LEASE OBLIGATIONS

12 Months Ended

Dec. 31, 2025

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, 2025 and 2024:


		Year Ended December 31,
(In millions)	Balance Sheet Location	2025		2024
Assets:
Finance	Property, plant and equipment, net	$	576	$	505
Operating	Other non-current assets	292		351
Current liabilities
Finance	Other current liabilities	$	67	$	63
Operating	Other current liabilities	48		50
Non-current liabilities
Finance	Other non-current liabilities	$	335	$	319
Operating	Other non-current liabilities	234		275

Lease costs are presented below:


	Year Ended December 31,
(In millions)	2025		2024		2023
Operating leases	$	72	$	64	$	59
Finance leases:
Amortization of right-of-use assets	65		38		92
Interest on lease liabilities	23		15		11
Short-term leases	161		174		171

Total	$	321	$	291	$	333

Lease terms and discount rates are shown below:


	December 31,
	2025
Weighted average lease term (in years):
Operating leases	10
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)	2025		2024		2023
Cash paid for amounts included in measurement of lease liabilities:
Operating leases within cash flows from operating activities	$	68	$	62	$	57
Finance leases within cash flows from operating activities	23		14		11
Finance leases within cash flows from financing activities	67		49		92
Right-of-use assets obtained in exchange for new finance lease liabilities1	87		97		93
Right-of-use assets obtained in exchange for new operating lease liabilities1	10		87		42

1Right-of-use assets obtained as a result of the 2024 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, 2025:


(In millions)	Finance Leases		Operating Leases
2026	$	88	$	64
2027	74		58
2028	71		47
2029	65		38
2030	49		31
Thereafter	180		158
Total future minimum lease payments	527		396
Less: imputed interest	125		114
Total lease payments	402		282
Less: current portion of lease liabilities	67		48
Long-term lease liabilities	$	335	$	234

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.