Mining Tax Guide - Minnesota State Legislature
Mining Tax Guide - Minnesota State Legislature
Mining Tax Guide - Minnesota State Legislature
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
The 1990 agreement between the taconite producers and the<br />
<strong>Minnesota</strong> Department of Revenue provided that any change in<br />
mine value would be determined by two factors:<br />
1. the change in the Steel Mill Products Index (SMPI) from June<br />
of the prior year to June of the current year (75 percent); and<br />
2. the change in the actual selling price of non-equity sales<br />
(25 percent).<br />
The directive was determined using the final adjusted June 2009<br />
SMPI (153.3) and final adjusted June 2010 SMPI (204.8). The<br />
nonequity sales factor was developed from completed reports<br />
provided by the taconite producers and steel companies making<br />
nonequity sales and/or purchases of taconite pellets.<br />
How to Determine Mine Value<br />
Acid Pellets<br />
The mine value of acid pellets is determined by the change in the<br />
SMPI between June 2009 and June 2010 and the non-equity sales<br />
per dry gross ton Fe (iron) unit. The price of all non-equity pellet<br />
sales is converted to an acid sales price.<br />
Steel Mill Products Index (SMPI)<br />
June 2009 SMPI (final) 153.3<br />
June 2010 SMPI (final) 204.8<br />
204.8 ÷ 153.3 = 133.6%<br />
2009 mine value $0.880<br />
2010 SMPI % of 2009 value × 133.6%<br />
2010 SMPI Factor $1.176<br />
Non-equity Sales<br />
Weighted average all pellet sales price $1,106,884,934<br />
Total Fe (iron) units 829,418,844<br />
$1,106,884,934 ÷ 829,418,844 = $1.335<br />
Weighted average sales price per Fe (iron) unit = $1.335<br />
SMPI $1.176 × 75% = $0.882<br />
Nonequity sales $1.335 × 25% 0.334<br />
2010 acid pellet mine value = $1.216 per Fe (iron) unit<br />
Backup 2010 Data to Final Directive<br />
2010 Occupation <strong>Tax</strong> Report<br />
32<br />
Flux Pellets<br />
The value of flux pellets is determined by the amount of flux in<br />
the finished pellet as determined for production tax purposes.<br />
Partial flux<br />
Pellets with 1.99 percent or less flux will be valued at $0.015 per<br />
Fe (iron) unit higher than acid pellets:<br />
$1.216 + $0.015 = $1.231<br />
Flux<br />
Pellets containing 2 percent flux or more are valued at $0.015<br />
per Fe (iron) unit per each 1 percent of flux in the finished pellet.<br />
Percentages are: 2% – 2.99%; 3% – 3.99%, etc. The percentage<br />
of flux is reported on page 1 of the Production <strong>Tax</strong> Report and<br />
rounded down to the nearest percentage. For example, 4.82 percent<br />
is rounded to 4 percent.<br />
Example:<br />
Percent of flux in finished pellet = 4.82%<br />
4.0 × $0.015 = $0.060<br />
The mine value of flux pellets with 4.82% flux would be:<br />
$1.216 + $0.060 = $1.276 per Fe (iron) unit<br />
Chips and Concentrates<br />
A pellet chip and concentrate value is included for companies selling<br />
pellet chips or concentrate. Acid chips or concentrate is valued<br />
at 75 percent of the acid pellet price. Flux chips or concentrate<br />
is valued at 75 percent of the flux pellet value. Concentrate sold<br />
or shipped without being processed into pellets uses the same<br />
value as chips.<br />
Direct-Reduced Iron (DRI)<br />
Direct-reduced iron (DRI). The 2010 mine value for DRI was<br />
determined using the average monthly sales price for pig iron<br />
from January–December 2010. The 2010 average price was<br />
$462.448 per long ton for pig iron containing 94 percent iron.<br />
The mine value of DRI is:<br />
$462.448 ÷ 94% Fe = $4.920 per Fe (iron) unit
Change language