Administrative Code

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Virginia Administrative Code
Title 23. Taxation
Agency 10. Department of Taxation
Chapter 210. Retail Sales and Use Tax

23VAC10-210-960. Mining and mineral processing.

A. Mining and mineral processing generally. Section 58.1-609.3(2)(v) of the Code of Virginia exempts tangible personal property used directly in mining and processing. Used directly refers to those activities which are an integral part of the production of a product including all steps of an integrated process, but not including ancillary activities such as general maintenance and administration and includes reclamation activities required by state or federal law when performed by the mining company on land which it has mined previously.

Direct use in mining begins with the drilling of the shaft in deep mining or the removal of the overburden in strip mining, auger mining or quarrying and ends with the conveyance of the mined product to storage or stockpile at the mine site. Direct use in mining processing begins with the handling of the raw material at the processing plant site and ends with the conveyance of the processed product to storage at a stockpile at the plant site. The fact that particular property may be considered essential to the conduct of the business of mining or mineral processing because its use is required either by law or practical necessity does not, of itself, mean that the property is used directly in mining or mineral processing operations.

1. Mining defined. "Mining" means both deep and strip mining, quarrying, gas and oil drilling and other industrial removal of natural resources, minerals, or mineral aggregates from the earth. Mining does not include the extraction from tailing piles which because of technological advances in processing have become economic mineral deposits. Mining does not include water well drilling.

2. Mineral processing defined. "Processing," as the term is used in this section, is the preparation, refining or concentrating of the ore, resource or mineral subsequent to extraction and prior to distribution for sale and includes those activities commonly occurring at a coal preparation plant as well as the cleaning, grading, washing, cracking, crushing and similar processing of other ores, minerals, or natural resources. Processing also includes those activities commonly associated with the refining of crude oil.

Mining and processing are separate and distinct activities. The mine site and the processing site constitute separate plant sites unless both are owned and operated by the same person and connected by a private transportation system, such as a conveyor or private roadway. If the mine and the processing plant are owned by different entities, private transportation systems, including hauling vehicles, between the two sites will be exempt only if owned by the processing plant operator. In this instance the processing plant site will be deemed to begin at the point the mineral product leaves the mine site via a private transportation system and such transportation will be deemed to be handling of the raw material at the processing plant site. If the transportation system is owned by the mine operator, transportation including hauling vehicles to the processing plant site will constitute distribution subsequent to the end of the mining function.

Where public roadways or public transportation systems are used between the mine site and the processing plant site, each will be deemed to be a separate plant site, and tangible personal property used to transport the product between the two separate plane sites will be taxable. For an illustration of the taxability of transportation systems, see Figure 1.


For Mining and mineral processing, see Virginia Administrative Code print product.

Transportation of a waste product from the processing plant to a waste dump at the plant site is a part of production line quality control and is included in mineral processing. Systems used to transport the waste product from the production line at the processing plant to the dump will not be subject to tax provided both of the following conditions are met: (1) the transportation to the dump is continuous and without interruption, i.e., the waste is not stored or stockpiled prior to conveyance; and, (2) the dump is located at the processing plant site. In order for a dump to be deemed located at the processing plant site, such dump must be connected to the processing plant via private transportation system entirely owned or leased by the processor. If public roadways or transportation systems are used between the processing plant and the dump, each will be deemed separate sites and no exemption will be available for property used to convey the waste between the two sites.

In all instances, the construction of private transportation systems, such as hauling roads and railroad tracks, which upon their completion constitute a fixture upon or improvement to realty is a taxable activity. All materials incorporated into such systems, as well as machinery and tools used in their construction, are subject to the tax.

3. Functions characteristic of the mining and mineral processing industry. The following functions are generally characteristic of those performed in the mining and mineral processing industry: exploration; site preparation; mineral extraction; product inspection and testing; repair and maintenance; refining; distribution; reclamation; and administration. Each of these activities is discussed below.

a. Exploration. Exploration is the search for economic deposits of minerals, ore, gas, oil or coal by geological surveys, geophysical processing, boreholes and trial pits, or surface or underground headings, drifts or tunnels, and includes the mapping and design of the mine site. All tangible personal property used in the exploration function is subject to the tax, including drilling equipment used to test the earth and surveying equipment.

b. Site preparation. Site preparation is the preparation of the mine site or well location to facilitate the extraction of the mineral or other resource and includes the removal of the overburden, the clearing of the land at the mine site, construction of access roads, and the construction of tunnels, shafts, and passageways in underground mines.

Removal of the overburden in surface mining operations, removal of the overburden at the opening of a deep mine tunnel or shaft and grading the area of the well location are part of the mining process, and tangible personal property used in these removal processes is not subject to the tax. Construction of tunnels, shafts, and passageways in underground mines is an exempt activity.

Other land clearing activities at the mine site, well location, or the mineral processing plant site, such as for the construction of a processing plant or office buildings, and the construction and maintenance of roads or other private transportation systems, are not a part of mining and property used in such activities is subject to the tax.

c. Extraction. Extraction is the actual removal of the mineral, ore or natural resource from the earth. Extraction includes severing of the mineral, hauling the mine product from the mine face to a stockpile at the mine site for storage, and reconstruction of tunnels, shafts, and passageways in deep mines, as well as the drilling, completion, and equipping of an oil or gas well. Tangible personal property used directly in extraction is not subject to the tax.

d. Product inspection and testing. Product inspection and testing is the testing and analysis of the product performed during mine production or mineral processing at the mine or plant site. Inspection and testing to determine the quality of the product and to determine if the product meets industry standard is deemed to be a part of mining and mineral processing and is an exempt activity.

Research for the purpose of improving administrative efficiency or any other testing not related to product quality control are not part of mining or mineral processing and are taxable activities. Examples of taxable research are efficiency surveys, management studies, consumer surveys, economic surveys, advertising, or promotions.

e. Repair and maintenance. Repair and maintenance is the repair of machinery and tools and equipment, routine maintenance in order to insure that machinery and equipment are in good working order, and the repair and maintenance of offices, outbuildings, and other real or tangible personal property connected with the operation of the mine.

Repair and maintenance is not mining. Therefore, repair and maintenance facilities, either within the mine or elsewhere, including tools, supplies, machinery and equipment used in performing repair and maintenance work are subject to the tax.

Replacement and repair parts which are used to replace worn or damaged parts on exempt machinery and equipment, as well as operating supplies which are actively and continually consumed in the operation of exempt machinery and equipment are deemed used directly in mining and/or mineral processing and are not subject to the tax.

Machinery and tools used by the person engaged in mining or mineral processing to fabricate exempt machinery or equipment are exempt from the tax only if the preponderance of their use is in an exempt manner. For information on the taxability on items used in both a taxable and exempt manner, see subsection C of this section.

f. Mineral processing. Mineral processing as defined in subdivision A 2 of this section includes the active cleaning, grading, washing, cracking, crushing, refining and similar processing of the mineral or resource. Tangible personal property used directly in these processes is not subject to the tax.

Ancillary activities such as plant construction and administration are not a part of mineral processing and are taxable activities. Construction materials such as concrete, structural steel, and roofing which become permanently incorporated into the processing plant, and machinery and tools used in the construction of the plant are subject to the tax.

Steel or similar supports which are a component part of exempt processing equipment or machinery and which do not become permanently affixed to realty are not subject to tax. The concrete foundations onto which such supports are bolted, floors on which machinery rests, and structures housing equipment and machinery are not used directly in processing and are subject to the tax.

g. Distribution. Distribution is the transport or conveyance after the completion of mining or processing of the product and is not a part of mining or mineral processing. Distribution includes the storage of the product subsequent to its extraction (other than for further processing at the mine site) or processing, and the actual transport of the product for sale. All tangible personal property used to convey, transport, handle or store the product is taxable.

h. Reclamation. Reclamation is the restoration or conversion of mined land to a stable condition and the ongoing restoration or conversion of land currently being mined prior to total site reclamation. The process includes recontouring, reseeding, and reforesting the land. Reclamation activities required by state or federal law are a part of the mining process when performed by a mining company on land which it has previously mined. Reclamation activities which are not required by federal or state law are not a part of mining and tangible personal property used in such activities is subject to the tax.

i. Administration. Administration is the managerial, sales and nonoperational aspects of the mining or mineral processing operation and includes management, selling and marketing, employee comfort and convenience, and recordkeeping. Tangible personal property used in administration is subject to the tax.

B. Examples of property used in mining and mineral processing. The following are examples of both taxable and exempt tangible personal property used in each of the above referenced activities. These lists are exemplary and are not intended to be all inclusive.

1. Exploration.


Blueprints and blueprinting equipment

Explosives, blasting, and dislodging equipment and test drilling equipment and supplies

Engineering equipment

Surveying equipment

Pneumatic rock drills, jackhammers and air compressors

Seismic equipment


Sight rods


All other property used in exploration

2. Site Preparation


Bulldozers, scrapers, and similar equipment, except when used in removing overburden or grading well site

Logging and timbering equipment used for land clearance, except when used in removing overburden


Explosives, blasting, and dislodging equipment and supplies

Shaft drilling equipment

Bulldozers and scrapers used in removing overburden or grading well location

Pneumatic rock drills, jackhammers, and air compressors

Fuel and supplies used to operate exempt equipment

3. Extraction


Light fixtures, bulbs, and other illumination equipment, except when integral part of extraction equipment

Containers for fuel and supplies



Digging and extracting equipment, machinery and tools including continuous miners, bulldozers, augers, backhoes, drag lines, cranes, power shovels, picks, and other cutting machines and hand tools

Mine support materials, including timber and tools used in mine roof installation

Oil and gas drills and accessories thereto

Drainage pumps, pipes, and valves used within the mine

Blasting and dislodging equipment and supplies, including explosives

Roof bolting machines, roof bolts, compressors, timbers, wedges, cribbing, collars, roof supports, and accessories thereto

Rock dust and other dust allaying materials, rock dusting equipment, and dust collectors

Ventilation equipment including brattice cloth, lumber, blocks, fans, and air blowers

Transportation devices and equipment used to haul extracted product from mine face or pit to a stockpile located outside the mine or pit, including shuttle cars, conveyor belts and accessories thereto, front end loaders, mine car handling equipment, and ballast

Lubricants and similar supplies used in exempt equipment, including oils, starting fluids, antifreeze, and brake fluid

Personnel cars, trolley locomotives, battery locomotives, mine cars, and supply cars

Cable and trolley wire, steel rail, track bolts, spikes, and braces used within the mine or pit

Trolley telephones and mine telephones used within the mine for purposes such as dispatching on mine railways within the mine or work coordination

Protective apparel, including goggles, miner's lamps, self rescuers and methanometers furnished to production personnel

Chemicals used in oil or gas well "completion"

Fuel and supplies used to operate exempt machinery and equipment including transformers and rectifiers, battery chargers, air compressors, and generators

Repair or replacement parts and accessories which become a component part of exempt machinery and equipment

First aid equipment and supplies

4. Product inspection and testing.


Clerical supplies


Tangible personal property used in marketing or other administrative research


Testing scoops or shovels

Coal ash fusion furnace, portable ovens, calorimeter, centrifuge, and similar laboratory equipment

Sample containers such as crucibles and sacks and labels therefor

Laboratory computers

Chemicals used in research and testing

Protective apparel furnished to laboratory personnel

5. Repair and maintenance.


Welding equipment and supplies

Drills, cranes, and similar equipment used in repair

Hand tools used in repair

Soaps and cleaning compounds, rags, and similar cleaning accessories

Solvents, brooms, mops, brushes, rags and similar cleaning accessories

Paint, except used on exempt machinery and equipment

Electrical testing equipment and test panels

Repair or replacement parts, fuel, and supplies used in repair or maintenance equipment


Repair or replacement parts for exempt machinery, tools, and equipment including wire rope and chain, welding rods, wire, and electrodes and paint used on exempt machinery and repair or replacement parts

6. Mineral processing.


Structural construction materials, such as fabricated steel products, angle irons and beams, concrete, and roofing, and machinery and tools used in the construction of tipples, screening plants, preparation plants, and refining plants

Administrative items used in the refining plant, such as forms, labels, reports, furniture, and office supplies

Light bulbs and light fixtures

Fuel or other supplies used for heating or cooling


Coal cleaning equipment, vibrating screens, dewatering devices, washing tables, separation devices, dust treating devices, weighing devices and controls therefor, used in processing plant

Rock crushers, grinders, and similar equipment and parts therefor

7. Distribution.


Repair or replacement parts, fuel, and supplies for vehicles used to transport or convey the product from storage at the mine or processing plant site

Railroad sidings at preparation plants, rails, ties, spikes, track bolts, bars, and switches therefor

Road construction and maintenance equipment and supplies, culvert pipe, stone, concrete, and asphalt used in road construction

Bulldozers, graders, front-end loaders, drag lines, cranes, and parts and supplies therefor used in road construction and maintenance

Bulldozers, front-end loaders and similar equipment used to load product from storage into vehicles for distribution

Storage bins and facilities

Chemicals used to preserve or protect product in storage

Scales and similar weighing devices

Oil or gas pipelines and accessories thereto

Exempt: (See subdivision A 2 of this section.)

Conveyor systems, vehicles and repair parts, fuel, and supplies therefor used to transport product for further processing at a mineral processing plant site or to remove product from production line to storage in storage pile, silo or rail car at plant site.

8. Reclamation.


Bulldozers, graders, front-end loaders, hydroseeders, and other equipment used in land recontouring

Fertilizers, seeds, seedlings and trees

Fuel, supplies, repair and replacement parts for machinery and equipment used in reclamation

9. Administration.


Office supplies and equipment

Light bulbs and lighting fixtures used in offices, shops, bath-houses, storage, and similar facilities

Fuel used for heating, cooling, or lighting purposes

Billing supplies

Tangible personal property used in supply houses, stores, bath-houses, and eating facilities

Mine maps and surveys

Personnel records and supplies, including safety records and miner identification tags

Textbooks, educational, and reference materials

Property used in the exhibition of mine products

Property used to prevent and control fires

Janitorial supplies

Eating facilities, such as picnic tables, even when located in mine or processing plant

C. Preponderance of use. When a single item of tangible personal property is used in two different activities, one of which constitutes direct use in mining or mineral processing (exempt) and the other of which constitutes a taxable activity, the sales and use tax shall apply in full when the preponderance of the item's use (fifty percent or more) is in taxable activities. Likewise, the item will be totally exempt from the tax if the preponderance of its use is in exempt activities.

D. Certified pollution control property. Any property or facility which has been certified by either the State Water Control Board or the State Air Pollution Control Board as used primarily for the purpose of preventing or abating air or water pollution is not subject to the tax. This is applicable to both real and tangible personal property. Only certified property or facilities qualify for exemption.

E. Contracted activities. The mining and mineral processing exemption extends to persons engaged in any phase of mining or mineral processing, provided such activities qualify for exemption as set forth in subsections A and B of this section. This requires that activities be performed at the mine or mineral processing plant site. For example, persons who construct a mine under contract with an industrial mining operation would not be subject to the tax on items used directly in an activity exempt under subsection B of this section. Contractors engaged in mine construction must apply to this department for exemption.

F. Applicability of this section. This section is intended to illustrate the application of the sales and use tax to mining and mineral processing and is based upon the usual methods of doing business used in the industry generally. Persons whose methods of doing business differ or who have specific factual questions should contact this department for a ruling on the taxability of the specific situation.

Statutory Authority

§§ 58.1-203 and 58.1-609.3(2) of the Code of Virginia.

Historical Notes

Derived from VR630-10-65.2; added March 1983; amended, eff. January 1, 1985.

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