AEG Recommendations on Mineral Exploration UN STATISTICS DIVISION Economic Statistics Branch National Accounts Section UNSD/NA/MR 1 UNSD/NA/MR

“mineral exploration” as a category of produced fixed asset. Treatment in 1993 SNA “mineral exploration” as a category of produced fixed asset. “subsoil deposits’ as a category of non-produced assets. Exploration, whether successful or not, is treated as gross capital formation. UNSD/NA/MR

Calls for review of present treatment Is the exploration activity separable from the value of the asset? How to measure exploration activity? How to value the deposit? How to record payments by the extractor to the legal owner of the deposit? In whose balance sheet is the deposit recorded? UNSD/NA/MR

Since 1993 SEEA examined these questions in depth and made detailed proposals. Canberra-II Group scrutinised the SEEA and confirmed that the 1993 SNA needed clarification but not substantive change. UNSD/NA/MR

Exploration activity is separable from deposits AEG decisions: Exploration activity is separable from deposits The group agreed to maintain a distinction between: ‘mineral exploration and evaluation’ as a produced asset and the mineral deposit as non-produced assets. UNSD/NA/MR

AEG decisions: Mineral exploration and evaluation Change the item “mineral exploration” to “mineral exploration and evaluation” to make SNA compatible with the IASB coverage of this item. Agreed that “mineral exploration and evaluation” is market production to be valued either at market prices, if purchased, or as the sum of costs plus mark-up, if produced on own-account. UNSD/NA/MR

AEG decisions: How to value deposits There are 3 options to value deposits: Present value of net returns from exploitation Market prices (seldom available) Owner’s valuation The group agreed that the preferred valuation for mineral deposits, market price, is seldom available. In default, the deposit should be valued as the present value of future receipts of resource rent. UNSD/NA/MR

Decision on payments to owner of deposit In principle, payments by the extractor to the owner of the deposit are property income. However, when the owner is government and the payments are described as taxes, adhering to this principle introduces a discrepancy between taxes in the SNA and in government accounts. This needs further consideration. The question of attribution of the ownership of a deposit extracted by a unit not the legal owner is deferred to a future meeting when leases and licenses will be discussed more generally. UNSD/NA/MR

Thank You UNSD/NA/MR