Coal Trading (Tables)

12 Months Ended

Dec. 31, 2012

Fair value coal trading net assets (liabilities) measured on recurring basis

The Company uses a three-level fair value hierarchy that categorizes assets and liabilities measured at fair value based on the observability of the inputs utilized in the valuation. These levels include: Level 1 - inputs are quoted prices in active markets for the identical assets or liabilities; Level 2 - inputs are other than quoted prices included in Level 1 that are directly or indirectly observable through market-corroborated inputs; and Level 3 - inputs are unobservable, or observable but cannot be market-corroborated, requiring the Company to make assumptions about pricing by market participants.

Financial Instruments Measured on a Recurring Basis. The following tables set forth the hierarchy of the Company’s net financial asset (liability) positions for which fair value is measured on a recurring basis:



	December 31, 2012
	Level 1		Level 2		Level 3		Total
			(Dollars in millions)
Investment in available-for-sale debt and equity securities	$	75.4	$	13.0	$	—	$	88.4
Commodity swaps and options	—		4.0		—		4.0
Foreign currency cash flow hedge contracts	—		286.9		—		286.9
Total net financial assets	$	75.4	$	303.9	$	—	$	379.3



	December 31, 2011
	Level 1 ⁽¹⁾		Level 2 ⁽¹⁾		Level 3		Total
			(Dollars in millions)
Investment in available-for-sale debt and equity securities	$	78.0	$	5.5	$	—	$	83.5
Commodity swaps and options	—		33.0		—		33.0
Foreign currency cash flow hedge contracts	—		490.6		—		490.6
Total net financial assets	$	78.0	$	529.1	$	—	$	607.1


⁽¹⁾	Certain amounts have been revised from a Level 1 to a Level 2 fair value hierarchy classification to conform to the current year presentation, which had no effect on previously reported consolidated results and was not material to the footnotes to the consolidated financial statements.

For Level 1 and 2 financial assets and liabilities, the Company utilizes both direct and indirect observable price quotes, including interest rate yield curves, exchange indices, broker quotes, published indices and other market quotes. Below is a summary of the Company’s valuation techniques for Level 1 and 2 financial assets and liabilities:


•	Investments in debt and equity securities: corporate bonds and U.S. government treasury instruments are valued based on quoted prices in active markets (Level 1) and U.S. government agency securities are valued based on derived prices in active markets (Level 2).


•	Commodity swap contracts — diesel fuel and explosives: valued based on a valuation that is corroborated by the use of market-based pricing (Level 2).


•	Foreign currency forward and option contracts: valued utilizing inputs obtained in quoted public markets (Level 2).

Coal Trading [Member]

Coal Trading [Line Items]

Trading revenue by type of instrument

Trading revenues recognized during the years ended December 31, 2012, 2011 and 2010 were as follows:



	Year Ended December 31,
Trading Revenue by Type of Instrument	2012			2011			2010
	(Dollars in millions)
Commodity swaps and options	$	159.9		$	(41.4	)	$	23.2
Physical commodity purchase/sale contracts	(8.1		)	187.0			135.5
Total trading revenue	$	151.8		$	145.6		$	158.7

Fair value of assets and liabilities from coal trading activities

The fair value of assets and liabilities from coal trading activities is set forth below:



	December 31,
	2012						2011
	Gross Basis			Net Basis			Gross Basis			Net Basis
	(Dollars in millions)
Assets from coal trading activities	$	380.4		$	52.4		$	170.4		$	44.6
Liabilities from coal trading activities	(190.5		)	(19.4		)	(84.0		)	(10.3		)
Subtotal	189.9			33.0			86.4			34.3
Net variation margin held ⁽¹⁾	(156.9		)	—			(52.1		)	—
Net fair value of coal trading positions	$	33.0		$	33.0		$	34.3		$	34.3


⁽¹⁾	Represents margin held from exchanges and counterparties to over-the-counter derivative contracts of $156.9 million and $52.1 million at December 31, 2012 and 2011, respectively. Approximately $76 million and $23 million of the margin held at December 31, 2012 and 2011, respectively, related to cash flow hedges.

Fair value coal trading net assets (liabilities) measured on recurring basis

The following tables set forth the hierarchy of the Company’s net financial asset (liability) trading positions for which fair value is measured on a recurring basis:



	December 31, 2012
	Level 1		Level 2		Level 3		Total
	(Dollars in millions)
Commodity swaps and options	$	1.2	$	24.4	$	—	$	25.6
Physical commodity purchase/sale contracts	—		2.2		5.2		7.4
Total net financial assets	$	1.2	$	26.6	$	5.2	$	33.0



	December 31, 2011
	Level 1		Level 2			Level 3		Total
			(Dollars in millions)
Commodity swaps and options	$	21.2	$	(1.9	)	$	—	$	19.3
Physical commodity purchase/sale contracts	—		6.3			8.7		15.0
Total net financial assets	$	21.2	$	4.4		$	8.7	$	34.3

Schedule of Quantitative Unobservable Inputs, Physical Commodity Purchase/Sale Contracts [Table Text Block]

The following table summarizes the quantitative unobservable inputs utilized by the Company's internally-developed valuation models for physical commodity purchase/sale contracts classified as Level 3 as of December 31, 2012:



	Range				Weighted
Input	Low		High		Average
Quality adjustments	2	%	22	%	14	%
Non-performance adjustments	4	%	4	%	4	%

Significant increases or decreases in the inputs in isolation could result in a significantly higher or lower fair value measurement. The unobservable inputs do not have a direct interrelationship; therefore, a change in one unobservable input would not necessarily correspond with a change in another unobservable input.

Change in the Company's recurring Level 3 net financial assets

The following table summarizes the changes in the Company’s recurring Level 3 net financial assets:



	Year Ended December 31,
	2012				2011			2010
	(Dollars in millions)
Beginning of year	$	8.7			$	18.6		$	17.0
Total gains (losses) realized/unrealized:
Included in earnings	17.5				8.9			2.1
Included in other comprehensive income	—				—			(0.5		)
Settlements	(21.0		)		(2.1		)	(0.1		)
Transfers in	—			—	1.0			—
Transfers out	—				(17.7		)	0.1
End of year	$	5.2			$	8.7		$	18.6

Changes in unrealized gains (losses) relating to Level 3 net financial assets

The following table summarizes the changes in unrealized gains relating to Level 3 net financial assets held both as of the beginning and the end of the year:



	Year Ended December 31,
	2012		2011		2010
	(Dollars in millions)
Changes in unrealized gains ⁽¹⁾	$	4.1	$	8.7	$	6.7


⁽¹⁾	Within the consolidated statements of operations and consolidated statements of comprehensive income for the periods presented, unrealized gains and losses from Level 3 items are combined with unrealized gains and losses on positions classified in Level 1 or 2, as well as other positions that have been realized during the applicable periods.

Schedule of future realization of the Company's trading portfolio

As of December 31, 2012, the timing of the estimated future realization of the value of the Company’s trading portfolio was as follows:



	Percentage of
Year of Expiration	Portfolio Total

2013	77	%
2014	15	%
2015	6	%
2016	2	%
	100	%

- Definition

Tabular disclosure of the total amount of gains or losses for the period which are included in earnings or resulted in a change to net assets which gains or losses have arisen from the use of significant unobservable inputs (Level 3) to measure the fair value of assets and liabilities. Such gains or losses are attributable to the change in unrealized gains or losses relating to those assets and liabilities so valued which are still held at the reporting date and which change are also considered for disclosure; it may be expected that a description of where those unrealized gains or losses are reported in the statement of income or the statement of financial position would also be disclosed.

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- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income, and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issuances, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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