Mining companies are unhappy with the Ministry of Finance’s initiative to provide reporting

Mining companies are dissatisfied with the initiative of the Ministry of Finance, which wants to oblige them to enter data on the mined ore of precious metals into the state information system GIIS DMDK. Companies and industry associations believe that it is impossible to reliably enter data at this stage, and they are expected to be fined for errors. According to analysts, the Ministry of Finance is seeking to obtain more data to adapt the taxation of the industry.

Mining companies have criticized the new regulation, which obliges them to enter data on mined ore into the State Integrated Information System for the Control of the Circulation of Precious Metals and Precious Stones (GIIS DMDK). The corresponding draft amendments to government resolution No. 270 of February 26, 2021 were developed by the Ministry of Finance.

According to the decree, information entered into the GIIS must contain information about extracted mineral raw materials containing precious metals.

The Chamber of Commerce and Industry of the Russian Federation in a letter to the Ministry of Finance (available to Kommersant) reported that such data cannot be reliable due to the natural unevenness of the content of precious metals in the rock.

Current regulatory documents determine the reliability of reserve calculations for ore deposits for category C2 with an accuracy of no more than 50%, and for category C1 – no more than 70%. Now companies enter data on the precious metals themselves into the GIIS DMDK: mass, content and quantity. This data may already be reliable, the Chamber of Commerce and Industry claims.

The draft resolution also does not stipulate at what point the data must be entered. This may be the stage of evaluation in the rock mass blasted in a quarry, or when loading onto dump trucks, or after mixing ores of different composition and metal content at an ore warehouse, or at the ore processing stage at a gold extraction plant. As each stage passes, the data will change, the Chamber of Commerce and Industry notes. They note that the real possibility of correctly assessing the amount of gold obtained from ore appears only at the stage of obtaining the doré alloy, in concentrates, in cathode metal or in zinc deposits. The Chamber also noted that a bill is currently being prepared that would establish administrative liability for entering false information. As a result, companies that, in the opinion of the Chamber of Commerce and Industry, cannot, even in theory, enter correct data on ore, will be subject to fines.

The Ministry of Finance told Kommersant that companies will submit information about mined ore based on the reporting they currently submit to Rosnedra.

“The presentation of calculated information on extracted mineral raw materials containing precious metals, in accordance with the project, will be carried out, inter alia, using local accounting documents used in mining organizations,” the ministry reported. Companies will also have the opportunity to correct information.

Companies consider regulation redundant and imperfect. The issue of registering mined ore in the GIIS DMDK was raised even during the implementation of this system, a representative of Polymetal reminded Kommersant, and even then the difficulties that subsoil users would face were obvious if accounting started from a quarry or mine. “The general industry reaction was negative, and the project was considered unfeasible,” he noted. In his opinion, the introduction of accounting is an additional unreasonable burden on subsoil users and contractors, the need to clarify a large amount of data already entered into the system, which is fraught with potential errors.

A source in the mining company says that the DMDK GIIS still does not allow reflecting all the nuances of production processes: the details of geological reporting, mining losses, and the specifics of calculating the content of precious metals in dore alloy are not taken into account. Another obstacle is the lack of differentiation of access rights for everyone who works with the GIIS DMDK, which creates risks for companies in terms of economic security.

Polyus, Norilsk Nickel and other large gold mining companies did not provide comments.

The point of the initiative is to quickly receive information on the production of precious metals, which can be used to calculate the mineral extraction tax, says Maxim Khudalov, chief strategist of the investment company Vector X. In his opinion, previously, inaccuracies and errors could only result in disciplinary sanctions from company management, but now they face fines, which will require companies to create systems for monitoring reporting and rising costs.

Evgeniy Zainullin