OPINION OF THE COURT
Harvey, J.The facts are not in dispute. Petitioner is engaged in the business of mining zinc ore. It operates two mines and a mill in the community of Balmat and a third mine in the Town of Pierrepont, all in St. Lawrence County. The Pierrepont mine is located 28 miles from the Balmat mill. The zinc ore is not saleable when it is brought to the surface. It requires milling in order to complete the mining process and produce a marketable product. Petitioner thus purchased trucks which are used to transport the ore mined in Pierrepont to the Balmat mill. It is these trucks, and the fuel used in them, which respondent determined were subject to taxation. Respondent assessed a tax of $37,491.23 plus interest for the period of December 1, 1979 through August 31, 1982. The assessment was sustained following a hearing and this proceeding ensued.
Petitioner contends that its trucks and the fuel they use are exempt from sales and use tax under Tax Law § 1115 (a) (12) and (c). Since it is conceded that the fuel is exempt if the trucks are exempt, we need only focus our analysis on petitioner’s trucks. An exemption from taxation is provided for machinery or equipment used "directly and predominately in the production of tangible personal property * * * by * * * processing * * * mining or extracting” (Tax Law § 1115 [a] [12]). Determining whether petitioner’s use of its trucks falls within this tax exemption requires determinations as to the nature of petitioner’s mining process and the role of the trucks in that process.
Respondent asserts that petitioner’s operation consists of two distinct and unrelated parts, extracting the ore and then milling it, and that petitioner’s trucks are not directly involved in either of these. If we accepted respondent’s premise, then petitioner’s trucks clearly could not be considered as directly involved in either of the two separate processes. On the facts at hand, however, we do not believe that petitioner’s operations are susceptible to the bifurcation urged by respondent.
Significant in this regard is the language of Tax Law § 1115 (a) (12). The statute refers to both the activities of "mining or extracting” as including potentially exempt uses. In constru*100ing this statute, meaning must be given to all of the language employed, and words should not be rejected as mere surplus-age (see, McKinney’s Cons Laws of NY, Book 1, Statutes § 231). The interpretation urged by respondent would be viable if the statute referred only to extracting. Indeed, given the deference often afforded to the interpretation of statutes which an agency administers (see, Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 459), if the statute here referred only to "mining” and the agency had construed this term in a narrow fashion we might be constrained to accept its interpretation. We cannot, however, consistent with accepted tenents of statutory interpretation, read "mining” and "extracting” as synonymous if a logical distinction does in fact exist.
The term "mining” is not defined in the Tax Law and thus we turn to other authority. For purposes of Federal taxation, mining is defined as: "not merely the extraction of the ores or minerals from the ground but also the treatment processes * * * and * * * the transportation of ores or minerals * * * from the point of extraction from the ground to the plants or mills in which such treatment processes are applied” (26 USC § 613 [c] [2]). The Environmental Conservation Law defines mining as: "the extraction or removal of minerals from the ground * * * including any activities or processes or parts thereof for extraction or removal of minerals from their original location and the preparation, washing, cleaning or other processing of minerals at the mine location so as to make them suitable for commercial, industrial or construction use” (ECL 23-2705 [8]). Both of these definitions are basically consistent with the definition of mining provided by the Society of Mining Engineers, which states that: "Mining may be defined * * * as the act, process or work of extracting minerals or coal from their natural environment and transporting them to the point of processing or use” (Cummins, SME Mining Engineer Handbook § 1.2, at 1-2 [1973]). It is evident from the above that mining should not be narrowly construed to include only the extracting of minerals. In the case at bar, it is uncontested that there was no market for the zinc ore as it existed when it was extracted from the ground. To make the product saleable, it was necessary to process it at the mill. We thus find that the extraction and milling of the zinc ore were all part of the mining process as that term is referred to in Tax Law § 1115 (a) (12).
The next issue is whether petitioner’s trucks were used directly in production. Determining whether equipment used *101to transport materials is used directly in production requires consideration of "the nexus extant between the end product and the machinery or equipment so as to ascertain if the bond or union between them is such that it can be said that the machinery or equipment is necessary and essential to production” (Matter of Rochester Ind. Packer v Heckelman, 83 Misc 2d 1064, 1065 [Mahoney, J.]). Thus, a forklift which transfers materials from one assembly line to another is exempt (20 NYCRR 528.13 [c] [2], example 8), and trucks used to transport water needed in drilling to the drilling site are likewise exempt (see, Matter of Envirogas, Inc. v Chu, 114 AD2d 38, affd 69 NY2d 632). However, equipment used to transport personnel serves an administrative function (see, supra). Further, trains used to transport raw material from a foreign market where they were purchased to a plant for processing are not directly involved in production since their function precedes commencement of the production process (see, Matter of Rochester Ind. Packer v Heckelman, supra). In order to determine whether petitioner’s trucks are used directly in the production process, it is necessary to consider the nexus between the function served by the trucks and the end product of the mining process.
The Pierrepont mine is a decline mine and thus equipment which respondent refers to as "trucks” are used to bring the ore from underground to the surface.* Since the ore is not saleable when it comes out of the mine, it is loaded onto the trucks which are the subject of this proceeding. These trucks are then used to transport the ore 28 miles over public highways to the Balmat mill where processing is completed and a marketable product is produced. It is clear that petitioner’s trucks are an essential element of the mining process and are directly involved in the production of the final product. Their function is solely to convey the product from one spot in the production process where it has virtually no marketable value to another where production continues and a saleable product emerges. The essence of the truck’s function is not significantly different from that of a forklift which transfers materials from one assembly line to another.
Respondent, however, seeks to support its position that petitioner’s trucks are not used directly in production by pointing out that petitioner’s trucks are registered with the *102Department of Motor Vehicles. Indeed, an example in respondent’s regulations seems to attach some significance to whether or not a vehicle is registered with the Department of Motor Vehicles (see, 20 NYCRR 528.13 [c] [2], example 7). However, no rational explanation has been offered to support this example. The only apparent explanation offered for the example is that a vehicle registered with the Department of Motor Vehicles might be used for purposes other than production. However, the vehicle only needs to be used "predominantly” in production (Tax Law § 1115 [a] [12]), which has been interpreted to mean over 50% of its use (20 NYCRR 528.13 [c] [4]). Thus, the occasional use of the vehicle on the highway for a use not directly related to production does not nullify its exemption. We note that here there was no contention nor any proof that petitioner’s trucks were used for añy purpose other than conveying ore from the Pierrepont mine to the Balmat mill. The regulation which example 7 seeks to illustrate specifically provides that equipment is directly involved in production when it is used in the "conveyance of materials” (20 NYCRR 528.13 [c] [1] [iii]). On the facts at hand, petitioner’s use of its trucks falls into this definition. Since an example merely serves as a speculative and hypothetical illustration of a regulation, it is not entitled to the same degree of judicial deference as a regulation. This is particularly true where, as here, petitioner’s activity is in compliance with the underlying statute and the language of the regulation, but appears to conflict only with an example in the regulation.
Interestingly, respondent has not argued that these "trucks” are subject to taxation.