This Quarterly Report on Form 10-Q contains certain forward-looking statements of expected future developments, as defined in the Private Securities Litigation Reform Act of 1995. This discussion contains forward-looking statements about our business, operations and industry that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations and intentions. Our future results and financial condition may differ materially from those we currently anticipate as a result of the factors we describe under "Cautionary Statement Concerning Forward-Looking Statements."

Unless the context otherwise requires, references in this report to "the Company," "we," "our," "us," or like terms, when used in a historical context (periods prior to July 18, 2011), refer to the cokemaking and coal mining operations of Sunoco prior to their transfer to the Company in connection with our separation from Sunoco (the "Separation"). References when used in the present tense or prospectively (after July 18, 2011) refer to SunCoke Energy, Inc. and its subsidiaries.

This "Management's Discussion and Analysis of Financial Condition and Results of Operations" is based on financial data derived from the financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and certain other financial data that is prepared using non-GAAP measures. For a reconciliation of these non-GAAP measures to the most comparable GAAP components, see "Non-GAAP Financial Measures" at the end of this Item.

Overview

We are the largest independent producer of coke in the Americas, as measured by tons of coke produced each year, and have 50 years of coke production experience. Coke is a principal raw material in the integrated steelmaking process. We have designed, developed and built, and own and operate five cokemaking facilities in the United States ("U.S."). Our fifth U.S. cokemaking facility in Middletown, Ohio was recently completed and commenced operations in October 2011.

During 2011, we sold approximately 3.8 million tons of coke to our three primary customers in the U.S.: ArcelorMittal, U.S. Steel, and AK Steel. With the completion of our Middletown facility, our total U.S. cokemaking capacity has increased to approximately 4.2 million tons of coke per year. We also operate a cokemaking facility in Brazil under licensing and operating agreements on behalf of a Brazilian subsidiary of ArcelorMittal. The Brazilian facility is the largest cokemaking facility that we operate, with production capacity of approximately 1.7 million tons of coke per year.

All of our coke sales are made pursuant to long-term take-or-pay agreements. These coke sales agreements have an average remaining term of approximately 10 years and contain pass-through provisions for costs we incur in the cokemaking process, including coal procurement costs, subject to meeting contractual coal-to-coke yields, operating and maintenance expenses, costs related to the transportation of coke to our customers, taxes (other than income taxes) and costs associated with changes in regulation. The coke sales agreement and energy sales agreement with AK Steel at our Haverhill facility are subject to early termination by AK Steel beginning in January 2014 under limited circumstances and provided that AK Steel has given at least two years prior notice of its intention to terminate the agreements and certain other conditions are met. In addition, AK Steel is required to pay a significant termination payment to us if it exercises its termination right prior to 2018. No other coke sales contract has an early termination clause.

The following table sets forth information about our cokemaking facilities:

                                                                                                                                  Cokemaking
                                                                           Year of         Contract         Number of              Capacity
Facility                                 Location          Customer        Start Up       Expiration        Coke Ovens        (thousands of tons)        Use of Waste Heat
Owned and Operated:
Jewell                                Vansant,                                                                                                          Partially used for
                                      Virginia           ArcelorMittal          1962             2020               142                        720      thermal coal drying

Indiana Harbor                        East Chicago,                                                                                                     Heat for power
                                      Indiana            ArcelorMittal          1998             2013               268                      1,220      generation

Haverhill Phase I                     Franklin           ArcelorMittal          2005             2020               100                        550      Process steam

Phase II                              Furnace, Ohio        AK Steel             2008             2022               100                        550      Power generation

Granite City                          Granite City,                                                                                                     Steam for power
                                      Illinois            U.S. Steel            2009             2025               120                        650      generation

Middletown(1)                         Middletown,
                                      Ohio                 AK Steel             2011             2032               100                        550      Power generation

Total                                                                                                               830                      4,240

Operated:
Vitσria                                                                                                                                                 Steam for power
                                      Vitσria, Brazil    ArcelorMittal          2007             2023               320                      1,700      generation

Total                                                                                                             1,150                      5,940

(1) Cokemaking capacity represents stated capacity for production of blast furnace coke. Middletown production and sales volumes are based on "run of oven" capacity, which include both blast furnace coke and small coke. Middletown capacity on a "run of oven" basis is 578 thousand tons per year.

We own and operate coal mining operations in Virginia and West Virginia that sold approximately 1.4 million tons of metallurgical coal (including internal sales to our cokemaking operations) in 2011. In January 2011, we acquired the Harold Keene Coal Co., Inc. and its affiliated companies ("HKCC") whose results are included in the Coal Mining segment from the date of acquisition. Our mining area consists of 14 active underground mines, two active surface mines and two active highwall mines, as well as three preparation plants and four load-out facilities in Russell and Buchanan Counties in Virginia and McDowell County, West Virginia.

Our Separation from Sunoco

On January 17, 2012 (the "Distribution Date"), we became an independent, publicly-traded company following our separation from Sunoco, Inc. ("Sunoco"). The Separation occurred in two steps (the "Separation"):

• We were formed as a wholly-owned subsidiary of Sunoco in 2010. On July 18, 2011 (the "Separation Date"), Sunoco contributed the subsidiaries, assets and liabilities that were primarily related to its cokemaking and coal mining operations to us in exchange for shares of our common stock. As of such date, Sunoco owned 100 percent of our common stock. On July 26, 2011, we completed an initial public offering ("IPO") of 13,340,000 shares of our common stock, or 19.1 percent of our outstanding common stock. Following the IPO, Sunoco continued to own 56,660,000 shares of our common stock, or 80.9 percent of our outstanding common stock.

• On the Distribution Date, Sunoco made a pro-rata, tax free distribution (the "Distribution") of the remaining shares of our common stock that it owned in the form of a special stock dividend to Sunoco shareholders. Sunoco shareholders received 0.53046456 of a share of common stock for every share of Sunoco common stock held as of the close of business on January 5, 2012, the record date for the Distribution. After the Distribution, Sunoco ceased to own any shares of our common stock.

Second Quarter Key Financial Results

• Revenues increased 22.0 percent in the three months ended June 30, 2012 to $460.9 million primarily due to higher sales in our Other Domestic Coke segment driven by contributions from our Middletown facility, the pass-through of higher coal costs and increased volumes in our Coal Mining segment.

• Net income attributable to stockholders increased $0.2 million for the three months ended June 30, 2012, to $22.7 million, or $0.32 per share, compared with the three months ended June 30, 2011. This increase is due to the contribution of our Middletown facility and strong performance of our cokemaking operations, offset by an increase in our net interest cost as a stand-alone company.

• Adjusted EBITDA was $65.5 million in the three months ended June 30, 2012 compared to $37.7 million in the same period prior year, an increase of $27.8 million. This increase was driven by the successful ramp up of production at our Middletown facility, improved operations at our Indiana Harbor and Granite City facilities, higher yields and operating cost recovery in our Jewell Coke segment and reduced corporate expenses. Higher costs at our Coal Mining segment partly offset this improvement.

Recent Developments and Outlook

• Indiana Harbor refurbishment. The initial term of our Indiana Harbor coke sales agreement with the customer ends on September 30, 2013. In preparation for negotiation of a new long-term contract, we conducted an engineering study to identify major maintenance projects necessary to preserve the production capacity of the facility. In accordance with the findings of this engineering study, we expect to spend approximately $50 million in the 2012 through 2014 timeframe to refurbish the facility, of which approximately $20 million will be spent in 2012. This estimate includes anticipated spending that may be required in connection with the settlement of the Notices of Violation ("NOV") at the Indiana Harbor facility. While we believe that there is a reasonable likelihood that we will reach agreement with our customer for a new long-term contract, such an agreement may not be reached.

• Timing of potential new U.S. plant. We are currently discussing opportunities for developing new heat recovery cokemaking facilities with domestic and international steel companies. Such cokemaking facilities could be either wholly-owned or developed through other business structures. As applicable, the steel company customers would be expected to purchase coke production under long-term contracts. The facilities would also generate steam or electricity for sale. We originally estimated that this plant could have a capacity of up to 1.1 million tons, but now believe a smaller facility size with 120 ovens and 660 thousand tons of capacity would be more closely aligned with near-term U.S. market demand. This potential new facility could serve multiple customers and may have a portion of its capacity reserved for coke sales in the spot market. We are in the early stages of permitting for this potential facility in Kentucky, but are also assessing alternative sites in other states. In light of the current economic and business outlook, we expect to defer seeking customer commitments for this potential facility until we make further progress on obtaining permits, which we anticipate receiving in 2013. Our ability to construct a new facility and to enter into new commercial arrangements is dependent upon market conditions in the steel industry.

• Expansion of growth strategy. We are exploring opportunities to enter into business relationships or other transactions with respect to existing cokemaking facilities in order to opportunistically capture market share in the United States and Canada. We believe that the efficiencies we have developed from our experience as the leading independent U.S. coke producer and our proven ability to provide a reliable supply of coke make us well suited to purchase or operate facilities, including by-product cokemaking facilities, currently operated by steelmakers or others that would prefer to utilize the capital committed to such equipment for other purposes. In addition to our exploration of opportunities described above, the Company continues to pursue investment opportunities to grow our international footprint in India.

• Coal operations. In view of current coal market conditions, which have deteriorated in the first half of 2012, we decided to defer our previously announced expansion plans for our Jewell underground mines, including deferring substantially all capital expenditures associated with the expansion plan. We also have idled certain high cost mines while consolidating the labor force and equipment in more productive mines in an effort to reduce our mining costs. With the idling and consolidation plan, we continue to expect to meet the Jewell coal mining production target to produce 1.15 million tons in 2012, but do not anticipate

In June 2011, we entered into a series of coal transactions with Revelation Energy, LLC ("Revelation"). Under a contract mining agreement, Revelation mines certain coal reserves at our Jewell coal mining operations that are included in our current proven and probable reserve estimates. This coal will be mined, subject to the satisfaction of certain conditions, over a three-year period. Although mining began in the first quarter of 2012, permitting delays for a portion of the reserves resulted in lower than expected production levels. We continue to expect approximately 1.2 million tons of coal in the aggregate to be mined over the three-year period but with a larger percentage being mined in the last two years. The construction of a rapid train coal loading facility has also been delayed and the majority of the approximately $15 million cost is now expected to occur in 2013.

• Formation of a master limited partnership. On July 19, 2012, we announced that our Board of Directors approved the formation of a master limited partnership ("MLP") and the filing of a registration statement to effect the initial public offering of common units representing limited partner interests in the MLP. The key assets of the MLP are expected to be a portion of our interests in each of our Haverhill and Middletown cokemaking facilities.

If an initial public offering of the MLP is completed, we would own the general partner of the MLP, as well as all of the MLP incentive distribution rights and a portion of the common units representing limited partner interests in the MLP. We expect to close the initial public offering of the MLP not earlier than the fourth quarter of 2012, subject to prevailing market conditions.

• Outlook. We continue to expect diluted earnings per share attributable to our stockholders to be in the range of $1.30 to $1.65 and Adjusted EBITDA to be in the range of $250 million to $280 million for 2012. We expect that the strong performance in our domestic coke operations will offset the impact of market and operational challenges in our Coal Mining segment. Domestic coke production in 2012 is expected to be in excess of 4.3 million tons, which would exceed 100 percent capacity utilization. Coal production in 2012 is expected to be approximately 1.6 million tons. We expect free cash flow in 2012 to exceed $100 million, compared to our original 2012 guidance of free cash flow in excess of $50 million. The expected increase in free cash flow is due to the deferral of capital expenditures associated with our coal expansion plan, the anticipated timing of potential international investment opportunities and decreases in working capital. See "Non-GAAP Financial Measures" at the end of this Item.

Items Impacting Comparability

• Indiana Harbor Cokemaking Operations. On September 30, 2011, we acquired the 19 percent interest held by an affiliate of GE Capital in the partnership that owns the Indiana Harbor facility. As a result of this transaction, we now hold an 85 percent interest in the partnership. The remaining 15 percent interest in the partnership is owned by an affiliate of DTE Energy Company.

In the fourth quarter of 2011, we clarified the interpretation of certain contract and billing items with our customer. As a result, coal spilled during the coke oven charging process ("Pad Coal") may not be subsequently reused for making coke for this customer, unless it is included in the coal blend at zero cost. In the first and second quarters of 2012, the Company recorded approximately $1.5 million and $0.5 million in lower of cost or market adjustments on existing Pad Coal inventory, respectively, and is currently remarketing this Pad Coal to other customers. Additionally, in conjunction with the work performed to address the contract and billing issues, the Company recorded a $2.8 million charge for a reduction in coke inventory in the first quarter of 2012.

• Middletown Cokemaking Operations. We commenced operations at our Middletown, Ohio cokemaking facility in October 2011 and reached full production in the first quarter of 2012, ahead of previous expectations. In the three months ended June 30, 2012, the Middletown cokemaking facility produced 153 thousand tons of coke and contributed $72.0 million and $14.0 million to revenues and Adjusted EBITDA, respectively. In the six months ended June 30, 2012, the Middletown cokemaking facility produced 295 thousand tons of coke and contributed $140.5 million and $25.5 million to revenues and Adjusted EBITDA, respectively. Higher costs and lower than expected coal-to-coke yield performance of $1.5 million and $5.5 million ($4.0 million related to start-up activities) are included in the results for the three and six months ended June 30, 2012, respectively.

• Loss on Firm Purchase Commitments. During the first quarter of 2011, we estimated that Indiana Harbor would fall short of its 2011 annual minimum coke production requirements by approximately 122 thousand tons. Accordingly, we entered into contracts to procure approximately 133 thousand tons of coke from third parties. However, the coke prices in the purchase agreements exceeded the sales price in our contract with ArcelorMittal. This pricing difference resulted in an estimated loss on firm purchase commitments of $18.5 million ($12.2 million attributable to net parent investment and $6.3 million attributable to noncontrolling interests), which was recorded during the first quarter of 2011. In the second quarter of 2011, the Company recorded lower of cost or market adjustments of $1.2 million ($0.8 million attributable to SunCoke Energy, Inc./net parent investment and $0.4 million attributable to noncontrolling interests) on this purchased coke. In the fourth quarter of 2011, we recorded lower of cost or market adjustments of $0.7 million ($0.6 million attributable to SunCoke Energy, Inc./net parent investment and $0.1 million attributable to noncontrolling interests) on this purchased coke. In the second quarter of 2011, the Company sold 38 thousand tons of this coke to ArcelorMittal. Operational improvements at Indiana Harbor subsequent to the first quarter of 2011 increased coke production for the balance of 2011 and Indiana Harbor was able to meet its 2011 contractual requirements with ArcelorMittal.

In the third quarter of 2011, the Company entered into an agreement to sell approximately 95 thousand tons of this purchased coke to a customer on a consignment basis that will expire, as amended, on the earlier of December 31, 2012 or full consumption of, and payment for, the coke. If, after December 31, 2012, the customer has not consumed all of the consigned coke and the Company chooses to remove any of the remaining coke from the customer's facility, the Company will be entitled to collect a commitment removal fee. The customer did not consume any coke in fiscal 2011. In the six months ended June 30, 2012, the customer consumed approximately 27 thousand tons of consigned coke.

• Financing Activities. Prior to the IPO, our primary source of liquidity was cash from operations and borrowings from Sunoco. Our funding from Sunoco was through floating-rate borrowings from Sunoco, Inc. (R&M), a wholly-owned subsidiary of Sunoco. The agreements between Sunoco and the Company related to these borrowings terminated concurrent with the IPO and all outstanding advances were settled. Prior to the Separation Date, we also earned interest income on $289.0 million in notes receivable from The Claymont Investment Company ("Claymont"), a then wholly-owned subsidiary of Sunoco. In connection with the Separation, Sunoco contributed Claymont to SunCoke Energy. As a result, we no longer earn interest income for these notes, as the balances and related interest are eliminated in our consolidated results. For periods prior to the Separation Date, interest income exceeded interest expense.

Since July 26, 2011, we have issued $730.0 million in debt. For periods subsequent to the Separation Date, interest expense has exceeded interest income.

Results of Operations

The following table sets forth amounts from the Combined and Consolidated
Statements of Income for the three and six months ended June 30, 2012 and 2011:



                                           Three Months Ended June 30              Six Months Ended June 30
                                            2012                 2011              2012                2011
                                                                 (Dollars in millions)
Revenues
Sales and other operating revenue       $      460.7         $      377.6       $     941.3         $     710.6
Other income, net                                0.2                  0.3               0.9                 0.7

Total revenues                                 460.9                377.9             942.2               711.3

Costs and Operating Expenses
Cost of products sold and operating
expenses                                       377.4                319.1             785.7               600.5
Loss on firm purchase commitments                 -                    -                 -                 18.5
Selling, general and administrative
expenses                                        20.5                 22.6              41.2                38.8
Depreciation, depletion and
amortization                                    20.2                 14.7              38.6                27.7

Total costs and operating expenses             418.1                356.4             865.5               685.5

Operating income                                42.8                 21.5              76.7                25.8

Interest income - affiliate                       -                   5.7                -                 11.4
Interest income                                  0.2                  0.1               0.3                 0.1
Interest cost - affiliate                         -                  (1.7 )              -                 (3.2 )
Interest cost                                  (12.0 )                 -              (24.1 )                -
Capitalized interest                              -                   0.4                -                  0.7

Total financing (expense) income,
net                                            (11.8 )                4.5             (23.8 )               9.0

Income before income tax expense                31.0                 26.0              52.9                34.8
Income tax expense                               7.0                  1.9              12.3                 5.0

Net income                                      24.0                 24.1              40.6                29.8
Less: Net loss attributable to
noncontrolling interests                         1.3                  1.6               1.0                (4.6 )

Net income attributable to SunCoke
Energy, Inc./net parent investment      $       22.7         $       22.5       $      39.6         $      34.4

Three Months Ended June 30, 2012 compared to Three Months Ended June 30, 2011

Revenues. Our total revenues, net of sales discounts, were $460.9 million for the three months ended June 30, 2012 compared to $377.9 million for the corresponding period of 2011. Our Middletown facility contributed $72.0 million to the increase in revenues. The remaining increase was primarily driven by higher sales in our Jewell Coke segment due to the pass-through of higher coal prices and transportation costs and higher sales in our Coal Mining segment, due to increased volumes. Sales price discounts provided to our customers in connection with sharing of nonconventional fuel tax credits were $3.8 million and $3.1 million for the three months ended June 30, 2012 and 2011, respectively.

Costs and Operating Expenses. Total operating expenses were $418.1 million for the three months ended June 30, 2012 compared to $356.4 million for the corresponding period of 2011. The increase in cost of products sold and operating expenses was driven by higher purchased coal costs, increased coal and coke volumes and higher coal mining costs. Selling, general and administrative expenses decreased in 2012 due primarily to favorable comparison to the prior year period which included increased relocation charges and lower allocations from Sunoco, offset partially by increased stock compensation expense and higher payroll expenses due to increased headcount. Depreciation, depletion and amortization expense increased due to the addition of our Middletown cokemaking facility and higher depreciation at our Coal Mining segment due to prior year capital expenditures.

Financing (Expense) Income, Net. Net financing expense was $11.8 million for the three months ended June 30, 2012 compared to $4.5 million in net financing . . .