Asset Impairment

The Company's mining and exploration assets and mining-related investments may be adversely affected by numerous uncertainties that may cause the Company to be unable to recover all or a portion of the carrying value of those assets. Because of the volatile and cyclical nature of U.S. and international seaborne coal demand, it is reasonably possible that prices may decrease in the near term, which, absent sufficient mitigation such as an offsetting reduction in the Company's operating costs, may result in the need for future adjustments to the carrying value of the Company's long-lived mining assets and mining-related investments.

The Company's assets whose recoverability and values are most sensitive to near-term pricing and other market factors include certain Australian metallurgical and thermal assets for which impairment charges were recorded in 2015 and certain U.S. coal properties being leased to unrelated mining companies under agreements that require royalties to be paid as the coal is mined. These assets had an aggregate carrying value of $577.7 million as of September 30, 2016. The Company conducted a review of those assets for recoverability as of September 30, 2016 and determined that no impairment charge was necessary as of that date.

As further discussed in Note 23. “Subsequent Event”, the Company has entered into an agreement for the sale of its Metropolitan mine. As a result of entering into the transaction, and the approval of the Company’s Board of Directors of such a transaction in October 2016, the Metropolitan mine was deemed to meet held-for-sale accounting criteria in the fourth quarter of 2016. Accordingly, the Company expects to record an after-tax impairment charge of approximately $180 million to write down the assets to their estimated selling price, which is the best estimate of fair value under a held-for-sale accounting model, in the fourth quarter of 2016. The carrying value of the mine is included in the value of assets noted as at-risk in the preceding paragraph.

Three and Nine Months Ended September 30, 2016

The Company reviewed its portfolio of mining tenements and surface lands that were classified as held-for-sale. As a result of that review, the Company recognized an aggregate impairment charge of $17.2 million during the nine months ended September 30, 2016 to write down the carrying value of certain Australian metallurgical assets targeted for divestiture, and eventually divested, to their estimated fair value. For additional information regarding those divested assets, refer to Note 16. "Other Events".

Nine Months Ended September 30, 2015

The following costs are reflected in "Asset impairment" in the unaudited condensed consolidated statement of operations for the nine months ended September 30, 2015:



	Reportable Segment
	Australian Metallurgical Mining		Australian Thermal Mining		Corporate and Other		Consolidated
	(Dollars in millions)
Asset impairment charges:
Long-lived assets	$	527.0	$	8.2	$	182.2	$	717.4
Equity method investments	—		—		183.4		183.4
Total	$	527.0	$	8.2	$	365.6	$	900.8

Australian Metallurgical and Thermal Mining

Due to the severity of the decline in seaborne metallurgical and thermal coal pricing observed during the first half of 2015 and other adverse conditions noted during that period, the Company concluded that indicators of impairment existed surrounding its Australian mining platform as of June 30, 2015. Accordingly, the Company reviewed its Australian mining assets for recoverability and, based on that review, determined that the carrying values of three of its active mines that produce metallurgical coal were not recoverable and recognized an aggregate impairment charge of $230.5 million to write those assets down from their carrying value to their estimated fair value.

Also during the second quarter of 2015, the Company reviewed its portfolio of mining tenements and surface lands to identify non-strategic assets that could be monetized. In connection with that review, certain of such assets were deemed to meet held-for-sale accounting criteria or were otherwise considered more likely to generate cash flows through divestiture rather than development, with the long-term plans for certain adjacent assets also consequently affected. Accordingly, the Company recognized an aggregate impairment charge of $304.7 million to write down those assets from their carrying value to their estimated fair value.

Corporate and Other

Long-lived Assets. In connection with a similar review of the Company's asset portfolio conducted during the second quarter of 2015 to identify non-strategic domestic assets that could be monetized, the Company identified non-strategic, non-coal-supplying assets as held-for-sale rather than held-for-use as of June 30, 2015. Accordingly, the Company recognized an impairment charge of $182.2 million to write the assets down from their carrying value to estimated fair value.

Equity Method Investments. Due to the impairment indicators noted above surrounding the Company's Australian platform, the Company reviewed its total investment in Middlemount Coal Pty Ltd. (Middlemount), which owns the Middlemount Mine in Queensland, Australia, as of June 30, 2015. As a result of that review, the Company determined that the carrying value of its total investment in Middlemount was other-than-temporarily impaired and recorded a charge of $46.6 million to write-off the equity investment and recorded a charge of $136.8 million to write down the carrying value of certain of its loans to Middlemount.

The fair value estimates made during the Company's impairment assessments were determined in accordance with the methods outlined in Note 1. "Summary of Significant Accounting Policies" to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015, except in certain instances where indicative bids were received related to non-strategic assets being marketed for divestiture. In those instances, the indicative bids were also considered in estimating fair value.