Equipment Maintenance Versus Replacement

10.3-1. Introduction. Equipment replacement or maintenance is of major concern to every company today. It can be the difference between an efficient and profitable operation or an inefficient and struggling one. Mining equipment, as everyone knows, will not last forever. Some equipment becomes obsolete before it wears out while some may be doing its intended job, yet not economically. It is a major problem for management to make the decision as to whether a piece of equipment should be repaired or replaced. There are numerous approaches to this problem; using formulas, charts, and graphs. These would be very good if all conditions were stable. Since conditions and requirements are constantly changing, an accurate observation cannot be derived from a set formula. A formula does, however, serve as a reminder to include most of the items that should be considered when evaluating old and new equipment. In the field of mining there are several questions which enter into the reasoning that are difficult to put into an equation. Some of these are: 1. Will the present equipment produce the required output of the mine, or an increase if necessary? 2. Are reserves adequate to support the purchase of new equipment? 3. Can the old equipment be repaired to efficiently continue the mining operation? 4. What is the stability of future markets for the product? Depreciation rate, or the write-off life, is a factor that can directly effect decisions on replacement. If the initial life expectancy is too long and the price of equipment is not written off when discarded, then the original investment has not been recovered. If the write-off time is too short, then the equipment is written off before replacement is even considered. In this case, the depreciation accrual is usually used to finance some other phase of the operation. In view of the increasing prices, the amount of depreciation fund is generally too small for much incentive to replace an older unit