R&D Credits for the Aggregates and Mining

Turning big rocks into little rocks to sell may seem like a straightforward business proposition. Anyone who has ever owned or operated an aggregate production operation knows this could not be further from reality. Modern construction aggregates require sand and stone that meet strict criteria in terms of gradation, coureness, size, and fine content. Any aggregate company wishing to to sell aggregates for various purposes must develop processes that allow for raw material to be turned into finished product. Success is often the result of substantial trial and error.

Taking sand and stone from the earth to the truck bed or train car requires a complex process. For many aggregate operation, R&D to develop these processes can be broken down into two areas:

  1. Open-pit mining operations
  2. Plant production operations


Mining Operations

Every mine or quarry must develop a mine engineering plan to detail how raw material can be extracted in a manner that will allow for optimal material yield while conforming with environmental standards. Development of this mine plan requires continuous R&D due to challenging geotechnical conditions. Quarry managers often experiment with alternative blasting or extraction processes to overcome problems with the rock face or seams. Alternatives are often tested to figure out how to extract materials in a way that leads to improved production efficiency or quality. You may qualify for the R&D Credit if your mining team performs the following activities:

Geotechnical exploration
Digging test bores
Reviewing geotechnical data
Creating a mine development plan
Analyzing alternative mining plans
Designing and testing alternative blasting plans to produce better shot yield
Analyzing blast data for efficiencies in shot dispersion
Designing alternative infrastructure workflows within the pit
Testing alternative dewatering processes
Developing mine reclamation plans

Plant Production

After the extraction and removal of raw material from the land, aggregate companies must develop the plant processes needed to turn rocks into sellable products. This requires design and experimentation with alternative plant setups and control processes. As companies attempt to create more finished products of varying sizes from the feedstock material, plant processes become more complex. Designing, constructing, and testing these plant processes all require activities that qualify for the R&D Tax Credit. Qualified plant activities include:

Designing the physical plant layout and workflow
Experimenting with alternative equipment configurations
Experimenting with alternative screen setups
Testing alternative speeds
Designing and fabricating custom equipment to improve the process
Modeling or performing calculations to simulate production output
Designing site infrastructure
Lab testing

Both mining and plant production processes carry an inherent uncertainty of failing to produce material that passes laboratory testing. When this happens, the processes, as they exist, no longer meet the commercial needs of the business. To eliminate this uncertainty, aggregate companies often employ numerous team members in a perpetual trial-and-error process. It is not upcoming for wages of quarry managers, production managers, lab analysts, and other engineers to qualify towards the R&D credit, along with expenses paid to third-party technical consultants.

If you believe your mining or aggregate production operation fits any of the descriptions above, it may be worth analyzing R&D Credit potential. Please contact the team at Alternate Tax Solutions for a free analysis. Our team has experience with mining and aggregate operations across the country.

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