ROYALTIES, IN MINING. In some countries (e.g. France) minerals are owned by the State which may grant con cessions to private individuals or corporations. In others (e.g. the United States) they belong to the landowner.
Until the coming into force of the Coal Mines Act of 1938 all minerals in Great Britain—apart from special customs and except ing mines of gold and silver, which are the property of the Crown (i.e. "Royal" metals, hence the term "royalty")—were privately owned. But under the Coal Mines Act alluded to the coal and associated mineral substances (fireclays, stratified ironstone) pass to the State under a system of compulsory purchase, the total amount of the compensation payable being £66,450,000. A Central Valuation Board was appointed in Sept. 1938 to divide this amount as between the coal "regions" in accordance with the terms of the Act, which specified that the amount allocated to each "valuation region" should bear the same proportion to the global figure as the value of all the principal coal hereditaments in the said region bears to the value of all such hereditaments in Great Britain.
The valuation of the individual ownerships, region by region, commenced in Jan. 1, 1939, the date determined by the Act, from which date the coal is held as if all existing owners had entered into a contract for the sale of the coal to the Coal Commission (a body set up by Parliament to control the nationalized coal property, and clothed with certain other powers), the contract being completed on the "vesting date", July 1, 1942.
Presumably the transfer of the ownership of the coal and allied minerals will not materially affect the terms upon which it is leased to the colliery proprietors. These terms are such as include the right to work the coal on the payment of a "fixed," "certain" or "dead" rent per annum, which merges in the royalty rent. When in any year the tonnage worked at this rent exceeds in royalty value the certain rent, the surplus is paid as "overwork ings"; when it falls short, the deficiency is carried forward as "short workings" to the next year's account.
The royalty rent is payable either (I) as a tonnage rate pure and simple, (2) a sum per acre per foot thick of coal in the seam, (3) simply a sum per acre as a proportion of the value of the mineral raised, or (4) by way of a sliding scale. The first two are the methods most commonly adopted. The average royalty per ton inclusive of way-leave (i.e. the right of passage through an
other's land—surface or underground) of all coal raised in Great Britain, is usually taken at 5-34. per ton. The total gross revenue derivable from ownership of coal (royalties and way-leaves) was, in 1918, L5,960,365. The average taken by government for pur poses of compensation under the Act was L4,430,000, being the average for the years 1928-34 inclusive. In the case of metalli ferous ores, both in Great Britain and in other countries, the royalty is assessed as a proportion of the "dressed" ore (i.e. as ready for smelting) : e.g. Ooth to 1/3oth. China clay, ganister, and other "clays," oil shale, slate, building stone, and stratified ironstone are also subject to royalty.
In the United States the royalty payable on coal is usually based upon a fixed rate per ton, which in the case of bituminous coal would be a uniform rate for all coal sold ; but in the case of anthracite the rate per ton frequently varies with the size, a higher royalty being paid upon larger sizes; and, in some instances, the royalty is a sliding scale varying with the sale price. Royal ties vary from a few cents per ton in the case of bituminous, to as much as $1.00 per ton for the highest grades and largest sizes of anthracite.
Natural petroleum does not occur in commercial quantity in Great Britain, but in the United States, where it is produced in vast quantities, oil lands are usually leased on a royalty basis, the royalty being paid to the owner of the land on a percentage of the oil produced. In the case of natural gas, royalties are rarely paid on a percentage basis, but usually as a stipulated amount for the right to pipe and sell the gas.
In Canada the royalty is io% of the crude oil; in British India 5%; France and Algeria 20%; Rumania from 8% when the out put per well per day averages io metric tons up to 35% when it exceeds 15o metric tons, payable to the State which allows 20% of the receipts to the surface owner; in Colombia and Peru, from 10 to 6 per cent; in Argentina and Venezuela, io per cent. Crude oil for royalty purposes usually means crude oil after deduction of water, foreign substances, and oil consumed in production.
See J. H. Cockburn, The Law of Coal and Minerals (1902) ; R. A. S. Redmayne and G. Stone, The Ownership and Valuation of Mineral Property (192o) ; E. R. Willey, The Oil Industry (1926). (R. R.)