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Fair value measurements | 9 Months Ended
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Sep. 30, 2013
Fair Value Disclosures [Abstract] |
Fair value measurements | Fair value measurements The following section describes the valuation methodology used to measure our financial assets and liabilities that were accounted for at fair value and are categorized based on the fair value hierarchy described in ASC 820 "Fair Value Measurements."
Overview of Century’s valuation methodology
| Level | Significant inputs
Cash equivalents | 1 | Quoted market prices
Trust assets (1) | 1 | Quoted market prices
Surety bonds | 1 | Quoted market prices
E.ON U.S. (“E.ON”) contingent obligation | 3 | Quoted LME forward market, management’s estimates of the LME forward market prices for periods beyond the quoted periods and management’s estimate of future level of operations at Century Aluminum of Kentucky, our wholly owned subsidiary (“CAKY”)
Primary aluminum sales premium contracts | 3 | Management’s estimates of future U.S. Midwest premium and risk-adjusted discount rates
Midwest premium contracts | 3 | Management’s estimates of future U.S. Midwest premium
(1) | Trust assets are currently invested in money market funds. These trust assets are held to fund the non-qualified supplemental executive pension benefit obligations for certain of our officers. The trust has sole authority to invest the funds in secure interest producing investments consisting of short-term securities issued or guaranteed by the United States government or cash and cash equivalents.
Fair value measurements Our fair value measurements include the consideration of market risks that other market participants might consider in pricing the particular asset or liability, specifically non-performance risk and counterparty credit risk. Consideration of the non-performance risk and counterparty credit risk are used to establish the appropriate risk-adjusted discount rates used in our fair value measurements. The following table sets forth our financial assets and liabilities that were accounted for at fair value on a recurring basis by the level of input within the ASC 820 fair value hierarchy. As required by GAAP for fair value measurements and disclosures, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and the placement within the fair value hierarchy levels. There were no transfers between Level 1 and 2 during the periods presented. There were no transfers into or out of Level 3 during the periods presented below. It is our policy to recognize transfers into and transfers out of Level 3 as of the actual date of the event or change in circumstances that caused the transfer.
Recurring Fair Value Measurements | As of September 30, 2013
| Level 1 | Level 2 | Level 3 | Total
ASSETS: |  |  |  |
Cash equivalents | $ | 119,183 |  | $ | — |  | $ | — |  | $ | 119,183 |
Trust assets (1) | 11,588 |  | — |  | — |  | 11,588 |
Surety bonds | 1,574 |  | — |  | — |  | 1,574 |
Midwest premium contracts | — |  | — |  | 363 |  | 363 |
TOTAL | $ | 132,345 |  | $ | — |  | $ | 363 |  | $ | 132,708 |
LIABILITIES: |  |  |  |
E.ON contingent obligation – net (2) | $ | — |  | $ | — |  | $ | — |  | $ | — |
Primary aluminum sales contract | — |  | — |  | 771 |  | 771 |
TOTAL | $ | — |  | $ | — |  | $ | 771 |  | $ | 771 |
(1) | Trust assets are currently invested in money market funds.
(2) | Based on the LME forward market prices for primary aluminum at September 30, 2013 and management's estimate of the LME forward market for periods beyond the quoted periods, we believe that we will not have any payment obligations for the E.ON contingent obligation through the term of the agreement which expires in 2028. See Note 10 Debt for additional information about the E.ON contingent obligation fair value.
Recurring Fair Value Measurements | As of December 31, 2012
| Level 1 | Level 2 | Level 3 | Total
ASSETS: |  |  |  |
Cash equivalents | $ | 168,309 |  | $ | — |  | $ | — |  | $ | 168,309 |
Trust assets (1) | 14,254 |  | — |  | — |  | 14,254 |
Surety bonds | 2,123 |  | — |  | — |  | 2,123 |
TOTAL | $ | 184,686 |  | $ | — |  | $ | — |  | $ | 184,686 |
LIABILITIES: |  |  |  |
E.ON contingent obligation – net | $ | — |  | $ | — |  | $ | 15,369 |  | $ | 15,369 |
Primary aluminum sales contract | — |  | — |  | 1,170 |  | 1,170 |
TOTAL | $ | — |  | $ | — |  | $ | 16,539 |  | $ | 16,539 |
(1) | Trust assets are currently invested in money market funds.
Change in Level 3 Fair Value Measurements during the three months ended September 30,
| Derivative liabilities - net
| 2013 | 2012
Beginning balance, July 1, | $ | (773 | ) | $ | (16,024 | )
Total gain (loss) included in earnings | 365 |  | (371 | )
Ending balance, September 30, | $ | (408 | ) | $ | (16,395 | )
Amount of gain (loss) included in earnings attributable to the change in unrealized losses relating to assets and liabilities held at September 30, | $ | 365 |  | $ | (371 | )
Change in Level 3 Fair Value Measurements during the nine months ended September 30,
| Derivative liabilities - net
| 2013 | 2012
Beginning balance, January 1, | $ | (16,539 | ) | $ | (14,760 | )
Total gain (loss) included in earnings | 16,131 |  | (1,529 | )
Settlements | — |  | (106 | )
Ending balance, September 30, | $ | (408 | ) | $ | (16,395 | )
Amount of gain (loss) included in earnings attributable to the change in unrealized losses relating to assets and liabilities held at September 30, | $ | 16,131 |  | $ | (1,529 | )
The net gain (loss) on our derivative assets and liabilities is recorded in our consolidated statements of operations under net gain (loss) on forward and derivative contracts. See Note 5 Derivative and hedging instruments for the location of our Level 3 derivative assets and liabilities within our consolidated balance sheets.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13537-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13433-108611 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25499696&loc=d3e19207-110258 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13504-108611 + Details
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