ESMA confirms recommendations should not apply to Cement Industry

On 6 January 2012, the European Securities and Markets Authority (ESMA) confirmed that the requirements of their recommendations regarding “mineral companies” should not apply to the cement industry. This follows the publication of non-binding guidelines regarding the prospectus to be issued by mineral companies, including cement companies, listed on the stock exchange. The guidelines require that a certified independent audit be carried out in respect of all the mineral reserves of all companies which call upon shareholders to invest in the company, or in the event of a merger or acquisition. The companies affected will have to introduce a great deal of information, including a certified evaluation of their resource reserves. The guidelines are designed for large mining companies, which have huge quarries generating a large revenue. The situation in the cement industry differs in that there are a large number of relatively small quarries which generate very little revenue.

As a result, in a letter published on their website, ESMA indicates that, regarding the triggering factor for issuing a Competent Persons’ Report, “the specificities of cement companies and the fact that the materiality of their mineral projects is not paramount” the obligation to produce such a report would be “disproportionate” and would not contribute “to effective investor’s protection”.

More information: Full letter