In mining operations, spare parts are often treated as a purely operational topic. In reality, their classification has a direct, and sometimes material impact on financial performance, reporting accuracy, and even valuation.

Over the years, We’ve seen recurring confusion around four categories: wear parts, spare parts, capital spares, and insurance spares. The distinction is not just technical: it is fundamentally driven by IFRS principles.

Here are the key points every mining professional should understand, not just accountants:

1. The core principle is NOT value: it is consumption. A 1.5 M€ set of mill liners is still not a capital asset. Why? Because it is designed to be consumed. Under IFRS, consumables are treated as inventory and expensed when used, regardless of cost.

2. Wear parts = Inventory → Expense Items like mill liners, crusher mantles, and chute liners are: • Stored as inventory when received • Expensed when installed/consumed.

They directly impact OPEX and cost per tonne.

Classification matters. Availability matters more.

3. Spare parts ≠ capital by default. Most spare parts: pumps, valves and components, remain inventory until used. They only become an expense when they are issued from the warehouse and used in maintenance.

4. Capital spares are the exception. A spare becomes a capital item only if it:

• Is used over multiple periods

• Is high value and critical

• Is typically tied to a specific asset

Examples: • Spare mill motor • Transformer • Major gearbox

These are treated as assets and depreciated over time.

5. Insurance spares require judgment These are rarely used but critical items held to mitigate catastrophic risk. Depending on the case, they may be classified as inventory or capital assets. The decision should always be backed by a clear risk and economic justification.

6. Timing of cost recognition matters A common mistake is expensing items when they arrive on site. The correct approach: • On delivery → Inventory (balance sheet) • On use → Expense (P&L)

This ensures costs are aligned with actual production.

7. One system, one truth, fewer headaches. Another practical lesson: planners and managers get much better results when they do not have to play treasure hunt across multiple systems.

If stock balances are in one place, work orders in another, reservations in a spreadsheet, and criticality in someone’s memory, planning becomes part engineering and part archaeology.

But when you can check everything from one system, a true single source of truth, life gets noticeably better: • Planners plan faster • Managers make decisions with more confidence • Errors reduce • Shutdown preparation improves • Material availability becomes visible before it becomes painful

In short: fewer surprises, fewer excuses, and far fewer meetings that should have been unnecessary.

Why this matters operationally? This is not just accounting theory. It directly affects: • Cost per tonne • EBITDA • Shutdown cost tracking • Working capital • Audit outcomes

In simple terms: • PPE = long-life production engine • Inventory = future use • Expense = consumed value

Getting this right creates transparency between operations and finance, avoiding unnecessary audit discussions.

If you are running or supporting a mining operation, aligning maintenance practices, CMMS logic, material availability, and financial treatment around these principles is low effort compared to the value it creates.

And here comes the wonderfully unromantic truth of maintenance: regardless of how beautifully your spares are classified—wear, spare, capital, insurance, or A, B, C class—if you do not physically have the part when the job starts, the work will not be completed. The taxonomy may be perfect, the PowerPoint may look excellent, but the wrench still stops turning when the part is missing.

Because at the end of the day, a perfectly classified spare that cannot be found is just an expensive theory.