Asset Retirement Obligation

9 Months Ended

Sep. 30, 2015

Asset Retirement Obligation Disclosure [Abstract]

NACoal's asset retirement obligations are principally for costs to dismantle certain mining equipment at the end of the life of the mine as well as for costs to close its surface mines and reclaim the land it has disturbed as a result of its normal mining activities. The Company determined the amounts of these obligations based on estimates adjusted for inflation, projected to the estimated closure dates, and then discounted using a credit-adjusted risk-free interest rate. The accretion of the liability is being recognized over the estimated life of each individual asset retirement obligation and is recorded in the line “Cost of sales” in the accompanying Unaudited Condensed Consolidated Statements of Operations. The associated asset is recorded in “Property, Plant and Equipment, net” in the accompanying Unaudited Condensed Consolidated Balance Sheets.

On July 31, 2015, management recommended and The North American Coal Corporation’s Board of Directors approved cessation of coal production at Centennial by the end of 2015. The decision was made as a result of worsening conditions in the Alabama and global coal markets and the adverse effect regulatory changes have had on Centennial’s business. As a result of the decision to cease mining operations, revisions were made to Centennial's asset retirement obligations due to revised estimated cash flows and the timing of those cash flows, resulting in a $7.5 million charge in the third quarter of 2015. A reconciliation of the beginning and ending aggregate carrying amount of the Company's asset retirement obligation is as follows:



	NACCO Consolidated
Balance at January 1, 2015	$	41,819
Liabilities settled during the period	(6,182		)
Accretion expense	2,049
Revision of estimated cash flows	7,526
Balance at September 30, 2015	$	45,212