LEASE OBLIGATIONS

12 Months Ended

Dec. 31, 2024

NOTE 12 - LEASE OBLIGATIONS

Our operating leases consist primarily of leases for land, office space, rail cars and storage tanks. Our finance leases consist primarily of mining equipment and rail cars. When an implicit discount rate is not readily determinable under our leases, we use our incremental borrowing rate as the discount rate to determine the present value of the lease payments. Our incremental borrowing rate is the rate of interest that we would have to borrow on a collateralized basis over a similar term and amount in a similar economic environment to pay our lease obligations. We determine the incremental borrowing rates for our leases by adjusting the local risk-free interest rate with a credit risk premium corresponding to our credit rating. From time to time, we may enter into arrangements for the construction or purchase of an asset and then enter into a financing arrangement to lease the asset. We recognize leased assets and liabilities under these arrangements when we obtain control of the asset.

The following table summarizes the lease amounts included in our Statements of Consolidated Financial Position as of December 31, 2024 and 2023:


		Year Ended December 31,
(In millions)	Balance Sheet Location	2024		2023
Assets:
Finance	Property, plant and equipment, net	$	505	$	306
Operating	Other non-current assets	351		228
Current liabilities
Finance	Other current liabilities	$	63	$	49
Operating	Other current liabilities	50		41
Non-current liabilities
Finance	Other non-current liabilities	$	319	$	166
Operating	Other non-current liabilities	275		197

Lease costs are presented below:


	Year Ended December 31,
(In millions)	2024		2023		2022
Operating leases	$	64	$	59	$	64
Finance leases:
Amortization of right-of-use assets	38		92		103
Interest on lease liabilities	15		11		8
Short-term leases	174		171		160

Total	$	291	$	333	$	335

Lease terms and discount rates are shown below:


	December 31,
	2024
Weighted average lease term (in years):
Operating leases	11
Finance leases	9
Weighted average discount rate:
Operating leases	7	%
Finance leases	6	%

Other information related to leases was as follows:


	Year Ended December 31,
(In millions)	2024		2023		2022
Cash paid for amounts included in measurement of lease liabilities:
Operating leases within cash flows from operating activities	$	62	$	57	$	62
Finance leases within cash flows from operating activities	14		11		8
Finance leases within cash flows from financing activities	49		92		96
Right-of-use assets obtained in exchange for new finance lease liabilities1	97		93		55
Right-of-use assets obtained in exchange for new operating lease liabilities1	87		42		31

1Right-of-use assets obtained as a result of the Stelco Acquisition are not included.

The following is a summary of future minimum lease payments under noncancellable finance and operating leases as of December 31, 2024:


(In millions)	Finance Leases		Operating Leases
2025	$	81	$	68
2026	71		61
2027	58		57
2028	56		47
2029	52		38
Thereafter	193		188
Total future minimum lease payments	511		459
Less: imputed interest	129		134
Total lease payments	382		325
Less: current portion of lease liabilities	63		50
Long-term lease liabilities	$	319	$	275

The current and long-term portions of our finance and operating lease liabilities are included in Other current liabilities and Other non-current liabilities, respectively.