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These excerpts taken from the ACI 10-K filed Mar 1, 2010. Asset
Retirement Obligations
Our asset retirement obligations arise from SMCRA and similar
state statutes, which require that mine property be restored in
accordance with specified standards and an approved reclamation
plan. Significant reclamation activities include reclaiming
refuse and slurry ponds, reclaiming the pit and support acreage
at surface mines, and sealing portals at deep mines. Our asset
retirement obligations are initially recorded at fair value, or
the amount at which the obligations could be settled in a
current transaction between willing parties. This involves
determining the present value of estimated future cash flows on
a
mine-by-mine
basis based upon current permit requirements and various
estimates and assumptions, including estimates of disturbed
acreage, reclamation costs and assumptions regarding
productivity. We estimate disturbed acreage based on approved
mining plans and related engineering data. Since we plan to use
internal resources to perform the majority of our reclamation
activities, our estimate of reclamation costs involves
estimating third-party profit margins, which we base on our
historical experience with contractors that perform certain
types of reclamation activities. We base productivity
assumptions on historical experience with the equipment that we
expect to utilize in the reclamation activities. In order to
determine fair value, we discount our estimates of cash flows to
their present value. We base our discount rate on the rates of
treasury bonds with maturities similar to expected mine lives,
adjusted for our credit standing. In 2009, we added
$75.1 million to our liability for asset retirement
obligations as a result of the acquisition of the Jacobs Ranch
mining complex.
Accretion expense is recognized on the obligation through the
expected settlement date. Accretion expense was
$23.4 million in 2009 and $19.6 million in 2008. On at
least an annual basis, we review our entire reclamation
liability and make necessary adjustments for permit changes as
granted by state authorities, changes in the timing of
reclamation activities, and revisions to cost estimates and
productivity assumptions, to reflect
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current experience. Adjustments to the liability resulting from
changes in estimates were a decrease in the liability of
$43.7 million in 2009 and an increase in the liability of
$18.9 million in 2008. The 2009 decrease resulted from the
impact of the Jacobs Ranch acquisition on the mining sequence in
the existing pit configuration. Any difference between the
recorded amount of the liability and the actual cost of
reclamation will be recognized as a gain or loss when the
obligation is settled. We expect our actual cost to reclaim our
properties will be less than the expected cash flows used to
determine the asset retirement obligation. At December 31,
2009, our balance sheet reflected asset retirement obligation
liabilities of $310.4 million, including amounts classified
as a current liability. As of December 31, 2009, we
estimate the aggregate undiscounted cost of final mine closures
to be approximately $722.2 million.
Asset
Retirement Obligations
The Company’s legal obligations associated with the
retirement of long-lived assets are recognized at fair value at
the time the obligations are incurred. Accretion expense is
recognized through the expected settlement date of the
obligation. Obligations are incurred at the time development of
a mine commences for underground and surface mines or
construction begins for support facilities, refuse areas and
slurry ponds. The obligation’s fair value is determined
using discounted cash flow techniques and is based upon permit
requirements and various estimates and assumptions, including
estimates of disturbed acreage, reclamation costs and
assumptions regarding productivity. Upon initial recognition of
a liability, a corresponding amount is capitalized as part of
the carrying value of the related long-lived asset. Amortization
of the related asset is recorded on a
units-of-production
basis over the mine’s estimated recoverable reserves. See
additional discussion in Note 12, “Asset Retirement
Obligations.”
These excerpts taken from the ACI 10-K filed Feb 27, 2009. Asset
Retirement Obligations
Our asset retirement obligations arise from SMCRA and similar
state statutes, which require that mine property be restored in
accordance with specified standards and an approved reclamation
plan. Significant reclamation activities include reclaiming
refuse and slurry ponds, reclaiming the pit and support acreage
at surface mines, and sealing portals at deep mines. Our asset
retirement obligations are initially recorded at fair value, or
the amount at which the obligations could be settled in a
current transaction between willing parties. This involves
determining the present value of estimated future cash flows on
a
mine-by-mine
basis based upon current permit requirements and various
estimates and assumptions, including estimates of disturbed
acreage, reclamation costs and assumptions regarding
productivity. We estimate disturbed acreage based on approved
mining plans and related engineering data. Since we plan to use
internal resources to perform the majority of
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our reclamation activities, our estimate of reclamation costs
involves estimating third-party profit margins, which we base on
our historical experience with contractors that perform certain
types of reclamation activities. We base productivity
assumptions on historical experience with the equipment that we
expect to utilize in the reclamation activities. In order to
determine fair value, we must also discount our estimates of
cash flows to their present value. We base our discount rate on
the rates of treasury bonds with maturities similar to expected
mine lives, adjusted for our credit standing.
Accretion expense is recognized on the obligation through the
expected settlement date. Accretion expense was
$19.6 million in 2008 and $18.6 million in 2007. On at
least an annual basis, we review our entire reclamation
liability and make necessary adjustments for permit changes as
granted by state authorities, changes in the timing of
reclamation activities, and revisions to cost estimates and
productivity assumptions, to reflect current experience.
Adjustments to the liability resulting from changes in estimates
were an increase in the liability of $18.9 million in 2008
and a decrease in the liability of $0.9 million in 2007.
Any difference between the recorded amount of the liability and
the actual cost of reclamation will be recognized as a gain or
loss when the obligation is settled. We expect our actual cost
to reclaim our properties will be less than the expected cash
flows used to determine the asset retirement obligation. At
December 31, 2008, we had recorded asset retirement
obligation liabilities of $258.9 million, including amounts
classified as a current liability. While the precise amount of
these future costs cannot be determined with certainty, as of
December 31, 2008, we estimate that the aggregate
undiscounted cost of final mine closure is approximately
$666.0 million.
Asset Retirement Obligations Our asset retirement obligations arise from SMCRA and similar state statutes, which require that mine property be restored in accordance with specified standards and an approved reclamation plan. Significant reclamation activities include reclaiming refuse and slurry ponds, reclaiming the pit and support acreage at surface mines, and sealing portals at deep mines. Our asset retirement obligations are initially recorded at fair value, or the amount at which the obligations could be settled in a current transaction between willing parties. This involves determining the present value of estimated future cash flows on a mine-by-mine basis based upon current permit requirements and various estimates and assumptions, including estimates of disturbed acreage, reclamation costs and assumptions regarding productivity. We estimate disturbed acreage based on approved mining plans and related engineering data. Since we plan to use internal resources to perform the majority of
Table of Contentsour reclamation activities, our estimate of reclamation costs involves estimating third-party profit margins, which we base on our historical experience with contractors that perform certain types of reclamation activities. We base productivity assumptions on historical experience with the equipment that we expect to utilize in the reclamation activities. In order to determine fair value, we must also discount our estimates of cash flows to their present value. We base our discount rate on the rates of treasury bonds with maturities similar to expected mine lives, adjusted for our credit standing. Accretion expense is recognized on the obligation through the expected settlement date. Accretion expense was $19.6 million in 2008 and $18.6 million in 2007. On at least an annual basis, we review our entire reclamation liability and make necessary adjustments for permit changes as granted by state authorities, changes in the timing of reclamation activities, and revisions to cost estimates and productivity assumptions, to reflect current experience. Adjustments to the liability resulting from changes in estimates were an increase in the liability of $18.9 million in 2008 and a decrease in the liability of $0.9 million in 2007. Any difference between the recorded amount of the liability and the actual cost of reclamation will be recognized as a gain or loss when the obligation is settled. We expect our actual cost to reclaim our properties will be less than the expected cash flows used to determine the asset retirement obligation. At December 31, 2008, we had recorded asset retirement obligation liabilities of $258.9 million, including amounts classified as a current liability. While the precise amount of these future costs cannot be determined with certainty, as of December 31, 2008, we estimate that the aggregate undiscounted cost of final mine closure is approximately $666.0 million. Asset
Retirement Obligations
The Company’s legal obligations associated with the
retirement of long-lived assets are recognized at fair value at
the time the obligations are incurred. Accretion expense is
recognized through the expected settlement date of the
obligation. Obligations are incurred at the time development of
a mine commences for underground and surface mines or
construction begins for support facilities, refuse areas and
slurry ponds. The obligation’s fair value is determined
using discounted cash flow techniques and is based upon permit
requirements and various estimates and assumptions, including
estimates of disturbed acreage, reclamation costs and
assumptions regarding productivity. Upon initial recognition of
a liability, a corresponding amount is capitalized as part of
the carrying value of the related long-lived asset. Amortization
of the related asset is recorded on a units-of-production basis
over the mine’s estimated recoverable reserves. See
additional discussion in Note 11, “Asset Retirement
Obligations.”
Asset Retirement Obligations The Company’s legal obligations associated with the retirement of long-lived assets are recognized at fair value at the time the obligations are incurred. Accretion expense is recognized through the expected settlement date of the obligation. Obligations are incurred at the time development of a mine commences for underground and surface mines or construction begins for support facilities, refuse areas and slurry ponds. The obligation’s fair value is determined using discounted cash flow techniques and is based upon permit requirements and various estimates and assumptions, including estimates of disturbed acreage, reclamation costs and assumptions regarding productivity. Upon initial recognition of a liability, a corresponding amount is capitalized as part of the carrying value of the related long-lived asset. Amortization of the related asset is recorded on a units-of-production basis over the mine’s estimated recoverable reserves. See additional discussion in Note 11, “Asset Retirement Obligations.” These excerpts taken from the ACI 10-K filed Feb 29, 2008. Asset
Retirement Obligations
The Company’s legal obligations associated with the
retirement of long-lived assets are recognized at fair value at
the time the obligations are incurred. Obligations are incurred
at the time development of a mine commences for underground and
surface mines or construction begins for support facilities,
refuse areas and slurry ponds. The obligation’s fair value
is determined using discounted cash flow techniques and is
accreted over time to its expected settlement value. Upon
initial recognition of a liability, a corresponding amount is
capitalized as part of the carrying amount of the related
long-lived asset. Amortization of the related asset is recorded
on a units-of-production basis over the mine’s estimated
recoverable reserves. See additional discussion in Note 11,
“Asset Retirement Obligations.”
Asset Retirement Obligations The Company’s legal obligations associated with the retirement of long-lived assets are recognized at fair value at the time the obligations are incurred. Obligations are incurred at the time development of a mine commences for underground and surface mines or construction begins for support facilities, refuse areas and slurry ponds. The obligation’s fair value is determined using discounted cash flow techniques and is accreted over time to its expected settlement value. Upon initial recognition of a liability, a corresponding amount is capitalized as part of the carrying amount of the related long-lived asset. Amortization of the related asset is recorded on a units-of-production basis over the mine’s estimated recoverable reserves. See additional discussion in Note 11, “Asset Retirement Obligations.” This excerpt taken from the ACI 10-K filed Mar 1, 2007. Asset Retirement
Obligations |
The Company’s legal obligations associated with the
retirement of long-lived assets are recognized at fair value at
the time the obligations are incurred. Obligations are incurred
at the time development of a mine commences for underground and
surface mines or construction begins for support facilities,
refuse areas and slurry ponds. The obligation’s fair value
is determined using discounted cash flow techniques and is
accreted over time to its expected settlement value. Upon
initial recognition of a liability, a
F-16
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —
(Continued)
corresponding amount is capitalized as part of the carrying
amount of the related long-lived asset. Amortization of the
related asset is recorded on a
units-of-production
basis over the mine’s estimated recoverable reserves. See
additional discussion in Note 12, “Asset Retirement
Obligations.”
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