What a quarry royalty is
A royalty is what a quarry or pit operator pays the owner of the ground, the lessor (also called the landowner or mineral owner), for the stone, sand or gravel taken out of it. It's separate from any rent for the land itself. If you run more than one pit, you often have more than one lessor, and each deal can be different.
Royalties are almost always tied to production: the tons mined, or more often the tons sold. That makes the scale house the source of the number. Leases routinely give the lessor the right to inspect the records behind it. Alabama's 2024 sample sand-and-gravel lease, for example, gives the lessor access to "books of account, mine reports, hauling tickets, shipping weights, and volume."
Per ton or a percentage of sales?
There are two basic ways to set a royalty, and both are widely used. A paper on valuing sand and gravel in the Counselors of Real Estate's Real Estate Issues journal puts it simply: operators "negotiate a rate per ton, or a percentage of gross sales for all extracted materials."
- Per ton (or per cubic yard): a fixed dollar amount for each ton. Simple to calculate. The lessor doesn't share in price increases unless the lease has an escalator.
- Percentage of sales: a share of the gross selling price, usually measured at the plant (FOB). The lessor's income rises and falls with your prices, and the calculation needs dollars as well as tons.
- The greater of the two: some leases pay whichever is higher. A Texas frac-sand lease filed with the SEC pays "the greater of 7.75% of the gross revenue from sales of Material" or "$2.25 per ton of Material sold."
What royalty rates actually look like
Private royalties are negotiated deal by deal and rarely published, so be skeptical of any single "typical" number you find online. Public landowners do publish their rates, which makes them the best reference points available:
| Source | Rate | Basis |
|---|---|---|
| Wyoming state trust land | $0.60/ton | Sand and gravel ($0.90/cu yd); rip-rap $1.50/ton |
| New Mexico State Land Office | $1.00–$1.60/ton | Listed "typical" negotiated rates; crusher fines $0.60/ton |
| Kansas river sand | $0.15/ton | Per ton removed, reported monthly |
| Minnesota state land | $0.10/cu yd | Per cubic yard of usable material removed |
| South Dakota state land | At least 10% | Of market value of material removed |
| Pennsylvania dredged sand & gravel | 7.0% | Of the USGS average value per ton, minimum $0.48/dry ton |
For private ground, Rock Associates, an aggregate appraisal firm, reports seeing royalties from $0.20 to $5.00 per ton across the United States. Urban pits close to market sit at the high end, rural pits at the low end. Material, haul distance and how much competing reserve is nearby all move the number.
Lease terms that change the math
The rate is only part of it. These terms decide what you actually owe each month:
- Minimum royalty. A floor you pay whether you ship or not. Alabama's sample lease sets a $36,000 annual minimum, paid monthly, offset by production royalties within the year, and excess royalties "shall not be carried over" to the next year.
- Escalators. Per-ton rates often rise on a schedule. The same Alabama lease raises the gravel rate by $0.010 per ton (and sand by $0.005) every year.
- Mined vs. sold. Is royalty owed when material comes out of the face, or when it leaves the property on a ticket? Stockpiles and material used on site depend on the answer. Get it in writing.
- Affiliate and internal use. Material sold to a related company or used in your own asphalt or concrete plant is often valued at a fixed or fair-market price, not whatever you charged yourself.
- Reporting deadline. Usually monthly, with a statement: by the 20th for the Alabama lease, the 15th for Minnesota state land and federal BLM mineral sales, the 10th for South Dakota.
- Audit rights and record retention. Two years under the Alabama lease, six under BLM rules. If records are missing, Alabama's lease resolves disputes in the lessor's favour.
What wheelage is
Wheelage is a per-ton payment to a landowner for hauling material across their land. The term comes from coal leases, where it's the fee for carrying coal mined on other property across the leased tract. In quarrying it usually means what you pay a neighbouring landowner for the right to run your trucks over their property, typically because the best haul route to the highway crosses it.
Published clauses calculate wheelage the same ways royalties are calculated: a flat amount per ton, a percentage of the gross selling price, or the greater of the two. One sample clause reads "Ten Cents ($0.10) or … one-fourth of one percent (1/4 of 1%), whichever is greater of the gross selling price." It's also common for wheelage to apply only to some materials or some pits, depending on which loads actually use the crossing.
Severance taxes ride on the same tons
Royalties and wheelage are private deals. On top of them, some states and counties tax aggregate by the ton, again calculated from what crossed the scale:
- Alabama levies a statewide severance tax of 10 cents per ton on sand, gravel, limestone, granite and other stone (with some exemptions), and some counties add their own. Coosa County's is 25 cents per ton.
- Tennessee counties can levy a mineral severance tax on sand, gravel, limestone and similar materials. The cap rose from 15 to 20 cents per ton on July 1, 2025, and is scheduled to reach 25 cents in 2030.
- Louisiana taxes stone at 3 cents and sand at 6 cents per ton.
A worked example
Here's a month at a made-up operator with two leased pits. Pit A's lessor gets a flat $0.75 per ton. Pit B's lessor gets 6% of sales, and Pit B's trucks cross a neighbour's land under a wheelage deal of 1% of sales.
| Pit / product | Tons sold | Sales | Owed |
|---|---|---|---|
| Pit A · #57 stone | 4,200 | — | 4,200 × $0.75 = $3,150 |
| Pit A · crusher run | 6,800 | — | 6,800 × $0.75 = $5,100 |
| Pit A royalty | 11,000 | $8,250 | |
| Pit B · #57 stone | 3,000 | $54,000 | |
| Pit B · screenings | 1,500 | $13,500 | |
| Pit B royalty (6%) | 4,500 | $67,500 | $4,050 |
| Pit B wheelage (1%) | $67,500 | $675 |
If both pits were in Alabama, the state severance tax would add 10 cents on all 15,500 tons, or $1,550. And if Pit A's lease carried the $3,000 monthly minimum from the Alabama example, this month's $8,250 clears it.
None of this is hard arithmetic. The hard part is getting the inputs right: every ticket assigned to the right pit and product, voided and corrected tickets handled, the month cut off on the right day, and, for percentage deals, the actual selling price attached to every ton.
Why weighed tons beat estimates
Where tonnage isn't weighed, it gets estimated, and small estimating choices move big money. The South Florida Water Management District's Inspector General audited a limerock mining lease whose royalties came from annual surveys converted from cubic yards to tons at a factor of 1.30. The auditors found that a factor of 1.40, "just one-tenth of a point higher," would have produced $500,000 more in cumulative royalties to date and about $3,000,000 more over the life of the quarry.
Certified scale tickets avoid that argument. A lessor who can trace the statement back to individual weighed loads has far less to dispute, and you have far less to defend.
How CloudAgg handles royalties and wheelage
Royalties and wheelage are costs you owe, not charges to your customer, so most producers build them into the selling price and they never appear on the ticket. What you need is the monthly number. In CloudAgg that's a saved report:
- Posted tons by site and product for any date range, straight from the certified tickets.
- A formula column that calculates what's owed as a price per ton or a percentage of sales, set for each lessor's deal. Each pit can have its own terms.
- All lessors and neighbours on one report, or a separate statement for each one to send with the payment.
Because the report reads the posted tickets themselves, every number on the statement ties back to loads a lessor can ask to see. If you're new to the ticket itself, start with our guide to what a scale ticket is, or see how CloudAgg runs a quarry scale house.