Accounting for in-process inventories in and around mineral and metal processing plants.

Significant in-process inventories can be locked in stockpiles of ore, concentrates, slags or reverts, or in process equipment such as bins, holding tanks, thickeners, heap leach pads and trucks, in and around mineral processing plants. Unfortunately, available measurements for such inventories in industrial practice are typically few and often carry significant inaccuracies. Ignoring estimation errors often leads to incoherencies in the plant production metal balances. As a consequence, in-process inventory levels are often adjusted, significantly and subjectively, in order to report coherent plant production metal balances. Operating plant production figures often show that such adjustments can have a significant financial impact. Following a brief review of the characteristics of common in-process inventories, an analysis of accounting methods based on industrial practice is presented along with a literature review. Although different methods can be applied, discussion focuses on the indirect inventory estimation method, applied when direct measurements of inventory are technically and economically challenging and/or inaccurate. The indirect estimation method uses feed and reclaim transactions to estimate in-process inventories. Its application, however, comes with significant operational and financial risks that should not be ignored.
Significant in-process inventories can be locked in stockpiles of ore, concentrates, slags or reverts, or in process equipment such as bins, holding tanks, thickeners, heap leach pads and trucks, in and around mineral processing plants. Unfortunately, available measurements for such inventories in industrial practice are typically few and often carry significant inaccuracies. Ignoring estimation errors often leads to incoherencies in the plant production metal balances. As a consequence, in-process inventory levels are often adjusted, significantly and subjectively, in order to report coherent plant production metal balances. Operating plant production figures often show that such adjustments can have a significant financial impact. Following a brief review of the characteristics of common in-process inventories, an analysis of accounting methods based on industrial practice is presented along with a literature review. Although different methods can be applied, discussion focuses on the indirect inventory estimation method, applied when direct measurements of inventory are technically and economically challenging and/or inaccurate. The indirect estimation method uses feed and reclaim transactions to estimate in-process inventories. Its application, however, comes with significant operational and financial risks that should not be ignored.