What changed in this filing

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Item 1. Business

2022-02-22 compared with 2021-02-24 · 78 added, 122 removed, 396 unchanged (34% of the section changed)

We are a U.S.-based, environmentally and socially minded supplier to the global steel industry.

We are a U.S.-based, environmentally and socially minded supplier to the global steel industry headquartered in Brookwood, Alabama.

We are dedicated entirely to mining non-thermal met coal used as a critical component of steel production by metal manufacturers in Europe, South America and Asia.

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4 and Mine No.

Our mining operations also consist of other surface met and thermal coal mines, five of which are currently under lease to third parties and four of which are not operating and are not currently planned to be operated in the future.

Our met coal production totaled 7.1 million in 2020.

Our met coal production totaled 5.1 million metric tons in 2021.

Our natural gas operations remove and sell natural gas from the coal seams owned or leased by reducing natural gas levels in our mines.

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All of our resources are primarily allocated to the mining, transportation and marketing of met coal.

The premium HCC we produce at Mine No.

4 and Mine No.

7 is of a similar quality to the HCC produced in Australia.

The premium nature of our HCC makes it ideally suited as a base feed coal for steel makers and results in price realizations near or above the Platts Index.

Coal from Mine No.

7 is classified as a premium low-volatility ("LV") HCC and coal from Mine No.

4 is classified as premium LV to mid-volatility ("MV") HCC.

The combination of low sulfur, low-to-medium ash, LV to MV, and other characteristics of our coal, as well as our ability to blend them, makes our HCC product an important component within our customers’ overall coking coal requirements.

As a result, our realized price has historically been slightly above, in line with or at a slight discount to the Platts Index.

Other publicly-listed U.S.

coal companies sell a higher proportion of lower quality met coals, including high-volatility, semi-soft coking coal (“SSCC”), and pulverized coal injection (“PCI”) coal.

These lower quality coals typically have lower realized prices compared to LV and MV met coals due to their relative availability and lower quality characteristics.

Additionally, these companies typically have significant thermal coal production that further reduces their realized price and operating margin per metric ton.

As a result of our premium met coal, we are able to achieve higher realized prices and operating margins relative to other U.S.

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Blue Creek represents one of the last remaining large scale untapped premium quality, high volatility ("High Vol") A coal reserves in the U.S.

with 103.0 million metric tons of recoverable reserves and we have the ability to acquire adjacent reserves that would increase the total reserves to over 154 million metric tons with a mine life of approximately 50 years assuming a single longwall operation.

and under the SEC's new rules governing mineral reserves, specifically subpart 1300 of Regulation S-K under the Modernization of Property Disclosures for Mining Registrants, has 63.3 million metric tons of recoverable reserves and 44.9 million metric tons of coal resources exclusive of reserves, which total 108.2 million metric tons.

We have the ability to acquire adjacent reserves that would increase the total reserves to over 154 million metric tons with a mine life of approximately 50 years assuming a single longwall operation.

High Vol A has traditionally priced at a slight discount to the Australian premium LV and the U.S.

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We believe this creates an opportunity for Blue Creek to take advantage of favorable pricing dynamics driven by the declining supply of premium High Vol A coals.

On February 19, 2020, we announced the commencement of the development of the Blue Creek project with expected capital expenditures related to this project in 2020 of $25.0 million.

Due to the uncertainties regarding the duration of the COVID-19 pandemic and its overall impact on the global economy, in the first quarter of 2020, we decided to delay the capital expenditures related to this project.

We now have delayed the development of this project until at least the summer of 2021.

Highly flexible cost structure protects through-the-cycle profitability .

We have “variabilized” our cost structure in our labor, royalties and logistics contracts, increasing the proportion of our cost structure that varies in response to changes in HCC prices based on a variety of indices.

Our Collective Bargaining Agreement ("CBA") with the United Mine Workers of America ("UMWA"), combined with our flexible rail, port and barge logistics and our royalty structure, results in a highly variable operating cost profile that allows our cash cost of sales to move with changes in the price we realize for our coal.

Approximately two-thirds of our cash cost of sales relate to the cost of production at our mines, while the remaining one-third relates to our logistics costs from mine to port as well as royalties.

Our logistics costs are structured to reduce cash requirements

in lower HCC price environments and to increase cash requirements within a range with higher HCC prices.

Our logistics costs are structured to reduce cash requirements in lower HCC price environments and to increase cash requirements within a range with higher HCC prices.

Our royalties are calculated as a percentage of the price we realize and therefore increase or decrease with changes in HCC prices.

Our CBA includes variable elements that tie compensation to HCC prices.

In addition, we can adjust our usage of continuous miner units in response to HCC pricing.

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Our two operating mines and Blue Creek are located approximately 300 miles from our export terminal capacity in Mobile, Alabama and have alternative transportation routes to move our coal to port.

These alternatives include direct rail access at the mine sites and a wholly-owned barge load-out facility, enabling us to utilize the lowest cost option between the two at any given point in time.

We believe our logistics costs are highly competitive.

In addition, we have a contract with the Port of Mobile in Alabama, that provides us up to 8.0 million metric tons of annual port capacity through July 2026 for our coal at very competitive rates.

The total annual throughput capacity of the McDuffie Coal Terminal at the Port of Mobile in Alabama is approximately 27.2 million metric tons and this coal terminal is presently utilized for all of our coal exports.

We believe, and representatives of the McDuffie Coal Terminal have informed us that they believe, that there is ample capacity to support the full production rates of Blue Creek, and we are working with the McDuffie Coal Terminal to achieve the needed capacity.

Our proximity to port contrasts with the approximately 400-mile distances for major Central Appalachian met coal producers to access their nearest port, the Port of Hampton Roads, Virginia.

Our proximity to port and the flexibility of our logistics networks underpin our logistical cost advantage compared to other U.S.

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This advantage results in a higher margin for our met coal.

Our strategic location is enhanced by our long-tenured, well-established customer portfolio, which includes significant recurring sales to multiple customers in excess of 10 years.

strategic location is enhanced by our long-tenured, well-established customer portfolio, which includes significant recurring sales to multiple customers in excess of 10 years.

High realized prices and low variable cost structure drive industry leading margins .

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7 are two of the lowest cost met coal mines in North America.

Our low cost position is derived from our operations’ favorable geology, automated long-wall mining methods, and significant flexibility allowed under our CBA.

Additionally, given our highly flexible cost structure, we believe we will be able to maintain our industry leading margins in all coal market conditions, which we expect should allow us to continue to outperform our competitors.

Clean balance sheet and tax asset to drive robust cash flow generation.

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Our clean balance sheet and its low sustaining capital expenditure requirements position us to generate strong cash flows across a range of met coal price environments.

Additionally, we expect our cash flows to benefit from a low cash tax rate as a result of our significant NOLs.

As a result of these tax assets, and the repeal of the corporate alternative minimum tax (“AMT”) beginning after December 31, 2017 (see Note 7 to our consolidated financial statements included elsewhere in this Annual Report), we believe our effective cash tax rate will be approximately 0%, exclusive of the AMT credit refunds, until our NOLs generated prior to 2018 are fully utilized or expire, which will enable strong cash conversion from our operating profits.

Additionally, we expect our cash flows to benefit from a low cash tax rate as a result of our significant federal NOLs.

As a result of these tax assets, and the repeal of the corporate alternative minimum tax ("AMT"), we believe our effective cash tax rate will be approximately 0%, exclusive of the AMT credit refunds, until our NOLs are fully utilized or expire, which will enable strong cash conversion from our operating profits.

Disciplined financial policies to ensure stable performance .

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Our Chief Executive Officer (“CEO”), Walter J.

Scheller, III, is the former CEO of Walter Energy and has eight years of direct experience managing Mine No.

Scheller, III, is the former CEO of Walter Energy and has nine years of direct experience managing Mine No.

4 and Mine No.

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Strong focus on reducing greenhouse gas emissions.

Investors and other third parties are increasingly focused on sustainability matters, and we are committed to reducing the release of greenhouse gases (“GHG”).

Investors and other third parties are increasingly focused on sustainability matters, and we are committed to reducing the release of greenhouse gases (“GHGs”) from our operations.

GHG emissions are produced as a by-product of mining activities, as operations in underground metallurgical coal mines produce coal bed methane.

With a view towards being an industry leader in environmental performance, we are actively engaged in several initiatives that occur before, during and after mining to reduce GHG emissions, including the capture of coalbed methane.

Currently, the Company is able to capture approximately 67% of the methane that is produced as part of our mining operations through direct pipelines as well as our low-quality gas plant.

Much of this methane is sold into the natural gas market.

The remainder of the methane is released through our mines’ ventilation systems as coal mine methane (“CMM”) emissions.

These emissions that are released into the environment are extremely diluted.

We have also partnered with a third-party to utilize new technology to increase the efficiency of methane reductions where practical.

Currently, we have planned to install the first full-scale methane destroying unit in early 2021, as discussed under “Our Business Strategies - Capitalize on opportunities for technological innovation to continue to reduce our impact on the environment.”

From its inception, the Company has participated in the EPA’s voluntary program aimed at CMM emission reductions.

We are also proud to participate in the EPA’s voluntary GHG reporting program which the EPA is using to improve its estimates of national GHG emissions.

The Company’s focus on reducing GHG emissions has proven effective, as the Company’s annual Toxic Release Inventory, which is required annually by the EPA, demonstrates that we do not have any reportable air emissions.

Our Business Strategies

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7 and Mine No.

We have the flexibility in our CBA that allows us to increase annual production with minimal incremental capital expenditures.

Based on our management’s operational experience, we are confident in our ability to continue to produce at or close to this capacity in a safe and efficient manner, and with a comparable cost profile to our current costs, should market conditions warrant.

Based on our management’s operational experience, we are confident in our ability to continue to produce at or close to capacity in a safe and efficient manner, and with a comparable cost profile to our current costs, should market conditions warrant.

Maximize organic growth.

In the first quarter of 2020, we announced the commencement of the development of Blue Creek into a new, world-class longwall mine located in Alabama near our existing mines.

Due to COVID-19, we delayed spending the $25.0 million that we budgeted for the development of Blue Creek until at least summer 2021 .

Due to COVID-19, we delayed commencement of the development of Blue Creek .

The new single longwall mine at Blue Creek is expected to have the capacity to produce an average of 3.7 million metric tons per annum of premium High Vol A met coal over the first ten years of production.

Once fully developed, we expect Blue Creek to be a transformational investment that will increase annual production capacity by 54% and expand our product portfolio to our global customers, offering three premium hard coking coals that are expected to achieve the highest premium met coal prices in the seaborne markets.

We control approximately 103.0 million metric tons of recoverable reserves at Blue Creek and have the ability to acquire adjacent reserves that would increase total recoverable reserves to over 154 million metric tons at Blue Creek.

Under the SEC's new rules governing mineral reserves, specifically subpart 1300 of Regulation S-K under the Modernization of Property Disclosures for Mining Registrants, Blue Creek has 63.3 million metric tons of recoverable reserves and 44.9 million metric tons of coal resources exclusive of reserves, which total 108.2 million metric tons.

We have the ability to acquire adjacent reserves that would increase total recoverable reserves to over 154 million metric tons at Blue Creek.

Blue Creek is expected to have a mine life of approximately 50 years assuming a single longwall operation.

We expect Blue Creek’s estimated production cost per short ton to be in the first quartile of the U.S.

and global seaborne hard coking coal cost curve and to be approximately 25 to 30% lower than our existing mines today.

We believe the combination of a low production cost and the high quality of the High Vol A product, if we achieve the expected price

realizations, will generate some of the highest met coal margins in the U.S., generate strong investment returns and achieve a rapid payback across a range of met coal price environments.

We expect to invest approximately $550 to $600 million over five years to develop Blue Creek once development begins.

Based on the current schedule, we expect first development tons from continuous miner units to occur in 2023 with the longwall scheduled to start up in 2025.

Our strong cash flow generation and current available liquidity, as well as the ability to finance $110 - $120 million of capital expenditures through equipment leases, allows us to be opportunistic as we evaluate funding options for Blue Creek.

Maintain and further improve our low and variable cost structure .

While we have already achieved significant structural cost reductions at our two operating mines, we see further opportunities to reduce our costs over time.

Our CBA with the UMWA allows for these ongoing cost optimization initiatives.

For example, in our CBA, we have additional flexibility in our operating days and alternative work schedules as compared to certain optional and more expensive provisions under the predecessor, Walter Energy, Inc.

("Walter Energy"), collective bargaining agreement.

We have variable elements that tie compensation to HCC prices.

Additionally, our CBA enables us to contract out work under certain circumstances.

We believe these types of structural incentive provisions and workforce flexibility in the initial CBA are helpful to further align our organization with operational excellence and to increase the proportion of our costs that vary in response to changes in the HCC price.

Broaden our marketing reach and maintain strong correlation between realized coal prices and the Platts Index .

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Traditionally, we have predominantly marketed our coal to European and South American buyers.

For the year ended December 31, 2020, our sales geographic customer mix was 56% in Europe, 25% in South America and 19% in Asia.

For the year ended December 31, 2021, our sales geographic customer mix was 52% in Asia, 39% in Europe and 9% in South America.

The higher mix of sales into Asia is the result of our taking advantage of opportunities with new Chinese customers due to the impact of the Chinese ban on Australian coal.

Since February 2017, we have had an arrangement with Xcoal Energy & Resource (“Xcoal”) to serve as Xcoal’s strategic partner for exports of LV HCC into certain markets.

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We focus our opportunities for technological innovation around GHG emissions, water management, waste management and biodiversity impact.

As described above, the Company currently captures approximately 67% of the coalbed methane that is produced during our mining activities as part of our commitment to reduce the Company’s GHG emissions.

The Company currently captures approximately 64% of the coalbed methane that is produced during our mining activities as part of our commitment to reduce the Company’s GHG emissions.

We are then able to sell this gas into the natural gas market.

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This plant operates using a complex system that concentrates the methane by removing other gases such as nitrogen and oxygen.

We are also exploring technologies with a third party for destroying CMM.

To prove one such technology, the Company built a pilot or demonstrator plant.

In 2021, we, along with a third party, installed two new carbon destroying units that destroy low quality gas from multiple de-gas wells.

We are in the process of evaluating additional wells to be piped to the new carbon destroying units.

The Company and a third party also built a pilot or demonstrator plant.

This plant successfully operated from 2014 to 2017.

During the demonstration period, the plant effectively destroyed coal mine methane released from our underground operations.

We and a third party also have plans to install the first full-scale methane destroying unit in early 2021.

A larger unit is now in the permitting process to help destroy coal mine methane from a fan installation.

We are working closely with several vendors to progress such efforts.

We also successfully achieved a 99.2% compliance record with the Environmental Protection Agency ("EPA") National Pollutant Discharge Elimination System program, which addresses water pollution by regulation point source discharges.

This reflects that we only had two minor instances of non-compliance with water quality standards within the annual period ending in the second quarter of 2020 and each of these were related to heavy rainfall events.

We currently have a goal to reduce water usage at our current facilities by 25% by 2030.

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Our two operating mines and Blue Creek are located approximately 300 miles from our export terminal at the Port of Mobile in Alabama, which we believe to be the shortest mine-to-port distance of any U.S.-based met coal producer.

Our low and variable cost structure, flexible and efficient rail and barge network underpins our cost advantage and dependable access to the seaborne markets.

and variable cost structure, flexible and efficient rail and barge network underpins our cost advantage and dependable access to the seaborne markets.

We sell our coal to a diversified customer base of blast furnace steel producers, primarily located in Europe, South America and Asia.

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Substantially all of our met coal sales consist of sales to international customers.

We also own mineral rights for approximately 103.0 million additional metric tons of recoverable reserves at Blue Creek located to the northwest of Mine No.

4, based on a reserve report prepared by Stantec.

We also have 63.3 million metric tons of recoverable reserves and 44.9 million metric tons of coal resources exclusive of reserves, which total 108.2 million metric tons, at Blue Creek located to the northwest of Mine No.

4, based on a reserve report prepared by Marshall Miller.

We have the ability to acquire adjacent reserves that would increase total reserves to over 154 million metric tons at Blue Creek.

According to our third party reserve report, the met coal reserve base of Blue Creek is a high quality High Vol A coal that is characterized by low-sulfur and high CSR.

Our two operating mines have demonstrated an ability to produce an average run rate of 7.0 million metric tons of HCC and 7.5 million metric tons of HCC when operating at full capacity.

As of December 31, 2021, our operations were producing below this capacity primarily due to the United Mine Workers of America (“UMWA”) strike.

Our operations have continued throughout the period of the strike, and have generated strong cash flows throughout the period of the strike, including $150.9 million in net income and $457.0 million in Adjusted EBITDA during the year ended December 31, 2021.

Coal Preparation and Blending

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Xcoal has 20 offices worldwide, including in Brussels, the UAE, Singapore, Beijing, Shanghai, Seoul, Mumbai, and Rio de Janeiro.

We expect to be able to leverage Xcoal’s more than 30 year history selling coal to key European and Asian steel customers to further improve the selling prices of our met coal relative to the global Platts Index.

We expect to be able to leverage Xcoal’s more than 30 year history selling coal to key European and Asian steel

customers to further improve the selling prices of our met coal relative to the global Platts Index.

The increase in our sales to Asia in the current year was driven by Xcoal sales into China.

Trade Names, Trademarks and Patents

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The Company takes pride in its environmental record and strives to be an industry leader in environmental stewardship.

The Company recently released its inaugural environmental, social and governance sustainability report that was prepared in accordance with the Global Reporting Initiative ("GRI") Standards -- Core Option and highlights the Company's strong environmental record.

The Company recently released its annual environmental, social and governance sustainability report that was prepared in accordance with the codified standards of the Sustainability Accounting Standards Board and highlights the Company's strong environmental record.

We are partnering with a third-party consultant to develop a comprehensive ESG strategy that will be focused on the following, among others, materiality and risk assessment, creating and tracking measurable goals, GHG reduction, water usage reduction and reporting standards.

This comprehensive plan will be completed and made publicly available in 2022.

We continually invest in new technologies to lessen our environmental impact and to improve our efficiencies and productivity.

Our executive leadership team is focused on establishing qualitative and quantitative goals that hold us accountable to our investors, employees, customers, community, as well as other stakeholders.

As noted above, we are actively engaged in the EPA’s voluntary programs to reduce and report GHG emissions and to improve estimates of national GHG emissions.

For example, we are actively engaged in the EPA’s voluntary programs to reduce and report GHG emissions and to improve estimates of national GHG emissions.

With regard to the Company’s water management efforts, we have a strong environmental compliance record with the EPA’s National Pollutant Discharge Elimination System (NPDES) program, which addresses water pollution by regulating point sources that discharge pollutants into the waters of the United States.

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We continue to improve our land reclamation efforts, which has yielded success across all of our sites and facilities.

We began an aggressive reclamation campaign in 2017, which has successfully reduced reclamation liability by 1,333 acres.

We began an aggressive reclamation campaign in 2017, which has successfully reclaimed

1,335 acres to date.

Finally, the Company is highly proactive in planning all ongoing and future activities to minimize negative impacts to wildlife and their habitats by mining activities.

All of the Company’s permit applications are reviewed by the regional U.S.

Fish and Wildlife office for potential negative impacts to any protected species or habitat within the area.

The Company has dedicated employees that oversee the Company’s efforts with respect to various environmental issues, including our efforts with respect to the programs discussed above.

Through their efforts, as well as oversight by our senior management and the Board, we continue to make significant progress in improving our environmental stewardship.

The Environmental, Health & Safety Committee of the Board is tasked with assessing the effectiveness of the Company’s environmental, health and safety policies, programs and initiatives, as well as reviewing and monitoring the Company’s

compliance with applicable environmental, health and safety laws, rules and regulations.

This committee receives quarterly reports from Company management, during which the committee reviews and discusses the Company’s various environmental, health and safety initiatives and any issues related to these areas.

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In addition, certain of our subsidiaries are responsible for medical and disability benefits for black lung disease under the Federal Coal Mine Health and Safety Act of 1969, the Mine Act and the Black Lung Benefits Revenue Act of 1977 and the Black Lung Benefits Reform Act of 1977 (together, the “Black Lung Benefits Act”), each as amended, and are insured under a guaranteed cost insurance policy beginning on April 1, 2016 through May 31, 2018 for black lung claims of any of our employees.

From June 1, 2018 to May 31, 2020, the Company had a deductible policy where the Company is responsible for the first $0.5 million for each black lung claim from any of our employees.

From June 1, 2018 to May 31, 2020, the Company had a deductible policy where the Company was responsible for the first $0.5 million for each black lung claim from any of our employees.

Beginning on June 1, 2020, the Company has a deductible policy where the Company is responsible for the first $1.0 million for each black lung related claim from any of our employees.

We also assumed all of the black lung liabilities of Walter Energy and its U.S.

subsidiaries.

We are self-insured for these black lung liabilities and have posted $17.0 million in surety bonds and $8.5 million of collateral recognized as short term investment in addition to maintaining a black lung trust of $3.0 million that was acquired from Walter Energy.

We received a letter from the Department of Labor on February 21, 2020 under its new process for self-insurance renewals that would require us to increase the amount of collateral posted to $39.8 million, but we have appealed such increase.

Changes in the estimated claims to be paid or changes in the amount of collateral required by the Department of Labor may have a greater impact on our profitability and cash flows in the future.” Under the Black Lung Benefits Act, as amended, each coal mine operator must make payments to a trust fund for the payment of benefits and medical expenses to claimants who last worked in the coal industry prior to January 1, 1970.

We are self-insured for these black lung liabilities and have posted $17.0 million in surety bonds and $8.5 million of collateral recognized as short term investments in addition to maintaining a black lung trust of $2.6 million that was acquired from Walter Energy.

We received a letter from the Department of Labor ("DOL") on February 21, 2020 under its new process for self-insurance renewals that would require us to increase the amount of collateral posted to $39.8 million, but we have appealed such increase.

We received another letter from the DOL on December 8, 2021 requesting additional information to support our appeal of the collateral requested by the DOL.

Changes in the estimated claims to be paid or changes in the amount of collateral required by the DOL may have a greater impact on our profitability and cash flows in the future.” Under the Black Lung Benefits Act, as amended, each coal mine operator must make payments to a trust fund for the payment of benefits and medical expenses to claimants who

last worked in the coal industry prior to January 1, 1970.

The trust fund is funded by an excise tax on production;

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The proceeds are used to reclaim mine lands closed or abandoned prior to 1977.

On December 7, 2006, the Abandoned Mine Land Program was extended for another 15 years.

On November 15, 2021, the Abandoned Mine Land Program was extended through September 2034.

We maintain extensive coal refuse areas and slurry impoundments at our mining complexes.

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We use surety bonds and letters of credit to provide financial assurance for certain transactions and business activities.

Federal and state laws require us to obtain surety bonds or other acceptable security to secure payment of certain long-term obligations including mine closure or reclamation costs and other miscellaneous obligations.

Federal and state laws require us to obtain surety bonds or other acceptable security to secure payment of certain long-term

obligations including mine closure or reclamation costs and other miscellaneous obligations.

The amount of security required to be obtained can change as the result of new federal or state laws, as well as changes to the factors used to calculate the bonding or security amounts.

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In response to these bankruptcies, the OSM issued a Policy Advisory in August 2016 to state agencies that are authorized under the SMCRA to implement the act in their states, notifying those state agencies that the OSM would more closely review self-bonding arrangements.

Certain states had previously announced that they would no longer accept self-bonding to secure reclamation obligations under the state mining

Certain states had previously announced or have since announced that they would either limit or no longer accept self-bonding to secure reclamation obligations under the state mining laws.

Although the Policy Advisory was rescinded in October 2017, some states may be reluctant to approve self-bonding arrangements.

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It is unclear when a final rule will be issued and/or whether and how additional actions by the Biden Administration could impact further regulatory developments in this area.

In June 2010, Earthjustice petitioned the EPA to make a finding that emissions from coal mines may reasonably be anticipated to endanger public health and welfare, and to list them as a stationary source subject to further regulation of emissions.

On April 30, 2013, the EPA denied the petition.

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However, on March 28, 2017, the Trump Administration issued an executive order directing the EPA to review all three actions and, if appropriate, initiate a rulemaking to rescind or revise the rules consistent with the stated policy of promoting clean and safe development of the nation’s energy resources, while at the same time avoiding regulatory burdens that unnecessarily encumber energy production.

Accordingly, on December 20, 2018, the EPA published a

proposed rule to amend the standards for new, modified and reconstructed stationary power plants.

Also, on July 8, 2019, the EPA published a final replacement rule that would "reduce the compliance burden" of the Clean Power Plan.

However, on January 20, 2021, President Biden issued an executive order directing federal agencies, including the EPA, to immediately review all federal regulations promulgated during the last four years that conflict with specified objectives, including the reduction of greenhouse gas emissions.

If the Clean Power Plan is retained in its original form, it could have a material adverse impact on the demand for thermal coal nationally.

While the Clean Power Plan does not affect our marketing of met coal, the continued regulatory focus could lead to future GHG regulations for the mining industry and its steelmaking customers, which ultimately could make it more difficult or costly for us to conduct our operations or adversely affect demand for our products.

Accordingly, on July 8, 2019, the EPA published a final replacement rule that would "reduce the compliance burden" of the Clean Power Plan.

On January 19, 2021, the D.C.

Circuit Court of Appeal vacated the replacement rule and remanded the rulemaking to the EPA for further proceedings.

On February 12, 2021, the EPA clarified that states are not required to take any actions to develop or submit plans under the Clean Power Plan or the now-vacated replacement rule.

The EPA is working on new rules to limit carbon emissions from power plants, which, depending on the requirements, could have a material adverse impact on the demand for thermal coal nationally.

While the above power plant rules do not affect our marketing of met coal, the continued regulatory focus could lead to future GHG regulations for the mining industry and its steelmaking customers, which ultimately could make it more difficult or costly for us to conduct our operations or adversely affect demand for our products.

Notably, in October 2021, the Supreme Court agreed to hear a case addressing the scope of the EPA's authority to regulate GHGs;

oral arguments are scheduled for February 28, 2022.

The Supreme Court's ruling in this case could have a substantial impact on the EPA's ability to regulate GHG emissions.

Demand for met coal and natural gas also may be impacted by international efforts to reduce GHG emissions.

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Although the United States withdrew from the Paris Agreement, effective November 4, 2020, President Biden issued an executive order on January 20, 2021 to rejoin the Paris Agreement, which took effect on February 19, 2021.

Furthermore, many state and local leaders have stated their intent to intensify efforts to support the commitments set forth in the international accord.

On April 21, 2021, the United States announced that it was setting an economy-wide target of reducing its GHG emissions by 50-52 percent below 2005 levels in 2030.

In November 2021, in connection with the 26th session of the Conference of Parties in Glasgow, Scotland, the United States and other world leaders made further commitments to reduce GHGs, including reducing global methane emissions by at least 30% by 2030 and ending the international public finance of new unabated coal power generation abroad by the end of 2021.

The resulting Glasgow Climate Pact calls upon the parties to "accelerate efforts towards the phase-down of unabated coal power and phase-out inefficient fossil fuel subsidies." Furthermore, many state and local leaders have stated their intent to intensify efforts to support the international commitments.

It is possible that the Paris Agreement and subsequent domestic and international regulations will have adverse effects on the market for met coal, natural gas, and other fossil fuel products.

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Finally, climate change may cause more extreme weather conditions such as more intense hurricanes, thunderstorms, tornadoes and snow or ice storms, as well as rising sea levels and increased volatility in seasonal temperatures.

Extreme weather conditions can interfere with our services and increase our costs, and damage resulting from extreme weather may not be fully insured.

Extreme weather conditions can interfere with our services and increase our costs, and damage resulting from extreme weather may not be fully

However, at this time, we are unable to determine the extent to which climate change may lead to increased storm or weather hazards affecting our operations.

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The CWA and corresponding state laws affect our operations by imposing restrictions on discharges of wastewater into creeks and streams.

These restrictions, more often than not, require us to pre-treat the wastewater

prior to discharging it.

These restrictions, more often than not, require us to pre-treat the wastewater prior to discharging it.

Permits requiring regular monitoring and compliance with effluent limitations and reporting requirements govern the discharge of pollutants into regulated waters.

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However, new requirements under the CWA and corresponding state laws may cause us to incur significant additional costs that could adversely affect our operating results.

For instance, in 2016, the EPA published stringent water quality standards for selenium.

We have begun to incorporate these new standards into our current permit applications;

however, there can be no guarantee that we will be able to meet these or any other new standards with respect to our permit applications.

We are in material compliance with our current permits;

however, there can be no guarantee that we will be able to meet new or future standards with respect to our permit applications.

• Dredge and Fill Permits .

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The new rules could expand the scope of CWA jurisdiction, making more waters subject to the CWA’s permitting and other requirements in the case of discharges.

However, on October 22, 2019, the agencies published a final rule to repeal the 2015 rules.

The 2015 rules and the 2019 repeal are subject to several ongoing legal challenges.

Also, on April 21, 2020, the EPA and the USACE published a final rule replacing the 2015 rule, and significantly reducing the waters subject to federal regulation under the Clean Water Act.

Several state and environmental groups have challenged the replacement rule.

As a result of such recent developments, it remains unclear whether and how the rules will be implemented.

However, on October 22, 2019, the agencies published a final rule to repeal the 2015 rules and then, on April 21, 2020, the EPA and the USACE published a final rule replacing the 2015 rule, and significantly reducing the waters subject to federal regulation under the Clean Water Act.

On August 30, 2021, a federal court struck down the replacement rule and, on December 7, 2021, the EPA and the USACE published a proposed rule that would return to a pre-2015 definition of "waters of the United States" while the agencies continue to consult with stakeholders in both the implementation of the rules and the future regulatory actions.

Additionally, on January 24, 2022, the Supreme Court agreed to hear a case addressing the proper test for determining whether wetlands are "waters of the United States." This case would provide much needed clarification, as confusion over the scope of CWA jurisdiction has led to significant permitting delays, litigation, and uncertainty in the mining industry.

Resource Conservation and Recovery Act

The Resource Conservation and Recovery Act (“RCRA”) and corresponding state laws establish standards for the management of solid and hazardous wastes generated at our various facilities.

Besides affecting current waste disposal practices, RCRA also addresses the environmental effects of certain past hazardous waste treatment, storage and disposal practices.

Besides affecting current waste disposal practices, RCRA also addresses the environmental effects of certain past hazardous waste treatment, storage and disposal

In addition, RCRA also requires certain of our facilities to evaluate and respond to any past release, or threatened release, of hazardous waste that may pose a risk to human health or the environment.

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In addition, the disposal, release or spilling of some products used by coal companies in operation, such as chemicals, could trigger the liability provisions of CERCLA or similar state laws.

former subsidiaries, sent waste materials, and (4) sites at which hazardous substances from our facilities’ operations have otherwise come to be located.

Thus, we may be subject to liability under CERCLA and similar state laws for properties that (1) we currently own, lease or operate, (2) we, our predecessors, or former subsidiaries have previously owned, leased or operated, (3) sites to which we, our predecessors or former subsidiaries, sent waste materials, and (4) sites at which hazardous substances from our facilities’ operations have otherwise come to be located.

Endangered Species Act and Similar Laws

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Human Capital

As of December 31, 2020, we had 1,401 employees, of whom 970 were hourly employees and 431 were salaried employees, and of whom approximately 67.2% were covered by the UMWA CBA, which expires on March 31, 2021.

We have not had any union-organized work stoppages since our inception.

We believe that we have good relationships with our employees and with the unions representing our employees.

We are currently renegotiating our UMWA CBA.

There is no guarantee that we will reach an agreement in a timely manner, and if an agreement is not reached, there could be an interruption in production at each of our mines.

As of December 31, 2021, we had 704 employees, of whom 287 were hourly employees and 417 were salaried employees.

The Company prioritizes employee safety, wellbeing, personal and professional development, and diversity and inclusion.

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We incorporate safety principles into every aspect of our business.

We are proud of our safety record, which includes a safety incident rate that is 32% better than the U.S.

We are proud of our safety record, which includes a safety incident rate that has consistently been over 30% better than the U.S.

industry rate and an incident severity measure that is consistently less than half the national average.

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code of business conduct and ethics training, driving policy, employee handbook, safety policy and work rules.

We also require

the following annual trainings on certain topics among others:

We also require the following annual trainings on certain topics among others:

Anti-Corruption and Anti-Bribery, cybersecurity, diversity and harassment, employee hazard, surface retraining, underground retraining and discipline specific retraining.

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We provide our employees with competitive fixed and/or variable pay, and for eligible employees we currently provide access to medical, dental and life insurance benefits, disability coverage, 401(k) plan and employee assistance programs, among other benefits.

During the unprecedented COVID-19 global pandemic, we focused first and foremost on the safety of our employees, supporting our local community and ensuring our employees were able to remain employed.

We worked with the National Mining Association and other key national and local stakeholders to secure essential industry designation for the mining industry so that our employees and their families would not have to worry about financial stability during a time of great stress in our country.

We have put in place numerous safety procedures to protect our workforce during the pandemic and continue to enhance our practices to remain aligned with federal, state, local and international regulations and guidelines.

Further, despite the negative impact that the COVID-19 pandemic has had on our business, we have not cut salaries or hourly rates for our employees, nor have we adjusted our benefits coverage and we have not had to furlough any employees.

Collective Bargaining Agreement

Our Collective Bargaining Agreement (“CBA”) with the UMWA expired on April 1, 2021, and the UMWA initiated a strike.

We continue to negotiate in good faith with the UMWA, and we remain committed to pursuing resolution.

For more labor related information go to https://warriormetcoalfacts.com.

Available Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business