CENTURY ALUMINUM CO 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO FINANCIAL STATEMENTS Page Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) 44 Consolidated Statements of Operations for the Years Ended December 31, 2021, 2020 and 2019 47 Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2021, 2020 and 2019 48 Consolidated Balance Sheets at December 31, 2021 and 2020 49 Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2021, 2020 and 2019 50 Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019 51 Notes to the Consolidated Financial Statements 53 43 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Century Aluminum Company Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Century Aluminum Company and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity, and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Convertible Debt — Refer to Note 6 to the financial statements Critical Audit Matter Description In April 2021, the Company issued $86.3 million of 2.75% Convertible Notes (the “Convertible Notes”). In accounting for the issuance of the Convertible Notes, management recorded the proceeds as a liability in accordance with the guidance set forth in Accounting Standards Update 2020-06- Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging- Contracts in Entity’s Own Equity (Subtopic 815-40) . The Convertible Notes include a conversion option and other redemption features that require the Company to determine whether those features represent derivatives and require those features to be accounted for separately from the Convertible Notes. Auditing the Company’s accounting assessment required a high degree of auditor judgement and audit effort due to the inherent complexity, including the need to involve professionals in our firm having expertise in the evaluation of such financial instruments. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Company’s accounting assessment of the conversion option and other redemption features included the following, among others: • We tested the operating effectiveness of internal controls over management’s analysis of the Convertible Notes and related conversion option and other redemption features and the accounting conclusions reached. 44 • We read the convertible notes agreement and applicable side letters and inquired with management to obtain an understanding of the terms and provisions. • We involved professionals with specialized skill and knowledge to assist in evaluating the appropriateness of the accounting analysis and conclusions reached. We utilized these professionals to assist in evaluating management’s accounting conclusions. Uncertain Tax Positions — Refer to Note 14 to the financial statements Critical Audit Matter Description The Company is subject to income taxes in the U.S. and certain foreign jurisdictions and, as discussed in Note 14 to the consolidated financial statements, there are tax positions for which the ultimate tax determination is uncertain. As a result, significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. The Company uses significant judgment in (1) determining whether a tax position’s technical merits are more likely than not to be sustained upon examination, including resolution of the related appeals or litigation processes and (2) measuring the amount of tax benefit that represents the largest amount of benefit more likely than not of being realized upon settlement with a taxing authority with full knowledge of all relevant information. During the year ended December 31, 2021, the Company recognized tax benefits of $49.8 million related to deductible costs for its historical investment in its wholly owned subsidiary Nordural Helguvik ehf (“Helguvik”) and has concluded the position was more likely than not to be sustained upon examination. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the evaluation of the conclusion that the Helguvik tax benefit met the more likely than not recognition standard included the following: • We tested the operating effectiveness of internal controls over the Company’s income tax provision, including controls related to the Company’s evaluation of uncertain tax positions. • We inspected relevant documentation from management and the Company’s external tax specialists related to the Helguvik uncertain tax position. • We involved tax professionals with specialized skills and knowledge, who assisted in evaluating the Company’s interpretation and application of relevant tax laws and regulations related to the tax position and measurement of such position, including whether or not the Helguvik tax benefit was more likely than not to be sustained. /s/ Deloitte & Touche LLP Chicago, Illinois February 25, 2022 We have served as the Company's auditor since 1992. 45 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Century Aluminum Company Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Century Aluminum Company and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated February 25, 2022, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that; (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Chicago, Illinois February 25, 2022 46 CENTURY ALUMINUM COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share amounts) Year Ended December 31, 2021 2020 2019 NET SALES: Related parties $ 1,337.0 $ 1,025.5 $ 1,191.6 Other customers 875.5 579.6 645.0 Total net sales 2,212.5 1,605.1 1,836.6 Cost of goods sold 2,088.3 1,641.6 1,860.5 Gross profit (loss) 124.2 ( 36.5 ) ( 23.9 ) Selling, general and administrative expenses 57.6 43.5 47.4 Other operating expense - net 0.6 0.5 0.8 Operating income (loss) 66.0 ( 80.5 ) ( 72.1 ) Interest expense – Hawesville term loan ( 1.6 ) ( 1.9 ) ( 2.1 ) Interest expense ( 28.8 ) ( 29.7 ) ( 23.0 ) Interest income 0.8 0.8 0.8 Net gain (loss) on forward and derivative contracts ( 212.4 ) ( 17.3 ) 12.0 Loss on early extinguishment of debt ( 24.7 ) ( 1.2 ) — Other income (expense) - net 3.1 3.5 ( 1.1 ) Income (loss) before income taxes and equity in earnings of joint ventures ( 197.6 ) ( 126.3 ) ( 85.5 ) Income tax benefit (expense) 30.6 3.1 8.4 Income (loss) before equity in earnings of joint ventures ( 167.0 ) ( 123.2 ) ( 77.1 ) Loss on sale of BHH — — ( 4.3 ) Equity in earnings of joint ventures ( 0.1 ) ( 0.1 ) 0.6 Net income (loss) $ ( 167.1 ) $ ( 123.3 ) $ ( 80.8 ) INCOME (LOSS) PER COMMON SHARE: Basic and diluted $ ( 1.85 ) $ ( 1.38 ) $ ( 0.91 ) See notes to consolidated financial statements. 47 CENTURY ALUMINUM COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in millions) Year Ended December 31, 2021 2020 2019 Comprehensive income (loss): Net income (loss) $ ( 167.1 ) $ ( 123.3 ) $ ( 80.8 ) Other comprehensive income (loss) before income tax effect: Net income (loss) on foreign currency cash flow hedges reclassified as income ( 0.1 ) ( 0.2 ) ( 0.2 ) Defined benefit plans and other postretirement benefits: Net gain (loss) arising during the period 31.6 ( 13.4 ) ( 12.7 ) Amortization of prior service benefit (cost) during the period ( 3.1 ) ( 3.0 ) ( 4.8 ) Amortization of net gain (loss) during the period 8.4 8.7 8.9 Other comprehensive income (loss) before income tax effect 36.8 ( 7.9 ) ( 8.8 ) Income tax effect ( 0.3 ) ( 1.0 ) ( 1.0 ) Other comprehensive income (loss) 36.5 ( 8.9 ) ( 9.8 ) Total comprehensive income (loss) $ ( 130.6 ) $ ( 132.2 ) $ ( 90.6 ) See notes to consolidated financial statements. 48 CENTURY ALUMINUM COMPANY CONSOLIDATED BALANCE SHEETS (in millions) December 31, 2021 2020 ASSETS Cash and cash equivalents $ 29.0 $ 81.6 Restricted cash 11.7 2.7 Accounts receivable - net 80.6 51.0 Due from affiliates 8.3 10.3 Inventories 425.6 291.1 Derivative assets 34.8 6.4 Prepaid and other current assets 28.2 12.9 Total current assets 618.2 456.0 Property, plant and equipment - net 892.5 880.4 Other assets 59.2 61.5 Due from affiliates - less current portion — 1.7 TOTAL $ 1,569.9 $ 1,399.6 LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES: Accounts payable, trade $ 186.5 $ 106.1 Interest payable — 15.0 Due to affiliates 65.8 21.7 Accrued and other current liabilities 62.7 54.5 Derivative liabilities 102.1 4.9 Accrued employee benefits costs 8.9 10.3 Hawesville term loan — 20.0 U.S. revolving credit facility 63.6 — Iceland revolving credit facility 50.0 — Industrial revenue bonds 7.8 7.8 Total current liabilities 547.4 240.3 Senior notes payable 245.8 243.1 Convertible senior notes payable 84.0 — Iceland revolving credit facility - less current portion — 45.0 Accrued pension benefits costs - less current portion 28.6 65.2 Accrued postretirement benefits costs - less current portion 93.3 101.5 Other liabilities 46.3 44.8 Leases - right of use liabilities 22.9 24.3 Due to affiliates - less current portion 21.9 0.1 Deferred taxes 58.7 89.2 Total noncurrent liabilities 601.5 613.2 COMMITMENTS AND CONTINGENCIES (NOTE 15) — — SHAREHOLDERS’ EQUITY: Preferred stock ( Note 7 ) 0.0 0.0 Common stock ( Note 7 ) 1.0 1.0 Additional paid-in capital 2,535.5 2,530.0 Treasury stock, at cost ( 86.3 ) ( 86.3 ) Accumulated other comprehensive loss ( 82.3 ) ( 118.8 ) Accumulated deficit ( 1,946.9 ) ( 1,779.8 ) Total shareholders’ equity 421.0 546.1 TOTAL $ 1,569.9 $ 1,399.6 See notes to consolidated financial statements. 49 CENTURY ALUMINUM COMPANY CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (in millions) Preferred stock Common stock Additional paid-in capital Treasury stock, at cost Accumulated other comprehensive loss Accumulated deficit Total shareholders’ equity Balance, December 31, 2018 $ 0.0 $ 1.0 $ 2,523.0 $ ( 86.3 ) $ ( 98.7 ) $ ( 1,576.8 ) $ 762.2 Impact of ASU 2018-02 * — — — — ( 1.3 ) 1.3 — Net loss – 2019 — — — — — ( 80.8 ) ( 80.8 ) Other comprehensive loss — — — — ( 9.8 ) — ( 9.8 ) Share-based compensation — 0.0 3.4 — — — 3.4 Conversion of preferred stock to common stock — 0.0 0.0 — — — 0.0 Balance, December 31, 2019 $ 0.0 $ 1.0 $ 2,526.5 $ ( 86.3 ) $ ( 109.8 ) $ ( 1,656.4 ) $ 675.0 Net loss – 2020 — — — — — ( 123.3 ) ( 123.3 ) Other comprehensive loss — — — — ( 8.9 ) — ( 8.9 ) Share-based compensation — 0.0 3.5 — — — 3.5 Conversion of preferred stock to common stock 0.0 0.0 0.0 — — — 0.0 Balance, December 31, 2020 $ 0.0 $ 1.0 $ 2,530.0 $ ( 86.3 ) $ ( 118.8 ) $ ( 1,779.8 ) $ 546.1 Net income (loss) — — — — — ( 167.1 ) ( 167.1 ) Other comprehensive income (loss) — — — — 36.5 — 36.5 Share-based compensation — 0.0 10.1 — — — 10.1 Conversion of preferred stock to common stock 0.0 0.0 0.0 — — — 0.0 Capped call premiums — — ( 4.6 ) — — — ( 4.6 ) Balance, December 31, 2021 $ 0.0 $ 1.0 $ 2,535.5 $ ( 86.3 ) ( 82.3 ) $ ( 1,946.9 ) $ 421.0 * ASU 2018-02. See Note 14. Income Taxes for further information regarding our adoption of ASU 2018-02. See notes to consolidated financial statements. 50 CENTURY ALUMINUM COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Year Ended December 31, 2021 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ ( 167.1 ) $ ( 123.3 ) $ ( 80.8 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Lower of cost or NRV inventory adjustment — 45.0 18.8 Unrealized (gains) losses on forward and derivative contracts 102.9 15.7 ( 11.4 ) Depreciation and amortization 82.6 83.0 83.2 Change in deferred tax benefit ( 30.6 ) — — Net loss on sale of BHH — — 4.3 Loss on early extinguishment of debt 24.7 1.0 — Other non-cash items - net ( 1.7 ) ( 0.9 ) ( 5.9 ) Change in operating assets and liabilities: Accounts receivable - net ( 16.2 ) 19.1 12.4 Due from affiliates 0.7 20.8 ( 7.1 ) Inventories ( 134.5 ) ( 15.5 ) 4.4 Prepaid and other current assets ( 13.4 ) 0.6 2.7 Accounts payable, trade 44.8 20.6 ( 25.2 ) Due to affiliates 38.3 ( 22.4 ) 22.6 Accrued and other current liabilities 5.0 ( 1.2 ) 2.7 Ravenswood retiree legal settlement ( 2.0 ) ( 2.0 ) ( 2.0 ) Other - net 1.8 2.4 ( 1.0 ) Net cash (used in) provided by operating activities ( 64.7 ) 42.9 17.7 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment ( 83.0 ) ( 13.4 ) ( 59.6 ) Proceeds from sale of property, plant and equipment 0.4 1.6 — Proceeds from sale of joint venture — — 20.8 Net cash used in investing activities ( 82.6 ) ( 11.8 ) ( 38.8 ) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of Senior Notes due 2021 — ( 250.0 ) — Proceeds from issuance of Senior Notes due 2025 — 243.8 — Repayment of Senior Notes due 2025 ( 250.0 ) — — Early redemption and tender premiums paid ( 18.1 ) — — Proceeds from issuance of Senior Notes due 2028 250.0 — — Proceeds from issuance of Convertible Senior Notes 86.3 — — Borrowings under Hawesville term loan — — 40.0 Repayments under Hawesville Term Loan ( 20.0 ) ( 20.0 ) — Borrowings under revolving credit facilities 978.8 258.9 388.1 Repayments under revolving credit facilities ( 910.2 ) ( 217.9 ) ( 407.3 ) Debt issuance cost ( 7.4 ) ( 1.1 ) — Debt retirement cost — ( 0.2 ) — Other short-term borrowings — — 3.4 Repayments on other short-term borrowings — — ( 3.4 ) 51 Purchase of capped calls related to Convertible Senior Notes ( 5.7 ) — — Issuance of common stock — — 0.3 Net cash provided by financing activities 103.7 13.5 21.1 CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH ( 43.6 ) 44.6 — Cash, cash equivalents and restricted cash, beginning of year 84.3 39.7 39.7 Cash, cash equivalents and restricted cash, end of year $ 40.7 $ 84.3 $ 39.7 Supplemental Cash Flow Information: Cash paid for: Interest $ 36.8 $ 14.5 $ 21.8 Taxes 3.1 0.2 0.5 Non-cash investing activities: Capital expenditures 7.1 0.9 3.0 Capitalized interest 1.6 — — See notes to consolidated financial statements . 52 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts ) 1. Summary of Significant Accounting Policies Organization — Century Aluminum Company ("Century Aluminum," "Century," the "Company", "we", "us", "our" or "ours") is a holding company, whose principal subsidiaries are Century Kentucky, Inc. (together with its subsidiaries, "CAKY"), Nordural ehf ("Nordural"), Century Aluminum Sebree LLC ("Century Sebree") and Century Aluminum of South Carolina ("CASC"). CAKY operates a primary aluminum reduction facility in Hawesville, Kentucky ("Hawesville"). Nordural Grundartangi ehf, a subsidiary of Nordural, operates a primary aluminum reduction facility in Grundartangi, Iceland ("Grundartangi"). Century Sebree operates a primary aluminum reduction facility in Robards, Kentucky ("Sebree"). CASC operates a primary aluminum reduction facility in Goose Creek, South Carolina ("Mt. Holly"). In addition to our primary aluminum assets, our subsidiary, Century Aluminum Vlissingen B.V., owns and operates a carbon anode production facility located in Vlissingen, the Netherlands ("Vlissingen"). Carbon anodes are used in the production of primary aluminum and Vlissingen currently supplies carbon anodes to Grundartangi. As of December 31, 2021, Glencore owns 42.9 % of Century’s outstanding common stock ( 46.4 % on a fully-diluted basis assuming the conversion of all of the Series A Convertible Preferred Stock) and all of our outstanding Series A Convertible Preferred Stock. See Note 7. Shareholders' Equity for a full description of our outstanding Series A Convertible Preferred Stock. Century and Glencore enter into various transactions from time to time such as the purchase and sale of primary aluminum, purchase and sale of alumina and raw materials, tolling agreements as well as forward financial contracts and borrowing and other debt transactions. See Note 2. Related Party Transactions . Basis of Presentation — The consolidated financial statements include the accounts of Century Aluminum Company and our subsidiaries, after elimination of all intercompany transactions and accounts. The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue recognition — See Note 3. Revenue . Cash and Cash Equivalents — Cash and cash equivalents are comprised of cash, money market funds and short-term investments having original maturities of three months or less. The carrying amount of cash equivalents approximates fair value. Accounts Receivable and Due from Affiliates — These amounts are net of an allowance for expected losses of $ 1.0 million at December 31, 2021 and 2020. Inventories — Our inventories are stated at the lower of cost or net realizable value, using the first-in, first-out ("FIFO") and the weighted average cost method. Due to the nature of our business, our inventory values are subject to market price changes and these changes can have a significant impact on cost of goods sold and gross profit in any period. Reductions in net realizable value below cost basis at the end of a period will have an impact on our cost of goods sold as this inventory is sold in subsequent periods. Property, Plant and Equipment — Property, plant and equipment is stated at cost. Additions and improvements are capitalized when each asset is placed into service. Asset and accumulated depreciation accounts are relieved for dispositions with resulting gains or losses included in Other income (expense) - net. Maintenance and repairs are expensed as incurred. Depreciation of plant and equipment is provided for by the straight-line method over the following estimated useful lives: Building and improvements 10 to 45 years Machinery and equipment 5 to 35 years Technology and software 3 to 7 years 53 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) During 2021, we continued our efforts to restart the curtailed capacity at our Hawesville facility. 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. The nature, size and scope of this effort represents a discrete construction project. All associated costs that meet the capitalization criteria have been and will continue to be capitalized as a component of property, plant and equipment. During 2021, we initiated efforts to restart the curtailed capacity at our Mt. Holly facility. Restart work at the Mt. Holly smelter is progressing and is expected to be completed in the second quarter of 2022, subject to market conditions. All associated costs that meet the capitalization criteria have been and will continue to be capitalized as a component of property, plant and equipment. Impairment of long-lived assets — We evaluate our property, plant and equipment for potential impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. If deemed unrecoverable, an impairment loss would be recognized for the amount by which the carrying amount exceeds the fair value of the assets. Impairment evaluation and fair value is based on estimates and assumptions that take into account our business plans and a long-term investment horizon. Leases — We determine whether an arrangement is a lease at the inception of the arrangement based on the terms and conditions in the contract. A contract contains a lease if there is an identified asset which we have the right to control. We have made a policy election not to separate lease and non-lease components within contracts. We have also elected not to recognize the impact of short term leases in the right of use asset ("ROUA") and right of use liability ("ROUL") balances. Short term leases are leases that have a lease term less than one year and do not include a purchase option. Income Taxes — We account for income taxes using the asset and liability method, whereby deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. In evaluating our ability to realize deferred tax assets, we use judgment to determine if it is more likely than not that some portion or all of a deferred tax asset will not be realized, and if a corresponding valuation allowance is required. Defined Benefit Pension and Other Postretirement Benefits — We sponsor defined benefit pension and OPEB plans for certain of our domestic hourly and salaried employees and a supplemental executive retirement benefit plan for certain current and former executive officers. Plan assets and obligations are measured annually or more frequently if there is a re-measurement event, based on the Company’s measurement date utilizing various actuarial assumptions. We attribute the service costs for the plans over the working lives of plan participants. The effects of actual results differing from our assumptions and the effects of changing assumptions are considered actuarial gains or losses. Actuarial gains or losses are recorded in Accumulated Other Comprehensive Income (Loss). We contribute to our defined benefit pension plans based upon actuarial and economic assumptions designed to achieve adequate funding of the projected benefit obligations and to meet the minimum funding requirements. Postemployment Benefits — We provide certain postemployment benefits to certain former and inactive employees and their dependents during the period following employment, but before retirement. These benefits include salary continuance, supplemental unemployment and disability health care. We recognize the estimated future cost of providing postemployment benefits on an accrual basis over the active service life of the employee. Derivatives and Hedging — As a global producer of primary aluminum, our operating results and cash flows from operations are subject to risk of fluctuations in the market prices of primary aluminum. We may from time to time enter into financial contracts to manage our exposure to such risk. Derivative instruments may consist of variable to fixed financial contracts and back-to-back fixed to floating arrangements for a portion of our sale of primary aluminum, where we receive fixed and pay floating prices from our customers and to counterparties, respectively. 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 are also exposed to foreign currency risk, and 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. Our derivatives are not designated as cash flow hedges. 54 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) Derivative and hedging instruments are recorded in due from affiliates, derivative assets, other assets, due to affiliates, derivative liabilities and derivative liabilities - less current portion in the consolidated balance sheets at fair value. We value our derivative and hedging instruments using quoted market prices and other significant unobservable inputs. We recognize changes in fair value and settlements of derivative instruments in net gain (loss) on forward and derivative contracts in the consolidated statements of operations as they occur. We recognize unrealized gains on forward and derivative contracts as part of cash flows from operations in the consolidated statements of cash flows. Foreign Currency – We are exposed to foreign currency risk due to fluctuations in the value of the U.S. dollar as compared to the Euro and the Icelandic krona ("ISK"), and the Chinese renminbi. Grundartangi and Vlissingen use the U.S. dollar as their functional currency, as contracts for sales of aluminum and purchases of alumina and power are denominated in U.S. dollars. Transactions denominated in currencies other than the functional currency are recorded based on exchange rates at the time such transactions arise and any transaction gains and losses are reflected in Other income (expense) - net in the consolidated statements of operations. Financial Instruments — Receivables, certain life insurance policies, payables, borrowings under revolving credit facilities and debt related to industrial revenue bonds ("IRBs") are carried at amounts that approximate fair value. Earnings per share — Basic earnings (loss) per share ("EPS") amounts are calculated by dividing earnings (loss) available to common stockholders by the weighted average number of common shares outstanding using the two-class method. Under the two-class method, net income is allocated between shares of common stock and other participating securities based on their participating rights. Net loss is not allocated to other participating securities if they are not obligated to share in the losses based on their contractual terms. Diluted earnings per share is calculated by dividing net income attributable to common shareholders by the weighted average number of common and dilutive common equivalent shares outstanding during the period. Common equivalent shares are not included in the denominator of the diluted loss per share calculation when inclusion of such shares would be anti-dilutive. The dilutive effect to earnings per share is determined using the "if converted" method whereby, if the conversion of the convertible notes would be dilutive, interest expense on the outstanding notes is added back to the diluted earnings numerator and all of the potentially dilutive shares are included in the diluted common shares outstanding denominator for the computation of diluted earnings per share. Our Series A Convertible Preferred Stock is a non-cumulative perpetual participating convertible preferred stock with no set dividend preferences. In periods where we report net losses, we do not allocate these losses to the Convertible Preferred Stock for the computation of basic or diluted EPS. Asset Retirement Obligations — We are subject to environmental regulations which create certain legal obligations related to the normal operations of our domestic primary aluminum smelter operations. Our asset retirement obligations ("AROs") consist primarily of costs associated with the disposal of spent potliner used in the reduction cells of our domestic facilities. AROs are recorded on a discounted basis at the time the obligation is incurred (when the potliner is put in service) and accreted over time for the change in the present value of the liability. We capitalize the asset retirement costs by increasing the carrying amount of the related long-lived assets and depreciating these assets over their remaining useful lives. Certain conditional asset retirement obligations ("CAROs") relate to the remediation of our primary aluminum facilities for hazardous material, such as landfill materials and asbestos which have not been recorded because they have an indeterminate settlement date. CAROs are a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within our control. Concentrations of Credit Risk — Financial instruments, which potentially expose us to concentrations of credit risk, consist principally of trade receivables. Our limited customer base increases our concentrations of credit risk with respect to trade receivables. We routinely assess the financial strength of our customers and collectability of our trade receivables and recognize an allowance based on our estimate of lifetime expected credit losses in accordance with the current expected credit loss ("CECL") model. 55 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) Share-Based Compensation — We measure the cost of employee services received in exchange for an award of equity instruments based on the fair value of the award on the grant date. We recognize the cost over the period during which an employee is required to provide service in exchange for the award. We issue shares to satisfy the requirements of our share-based compensation plans. At this time, we do not plan to issue treasury shares to support our share-based compensation plans, but we may in the future. We award performance units to certain officers and employees. The performance units may be settled in cash or common stock at the discretion of the Board. We have not issued any stock options since 2009. Recently Adopted Accounting Standards On January 1, 2021, we adopted Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." The ASU amendments include the removal of certain exceptions to the general principles of ASC 740 and to improve and simplify accounting for income taxes by clarifying and amending existing guidance. The adoption of the ASU did not have a material effect on the Company’s consolidated financial statements. On January 1, 2021, we adopted FASB ASU 2020-06, “Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity" using the modified retrospective method. The ASU amendments include simplification of the accounting models for convertible instruments and conversion options, and amendments to diluted earnings per share (“EPS”) calculations for certain convertible instruments, requiring the inclusion of convertible securities in the calculation of diluted EPS using the if-converted method. The adoption of the ASU did not have a material effect on the Company’s consolidated financial statements. On January 1, 2021, we adopted the final rule issued by the Securities and Exchange Commission (“SEC”) that amends the disclosure requirements related to issuers and guarantors of certain registered securities under SEC Regulation S-X Rule 3-10. We presented the alternative financial disclosures in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . The adoption of the SEC rule is limited to disclosures only and did not have a material effect on the Company’s consolidated financial statements. 2. Related Party Transactions The significant related party transactions occurring during the years ended December 31, 2021, 2020 and 2019 are described below. We believe all of our transactions with related parties are at prices that approximate market. Glencore ownership As of December 31, 2021, Glencore plc and its affiliates (together "Glencore") beneficially owned 42.9 % of Century’s outstanding common stock ( 46.4 % on a fully-diluted basis assuming the conversion of all of the Series A Convertible Preferred Stock) and all of our outstanding Series A Convertible Preferred Stock. See Note 7. Shareholders' Equity for a full description of our outstanding Series A Convertible Preferred Stock. Century and Glencore enter into various transactions from time to time such as the purchase and sale of primary aluminum, purchase and sale of alumina and raw materials, tolling agreements as well as forward financial contracts and borrowing and other debt transactions. Sales to Glencore For the years ended December 31, 2021, 2020 and 2019 we derived approximately 60 %, 64 % and 65 % of our consolidated sales from Glencore, respectively. Glencore purchases aluminum produced at our U.S. smelters at prices based on the LME plus the Midwest regional delivery premium plus any additional market-based product premiums. Glencore 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. 56 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) We have entered into agreements with Glencore pursua nt to which we sell certain amounts of alumina at market-based prices. For the years ended December 31, 2021, 2020 and 2019 we recorded $ 18.3 million, $ 17.9 million, and $ 28.7 million o f revenue related to alumina sales to Glencore, respectively. Purchases from Glencore We purchase a portion of our alumina and certain other raw material requirements from Glencore. Alumina purchases from Glencore during 2021 were priced based on published alumina and aluminum indices as well as fixed prices. Glencore Agreement Settlement In July 2021, we reached a full and final legal settlement agreement with Glencore resolving a dispute related to alumina purchases and, accordingly, recorded a $ 4.0 million settlement loss to Cost of goods sold. This amount was paid during the fourth quarter. Financial contracts with Glencore We have certain financial contracts with Glencore. See Note 1 8 . Derivatives regarding these forward financial sales contracts. Hawesville Term Loan On April 29, 2019, we entered into a loan agreement with Glencore Ltd. pursuant to which the Company borrowed $ 40.0 million (the "Hawesville Term Loan”). See Note 6. Debt for additional information. Borrowings under the Hawesville Term Loan were used to partially finance the second phase of the Hawesville restart project. The Hawesville Term Loan has been fully repaid as of December 31, 2021. Summary A summary of the aforementioned significant related party transactions for the years ended December 31, 2021, 2020 and 2019 is as follows: Year Ended December 31, 2021 2020 2019 Net sales to Glencore $ 1,337.0 $ 1,025.5 $ 1,191.6 Purchases from Glencore (2) 334.6 197.6 323.9 Purchases from BHH (1) — — 17.8 (1) We previously owned a 40 % interest in Baise Haohai Carbon Co. Ltd. ("BHH") and purchased carbon anodes from them for use in our operations. Purchases represented herein were prior to the divestiture of our interest in BHH in May 2019. (2) Includes settlements of financial contract positions. 57 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) 3. Revenue We disaggregate our revenue by geographical region as follows: Year ended December 31, Net Sales 2021 2020 2019 United States $ 1,413.0 $ 1,007.5 $ 1,179.6 Iceland 799.5 597.6 657.0 Total $ 2,212.5 $ 1,605.1 $ 1,836.6 We enter into contracts to sell mainly primary aluminum to our customers. Revenue is recognized when our performance obligations with our customers are satisfied. Our obligations under the contracts are satisfied when we transfer control of our primary aluminum to our customers which is generally upon shipment or delivery to customer directed locations. The amount of consideration we receive, thus the revenue we recognize, is a function of volume delivered, market price of primary aluminum, which is based on the LME, plus regional premiums and any value-added product premiums. The payment terms and conditions in our contracts vary and are not significant to our revenue. We complete an appropriate credit evaluation for each customer at contract inception. Customer payments are due in arrears and are recognized as accounts receivable - net and due from affiliates in our consolidated balance sheets. In connection with our sales agreement with Glencore, we invoice Glencore prior to physical shipment of goods for a majority of production generated from each of our U.S. domestic smelters. For those sales, revenue is recognized only when Glencore has specifically requested such treatment and has made a commitment to purchase the product. The goods must be complete, ready for shipment and separated from other inventory with control over the goods passing to Glencore. We must retain no further performance obligations. 58 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) 4. Leases We are a lessee in various agreements for the lease of office space, land, automobiles, and mobile equipment. All our leases are considered operating leases. The terms of our leases vary, including the lease term and the ability to renew or extend certain leases. As part of determining the lease term and potential extensions for purposes of calculating the ROUA and ROUL, we consider our historical practices related to renewal of certain leases. The weighted average remaining lease term for our operating leases was 13.2 years as of December 31, 2021 and 14.2 years as of December 31, 2020. Certain lease payment amounts are variable in nature and change periodically based on the local market consumer price index. We use our incremental borrowing rate as the basis for the discount rate used to calculate the ROUA and ROUL, respectively, for our operating leases. The incremental borrowing rate is determined on a lease-by-lease basis and is based on the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to our lease payments. We consider the most likely financing options available for each lease based on the leased asset, legal entity party to the lease, economic environment in which the lease is denominated, the market conditions relative to the leased asset and our historical practices of obtaining financing for similar types of costs. The weighted average discount rate for our operating leases was 7.3 % as of December 31, 2021 and 2020. Our ROUA and ROUL balances for the years ended December 31, 2021 and December 31, 2020 were as follows (in millions): December 31, 2021 December 31, 2020 ROUA (1) $ 22.9 $ 24.9 ROUL - current (2) $ 1.6 $ 1.6 ROUL - non-current (3) 22.9 24.3 Total ROUL $ 24.5 $ 25.9 (1) ROUA was recorded as part of Other Assets within Non-current assets at December 31, 2021 and 2020. (2) ROUL - current was recorded as part of Accrued and other current liabilities within Current liabilities at December 31, 2021 and 2020. (3) ROUL - non-current was recorded as part of Leases - Right of use liabilities within Non-current liabilities at December 31, 2021 and 2020. The undiscounted maturities of our operating lease liability balances are as follows (in millions): Year December 31, 2021 2022 $ 3.3 2023 3.0 2024 2.8 2025 2.7 2026 2.7 Thereafter 25.1 Total 39.6 Less: Interest ( 15.1 ) ROUL $ 24.5 During 2021 and 2020, we entered into new lease obligations, which resulted in $ 2.3 million and $ 1.2 million of additional right of use assets. Total operating expense includes the following (in millions): 59 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) December 31, 2021 December 31, 2020 Operating leases expense $ 4.7 $ 4.7 Short term lease expense 0.6 0.5 Total (1) $ 5.3 $ 5.2 (1) Total lease expense is included in cost of goods sold and selling, general, and administrative expenses on the Consolidated Statements of Operations. We had cash outflows of $ 4.1 million for amounts included in the ROUL balance at the beginning of the year related to our operating leases for the years ended December 31, 2021 and December 31, 2020. 60 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) 5. Fair Value Measurements We measure certain of our assets and liabilities at fair value. Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In general, reporting entities should apply valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. Observable inputs are developed using market data and reflect assumptions that market participants would use when pricing the asset or liability. Unobservable inputs are developed using the best information available about the assumptions that market participants would use when pricing the asset or liability. The fair value hierarchy provides transparency regarding the inputs we use to measure fair value. We categorize each fair value measurement in its entirety into the following three levels, based on the lowest level input that is significant to the entire measurement: • Level 1 Inputs – quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. • Level 2 Inputs – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. • Level 3 Inputs – unobservable inputs for the asset or liability. Recurring Fair Value Measurements As of December 31, 2021 Level 1 Level 2 Level 3 Total ASSETS: Cash equivalents $ 14.2 $ — $ — $ 14.2 Trust assets (1) 0.1 — — 0.1 Derivative instruments — 42.6 0.2 42.8 TOTAL $ 14.3 $ 42.6 $ 0.2 $ 57.1 LIABILITIES: Contingent obligation – net (2) $ — $ — $ — $ — Derivative instruments — 140.9 5.3 146.2 TOTAL $ — $ 140.9 $ 5.3 $ 146.2 Recurring Fair Value Measurements As of December 31, 2020 Level 1 Level 2 Level 3 Total ASSETS: Cash equivalents 54.2 $ — $ — $ 54.2 Trust assets (1) — — — — Derivative instruments — 12.1 3.0 15.1 TOTAL $ 54.2 $ 12.1 $ 3.0 $ 69.3 LIABILITIES: Contingent obligation – net (2) $ — $ — $ — $ — Derivative instruments — 16.7 — 16.7 TOTAL $ — $ 16.7 $ — $ 16.7 (1) Trust assets are currently invested in money market funds. These trust assets are held to fund the non-qualified supplemental executive pension benefit obligations for certain of our officers. (2) See Note 6. Debt for additional information about the contingent obligation. 61 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) The following section describes the valuation techniques and inputs used for fair value measurements categorized within Level 2 or Level 3 of the fair value hierarchy: Level 2 Fair Value Measurements: Asset / Liability Valuation Techniques Inputs LME forward financial sales contracts Discounted cash flows Quoted LME forward market Midwest Premium ("MWP") forward financial sales contracts Discounted cash flows Quoted MWP forward market Fixed for floating swaps Discounted cash flows Quoted LME forward market, quoted MWP forward market Nord Pool power price swaps Discounted cash flows Quoted Nord Pool forward market Indiana Hub power price swaps Discounted cash flows Quoted Indiana Hub forward market FX swaps Discounted cash flows Euro/USD forward exchange rate When valuing Level 3 assets and liabilities, we use certain significant unobservable inputs. Management incorporates various inputs and assumptions including forward commodity prices, commodity price volatility, and macroeconomic conditions, including interest rates and discount rates. Our estimates of significant unobservable inputs are ultimately based on our estimates of risks that market participants would consider when valuing our assets and liabilities. The following table presents the inputs for fair value measurements categorized within Level 3 of the fair value hierarchy, along with information regarding significant unobservable inputs used to value Level 3 assets and liabilities: Level 3 Fair Value Measurements: As of December 31, 2021 As of December 31, 2020 Asset / Liability Valuation Technique Observable Inputs Significant Unobservable Input Fair Value Value/Range of Unobservable Input Fair Value Value/Range of Unobservable Input LME forward financial sales contracts Discounted cash flows Quoted LME forward market Discount rate net (1) $ ( 5.1 ) 8.58 % $ 2.9 10.00 % FX Swaps Discounted cash flows Euro/USD forward exchange rate Discount rate net (1) $ ( 0.2 ) 8.58 % $ 0.1 10.00 % Nord Pool Swaps Discounted cash flows Quoted Nord Pool forward market Discount rate net (1) $ 0.2 8.58 % $ — N/A Contingent Obligation Discounted cash flows Quoted LME forward market Expected monthly Hawesville production level (2) $ — 14,000 - 15,000 MT/month $ — 14,000 - 15,000 MT/month (1) Represents risk adjusted discount rate (2) Represents management's estimate of expected monthly Hawesville production levels through the term of the agreement in December 2028. The following table presents the fair value reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis. 62 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) For the twelve months ended December 31, 2021 Level 3 Assets Level 3 Liabilities Nord Pool LME forward financial sales contracts FX Swaps Balance as of January 1, 2021 $ — $ 2.9 $ 0.1 Total realized/unrealized gains (losses) Included in Net Income (1) — ( 28.7 ) ( 0.6 ) Purchases, sales, settlements Purchases — — Sales — — Settlements — — Transfers into Level 3 (2) 1.7 ( 1.0 ) ( 0.4 ) Transfers out of Level 3 (3) ( 1.5 ) 21.7 0.7 Balance as of December 31, 2021 $ 0.2 $ ( 5.1 ) $ ( 0.2 ) Change in unrealized gains (losses) (1) $ — $ ( 28.7 ) $ ( 0.6 ) (1) Gains and losses are presented in the Consolidated Statement of Operations within the line item "Net gain (loss) on forward and derivative contracts." (2) Transfers into Level 3 due to contracts with applied discount rate entered into during 2021. (3) Transfer out of Level 3 due to period of time remaining in derivative contract. For the twelve months ended December 31, 2020 Level 3 Assets Level 3 Liabilities U.S. LME forward financial sales contracts FX Swaps Hawesville L4 Power Price Swaps Balance as of January 1, 2020 $ 10.6 $ — $ ( 2.9 ) Total realized/unrealized gains (losses) Included in Net Income (1) ( 1.5 ) — 0.1 Purchases, sales, settlements Purchases — — — Sales — — — Settlements — — 2.8 Transfers into Level 3 (2) 6.5 0.1 — Transfers out of Level 3 (3) ( 12.7 ) — — Balance as of December 31, 2020 $ 2.9 $ 0.1 $ — Change in unrealized gains (losses) (1) $ ( 1.5 ) $ — $ 2.9 (1) Gains and losses are presented in the Consolidated Statement of Operations within the line item "Net gain (loss) on forward and derivative contracts." (2) Transfers into Level 3 due to contracts with applied discount rate entered into during 2020. (3) Transfer out of Level 3 due to period of time remaining in derivative contract. 63 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) 6. Debt December 31, 2021 2020 Debt classified as current liabilities: Hawesville Term Loan - current portion (1) $ — $ 20.0 Hancock County industrial revenue bonds ("IRBs") due April 2028, interest payable quarterly (variable interest rates (not to exceed 12 %)) (2) 7.8 7.8 U.S. Revolving Credit Facility (3) 63.6 — Iceland Revolving Credit Facility (4) 50.0 — Debt classified as non-current liabilities: Iceland Revolving Credit Facility (4) — 45.0 12.0 % senior secured notes due July 1, 2025, net of debt discount of $ 2.3 million and financing fees of $ 4.6 million at December 31, 2020, interest payable semiannually — 243.1 7.5 % senior secured notes due April 1, 2028, net of financing fees of $ 4.2 million at December 31, 2021, interest payable semiannually 245.8 — 2.75 % convertible senior notes due May 1, 2028, net of financing fees of $ 2.3 million at December 31, 2021, interest payable semiannually 84.0 $ — Total $ 451.2 $ 315.9 (1) See "Hawesville Term Loan" below. As of December 31, 2021, we have made $ 40.0 million of principal payments and $ 4.6 million of interest payments. (2) The IRBs are classified as current liabilities because they are remarketed weekly and could be required to be repaid upon demand if there is a failed remarketing. The IRBs interest rate at December 31, 2021 was 0.3 %. (3) We have elected to incur interest at a base rate plus applicable margin as defined within the agreement. The interest rate at December 31, 2021 was 4.0 %. (4) We have elected to incur interest at LIBOR plus applicable margin as defined within the agreement. The interest rate at December 31, 2021 was 3.054 %. The classification of our Iceland Revolving Credit Facility balance reflects our anticipated payment timeframe. 7.5 % Senior Secured Notes due 2028 General . On April 14, 2021, we issued $ 250.0 million in aggregate principal amount of 7.5 % senior secured notes due 2028 (the "2028 Notes"). We received proceeds of $ 245.2 million, after payment of certain financing fees and related expenses. Interest Rate. The 2028 Notes bear interest semi-annually in arrears on April 1 and October 1 of each year, beginning on October 1, 2021, at a rate of 7.5 % per annum in cash. Maturity. The 2028 Notes mature on April 1, 2028. Seniority. The 2028 Notes are senior secured obligations of Century, ranking equally in right of payment with all existing and future senior indebtedness of Century, but effectively senior to unsecured debt to the extent of the value of collateral. Guaranty . Our obligations under the 2028 Notes are guaranteed by all of our existing and future domestic restricted subsidiaries (the “Guarantor Subsidiaries”), except for foreign owned holding companies, any domestic restricted subsidiary that owns no assets other than equity interests or other investments in foreign subsidiaries and certain immaterial subsidiaries, which guaranty shall in each case be a senior secured obligation of such Guarantor Subsidiaries, ranking equally in right of payment with all existing and future senior indebtedness of such Guarantor Subsidiaries but effectively senior to unsecured debt to the extent of the value of collateral. Collateral. Our obligations under the 2028 Notes and the Guarantor Subsidiaries' obligations under the guarantees are secured by a pledge of and lien on (subject to certain exceptions): 64 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) (i) all of our and the Guarantor Subsidiaries' property, plant and equipment (other than certain excluded property); (ii) all equity interests in subsidiaries directly owned by Century or any Guarantor Subsidiaries; and (iii) proceeds of the foregoing. Under certain circumstances, the indenture and the security documents governing the 2028 Notes will permit us and the Guarantors to incur additional debt that also may be secured by liens on the collateral that are equal to or have priority over the liens securing the 2028 Notes. The collateral agent for the 2028 Notes will agree with the collateral agent for the other debt holders and us under such circumstances to enter into an intercreditor agreement that will cause the liens securing the 2028 Notes to be contractually subordinated to the liens securing such additional debt. Redemption Rights. Prior to April 1, 2024, we may redeem the 2028 Notes, in whole or in part, at a redemption price equal to 100.00 % of the principal amount plus a make-whole premium and accrued and unpaid interest, and if redeemed during the twelve-month period beginning on April 1 of the years indicated below, at the following redemption prices plus accrued and unpaid interest: Year Percentage 2024 103.750 % 2025 101.875 % 2026 and Thereafter 100.000 % Upon a change of control (as defined in the indenture governing the 2028 Notes), we will be required to make an offer to purchase the 2028 Notes at a purchase price equal to 101 % of the outstanding principal amount of the 2028 Notes on the date of the purchase, plus accrued and unpaid interest to, but not including, the date of purchase. Covenants . 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. Fair Value. As of December 31, 2021, the total estimated fair value of the 2028 Notes was $ 264.7 million. Although we use quoted market prices for identical debt instruments, the markets on which they trade are not considered to be active and are therefore considered Level 2 fair value measurements. 12.0 % Notes Tender Offer and Redemption In April 2021, we commenced a tender offer to the holders of the outstanding 12.0 % senior secured notes due July 2025 (the "2025 Notes") and notified all such holders of our election to redeem all 2025 Notes not purchased in our tender offer on May 14, 2021. We received tenders for approximately $ 195.9 million in aggregate principal amount of the 2025 Notes and the remaining 2025 Notes were redeemed on May 14, 2021 at a redemption price of 107 % of the principal amount thereof, plus accrued and unpaid interest. As a result, the Company's and the guarantors' obligations under the indenture governing the 2025 Notes have been fully discharged. We applied net proceeds from the offering of the 2028 Notes described above, together with a portion of the net proceeds from the Convertible Notes offering described below, toward payment of the total consideration amount to holders whose 2025 Notes were accepted and purchased in the tender offer and to fund the redemption of any remaining 2025 Notes. Based on the characteristics of the 2025 Notes and the 2028 Notes that were issued, the tender and redemption of the 2025 Notes were accounted for as an extinguishment of the debt. Accordingly, we have recorded a $ 24.7 million loss on early extinguishment of debt, consisting of early redemption and tender premiums of $ 18.1 million, write-off of deferred financing costs and the debt discount associated with the 2025 Notes of $ 4.4 million and $ 2.2 million, respectively. Convertible Notes due 2028 65 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) General. On April 9, 2021, we completed a private offering of $ 86.3 million aggregate principal amount of convertible senior notes due 2028 (the "Convertible Notes"). The Convertible Notes were issued at a price of 100 % of their aggregate principal amount. We received proce eds of $ 83.7 million, a fter payment of certain financing fees and related expenses. The initial conversion rate for the Convertible Notes is 53.3547 shares of the Company's common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $ 18.74 per share of the Company's common stock. The conversion rate and conversion price are subject to customary adjustments under certain circumstances in accordance with the terms of the indenture. Interest Rate. The Convertible Notes will bear interest semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2021, at a rate of 2.75 % per annum in cash. Maturity. The Convertible Notes will mature on May 1, 2028, unless earlier converted, repurchased, or redeemed. Seniority. The Convertible Notes are the Company’s senior unsecured obligations and rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Convertible Notes; equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s senior secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries. Redemption rights. We may not redeem the Convertible Notes prior to May 6, 2025. On or after May 6, 2025, we may redeem for cash all or part of the Convertible Notes at our option if the last reported sale price of our common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period (including the last trading day of such period) ending on and including the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100 % of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest. Upon conversion, we may satisfy our conversion obligation by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, based on the applicable conversion rate. In addition, if certain corporate events that constitute a make-whole fundamental change (as defined in the indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. Additionally, in the event of a corporate event constituting a fundamental change (as defined in the indenture), holders of the Convertible Notes may require us to repurchase all or a portion of their Convertible Notes at a repurchase price equal to 100 % of the principal amount of the Convertible Notes being repurchased, plus accrued and unpaid interest to, but excluding, the date of the fundamental change repurchase. As of December 31, 2021, the if-converted value of the Convertible Notes did not exceed the outstanding principal amount. Fair Value. As of December 31, 2021, the total estimated fair value of the Convertible Notes was $ 98.6 million. Although we use quoted market prices for identical debt instruments, the markets on which they trade are not considered to be active and are therefore considered Level 2 fair value measurements. Capped Calls On April 6, 2021 and April 7, 2021, in connection with the pricing of the Convertible Notes, we entered into privately negotiated capped call transactions (the “Capped Calls”) with certain of the initial purchasers and other financial institutions (the "Option Counterparties") at a cost of $ 5.7 million. The Capped Calls cover, subject to customary adjustments, the number of shares of our common stock initially underlying the Convertible Notes. By entering into the Capped Calls, we expect to reduce the potential dilution to our common stock upon any conversion of the Convertible Notes (or, in the event a conversion of the Convertible Notes is settled in cash, to reduce our cash payment obligation) in the event that at the time of conversion of the Convertible Notes our common stock price exceeds the conversion price of the Convertible Notes. The Capped Calls each have an initial strike price of approximately $ 18.74 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Convertible Notes. The Capped Calls have an initial cap price of $ 22.95 per share of common stock . On April 6, 2021 and April 7, 2021, we entered into side letters with the Option Counterparties that modified the terms of the Capped Calls, thus requiring derivative accounting treatment with changes in fair value reported in earnings. On June 29, 2021, we terminated the side letters with the Option Counterparties by mutual agreement, which caused the Capped Calls to 66 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) meet the criteria for classification in equity. As of December 31, 2021, the Capped Calls are included as a reduction to additional paid-in-capital within stockholders’ equity. During the period in the second quarter in which the Capped Calls were classified as derivatives, we recognized $ 1.0 million as a loss on forward and derivative contracts. Hawesville Term Loan On April 29, 2019, we entered into a loan agreement with Glencore Ltd. pursuant to which the Company borrowed $ 40.0 million. Borrowings under the Hawesville Term Loan were used to partially finance the second phase of the Hawesville restart project. The Hawesville Term Loan bore interest, due monthly, at a floating rate equal to LIBOR plus 5.375 % per annum. The Hawesville Term Loan matured on December 31, 2021 and was fully repaid as of December 31, 2021. U.S. Revolving Credit Facility General . We and certain of our direct and indirect domestic subsidiaries (the "Borrowers") have a senior secured revolving credit facility with a syndicate of lenders (the "U.S. revolving credit facility"). On December 23, 2021 we amended our U.S. revolving credit facility, increasing our borrowing capacity to $ 220.0 million, including up to $ 110.0 million under a letter of credit sub-facility. The U.S. revolving credit facility matures on May 16, 2023. Any letters of credit issued and outstanding under the U.S. revolving credit facility reduce our borrowing availability on a dollar-for-dollar basis. At December 31, 2021, there were $ 63.6 million outstanding borrowings and $ 81.1 million of outstanding letters of credit issued under our U.S. revolving credit facility. Principal payments, if any, are due upon maturity of the U.S. revolving credit facility and may be prepaid without penalty. Status of our U.S. revolving credit facility: December 31, 2021 Credit facility maximum amount $ 220.0 Borrowing availability 215.2 Outstanding letters of credit issued 81.1 Outstanding borrowings 63.6 Borrowing availability, net of outstanding letters of credit and borrowings $ 70.5 Borrowing Base. The availability of funds under the U.S. revolving credit facility is limited by a specified borrowing base consisting of the Borrower's accounts receivable and inventory which meet the eligibility criteria. Guaranty. The Borrowers' obligations under the U.S. revolving credit facility are guaranteed by certain of our domestic subsidiaries and secured by a continuing lien upon and a security interest in all of the Borrowers' accounts receivable, inventory and certain bank accounts. Each Borrower is liable for any and all obligations under the U.S. revolving credit facility on a joint and several basis. Interest Rates and Fees. Any amounts outstanding under the U.S. revolving credit facility will bear interest at our option of either LIBOR or a base rate, plus, in each case, an applicable interest margin. The applicable interest margin is determined based on the average daily availability for the immediately preceding quarter. In addition, we pay an unused line fee on undrawn amounts, less the amount of our letters of credit exposure. For standby letters of credit, we are required to pay a fee on the face amount of such letters of credit that varies depending on whether the letter of credit exposure is cash collateralized. In June 2021, the U.S. revolving credit facility was amended to include fallback language relating to a benchmark reference rate replacement when a LIBOR transition occurs. Prepayments . We can make prepayments of amounts outstanding under the U.S. revolving credit facility, in whole or in part, without premium or penalty, subject to standard breakage costs, if applicable. We may be required to apply the proceeds from sales of collateral accounts, other than sales of inventory in the ordinary course of business, to repay amounts outstanding under the revolving credit facility and correspondingly reduce the commitments there under. Covenants . The U.S. revolving credit facility contains customary covenants, including restrictions on mergers and acquisitions, indebtedness, affiliate transactions, liens, dividends and distributions, dispositions of collateral, investments, and 67 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) prepayments of indebtedness, as well as a covenant that requires the Borrowers to maintain certain minimum liquidity or availability requirements. Events of Default. The U.S. revolving credit facility also includes customary events of default, including nonpayment, misrepresentation, breach of covenant, bankruptcy, change of ownership, certain judgments and certain cross defaults. Upon the occurrence of an event of default, commitments under the U.S. revolving credit facility may be terminated and amounts outstanding may be accelerated and declared immediately due and payable. Iceland Revolving Credit Facility General . Our wholly-owned subsidiary, Nordural Grundartangi ehf ("Grundartangi"), has entered into a $ 50.0 million revolving credit facility agreement with Landsbankinn hf., dated November 2013, as amended. Under the terms of the Iceland revolving credit facility, when Grundartangi borrows funds it will designate a repayment date, which may be any date prior to the maturity of the Iceland revolving credit facility. The Iceland revolving credit facility has a term through November 2024. Status of our Iceland revolving credit facility: December 31, 2021 Credit facility maximum amount $ 50.0 Borrowing availability 50.0 Outstanding letters of credit issued — Outstanding borrowings 50.0 Borrowing availability, net of outstanding letters of credit and borrowings $ — Borrowing Base. The availability of funds under the Iceland revolving credit facility is limited by a specified borrowing base consisting of inventory and accounts receivable of Grundartangi. Security. Grundartangi's obligations under the Iceland revolving credit facility are secured by a general bond under which Grundartangi's inventory and accounts receivable are pledged to secure full payment of the loan. Interest Rates and Fees. Any amounts outstanding under the Iceland revolving credit facility will bear interest at LIBOR plus a margin per annum. Prepayments. Any outstanding borrowings may be prepaid without penalty or premium in whole or in part. Covenants. The Iceland revolving credit facility contains customary covenants, including restrictions on mergers and acquisitions, dispositions of assets, compliance with permits, laws and payment of taxes, as well as a covenant that requires Grundartangi to maintain a certain minimum equity ratio. Events of Default. The Iceland revolving credit facility also includes customary events of default, including nonpayment, loss of license, cessation of operations, unlawfulness, breach of covenant, bankruptcy, change of ownership, certain judgments and certain cross defaults. Upon the occurrence of an event of default, commitments under the Iceland revolving credit facility may be terminated and amounts outstanding may be accelerated and declared immediately due and payable. 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"). Under the Casthouse Facility, repayments of principal amounts will be made in equal quarterly installments equal to 1.818 % of the principal amount, the first payment occurring 30 months after the first drawdown by Grundartangi, with the remaining 60 % of the principal amount to be paid no later than the termination date. As of December 31, 2021, there are no outstanding borrowings under this Casthouse Facility. Security. Grundartangi's obligations under the Casthouse Facility are secured by a general bond on an aggregate of $ 430.0 million in assets and rights related to Grundartangi. 68 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) Interest Rates and Fees . The interest rate shall be the sum of the interest rate equal to USD LIBOR 3 month plus the applicable margin as set forth in the agreement. Grundartangi shall pay an arrangement fee equal to 0.78 % of the total facility amount, 50 % of which was paid upfront and 50 % to be paid at the end of the availability period, and shall pay a commitment fee of 0.38 % per annum on undrawn commitments, payable quarterly at the same time as interest payments are due and payable. Upon occurrence of the LIBOR transition, the Casthouse Facility provides for the use of an alternative base interest rate to LIBOR aimed at achieving the same commercial result. Prepayments . We can make prepayments of amounts outstanding under the Casthouse Facility, in whole or in part, without premium or penalty, together with accrued interest on the amount prepaid and subject to standard breakage costs, if applicable. Covenants . This Casthouse Facility contains customary covenants, including restrictions on mergers and acquisitions, indebtedness, preservation of assets, and dispositions of assets, as well as a covenant that requires Grundartangi to maintain a certain minimum equity ratio. Events of Default. The Casthouse Facility also includes customary events of default, including nonpayment, loss of license, cessation of operations, unlawfulness, breach of covenant, bankruptcy, change of ownership, certain judgments and certain cross defaults. Upon the occurrence of an event of default, commitments under the Casthouse facility may be terminated and amounts outstanding may be accelerated and declared immediately due and payable. Contingent Obligation We have a contingent obligation in connection with the “unwind” of a contractual arrangement between CAKY, Big Rivers Electric Corporation ("Big Rivers") and a third party and the execution of a long-term cost-based power contract with Kenergy, a member of a cooperative of Big Rivers, in July 2009. 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. Our obligation to make repayments is contingent upon certain operating criteria for Hawesville and the LME price of primary aluminum. When the conditions for repayment are met, and for so long as those conditions continue to be met, we will be obligated to make principal and interest payments, in up to 72 monthly payments. Interest accrues at an annual rate equal to 10.94 % and the term of the agreement is through December 2028. Based on the LME forward market prices for primary aluminum at December 31, 2021, and current level of Hawesville's operations, we believe that we will not have any payment obligations for the contingent obligation through the term of the agreement, which expires in 2028. We recognized a derivative asset which offsets our contingent obligation. As a result, our net liability decreased and we recognized a gain of $ 1.4 million for each of the years ended December 31, 2021 and 2020. These amounts are exactly offset by interest expense on the contingent obligation which is recorded in interest expense. Future increases in the LME forward market and increased operations at Hawesville may result in a partial or full derecognition of the derivative asset and a corresponding recognition of a loss. The following table provides information about the balance sheet location and gross amounts offset: Offsetting of financial instruments and derivatives Balance sheet location December 31, 2021 December 31, 2020 Contingent obligation – principal Other liabilities $ ( 12.9 ) $ ( 12.9 ) Contingent obligation – accrued interest Other liabilities ( 15.2 ) ( 13.8 ) Contingent obligation – derivative asset Other liabilities 28.1 26.7 $ — $ — Industrial Revenue Bonds As part of the purchase price for our acquisition of the Hawesville facility, we assumed IRBs which were issued in connection with the financing of certain solid waste disposal facilities constructed at the Hawesville facility. The IRBs bear interest at a variable rate not to exceed 12 % per annum determined weekly based upon prevailing rates for similar bonds in the industrial revenue bond market and interest on the IRBs is paid quarterly. The IRBs are secured by a letter of credit issued under our U.S revolving credit facility and mature in April 2028. 69 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) 7. Shareholders' Equity Common Stock As of December 31, 2021 and 2020, we had 195,000,000 shares of common stock, $ 0.01 cent par value, authorized under our Restated Certificate of Incorporation, of which 98,418,132 shares were issued and 91,231,611 shares were outstanding at December 31, 2021; 97,242,318 shares were issued and 90,055,797 shares were outstanding at December 31, 2020. The rights, preferences and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock which are currently outstanding, including our Series A Convertible Preferred Stock, or which we may designate and issue in the future. Preferred Stock As of December 31, 2021 and 2020, we had 5,000,000 shares of preferred stock, $ 0.01 cent par value per share, authorized under our Restated Certificate of Incorporation. Our Board of Directors may issue preferred stock in one or more series and determine for each series the dividend rights, conversion rights, voting rights, redemption rights, liquidation preferences, sinking fund terms and the number of shares constituting that series, as well as the designation thereof. Depending upon the terms of preferred stock established by our Board of Directors, any or all of the preferred stock could have preference over the common stock with respect to dividends and other distributions and upon the liquidation of Century. In addition, issuance of any shares of preferred stock with voting powers may dilute the voting power of the outstanding common stock. Series A Convertible Preferred Stock Shares Authorized and Outstanding. In 2008, we issued 160,000 shares of our Series A Convertible Preferred Stock. Glencore holds all of the issued and outstanding Series A Convertible Preferred Stock. At December 31, 2021 and December 31, 2020, 58,542 shares and 63,589 shares were outstanding, respectively. The issuance of common stock under our stock incentive programs, debt exchange transactions and any stock offering that excludes Glencore participation triggers anti-dilution provisions of the preferred stock agreement and results in the automatic conversion of Series A Convertible Preferred Stock shares into shares of common stock. The conversion of preferred to common shares is 100 shares of common for each share of preferred stock. Our Series A Convertible Preferred Stock has a par value of $ 0.01 per share. 70 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) The Common and Preferred Stock Activity table below contains additional information about preferred stock conversions during 2021, 2020 and 2019: Common and Preferred Stock Activity: Preferred Stock Common stock (in shares) Series A Convertible Treasury Outstanding Balance as of December 31, 2018 71,967 7,186,521 88,103,440 Repurchase of common stock — — — Conversion of convertible preferred stock ( 4,644 ) — 464,431 Issuance for share-based compensation plans — — 617,790 Balance as of December 31, 2019 67,323 7,186,521 89,185,661 Repurchase of common stock — — — Conversion of convertible preferred stock ( 3,734 ) — 373,416 Issuance for share-based compensation plans — — 496,720 Balance as of December 31, 2020 63,589 7,186,521 90,055,797 Repurchase of common stock — — — Conversion of convertible preferred stock ( 5,047 ) — 504,596 Issuance for share-based compensation plans — — 671,218 Balance as of December 31, 2021 58,542 7,186,521 91,231,611 Dividend Rights. So long as any shares of our Series A Convertible Preferred Stock are outstanding, we may not pay or declare any dividend or make any distribution upon or in respect of our common stock or any other capital stock ranking on a parity with or junior to the Series A Convertible Preferred Stock in respect of dividends or liquidation preference, unless we, at the same time, declare and pay a dividend or distribution on the shares of Series A Convertible Preferred Stock (a) in an amount equal to the amount such holders would receive if they were the holders of the number of shares of our common stock into which their shares of Series A Convertible Preferred Stock are convertible as of the record date fixed for such dividend or distribution, or (b) in the case of a dividend or distribution on other capital stock ranking on a parity with or junior to the Series A Convertible Preferred Stock in such amount and in such form as (based on the determination of holders of a majority of the Series A Convertible Preferred Stock) will preserve, without dilution, the economic position of the Series A Convertible Preferred Stock relative to such other capital stock. Voting Rights. The Series A Convertible Preferred Stock has no voting rights for the election of directors or on other matters where the shares of common stock have voting rights. However, we may not change the powers, preferences, or rights given to the Series A Convertible Preferred Stock, or authorize, create or issue any additional shares of Series A Convertible Preferred Stock without the affirmative vote of the holders of a majority of the shares of Series A Convertible Preferred Stock then outstanding (voting separately as a class). Liquidation Rights. Upon any liquidation, dissolution, or winding-up of Century, the holders of shares of Series A Convertible Preferred Stock are entitled to receive a preferential distribution of $ 0.01 per share out of the assets available for distribution. In addition, upon any liquidation, dissolution or winding-up of Century, if our assets are sufficient to make any distribution to the holders of the common stock, then the holders of shares of Series A Convertible Preferred Stock are also entitled to share ratably with the holders of common stock in the distribution of Century’s assets (as though the holders of Series A Convertible Preferred Stock were holders of that number of shares of common stock into which their shares of Series A Convertible Preferred Stock are convertible). However, the amount of any such distribution will be reduced by the amount of the preferential distribution received by the holders of the Series A Convertible Preferred Stock. Transfer Restrictions. Glencore is prohibited from transferring shares of Series A Convertible Preferred Stock to any party other than an affiliate who agrees to become bound by certain agreements associated with these shares. Automatic Conversion. The Series A Convertible Preferred Stock automatically converts, without any further act of Century or any holders of Series A Convertible Preferred Stock, into shares of common stock, at a conversion ratio of 100 shares of common stock for each share of Series A Convertible Preferred Stock, upon the occurrence of any of the following automatic conversion events: 71 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) • If we sell or issue shares of common stock or any other stock that votes generally with our common stock, or the occurrence of any other event, including a sale, transfer or other disposition of common stock by Glencore, as a result of which the percentage of voting stock held by Glencore decreases, an amount of Series A Convertible Preferred Stock will convert to common stock to restore Glencore to its previous ownership percentage; • If shares of Series A Convertible Preferred Stock are transferred to an entity that is not an affiliate of Glencore, such shares of Series A Convertible Preferred Stock will convert to shares of our common stock, provided that such transfers may only be made pursuant to an effective registration statement; • Upon a sale of Series A Convertible Preferred Stock by Glencore in a Rule 144 transaction in which the shares of Series A Convertible Preferred Stock and our common stock issuable upon the conversion thereof are not directed to any purchaser, such shares of Series A Convertible Preferred Stock sold will convert to shares of our common stock; and • Immediately prior to and conditioned upon the consummation of a merger, reorganization or consolidation to which we are a party or a sale, abandonment, transfer, lease, license, mortgage, exchange or other disposition of all or substantially all of our property or assets, in one or a series of transactions where, in any such case, all of our common stock would be converted into the right to receive, or exchanged for, cash and/or securities, other than any transaction in which the Series A Convertible Preferred Stock will be redeemed. Optional Conversion. Glencore has the option to convert the Series A Convertible Preferred Stock in a tender offer or exchange offer, at the same conversion ratio as above, in which a majority of the outstanding shares of our common stock have been tendered by the holders thereof and not duly withdrawn at the expiration time of such tender or exchange offer, so long as the Series A Convertible Preferred Stock is tendered or exchanged in such offer. Stock Combinations – Adjustments. If, at any time while the Series A Convertible Preferred Stock is outstanding, Century combines outstanding common stock into a smaller number of shares, then the number of shares of common stock issuable on conversion of each share of Series A Convertible Preferred Stock will be decreased in proportion to such decrease in the aggregate number of shares of common stock outstanding. Redemptions or Repurchases of Common Stock. We may not redeem or repurchase our common stock unless we redeem or repurchase, or otherwise make a payment on, a pro-rata number of shares of the Series A Convertible Preferred Stock. These restrictions do not apply to our open market repurchases or our repurchases pursuant to our employee benefit plans. Right of Redemption. The Series A Convertible Preferred Stock will be redeemed by Century if any of the following events occur (at a redemption price based on the trading price of our common stock prior to the announcement of such event) and Glencore votes its shares of our common stock in opposition to such events: • We propose a merger, reorganization or consolidation, sale, abandonment, transfer, lease, license, mortgage, exchange or other disposition of all or substantially all of our property or assets where any of our common stock would be converted into the right to receive, or exchanged for, assets other than cash and/or securities traded on a national stock exchange or that are otherwise readily marketable, or • We propose to dissolve and wind up operations and any assets, other than cash and/or securities traded on a national stock exchange or that are otherwise readily marketable, are to be distributed to the holders of our common stock. Stock Repurchase Program In 2011, our Board of Directors authorized a $ 60.0 million stock repurchase program and during the first quarter of 2015, our Board of Directors increased the size of the program by $ 70.0 million. Under the program, Century is authorized to repurchase up to $ 130.0 million of our outstanding shares of common stock, from time to time, on the open market at prevailing market prices, in block trades or otherwise. 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. The stock repurchase program may be suspended or discontinued at any time. Shares of common stock repurchased are recorded at cost as treasury stock and result in a reduction of shareholders’ equity in the consolidated balance sheets. From time to time, treasury shares may be reissued as contributions to our employee benefit plans and for the conversion of preferred stock. When shares are reissued, we use an average cost method for 72 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) determining cost. The difference between the cost of the shares and the reissuance price is added to or deducted from additional paid-in capital. Through December 31, 2021, we repurchased 7,186,521 shares of common stock for an aggregate purchase price of $ 86.3 million. We have made no repurchases since April 2015 and have approximately $ 43.7 million remaining under the repurchase program authorization as of December 31, 2021. 8. Inventories Inventories, at December 31, consist of the following: 2021 2020 Raw materials $ 132.9 $ 95.9 Work-in-process 76.1 40.5 Finished goods 43.9 26.9 Operating and other supplies 172.7 127.8 Inventories $ 425.6 $ 291.1 9. Property, Plant and Equipment Property, plant and equipment, at December 31, consist of the following: 2021 2020 Land and improvements $ 40.1 $ 40.1 Buildings and improvements 341.1 340.1 Machinery and equipment 1,522.1 1,506.5 Construction in progress 89.6 15.8 1,992.9 1,902.5 Less accumulated depreciation ( 1,100.4 ) ( 1,022.1 ) Property, plant and equipment - net $ 892.5 $ 880.4 For the years ended December 31, 2021, 2020 and 2019, we recorded depreciation and amortization expense of $ 82.6 million, $ 83.0 million, and $ 83.2 million, respectively. 10. Accumulated Other Comprehensive Loss ("AOCL") Components of AOCL 2021 2020 Defined benefit plan liabilities $ ( 86.7 ) $ ( 123.7 ) Unrealized gain (loss) on financial instruments 1.9 2.1 Other comprehensive loss before income tax effect ( 84.8 ) ( 121.6 ) Income tax effect (1) 2.5 2.8 Accumulated other comprehensive loss $ ( 82.3 ) $ ( 118.8 ) (1) The allocation of the income tax effect to the components of other comprehensive loss is as follows: 2021 2020 Defined benefit plan liabilities $ 2.9 $ 3.2 Unrealized loss on financial instruments ( 0.4 ) ( 0.4 ) 73 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) The following table summarizes the changes in the accumulated balances for each component of AOCL: Defined benefit plan and other postretirement liabilities Unrealized gain (loss) on financial instruments Total, net of tax Balance, December 31, 2018 $ ( 100.7 ) $ 2.0 $ ( 98.7 ) Impact of ASU 2018-02* ( 1.3 ) — ( 1.3 ) Other comprehensive (loss) before reclassifications ( 12.7 ) — ( 12.7 ) Net amount reclassified to net income (loss) 3.0 ( 0.1 ) 2.9 Balance, December 31, 2019 ( 111.7 ) 1.9 ( 109.8 ) Other comprehensive (loss) before reclassifications ( 13.5 ) — ( 13.5 ) Net amount reclassified to net income (loss) 4.6 ( 0.1 ) 4.5 Balance, December 31, 2020 ( 120.6 ) 1.8 ( 118.8 ) Other comprehensive (loss) before reclassifications 31.6 — 31.6 Net amount reclassified to net income (loss) 5.0 ( 0.1 ) 4.9 Balance, December 31, 2021 $ ( 84.0 ) $ 1.7 $ ( 82.3 ) *ASU 2018-02. See Note 14. Income Taxes for further information regarding our adoption of ASU 2018-02. 74 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) Reclassifications out of AOCL were included in the consolidated statements of operations as follows: AOCL Components Location 2021 2020 2019 Defined benefit plan and other postretirement liabilities Cost of goods sold $ 26.8 $ ( 4.7 ) $ ( 3.2 ) Selling, general and administrative expenses 2.9 ( 2.0 ) ( 4.4 ) Other operating expense, net 7.3 ( 1.1 ) ( 1.0 ) Income tax expense ( 0.4 ) ( 1.1 ) ( 1.1 ) Net of tax $ 36.6 $ ( 8.9 ) $ ( 9.7 ) Gain (loss) on financial instruments Cost of goods sold $ ( 0.1 ) $ ( 0.2 ) $ ( 0.2 ) Income tax benefit 0.0 0.1 0.1 Net of tax $ ( 0.1 ) $ ( 0.1 ) $ ( 0.1 ) 11. Pension and Other Postretirement Benefits Pension Benefits We maintain noncontributory defined benefit pension plans for certain domestic hourly and salaried employees. For the eligible domestic salaried employees, plan benefits are based primarily on years of service and average compensation during the later years of employment. For hourly employees, plan benefits are based primarily on a formula that provides a specific benefit for each year of service. Our funding policy is to contribute amounts based upon actuarial and economic assumptions designed to achieve adequate funding of the projected benefit obligations and to meet the minimum funding requirements of the Employee Retirement Income Security Act of 1974 ("ERISA"). In addition, we maintain the supplemental executive retirement benefit ("SERB") plan for certain current and former executive officers, which is frozen to future accruals. Other Postretirement Benefits ("OPEB") In addition to providing pension benefits, we provide certain healthcare and life insurance benefits for certain domestic retired employees. We accrue the estimated cost of providing postretirement benefits during the working careers of those employees who could become eligible for such benefits when they retire. We fund these benefits as the retirees submit claims. Retiree medical welfare changes Under the current Hawesville labor agreement, employees who retire during the term of the labor agreement have been divided into sub-groups based on attributes such as Medicare eligibility, hire date, age and years of service. Levels of benefits are defined for the sub-groups and range from no substantive change from the benefits provided under the previous labor agreement to replacement of the defined retiree medical benefit program with individual health reimbursement accounts for each eligible participant. The health reimbursement accounts are funded based on established rates per hour worked by each eligible participant. Eligible participants will be able to withdraw from their health reimbursement accounts to fund their own retiree medical coverage. During 2017, the Company amended its non-union retiree medical and life insurance benefits to align the Company’s benefits with the market and achieve a uniform retiree medical benefit design across the Company’s U.S. locations. Effective January 1, 2018, non-union retiree medical and life insurance benefits are restricted to current participants who meet the eligibility criteria as of January 1, 2018. Additionally, effective January 1, 2019, Century will no longer administer non-union retiree medical, prescription drug, dental, or vision benefits and instead will make fixed health reimbursement account contributions. 75 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) Obligations and Funded Status The change in benefit obligations and change in plan assets as of December 31 are as follows: Pension OPEB 2021 2020 2021 2020 Change in benefit obligation: Benefit obligation at beginning of year $ 385.8 $ 358.4 $ 107.9 $ 107.7 Service cost 4.7 4.9 0.2 0.2 Interest cost 9.6 11.4 2.4 3.1 Actuarial (gain) loss ( 18.8 ) 31.1 ( 5.0 ) 2.7 Medicare Part D — — 0.2 0.2 Benefits paid ( 21.2 ) ( 20.0 ) ( 6.1 ) ( 6.0 ) Benefit obligation at end of year $ 360.1 $ 385.8 $ 99.6 $ 107.9 The decreases in both the defined benefit plans' and OPEB plan's benefit obligation were mainly driven by the actuarial gains in 2021, which were primarily attributable to the increases in the discount rates from fiscal year 2020 to 2021. Pension OPEB 2021 2020 2021 2020 Change in plan assets: Fair value of plan assets at beginning of year $ 318.8 $ 295.8 $ — $ — Actual return on plan assets 30.3 41.1 — — Employer contributions 1.8 1.9 5.9 5.8 Medicare Part D subsidy received — — 0.2 0.2 Benefits paid ( 21.2 ) ( 20.0 ) ( 6.1 ) ( 6.0 ) Fair value of assets at end of year $ 329.7 $ 318.8 $ — $ — The decrease of actual return on plan assets in 2021 was primarily attributable to changes in our investment compliment during fiscal year 2021 to manage risk relative to the pension asset balance. Pension OPEB 2021 2020 2021 2020 Funded status of plans: Funded status $ ( 30.4 ) $ ( 67.0 ) $ ( 99.6 ) $ ( 107.9 ) Amounts recognized in the Consolidated Balance Sheets: Non-current assets — — — — Current liabilities ( 1.8 ) ( 1.8 ) ( 6.3 ) ( 6.4 ) Non-current liabilities ( 28.6 ) ( 65.2 ) ( 93.3 ) ( 101.5 ) Net amount recognized $ ( 30.4 ) $ ( 67.0 ) $ ( 99.6 ) $ ( 107.9 ) Amounts recognized in accumulated other comprehensive loss (pre-tax): Net loss $ 61.2 $ 94.0 $ 35.0 $ 42.2 Prior service cost (benefit) 0.9 1.1 ( 10.3 ) ( 13.5 ) Total $ 62.1 $ 95.1 $ 24.7 $ 28.7 76 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) Pension Plans That Are Not Fully Funded At December 31, 2021, the projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets were $ 360.1 million, $ 355.7 million, and $ 329.7 million, respectively. At December 31, 2020, the projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets were $ 385.8 million, $ 379.4 million and $ 318.8 million, respectively. Components of net periodic benefit cost and other amounts recognized in other comprehensive loss: Net Periodic Benefit Cost: Year Ended December 31, Pension OPEB 2021 2020 2019 2021 2020 2019 Service cost $ 4.7 $ 4.9 $ 4.0 $ 0.2 $ 0.2 $ 0.2 Interest cost 9.6 11.4 13.3 2.4 3.1 4.5 Expected return on plan assets ( 22.4 ) ( 20.8 ) ( 18.3 ) — — — Amortization of prior service costs 0.1 0.1 0.1 ( 3.2 ) ( 3.2 ) ( 4.9 ) Amortization of net loss 6.1 6.5 6.6 2.3 2.2 2.3 Net periodic benefit cost $ ( 1.9 ) $ 2.1 $ 5.7 $ 1.7 $ 2.3 $ 2.1 Other changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Loss (pre-tax): Year Ended December 31, Pension OPEB 2021 2020 2021 2020 Net loss (gain) $ ( 26.7 ) $ 10.8 $ ( 5.0 ) $ 2.7 Prior service cost (benefit) — — — — Amortization of net loss, including recognition due to settlement ( 6.1 ) ( 6.5 ) ( 2.3 ) ( 2.2 ) Amortization of prior service (cost) benefit, including recognition due to curtailment ( 0.1 ) ( 0.1 ) 3.2 3.2 Total amount recognized in other comprehensive loss ( 32.9 ) 4.2 ( 4.1 ) 3.7 Net periodic benefit cost ( 1.9 ) 2.1 1.7 2.3 Total recognized in net periodic benefit cost and other comprehensive loss $ ( 34.8 ) $ 6.3 $ ( 2.4 ) $ 6.0 Weighted average assumptions used to determine benefit obligations at December 31: Pension OPEB 2021 2020 2021 2020 Discount rate (1) 2.89 % 2.58 % 2.75 % 2.34 % Rate of compensation increase (2) 3 %/ 3.5 % 3 %/ 3.5 % 3 %/ 3.5 % 3 %/ 3.5 % Measurement date 12/31/2021 12/31/2020 12/31/2021 12/31/2020 77 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) Weighted average assumptions used to determine net periodic benefit cost for the years ended December 31: Pension OPEB 2021 2020 2019 2021 2020 2019 Measurement date 12/31/2020 12/31/2019 12/31/2018 12/31/2020 12/31/2019 12/31/2018 Fiscal year end 12/31/2021 12/31/2020 12/31/2019 12/31/2021 12/31/2020 12/31/2019 Discount rate (1) 2.77 % 3.22 % 4.38 % 1.89 % 2.79 % 4.29 % Rate of compensation increase (3) 3 %/ 3.5 % 3 %/ 3.5 % 3 %/ 3.5 % 3 %/ 3.5 % 3 %/ 3.5 % 3 %/ 3.5 % Expected return on plan assets (4) 7.25 % 7.25 % 7.25 % — % — % — % (1) We use the Ryan Above Median Yield Curve to determine the discount rate. (2) For 2021 and 2020, the rate of compensation increase is 3 % per year for the first year and 3.5 % per year thereafter. (3) For 2021, 2020, and 2019, the rate of compensation increase is 3 % per year for the first year and 3.5 % per year thereafter. (4) The rate for each of our defined benefit plans was selected by taking into account our expected asset mix and is based on historical performance as well as expected future rates of return on plan assets. For measurement purposes, medical cost inflation is initially estimated to be 6.4 %, and 7.1 % for pre- and post-65 participants, respectively, declining to 4.5 % over ten years and continuing thereafter. Benefit Plan Assets Pension Plan Investment Strategy and Policy The Pension Plans’ assets are invested in a prudent manner for the exclusive purpose of providing benefits to participants. Other objectives are to: • Provide a total return that, over the long term, provides sufficient assets to fund the pension plan liabilities subject to a level of risk, contributions and pension expense deemed appropriate by the company. • Minimize, where possible, pension expense volatility, and inclusion of liability driven investing as an investment strategy when appropriate. As the funding ratio improves, the objectives will evolve to minimize the funded status volatility. • Diversify investments within asset classes to reduce the impact of losses in single investments. The assets of the Pension Plans are invested in compliance with ERISA, as amended, and any subsequent applicable regulations and laws. Performance Our performance objective is to outperform the return of weighing passive investment alternatives by the policy target allocations after fees at a comparable level of risk. This investment objective is expected to be achieved over the long term and is measured over rolling multi-year periods. Peer-relative performance comparisons will also be considered especially when performance deviates meaningfully from market indexes. Investment objectives for each asset class are included below. 78 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) Asset Allocation Policy Asset allocation policy is the principal method for achieving the Pension Plans' investment objectives stated above. The Pension Plans’ weighted average long-term strategic asset allocation policy targets are as follows: Pension Plan Asset Allocation 2021 Target December 31, 2021 December 31, 2020 Equities: U.S. equities — % — % 31 % International equities — % — % 27 % Fixed income — % — % 42 % Return seeking assets: Global equity 52 % 51 % — % Diversified credit 15 % 15 % — % Real assets 8 % 9 % — % Liability hedging assets 25 % 25 % — % Cash — % — % — % 100 % 100 % 100 % Global equities are held for their long-term expected return premium over fixed income investments and inflation. Fixed income is held for diversification relative to equities, and as a hedging instrument to interest rate volatility for the pension obligation. Diversified Credit and Real Assets are held for diversification relative to equities and for income generation. The strategic role of global equities is to: • Provide higher expected returns of the major asset classes. • Maintain a diversified exposure within global stock markets through the use of multi-manager portfolio strategies. The strategic role of fixed income is to: • Diversify the Pension Plans’ equity exposure by investing in fixed income securities that exhibit a low correlation to equities, thereby lowering the overall return volatility of the entire investment portfolio. • Maintain a diversified exposure within the U.S. fixed income market through the use of portfolio strategies targeting treasury bond exposures. • Hedge the interest rate risk of the pension obligation by investing in securities that target a similar duration to the pension obligation cash flows. The strategic role of diversified credit is to: • Diversify the Pension Plans’ equity exposure by investing in alternative credit securities that exhibit a low correlation to equities, thereby lowering the overall return volatility of the entire investment portfolio. • Maintain a diversified exposure within the alternative credit markets through the use of multi-manager portfolio strategies targeting, but not limited to, securitized credit, high yield securities, and emerging market debt. • Achieve returns in excess of passive indexes through the use of active investment managers and strategies. The strategic role of real assets is to: 79 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) • Diversify the Pension Plans’ equity exposure by investing in real assets that exhibit a low correlation to equities, thereby lowering the overall return volatility of the entire investment portfolio. • Maintain a diversified exposure within the real asset markets through the use of multi-manager portfolio strategies targeting listed and unlisted exposures. • Achieve returns in excess of passive indexes through the use of active investment managers and strategies. The long-term strategic asset allocation policy is reviewed regularly or whenever significant changes occur to Century’s or the Pension Plans' financial position and liabilities. Fair Value Measurements of Pension Plan assets The following table sets forth by level the fair value hierarchy our Pension Plans' assets. These assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and the placement within the fair value hierarchy levels. As more fully described within Note 5. Fair Value Measurements , the Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair values. The fair value hierarchy provides transparency regarding the inputs we use to measure fair value. We categorize each fair value measurement in its entirety into the following three levels, based on the lowest level input that is significant to the entire measurement: • Level 1 Inputs – quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. • Level 2 Inputs – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. • Level 3 Inputs – unobservable inputs for the asset or liability. The following summarizes the Company’s pension included assets under the fair value hierarchy: As of December 31, 2021 (1) Level 1 Level 2 Level 3 Assets measured at NAV Total Cash and cash equivalents $ — $ — $ — $ 2.5 $ 2.5 Return seeking assets: Global Equity — — — 167.8 167.8 Diversified Credit — — — 49.2 49.2 Real Assets — — — 28.6 28.6 Total return seeking assets — — — 245.6 245.6 Liability hedging assets — — — 81.6 81.6 Total $ — $ — $ — $ 329.7 $ 329.7 As of December 31, 2020 Equities: U.S. equities $ 98.4 $ — $ — $ — $ 98.4 International equities 86.8 — — — 86.8 Fixed income 133.6 — — — 133.6 Total $ 318.8 $ — $ — $ — $ 318.8 80 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) (1) During 2021, Century changed plan custodians for our pension assets, at which time our pension assets were reinvested in new securities that are measured at Net Asset Value ("NAV") and not subject to leveling. Prior to the custodian change, all pension assets were classified as Level 1 assets. Our Pension Plans’ assets are held in certain comingled funds and group trusts which do not have publicly quoted prices. The fair value of the comingled funds and group trusts is based on NAV of the underlying investments. The fair value of the underlying investments held by the comingled funds, separate accounts and common collective trusts is generally based on quoted prices in active markets. Though the Company believes the methods used to estimate fair value are consistent with those used by other market participants, the use of other methods or assumptions could result in a different estimate of fair value. No material transfers in or out of Level 3 occurred during the years ended December 31, 2021 or 2020. Our other postretirement benefit plans are unfunded. We fund these benefits as the retirees submit claims. Pension and OPEB Cash Flows During 2021 and 2020, we made contributions of approximately $ 1.8 million and $ 1.9 million, respectively, to the qualified defined benefit and SERB plans we sponsor and $ 5.9 million and $ 5.8 million, respectively, to the other postretirement benefit plans. We expect to make the following contributions for 2022: 2022 Expected pension plan contributions $ 4.2 Expected OPEB benefits payments 6.3 Estimated Future Benefit Payments The following table provides the estimated future benefit payments for the pension and other postretirement benefit plans: Pension Benefits OPEB Benefits 2022 $ 20.7 $ 6.3 2023 20.4 6.2 2024 20.1 6.2 2025 20.0 6.1 2026 20.1 6.0 2027 – 2031 97.6 29.6 Participation in Multi-employer Pension Plans The union-represented employees at Hawesville are part of a United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union ("USWA") sponsored multi-employer plan. Our contributions to the plan are determined at a fixed rate per hour worked. Currently, we do not have any plans to withdraw from or curtail participation in this plan. The risks of participating in a multi-employer plan are different from single-employer plans in the following respects: • Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers. • If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. • If a participating employer chooses to stop participating in a multi-employer plan, the employer may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability. 81 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) Century’s participation in the plan for the year ended December 31, 2021, is outlined in the table below. Fund Steelworkers Pension Trust EIN / PN 23-6648508/499 Pension Protection Act Zone Status 2021 (1) Green Pension Protection Act Zone Status 2020 (1) Green Subject to Financial Improvement/Rehabilitation Plan (2) No Contributions of Century Aluminum 2021 $ 1.7 Contributions of Century Aluminum 2020 $ 1.4 Contributions of Century Aluminum 2019 $ 1.3 Withdrawal from Plan Probable No Surcharge Imposed No Expiration Date of Collective Bargaining Agreement (2) March 31, 2026 (1) The most recent Pension Protection Act zone status available in 2021 and 2020 is for the plan's year-end December 31, 2020 and December 31, 2019, respectively. The zone status is based on information that Century received from the plan as well as publicly available information per the Department of Labor and is certified by the plan’s actuary. Among other factors, plans in the green zone are at least 80 percent funded. (2) The “Subject to Financial Improvement / Rehabilitation Plan” column indicates plans for which a financial improvement plan (FIP) or a rehabilitation plan (RP) is either pending or has been implemented. The last column lists the expiration date(s) of the collective-bargaining agreement(s) to which the plans are subject. Century 401(k) Plans We sponsor a tax-deferred savings plan under which eligible domestic employees may elect to contribute specified percentages of their compensation with Century. We match a portion of participants' contributions to the savings plan. Employee and matching contributions are considered fully vested immediately upon participation in the plan. Concurrent with the 2014 amendment to the Salaried Pension Plan that eliminated future accruals for participants who are under age 50 as of January 1, 2015 and closed the plan to new entrants, the Company increased the proportional match of contributions made to those affected by the amendment. The expense related to the plan was $ 5.3 million, $ 4.9 million, and $ 4.9 million for 2021, 2020, and 2019, respectively. 12. Share-based Compensation Amended and Restated Stock Incentive Plan. We award restricted share units and grant qualified incentive and nonqualified stock options to our salaried officers, non-employee directors, and other key employees from our Amended and Restated Stock Incentive Plan (the "Stock Incentive Plan"). The Stock Incentive Plan has 12,900,000 shares authorized for issuance with approximately 4,255,857 shares remaining at December 31, 2021. Our share-based compensation consists of service-based and performance-based share awards that typically vest over a period of three years from the date of grant, provided that the recipient is still our employee at the time of vesting. Our independent non-employee directors receive annual grants of service-based share awards that typically vest following 12 months of service. Long-Term Incentive Plan . We also grant annual long-term incentive awards under our Amended and Restated Long-Term Incentive Plan (the "LTIP"). The LTIP is designed to provide senior-level employees the opportunity to earn long-term incentive awards through the achievement of performance goals and to align compensation with the interests of our stockholders. This is achieved by linking compensation to share price appreciation and total stockholder return over a multi-year period. Awards made under the LTIP are granted subject to the Stock Incentive Plan to the extent the award is deliverable in stock. We provide two types of LTIP awards: time-vested share units and performance units. Time-vested share units are stock-settled awards which do not contain any performance-based vesting requirements. Performance units can be settled in cash or stock and vest based on the achievement of pre-determined performance metrics at the discretion of the Board. Our performance unit liability was approximately $ 9.1 million and $ 6.5 82 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) million as of December 31, 2021 and 2020, respectively. Both the performance units and time-vested share units vest, in their entirety, after three years . Service-based share awards Number Outstanding at January 1, 2021 1,581,152 Granted 554,760 Vested ( 531,846 ) Forfeited ( 144,053 ) Outstanding at December 31, 2021 1,460,013 Performance-based share awards Number Outstanding at January 1, 2021 1,201,777 Granted 496,323 Vested ( 552,121 ) Forfeited ( 72,351 ) Outstanding at December 31, 2021 1,073,628 Year ended December 31, Service-based share awards 2021 2020 2019 Weighted average per share fair value of service-based share grants $ 9.97 $ 7.50 $ 11.34 Total intrinsic value of option exercises — — 39 Fair Value Measurement of Share-Based Compensation Awards. We estimate the fair value of each stock option award using the Black-Scholes model on the date of grant. Our last grant of stock options, awarded in 2009, expired in May 2019. We have not granted any stock options since 2009. For our service-based awards, fair value is equal to the closing stock price on the date of grant. For our performance-based awards, fair value is equal to the closing stock price at each reporting period end. The following table summarizes the compensation cost recognized for the years ended December 31, 2021, 2020 and 2019 for all options, service-based and performance-based share awards. The compensation cost is included as part of selling, general and administrative expenses in our Consolidated Statements of Operations. Year ended December 31, 2021 2020 2019 Share-based compensation expense reported: Performance-based share expense $ 12.5 $ 6.3 $ 3.0 Service-based share expense 8.3 3.3 3.5 Total share-based compensation expense before income tax 20.8 9.6 6.5 Income tax — — — Total share-based compensation expense, net of income tax $ 20.8 $ 9.6 $ 6.5 No share-based compensation cost was capitalized during these periods and there were no significant modifications of any share-based awards in 2021, 2020 and 2019. As of December 31, 2021, we had unrecognized compensation cost of $ 15.3 million before taxes. This cost will be recognized over a weighted average period of two years . 13. Earnings (Loss) Per Share Basic EPS amounts are calculated by dividing net income (loss) allocated to common stockholders by the weighted average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive common shares outstanding. 83 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) The following table shows the basic and diluted earnings (loss) per share for 2021, 2020, and 2019: For the year ended December 31, 2021 Net (Loss) Shares (in millions) Per Share Net loss $ ( 167.1 ) Amount allocated to common stockholders 100 % Basic and Diluted EPS: (1) $ ( 167.1 ) 90.2 $ ( 1.85 ) For the year ended December 31, 2020 Net (Loss) Shares (in millions) Per Share Net loss $ ( 123.3 ) Amount allocated to common stockholders 100 % Basic and Diluted EPS: (1) $ ( 123.3 ) 89.5 $ ( 1.38 ) For the year ended December 31, 2019 Net Income Shares (in millions) Per Share Net income $ ( 80.8 ) Amount allocated to common stockholders 100 % Basic and Diluted EPS: (1) $ ( 80.8 ) 88.8 $ ( 0.91 ) Securities excluded from the calculation of diluted EPS (in millions) (1) : 2021 2020 2019 Share-based compensation 2.7 1.3 0.3 Convertible preferred shares 6.3 6.6 6.9 Convertible senior notes 4.8 — — (1) In periods when we report a net loss, all share-based compensation awards, convertible preferred shares and convertible senior notes are excluded from the calculation of diluted weighted average shares outstanding because of their anti-dilutive effect on earnings (loss) per share. 14. Income Taxes The components of pre-tax book income (loss) consist of the following: Year Ended December 31, 2021 2020 2019 U.S. $ ( 250.5 ) $ ( 76.7 ) $ ( 15.8 ) Foreign 52.9 ( 49.6 ) ( 69.7 ) Total $ ( 197.6 ) $ ( 126.3 ) $ ( 85.5 ) 84 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) Significant components of income tax expense consist of the following: Year Ended December 31, 2021 2020 2019 Current: U.S. federal current expense (benefit) $ — $ — $ — State current expense (benefit) — — ( 0.1 ) Foreign current expense 0.1 4.0 0.1 Total current expense (benefit) 0.1 4.0 ( 0.0 ) Deferred: U.S. federal deferred benefit ( 0.2 ) ( 1.2 ) ( 2.2 ) State deferred benefit — — ( 0.2 ) Foreign deferred tax benefit ( 30.5 ) ( 5.9 ) ( 6.0 ) Total deferred benefit ( 30.7 ) ( 7.1 ) ( 8.4 ) Total income tax benefit $ ( 30.6 ) $ ( 3.1 ) $ ( 8.4 ) A reconciliation of the statutory U.S. Federal income tax rate to the effective income tax rate on income (loss) is as follows: 2021 2020 2019 Federal Statutory Rate 21.0 % 21.0 % 21.0 % Permanent differences ( 0.3 ) ( 1.2 ) ( 13.1 ) State taxes, net of Federal benefit — — ( 0.1 ) Rate change 2.5 ( 0.2 ) ( 3.5 ) Foreign earnings taxed at different rates than U.S. ( 3.9 ) ( 0.3 ) ( 3.3 ) Valuation allowance ( 15.9 ) ( 4.3 ) 72.8 Helguvik investment 26.4 — — Foreign restructuring — ( 2.3 ) — Foreign dividends and inclusions ( 10.1 ) ( 1.5 ) — Net operating loss expiration and remeasurement ( 5.2 ) ( 10.8 ) ( 66.2 ) Changes in uncertain tax reserves 1.3 1.4 1.2 Other ( 0.3 ) 0.6 1.0 Effective tax rate 15.5 % 2.4 % 9.8 % On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was enacted in response to the coronavirus ("COVID-19") pandemic. The CARES Act is aimed at providing assistance and health care for individuals, families, and businesses affected by COVID-19 and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions related to refundable payroll tax credits, deferment of the employer portion of social security payments, net operating loss carryback periods, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act did not have a material impact on the Company’s consolidated financial condition or results of operations for the year ended December 31, 2020. On December 27, 2020, the Consolidated Appropriations Act (“CAA”) was enacted in further response to the COVID-19 pandemic, in combination with omnibus spending for the 2021 federal fiscal year. The CAA extended many of the provisions enacted by the CARES Act, the extension of which likewise did not have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2020. On March 11, 2021, the American Rescue Plan Act, (or "ARPA"), was signed into law. The ARPA enacted certain provisions that are relevant to corporate income tax. On November 15, 2021, the Infrastructure Investment and Jobs Act was signed into law. These acts did not have a material impact on our income tax provision for 2021, 2020 or 2019. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. 85 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) The significant components of our deferred tax assets and liabilities as of December 31 are as follows: 2021 2020 Deferred tax assets: Accrued postretirement benefit cost $ 29.5 $ 38.9 Net operating losses and tax credits 453.1 430.3 Disallowed interest expense 17.8 6.9 Foreign basis differences — 16.2 Derivative and hedging contracts 18.6 0.5 Other 13.9 12.3 Total deferred tax assets 532.9 505.1 Valuation allowance ( 485.8 ) ( 499.4 ) Net deferred tax assets $ 47.1 $ 5.7 Deferred tax liabilities: Tax over financial statement depreciation ( 86.2 ) ( 95.0 ) Foreign basis differences ( 19.6 ) — Total deferred tax liabilities ( 105.8 ) ( 95.0 ) Net deferred tax liability $ ( 58.7 ) $ ( 89.3 ) We regularly assess the likelihood that deferred tax assets will be recovered from future taxable income. To the extent we believe that it is more likely than not that a deferred tax asset will not be realized, a valuation allowance is established. When a valuation allowance is established or increased, an income tax charge is included in the consolidated statement of operations and net deferred tax assets are adjusted accordingly. Future changes in tax laws, statutory tax rates and taxable income levels could result in actual realization of the deferred tax assets being materially different from the amounts provided for in the consolidated financial statements. If the actual recovery amount of the deferred tax asset is less than anticipated, we would be required to write-off the remaining deferred tax asset and increase the tax provision. The Company is subject to the provisions of ASC 740-10, Income Taxes, which requires that the effect on deferred tax assets and liabilities of a change in tax rates be recognized in the period the tax rate change was enacted. We recognized a deferred tax asset and recorded a discrete tax benefit of $ 49.8 million related to the recognition of a certain foreign deferred tax asset. The deferred tax asset represents the future tax benefit we expect to realize for deductible costs related to our historical investment in Nordural Helguvík ehf (“Helguvík”). As this deferred tax asset is expected to be realized prior to expiration, we have not recorded a valuation allowance. We did not change our judgment with respect to other valuation allowances previously recorded. We have a valuation allowance of $ 485.8 million recorded for all of our U.S. deferred tax assets, and a portion of our Icelandic deferred tax assets as of December 31, 2021. The changes in the valuation allowance are as follows: 2021 2020 2019 Beginning balance, valuation allowance $ 499.4 $ 492.4 $ 552.5 Remeasurement of deferred tax assets — — ( 41.6 ) Release of valuation allowance — — — Expiration of net operating losses ( 13.2 ) ( 11.7 ) ( 10.8 ) Other change in valuation allowance ( 0.4 ) 18.7 ( 7.7 ) Ending balance, valuation allowance $ 485.8 $ 499.4 $ 492.4 86 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) The significant components of our NOLs are as follows: 2021 2020 Federal (1) $ 1,568.4 $ 1,572.9 State (2) 1,161.0 1,090.7 Foreign (3) 321.7 229.4 (1) The federal NOL begins to expire in 2028. (2) The state NOLs begin to expire in 2027. (3) The Icelandic NOLs expire between 2022 and 2031. Our ability to utilize our deferred tax assets to offset future federal taxable income may be significantly limited if we experience an "ownership change" as defined in the Code. In general, an ownership change would occur if our "five-percent shareholders," as defined under the Code, collectively increase their ownership in us by more than 50 percentage points over a rolling three-year period. Future transactions in our stock that may not be in our control may cause us to experience such an ownership change and thus limit our ability to utilize net operating losses, tax credits and other tax assets to offset future taxable income. A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits (excluding interest) is as follows: 2021 2020 2019 Balance as of January 1, $ 6.5 $ 8.2 $ 9.5 Additions based on tax positions related to the current year — — — Decreases due to lapse of applicable statute of limitations ( 2.5 ) ( 1.7 ) ( 1.3 ) Settlements — — — Balance as of December 31, $ 4.0 $ 6.5 $ 8.2 As of December 31, 2021 and 2020, the Company’s gross unrecognized tax benefits totaled $ 4.0 million and $ 6.5 million, respectively. After considering the deferred tax accounting impact, it is expected that about $ 1.4 million of the total as of December 31, 2021 and 2020 would favorably affect the effective tax rate if resolved in the Company’s favor. Included in the above balances are tax positions relating to temporary differences where there is uncertainty about the timing of tax return inclusion, but not that the amounts will ultimately be tax deductible. Because of the impact of deferred tax accounting, other than interest and penalties, the timing would not impact the annual effective tax rate but could accelerate the payment of cash to the taxing authority to an earlier period. The remaining amounts of unrecognized tax benefits would affect our effective tax rate if recognized. We do not expect a significant change in the balance of unrecognized tax benefits within the next twelve months. Century and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various state and local jurisdictions, and several foreign jurisdictions. Our federal income tax returns have been reviewed by the IRS through 2010. However, we have NOLs beginning in 2008 that are available for carryforward to future years. Under U.S. tax law, NOLs may be adjusted by the IRS until the statute of limitations expires for the year in which the NOL is used. Accordingly, our 2008 and later NOLs may be reviewed until they are used or expire. Material state and local income tax matters have been concluded for years through 2016. Our Icelandic tax returns are subject to examination beginning with the 2019 tax year. 15. Commitments and Contingencies 87 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) We have pending against us or may be subject to various lawsuits, claims and proceedings related primarily to employment, commercial, stockholder, environmental, safety and health matters and are involved in other matters that may give rise to contingent liabilities. While the results of such matters and claims cannot be predicted with certainty, we believe that the ultimate outcome of any such matters and claims will not have a material adverse impact on our financial condition, results of operations or liquidity. However, because of the nature and inherent uncertainties of litigation and estimating liabilities, should the resolution or outcome of these actions be unfavorable, our business, financial condition, results of operations and liquidity could be materially and adversely affected. In evaluating whether to accrue for losses associated with legal or environmental contingencies, it is our policy to take into consideration factors such as the facts and circumstances asserted, our historical experience with contingencies of a similar nature, the likelihood of our prevailing and the severity of any potential loss. For some matters, no accrual is established because we have assessed our risk of loss to be remote. Where the risk of loss is probable and the amount of the loss can be reasonably estimated, we record an accrual, either on an individual basis or with respect to a group of matters involving similar claims, based on the factors set forth above. While we regularly review the status of, and our estimates of potential liability associated with, contingencies to determine the adequacy of any associated accruals and related disclosures, the ultimate amount of loss may differ from our estimates. Legal Contingencies Vernon In July 2006, we were named as a defendant, together with certain affiliates of Alcan Inc., in a lawsuit brought by Alcoa Inc. seeking to determine responsibility for certain environmental indemnity obligations related to the sale of a cast aluminum plate manufacturing facility located in Vernon, California, which we purchased from Alcoa Inc. in December 1998, and sold to Alcan Rolled Products-Ravenswood LLC in July 1999. The complaint also seeks costs and attorney fees. Trial was bifurcated and moved to September 2021 for Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") issues and to a later undetermined date for questions of fact. Prior to trial, the parties reached an agreement to settle the case, full and final, effective October 1, 2021 (the "Vernon Settlement"). Pursuant to the terms of the Vernon Settlement, Century agreed to pay $ 3.9 million in exchange for full release of all environmental liabilities at the site, a full release of all of our contractual indemnification obligations, and a dismissal of the case with prejudice. The Stipulation and Order of Dismissal was entered on November 10, 2021, and the settlement was paid during the fourth quarter. Ravenswood Retiree Medical Benefits changes In November 2009, Century Aluminum of West Virginia ("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. Later in November 2009, the USW and representatives of a retiree class filed a separate suit against CAWV, Century Aluminum Company, Century Aluminum Master Welfare Benefit Plan, and various John Does with respect to the foregoing. On August 18, 2017, the District Court for the Southern District of West Virginia approved a settlement agreement in respect of these actions, pursuant to which agreement, CAWV agreed to make payments into a trust for the benefit of the CAWV Retirees in the aggregate amount of $ 23.0 million over the course of 10 years. Upon approval of the settlement, we paid $ 5.0 million to the aforementioned trust in September 2017 and recognized a gain of $ 5.5 million to arrive at the-then net present value of $ 12.5 million. CAWV has agreed to pay the remaining amounts under the settlement agreement in annual increments of $ 2.0 million for nine years . As of December 31, 2021, $ 2.0 million was recorded in other current liabilities and $ 6.2 million was recorded in other liabilities. PBGC Settlement 88 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) In 2013, we entered into a settlement agreement with the Pension Benefit Guarantee Corporation ("the PBGC") regarding an alleged "cessation of operations" at our Ravenswood facility (the "PBGC Settlement Agreement"). Pursuant to the terms of the PBGC Settlement Agreement, we agreed to make additional contributions (above any minimum required contributions) to our defined benefit pension plans totaling approximately $ 17.4 million. 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 no t make any contributions for the three or nine month periods ended September 30, 2021, and 2020. We historically elected to defer certain payments under the PBGC Settlement Agreement and provided the PBGC with the appropriate security. On October 1, 2021, we amended the PBGC Settlement Agreement such that we removed the deferral mechanism and agreed to contribute approximately $ 2.4 million per year to our defined benefit pension plans for a total of approximately $ 9.6 million, over the next four years beginning on November 30, 2022 and ending on November 30, 2025, subject to acceleration if certain terms and conditions are met in such amendment. Power Commitments and Contingencies Hawesville Hawesville has a power supply arrangement with Kenergy and EDF Trading North America, LLC (“EDF") which provides market-based power to the Hawesville smelter. Under this arrangement, the power companies purchase power on the open market and pass it through to Hawesville at Midcontinent Independent System Operator ("MISO") pricing plus transmission and other costs. The power supply arrangement with Kenergy has an effective term through December 2023. The arrangement with EDF to act as our market participant with MISO has an effective term through May 2023. Each of these agreements provides for automatic extension on a year-to-year basis unless a one year notice is given. Sebree Sebree has a power supply arrangement with Kenergy and EDF which provides market-based power to the Sebree smelter. Similar to the arrangement at Hawesville, the power companies purchase power on the open market and pass it through to Sebree at MISO pricing plus transmission and other costs. The power supply arrangement with Kenergy has an effective term through December 2023. The arrangement with EDF to act as our market participant with MISO has an effective term through May 2023. Each of these agreements provides for automatic extension on a year-to-year basis unless a one year notice is given. Mt. Holly CASC has a power supply agreement with Santee Cooper that has an effective term beginning April 1, 2021 and runs through December 2023. 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 implement a restart project to increase its production to 75 % of full production capacity. Grundartangi Grundartangi has power purchase agreements for approximately 545 MW with HS Orka hf ("HS"), Landsvirkjun and Orkuveita Reykjavikur ("OR") to provide power to its Grundartangi smelter. These power purchase agreements expire on various dates from 2026 through 2036 (subject to extension). The power purchase agreements with HS and OR provide power at LME-based variable rates for the duration of these agreements. In July 2021, Grundartangi reached an agreement with Landsvirkjun for an extension of its existing 161 MW power contract that would have expired in December 2023. Under the terms of the extension, Landsvirkjun will continue to supply power to Grundartangi from January 1, 2024 through December 31, 2026 and will increase the existing contract from 161 MW to 182 MW over time to provide the necessary flexibility to support the most recent capacity creep requirements and future growth opportunities for value-added products at the Grundartangi plant with the Casthouse Project. Under the terms of this extension, the majority of power supplied by Landsvirkjun will be priced at rates linked to the Nord Pool power market through December 2023 and a small portion of power at a fixed price. Thereafter, beginning January 1, 2024 through December 31, 2026 this agreement provides for only fixed rates. 89 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) Other Commitments and Contingencies Labor Commitments The bargaining unit employees at our Grundartangi, Vlissingen, Hawesville and Sebree facilities are represented by labor unions, representing approximately 63 % of our total workforce. Approximately 86 % of Grundartangi’s work force is represented by five labor unions, governed by a labor agreement that establishes wages and work rules for covered employees. This agreement is effective through December 31, 2024. 100 % of Vlissingen’s workforce is represented by the FME since Vlissingen is a member of the Federation for the Metal and Electrical Industry ("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 is effective through November 30, 2022. Approximately 55 % of our U.S. based work force is represented by the USW. The labor agreement for Hawesville employees is effective through April 1, 2026. Century Sebree's labor agreement with the USW for its employees is effective through October 28, 2023. Mt. Holly employees are not represented by a labor union. 16. Asset Retirement Obligations The reconciliation of the changes in our AROs is presented below: Year ended December 31, 2021 2020 Beginning balance, ARO liability $ 19.8 $ 18.9 Additional ARO liability incurred 4.9 2.3 ARO liabilities settled ( 6.1 ) ( 2.2 ) Accretion expense 2.1 1.3 Revisions in estimated cash flows — ( 0.5 ) Ending balance, ARO liability $ 20.7 $ 19.8 17. Business Segments Century Aluminum is a producer of primary aluminum, which trades as a global commodity. We are organized as a holding company with each of our operating primary aluminum smelters managed and operated as a separate facility reporting to our corporate headquarters. Each of our operating primary aluminum smelters meets the definition of an operating segment. We evaluated the similar economic and other characteristics, including nearly identical products, production processes, customers and distribution and have aggregated our four operating segments into one reportable segment, primary aluminum, based on these factors. In addition, all of our primary aluminum smelters share several key economic factors inherent in their common products and production processes. For example, all of our facilities' revenue is based on the LME price for primary aluminum. 90 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) A reconciliation of our consolidated assets to the total of primary aluminum segment assets is provided below. Segment assets (1) 2021 2020 2019 Primary $ 1,513.3 $ 1,332.0 $ 1,433.7 Corporate, unallocated 56.6 67.6 66.0 Total assets $ 1,569.9 $ 1,399.6 $ 1,499.7 (1) Segment assets include accounts receivable, due from affiliates, prepaid and other current assets, leases- right of use assets, inventory, intangible assets and property, plant and equipment — net; the remaining assets are unallocated corporate assets. Geographic information Included in the consolidated financial statements are the following amounts related to geographic locations: 2021 2020 2019 Net sales: (1) United States $ 1,413.0 $ 1,007.5 $ 1,179.6 Iceland 799.5 597.6 657.0 Long-lived assets: (2) United States $ 400.1 $ 363.3 $ 419.1 Iceland 490.1 511.8 518.0 Other 61.5 68.6 75.3 (1) Includes sales of primary aluminum, scrap aluminum and alumina. (2) Includes long-lived assets other than financial instruments and deferred taxes. Major customer information Revenues from two customers exceeded 10 % of our net sales in 2021, 2020 and 2019. A loss of these customers could have a material adverse effect on our results of operations. The net sales related to the customers is as follows: Year Ended December 31, 2021 2020 2019 Glencore $ 1,337.0 $ 1,025.5 $ 1,191.6 Southwire 304.6 195.9 235.4 18. Derivatives As of December 31, 2021, we had an open position of 123,216 tonnes related to LME forward financial sales contracts to fix the forward LME aluminum price. These contracts are expected to settle monthly through December 2024. We also had an open position of 207,000 tonnes related to MWP forward financial sales contracts to fix the forward MWP price. These contracts are expected to settle monthly through December 2022. We have also entered into financial contracts with various counterparties to offset fixed price sales arrangements with certain of our customers ("fixed for floating swaps") to remain exposed to the LME and MWP aluminum prices. As of December 31, 2021, we had 8,245 tonnes related to fixed for floating swaps that will settle monthly through September 2022. We have entered into financial contracts to hedge a portion of Grundartangi's exposure to the Nord Pool power market (“Nord Pool power price swaps”). As of December 31, 2021, we had an open position of 1,664,400 MWh related to the Nord Pool power price swaps. The Nord Pool power price swaps are expected to settle monthly through December 2023. Because the Nord Pool power price swaps are settled in Euros, we have entered into financial contracts to hedge the risk of fluctuations 91 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) associated with the Euro ("FX swaps"). As of December 31, 2021, we had an open position related to the FX swaps of € 42.2 million that will settle monthly through December 2023. We have entered into financial contracts to fix a portion of our exposure to the Indiana Hub power market at our Kentucky plants ("Indiana Hub power price swaps"). As of December 31, 2021, we had an open position of 350,400 MWh. The Indiana Hub power price swaps are expected to settle monthly through December 2023. The following table sets forth the Company's derivative assets and liabilities that were accounted for at fair value and not designated as cash flow hedges as of December 31, 2021 and 2020, respectively: Asset Fair Value 2021 2020 Commodity contracts (1) 42.9 $ 12.8 Foreign exchange contracts (2) — 2.4 Total $ 42.9 $ 15.2 Liability Fair Value 2021 2020 Commodity contracts (1) 143.3 16.7 Foreign exchange contracts (2) 2.9 — Total $ 146.2 $ 16.7 (1) Commodity contracts reflect our outstanding LME forward financial sales contracts, MWP forward financial sales contracts, fixed for floating swaps, Nord Pool power price swaps, and Indiana Hub power price swaps. At December 31, 2021, $ 17.1 million of Due to affiliates and $ 21.9 million of Due to affiliates - less current portion was related to commodity contract liabilities with Glencore. At December 31, 2020, $ 1.2 million of Due from affiliates, $ 1.7 million of Due from affiliates - less current portion, $ 11.3 million of Due to affiliates, and $ 0.1 million of Due to affiliates - less current portion was related to commodity contract assets and liabilities with Glencore. (2) Foreign exchange contracts reflect our outstanding FX swaps. The following table summarizes the net gain (loss) on forward and derivative contracts for the years ended December 31, 2021, 2020, and 2019: Year Ended December 31, 2021 2020 2019 Commodity contracts (1) $ ( 208.0 ) $ ( 16.3 ) $ 12.9 Foreign exchange contracts ( 4.4 ) ( 1.0 ) ( 0.9 ) Total $ ( 212.4 ) $ ( 17.3 ) $ 12.0 (1) For the years ended December 31, 2021, 2020, and 2019, $ 116.9 million, $( 9.2 ) million, and $ 2.0 million of net gain (loss), respectively, was with Glencore. 19. Subsequent events On February 4, 2022, we entered into an Amendment to our Iceland revolving credit facility, increasing the facility amount to $ 80.0 million. On February 16, 2022, we detected a cyber incursion affecting some of the servers supporting our global operations. The Company took immediate action by shutting down all impacted information systems and activating the Company's internal response procedures and mobilizing both internal resources and third-party experts to address the situation as quickly as possible. Currently, there has been no material impact to our production globally. We have switched to manual operations and 92 CENTURY ALUMINUM COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in millions, except share and per share amounts) procedures where necessary and we continue to operate safely. At this time we cannot determine the extent, if any, of lost revenue, incremental costs, injury to reputation or other material adverse impact that this event may have on our business, operations or financial results. 93 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable.