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12. ... ... Therefore, a mineral as judicially defined would mean an inorganic substance found either on or in the earth which may be garnered and exploited for profit."

19. In National Mineral Development Corporation Ltd., (2004) 6 SCC 281, the Hon‟ble Supreme Court considered the question whether slimes exigible to charge of royalty, as forming part and parcel of iron ore. In the process of mining, the iron ore is extracted and separated into ore lumps, fines and waste materials which is generally referred to and known as "slime". "Slime" is not iron ore within the meaning of the provisions of the Act and the Second Schedule.

"Slimes" are nothing but impurities left available to be discarded at the end of the process of production of iron ores and iron ore fines. The State of Madhya Pradesh levied royalty on slimes. The Madhya Pradesh High Court, interpreting Entry 23 of the Second Schedule of MMDR Act, held that the royalty is payable on the „slimes‟. In the appeal filed before the Hon‟ble Supreme Court, the NMDC contended that in view of the provisions contained in Section 9 and Entry 23 of the Second Schedule, Slime is the resultant waste material and slime consists of impurities and minute particles with ferrous content but the ferrous part can neither be retrieved nor utilized for production of iron/steel as no technology for the said purpose is yet developed and therefore, contended that the State cannot claim to levy royalty on such waste material namely "slimes" and hence the action of the State is liable to be struck down. Interpreting Entry 23, the Hon‟ble Supreme Court held that the "slimes" do not have any commercial value and that "slimes" have been left out of consideration by Entry 23 for the purpose of quantification and levy and therefore held that the "slimes" are not exigible for levy of royalty.
"22. There can be no manner of doubt that the entire material extracted from the earth, so far as iron ore mines are concerned, has to be subjected to a process for the purpose of winning iron therefrom. The process results in (i) lumps, (ii) fines and (iii) slimes. Section 9 of the Act obliges the holder of a mining lease to pay royalty in respect of any mineral removed or consumed from the leased area. If only it would have been the question of considering Section 9 and determining the impact thereof, may be, it is the total quantity of mineral removed from the leased area or consumed in the beneficiation process which would have been liable for payment of royalty and that quantity may have included the quantity of slimes as well, as was held by this Court in State of Orissa Vs. Steel Authority of India Ltd. But in case of iron ore the process of beneficiation involves introduction of catalytic agents leading to separation and generation of waste consisting of impurities which the scheme of the Act has left out from charging.
25. A bare reading of Entry 23 reveals that the Parliament has not chosen to compute royalty on iron ore by itself and quantifiable as run of mine (ROM). Parliament is conscious of the fact that iron ore shall have to be subjected to processing whereafter it would yield (i) lumps, (ii) fines, (iii) concentrates, and (iv) slimes - the last one to be found deposited in the tailing pond. Parliament has to be attributed with the knowledge that keeping in view the advancements in the field of science and technology as on the day, the slimes do not have any commercial value. While carrying out prospecting operations it is known what will be the strength of the iron ore (i.e. the percentage of ferrous content) available in a particular area. By reference to such strength or quality of iron ore, the rate of royalty could have been made available for calculation based on the quantity of the iron ore as run of mine and quantifiable on per tonne of iron ore, that is, tonnage of iron ore as such. Parliament has chosen not to do so. Entry 23, the manner in which it has been drafted, mandates the quantification of royalty to await or be postponed until the processing has been carried out and the lumps, fines and concentrates are prepared. Once the result of processing is available, the lumps, fines and the concentrates are subjected to levy of royalty at different rates applied by reference to the quantity of each of the three items earned as a result of processing. The slimes have been left out of consideration by Entry 23 for the purpose of quantification and levy." (Emphasis added)