What changed in this filing

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Item 1. Business

2021-03-04 compared with 2020-02-27 · 93 added, 92 removed, 185 unchanged (50% of the section changed)

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The Grundartangi facility, located in Grundartangi, Iceland, is a primary aluminum reduction facility owned and operated by our wholly-owned subsidiary, Nordural Grundartangi ehf, and is our most modern facility.

Grundartangi is currently in the process of a multi-year expansion project that has brought the annual primary aluminum production capacity from 280,000 tonnes to current capacity of approximately 317,000 tonnes and is expected to ultimately increase annual production capacity at Grundartangi to approximately 325,000 tonnes.

Grundartangi is currently in the process of a multi-year expansion project that has brought the annual primary aluminum production capacity to current capacity of approximately 317,000 tonnes and is expected to ultimately increase annual production capacity at Grundartangi to approximately 325,000 tonnes.

Grundartangi produces standard-grade aluminum ingot and a primary foundry alloy product, which is a value-added product that is sold at a premium to standard-grade aluminum.

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We are currently in the process of a multi-year project at Hawesville to restart this previously curtailed capacity, rebuild the two potlines that we continued to operate past their expected life cycle, and implement new technology across all production.

In early 2019, we completed the first phase of this project, which involved restarting production on the three potlines that had been curtailed since the fourth quarter of 2015.

The second phase of this project involves the rebuilding the two potlines that had been continuously operating and implementation of certain new technology across all production at Hawesville.

The first of these potlines is currently in the process of being rebuilt and is expected to return to production in early 2020.

The rebuild of the fifth and final potline at Hawesville and completion of planned technology upgrades are expected to be completed over the next several years, subject to market conditions.

Each potline at Hawesville represents incremental production capacity of approximately 50,000 tonnes.

In early 2019, we completed the first phase of this project, which involved restarting production on the three potlines that had been curtailed since 2015.

The second phase of the project involves rebuilding the two potlines that had continued to operate past their expected life cycle and the implementation of certain new technology across all production.

These two potlines were taken out of production in February and September 2019, respectively.

The rebuild of the first of these potlines was completed in the second quarter of 2020.

With the restart of this potline, the Hawesville smelter is currently operating at approximately 80% production capacity.

The rebuild of the fifth and final potline and the completion of the technology upgrades are expected to be completed over the next several years subject to market conditions.

Hawesville produces standard-grade and high purity aluminum that can be cast into sow or delivered directly to nearby customers as molten metal.

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Holly, located in Goose Creek, South Carolina, is a primary aluminum reduction facility owned and operated by our wholly-owned subsidiary, Century Aluminum of South Carolina, Inc.

Holly has an annual production capacity of approximately 229,000 tonnes.

Holly facility is currently operating at approximately 50% of capacity while CASC pursues a long-term power solution.

Holly has an annual production capacity of approximately 229,000 tonnes of primary aluminum.

Holly facility is currently operating at approximately 50% of its production capacity while CASC finalizes a new, three-year power agreement with South Carolina Public Service Authority (also known as Santee Cooper), which is expected to be effective April 1, 2021.

The new contract with Santee Cooper is expected to provide sufficient energy to allow the smelter to increase its production to 75% of Mt.

Holly's full production capacity.

See "Key Production Costs — Electrical Power Supply Agreements" below for further discussion of our power arrangements at Mt.

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Our primary aluminum smelters and their respective primary aluminum capacities are shown in the following table:

Ownership Percentage

Annual Production Capacity (tpy) (1)

Facility Ownership Percentage Operational Annual Production Capacity (tpy) (1)

Actual 2020 Annual Production (tpy)

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Holly, South Carolina, USA 100% 1980 229,000 107,000

1,016,000 794,000

(1) The tonnes per year (tpy) figures in this column reflect an estimate of the facility's total production capacity based on plant design, historical operating results and operating efficiencies and does not necessarily represent each facility’s maximum production capability.

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The following table shows our primary aluminum shipment volumes since 2016.

Shipment volumes reflect (i) the partial curtailment of our Hawesville and Mt.

Holly operations during the fourth quarter of 2015 and (ii) incremental production from the restart of capacity at Hawesville beginning in 2018, offset by lower production due to a temporary potline outage at Sebree in 2018.

Primary Aluminum Projects

Helguvik project

The Helguvik project is a greenfield project for an aluminum reduction facility in Helguvik, Iceland ("Helguvik" or the "Helguvik project"), owned by our wholly-owned subsidiary, Nordural Helguvik ehf ("Nordural Helguvik").

The Helguvik project site is located approximately 30 miles from the city of Reykjavik, Iceland.

Construction activity and spending on the project have been curtailed since 2008.

Carbon Products Facilities

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We acquired Vlissingen in 2012 and restarted the facility in late 2013 with an initial carbon anode production capacity of 75,000 tonnes.

In 2015, we completed a project to expand Vlissingen’s annual production capacity to 145,000 tonnes;

and in 2019, we completed the rebuild and expansion of one of the baking furnaces at Vlissingen which is expected to further increase annual carbon anode production capacity by an

additional 12,000 tonnes.

With these expansion projects in place, we expect Vlissingen will be able to supply approximately 90% of Grundartangi’s carbon anodes requirements at current production levels.

Since the acquisition, we have completed a variety of expansion projects and efficiency programs in order to more than double the plant's production capacity.

With these expansion projects and efficiency programs in place, we expect Vlissingen will be able to supply approximately 93% to 98% of Grundartangi’s carbon anodes requirements at current production levels.

Each of our smelters in the United States produces anodes at on-site facilities.

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(i) the base commodity price which is based on quoted prices on the LME, plus (ii) any regional premium (e.g., the Midwest premium for metal sold in the United States and the European Duty Paid premium for metal sold into Europe) plus (iii) any product premium.

Our operating results are highly sensitive to changes in the LME price of primary aluminum and the amount of regional premiums and product premiums.

Our operating results are highly sensitive to changes in the LME price of primary aluminum and the amount of regional premiums and product

As a result, from time to time, we assess the appropriateness of mitigating the effects of fluctuations in the aluminum price through the use of fixed-price commitments, LME-linked supply contracts and other financial instruments.

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Customer Base

We have historically derived substantially all of our consolidated net sales from a small number of customers.

We have historically derived substantially all of our consolidated net sales of primary aluminum from a small number of customers.

For the year ended December 31, 2020, we derived approximately 64% of our consolidated sales from Glencore plc and its affiliates (together, "Glencore") and approximately 12% of our consolidated sales from Southwire Company ("Southwire").

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Both Glencore and Southwire purchase aluminum produced at our U.S.

smelters at prices based on the LME price for primary aluminum plus the Midwest regional premium plus any additional market-based product premiums.

smelters at prices based on the LME price for primary aluminum plus the Midwest premium plus any additional market-based product premiums.

Glencore also purchases aluminum produced at our Grundartangi, Iceland smelter at prices based on the LME plus the European Duty Paid premium plus any additional market-based product premiums.

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While Century may enter into other purchases of alumina as market conditions change, a summary of our principal alumina supply agreements is provided below:

Noble Resources

Approximately 180,000 tpy

Through December 2020

Concord Resources Ltd.

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Through December 2021

API and LME-linked

(1) Under the terms of this agreement, Glencore provides alumina supply for all of Century's requirements net of other contractual commitments.

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The table below summarizes our long-term power supply agreements:

Through 2023 - 2036

Variable rate linked to (i) the LME price for primary aluminum or (ii) the Nord Pool power market

Grundartangi Landsvirkjun Through 2023 - 2036 Variable rate linked to (i) the LME price for primary aluminum or (ii) the Nord Pool power market

Orkuveita Reykjavíkur ("OR")

HS Orka hf ("HS")

Kenergy Corporation ("Kenergy")

Through December 31, 2023

Variable rate based on market prices

Through December 31, 2023

Variable rate based on market prices

South Carolina Public Service Authority

Through December 31, 2020

Variable rate based in part on a cost of service charge and in part on natural gas prices

Approximately 25 years from the dates of each phase of power delivery

Variable rate based on the LME price for primary aluminum

Hawesville Kenergy Corporation ("Kenergy") Through December 31, 2023 Variable rate based on market prices

Sebree Kenergy Through December 31, 2023 Variable rate based on market prices

Holly South Carolina Public Service Authority ("Santee Cooper") Through March 31, 2021 Variable rate based in part on a cost of service charge and in part on natural gas prices

Helguvik OR Approximately 25 years from the dates of each phase of power delivery Variable rate based on the LME price for primary aluminum

Electrical power represents one of the largest components of our cost of goods sold.

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Historically, all of the power supplied to Grundartangi has been delivered at prices indexed to the price of primary aluminum.

Beginning in November 2019, the price of approximately thirty percent (30%) of Grundartangi’s power requirements began to be linked to the market price for power in the Nord Pool power market, the trading market for power in the Nordic countries and certain other areas of Europe.

As of December 31, 2019, we had entered into financial contracts to fix the forward price of approximately 4% of Grundartangi's total power requirements for the period from November 1, 2019 through December 31, 2020, and we may enter into further similar financial contracts in the future.

Since November 2019, the price of approximately 30% of Grundartangi’s power requirements has been linked to the market price for power in the Nord Pool power market, the trading market for power in the Nordic countries and certain other areas of Europe.

As of December 31, 2020, we had entered into financial contracts to fix the forward price of approximately 80% and 50% of Grundartangi's Nord Pool based power requirements for the years ending December 31, 2021 and December 31, 2022, respectively.

We may enter into further similar financial contracts in the future.

Grundartangi's power purchase agreements expire on various dates from 2023 through 2036 (subject to extension).

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Both of these agreements extend automatically year to year thereafter unless a one year notice of termination is given by either party.

CASC is party to a power agreement with the South Carolina Public Service Authority ("Santee Cooper") for power to the Mt.

Holly smelter.

Under this contract, 25% of Mt.

Holly's electric power requirements is supplied from Santee Cooper's generation at cost-of-service based rates.

The remaining 75% of Mt.

Holly's electric power requirements is supplied

from third-party generation at rates based on natural gas prices.

The agreement with Santee Cooper has a term through December 31, 2020 and can be terminated by Mt.

Holly on 120 days' notice.

The agreement with the other power supplier has a term through December 31, 2020 and may be terminated by Mt.

Holly on 60 days' notice.

Holly's inability to access the open market for 100% of its power requirements significantly impacts its ability to be competitive in the aluminum industry and puts its continued operation at risk.

As a result of such uncompetitive power prices, Mt.

Holly has already curtailed 50% of its production capacity.

CASC is currently party to both a power agreement with a third-party supplier (providing 75% of Mt.

Holly's power) and Santee Cooper (providing 25% of Mt.

Holly's power) to supply the Mt.

Holly smelter with all its power needs.

Both of these power agreements were set to expire on December 31, 2020 but were extended through March 31, 2021 as we finalize a new, three-year power arrangement with Santee Cooper that is expected to be effective April 1, 2021.

It is expected under the new power contract with Santee Cooper, 100% of Mt.

Holly's electrical power requirements will be supplied from

Santee Cooper's generation at cost of service based rates.

The new contract with Santee Cooper is expected to provide sufficient energy to allow the smelter to increase its production to 75% of Mt.

Holly's full production capacity.

If we are unable to finalize this proposed new power contract with Santee Cooper and obtain all necessary government approvals, we may choose, or be forced, to further curtail operations at the plant.

Risk Factors .

If we are unable to enter into a long term, market-based power arrangement for Mt.

Holly, we may choose, or be forced, to further curtail operations at the plant.

Nordural Helguvik is party to a power agreement with OR for a portion of Helguvik’s expected power requirements to the Helguvik project.

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Commitments and Contingencies to the consolidated financial statements included herein for additional information concerning our power arrangements.

Employees and Human Capital Resources

We believe our employees are key to achieving our business goals and growth strategy.

As of December 31, 2020, we had 2,078 employees.

Of these, 1,392 were domiciled in the United States, 72 in the Netherlands and 614 in Iceland.

Health, Safety and Wellness.

Nothing is more important than the health and safety of our employees and the members of the communities in which we do business.

We continuously assess the risks our employees face at our operations and we work to mitigate those risks through frequent training and other preventative safety and health programs.

We strive for zero injuries and accidents, to foster systems and processes aimed to continuously improve our health and safety performance and to integrate risk management relating to health and safety into all aspects of our operations.

We emphasize the importance of safety goals by including safety performance as one of the metrics for determining payouts under our annual incentive awards to our executives.

The safety focus of the Company is evident in our approach to the COVID-19 pandemic.

During this time, we have taken, and continue to take, measures to protect the health and safety of our employees during the pandemic, including requirements regarding wearing masks, social distancing, cleaning sanitation procedures, and temperature checks.

We have also developed and implemented protocols across our operations to address actual and suspected COVID-19 cases and potential exposure of our employees.

Compensation and Benefits.

The Company's non-union employees are all eligible to participate in the Company paid health, vision, dental, life, prescription and long-term disability insurance plans.

The Company also provides employees with paid supplemental life and accident insurance plan.

The Company offers employees the opportunity to contribute to a Flexible Spending Account and a Health Savings Account.

The Company also offers employees a 401(k) retirement plan with a Company match.

As part of our Century Well-being program, and in an effort to encourage employees to participate, Century provides financial incentives to its employees who choose to participate.

We also have recently taken steps to strengthen our Century Well-being program and to build a program that is specifically designed for Century employees and the unique health issues they may encounter.

At the end of 2020 and beginning of 2021, we have begun efforts to roll out new health benefits at no cost to our employees centered around diabetes management, mental health and substance abuse and counseling, and musculoskeletal conditions.

Diversity and Inclusion.

The Company is committed to promoting equal employment opportunity in all of our operations.

It is the Company’s policy, specifically noted in the Company’s Code of Ethics, that we do not tolerate discrimination in any form on the basis of race, color, religion, sex, sexual orientation, age, national origin, disability, veteran status or genetic information as defined in the Genetic Information Nondiscrimination Act of 2008, whether or not such discrimination violates law, and to comply fully with all laws prohibiting discrimination and promoting opportunity and advancement in employment.

This policy extends to all aspects of employment opportunity including recruitment, hiring, compensation, benefits, promotion, transfer, layoff, recall, reduction in force, termination, retirement, placement, training and all other privileges, terms and conditions of employment.

Talent Development.

Recently, we have made significant progress in enhancing our internal performance management and talent management systems in an effort to continue to recognize and promote outstanding employees.

We have worked to streamline the process for our employees and ensure that we provide employees with the opportunity to provide input as part of the review process.

Labor Agreements

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A summary of our key labor agreements is provided below:

Icelandic labor unions

Through December 31, 2019

United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (“USW”)

Facility Organization Term

Grundartangi Icelandic labor unions Through December 31, 2024

Hawesville United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (“USW”)

Through April 1, 2021

Through October 28, 2023

Federation for the Metal and Electrical Industry (“FME”)

Sebree USW Through October 28, 2023

Vlissingen Federation for the Metal and Electrical Industry (“FME”)

Through December 1, 2020

Approximately 86% of Grundartangi’s workforce is represented by five labor unions, governed by a labor agreement that establishes wages and work rules for covered employees.

This agreement expired on December 31, 2019.

Since such time, we have been operating under the terms of the expired agreement while we engage in negotiations with the unions regarding the terms of a new agreement.

100% of Vlissingen's workforce is represented by the FME.

The FME negotiates working conditions with trade unions on behalf of its members.

The current labor agreement is effective through December 1, 2020.

The current agreement is effective through December 31, 2024.

100% of Vlissingen’s workforce is represented by FME as Vlissingen is a member of the FME, a Netherlands' employers' organization for companies in the metal, electronics, electrical engineering and plastic sectors.

The FME negotiates working conditions with trade unions on behalf of its members, which, when agreed upon, are then applicable to all employees of Vlissingen.

The current labor agreement expired on December 1, 2020 and since such time we have been operating under the terms of the expired agreement while we engage in negotiations regarding the terms of a new labor agreement.

Approximately 58% of our U.S.

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Strong Internal Growth Opportunities.

Over the past several years, we have undertaken expansion programs at all of our operating facilities with the exception of Mt.

Holly, and continue to pursue additional internal growth opportunities.

Over the past several years, we have undertaken various expansion programs at all of our operating facilities and continue to pursue additional internal growth opportunities.

We are currently in the process of a multi-year project at Hawesville to restart previously curtailed capacity, rebuild two potlines that we had continued to operate past their expected life cycle, and implement new technology across all production.

Bringing Hawesville back to full capacity would allow us to increase our annual production capacity of aluminum by approximately 150,000 tonnes from pre-restart levels.

Through December 31, 2020, we have rebuilt or restarted 200,000 tonnes of production (Hawesville's current production capacity) and can restart another 50,000 tonnes of production capacity in the future.

At Sebree, in 2019, we expanded the smelter’s overall output by adding 20,000 tonnes of additional secondary (scrap reprocessing) capacity.

At our Grundartangi, Iceland smelter, we are in the process of a multi-year project that has brought Grundartangi's annual primary aluminum production capacity from 280,000 tonnes to current capacity of approximately 317,000 tonnes and is expected to ultimately increase annual production capacity to approximately 325,000 tonnes.

At Vlissingen, in 2019, we completed the rebuild and expansion of one of the baking furnaces which is expected to increase annual carbon anode production capacity by 12,000 tonnes and to allow Vlissingen to supply approximately 90% of Grundartangi’s carbon anode requirements at current production levels.

Holly, the new power

contract with Santee Cooper is expected to provide sufficient energy to allow the smelter to increase its production to 75% of Mt.

Holly's full production capacity.

At our Grundartangi, Iceland smelter, we are in the process of a multi-year project that has brought Grundartangi's annual primary aluminum production capacity to current capacity of approximately 317,000 tonnes of primary aluminum and is expected to ultimately increase annual production capacity to approximately 325,000 tonnes.

At Vlissingen, we have completed a variety of expansion projects and efficiency programs in order to more than double the plant's production capacity.

With these expansion projects and efficiency programs in place, we expect Vlissingen to be able to supply approximately 93% to 98% of Grundartangi’s carbon anode requirements at current production levels.

We continue to pursue additional internal growth opportunities to maximize efficiencies and improve overall performance.

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For example, the European Union imposes import tariffs on primary aluminum from producers outside the European Economic Area (the "EEA"), which includes Iceland, and the U.S.

imposes a 10% tariff on certain primary aluminum imports into the United States.

currently imposes a 10% tariff on certain primary aluminum imports into the United States.

and Icelandic businesses currently access these respective markets duty-free which provides us with an advantage over our competitors who sell into these markets under these tariff regimes.

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facilities benefit from the proximity to our U.S.

customer base, allowing us to capture the Midwest regional premium and providing a competitive advantage in freight costs over our competitors.

customer base, allowing us to capture the Midwest premium and providing a competitive advantage in freight costs over our competitors.

The proximity to our customers also allows us to deliver a portion of our Kentucky production in molten form, saving casting costs, and providing a competitive advantage over other potential suppliers.

In Iceland, our proximity to European markets provides a competitive advantage for Grundartangi, allowing us to capture the European Duty Paid Premium and other logistical benefits compared to our competitors outside the EEA.

Access to Competitive Power.

Access to Market Power.

Our Kentucky operations benefit from market-based power contracts that provide electricity to these operations at competitive prices.

The price of approximately thirty percent (30%) of Grundartangi’s power requirements is linked to the market price for power in the Nord Pool power market, the trading market for power in the Nordic countries and certain areas of Europe.

Approximately seventy percent (70%) of the power requirements for our Grundartangi plant is indexed to the price of primary aluminum, which reduces our exposure to power price fluctuations and provides a natural hedge against movements in the aluminum price.

We continue to seek the ability to access the open market for 100% of our power requirements at Mt.

Approximately 70% of the power requirements for our Grundartangi plant is indexed to the price of primary aluminum, which reduces our exposure to power price fluctuations and provides a natural hedge against movements in the aluminum price.

Diverse Value Added Product and Secondary Market Portfolio.

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Our Natur-Al™ aluminum produced at our Grundartangi, Iceland smelter has one of the lowest carbon footprints in the industry due to Grundartangi’s access to clean hydroelectric and geothermal power sources.

Our Grundartangi smelter has also been certified against the Aluminum Stewardship Initiative (ASI) Performance Standard for responsible production, sourcing and stewardship of aluminum.

Our Grundartangi smelter has also been certified against the Aluminium Stewardship Initiative (ASI) Performance Standard for responsible production, sourcing and stewardship of aluminum.

In addition to providing additional value to our customers, our low carbon footprint in Iceland mitigates our exposure to current or future carbon regulations.

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We may be unable to continue to compete successfully in the highly competitive markets in which we operate.

Sale of our Interest in BHH

On May 22, 2019, Century Aluminum Asia Holdings Ltd.

("CAHL"), a wholly-owned subsidiary of Century Aluminum Company, entered into an equity transfer agreement (the "Equity Transfer Agreement") with Guangxi Qiangqiang Carbon Co., Ltd.

("GQQ") pursuant to which GQQ acquired all of our 40% interest in Baise Haohai Carbon Co., Ltd.

("BHH"), a former joint venture with GQQ, that owns and operates a carbon anode and cathode facility located in the Guangxi Zhuang Autonomous Region of south China.

As consideration for the sale, GQQ paid us the full purchase price of RMB144.9 million ($20.8 million) in cash in 2019.

Environmental Matters

We are subject to various environmental laws and regulations in the countries in which we operate.

We have spent, and expect to continue to spend, significant amounts for compliance with those laws and regulations.

Government Regulations

Our facilities and operations are subject to various laws and regulations in the countries in which we operate, including, but not limited to, environmental laws and regulations.

We have spent, and expect to continue to spend, significant amounts for compliance with those various laws and regulations, including environmental laws and regulations.

In addition, some of our past manufacturing activities or those of our predecessors have resulted in environmental consequences that require remedial measures.

Under certain environmental laws, which may impose liability regardless of fault, we may be liable for the costs of remediation of contaminated property, including our current and formerly owned or operated properties or adjacent areas, or for the amelioration of damage to natural resources.

We believe, based on currently available information, that our current environmental liabilities are not likely to have a material adverse effect on Century.

However, we cannot predict the requirements of future environmental laws and future requirements at current or formerly owned or operated properties or adjacent areas or the outcome of certain existing litigation to which we are a party.

We believe, based on currently available information, that compliance with existing laws and regulations has not had a material adverse effect upon our capital expenditures, earnings and our competitive position.

Furthermore, we believe, based on currently available information, that our current liabilities are not likely to have a material adverse effect on Century.

However, we cannot predict the requirements of future laws and future requirements at current or formerly owned or operated properties or adjacent areas or the outcome of certain existing litigation to which we are a party.

Such future requirements or events may result in unanticipated costs or liabilities that may have a material adverse effect on our financial condition, results of operations or liquidity.

More information concerning our environmental contingencies can be found in Note 15.

More information concerning our contingencies can be found in Note 15.

Commitments and Contingencies to the consolidated financial statements included herein.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business