Annual report [Section 13 and 15(d), not S-K Item 405]

LEASE OBLIGATIONS

v3.25.4
LEASE OBLIGATIONS
 12 Months Ended
Dec. 31, 2025
Leases [Abstract]  
Lease Obligations
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.