Asset Retirement Obligations

12 Months Ended

Dec. 31, 2023

Asset Retirement Obligation Disclosure [Abstract]

The Company’s obligations associated with the retirement of long-lived assets are recognized at fair value at the time the legal

obligations are incurred. Upon initial recognition of a liability, a corresponding amount is capitalized as part of the carrying

value of the related long-lived asset and is depreciated either by the straight-line method or the units-of-production method. The

liability is accreted each period until the liability is settled, at which time the liability is removed. If the liability is settled for an amount other than the recorded amount, a gain or loss is recognized.

The Company's asset retirement obligations are principally for costs to close its surface mines and reclaim the land it has disturbed as a result of its normal mining activities as well as for costs to dismantle certain mining equipment at the end of the life of the mine. Management’s estimate involves a high degree of subjectivity. In particular, the obligation’s fair value is determined using a discounted cash flow technique and is based upon mining permit requirements and various assumptions including credit adjusted risk-free-rates, estimates of disturbed acreage, life of the mine, estimated reclamation costs, the application of various environmental laws and regulations and assumptions regarding equipment productivity. The Company reviews its asset retirement obligations at each mine site at least annually and makes necessary adjustments for permit changes and for revisions of estimates of the timing and extent of reclamation activities and cost estimates.

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 Consolidated Statements of Operations. The associated asset is recorded in Property, Plant and Equipment, net in the accompanying Consolidated Balance Sheets. The depreciation of the asset is recorded in the line Cost of sales in the accompanying Consolidated Statements of Operations.

A reconciliation of the Company's beginning and ending aggregate carrying amount of the asset retirement obligations are as follows:


	Coal Mining		Unallocated Items		NACCO Consolidated
Balance at January 1, 2022	$	26,898	$	17,053	$	43,951

Liabilities settled during the period	(223)		(956)		(1,179)
Accretion expense	2,190		1,332		3,522
Revision of estimated cash flows	(405)		113		(292)
Balance at December 31, 2022	$	28,460	$	17,542	$	46,002
Liabilities incurred during the period	1,920		—		1,920
Liabilities settled during the period	(852)		(1,048)		(1,900)
Accretion expense	2,170		1,358		3,528
Revision of estimated cash flows	1,346		1,717		3,063
Balance at December 31, 2023	$	33,044	$	19,569	$	52,613

During 2023, the Company’s wholly-owned subsidiary, Caddo Creek Resources Company (“Caddo Creek”), acquired 100% of the membership interests in the Marshall Mine. Prior to the acquisition, Caddo Creek was performing mine reclamation under a fixed price contract with a customer. The Company received $2.2 million of cash, assumed the asset retirement obligation estimated to be approximately $1.9 million and recognized a gain of approximately $0.3 million in the line "Other, net” in the accompanying Consolidated Statements of Operations. The asset retirement obligation’s fair value was determined using a discounted cash flow technique and is based upon permit requirements and various estimates and assumptions that would be used by market participants, including estimates of disturbed acreage, reclamation costs and assumptions regarding equipment productivity.

Bellaire's legacy liabilities include obligations for water treatment and other environmental remediation that arose as part of the normal course of closing these underground mining operations. Since Bellaire's properties are no longer active operations, no associated asset has been capitalized. Bellaire’s asset retirement obligation is included in the table above in the Unallocated Items column.

Prior to 2022, Bellaire established a $5.0 million Mine Water Treatment Trust to provide a financial assurance mechanism in order to assure the long-term treatment of post-mining discharges. The fair value of Bellaire's Mine Water Treatment assets, which are recognized as a component of Other non-current assets on the Consolidated Balance Sheets, are $11.2 million and $9.9 million at December 31, 2023 and December 31, 2022, respectively, and are legally restricted for purposes of settling the Bellaire asset retirement obligation. See Note 9 for further discussion of the Mine Water Treatment Trust.