Quite frankly, each of these deals holds the prospect of being game changers for our company. We're excited about these deals as they're key pieces of our vertical integration plan to enhance our raw material self-sufficiency and lower our costs in the future.In recent years, as most of you know, AK Steel has paid a heavy price by being short when it comes to raw materials ownership. Increasing global demand for commodities such as coal and iron ore has caused the purchase prices for these and other steelmaking inputs to skyrocket. And as a result, our margins have been severely squeezed, and we've been working diligently to change that circumstance. These deals bring to fruition a lot of very hard work that will soon begin to expand our margins. With these transactions, we've created a clear roadmap towards our goal of 50% ownership of 2 of our most critical raw materials, iron ore and metallurgical coal. On today's call, we hope to provide you with some information on each of these 2 deals on why we believe they're great deals for AK Steel and how we expect them to help transform the company and its financial performance in years to come. Following a brief overview of each transaction, our Senior VP of Finance and CFO, Al Ferrara; together with our Executive VP and Operating Officer, John Kaloski and I would be happy to respond to your questions. As a reminder, some information provided during this call may include forward-looking statements that are based on certain assumptions and are subject to a number of risks and uncertainties, and of course, actual future results may vary materially. Please refer to the risks described in AK Steel's SEC reports including our Form 10-K and Form 10-Q. Let me start then with our acquisition of Solar Fuel Company, which is located in Somerset County in southwestern Pennsylvania. But first, as background, AK Steel, either directly or indirectly through our strong relationship with SunCoke, consumes about 2.5 million short tons of coal annually, consisting of various met coal grades, either low, mid or high-vol coal. These coals are used primarily at our coke battery in Middletown and the SunCoke heat recovery coke batteries located in Haverhill, Ohio and beginning later this quarter in Middletown, Ohio.
I have purposely noted that these are short, or 2,000 pound U.S. tons, simply because as you saw in our news release last evening, the iron ore joint venture was transacted using metric tonnes. Thus, to be consistent with our historic reporting and disclosure at AK Steel, which is based upon U.S. tons, we provided the short-ton equivalents of our iron ore transaction.Currently, we purchase 100% of our coal requirements, and we've been paying increasingly higher prices for coal as global demand has exceeded supply. Our goal has been to acquire an equity interest or to hedge at least 50% of our needs. We're excited to report that with the acquisition of Solar, we're positioned to achieve this important strategic objective. We have acquired 100% of the stock of Solar, which we're in the process of renaming AK Coal Resources, Inc. Our purchase price is $36 million, $24 million of which was paid yesterday at the closing, with the remainder to be paid over the next 3 years. In return, AK Steel has acquired certain land and mineral rights associated with more than 20 million short tons of recoverable low cost, low-vol met coal reserves. Currently, AK Coal Resources is a passive owner of assets, with minimal income derived from royalties earned from leases. However, our vision is certainly not to lease but rather to develop a series of mines to help meet our own coal needs and/or to sell the product as a financial hedge against our coal purchases going forward. Accordingly, we intend to immediately begin developing a mine plan and initiate the process to obtain the necessary permits. Once permitted, which may take up to 24 months, we would expect to invest an additional approximately $60 million in mining and coal preparation equipment, most of which would be expended between the years 2013 and 2015. Read the rest of this transcript for free on seekingalpha.com