Instead, it is calculated as a percentage of the realised value of the diamonds extracted from the diamond-bearing ores and without any allowance or deduction that takes into account the costs of extracting the diamonds from the ore in its natural state. The same applies to gold, silver, nickel, lead and every other metal, mineral and gemstone. The Crown levies royalties not at the point at which the material is extracted in its natural state, but at a subsequent stage of production. Kailis was a company with a dual identity. On the one hand it was involved in fishing and required to pay for the right of access to a natural resource by means of fishing licences.
Many miners have a similar dual identity.
On the other hand, and for a variety of reasons, they process the natural resource extracted, often on-site. The argument is reinforced by the text of the Regulations in respect of Gold, which clearly state in no uncertain terms that gold royalties are based on 'Gold produced from gold bearing material'. The section is clearly taxing a good produced since every calculation is made in terms of the value of the final product, rather than on the value of the mineral in its natural state, the substance over which the Crown has ownership rights. Mining royalties of the kind levied on processed minerals could then fall within the definition of duties of excise . The first is clearly the easiest option to take.