Search Site

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

Overview of SunCoke's U.S. Coke Contracts


Granite City Haverhill 1 Haverhill 2 Indiana Harbor Jewell Middletown
Counterparty /
Guarantor
United States
Steel Corp.
ArcelorMittal
USA
AK Steel
Holding Corp.
ArcelorMittal
USA
ArcelorMittal
USA
AK Steel
Holding Corp.
Location Granite City,
IL
Franklin Furnace,
OH
Franklin Furnace,
OH
East Chicago,
IN
Vansant,
VA
Middletown,
OH
SXCP / SXC
Ownership
98% / 2% 98% / 2% 98% / 2% 0 / 100% 0 / 100% 98% / 2%
Start-up Year 2009 2005 2008 1998 1962 2011
Contract
Expiration
December
2025
December
2020
December
2022(1)
December
2023
December
2020
December
2032
Cokemaking
Ovens
120 100 100 268 142 100
Nameplate
Capacity (short
tons per year)
650,000 550,000 550,000 1,220,000 720,000 550,000(2)
SunCoke
Minimum
Volume
Obligation(3)
Generally between 90% and 100% of nameplate capacity
Maximum
Volume
Customer
Required to
Take(4)
Typically 1% to 5% above nameplate capacity subject to coal-to-coke yield performance
Coal Costs All costs, including transportation, are passed through to customer
Operating
Costs(5)
Typically passed through to customer based on annually negotiated budget or a fixed cost indexed to inflation; contract may include sharing of cost over/underruns
Reimbursement
of Gov’t
Mandated
Expenditures
Typically reimbursed by customer, in whole or part, for expenditures required as a result of government regulatory changes occurring after the contract effective date, with the exception of Jewell Coke

(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
(2) Represents production capacity for blast furnace-sized coke, however, customer takes all on a “run of oven” basis, which represents approximately 578,000 tons per year
(3) Represents minimum annual volume SunCoke must produce; if short of minimum volume, SunCoke typically obligated to secure other coke supply at contract price; minimum typically stated as a percent of facility’s nameplate capacity; subject to tonnage adjustments caused by volatile matter content deviations from the base coal blend
(4) Represents annual volume up to which customer must take all coke production from SunCoke facility; maximum typically stated as a percent of facility’s nameplate capacity; subject to tonnage adjustments caused by volatile matter content deviations from the base coal blend
(5) At Haverhill and Jewell, SunCoke delivers coke to customers and is reimbursed in full for coke transportation costs

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.

Email Sign Up

  • Subscribe
    Register to receive email alerts on news, financial reports, SEC filings and events for SXC and SXCP.

Connect with us