Suncoke Energy Inc's Business Segments

SunCoke Energy, Inc. is the largest independent producer of high-quality coke in the Americas, as measured by tons of coke produced each year, and has more than 50 years of coke production experience. Coke is a principal raw material in the blast furnace steelmaking process and is produced by heating metallurgical coal in a refractory oven, which releases certain volatile components from the coal, thus transforming the coal into coke. We also provide coal handling and/or mixing services at our Coal Logistics terminals to steel, coke (including some of our domestic cokemaking facilities), electric utility and coal mining customers.

Coal Logistics Operations
Our Coal Logistics segment consists of CMT, KRT, Lake Terminal and DRT. CMT is one of the largest export terminals on the U.S. Gulf Coast. CMT provides strategic access to seaborne markets for coal and other industrial materials. Supporting low-cost Illinois basin coal producers, the terminal provides loading and unloading services and has direct rail access and the current capability to transload 15 million tons of coal annually due to its recently commissioned ship loader. The facility is supported by long-term contracts with volume commitments covering 10 million tons of its coal handling capacity as well as 350 thousand liquid tons and additional merchant coal business. KRT is a leading metallurgical and thermal coal mixing and handling terminal service provider with collective capacity to mix and transload 25 million tons of coal annually through its two operations in West Virginia. Lake Terminal is located in East Chicago, Indiana and provides coal handling and mixing services to SunCokes Indiana Harbor cokemaking operations. DRT was formed in 2016 to accommodate our Jewell cokemaking facility in its direct procurement of third-party coal.

Our five coal handling terminals have the collective capacity to mix and/or transload more than 40 million tons of coal annually and have storage capacity of approximately 3 million tons. Our coal terminals act as intermediaries between coal producers and coal end users by providing transloading, storage and mixing services. Coal is transported from the mine site in numerous ways, including rail, truck, barge or ship. We do not take possession of coal but instead derive our revenues by providing coal handling and/or mixing services to our customers on a per ton basis. Revenues are recognized when services are provided as defined by customer contracts. For CMT, cash received from customers for quarterly take-or-pay billings based on pro-rata volume commitments under take-or-pay contracts that is in excess of cash earned for services provided during the quarter is recorded as deferred revenue. Deferred revenue on take-or-pay contracts is recognized into income at the earlier of when service is provided or annually based on the terms of the contract. Our coal mixing and/or handling services are provided to steel, coal mining, coke (including some of our domestic cokemaking facilities) and electric utility customers. Services provided to our domestic cokemaking facilities are provided under contracts with terms equivalent to those of an arms-length transactions.

Coal Mining Operations
The domestic metallurgical coal markets remained challenged during early 2016 as the drastic and sustained decline in coal prices led to several coal producers filing for Chapter 11 bankruptcy protection. Despite our own diligent efforts to reduce costs by rationalizing our mining footprint, this challenged environment was likely to prevent us from generating positive cash flow from our mining operations for the foreseeable future. As a result, we divested our Coal Mining business in April 2016, which included approximately 250 acres of land owned in Russell County, Virginia and approximately 90 thousand acres of leased small parcels of land, mineral rights and coal mining rights in Buchanan and Russell Counties, Virginia and McDowell County, West Virginia. We entered into a coal supply agreement whereby the buyer, Revelation Energy, LLC ("Revelation"), will supply approximately 300,000 tons of coal to our Jewell cokemaking facility annually for five years at a market rate. The delivered cost, as compared to alternative coal sources, is favorable due to the proximity of the Jewell cokemaking facility to the mines. The Company retained certain asset retirement obligations related to certain contractual obligations, including the retirement and removal of long-lived assets from certain properties associated with our former coal mining business.