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Improving financial reporting standards on mining in Uruguay

Improving financial reporting standards on mining in Uruguay
  • Name: Fabiana Kiedanski
  • Title: Accountant
  • Organisation: National Directorate of Mining and Geology, Ministry of Industry, Energy and Mining (MIEM-DINAMIGE)
  • Country: Uruguay
  • Programs participated in:

    Minerals Polioy and Economics 2015

Fabiana teachingFabiana Kiedanski is an Accountant at the National Directorate of Mining and Geology, Ministry of Industry, Energy and Mining (MIEM-DINAMIGE), Uruguay and a Lecturer in Accounting in the Accounting and Taxes Department at the University of the Republic.

In the context of increasing foreign interest to develop Uruguay’s iron ore deposits, Fabiana’s Return to Work (RTW) project for the IM4DC course on Mineral Policy and Economics 2015 aims to improve the application of financial reporting standards on mining in Uruguay.

Uruguay is one of Latin America’s smallest countries with a population of 3.4 million people. Uruguay’s mineral commodities –  clays, semiprecious gemstones, gold, iron and steel, sand and gravel, and stone – contribute 1% to the country’s GDP. Uruguay holds vast deposits of iron ore estimated to be 2,500 million tons. If mined, they could put the South American country in eighth position of the world’s largest iron producers.

In 2013, the Uruguayan government enacted a law regulating large-scale mining, prompted by London-based mining firm Zamin Ferrous potential investment of $3bn for an open pit iron ore mine. This was to be the largest level of foreign investment in mining in Uruguay’s history. However the development of the mine was hit by the downturn of commodity prices and local resistance to open pit mining.

The growth of the extractive industry in Uruguay calls for changes in mining policy. Drawing on both her roles in the Department of Administration and Management at MIEM-DINAMIGE and as lecturer at the university, Fabiana wants to educate students and professionals on International Financial Reporting Standards (IFRS) on mining.

 “When I returned to work after my course, I felt the importance not only to keep on what was my RTW, but also to share with others what I had learnt. I wanted to build new projects for sustainable development. In addition, I learned a different way of sharing in that for a project; both sides should win, to be a successful project.”

In collaboration with academics at the University of the Republic, she has co-authored a preliminary paper on “A Contribution to Financial Accounting in Mining”. The purpose of the paper is to introduce the required financial information for all stages of mining projects as well as to demonstrate how financial reporting contributes to sustainable development. The paper draws on Uruguay as a member of the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF) which commits to the Mining Policy Framework with recommendations that pertain to financial benefit optimization and the legal and policy environment. With reference to this framework and IFRS, Fabiana and her co-authors intend for their research to contribute to the proper application of international accounting standards for sustainable development in mining in Uruguay.

Her project has met with approval and support from the National Director of MIEM-DINAMIGE. Building on Fabiana’s project, MIEM-DINAMIGE plans on having a definition of mining investment at all stages of mining based on their mining code; apply IFRS standards according to their mining regulation; have a model to present to stakeholders on mining investment; and guidance for certified accountants on IFRS reporting standards.

Although there is a long way to go, we hope to have the support of experienced professionals in this area and stakeholders that let us keep on with this project.”

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