Dimension stone can include a variety of stones such as sandstone, granite, gritstone, limestone and many other mineral types. There are a variety of markets for the products such as landscaping, heritage repairs, paving, architectural design etc and the costs of the products can range accordingly. The products can be marketed on a worldwide basis, but are mostly produced for the domestic market, but are sold interstate. We understand that China is currently the major export destination.
It is often the amount of processing that determines a products end value. It is common for dimension stone quarries to be remotely located and the raw product transported to processing operations closer to the markets. We have carried out numerous valuations on dimension stone quarries, particularly sandstones, and have a good understanding of the local, regional and national markets as well as export markets. Dimension stone quarries mostly operate under the Mining Act 1992 in NSW, the Mining Act 1971 in SA (as well as other extractive industries quarries) and other similar Mining Acts in other States and are predominantly State owned minerals, which are subject to a royalty paid to the Crown or State. This different ownership structure is in contrast to other extractive industry operations and a strong knowledge of geology is required to determine the ownership contraints as well knowledge of Mining Licences and all the other applicable regulations. We also have an extensive database of dimension stone quarry sales and lease evidence throughout Australia, but also sales of sandstone quarries operating within the extractive industries.
Where the "Minerals" are State owned, then the usual quarry valuation methodology needs to be adjusted to reflect the fact that the value of the Minerals are not included in the quarry valuation. Consequently the capitalisation rates involved are often very different and also need to be adjusted, but also reflection of the mining access or working rights need to be considered, and this is purely based on valuer judgement, as these rights are not actively traded in the market place for the valuer to derive their value. It is generally applicable to identify the seperate royalty values for the valuation, being the surface royalty, which is tangible and runs with the land, and the mining rights royalty which is intangible, but depending upon the purpose of the valuation.
There are many sandstone quarries, operating under the Planning Acts in various States, that also produce dimension stone products, but there are often limits imposed for this, and operators need to be careful not to exceed these limits, or they could find themsleves being liable for a back payment of royalties to the Crown or State. But also where the Mining Acts have been breached, or non compliance is evident then these liabilities can quite often prevent the quarry operator from obtaining finance.
