while the 2017 figures may have been the best available data available in 2020, by October 2022 this was no longer the case.[2]

1. The fact that Core relied on a linkage factor of 8.8 to obtain the Ministerial Declaration Regarding Saleable Mineral Commodity for the Grant Lithium Production Unit in 2020 does not amount to any representation that the linkage factor would remain static. In my view it was open to the assessor to apply a linkage factor taking into account any comparable sale information known at the time of the calculation. The Applicant has not established any error on the part of the delegate and this ground of review is dismissed.

Ground 2: The Secretary overstated the grade of the Spodumene DSO mined from the Grants production unit during the royalty year, resulting (sic) the Secretary overstating the spodumene DSO revenue.

1. In support of this ground the Applicant submits that the Spodumene produced during the relevant period was of varying grades ranging from 1.22% to 1.49%. Notwithstanding the variations, the Secretary determined the linkage factor on the basis of a provisional assay of 1.51% lithium grade which was announced to the Australian Securities Exchange on 3 October 2022. The Applicant submits that, had the revenue been adjusted to the actual grades achieved, the revenue amount would be reduced.

1. The secretary considered that submission and was satisfied that "the delegate did not determine the linkage factor based on DSO with a specific grade of 1.51%, but in fact determined the factor based on DSO falling within a range as per the C&D Agreement (1.35% to 1.55%)."[3]

1. The Secretary further observed that the Applicant's "submission implies that DSO is valued based on an exact grade however the documentation provided by [the Applicant] suggests that industry practice is for DSO to be priced on a grade range."[4]

1. The Applicant has provided no counter argument to that of the Secretary. In my view the Applicant has failed to establish any error on the part of the original decision maker to either the secretary or the Tribunal. I am not satisfied that a valuation based on a grade range is not acceptable practice or is an incorrect method to apply.

1. In relation to the grade of Spodumene DSO the Applicant also submits that the

original decision maker and the secretary erred by attributing a deemed sale and consequent revenue to Spodumene produced in the months of March and April 2023.

In those months the grade of the "DSO" fed into the DMS plant was 1.27% and 1.22% respectively.

1. The mineral Declaration defines Spodumene DSO as:

"a mineral commodity comprised of between 1.3% and 1.5% Lithium Oxide (Li2O) with the balance comprised of gangue minerals and obtained by mining, crushing and screening spodumene ore".

On the basis of that definition the Applicant submits that the material fed into the DMS plant in March and April was not Spodumene DSO and should not be assessed as such. Rather any liability for revenue should be based on any resultant Spodumene Concentrate.

1. The relevant Ministerial Declaration is dated 29 July 2020 and included:

Subject to the conditions set out below, and for the duration of the Term, I declare that a mineral commodity comprising lithium oxide (Li2O) ceases to be a saleable mineral commodity in relation to the Grants Lithium Production Unit beyond the stage that it is in the form of DSO."

"saleable mineral commodity, in relation to a production unit, means a mineral commodity, other than a mineral commodity treated or processed to a stage declared by the Minister, by notice in writing to the royalty payer, at the stage at or beyond which it ceases to be a saleable mineral commodity for the purposes of this Act."

1. I do not accept the Applicant's argument in this respect. The relevant wording of the Declaration relates to a "mineral commodity comprising lithium oxide." There is no suggestion that the material fed into the DMS in March and April 2023 was not such a commodity. In the process of refinement, it necessarily went through and beyond a stage of meeting the DSO definition and ceased to be a saleable mineral commodity by virtue of the Declaration.

1. Ground 2 of the application for review is dismissed.

Ground 3: The Secretary's methodology for valuing spodumene DSO based on a notational (sic) price for the month, rather than on the realised selling price was neither correct nor reasonable.

1. The Applicant submits the saleable mineral commodity should be valued at the

realised selling price obtained Free On Board (FOB), Darwin Port, instead of the

notional SC6 price for the month. In response the Secretary accepted that:

Section 4AA required valuation to occur at the precise time of the deemed sale. While I agree that the realised sales price of the SC6 provides evidence of the DSO's value, the lag between the processing and sales dates, which occurred during a period of significant price volatility, meant that the sales price

was not necessarily a reliable indicator of the DSO's value at the time of the deemed sale.

As such, the delegate's approach of using the monthly average FastMarkets SC6 index price (MB-LI-0012) corresponding to the month the DSO was fed into the DMS appears to provide a more accurate measure of value at the precise time of the deemed sale, as required by the legislation."[5]

1. Section 4AA of the Mineral Royalty Act 1982 provides that:

Where a saleable mineral commodity produced on a production unit is used on that production unit in the production of a mineral commodity that is not a saleable mineral commodity, the saleable mineral commodity so used shall be taken to have been sold immediately before the stage at or beyond which it ceased to be a saleable mineral commodity, and royalty shall be payable under this Act accordingly."

1. In my view the temporal aspect of section 4AA is clear. The royalty is to be assessed on the value of the mineral commodity at the time it is refined. I agree with the Respondent's reasons that:

[the Applicant] has not demonstrated that the FastMarkets price data provided an inaccurate or unreliable measure of value during the periods used by the delegate. In my view, it is not sufficient that the realised price was lower than the index price at the time of the deemed sale. This price difference is consistent with the significant market volatility during that period, and does not establish that the index was inaccurate. I note that the same index relied upon by the delegate was also relied upon by [the Applicant] in establishing the price of spodumene concentrate in the sales agreement with Yahua dated 22 March 2023 (clause 10). This suggests that the Fast Markets price data is accepted by industry participants as a reliable measure of value.[6]

1. The Applicant has not introduced any evidence to suggest that the price data relied upon by the delegate was not an acceptable and reliable measure of value. It is not sufficient for the Applicant to propose an alternate method of valuation. The Applicant has not established any error on the part of the assessor or secretary in applying the SC6 price for the month the commodity was fed into the DMS. Ground 3 is dismissed.

Ground 4: The Secretary overstated spodumene DSO revenue by failing to make proper allowances for haulage, storage and loading costs.

1. The Applicant submits that the Secretary erred in determining the Spodumene

revenue on the basis of the FOB pricing without allowances for haulage, storage and loading costs. Rather, submits the Applicant, section 4AA of the MRA together with the Ministerial Declaration require that the deemed sale occurs within the production unit at the time the DSO is fed into the DMS. That price would be lower than the FOB Darwin Port price due to haulage and other costs which would be required to achieve FOB. Accordingly, the revenue would be reduced.

1. The Applicant proffers as an alternative "reasonable valuation basis":

(a) To determine the arm's length revenue based upon a reliable Spodumene Concentrate Index price, converted having regard to a proper linkage factor - which determines an arm's length revenue for Spodumene DSO at FOB Darwin Ports; and

(b) Deduct from that determined arm's length revenue the costs of transport, handling and storage from the FOB Darwin Port to the Production Unit - which determines an arm's length revenue for Spodumene DSO at the production Unit.

1. The Applicant adopted an identical position in its objection to the original decision of the delegate. The Respondent's decision of 4 October 2024 included:

Paragraph 21 of RG-MRA-004 provides that a sale for the purpose of the MRA occurs when ownership of the mineral commodity is transferred to the buyer in accordance with the sales contract. A sale determines the point at which ownership passes to the buyer but it does not determine who is responsible for logistical costs associated with removing the commodity from the production unit.

Paragraph 24 of RG-MRA-004, which specifically deals with gross value in cases of sale prior to removal from the production unit, provides that 'where the royalty is triggered by a sale and the transaction is at arm's length, generally the FOB price obtained for the saleable mineral commodities is taken as the gross value for gross production revenue purposes' (emphasis added). This appears to support the view that sales agreements are generally negotiated on a FOB or CIF basis, even where a saleable mineral commodity is sold prior to removal. CIF and FOB pricing arrangements generally reflect industry practice, regardless of the point at which the sale occurs, and Core has not demonstrated evidence to the contrary.[7]

1. In its submissions to the Tribunal the Applicant has not addressed the reasons

provided by the Respondent for confirming the delegate's decision. Whether or not

the Applicant's suggested basis of valuation is reasonably open, there is nothing before me to suggest that the method adopted by the original decision maker and reaffirmed by the Respondent was wrong.

1. Paragraphs 59 and 60 of RG-MRA-004 provide that:

59. Where a saleable mineral commodity produced on a production unit is further processed to a stage where, by virtue of the Minister's declaration, it ceases to be a saleable mineral commodity, the saleable mineral commodity used in that further process shall be taken to have been sold immediately before the further process commenced and liability for royalty is triggered.

60. The saleable mineral commodity may be valued using the valuation methods applicable for a mineral commodity removed without sale to estimate or approximate the value of the saleable mineral commodity deemed to be sold from the production unit.

1. Paragraph 31 and following of RG-MRA-004 address liability for royalty triggered by the removal of saleable material commodities without sale. Paragraph 31 provides that the value of such commodities:

(1) The open market value for the mineral commodities (see paragraphs 36 and 37)

(2) or an amount that the royalty paper may establish and substantiate as being the value to the royalty payer, which is labelled as the "alternative value" in them RA (see paragraphs 38 to 43). If the royalty payer does not establish such a vale, the open market value will be used.

1. In circumstances where the Applicant did not establish and substantiate an alternative value, open market value was to be applied. Paragraph 37 of the Guideline provides that:

The following valuation methods will be accepted as a fair representation of the open market value:

(1) The value published by a recognised commodities exchange (for example, the London Metals Exchange, Perth Mint)

(2) Or the price received from comparable arme's length sales made by the royalty payer of the same or substantially similar mineral commodity (including quantity and quality) at the time of removal of the saleable mineral commodity to be valued.

"while neither of those methods of valuation were available in the present case, it should be noted that either of these stipulated valuation methods would not then involve making an adjustment or allowance for actual or hypothetical

Rather, submits the Respondent, it was open and reasonable for the delegate and Secretary to apply the mutually recognised linkage factor as an appropriate method. That method, as I understand it, was calculated by reference to the FOB sale price.

1. I accept the submission of the Respondent and note that the Applicant has not addressed those arguments in reply. In my view the Applicant has failed to establish that either the original decision or the subsequent review by the Secretary were wrong. Ground 4 will be dismissed.

1. Having dismissed each of the Applicant's grounds for review and having found no other error, I am satisfied that the decision of the Respondent was the correct and preferable one. I will make an order dismissing the application.

[3] Decision of the Secretary dated 4 October 2024 at page 6.

[5] Decision of the Respondent dated 4 October 2024 at page [7].