Mining companies are among the worst performers in an assessment of the corporate governance standards of Australian listed companies.
The seventh annual report was released by accounting firm WHK Horwath, conducted by University of Newcastle Associate Professor Jim Psaros.
Psaros told MINING DAILY that the main reason so many new, fast-growing mining companies are performing poorly is because of their organisational “immaturity.”
“We’ve been doing the report for the past handful of years. The mining sector has always had a higher than normal representation among the poorer performing companies when compared to some other sectors,” he said.
He believes it is distinctly possible that mining may have lagged behind while other sectors lifted their game.
“There are a lot more new mining companies that have grown very significantly in recent years. I think they have grown with a reasonably modest set of corporate governance principles in place,” he said.
“This might have been fine when they were much smaller, but when you reach a higher degree of market prominence the obligations are greater. “I’m not really sure whether there is anything fundamentally different about the corporate governance culture behind mining companies compared to those in other sectors.”
The report ranked Murchison Metals, Citadel Resources, Citigold Corporation and Cape Lambert Iron as poor performers, with a one star rating.
Indophil Resources was downgraded from a three star rating to just one star as a result of the directors’ transactions with the company.
BHP Billiton was among the 39 companies that met best practice standards with a five star ranking.
“We look at what we believe are important structures and how they are composed. This can include the independence of the board, the existence of separate audit, remuneration and nomination committees, as well as the key policies in different areas,” Psaros said.
“There are some mining companies with excellent corporate governance. The more immature companies really have to look to embrace change and not view it as more bureaucracy or an expense.”