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What changed in CENTURY ALUMINUM CO's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CENTURY ALUMINUM CO's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+215 added−185 removedSource: 10-K (2024-03-15) vs 10-K (2023-02-27)

Top changes in CENTURY ALUMINUM CO's 2023 10-K

215 paragraphs added · 185 removed · 146 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeAsset Fair Value Fair Value with 10% Adverse Price Change 2022 2021 2022 2021 Commodity contracts (1) $ 129.1 $ 42.9 $ 100.7 $ 35.7 Foreign exchange contracts (2) — — — — Total $ 129.1 $ 42.9 $ 100.7 $ 35.7 Liability Fair Value Liability Fair Value with 10% Adverse Price Change 2022 2021 2022 2021 Commodity contracts (1) 23.7 $ 143.3 46.0 $ 191.4 Foreign exchange contracts (2) 7.3 2.9 16.0 7.5 Total $ 31.0 $ 146.2 $ 62.0 $ 198.9 (1) Commodity contracts reflect our outstanding LME forward financial sales contracts, MWP forward financial sales contracts, fixed for floating swaps, and Nord Pool power price swaps.
Biggest changeAsset Fair Value Fair Value with 10% Adverse Price Change 2023 2022 2023 2022 Commodity contracts (1) $ 2.9 $ 129.1 $ 0.5 $ 100.7 Foreign exchange contracts (2) — — — — Total $ 2.9 $ 129.1 $ 0.5 $ 100.7 Liability Fair Value Liability Fair Value with 10% Adverse Price Change 2023 2022 2023 2022 Commodity contracts (1) 7.8 $ 23.7 15.3 $ 46.0 Foreign exchange contracts (2) 0.1 7.3 0.6 16.0 Total $ 7.9 $ 31.0 $ 15.9 $ 62.0 (1) Commodity contracts reflect our outstanding LME forward financial sales contracts, fixed for floating swaps, and HFO price swaps.
Holly Grundartangi Total Expected average load (in megawatts ("MW")) 482 385 400 537 1,804 Annual expected electrical power usage (in megawatt hours ("MWh")) 4,222,320 3,372,600 3,504,000 4,704,120 15,803,040 Annual cost impact of an increase or decrease of $1 per MWh (in millions) $ 4.2 $ 3.4 $ 3.5 $ 4.7 $ 15.8 Foreign Currency We are exposed to foreign currency risk due to fluctuations in the value of the U.S. dollar as compared to the Iceland krona ("ISK"), the Euro, the Chinese renminbi and other currencies.
Holly Grundartangi Total Expected average load (in megawatts ("MW")) 482 385 400 537 1,804 Annual expected electrical power usage (in megawatt hours ("MWh")) 4,222,320 3,372,600 3,504,000 4,704,120 15,803,040 Annual cost impact of an increase or decrease of $1 per MWh (in millions) $ 4.2 $ 3.4 $ 3.5 $ 4.7 $ 15.8 Foreign Currency We are exposed to foreign currency risk due to fluctuations in the value of the U.S. dollar as compared to the Iceland krona ("ISK"), the Euro, the Chinese renminbi, the Jamaican dollar and other currencies.
Natural Economic Hedges 39 Any analysis of our exposure to the commodity price of aluminum should consider the impact of natural hedges provided by certain contracts that contain pricing indexed to the LME price for primary aluminum.
Natural Economic Hedges Any analysis of our exposure to the commodity price of aluminum should consider the impact of natural hedges provided by certain contracts that contain pricing indexed to the LME price for primary aluminum.
Fair Values and Sensitivity Analysis The following tables present the fair values of our derivative assets and liabilities as of year-end 2022 and 2021 and the effect on the fair value of a hypothetical ten percent (10%) adverse change in the market prices in effect at December 31, 2022 and 2021.
Fair Values and Sensitivity Analysis The following tables present the fair values of our derivative assets and liabilities as of year-end 2023 and 2022 and the effect on the fair value of a hypothetical ten percent (10%) adverse change in the market prices in effect at December 31, 2023 and 2022.
(2) Foreign exchange contracts reflect our outstanding FX swaps and the casthouse currency hedges. 40
(2) Foreign exchange contracts reflect our outstanding FX swaps and the casthouse currency hedges. 45
At this time, the price of approximately 20% of Grundartangi's power requirements is linked to the market price for power in the Nord Pool power market. From time to time, we may manage our exposure to fluctuations in the market price of power through financial instruments designed to protect our downside risk exposure.
From time to time, we may manage our exposure to fluctuations in the market price of power through financial instruments designed to protect our downside risk exposure.
We may manage our exposure by entering into foreign currency forward contracts or option contracts for forecasted transactions and projected cash flows for foreign currencies in future periods. We have entered into financial contracts to hedge the risk of fluctuations associated with the Euro under our power price swaps described above (the "FX swaps").
We have entered into financial contracts to hedge the risk of fluctuations associated with the Euro under our power price swaps described above (the "FX swaps").
Further, Vlissingen's labor costs, maintenance costs and other local services are denominated in Euros and our existing Nord Pool power price swaps described above are settled in Euros. As a result, an increase or decrease in the value of those currencies relative to the U.S. dollar would affect Grundartangi’s operating margins.
Vlissingen's labor costs, maintenance costs and other local services are denominated in Euros and our existing Nord Pool power price swaps described above are settled in Euros. Further, Jamalco's labor costs, maintenance costs, and other local services are denominated in Jamaican dollars.
Added
At this time, the price of approximately 20% of Grundartangi's power requirements is linked to the market price for power in the Nord Pool power market 2023 and beginning January 1, 2024 through December 31, 2026, this agreement allows for fixed rates plus a small variable rate portion, which is predominantly hedged.
Added
We also have deposits denominated in Jamaican dollars in Jamaican banks and our estimated payments of Jamaican income taxes and any associated refunds are denominated in Jamaican dollars.
Added
As a result, an increase or decrease in the value of those currencies relative to the U.S. dollar would affect Grundartangi’s, Vlissingen's and Jamalco's operating margins. 44 We may manage our exposure by entering into foreign currency forward contracts or option contracts for forecasted transactions and projected cash flows for foreign currencies in future periods.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe following table sets forth, for the periods indicated, the shipment volumes and revenues for primary aluminum shipments: SHIPMENTS - PRIMARY ALUMINUM (1) United States Iceland Total Tonnes Revenue $ Tonnes Revenue $ Tonnes Revenue $ (dollars in millions) 2022 459,991 $ 1,650.4 308,700 $ 1,040.1 768,691 $ 2,690.5 2021 468,729 1,368.0 314,918 790.8 783,647 2,158.8 2020 495,433 985.3 315,743 570.8 811,176 1,556.1 (1) Excludes scrap aluminum, purchased aluminum and alumina sales Results of Operations Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Net sales (in millions) 2022 2021 Twelve months ended December 31, $ 2,777.3 $ 2,212.5 Net sales: Net sales (excluding scrap aluminum and alumina sales) increased by $564.8 million for the twelve months ended December 31, 2022, compared to the same period in 2021, primarily driven by favorable LME and regional premium price realizations of $496.9 million and favorable product mix of $82.0 million driven by higher value-added product premiums, partially offset by $26.8 million in volume primarily related to the full curtailment of our Hawesville smelter in the third quarter of 2022. 29 Gross profit (loss) (in millions) 2022 2021 Twelve months ended December 31, $ 46.7 $ 124.2 Gross profit (loss) : Gross profit decreased by $77.5 million for the twelve months ended December 31, 2022, compared to the same period in 2021, primarily driven by unfavorable raw material price realizations of $338.4 million and unfavorable power price realizations of $285.5 million.
Biggest changeThe following table sets forth, for the periods indicated, the shipment volumes and revenues for primary aluminum shipments: 34 SHIPMENTS - PRIMARY ALUMINUM (1) United States Iceland Total Tonnes Revenue $ Tonnes Revenue $ Tonnes Revenue $ (dollars in millions) 2023 389,331 $ 1,139.0 311,349 $ 827.0 700,680 $ 1,966.0 2022 459,991 $ 1,650.4 308,700 $ 1,040.1 768,691 $ 2,690.5 2021 468,729 $ 1,368.0 314,918 $ 790.8 783,647 $ 2,158.8 (1) Excludes scrap aluminum, purchased aluminum and alumina sales Results of Operations Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Net sales (in millions) 2023 2022 Twelve months ended December 31, $ 2,185.4 $ 2,777.3 Net sales: Net sales decreased by $591.9 million for the twelve months ended December 31, 2023, compared to the same period in 2022, primarily driven by unfavorable LME and regional premium price realizations of $384.6 million and unfavorable volume of $376.7 million primarily related to the full curtailment of our Hawesville smelter in the third quarter of 2022, partially offset by favorable alumina prices and sales volume of $186.1 million primarily attributable to Jamalco sales of $150.3 million since acquisition in May 2023.
The indenture governing the 2028 Notes contains customary covenants which may limit our ability, and the ability of certain of our subsidiaries, to: (i) incur additional debt; (ii) incur additional liens; (iii) pay dividends or make distributions in respect of capital stock; (iv) purchase or redeem capital stock; (v) 32 make investments or certain other restricted payments; (vi) sell assets; (vii) issue or sell stock of certain subsidiaries; (viii) enter into transactions with shareholders or affiliates; and (ix) effect a consolidation or merger.
The indenture governing the 2028 Notes contains customary covenants which may limit our ability, and the ability of certain of our subsidiaries, to: (i) incur additional debt; (ii) incur additional liens; (iii) pay dividends or make distributions in respect of capital stock; (iv) purchase or redeem capital stock; (v) make investments or certain other restricted payments; (vi) sell assets; (vii) issue or sell stock of certain subsidiaries; (viii) enter into transactions with shareholders or affiliates; and (ix) effect a consolidation or merger.
("CAWV") filed a class action complaint for declaratory judgment against the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union ("USW"), the USW’s local and certain CAWV retirees, individually and as class representatives ("CAWV Retirees"), seeking a declaration of CAWV’s rights to modify/terminate retiree medical benefits.
("CAWV") filed a class action complaint for declaratory judgment against the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers 40 International Union ("USW"), the USW’s local and certain CAWV retirees, individually and as class representatives ("CAWV Retirees"), seeking a declaration of CAWV’s rights to modify/terminate retiree medical benefits.
Although we believe that the assumptions used to estimate the market value of our inventory are reasonable, actual market conditions at the time our inventory is sold may be more or less favorable than management’s current estimates. Pension and Other Postretirement Benefit Liabilities We sponsor several pension and OPEB plans.
Although we believe that the assumptions used to estimate the market value of our inventory are reasonable, actual market conditions at the time our inventory is sold may be more or less favorable than management’s current estimates. 41 Pension and Other Postretirement Benefit Liabilities We sponsor several pension and OPEB plans.
In June 2022, we entered into a Fourth Amendment to our existing $220.0 million U.S. revolving credit facility, increasing the maximum capacity from $220.0 million to $250.0 million, including up to $150.0 million under a letter of credit sub-facility. The U.S. 31 revolving credit facility matures in June 2027.
In June 2022, we entered into a Fourth Amendment to our existing $220.0 million U.S. revolving credit facility, increasing the maximum capacity from $220.0 million to $250.0 million, including up to $150.0 million under a letter of credit sub-facility. The U.S. revolving credit facility matures in June 2027.
Market-based energy prices are driven in large part by the price of coal, natural gas, and 28 other fuel sources, weather influenced reservoir or generation levels for wind, solar and hydro production and weather-influenced electric loads.
Market-based energy prices are driven in large part by the price of coal, natural gas, and other fuel sources, weather influenced reservoir or generation levels for wind, solar and hydro production and weather-influenced electric loads.
The timing and amount of any shares repurchased will be determined by our management based on its evaluation of market conditions, the trading price of our common stock and other factors. We made no repurchases during the years ended 2022, 2021, and 2020. As of December 31, 2022, we had $43.7 million remaining under the repurchase program authorization.
The timing and amount of any shares repurchased will be determined by our management based on its evaluation of market conditions, the trading price of our common stock and other factors. We made no repurchases during the years ended 2023, 2022, and 2021. As of December 31, 2023, we had $43.7 million remaining under the repurchase program authorization.
We are a defendant in several actions relating to various aspects of our business. While it is impossible to predict the ultimate disposition of any litigation, we do not believe that any of these lawsuits, either individually or in the aggregate, will have a material adverse effect on our financial condition, results of operations or liquidity. See Note 16.
We are a defendant in several actions relating to various aspects of our business. While it is impossible to predict the ultimate disposition of any litigation, we do not believe that any of these lawsuits, either individually or in the aggregate, will have a material adverse effect on our financial condition, results of operations or liquidity. See Note 17.
Based on the LME forward market at December 31, 2022 and our expected level of Hawesville's operations, we believe that we will not be required to make payments on the contingent obligation during the term of the agreement, which expires in 2028. There can be no assurance that circumstances will not change thus accelerating the timing of such payments.
Based on the LME forward market at December 31, 2023 and our expected level of Hawesville's operations, we believe that we will not be required to make payments on the contingent obligation during the term of the agreement, which expires in 2028. There can be no assurance that circumstances will not change thus accelerating the timing of such payments.
The Casthouse Facility also contains customary covenants, including restrictions on mergers and acquisitions, indebtedness, preservation of assets, and dispositions of assets and contains a covenant that requires Grundartangi to maintain a minimum equity ratio. As of December 31, 2022, we were in compliance with all such covenants or maintained availability above such covenant triggers.
The Casthouse Facility also contains customary covenants, including restrictions on mergers and acquisitions, indebtedness, preservation of assets, and dispositions of assets and contains a covenant that requires Grundartangi to maintain a minimum equity ratio. As of December 31, 2023, we were in compliance with all such covenants or maintained availability above such covenant triggers.
Grundartangi also has a 25 MW power purchase agreement with Landsvirkjun at LME-based variable rates. Production/Shipment Volumes Shipment volume is another key determinant of our financial results. In normal circumstances, fluctuations in production and shipment volumes, other than through acquisitions or expansions, are generally small period over period.
Grundartangi also has a 25 MW power purchase agreement with Landsvirkjun at LME-based variable rates. Production/Shipment Volumes Shipment volume is another key determinant of our financial results. Fluctuations in production and shipment volumes, other than through acquisitions or expansions, are generally small period over period.
Our foreign subsidiaries, together with Nordural US LLC, Century Aluminum Development LLC and Century Aluminum of West Virginia, Inc., are collectively referred to as the "Non-Guarantor Subsidiaries". We allocate corporate expenses or income to our subsidiaries and charge interest on certain intercompany balances.
Our foreign subsidiaries, together with Nordural US LLC, Century Aluminum Development LLC, Century Aluminum of West Virginia, Inc. and Century Aluminum Jamaica Holdings, Inc. are collectively referred to as the "Non-Guarantor Subsidiaries." We allocate corporate expenses or income to our subsidiaries and charge interest on certain intercompany balances.
Our analysis gives consideration to recent plan performance and historical returns; however, the assumptions are primarily based on long-term, prospective rates of return. The weighted average long-term rate of return on plan assets for our defined benefit pension plans is 7.25% for 2022.
Our analysis gives consideration to recent plan performance and historical returns; however, the assumptions are primarily based on long-term, prospective rates of return. The weighted average long-term rate of return on plan assets for our defined benefit pension plans is 7.25% for 2023.
We historically elected to defer certain payments under the PBGC Settlement Agreement and provided the PBGC with the appropriate security.
We historically elected to defer certain payments 39 under the PBGC Settlement Agreement and provided the PBGC with the appropriate security.
As of December 31, 2022, we were in compliance with all such covenants or maintained availability above such covenant triggers. Grundartangi Casthouse Facility On November 2, 2021, in connection with the casthouse project at Grundartangi, we entered into an eight-year Term Facility Agreement with Arion Bank hf, to provide for borrowings up to $130.0 million (the “Casthouse Facility”).
As of December 31, 2023, we were in compliance with all such covenants or maintained availability above such covenant triggers. Grundartangi Casthouse Facility 37 On November 2, 2021, in connection with the casthouse project at Grundartangi, we entered into an eight-year Term Facility Agreement with Arion Bank hf, to provide for borrowings up to $130.0 million (the “Casthouse Facility”).
Asset impairment charge (in millions) 2022 2021 Twelve months ended December 31, $ 159.4 $ — Asset impairment charge: An asset impairment charge was recognized for the twelve months ended December 31, 2022 as a result of the temporary curtailment of the Hawesville facility, announced during June 2022.
Asset impairment charge (in millions) 2023 2022 Twelve months ended December 31, $ — $ 159.4 Asset impairment charge: An asset impairment charge was recognized for the twelve months ended December 31, 2022 as a result of the temporary curtailment of the Hawesville facility, announced during June 2022.
Additionally, extreme geopolitical events, such as the Russia-Ukraine conflict in 2022, which led to the cut-off of natural gas supply to Western Europe and increased exports of U.S natural gas as result, may result in significant power costs globally. Our Mt. Holly plant has a power supply agreement with Santee Cooper that runs through December 2023.
Additionally, extreme geopolitical events, such as the on-going Russia-Ukraine conflict, which led to the cut-off of natural gas supply to Western Europe and increased exports of U.S natural gas as result, may result in significant power costs globally. Our Mt. Holly plant has a power supply agreement with Santee Cooper that runs through December 2026.
This contingent obligation consists of the aggregate payments made to Big Rivers by the third party on CAKY’s behalf in excess of the agreed upon base amount under the long-term cost-based power contract with Kenergy. As of December 31, 2022, the principal and accrued interest for the contingent obligation was $29.5 million, which was fully offset by a derivative asset.
This contingent obligation consists of the aggregate payments made to Big Rivers by the third party on CAKY’s behalf in excess of the agreed upon base amount under the long-term cost-based power contract with Kenergy. As of December 31, 2023, the principal and accrued interest for the contingent obligation was $30.9 million, which was fully offset by a derivative asset.
Upon approval of the settlement, we paid $5.0 million to the aforementioned trust in September 2017 and agreed to pay the remaining amounts under the settlement agreement in annual increments of $2.0 million for nine years. At December 31, 2022, we had $2.0 million in other current liabilities and $4.8 million in other liabilities related to this agreement.
Upon approval of the settlement, we paid $5.0 million to the aforementioned trust in September 2017 and agreed to pay the remaining amounts under the settlement agreement in annual increments of $2.0 million for nine years. At December 31, 2023, we had $2.0 million in other current liabilities and $3.3 million in other liabilities related to this agreement.
Summary of Significant Accounting Policies to the consolidated financial statements. The preparation of the financial statements requires that management make judgments, assumptions and estimates in applying these accounting policies. Those judgments are normally based on knowledge and experience about past and current events and on assumptions about future events.
The preparation of the financial statements requires that management make judgments, assumptions and estimates in applying these accounting policies. Those judgments are normally based on knowledge and experience about past and current events and on assumptions about future events.
On February 4, 2022, we amended the Iceland revolving credit facility and increased the facility amount to $80.0 million in the aggregate. On September 28, 2022, we further amended the Iceland revolving credit facility and increased the facility amount to $100.0 million in the aggregate. The Iceland revolving credit facility matures November 2024.
On February 4, 2022, we amended the Iceland revolving credit facility and increased the facility amount to $80.0 million in the aggregate. On September 28, 2022, we further amended the Iceland revolving credit facility and increased the facility amount to $100.0 million in the aggregate. The Iceland revolving credit facility matures December 2026.
Although we attempt to mitigate the effects of price fluctuations from time to time through the use of various fixed-price commitments, financial instruments and also by negotiating LME-based pricing in some of our raw materials and electrical power contracts, these efforts also limit our ability to take advantage of favorable changes in the market prices for primary aluminum or raw materials and may affect our financial position, results of operations and cash flows.
Although we attempt to mitigate the effects of price fluctuations from time to time through the use of various fixed-price commitments, financial instruments and also by negotiating LME-based pricing in some of our raw materials and electrical power contracts, these efforts also limit our ability to take advantage of favorable changes in the market prices for primary aluminum or raw materials and may affect our financial position, results of operations and cash flows. 33 Alumina and electrical power represent the two largest components of our cost of goods sold.
Borrowings under the Iceland Term Facility will bear interest at a rate equal to 3.2% plus EUR EURIBOR 1 month as published by the European Money Markets Institute. As of December 31, 2022, there were $14.5 million (€13.6 million) in outstanding borrowings under the Iceland Term Facility.
Borrowings under the Iceland Term Facility will bear interest at a rate equal to 3.2% plus EUR EURIBOR 1 month as published by the European Money Markets Institute. As of December 31, 2023, there were $1.3 million (€1.1 million ) in outstanding borrowings under the Iceland Term Facility.
Weighted Average Discount Rate Assumption for: 2022 2021 Pension plans 5.50% 2.89% OPEB plans 5.57% 2.75% 36 A change of a half percentage point in the discount rate for our defined benefit plans would have the following effects on our obligations under these plans as of December 31, 2022: Effect of changes in the discount rates on the Projected Benefit Obligations for: 50 basis point increase 50 basis point decrease (dollars in millions) Pension plans $ (14.4) $ 16.0 OPEB plans (2.9) 3.1 Long-term Rate of Return on Plan Assets Assumption Our expected long-term rate of return on plan assets is derived from our asset allocation strategies and anticipated future long-term performance of individual asset classes.
Weighted Average Discount Rate Assumption for: 2023 2022 Pension plans 5.19% 5.50% OPEB plans 5.19% 5.57% A change of a half percentage point in the discount rate for our defined benefit plans would have the following effects on our obligations under these plans as of December 31, 2023: Effect of changes in the discount rates on the Projected Benefit Obligations for: 50 basis point increase 50 basis point decrease (dollars in millions) Pension plans $ (15.0) $ 16.8 OPEB plans (3.0) 3.2 Long-term Rate of Return on Plan Assets Assumption Our expected long-term rate of return on plan assets is derived from our asset allocation strategies and anticipated future long-term performance of individual asset classes.
As of December 31, 2022, we made contributions of $2.4 million related to the Amended PBGC Settlement Agreement. Section 232 Aluminum Tariff On March 23, 2018, the U.S. implemented a 10% tariff on imported primary aluminum products into the U.S.
As of December 31, 2023, we made contributions of $6.9 million related to the Amended PBGC Settlement Agreement. Section 232 Aluminum Tariff On March 23, 2018, the U.S. implemented a 10% tariff on imported primary aluminum products into the U.S.
Sources and Uses of Cash Our cash flows from operating, investing and financing activities as reflected in the consolidated statement of cash flows for the twelve months ended December 31, 2022, 2021 and 2020 are summarized below: Twelve months ended December 31, 2022 2021 2020 (dollars in millions) Net cash provided by (used in) operating activities $ 25.9 $ (64.7) $ 42.9 Net cash used in investing activities (85.5) (82.6) (11.8) Net cash provided by financing activities 74.4 103.7 13.5 Change in cash, cash equivalents and restricted cash $ 14.8 $ (43.6) $ 44.6 Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Net cash provided by operating activities for 2022 was $25.9 million, compared to cash used in operating activities of $64.7 million in 2021.
Sources and Uses of Cash Our cash flows from operating, investing and financing activities as reflected in the consolidated statement of cash flows for the twelve months ended December 31, 2023, 2022 and 2021 are summarized below: Twelve months ended December 31, (in millions) 2023 2022 2021 Net cash provided by (used in) operating activities $ 105.6 $ 25.9 $ (64.7) Net cash used in investing activities (57.8) (85.5) (82.6) Net cash (used in) provided by financing activities (13.0) 74.4 103.7 Change in cash, cash equivalents and restricted cash $ 34.8 $ 14.8 $ (43.6) 36 Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Net cash provided by operating activities for 2023 was $105.6 million compared to $25.9 million in 2022.
The amount of a valuation allowance is based upon our best estimate of our ability to realize the net deferred tax assets. We have a valuation allowance of $487.9 million recorded against our net U.S. deferred tax assets and a portion of our Icelandic deferred tax assets as of December 31, 2022.
The amount of a valuation allowance is based upon our best estimate of our ability to realize the net deferred tax assets. We have a valuation allowance of $537.6 million recorded against our net U.S. and Jamaican deferred tax assets and a portion of our Icelandic deferred tax assets as of December 31, 2023.
The availability period for borrowings under the Vlissingen Facility Agreement ends December 2, 2024. Amounts drawn, if any, under the Vlissingen Facility Agreement are expected to be used for general corporate and working capital purposes of Century and its subsidiaries. As of December 31, 2022, there were no outstanding borrowings under the Vlissingen Facility Agreement.
The availability period for borrowings under the Vlissingen Facility Agreement ends December 2, 2024. Amounts drawn, if any, under the Vlissingen Facility Agreement are expected to be used for general corporate and working capital purposes of Century and its subsidiaries. As of December 31, 2023, there were $10.0 million in borrowings under the Vlissingen Facility Agreement.
Imports that receive a product exclusion from the Department of Commerce may also enter the US duty free. In July 2022, the International Trade Commission (ITC) initiated a review of the Section 301 and 232 duties as required by law every four years. The process will conclude no later than March 15, 2023.
Imports that receive a product exclusion from the Department of Commerce may also enter the US duty free. In July 2022, the International Trade Commission (ITC) initiated a review of the Section 301 and 232 duties as required by law every four years.
Of the outstanding letters of credit, $21.6 million related to our power commitments, $13.3 million are related to hedging collateral, and the remainder are primarily for the purpose of securing certain secured debt and workers’ compensation commitments. As of December 31, 2022, our Iceland revolving credit facility had a borrowing base of $95.1 million and $35.0 million in outstanding borrowings.
Of the outstanding letters of credit, $13.7 million related to our power commitments, $47.7 million are related to hedging collateral, and the remainder are primarily for the purpose of securing certain secured debt and workers’ compensation commitments. As of December 31, 2023, our Iceland revolving credit facility had a borrowing base of $100.0 million and no outstanding borrowings.
Under certain circumstances, in periods of lower primary aluminum prices relative to our cost of operations, we were able to defer one or more of these payments, provided that we provide the PBGC with acceptable security for such deferred payments. We did not make any contributions during the years ended December 31, 2021 and 2020.
Under certain circumstances, in periods of lower primary aluminum prices relative to our cost of operations, we were able to defer one or more of these payments, provided that we provide the PBGC with acceptable security for such deferred payments.
The Casthouse Facility bears interest at a rate equal to USD LIBOR 3 month plus an applicable margin. The Casthouse Facility is secured by a $430.0 million general bond. As of December 31, 2022, there were $50.0 million in borrowings outstanding under the Casthouse Facility.
The Casthouse Facility bears interest at a rate equal to a base rate plus the applicable margin as set forth in the agreement. The Casthouse Facility is secured by a $430.0 million general bond. As of December 31, 2023, there were $104.3 million in borrowings outstanding under the Casthouse Facility.
The Company’s or Guarantors’ amounts due from, amounts due to, and transactions with the Non-Guarantor Subsidiaries are disclosed below: December 31, 2022 December 31, 2021 Current assets $ 305.7 $ 395.3 Non-current assets 704.5 935.3 Current liabilities 309.6 375.1 Non-current liabilities 487.1 556.1 33 Twelve months ended December 31, 2022 Net sales $ 1,737.2 Gross profit (loss) (37.6) Income (loss) before income taxes (187.6) Net income (loss) (14.1) As of December 31, 2022 and December 31, 2021, an intercompany receivable due to the Company and Guarantors from the Non-Guarantor Subsidiaries totaled $18.2 million and $15.1 million, respectively, and an intercompany non-current loan due to the Company from the Non-Guarantor Subsidiaries totaled $466.3 million and $554.2 million, respectively.
The Company’s or Guarantors’ amounts due from, amounts due to, and transactions with the Non-Guarantor Subsidiaries are disclosed below: December 31, 2023 December 31, 2022 Current assets $ 361.5 $ 305.7 Non-current assets 648.6 704.5 Current liabilities 253.6 309.6 Non-current liabilities 485.7 487.1 Twelve months ended December 31, 2023 Net sales $ 1,427.7 Gross profit (loss) 112.6 Income (loss) before income taxes 74.0 Net income (loss) (43.1) As of December 31, 2023 and December 31, 2022, an intercompany receivable due to the Company and Guarantors from the Non-Guarantor Subsidiaries totaled $48.7 million and $18.2 million, respectively, and an intercompany non-current loan due to the Company from the Non-Guarantor Subsidiaries totaled $384.9 million and $466.3 million, respectively.
Future uncertainty in the U.S. and international markets and economies may adversely affect our liquidity, our ability to access the debt or capital markets and our financial condition. Capital expenditures incurred for the year ended December 31, 2022 were $17.3 million, excluding expenditures of $16.2 million associated with the restart at Mt.
Future uncertainty in the U.S. and international markets and economies may adversely affect our liquidity, our ability to access the debt or capital markets and our financial condition. Capital expenditures incurred for the year ended December 31, 2023 were $25.9 million, excluding expenditures of $69.1 million associated with the Grundartangi casthouse project.
Holly and $40.0 million associated with the Grundartangi casthouse project. We 35 estimate our total capital spending in 2023, excluding the Grundartangi casthouse project, will be approximately $24 million, related to our ongoing investment and sustainability projects at our plants. Critical Accounting Estimates Our significant accounting policies are described in Note 1.
We estimate our total capital spending in 2024, excluding the Grundartangi casthouse project, will be approximately $20 to $30 million, related to our ongoing investment and sustainability projects at our plants. Critical Accounting Estimates Our significant accounting policies are described in Note 1. Summary of Significant Accounting Policies to the consolidated financial statements.
As of December 31, 2022, our credit facilities had $100.7 million of net availability after consideration of our outstanding borrowings and letters of credit. We may borrow and make repayments under our revolving credit facilities in the ordinary course based on a number of factors, including the timing of payments from our customers and payments to our suppliers.
We may borrow and make repayments under our revolving credit facilities in the ordinary course based on a number of factors, including the timing of payments from our customers and payments to our suppliers.
Income tax (expense) benefit (in millions) 2022 2021 Twelve months ended December 31, $ (47.4) $ 30.6 Income tax benefit (expense): We have a valuation allowance against all of our U.S. and certain foreign deferred tax assets. We recognized $(47.4) million income tax expense in 2022 as compared to income tax benefit of $30.6 million in 2021.
Income tax benefit (expense) (in millions) 2023 2022 Twelve months ended December 31, $ 14.6 $ (47.4) Income tax benefit (expense): We have a valuation allowance recorded against our net U.S. and Jamaican deferred tax assets, and a portion of our Icelandic deferred tax assets as of December 31, 2023.
Other Items 34 On January 17, 2023, our wholly owned subsidiary, Mt. Holly Commerce Park LLC, entered into a binding agreement, subject to ordinary course conditions, to sell approximately 133 acres of land for approximately $28.5 million. We previously formed the commerce park, located near our Mt.
On January 17, 2023, our wholly owned subsidiary, Mt. Holly Commerce Park LLC, entered into a binding agreement, subject to ordinary course conditions, to sell approximately 133 acres of land for approximately $28.5 million. On September 12, 2023, the Mt. Holly Land Sale Agreement was completed at a revised purchase price of $25.7 million.
Determination as to whether and how much an asset is impaired involves significant management judgment involving highly uncertain matters, including estimating the future sales volumes, future selling prices and estimated raw material and conversion costs, alternative uses for the asset, and estimated proceeds from the disposal of the asset.
These estimates of future cash flows include management’s assumptions about the expected use of the assets (asset group), the remaining useful life, expenditures to maintain the service potential, market and cost assumptions. 42 Determination as to whether and how much an asset is impaired involves significant management judgment involving highly uncertain matters, including estimating the future sales volumes, future selling prices and estimated raw material and conversion costs, alternative uses for the asset, and estimated proceeds from the disposal of the asset.
Selling, general and administrative expenses (in millions) 2022 2021 Twelve months ended December 31, $ 37.5 $ 57.6 Selling, general and administrative expenses: Selling, general and administrative expenses decreased $20.1 million in 2022 compared to 2021, primarily due to decreases in share-based compensation due to fluctuations in the Company's stock price year over year.
Selling, general and administrative expenses (in millions) 2023 2022 Twelve months ended December 31, $ 44.3 $ 37.5 Selling, general and administrative expenses: Selling, general and administrative expenses increased $6.8 million in 2023 compared to 2022, primarily due to increases in share-based compensation due to the increase in the Company's stock price year over year. See Note 14.
We regularly explore various other financing alternatives. Our principal uses of cash include the funding of operating costs (including post-retirement benefits), debt service requirements, capital expenditures, investments in our growth activities and in related businesses, working capital and other general corporate requirements.
Our principal uses of cash include the funding of operating costs (including post-retirement benefits), debt service requirements, capital expenditures, investments in our growth activities and in related businesses, working capital and other general corporate requirements. We believe that cash provided from operations and financing activities will be adequate to cover our operations and business needs over the next 12 months.
As of December 31, 2022, our U.S. revolving credit facility had a borrowing base of $165.5 million, $90.0 million in outstanding borrowings, and $34.9 million in letters of credit outstanding. The borrowing base under the U.S. revolving credit facility has been adversely affected by the curtailment of our Hawesville facility.
As of December 31, 2023, our U.S. revolving credit facility had a borrowing base of $128.8 million, $23.7 million in outstanding borrowings, and $ 61.4 million in letters of credit outstanding. The borrowing base under the U.S. revolving credit facility has been adversely affected by the curtailment of our Hawesville facility and a reduction in LME and regional premium prices.
The average European Duty Paid premium was $466 per tonne in 2022 compared to $272 per tonne in 2021 and $126 per tonne in 2020. Energy, Key Supplies and Raw Materials Our operating costs are significantly impacted by changes in the prices of the materials used in the production of aluminum, including alumina, electrical power and carbon products.
December 31, ($ per tonne) 2023 2022 2021 Average LME $ 2,252 $ 2,707 $ 2,475 Average MWP $ 512 $ 657 $ 581 Average EDPP $ 277 $ 466 $ 272 Energy, Key Supplies and Raw Materials Our operating costs are significantly impacted by changes in the prices of the materials used in the production of aluminum, including alumina, electrical power and carbon products.
In 2011, our Board of Directors approved a $60.0 million common stock repurchase program and subsequently increased this program by $70.0 million in the first quarter of 2015.
The Grundartangi casthouse project began in late 2021 and is fully funded through the Casthouse Facility. The project is progressing and is expected to start production in the first quarter of 2024. In 2011, our Board of Directors approved a $60.0 million common stock repurchase program and subsequently increased this program by $70.0 million in the first quarter of 2015.
In Iceland, approximately 70 % of the power requirements for our Grundartangi plant are indexed to the price of primary aluminum, which provides a natural hedge of one of our largest production costs.
Under this power supply agreement, 100% of Mt. Holly’s current electrical power requirements are supplied from Santee Cooper’s generation at cost of service based rates. In Iceland, approximately 70% of the power requirements for our Grundartangi plant are indexed to the price of primary aluminum, which provides a natural hedge of one of our largest production costs.
The change in net cash provided by financing activities from 2022 compared to 2021 was primarily due to borrowings under the Grundartangi casthouse facility and Iceland term facility in 2022 as compared to net borrowings on our revolving credit facilities in 2021.
The change in net cash used in financing activities in 2023 compared to net cash provided by financing activities in 2022 was primarily due to net repayments on our revolving credit facilities in 2023 and repayment of the Iceland Term Facility, partially offset by the sale of carbon credits and proceeds from the Vlissingen Facility Agreement.
Alumina and electrical power represent the two largest components of our cost of goods sold. As a result, the availability of these cost components at competitive prices is critical to the profitability of our operations. The pricing under our alumina supply contracts varies from contract to contract.
As a result, the availability of these cost components at competitive prices is critical to the profitability of our operations. The pricing under our alumina supply contracts varies from contract to contract. A major portion of our alumina requirements is indexed to the price of primary aluminum, which provides a natural hedge to one of our largest production costs.
The changes were partially offset by favorable LME and regional premium price realizations of $496.9 million, and favorable volume and product mix of $28.2 million driven by the restart at our Mt. Holly facility, curtailment at our Hawesville smelter and higher value-added product premiums.
The changes were partially offset by unfavorable LME and regional premium price realizations of $384.6 million and unfavorable volume and product mix of $33.0 million driven by the curtailment at our Hawesville smelter.
From time to time, we may manage our exposure to fluctuations in our alumina costs by purchasing certain of our 38 alumina requirements under supply contracts with prices tied to the same indices as our aluminum sales contracts (the LME price of primary aluminum).
From time to time, we may manage our exposure to fluctuations in our alumina costs by purchasing certain of our alumina requirements under supply contracts with prices tied to the same indices as our aluminum sales contracts (the LME price of primary aluminum). 43 Market-Based Power Price Sensitivity Market-Based Electrical Power Agreements Hawesville and Sebree have a market-based electrical power agreement with Kenergy and Century Marketer, LLC ("Century Marketer"), Century's wholly-owned subsidiary that acts as a MISO market participant.
Net gain (loss) on forward and derivative contracts (in millions) 2022 2021 Twelve months ended December 31, $ 197.1 $ (212.4) Net gain (loss) on forward and derivative contracts: In 2022, we recognized gains of $197.1 million primarily driven by decreases in LME and MWP forward prices, and increased gains on Nord Pool derivative contracts due to Nord Pool power forward price increases.
In 2022, we recognized gains of $197.1 million primarily driven by decreases in LME and MWP forward prices, and increased gains on Nord Pool derivative contracts due to Nord Pool power forward price increases. See Note 20. Derivatives to the consolidated financial statements included herein for additional information.
Market-Based Power Price Sensitivity Market-Based Electrical Power Agreements Hawesville and Sebree have market-based electrical power agreements pursuant to which EDF and Kenergy purchase electrical power on the open market and pass it through at MISO energy pricing, plus transmission and other costs incurred by them. See
Under this agreement, Century Marketer purchases electrical power on the open market for resale to Kenergy, which then resells the power to Hawesville and Sebree at MISO energy pricing, plus transmission and other costs incurred by them. See
As of December 31, 2022, we had cash and cash equivalents of approximately $54.3 million, unused availability under our revolving credit facilities of $100.7 million, and additional liquidity of $90.0 million under the Vlissingen Facility Agreement, resulting in a total liquidity position of approximately $245.0 million.
As of December 31, 2023, we had cash and cash equivalents of approximately $88.8 million and unused availability under our revolving credit facilities of $223.7 million (including $80.0 million under the Vlissingen Facility Agreement referred to below).
"Guarantor Subsidiaries" refers to all of our material domestic subsidiaries except for Nordural US LLC, Century Aluminum Development LLC and Century Aluminum of West Virginia, Inc. The Guarantor Subsidiaries are 100% owned by Century. All guarantees will be full and unconditional; all guarantees will be joint and several.
The Guarantor Subsidiaries are 100% owned by Century. All guarantees will be full and unconditional; all guarantees will be joint and several.
Any adverse changes in the conditions that affect shipment volumes could have a material adverse effect on our results of operations and cash flows.
Any adverse changes in the conditions that affect shipment volumes could have a material adverse effect on our results of operations and cash flows. Our 2023 shipment volumes were adversely impacted by the curtailment of our Hawesville facility in August 2022. This was partially offset by a full year of Mt. Holly operating at 75% capacity in 2023.
The alumina price is influenced by a number of factors, including global supply-demand balance, natural disasters and weather events, and other factors outside of our control. The average market alumina index price as a percentage of market LME price per tonne for 2022 was 13 % compared to 13% for 2021 and 16% for 2020.
We also purchase alumina based on a published alumina index and at fixed prices. The alumina price is influenced by a number of factors, including global supply-demand balance, natural disasters and weather events, and other factors outside of our control.
As of December 31, 2022, we have not issued any debt securities pursuant to the Universal Shelf Registration Statement. However, any securities that we may issue in the future may limit our ability, and the ability of certain of our subsidiaries, to pay dividends or make distributions in respect of capital stock.
As of December 31, 2023, we have not issued any debt securities pursuant to the Universal Shelf Registration Statement.
The change in net cash provided by operating activities was primarily driven by improvement in results of operations year over year. The change was further due to changes in working capital primarily attributable to timing of payables, timing of raw material receipts, and pricing increases, and partially offset by hedge settlements.
The change in net cash provided by operating activities was due to changes in working capital primarily attributable to timing of receipts and payments. The decrease in net cash used in investing activities during 2023 was primarily attributable to $25.7 million in proceeds from the Mt.
We also have access to our existing U.S. and Iceland revolving credit facilities (collectively, the "revolving credit facilities") and have raised capital in the past through public equity and debt markets. Additionally, on December 9, 2022, Vlissingen entered into the Vlissingen Facility Agreement (defined below) pursuant to which it may borrow from time to time up to $90.0 million.
Liquidity and Capital Resources Liquidity Our principal sources of liquidity are available cash and cash flow from operations. We also have access to our existing U.S. and Iceland revolving credit facilities (collectively, the "revolving credit facilities") and have raised capital in the past through public equity and debt markets. We regularly explore various other financing alternatives.
In 2021, we recognized losses of $212.4 million primarily related to LME and MWP fixed forward financial sales contracts. The losses were primarily driven by fluctuations in forward prices. See Note 19. Derivatives to the consolidated financial statements included herein for additional information.
Share-based compensation to the consolidated financial statements included herein for additional information. 35 Net (loss) gain on forward and derivative contracts (in millions) 2023 2022 Twelve months ended December 31, $ (61.8) $ 197.1 Net (loss) gain on forward and derivative contracts: In 2023, we recognized losses of $61.8 million primarily driven by decreases in LME and Nord Pool forward prices.
The increase in net cash used in investing activities during 2022 was primarily due to higher spending on capital projects during the twelve months ended December 31, 2022, driven by capital investments in the Mt. Holly restart project and the Grundartangi casthouse project.
Holly Commerce Park Land sale and $11.5 million related to the acquisition of Jamalco, net of cash acquired, partially offset by higher spending on capital projects during the twelve months ended December 31, 2023.
Holly smelter, to develop excess land at the site and to assist the county with bringing additional business and commerce to the area. During 2021, we initiated efforts to restart the curtailed capacity at our Mt. Holly facility. The project was completed during the second quarter of 2022, resulting in total production of 75% of Mt. Holly's full capacity.
The proceeds from this sale are restricted to be used on capital expenditures. We previously formed the commerce park, located near our Mt. Holly smelter, to develop excess land at the site and to assist the county with bringing additional business and commerce to the area. During 2021, we announced plans for construction of a new billet casthouse at Grundartangi.
Removed
Risk Factors . 27 The historic volatility of the price of aluminum is reflected in the chart below: During 2022, global, macroeconomic conditions, including the onset of the Russia-Ukraine conflict in the first quarter of 2022, contributed to a 32% decline in the LME spot price for primary aluminum for the year with a monthly average price in March 2022 of $3,538 compared to a monthly average price in December 2022 of $2,395.
Added
Item 1A. Risk Factors . 32 The historic volatility of the price of aluminum is reflected in the chart below: During 2023, global, macroeconomic trends continued to impact global LME inventory levels which remain near all-time lows.
Removed
The average LME price for primary aluminum was $2,707 per tonne in 2022, compared to $2,475 per tonne in 2021, and $1,702 per tonne in 2020. The average MWP price was $657 per tonne in 2022 compared to $581 per tonne in 2021 and $267 per tonne in 2020.
Added
The most significant demand growth was seen in China as aluminum-intensive electric vehicles and renewable energy applications supported a 5% demand increase from 2022. Western demand remained challenged, contributing to a 17% decline in the LME primary aluminum average spot price from 2022.
Removed
A major portion of our alumina requirements is indexed to the price of primary aluminum, which provides a natural hedge to one of our largest production costs. We also purchase alumina based on a published alumina index and at fixed prices.
Added
The following table summarizes the average price for primary aluminum per tonne for the years ended December 31, 2023, 2022 and 2021.
Removed
Under this power supply agreement, 100% of Mt. Holly’s electrical power requirements are supplied from Santee Cooper’s generation at cost of service based rates. The contract provides sufficient energy to allow the Mt. Holly smelter to produce at 75% of full production capacity.
Added
Additionally, with our acquisition of a 55% interest in Jamalco, we secured a predictable, long-term supply of alumina and achieved increased transparency and control of our supply chain. The average market alumina index price as a percentage of market LME price per tonne was 15% for 2023 and 13% for 2022 and 2021.
Removed
Our 2022 shipment volumes were adversely impacted by power curtailments in Iceland in winter 2022 driven by low reservoir levels and the curtailment of our Hawesville facility in August 2022, partially offset by the restart of production at Mt. Holly bringing operating capacity to 75% in second quarter of 2022.
Added
In December 2023, continued dry and cold conditions led the energy companies to issue partial curtailment orders across their industrial customers, including our Grundartangi smelter. The end of these curtailments remain subject to weather patterns and reservoir levels in Iceland and other factors.
Removed
The period-to-period change is primarily related to foreign earnings in the current period, and a discrete tax benefit of $49.8 million related to the recognition of certain foreign deferred tax assets in 2021. See Note 15.
Added
Gross profit (loss) (in millions) 2023 2022 Twelve months ended December 31, $ 91.9 $ 46.7 Gross profit (loss) : Gross profit increased by $45.2 million for the twelve months ended December 31, 2023, compared to the same period in 2022, primarily driven by favorable power price realizations of $289.9 million, favorable raw material price realization of $117.6 million and $56.5 million attributable to the Inflation Reduction Act manufacturing production credit.
Removed
Income Taxes to the consolidated financial statements included herein for additional information. 30 Liquidity and Capital Resources Liquidity Our principal sources of liquidity are available cash and cash flow from operations.
Added
We recognized a $14.6 million income tax benefit in 2023 as compared to income tax expense of $47.4 million in 2022. The period-to-period change is primarily related to foreign results in the current period. See Note 16. Income Taxes to the consolidated financial statements included herein for additional information.
Removed
We believe that cash provided from operations and financing activities will be adequate to cover our operations and business needs over the next 12 months.
Added
Our cash and cash equivalents and unused availability under our revolving credit facilities comprise our liquidity position, which was $312.5 million as of December 31, 2023. Our material contractual obligations consist of purchase obligations under long-term alumina and power contracts, debt and related interest payments and operating leases. See Note 6. Leases , Note 8. Debt , Note 17.
Removed
Available Cash Our available cash and cash equivalents balance at December 31, 2022 was $54.3 million compared to $29.0 million at December 31, 2021.
Added
Commitments and Contingencies and Note 18. Asset retirement obligations ("ARO") to the accompanying consolidated financial statements for additional information regarding future maturities of debt and operating leases and obligations under power contracts. Available Cash Our available cash and cash equivalents balance at December 31, 2023 was $88.8 million compared to $54.3 million at December 31, 2022.
Removed
During 2021, we announced plans for construction of a new billet casthouse at Grundartangi. The Grundartangi casthouse project began in late 2021 and is expected to continue through the second half of 2023. The Grundartangi casthouse project will be fully funded through the Casthouse Facility.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAdditional information about the location and productive capacity of our facilities is available in the "Overview" section of Item 1. Business . Facility Ownership Hawesville 100% Owned Sebree 100% Owned Mt. Holly 100% Owned Grundartangi Facility 100% owned; long-term ground lease Vlissingen Facility 100% owned; long-term ground lease Chicago Corporate Office Long-term office lease Item 3.
Biggest changeAdditional information about the location and productive capacity of our facilities is available in the "Overview" section of Item 1. Business . Facility Ownership Hawesville 100% Owned Sebree 100% Owned Mt.
Item 2. Properties Our principal executive office is located at 1 South Wacker Drive, Suite 1000, Chicago, Illinois 60606. We own and operate aluminum smelters in the United States and Iceland. We also own a carbon anode production facility located in the Netherlands.
Item 2. Properties Our principal executive office is located at 1 South Wacker Drive, Suite 1000, Chicago, Illinois 60606. We own and operate aluminum smelters in the United States and Iceland. We also own a carbon anode production facility located in the Netherlands and hold a 55% interest in a bauxite mining and alumina refining facility in Jamaica.
For information regarding material legal proceedings pending against us at December 31, 2022, refer to Note 16. Commitments and Contingencies to the consolidated financial statements included herein. Item 4. Mine Safety Disclosures Not applicable. 24 PART II
For information regarding material legal proceedings pending against us at December 31, 2023, refer to Note 17. Commitments and Contingencies to the consolidated financial statements included herein. 26
Added
Holly 100% Owned Grundartangi Facility 100% owned; long-term ground lease Vlissingen Facility 100% owned; long-term ground lease Jamalco 55% Joint venture interest; long-term ground lease Chicago Corporate Office Long-term office lease Item 3.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

8 edited+8 added−0 removed9 unchanged
Biggest changeOur ability to utilize certain net operating loss carryforwards to offset future taxable income may be significantly limited if we experience an "ownership change" under the Internal Revenue Code. As of December 31, 2022, we had federal net operating loss carryforwards of approximately $1,487.8 million which could offset future taxable income.
Biggest changeAny reduction, elimination, or discriminatory application or expiration of the IRA may materially adversely affect the Company’s future operating results and liquidity. Our ability to utilize certain net operating loss carryforwards to offset future taxable income may be significantly limited if we experience an "ownership change" under the Internal Revenue Code.
In the event of a dispute arising at our foreign operations, we may be subject to the exclusive jurisdiction of foreign courts or arbitral panels, or may not be successful in subjecting foreign persons to the jurisdiction of courts or arbitral panels in the 22 United States.
In the event of a dispute arising at our foreign operations, we may be subject to the exclusive jurisdiction of foreign courts or arbitral panels, or may not be successful in subjecting foreign persons to the jurisdiction of courts or arbitral panels in the United States.
Item 3. Legal Proceedings and Note 16. Commitments and Contingencies to the consolidated financial statements included herein.
Item 3. Legal Proceedings and Note 17. Commitments and Contingencies to the consolidated financial statements included herein.
During the year ended December 31, 2022, we derived approximately 60% of our consolidated sales from Glencore and we expect to sell a significant portion of our production to Glencore in 2023.
During the year ended December 31, 2023, we derived approximately 73.8% of our consolidated sales from Glencore and we expect to sell a significant portion of our production to Glencore in 2024.
Glencore may also make investments in businesses that directly or indirectly compete with us, or may pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us.
Glencore may also make investments in businesses that directly or indirectly compete with us, or may pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. Item 1B. Unresolved Staff Comments We have no unresolved comments from the staff of the SEC.
Accordingly, our past or future acquisitions might not ultimately improve our competitive position and business prospects as anticipated and may subject us to additional liabilities that could have a material adverse effect on our business, financial position, results of operations and liquidity.
Accordingly, our past or future acquisitions might not ultimately improve our competitive position and business prospects as anticipated and may subject us to additional liabilities that could have a material adverse effect on our business, financial position, results of operations and liquidity. 23 Risks Related to Stock Ownership in the Company Glencore may exercise substantial influence over us, and they may have interests that differ from those of our other stockholders.
Our inability to enforce our rights and the enforcement of rights on a prejudicial basis by foreign courts or arbitral panels could have an adverse effect on our results of operations and financial position.
Our inability to enforce our rights and the enforcement of rights on a prejudicial basis by foreign courts or arbitral panels could have an adverse effect on our results of operations and financial position. 22 The Inflation Reduction Act of 2022 ("IRA") contains production tax credits for certain critical minerals, including aluminum.
Risks Related to Stock Ownership in the Company Glencore may exercise substantial influence over us, and they may have interests that differ from those of our other stockholders. Glencore beneficially owns approximately 42.9% of our outstanding common stock and all of our outstanding Series A Convertible Preferred Stock. In addition, one of our six directors is a Glencore employee.
Glencore beneficially owns approximately 42.9% of our outstanding common stock and all of our outstanding Series A Convertible Preferred Stock. In addition, one of our seven directors is a Glencore employee.
Added
The Company's ability to benefit from Section 45X production tax credits is not guaranteed and is dependent upon the federal government's ongoing implementation, guidance, regulations, and/or rulemakings that have been the subject of substantial public interest and debate. In August 2022, President Biden signed the IRA into law.
Added
The IRA provides for substantial tax credits and incentives for the development of critical minerals (including aluminum), renewable energy, clean fuels, electric vehicles, and supporting infrastructure, among other provisions. Section 45X of the IRA contains a production tax credit equal to 10% of certain eligible production costs, including, without limitation, labor, energy, depreciation and amortization and overhead expenses.
Added
On December 14, 2023, the U.S. Department of the Treasury and the Internal Revenue Service released proposed rules to provide guidance on the production tax credit requirements under Internal Revenue Code Section 45X (the “Proposed Regulations”). The Proposed Regulations provide guidance on rules that taxpayers must satisfy to qualify for the Section 45X tax credit.
Added
While Section 45X of the IRA provides for substantial tax benefits for Century, the Proposed Regulations have not been finalized and remain subject to public comment. There is uncertainty as to how the provisions under the IRA will be interpreted and implemented.
Added
The Company’s ability to ultimately benefit from IRA tax credits is not guaranteed and is dependent to a large degree upon the final scope, terms and conditions of the Proposed Regulations.
Added
Certain provisions of the IRA have been the subject of substantial public interest and have been subject to debate, and there are divergent views on potential implementation, guidance, rules, and regulatory principles by a diverse group of interested parties. There can be no assurance that the Company’s domestic aluminum production operations will fully qualify for the benefits under the IRA.
Added
As a result, the final interpretation and implementation of the provisions in the IRA could have a material adverse impact on the Company. Furthermore, future legislative enactments or administrative actions could limit, amend, repeal, or terminate IRA policies or other incentives that the Company currently hopes to leverage.
Added
As of December 31, 2023, we had federal net operating loss carryforwards of approximately $1,533.5 million which could offset future taxable income.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

15 edited+11 added−5 removed3 unchanged
Biggest changeManagement's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources Other Items for a discussion of the current stock repurchase authorization. 26 Item 6. [Reserved] Item 7.
Biggest changeIssuer Purchases of Equity Securities during the three months ended December 31, 2023 There were no issuer purchases of equity securities during the three months ended December 31, 2023. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources Other Items for a discussion of the current stock repurchase authorization.
We do not plan to declare cash dividends in the foreseeable future. Any declaration of dividends is at the discretion of our Board of Directors. Our agreements governing our existing debt contain restrictions which limit our ability to pay dividends. Additional information about the terms of our long-term borrowing agreements is available at Note 7.
We do not plan to declare cash dividends in the foreseeable future. Any declaration of dividends is at the discretion of our Board of Directors. Our agreements governing our existing debt contain restrictions which limit our ability to pay dividends. Additional information about the terms of our long-term borrowing agreements is available at Note 8 .
Financial Statements and Supplementary Data and in Item 1A. Risk Factors . This MD&A contains “forward-looking statements” - See “Forward-Looking Statements” above. The following discussion and analysis are for the year ended December 31, 2022, compared with the same period in 2021 unless otherwise stated.
Financial Statements and Supplementary Data and in Item 1A. Risk Factors . This MD&A contains “forward-looking statements” - See “Forward-Looking Statements” above. The following discussion and analysis are for the year ended December 31, 2023, compared with the same period in 2022 unless otherwise stated.
These factors can be highly variable and difficult to predict which can lead to significant volatility in the aluminum price. Increases or decreases in primary aluminum prices result in increases and decreases in our revenues (assuming all other factors are unchanged).
These factors can be highly variable and difficult to predict which can lead to significant volatility in the price of aluminum. Increases or decreases in primary aluminum prices result in variability in our revenues (assuming all other factors are unchanged).
For discussion and analysis of the year ended December 31, 2021, compared with the same period in 2020, please refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations" included in Part II, Item 7. of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (the "SEC") on February 25, 2022.
For discussion and analysis of the year ended December 31, 2022, compared with the same period in 2021, please refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations" included in Part II, Item 7. of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (the "SEC") on February 27, 2023.
From time to time, we may seek to manage our exposure to fluctuations in the LME price of primary aluminum and/or associated regional premiums through financial instruments designed to protect our downside price risk exposure. Information regarding financial contracts is included in Note 19. Derivatives and risks affiliated with such financial contracts are disclosed specifically in
From time to time, we may seek to manage our exposure to fluctuations in the LME price of primary aluminum and/or associated regional premiums through financial instruments designed to limit our downside price risk. Information regarding financial contracts is included in Note 20. Derivatives and risks affiliated with such financial contracts are disclosed specifically in
Debt to the consolidated financial statements included herein. 25 Stock Performance Graph The following line graph compares Century Aluminum Company’s cumulative total return to stockholders with the cumulative total return of the S&P 500 Index and the Dow Jones U.S. Aluminum Total Return Index. These comparisons assume the investment of $100 on December 31, 2017 and the reinvestment of dividends.
Debt to the consolidated financial statements included herein. 29 Stock Performance Graph The following line graph compares Century Aluminum Company’s cumulative total return to stockholders with the cumulative total return of the S&P 500 Index and the Dow Jones U.S. Aluminum Total Return Index. These comparisons assume the investment of $100 on December 31, 2018 and the reinvestment of dividends.
Each of these price components has its own drivers and variability. The price of aluminum is influenced by a number of factors, including global supply-demand balance, inventory levels, speculative activities by market participants, production activities by competitors and political and economic conditions, as well as production costs in major production regions.
Each of these price components has its own drivers and variability. The price of aluminum is influenced by a number of factors, including global supply-demand balance, inventory levels, speculative activities by market participants, production activities by producers, geopolitical and economic conditions, as well as production costs in major production regions.
The key determinants of our results of operations and cash flow from operations are as follows: • the price of primary aluminum, which is based on the London Metal Exchange ("LME") and other exchanges, plus any regional premiums and value-added product premiums; • the cost of goods sold, the principal components of which are electrical power, alumina, carbon products and labor, which in aggregate represent more than 85% of our cost of goods sold; and • our production volume and product mix.
The key determinants of our results of operations and cash flow from operations are as follows: • the price of primary aluminum, which is based on the London Metal Exchange ("LME") and other exchanges, plus any regional premiums and value-added product premiums; • the cost of goods sold, the principal components of which are electrical power, alumina, carbon products, caustic soda, natural gas, heavy fuel oil and labor, which in aggregate represent more than 79% of our cost of goods sold; and • our production volume and product mix.
Holders As of February 23, 2023, there were 97 holders of record of our common stock, which does not include the number of beneficial owners whose common stock was held in street name or through fiduciaries. Dividend Information We did not declare dividends on our common stock in 2022 or 2021.
Holders As of March 14, 2024, there were 91 holders of record of our common stock, which does not include the number of beneficial owners whose common stock was held in street name or through fiduciaries. Dividend Information We did not declare dividends on our common stock in 2023 or 2022.
We have since fully curtailed all of our production at the facility and expect to continue to maintain the plant with the intention of restarting operations when market conditions permit, including energy prices returning to more normalized levels and aluminum prices maintaining levels that can support the on-going costs and capital expenditures necessary to restart and operate the plant.
Hawesville temporary curtailment In August 2022 we fully curtailed production at the Hawesville facility and expect to continue to maintain the plant with the intention of restarting operations when market conditions permit, including energy prices returning to more normalized levels and aluminum prices maintaining levels that can support the on-going costs and capital expenditures necessary to restart and operate the plant.
Comparison of Cumulative Total Return to Stockholders from December 31, 2017 through December 31, 2022 As of December 31, 2017 2018 2019 2020 2021 2022 Century Aluminum Company $ 100 $ 37 $ 38 $ 56 $ 84 $ 42 Dow Jones U.S.
Comparison of Cumulative Total Return to Stockholders from December 31, 2018 through December 31, 2023 As of December 31, 2018 2019 2020 2021 2022 2023 Century Aluminum Company $ 100 $ 103 $ 151 $ 227 $ 112 $ 166 Dow Jones U.S.
We recognized $18.1 million of expense during the year related to wages and severance triggered by our issuance of the WARN notice and excess capacity charges, partially offset by final plant idling activities. We also recognized a non-cash other postretirement benefits ("OPEB") curtailment gain totaling $8.9 million for the year ended December 31, 2022.
Comparatively, for the year ended December 31, 2022, we recognized an impairment charge of $159.4 million, approximately $18.1 million of expense during the year related to wages and severance triggered by our issuance of the WARN notice and excess capacity charges, partially offset by final plant idling activities.
Aluminum Total Return Index (1) 100 49 40 46 119 91 S&P 500 Index 100 96 126 149 192 157 (1) The Dow Jones U.S. Aluminum Total Return Index replaces the Morningstar Aluminum Index in this analysis and going forward, as the latter data is no longer accessible. The latter index has been included with data through 2019.
Aluminum Total Return Index (1) 100 81 93 240 185 140 S&P 500 Index 100 131 156 200 164 207 (1) The Dow Jones U.S. Aluminum Total Return Index replaces the Morningstar Aluminum Index in this analysis and going forward, as the latter data is no longer accessible. The latter index has been included with data through 2019.
Overview We are a global producer of primary aluminum with aluminum reduction facilities, or "smelters," in the United States and Iceland.
Overview We are a global producer of primary aluminum with aluminum reduction facilities, or "smelters," in the United States and Iceland. In addition to our primary aluminum assets, we have a 55% joint venture interest in the Jamalco bauxite mining operation and alumina refinery in Jamaica.
Removed
Issuer Purchases of Equity Securities during the three months ended December 31, 2022 There were no issuer purchases of equity securities during the three months ended December 31, 2022. See Item 7.
Added
The Jamalco refinery supplies a substantial amount of the alumina used for the production of primary aluminum at our Grundartangi, Iceland facility. We also own a carbon anode production facility located in the Netherlands.
Removed
Hawesville temporary curtailment On June 22, 2022, we announced that we would temporarily idle all of our production capacity at our Hawesville smelter, as a direct result of historically high energy costs and declining LME prices.
Added
Section 45X of the Inflation Reduction Act On December 14, 2023, the U.S. Treasury Department’s issued proposed regulations implementing Section 45X of the Inflation Reduction Act, and the expected impact of the Section 45X Advanced Manufacturing Tax Credit on the Company.
Removed
As part of this action, we issued a notice to most of the employees at the facility pursuant to the Worker Adjustment and Retraining Notification (“WARN”) Act regarding our intentions to temporarily curtail Hawesville plant operations by no later than August 20, 2022.
Added
The government has incentivized the production of aluminum by offering a tax credit equal to 10% of eligible domestic production costs. Based on the proposed regulations, we have recognized a receivable and corresponding offset to cost of goods sold and selling, general and administrative expenses. Any changes to the proposed regulations as part of the U.S.
Removed
As the curtailment represents a significant adverse change in the extent and manner in which the Hawesville smelter will be used, we accordingly evaluated the Hawesville asset group for recoverability.
Added
Treasury Department's finalization of the regulations could result in a subsequent adjustment to the estimated credit as of December 31, 2023.
Removed
As the carrying value of the Hawesville asset group was determined to not be recoverable based on the estimated undiscounted cash flows expected to be generated over the life of the asset group, an impairment charge of $159.4 million was recognized to write down the asset group to its estimated fair value.
Added
For the year ended December 31, 2023, we incurred curtailment charges of $16.6 million, including $9.0 million related to excess capacity charges. These charges were partially offset by income related to scrap and materials sales of $1.7 million.
Added
We also recognized a non-cash other postretirement benefits ("OPEB") curtailment gain totaling $8.9 million. Acquisition of 55% interest in Jamalco On May 2, 2023, our wholly-owned subsidiary, Century Aluminum Jamaica Holdings, Inc., acquired for $1.00 a 55% interest in Jamalco, an unincorporated joint venture with Clarendon Alumina Production Limited ("CAP"), which is owned by the Government of Jamaica.
Added
Jamalco is engaged in bauxite mining and alumina refining in Jamaica. The Company's wholly-owned subsidiary, General Alumina Jamaica Limited, is the managing partner of the Jamalco joint venture. Jamalco has optimal alumina production capacity of approximately 1.4 million tonnes. Our historical financial statements for periods prior to May 2, 2023 do not include the results of Jamalco.
Added
Refer to Note 2. Acquisition of Jamalco for further information. 31 Mt. Holly Power Contract On October 27, 2023, our wholly-owned subsidiary, Century Aluminum of South Carolina, Inc. ("CASC"), entered into an agreement with the South Carolina Public Service Authority (also known as Santee Cooper) for a new, three-year power contract for Century's Mt. Holly aluminum smelter.
Added
The contract will be effective as of January 1, 2024, and run through December 2026, and will provide for 295MW of electric power at cost-of-service based rates, allowing the Mt. Holly smelter to continue operating at its current capacity and potentially to restart the remaining 25% of its curtailed production capacity.
Added
Jamalco Equipment Failure In June 2023, Jamalco experienced a power disruption caused by damage to its power generation unit. The equipment failure resulted in a loss of production at Jamalco of approximately 84,000 tonnes for the year ended December 31, 2023. The impact of the equipment failure was approximately $30.4 million.
Added
Despite returning the equipment to full capacity as of the end of October, we continue to see some inefficiencies into the first quarter of 2024. We are actively engaged with our insurance carriers in connection with this equipment failure to determine the specific amount of coverage available to us, including any applicable deductibles.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

34 edited+3 added−10 removed67 unchanged
Biggest changeRisk Factor Summary Risks Related to our Industry and Business • Declines in the market price (including premiums) for primary aluminum • Excess capacity and overproduction of aluminum • Increases in energy costs and loss or disruption of our supply of power • Inability to compete • Resurgence of COVID-19 pandemic and impact of other future pandemics • Curtailment of our production capacities and/or aluminum reduction facilities • Casthouse Project at Grundartangi and related financing • Inability to realize benefits from capital projects • "Take-or-pay" obligations under our raw material and services contracts • Small customer base • Requirement to maintain substantial resources for operations • Exposure to political, economic, regulatory, currency and other risks related to our international operations • Unpredictable events affecting operations • Impact of our hedging transactions Risks Related to Labor and Employees • Failure to maintain stable and productive labor relations • Increased labor costs and labor shortages at our operations Risks Related to Indebtedness and Financing • Deterioration in our credit rating or financial condition • Failure to generate sufficient cash flow for debt service requirements • Levels of indebtedness and/or any future indebtedness • Interest rate risk • Covenants and restrictions in debt instruments • Dependence on intercompany transfers • Potential dilution of ownership interests upon conversion of the Convertible Notes • Impact of accounting method for settlement of Convertible Notes • Effect of the capped call transactions on Century stock and value of notes and related counterparty risk Risks Related to Cybersecurity • Failure of IT systems, network disruptions, cyber-attacks, and other security data breaches Risks Related to Legal, Regulatory and Compliance Matters • Effects of climate change, climate change legislation and/or environmental regulations • Effects of health and safety laws and regulations • Effects of trade laws or regulations • Effects of litigation and legal proceedings • Ability to use certain NOLs to offset future taxable income Risks Related to Acquisition • Effect of any future acquisitions on the Company and its operations Risks Related to Stock Ownership • Impact and influence from Glencore's ownership interests in Century 10 Risk Related to our Industry and Business Declines in overall aluminum prices could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Biggest changeThis list of material risk factors is not all-inclusive or necessarily in order of importance. 9 Risk Factor Summary Risks Related to our Industry and Business • Declines in the market price (including premiums) for primary aluminum • Excess capacity and overproduction of aluminum • Increases in energy costs and loss or disruption of our supply of power • Inability to compete • Impact of future pandemics • Curtailment of our production capacities and/or aluminum reduction facilities • Casthouse Project at Grundartangi and related financing • Inability to realize benefits from capital projects • "Take-or-pay" obligations under our raw material and services contracts • Small customer base • Requirement to maintain substantial resources for operations • Exposure to political, economic, regulatory, currency and other risks related to our international operations • Unpredictable events affecting operations • Impact of our hedging transactions • Complexity of Jamalco business • Risks of Jamalco Joint Venture structure • Jamalco permitting risks Risks Related to Labor and Employees • Failure to maintain stable and productive labor relations • Increased labor costs and labor shortages at our operations Risks Related to Indebtedness and Financing • Deterioration in our credit rating or financial condition • Failure to generate sufficient cash flow for debt service requirements • Levels of indebtedness and/or any future indebtedness • Interest rate risk • Covenants and restrictions in debt instruments • Dependence on intercompany transfers • Potential dilution of ownership interests upon conversion of the Convertible Notes • Impact of accounting method for settlement of Convertible Notes • Effect of the capped call transactions on Century stock and value of notes and related counterparty risk Risks Related to Cybersecurity • Failure of IT systems, network disruptions, cyber-attacks, and other security data breaches Risks Related to Legal, Regulatory and Compliance Matters • Effects of climate change, climate change legislation and/or environmental regulations • Effects of health and safety laws and regulations • Effects of trade laws or regulations • Effects of litigation and legal proceedings • Realization of benefits under Inflation Reduction Act Section 45X • Ability to use certain NOLs to offset future taxable income Risks Related to Acquisition • Effect of any future acquisitions on the Company and its operations Risks Related to Stock Ownership • Impact and influence from Glencore's ownership interests in Century Risk Related to our Industry and Business Declines in overall aluminum prices could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Market-based electricity contracts expose us to market price volatility and fluctuations driven by, among other things, coal and 11 natural gas prices, renewable energy production, regulatory changes and weather events, in each case, without any direct relationship to the price of primary aluminum. There can be no assurance that our market-based power supply arrangements will result in favorable electricity costs.
Market-based electricity contracts expose us to market price volatility and fluctuations driven by, among other things, coal and natural gas prices, renewable energy production, regulatory changes and weather events, in each case, without any direct relationship to the price of primary aluminum. There can be no assurance that our market-based power supply arrangements will result in favorable electricity costs.
Certain of our principal raw materials are commodities for which, at times, availability and pricing can be volatile due to a number of factors beyond our control, including general economic conditions, inflationary impacts, domestic and worldwide demand, labor costs, competition, weather conditions and other transportation delays, major force majeure events, pandemics, tariffs, sanctions and currency exchange rates.
Certain of our principal raw materials are commodities for which, at times, availability and pricing can be volatile due to a number of factors beyond our control, including general economic conditions, inflationary impacts, domestic and worldwide demand, 13 labor costs, competition, weather conditions and other transportation delays, major force majeure events, pandemics, tariffs, sanctions and currency exchange rates.
Insufficient rain in Iceland has and could in the future lead to low water levels in the reservoirs which has resulted and may again result in curtailments in power which is provided to our Grundartangi smelter from hydroelectric and geothermal sources. We accept delivery of necessary raw materials to our operations using public infrastructure such as river systems and seaports.
Insufficient rain in Iceland has and could in the future lead to low water levels in the reservoirs which has resulted and may again result in curtailments in power which is provided to our Grundartangi smelter from hydroelectric and geothermal sources. 15 We accept delivery of necessary raw materials to our operations using public infrastructure such as river systems and seaports.
In addition, unpredictable events that lead to power cost increases may adversely affect our financial condition, results of operations and liquidity. Iceland, for example, has suffered several natural disasters and extreme weather events, including significant volcanic eruptions and earthquakes which can lead to disruption in power transmission or other impacts to our operations.
In addition, unpredictable events that lead to power cost increases may adversely affect our financial condition, results of operations and liquidity. Iceland, for example, has recently suffered several natural disasters and extreme weather events, including significant volcanic eruptions and earthquakes which can lead to disruption in power transmission or other impacts to our operations.
Although we maintain insurance to mitigate losses resulting from such events, our coverage may not be sufficient to cover all losses, may 16 have high deductibles or may not cover certain events at all. To the extent these losses are not covered by insurance, our financial condition, results of operations and cash flows could be materially and adversely affected.
Although we maintain insurance to mitigate losses resulting from such events, our coverage may not be sufficient to cover all losses, may have high deductibles or may not cover certain events at all. To the extent these losses are not covered by insurance, our financial condition, results of operations and cash flows could be materially and adversely affected.
Any curtailments of our operations, or actions taken to seek bankruptcy protection or divest some or all of our assets, could have a material adverse effect on our business, financial position, results of operations and liquidity. The restart of curtailed capacity at our Mt. Holly smelter is subject to certain risks and uncertainties.
Any curtailments of our operations, or actions taken to seek bankruptcy protection or divest some or all of our assets, could have a material adverse effect on our business, financial position, results of operations and liquidity. 12 The restart of curtailed capacity at our Mt. Holly smelter is subject to certain risks and uncertainties.
The availability of our raw materials at competitive 14 prices is critical to the profitability of our operations and increases in pricing and/or disruptions in our supply could have a material adverse effect on our business, financial position, results of operations and liquidity. We may be unable to realize expected benefits of our capital projects.
The availability of our raw materials at competitive prices is critical to the profitability of our operations and increases in pricing and/or disruptions in our supply could have a material adverse effect on our business, financial position, results of operations and liquidity. We may be unable to realize expected benefits of our capital projects.
Any increase in our electricity and energy prices not tied to corresponding increases in the LME price could have a material adverse effect on our business, financial position, results of operations and liquidity. Loss or disruptions in our supply of power and other power-related events could adversely affect our business, financial condition or results of operations.
Any increase in our electricity and energy prices not tied to corresponding increases in the LME price could have a material adverse effect on our business, financial position, results of operations and liquidity. 11 Loss or disruptions in our supply of power and other power-related events could adversely affect our business, financial condition or results of operations.
If we are unable to generate funds from our operations to pay our operating expenses and fund our capital expenditures and other obligations, our 15 ability to continue to meet our cash requirements in the future could require substantial liquidity and access to sources of funds, including from financial, capital and/or credit markets.
If we are unable to generate funds from our operations to pay our operating expenses and fund our capital expenditures and other obligations, our ability to continue to meet our cash requirements in the future could require substantial liquidity and access to sources of funds, including from financial, capital and/or credit markets.
The casthouse project at our Grundartangi smelter and related financing are subject to certain risks and uncertainties 13 and we may be unable to realize the expected benefits of this project. On November 3, 2021, we announced plans for construction of a new billet casthouse at Grundartangi.
The casthouse project at our Grundartangi smelter and related financing are subject to certain risks and uncertainties and we may be unable to realize the expected benefits of this project. On November 3, 2021, we announced plans for construction of a new billet casthouse at Grundartangi.
Our operating results depend on the market for primary aluminum which can be volatile and subject to many factors beyond our control.
Our operating results depend on the market for primary aluminum which can be volatile and subject to many factors 10 beyond our control.
Additionally, in 2021, due in large part to low reservoir levels in Europe and low natural gas inventory in Europe, the monthly Nord Pool power prices more than tripled from January 2021 to December 2021. More recently, market disruptions in global energy markets related to the war in Ukraine caused significant increases in market-based power prices.
Previously, in 2021, due in large part to low reservoir levels in Europe and low natural gas inventory in Europe, the monthly Nord Pool power prices more than tripled from January 2021 to December 2021. More recently, market disruptions in global energy markets related to the war in Ukraine caused significant increases in market-based power prices.
Geopolitical uncertainty of any kind (including an outbreak or escalation of a regional conflict, such as the current situation in Ukraine), major public health issues (such as an outbreak of a pandemic or epidemic like COVID-19) or other unexpected events have the potential to negatively impact business confidence, potentially resulting in reduced global or regional demand for aluminum and increased price volatility.
Geopolitical uncertainty of any kind (including an outbreak or escalation of a regional conflict, such as the current situation in Ukraine or the hostilities in the Middle East), major public health issues (such as an outbreak of a pandemic or epidemic like COVID-19) or other unexpected events have the potential to negatively impact business confidence, potentially resulting in reduced global or regional demand for aluminum and increased price volatility.
As a result, an increase in the value of foreign currencies relative to the U.S. dollar could increase the U.S. dollar cost of our operating expenses which are denominated and payable in those currencies. To the extent we explore additional opportunities outside the U.S., our currency risk with respect to foreign currencies may increase.
As a result, an increase in the value of foreign currencies relative to the U.S. dollar could increase the U.S. dollar cost of our operating expenses which are denominated and payable in those currencies. To the extent we explore additional opportunities outside the U.S., our currency risk with respect to foreign currencies may increase. See Item 7A.
For example, we are unable to realize the anticipated benefits from our recent investments in Hawesville because of the recent curtailment of that facility due to historically high energy costs and declining LME prices.
For example, we are unable to realize the anticipated benefits from our recent investments in Hawesville because of the curtailment of that facility in the third quarter of 2022 due to historically high energy costs and declining LME prices.
Any material non-payment or non-performance by one of these customers, a significant dispute with one of these customers, a significant downturn or deterioration in the business or financial condition of any of these customers, early termination of our sales agreement with any of these customers, or any other event significantly negatively impacting the contractual relationship with one of these customers could adversely affect our financial condition and results of operations.
Business - Customer Base. 14 Any material non-payment or non-performance by one of our principal customers, a significant dispute with one of these customers, a significant downturn or deterioration in the business or financial condition of any of these customers, early termination of our sales agreement with any of these customers, or any other event significantly negatively impacting the contractual relationship with one of these customers could adversely affect our financial condition and results of operations.
In the U.S., our Hawesville and Sebree plants receive all of their electricity requirements under market-based electricity contracts. As of December 31, 2022, we have entered into contracts to fix the forward price of approximately 20% of Grundartangi's Nord Pool based power requirements for the year ending December 31, 2023.
In the U.S., our Hawesville and Sebree plants receive all of their electricity requirements under market-based electricity contracts. In Iceland, we previously entered into contracts to fix the forward price of approximately 20% of Grundartangi's Nord Pool based power requirements for the year ending December 31, 2023.
As a result of these events, the alumina index price reached a high of $710 per tonne in April 2018 compared to an average price of $ 362 per tonne for 2022, $329 per tonne for 2021, and $271 per tonne for 2020.
As a result of these events, the alumina index price reached a high of $710 per tonne in April 2018 compared to an average price of $343 per tonne in 2023, $ 362 per tonne for 2022, and $329 per tonne for 2021.
Unpredictable events may interrupt our operations, which may adversely affect our business. Our operations may be susceptible to unpredictable events, including accidents, transportation and supply interruptions, labor disputes, equipment failure, information system breakdowns, natural disasters, dangerous weather conditions, river conditions, political unrest, pandemics, cyberattacks and other events.
Quantitative and Qualitative Disclosures about Market Risk – Foreign Currency . Unpredictable events may interrupt our operations, which may adversely affect our business. Our operations may be susceptible to unpredictable events, including accidents, transportation and supply interruptions, labor disputes, equipment failure, information system breakdowns, natural disasters, dangerous weather conditions, river conditions, political unrest, global pandemics, cyberattacks and other events.
In the third quarter of 2022, we curtailed all operations at our Hawesville smelter. Any potential restart of operations at the Hawesville smelter is based on certain market assumptions that are subject to risks outside of our control, specifically the LME price of aluminum, price and availability of raw materials and price levels of premiums.
Any potential restart of operations at the Hawesville smelter would be based on certain market assumptions that would be subject to risks outside of our control, specifically the LME price of aluminum, price and availability of raw materials and price levels of metal premiums.
Our facilities are subject to contractual and other fixed costs that continue even if we curtail operations at these facilities. These costs reduce the cost saving advantages of curtailing unprofitable aluminum production.
Curtailing production requires us to incur substantial expenses, both at the time of the curtailment and on an ongoing basis. Our facilities are subject to contractual and other fixed costs that continue even if we curtail operations at these facilities. These costs reduce the cost saving advantages of curtailing unprofitable aluminum production.
Changes in these inputs may result in actual costs and returns that materially differ from the estimated costs and returns and our financial position and results of operations may be negatively affected as a result. The restart of production at our Hawesville smelter is subject to certain risks and uncertainties.
Changes in these inputs may result in actual costs and returns that materially differ from the estimated costs and returns and our financial position and results of operations may be negatively affected as a result. Changes in these inputs may also make the restart of the remaining curtailed capacity at Mt. Holly uneconomic.
There can be no assurance that future deterioration in the price of aluminum or increases in our costs of production, including power, will not result in additional production curtailments at our smelters. Curtailing production requires us to incur substantial expenses, both at the time of the curtailment and on an ongoing basis.
The continued operation of our smelters depends on the market for primary aluminum and our underlying costs of production. There can be no assurance that future deterioration in the price of aluminum or increases in our costs of production, including power, will not result in additional production curtailments at our smelters.
Many of our supply agreements are short term or expire in the next few years. There is no assurance that we will be able to renew such agreements on commercially favorable terms, if at all.
There is no assurance that we will be able to renew such agreements on commercially favorable terms, if at all.
For example, extreme weather events in mid-February 2021 across the United States resulted in increases to power prices for our Kentucky plants, which had an impact on our results in the first quarter of 2021.
For example, extreme weather events throughout 2022 across the United States resulted in increases to power prices for our Kentucky plants, which resulted in the curtailment of the Hawesville smelter in the third quarter of 2022.
Holly restart project was completed in the second quarter of 2022. The profitability of this restart project is subject to certain market assumptions that are subject to risks outside of our control, specifically the LME price of aluminum, price and availability of raw materials and price levels of premiums.
Any potential future restart of this curtailed capacity will be made in light of certain market assumptions that are subject to risks outside of our control, specifically the LME price of aluminum, price and availability of raw materials and price levels of metal premiums.
International operations expose us to political, economic, regulatory, currency and other related risks which may materially adversely impact our business. We receive a significant portion of our revenues and cash flow from our operations in Iceland and have significant operations in the Netherlands.
International operations expose us to political, economic, regulatory, currency and other related risks which may materially adversely impact our business.
For the year ended December 31, 2022, we derived approximately 72% of our consolidated net sales from two major customers and we currently have agreements in place to sell a substantial portion of our 2023 production to Glencore.
For the year ended December 31, 2023, we derived approximately 73.8% of our consolidated net sales from Glencore and we currently have agreements in place to sell a substantial portion of our 2024 production to Glencore. We expect that the rest of our 2024 customer base will remain fairly concentrated among a small number of customers under short-term contracts.
Our business depends upon the adequate supply of alumina, aluminum fluoride, calcined petroleum coke, pitch, carbon anodes, cathodes, alloys and other raw materials. For some of these production inputs, such as alumina, coke, pitch and cathodes, we do not have any internal production and rely on a limited number of suppliers for all of our requirements.
For some of these production inputs, such as alumina, coke, pitch and cathodes, we do not have any internal production and rely on a limited number of suppliers for all of our requirements. Many of our supply agreements are short term or expire in the next few years.
For example, extreme weather events in mid-February 2021 across the United States resulted in increases to power prices for our Kentucky plants after the occurrence of such events, which had an impact on our results in the first quarter of 2021.
For example, extreme weather events throughout 2022 across the United States resulted in increases to power prices for our Kentucky plants, which resulted in the curtailment of the Hawesville smelter in the third quarter of 2022.
If we are not able to compete successfully, our business, financial position, results of operations and cash flows could be materially and adversely affected. Public health pandemics, epidemics or similar public health threats, including any potential resurgence of COVID-19, may continue to have an adverse effect on our business, outlook, financial condition, results of operations and liquidity.
If we are not able to compete successfully, our business, financial position, results of operations and cash flows could be materially and adversely affected. Curtailment of aluminum production at our facilities could have a material adverse effect on our business, financial position, results of operations and liquidity.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere herein. This list of material risk factors is not all-inclusive or necessarily in order of importance.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere herein.
Upon the finalization of the three-year power agreement with Santee Cooper at our Mt. Holly smelter in early 2021, we began the process of restarting capacity at Mt. Holly that had been previously curtailed. This power contract with Santee Cooper provides sufficient energy to allow Mt. Holly to produce at 75% of full production capacity. The Mt.
In late 2023, we finalized a new power agreement with Santee Cooper at our Mt. Holly smelter which provides access to sufficient energy to potentially allow Mt. Holly to restart the remaining 25% of its curtailed production capacity.
Removed
The COVID-19 pandemic continues to impact the countries, communities, supply chains and markets in which we operate, though to a generally lesser extent than during 2020-2022.
Added
The restart of production at our Hawesville smelter is subject to certain risks and uncertainties. In the third quarter of 2022, we curtailed all operations at our Hawesville smelter.
Removed
Government, business and individual responses to the COVID-19 pandemic and efforts to reduce its spread, including quarantines, travel restrictions, business closures, and mandatory stay-at-home or work-from-home orders, while largely lifted during 2022, could be reinstituted in the event novel strains or new variants prove resistant to existing vaccines.
Added
Our business depends upon the adequate supply of alumina, aluminum fluoride, calcined petroleum coke, pitch, carbon anodes, cathodes, alloys, caustic soda, natural gas, heavy fuel oil, and other raw materials.
Removed
We continue to be subject to risks arising out of the turbulence of the economic recovery associated with the COVID-19 pandemic, including inflationary pressures, which have generally increased the costs of our labor, raw materials, energy supplies and other production inputs, adversely impacting our results of operations and profitability.
Added
We receive a significant portion of our revenues and cash flow from our operations in Iceland, we have significant operations in the Netherlands and we own a 55% interest in and operate a bauxite mining and alumina refining business in Jamaica.
Removed
Despite widespread vaccination efforts, we also remain subject to the ongoing risk that a portion of 12 our workforce could suffer illness or otherwise be unable to perform their ordinary work functions due to adverse developments in the COVID-19 pandemic or other infectious disease outbreak.
Removed
In addition, we have experienced, and may continue to experience, supply chain and/or operational disruptions, as our suppliers and vendors face similar challenges.
Removed
Raw material suppliers, including those we currently use, may not be available or may be delayed in shipments to us, impacting our ability to deliver our products to our customers thereby negatively impacting our operational results and financial condition. Further, if our customers’ businesses are similarly affected, they might delay, reduce or even eliminate purchases from us.
Removed
Because the prolonged COVID-19 pandemic and resulting economic volatility continues to evolve, we cannot predict the full extent to which our businesses, results of operations, financial condition or liquidity will ultimately be impacted.
Removed
To the extent the COVID-19 pandemic adversely affects our businesses, it may also have the effect of exacerbating many of the other risks described in this ‘‘Risk Factors’’ section, any of which could have a material adverse effect on us.
Removed
Curtailment of aluminum production at our facilities could have a material adverse effect on our business, financial position, results of operations and liquidity. The continued operation of our smelters depends on the market for primary aluminum and our underlying costs of production.
Removed
We expect that the rest of our 2023 customer base will remain fairly concentrated among a small number of customers under short-term contracts. See Item 1. Business - Customer Base.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

17 edited+18 added−0 removed80 unchanged
Biggest changeItem 7A. Quantitative and Qualitative Disclosure about Market Risk and Note 19. Derivatives to the consolidated financial statements included herein. Risks Related to Labor and Employees Our failure to maintain satisfactory labor relations could adversely affect our business.
Biggest changeItem 7A. Quantitative and Qualitative Disclosure about Market Risk and Note 20. Derivatives to the consolidated financial statements included herein. Jamalco’s operations are complex and we may experience substantial risks, delays and/or disruptions in connection with integration activities, a failure of which may result in a material adverse effect on Jamalco’s and Century’s business, financial condition and results of operations.
If more stringent compliance or cleanup standards under environmental laws or regulations are imposed, previously unknown environmental conditions or damages to natural resources are discovered or alleged, or if contributions from other responsible parties with respect to sites for which we have cleanup responsibilities are not available, we may be subject to additional liability, which may have a material adverse effect on our business, financial condition, results of operations and liquidity.
If more stringent compliance or cleanup standards under environmental laws or regulations are imposed, previously unknown environmental conditions or damages to natural resources are discovered or alleged, or if contributions from other responsible parties with respect to sites for which we have cleanup responsibilities are not available, we may be subject to 21 additional liability, which may have a material adverse effect on our business, financial condition, results of operations and liquidity.
Such security breaches could also result in a violation of applicable U.S. and international privacy and other laws and could have a material adverse effect on our business, results of operations and financial position. Risks Related to Legal, Regulatory and Compliance Matters Climate change, climate change legislation or environmental regulations may adversely impact our operations.
Such security breaches 20 could also result in a violation of applicable U.S. and international privacy and other laws and could have a material adverse effect on our business, results of operations and financial position. Risks Related to Legal, Regulatory and Compliance Matters Climate change, climate change legislation or environmental regulations may adversely impact our operations.
If any option counterparty becomes subject to bankruptcy or 19 other insolvency proceedings, with respect to such option counterparty’s obligations under the relevant capped call transaction, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under such transaction.
If any option counterparty becomes subject to bankruptcy or other insolvency proceedings, with respect to such option counterparty’s obligations under the relevant capped call transaction, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under such transaction.
Governmental regulatory bodies in the United States and other countries where we operate have adopted, or may in the future adopt, laws or enact other regulatory changes in response to the potential impacts of climate change. Such laws and 20 regulations could have a variety of adverse effects on our business.
Governmental regulatory bodies in the United States and other countries where we operate have adopted, or may in the future adopt, laws or enact other regulatory changes in response to the potential impacts of climate change. Such laws and regulations could have a variety of adverse effects on our business.
Our existing debt instruments contain various covenants that restrict the way we conduct our business and limit our ability to incur debt, pay dividends and engage in transactions such as acquisitions and investments, among other things, which may impair our ability to obtain additional liquidity and grow our business.
Our existing debt instruments contain various covenants that restrict the way we conduct our business and limit our ability to incur debt, pay dividends and engage in transactions such as acquisitions and investments, among other things, which may 18 impair our ability to obtain additional liquidity and grow our business.
This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the notes. The potential effect, if any, of these transactions and activities on the market price of our common stock or the notes will depend in part on market conditions and cannot be ascertained at this time.
This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the notes. 19 The potential effect, if any, of these transactions and activities on the market price of our common stock or the notes will depend in part on market conditions and cannot be ascertained at this time.
An inability to access the credit and capital markets when needed in order to refinance our existing 17 debt or raise new debt or equity could have a material adverse effect on our business, financial position, results of operations and liquidity.
An inability to access the credit and capital markets when needed in order to refinance our existing debt or raise new debt or equity could have a material adverse effect on our business, financial position, results of operations and liquidity.
Application of existing and new 21 environmental laws and regulations to us and/or our key suppliers may have a material adverse effect on our business, financial position, results of operations and liquidity.
Application of existing and new environmental laws and regulations to us and/or our key suppliers may have a material adverse effect on our business, financial position, results of operations and liquidity.
Moreover, our ability to meet our debt service obligations 18 depends upon the receipt of intercompany transfers from our subsidiaries.
Moreover, our ability to meet our debt service obligations depends upon the receipt of intercompany transfers from our subsidiaries.
We currently receive approximately 70% of needed emission allowances for the Grundartangi smelter free of charge, although changes to these regulations, or the implementation of new regulations, could cause our cost of allowances to rise or impose other costs.
We currently receive approximately 80% of needed emission allowances for the Grundartangi smelter free of charge, although changes to these regulations, or the implementation of new regulations, could cause our cost of allowances to rise or impose other costs.
As of December 31, 2022, we had an aggregate of approximately $527.7 million of outstanding debt (including $250.0 million aggregate principal amount of our 7.5% senior secured notes due 2028 (the "2028 Notes") and $86.3 million aggregate principal amount of our convertible senior notes due 2028 (the "Convertible Notes")).
As of December 31, 2023, we had an aggregate of approximately $479.2 million of outstanding debt (including $250.0 million aggregate principal amount of our 7.5% senior secured notes due 2028 (the "2028 Notes") and $86.3 million aggregate principal amount of our convertible senior notes due 2028 (the "Convertible Notes")).
The occurrence of unexpected and extraordinary events, such as the COVID-19 pandemic, can also create substantial uncertainty and volatility in the financial markets which may impact our ability to access capital to refinance our existing indebtedness.
The occurrence of unexpected and extraordinary events, such as an outbreak of a pandemic or epidemic like COVID-19, can also create substantial uncertainty and volatility in the financial markets which may impact our ability to access capital to refinance our existing indebtedness.
The bargaining unit employees at our Grundartangi, Hawesville, Sebree and Vlissingen facilities are represented by labor unions, representing approximately 59% of our total workforce as of December 31, 2022. Our Grundartangi labor agreement is effective through December 31, 2024. Our Vlissingen labor agreement is effective through May 31, 2024 .
Risks Related to Labor and Employees Our failure to maintain satisfactory labor relations could adversely affect our business. The bargaining unit employees at our Grundartangi, Hawesville, Sebree, Vlissingen and Jamalco facilities are represented by labor unions, representing approximately 60% of our total workforce as of December 31, 2023. Our Grundartangi labor agreement is effective through December 31, 2024.
Risks Related to Indebtedness and Financing A deterioration in our financial condition or credit rating could limit our ability to access the credit and capital markets on acceptable terms or to enter into hedging and financial transactions, lead to our inability to access liquidity facilities, and could adversely affect our financial condition and our business relationships.
Recruiting and retaining employees in sufficient numbers to optimize our workforce levels may result in increased labor costs which could in turn lead to a material adverse effect on our results of operations and financial position. 17 Risks Related to Indebtedness and Financing A deterioration in our financial condition or credit rating could limit our ability to access the credit and capital markets on acceptable terms or to enter into hedging and financial transactions, lead to our inability to access liquidity facilities, and could adversely affect our financial condition and our business relationships.
Our Hawesville and Sebree labor agreements are scheduled to expire April 1, 2026 and October 28, 2023, respectively. While we are hopeful to reach agreement with the labor unions to renew these agreements on acceptable terms when these agreements expire, there is no assurance that we will be successful in doing so.
Jamalco is currently in the process of negotiating new contracts with both the salaried and hourly employee groups. While we are hopeful to reach agreement with the labor unions to renew these agreements on acceptable terms when these agreements expire, there is no assurance that we will be successful in doing so.
Like many U.S. businesses, we did experience increasing levels of turnover at all of our U.S. locations in 2022 and increased labor costs. Recruiting and retaining employees in sufficient numbers to optimize our workforce levels may result in increased labor costs which could in turn lead to a material adverse effect on our results of operations and financial position.
Like many U.S. businesses, we did experience increasing levels of turnover at all of our U.S. locations in 2022 and increased labor costs.
Added
Our acquisition of a 55% interest in Jamalco in May 2023 substantially expanded the scope and size of our business by adding Jamalco’s bauxite mining and alumina refining operations to our existing primary aluminum production.
Added
Operating bauxite mining and alumina refining assets may require different operating strategies and managerial expertise than our other operations, and these operations are subject to additional and/or different regulatory requirements. See “We may be unable to obtain, maintain, or renew permits or approvals necessary for Jamalco’s operations, which could materially adversely affect our business” below.
Added
The integration of Jamalco’s operations may place strain on our administrative and operational infrastructure and the Jamalco business may not perform as expected following the acquisition. Our senior management’s attention may be diverted from the management of daily operations to the integration of Jamalco’s business operations and the assets acquired in the acquisition.
Added
Our ability to manage our business and growth will require us to apply our operational, financial and management controls, reporting systems and procedures to the Jamalco business. The failure to do so, may have a material adverse effect on our business, financial condition and results of operations.
Added
We may also encounter risks, costs and expenses associated with undisclosed or unanticipated liabilities, and use more cash and other financial resources on integration and implementation activities than we anticipate.
Added
We may not be able to successfully integrate Jamalco’s operations into our existing operations, assimilate and retain key employees, successfully manage this new line of business or realize the expected economic benefits of the Jamalco acquisition, which may have a material adverse effect on our business, financial condition and results of operations.
Added
See “Risks Related to Acquisitions - Acquisitions could disrupt our operations and harm our operating results” below. Jamalco is operated as an unincorporated joint venture, which may pose unique risks to its operations.
Added
Joint ventures inherently involve unique and special risks as joint venture partners may have divergent strategies to operate the joint venture's business and operations, and partners may take (or fail to take) certain actions and positions, or experience difficulties, that may negatively impact the joint venture’s business and operating results.
Added
While Century is the operating partner at Jamalco through its wholly owned subsidiary General Alumina Jamaica Limited (“GAJL”), our joint venture partner, Clarendon Alumina Production Limited (“CAP”), retains substantial shareholder rights that could impact Jamalco’s business, such as approval of annual budgets, major capital investments, and expansion into additional areas of 16 business.
Added
Furthermore, due to the structure of the Jamalco joint venture, each partner may from time to time be required to fund capital contributions necessary for Jamalco’s business.
Added
If Century and its joint venture partner were to have material disagreements about the operation of Jamalco’s business or fail to make required capital contributions when required, it could have a material adverse impact on our business, financial condition and results of operations.
Added
Additionally, the unincorporated nature of Jamalco’s joint venture structure is highly complex and atypical when compared to commonly observed legal entity structures across many jurisdictions. This atypical structure may drive unique and special legal, accounting, tax, and/or compliance outcomes, which are complex and difficult to ascertain and analyze.
Added
For example, we identified a material weakness in the design of our internal control over the allocation of excess fair value acquired between non-controlling interest and the preliminary deferred bargain purchase gain.
Added
For additional information on the foregoing, see “Item 9A — Controls and procedures — Management’s Report on Internal Control over Financial Reporting.” We may be unable to obtain, maintain, or renew permits or approvals necessary for Jamalco’s operations, which could materially adversely affect our business. Jamalco’s operations are subject to extensive permitting and approval requirements.
Added
These include permits and approvals issued by Jamaican government agencies and regulatory bodies. The permitting and approval rules are complex, are often subject to interpretations by regulators, which may change over time.
Added
Changing regulatory requirements could make our ability to comply with the applicable requirements more difficult, inhibit or delay our ability to timely obtain the necessary approvals, if at all, result in approvals being conditioned in a manner that may restrict Jamalco’s ability to efficiently and economically conduct its operations or preclude the continuation of certain ongoing operations.
Added
Failure to obtain, maintain, or renew permits or approvals, or permitting or approval delays, restrictions, or conditions could increase Jamalco’s costs and affect our ability to conduct our operations, potentially having a materially adverse impact on our business, financial condition and results of operations.
Added
Our Vlissingen labor agreement is effective through May 31, 2024. Our Hawesville and Sebree labor agreements are scheduled to expire April 1, 2026 and October 28, 2028, respectively. Jamalco’s work force is represented through separately negotiated labor agreements for hourly and salaried employee groups. Both contracts are effective through December 31, 2023.

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