Initial exploration activities to infrastructure development, production expansion and mine acquisition require funding. The basis for external or internal investors of mining companies to provide funds is the status of resources and reserves which reflects investors’ expectations and beliefs regarding the potential return on investment and asset growth. In order for investors to make the right and balanced decisions (balanced judgment) in providing funds or investments, the status of resources and reserves must be based on accurate and credible reporting.
Guidelines for public reporting of exploration results, resources and mineral and coal reserves (hereinafter referred to as the Guidelines) have long been successfully implemented in Australia, Canada, South Africa and the USA. Stock exchanges in these countries have long enforced the Guidelines as part of the regulations for listing mining company shares, because it is believed to be able to guarantee the realization of accurate and credible reports so as to protect the interests of investors and stakeholders. The Guidelines have also become a reference for financial and banking businesses.
The initiation of the Guidelines was basically triggered by the scandal of manipulation of mineral and coal resource reporting and reserves that caused extraordinary losses for investors. The birth of the JORC Code (Australia) which has been in effect since the late 60s, was triggered by the Poseidon Scandal and the Birth of the CIM/NI 43-101 Code (Canada) which has been in effect since the late 90s, was triggered by the Busang Scandal.
In September 2011, the KCMI Joint Committee whose members are PERHAPI and IAGI, through the National Convention gave birth to the Indonesian Mineral Reserves Committee (KCMI) Code: 2011. It is hoped that the Code adopted from the 2004 JORC Code can be a guideline for public reporting of exploration results, resources, and mineral and coal reserves in Indonesia; and is able to protect the interests of investors and stakeholders
Since its introduction at the end of 2011, recognition and acceptance of the KCMI:2011 Code has become increasingly widespread and encouraging, this can be seen from:
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The Indonesian Stock Exchange (BEI) in Regulation I-A.1 which has been in effect since November 1 2014, recognizes mineral and coal reserve statements signed by Indonesian Competent Persons (CPI) who work based on the KCMI Code: 2011; where the reserve statement is used as the basis for mining companies that will list their shares on the IDX.
Director General of Mineral and Coal in Decree no. 569DJB/2015 requires that since April 2017, reporting of exploration results, mineral and coal resources and reserves refers to the KCMI Code and is signed by the CPI
Several mineral and coal mining companies have used the KCMI Code: 2011 as a guide for reporting their resources and reserves.
Pelaporan yang mengacu Kode KCMI:2011 dan Panduan lain yang telah sukses penerapannya di dunia tersebut berbasis kepada Azas Transparansi – Materialitas – Kompeten, yang dapat dijelaskan sebagai berikut
By implementing the Principles of Transparency – Materiality – Competent, it is hoped that ‘KCMI’ accurate and credible Exploration Results, Mineral Resources or Ore Reserves reports can be realized.
The requirements to be registered as an Indonesian Competent Person are as follows:
Member of PERHAPI/IAGI/MGEI
- Mining Engineering or Geology graduate from an accredited university
Have sufficient work experience in the mineral and coal mining industry, including a minimum of 5 years in the relevant field, related to the CPI category and skilled commodities;
It has gone through a verification process, organized by the CPI Implementation (Special) Committee
Fulfill administrative obligations as CPI
From the previous description, it can be understood that a Competent Person (related to the KCMI Code, called CPI) prepares an accurate and credible report on Exploration Results, Mineral and Coal Resources and Reserves that can provide protection to investors, if:
The report contains all relevant information reasonably required by the investor and its professional advisors; and this information is expected to be included in the reporting
Investors and their professional advisors can understand the report and not be misled because they are presented with sufficient information with a clear presentation and no confusing meaning; so that investors can make appropriate and balanced decisions regarding reported Exploration Results, Mineral Resources or Ore Reserves. The ‘moral and ethical fence’ that guarantees CPI truly has an understanding and confidence in its competence and always adheres to the KCMI Code: 2011 in actualizing its competence, is described as follows:
CPI is a member of a professional organization that has a code of ethics and a disciplinary enforcement system. In the case of CPI-PERHAPI, it complies with and implements the PERHAPI code of ethics, as well as being the object of surveillance from fellow CPI PERHAPI
Apart from having inherent responsibility for every report prepared and signed, CPI PERHAPI also has inherent responsibility for complaints or claims regarding its reports.
CPI works in the mineral and coal mining community which has a relatively small distribution, so that good or bad information about the CPI in question will spread very quickly.
There is an obligation for CPI to always update its competencies, so that it is always able to implement the latest and tested methods in actualizing its competencies.
The CPI should be more careful and wise (prudence) in compiling the report, because in the end there will be a follow-up mechanism to confirm the report. accurate and credible, including peer reviews by other CPIs, second opinions by other CPIs, reviews by report user institutions, reviews by authorities, etc.
The CPI classification in the Indonesian Competent Person System is related to the Verification Process, as follows:
