IFRS in Focus — IFRS Interpretations Committee issues draft interpretation on stripping costs in the production phase of a surface mine (September 2010)
On 26 August 2010, the International Financial Reporting Standards Interpretations Committee (“the Interpretations Committee”) published draft Interpretation DI/2010/1 Stripping Costs in the Production Phase of a Surface Mine (“the draft Interpretation”).
The draft Interpretation was developed in response to a request for guidance on accounting for waste removal costs incurred in the production phase of a surface mine. In surface mining operations, entities may find it necessary to remove waste materials to access mineral ore deposits. During the development phase of the mine, stripping costs are usually capitalised as part of the cost of constructing the mine and depreciated over the life of the mine once production begins. However, it may be necessary to continue removing waste materials during the production phase to gain access to a specific section of the ore body. This process is referred to as the “stripping campaign”.