SunCoke Energy, Inc. Begins Executing Contingency Plan to Downsize Coal Mining Business

SunCoke Energy, Inc.

today announced it is executing a phased plan to scale back its Coal Mining business. “While we plan to continue pursuing opportunities to sell all or a portion of our Coal Mining business, the challenging coal price environment has led us to make these hard decisions,” said Fritz Henderson, Chairman and Chief Executive Officer of SunCoke Energy, Inc. “I've been very impressed by and thankful for the leadership and commitment of our coal team, which has consistently achieved high levels of productivity, safety and regulatory compliance during this difficult time. However, idling a significant portion of the Coal Mining business is the right step going forward and allows us to focus on our core competencies of processing and handling raw materials for industrial customers.” Our initial actions include immediately idling certain mines to reduce coal production from approximately 1.1 million annual tons to about 500 thousand annual tons of mid-vol coal and eliminating approximately 175 positions. In the short term, we expect to continue to mine about 500 thousand annual tons as we pursue a sale or explore other alternatives such as potentially retaining contractors to mine on our behalf or purchasing all our coal requirements to supply our Jewell Coke facility. We also plan to reduce operations at our coal preparation plant by 50 percent to further reduce costs. While we expect our downsizing plan to significantly reduce the ongoing cost to supply coal to our Jewell Coke operations, in light of current coal market conditions, we will continue to incur costs whether we mine the mid-vol portion of Jewell Coke's coal supply requirements or purchase all coal from third-parties. If we are ultimately unsuccessful in selling the Coal Mining business and mining mid-vol coal becomes less economic than procuring from third-party sources, we may decide to idle the remaining mines, demolish the preparation plant and purchase all Jewell Coke coal requirements from third-parties. The anticipated impact to Jewell Coke of purchasing 100% third-party coal is estimated to be approximately $20 million annually, primarily due to incremental coal transportation and material handling costs. This is approximately $20 million favorable to the anticipated cash loss of continuing to operate the Coal Mining business absent any wind down actions. We expect to incur one-time cash costs of $25 million to $35 million related to our plans to downsize our coal operations including: The previously disclosed estimated expense of approximately $10 million primarily related to contract terminations, which will be incurred primarily in fourth quarter 2014 Anticipated employee severance and other one-time costs to idle mines of $10 million to $15 million to be recognized in fourth quarter 2014 and early 2015 Expected capital expenditures of $5 million to $10 million in 2015 to demolish our coal preparation plant and install additional coal handling and storage to enable third-party coal purchases for our Jewell facility. In view of our Coal Mining business downsizing plans, we expect to recognize non-cash charges related to worker's compensation, asset reclamation, black lung liability and other post-employment benefits liabilities. Further, we will also evaluate the recoverability of the long-lived assets of the Coal Mining business to determine if the carrying value of the assets is recoverable. Unrelated to the coal downsizing plans, we now estimate that due to anticipated changes in discount rates and claim approval rates our incremental black lung charge in the fourth quarter will be approximately $15 million versus our original estimate of $8 million. UPCOMING EVENTS We plan to issue fourth quarter 2014 earnings and provide 2015 guidance before market opens on Thursday, January 29, 2015. Also on this date, we expect to host an investor conference call, which will be webcast live and archived for replay on www.suncoke.com. Times and dial-in information for these conference calls and webcasts will be provided in early January 2015.