On July 17, SunCoke Energy Inc.’s (NYSE: SXC) Board of Directors authorized the sale or other disposal of its Central Appalachia coal mining business.
SunCoke said July 23 that it currently anticipates a transaction by year-end 2014. Concurrent with this approval, the Coal Mining segment is now considered “held for sale” and will be reflected as discontinued operations in company financial statements beginning in third quarter 2014.
These coal operations primarily supply the company’s Jewell coke plant in southwest Virginia, with a shrinking level lately of outside sales to other coke producers. The coal mining operations, which have more than 110 million tons of proven and probable reserves, are located in southwest Virginia and southern West Virginia.
The company estimates that it will incur total pre-tax exit and disposal costs of $10m to $13m, with the majority of these costs occurring in second half 2014. Actual costs relating to these actions will not be known until it finalizes the sale/disposition plan. In addition, it will no longer record depreciation expense in the Coal Mining segment.
In the second quarter of 2014, pursuant to an exit strategy, SunCoke solicited and received indicative offers for the purchase of the Coal Mining segment. In view of these offers, the continuing weakness in coal pricing and its analysis of the recoverability of long-lived assets and goodwill, it recorded a non-cash pre-tax impairment charge of $103.1m in the second quarter of 2014.
SunCoke Energy is the largest independent producer of coke in the Americas. Its advanced, heat-recovery cokemaking process produces high-quality coke for use in steelmaking, typically captures waste heat for derivative energy resale and meets or exceeds environmental standards. U.S. cokemaking facilities are located in Virginia, Indiana, Ohio and Illinois.