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Miners tell all for capital

Australian mining comp-anies are responding to international pressures for greater disclosure, providing a range of information that could not have been foreseen even a decade ago.

Intense competition for investment capital has prompted the Australian industry to reach the best international standards in most areas, although issues related to financial instruments could be improved.

This increased candour is in striking contrast to the attitude of corporate Australia 20 years ago, when company reports offered far less information than was common in other countries, particularly the US.

The new transparency is described in a survey by KPMG entitled Mining - A Survey of Global Reporting Trends, which reviews the reporting procedures of 40 of the world’s largest mining companies, including nine from Australia.

The report points out that the mining industry today faces issues and challenges never imagined 20 or even 10 years ago as the role of government declines and today’s multinational corporations are looked to more and more to be guardians of responsible environmental and social policies. Mining companies find themselves at the forefront of this significant change.

Operating in remote loc-ations, working side by side with indigenous communities, today’s successful mining companies have realised that they cannot measure success in terms of profits alone.

The survey confirmed the increasing international nature of the mining industry, with companies in Australia, Canada, South Africa, United Kingdom and the US participating.

Companies in these countries were the source of 90 per cent of the global mining equity offerings last year and are home to most of the world’s major mining companies.

In particular, stock exchanges in Australia, Canada, and the US, are the markets where the vast majority of the major mining companies are traded.

This globalisation extends to their operations, with most significant companies involved in many parts of the world.

The US exchanges are dominant, with two thirds of the surveyed companies maintaining listings there, but Australia’s role is respectable, with a quarter of the world’s major companies traded on the Australian markets.

These home stock exchanges bore no relationship to a company’s headquarters, for only a fifth of the companies surveyed were based in the U.S., and it follows that many Australian based companies are also on the New York markets.

The KPMG study notes that as a result of globalisation companies are accountable to an increasingly wide array of stakeholders, any of whom may influence how and with whom the company does business.

As a result more companies are looking at reporting on business performance as a new way of differentiating themselves and also enhancing their success in the marketplace.

In Australia shareholders in the Australian mining industry are now being provided with annual reports that include information on environmental issues, business procedures and even human rights, as competition increases for global capital in the global mining industry.

“A key theme in the survey is the way that companies differentiate themselves in their disclosures with the aim of attracting and retaining capital - mainly through demonstrating enhanced shareholder returns,” said KPMG mining industry assurance spokesperson Alison Kitchen.

For example, 98 per cent of the companies surveyed report-ed on environmental performance. More than 50 per cent of the Australian companies published separate reports about how they meet their environmental responsibilities.

“In Australia, 66 per cent also set goals in relation to environmental and social objectives compared with only 20 per cent of other global mining companies.” And of the examples presented in the survey, BHP and Western Mining disclosed a link between their mission, their goals, and their charter.

The survey reveals that a mining company’s need to raise equity is still very much a priority. Leading companies around the globe are increasingly reacting to the dominant position of the US capital markets. For example although only 20 per cent of the companies surveyed were based in the United States, two thirds traded securities or debt there, as reported in US Generally Accepted Accounting Principles.

“The US capital market is so significant that even some Australian companies are using US GAAP because they know they have US-based share-holders,” said Ms Kitchen.

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