The KCMI 2017 reporting code for Indonesian resources and reserves of minerals and coal was socialized to an eager 100 strong audience in Jakarta on 18 January 2018.
Chairul Nas, chairman of the KCMI committee provided some background to the development of the first edition of the KCMI 2011 code, and its modification for acceptance into the International CRISCO mineral and coal reporting system. The KCMI code has been accepted by the Indonesian Stock exchange (IDX) as necessary for IPO’s, but not yet for subsequent public reporting. The KCMI committee is working closely with the Mines Department, ministry of Finance and regional governments to have the code more widely accepted and applied.
Sri Raharjo, from the Directorate of mineral and coal, emphasized the ministries appreciation of this KCMI code. The development of the code, along with ministry programs such as CnC, is seen as part of the wider maturing of the mining and exploration industry. There is ongoing work to improve the management of the resource sector, including looking into data validation and storage, reviewing National Resources and updating the National Standards (NSI) relating to the definition of ore resources and reserves.
Dwi Prasetya, on behalf of PERHAPI, made short comments that the next phase of the KCMI 2017 development is to prepare a number of “Guidelines”, including those on the nature of technical studies that are to support the conversion of Resources to Reserves. Dwi also noted the positive development of the “Competent Persons” WA group, and the appointment of two representatives to the CRISCO committee.
Joseph Swamidharma , of the CRISCO team, outlined the KCMI organization structure, and its working relationship with CRISCO. This acceptance into CRISCO is a window for Indonesian professionals to peer further into the international market of for the development of resource and reserve reporting. Within Indonesia CRISCO is a boost for “best practice reporting”, professionalism, transparency and ethics. Unfortunately, the path to get KCMI accepted into a number of Indonesian institutions (IDX, OJK) is somewhat complicated, and will take time and further socialization.
Robby Rafianto, of the KCMI committee, presented the gap analysis between the old 2011 edition, and the new KCMI 2017 version. The new code will be produced in Bahasa & English, and may be posted on the IAGI, PERHAPI web sites soon, and on the KCMI web site when that site is developed. KCMI 2017 code is nominally effective from 1 November 2017, and compulsory from 1 November 2019 onwards. The CRISCO connection allows for Recognized Professional Organizations (RPO’s) to be acknowledged, though individual country codes and associations need to be formally recognized by the KCMI committee. Most of the wording changes of the KCMI 2017 version simply provide a little more clarity and detail to the previous 2011 version.
Lufti Rachmad, of KCMI, outlined some aspects on technical studies. One key improvement is the advancement from resources to reserves simply does not refer to “appropriate studies” but specifies Scoping, Pre-Feasibility and Feasibility studies. Guidelines are to follow, wherein some proposed key elements of such studies were displayed on summary tables. This included the expected level of accuracy of 30% for scoping studies, 15-30% for Pre-Feasibility and 10% for Feasibility.
Question & Answer session;
· The AusIMM has a VALMIN code specially for valuing mineral & coal assets. The KCMI is working slowly to develop something similar, but the legal structure is quite different to Australia. Indonesian valuations are now undertaken through the OJK recognized body of MAPPI (mostly real estate evaluations, but has links to international mineral valuation bodies). The OJK requests the CPI’s to form a separate Associationthat comes under the direction of the OJK – similar to MAPPI. Perhaps KCMI Competent Persons would also join a second CP Association for valuations?
· The updated KCMI 2017 follows the CRISCO code that does not include the JORC reporting requirement known as “If not – why not?” This is one of the differences between such codes that may present a barrier for some international parties to accept reciprocity with the Indonesian code.
· KCMI applies only 3 levels of studies, in line with CRISCO. The concept of “bankable feasibility study” is seen as a separate issue that may fall outside the technical field, and may be an extra option for the financial field.
· There is general recognition that the National Standards (SNI) for resources, reserves etc should be updated and be consistent with the KCMI code. Socialization with various government bodies is expected to take about 1 year, and a new standard is planned for 2019.
· Discussion and clarification that Per Feasibility and Feasibility Studies are to be prepared to support the upgrading of resources to reserves. The Scoping Study is to set a minimum standard for study reporting. Clear guidelines on such studies are expected before November 2019. Other guidelines may be developed to support “reasonable prospects for eventual extraction”.
Discussion session; –
· The names of the Joint KCMI committee for 2018 were announced, being about 10 from PERHAPI, 10 from IAGI, 2 from Dir Gen of Minerals & Coal, 2 from the Dir of Geology, one from the IDX plus a secretariat. Note that there are about 150 CPI’s from IAGI and 150 from PERHAPI. Note that the Competent Persons WA group has about 200 members.
· Discussed the roll of company CPI’s and independent CPI’s. In some cases, independent CPI’s can take on the roll of peer review.
· Discussed concerned that other industrial professional associations can develop systems whereby their members get a better pay structure (architects may get 3% value of a job). For example, the Australian Mining Consultants Association sets guidelines for pay rates for independent consultants. There is some hope the KCMI committee can work towards getting better pay terms for its CPI’s.
· The CPI’s main roll is in preparing reports relating to work done to develop Resources and reserves. However, the planning for such work, including the government required annual work plan (RKAB), is not formally in the scope of responsibility of CPI’s.
· Industry concerns relates to about 40% of all exploration and mining reports are “rubbish”. The development and socialization of KCMI and CPI’s is starting to have an impact on new reports, but there is still a big issue with bad reporting that KCMI should work on.
· The use of “old data’ was discussed, wherein it comes down to the CPI’s assessment of the old data to see how it may be “acceptable”. In many cases it may only be reliable for Inferred resources. It needs a case by case approach; wherein how well documented and reliable the data may be seen. This may become a significant professional issue when the Government starts the new IUP auction process.
· There is a general industry call for old data to be made open to the public. In particular there are many earlier reliable exploration reports by relinquished COW companies. The IAGI & PERHAPI are working on such issues. Opening up such data is seen to promote new exploration.
· There is concern that some foreign funded and foreign manned exploration and mining companies are using “uncommon” work methods. The exploration data so derived may not be acceptable for KCMI standard reporting code, and further discussion on this issue is called for.
· There needs to be greater coordination between the Dir Gen of minerals & coal and the Dir of geology over reporting standards and data provided.
· There are strong trends whereby larger better managed companies produce better reports, while smaller companies (often with management unfamiliar with the exploration & mining industry) provide poor reports. A solution to this difference in reporting standards will take time and socialization.
· The government has a completely separate system of “Competent Persons” that are ‘Registered Professional Engineers” (PDE) that was derived from an earlier doctor registration system. These are the only persons legally able to sign some reports for the Government, and others signing off may face criminal charges. These registered professionals fall into 3 categories, that for 1) Exploration, 2) Open Pit mining, and 3) Underground mining. Their reports are designed to contribute to government monitoring of the industry. The KCMI Competent Persons is an industry based system focussing on commercial realization of the nations resources. There is a strong industry call for synchronization between these two sets of Professional Reporting Associations. It is expected such synchronization may take a few years, particularly as the government has shown no interest in this issue to date.
· It is evident there are a number of competing professional associations for the CPI, and this should be simplified.
Foto 1: Ian Wollff presentation
Foto 2: Foto bersama CPI peserta Sosialisasi Kode KCMI 2017 (doc. IAGI)
Foto 3: Pembukaan Sosialisasi Kode KCMI oleh Ketua Kombers IAGI-PERHAPI, Dr. Chairul Nas (doc. IAGI)
Foto 4: Diskusi interaktif Kode KCMI 2017 (doc. IAGI)
Principal Geologist, Independent Director. Independent Consultant