South32 (S32), a globally diversified mining and metals company, is listed on securities exchanges
around the world (ASX, JSE, LSE), with its primary listing being on the Australian Securities
Exchange (ASX).
Chapter 5 of the ASX Listing Rules (Australian Securities Exchange (ASX), 2019b) requires a mining
entity to provide a summary of governance arrangements and internal controls with respect to its
estimation processes, estimates and reporting of Mineral Resources and Ore Reserves annually. As
a global company, it is also important to design and implement all governance processes and internal
controls which can be used consistently across the organisation.
The three lines model (previously known as the ‘three lines of defense’ model) is employed across
South32 to manage risk where the first line (Practitioners) designs, implements and executes
processes and controls to manage risk; the second line (Stewardship) identifies material gaps and
improvement opportunities in the first line by monitoring conformance with the group requirements,
legislative and regulatory obligations. Second line also assists with the development and
improvement of core fundamentals based on industry good practise. The third line (Group
Assurance) provides independent and objective assurance over the Group’s system of risk
management and control.
The estimation of resources and reserves for most of the operations within South32 is managed by
the Planning function. The estimation process is part of the annual Life of Operation Plan (LoOP).
The LoOP identifies and assesses the strategic alternatives for the development of an operation and
recommends the preferred pathway based on value and risk. The LoOP starts with opportunity
framing and the updated resources as an input and ends with the short-term plan and annual budget
(the outputs). Ore Reserves estimates are one of the outputs from the LoOP. All the inputs and
outputs follow internal standards and procedures which includes peer review and performance
reconciliation. Stewardship (Second line) which is a centralised function has standards in place to
ensure compliance to internal controls and external regulatory requirements. This includes
assessment of the competence of Competent Persons, technical reviews, independent audits and
training in the relevant chapters of the ASX Listing Rules, Guidance Notes and Appendices. Group
Assurance (Third line) which reports to the Risk and Audit Committee of the Board of Directors
ensures the design and operating effectiveness of the processes, standards and procedures
associated with the estimation and reporting of resources and reserves. While the level of scrutiny
has a different intent for each line in the three lines model, the overall purpose is to achieve a
consistent outcome across the organisation