Abbott Point Bulk Coal Pty Ltd v Collector of Customs
[1992] FCA 262
•01 MAY 1992
Re: ABBOTT POINT BULK COAL PTY LTD and QUEENSLAND RAILWAYS
And: COLLECTOR OF CUSTOMS
Nos. Q G165 and 167 of 1991
FED No. 262
Customs and Excise
(1992) 15 AAR 365
COURT
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Ryan(1), French(2) and Cooper(1) JJ.
CATCHWORDS
Customs and Excise - Appeal from Administrative Appeals Tribunal - Diesel fuel rebate - Right to rebate for diesel fuel purchased for use at and for carriage of coal to coal export facility at which blending of coals occurred - s.164(1)(7) Customs Act (1901), "mining operations", "beneficiation", "integral part of operations", "recovery" - whether blending of coals can be characterised as beneficiation - whether blending of coals is an integral part of operations for the recovery of minerals or of ores - when recovery of minerals or of ores is complete - distinction between recovery of minerals or ores and processing of minerals or ores for commercial reasons.
Customs Act (1901): s.164(1), s.164(7).
Max Cooper and Sons Pty Ltd v Sydney City Council (1980) 29 ALR 77.
Re Western Mining Corporation Ltd v Collector of Customs (unreported decision of AAT 30 March 1984).
Robe River Mining Co Pty Ltd v Federal Commissioner of Taxation (1990) 90 ATC 5028.
Queensland Bulk Handling Pty Ltd v Collector of Customs (unreported decision of AAT, N88/790 26 May 1989).
Federal Commissioner of Taxation v Broken Hill Proprietary Co Ltd (1969) 120 CLR 240.
Federal Commissioner of Taxation v ICI Australia Ltd (1972) 127 CLR 529.
Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60.
NSW Associated Blue Metal Quarries Ltd v Federal Commissioner of Taxation (1956) 94 CLR 509.
Neal v Secretary, Department of Transport (1980) 29 ALR 350.
Jedko Game Co Pty Ltd v Collector of Customs (NSW) (Full Federal Court, unreported, 10 March 1987).
HEARING
BRISBANE
#DATE 1:5:1992
Counsel for the Applicants: Mr W. Sofronoff QC and Mr M.M. Stewart
Solicitor for the Applicants: Feez Ruthning
Counsel for the Respondent: Mr R. Gotterson QC and Mr R.G. Maguire
Solicitor for the Respondent: Australian Government Solicitor
ORDER
The Court orders that:
1. The application be dismissed.
2. The applicants pay the respondent's costs of and incidental to the application, including any reserved costs, to be taxed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
These applications are by way of appeals on a question of law from a decision of the Administrative Appeals Tribunal ("the Tribunal") constituted by its President, O'Connor J, and Mr Muller (Senior Member) and Brigadier Gibson (Member). By its decision given on 6 November 1991, the Tribunal affirmed decisions of the Respondent, the Collector of Customs ("the Collector"), refusing to pay to the applicants rebates for diesel fuel purchased respectively by the first-named applicant for use in a range of vehicles at the Abbott Point coal export facility in Central Queensland and by the second-named applicant for use in diesel-powered locomotives for the carriage of coal-from the Collinsville and Newlands Mines to the Abbott Point facility.
The essential facts out of which the question of law is said to arise were not in dispute either before the Tribunal or in this Court. The Collinsville and Newlands mines are both connected by dedicated railway lines to the export coal facility at Abbott Point. Each of the mines and the export coal facility were, as the Tribunal found, developed in about 1986 as an integrated operation by Mount Isa Mines Limited. The Tribunal in its reasons described that operation as follows:
"4. The Newlands mine is open cut, about seven kilometres long
and is served by five access ramps. The Newlands Upper Seam comprises a low ash (10-14%) lower section of about four metres thickness and a high ash (24-28%) upper section of about three metres thickness. The "top" and "bottom" coal is generally mined and processed separately. The coal preparation plant comprises two identical but entirely separate modules, each capable of handling up to 1000 tonnes per hour of feed. One module is dedicated to processing run of mine "top" coal and the other to "bottom" coal. The plant is operated from a central control room using a distributed microprocessor control system. The coal undergoes three stages of crushing and screening and fine coal is removed in a "deduster". The coal is then washed in Batac jigs where inferior coal and shaly material are removed. The washed coal is then "dewatered". The coals from the two modules (the two streams of washed coal and two streams of fines) are then combined on a single product conveyor and taken via a sampling station to the product stockpile. Underneath the product stockpile is a reclaim tunnel which allows the coal to be transported via another conveyor to the train loadout for shipment to Abbott Point.
5. At the Collinsville mine export coking coal is mined from
three seams: Garrick West, Scott Denison North and Scott Denison West. The ash content differs between these seams and there is also some variation within each seam. Run of mine coal from the Scott Denison West, Scott Denison North and Garrick West is crushed and screened and then blended on a raw coal stockpile in the ratio 2:2:1. The coal is then washed in a preparation plant using dense medium and water washing cyclones. The coal leaves the preparation plant via a conveyor belt and is then dumped onto a concrete pad which holds up to 15 000 tonnes. The coal is then loaded into a reclaim hopper by end loaders and emptied onto a conveyor belt which transports the coal to trains for shipment to Abbott Point.
6. At neither Newlands nor Collinsville is all coal washed to
the same ash content specification. Abbott Point receives coal by rail separately from the Newlands and Collinsville Mines. Each train carries approximately 4 400-4 500 tonnes. Unloading of trains at Abbott Point is continuous from the bottom dump rail wagons at approximately 4 000 tonnes per hour into a receiving hopper. A conveyor takes the coals to the 1.2 kilometre long stockpile area. The coals are moved by conveyor to one of two stacker reclaimers for placement as directed by Newlands or Collinsville onto specific stockpiles in stockpile area A
(Collinsville) or area B (Newlands). There are ten stockpiles, five on the A side and five on the B side. On some occasions coal is loaded direct from a train to a vessel in the port."
The statutory context for the decision which the Collector was required to make is provided by s.164(1) of the Customs Act 1901 in these terms:
"(1) A rebate is, subject to subsections (2) and (3) and to such conditions and restrictions as are prescribed (being conditions and restrictions that relate to goods generally, to goods included in a class of goods that includes diesel fuel or to diesel fuel only), payable to a person who purchases diesel fuel for use by him:
(a) in mining operations (otherwise than for the purpose of propelling a road vehicle on a public road)".
By sub-s (7) of the same section it is provided:
"(7) In this section:
...
"minerals" means minerals in any form, whether solid, liquid or gaseous and whether organic or inorganic; "mining operations" means:
(a) exploration, prospecting or mining for minerals; or
(b) the dressing or beneficiation (at the mining site or elsewhere) of minerals, or ores bearing minerals, as an integral part of operations for their recovery;
and includes:
(c) other operations connected with exploration, prospecting or mining for minerals that are carried out in, or at a place adjacent to, the area in which the exploration, prospecting or mining occurs;
(ca) other operations connected with the dressing or beneficiation of minerals, or ores bearing minerals, where that dressing or beneficiation is an integral part of the operation for the recovery of the minerals or of the ores, being operations that are carried out in, or at a place adjacent to, the area in which the dressing or beneficiation occurs;
(d) where minerals, or ores bearing minerals, are dressed or beneficiated, at a place other than the mining site, as an integral part of operations for their recovery - the transporting of the minerals or ores from the mining site to the place where they are dressed or beneficiated;
(e) the liquefying of natural gas;
(f) where natural gas is liquefied at a place other than the mining site - the transporting of the natural gas from the mining site to that place; or
(g) the production of common salt by means of evaporation,
but does not include quarrying operations carried on for the sole purpose of obtaining stone for building, road making or similar purposes."
After holding that coal is a "mineral" as defined in s.164(7), the Tribunal identified the issue for resolution as "whether the activities at Abbott Point can be characterised as 'beneficiation' of 'minerals' as an 'integral part of operations for their recovery'". (The Collector in this Court has accepted as correct the conclusion that coal is a "mineral").
It is clear, in our view, that "beneficiation" is not a term in ordinary English usage. It is a technical term applicable to a range of processes in the mining and metallurgical industries. Accordingly, its meaning is to be determined as a question of fact. (See e.g. Max Cooper and Sons Pty Ltd v Sydney City Council (1980) 29 ALR 77 at 85). Here, the Tribunal found, at least by implication from its reference to another decision of the AAT in Re Western Mining Corporation Limited and Collector of Customs (unreported, 30 March 1984) in which there was evidence similar in effect to that in the present case, that "beneficiation" denotes the processing of minerals or ore bearing minerals to improve their physical and chemical properties. Since there was clearly evidence, for example from Mr Hughson, to support that finding, it cannot be disturbed in determining the present application.
The Tribunal then proceeded to consider whether the blending of coals of different ash content which occurs at Abbott Point can be characterised as "beneficiation" in the sense of the finding just imputed to it.
The reasoning adopted by the Tribunal made it unnecessary for it to decide that question in isolation because it looked first to whether the blending at Abbott Point, assuming it to be "beneficiation", occurred, as required by paragraph (b) of the definition of "mining operations" in s.164(7), "as an integral part of operations for (the) recovery" of coal. The Tribunal did not expressly indicate whether it regarded "recovery" in this context as a technical term in the sense discussed above, or as used in one of its meanings in ordinary English usage. However, it appeared to approach this second question by treating "recovery" as a technical term. The relevant paragraphs from its reasons are these:
"24. In the definition of "mining operations" set out above beneficiation must be an integral part of operations for the recovery of the minerals. Mr Hegarty (for the Collector) submitted that even if the blending operations at Abbott Point can be described as beneficiation, recovery is complete when the coal lands on the product stockpile at either Newlands or Collinsville. In Re Western Mining Corporation (supra) the Tribunal said: "We should add that the word 'recovery' is a word which is well-known in mining and metallurgy. Although this word is often used to describe the recovery of ore from the ground, it is more commonly used in a technical sense to refer to the percentage of each valuable mineral retained at the end of each dressing or beneficiation process."
25. The expert witnesses before the Tribunal were in general agreement that the term "recovery" means a proportion, usually expressed as a percentage, of material obtained as a product from the run of mine coal after a beneficiation process. Recovery implies a notion of separation, leaving on one hand a saleable product and on the other reject material. The Australian Standard referred to above defines "recovery" as: "The mass of a specified material obtained as a product from any operation, expressed as a percentage of the feed material on the same moisture basis."
26. The thrust of Mr Sofronoff's (Counsel for the Applicants) submissions was that what is sought to be recovered is coal of a particular contract specification. That process is not complete until after the blending operations at Abbott Point. Mr Hegarty submitted that recovery was complete at the mine site. In his submission recovery is a physical operation which ceases when coal lands on the product stockpile.
27. In Re Queensland Bulk Handling (supra) the applicant company operated a coal export terminal at Fisherman Islands in the Port of Brisbane. Coal from different pits and coal from different seams in the same pit was stockpiled at the terminal. These stockpiles comprised coals of differing ash contents. Queensland Bulk Handling blended coals from different stockpiles at the site to meet contract specifications. The Tribunal held that rebate in respect of diesel fuel used in the blending process at the terminal was not payable to the applicant. In respect of "recovery" the Tribunal said:
"...there was no suggestion that the post mining blending at Fisherman Islands caused a percentage of valuable mineral to be retained. On the contrary, the whole of the ore which was mined and blended was retained in the new mixture. It appears to me that the statute is not concerned with processes which occur after a mineral has been washed, prepared, beneficiated, call it what one may, once the product of the mine or colliery has been processed to produce a vendible product, or an end product."
28. Mr Sofronoff sought to distinguish Re Queensland Bulk Handling on the basis that what occurred there was not part of an overall plan engaged in by the mines to maximise the yield of the mines. Queensland Bulk Handling blended coals it obtained from different mines to meet its own contract specifications not to some how enable the mines to increase their overall yield.
29. In our view, the present case is unable to be distinguished from Re Queensland Bulk Handling to any material degree. In this case recovery is complete when coal is loaded onto a product stockpile at the mine site at the end of the coal preparation operations. Every tonne of coal railed from Newlands and Collinsville is sold. The operations at Abbott Point do not produce a saleable product and a reject product. The fact that any particular train load of coal may have undesirable characteristics in that its ash content may be too high or too low to meet contract specifications does not detract from the fact that that coal is a saleable product. It is true that the section contemplates that all beneficiation processes undertaken as an integral part of the recovery of the mineral do not have to occur at the mine site (see s.164(7)(d)). However, recovery is complete when an end product is obtained which is saleable. The further blending of that product to meet contract specification is not part of the recovery of the mineral and, in our view, is not an activity contemplated by the section. That such a process permits the miner to maximise the overall yield from the mine does not detract from the characterisation of the operations at Abbott Point as cargo manipulation or assembly."
We take leave to doubt, with respect, whether "recovery" is used in paragraph (b) of the definition of "mining operations" in s.164(7) in the more limited technical sense, illustrated by the Australian Standard, of a "yield" expressed as a percentage of some larger mass of mineral bearing ores or minerals together with adherent earth. Rather, we consider that the word is used more as a gerund than a true substantive, and is equivalent to "the minerals or ores being recovered". In this sense it has the meaning indicated at p 370 of Vol XIII of the Oxford English Dictionary (2nd Edn) as:
"e. The extraction of reusable substances from the waste produced by a process; also, the original extraction of a useful substance from a mixture, raw material, etc."
Support for this view is afforded by the expanded requirement in paragraph (ca) of the definition of "mining operations" in s.164(7) that dressing or beneficiation be "an integral part of the operation for the recovery of the minerals or of the ores" (emphasis added). However, little will turn on this linguistic distinction unless, on the evidence which the Tribunal can be taken to have accepted, it could be said that the blending which occurs at Abbott Point is an integral part of operations directed to the derivation of useful coal from a larger mass or feed material which also contains some other substance.
The evidence discloses that the coal is not of a uniform quality at either mine and variations in quality occur at different locations and within different coal seams at each mine. At both mines the coal is crushed, screened and washed by different means, but essentially the same processing functions are undertaken at each mine. Although there is some blending of raw coal at Collinsville, at neither mine is all coal washed to the same ash content specification. The coal is transported by rail from each mine to Abbott Point where the coal from Collinsville is stacked in five stockpiles on the A side. The coal from Newlands is stacked in five stockpiles on the B side. Each stockpile has a different ash content. In order to produce a cargo of a particular ash content, coal is taken from different stockpiles and mixed. The mixing occurs by placing the coal in predetermined layers and quantities in the holds of ships arriving at the port to take on coal cargoes for delivery. Occasionally, coal is placed directly on-board ship from the rail wagons without being stockpiled, but when that is done it is still loaded in layers and in predetermined amounts.
As appears from the affidavit of Mr David Hughes, the coal production manager at Newlands Coal Mine for the period March, 1983 to November, 1989, the Newlands coal is highly variable in quality and has a low specific energy. Although there is a market for such coal, it is a small market, buyers have no loyalty, demand fluctuates widely and prices paid are very low. Mr Hughes deposed:-
"Thus washing and blending operations enable higher prices and better long term security for sales ie. the production of a higher energy product (bigger and more reliable market) and a more consistent quality (consumer loyalty)."
Mr Hughes also deposed to the blending on occasions of coal from the Garrick seam at the Collinsville mine, which coal has a high specific energy, with Newlands coal which has a lower specific energy.
Counsel for the applicants submitted that the fundamental consideration which prompted the use from 1986 of Abbott Point for blending coal from Newlands was to sell as much of the mass of coal removed from the ground as possible, given that the coal as sold must have a specific maximum ash content. The object was stated by Mr Hughes in his affidavit to be "to maximise clean coal recovery". In this regard we were referred to a study by G J Lyman and A Jonkers, commissioned by Mr Hughes in 1990 which demonstrates that the maximum yield using two separate product streams, one operated to produce a stockpile of 17% ash content coal, while the other is operated to produce a stockpile of 13% ash coal, which are then combined to produce a 15% ash coal, (the method employed by the applicants), is approximately 3% greater than that obtained by operating both process streams to produce a 15% ash product. What needs to be noted, however, is that the study was aimed at maximising product yield with a specific ash coal content.
It is clear that the miner maximises its saleable production by selling lower grade Newlands coal into a market into which it could not be sold if it were not mixed with higher grade coal. Conversely, the miner is able to maximise the return from its higher grade coal by bulking it out with an inferior coal to produce a product satisfying the minimum standard specified by a particular customer.
What the Tribunal has found is that prior to mixing, the coal as it is stockpiled can be sold in that condition into discrete markets. The Tribunal has also found that the mixing is only undertaken by the miner to maximise its return for commercial purposes by producing a blended product from the two constituent parts to meet a particular market demand.
It was submitted on behalf of the applicants that the process of recovery, having regard to the integrated activities conducted at both the mine sites and at Abbott Point, was not complete until the blending of the coal occurred when it was placed on-board ship in layers in predetermined amounts. In support of this submission reference was made to the decision of Lee J. in Robe River Mining Co. Pty. Ltd. v. Federal Commission of Taxation (1990) 90 ATC 5028 at 5038. In Robe River Mining Co. his Honour said:-
"Circumstances may be conceived where an activity that would normally be part of a mining operation ceases to be so (see F.C. of T. v. Henderson (1943) 68 CLR 29 per Latham C.J. at p 45, per Starke J. at p 50) but in the present case, the integrated activities of extracting the iron ore, reducing its size to fines and blending the product for some degree of chemical consistency are fundamental to the presentation of a marketable product. That is the mining operation. There could be no mining without the undertaking of the interlocking steps and the consent to mine granted by the State of Western Australia to the joint venturers, is plainly predicated upon that premise.... In determining what is the mining operation conducted by the joint venturers as that term is understood in item 14(1), it is to be noted that the sales tax legislation is dealing with commercial activities and the terms used in the legislation are likely to bear broad common-sense meanings consistent with the ordinary meaning of the words used unless the context of the Act dictates that some other meaning is intended.
Mining as a commercial activity is more than the excavation or removal of minerals. The nature of mining will vary with the nature of the substance being mined but above all it will be the winning of a product for a market. In the present case the entire history of the joint venture operation showed that the blasting of ore reserves and loading of the mined ore on railway wagons for transport would not provide a product for which there was a market. It is of great importance that the whole venture was conceived as an integrated project."
The question is whether or not a distinction is to be drawn between winning a product for a market of the miner's choosing and winning it for any available market whether or not the miner chooses to sell into that market. The Tribunal has held that to be a real distinction and that recovery is complete when the product is capable of being sold into any market irrespective of whether or not it is one which the miner, for commercial reasons, wishes to supply. In this regard the Tribunal relied upon an earlier decision of the Tribunal in Queensland Bulk Handling Pty. Ltd. v. Collector of Customs (Queensland) (Unreported N88/790, 26 May 1989, Deputy President C.J. Bannon QC).
Whether an activity falls within the definition of "mining operations" as defined in s.164(7) of the Customs Act 1901 is a question of fact. So too is the question of when recovery is complete. In each case a common-sense and commercial approach has to be taken to the question having regard to the evident purpose of the legislation, to make rebates available to promote the exploitation of mineral deposits in Australia. However, a point is reached where the mineral has been recovered and what is done with it thereafter is the use or processing of it for its better use as a mineral. Although care needs to be taken in referring to decisions on other legislative enactments to determine the meaning of "mining operations" in the Customs Act, the authorities do give some understanding as to the common or ordinary acceptation of that term.
In Federal Commission of Taxation v. Broken Hill Proprietary Co. Ltd. (1969) 120 CLR 240 at 273 Barwick C.J., McTiernan and Menzies JJ. said-:
"We do not doubt that to separate what it is sought to obtain by mining from that which is mined with it, eg., the separation of gold from quartz by crushing etc., or the separation of tin from dirt by sluicing, is part of a 'mining operation' but we would not extend the conception to what is merely the treatment of the mineral recovered for the purpose of the better utilisation of that mineral."
In Federal Commissioner of Taxation v. I.C.I. Australia Ltd. (1972) 127 CLR 529, Barwick C.J., with whom McTiernan J. agreed, said at 567:-
"In the mining to recover many metals what is brought out of or up from the earth is a substance in which the metal is embedded or intermixed. The recovery of the metal is the process of freeing it from the total substance, in general referred to as the ore or ore body...It does not seem to matter whether the process of freeing the mineral is mainly physical or chemical. In general, the process of freeing the metal leaves on the one hand the metal and on the other a residue. I much doubt whether that residue, for example, the sand resulting from the flotation process used in the barrier mines, or the quartz after the removal of the gold in the case of gold recovered from reef gold or the dross after a cyanide process is properly called the ore or the metal's ore. That term, it seems to me, is properly used to describe the substance in which the metal has been found whilst still embedded in or intermixed with it."
See comments to similar effect in the judgments of Walsh J. at 550 and Gibbs J. (as he then was) at 583.
The process of recovery includes, in our view, those steps which are taken by a miner before sale, by whatever process, to remove the mineral from that in which it is embedded or with which it is intermixed. Such a process comprehends the refining of minerals or ore to remove impurities naturally occurring in the material as it has been mined. Once the process of separation or refining has been completed, to subject the mineral product to a process or procedure designed purely to facilitate its better use as so separated or refined or to render it more readily or advantageously marketable, is not in our view part of the recovery process.
In the instant case the coal, as coal, was recovered when it was washed and stockpiled at the mine sites. No further step was taken to separate the coal from foreign material adhering to it or intermixed with it for the purpose of improving the product by separation. What occurred thereafter was an operation designed to place clean coal on board ships in such proportions as to create a combined product with an ash content of 15%, or whatever other content was necessary, to satisfy requirements of a particular buyer. It was a process designed to best utilise the lower grade coal as coal.
It was submitted by Counsel for the applicants that if the mixing had occurred before the washing at the mine site then in the common opinion of all of the expert witnesses before the Tribunal the process of mixing would have been regarded as a process, or part of a process, of beneficiation. It was submitted that there is in logic and reason no basis for excluding the mixing of coal after the washing process either at the mine site or at the port facility. That submission, in our view, fails to recognise the distinction between what would occur if mixing had been undertaken before washing, and what in fact occurs at the mine site. A mixing before washing would be mixing of material which contains coal and other material naturally adhering to or intermixed with it. The washing process frees or separates the coal from the other material. What occurs at the port facility, or would occur at the mine site after washing if that procedure were followed, is the mixing of coal with coal simpliciter.
If the mixing of the coal after washing were done at the mine site to achieve the desired ash content, the carriage of the coal to the port facility and its loading on board ship could not on any view be regarded as "mining operations" within the definition in s.164(7) of the Customs Act. The integrated process implemented by the miners, and accepted by the Tribunal, did not require that mixing take place at the port in order to increase the yield of coal. The Lyman and Jonkers study was concerned only with the differences in processing methods to produce a volume of coal of a specified ash content. Thus the increased "yield" using the processing methods presently undertaken, could be achieved whether the process were undertaken at the mine site or at the port. On the evidence of Mr Hughes the mixing takes place at the port only to avoid the duplication at the mine of the facilities already available at the port. In consequence it cannot be said that the operations conducted at the port are in themselves an integral part of increasing the yield from the deposits of lower grade coal. What is achieved by the process undertaken at the port is a better use of capital equipment to blend clean coal already recovered so that it can be sold to optimum advantage by the miner.
Assuming that the placing of coal from separate stockpiles in the hold of a ship in layers in predetermined quantities can properly be categorised as "beneficiation", which we find unnecessary to determine, then it was not in our view "beneficiation (at the mining site or elsewhere) of minerals, or ores bearing minerals, as an integral part of the operations for their recovery". Accordingly, the operations conducted at Abbott Point do not entitle the applicants or either of them to a rebate in relation to diesel fuel purchased and used for the transport of the coal from the mine site to Abbott Point or in the handling of the coal or loading of it at the port.
The Tribunal, in our view, was correct in concluding that recovery was complete when coal was loaded on to a product stockpile at the mine site at the end of the coal preparation operations. We should not be taken as deciding that recovery is always complete as soon as an end product is obtained which is saleable. Rather, for reasons which we have outlined above we regard recovery as complete for the purposes of s.164 when no further process is undertaken by the miner to separate the mineral from any material adhering to it or intermixed with it prior to sale.
In the result, the application should be dismissed and the applicants must pay the Collector's costs of and incidental to the application, including any reserved costs, to be taxed.
JUDGE2
Mt. Isa Mines Limited conducts a substantial coal mining operation in Northern Queensland which involves the extraction, crushing and washing of coal from mines at Newlands and Collinsville and its delivery by rail to a dedicated port at Abbott Point. Queensland Railways, which transports coal to the port, and Abbott Port Bulkcoal Pty Ltd which loads it onto ships there, have both claimed rebates on excise duty paid on diesel fuel used in connection with their operations. They did so on the ground that the loading of coals of different mineral ash contents to achieve, by way of average, contractually specified grades, constituted the beneficiation of the coal as an integral part of operations for its recovery within the meaning of the Customs Act 1901. Their claims for rebate were refused by the Collector of Customs and his decisions affirmed by the Administrative Appeals Tribunal on review. They now appeal to this Court against the Tribunal's decision. The case raises questions about the proper construction of terms used in the definition of "mining operations" in s.164(7) of the Customs Act 1901.
Factual Background
Abbott Point is a deep water coal shipping port located on the Queensland coast about 20 kilometres north of the coastal town of Bowen. It was developed in 1981 by Mt. Isa Mines Ltd and receives coal for export from and only from that company's mines at Newlands and Collinsville which are about 180 kilometres and 80 kilometres south of the port respectively. One heavy duty rail line links the port to both mines. Coal received at the port is stockpiled in preparation for shipment and loading onto export coal vessels according to specifications set out in sale contracts. The port and the two mines are run as an integrated project which, since September 1989, has been owned by an unincorporated joint venture in which Mt. Isa Mines Limited has a 75% interest and AGIP Coal Australia Ltd has a 25% interest. The project is operated and managed at the mines by Newlands Coal Pty Ltd and Collinsville Coal Company Pty respectively and at the port by Abbott Point Bulkcoal Pty Ltd all of which are wholly owned subsidiaries of Mt. Isa Mines Ltd. The nature of the operation has not changed since before the formation of the joint venture. Its magnitude is indicated by the fact that the Newlands Mine produces steaming coal for export at an annual rate of 4.5 million tonnes. The Collinsville Mine produces about 1 million tonnes of coking coal for export. Domestic steaming coal produced at that mine is not delivered to Abbott Point. Queensland Railways transports the coal to the port by way of the rail link from Newlands and Collinsville.
A commercially important attribute of coal is its "ash content" which can be expressed as a percentage and measured by completely burning a 0.5 gram sample and comparing the weight of the residue to the weight of the sample. Broadly speaking, coal with a low ash content contains less non-organic mineral such as shale and sandstone and is of a better grade and greater commercial value than coal with a higher ash content. The ash content from the Newlands mine varies from a range of 10-14% in the lower section of the seam to 24-28% in the upper section. Coal from the upper section is called "top" coal and coal from the lower section "bottom" coal. Coal for export from Collinsville is mined from three seams, known as Garrick West, Scott Denison North and Scott Denison West. The ash contents are usually about 12%, 24% and 17% for those three seams respectively but can vary within them. All the Collinsville seams have a high sulphur content which presents difficulties in marketing and selling.
The Newlands coal is processed at the mine in two streams, one for the top coal and one for the bottom coal. Each stream undergoes three stages of crushing and screening in the course of which fine coal (particle sizes less than 0.5mm) is separated out. The crushed material is washed in Batac jigs where inferior coal and shaly matter are removed. The washed coal is then dewatered. The two streams of washed coal and fines are combined on a single conveyor and taken through a sampling station to a product stockpile. The top and bottom coals are treated separately because the coal washing process by which a percentage of the raw coal feed is removed for sale and the remainder rejected as waste is based upon density differences. To obtain a clean coal product with an aggregate percentage ash of say 15%, from two sources of raw coal with different ash percentages, will require different settings in the batac jigs. Following the recombination of the two streams of washed coal and fines, coal from the product stockpile is taken via a reclaim tunnel to another conveyor for loading onto a train for shipment to Abbott Point. It is important to note that not all the washed coal from Newlands had the same percentage ash content range.
Coal from the Scott Denison West, Scott Denison North and Garrick West seams at the Collinsville mine is crushed and screened and then blended on a raw coal stockpile in the ratio 2:2:1. This coal is washed in a preparation plant after which it is placed on a conveyor belt and then onto a concrete pad which holds up to 15,000 tonnes. It is loaded into a reclaim hopper by endloaders and emptied onto a conveyor belt which then transports it to trains for shipment to Abbott Point. Separate trains carry the coal from each of the mines. It is dumped continuously at Abbott Point from rail wagons at approximately 4,000 tonnes per hour into a receiving hopper and taken by conveyor to a 1.2 kilometre long stockpile area. It is then moved by conveyor to one of two stacker reclaimers for placement on to specific stockpiles in stockpile area A which receives Collinsville coal or stockpile area B which receives Newlands coal. There are five stockpiles in area A and five in area B.
In 1986 a system was devised to maximise the amount of coal from the mines that could be used to meet export requirements. The overall ash percentage of coal specified for a given shipment is achieved by loading into the ship coal of different ash percentages from different stockpiles at the port. Sometimes Newlands coal is loaded with Collinsville coal. Generally, however, it appears that Newlands serves the market for export steaming coal, whereas export coal from Collinsville is used for coking. For any proposed shipment of Newlands' coal a plan is provided to the port on how to load a vessel from the different stockpiles with varying ash contents. One example related to the loading of the MV Alpha Faith. 13,263 tonnes were loaded from stockpile B1, 10,233 tonnes from stock B3 and 9,280 tonnes directly from trains. The overall ash content of the coal once loaded met the cargo specification, although individually the three tonnages did not. A similar process is undertaken in relation to Collinsville mine coals. Although the word "blend" was used to describe this process it does not involve any mechanical mixing beyond that achieved by loading layers of coal of different ash percentage ranges successively into the ship. To the extent that any true mixing of the products of the different stockpiles occurs it can be inferred that it happens when the ship is unloaded.
Diesel fuel upon which excise duty has been paid is used by Queensland Railways to power the locomotives which haul the coal from the Newlands and Collinsville Mines. At the Abbott Point port bulldozers push coal from "dead" to "live" stockpile areas near stacker reclaimers for loading onto a ship. A loader is used for cleaning up stockpiles and clearing out windrows and bobcats are used near the stacker reclaimers for clearing up coal which spills into drains. Each of these machines consumes diesel fuel. On 5 January 1989, Abbott Point Bulkcoal Pty Ltd lodged an application dated 12 December 1988 with the Collector of Customs seeking a rebate of excise duty paid on diesel fuel used at Abbott Point for the period 1 July 1986 to 31 October 1988. The eligible operation in which it was said that the fuel had been used was described in the application thus:
"The diesel fuel covered by this application is used to power equipment used in the Blending (being Dressing or Beneficiation) of export coals at the Abbott Point export facility."
The claim was refused by a letter dated 23 January 1989 from a Mr K. O'Shaughnessy of the Rebates and Subsidies Section of the Australian Customs Service. In refusing the claim he wrote:
"Coal blending is an after recovery process and is not included in the eligible operations."
On 22 February 1989 the company wrote to the Deputy Registrar of the Administrative Appeals Tribunal in Sydney seeking a review of the decision.
On 4 August 1989, Queensland Railways lodged two applications dated 3 August 1989 with the Collector seeking rebates of excise duty paid on diesel fuel used in transporting coal to Abbott Point from Newlands and Collinsville respectively for the period 1 August 1986 to 31 May 1989. The eligible operation was described in the Newlands' claim as follows:
"IN THE TRANSPORTATION OF COAL FROM THE NEWLANDS MINING SITE TO THE PLACE WHERE THE COAL IS DRESSED OR BENEFICIATED AS AN INTEGRAL PART OF OPERATIONS FOR ITS RECOVERY"
A like description was applied to the transportation of Collinsville coal.
By a letter dated 3 April 1990, Mr J.A. Henderson, a Senior Inspector, Rebates and Subsidies Investigations of the Australian Customs Service refused payment of the rebate saying:
"Coal blending is not considered to be part of the process of dressing or beneficiating the product and therefore is not an eligible operation under the definition. Accordingly the transporting of coal for coal blending is ineligible, as it is also an after recovery function and payment of diesel fuel rebate is refused."
On 27 April 1990, Queensland Railways lodged an application with the Administrative Appeals Tribunal seeking review of these decisions which were characterised in its application for review as one decision made 3 April 1990.
On 29 June 1990, Abbott Point Bulkcoal Pty Ltd made a supplementary application dated 28 June 1990 claiming rebate of diesel fuel for the period December 1988 to December 1989. By a letter dated 31 July 1990 from Mr O'Shaughnessy the supplementary application was also refused and on 17 October 1990 a second application for review was lodged by the company with the Administrative Appeals Tribunal. The two Abbott Point Bulkcoal Pty Ltd applications (Q89/61 and Q90/495) and the Queensland Railways application (Q90/187) were heard together by the Administrative Appeals Tribunal on 1, 2 and 4 July 1991. On 6 November 1991 the Tribunal affirmed the decisions under review. Abbott Point Bulkcoal Pty Ltd and Queensland Railways now appeal against the Tribunal's decision.
Statutory FrameworkBefore turning to a consideration of the Tribunal's reasons for decision, it is convenient to set out the relevant statutory provisions. In this case the applicants' claims for diesel fuel rebate were made under s.78A of the Excise Act 1901 which provides in the relevant parts:
"78A(1) A rebate is, subject to sub-sections (2) and
(3) and to such conditions and restrictions as are prescribed... payable to a person who purchases diesel fuel, being diesel fuel upon which duty has been paid, for use by him -
(a) in mining operations (otherwise than for the purpose of propelling a road vehicle on a public road).
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(7) In this section, "mining operations", ... and "use" have the same respective meanings as in section 164 of the Customs Act 1901."
In s.164(7) of the Customs Act 1901, the word "mining operations" is defined in part as follows:
""mining operations" means -
(a) exploration, prospecting or mining for minerals; or
(b) the dressing or beneficiation (at the mining site or elsewhere) of minerals, or ores bearing minerals, as an integral part of operations for their recovery, and includes -
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(d) where minerals, or ores bearing minerals, are dressed or beneficiated, at a place other than the mining site, as an integral part of operations for their recovery - the transporting of the minerals or ores from the mining site to the place where they are dressed or beneficiated;"
The word "minerals" is defined to mean:
"minerals in any form, whether solid, liquid or gaseous and whether organic or inorganic."
There is no definition of the terms "beneficiation" or "recovery".
Section 78A of the Excise Act 1901 and s.164 of the Customs Act 1901 were enacted by the Diesel Fuel Taxes Legislation Amendment Act 1982. There is no relevant legislative history. With the Diesel Fuel Tax Amendment Act (No. 1) and (No. 2) it formed part of a package of measures described in the Explanatory Memorandum to the Diesel Fuel Tax Amendment Bill (No. 1) as designed to:
"introduce... a new system providing for rebates of duty paid on diesel fuel used for "off-road" purposes by persons engaged in the agriculture, mining, forestry and fishing industries."
The Tribunal's Reasons for Decision
There was, as the Tribunal said in its reasons for decision, no dispute as to the facts and the factual background which is derived from those reasons and the evidence before the Tribunal including a statement of agreed facts has already been set out above. As appears from those facts and the statutory framework, the applicants' entitlement to rebates depended upon whether the diesel fuel used by them was used in "the dressing or beneficiation ... of minerals or ore bearing minerals, as an integral part of operations for their recovery."
Although there was evidence from some experts that coal is not a mineral, the Tribunal accepted that it comes within the definition in s.164(7) of the Customs Act 1901 and there was no dispute on that point. A considerable part of the Tribunal's reasoning was devoted to the meaning of the terms "beneficiation" and "recovery" which appear in the definition of "mining operations" to which reference has already been made.
There were conflicting views on the evidence about the word "beneficiation". The Standards Association of Australia in a document entitled "Glossary of Terms Relating to Solid Mineral Fuels" defined "beneficiate" in the context of coal preparation as "to increase the commercial value of a coal by appropriate treatment". Emeritus Professor Raymond Whitmore, formerly Professor of Mining and Metallurgical Engineering at the University of Queensland, and one of the draftsmen of the SAA definition said that an "appropriate treatment" would include "mixing in predetermined and controlled quantities to give a uniform product" which was the Australian Standard definition of "Blending". He said that the blending conducted at Abbott Point produced coal of a particular ash content in order to meet specification. The process increased its commercial value and was therefore beneficiation. Dr. Ian Ketteridge, a consulting metallurgical engineer and formerly Professor of Mining and Metallurgy at the South Australian Institute of Technology, said that the term "beneficiation" is used in the mining industry to mean the improvement by a process of the quality, physical or chemical, of a mineral or other earth-derived commodity in terms of a specification. It was applied only to preparatory stages in a processing sequence which produced a useful commodity. Concentration is a common form of beneficiation. Crushing is another. He cited a number of other examples and said that the various processes described had one thing in common, the alteration of the nature of the substance physically or chemically or both to comply with a specification. In relation to coal, the breaking up of the coal was a beneficiation process and the same applied to screening, jigging, flotation, drying, blending and briquetting. In respect of the processes adopted at Abbott Point he said:
"For a number of reasons the blending of coal at the Abbot (sic) Point facility as described in the agreed statement of facts is the most convenient and indeed the only practical way of meeting various specifications for shipment. Feed entering the preparation plant at Newlands is drawn from several pits and from different depths in each pit. It is variable in quality and it is not possible to continually fine tune the plant to produce material in compliance with specifications for each shipment. It is simpler to operate the plant with less adjustment to operational controls and to upgrade all feed and to subsequently blend the upgraded product at Abbott Point to meet particular specifications. Blending at Abbot (sic) Point is the final step in the overall beneficiation of the run-of-mine coal."
The Tribunal also referred to the evidence of Robert Arthur Hughson, Chief Mining Engineer (Coal) with the New South Wales Department of Minerals. He told the Tribunal that the terms "dressing" and "beneficiation" have their origin in the metalliferous mining industries. As they apply to the mining and treatment of coal he regarded them as synonymous and applicable to those processes whereby run-of-mine coal is treated so as to improve its physical and/or chemical properties to end up with a saleable product. On this basis crushing prior to treatment is a form of beneficiation as it is essential to effective treatment. He went on to say, however:
"In my opinion the blending of the products of a coal preparation plant is not beneficiation. In particular the blending by the applicant at Abbott Point of coal of different characteristics to meet specific contract specifications as described in the statement of fact is not beneficiation as that process does not affect the inherent nature of the blended coals. It is however an efficient form of resource optimisation. Blending is a procedure long practised in the industry for this purpose."
In his opinion, the operations which occur after placement of coal on the product stockpile can be characterised as stockpile manipulation and cargo assembly but not beneficiation.
James Edgar, a Mining Consultant, also gave evidence referred to by the Tribunal that beneficiation proper took place in the washing process when raw coal was subjected to operations which separated coal with required characteristics from reject material. The process of beneficiation was in his view complete when the coal was discharged from the washery on to a product stockpile. Blending of coal thereafter to make up a product which overall met specific contract specifications was not a beneficiation process.
The submission was made on behalf of the applicants that the term "beneficiation" involves an economic and not a material concept. The Tribunal said however, that there is an inherent difficulty in moving the concept away from the product, that is from the coal to the value that it has to a customer. Having expressed that difficulty, it found that there was much force in submissions made on behalf of the Collector that beneficiation is finished when the coal is deposited on the product stockpile at the end of the coal preparation process and that what happens thereafter in the transport from Newlands or Collinsville and at Abbott Point is properly to be characterised as handling and transporting operations. It referred to a decision of the Tribunal differently constituted in Re Western Mining Corporation Ltd and Collector of Customs (unrep. 30/3/1984) where it was said that there were strong indications in the legislation that Parliament had intended the term "beneficiation" to have a dictionary meaning which was "to process (as a raw material) so as to improve the physical and chemical properties...". But the Tribunal in this case did not specifically adopt this definition or apply it to the evidence. Nor did it make any finding of fact on the question whether the so called "blending" of coal at Abbott Point was beneficiation. Rather it turned to consider the other important term in the statutory condition of eligibility which requires that beneficiation be an integral part of operations for the recovery of minerals.
The Tribunal found that the expert witnesses before it had been in general agreement that the term "recovery" means a proportion, usually expressed as a percentage, of material obtained as a product from the run-of-mine coal after a beneficiation process. Recovery, it said, implies a notion of separation leaving on one hand a saleable product and on the other hand reject material. It referred to an Australian Standard definition of "recovery" as:
"The mass of a specified material obtained as a product from any operation, expressed as a percentage of the feed material on the same moisture basis."
Whatever else may be said of that definition, it is not applicable to the statutory phrase under consideration. It refers to a measure or quantity of material which may reflect the outcome of a process of recovery. It is the recovery process itself which is adverted to in the phrase "operations for their recovery" in s.164(7) of the Customs Act. Nevertheless it is fair to say that the Tribunal relied upon the experts' and the Australian Standard definitions to conclude that recovery in the sense of a process implied a notion of separation out of saleable product from reject material.
Reference was also made to the decision of the Tribunal differently constituted in Re Queensland Bulk Handling Pty Ltd and Collector of Customs (unrep. 26 May 1989) which concerned a rebate claimed in respect of the blending of coals at a coal export terminal in the port of Brisbane. There the Tribunal had said:
"... that the Statute is not concerned with processes which occur after a mineral has been washed, prepared, beneficiated, call it what one may, once the product of the mine or colliery has been processed to produce a vendible product, or an end product."
The Tribunal rejected an attempt by counsel for the applicants to distinguish Re Queensland Bulk Handling on the basis that what had occurred there was not part of an overall plan engaged in by the mines to maximise their yield. It concluded its reasons in the following terms:
"In our view, the present case is unable to be distinguished from Re Queensland Bulk Handling to any material degree. In this case recovery is complete when coal is loaded onto a product stockpile at the mine site at the end of the coal preparation operations. Every tonne of coal railed from Newlands and Collinsville is sold. The operations at Abbott Point do not produce a saleable product and a reject product. The fact that any particular train load of coal may have undesirable characteristics in that its ash content may be too high or too low to meet contract specifications, does not detract from the fact that the coal is a saleable product. It is true that the section contemplates that all beneficiation processes undertaken as an integral part of the recovery of the mineral do not have to occur at the mine site (see s.164(7)(d)). However, recovery is complete when an end product is obtained which is saleable. The further blending of that product to meet contract specification is not part of the recovery of the mineral and, in our view, is not an activity contemplated by the section. That such a process permits the miner to maximise the overall yield from the mine does not detract from the characterisation of the operations at Abbott Point as cargo manipulation or assembly."
The Submissions
The questions of law said to arise in this appeal are:
1. The proper construction of the term "beneficiation" contained in sub-section 164(7) of the Customs Act 1901.
2. The proper construction of the term "integral part of the operations for their recovery" contained in sub-section 164(7) of the Customs Act 1901.
Referring to the Tribunal's finding that the process of recovery of coal concluded when the coal joined the product stockpile at the mine, the applicants submitted that the Tribunal erred in law in finding that no process which occurs after the point where recovery has ceased could constitute a process or operation integral to operations for its recovery. The Tribunal had found that the blending which took place at the port was integrated with the planning of the mining process at the mines and that the integration maximised the amount of coal available for sale and therefore the amount recovered from the mine. Without the blending at the port it was said, less coal would have been recovered from the mines in the sense that there would have been less of the coal taken from the ground which was available for sale.
On this issue the respondent contended that the reasoning of the Tribunal involved the proposition that recovery implies a notion of separation leaving a saleable product and reject material, that no separation of that or any other kind takes place at Abbott Point and the process of separation is complete at the end of the coal preparation operations. The conclusion logically followed that no recovery took place at Abbott Point. The word "recovery" in the statute was said to bear its ordinary industry meaning determinable by reference to expert evidence which amply supported the Tribunal's finding. As a result, it was impossible to contend that the blending which occurred at Abbott Point was "an integral part of the operations for the recovery of the coal".
On the question of beneficiation the applicants pointed out that expert witnesses had agreed that it was never seriously disputed that if as part of a plan to recover the maximum amount of coal the mine process provided for blending before washing, then such blending would constitute beneficiation. It lacked any logic to conclude that if for reasons connected with maximising recovery and the economics of the mine the step was taken after washing, it did not constitute beneficiation. In any event it was said, the creation of a "vendible product" could not of itself determine the end point of beneficiation. Even coal straight from the ground could be vendible. The result of the blending conducted at the port was that two bodies of coal, neither of which had the necessary qualities to satisfy a particular contract specification were combined so as to produce an homogeneous body of coal which did satisfy that specification. In this sense the coal was "improved" so that the process of blending did amount to beneficiation.
The respondent took the threshold point that it was impossible to contend that blending which occurred at Abbott Point was an integral part of the operations for the recovery of the coal. Apart from this, it submitted that the Tribunal was correct in adopting the definition of beneficiation which it had used in Re Western Mining and that there was no evidence that blending improved the physical or chemical properties of the coal. As to that latter point, it should be said immediately that the Tribunal did not adopt any definition on beneficiation. It determined the case by holding that the process of blending was not an integral part of the operations for the recovery of the coal.
The Merits of the AppealAs appears from its reasons, the Tribunal favoured a meaning of beneficiation involving the improvement of physical and chemical properties. It had difficulty with the concept of economic enhancement advanced by the applicants. In the end however, it did not determine the question of construction nor did it make any finding of fact on whether the so called "blending" process constituted beneficiation for the purposes of s.164. Its decision rested upon the proposition that the concept of recovery does not extend beyond the point at which the product of the mine has been processed to produce a vendible product or an end product. The closing paragraph of its reasons made this clear:
"...recovery is complete when an end product is obtained which is saleable."
That proposition was taken without further exposition from Re Queensland Bulk Handling. It was nevertheless related to the earlier statement based upon expert evidence that in the present statutory setting "recovery" implies a notion of separation leaving on the one hand a saleable product and on the other reject material. That attributes a non-legal technical meaning to the word and is a finding of fact which is not reviewable in this application - Life Insurance Co. of Australia Ltd v. Phillips (1925) 36 CLR 60 at 78; NSW Associated Blue Metal Quarries Ltd v. Federal Commissioner of Taxation (1956) 94 CLR 509 at 512; Neal v. Secretary, Department of Transport (1980) 29 ALR 350 at 361-2; Jedko Game Co. Pty Ltd v. Collector of Customs (NSW) (unrep. Full Fed. Ct. 10/3/1987). The conclusion that "recovery" within the meaning of the statute was complete upon the bringing into existence of a saleable end product was, however, a finding about the construction or effect of the term as used in the Act and therefore raises a question of law - Life Insurance Co. of Australia Ltd v. Phillips (at p 78). So too, does the effect of the phrase of which it forms part requiring that eligible beneficiation of minerals be an "integral part of operations for their recovery". It was evidently the Tribunal's view that once the recovery process was complete in the sense that there was a vendible product, no subsequent step could be seen as an integral part of it.
The construction to be given to the word "recovery" and the larger phrase of which it forms a part, must take into account the legislative policy of these provisions which was identified by a Full Court in Collector of Customs v. Cliffs Robe River Iron Associates (1985) 7 FCR 271 at 275 when it was said:
"The relevant provisions of the Excise Act reflect a legislative policy of encouragement of mining operations and should not be given a narrow application."
There is nothing in the concept of recovery which requires the conclusion that it ceases when a vendible product is produced. The mere excavation and stockpiling of a mineral may yield a vendible product. Even reject material in tailings dumps can attract buyers. Whether a product is vendible depends upon whether somebody is prepared to pay for it. While some concept of utility or commercial value may be inherent in the idea of recovery, there is no warrant for the conclusion that it is a process which ceases upon first production of a saleable product. Such a restrictive construction of the term "recovery" is, in my opinion, not mandated by the language of the subsection and seems antithetical to the legislative policy. In making the finding it did on this point the Tribunal, in my opinion, erred on a question of law. But, in the event, the error was irrelevant to the outcome of the case. For whatever effect is given to the word "recovery" it does involve the notion of separation of material and was a process which, on the Tribunal's finding of fact, had ceased by the time the coal was delivered to Abbott Point.
The question remains whether the so called "blending" of the coal at the port could be regarded as an integral part of the recovery operation. It may be accepted that the technique of mixed loading adopted at Abbott Point for achieving contractually specified ash contents made use of coal which might otherwise have been unsaleable. It may also be accepted that the process was an element of an integrated plan for the extraction, preparation and delivery of coal from the two mines. It would nevertheless be an abuse of the English language to describe it as "an integral part" of the recovery operation. To say that there is a close connection between recovery and mixed loading or that the recovery process would be different if the "blending" procedure had not been adopted, is not to say that the latter is an integral part of the former.
In this case it is not necessary to go any further to conclude that the applications by way of appeal against the Tribunal's decision must be dismissed. However, since the question of beneficiation was also agitated, it is desirable to say something about it. The distinction drawn by the Tribunal between the concept of economic enhancement for which the applicants contended and the improvement of physical or chemical qualities advanced by the respondent may be questionable if not illusory. The definition of the word "beneficiate" in the Oxford English Dictionary shows that it was derived from the Spanish word "beneficiar" which means "to benefit, or derive profit from a mine or to reduce ores". The term is economic in concept.
The notion favoured by the Tribunal of improved physical or chemical properties implies some normative standard by which the question whether physical or chemical properties of the mineral have been "improved" can be answered. It is hard to imagine any such standard which is separable from economic or commercial considerations. Nor is it difficult to conceive of an enhancement of the overall value of different grades of some ores by the production of a blended ore designed to meet a specific commercial need. But even allowing for that broad view of beneficiation which may be more consistent with the legislative policy than the approach favoured by the Tribunal, it would be going too far to characterise the so called blending process at Abbott Point as a beneficiation. It is a process which barely qualifies, it at all, for the appellation "blending". The layered loading of different grades of coal into a ship to obtain a mathematical average grade within contractual specification, is not blending nor even on the most generous view, beneficiation. There is nothing inconsistent in that conclusion with acceptance of the proposition that the blending of different grades of coal prior to the washing process may be seen as part of a process of beneficiation. In the event, however, the appeals fail in this case because whatever the proper characterisation of the loading process at Abbott Point it was not an integral part of the recovery operations.
For the preceding reasons I agree that the appeals must be dismissed.
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