[Minings Australia Review] Mineral resource valuation guidelines play an extremely important role in economic activities involving mineral assets. By comparing and analyzing the differences—and identifying commonalities—between the world’s earliest mineral resource valuation guidelines—the Australian VALMIN Guidelines and China’s Mineral Rights Valuation Standards (CMVS), as well as conducting a deeper analysis of these differences, we can explore the underlying causes of these discrepancies and draw relevant conclusions. This comparative study also provides valuable insights for the formulation and improvement of mineral resource valuation guidelines, both in China and globally.

《 A Comparative Study of Mineral Resource Assessment Standards Between Australia and China 》

[ 1 Overview 】

[1.1 Mineral Resource Assessment] Mineral resource valuation—also known as the economic valuation of mineral resources—is the process of determining the monetary value of mineral resources. In Australia, the economic valuation of mineral resources is commonly referred to as mineral asset valuation, which refers to the process of establishing the monetary value of mineral assets or securities. The VALMIN Guidelines in Australia explicitly stipulate that the valuation objects covered by these guidelines are “mineral or oil-and-gas assets and their related securities.” In China, the economic valuation of mineral resources is referred to as mining rights valuation (i.e., the right to use mineral resources, a collective term encompassing both exploration rights and mining rights). Mining rights valuation is a market service activity in which individuals holding qualifications as mining rights appraisers and institutions accredited for mining rights appraisal, acting on the basis of a commissioned relationship, evaluate and estimate the value of agreed-upon mining rights and provide advisory opinions in the form of an appraisal report.

[1.2 Criteria for Mineral Resource Assessment] Many countries and international organizations have developed guidelines for mineral resource assessment. The following table summarizes the major global mineral resource assessment guidelines and related information (Table 1).

The earliest mineral resource valuation guidelines can be traced back to the VALMIN Guidelines, promulgated in 1995. These guidelines are among the most widely used of their kind in the mining industry today. The CIMVAL Guidelines and the SAMVAL Guidelines rank second only to the VALMIN Guidelines in terms of international adoption; however, they were introduced at a later date. The IVS Guidelines represent an internationally recognized standard for valuation. In 2005, the IVS Guidelines incorporated Guideline No. 14 specifically for the extractive industries, establishing corresponding standards and application guidelines for asset valuation in the extractive sector. Yet since its introduction, this guideline has consistently faced skepticism and criticism from industry stakeholders. Consequently, starting in 2008, the IVS drafting team initiated a series of discussions on the guideline and ultimately decided in 2010 to withdraw Guideline No. 14 in order to further deliberate and revise it. To date, the IVS has not yet issued a new set of guidelines for asset valuation in the extractive industries. Since their initial promulgation in 1995, the VALMIN Guidelines have undergone several major updates. China’s first “Mineral Rights Valuation Guidelines (CMVS),” after being drafted and first promulgated on August 1, 2008, was further refined in 2010, with numerous additional detailed provisions added. As these examples illustrate, developing mineral resource valuation guidelines is an extremely challenging undertaking that requires continuous improvement and refinement in response to market changes and evolving needs.

[2 Australian and Chinese Guidelines for Mineral Resource Assessment]

[2.1 Australian Mineral Asset Valuation Standards (VALMIN Standards)] The VALMIN Guidelines, formally known as the “Guidelines for Independent Expert Reports on Technical Evaluation and Assessment of Mineral, Petroleum Assets and Securities,” are issued by the VALMIN Committee. This committee is a special committee jointly established by three organizations: the Australasian Institute of Mining and Metallurgy (AusIMM), the Australian Institute of Geoscientists (AIG), and the Minerals Industry Consultants Association of Australia (MICA). The committee has received support and participation from the Australian Securities and Investments Commission, the Australian Stock Exchange, the Minerals Council of Australia, the Australian Petroleum Exploration Society, the Australian Securities Institute, and other representatives from Australia’s financial community.

The VALMIN Guidelines apply to the technical assessment and valuation of all solid mineral and petroleum assets as well as their securities, and they represent a pioneering effort among Western mineral resource valuation guidelines. Currently, many countries around the world—including Canada’s CIMVAL Guidelines and South Africa’s SAMVAL Guidelines—have drawn upon the VALMIN Guidelines when developing their own mineral resource valuation standards. The VALMIN Guidelines were first introduced in 1995 and underwent two major revisions in 1998 and 2005, resulting in the release of new versions. In 2013, the VALMIN Committee initiated a new round of revision work. The latest version of the VALMIN Guidelines has been updated to reflect new laws and regulations that have come into effect since 2005, and it has also undergone a reorganization of its format. Furthermore, the new guidelines have adopted terminology standardized according to Canada’s CIMVAL Guidelines and South Africa’s SAMVAL Guidelines. In April 2015, the VALMIN Committee released a draft of the new version of the VALMIN Guidelines.

[2.2 China Mineral Rights Valuation Standards (CMVS Standards)] In contrast, the development of the CMVS Guidelines started relatively late. In August 1, 2008, the China Association of Mineral Rights Appraisers officially released China’s first set of guidelines for mineral rights appraisal, thereby laying the initial foundation for a standardized system of mineral rights appraisal in China. These guidelines, commonly referred to as the “Mineral Rights Appraisal Guidelines (CMVS),” consist of nine components, including the “Basic Technical Guidelines for Mineral Rights Appraisal,” and were fully implemented on September 1, 2008. On November 22, 2010, the China Association of Mineral Rights Appraisers further issued eight additional detailed rules for mineral rights appraisal, including the “Standards for Working Papers of Mineral Rights Appraisal Projects,” which took effect officially from January 1, 2011. With this, the CMVS guidelines—comprising a total of 17 detailed rules—have become increasingly comprehensive and refined.

[3 Comparative Analysis of Australian and Chinese Mineral Resource Assessment Standards]

Although both Australia’s VALMIN Guidelines and China’s CMVS Guidelines are industry standards developed by the relevant authorities in their respective countries to standardize mineral resource assessments, they differ significantly in several key aspects. This article provides a comprehensive comparison of the two guidelines, highlighting their differences from three perspectives: overall requirements, scope of application, and technical specifications.

[Overall Requirements of Guideline 3.1] Comparing the overall requirements of the VALMIN and CMVS guidelines, we find that the two guidelines differ significantly in terms of their drafting principles and the institutions responsible for their formulation.

[1) Principles for Developing Evaluation Criteria] The VALMIN Guidelines specify four fundamental principles for the valuation of mineral assets and the preparation of valuation reports: substance, competence, independence, and transparency. Substance refers to the requirement that any content and conclusions in the valuation report—such as data and information used in the assessment and calculations—that could significantly alter the reader’s conclusions if included or omitted constitute essential elements. This principle is the primary criterion for determining whether specific information and data should be incorporated into the valuation report. Competence means that valuation experts must possess the relevant educational background, academic qualifications, professional experience, specialized knowledge, and corresponding certifications necessary to render authoritative opinions on particular matters. Independence requires that valuation experts and/or professionals must satisfy all legal tests related to independence and ensure that their assessments are impartial and free from bias. Transparency means that other competent and qualified valuation experts and/or professionals, using the information and data disclosed in the report and applying the same valuation methodologies, should arrive at roughly similar valuation results for the target mineral asset. This ensures that the valuation process is transparent, objective, and rigorous, and that all material aspects are appropriately disclosed in the report.

In contrast, the CMVS Guidelines do not specify their underlying principles of formulation; rather, they merely set forth the working principles for mining rights valuation—namely, the fundamental principles that registered mining rights appraisers should follow when conducting mining rights valuation assignments. These principles include the principles of independence, objectivity, and fairness. At the same time, the CMVS Guidelines also stipulate that registered mining rights appraisers must be honest and upright, diligent and responsible, and strictly adhere to the professional principles of independence, objectivity, fairness, and integrity. This is consistent with the requirement outlined in the “Administrative Measures for Mining Rights Valuation (Trial)” issued by the Ministry of Natural Resources, which states: “Mining rights appraisers and mining rights valuation agencies, when conducting valuation activities, shall comply with relevant national laws and regulations, provisions of relevant departments under the State Council, national standards, and industry codes and norms, implement mining rights valuation guidelines, and uphold the basic professional principles of objectivity, equity, fairness, integrity, and competence.” However, the CMVS Guidelines do not provide detailed explanations or comprehensive definitions of these principles.

[2) The body responsible for developing the guidelines] The VALMIN Guidelines were developed by a special committee comprising three organizations: the Australasian Institute of Mining and Metallurgy, the Geological Society of Australia, and the Australian Mineral Industry Consultants Association. These organizations are all voluntary, self-regulating professional bodies that impose binding mechanisms on their members—for instance, requiring members to adhere to professional codes of conduct related to competence and ethical standards—and possess the authority to take disciplinary actions, including the power to suspend or expel members, thereby regulating their members’ behavior. Nevertheless, these organizations are not affiliated with any government agency in Australia, and their membership is not limited exclusively to Australian citizens.

The developer of the CMVS Guidelines—the China Association of Mineral Rights Appraisers—is also a non-profit, self-regulatory industry organization voluntarily established by mineral rights appraisers, mineral rights appraisal agencies, and related entities or individuals engaged in mineral reserve assessment, mine geological surveying, and consulting services for the exploration, development, and utilization of mineral resources. However, its establishment was approved by the State Council and it operates under the guidance and supervision of the Ministry of Natural Resources and the Ministry of Civil Affairs; its funding is provided by the government, making it a state-owned institution. This fundamental difference in nature from the VALMIN Committee is one of the indirect reasons behind the significant differences in the application of the two sets of guidelines.

[3.2 Scope of Application of the Guidelines] Comparing the application requirements of the VALMIN criterion and the CMVS criterion, we find three significant differences between the two: their respective fields of application, the scope of implementation, and the qualifications required for evaluators.

[1) Applicable Fields] The VALMIN guidelines have a very broad scope of application. In addition to being applicable to solid mineral resources, they are also suitable for oil and gas resources. By contrast, the CMVS guidelines apply exclusively to general solid mineral resources, including both metallic and non-metallic minerals. Moreover, like the CMVS guidelines, both the CIMVAL guidelines and the SAMVAL guidelines explicitly state that they apply only to solid minerals—including metallic and non-metallic minerals—but not to oil and gas resource assets. This is primarily because oil and gas resources, when compared with other mineral resources, are relatively unique and have their own independent and well-established reserve standards, evaluation systems, as well as specific evaluation methods and technical parameters.

In fact, some international stock exchanges have established separate requirements and standards for oil and gas resources, distinct from those applicable to general mineral resources. Moreover, professionals in the international capital markets and the oil-and-gas industry rarely use the VALMIN Guidelines as the standard document for economic evaluation of oil and gas resources. Therefore, it would be inappropriate—and inconsistent with international practice—to unify the evaluation requirements for solid mineral resources with those for oil and gas resources under a single set of evaluation guidelines. At the same time, given that no evaluation guidelines specifically tailored for oil and gas resources currently exist worldwide, developing a dedicated set of economic evaluation guidelines for oil-and-gas assets represents an important task that industry professionals will need to advance in the future.

[2) Scope of Implementation and Detailed Application Guidelines] As a pioneering standard for mineral resource assessment, the VALMIN Guidelines were initially developed for use exclusively within Australia. However, due to their remarkable inclusiveness, they have now been adopted by numerous countries and regions around the world and play a pivotal role in both domestic Australian and international mineral resource assessment practices. Beyond the Australian Securities Exchange, these guidelines are widely recognized in many global financial centers—including exchanges in Hong Kong, Singapore, and others—where they have been incorporated into listing rules as the accepted (and in some cases, the sole) standard for mineral resource assessment. Meanwhile, the Australasian Institute of Mining and Metallurgy actively promotes the global dissemination and application of both the JORC Guidelines and the VALMIN Guidelines through various initiatives, such as translating the guidelines into different languages and offering specialized training courses in multiple countries.

On the contrary, the CMVS guidelines were developed in accordance with China’s national conditions and needs. From the guiding principles of the guidelines to the recommended detailed parameters, everything was formulated and implemented based on China’s actual situation. Therefore, the CMVS guidelines have a certain degree of exclusivity and apply only to mainland China; currently, they have not been adopted by any regulatory authorities or practitioners in other countries or regions.

[3) Assessor Qualifications] The VALMIN Guidelines impose relatively lenient requirements on practitioners engaged in mineral asset valuation. Practitioners conducting mineral asset valuations in compliance with the VALMIN Guidelines may either be independent natural persons (valuation experts) who prepare and take responsibility for the report, or nominated representatives of legally established institutions (representative experts) who oversee the preparation of the report, with the actual implementation carried out by qualified professionals who are accountable to the institution for the report. The qualification requirements for independent natural-person valuation experts under the VALMIN Guidelines are broadly similar to those for registered mining rights appraisers: both require a certain number of years of relevant work experience, membership in a professional association, and possession of the corresponding professional qualification certificates. However, the VALMIN Guidelines do not mandate that appraisers be affiliated with any specific institution, nor do they impose any particular requirements on the institutions themselves.

However, the CMVS standards are relatively stringent in terms of relevant regulations, requiring that personnel engaged in mineral rights valuation must be “registered mineral rights appraisers.” To become a registered mineral rights appraiser, one must meet the conditions stipulated by various national ministries and commissions. After passing the examination and undergoing public notice without objection, the individual will obtain the qualification of a mineral rights appraiser and become a member of the China Mineral Rights Appraisers Association, where they will complete the registration for practice. Moreover, mineral rights appraisers must be employed full-time by a mineral rights appraisal agency—such agencies being intermediary institutions registered with the administration for industry and commerce as partnerships or corporations. These intermediary institutions must apply for registration of their mineral rights appraisal qualifications, which, after being approved and publicly announced by the China Mineral Rights Appraisers Association without objection, will enable them to complete the registration procedures and obtain the requisite mineral rights appraisal qualifications. In addition, the state has specific requirements regarding the number of practicing mineral rights appraisers, their specialties, and educational backgrounds within these intermediary institutions.

[3.3 Technical Specifications of the Guidelines] Comparing the technical specification requirements of the VALMIN and CMVS guidelines, we find that these two guidelines exhibit distinct differences in three key areas: evaluation approaches and methods, guidance on evaluation parameters, and evaluation conclusions.

[1) Assessment Approaches and Assessment Methods] The assessment approaches for valuing any asset can generally be categorized into three types: the cost approach, the market approach, and the income approach. When conducting any valuation analysis, it is essential to consider all three of these assessment approaches, select the most appropriate one or combination of approaches, and then choose from among these approaches the specific valuation methods that are suitable for valuing the asset. The VALMIN Guidelines in Australia do not specify any particular assessment approaches or valuation methods; accordingly, they neither prescribe which assessment approach or valuation method should be used under specific circumstances nor recommend or restrict the use of any particular approach or method. Instead, the VALMIN Guidelines grant absolute discretion to the valuation experts and/or professionals they recognize, enabling them to determine, based on the actual circumstances of the valuation object, which assessment approach or valuation method is most appropriate.

Of course, all significant factors considered in selecting a particular valuation approach or methodology must be disclosed and discussed in the report to ensure that another qualified valuation expert and/or professional can understand the rationale and process behind the choice of a specific valuation approach or methodology. At the same time, the VALMIN guidelines also encourage valuation experts or professionals to discuss in their reports why certain specific valuation approaches were not adopted. In contrast, although the CIMVAL and SAMVAL guidelines draw upon the VALMIN guidelines in their development, they are considerably more explicit than the VALMIN guidelines regarding the selection of valuation approaches and methodologies. With regard to the choice of valuation approach, both of these guidelines stipulate that the development stage of the valuation object—namely, the mineral resource—should be considered first. Both guidelines categorize the development stages of mineral resources into several types and specify which valuation approaches are appropriate for each particular development stage (Table 2).