We studied the electrical properties of composite resistors fabricated from materials of natural origin based on Al-kaolinite clay mixture. Our electrical measurements and microstructural studies reveal the effect of annealing schedule, insulating particle size and composition on the resistance of the cermet. We measured small values of activation energy of conduction from temperature dependence of resistance and compared these values of activation energy with those obtained from microstructural examinations using electron microscopy. The small activation energy in the range of 0.53-1.24 mu eV obtained suggests conduction by direct or quantum mechanical tunneling between conducting grains. All the resistors were observed to show a negative TCR with some possessing TCR as low as 50 ppm/degrees C in magnitude, which further confirms the tunneling conduction process. The variation of resistivity with the volume fraction of the metallic phase was found to follow a percolative conduction expression of the form R(X) = R-M(x -x(c))(-t), with the critical exponent t and critical concentration xc showing a significant dependence on firing temperature. We found that the critical exponent assumed a value of t = 2.0 +/- 0.8, which is different from a universal value of 2.0. This was shown to result from tunneling-percolating nature of the cermet. (c) 2005 Springer Science + Business Media, Inc.