Mineral Code Custodians Strive To Keep Industry on Straight and Narrow
Source: Mining Weekly, Brindaveni Naidoo (1/30/09)
"With an increasingly globalized mining industry. . .the need for common terminology and understanding across country boundaries and language barriers has never been greater."
Developing and maintaining standards for the reporting of mineral reserves, mineral resources, and exploration results are important, says Committee for Mineral Reserves International Reporting Standards (Crirsco) chairperson Niall Weatherstone. With an increasingly globalized mining industry, the commodity wealth of countries attracting strong political attention and the impact that minerals have on the financial, accounting and investment communities, the need for common terminology and understanding across country boundaries and language barriers has never been greater, he adds.
Awareness about the importance of issues surrounding mineral resources and reserves has increased rapidly since the early 1990s, in part because of the biggest stock scandal in mining history, in which Canadian junior miner Bre-X claimed to have discovered a gold deposit in Busang, Indonesia.
The gold estimates, which had been based on crushed core samples that had been fraudulently salted with gold, sent stock prices soaring and investors were swindled out of billions of dollars, in the greatest fraud in the mining industry.
Since then, the need to protect all stake-holders from undue risk, even in the current global economic downturn, has resulted in mineral codes playing an integral part in the investment chain and financial markets.
On the flip side, there is a strong and growing presence of a healthy international body of reporting organizations, including those of Canada, the US, Europe, Australia and Chile. South Africa is playing its part, last year releasing the revised edition of the South African Mineral Resources and Mineral Reserves Code (Samrec) and the South African Mineral Asset Valuation (Samval) code, which collectively became the South African Mineral Codes (Samcode.
Countries such as China, India and Russia have a legacy of centrally controlled economies where government systems are often very prescriptive. This worked while countries were internally focused, but difficulties began when they emerged into the international trading arena.
For example, companies from Russia listing on the London Stock Exchange have to comply with Western systems designed to inform the financial and investing communities rather than governments.
Similarly, in the West, the responsibility for public reports on reserves lies with the competent person, a concept that did not exist in government-centric countries.
The systems are gradually beginning to come together and Crirsco is at the forefront of efforts to align reporting definitions by "mapping" the Crirsco system to those of countries such as Russia and China, and in Africa, in countries such as Tanzania and Zambia.
"I think it will be possible to achieve a form of 'world code' that brings together agreed parts of existing codes – for example, the definition of resources and reserves," says Weatherstone.