Established in 1996 the company started as a technical consulting group doing resource evaluation and mine planning type work. Today MINARCO has evolved into more of a specialist financial advisory group offering advice to a range of international and local clients across a host of areas.
As much as 70% of the company’s revenues now come from this high-end corporate work which includes IPOs and acquisition of coal assets.
Typically the company will have around 100 assignments a year and at the moment has about 20 jobs in five countries on the go. The company has conducted due diligence on over 70 mines in China, supported by ten staff based in Beijing.
Recently it advised the Yanzhou group on its acquisition of the Austar mine in New South Wales, which is now gearing up to become Australia’s first top-coal caving mine.
Growth in demand from Asian countries for shares in offshore mines as well as western expertise to set up local deposits has helped drive this development.
For example, MINARCO managing director David Meldrum has noticed a growth in Korean acquisitions of offshore assets.
The state-run Korea Resources Corporation (KORES) for example has increased its activity in Australia to reduce its reliance on China as the main source of coal. The Korean government is pursuing a 10-year overseas resources development plan with US$350 million set aside to pursue some 20 production projects, among which is the Wyong coal project in New South Wales in which Kores has more than 80% interest.
Another big issue for Asian countries and China in particular is reserve reporting, according to Meldrum. This is of major importance in the investment arena in terms of evaluating the net value of a deposit or a company.
In the past resource reporting for China followed the Russian system. Geological work standards are historically good and are highly regulated. A new system is now being introduced which will allow alignment with the JORC code, the AusIMM managed resource reporting code for Australian mining. In Australia what can be made public regarding resources is regulated but this is not so in China.
Meldrum believes security and reliability of title around resource reporting is critical and that unscrupulous public reporting of resource information will erode confidence.
“We are now a global industry and we have to realise that the old paradigm of working in an Anglo-Saxon culture is no longer applicable,” Meldrum said.
