Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Commodity Price Risk
We manage our commodity price risk for coal sales through the use of coal supply agreements. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Results of Operations” for information on our sales commitments for 2023.
We have exposure to commodity price risk for supplies that are used directly or indirectly in the normal course of production such as diesel fuel, steel and other items such as explosives. We manage our risk for these items through strategic sourcing contracts in normal quantities with our suppliers.
The market price of diesel fuel fluctuates due to changes in production, seasonality, and other market factors generally outside of our control. Increased fuel costs may have a negative impact on our results of operations and financial condition. As of December 31, 2022, our forecasted diesel fuel usage and fixed price diesel fuel purchase commitments for 2023 are as follows:
Budgeted Usage in Gallons % Priced Average Realized Price per Gallon
Diesel fuel 22.2 million 73.5 % $3.62
Interest Rate Risk
As of December 31, 2021, we had $449.4 million of outstanding borrowings under a Term Loan Credit Facility. The borrowings carried a floating rate of interest and were due in June 2024. In 2022, we voluntarily prepaid the amounts borrowed and terminated the facility. As of December 31, 2022, we maintain a senior secured asset-based revolving credit facility under which we may borrow up to $155.0 million (less amounts outstanding for letters of credit). Any cash borrowings under the facility would bear a floating rate of interest. No cash borrowings were outstanding under the facility as of December 31, 2022, or December 31, 2021. As of December 31, 2022, we had $61.9 million letters of credit outstanding under the facility. Refer to Note 14 to our consolidated financial statements for additional information, including discussion on the terms of our long-term debt.
As of December 31, 2022 and December 31, 2021, we had investments in trading securities of $151.8 million and $30.9 million respectively. While the fair value of these investments is exposed to risk with respect to changes in market rates of interest, we do not believe exposure to changes in interest rates is material to our consolidated financial statements. We manage risk by investing in shorter term highly rated debt obligations (primarily U.S. government securities). As of December 31, 2022 and December 31, 2021, the remaining maturities of our acquired debt securities was less than 12 months.
Foreign Currency Risk
Our transactions are denominated in U.S. dollars, and, as a result, we do not have material exposure to currency exchange-rate risks. However, our coal is sold internationally in U.S. dollars and, as a result, general economic conditions in foreign markets and changes in foreign currency exchange rates may provide our foreign competitors with a competitive advantage. If our competitors’ currencies decline against the U.S. dollar or against our foreign customers’ local currencies, those competitors may be able to offer lower prices for coal to customers. Furthermore, if the currencies of our overseas customers were to significantly decline in value in comparison to the U.S. dollar, those customers may seek decreased prices for the coal we sell to them. Consequently, currency fluctuations could adversely affect the competitiveness of our coal in international markets, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
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