Overburden definition
/What is Overburden?
Overburden is the rock or soil overlying a mineral deposit. The removal of overburden can occur during the development and production phases of a mine. It is removed when a mining company intends to access the mineral deposit from the surface. It can eventually be used to cover over (restore) a decommissioned mining site.
Accounting for Overburden
Stripping costs are incurred when removing overburden in order to obtain access to a commercially-producible mineral deposit. If this occurs during the development phase of a mine, and the activity provides better access to the deposit, then the cost should be capitalized. If not, then the stripping cost should be charged to expense as incurred. When stripping costs are incurred during the production phase, the firm should treat these costs as variable production costs. As such, they should be included in the costs of produced inventory during the period in which the stripping costs are incurred. This cost application applies to all types of inventory, including in-process materials and stockpiles.