Mexico Needs a Mexican Code for Resources, ReservesBy Armando Ernesto Alatorre Campos | Mon, 02/08/2021 - 13:06
The Mexican mining industry is fully moving into the 21st century, incorporating the latest technologies available for geology, mining, metallurgy, and so forth in every aspect of its daily work. But it has not yet fully addressed a current issue that is already handled as routine in other mining latitudes with which it collaborates, but also competes. What is it? It is to have an instrument that sets the standards for reporting resources and reserves that are fully accepted in the country as well as in the world and to have the kind of professional people who, in a very honest and ethical way, are responsible for the accuracy of such reports.
Many would say that the Canadian NI-43-101 has been in use for a long time in Mexico, as well as the Australian JORC code. The first time we learned about this was when the juniors from these countries arrived en masse to Mexico at the closing of the past century. Today, companies have to fulfill that requirement in their country to maintain their ability to raise capital in the stock markets.
Also, it could be said that some Mexican mining companies, in an enormous effort to follow the “best international practices,” have implemented one or the other codes: Canadian or Australian. However, to fulfill those procedures, Mexican reports need to be elaborated and signed under the responsibility of mining professionals from other countries. Some would also add that there are Mexican mining companies registered in foreign stock markets and should follow such requirements; however, in this last case, no matter how big the companies might be, they are more the exception than the rule.
How many mining-relevant countries in the world have such codes as the two already mentioned? Well, there 14 so far: Canada, US, Brazil, Chile, Colombia, South Africa, Australia, Indonesia, India, Mongolia, Russia, Kazakhstan, Turkey and most of Europe as a region than individual countries. It should also be said that the list will increase in the foreseeable future to include Peru, Ecuador and Kyrgyzstan.
What do all these mining entities have in common? Well, the codes of all those countries have been created under the guidance issued by the Committee for Mineral Reserves International Reporting Standards (CRIRSCO) to which they are affiliated. This group was created in 1994, probably more as a good intention at that time. But given the truly international reach of mining today, the group has become a world-leading organization, with the objective of communicating the risks associated with an investment in mining in such an effective and transparent way as to earn the level of trust necessary by the stock markets and their investors.
CRIRSCO established a series of definitions and guidelines (the Template) regarding what a resource and a reserve are, proper terminology and who is responsible for the reports, among many others. This is the base upon which each standard is built by a National Reporting Organization (NRO); therefore, having the same root, it must be understood that the reporting codes are quite similar in form and scope.
What changes is that each NRO and each country/region decides how it will work; sometimes, it is a group of organizations that come together to form one group. For instance, Peru is forming an NRO called the Peruvian Commission of Mineral Resources and Reserves, where the participants, so far, are the Peruvian Geological Society, the Peruvian Institute of Mining Engineers, and the Lima Stock Exchange. In the US, however, the NRO is solely the Society for Mining, Metallurgy and Exploration, Inc. (SME).
Then, what about the stock exchanges if they are not playing within one specific NRO? Looking at the American case, SME's Guide for Reporting Exploration Information, Mineral Resources and Mineral Reserves follows the Industry Guide 7 issued first in 1981 by the U.S. Securities and Exchange Commission (SEC). So, in one way or another, the stock exchanges have their share of participation and surveillance about what the mining companies report before the great investor audience.
What about Mexico?
From what has been already established, our country has not yet arrived to the party. Chile, Brazil and Colombia are already there. Peru and Ecuador are some steps ahead. But, for bad or good, better late than never. In September 2020, CRIRSCO held its annual meeting from Johannesburg, South Africa, obviously in a remote fashion, where the College of Mining Engineers, Metallurgists and Geologists of Mexico presented, formally, its intention to work as the NRO that will oversee everything needed to, eventually, have a Mexican standard.
It is completely clear to the College that such a task, and the arduous work needed, cannot be done by itself alone; it will require collaboration from all parties within the Mexican mining industry, including AIMMGM, the Chamber of Mines (CAMIMEX), the Mexican Geological Survey, all the mining clusters, academic entities, governmental regulatory bodies, the Mexican stock exchange and, mainly, from each individual that will eventually be certified as a Competent Person (under CRIRSCO terminology) for taking care of the reports that ultimately will arise.
How long will it take to achieve this? Most people would say somewhere between four and six years; however, Colombia was able to do it in about two years. So, it depends on us. As the first Mexican president, Vicente Guerrero, said: “My sword goes on the garment, I go after it.”