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By James T. Kemp

Some interesting and, to American eyes, rather unusual processes for refining impure aluminum derived from scraps were found by American and British investigators who went into Germany in 1945 for the Technical Industrial Intelligence Committee of the Joint Chiefs of Staff. What was found was recorded in a series of reports (see page ), many of which have been released for general reading. This paper gathers under one title and summarizes the German work in refining light metal scrap. Reference must be made to the original reports for greater detail. Basically, the occasion and stimulus for the German developments in treating light metal scrap were hard necessity. Germany needed the metal for a rapacious war industry. Adequate supplies of new aluminum from reduction works were not assured. Great quantities of airplane and other light metal war scraps were forecast. It was evident that the scrap metal would have to be reabsorbed by the producing industry and would have to be kept of good quality. The normal current production of manufacturing scrap was being and could be consumed as generated. It offered no technical problem. The mixed scraps, especially those arising from crashed and decommissioned airplanes, however, presented problems of another kind. Airplane Scrap The recovery of usable aluminum alloy from the mixed assemblies that made up the piles of airplane scrap was attacked in different ways by different groups and with differing degrees of success. Three procedures actually were used on a commercial scale, one was in pilot-plant stage and another had come to a halt in the laboratory a year before Germany collapsed. Four of these five processes actually involved "refining"; that is, some measure of purification of the metal after melting. Sorting and Separation on a Sloping Hearth The simplest procedure for utilizing airplane scrap involved no refining in the strict sense of the word. This was the practice adopted by two representative plants visited by the author, the Leipziger Leichtmetalle Werke, Rackwitz, Saxony, and the Vereinigte Leichtmetalle Werke, Hanover. These firms did essentially the same thing that was done in England but not with equal success, to judge by their shorter experience, the smaller tonnage handled and by the number and quality of alloys produced. The two German firms named rough-sorted scraps by their easily recognizable alloys, essentially by part and shape. They used hand labor to chop and hack and tear apart. The easily separated heavy metal and nonmetallic scraps were discarded as they were found. Steel and the higher-melting-point metal parts riveted to aluminum or built into

Jan 1, 1947

By James T. Kemp

Some interesting and, to American eyes, rather unusual processes for refining impure aluminum derived from scraps were found by American and British investigators who went into Germany in 1945 for the Technical Industrial Intelligence Committee of the Joint Chiefs of Staff. What was found was recorded in a series of reports (see page ), many of which have been released for general reading. This paper gathers under one title and summarizes the German work in refining light metal scrap. Reference must be made to the original reports for greater detail. Basically, the occasion and stimulus for the German developments in treating light metal scrap were hard necessity. Germany needed the metal for a rapacious war industry. Adequate supplies of new aluminum from reduction works were not assured. Great quantities of airplane and other light metal war scraps were forecast. It was evident that the scrap metal would have to be reabsorbed by the producing industry and would have to be kept of good quality. The normal current production of manufacturing scrap was being and could be consumed as generated. It offered no technical problem. The mixed scraps, especially those arising from crashed and decommissioned airplanes, however, presented problems of another kind. Airplane Scrap The recovery of usable aluminum alloy from the mixed assemblies that made up the piles of airplane scrap was attacked in different ways by different groups and with differing degrees of success. Three procedures actually were used on a commercial scale, one was in pilot-plant stage and another had come to a halt in the laboratory a year before Germany collapsed. Four of these five processes actually involved "refining"; that is, some measure of purification of the metal after melting. Sorting and Separation on a Sloping Hearth The simplest procedure for utilizing airplane scrap involved no refining in the strict sense of the word. This was the practice adopted by two representative plants visited by the author, the Leipziger Leichtmetalle Werke, Rackwitz, Saxony, and the Vereinigte Leichtmetalle Werke, Hanover. These firms did essentially the same thing that was done in England but not with equal success, to judge by their shorter experience, the smaller tonnage handled and by the number and quality of alloys produced. The two German firms named rough-sorted scraps by their easily recognizable alloys, essentially by part and shape. They used hand labor to chop and hack and tear apart. The easily separated heavy metal and nonmetallic scraps were discarded as they were found. Steel and the higher-melting-point metal parts riveted to aluminum or built into

Jan 1, 1947

By Klaus Schwerdtfeger

In order to test the performance of ZrO, (CaO) and Tho,(Yz03) electrolytes in the electrochemical determination of oxygen activities in liquid metals at steel-rrzakitng temperatures , electromotive force measurements have been made with the following cells: The oxygen-- activities are calculated from the electmrnotive forces for the investigated systems. The standard free energy of- formation of MnO and the activity of manganese in Fe-Mn melts are derived. Indications are that the Zr 0z(Ca0) electrolyte exhibits little electronic conductivity at oxygen pressures as low as 10'a atnz at 1600°C; however, the partial electronic conductivity may become noticeable at lower oxygen activities. The Tho,(Yz03) electrolyte is found to be an ionic conductor at the oxygen pressure as low as that for the Mn + MnO equilibrium, but exhibits partial electronic conductivity at oxygen pressures higher than 10"1 atm (1500°C). fi. better control of oxidation and deoxidation reactions in steelmaking may be facilitated if the oxygen activity in the steel is known during various stages of the process. In the present work oxygen activities have been measured in liquid iron, manganese, and iron alloys with galvanic cells using ZrOz(CaO) and s solid electrolytes with the object of establishing the range of oxygen pressure in which these materials can be used as electrolytes at steelmaking temperatures. Calcia-stabilized zirconia and Tho2-Y203 solid solutions are oxygen ion conductors. Such electrolytes were first used by Kiukkola and Wagner1 and Peters and ~ann' in galvanic cells for the determination of thermodynamicquantities of oxide systems in the temperature range 700" to 1200°C. At these moderate temperatures calcia-stabilized zirconia has been found to exhibit predominantly ionic conductivity at oxygen pressures as low as those for the Cr + Crz03 equilibrium,394 but at lower oxygen pressures elec- tronic contribution to conductivity becomes significants4 The Th02-Y203 solid solutions are ionic conductors at oxygen pressures lower than those applicable to zirconia base electrolytes.5'6 At high oxygen pressures Thoz base electrolytes exhibit significant p-type semiconduction. At the time the present experiments were carried out several papers1'-* were published on the electrochemical determination of oxygen activities in liquid iron using the ZrOz(CaO) electrolyte. The results of different authors do not agree well. For instance, according to Fischer and ~ckermann" stabilized zirconia can be used to measure oxygen contents in liquid iron larger than 0.02 wt pct, but according to Baker and west1' ZrOz(CaO) cannot be used for the determination of oxygen content in liquid iron because of high electronic contribution to the conductivity. Fig. 1 is a schematic diagram of the apparatus used. About 500 g of liquid metal is contained in a crucible into which a stabilized zirconia or Th02(Y203) tube is immersed. A platinum contact wire is pressed (with a spring mechanism) against the inside bottom wall of the electrolyte tube. The tube is flushed continuously with a stream of air, CO-CO, (or Hz-C02) (at 0.96 atm and at a rate of about 300 cu cm per min), via an alumina tube inserted inside the electrolyte tube. This alumina tube also contains the Pt-Pt/10 pct Rh thermocouple. A capillary alumina tube shielding the other contact wire is immersed in the melt. The molybdenum contact wires were used mostly; in some cases platinum wire was employed. Molybdenum has the advantage that it dissolves more slowly in the melt than platinum. The whole cell was contained in the alumina reaction tube of a resistance furnace with molybdenum winding. The reaction tube was closed gas tight at both ends and flushed continuously with argon. Because of the poor thermal shock resistance of the electrolyte tubes the cell had to be assembled in the cold furnace. The electrolyte tube and alumina sheath

Jan 1, 1968

By Henry G. Granger

A residence of 14 Sears in the Republic of Colombia, spent . in almost continuous traveling and prospecting-trips, has given me an intimate knowledge of the resources of that wonderful country. The man who best knows Colombia is unquestionably General Rafael Reyes, President of the Republic for the past three years, and with seven years more to serve in his present term. Such is the strength of his personality and the wisdom of his policies that his term of office will no doubt endure as long as he is milling to serve. The vastly improved economic situation and the brilliant outlook for Colombia are so directly due to the influence of President Reyes that a few lines concerning him will not be amiss, if they serve towards a better understanding of his personality. Born of a distinguished ancestry in the mountain~ of Boyaca, he is now 57 years old, just the age of his friend Porfirio Diaz when he began the work which has placed Mexico in the rank of great modern nations. It was Reyes who came to Washington to protest against the action of the government of the United States of America in

Jan 1, 1909

NEW MEMBERS The following list comprises the names f those persons who became members during the period of Dec. 10, 1917, to Jan. 10, 1918. ARLUCK,- A. A., Headquarters Co., 66th Artillery Brigade, 41st Division, Care Postmaster, New York, N. Y. BUCK, LEONARD J Park & Prospect Ave., Bethlehem, Pa. BULL, FREEMAN N., Min. Engr., Robert W. Hunt & Co., 310 Wall St., Joplin, MO. BURGESS, ELISHA PAYNE JEWETT, Pres. & Mgr., Montana Consolidated Copper Co., Care Clark Dodge & Co., 51 Wall St., New York, -N. Y. CAMPBELL, THOMAS E Governor of Arizona, State House, Phoenix, Ariz. CARTWRIGHT, F. 0., Asst. Chief Clerk, The Braden Copper Co., Bancagua, Chile. CASH, FRANK E., Engr. & Asst. Supt. of Mines, Alleghany Ore & Iron Co., Lignite, Botetourt Co., Va. CRITCHLOW, EDWARD B., Pres., Conkling Min. Co., 307 McCormick Bldg., Salt Lake City, Utah.

Jan 2, 1918

NEW MEMBERS. The following list comprises the names of those persons who became members during the month of June, 1913: Members. ANGERER, VICTOR, Vice-Prest. and Genl. Mgr., Wm. Wharton, Jr. &, Co., Inc., 25th St. and Washington Ave., Philadelphia, Pa. BULLOCK, ALLYN, Min. Engr., Hazleton, Pa. CUNNINGHAM, NOEL Met. Engr. Hollinger Gold Mines Ltd., Timmins, Ont Canada ESTABROOK, EDWARD L., Supt. of Colliery 426 Center St., Ashland, PA. GATES A. O. Instructor Purdue Univ. La Fayette Ind. 1 LUDLUM, ALBERT C., Prest., New York Engrg. Co., ,2 Rector St., New York, N. Y. MILLER, HERBERT F., Met. Engr P. O. Box 142, Verona, Pa. MORTON, ELMER T., Min. Engr Clifton, Ariz. MURFIT, RICHARD H.. Fdv. Asst Hess Steel Castings Co., Bridgeton, N.J. QUAYLE, THEODORE W., Chief Sampler, Metcalf Mines, Arizona Copper Co., Metcalf, Ariz.

Jan 7, 1913

NEW MEMBERS The following list comprises the names of those persons who became members during the period Apr. 10, 1919, to May 10, 1919. BEAVER, JAMES J., Supt., Mech. Ore Loaders, Tennessee Coal, Iron & R.R. Co., Box 62, Bessemer, Ala. BLACKWELDER, ELIOT Geol. & Prof. of Geol., Univ. of Ill., Urbana, Ill. BRAECKE, GUSTAVE E., -Min. Engr., Mgr., Societe Curas et Soldado, La Carolina, Spain. BRINK, CYRIL GORDON, Reduction Officer, Charge of Reduction Works. Fairview Devonian Montrose Gold Mines, Ltd., P. O. Sheba, Transvaal, So. Africa. COMERFORD, JOSEPH S., Chief Chem. & Met., American Manganese Steel Co., New Castle, Delaware. DROSDOWSKI, N. C. V., Asst. Supt.,, The Spassky Copper Mine, Ltd., Karagandy, Akmolinsk, Oblast, Siberia. DUNGLINSON, GEORGE, JR., Asst. to Gen'l Mgr., Norfolk & Western Railroad, Bluefield, W. Va. FARAGHER, PAUL VANCE, Research Fellow on Light Metals, Mellon Institute, Pittsburgh, Pa.

Jan 6, 1919

By Alfred Weiss

Daniel C. Jackling's innovative concept for handling low grade ores ushered in a new philosophy of open pit mining. As one of the greatest minemakers of all times he revolutionized major segments of the industry and helped strengthen US defense efforts during World Wars I and II by making possible the tremendous copper supplies from US mines. Many great mining men have since followed in his footsteps with their discoveries of new orebodies or development of new mines. Their brilliance in leadership can also be traced to the coupling of a new idea to the physical nature of the materials in the earth's crust or to the extractive stages of minerals recovery. The minerals industry is now in another era of change and must again devise techniques to meet the challenge. The task is not only to create new exploration techniques and develop new mining methods, but, I believe, to optimally apply new concepts and tools in daily decision-making.

Jan 11, 1978

By John Gross

THE deductions drawn in crushing and grinding operations have heretofore been based on a separation of the products into various sizes. A crushed product may be sized by sieving, by elutriation, and by aid of the microscope. To estimate the surface of each size the relation of the surface to the estimated average diameter must be assumed. Such a relation, owing to the irregularity of the particles, may involve two assumptions: First, a factor to convert average diameter to surface for one particular size; and second, a variation in the factor as the diameter of the particle changes. Obviously a surface measurement in which such assumptions and estimates are involved is questionable. In the first paper of this series1 a method has been given by which an accurate measure of surface of quartz can be obtained from its dissolution rate. By the use of this method, surface measurements have been made on a series of sieve sizes of crushed quartz, the results of which are given and discussed in this paper.

Jan 1, 1928

The world's production of petroleum in 1926 amounted to nearly 150 million long tons, of which India contributed 0.72 per cent. In 1927, this figure jumped to some 172 million long tons, of which the Indian proportion, on a practically stationary production, fell to 0.64 per cent. In 1928, there was another substantial rise in the world's production, which reached the figure of over 181 million tons. In 1929, there was another jump to over 202 million tons, but in 1930 the world's production fell to about 193% million tons, in 1931 to about 187 million tons, and in 1932 to about 183 million tons, while in 1933 the production rose again to about 202 million tons, in 1934 to about 215 million tons, and in 1935 to 233 million tons1. Decreases were shown by Poland, Sarawak, Egypt, Rumania and France. All other important producers showed an increase in production, by far the largest being due to Iraq, as a result of the opening of the pipe line to the Mediterranean. The United States contributed 60.9 per cent of the world's supply in 1935, Russia 10.7 per cent, Venezuela 9.4 per cent, Rumania 3.9 per cent and Iran 3.1 per cent. In 1928, India contributed 0.64 per cent, which fell to 0.60 per cent in 1929 and rose to 0.62 per cent in 1930, 0.63 per cent in 1931, and 0.64 per cent in 1932, and fell again to 0.62 per cent in 1933, to 0.60 per cent in 1934 and to 0.50 per cent in 1935; her position on the list of petroleum-producing countries fell from eleventh in 1929 to twelfth in 1930 to 1933, her place being taken by Trinidad and to thirteenth in 1934 and 1935, owing to the production by Iraq. The production of petroleum in India (including Burma2) increased slightly from 322,025,280 gal.3 in 1934 to 322,662,336 gal. in 1935, the highest figure in the history of the industry. The increase in 1935 is due to an increase of some 4 million gallons in Assam, almost offset by a decrease of 31/2 million gallons in Burma. This increase in output in 1935 was accompanied by an increase in estimated value amounting to Rs. 22,73,550 (£170,944).

Jan 1, 1937

By S. S. Clarke

THE opening of sheet-ground mines in which the ore beds are only from 7 to 9 ft. thick led the Commerce Mining and Royalty Co. to con-sider mechanical loading, in order to avoid the high cost of hand shovel-ing in such mines. Scraper loaders were chosen because the capital investment would be comparatively low; because they are small enough to be used in low working faces, and because they can be mounted on a mobile carrier.

Jan 1, 1939

US 4,192,851-Recovery of elemental sulfur and the metal values from a complex sulfide ore containing two or more of the metals zinc, lead, copper, silver, gold and/or other metals. A mixture of ore and sulfuric acid and/or spent electrolyte is flowed at optimum temperature and pressure in a quiescent zone to dissolve selected metals and sulfur and coalesce the sulfur. The coalesced sulfur and unreacted sulfides are separated by flowing the leach slurry with an upward velocity component The separated materials are discharged and further processed by conventional methods as war- ranted. H.E. Hirsch, J F. Higginson, EG. Parker, and G M Swinkels, assigned to Sherritt Gordon Mines Ltd. Mar. 11, 1980. 6 pp. (423-28) Filed. 3-14-78 (886,368). Priority. United Kingdom, 3-15-77 (10800/77).

Jan 1, 1982

Albin, B. R Billings, Mont. '28 Amster, Nathan L 25 Broad St., New York, N. Y. '28 Bache, Jules S. 42 Broadway, New York, N. Y. '28 Barrett C. P. 5338 Harper Ave., Chicago, Ill. '28 Baum, Frank G., Cons. Hydro-Electric Engr Cassel, Shasta Co., Cal. '28 Bayless, William S. Russ Bldg., San Francisco, Cal. '28 Bean, Louis H. 60 E. 42nd St., New York, N. Y. '28 Beatty, Ross J. Room 604, 6 N. Clark St., Chicago, Ill. '28 Benwell, Oswald F. Hold Mags. '28 Beymer, Albert S., V.-P., Keystone National BankPittsburgh, Pa. '28 Blumenthal, Hugo. 44 Pine St., New York, N. Y. '28 Boettcher, Charles Ideal Cement Bldg., Denver, Colo. '28 Bowlus. Thomas H. Iola, Ken. '28 Brown, Colvin B. Chamber of Commerce Washington, D. C. '28 Burt, Maxwell Struthers Southern Pines, N. C. '28

Jan 1, 1932

By M. G. Fowler

A GENERAL decline in copper production for most American producers occurred during the past year as a result of shortage in available labor. Few noteworthy technical developments have been reported; undoubtedly, many changes and improvements have been made but have not been reported because of lack of time. During the war years through 1944 the pressure for sustained high production has been of prime importance and during 1945, with slackening of production, many operators were faced with the problem of catching up on repairs and maintenance of plants, with inadequate labor supply. In hydrometallurgy there were some important developments that undoubtedly will be reported during 1946. Several operators in the Southwest have instituted experimental leaching programs to exploit low-grade oxidized and mixed ore bodies. The Bureau of Mines is conducting pilot-plant experimental work to determine the possibility of producing a satisfactory sponge iron at an attractive cost from deposits of iron ore and coal in Arizona. The sponge iron would be used for the production of cement cop¬per. The cell house of the Inspiration Consolidated Copper Co. at Inspiration,

Jan 1, 1946

By AIME AIME

WHEN the War Production Board issued its order which will end the use of iron and steel in more than 400 familiar civilian articles, the list of those products formed a fascinating and homeric catalogue of the things we use. Articles for which iron and steel may not be used after a 90-day "tapering-off" period are as workaday as office machinery and as frivolous as cocktail shakers. Mostly they are smaller items-the smallest probably are phonograph needles but in the aggregate they will save tremendous quantities of the metal most needed to win the war. In total war there are no trifles. Interesting proof of this lies in the fact that by eliminating manufacture of blackhead squeezers we shall save 110,000 lb. of steel a year. Out of this steel we might have made four 155-mm. field pieces. We might have made a thousand 3-in. trench mortars, 4400 0.30-caliber machine guns, 55 16-in. shells, 110 200-lb. aerial bombs, or three 15-ton tanks with something left over to arm them.

Jan 1, 1942

By Kazutami Imai

Effects of heavy metal ions on the growth and the activities of iron and sulfur oxidation of Thiobacillus ferrooxidans were investigated. Mercuric, silver, and stannous ions inhibited both of the growth and the iron- oxidizing enzyme system of the bacterium. On the other hand, uranyl ion inhibited the growth, but it gave almost no effect on the iron-oxidizing enzyme system. The inhibitory effect of uranyl sulfate on the growth of the bacterium is intensified on lowering the cultivating ' temperature from 28 ºC to 7 ºC. In the concentration of 10-3M, cadmium and copper ions inhibited colloidal sulfur-oxidizing activity of the cells 69 and 52 %, respectively, though they did not inhibit the iron-oxidizing activity at all in the concentration. On the contrary, stannous chloride did not givr any effect on the sulfur-oxidizing activity of the cells, though it inhibited the iron-oxidizing activity 55 % in the concentration of 10-3M. Several differences were observed among the cytochrome systems of cell-free extracts of the cells grown on iron and on sulfur.

Jan 1, 1976

By Charles Malcolmson

AN elaborate series of experiments has been conducted during the past three years at Irvington, N. J., which has resulted in the perfection of a process for the manufacture of smokeless fuel from high-volatile coals, and for the recovery and refinement of the coal-tar products derived therefrom. These experiments have been financed by Messrs. Blair Co., of New York, and were conducted under the direction of Charles H. Smith, a member of this Institute, and the inventor of the process. The low-temperature distillation of coal has interested investigators for many years. Sporadic attempts have been made to solve the mechanical problems, but until the Smith process. was developed, they were not carried to conclusions of economic value. The present coal shortage and the increasing demand for smokeless fuels make this subject one of timely interest.

Jan 5, 1918

By David Reger

THE value of carbon ratios in determining the boundaries of possible oil deposits appears to have passed the hypothetical stage. The theory that the ratio of fixed carbon in pure coals is an, invariable index of incipient metamorphism in both, surface and underground rocks and that it may be applied in defining the limits of petroleum, advanced by David White,1 has been received with keen interest by many petroleum geologists. Detailed isocarb maps have been prepared of the Pennsylvanian area of North Texas and Eastern Oklahoma by M. L. Fuller.2 A similar map of the coal-bearing area of West Virginia is given here. An isocarb3 is a line showing an equal fixed-carbon percentage, pure coal basis; the term has been proposed by David White to supersede a less expressive nomenclature. The term carbon ratio is applied to the percentage of carbon in pure coal after water and ash have been eliminated. As a comparatively small number of analyses have been made on this basis, it is usually necessary to compute the ratio by dividing the fixed carbon of the proximate analysis by the sum of the fixed carbon and volatile matter of the same analysis. Many thousands of proximate analyses have been made by the West Virginia Geological Survey, covering nearly every county in which coal is found. Numerous others have been made by the. U.S. Geological Survey and the U. S. Bureau of Mines, but as uniformity of results is

Jan 2, 1921

(Members are urged to send in for this column any notes of interest concerning themselves or their fellow-members.) Members who registered at Institute headquarters during September: William B. Phillips, Austin, Texas. Will L. Clark, Jerome, Ariz. Olof Wenstrom, Boston, Mass. Robert H. Richards, Boston, Mass. Anthony F. Lucas, Washington, D. C. Hennen Jennings, Washington, D. C. P. H. Griffin, New York, N. Y. Waldemar Lindgren, Boston, Mass. H. N. Lawrie, Portland, Ore. C. Snelling Robinson, Youngstown, 0. Clarence P. Linville, Everett, Pa. E. P. Ross, Johnson, Tenn. Members of the XII International Geological Congress who made the Institute Office their headquarters while in New York A. Bigot, Caen, France. E. Gentil, Paris, France. J. Caillebotte, Paris, France. H. Saint-Clivier, Paris, France. John Ashworth, Manchester, England. Tadasu Hiki, Kioto, Japan. T. Dahlblom, Falun, Sweden. L. Milch, Greifswald, Germany.

Jan 10, 1913

By John J. McCabe

INTRODUCTION Over the years, Congress has written into the Internal Revenue Code various provisions aimed at lessening at least one financial burden faced by taxpayers in the mining industry - the federal income tax burden. These provisions include the election to deduct exploration expenses, the election to defer deduction of development expenses, and the percentage depletion deduction. Careful tax planning from the very beginning of a mining venture is essential in taking maximum advantage of these tax benefits. A major decision to be made is the choice of organizational structure. (For a more detailed discussion of this subject, see McCabe, John J., "Developing Structures for Investments in Mineral Property," New York University Institute on Federal Taxation, 42 NYU 24, 1984). One such structure is the use of multiple corporations, with mining activities conducted by one corporation and nonmining activities, such as manufacturing, financing and administration, conducted by the other corporation. This technique, which will be discussed in detail below, can be particularly advantageous in delaying recapture of previously deducted exploration expenses and in maximizing depletion deductions. TAX BENEFITS IN MINING Exploration Subject to certain restrictions discussed below, exploration expenditures (i.e., expenditures paid or incurred during the taxable year for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral, and paid or incurred before the beginning of the development state of the mine are deductible at the election of the taxpayer (Section 617(a)).* Were it not for this option, exploration expenditures would be required to be capitalized and recovered through depletion, after production begins. Exploration of a mineral deposit can be very costly and may not result in commercial production for some time. If the taxpayer has income to he offset by the deductions, a mining venture can usually be structured in such a way as to allow the offset of mining losses against the other income. With today's high interest rates, this election can be quite valuable in present value terms. Corporate and noncorporate taxpayers are subject to different restrictions on this tax benefit. Corporations may elect to deduct only 85 percent of eligible exploration expenditures (Section 291(b)). (The Tax Reform Act of 1984 reduced this to 80 percent effective for expenditures after December 31, 1984, in taxable years ending after such date). The remaining 15 percent (20 percent after December 31, 1984) is capitalized and recovered at the same rate as five-year ACRS property (Section 291(b)). Individual taxpayers are not subject to this 85 percent rule; however, any amount deducted in excess of ten-year straightline amortization is a tax preference item for individuals (Section 57(a)(5)). Individuals may avoid the tax preference by electing to capitalize exploration expenditures and amortize them over ten years (Section 58(i)). In order to prevent the taxpayer from, in effect, converting ordinary income into capital gain by selling property that has given rise to exploration expense deductions, the Code requires recapture of such deductions upon the occurrence of certain events (Section 617): 1. Upon disposition of the property, adjusted exploration expenditures are recaptured to the extent of gain realized on the disposition (Section 617(d)). 2. If the property is leased, the lessor is disallowed any depletion deduction until his adjusted exploration expenditures have been recaptured in the form of foregone depletion deductions (Section 617(c)).

Jan 1, 1985