Australia's Mining Sector Caught in ASX-JORC Split
The mining industry is caught in a web of regulators' rift as the Australian Securities Exchange and Joint Ore Reserves Committee clash over whose reporting standards should be followed.
Earlier, the ASX proposed new disclosure rules for mining companies when reporting their mineral reserves and resources. The rules, according to ASX, will make it easier for the mining companies to secure funding for future projects. ASX said its suggestions are based on standards used in Canada.
But JORC said the ASX reforms were inadequate, and that ASX should not be pushing for its ratification at this early stage.
JORC and ASX were initially working on a reform paper to improve reporting standards in the mining sector, but discussions faltered when ASX insisted that its preferred reform solutions be included in the discussion paper.
"During the process of drafting the issues paper, it became clear that the ASX had a preference to move away from the long-established principles-based reporting on which the JORC Code is based," JORC Chairman Peter Stoker told the Business Spectator. "ASX formed the view that it could not reach an agreement or compromise with JORC."
The ASX released its consultation paper on Tuesday, without JORC's support.
The prevailing system requires industry professionals to submit public reports containing all relevant information required to assist shareholders make balanced decisions.
Under the Canadian system being proposed by the ASX, lawyers assess reports published by minerals companies. This could mean surging costs as listed companies have to pay an increment to shoulder lawyer fees.
The ASX also argued that it only meant to ensure that Australian reporting requirements were parallel with international best practices.
Both organizations will now run separate reviews of the reporting requirements for the meantime.
Mining and oil and gas companies represent 32 percent of the total listed equity market capitalization on the ASX, with the mining industry representing the largest sector by number of companies listed.
The JORC was created in 1971 mainly to correct unacceptable reporting practices by Australian miners.