Update on the Competent Person issue in the current JORC Code review
As part of the current JORC Code review, JORC has formed several working groups comprised of JORC members and selected contributors from industry.
The working group topics include; Competent Person, Reasonable Prospects for Eventual Economic Extraction, ESG reporting, Guidance, Reconciliation, Use of JORC for non-ASX reporting, and Risk. The Competent Person issue is unique amongst this group of issues in that it has a broad cohort of stakeholders and will likely require the parent bodies to modify certain membership requirements and obligations for members acting as Competent Persons. This future impact on members is the reason for this update so that members are aware that change is coming.
In establishing the JORC Code review, the Committee Executive also engaged with key stakeholder groups, including the Australian Securities and Investment Commission (ASIC), the Australian Securities Exchange (ASX), the Financial Services Institute of Australasia (FINSIA), the Association of Mining and Exploration Companies (AMEC) and the parent bodies the Australasian Institute of Mining and Metallurgy (AusIMM), the Australian Institute of Geoscientists (AIG) and the Minerals Council of Australia (MCA).
In response, JORC received several pieces of correspondence, in particular three letters from ASIC. Without detailing the confidential elements of the ASIC correspondence, concerns were expressed with respect to competence relating to some recent high-profile mining developments that materially under-performed and resulted in significant shareholder loss. Further concerns were expressed around the efficacy of competence self-nomination. Specific concerns were also raised around Competent Person(s) taking responsibility in Public Reports for broad technical areas that are likely well outside their relevant experience. It is clear from the ASIC correspondence that there is no ‘do nothing’ option with respect to the issue of competence in reporting and the regulator is looking to JORC and the parent bodies to address the issue in a meaningful manner.
To address the issues raised by ASIC, the AIG and AusIMM have established a Joint Taskforce to review the issues of competence and Competent Persons in collaboration with JORC and the JORC Competent Person Working Group. The intent of the review is to assess current practices related to competence and JORC Code reporting, to assess mechanisms to support professional standards and to satisfy the ongoing governance requirements of ASX and ASIC.
The current JORC Code provides for self-nomination of competence by AIG and AusIMM Members, with a requirement of sufficient relevant experience in the specific areas of reporting activity. As part of the JORC Code review, a stakeholder survey was conducted with a wide range of contributions from industry professionals, regulators, and financial bodies. The survey revealed a strong desire for a review of the competence framework, the consideration of a more transparent and robust process related to competence assessment, review of the criteria required to act as a Competent Person to meet the requirements of JORC reporting and associated disciplinary processes including the transparency of these processes and outcomes.
It is possible that there will be a need to modify membership requirements for AIG and AusIMM members to act as Competent Persons, which may include a revised process for registration and/or accreditation either through a modification of the existing Chartered Professional or Registered Professional Geoscientist membership categories, or new categories yet to be determined. A process for subsidiary signoffs by experts under the supervision of the Competent Person will also be examined under the JORC Code review. Any such requirements will likely require a transitional period for practical implementation.
The Taskforce has embarked on a Competent Person Baseline Study, to summarise stakeholder feedback, current international practices, lessons learnt from other jurisdictions and to assist in development of JORC Code requirements to meet changes in industry, regulator, and investor expectations.
The Baseline Study scope includes investigation of potential options for parent body consideration, and will be the starting point for subsequent consideration, review, and engagement with members and other stakeholders. The Baseline Study will run from January to March 2022, in conjunction with the overall JORC Code review process and timeline.
Findings from the Competent Person Baseline Study will be made available to parent bodies in order to consult with an informed membership on the necessity for change, what changes are proposed and how they will be implemented.
It is not so much that practitioners acting as Competent Person(s) need to become more ‘professional’, as the vast majority of Competent Persons are suitably experienced and capable, but rather that the processes within which we operate need to be updated to match the expectations of the market regulators and investors. Meaningful self-regulation (via parent body membership) is the preferred mechanism to improve standards of Public Reporting in compliance with the JORC Code as opposed to having regulation imposed from an external source.
The parent organisations will jointly develop and determine these requirements for consistency and equality for all members.
In doing so, the aim is to improve accountability, risk clarity and the quality of reporting at all stages of project evolution. This will put poor reporting practices under pressure and require practitioners to declare their areas of competence in a transparent manner.
The desired outcome is that investors have greater confidence to invest in the minerals sector to their financial benefit and, in doing so, enhance the employment opportunities / professional advancement of mineral exploration and mining professionals.
The JORC and its parents will continue to update all stakeholders regularly.