Principal Issues: Whether NRCan can certify that the principal mineral to be extracted from the silica quartz deposit of the taxpayer will be an industrial mineral extracted from a non-bedded deposit.
Position: No, but the deposit should qualify under (d)(iii) of the definition of mineral resource.
Reasons: Positive Opinion provided by NRCan that the principal mineral that will be extracted from the quartzite deposit is silica (which is synonymous with silica quartz). Therefore, the quartzite deposit should qualify as a mineral resource under subparagraph (d)(iii) of the definition of that term.
XXXXXXXXXX 2022-093529 André Payette
June 27, 2022
Dear XXXXXXXXXX:
Re: XXXXXXXXXX - Mineral resource
This is in response to your letter dated March 16, 2022, in which you requested certification pursuant to subparagraph (d)(i) of the definition “mineral resource” in subsection 248(1) of the Income Tax Act (the “Act”) with respect to a quartzite deposit located near XXXXXXXXXX.
XXXXXXXXXX owns a royalty which covers all materials, minerals, including silica and other mineral products, extracted, mined or otherwise obtained from the XXXXXXXXXX (the “Property”). On the Property there is a deposit of hard, dense quartzite (the “Deposit”). You have indicated that the principal mineral to be extracted from the Deposit is silica quartz, which will be used as an input for silicon metal, which is used for semiconductor chips, solar panels and battery anodes.
The relevant portions of the definition of “mineral resource” in subsection 248(1) read as follows:
“mineral resource” means
…
(d) a mineral deposit in respect of which(i) the Minister of Natural Resources has certified that the principal mineral extracted is an industrial mineral contained in a non-bedded deposit,
…
(iii) the principal mineral extracted is silica that is extracted from sandstone or quartzite
You requested a certification under subparagraph (d)(i) of the definition because your understanding was that the principal mineral to be extracted from the Deposit was “silica quartz” and you were therefore uncertain as to whether subparagraph (d)(iii) would apply in this circumstance.
Natural Resources Canada (“NRCan”) has advised that the term silica is a generic term for silicon dioxide [SiO2]. Quartz is the naturally occurring form of silica. From a mining perspective, quartz and silica are identical and the terms are interchangeable. NRCan has therefore indicated that the principal mineral to be extracted from the Deposit would be considered to be silica for purposes of subparagraph (d)(iii) of the definition of a “mineral resource” in subsection 248(1).
As a result, because the principal mineral is silica that is being extracted from quartzite, the Deposit qualifies as a "mineral resource" under subparagraph (d)(iii) of the definition of "mineral resource” in subsection 248(1). In this regard, we note that the Deposit does not require certification under subparagraph (d)(i) of the definition.
Yours truly,
Kimberley Wharram
Manager
Resources Section
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch