M.Phil. / In an ever - increasing competitive business world it is essential to optimise the replacement of expensive mining equipment. The decisions regarding the replacement of assets used in a coal mine are usually based on life cycle costing models. Financial methods such as Net Present Value, Internal Rate of Return or Payback are applied to determine the feasibility of replacement of the asset. Whereas these methods and other models such as life cycle costing, challenger / defender and the Non-Homogeneous Poisson Process models can be applied in most cases, it is deemed to be insufficient as the sole decision making tool for the replacement of mining equipment. The development of another tool to assist in the decision making process is required for specific use by the engineer to be used in conjunction with the traditional financial models. Key performance indicators are used extensively in the mining industry to manage the performance of equipment and are deemed to be essential components in achieving the organisation's objectives. There are certain limitations when using only the traditional financial life cycle costing methods when viewed from the engineer's perspective, since they do not directly incorporate the level of the maintenance function and the performance effectiveness of the asset. The engineer usually requires more insight into the performance of the asset to assess the feasibility of replacement, hence the need for an additional tool that incorporates these key performance indicators. In most cases there are relationships between the various key performance indicators themselves as well as between them and the operating and maintenance cost of the asset. The key performance indicators used are availability, reliability (mean time to failure), maintainability (mean time to repair) and the operability (tons per direct operating hour). There are certain factors that may lead to the excessive operating and maintenance cost of an asset, especially if there is no investigation into the reasons for the excessive cost. Examples are sub-standard maintenance practices and an insufficient level of service from suppliers. Both are issues that can be resolved with a consequent decrease in the cost of ownership of the asset. Cost as the only indicator of the feasibility of replacement may therefore not be a true reflection of the real status of the performance of the asset. Weighting factors are used to allocate values to the key performance indicators in terms of their contribution towards achieving the organisational objectives. The equipment effectiveness is derived from these values to give an indication of how well the equipment is performing against predetermined benchmarks. This dissertation attempts tb find a solution to the problem through the use of the key performance indicators in addition to the existing models that focus on the financial aspect in order to provide a more accurate assessment of the replacement requirement of an asset in an opencast coal mine.