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Item 1A. Risk Factors

2022-02-24 compared with 2021-02-24 · 194 added, 186 removed, 342 unchanged (53% of the section changed)

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These risks and uncertainties, individually or in combination, could materially and adversely affect our business, financial condition, results of operations and cash flows.

References to tons refer to short tons and references to tonnes refer to metric tons.

Our business is cyclical, resulting in periods of industry oversupply during which our business, financial condition, results of operations and cash flows tend to be negatively affected.

Historically, selling prices for our products have fluctuated in response to periodic changes in supply and demand conditions.

Historically, selling prices for our products, which are generally global commodities, have fluctuated in response to periodic changes in supply and demand conditions.

Demand for nitrogen is affected by planted acreage, crop selection and fertilizer application rates, driven by population growth, gross domestic product growth, changes in dietary habits and non-food use of crops, such as production of ethanol and other biofuels among other things.

Demand also includes industrial uses of nitrogen, for example chemical manufacturing and emissions reductants such as diesel exhaust fluid (DEF).

Supply is affected by available capacity and operating rates, raw material costs and availability, energy prices, government policies and global trade.

Supply is affected primarily by available production capacity and operating rates, raw material costs and availability, energy prices, government policies and global trade.

Periods of strong demand, high capacity utilization and increasing operating margins tend to stimulate global investment in production capacity.

In recent years, fertilizer producers, including CF Holdings, have built new production facilities or expanded capacity of existing production assets, or announced plans to do so.

The construction of new nitrogen fertilizer manufacturing capacity in the industry, plus improvements to increase output from the existing production assets, increase nitrogen supply availability and affect the balance of supply and demand.

In certain years, global nitrogen fertilizer capacity has increased faster than global nitrogen fertilizer demand, creating a surplus of global nitrogen fertilizer capacity, which led to lower nitrogen fertilizer selling prices in 2016 and 2017.

In the past, fertilizer producers, including CF Holdings, have built new production facilities or expanded capacity of existing production assets, or announced plans to do so.

In certain years, global nitrogen fertilizer capacity has increased faster than global nitrogen fertilizer demand, creating a surplus of global nitrogen fertilizer capacity, which has led to lower nitrogen fertilizer selling prices.

For example, in the two-year period ended December 31, 2017, additional production capacity came on line and, at the same time, the average selling price for our products declined 34%, from $314 per ton in 2015 to $207 per ton in 2017.

Additional production capacity is expected to come on line over the next 12 months outside of North America.

We cannot predict the impact of this additional capacity.

Also, global or local economic and financial conditions or changes in such conditions, or other factors may cause acceleration of other announced and/or ongoing projects.

Price fluctuations for our products result from changes in supply and demand.

Significant price fluctuations we experience could be symptoms of an oversupplied market in transition as new capacity ramps up, and production slows down or shuts down in high cost regions.

We cannot predict the impact of this additional capacity on nitrogen fertilizer selling prices.

Also, global or local economic, political and financial conditions or changes in such conditions, or other factors, may cause acceleration of announced and/or ongoing projects.

Similarly, lower energy prices can spur increases in production in high cost regions, which would result in increased supply and pressure on selling prices.

Additionally, trade flows adjust as imports into different regions of the world also impact the local supply and demand balances.

If imports increase into an oversupplied region, lower prices in that region could result.

Additionally, if imports increase into an oversupplied region, lower prices in that region could result.

During periods of industry oversupply, our financial condition, results of operations and cash flows tend to be affected negatively as the price at which we sell our products typically declines, resulting in possible reduced profit margins, write-downs in the value of our inventory and temporary or permanent curtailments of production.

In 2016 and 2017, our financial performance, credit ratings and the trading price for our common stock were negatively impacted by the lower selling prices resulting from the global oversupply of nitrogen fertilizer.

while in 2018 and 2019, we experienced increases in the average selling price for our products.

In 2020, the average selling price for our products decreased 14% to $203 per ton compared to $235 per ton in 2019.

The period of time that these oversupply conditions can persist and the degree to which they will impact our business, financial condition, results of operations and cash flows are uncertain.

While in 2018 and 2019, we experienced increases in the average selling price for our products, in 2020, the average selling price for our products decreased 14% to $203 per ton compared to $235 per ton in 2019.

In 2021, the average selling price for our products increased 74% to $353 per ton compared to 2020.

Due to the cyclical nature of our industry, we cannot predict the timing of oversupply and undersupply conditions, the period of time that these conditions will persist or the degree to which oversupply conditions will impact our business, financial condition, results of operations and cash flows.

Our nitrogen products are global commodities, and we face intense global competition from other producers.

We are subject to intense price competition from our competitors.

Most fertilizers and related nitrogen products that we produce, such as industrial grade ammonium nitrate and DEF, are global commodities, with little or no product differentiation, and customers make their purchasing decisions principally on the basis of delivered price and, to a lesser extent, customer service and product quality.

Most fertilizers and related nitrogen products that we produce, such as industrial grade ammonium nitrate (AN) and DEF, are global commodities, with little or no product differentiation, and customers make their purchasing decisions principally on the basis of delivered price and, to a lesser extent, customer service and product quality.

As a consequence, conditions in the international market for nitrogen products significantly influence our operating results.

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Our competitive position could suffer to the extent we are not able to expand our own resources, either through investments in new or existing operations or through acquisitions, joint ventures or partnerships.

China, the world’s largest producer and consumer of nitrogen fertilizers, currently has significant capacity surplus and many high-cost plants.

Our competitive position could suffer if we are not able to expand our own resources to a similar extent, either through investments in new or existing operations or through acquisitions or joint ventures.

China, the world’s largest producer and consumer of nitrogen fertilizers, currently has capacity surplus and many high-cost plants.

As a result, the domestic nitrogen industry in China is operating at less than full capacity.

If Chinese government policy, devaluation of the Chinese renminbi, the relaxation of Chinese environmental standards or decreases in Chinese producers’ underlying costs such as the price of Chinese coal encourage increased production capacity utilization, any resulting export volume could adversely affect the balance between global supply and demand and may put downward pressure on global fertilizer prices, which could materially adversely affect our business, financial condition, results of operations and cash flows.

Our competitors in Russia continue to benefit from non-market pricing of natural gas, allowing continued exports from the region, and have significant nitrogen fertilizer export capacity.

The 2016 revocations of U.S.

antidumping measures on solid urea and fertilizer grade ammonium nitrate from Russia have allowed for increases in imports from that country into the United States in recent years.

We also face competition from other fertilizer producers in the Middle East, Europe, Latin America and Africa, who, depending on market conditions, fluctuating input prices, geographic location and freight economics, may take actions at times with respect to price or selling volumes that adversely affect our business, financial condition, results of operations and cash flows.

A number of factors could encourage China to increase product capacity utilization, including changes in Chinese government policy, devaluation of the Chinese renminbi, the relaxation of Chinese environmental standards or decreases in Chinese producers’ underlying costs such as the price of Chinese coal.

Any resulting increase in export volume could adversely affect the balance between global supply and demand and may put downward pressure on global fertilizer prices, which could materially adversely affect our business, financial condition, results of operations and cash flows.

From time to time, certain of our competitors with significant nitrogen fertilizer export capacity have benefited from non-market pricing of natural gas, which has resulted in significant volumes of exports to the United States.

For example, the 2016 revocations of U.S.

antidumping measures on solid urea and fertilizer grade ammonium nitrate from Russia allowed for increased imports from that country into the United States in recent years.

In addition, high volumes of urea ammonium nitrate solution (UAN) imports from Russia and Trinidad and Tobago have negatively affected U.S.

producers’ UAN profitability.

We also face competition from other fertilizer producers in the Middle East, Europe, Latin America and Africa.

These producers, depending on market conditions, fluctuating input prices, geographic location and freight economics, may take actions at times with respect to price or selling volumes that adversely affect our business, financial condition, results of operations and cash flows.

Some of these producers also benefit from non-market or government-set rates for natural gas pricing.

In addition, the international market for nitrogen products is influenced by such factors as currency exchange rates, including the relative value of the U.S.

dollar and its impact upon the cost of importing of nitrogen products into the United States, foreign agricultural policies, the existence of, or changes in, import or foreign currency exchange barriers in certain foreign markets and the laws and policies of the markets in which we operate, including the imposition of new duties, tariffs or quotas, that affect foreign trade and investment.

dollar and its impact on the cost of importing nitrogen products into the United States, foreign agricultural policies, the existence of, or changes in, import or foreign currency exchange barriers in certain foreign markets and the laws and policies of the markets in which we operate, including the imposition of new duties, tariffs or quotas, that affect foreign trade and investment.

For example, the imposition of duties, tariffs or quotas in a region can directly impact product pricing in that region, which can lead to changes in global trade flows and impact the global supply and demand balance and pricing.

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As a result, other manufacturers, traders and other market participants can move nitrogen products to North America when there is uncertainty associated with the supply and demand balance in other regions or when duties, tariffs or quotas impact prices or trade flows in other regions.

As a result, duties, tariffs and quotas can lead to uncertainty in the global marketplace and impact the supply and demand balance in many regions, which could adversely affect our business, financial condition, results of operations and cash flows.

Thus, duties, tariffs and quotas can lead to uncertainty in the global marketplace and impact the supply and demand balance in many regions, which could adversely affect our business, financial condition, results of operations and cash flows.

On October 9, 2019, the European Commission (the Commission) imposed definitive anti-dumping duties on imports to the European Union of UAN manufactured in Russia, the Republic of Trinidad and Tobago and the United States.

For imports of UAN manufactured in the United States, the fixed duty rate is €29.48 per metric ton (or €26.74 per ton).

The duties will remain in place for an initial five-year period, after which the measures may be renewed by the Commission.

The long term impact of this duty on the international market for nitrogen products is uncertain.

For imports of UAN manufactured in the United States, the fixed duty rate is €29.48 per tonne (or €26.74 per ton).

The duties will remain in place for an initial five-year period unless the Commission suspends them before the five-year period has expired.

After the initial five-year period, the Commission may renew the measures.

The long-term impact of these duties on the international market for nitrogen products is uncertain.

A decline in agricultural production or limitations on the use of our products for agricultural purposes could materially adversely affect the demand for our products.

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These factors are outside of our control.

Governmental policies, including farm and biofuel subsidies, commodity support programs and tariffs, as well as the prices of fertilizer products, may also directly or indirectly influence the number of acres planted, the mix of crops planted and the use of fertilizers for particular agricultural applications.

Governmental policies, including farm and biofuel subsidies, commodity support programs and tariffs, environmental and greenhouse gas policies, as well as the prices of fertilizer products, may also directly or indirectly influence the number of acres planted, the mix of crops planted and the use of fertilizers for particular agricultural applications.

Ethanol production in the United States contributes significantly to corn demand, representing approximately 35% of total U.S.

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While the current Renewable Fuel Standard encourages continued high levels of corn-based ethanol production, various interested parties have called to eliminate or reduce the renewable fuel mandate, or to eliminate or reduce corn-based ethanol as part of the renewable fuel mandate.

Other factors that drive the ethanol market include the prices of ethanol, gasoline and corn.

Lower gasoline prices and fewer aggregate miles, driven by increased automobile fuel efficiency or the continued expansion of electric

Other factors that drive the ethanol market include the prices of

CF INDUSTRIES HOLDINGS, INC.

vehicles, may put pressure on ethanol prices that could result in reduced profitability and lower production for the ethanol industry.

ethanol, gasoline and corn.

Lower gasoline prices and fewer aggregate miles, driven by increased automobile fuel efficiency, the continued expansion of electric vehicle use or the impact of decreased travel resulting from the coronavirus disease 2019 (COVID-19) pandemic, may put pressure on ethanol prices that could result in reduced profitability and lower production for the ethanol industry.

This could have an adverse effect on corn-based ethanol production, planted corn acreage and fertilizer demand.

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In addition, from time to time various foreign government and U.S.

state legislatures have considered limitations on the use and application of chemical fertilizers due to concerns about the impact of these products on the environment.

state legislatures have considered limitations on the use and application of chemical fertilizers due to concerns about the negative impact of these products on the environment.

For example, the United Kingdom is currently consulting with stakeholders and reviewing proposals to limit emissions from solid urea fertilizers, including a potential ban on urea fertilizers.

While CF Fertilisers UK Limited does not sell solid urea fertilizer in the United Kingdom, other jurisdictions may consider limits on fertilizer use, such as the European Union, which announced its Farm to Fork and Biodiversity Strategies, or Canada, which as part of its Healthy Environment, Healthy Economy plan announced plans in late 2020 to introduce a target of reducing emissions from fertilizers by 30% below 2020 levels and has begun informal consultations with industry and other stakeholders on this proposal.

These or other more stringent limitations on greenhouse gas emissions applicable to farmers, the end-users of our nitrogen fertilizers, could reduce the demand for our fertilizer products to the extent their use of our products increases farm-level emissions.

Any reduction in the demand for chemical fertilizer products, including as a result of technological developments and/or limitations on the use and application of chemical fertilizers, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our business is dependent on natural gas, the prices of which are subject to volatility.

Nitrogen from the atmosphere and hydrogen from natural gas, coal and other carbon energy feedstocks, or from the electrolysis of water, are the fundamental building blocks of nitrogen fertilizers.

Nitrogen from the atmosphere and hydrogen from natural gas, coal and other carbon energy feedstocks, or from the electrolysis of water, are the fundamental building blocks of nitrogen products.

Energy feedstock costs comprise a significant portion of the total production cost of nitrogen products and, relative to the industry’s marginal producers that set the global price of nitrogen, generally determine profitability for nitrogen producers.

Our manufacturing processes utilize natural gas as the principal raw material used in our production of nitrogen fertilizers.

We use natural gas both as a chemical feedstock and as a fuel to produce ammonia, granular urea, urea ammonium nitrate solution (UAN), ammonium nitrate (AN) and other nitrogen products.

Most of our nitrogen fertilizer manufacturing facilities are located in the United States and Canada.

Our manufacturing processes utilize natural gas as the principal raw material used in our production of nitrogen products.

We use natural gas both as a chemical feedstock and as a fuel to produce ammonia, granular urea, UAN, AN and other nitrogen products.

Most of our nitrogen manufacturing facilities are located in the United States and Canada.

As a result, North American natural gas comprises a significant portion of the total production cost of our products.

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Changes in the supply of and demand for natural gas can lead to extended periods of higher natural gas prices.

In addition, any increases in the volume of liquefied natural gas exported from the U.S.

to other regions, particularly regions where nitrogen products are produced, could increase our natural gas costs and/or lower natural gas costs for our competitors.

If high natural gas prices were to persist in North America and significantly erode our favorable energy cost differentials relative to the marginal nitrogen producers, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The price of natural gas in North America has been volatile in recent years.

During 2020, the daily closing price at the Henry Hub, the most heavily-traded natural gas pricing point in North America, reached a low of $1.34 per MMBtu on September 22, 2020 and three consecutive days in October and a high of $3.08 per MMBtu on October 27, 2020.

During the three-year period ended December 31, 2020, the daily closing price at the Henry Hub reached a low of $1.34 per MMBtu on September 22, 2020 and three consecutive days in October 2020 and a high of $6.88 per MMBtu on January 4, 2018.

During 2021, the daily closing price at the Henry Hub, the most heavily-traded natural gas pricing point in North America, reached a low of $2.36 per MMBtu on April 7, 2021 and a high of $23.61 per MMBtu on February 18, 2021.

During the three-year period ended December 31, 2021, the daily closing price at the Henry Hub reached a low of $1.34 per MMBtu on September 22, 2020 and three consecutive days in October 2020 and a high of $23.61 per MMBtu on February 18, 2021.

We also have manufacturing facilities located in the United Kingdom.

These facilities are subject to fluctuations associated with the price of natural gas in Europe, which has also been volatile in recent years.

These facilities are subject to fluctuations associated with the price of natural gas in Europe, which has also been volatile in recent years and reached unprecedented high levels in 2021.

The major natural gas trading point for the United Kingdom is the National Balancing Point (NBP).

During 2020, the daily closing price at NBP reached a low of $1.04 per MMBtu on May 22, 2020 and a high of $7.71 per MMBtu on December 30, 2020.

During the three-year period ended December 31, 2020, the daily closing price at NBP reached a low of $1.04 per MMBtu on May 22, 2020 and a high of $31.74 per MMBtu on March 2, 2018.

During 2021, the daily closing price at NBP reached a low of $5.58 per MMBtu on February 23, 2021 and a high of $60.10 per MMBtu on December 22, 2021.

During the three-year period ended December 31, 2021, the daily closing price at NBP reached a low of $1.04 per MMBtu on May 22, 2020 and a high of $60.10 per MMBtu on December 22, 2021.

The high price for natural gas in the United Kingdom has had an effect on our local operations, resulting in the idling of certain of our United Kingdom plants in 2021.

Since the third quarter of 2021, the price for natural gas in the United Kingdom has remained high.

The average daily market price of natural gas at NBP for January 2022 was $25.91 per MMBtu.

CF INDUSTRIES HOLDINGS, INC.

The price of natural gas in North America and worldwide has been volatile in recent years and has declined on average due in part to the development of significant natural gas reserves, including shale gas, and the rapid improvement in shale gas extraction techniques, such as hydraulic fracturing and horizontal drilling.

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Increased demand for natural gas, particularly in the Gulf Coast Region, due to increased industrial demand and increased natural gas exports, could result in increased natural gas prices.

If such reduced production, increased demand or changes in basis were to occur, or if other developments adversely impact the

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supply and demand balance for natural gas in North America or elsewhere, natural gas prices could rise, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

If reduced production, increased demand or changes in basis were to occur, or if other developments adversely impact the supply and demand balance for natural gas in North America or elsewhere, natural gas prices could rise, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Adverse weather conditions may decrease demand for our fertilizer products, increase the cost of natural gas or materially disrupt our operations.

Adverse weather conditions could become more frequent and/or more severe as a result of climate change.

Weather conditions that delay or disrupt field work during the planting, growing, harvesting or application periods may cause agricultural customers to use different forms of nitrogen fertilizer, which may adversely affect demand for the forms that we sell or may impede farmers from applying our fertilizers until the following application period, resulting in lower seasonal demand for our products.

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Over the longer-term, changes in weather patterns may shift the periods of demand for products and even the regions to which our products are distributed, which could require us to evolve our distribution system.

In addition, we use the North American waterway system extensively to ship products from some of our manufacturing facilities to our distribution facilities and our customers, and we also export nitrogen fertilizer products via seagoing vessels from deep-water docking facilities at certain of our manufacturing sites.

Therefore, persistent significant changes in river or ocean water levels (either up or down, such as a result of flooding or drought for example), may require changes to our operating and distribution activities and/or significant capital improvements to our facilities.

Weather conditions or, in certain cases, weather forecasts, also can disrupt our operations and can affect the price of natural gas, the principal raw material used to make our nitrogen fertilizer products.

In addition, we use the North American waterway system extensively to ship products from some of our manufacturing facilities to our distribution facilities and our customers.

We also export nitrogen fertilizer products via seagoing vessels from deep-water docking facilities at certain of our manufacturing sites.

Therefore, persistent significant changes in river or ocean water levels (either up or down, such as a result of flooding, drought or climate change, for example), may require changes to our operating and distribution activities and/or significant capital improvements to our facilities.

Weather conditions or, in certain cases, weather forecasts, also can disrupt our operations and can affect the price of natural gas, the principal raw material used to make our nitrogen products.

Colder and/or longer than normal winters and warmer than normal summers increase the demand for natural gas for power generation and for residential and industrial use, which can increase the cost and/or decrease the availability of natural gas.

In addition, adverse weather events can not only cause loss of power at our facilities disrupting our operations, but also can impact the supply of natural gas and utilities and cause prices to rise.

In addition, adverse weather events not only can cause loss of power at our facilities or damage to or delays in logistics capabilities disrupting our operations, but also can impact the supply of natural gas and utilities and cause prices to rise.

All of the adverse weather conditions described above, including those impacting our customers and our operations, such as the physical risk from storms, hurricanes, tornadoes, or floods could become more frequent and/or more severe as a result of climate change.

Our Donaldsonville complex is located in an area of the United States that experiences a relatively high level of hurricane or high wind activity and several of our complexes are located in areas that experience severe weather.

In the last several years, there has been an increase in the frequency and severity of adverse weather conditions, including in the geographic areas where we have operations.

Any significant adverse weather event or combination of adverse weather events could decrease demand for our fertilizer products, increase the cost of natural gas or materially disrupt our operations — any of which could have a material adverse impact on our business, financial condition, results of operations and cash flows.

Our operating results fluctuate due to seasonality.

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The degree of seasonality of our business can change significantly from year to year due to conditions in the agricultural industry and other factors.

The strongest demand for our products in North America occurs during the spring planting season, with a second period of strong demand following the fall harvest.

The strongest demand for our products in North America occurs

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during the spring planting season, with a second period of strong demand following the fall harvest.

In contrast, we and other fertilizer producers generally manufacture and distribute products throughout the year.

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Seasonality is greatest for ammonia due to the short application seasons and the limited ability of our customers and their customers to store significant quantities of this product.

The seasonality of fertilizer demand generally results in our sales volumes and net sales being the highest during the spring and our working capital requirements being the highest just prior to the start of the spring planting season.

The seasonality of fertilizer demand generally results in our sales volumes and net sales being the highest during the spring and our working capital requirements to build inventory being the highest just prior to the start of the spring planting season.

If seasonal demand is less than we expect, we may be left with excess inventory that will have to be stored (in which case our results of operations would be negatively affected by any related increased storage costs) or liquidated (in which case the selling price could be below our production, procurement and storage costs).

The risks associated with excess inventory and product shortages are exacerbated by the volatility of nitrogen fertilizer prices and the relatively brief periods during which farmers can apply nitrogen fertilizers.

The risks associated with excess inventory and product shortages are exacerbated by the volatility of nitrogen fertilizer prices, the constraints of our storage capacity, and the relatively brief periods during which farmers can apply nitrogen fertilizers.

If prices for our products rapidly decrease, we may be subject to inventory write-downs, adversely affecting our operating results.

A change in the volume of products that our customers purchase on a forward basis, or the percentage of our sales volume that is sold to our customers on a forward basis, could increase our exposure to fluctuations in our profit margins and materially adversely affect our business, financial condition, results of operations and cash flows.

A change in the volume of products that our customers purchase on a forward basis, or the percentage of our sales volume that is sold to our customers on a forward basis, could increase our exposure to fluctuations in our profit margins and working capital and materially adversely affect our business, financial condition, results of operations and cash flows.

We offer our customers the opportunity to purchase products from us on a forward basis at prices and delivery dates we propose.

Under our forward sales programs, customers generally make an initial cash down payment at the time of order and pay the remaining portion of the contract sales value in advance of the shipment date.

Forward sales improve our liquidity by reducing our working capital needs due to the cash payments received from customers in advance of shipment of the product

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and allow us to improve our production scheduling and planning and the utilization of our manufacturing and distribution assets.

Forward sales improve our liquidity by reducing our working capital needs due to the cash payments received from customers in advance of shipment of the product and allow us to improve our production scheduling and planning and the utilization of our manufacturing and distribution assets.

Any cash payments received in advance from customers in connection with forward sales are reflected on our consolidated balance sheets as a current liability until the related orders are shipped, which can take up to several months.

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Our customers may be less willing or even unwilling to purchase products on a forward basis during periods of generally decreasing or stable prices or during periods of relatively high fertilizer prices due to the expectation of lower prices in the future or limited capital resources.

Fixing the selling prices of our products, often months in advance of their ultimate delivery to customers, typically causes our reported selling prices and margins to differ from spot market prices and margins available at the time of shipment.

In periods of rising fertilizer prices, selling our nitrogen fertilizers on a forward basis may result in lower profit margins than if we had not sold fertilizer on a forward basis.

Conversely, in periods of declining fertilizer prices, selling our nitrogen fertilizers on a forward basis may result in higher profit margins than if we had not sold fertilizer on a forward basis.

In addition, fixing the selling prices of our products, often months in advance of their ultimate delivery to customers, typically causes our reported selling prices and margins to differ from spot market prices and margins available at the time of shipment.

Operational Risks

Our operations are dependent upon raw materials provided by third parties, and any delay or interruption in the delivery of raw materials may adversely affect our business.

We use natural gas and other raw materials in the manufacture of nitrogen products.

We use natural gas and other raw materials in the manufacture of our nitrogen products.

We purchase the natural gas and other raw materials from third party suppliers.

Our natural gas is transported by pipeline to our facilities by third party transportation providers or through the use of facilities owned by third parties.

Delays or interruptions in the delivery of natural gas or other raw materials may be caused by, among other things, severe weather or natural disasters, unscheduled downtime, labor difficulties, insolvency of our suppliers or their inability to meet existing contractual arrangements, deliberate sabotage and terrorist incidents, or mechanical failures.

Delays or interruptions in the delivery of natural gas or other raw materials may be caused by, among other things, severe weather or natural disasters, unscheduled downtime, labor difficulties or shortages, insolvency of our suppliers or their inability to meet existing contractual arrangements, deliberate sabotage and terrorist incidents, or mechanical failures.

In addition, the transport of natural gas by pipeline is subject to additional risks, including delays or interruptions caused by capacity constraints, leaks or ruptures.

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We also lease rail cars in order to ship raw materials and finished products.

These transportation operations, equipment and services are subject to various hazards, including adverse operating conditions on the inland waterway system, extreme weather conditions, system failures, work stoppages, shutdowns, delays, accidents such as spills and derailments, vessel groundings and other accidents and operating hazards.

These transportation operations, equipment and services are subject to various hazards, including adverse operating conditions on the

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inland waterway system, extreme weather conditions, system failures, work stoppages, shutdowns, delays, accidents such as spills and derailments, vessel groundings and other accidents and operating hazards.

Additionally, due to the aging infrastructure of certain rail lines, bridges, roadways, pipelines, river locks, and equipment that our third party service providers utilize, we may experience delays in both the receipt of raw materials or the shipment of finished product while repairs, maintenance or replacement activities are conducted.

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In addition, increases in our transportation costs, or changes in such costs relative to transportation costs incurred by our competitors, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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In the United States and Canada, the railroad industry continues various efforts to limit the railroads’ potential liability stemming from the transportation of Toxic Inhalation Hazard materials, such as the anhydrous ammonia we transport to and from our manufacturing and distribution facilities.

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Restrictions on service, increases in transportation costs, or changes in such costs relative to transportation costs incurred by our competitors, and any railroad industry initiatives that may impact our ability to transport our products, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We are reliant on a limited number of key facilities.

Our nitrogen manufacturing facilities are located at nine separate nitrogen complexes, the largest of which is the Donaldsonville complex, which represented approximately 40% of our ammonia production capacity as of December 31, 2021.

The suspension of operations at any of these complexes could adversely affect our ability to produce our products and fulfill our commitments, and could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Operational disruptions could occur for many reasons, including natural disasters, weather, unplanned maintenance and other manufacturing problems, disease, strikes or other labor unrest or transportation interruptions.

For example, our Donaldsonville complex is located in an area of the United States that experiences severe weather, including a relatively high level of hurricane or high wind activity, and several of our other complexes are also located in areas that experience severe weather.

Such storms and severe weather events, depending on their severity and location, have the potential not only to damage our facilities and disrupt our operations, but also to affect adversely the shipping and distribution of our products.

Moreover, our facilities may be subject to failure of equipment that may be difficult to replace or have long delivery lead times, due in part to a limited number of suppliers, and could result in operational disruptions.

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We are subject to risks relating to our information technology systems, and any technology disruption or cybersecurity incident could negatively affect our operations.

We rely on internal and third-party information technology and computer control systems in many aspects of our business, including internal and external communications, the management of our accounting, financial and supply chain functions and plant operations.

If we do not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure, we could be subject to transaction errors, processing inefficiencies, the loss of customers, business disruptions, or the loss of or damage to our confidential business information due to a security breach.

If we do not allocate and effectively manage the resources necessary to build, implement and sustain the proper technology infrastructure, we could be subject to transaction errors, inaccurate financial reporting, processing inefficiencies, the loss of customers, business disruptions, or the loss of or damage to our confidential business information due to a security breach.

In addition, our information technology systems may be damaged, disrupted or shut down due to attacks by computer hackers, computer viruses, employee error or malfeasance, power outages, hardware failures, telecommunication or utility failures, catastrophes or other unforeseen events, and in any such circumstances our system redundancy and other disaster recovery planning may be ineffective or inadequate.

Security breaches of our systems (or the systems of our customers, suppliers or other business partners) could result in the misappropriation, destruction or unauthorized disclosure of confidential information or personal data belonging to us or to our employees, business partners, customers or suppliers, and may subject us to legal liability.

As with most large systems, our information technology systems have in the past been, and in the future likely will be, subject to computer viruses, malicious codes, unauthorized access and other cyber attacks, and we expect the sophistication and frequency of such attacks to continue to increase.

As with most large systems, our information technology systems (and the systems of our suppliers) have in the past been, and in the future likely will be, subject to computer viruses, malicious codes, unauthorized access and other cyber attacks, and we expect the sophistication and frequency of such attacks to continue to increase.

To date, we are not aware of any significant impact on our operations or financial results from such attempts;

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The regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and constantly changing requirements.

We have established policies and procedures to help protect the security and privacy of this information.

Breaches of our security measures or the accidental loss, inadvertent disclosure, or unapproved dissemination of proprietary information or sensitive or confidential data about us or our employees, customers or suppliers, including the potential loss or disclosure of such information or data as a result of fraud, trickery, or other forms of deception, could expose us or our employees, customers, suppliers or other individuals affected to a risk of loss or misuse of this information, which could ultimately result in litigation and potential legal and financial liability.

These events could also damage our reputation or otherwise harm our business.

We are reliant on a limited number of key facilities.

Our nitrogen fertilizer operations are located at nine separate nitrogen complexes, the largest of which is the Donaldsonville complex, which represented approximately 40% of our ammonia production capacity as of December 31, 2020.

For example, our

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Donaldsonville complex is located in an area of the United States that experiences a relatively high level of hurricane or high wind activity and several of our complexes are located in areas that experience severe weather.

Such storms, depending on their severity and location, have the potential not only to damage our facilities and disrupt our operations, but also to affect adversely the shipping and distribution of our products.

Acts of terrorism and regulations to combat terrorism could negatively affect our business.

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Any disruption of our ability to produce or distribute our products could result in a significant decrease in revenues and significant additional costs to replace, repair or insure our assets, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Due to concerns related to terrorism or the potential use of certain fertilizers as explosives, we are subject to various security laws and regulations.

Due to concerns related to terrorism or the potential use of certain nitrogen products as explosives, we are subject to various security laws and regulations.

In the United States, these security laws include the Maritime Transportation Security Act of 2002 and the Chemical Facilities Anti-Terrorism Standards regulation.

In addition, President Obama issued in 2013 Executive Order 13650 Improving Chemical Facility Safety and Security to improve chemical facility safety in coordination with owners and operators.

Governmental entities could implement new or impose more stringent regulations affecting the security of our plants, terminals and warehouses or the transportation and use of fertilizers.

Governmental entities could implement new or impose more stringent regulations affecting the security of our plants, terminals and warehouses or the transportation and use of fertilizers and other nitrogen products.

These regulations could result in higher operating costs or limitations on the sale of our products and could result in significant unanticipated costs, lower revenues and reduced profit margins.

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It is possible that governmental entities in the United States or elsewhere could impose additional limitations on the use, sale or distribution of nitrogen products, thereby limiting our ability to manufacture or sell those products, or that illicit use of our products could result in liability for us.

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We are subject to risks associated with international operations.

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The violation of applicable laws by our employees, consultants, agents or partners could subject us to penalties and could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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We are subject to antitrust and competition laws in various countries throughout the world.

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Therefore, our insurance coverage may not adequately cover our losses.

Our operations are subject to hazards inherent in the manufacture, transportation, storage and distribution of chemical products, including ammonia, which is highly toxic and corrosive.

Our operations are subject to hazards inherent in the manufacture, transportation, storage and distribution of chemical products, including ammonia, which is highly toxic and can be corrosive, and ammonium nitrate, which is explosive.

These hazards include:

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Some of these hazards can cause bodily injury and loss of life, severe damage to or destruction of property and equipment and environmental damage, and may result in suspension of operations for an extended period of time and/or the imposition of civil or criminal penalties and liabilities.

In April 2013, there was a fire and explosion at the West Fertilizer Co.

fertilizer storage and distribution facility in West, Texas.

According to published reports, 15 people were killed and approximately 200 people were injured in the incident, and the fire and explosion damaged or destroyed a number of homes and buildings around the facility.

Various subsidiaries of CF Industries Holdings, Inc.

(the CF Entities) were named as defendants along with other companies in lawsuits alleging various theories of negligence, strict liability, and breach of warranty under Texas law.

Although we did not own or operate the facility or directly sell our products to West Fertilizer Co., products that the CF Entities manufactured and sold to others were delivered to the facility and may have been stored at the West facility at the time of the incident.

Nearly all of the cases, including all wrongful death and personal injury claims, have been resolved pursuant to confidential settlements that have been or we expect will be fully funded by insurance.

The remaining subrogation and statutory indemnification claims total approximately

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$37 million, before prejudgment interest.

The increased focus on the risks associated with fertilizers as a result of the incident could impact the regulatory environment and requirements applicable to fertilizer manufacturing and storage facilities.

We maintain property, business interruption, casualty and liability insurance policies, but we are not fully insured against all potential hazards and risks incident to our business.

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There can be no assurance that we will be able to buy and maintain insurance with adequate limits and reasonable pricing terms and conditions.

In April 2013, there was a fire and explosion at the West Fertilizer Co.

fertilizer storage and distribution facility in West, Texas.

Various subsidiaries of CF Industries Holdings, Inc.

(the CF Entities) were named as defendants along with other companies in lawsuits filed in 2013, 2014 and 2015 in the District Court of McLennan County, Texas by the City of West, individual residents of the County and other parties seeking recovery for damages allegedly sustained as a result of the explosion.

The cases were consolidated for discovery and pretrial proceedings in the District Court of McLennan County under the caption “In re:

West Explosion Cases.” The two-year statute of limitations expired on April 17, 2015.

As of that date, over 400 plaintiffs had filed claims, including at least 9 entities, 325 individuals, and 80 insurance companies.

Plaintiffs allege various theories of negligence, strict liability, and breach of warranty under Texas law.

Although we do not own or operate the facility or directly sell our products to West Fertilizer Co., products that the CF Entities manufactured and sold to others were delivered to the facility and may have been stored at the West facility at the time of the incident.

The Court granted in part and denied in part the CF Entities’ Motions for Summary Judgment in August 2015.

Over three hundred cases have been resolved pursuant to confidential settlements that have been or we expect will be fully funded by insurance.

The remaining cases are in various stages of discovery and pre-trial proceedings.

The next group of cases is expected to be set for trial after the Court resumes scheduling civil jury trials currently on hold because of the outbreak of coronavirus disease 2019 (COVID-19) pandemic.

We believe we have strong legal and factual defenses and intend to continue defending the CF Entities vigorously in the pending lawsuits.

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Our substantial indebtedness could adversely affect our cash flow, prevent us from fulfilling our obligations and impair our ability to pursue or achieve other business objectives.

As of December 31, 2020, we had approximately $4.0 billion of total funded indebtedness, consisting primarily of secured and unsecured senior notes with varying maturity dates between 2021 and 2044, or approximately 40% of our total capitalization, and an additional $750 million of senior secured borrowing availability (reflecting no outstanding borrowings and no outstanding letters of credit) for general corporate purposes under our senior secured revolving credit agreement (as amended, the Revolving Credit Agreement).

As of December 31, 2021, we had approximately $3.5 billion of total funded indebtedness, consisting primarily of unsecured senior notes with varying maturity dates between 2023 and 2044, or approximately 36% of our total capitalization (total debt plus total stockholders’ equity), and an additional $750 million of unsecured senior borrowing availability (reflecting no outstanding borrowings and no outstanding letters of credit) for general corporate purposes under our revolving credit agreement (the Revolving Credit Agreement).

Our substantial debt service obligations will have an impact on our earnings and cash flow for so long as the indebtedness is outstanding.

Our substantial indebtedness could, as a result of our debt service obligations or through the operation of the financial and other restrictive covenants to which we are subject under the agreements and instruments governing that indebtedness and otherwise, have important consequences.

Our indebtedness could, as a result of our debt service obligations or through the operation of the financial and other restrictive covenants to which we are subject under the agreements and instruments governing that indebtedness and otherwise, have important consequences.

For example, it could:

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• cause us to be more vulnerable to general adverse economic and industry conditions;

• expose us to the risk of increased interest rates because certain of our borrowings, including borrowings under our Revolving Credit Agreement, could be at variable rates of interest;

• expose us to the risk of increased interest rates because certain of our borrowings, including borrowings under the Revolving Credit Agreement, could be at variable rates of interest;

• make us more leveraged than some of our competitors, which could place us at a competitive disadvantage;

• restrict our ability to dispose of assets or otherwise restrict our use of funds from the disposal of assets;

• restrict our ability to pay dividends on our common stock or utilize excess cash to repurchase shares of our common stock;

• limit our ability to borrow additional monies in the future to fund working capital, capital expenditures and other general corporate purposes;

• result in a downgrade in the credit rating of our indebtedness which could increase the cost of further borrowings.

• limit our ability to borrow additional amounts to fund working capital, capital expenditures and other general corporate purposes;

• result in our credit ratings being downgraded, which could increase the cost of further borrowings.

We expect to consider options to refinance our outstanding indebtedness from time to time.

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An inability to obtain financing with acceptable terms when needed could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The terms of our existing indebtedness allow us to incur significant additional debt in the future.

The terms of our existing indebtedness allow us to incur significant additional debt.

If we incur additional indebtedness, the risks that we face as a result of our leverage could intensify.

If our financial condition or operating results deteriorate, our relations with our creditors, including the holders of our outstanding debt securities, the lenders under our Revolving Credit Agreement and our suppliers, may be materially and adversely affected.

A failure to satisfy the financial maintenance covenants under our Revolving Credit Agreement or a breach of the covenants under any of the agreements governing our indebtedness could limit the borrowing availability under our Revolving Credit Agreement or result in an event of default under such agreements.

Our ability to comply with the covenants in the agreements and instruments governing our indebtedness, including the consolidated interest coverage ratio and consolidated net leverage ratio maintenance covenants contained in our Revolving Credit Agreement, will depend upon our future performance and various other factors, such as market prices for our nitrogen products, natural gas prices and other business, competitive and regulatory factors, many of which are beyond our control.

If our financial condition or operating results deteriorate, our relations with our creditors, including the holders of our outstanding debt securities, the lenders under the Revolving Credit Agreement and our suppliers, may be materially and adversely affected.

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A failure to satisfy the financial maintenance covenants under the Revolving Credit Agreement or a breach of the covenants under any of the agreements governing our indebtedness could limit the borrowing availability under the Revolving Credit Agreement or result in an event of default under such agreements.

Our ability to comply with the covenants in the agreements and instruments governing our indebtedness, including the consolidated interest coverage ratio and consolidated net leverage ratio maintenance covenants contained in the Revolving Credit Agreement, will depend upon our future performance and various other factors, such as market prices for our nitrogen products, natural gas prices and other business, competitive and regulatory factors, many of which are beyond our control.

We may not be able to maintain compliance with all of these covenants.

In that event, we may not be able to access the borrowing availability under our Revolving Credit Agreement and we would need to seek an amendment to our debt agreements or would need to refinance our indebtedness.

In that event, we may not be able to access the borrowing availability under the Revolving Credit Agreement and we would need to seek an amendment to our debt agreements or would need to refinance our indebtedness.

There can be no assurance that we can obtain future amendments or waivers of our debt agreements and instruments, or refinance our debt, and, even if we were able to do so, such relief might only last for a limited period, potentially necessitating additional amendments, waivers or refinancings.

Any noncompliance by us with the covenants under our debt agreements and instruments could result in an event of default under those debt agreements and instruments.

An event of default under an agreement or instrument governing any of our indebtedness may allow our creditors to accelerate the

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related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies.

An event of default under an agreement or instrument governing any of our indebtedness may allow our creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies.

If our lenders or holders of our debt securities accelerate the repayment of borrowings, we may be forced to liquidate certain assets to repay all or part of our indebtedness, which could materially and adversely impair our business operations.

An event of default under our Revolving Credit Agreement would permit the lenders thereunder to terminate all commitments to extend further credit under our Revolving Credit Agreement.

Furthermore, our Revolving Credit Agreement and senior secured notes provide for liens on specified collateral to secure our obligations thereunder, and if we were unable to repay amounts due and payable under our Revolving Credit Agreement or the senior secured notes, our Revolving Credit Agreement lenders or holders of the senior secured notes, as applicable, could proceed against the collateral granted to them, which could have a material adverse effect on our business, financial condition and results of operations.

An event of default under the Revolving Credit Agreement would permit the lenders thereunder to terminate all commitments to extend further credit under the Revolving Credit Agreement.

In the event our creditors accelerate the repayment of our indebtedness, we cannot assure that we would have sufficient assets to make such repayment.

Potential future downgrades of our credit ratings could adversely affect our access to capital, cause vendors to change their credit terms for doing business with us, and could otherwise have a material adverse effect on us.

As of February 16, 2021, our corporate credit rating by S&P Global Ratings is BB+ with a stable outlook;

As of February 14, 2022, our corporate credit rating by S&P Global Ratings is BBB- with a stable outlook;

our corporate credit rating by Moody’s Investor Services, Inc.

is Ba1 with a stable outlook;

is Ba1 with a positive outlook;

and our corporate credit rating with Fitch Ratings, Inc.

is BB+ with a stable outlook.

is BBB- with a stable outlook.

These ratings and our current credit condition affect, among other things, our ability to access new capital, especially debt, as well as the payment terms that vendors are willing to provide us.

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Tax matters, including changes in tax laws or rates, adverse determinations by taxing authorities and imposition of new taxes could adversely affect our results of operations and financial condition.

We are subject to taxes in (i) the United States, where most of our operations are located, and (ii) numerous foreign jurisdictions where our subsidiaries are organized or conduct business.

Tax rates in the various jurisdictions in which we operate may be subject to significant change.

Our future effective tax rate could also be affected by changes in our mix of earnings from countries with differing statutory tax rates and tax systems, changes in valuation of deferred tax assets and liabilities or changes in tax laws or their interpretation.

We are subject to taxes in (i) the United States, where most of our operations are located, and (ii) several foreign jurisdictions where our subsidiaries are organized or conduct business.

Tax laws or rates in the various jurisdictions in which we operate may be subject to significant change.

Our future effective tax rate could also be affected by changes in our mix of earnings from jurisdictions with differing statutory tax rates and tax systems, changes in valuation of deferred tax assets and liabilities or changes in tax laws or their interpretation.

We are also subject to regular reviews, examinations and audits by the Internal Revenue Service (IRS) and other taxing authorities in jurisdictions where we conduct business.

Although we believe our tax estimates are reasonable, if a taxing authority disagrees with the positions we have taken, we could face additional tax liabilities, including interest and penalties.

There can be no assurance that payment of such additional amounts upon final adjudication of any disputes will not have a material impact on our results of operations and financial condition.

There can be no assurance that payment of such additional amounts upon final adjudication of any disputes will not have a material impact on our financial condition, results of operations and cash flows.

We have used the cash we generate outside the United States primarily to fund development of our business in non-U.S.

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We also need to comply with other new, evolving or revised tax laws and regulations.

The enactment of, or increases in, tariffs or value added taxes, or other changes in the application of existing taxes, in markets in which we are currently active, or may be active in the future, or on specific products that we sell or with which our products compete, could have an adverse effect on our results of operations and financial condition.

BEPS is intended to improve tax disclosure and transparency and eliminate structures and activities that could be perceived by a particular country as resulting in tax avoidance.

The OECD is currently developing a framework in order to assist member countries in adopting BEPS related legislation.

The enactment of, or increases in, carbon taxes, tariffs or value added taxes, or other changes in the application of existing taxes, in markets in which we are currently active, or may be active in the future, or on specific products that we sell or with which our products compete, could have an adverse effect on our financial condition and results of operations.

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The United States and other countries in which we operate are in the process of implementing the Organization for Economic Co-operation and Development’s (OECD) Base Erosion and Profit Shifting Project (BEPS), which is intended to improve tax disclosure and transparency and eliminate structures and activities that could be perceived by a particular country as resulting in tax avoidance.

The OECD has partially developed and continues with development of a framework to assist member countries in adopting BEPS related legislation.

Each country is permitted to introduce its own legislation to implement BEPS legislation.

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The implementation of BEPS could result in tax changes and may adversely affect our provision for income taxes, results of operations and cash flows.

In some cases, BEPS legislation could result in double taxation in a portion of our profits without an appropriate mechanism to recover the incremental tax amount in another jurisdiction.

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In some cases, BEPS legislation could result in double taxation on a portion of our profits without an appropriate mechanism to recover the incremental tax amount in another jurisdiction.

Our business is subject to risks involving derivatives and the risk that our hedging activities might not prevent losses.

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We are subject to numerous environmental, health and safety laws and regulations in the United States, Canada, the United Kingdom, the European Union, the Republic of Trinidad and Tobago and other locations, including laws and regulations relating to the generation and handling of hazardous substances and wastes;

the introduction of new chemicals or substances into a market;

the cleanup of hazardous substance releases;

the discharge of regulated substances to air or water;

and the demolition of existing plant sites upon permanent closure.

and the demolition and cleanup of existing plant sites upon permanent closure.

In the United States, these laws include the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the Toxic Substances Control Act and various other federal, state, provincial, local and international laws.

In November 2021, the Infrastructure Investment and Jobs Act reinstated and doubled the Superfund tax on chemicals, including ammonia and nitric acid.

These taxes will be in place from July 1, 2022 through December 31, 2031 and apply to all domestic and imported products not used as fertilizer.

As a producer of nitrogen fertilizer products working with hazardous substances, our business faces risks of spills, discharges or other releases of those substances into the environment.

Certain environmental laws, including CERCLA, impose joint and several liability, without regard to fault, for cleanup costs on persons who have disposed of or released hazardous substances into the environment.

Given the nature of our business, we have incurred, are incurring currently, and are likely to incur periodically in the future, liabilities under CERCLA and other environmental cleanup laws at our current facilities or facilities previously owned by us or other acquired businesses, adjacent or nearby third-party facilities or offsite disposal locations.

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The costs associated with future cleanup activities that we may be required to conduct or finance may be material.

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Our costs to comply with, or any liabilities under, these laws and regulations could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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From time to time, our production, distribution or storage of anhydrous ammonia has resulted in accidental releases that have temporarily disrupted our operations and/or resulted in liability for administrative penalties and/or claims for personal injury.

From time to time, our production, distribution or storage of anhydrous ammonia and other hazardous or regulated substances has resulted in accidental releases that have temporarily disrupted our operations and/or resulted in liability for administrative penalties and/or claims for personal injury.

To date, our costs to resolve these liabilities have not been material.

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Future regulatory or legislative restrictions on greenhouse gas (GHG) emissions in the jurisdictions in which we operate could materially adversely affect our business, financial condition, results of operations and cash flows.

Our production facilities emit GHGs, such as carbon dioxide and nitrous oxide, and natural gas, a fossil fuel, is a primary raw material used in our nitrogen production process.

Because conventional ammonia production generates CO 2 as an unavoidable chemical byproduct, ammonia production globally is considered an emissions- and energy-intensive industry.

We are subject to GHG regulations in the United Kingdom, Canada and the United States.

In the United States, our existing facilities currently are only subject to GHG emissions reporting obligations, although new facilities that we build, or existing facilities that we modify in the future, could be subject to GHG emissions standards included in their air permits.

Our facilities in the United Kingdom have been subject to the European Union Emissions Trading System (EU ETS), which generally required us to hold or obtain emissions allowances to offset GHG emissions from those aspects of our operations that are subject to regulation under this program.

Notwithstanding the exit of the United Kingdom from the European Union (Brexit) on January 31, 2020, facilities in the United Kingdom remained subject to the EU ETS through the end of 2020.

In the United States, our existing facilities, which are considered large emitters of GHGs, currently are only subject to GHG emissions reporting obligations.

New facilities that we build, or existing facilities that we modify in the future, could also be subject to GHG emissions standards included in their air permits.

Beginning on January 1, 2021, our U.K.

manufacturing plants became subject to the UK Emissions Trading Scheme (UK ETS).

At least initially, the UK ETS is expected to be similar to the EU ETS, although the UK government has stated that it intends to establish an emissions cap that is lower than what it would have been had the United Kingdom remained subject to the EU ETS.

No agreement has been reached as to whether the UK ETS will establish a linkage with the EU ETS or other national emission trading systems.

Our Medicine Hat Nitrogen Complex, in Alberta, Canada, and our Courtright Nitrogen Complex, in Ontario, Canada, are subject to provincial or federal laws that impose a price on excess GHG emissions.

manufacturing plants became subject to the UK Emissions Trading Scheme (UK ETS), which generally requires us to hold or obtain emissions allowances to offset GHG emissions from those aspects of our operations that are subject to regulation under this program.

Given the recent development of the UK ETS, there is substantial uncertainty as to the liquidity in the market for, and the stability of the price of, emission allowances that will be necessary for compliance with the regulations.

Our manufacturing plants in the Alberta and Ontario provinces of Canada are subject to provincial or federal laws that impose a price on excess GHG emissions.

Each of these laws establishes carbon dioxide equivalent (CO 2 e) emissions standards applicable to our facilities in terms of emissions per unit of production, with the provincial laws and the federal law using different formulas for establishing these intensity limits and changes in these limits over time.

If CO 2 e emissions exceed the applicable limits, the excess emissions must be offset, either through obtaining qualifying emission credits or offsets or by making a payment for each ton of excess emissions.

The Canadian federal government has announced that it intends to increase the price of excess emissions of CO 2 e from CAD $40 per ton in 2021 and CAD $50 per ton in 2022, by CAD $15 per ton each year beginning in 2023, with the price of excess CO 2 e emissions reaching CAD $170 per ton by 2030.

On December 12, 2015, 195 countries adopted by consensus a new international agreement known as the Paris Agreement.

The Paris Agreement was accepted by the United States and ratified by Canada and the United Kingdom and went into effect in November 2016.

The Paris Agreement is intended to provide a framework pursuant to which the parties to the agreement will attempt to hold the increase in global average temperatures to below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5ºC above pre-industrial levels.

Increasing concern over the impacts of climate change is driving countries to establish ever more ambitious GHG reduction targets.

Approximately 200 countries, including the United States, Canada, the United Kingdom and the members of the European Union (EU), have joined the Paris Agreement, an international agreement intended to provide a framework pursuant to which the parties to the agreement will attempt to hold the increase in global average temperatures to below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5ºC above pre-industrial levels.

Each signatory is required to develop its own national plan to attain this objective.

Increasing concern over the impacts of climate change is driving the signatories to establish ever more ambitious GHG reduction targets.

In December 2020, the United Kingdom announced a target to reduce GHG emission 68% from 1990 levels by 2030.

The EU has announced a new target to reduce its GHG emission 55% below 1990 levels by 2030.

On November 4, 2019, the United States submitted formal notice of its withdrawal from the Paris Agreement, which became effective on November 4, 2020, but on January 20, 2021, President Biden announced that the United States has rejoined the Paris Agreement.

This will require the United States to submit its own national plan for reducing GHG emissions.

Executive Orders issued by the Biden administration, including in particular an executive order issued on January 27, 2021 focusing on climate change, evidence the Administration’s intent to undertake numerous initiatives in an effort to reduce GHG emissions, including promoting renewable energy development, limiting or prohibiting new oil and gas leases on federal lands, and in general, making climate change considerations a critical component of federal policy.

In December 2020, the United Kingdom announced a target to reduce GHG emissions 68% from 1990 levels by 2030.

Canada has increased its emissions reduction target under the Paris Agreement to 40-45% (up from 30%) below 2005 levels by 2030.

In April 2021, the United States increased its goal to reduce emissions to 50-52% below 2005 levels by 2030.

The Biden administration has also issued several executive orders focused on climate change to promote more active management of these issues across the executive branch, including by the EPA and the Departments of Agriculture, Interior, Transportation and Treasury.

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In July 2021, the EU proposed a new carbon border adjustment mechanism that would require importers of certain products, including nitrogen fertilizers, to pay an import tax approximately equal to the costs incurred by EU producers of the products starting in 2026.

Other governments are also considering border adjustment mechanisms for carbon intensive products.

The imposition of any carbon border adjustment taxes may distort investment and trade flows, which could adversely impact our business.

More stringent GHG regulations, if they are enacted, are likely to have a significant impact on us, because our production facilities emit GHGs such as carbon dioxide and nitrous oxide and because natural gas, a fossil fuel, is a primary raw material used in our nitrogen production process.

Regulation of GHGs may require us to make changes in our operating activities that would increase our operating costs, reduce our efficiency, limit our output, require us to make capital improvements to our facilities, increase our costs for or limit the availability of energy, raw materials or transportation, or otherwise materially adversely affect our business, financial condition, results of operations and cash flows.

In addition, to the extent that GHG

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restrictions are not imposed in countries where our competitors operate or are less stringent than regulations that may be imposed in the United States, Canada or the United Kingdom, our competitors may have cost or other competitive advantages over us.

Changes could also be made to tax policies related to decarbonization and clean energy that could impact our business and investment decisions.

In addition, to the extent that GHG restrictions are not imposed in countries where our competitors operate or are less stringent than regulations that may be imposed in the United States, Canada or the United Kingdom, our competitors may have cost or other competitive advantages over us.

Strategic Risks

The market for green and low-carbon ammonia may be slow to develop, may not develop to the size expected or may not develop at all.

Moreover, we may not be successful in the development and implementation of our green and low-carbon ammonia projects in a timely or economic manner, or at all, due to a number of factors, many of which are beyond our control.

The market for green and low-carbon ammonia is developing and evolving, may not develop to the size or at the rate we expect, and is dependent in part on the developing market for green and low-carbon hydrogen.

These markets are heavily influenced by federal, state and local government laws, regulations and policies concerning carbon emissions and clean energy in the United States and abroad.

We believe the demand for green and low-carbon ammonia will take several years to fully develop and mature and we cannot be certain that this market or the market for green and low-carbon hydrogen will grow to the size or at the rate we expect.

Hydrogen currently only accounts for less than 1% of the world’s energy needs.

The recognition and acceptance of green and low-carbon ammonia as a transport and storage mechanism for green and low-carbon hydrogen, the use of green and low-carbon ammonia as a fuel in its own right and the development and growth of end market demand and applications for green and low-carbon hydrogen and green and low-carbon ammonia are uncertain and dependent on a number of factors outside of our control.

These factors include, among others, the extent to which and rate at which cost competitive global renewable energy capacity increases, the pricing of alternative sources of energy, the realization of technological improvements required to increase the efficiency and lower the costs of production of green and low-carbon ammonia, the regulatory environment, the rate and extent of infrastructure investment and developments, the availability of tax benefits and other incentives and our ability to provide green and low-carbon ammonia offerings cost-effectively.

If a sustainable market fails to develop or develops more slowly than we anticipate, we may decide not to implement, or may not be successful in implementing, one or more elements of our multi-year strategic plan and commitment to a clean fuel economy.

Our clean energy strategy also depends on the realization of certain technical improvements required to increase the efficiency and lower the costs of production of green and low-carbon ammonia.

Over time, as we seek to convert additional existing production facilities and further expand our green ammonia and low-carbon ammonia production capacity, we may face operational difficulties and execution risks related to the design, development and construction.

If our assumptions about the engineering and process characteristics necessary to successfully build the facility capacity that we are contemplating and to scale up to larger production quantities prove to be incorrect, we may be unable to produce substantial quantities of green or low-carbon ammonia, and the cost to construct or convert such green and low-carbon ammonia facilities, or the production costs associated with the operation of such facilities, may be higher than we project.

The market for green and blue (low-carbon) ammonia may be slow to develop, may not develop to the size expected or may not develop at all.

Moreover, we may not be successful in the development and implementation of our green and blue ammonia projects in a timely or economic manner, or at all, due to a number of factors, many of which are beyond our control.

The market for green and blue (low-carbon) ammonia is developing and evolving, may not develop to the size or at the rate we expect, and is dependent in part on the developing market for green and blue (low-carbon) hydrogen, for which ammonia can serve as a transport and storage mechanism.

These markets are heavily influenced by demand for clean energy, technology evolution and federal, state and local government laws, regulations and policies concerning carbon emissions, clean energy, and corporate accountability in the United States and abroad.

We believe the demand for green and blue ammonia could take several years to materialize and then ten or more years to fully develop and mature, and we cannot be certain that this market or the market for green and blue hydrogen will grow to the size or at the rate we expect.

Hydrogen currently accounts for less than 1% of the world’s energy needs.

The recognition and acceptance of green and blue ammonia as a transport and storage mechanism for green and blue hydrogen, the use of green and blue ammonia as a fuel in its own right, the use of green and blue ammonia as a fertilizer, and the development and growth of end market demand and applications for green and blue hydrogen and green and blue ammonia are uncertain and dependent on a number of factors outside of our control.

These factors include, among others, the extent to which and rate at which cost competitive global renewable energy capacity increases, the pricing of traditional and alternative sources of energy, the realization of technological improvements required to increase the efficiency and lower the costs of production of green and blue ammonia, the regulatory environment, the rate and extent of infrastructure investment and development, which may be affected by the relevant parties’ ability to obtain permits for these investments, the availability of tax benefits and other incentives and our ability to provide green and blue ammonia offerings cost-effectively.

In addition, further development of alternative decarbonization technologies may result in viable alternatives to the use of blue ammonia for many potential decarbonization applications, resulting in lower than expected market demand growth relative to our current expectations.

If a sustainable market for green or blue ammonia or hydrogen fails to develop, develops more slowly than we anticipate, or develops in a way that is not viable to serve with our assets and capabilities, we may decide not to implement, or may not be successful in implementing, one or more elements of our multi-year strategic plan.

Our clean energy strategy also depends on the realization of certain technical improvements required to increase the efficiency and lower the costs of production of green and blue ammonia.

Over time, as we seek to convert additional existing facilities to green and blue production and further expand our green and blue ammonia production capacity, we may face operational difficulties and execution risks related to the design, development and construction.

If our assumptions about the engineering and processing characteristics necessary to successfully build the facility capacity that we are contemplating and to scale up to larger production quantities prove to be incorrect, we may be unable to produce substantial quantities of green or blue ammonia, and the cost to construct or convert such green and blue ammonia facilities, or the production costs associated with the operation of such facilities, may be higher than we project.

The production of blue ammonia depends to a large extent upon development by third parties of carbon capture and storage wells, which are not well-established technologies and are subject to a permitting process and operational risks, which may result in delays, impact viability in some or all situations, or create long-term liabilities.

CF INDUSTRIES HOLDINGS, INC.

We may not be successful in the expansion of our business.

We routinely consider possible expansions of our business, both within the United States and elsewhere.

Major investments in our business, including as a result of acquisitions, partnerships, joint ventures, business combination transactions or other major investments, such as our green and low-carbon ammonia projects, require significant managerial resources, the diversion of which from our other activities or opportunities may impair the existing operations of our business.

Major investments in our business, including acquisitions, partnerships, joint ventures, business combination transactions or other major investments, such as our green and blue ammonia projects, require significant managerial resources, the diversion of which from our other activities or opportunities may negatively affect the existing operations of our business.

We may be unable to identify or successfully compete for certain acquisition targets, which may hinder or prevent us from acquiring a target or completing other transactions.

The risks of any expansion of our business through investments, acquisitions, partnerships, joint ventures or business combination transactions are increased due to the significant capital and other resources that we may have to commit to any such expansion, which may not be recoverable if the expansion initiative to which they were devoted is ultimately not implemented.

The risks of any expansion of our business through investments, acquisitions, partnerships, joint ventures or business combination transactions may increase due to the significant capital and other resources that we may have to commit to any such expansion, which may not be recoverable if the expansion initiative to which they were devoted is ultimately not implemented.

In addition, these efforts may require capital resources that could otherwise be used for the improvement and expansion of our existing business.

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Among the risks associated with the pursuit and consummation of acquisitions, partnerships, joint ventures or other major investments or business combinations are those involving:

• difficulties in integrating the parties’ operations, systems, technologies, products and personnel;

• difficulties in integrating the parties’ operations, systems, technologies, products, cultures, and personnel;

• incurrence of significant transaction-related expenses;

• potential integration or restructuring costs;

CF INDUSTRIES HOLDINGS, INC.

• potential impairment charges related to the goodwill, intangible assets or other assets to which any such transaction relates, in the event that the economic benefits of such transaction prove to be less than anticipated;

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• assumption of contingent liabilities, including litigation;

• exposure to unanticipated liabilities;

• exposure to unanticipated liabilities, including litigation;

• differences in the parties’ internal control environments, which may require significant time and resources to resolve in conformity with applicable legal and accounting standards;

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• the potential for costly and time-consuming litigation, including stockholder lawsuits.

In addition, major capital projects may be dependent on the availability and performance of engineering firms, construction firms, equipment suppliers, transportation providers and other vendors necessary to design and implement those projects on a timely basis and on acceptable terms.

Moreover, legal proceedings or other risks from acquisitions and other business combinations may arise years after a transaction has been completed and may involve matters unrelated to the business acquired.

For example, we were recently named along with other parties in certain product liability actions relating to a product containing the herbicide paraquat, which was allegedly sold, manufactured, distributed and/or marketed by Terra Industries Inc.

(Terra) before it exited such lines of business, which exit occurred more than ten years before CF Holdings acquired Terra in April 2010.

In addition, major capital projects may be dependent on the availability and performance of engineering firms, construction firms, equipment and material suppliers, transportation providers and other vendors necessary to design and implement those projects on a timely basis and on acceptable terms.

Major investments such as capital improvements at our facilities are subject to a number of risks, any of which could prevent us from completing capital projects in a timely or economic manner or at all, including, without limitation, cost overruns, non-performance of third parties, the inability to obtain necessary permits or other permitting matters, adverse weather, defects in materials and workmanship, labor and raw material shortages, transportation constraints, engineering and construction change orders, errors in design, construction or start-up, and other unforeseen difficulties.

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• unexpected changes in regulatory environments;

CF INDUSTRIES HOLDINGS, INC.

• political and economic instability, including the possibility for civil unrest;

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Additionally, any challenges related to the CHS strategic venture could harm our relationships with CHS or our other customers.

CF INDUSTRIES HOLDINGS, INC.

COVID-19 Pandemic Risk

Our business and operations may be adversely affected by the COVID-19 pandemic.

The outbreak and pandemic of the coronavirus disease 2019 (COVID-19) could have a material and adverse effect on our business, financial condition, results of operations or cash flows.

The coronavirus disease 2019 (COVID-19) pandemic could have a material and adverse effect on our business, financial condition, results of operations or cash flows.

The rapid spread of COVID-19 has resulted in governmental authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders and shutdowns.

Even though our business operations are designated as part of the critical infrastructure by the United States, United Kingdom and Canadian governments and the governments of the states and provinces in which we operate, these measures have impacted and may further impact all or portions of our workforce and operations.

If significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, facility closures or other restrictions, we may be unable to meet customer demand or perform fully under our contracts.

In addition, our customers, suppliers and third party service providers, including transportation providers, have been, or may be in the future, affected by COVID-19, including by the impact of measures taken by federal and local governments to slow the spread of the virus.

Any negative impacts on our customers, suppliers and third party service providers could negatively impact our business, financial condition, results of operations or cash flows.

For example, global demand for nitrogen for industrial use has been negatively affected by the pandemic, and we expect this to continue as long as economic activity remains low due to the impacts of the pandemic.

Restrictions on or disruptions of transportation, port closures or increased border controls or closures, or other impacts on domestic and global supply chains or distribution channels, could increase our costs, limit our ability to meet customer demand or otherwise have a material adverse effect on our business, financial condition, results of operations or cash flows.

The COVID-19 pandemic has reduced and may further reduce the demand for energy, including crude oil, as well as natural gas and coal, which are nitrogen feedstocks.

Reduced demand for nitrogen feedstocks has reduced and could further reduce the cost of nitrogen production outside of North America, increasing global nitrogen supply and reducing the market prices of our products.

Lower demand for crude oil could also reduce the supply and therefore increase the cost of natural gas, which is the principal raw material used in our production of nitrogen fertilizers.

In addition, lower crude oil prices, and a reduced demand for gasoline resulting from actions to slow the spread of COVID-19, have reduced ethanol production and therefore negatively impacted the demand for corn, which is a significant factor driving customer demand for our nitrogen fertilizers.

The COVID-19 pandemic could also affect our customers, suppliers and third party service providers, including transportation providers, and result in restrictions on or disruptions of transportation, port closures or increased border controls or closures, or other impacts on domestic and global supply chains or distribution channels, which could increase our costs and/or limit our ability to meet customer demand.

In addition, the COVID-19 pandemic could reduce, and has in the past reduced, the demand for energy, including crude oil, as well as natural gas and coal, which are nitrogen feedstocks.

Reduced demand for nitrogen feedstocks could reduce the cost of nitrogen production outside of North America, which could increase global nitrogen supply and reduce the market prices of our products.

Lower demand for crude oil could also reduce the supply and therefore increase the cost of natural gas, which is the principal raw material used in our production of nitrogen products.

The pandemic has also disrupted traditional food supply chains, which may have a material impact on livestock and food demand, including the demand for corn.

Each of these consequences could have a material adverse effect on our business, financial condition, results of operations or cash flows.

While the COVID-19 pandemic did not have a material adverse effect on our reported results for the year ended December 31, 2020, we are unable to predict the ultimate impact it may have on our business, financial condition, results of operations or cash flows.

The extent to which our operations may be impacted by COVID-19 will depend on future developments, which are highly uncertain and cannot be accurately predicted, including the further spread of the virus, the duration of the COVID-19 outbreak and the type and duration of actions that may be taken by various governmental authorities in response to the outbreak.

The pandemic significantly increased global market uncertainty and caused an economic slowdown, which resulted in a global recession.

We are unable to predict the ultimate impact the COVID-19 pandemic may have on our business, financial condition, results of operations or cash flows.

The extent to which our operations may be impacted by COVID-19 will depend on future developments, which are highly uncertain and cannot be accurately predicted, including the further spread of the virus, the rise of new variants of COVID-19, the duration of the pandemic and the type and duration of actions that may be taken by various governmental authorities in response to these developments.

In 2020, the pandemic significantly increased global market uncertainty and caused an economic slowdown, which resulted in a global recession.

Persistent weakness in economic activity caused by a deterioration of global market and economic conditions could materially adversely affect our business, financial condition, results of operations or cash flows.

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• the global commodity nature of our nitrogen products, the conditions in the international market for nitrogen products, and the intense global competition from other producers;

• conditions in the United States, Europe and other agricultural areas;

• the volatility of natural gas prices in North America and Europe;

• weather conditions;

• conditions in the United States, Europe and other agricultural areas, including the influence of governmental policies and technological developments on the demand for agricultural products;

• the volatility of natural gas prices in North America and the United Kingdom;

• weather conditions and the impact of severe adverse weather events;

• the seasonality of the fertilizer business;

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• reliance on third party providers of transportation services and equipment;

• risks associated with cyber security;

• our reliance on a limited number of key facilities;

• risks associated with cyber security;

• acts of terrorism and regulations to combat terrorism;

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• regulatory restrictions and requirements related to greenhouse gas emissions;

• the development and growth of the market for green and low-carbon ammonia and the risks and uncertainties relating to the development and implementation of our green and low-carbon ammonia projects;

• the development and growth of the market for green and blue (low-carbon) ammonia and the risks and uncertainties relating to the development and implementation of our green and blue ammonia projects;

• risks associated with expansions of our business, including unanticipated adverse consequences and the significant resources that could be required;

• risks associated with the operation or management of the CHS strategic venture, risks and uncertainties relating to the market prices of the fertilizer products that are the subject of our supply agreement with CHS over the life of the supply agreement, and the risk that any challenges related to the CHS strategic venture will harm our other business relationships;

• the impact of the novel coronavirus disease 2019 (COVID-19) pandemic, including measures taken by governmental authorities to slow the spread of the virus, on our business and operations.

• the impact of the novel coronavirus disease 2019 (COVID-19) pandemic on our business and operations.

CF INDUSTRIES HOLDINGS, INC.

UNRESOLVED STAFF COMMENTS.

Information regarding our facilities and properties is included in Item 1.

Business—Nitrogen Manufacturing Facilities and Item 1.

Business—Storage Facilities and Other Properties.

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 1A. Risk Factors