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Long-term Coke Contracts

SunCoke Energy, Inc. (NYSE: SXC) and SunCoke Energy Partners, L.P. (NYSE: SXCP) have long-term, take-or-pay cokemaking contracts with the three integrated steel producers in the U.S.: ArcelorMittal USA, AK Steel Holding Corp. and United States Steel Corp.

Key Contract Terms

  • Contract duration typically 15 to 20 years; current contracts have remaining terms of approximately 9 years
  • Customers required to take all the coke we produce up to contract maximum or pay for what is not taken
    • Coke production in excess of contract maximum can be sold to a third-party if customer chooses not to take
    • SunCoke required to meet certain operating and coke volume minimums
  • Commodity risk minimized by passing through coal, transportation and certain operating costs to customer
  • No early termination without default, except one contract under limited circumstances(1)
    • Default triggers significant penalties that are materially equivalent to accelerating the remaining economic terms of the contract
  • Force Majeure is available for true “acts of God” (floods, strikes, etc.) and is not a vehicle for contract termination
  • Counterparty risk mitigated by contracting with customers’ respective parent companies or senior-most North American subsidiary

(1) AK Steel can terminate the Haverhill 2 contract upon two-year notice and payment of a termination fee (unless the termination occurs after December 31, 2017, in which case the termination fee is not due) if it permanently closes the blast furnace steelmaking facilities at its Ashland Plant; provided that AK Steel has not acquired or commenced construction of a new blast furnace in the United States to replace all or a part of the Ashland Plant iron production

SXCP Contract Protections

  • In addition to the take-or-pay contract structure, SunCoke Energy, Inc. provides SunCoke Energy Partners, L.P. certain commercial protections through 2018 under its Omnibus Agreement
    • SXC will make SXCP whole by fulfilling the customer’s purchase and payment obligations to SXCP for the coke produced in the event of the customer’s failure to fulfill its purchase or payment obligations

Links to Contracts Filed with the SEC

Our cokemaking contracts were filed with the SEC as part of our initial public offering in 2011, with any amendments included in subsequent 10-K and 10-Q filings. Some contract terms have been redacted to protect confidentiality. If you would like to access the redacted contracts, please visit www.sec.gov or contact us at investorrelations@suncoke.com to receive a link.

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