What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-03-15 compared with 2023-02-27 · 136 added, 113 removed, 273 unchanged (48% of the section changed)

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

In addition to our primary aluminum assets, we have a 55% joint venture interest in the Jamalco bauxite mining operation and alumina refinery in Jamaica.

The Jamalco refinery supplies a substantial amount of the alumina used for the production of primary aluminum at our Grundartangi, Iceland facility.

We also own a carbon anode production facility located in the Netherlands.

The key determinants of our results of operations and cash flow from operations are as follows:

• the price of primary aluminum, which is based on the London Metal Exchange ("LME") and other exchanges, plus any regional premiums and value-added product premiums;

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

• the cost of goods sold, the principal components of which are electrical power, alumina, carbon products, caustic soda, natural gas, heavy fuel oil and labor, which in aggregate represent more than 79% of our cost of goods sold;

• our production volume and product mix.

Section 45X of the Inflation Reduction Act

On December 14, 2023, the U.S.

Treasury Department’s issued proposed regulations implementing Section 45X of the Inflation Reduction Act, and the expected impact of the Section 45X Advanced Manufacturing Tax Credit on the Company.

The government has incentivized the production of aluminum by offering a tax credit equal to 10% of eligible domestic production costs.

Based on the proposed regulations, we have recognized a receivable and corresponding offset to cost of goods sold and selling, general and administrative expenses.

Any changes to the proposed regulations as part of the U.S.

Treasury Department's finalization of the regulations could result in a subsequent adjustment to the estimated credit as of December 31, 2023.

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.

In August 2022 we fully curtailed production at the Hawesville facility and expect to continue to maintain the plant with the intention of restarting operations when market conditions permit, including energy prices returning to more normalized levels and aluminum prices maintaining levels that can support the on-going costs and capital expenditures necessary to restart and operate the plant.

For the year ended December 31, 2023, we incurred curtailment charges of $16.6 million, including $9.0 million related to excess capacity charges.

These charges were partially offset by income related to scrap and materials sales of $1.7 million.

Comparatively, for the year ended December 31, 2022, we recognized an impairment charge of $159.4 million, approximately $18.1 million of expense during the year related to wages and severance triggered by our issuance of the WARN notice and excess capacity charges, partially offset by final plant idling activities.

We also recognized a non-cash other postretirement benefits ("OPEB") curtailment gain totaling $8.9 million.

Acquisition of 55% interest in Jamalco

On May 2, 2023, our wholly-owned subsidiary, Century Aluminum Jamaica Holdings, Inc., acquired for $1.00 a 55% interest in Jamalco, an unincorporated joint venture with Clarendon Alumina Production Limited ("CAP"), which is owned by the Government of Jamaica.

Jamalco is engaged in bauxite mining and alumina refining in Jamaica.

The Company's wholly-owned subsidiary, General Alumina Jamaica Limited, is the managing partner of the Jamalco joint venture.

Jamalco has optimal alumina production capacity of approximately 1.4 million tonnes.

Our historical financial statements for periods prior to May 2, 2023 do not include the results of Jamalco.

Refer to Note 2.

Acquisition of Jamalco for further information.

Holly Power Contract

On October 27, 2023, our wholly-owned subsidiary, Century Aluminum of South Carolina, Inc.

("CASC"), entered into an agreement with the South Carolina Public Service Authority (also known as Santee Cooper) for a new, three-year power contract for Century's Mt.

Holly aluminum smelter.

The contract will be effective as of January 1, 2024, and run through December 2026, and will provide for 295MW of electric power at cost-of-service based rates, allowing the Mt.

Holly smelter to continue operating at its current capacity and potentially to restart the remaining 25% of its curtailed production capacity.

Jamalco Equipment Failure

In June 2023, Jamalco experienced a power disruption caused by damage to its power generation unit.

The equipment failure resulted in a loss of production at Jamalco of approximately 84,000 tonnes for the year ended December 31, 2023.

The impact of the equipment failure was approximately $30.4 million.

Despite returning the equipment to full capacity as of the end of October, we continue to see some inefficiencies into the first quarter of 2024.

We are actively engaged with our insurance carriers in connection with this equipment failure to determine the specific amount of coverage available to us, including any applicable deductibles.

Pricing of aluminum

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

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

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).

From time to time, we may seek to manage our exposure to fluctuations in the LME price of primary aluminum and/or associated regional premiums through financial instruments designed to protect our downside price risk exposure.

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

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

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

Information regarding financial contracts is included in Note 20.

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

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

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.

The average European Duty Paid premium was $466 per tonne in 2022 compared to $272 per tonne in 2021 and $126 per tonne in 2020.

During 2023, global, macroeconomic trends continued to impact global LME inventory levels which remain near all-time lows.

The most significant demand growth was seen in China as aluminum-intensive electric vehicles and renewable energy applications supported a 5% demand increase from 2022.

Western demand remained challenged, contributing to a 17% decline in the LME primary aluminum average spot price from 2022.

The following table summarizes the average price for primary aluminum per tonne for the years ended December 31, 2023, 2022 and 2021.

($ per tonne) 2023 2022 2021

Average LME $ 2,252 $ 2,707 $ 2,475

Average MWP $ 512 $ 657 $ 581

Average EDPP $ 277 $ 466 $ 272

Energy, Key Supplies and Raw Materials

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The alumina price is influenced by a number of factors, including global supply-demand balance, natural disasters and weather events, and other factors outside of our control.

The average market alumina index price as a percentage of market LME price per tonne for 2022 was 13 % compared to 13% for 2021 and 16% for 2020.

Additionally, with our acquisition of a 55% interest in Jamalco, we secured a predictable, long-term supply of alumina and achieved increased transparency and control of our supply chain.

The average market alumina index price as a percentage of market LME price per tonne was 15% for 2023 and 13% for 2022 and 2021.

Electrical power is our other largest operating cost.

Currently, our Hawesville and Sebree plants receive all of their electricity requirements under market-based power agreements and Grundartangi receives 20 % of its electricity requirements from market-based power agreements.

Market-based energy prices are driven in large part by the price of coal, natural gas, and

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

Market-based energy prices are driven in large part by the price of coal, natural gas, and other fuel sources, weather influenced reservoir or generation levels for wind, solar and hydro production and weather-influenced electric loads.

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.

In December 2023, continued dry and cold conditions led the energy companies to issue partial curtailment orders across their industrial customers, including our Grundartangi smelter.

The end of these curtailments remain subject to weather patterns and reservoir levels in Iceland and other factors.

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

Holly plant has a power supply agreement with Santee Cooper that runs through December 2026.

Under this power supply agreement, 100% of Mt.

Holly’s electrical power requirements are supplied from Santee Cooper’s generation at cost of service based rates.

The contract provides sufficient energy to allow the Mt.

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

Holly’s current electrical power requirements are supplied from Santee Cooper’s generation at cost of service based rates.

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

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Shipment volume is another key determinant of our financial results.

In normal circumstances, fluctuations in production and shipment volumes, other than through acquisitions or expansions, are generally small period over period.

Fluctuations in production and shipment volumes, other than through acquisitions or expansions, are generally small period over period.

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.

Our 2023 shipment volumes were adversely impacted by the curtailment of our Hawesville facility in August 2022.

This was partially offset by a full year of Mt.

Holly operating at 75% capacity in 2023.

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

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Twelve months ended December 31, $ 2,185.4 $ 2,777.3

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.

Net sales decreased by $591.9 million for the twelve months ended December 31, 2023, compared to the same period in 2022, primarily driven by unfavorable LME and regional premium price realizations of $384.6 million and unfavorable volume of $376.7 million primarily related to the full curtailment of our Hawesville smelter in the third quarter of 2022, partially offset by favorable alumina prices and sales volume of $186.1 million primarily attributable to Jamalco sales of $150.3 million since acquisition in May 2023.

Gross profit (loss) (in millions) 2023 2022

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Gross profit (loss) :

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

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.

Gross profit increased by $45.2 million for the twelve months ended December 31, 2023, compared to the same period in 2022, primarily driven by favorable power price realizations of $289.9 million, favorable raw material price realization of $117.6 million and $56.5 million attributable to the Inflation Reduction Act manufacturing production credit.

The changes were partially offset by unfavorable LME and regional premium price realizations of $384.6 million and unfavorable volume and product mix of $33.0 million driven by the curtailment at our Hawesville smelter.

Asset impairment charge (in millions) 2023 2022

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Selling, general and administrative expenses:

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

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

Selling, general and administrative expenses increased $6.8 million in 2023 compared to 2022, primarily due to increases in share-based compensation due to the increase in the Company's stock price year over year.

Share-based compensation to the consolidated financial statements included herein for additional information.

Net (loss) gain on forward and derivative contracts (in millions) 2023 2022

Twelve months ended December 31, $ (61.8) $ 197.1

Net gain (loss) on forward and derivative contracts:

Net (loss) gain on forward and derivative contracts:

In 2023, we recognized losses of $61.8 million primarily driven by decreases in LME and Nord Pool forward prices.

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.

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

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

Income tax benefit (expense) (in millions) 2023 2022

Twelve months ended December 31, $ 14.6 $ (47.4)

Income tax benefit (expense):

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

and certain foreign deferred tax assets.

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

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.

We have a valuation allowance recorded against our net U.S.

and Jamaican deferred tax assets, and a portion of our Icelandic deferred tax assets as of December 31, 2023.

We recognized a $14.6 million income tax benefit in 2023 as compared to income tax expense of $47.4 million in 2022.

The period-to-period change is primarily related to foreign results in the current period.

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

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

As of December 31, 2023, we had cash and cash equivalents of approximately $88.8 million and unused availability under our revolving credit facilities of $223.7 million (including $80.0 million under the Vlissingen Facility Agreement referred to below).

Our cash and cash equivalents and unused availability under our revolving credit facilities comprise our liquidity position, which was $312.5 million as of December 31, 2023.

Our material contractual obligations consist of purchase obligations under long-term alumina and power contracts, debt and related interest payments and operating leases.

Leases , Note 8.

Debt , Note 17.

Commitments and Contingencies and Note 18.

Asset retirement obligations ("ARO") to the accompanying consolidated financial statements for additional information regarding future maturities of debt and operating leases and obligations under power contracts.

Available Cash

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Twelve months ended December 31,

2022 2021 2020

(dollars in millions)

(in millions) 2023 2022 2021

Net cash provided by (used in) operating activities $ 105.6 $ 25.9 $ (64.7)

Net cash used in investing activities (57.8) (85.5) (82.6)

Net cash provided by financing activities 74.4 103.7 13.5

Net cash (used in) provided by financing activities (13.0) 74.4 103.7

Change in cash, cash equivalents and restricted cash $ 34.8 $ 14.8 $ (43.6)

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

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 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.

Net cash provided by operating activities for 2023 was $105.6 million compared to $25.9 million in 2022.

The change in net cash provided by operating activities was due to changes in working capital primarily attributable to timing of receipts and payments.

The decrease in net cash used in investing activities during 2023 was primarily attributable to $25.7 million in proceeds from the Mt.

Holly Commerce Park Land sale and $11.5 million related to the acquisition of Jamalco, net of cash acquired, partially offset by higher spending on capital projects during the twelve months ended December 31, 2023.

The change in net cash used in financing activities in 2023 compared to net cash provided by financing activities in 2022 was primarily due to net repayments on our revolving credit facilities in 2023 and repayment of the Iceland Term Facility, partially offset by the sale of carbon credits and proceeds from the Vlissingen Facility Agreement.

Availability under Our Credit Facilities

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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 Iceland revolving credit facility matures December 2026.

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.

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The borrowing base under the U.S.

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

revolving credit facility has been adversely affected by the curtailment of our Hawesville facility and a reduction in LME and regional premium prices.

Of the outstanding letters of credit, $13.7 million related to our power commitments, $47.7 million are related to hedging collateral, and the remainder are primarily for the purpose of securing certain secured debt and workers’ compensation commitments.

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

As of December 31, 2023, our Iceland revolving credit facility had a borrowing base of $100.0 million and no outstanding borrowings.

As o f December 31, 2023, our credit facilities (including the Vlissingen Facility Agreement referred to below) had $223.7 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.

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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 bears interest at a rate equal to a base rate plus the applicable margin as set forth in the agreement.

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

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(iv) purchase or redeem capital stock;

make investments or certain other restricted payments;

(v) make investments or certain other restricted payments;

(vi) sell assets;

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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.

As of December 31, 2023, there were $10.0 million in borrowings under the Vlissingen Facility Agreement.

Supplemental Guarantor Financial Information

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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.

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

and Century Aluminum Jamaica Holdings, Inc.

The Guarantor Subsidiaries are 100% owned by Century.

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all guarantees will be joint and several.

Our foreign subsidiaries, together with Nordural US LLC, Century Aluminum Development LLC and Century Aluminum of West Virginia, Inc., are collectively referred to as the "Non-Guarantor Subsidiaries".

We allocate corporate expenses or income to our subsidiaries and charge interest on certain intercompany balances.

Our foreign subsidiaries, together with Nordural US LLC, Century Aluminum Development LLC, Century Aluminum of West Virginia, Inc.

and Century Aluminum Jamaica Holdings, Inc.

are collectively referred to as the "Non-Guarantor Subsidiaries." We allocate corporate expenses or income to our subsidiaries and charge interest on certain intercompany balances.

The following summarized financial information of both the Company and the Guarantor Subsidiaries ("Guarantors") is presented on a combined basis.

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As of December 31, 2023 and December 31, 2022, an intercompany receivable due to the Company and Guarantors from the Non-Guarantor Subsidiaries totaled $48.7 million and $18.2 million, respectively, and an intercompany non-current loan due to the Company from the Non-Guarantor Subsidiaries totaled $384.9 million and $466.3 million, respectively.

As of December 31, 2023, an intercompany current loan to the Company from the Non-Guarantors totaled $2.9 million.

There was no intercompany current loan as of December 31, 2022.

Contingent Commitments

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Under certain circumstances, in periods of lower primary aluminum prices relative to our cost of operations, we were able to defer one or more of these payments, provided that we provide the PBGC with acceptable security for such deferred payments.

We did not make any contributions during the years ended December 31, 2021 and 2020.

We historically elected to defer certain payments under the PBGC Settlement Agreement and provided the PBGC with the appropriate security.

We historically elected to defer certain payments

under the PBGC Settlement Agreement and provided the PBGC with the appropriate security.

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.

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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 March 15, 2023, the ITC submitted a report to the United States Congress entitled, 'Economic Impact of Section 232 and 301 Tariffs on U.S.

Industries,' in which the ITC found that the tariffs increased the production of domestic aluminum while causing prices to increase by less than two percent.

Accordingly, we do not believe there will be any material changes to the current tariffs in the near future.

In August 2022, President Biden signed the IRA into law.

The IRA provides for substantial tax credits and incentives for the development of critical minerals (including aluminum), renewable energy, clean fuels, electric vehicles, and supporting infrastructure, among other provisions.

Section 45X of the IRA contains a production tax credit equal to 10% of certain eligible production costs, including, without limitation, labor, energy, depreciation and amortization and overhead expenses.

On December 14, 2023, the U.S.

Department of the Treasury and the Internal Revenue Service released proposed rules to provide guidance on the production tax credit requirements under Internal Revenue Code Section 45X (the “Proposed Regulations”).

The Proposed Regulations provide guidance on rules that taxpayers must satisfy to qualify for the Section 45X tax credit.

For the year ended December 31, 2023, we recognized $56.5 million as a reduction in Cost of goods sold and $2.8 million as a reduction in Selling, general and administrative expenses on the Consolidated Statements of Operations and recorded an equal amount as a Manufacturing credit receivable on the Consolidated Balance Sheets.

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

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

On September 12, 2023, the Mt.

Holly Land Sale Agreement was completed at a revised purchase price of $25.7 million.

The proceeds from this sale are restricted to be used on capital expenditures.

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

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

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

Holly facility.

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

Holly's full capacity.

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

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

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

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.

We recognized a deferred tax asset and recorded a discrete tax benefit of $49.8 million related to the future tax benefit we expect to realize for deductible costs related to our historical investment in Helguvik.

There are no other financial statement impacts as a result of the bankruptcy filing.

The Grundartangi casthouse project began in late 2021 and is fully funded through the Casthouse Facility.

The project is progressing and is expected to start production in the first quarter of 2024.

In 2011, our Board of Directors approved a $60.0 million common stock repurchase program and subsequently increased this program by $70.0 million in the first quarter of 2015.

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In November 2009, Century Aluminum of West Virginia, Inc.

("CAWV") filed a class action complaint for declaratory judgment against the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union ("USW"), the USW’s local and certain CAWV retirees, individually and as class representatives ("CAWV Retirees"), seeking a declaration of CAWV’s rights to modify/terminate retiree medical benefits.

("CAWV") filed a class action complaint for declaratory judgment against the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers

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.

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and international markets and economies may adversely affect our liquidity, our ability to access the debt or capital markets and our financial condition.

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

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.

Capital expenditures incurred for the year ended December 31, 2023 were $25.9 million, excluding expenditures of $69.1 million associated with the Grundartangi casthouse project.

We estimate our total capital spending in 2024, excluding the Grundartangi casthouse project, will be approximately $20 to $30 million, related to our ongoing investment and sustainability projects at our plants.

Critical Accounting Estimates

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We have a valuation allowance of $537.6 million recorded against our net U.S.

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

and Jamaican deferred tax assets and a portion of our Icelandic deferred tax assets as of December 31, 2023.

Property, Plant and Equipment Impairment

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Determination as to whether and how much an asset is impaired involves significant management judgment involving highly uncertain matters, including estimating the future sales volumes, future selling prices and estimated raw material and conversion costs, alternative uses for the asset, and estimated proceeds from the disposal of the asset.

Business Combination

We account for business combinations using the acquisition method of accounting, which requires that once control is obtained, all the assets acquired and liabilities assumed, including amounts attributable to noncontrolling interests, are recorded at their respective fair values at the date of acquisition.

The determination of fair values of identifiable assets and liabilities requires estimates and the use of valuation techniques when market value is not readily available.

Significant estimates in valuing certain assets and liabilities assumed include, but are not limited to, the amount and timing of future cash flows, growth rates, discount rates and useful lives.

The excess of the fair value of identifiable assets and liabilities acquired, excluding noncontrolling interest, over purchase price is recorded as a bargain purchase gain.

Determining the fair value of identified assets acquired, liabilities assumed and noncontrolling interest requires judgment and involves the use of significant estimates and assumptions.

If our assumptions or estimates in the fair value calculation change based on information that becomes available during the one-year period from the acquisition date, we may record adjustments to the net assets acquired.

As purchase accounting is not finalized, we have recorded the preliminary bargain purchase gain as the deferred credit - preliminary bargain purchase gain within the Consolidated Balance Sheet.

Upon the conclusion of the sooner of purchase accounting or the measurement period, any subsequent adjustments will be recorded to earnings.

Inflation Reduction Act Manufacturing Production Credit

Our estimate of the Section 45X advanced manufacturing production tax credit is based on Proposed Regulations released by the U.S.

Department of the Treasury and the Internal Revenue Service on December 14, 2023.

Any changes to determinations of eligible production costs upon the final scope, terms and conditions of the Proposed Regulations could impact our estimate of eligible manufacturing production credits issued.

A change in eligible costs of $10 million would impact our estimate by $1 million.

Recently Issued Accounting Standards Updates

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Summary of Significant Accounting Policies to the consolidated financial statements included herein.

Contractual Obligations

In the normal course of business, we have entered into various contractual obligations that will be settled in cash.

These obligations consist primarily of long-term debt obligations and purchase obligations.

The expected future cash flows required to meet these obligations through the year 2031 are shown in the table below.

More information is available about these contractual obligations in the notes to the consolidated financial statements included herein.

Payments Due by Period

Total 2023 2024 2025 2026 2027 Thereafter

(dollars in millions)

Long-term debt (1)

$ 475 $ — $ 8 $ 9 $ 9 $ 9 $ 440

Estimated interest payments (2)

169 26 31 31 30 30 21

Operating lease obligations (3)

36 3 3 3 3 3 21

Purchase obligations (4)

1,369 741 325 90 83 47 83

Other long-term liabilities (5)

24 6 3 3 7 5 —

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, 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.

For our contingent obligation, based on the LME forward market prices for primary aluminum at December 31, 2022 and expected Hawesville operating levels, we believe that we will not have any payment obligations through the term of the agreement, which expires in 2028.

(2) Estimated interest payments on our long-term debt assume that all outstanding debt instruments will remain outstanding until their respective due dates.

Our estimated future interest payments for any debt with a variable rate are based on the assumption that the December 31, 2022 rate for that debt continues until the respective due date.

We assume that no interest payments on the contingent obligation will be paid through the term of agreement, see above.

(3) Operating leases include long-term leases for land, office space, automobiles, and mobile equipment.

(4) Purchase obligations include long-term alumina and power contracts, excluding market-based power and raw material requirements contracts.

Purchase obligations not executed or legally binding as of December 31, 2022 have been excluded from this table.

For contracts with LME-based pricing provisions, including our long-term Icelandic power contracts, we assumed an LME price using the LME forward curve as of December 31, 2022.

(5) Other long-term liabilities include asset retirement obligations.

Asset retirement obligations are primarily estimated disposal costs for spent potliner used in the reduction cells of our domestic smelters.

Material Commitments

We also have outstanding commitments related to pension, supplemental executive retirement benefit ("SERB") plans, OPEB and workers' compensation obligations.

As of December 31, 2022, estimated future payments related to these obligations through the year 2032 amount to approximately $180.8 million, $16.3 million, $59.2 million and $9.6 million, respectively.

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What changed 10-K

Item 7. Management’s Discussion and Analysis