United Nations Framework Classification Building a new resource consciousness

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Dawn of the

Anthropocene

• Revenue Volatility

• Swings in revenue can confound companies and States’ best efforts to balance budgets.

• The “Dutch disease”

• The apparent causal relationship between the increase in the economic development of a specific sector (for example natural resources) and a decline in other sectors (like the manufacturing sector or agriculture).

• Resource depletion/exhaustion

• Lack of attention to exploration and discovery of new resources will deplete the resources

What are the issues?

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Ensure sufficient, reliable, affordable and environmentally responsible supplies of energy and raw materials

Demonstrate alignment to SDGs

Decarbonize the economy

Social acceptance

The Challenges for mineral industry

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“If mining companies truly hope to repair their image, they must do more than change their messaging. They must also fundamentally change their behaviors around the way they mine how they engage with communities, attract talent, and deliver on their promises.”

James FergusonGlobal Mining Tax Leader

Deloitte UK

Depleting grades

Difficult mining conditions (greater depths; difficult terrain)

Improving productivity with decreasing grades

Increasing energy and other requirements for processing

Boom-Bust cycles

Changing mineral working conditions

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A quarter of mining production, representing up to US$50bn in annual revenue, could be exposed to water shortages and drought by 2030.

CDP, July 19, 2017. “World’s mining heavyweights put $16 billion at risk in climate costs.” https://www.cdp.net/en/articles/investor/press-release-worlds-mining-heavyweights-put-16-billion-at-risk-in-climate-costs

Water stress

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• Technology• Big data

• Artificial intelligence

• Ultra selective mining

• Comprehensive resource recovery

Mining 4.0

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• New business models needed to:

• Discover of “clusters of value”

• Value-added mineral products and services

• Comprehensive recovery

• Secondary resources from “wastes” – Zero waste

• Water resources• Land resources

Value beyond minerals

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Holistic resource management

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Policy, Legal and Contractual Framework

Sector organization, Resource

management and Regulations

Fiscal design and administration

Revenue Management and

Distribution

Sustainable Development

Implementation

Urgent need to remove the fragmentation of industry life-cycles and bring in a resource management methodology that is agile and responsive to current needs.

Resources RedefinedResource progression is critical

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• UNFC is a project maturity-based, resource-progression oriented tool for the management resources.

• UNFC provides a balanced view of socio-economic factors, technology and uncertainties involved in the classification of resources and provides a progression pathway for projects.

• UNFC put emphasis on figuring in social and environmental considerations at the centre of resource management.

UNFC is different from other resource classification and management tools in being responsive to requirements of the Global Agenda 2030, the aspirations of the society and the modern outlook of the industry.

Defining resources with UNFCThe 3 Criteria

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UNFC using all sub-categories

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UNFC Classes defined by categories and sub-categories

To

tal co

mm

od

ity i

nit

ially in

pla

ce

Extr

acte

dSales Production

Non-sales Production

Class Sub-classCategories

E F G

Kn

ow

n D

ep

osit

Commercial

Projects

On

Production1 1.1 1, 2, 3

Approved

for Development1 1.2 1, 2, 3

Justified

for Development1 1.3 1, 2, 3

Potentially

Commercial

Projects

Development

Pending2 2.1 1, 2, 3

Development

On Hold2 2.2 1, 2, 3

Non-Commercial

Projects

Development

Unclarified3.2 2.2 1, 2, 3

Development

Not Viable3.3 2.3 1, 2, 3

Additional quantities in place 3.3 4 1, 2, 3

Po

ten

tial

Dep

osit Exploration

Projects[No sub-classes defined] 3.2 3 4

Additional quantities in place 3.3 4 4

Growing applications of UNFC

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UNFC AdoptionIncreasing global use of UNFC

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• UNFC is part of the United Nations System of Environmental-Economic Accounting (SEEA), a system now widely adopted for organizing national data for the derivation of coherent indicators and descriptive statistics to monitor the interactions between the economy and the environment.

• The Nordic countries (Norway, Sweden and Finland) have developed standard sub-regional guidelines for applying UNFC

• Russian Federation has bridged its oil and gas classification system to UNFC and China has developed bridging documents for minerals and petroleum. India is actively using UNFC.

• The African Mineral Development Centre (AMDC), of the African Union has decided to adopt UNFC

• The Coordinating Committee for Geoscience Programmes in East and Southeast Asia (CCOP) has decided to develop guidelines for adoption of UNFC as the unifying framework in 14 member countries.

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UNFC Mineral Management Framework

Sustainable Development Goals

SDG 1

SDG 2

SDG 5

SDG 6

SDG 7

SDG 8

SDG 9

SDG 10

SDG 11

SDG 12

SDG 13

SDG 17

UNFC Mineral Management

International studies

Goverment management

Compmany management

Public disclosure

Controling Factors

Definitions Up-scaling

• EGRC has a Working Group to examine the social and environmental aspects of the classification. Two guidance notes are available:

1. Accommodating environmental and social considerations in UNFC

2. Clarification of terminology and concepts related to UNFC

Social & environmental considerationsEnsuring that resources a developed in a sustainable manner

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• “Evaluators must possess an appropriate level of expertise and relevant experience in the estimation of quantities associated with the type of deposit under evaluation.”

• Two guidance notes developed:

• 1. UNFC Specification for Evaluator Qualifications – Top-level guidance

• 2. Competent Person Requirements and Options for Resources Reporting –Detailed guidance on generic requirements for public reporting and disclosures for all commodities

UNFC Evaluator / Competent Person

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• Promote the consistent and coherent classification of all mineral resources and “values”

• Provide specifications and guidelines that will allow the mineral industry to align to good outcomes

• Resource classification

• Resource management

• Socio-economic and commercial assessment

• Innovation planning and management

• Definition of life-cycle and certification of recovery chains

UNFC Mineral Management System

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• Innovation in the mineral sector (exploration, mining, processing, remediation, mine closure) and understanding of how sustaining, transformational and experiential innovations are going to change discovery of resources in the future.

• The mineral potential that will be mined in the future (materials that will be required for the future).

• How we foresee mineral industry transformation, especially through the networked development and identifying clusters of value.

• Success stories focused on building and nurturing a catalytic environment conducive to innovation in mineral management.

• Development of less water consuming mining, milling and processing technologies

Predicting the future of mining

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A Global Workspace

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UNFC Resource

Management System

Policy

Social

Economic

Regulatory

Metallurgical

Comprehensive recovery

Environment

Value-addition

Secondary resources

Exploration

Mining

Processing

Sorting

Refining

Safety

Infrastructure

Marketing

Legal

Fiscal

Revenue

Site Closure

Remediation

External costs

Human Resources

SD Implementation

A New Resource Consciousness

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Exploration Projects

Commercial Projects

Potentially Commercial Projects

Non-Commercial Projects

Be in sync with the top-down process

Compare results and options

Make realistic assumptions

Collect, check and use available data across E, F and G

Top – down section of knowledge

Bottom – up flow of information

VisionPolicy

Regulations

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Recent publications

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Thank youHari Tulsidas

Economic Affairs Officer

UNECE

harikrishnan.tulsidas@un.orgTwitter Facebook YouTube UNECE