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Last Updated: 1/23/2017

Ad Valorem Tax on Unmined Taconite

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Minnesota Statutes 298.26

A tax not exceeding $15 per acre may be assessed on the taconite or iron sulfides in any 40-acre tract from which the production of iron ore concentrate is less than 1,000 tons.

The heading in the statute is somewhat misleading since it refers to a Tax on Unmined Iron Ore or Iron Sulfides. The tax clearly applies to unmined taconite and has been administered in that manner. The term “iron ore” does not refer to high-grade natural ore in this instance.

The tax, as presently administered, applies to all iron formation lands on the Mesabi Range. The statutory exemption administered by the county assessor provides that in any year in which at least 1,000 tons of iron ore concentrates are produced from a 40-acre tract or government lot, the tract or lot are exempt from the Unmined Taconite Tax. The county assessors have also exempted actual platted townsites that are occupied.

The iron formation lands on the Mesabi Range are divided into two categories by the Minnesota Department of Revenue. This is done through the evaluation of exploration drill hole data submitted by the mining companies.

The categories are:

  1. Lands that are underlain by magnetic taconite of sufficient quantity and grade to be currently economic: They are considered to be economic taconite and are given a market value of $500 per acre.
  2. Lands either not believed or not known to be underlain by magnetic taconite of current economic quantity, quality and grade: They are considered to be uneconomic taconite and are given a market value of $25 per acre.

To be classified as economic taconite, category 1, the taconite must pass the following criteria:

  • contain more than 16 percent magnetic iron with the Davis tube test;
  •  contain less than 10 percent concentrate silica (SiO2) with the Davis tube test;
  •  have a 15- to 25-foot minimum mining thickness; and
  •  have a stripping ratio of less than four-to-one (waste/concentrate), calculated as follows:
A)   Surface (ft.) x 1.5= Equiv. Ft. Surface
B)   Rock (ft.) x 2.25 = Equiv. Ft. Waste
C)   Ore (ft.) x 2.5  = Equiv. Ft. Concentrate
Stripping Ratio         =  A + B

If the material fails any of the above criteria, then it is considered to be uneconomic taconite and classified as category 2.  Some lands may also be considered as uneconomic due to environmental restrictions.

For taxes payable in 2016, the tax is calculated by multiplying the market value for the parcel of land by the 2.00 percent class rate to obtain the tax capacity.   The special rate on the first $150,000 of market value that applies to class 3 commercial/industrial property does not apply to class 5 unmined taconite.   This is then multiplied by the local tax rate. Note: Call your county auditor for more information.