Words and Phrases - "mining"

Two Caymans investment LPs (“RCF IV” and RCF V”) whose limited partners were mostly U.S. residents, realized gains from the disposal of shares of significant shareholdings in a TSX-listed Australian corporation (Talison Lithium) which, through a grandchild corporation, held leases in Australia and carried out an operation there of mining lithium ores and processing them. Although their (income account) gains were from selling the shares of Talison Lithium were not exempted under Art. 7 of the Australia-U.S. Convention because of the exclusion in Art. 13 (as expanded in Australian domestic legislation) for dispositions of (deemed) real property situated in Australia, their appeals nonetheless were allowed by Pagone J below on the basis that the shares of Talison Lithium were not taxable Australian real property because their value was attributable more to the “downstream” lithium processing operations than to the “upstream” mining operations. This finding was reversed by the Full Court on various grounds including that the mining operations did not end with the extraction of ore from the ground (so that most of the processing assets also were mining assets, and the associated leases, effectively mining leases).

The Court stated (at para. 167):

In our view, the separation and processing at those buildings of the different grades of lithium concentrate from the ore extracted may fairly be seen as mining because:

1. the object of the Greenbushes mine was the winning of two types of lithium concentrate, not lithium containing minerals in hard rock, and those products were first won following the processing into lithium concentrate. That processing was not an improvement of the mineral mined, but a step in obtaining the mineral sought;
2. all of this processing took place at the mine site;
3. this processing was not a distinct activity from excavation, but was a step in a single integrated process to produce the product sought to be won by Talison Lithium. This integration can be seen in the way in which Talison Lithium itself described the Greenbushes operations in its “Annual Information Form” … .
4. the foregoing passage [in the AIF] draws no distinction between the activities of extraction, said to be mining by the respondents, and the activities of processing. …
5. … The term “mine”, as a verb, is defined by s 8 of the Mining Act to mean any manner or method of “mining operations” and that term refers to a number of different means of refining a mineral. In our view, it includes the processing that takes place to convert the ore into concentrate.