Coal Royalty and Other Segment
We own coal reserves in the three major producing regions of the United States:
the Appalachia Basin, the Illinois Basin, the Powder River Basin and the Gulf
Coast. We do not operate any coal mines, but lease our reserves to experienced
mine operators under long-term leases that grant the operators the right to
mine and sell our reserves in exchange for royalty payments. Approximately two-thirds
of our leases have a term between five to forty years, with many leases having
an option by the operators to extend the lease for additional terms. Leases
may include the right to renegotiate rents and royalties for the extended term.
We also own and manage coal-related infrastructure assets that generate additional
revenues in the Illinois Basin. In addition, we own aggregates and industrial
mineral reserves located in a number of states across the country. As described
in the "Other Assets" section below, we also own natural gas, aggregate
and industrial mineral reserves that generate a small portion of coal royalty
and other segment revenues.
Under our standard lease, lessees calculate royalty payments due to us and
are required to report tons of minerals removed as well as the sales prices
of the extracted minerals. Therefore, to a great extent, amounts reported as
royalty revenue are based upon the reports of our lessees. We periodically audit
this information by examining certain records and internal reports of our lessees,
and we perform periodic mine inspections to verify that the information that
our lessees have submitted to us is accurate. Our audit and inspection processes
are designed to identify material variances from lease terms as well as differences
between the information reported to us and the actual results from each property.
In addition to their royalty obligations, our lessees are often subject to
pre-established minimum quarterly or annual payments. These minimum rentals
reflect amounts we are entitled to receive even if no mining activity occurred
during the period. Minimum rentals are usually credited against future royalties
that are earned as minerals are produced. Typically, the lessee is time limited
on the period available for recouping minimum rentals.
Soda Ash Segment
We own a 49% non-controlling equity interest in Ciner Wyoming. Ciner Resources
LP, our operating partner, controls and operates Ciner Wyoming. Ciner Resources
LP mines the trona, processes it into soda ash, and distributes the soda ash
both domestically and internationally into the glass and chemicals industries.
Ciner Resources LP is a publicly traded master limited partnership that depends
on distributions from Ciner Wyoming in order to make distributions to its public
unitholders.
Ciner Wyoming is one of the largest and lowest cost producers of soda ash in
the world, serving a global market from its facility located in the Green River
Basin of Wyoming. The Green River Basin geological formation holds the largest,
and one of the highest purity, known deposits of trona ore in the world. Trona,
a naturally occurring soft mineral, is also known as sodium sesquicarbonate
and consists primarily of sodium carbonate, or soda ash, sodium bicarbonate
and water. Ciner Wyoming processes trona ore into soda ash, which is an essential
raw material in flat glass, container glass, detergents, chemicals, paper and
other consumer and industrial products. The vast majority of the world’s
accessible trona reserves are located in the Green River Basin. According to
historical production statistics, approximately one-quarter of global soda ash
is produced by processing trona, with the remainder being produced synthetically
through chemical processes. The costs associated with procuring the materials
needed for synthetic production are greater than the costs associated with mining
trona for trona-based production. In addition, trona-based production consumes
less energy and produces fewer undesirable by-products than synthetic production.
Construction Aggregates Segment
Our Construction Aggregates segment consists of our construction materials
business that was acquired on October 1, 2014. The business operates four limestone
quarries, one underground limestone mine, five sand and gravel plants, two asphalt
plants and two marine terminals. As of December 31, 2017, Construction Aggregates
controlled approximately 400 million tons of estimated aggregates reserves,
including approximately 108 million tons of reserves leased at the Grand Rivers
operation from the Coal Royalty and Other segment. The reserve estimates for
each of Construction Aggregates’ properties were prepared internally and
audited by an independent third party advisor. During the year ended December
31, 2017, Construction Aggregates sold approximately 6.3 million tons of crushed
stone and gravel, including brokered stone, 1.3 million tons of sand and 0.3
million tons of asphalt. Our Construction Aggregates business is seasonal, with
production typically lower in the first quarter of each year due to winter weather.