LEASE OBLIGATIONS

12 Months Ended

Dec. 31, 2023

NOTE 12 - LEASE OBLIGATIONS

Our operating leases consist primarily of leases for land, office space, rail cars and storage tanks. Our finance leases consist primarily of mining equipment and rail cars. When an implicit discount rate is not readily determinable under our leases, we use our incremental borrowing rate as the discount rate to determine the present value of the lease payments. Our incremental borrowing rate is the rate of interest that we would have to borrow on a collateralized basis over a similar term and amount in a similar economic environment to pay our lease obligations. We determine the incremental borrowing rates for our leases by adjusting the local risk-free interest rate with a credit risk premium corresponding to our credit rating. From time to time, we may enter into arrangements for the construction or purchase of an asset and then enter into a financing arrangement to lease the asset. We recognize leased assets and liabilities under these arrangements when we obtain control of the asset.

Lease costs are presented below:


	Year Ended December 31,
(In millions)	2023		2022
Operating leases	$	59	$	64
Finance leases:
Amortization of right-of-use assets	92		103
Interest on lease liabilities	11		8
Short-term leases	171		160

Total	$	333	$	335

Lease terms and discount rates are shown below:


	December 31,
(In millions)	2023
Weighted average lease term (in years):
Operating leases	8
Finance leases	7
Weighted average discount rate:
Operating leases	8	%
Finance leases	6	%

Other information related to leases was as follows:


	Year Ended December 31,
(In millions)	2023		2022		2021
Cash paid for amounts included in measurement of lease liabilities:
Operating leases within cash flows from operating activities	$	57	$	62	$	70
Finance leases within cash flows from operating activities	11		8		9
Finance leases within cash flows from financing activities	92		96		94
Right-of-use assets obtained in exchange for new finance lease liabilities	93		55		50

Future minimum lease payments under noncancellable finance and operating leases as of December 31, 2023 were as follows:


(In millions)	Finance Leases		Operating Leases
2024	$	53	$	56
2025	49		49
2026	39		42
2027	27		38
2028	25		29
Thereafter	74		117
Total future minimum lease payments	267		331
Less: imputed interest	52		93
Total lease payments	215		238
Less: current portion of lease liabilities	49		41
Long-term lease liabilities	$	166	$	197

The current and long-term portions of our finance and operating lease liabilities are included in Other current liabilities and Other non-current liabilities, respectively.