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Item 7. Management’s Discussion and Analysis

2023-02-27 compared with 2022-02-25 · 108 added, 133 removed, 278 unchanged (46% of the section changed)

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This MD&A contains “forward-looking statements” - See “Forward-Looking Statements” above.

The following discussion and analysis are for the year ended December 31, 2022, compared with the same period in 2021 unless otherwise stated.

For discussion and analysis of the year ended December 31, 2021, compared with the same period in 2020, please refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations" included in Part II, Item 7.

of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (the "SEC") on February 25, 2022.

We are a global producer of primary aluminum with aluminum reduction facilities, or "smelters," in the United States and Iceland.

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• the cost of goods sold, the principal components of which are electrical power, alumina, carbon products and labor, which in aggregate represent more than 85% of our cost of goods sold;

• our production volume.

• our production volume and product mix.

Hawesville temporary curtailment

On June 22, 2022, we announced that we would temporarily idle all of our production capacity at our Hawesville smelter, as a direct result of historically high energy costs and declining LME prices.

As part of this action, we issued a notice to most of the employees at the facility pursuant to the Worker Adjustment and Retraining Notification (“WARN”) Act regarding our intentions to temporarily curtail Hawesville plant operations by no later than August 20, 2022.

We have since fully curtailed all of our production at the facility and expect to continue to maintain the plant with the intention of restarting operations when market conditions permit, including energy prices returning to more normalized levels and aluminum prices maintaining levels that can support the on-going costs and capital expenditures necessary to restart and operate the plant.

As the curtailment represents a significant adverse change in the extent and manner in which the Hawesville smelter will be used, we accordingly evaluated the Hawesville asset group for recoverability.

As the carrying value of the Hawesville asset group was determined to not be recoverable based on the estimated undiscounted cash flows expected to be generated over the life of the asset group, an impairment charge of $159.4 million was recognized to write down the asset group to its estimated fair value.

We recognized $18.1 million of expense during the year related to wages and severance triggered by our issuance of the WARN notice and excess capacity charges, partially offset by final plant idling activities.

We also recognized a non-cash other postretirement benefits ("OPEB") curtailment gain totaling $8.9 million for the year ended December 31, 2022.

Pricing of aluminum

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Each of these price components has its own drivers and variability.

The aluminum price is influenced by a number of factors, including global supply-demand balance, inventory levels, speculative activities by market participants, production activities by competitors and political and economic conditions, as well as production costs in major production regions.

These factors can be highly speculative and difficult to predict which can lead to significant volatility in the aluminum price.

The price of aluminum is influenced by a number of factors, including global supply-demand balance, inventory levels, speculative activities by market participants, production activities by competitors and political and economic conditions, as well as production costs in major production regions.

These factors can be highly variable and difficult to predict which can lead to significant volatility in the aluminum price.

Increases or decreases in primary aluminum prices result in increases and decreases in our revenues (assuming all other factors are unchanged).

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The historic volatility of the price of aluminum is reflected in the chart below:

We have seen meaningful increases in the pricing of aluminum throughout 2021.

The average LME price for primary aluminum was $2,475 per tonne in 2021, compared to $1,702 per tonne in 2020, and $1,792 in 2019.

During 2022, global, macroeconomic conditions, including the onset of the Russia-Ukraine conflict in the first quarter of 2022, contributed to a 32% decline in the LME spot price for primary aluminum for the year with a monthly average price in March 2022 of $3,538 compared to a monthly average price in December 2022 of $2,395.

The average LME price for primary aluminum was $2,707 per tonne in 2022, compared to $2,475 per tonne in 2021, and $1,702 per tonne in 2020.

The average MWP price was $657 per tonne in 2022 compared to $581 per tonne in 2021 and $267 per tonne in 2020.

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other fuel sources, weather influenced reservoir or generation levels for wind, solar and hydro production and weather-influenced electric loads.

Extreme weather events, such as that experienced in mid-February 2021 throughout the United States or the low rain levels experienced in Nordic regions during winter 2021, can result in low generation, power outages and/or significant increases in demand, which may result in significant increased power costs incurred in our operations.

Prior to April 2021, our Mt.

Holly aluminum smelter was a party to both a power agreement with a third party supplier (providing 75% of Mt.

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

Holly's power) to supply the Mt.

Holly smelter with all its power needs.

Holly plant now has a power supply agreement with Santee Cooper that runs through December 2023.

Extreme weather events, such as that experienced in mid-February 2021 throughout the United States, the low rain levels experienced in Nordic regions during winter 2021 and 2022, can result in low generation, power outages and/or significant increases in demand, which may result in significant increased power costs incurred in our operations.

Additionally, extreme geopolitical events, such as the Russia-Ukraine conflict in 2022, which led to the cut-off of natural gas supply to Western Europe and increased exports of U.S natural gas as result, may result in significant power costs globally.

Holly plant has a power supply agreement with Santee Cooper that runs through December 2023.

Under this power supply agreement, 100% of Mt.

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The contract provides sufficient energy to allow the Mt.

Holly smelter to reach 75% of full production capacity upon completion of the restart project.

Holly smelter to produce at 75% of full production capacity.

In Iceland, approximately 70 % of the power requirements for our Grundartangi plant are indexed to the price of primary aluminum, which provides a natural hedge of one of our largest production costs.

The price of the remaining 30% of Grundartangi’s power requirements is linked to the market price for power in the Nord Pool power market, the trading market for power in the Nordic countries and certain other areas of Europe, through December 2023.

In July 2021, the contract was extended for the period January 1, 2024 through December 31, 2026 with pricing at fixed rates.

Approximately 20% of Grundartangi’s power requirements is linked to the market price for power in the Nord Pool power market, the trading market for power in the Nordic countries and certain other areas of Europe, and the remaining 10% of power requirements is fixed.

In July 2021, Grundartangi reached an agreement with Landsvirkjun for an extension of the existing contract to supply power for 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, including the Grundartangi casthouse project.

In September 2022, this agreement was further amended to provide for 42 MW at a fixed price and 119 MW at rates linked to Nord Pool plus transmission through 2023, and beginning January 1, 2024 through December 31, 2026, this agreement allows for fixed rates plus a small variable rate portion of the full 182 MW.

Grundartangi also has a 25 MW power purchase agreement with Landsvirkjun at LME-based variable rates.

Production/Shipment Volumes

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Any adverse changes in the conditions that affect shipment volumes could have a material adverse effect on our results of operations and cash flows.

Our 2022 shipment volumes were adversely impacted by power curtailments in Iceland in winter 2022 driven by low reservoir levels and the curtailment of our Hawesville facility in August 2022, partially offset by the restart of production at Mt.

Holly bringing operating capacity to 75% in second quarter of 2022.

The following table sets forth, for the periods indicated, the shipment volumes and revenues for primary aluminum shipments:

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2020 495,433 985.3 315,743 570.8 811,176 1,556.1

(1) Excludes scrap aluminum and alumina sales

(1) Excludes scrap aluminum, purchased aluminum and alumina sales

Results of Operations

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Twelve months ended December 31, $ 2,777.3 $ 2,212.5

Net sales (excluding alumina sales) increased by $603.6 million for the twelve months ended December 31, 2021, compared to the same period in 2020, primarily driven by favorable LME and regional premium price realizations of $640.9 million, partially offset by unfavorable volume and product mix of $37.4 million.

Net sales (excluding scrap aluminum and alumina sales) increased by $564.8 million for the twelve months ended December 31, 2022, compared to the same period in 2021, primarily driven by favorable LME and regional premium price realizations of $496.9 million and favorable product mix of $82.0 million driven by higher value-added product premiums, partially offset by $26.8 million in volume primarily related to the full curtailment of our Hawesville smelter in the third quarter of 2022.

Gross profit (loss) (in millions) 2022 2021

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Gross profit (loss) :

Gross profit increased by $160.8 million for the twelve months ended December 31, 2021, compared to the same period in 2020, primarily driven by favorable LME and regional premium price realizations of $640.9 million, partially offset by unfavorable power price realizations of $251.1 million, unfavorable raw material price realizations of $99.1

million, unfavorable volume impacts of $23.7 million and increased operating costs of $108.3 million driven by higher labor and supplies costs, both primarily related to our restart projects at Mt.

Holly and Hawesville.

Selling, general and administrative expenses (in millions) 2021 2020

Twelve months ended December 31, $ 57.6 $ 43.5

Selling, general and administrative expenses:

Selling, general and administrative expenses increased $14.1 million in 2021 compared to 2020, primarily due to increases in share-based compensation due to fluctuations of the stock price period over period and other compensation costs.

Net loss on forward and derivative contracts (in millions) 2021 2020

Twelve months ended December 31, $ (212.4) $ (17.3)

Net loss on forward and derivative contracts:

In 2021, we recognized losses of $212.4 million primarily related to LME, MWP and Nord Pool fixed forward financial sales contracts.

The losses were primarily driven by increases in LME and MWP forward prices.

In 2020, we recognized losses of $17.3 million primarily related to LME and MWP fixed forward financial sales contracts.

The losses were primarily driven by fluctuations in forward prices.

Derivatives to the consolidated financial statements included herein for additional information.

Income tax benefit (expense) (in millions) 2021 2020

Twelve months ended December 31, $ 30.6 $ 3.1

Income tax expense (benefit):

We have a valuation allowance against all of our U.S.

and certain foreign deferred tax assets.

We recognized a $30.6 million income tax benefit in 2021 as compared to income tax benefit of $3.1 million in 2020.

The period-to-period change is primarily related to a discrete tax benefit of $49.8 million related to the recognition of certain foreign deferred tax assets.

The deferred tax asset represents the future tax benefit we expect to realize for deductible costs related to our historical investment in Nordural Helguvik ehf (“Helguvik”).

During the period, it became apparent this deferred tax asset would be realized in the foreseeable future.

As this deferred tax asset is expected to be realized prior to expiration, we have not recorded a valuation allowance.

Income Taxes to the consolidated financial statements included herein for additional information.

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Net sales (in millions) 2020 2019

Twelve months ended December 31, $ 1,605.1 $ 1,836.6

Net sales (excluding alumina sales) decreased by $220.2 million for the twelve months ended December 31, 2020, compared to the same period in 2019, primarily driven by unfavorable LME and regional premium price realizations of $188.6 million and unfavorable volume and product mix of $31.6 million.

Gross profit (loss) (in millions) 2020 2019

Gross profit decreased by $77.5 million for the twelve months ended December 31, 2022, compared to the same period in 2021, primarily driven by unfavorable raw material price realizations of $338.4 million and unfavorable power price realizations of $285.5 million.

The changes were partially offset by favorable LME and regional premium price realizations of $496.9 million, and favorable volume and product mix of $28.2 million driven by the restart at our Mt.

Holly facility, curtailment at our Hawesville smelter and higher value-added product premiums.

Asset impairment charge (in millions) 2022 2021

Twelve months ended December 31, $ 159.4 $ —

Gross profit (loss) :

Gross loss increased by $12.6 million for the twelve months ended December 31, 2020, compared to the same period in 2019, primarily driven by unfavorable LME and regional premium price realizations of $188.6 million.

The increases to gross loss were offset by favorable raw material price realizations of $178.6 million.

Asset impairment charge:

An asset impairment charge was recognized for the twelve months ended December 31, 2022 as a result of the temporary curtailment of the Hawesville facility, announced during June 2022.

As the curtailment represents a significant adverse change in the extent and manner in which Hawesville will be used, we accordingly evaluated the Hawesville asset group for recoverability which resulted in the recognized impairment charge of $159.4 million.

Selling, general and administrative expenses (in millions) 2022 2021

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Selling, general and administrative expenses:

Selling, general and administrative expenses decreased $3.9 million in 2020 compared to 2019, primarily due to decreases in compensation cost in the current year, partially offset by increases in professional fees.

Selling, general and administrative expenses decreased $20.1 million in 2022 compared to 2021, primarily due to decreases in share-based compensation due to fluctuations in the Company's stock price year over year.

Net gain (loss) on forward and derivative contracts (in millions) 2022 2021

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Net gain (loss) on forward and derivative contracts:

In 2020, we recognized losses of $17.3 million primarily related to LME, MWP and Nord Pool fixed forward financial sales contracts.

In 2022, we recognized gains of $197.1 million primarily driven by decreases in LME and MWP forward prices, and increased gains on Nord Pool derivative contracts due to Nord Pool power forward price increases.

In 2021, we recognized losses of $212.4 million primarily related to LME and MWP fixed forward financial sales contracts.

The losses were primarily driven by fluctuations in forward prices.

In 2019, we had recognized gains of $12.0 million primarily related to LME and MWP fixed forward financial sales contracts.

The gains were primarily driven by decreases in the LME and MWP prices during 2019.

Income tax expense (in millions) 2020 2019

Derivatives to the consolidated financial statements included herein for additional information.

Income tax (expense) benefit (in millions) 2022 2021

Twelve months ended December 31, $ (47.4) $ 30.6

Income tax expense (benefit):

Income tax benefit (expense):

We have a valuation allowance against all of our U.S.

and certain foreign deferred tax assets.

We recognized an $3.1 million income tax benefit in 2020 as compared to income tax benefit of $8.4 million in 2019.

The increase in income tax benefit year over year primarily relates to a decrease in earnings of certain of our foreign entities.

We recognized $(47.4) million income tax expense in 2022 as compared to income tax benefit of $30.6 million in 2021.

The period-to-period change is primarily related to foreign earnings in the current period, and a discrete tax benefit of $49.8 million related to the recognition of certain foreign deferred tax assets in 2021.

Income Taxes to the consolidated financial statements included herein for additional information.

Liquidity and Capital Resources

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and Iceland revolving credit facilities (collectively, the "revolving credit facilities") and have raised capital in the past through public equity and debt markets.

Additionally, on December 9, 2022, Vlissingen entered into the Vlissingen Facility Agreement (defined below) pursuant to which it may borrow from time to time up to $90.0 million.

We regularly explore various other financing alternatives.

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We believe that cash provided from operations and financing activities will be adequate to cover our operations and business needs over the next 12 months.

As of December 31, 2021, we had cash and cash equivalents of approximately $29.0 million and unused availability under our revolving credit facilities of $70.5 million, resulting in a total liquidity position of approximately $99.5 million.

On April 14, 2021, we issued $250.0 million in aggregate principal amount of our 7.5% senior secured notes that will mature in 2028 (the "2028 Notes") and used a portion of the proceeds to purchase $195.9 million of our 12.0% senior secured notes due 2025 (the "2025 Notes") pursuant to a cash tender offer for the 2025 Notes.

On April 9, 2021, we issued $86.3 million in aggregate principal amount of convertible senior notes due 2028 (the "Convertible Notes").

The remaining proceeds from the issuance of the 2028 Notes and a portion of the proceeds from the issuance of the Convertible Notes were used to redeem the remaining 2025 Notes on May 14, 2021.

The remaining proceeds from the Convertible Notes offering were used to repay borrowings under our revolving credit facilities and to pay for the cost of the capped call transactions in connection with the issuance of the Convertible Notes.

With these transactions, we have effectively extended the maturities of our principal debt obligations, reduced the interest rate on these obligations, and raised additional liquidity through the issuance of the Convertible Notes.

As of December 31, 2022, we had cash and cash equivalents of approximately $54.3 million, unused availability under our revolving credit facilities of $100.7 million, and additional liquidity of $90.0 million under the Vlissingen Facility Agreement, resulting in a total liquidity position of approximately $245.0 million.

Available Cash

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(dollars in millions)

Net cash (used in) provided by operating activities $ (64.7) $ 42.9 $ 17.7

Net cash provided by (used in) operating activities $ 25.9 $ (64.7) $ 42.9

Net cash used in investing activities (85.5) (82.6) (11.8)

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Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

Net cash used in operating activities for 2021 was $64.7 million, compared to cash provided by operating activities of $42.9 million in 2020.

The change in net cash used in operating activities was driven by increasing raw material prices, increasing power prices, higher labor costs, increases in working capital, and hedge settlements, partially offset by higher realized aluminum prices.

Net cash provided by operating activities for 2022 was $25.9 million, compared to cash used in operating activities of $64.7 million in 2021.

The change in net cash provided by operating activities was primarily driven by improvement in results of operations year over year.

The change was further due to changes in working capital primarily attributable to timing of payables, timing of raw material receipts, and pricing increases, and partially offset by hedge settlements.

The increase in net cash used in investing activities during 2022 was primarily due to higher spending on capital projects during the twelve months ended December 31, 2022, driven by capital investments in the Mt.

Holly restart project.

Net cash provided by financing activities increased by $90.2 million in 2021 compared to 2020 primarily due to increased borrowings on the revolving credit facilities primarily used to fund working capital and the Mt.

Holly restart project and issuance of the Convertible Notes.

Year Ended December 31, 2020 Compared to Year December 31, 2019

Net cash provided by operating activities for 2020 was $42.9 million, compared to $17.7 million for 2019.

The increase in net cash provided by operating activities was primarily driven by improvements in working capital.

The improvements in working capital were primarily attributable to timing of raw material receipts and the timing of trade receivable collections, offset by increasing raw material prices.

The decrease in net cash used in investing activities during 2020 was due to lower capital expenditures related to Hawesville restart activities and deferral of capital projects in response to COVID-19.

Net cash provided by financing activities decreased by $7.6 million during 2020 primarily due to payments made on our term loan with Glencore Ltd.

(the "Hawesville Term Loan"), offset by net borrowings on our U.S.

revolving credit facility and Iceland revolving credit facility.

Borrowings on our revolving credit facilities are available, if needed, for working capital requirements, general corporate or other purposes.

Holly restart project and the Grundartangi casthouse project.

The change in net cash provided by financing activities from 2022 compared to 2021 was primarily due to borrowings under the Grundartangi casthouse facility and Iceland term facility in 2022 as compared to net borrowings on our revolving credit facilities in 2021.

Availability under Our Credit Facilities

revolving credit facility, dated May 2018 (as amended, the "U.S.

revolving credit facility"), originally provided for borrowings of up to $175.0 million in the aggregate.

On December 23, 2021, we entered into a Third Amendment to our existing $175.0 million U.S.

revolving credit facility and exercised a portion of the uncommitted accordion feature in the amount of $45.0 million, increasing the maximum capacity from $175.0 million to $220.0 million, including up to $110.0 million under a letter of credit sub-facility.

revolving credit facility matures in May 2023.

revolving credit facility"), previously provided for borrowings of up to $220.0 million, including up to $110.0 million under a letter of credit sub-facility.

In June 2022, we entered into a Fourth Amendment to our existing $220.0 million U.S.

revolving credit facility, increasing the maximum capacity from $220.0 million to $250.0 million, including up to $150.0 million under a letter of credit sub-facility.

revolving credit facility matures in June 2027.

Any letters of credit issued and outstanding under the U.S.

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We have also entered into, through our wholly-owned subsidiary Nordural Grundartangi ehf ("Grundartangi"), a revolving credit facility, dated November 2013, as amended (the "Iceland revolving credit facility") which originally provided for borrowings of up to $50.0 million in the aggregate.

On February 4, 2022, we further amended this Iceland revolving credit facility and increased the facility amount to $80.0 million in the aggregate.

On February 4, 2022, we amended the Iceland revolving credit facility and increased the facility amount to $80.0 million in the aggregate.

On September 28, 2022, we further amended the Iceland revolving credit facility and increased the facility amount to $100.0 million in the aggregate.

The Iceland revolving credit facility matures November 2024.

The availability of funds under our revolving credit facilities is limited by a specified borrowing base consisting of certain accounts receivable, inventory and qualified cash deposits which meet the lenders' eligibility criteria.

The availability of funds under our credit facilities is limited by a specified borrowing base consisting of certain accounts receivable, inventory and qualified cash deposits which meet the lenders' eligibility criteria.

Increases in the price of aluminum and/or restarts of previously curtailed operations, for example, increase our borrowing base by increasing our accounts receivable and inventory balances;

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revolving credit facility had a borrowing base of $165.5 million, $90.0 million in outstanding borrowings, and $34.9 million in letters of credit outstanding.

The borrowing base under the U.S.

revolving credit facility has been adversely affected by the curtailment of our Hawesville facility.

Of the outstanding letters of credit, $21.6 million related to our power commitments, $13.3 million are related to hedging collateral, and the remainder are primarily for the purpose of securing certain secured debt and workers’ compensation commitments.

As of December 31, 2022, our Iceland revolving credit facility had a borrowing base of $95.1 million and $35.0 million in outstanding borrowings.

As of December 31, 2021, our revolving credit facilities had $70.5 million of net availability after consideration of our outstanding borrowings and letters of credit.

As of December 31, 2022, our credit facilities had $100.7 million of net availability after consideration of our outstanding borrowings and letters of credit.

We may borrow and make repayments under our revolving credit facilities in the ordinary course based on a number of factors, including the timing of payments from our customers and payments to our suppliers.

Our revolving credit facilities contain customary covenants, including restrictions on mergers and acquisitions, indebtedness, affiliate transactions, liens, dividends and distributions, dispositions of collateral, investments and prepayments of indebtedness, including in the U.S.

Our credit facilities contain customary covenants, including restrictions on mergers and acquisitions, indebtedness, affiliate transactions, liens, dividends and distributions, dispositions of collateral, investments and prepayments of indebtedness, including in the U.S.

revolving credit facility, a springing financial covenant that requires us to maintain a fixed charge coverage ratio of at least 1.0 to 1.0 any time availability under the U.S.

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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.

The Casthouse Facility shall mature 8 years following the first drawdown date.

Under the Casthouse Facility, repayments of principal amounts will be made in equal quarterly installments equal to 1.739% of the principal amount, the first payment occurring in July 2024, with the remaining 60% of the principal amount to be paid no later than the termination date.

The Casthouse Facility will mature in December 2029.

The Casthouse Facility bears interest at a rate equal to USD LIBOR 3 month plus an applicable margin.

The Casthouse Facility is secured by a $430.0 million general bond.

As of December 31, 2021, there were no borrowings outstanding under the Casthouse Facility.

As of December 31, 2022, there were $50.0 million in borrowings outstanding under the Casthouse Facility.

The Casthouse Facility also contains customary covenants, including restrictions on mergers and acquisitions, indebtedness, preservation of assets, and dispositions of assets and contains a covenant that requires Grundartangi to maintain a minimum equity ratio.

As of December 31, 2022, we were in compliance with all such covenants or maintained availability above such covenant triggers.

Senior Secured Notes and Convertible Senior Notes

Senior Notes and Convertible Senior Notes

We have $250.0 million principal of senior secured notes that mature on April 1, 2028, unless earlier refinanced in accordance with their terms.

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(iv) purchase or redeem capital stock;

(v) make investments or certain other restricted payments;

make investments or certain other restricted payments;

(vi) sell assets;

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and (ix) effect a consolidation or merger.

In April 2021, we issued $86.3 million in aggregate principal amount of Convertible Notes, unless earlier converted, repurchased or redeemed.

The principal included the full exercise of the option by the initial purchasers of the Convertible Notes to purchase $11.3 million of additional principal amount.

In April 2021, we issued $86.3 million in aggregate principal amount of Convertible Notes due 2028, unless earlier converted, repurchased or redeemed.

The Convertible Notes 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.

We applied the net proceeds from the offering of the 2028 Notes and a portion of the net proceeds from the Convertible Notes described above 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.

Iceland Term Facility

Our wholly-owned subsidiary, Grundartangi, entered into a Term Facility Agreement with Arion Bank hf, dated September 2022, (the "Iceland Term Facility") to provide for borrowings up to €13.6 million.

Under the Iceland Term Facility, repayments of principal amounts will be made in equal monthly installments, the first payment occurring in February 2023, with the remainder of the principal amount to be paid no later than the termination date in January 2024.

Borrowings under the Iceland Term Facility will bear interest at a rate equal to 3.2% plus EUR EURIBOR 1 month as published by the European Money Markets Institute.

As of December 31, 2022, there were $14.5 million (€13.6 million) in outstanding borrowings under the Iceland Term Facility.

Vlissingen Facility Agreement

On December 9, 2022, Vlissingen entered into the Vlissingen Facility Agreement with Glencore International AG pursuant to which Vlissingen may borrow from time to time up to $90 million in one or more loans at a fixed interest rate equal to 8.75% per annum and payable on December 2, 2024.

The obligations under the Vlissingen Facility Agreement are secured by liens on the ground lease on which Vlissingen’s facilities are located, Vlissingen’s moveable assets, financial assets, receivables and other assets, and Vlissingen’s shares.

The Vlissingen Facility Agreement contains customary covenants, including with respect to mergers, guarantees and preservation and dispositions of assets.

The availability period for borrowings under the Vlissingen Facility Agreement ends December 2, 2024.

Amounts drawn, if any, under the Vlissingen Facility Agreement are expected to be used for general corporate and working capital purposes of Century and its subsidiaries.

As of December 31, 2022, there were no outstanding borrowings under the Vlissingen Facility Agreement.

Supplemental Guarantor Financial Information

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As of December 31, 2022, we have not issued any debt securities pursuant to the Universal Shelf Registration Statement.

However, the securities that we may issue in the future may limit the ability of certain of our subsidiaries to pay dividends or make distributions in respect of capital stock.

However, any securities that we may issue in the future may limit our ability, and the ability of certain of our subsidiaries, to pay dividends or make distributions in respect of capital stock.

"Guarantor Subsidiaries" refers to all of our material domestic subsidiaries except for Nordural US LLC, Century Aluminum Development LLC and Century Aluminum of West Virginia, Inc.

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These payments are contingent based on the LME price of primary aluminum and the level of Hawesville’s operations.

Based on the LME forward market at December 31, 2021 and current level of Hawesville's operations, we believe that we will not be required to make payments on the contingent obligation during the term of the

agreement, which expires in 2028.

Based on the LME forward market at December 31, 2022 and our expected level of Hawesville's operations, we believe that we will not be required to make payments on the contingent obligation during the term of the agreement, which expires in 2028.

There can be no assurance that circumstances will not change thus accelerating the timing of such payments.

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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.

On October 1, 2021, we amended the PBGC Settlement Agreement (the "Amended 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 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.

As of December 31, 2022, we made contributions of $2.4 million related to the Amended PBGC Settlement Agreement.

Section 232 Aluminum Tariff

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These tariffs are intended to protect U.S.

national security by incentivizing the restart of primary aluminum production in the U.S., reducing reliance on imports and ensuring that domestic producers, like Century, can supply all the aluminum necessary for critical industries and national defense.

national security and incentivize the restart of primary aluminum production in the U.S., reducing reliance on imports and ensuring that domestic producers, like Century, can supply all the aluminum necessary for critical industries and national defense.

In addition to primary aluminum products, the tariffs also cover certain other semi-finished products.

All imports that directly compete with our products are covered by the tariff, with the exception of imports from Australia, Argentina, Canada and Mexico and imports from the European Union up to a quota limit of 18,000 metric tonnes or imports that receive a product exclusion from the Department of Commerce.

We are currently in the process of a multi-year project that began in 2018 to restart Hawesville's previously curtailed capacity and return the plant to a production level of approximately 200,000 MT per annum (80% of capacity).

As of December 31, 2021, we are finished with these efforts and are producing at approximately 80% of Hawesville’s capacity.

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

All imports that directly compete with our products are covered by the tariff, with the exception of imports from Australia, Canada and Mexico.

Additionally, primary aluminum imports from Argentina are allowed up to an annual quota limit of 169,000 metric tonnes, the first 18,000 metric tonnes of imports from the European Union and the first 900 metric tonnes of imports from the United Kingdom are also allowed duty free.

Imports that receive a product exclusion from the Department of Commerce may also enter the US duty free.

In July 2022, the International Trade Commission (ITC) initiated a review of the Section 301 and 232 duties as required by law every four years.

The process will conclude no later than March 15, 2023.

On January 17, 2023, our wholly owned subsidiary, Mt.

Holly Commerce Park LLC, entered into a binding agreement, subject to ordinary course conditions, to sell approximately 133 acres of land for approximately $28.5 million.

We previously formed the commerce park, located near our Mt.

Holly smelter, to develop excess land at the site and to assist the county with bringing additional business and commerce to the area.

During 2021, we initiated efforts to restart the curtailed capacity at our Mt.

Holly facility, resulting in total production of 75% of Mt.

Holly’s full capacity once the restart project is completed.

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.

Holly facility.

The project was completed during the second quarter of 2022, resulting in total production of 75% of Mt.

Holly's full capacity.

During 2021, we announced plans for construction of a new billet casthouse at Grundartangi.

The Grundartangi casthouse project began in late 2021 and is expected to continue through the first quarter of 2024.

The Grundartangi casthouse project began in late 2021 and is expected to continue through the second half of 2023.

The Grundartangi casthouse project will be fully funded through the Casthouse Facility.

In May 2018, we temporarily curtailed one potline at our Sebree aluminum smelter due to an equipment failure.

Sebree was returned to full capacity by the end of the third quarter of 2018.

As of December 31, 2020, we received $19.9 million of insurance proceeds related to a policy covering the equipment failure.

In January 2021, the claims process was concluded and a final payment of $1.4 million of insurance proceeds was received.

The project is progressing and is expected to be completed on-time and on-budget, subject to market conditions.

In October 2021, Nordural Helguvik ehf ("Helguvik"), a past subsidiary of ours and owner of the former Helguvik project site which has been curtailed since 2008, filed for bankruptcy and on October 28, 2021, a district court in Iceland issued a verdict declaring bankruptcy of Helguvik.

5 unchanged sentences

We made no repurchases during the years ended 2022, 2021, and 2020.

As of December 31, 2021, we had $43.7 million remaining under the repurchase program

authorization.

As of December 31, 2022, we had $43.7 million remaining under the repurchase program authorization.

The repurchase program may be expanded, suspended or discontinued by our Board, in its sole discretion, at any time.

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Capital expenditures incurred for the year ended December 31, 2022 were $17.3 million, excluding expenditures of $16.2 million associated with the restart at Mt.

We estimate our total capital spending in 2022, excluding the Mt.

Holly restart project and Grundartangi casthouse project, will be approximately $30.0 million, related to our ongoing investment and sustainability projects at our plants.

Holly and $40.0 million associated with the Grundartangi casthouse project.

estimate our total capital spending in 2023, excluding the Grundartangi casthouse project, will be approximately $24 million, related to our ongoing investment and sustainability projects at our plants.

Critical Accounting Estimates

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We sponsor several pension and OPEB plans.

Our liabilities under these defined benefit plans are determined using methodologies that involve several actuarial assumptions, the most significant of which are the discount rate, health care cost inflation rate and the long-term rate of return on plan assets.

We review our actuarial assumptions on an annual basis and make modifications to the assumptions when appropriate.

12 unchanged sentences

OPEB plans (2.9) 3.1

Medical Trend Rate

Measurement of our postretirement benefit obligations requires the use of several assumptions about factors that will affect the amount and timing of future benefit payments.

The assumed health care cost trend rates are the most critical estimates for measurement of the postretirement benefit obligation.

Changes in the health care cost trend rates have a significant effect on the amounts reported for the health care benefit obligation.

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 thereafter.

A one-percentage-point change in the assumed health care cost trend rate would have had the following effects in 2021:

1% Increase 1% Decrease

(dollars in millions)

Effect on total of service and interest cost components $ 0.2 $ (0.2)

Effect on accumulated postretirement benefit obligation 9.7 (8.3)

Long-term Rate of Return on Plan Assets Assumption

Our expected long-term rate of return on plan assets is derived from our asset allocation strategies and anticipated future long-term performance of individual asset classes.

Our analysis gives consideration to recent plan performance and historical

Our analysis gives consideration to recent plan performance and historical returns;

however, the assumptions are primarily based on long-term, prospective rates of return.

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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.

The a mount of a valuation allowance is based upon our best estimate of our ability to realize the net deferred tax assets.

We have a valuation allowance of $485.8 million recorded for all of our U.S.

The amount of a valuation allowance is based upon our best estimate of our ability to realize the net deferred tax assets.

We have a valuation allowance of $487.9 million recorded against our net U.S.

deferred tax assets and a portion of our Icelandic deferred tax assets as of December 31, 2022.

27 unchanged sentences

Total $ 2,073 776 370 136 132 94 565

(1) Long-term debt includes principal repayments on our 2028 Notes, Convertible Notes, the Casthouse Facility and the IRB.

(1) Long-term debt includes principal repayments on our 2028 Notes, Convertible Notes, the Casthouse Facility, the IRB and the Iceland Term Facility.

Payments are based on the assumption that all outstanding debt instruments will remain outstanding until their respective due dates.

13 unchanged sentences

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

What changed 10-K

Item 7. Management’s Discussion and Analysis