CIM Technical Session: “Towards Improving Environmental and Social Disclosure in NI43-101”
Co-chairs of CIM Technical Session: “Towards Improving Environmental and Social Disclosure in NI43-101”: Ian Thomson and Alistair Kent
Abstract of the session: In 2013 the Ontario Securities Commission (OSC) reported significant deficiencies in the reporting and disclosure of environmental and social aspects of mining projects within National Instrument 43-101 (NI 43-101) by an uncomfortably large number of mining companies. Subsequent studies by the OSC and other parties attributed much of this shortcoming to a lack of clarity and inclusion in the guidelines for disclosure. The CIM, in its role as provider of definitions, standards and good practice to the Canadian Securities Commission, has responded by collaborating with the Mining Association of Canada and the Prospectors and Developers Association of Canada to form a Working Group charged with developing guidance for good practice in disclosure and reporting of environmental and social factors within NI 43-101. The combined morning sessions will feature presentations that examine the challenges, opportunities, and limitations of, and examples of good practice in environmental and social disclosure from various perspectives: mining company, explorer, investor, regulator, host community, etc. followed by a panel discussion and open forum.
The disclosure rule under NI 43-101 requires that companies provide technical information that is:
- Based on reasonable assumptions which are clearly explained;
- Consistent in its use of standardized terms and definitions;
- Unbiased and identifies the potential risks and uncertainties;
- Balanced and not misleading;
- In a format that allows for comparing similar projects, and
- Understandable to a reasonably informed investor.
The Ontario Securities Commission and British Columbia Securities Commission review in 2013 , and 2015 , respectively, indicated that 80% of NI 43-101 was non-compliant and 32% of the environmental and social sections were not compliant.
The CIM has to date provided definitions, standards and best practices in the topics of geology and mining but has provided little guidance in social and environmental aspects. The fact that there are no defined requirements for what is a qualified person; definitions, standards and best practices for aspects such as water, tailings and mineral waste management would suggest that deficiencies in the environmental and social sections in NI 43-101 technical reports are higher than 32%.
The Environmental, Social and Governance (ESG) Disclosure Working Group has the mandate to codify best practices related to NI 43-101. The scope of this working group includes:
- Provide guidance on types of ESG information that should be covered in relevant sections of Form NI 43-101F1 technical reports.
- Build an ESG framework that addresses:
- Full life cycle of mining from exploration to closure;
- Principles for preparation of disclosure of ESG information;
- Internal controls and procedures related to ESG factors;
- Preparation, analysis, proper consideration and disclosure of ESG information;
- Integration of ESG factors in decision-making related economic, environmental, financial, social, political;
- Objective for the CIM 2017 Convention
- Provide presentations and a dialogue space to discuss the concerns and challenges related to developing guidance for disclosure of environmental and social factors to meet the needs of all stakeholders when using NI 43-101 reports.
Topics for discussion could include:
- How should the information be reported
- What information should be disclosed
- Why should the information be disclosed
- What disclosure is appropriate to address the environmental and social risks
- Our Presentation abstract
CIM discussion abstract:
NI 43-101 and risks. What risks?
By Franco Oboni, Cesar Oboni, Oboni Riskope Associates Inc., Vancouver, B.C.
The definition of the “viewing angle” (corporate, investor, regulators, public, etc.), the success/ failure criteria, the resulting multi-dimensional consequences are of paramount importance when attempting to perform a risk assessment (RA). If any of those is missing or unclear any RA will be meaningless or at least misleading.
This is particularly important when looking at the relationship between the disclosure requirements intended for investors following, for example, NI43-101. NI43-101 reports should provide information about a mine to prospective investors. However, in our experience, numerous factors generally not included in the report can turn a great prospect into a financial disaster, with dire consequences to the investors.
Recent failures of tailings facilities brought back this particular issue with great emphasis.
Some operational risk may indeed significantly affect share values and ability to conduct business, maintain Social License to Operate (SLO).
The Expert Panel opinion report on the Mt Polley tailings facility failure recommended that all proposed new tailings facilities should include a bankable feasibility study, but “bankable” is not an assurance either.
Thus it is reasonable to ask: should an NI43-101 report contain information about critical mine’s facilities (risks) such as tailings, access roads, logistics, etc..? And, if positive, which ones? Should NI43-101 report include holistic convergent scalable and drillable risk assessments? Again, if positive, convergence should cover at least:
- tailings facilities and dumps,
- ingress/egress (logistic and supplying infrastructures),
We will focus the attention on various well reported accidents such as Duke Energy, Mount Polley, Boliden, Samarco looking at the share valuation over the accident period and other consequences and comparing those “occurred risks” to other possible events. We will show the effect of “one out of many” possible events, compare it to “one out of one” event. As we have developed to date large spectrum risk assessments for tailings systems, dumps, road and railroad mining logistic, mining wharves, water, energy, cyber, etc. we will use these example to show that a risk assessment intended for investors is very different (in its conclusions) than the one intended for the corporation or a manager.
Conclusion: if considering investment in a new mine or investment in a mine upgrade read the NI43-101 report but don’t think it is enough. It is time to get the full picture and understand a few specific points about what risks really matter to you, the investor.