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By K. S. Benson

DEPLETION is a subject of vital importance to the mining industry. Yet, in spite of its importance, its significance is not generally understood. The purpose of this discussion is to clarify the main aspects of the subject from the viewpoint of a metal mine taxpayer. To define the term depletion, it is necessary to distinguish among its various uses. In the economic or geological sense, depletion means the exhaustion of a natural resource. A mineral deposit is a wasting asset and once exhausted is nonrenewable. Millions of years were needed to produce an ore deposit, which may be consumed in a few years and which cannot be replaced except by the discovery of new sources of supply. The wasting asset feature of the mining industry has a vital bearing on the impact of the Federal Income Tax Law on this industry. This is recognized in the law by the various provisions dealing with the depletion allowance, and in this sense the term depletion has an income tax meaning. Depletion from the tax viewpoint means the statutory deduction from gross income designed to permit the return to the taxpayer of the capital consumed in the production and sale of a natural resource. The mining enterprise realizes income on the extraction and sale of minerals and a portion of the income realized represents capital consumed. As the resource is exhausted, the mining enterprise approaches the end of its existence unless new sources of supply can be acquired. Depletion from the tax viewpoint is a creature of statute with limited meaning and application and, in essence, is a method for amortizing the value of the primary asset of a mining enterprise. An example can best illustrate the significance of depletion from the tax viewpoint. Compare a manufacturing concern with a mining company. In computing taxable income of a manufacturing concern, consideraion is given to the cost of producing such income, the principal costs being capital investment for plant and equipment, labor, and raw materials going into the products produced. A mining enterprise, on the other hand, is faced with a different problem because its principal asset is the natural resource which it is producing. In computing its taxable income, consideration is given also to its capital investment for plant and equipment and the cost of labor; but in addition, recognition must be given to the fact that a portion of the proceeds realized on the sale of mineral represents capital. Without such recognition, the mining company would be taxed not on income but on capital and income, and Congress has never intended that capital be taxed as income. Thus, when depletion allowable is referred to in the mining industry, it means the statutory deduction allowable in computing taxable income of a mining enterprise. For guidance the appropriate provisions of the Internal Revenue Code, Income Tax Regulations, and the judicial decisions interpreting and construing them must be examined. It is important to identify and distinguish three methods of determining the allowance for depletion: 1—Cost depletion, 2—Discovery depletion, and 3—Percentage depletion. The basic method is cost depletion and in addition some taxpayers may be entitled to use discovery depletion and other taxpayers may be entitled to use percentage depletion. Discovery depletion and percentage depletion, however, are mutually exclusive and if a taxpayer is entitled to percentage depletion, he is not entitled to discovery depletion. By statute, a metal mine taxpayer is entitled to use cost depletion or percentage depletion, whichever produces the highest deduction. Thus, discovery depletion is merely of academic interest to such taxpayers and to most others. Briefly and broadly speaking, these methods of determining depletion may be described as follows: 1—Cost Depletion: Under this method, the allowable deduction for depletion is based upon the cost of the particular deposit to the taxpayer, unless the deposit was owned prior to Mar. 1, 1913, in which case the taxpayer may use the fair market value of the deposit on that date or actual cost, whichever is higher. This method is sometimes described as basis depletion or adjusted basis depletion, but in this discussion it will be referred to as cost depletion. 2—Discovery Depletion: Under this method, the allowable deduction for depletion is based on the fair market value of the deposit at the date of discovery or within 30 days thereafter and was originally designed to take into account deposits discovered subsequent to Feb. 28, 1913. 3—Percentage Depletion: Under this method, the allowable deduction for depletion is based on a specified percentage of the income realized during the taxable year from a particular property. As stated, the concept of depletion is based upon the exhaustion of a natural resource as distinguished, for example, from the concept of depreciation based on the exhaustion of property used in trade or business. From the tax viewpoint, depletion first became important in the administration of the Corporation Tax Act of 1909, which provided for an excise tax on net income. As soon as this act went into effect, mining taxpayers attempted to claim a deduction for depletion in computing net income although there was no specific mention of a deduction for depletion in the statute. The courts in these cases uniformly held that the statute did not permit an allowance for depletion in computing net income and also held that the provision permitting a reasonable allowance for depreciation did not include depletion. These early cases are quite significant because they establish the principle that the

Jan 1, 1952

By AIME AIME

DESPITE the meetings and discussions on over- production the situation still continues to grow worse instead of better. The demand for oil has dropped to 2,700,000 bbl. per day. On the other hand domestic production has risen to 2,700,000 bbl. with prospects of further increases, and if imports and natural gas-gasoline be added to this the current supply is about 3,100,000 bbl. per day. Though during the summer and early fall the demand may exceed this figure for a few months the prospects are that 'the average demand during 1929 will be at least 200,000 bbl. per day less than the present current supply, meaning additions to stocks over the year of about 75,000,000 bbl.

Jan 1, 1929

By Lyon F. Terry

INCREASING domestic demand for products, a sharp reduction in exports to Europe, and a rise in imports from South America were the chief features of the economic side of the industry in 1940. As the war progressed it became evident that exports to former European customers were being cut off or drastically reduced, leaving heavy inventories of products in the hands of many American refiners who had anticipated larger demands from the belligerents. Stocks of motor fuel reached burden-some proportions early in the year for the added reason that refining operations were stimulated by heavy demand for heating oils. Excessive tanker rates for Gulf to Eastern Seaboard movements during the first part of 1940 contributed to the accumulation of products on the Gulf Coast, where refinery gasoline prices were forced to extremely low levels by midyear. Tanker rates receded to normal during the summer but have since risen again to the approximate equivalent of pipe-line tariffs from the Mid-Continent.

Jan 1, 1941

By Harold L. Walker

ENGINEERING educators have recently been discussing the advisability of extending the undergraduate curricula to five or six years, and a plan has also been proposed requiring a preliminary period of study in the liberal arts college before admission to the engineering college. Extension of the undergraduate curricula has been suggested as a means of more fully covering the subject matter in the major field of study. Interest in this proposed plan of requiring a preliminary period of study in the liberal arts college has been heightened through a bill recently introduced in the legislature of the State of New York. This plan intends to give a more professional status to engineering, and credit for these additional years of study would be allowed to those engineers applying for professional licensure. As a result of the interest in engineering curricula and due to the impetus given by these proposed plans a general reexamination of curricula has been conducted by a large number of schools with the stated purpose of determining if the present curricula are meeting the aims and scopes of engineering education.

Jan 1, 1940

By AIME AIME

ABOUT 55 attended the general session of the Nonferrous Metallurgy Committee on Wednesday afternoon. In opening the proceedings the Chairman, Frank G. Breyer, served notice of his intention to make an early start this year in securing papers for his committee. He voiced the thought that more importance should be attached to the prompt publication of data on new advances in practice; the record of technical progress should be written before the sharpness of the current image becomes blurred by the veil of time. As an illustration, Mr. Breyer declared that great strides have been made in the zinc industry during the past nine years, whereby zinc ore is converted directly to the oxide in large mechanical furnaces, yet the literature is confined to patents.

Jan 1, 1933

H. W. Turner, Portland, Ore. (communication to the Secretary*) :—Mr. Brown's paper on the complicated groups of veins exposed in the workings of the Bodie mine forme a valuable contribution to the literature of the structural features of ore-depoeits. It is much to be desired that managers should put into print the results of their observations of the mines under their charge. These observations, as well as data of production, kind of ores, etc., usually accumulate for years, and unless the mining geologists of the Geological Survey happen along before the mine is worked out, such data seldom get into print. About the year 1899 I went through the mines at Bodie with R. C. Turner, then superintendent, and made some notes on the veins and gangue-minerals, and collected some specimens. Mr. Brown refers to crystals of feldspar (albite) found on fragments of quartz on the surface. I collected a number of specimens of these crystals, mostly from Queen Bee hill, and

Jan 1, 1909

By Willard P. Ward

HAVING been engaged during the past year in the manufacture of ferro-manganese in a blast furnace, I have imagined that some further information on this subject might be of interest to that large number of members of the Institute who are engaged in the iron and steel industries. The great question of the economical production of good steel, ingot metal, or homogeneous iron (we scarcely know now what to call it) from good materials, and at reasonable prices, has, thanks to the intelligence and energy of a few American engineers, been successfully solved in this country. Nearly all first-class railroads, and many that would riot rank so high, have adopted the Bessemer rail. Martin boiler-plates are rapidly gaining ground, in competition with

Jan 1, 1877

By Willard P. Ward

Having been engaged during the past year in the manufacture of ferro-manganese in a blast furnace, I have imagined that some further information on this subject might be of interest to that large number of members of the Institute who are engaged in the iron and steel industries. The great question of the economical production of good steel, ingot metal, or homogeneous iron (we scarcely know now what to call it) from good materials, and at reasonable prices, has, thanks to the intelligence and energy of a few American engineers, been successfully solved in this country. Nearly all first-class railroads, and many that would not rank so high, have adopted the Bessemer rail. Martin boiler-plates are rapidly gaining ground, in competition with

By V. F. Leferrer

A new process for the treatment of silver crusts from desilverization of lead has been developed by Societe de Penarroya. The zinc contained in the crusts is recuperated by vacuum distillation at low temperature. The use of special retort crucibles is avoided. AT Noyelles-Godault the Parkes process (zinc addition to a silver-bearing lead melt) is used to desilverize lead bullion from the blast furnace. The crust which rises to the surface of the bath is removed and pressed by a well-known process in a press of the Howard type. The pressed crust, called zinc crust or silver crust, contains 10 pct Ag, 30 pct Zn, and 60 pct Pb. It is melted under a salt bed in a small, narrow, and deep kettle heated only in its upper part. A liquid concentrated alloy is obtained which is called T.A.C. in France (triple alliage concentr6) analyzing approximately 25 pct Ag, 65 pct Zn, 8 to 10 pct Pb, and 1 to 1.5 pct Cu. This T.A.C. is a real metallic alloy, completely deoxidized, and can be stored indefinitely. The process used at Noyelles-Godault consists in distilling this alloy in a tight furnace, under low vacuum and at low temperature, so that only the zinc distills and is condensed into liquid form. The residual silver-bearing lead is almost entirely free from zinc and oxidized dross. The vacuum dezincing equipment, see Figs. 1 and 2, consists of: 1) A furnace, constituted of a casing of steel plate lined with refractory bricks, heated internally by means of graphite resistors. The temperature of the furnace is measured by a thermocouple device and controlled by an automatic temperature regulator which acts upon the flow of the current passing through the resistors. Two doors, numbered 1 and 2 in Fig. 2, are provided for, one for charging the T.A.C., the other for tapping the high silver-bearing lead. 2) A condenser, and an ordinary room lined with good heat conductor refractory material. This condenser is provided with a graphite resistor which serves to bring to temperature when starting the furnace. A thermocouple records the temperature of the zinc melt and controls the temperature in the furnace, that is, the flow of current through the resistors, by means of the above mentioned regulator, so that the distillation rate in the furnace does not exceed that of the condensation. The condenser is connected to the vacuum pump by a filter. The whole equipment should, of course, be fluid-tight. The operation is carried out under a vacuum of about 10 mm Hg.

Jan 1, 1958

By L. T. Hiaains

EVEN before the surrender of Germany, a gradual reduction in output of many of the small mining iseswises in the different countries of South America had occurred. Part of this was due to restricted purchases of strategic mineral supplies, and part to economic conditions. Inflationary tendencies have keen increasing since the war started; out in the past three years they have become serious. The difficulty in obtaining supplies, and labor troubles, has also combined to reduce production in many circumstances. British Guiana The Cuyuni Goldfields, Ltd., operating he Aleck Hill mine, is increasing their yanked mill to 500 tons. This appears be one of the few important new developments in South America during recent years. Brazil The big Volta Redonda steel plant was sported as being ready to start operations. Argentina Political troubles have restricted activities during the past year, and fuel short. ges have been so acute that surplus corn as burned in some instances. Practically all the tungsten producers ther closed down entirely or reduced

Jan 1, 1946

By Eli T. Conner

WITH Thomas G. Fear, chairman of the Coal Di- vision, presiding, the coal miners opened their program Monday morning with a general session at which three papers were presented. The first, "The Classification of Coal for Stationary Steam Generation," was presented by the author, Thomas W. Harris, Jr. In discussion, H. T. Coates inquired if it would not be possible to pick out a geographical coal section, certain seams or a group of mines, which would rank high in a desired feature or features, perhaps giving different -- - local sections or different mines something to designate a rating ("good," "fair," and "poor"). This might be done relative to anti-clinkering, free-burning, ,anti-slagging, smokelessness, friability and grindability. These might be listed or arranged on a map or diagram so that the prospective customer could find a coal that rated particularly high in desired characteristics. C. A. Reed pointed out, in part, that coal producers and sellers have found a bad but necessarily present condition in the country, especially with the smaller user of coal. This is entirely due to the fact that the employer expects his purchasing representative to be a genius and have expert knowledge of everything he buys, coal included, whereas in the larger plants he has and uses expert knowledge from the active organization when necessary. J. B. Morrow said that size rating was important in classifying coal and he emphasized that it was impossible to come to a definite basis on analysis alone.

Jan 1, 1933

By Albert Sauveur

(Winces-Barre Meeting, June, 1911.) THE instrument about to be described meets so perfectly the special needs of the metal microscopist that there seems to be little doubt but its merits must be readily appreciated by those who have had any experience in the microscopical examination of metals. The Microscope-Stand.-The microscope-stand proper, Fig. 1, consists of a microscope-tube, provided with both coarse and fine adjustments of the best construction, and with a draw-tube, rigidly mounted on a bar supported at both ends on substantial and firm cast-iron legs. The height between the table and the under side of the supporting bar is 5 in. and the distance between the supporting legs 12 inches. This arrangement' affords free space below the objective for the examination of large specimens of metals, such as full rail-sections, without detracting in the least from the value of the instrument when applied to the examination of the usual small specimen, as explained later. Many metal microscopists frequently have to examine bulky specimens, and this is altogether impossible with the ordinary microscopes as well as with the special metallurgical microscopes which have been designed and described from time to time. Recourse must be had to all sorts of makeshifts for the proper support of large specimens, or, more often, the microscopist gives up the attempt altogether, or else resigns himself to the cutting of the bulky samples into small pieces to -be laboriously polished and separately examined. It is believed that an instrument permitting the examination of large as well as of small specimens with equal ease and accu-

Dec 1, 1911

By F. B. Harris

MINE surveying and engineering at the various properties of the United States Smelting Refining and Mining Company has developed and increased in importance steadily as mining methods have changed and expanded, both in the development of ore bodies and in the methods and styles of stoping. Most important to satisfactory engineering practice, and secondary -only to accuracy and precision, is the preservation of all data relative to surveys and calculations so that it is readily available for use at all times and in -such form that it is permanent, easily found, and usable. The first consideration for a proper, accurate, and practical start for surveys and efficient engineering at any property is an accurate triangulation net and system of co-ordinates. This has been our practice and the first step seas to select a base line, readily accessible and easily measured, situated preferably on an even grade where the difference of elevation between the two -end monuments was not too great and -the distance was long enough for practical use. Permanent concrete monuments were built for these base-line points so constructed that they could be easily recognized and were visible. Precise levels were run on this base 'line and the elevation (sea level datum) if possible was established at each end monument. The distance was carefully measured many times, back and forward, by using a tape that had been standardized by the National Bureau of Standards. The tape was supported at ,each 25-ft interval on stakes which had been brought to grade between each measuring point. All conditions were

Jan 1, 1948

By Samuel M. Dunaway

INTRODUCTION ASARCO Incorporated purchased the East Tennessee Zinc Mines of the American Zinc Company and commenced operating on November 29, 1971. Presently, three mines are operating producing 6620 t/d (7300 stpd). The ore mined is sphalerite which occurs In lower Ordovician carbonates of the upper Knox Group and occurs in open space and fracture filling. Orebodies range from 3 to 46 m (10 to 150 ft) thick with dips from flat to 20º. The mining method is random room and pillar modified by shrinkage and bench stoping. Like other mining departments, the mining group at the Tennessee Mines Division is constantly looking for methods to improve productivity and safety and to reduce mining costs. This involves testing new equipment, trying new ore extraction ideas and making mining plant alterations to meet changes in operating conditions. The areas of change that will be described in this paper are longhole raising, jumbos and LHD loading, shaft sinking, conveyor transport of ore and sublevel haulage developments. LONGHOLED RAISES Raise driving has always been a hazardous occupation for miners and today it is becoming more difficult to get competent people for this kind of work. This problem has led us to seek an easier, safer way in which to excavate raises. The first longhole raises were excavated in the early 1970's using a Gardner-Denver air trac equipped with a PR-123 rock drill. The machine used 38 mm x 244 cm (1 ½ in x 8 ft) round rods with rope

Jan 1, 1977

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