a water layer, the process is called bulk-oil flotation; if particles are retained at a free water surface as a layer one particle deep, the process is skin flotation; if the particles are retained in a foamy layer several inches thick, the process is froth flotation. In the latter method a froth created in water by a variety of reagents floats some finely crushed minerals, whereas others sink. The separation is caused by a selective attachment of gas bubbles to one mineral and results in a change in the effective specific gravity of that mineral, thus permitting a gravitational separation of the components (16, 17, 19, 25, 26). See also .51 SINK-AND-FLOAT.

.23 FURNACING OF QUICKSILVER, Section 613(c)(4)(E); Section 1.613-4(f)(2)(i)(e)(1).

The furnacing of quicksilver is a distillation process by which ores of mercury (cinnabar) are heated to volatilize the mercury. Volatilization is followed by condensation of the mercur vapor. This may be done in a field camp by a prospector through the use of a frying-pan retort. See also .47 RETORTING.

.24 GRAVITY (concentration), Section 613(c)(4)(D); Sections 1.613-4(f)(2)(i)(d) and 1.613-4(f)(3)(i).

Gravity concentration is the separating of grains of minerals by a concentration method operating by virtue of the differences in the specific gravities of the minerals involved, which causes differences in their behavior when settling in water, air, or other fluids (7, 14, 17, 19).

.25 GRINDING, Sections 613(c)(4)(D) and 613(c)(4)(G); Sections 1.613-4(f)(2)(i)(d), 1.613-4(f)(2)(ii)(b), and 1.613-4(f)(5)(i). Also see Section 1.613-4(g)(6)(v).

Grinding is distinguishable from crushing only in that it is a later stage in size reduction that produces relatively fine particles.

Grinding may constitute either dry grinding, performed on material containing only moisture as it comes from the ground; or wet grinding, usually done in ball, rod, and pebble mills with water added (2, 17, 19, 26). See also .13 CRUSHING.

.26 HYDROGENATION (with respect to oil shale), Section 613(c)(4)(H); Section 1.613-4(f)(2)(ii)(d).

Hydrogenation is a form of reduction in which hydrogen, in its gaseous form, is caused to react with a substance in the presence of a catalyst at high pressure (19).

.27 HYDROTATOR, Section 1.613-4(f)(3)(i). A hydrotator is a coal washer of the classifier type whose agitator or rotator consists of hollow arms radiating from a central distributing manifold or central head. There may be four or more of these radiating arms, each with one or more downwardly inclined nozzles. When water is discharged from these nozzles, the impulse has the effect of rotating the agitator in a manner similar to a lawn sprinkler. This agitator is suspended in a cylindrical tank and water is pumped through it under pressure thereby creating a controlled upward current uniform over the entire area of the tank (6).

.28 INCIDENTAL PROCESSES, Section 613(c)(2); Sections 1.613-4(f)(2)(iii), 1.613-4(f)(5), and 1.613-4(g)(4).

A process is "incidental" to another related process if the cost thereof is insubstantial in relation to the cost of the other process, or if the process is merely the coincidental result of the application of the other process. For example, the sprinkling of coal, prior to loading for shipment, with dots of paper to identify the coal for trade name purposes will be considered incidental to the loading where the cost of that sprinkling is insubstantial in relation to the cost of the loading process. Also, where crushing of a crude mineral is treated as a mining process, the production of fines as a by-product is ordinarily the coincidental result of the application of a mining process.

.29 JIGGING, Section 1.613-4(f)(3)(i).

Jigging is the separation of the heavy fraction of an ore from the lighter fraction by means of a jig.

A jig is a machine in which the feed is stratified in water by means of a pulsating motion and from which the stratified products are separately removed. The pulsating motion usually is obtained by alternating upward and downward currents of water (13, 16, 19).

.30 LEACHING, Section 613(c)(4)(D); Section 1.613-4(f)(2)(i)(d) and 1.613-4(f)(4).

Leaching is the separation of metallic or nonmetallic compounds from ore by causing the desired substance to dissolve in an aqueous solution of acid, base, or salt, and the separation of the solution from the solid residue. The solvent is usually recovered by precipitation of the desired substance (4, 8, 10, 15, 20). See also .15 CYANIDATION and .42 PRECIPITATION.

.31 LOADING FOR SHIPMENT, Sections 613(c)(4)(A), 613(c)(4)(B), and 613(c)(4)(C); Sections 1.613-4(f)(2)(i)(a), 1.613-4(f)(2)(i)(b), and 1.613-4(f)(2)(i)(c)(2).

Loading for shipment is the allowable mining process of conveying the appropriate mineral product into vehicles of transportation.

.32 MAGNETIC (separation), Section 613(c)(4)(D); Section 1.613-4(f)(2)(i)(d); Section 1.613-4(f)(3)(i).

Magnetic separation utilizes the force of a magnetic field, coacting with some other force, to produce differential movement on mineral grains through the field. Fundamentally, differences in magnetic permeability of minerals constitute the basis of separation, but practically, separation is influenced by specific gravity, size, and purity of the mineral grains, and by mechanical and electrical attributes of the separator. (14, 16, 17, 26). See also .24 GRAVITY.

.33 MANUFACTURING, Section 1.613-4(g)(4).

Manufacturing, which is a nonmining process, includes the production, packaging, and marketing of manufactured products, and the processes necessary or incidental thereto.

.34 MINERAL, Sections 613(c)(2), 613(c)(3), 613(c)(4); Section 1.613-4(f)(1)(i).

The term "mineral" includes ores of the metals, coal, oil, gas, and all other natural metallic and nonmetallic deposits, except minerals derived from sea water, the air, or from similar inexhaustible sources. It includes but is not limited to all of the minerals and other natural deposits subject to depletion based upon a percentage of gross income from the property under section 613 and the regulations thereunder. Sections 1.611-1(d)(5) of the regulations.

.35 MINING, Section 613(c)(2), 613(c)(4); Sections 1.613-4(f), 1.613-4(f)(2)(iv), 1.613-4(f)(3), 1.613-4(f)(4), and 1.613-4(f)(5).

The term "mining" includes not merely the extraction of the ores or minerals from the ground but also the treatment processes considered as mining described in paragraph (4) (and the treatment processes necessary or incidental thereto), and so much of the transportation of ores or minerals (whether or not by common carrier) from the point of extraction from the ground to the plants or mills in which such treatment processes are applied thereto as is not in excess of 50 miles unless the Secretary or the Secretary's delegate finds that the physical and other requirements are such that the ore or mineral must be transported a greater distance to such plants or mills. Section 613(c)(2) of the Code

.36 MINING PROCESSES, Sections 1.613-4(f)(1)(ii), 1.613-4(f)(2)(i), 1.613-4(f)(2)(ii), 1.613-4(f)(2)(iii), 1.613-4(f)(3)(i), 1.613-4(f)(3)(ii), and 1.613-4(f)(3)(iii).

For Federal income tax purposes, a "mining process" is a process associated with mineral extraction and beneficiation, that is so designated by statute, regulation, or published revenue ruling, for the computation of gross income from mining under section 613(c) and the regulations thereunder.

.37 MOLDING OR SHAPING, Section 613(c)(5); Section 1.613-4(g)(1).

The processes of molding or shaping are used by manufacturers who shape the product of the mine into customer specified forms or into industrial shapes. The processes include such fabricating processes as molding or extruding of clay products prior to firing, and the shaping processes of "coping", "sawing", and "cutting" of dimension stone.

.38 NECESSARY PROCESSES, Section 613(c)(2); Sections 1.613-4(f)(2)(iii), 1.613-4(f)(5), and 1.613-4(g)(4).

A process is "necessary" to another related process if it is prerequisite to the performance of the other process. For example, if the concentrating of low-grade iron ores to bring to shipping grade and form cannot be effectively accomplished without fine pulverization, such pulverization shall be treated as a process which is "necessary" to the concentration process. Accordingly, because concentration is a mining process, such pulverization is also a mining process. Furthermore, if mining processes cannot be effectively applied to a mineral without storage of the mineral while awaiting the application of such processes, such storage shall be treated as a process which is "necessary" to the accomplishment of such mining processes.

.39 ORE, Section 613(c); Sections 1.613-4(f)(1)(i), 1.613-4(f)(1)(iii), 1.613-4(f)(2)(i)(c), 1.613-4(2)(i)(d), 1.613-4(2)(i)(e), 1.613-4(f)(2)(i)(e)(1), 1.613-4(f)(2)(iv), 1.613-4(f)(3)(i), 1.613-4(f)(3)(ii), 1.613-4(f)(3)(iii), and 1.613-4(f)(3)(iv).

Ore is any naturally occurring mineral or mineral aggregate containing valuable constituents (2, 17, 19, 26).

.40 ORE DRESSING, Section 1.613-4(f)(3)(iv).

Ore dressing is the cleaning of ore by the removal of certain valueless portions by jigging, cobbing, vanning, and the like.

.41 POLISHING, Section 613(c)(5); Sections 1.613-4(g)(1) and 1.613-4(g)(6)(iv).

The term "polishing" refers to processes used to smooth the surface of minerals, as, for example, sawing applied to finish rough cut blocks of stone, sand finishing, buffing, or otherwise smoothing blocks of stone.

.42 PRECIPITATION, Section 613(c)(4)(D); Sections 1.613-4(f)(2)(i)(d) and 1.613-4(f)(4).

Precipitation is the process of separating mineral constituents from a solution by evaporation, or by the addition of an agent, as a reagent, that when added or applied to the solution causes a precipitate of one or more of the solution's constituents. Following cyanidation, precipitation is the process of adding to the cyanide solution containing gold and/or silver, zinc or another metal which is chemically more active than the gold or silver. This results in the ejection of the gold and/or silver in solid form.

In the case of leaching, precipitation (other than electrolytic deposition) is the process of adding to the leach solution a metal such as copper, iron or another metal which is chemically more active than the solution metal. This results in an ejection of the desired metal in an impure solid form (4, 11, 15, 19, 20). See also .14 CRYSTALLIZATION and .30 LEACHING.

.43 PULVERIZATION OF TALC, Section 613(c)(4)(E); Section 1.613-4(f)(2)(i)(e)(2).

Pulverization of talc is a size reduction action necessary to bring talc into the condition in which it is customarily sold in the industry.

.44 PUMPING TO VATS, Section 613(c)(4)(B); Section 1.613-4(f)(2)(i)(b).

Pumping to vats refers to the process of transferring Frasch produced molten sulfur from the mine, or from the cleaner, to conventional vats for cooling and solidification.

.45 REFINING, Sections 613(c)(4)(D), 613(c)(4)(H), 613(c)(5); Sections 1.613-4(f)(2)(i)(d), 1.613-4(f)(2)(ii)(c), 1.613-4(f)(2)(ii)(d), 1.613-4(f)(4), 1.613-4(g)(1), and 1.613-4(g)(6)(iii).

The term "refining" refers to processes (other than mining processes) used to eliminate impurities or foreign matter from smelted or partially processed metallic and nonmetallic ores and minerals, as, for example, the refining of blister copper. In general, a refining process is designed to achieve a high degree of purity by removing relatively small amounts of impurities or foreign matter from smelted or partially processed ores or minerals (2, 4, 15).

.46 RETORT, Section 613(c)(4)(H); Section 1.613-4(f)(2)(ii)(d).

A retort is a closed vessel used for the distillation of volatile materials as in the separation of kerogen from oil shale. (See also .47 RETORTING) (19).

.47 RETORTING, Section 613(c)(4)(H); Section 1.613-4(f)(2)(ii)(d).

Retorting as used in Section 613(c)(4)(H) is the extraction of kerogen from oil shale (19, 24). See also .23 FURNACING OF QUICKSILVER and .46 RETORT.

.48 ROASTING, Sections 613(c)(4)(D) and 613(c)(5); Sections 1.613-4(f)(2)(i)(d), 1.613-4(g)(1), and 1.613-4(g)(2).

Roasting is a heating operation for the purpose of driving off volatile matter or to effect certain chemical changes at temperatures below those required for complete fusion (1, 13, 15, 19). See also .57 SMELTING.

.49 SHAKING TABLE, Section 1.613-4(f)(3)(i).

A shaking table is a slightly inclined table oscillated horizontally by an eccentric.

In concentration of finely crushed ores by gravity the table deck has a water resistant cover with parallel longitudinal riffles. The oscillating to-and-fro motion moves the ore along and over the riffles while it is exposed to the sweeping action of a stream of water flowing across the deck which is tilted about its long axis. In dry or pneumatic tabling, the feed is dry and air is blown upward through a porous deck (19, 26). See also .10 CONCENTRATING TABLE.

.50 SHIPPING GRADE AND FORM, Section 613(c)(4)(C); Sections 1.613-4(f)(2)(i)(c)(1), 1.613-4(f)(3)(i), 1.613-4(f)(3)(ii), 1.613-4(f)(3)(iii), and 1.613-4(g)(2).

To bring to "shipping grade and form" means, with respect to taxable years beginning after December 31, 1960, to bring (by the application of mining processes at the mine or concentration plant) the quality or size of an ore or mineral to the stage or stages at which the ore or mineral is shipped to customers or used in nonmining processes by the taxpayer.

.51 SINK-AND-FLOAT, Section 1.613-4(f)(3)(i).

Sink-float processes are those that separate particles of different sizes or compositions on the basis of specific gravity. When ore or coal particles are introduced into a liquid or other medium (a solid suspension), those having a specific gravity higher than that of the liquid or other medium will sink, while those that are of a lighter gravity than the liquid or other medium will float (25, 26). See also .22 FLOTATION.

.52 SINTERING, Sections 613(c)(4)(C) and 613(c)(4)(E); Sections 1.613-4(f)(2)(i)(c)(1), 1.613-4(f)(3)(ii), and 1.613-4(g)(2).

The term "sintering" means the agglomeration of fine particles by heating to a temperature at which incipient, but not complete, fusion occurs. Sintering will be considered a mining process only where it is applied to an ore or mineral, or a concentrate of an ore or mineral, as an auxiliary process necessary to bring the ore or mineral to shipping form. A thermal action which is applied in the manufacture of a finished product will not be considered a mining process even though such thermal action may cause the agglomeration of fine particles by incipient fusion, and even though such action does not cause a chemical change in the agglomerated particles. For example, the sintering of finely ground iron ore concentrate, prior to shipment from the concentration plant, for the purpose of preventing the risk of loss of the finely divided particles during shipment is considered a mining process. On the other hand, for example, a heating process applied to expand or harden clay, shale, perlite, vermiculite, or other materials in the course of the manufacture of lightweight aggregate or other building materials is not considered to be a mining process.

.53 SINTERING AND NODULIZING OF PHOSPHATE ROCK, Section 613(c)(4)(E); Section 1.613-4(f)(2)(i)(e)(4).

Sintering and nodulizing is a process of agglomeration of phosphate rock fines in order to produce an acceptable electric furnace feed in the production of elemental phosphorous.

.54 SIZE CLASSIFICATION, Section 1.613-4(f)(5)(ii).

Section 1.613-4(f)(5)(ii) of the regulations provides that size classification processes applied to the products of an allowable mining process are processes recognized as mining under section 613(c)(4)(I) of the Code.

Size classification is the grading of particles too small to be screened in accordance with their size, shape, and density by control of their settling rate through a fluid medium (water, slurry, or air) (13, 19).

.55 SIZING, Section 613(c)(4)(A); Section 1.613-4(f)(2)(i)(a).

Sizing is the process of separating mixed particles into groups of particles all of the same size, or into groups in which all particles range between definite maximum and minimum sizes (6, 19).

.56 SLUICES AND SLUICE BOXES, Section 1.613-4(f)(3)(i).

Sluices and sluice boxes are long inclined troughs or launders containing riffles in the bottom that provide a lodging place for heavy minerals in ore concentration. The material to be concentrated, usually stream gravel or finely crushed vein material, is carried down through the sluices on a current of water.

Sluice boxes are often used in placer operations for concentrating such minerals as free gold, platinum, mercury, cassiterite, and diamonds from stream gravels (19, 26). See also .59 SPIRAL CONCENTRATOR.

.57 SMELTING, Sections 613(c)(4)(D) and 613(c)(5); Sections 1.613-4(f)(2)(i)(d), 1.613-4(f)(4), 1.613-4(g)(1), and 1.613-4(g)(6)(ii).

Smelting is the process of melting an ore accompanied by a chemical change so that the molten products are chemically different from the substance existing before conversion to a liquid form. In thermal smelting, a fuel is the source of the energy. In electric smelting, the heat is derived from electrical energy.

Smelting also is the chemical reduction of a metal from its ore by a process usually involving fusion, so that the earthy and other impurities, separating as lighter and more fusible slags, can be removed from the reduced metal (10, 15, 19, 21). See also .48 ROASTING.

.58 SORTING, Section 613(c)(4)(C); Sections 1.613-4(f)(2)(i)(c)(1), and 1.613-4(f)(3)(i).

"Sorting" means the process of eliminating substantial amounts of the impurities or foreign matter associated with ores or minerals in their natural state, or of separating two or more minerals or ores, without changing the physical or chemical identity of the ores or minerals. See also .09 CONCENTRATING and CONCENTRATION.

.59 SPIRAL CONCENTRATOR, Section 1.613-4(f)(3)(i).

A spiral concentrator is a sluice formed in five or six tight spirals, in which centrifugal force aids the separating effect of the sluice action (19). See also .56 SLUICES AND SLUICE BOXES.

.60 STORAGE, Sections 1.613-4(f)(2)(iii) and 1.613-4(g)(3).

Storage is the temporary holding of a mineral product prior to further processing or shipment. See also .67 WAREHOUSING.

.61 THERMAL ACTION, Section 613(c)(5); Sections 1.613-4(f)(3)(ii), 1.613-4(g)(1), and 1.613-4(g)(6)(viii).

The term "thermal action" refers to processes which involves the application of artificial heat to ores or minerals, such as, for example, the burning of bricks, the coking of coal, the expansion or popping of perlite, the exfoliation of vermiculite, the heat treatment of garnet, and the heating of shale, clay, or slate to produce lightweight aggregates. The term does not include drying to remove free water.

.62 THERMAL SMELTING, Section 613(c)(4)(D); Sections 1.613-4(g)(1) and 1.613-4(g)(6)(ii).

The term "thermal smelting" refers to processes which reduce, separate, or remove impurities from ores or minerals by the application of heat, as, for example, the furnacing of copper concentrates, the heating of iron ores, concentrates, or pellets in a blast furnace to produce pig iron, or the heating of iron ores or concentrates in a direct reduction kiln to produce a feed for direct conversion into steel.

.63 TRANSFORMATION PROCESS, Section 1.613-4(g)(5).

Processes which effect a substantial physical or chemical change in a crude mineral product, or which transform a crude mineral product into new or different mineral products, or into refined or manufactured products, are nonmining transformation processes except to the extent that such processes are allowed as mining processes under section 613(c) of the Code or section 1.613-4(f) of the regulations.

.64 TREATING TO PREVENT FREEZING, Section 613(c)(4)(A); Section 1.613-4(f)(2)(i)(a).

A treatment to prevent freezing with respect to coal is the application of calcium chloride or other material to coal to prevent the coal from freezing in the car during transportation.

.65 TREATMENT EFFECTING A CHEMICAL CHANGE, Section 613(c)(5); Sections 1.613-4(g)(1) and 1.613-4(g)(6)(vii).

The term "treatment effecting a chemical change" refers to processes which transform or modify the chemical composition of a crude mineral, as, for example, the coking of coal. The term does not include the use of chemicals to clean the surface of mineral particles provided that such cleaning does not make any change in the physical or chemical structure of the mineral particles.

.66 WASHING, Section 1.613-4(f)(5)(iv).

Washing or cleaning the surface of mineral particles (including the washing of sand and gravel and the treatment of kaolin particles to remove surface stains), is a process recognized as mining under section 613(c)(4)(I) of the Code provided that such washing or cleaning does not activate or otherwise change the physical or chemical structure of the mineral particles.

.67 WAREHOUSING, Section 1.613-4(g)(3).

Warehousing is the temporary holding of mineral products prior to further processing or shipment. (See also .60 STORAGE.)

¹ Section references following the word or phrase being defined indicate where such word or phrase is used in the Code or regulations.

² Where Arabic numbers are set forth in parenthesis at the end of a definition, they refer to the source material of the definition. See corresponding Arabic numbers in Section 6, REFERENCES.

Sec. 6. References

1. Clegg, J. W. & Foley, D. D., Uranium Ore Processing (Sept. 1958)

2. Fey, Albert H., A Glossary of the Mining and Mineral Industry, U.S. Bureau of Mines Bulletin 95 (1947)

3. Gaudin, A. M., Principles of Mineral Dressing (1939 edition)

4. Henderson & Bates, Metallurgical Dictionary (1953 edition)

5. Hodgman, C. D., Weast, R. C., Sleby, S. M., Handbook of Chemistry & Physics, Chemical Rubber Publishing Co. (41 edition)

6. Mitchell, David R. (editor), Coal Preparation, American Institute of Mining and Metallurgical Engineers, New York (3d ed. 1950)

7. Mudd, Seeley W., Series (A.I.M.E. 1951) Mitchell, Coal Preparation

8. Mudd, Seeley W., Series, Economics of the Mineral Industries, (A.I.M.E. 1959) Chapter 8, p. 351 Schroeder, W.C. & Mote R. H., Dimensions and Changing Patterns of Supply and Demand, at pp. 378, 379

9. Nelson, A., Dictionary of Mining, Philosophical Library, Inc. (New York, 1965)

10. Newton, Joseph, An Introduction to Metallurgy (2d ed. 1948)

11. Peele, Robert, Mining Engineers' Handbook (1945 edition)

12. Peele, Robert, Mining Engineers' Handbook (1952 edition)

13. Pryor, Edmund J., Dictionary of Mineral Technology, Mining Publications, Ltd., London (1963)

14. Richards, R. H. & Locke, C. E., Textbook of Ore Dressing (3d ed. 1940)

15. Stoughton & Butts, Engineering Metallurgy (1926 edition)

16. Taggart, Arthur F., Handbook of Ore Dressing (1927 edition)

17. Taggart, Arthur F., Elements of Ore Dressing (1951 edition)

18. Taggart, Arthur F., Handbook of Mineral Dressing (1945 edition, 6th printing 1956)

19. U.S. Bureau of Mines, A Dictionary of Mining, Mineral, and Related Terms (1968)

20. U.S. Bureau of Mines, Copper, A Materials Survey (Sept. 1952) Ch. II. p. 26

21. U.S. Bureau of Mines, Iron Ore, a Materials Survey (May 1956) Ch. III

22. U.S. Bureau of Mines Bulletin 556, Mineral Facts and Problems (1956)

23. Webster's New International Dictionary (1927)

24. Webster's New International Dictionary (1947)

25. Werner, Materials Beneficiation Enters New Fields, Battelle Technical Review, Vol. 8, No. 9 (Sept. 1959)

26. SME Mining Engineering Handbook, Vol. 2 AIME (1973)

Sec. 7. Inquiries.

Inquiries in regard to this Revenue Procedure should be addressed to the Assistant Commissioner (Technical), Attention: T:C:E:, Internal Revenue Service, Washington, D.C. 20224.