Extractive Activities

The International Accounting Standards Board (IASB) issued IFRS 6 Exploration for and Evaluation of Mineral Resources in 2004 as an interim step in the accounting for extractive activities.

Between 2018 and 2023 the IASB researched whether to amend or replace IFRS 6, including research on improving:

• recognition and measurement requirements to reduce the diversity of accounting policies used in practice for exploration and evaluation expenditure;
• disclosure requirements to increase the transparency, comparability and relevance of information provided in financial statements about that expenditure and the related activities; and
• other IFRS Accounting Standards to address matters relating to extractive activities identified by stakeholders that are not in the scope of IFRS 6.

The IASB decided not to develop new or amended recognition, measurement or disclosure requirements for exploration and evaluation expenditure or other aspects of accounting for extractive activities. The IASB did not find compelling evidence that standard-setting would be necessary.

The IASB acknowledged that diverse accounting policies for exploration and evaluation expenditure would continue to be used in practice. However, feedback from investors and other users of financial statements suggested that those diverse accounting policies were not a significant concern.

Overall, the research findings suggested that any improvements to financial reporting that might result from amending or replacing the requirements in IFRS 6 or other IFRS Accounting Standards are likely to be outweighed by the costs of developing and implementing any such changes.

The IASB decided that the work on developing the Discussion Paper Extractive Activities published in 2010 and the work in this research project from 2018 to 2023 (this project) fulfilled the comprehensive review of the accounting for extractive activities that the IASB envisaged when it issued IFRS 6.

The Project Summary was published in December 2023 summarising the research findings and decisions of the IASB.

Separately, the IASB decided to add a new project to its maintenance project pipeline to remove, as part of its next volume of Annual Improvements to IFRS Accounting Standards, the word ‘Temporary’ from the heading of the section in IFRS 6 that exempts an entity from applying some of the requirements in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to its accounting policies for exploration and evaluation expenditure.