1.1 	A bill for an act
1.2 	relating to taxation; minerals; providing for taxation of mining, and refining of 
1.3 	nonferrous ores, metals, minerals;amending Minnesota Statutes 2010, sections 
1.4 	272.02, by adding a subdivision; 290.05, subdivision 1; 297A.68, subdivision 4; 
1.5 	297A.71, by adding a subdivision; 298.001, by adding a subdivision; 298.01, 
1.6 	subdivisions 3, 3a; 298.015, subdivision 1; 298.016, subdivision 4.
1.7 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.8 	Section 1. Minnesota Statutes 2010, section 272.02, is amended by adding a 
1.9 	subdivision to read:
1.10 		Subd. 95.Property used in the business of mining subject to the net proceeds 
1.11 	tax. The following property used in the business of mining that is subject to the net 
1.12 	proceeds tax under section 298.015 is exempt:
1.13 	(1) deposits of ores, metals, and minerals and the lands in which they are contained;
1.14 	(2) all real and personal property used in mining, quarrying, producing, or refining 
1.15 	ores, minerals, or metals, including lands occupied by or used in connection with the 
1.16 	mining, quarrying, production, or ore refining facilities; and
1.17 	(3) concentrate or direct reduced ore.
1.18 	This exemption applies for each year that a person subject to tax under section 
1.19 	298.015 uses the property for mining, quarrying, producing, or refining ores, metals, or 
1.20 	minerals.

1.21 	EFFECTIVE DATE. This section is effective for taxes payable in 2012 and 
1.22 	thereafter.

1.23 	Sec. 2. Minnesota Statutes 2010, section 290.05, subdivision 1, is amended to read:
2.1 		Subdivision 1.Exempt entities. The following corporations, individuals, estates, 
2.2 	trusts, and organizations shall be exempted from taxation under this chapter, provided 
2.3 	that every such person or corporation claiming exemption under this chapter, in whole 
2.4 	or in part, must establish to the satisfaction of the commissioner the taxable status of 
2.5 	any income or activity:
2.6 	(a) corporations, individuals, estates, and trusts engaged in the business of mining or 
2.7 	producing iron ore and mining, producing, or refining other ores, metals, and minerals,
2.8 	the mining or, production, or refining of which is subject to the occupation tax imposed 
2.9 	by section 298.01; but if any such corporation, individual, estate, or trust engages in any 
2.10 	other business or activity or has income from any property not used in such business it 
2.11 	shall be subject to this tax computed on the net income from such property or such other 
2.12 	business or activity. Royalty shall not be considered as income from the business of 
2.13 	mining or producing iron ore within the meaning of this section;
2.14 	(b) the United States of America, the state of Minnesota or any political subdivision 
2.15 	of either agencies or instrumentalities, whether engaged in the discharge of governmental 
2.16 	or proprietary functions; and
2.17 	(c) any insurance company.

2.18 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
2.19 	December 31, 2010.

2.20 	Sec. 3. Minnesota Statutes 2010, section 297A.68, subdivision 4, is amended to read:
2.21 		Subd. 4.Taconite, other ores, metals, or minerals; production materials. Mill 
2.22 	liners, grinding rods, and grinding balls that are substantially consumed in the production 
2.23 	of taconite or other ores, metals, or minerals are exempt when sold to or stored, used, or 
2.24 	consumed by persons taxed under the in-lieu or net proceeds provisions of chapter 298.

2.25 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
2.26 	June 30, 2011. 

2.27 	Sec. 4. Minnesota Statutes 2010, section 297A.71, is amended by adding a subdivision 
2.28 	to read:
2.29 		Subd. 43.Construction materials and equipment; nonferrous metals and 
2.30 	minerals facility. Materials and supplies used or consumed in, and equipment 
2.31 	incorporated into, the improvement, construction, or expansion of an existing taconite ore 
2.32 	processing facility to extract and refine nonferrous ores, metals, and minerals, including 
2.33 	the construction, improvement, or expansion of a hydrometallurgical processing facility, 
3.1 	are exempt. This exemption includes any delivery or installation charges relating to 
3.2 	materials, supplies, and equipment exempt under this section.

3.3 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
3.4 	June 30, 2011, and before July, 1, 2015.

3.5 	Sec. 5. Minnesota Statutes 2010, section 298.001, is amended by adding a subdivision 
3.6 	to read:
3.7 		Subd. 10.Refining. "Refining" means and is limited to refining:
3.8 	(1) of ores, metals, or mineral products, the mining, extraction, or quarrying of 
3.9 	which were subject to tax under section 298.015; and
3.10 	(2) carried out by the entity, or an affiliated entity, that mined, extracted, or quarried 
3.11 	the metal or mineral products.

3.12 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
3.13 	December 31, 2010.

3.14 	Sec. 6. Minnesota Statutes 2010, section 298.01, subdivision 3, is amended to read:
3.15 		Subd. 3.Occupation tax; other ores. Every person engaged in the business of 
3.16 	mining, refining, or producing ores, metals, or minerals in this state, except iron ore or 
3.17 	taconite concentrates, shall pay an occupation tax to the state of Minnesota as provided 
3.18 	in this subdivision. For purposes of this subdivision, mining includes the application 
3.19 	of hydrometallurgical processes. The tax is determined in the same manner as the tax 
3.20 	imposed by section 290.02, except that sections 290.05, subdivision 1, clause (a), 290.17, 
3.21 	subdivision 4, and 290.191, subdivision 2, do not apply, and the occupation tax must 
3.22 	be computed by applying to taxable income the rate of 2.45 percent. A person subject 
3.23 	to occupation tax under this section shall apportion its net income on the basis of the 
3.24 	percentage obtained by taking the sum of:
3.25 	(1) 75 percent of the percentage which the sales made within this state in connection 
3.26 	with the trade or business during the tax period are of the total sales wherever made in 
3.27 	connection with the trade or business during the tax period;
3.28 	(2) 12.5 percent of the percentage which the total tangible property used by the 
3.29 	taxpayer in this state in connection with the trade or business during the tax period is of 
3.30 	the total tangible property, wherever located, used by the taxpayer in connection with the 
3.31 	trade or business during the tax period; and
3.32 	(3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or incurred 
3.33 	in this state or paid in respect to labor performed in this state in connection with the trade 
4.1 	or business during the tax period are of the taxpayer's total payrolls paid or incurred in 
4.2 	connection with the trade or business during the tax period.
4.3 	The tax is in addition to all other taxes.

4.4 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
4.5 	December 31, 2010.

4.6 	Sec. 7. Minnesota Statutes 2010, section 298.01, subdivision 3a, is amended to read:
4.7 		Subd. 3a.Gross income. (a) For purposes of determining a person's taxable income 
4.8 	under subdivision 3, gross income is determined by the amount of gross proceeds from 
4.9 	mining in this state under section 298.016 and includes any gain or loss recognized 
4.10 	from the sale or disposition of assets used in the business in this state. If more than one 
4.11 	ore, mineral, or metal, or energy resource referred to in section 298.016 is mined and 
4.12 	processed at the same mine and plant, a gross income for each ore, mineral, or metal, or 
4.13 	energy resource must be determined separately. The gross incomes may be combined on 
4.14 	one occupation tax return to arrive at the gross income of all production.
4.15 	(b) In applying section 290.191, subdivision 5, transfers of ores, metals, or minerals 
4.16 	that are subject to tax under this chapter are deemed to be sales in this state.

4.17 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
4.18 	December 31, 2010.

4.19 	Sec. 8. Minnesota Statutes 2010, section 298.015, subdivision 1, is amended to read:
4.20 		Subdivision 1.Tax imposed. A person engaged in the business of mining shall pay 
4.21 	to the state of Minnesota for distribution as provided in section 298.018 a net proceeds tax 
4.22 	equal to two percent of the net proceeds from mining in Minnesota. The tax applies to all 
4.23 	mineral and energy resources ores, metals, and minerals mined or, extracted, produced, 
4.24 	or refined within the state of Minnesota except for sand, silica sand, gravel, building 
4.25 	stone, crushed rock, limestone, granite, dimension granite, dimension stone, horticultural 
4.26 	peat, clay, soil, iron ore, and taconite concentrates. Except as provided in section 272.02, 
4.27 	subdivision 95, the tax is in addition to all other taxes provided for by law. 

4.28 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
4.29 	December 31, 2010.

4.30 	Sec. 9. Minnesota Statutes 2010, section 298.016, subdivision 4, is amended to read:
5.1 		Subd. 4.Definitions. For the purposes of sections 298.015 and 298.017, the 
5.2 	terms defined in this subdivision have the meaning given them unless the context clearly 
5.3 	indicates otherwise. 
5.4 	(a) "Metal or mineral products" means all those mineral and energy resources ores, 
5.5 	metals, and minerals subject to the tax provided in section 298.015. 
5.6 	(b) "Exploration" means activities designed and engaged in to ascertain the 
5.7 	existence, location, extent, or quality of any deposit of metal or mineral products prior to 
5.8 	the development of a mining site.
5.9 	(c) "Development" means activities designed and engaged in to prepare or develop 
5.10 	a potential mining site for mining after the existence of metal or mineral products in 
5.11 	commercially marketable quantities has been disclosed including, but not limited to, 
5.12 	the clearing of forestation, the building of roads, removal of overburden, or the sinking 
5.13 	of shafts.
5.14 	(d) "Research" means activities designed and engaged in to create new or improved 
5.15 	methods of mining, producing, processing, beneficiating, smelting, or refining metal 
5.16 	or mineral products.

5.17 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
5.18 	December 31, 2010.