What changed in this filing

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Item 1. Business

2023-02-24 compared with 2022-02-17 · 121 added, 113 removed, 180 unchanged (57% of the section changed)

Orion Engineered Carbons S.A.

(“Orion”, “Company”, “we”, and “our”, “OEC”) is a Luxembourg joint stock corporation ( société anonyme or S.A.), incorporated on July 28, 2014 as a Luxembourg limited liability company ( société à responsabilité limitée ).

(“Orion”, “Company”, “we”, “our”, or “OEC”) is a Luxembourg joint stock corporation ( société anonyme or S.A.), incorporated on July 28, 2014 as a Luxembourg limited liability company ( société à responsabilité limitée ).

Our registered office is located at 6, Route de Trèves, L-2633 Senningerberg (Municipality of Niederanven), Grand Duchy of Luxembourg.

Our principal executive office is located in Houston, Texas, U.S.

Our principal executive office is located in Spring, Texas, U.S.

We are a leading global manufacturer of carbon black products.

Carbon black is a powdered form of carbon that is used to create the desired physical, electrical and optical qualities of various materials.

Carbon black products are primarily used as additives for the production of polymers, printing inks and coatings (“Specialty Carbon Black” or “Specialties”) and in the reinforcement of rubber polymers (“Rubber Carbon Black” or “Rubber”).

Carbon black products are primarily used as additives for the production of polymers, batteries, printing inks and coatings (“Specialty Carbon Black” or “Specialty”) and in the reinforcement of rubber polymers (“Rubber Carbon Black” or “Rubber”).

Our core competencies include the ability to engineer the physical properties of carbon black to meet the functional needs of our customers.

The Company is one of the largest global producers of Specialty and Rubber Carbon Black.

We operate a global supply chain network comprised of 14 production sites (including a joint venture in Dortmund, Germany) in 10 countries.

In addition to our headquarters in Luxembourg, we have our principal executive office in Houston, Texas (U.S.), as well as offices in Frankfurt (Germany), Cologne (Germany), Shanghai (China), Seoul (South Korea), Tokyo (Japan) and other locations.

We currently operate 14 wholly owned production facilities in Europe, North and South America, South Africa, and Asia, including Huaibei, China (to begin commercial production in 2023 ) , and one jointly-owned production facility at Dortmund, Germany.

In addition to our headquarters in Luxembourg, we have our principal executive office in Spring, Texas (U.S.), as well as offices in Frankfurt (Germany), Cologne (Germany), Shanghai (China), Seoul (South Korea), Tokyo (Japan) and other locations.

Our principal research and development (“R&D”) center is located in Cologne (Germany).

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Our internet address is www.orioncarbons.com.

We make available free of charge on or through our website, our Annual Reports in Form 10-K, Quarterly Reports in Form 10-Q, current reports in Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after electronically filing such material with, or furnishing it to, the U.S.

We make available free of charge on or through our website, our Annual Reports in Form 10-K, Quarterly Reports in Form 10-Q, current reports in Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after electronically filing such material with, or furnishing it to, the U.S.

Securities and Exchange Commission (“SEC”).

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Products and Applications

Specialty Carbon Black

Carbon black is manufactured in a highly controlled process to produce particles and aggregates of varied structure and surface chemistry, resulting in many different performance characteristics for a wide variety of applications.

The Company manufactures specialty carbon black for a broad range of specialized applications such as polymers, printing, batteries and coatings applications.

Specialty Carbon Black

The Company manufactures Specialty Carbon Black for a broad range of specialized applications such as polymers, batteries, printing and coatings.

The various production processes result in a wide range of different Specialty Carbon Black grades with respect to their primary particle size, structure, surface area and surface chemistry.

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These specialty carbon products are used in a wide variety of applications, such as coatings, inks, plastics, adhesives, toners and batteries.

Carbon Black for Coatings — We offer a broad range of specialty carbon black products for coatings, which includes products used for pigmentation in black coatings and enhancement of various other coatings (e.g., automotive base coats and architectural coatings), for conductivity and for tinting, as well as for paints and for light tinting in transparent coatings (e.g., metallic effects and wood glazing).

Carbon Black for Coatings — We offer a broad range of Specialty Carbon Black products for coatings, which includes products used for pigmentation in black coatings and protection of various other coatings (e.g., automotive base coats and architectural coatings), for conductivity and for tinting, as well as for paints and for light tinting in transparent coatings (e.g., metallic effects and wood glazing).

The diversity of our manufacturing processes allows for the creation of a wide range of Specialty Carbon Black grades with different structures and chemical properties, thereby allowing our products to impart unique characteristics to our customers’ products.

Orion Engineered Carbons S.A

Carbon Black for Polymers — We offer a broad range of specialty carbon black products for polymers that provide products to a diverse range of end markets including pipe (e.g., gas, oil, municipal water, sewage), construction, energy distribution (e.g., power cables), automotive, agriculture, and consumer packaging.

Carbon Black for Polymers — We offer Specialty Carbon Black for polymers in a diverse range of end markets including pipe (e.g., gas, oil, municipal water, sewage), construction, energy distribution (e.g., power cables), automotive, agriculture and consumer packaging.

Certain products within this portfolio provide UV protection against polymer degradation for material such as pipe used for potable water, injection molding, agriculture films and cables.

Other products include standard-to high-performance grades designed and modified to provide electrical conductivity, antistatic and reinforcing properties to many different polymer articles, including high-voltage cables, films, boxes and high-pressure pipes.

Carbon Black for Printing — We offer a broad range of specialty carbon black products for printing products that provide numerous grades for different printing technologies and applications.

Other products include standard- to high-performance grades designed and modified to provide electrical conductivity, antistatic and reinforcing properties to many different polymer applications, including high-voltage cables, film and high-pressure pipes.

Carbon Black for Printing — We offer Specialty Carbon Black for printing inks used in different printing systems and applications.

We apply different process technologies to offer highly specialized products meeting specific requirements, including compliance with food-contact regulations and specially formulated products that require unique attributes such as color undertone, optical density and gloss.

Carbon Black for Batteries — We also offer a broad range of specialty carbon black products for wide range of energy storage applications such as lead-acid batteries, dry cells, supercapacitors and lithium-ion batteries.

The products, which are manufactured in different production processes, function as tailor-made additives to provide electrical conductivity to increase the performance of batteries.

Carbon Black for Batteries — We also offer Specialty Carbon Black for wide range of energy storage applications such as lead-acid batteries, dry cells, supercapacitors and lithium-ion batteries.

The products, which are manufactured in different production processes, function as high purity additives to provide electrical conductivity to increase the performance of batteries.

We are one of the largest global producers of Specialty Carbon Black.

Cabot Corporation and Birla Carbon are the other two large global producers of specialty carbon black.

Each of the top three producers of specialty carbon black leverages R&D and applications technology platforms to tailor products to customer needs and to introduce its products into new application niches.

There are two other large global producers of Specialty Carbon Black.

As a top three producer of Specialty Carbon Black, we leverage R&D and applications technology platforms to tailor products to customer needs and to introduce our products into new application niches.

Rubber Carbon Black

Our Rubber Carbon Black products are used in tires and mechanical rubber goods (“MRG”).

Rubber carbon blacks are used to enhance the physical properties of the systems and applications in which they are incorporated.

Rubber carbon blacks have traditionally been used in the tire industry as a rubber reinforcing agent to increase tread durability and are also used as a performance additive to reduce rolling resistance and improve traction.

In MRG, such as hoses, belts, extruded profiles and molded goods, rubber carbon blacks are used to improve the physical performance of the product, including the product’s physical strength, fluid resistance, conductivity and resistivity.

Rubber Carbon Black are used to enhance the physical properties of the systems and applications in which they are incorporated.

Rubber Carbon Black have traditionally been used in the tire industry as a rubber reinforcing agent to increase tread durability and are also used as a performance additive to reduce rolling resistance and improve traction.

In MRG, such as hoses, belts, extruded profiles and molded goods, Rubber Carbon Black are used to improve the physical performance of the product, including the product’s physical strength, fluid resistance, conductivity and resistivity.

Carbon Black for Tires — We offer a broad range of carbon black products for tires, which includes high reinforcing grades and semi-reinforcing grades.

Fine particle reinforcing grade carbon blacks are used mostly in the tread of tires.

Other reinforcing grade carbon blacks are also used in different components of the tire carcass.

Fine particle reinforcing grade carbon black is used mostly in the tread of tires.

Other reinforcing grade carbon black is also used in different components of the tire carcass.

In addition to standardized grades, we produce advanced grades tailored to meet specific customer performance requirements, such as ECORAX® grades designed to lower rolling resistance and high-performance grades for truck tires and high- and ultra-high-performance passenger car tires.

Carbon Black for Mechanical Rubber Goods — We produce a wide range of carbon black products for a variety of MRG end-uses, including automotive production, construction, manufacturing of wires and cables, as well as certain food, consumer and medical applications.

Carbon Black for Mechanical Rubber Goods — We produce a wide range of carbon black products for a variety of MRG end-uses, including automotive production, construction, as well as certain food, consumer and medical applications.

These grades have an exceptionally high purity and high consistency and satisfy special requirements needed for smooth surfaces and electrical resistance.

These grades also disperse well in rubber compounds used in parts like window seals, automotive hoses, transmission belts, damping elements and electrically conductive and antistatic rubber goods.

We are one of the leading global producers of rubber carbon blacks.

We compete with four companies that operate globally and numerous other companies that operate regionally, a number of which export product outside their region.

We are one of the leading global producers of Rubber Carbon Black.

We compete with two other global companies and multiple regional companies.

The smaller regional suppliers mainly participate in standard and MRG applications and are less likely to provide specialized products used in higher end tire and MRG applications.

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Besides general global economic conditions, certain specific drivers of demand for carbon black differ among our operating segments.

Specialty carbon black has a wide variety of end-uses, and demand is largely driven by the growth and development of the coatings, polymers, printing and batteries.

Specialty Carbon Black has a wide variety of end-uses and demand is largely driven by the growth and development of the coatings, polymers, printing and battery industries.

Demand for Specialty Carbon Black in the coatings and polymers industries is mainly influenced by the levels of industrialization, automobile original equipment manufacturer (“OEM”) demand, infrastructure development, consumer spending and construction activity.

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Demand for Rubber Carbon Black is largely driven by the growth and development of the automotive tire, commercial tire and MRG industries.

Demand for rubber carbon black in tires is mainly influenced by the number of replacement and original equipment tires produced, which in turn is driven by (i) vehicle trends, including the number of vehicles produced and registered, and the number of miles driven, (ii) demand for high-performance tires, (iii) demand for larger vehicles,

Demand for Rubber Carbon Black in tires is mainly influenced by the number of replacement and original equipment tires produced, which in turn is driven by (i) the number of miles driven, (ii) vehicle trends, including the number of vehicles produced and registered, (iii) demand for larger vehicles, such as trucks and buses, (iv) demand for high-performance tires, (v) consumer and industrial spending on new vehicles, and (vi) changes in regulatory requirements.

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such as trucks and buses, (iv) consumer and industrial spending on new vehicles and (v) changes in regulatory requirements.

Demand for Rubber Carbon Black in MRG is mainly influenced by vehicle production and design trends, construction activity and general industrial production.

Demand in the developed Western European and North American regions is mainly driven by demographic changes, customers’ high-quality requirements, stringent tire regulation standards and relatively stable tire replacement demand.

Demand in the developed Western European and North American regions is mainly driven by demographic changes, customers’ high-quality requirements, truck freight activity, stringent tire regulation standards and relatively stable tire replacement demand.

Demand in developing markets, such as China, Southeastern Asia, South America and Eastern Europe, is mainly driven by the growing middle class, rapid industrialization, infrastructure spending and increasing car ownership trends.

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Customer Contracts

Most of our long-term contracts contain formula-driven price adjustment mechanisms for changes in raw material and/or energy costs and in some instances, foreign exchange rates.

Most of our long-term contracts, 12 months or longer, contain formula-driven price adjustment mechanisms for changes in raw material and/or energy costs.

We sell carbon black under the following two main categories of contracts based on price adjustment mechanisms:

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Raw Materials

Raw materials for our products are, in general, readily available and in adequate supply.

The principal raw material used in the manufacture of carbon black is carbon black oil comprised of residual heavy oils derived from petroleum refining operations, the distillation of coal tars and the production of ethylene throughout the world.

Majority of our carbon black oil supply is covered by short and long-term contracts with a wide variety of suppliers.

The majority of our carbon black oil supply is covered by short and long-term contracts with a wide variety of suppliers.

Natural gas is also used in the production of carbon black.

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The process development team works closely with our manufacturing and procurement teams to improve production processes, product quality and cost structure.

Our Innovation function’s leading center of excellence is located in Cologne (Germany) to support and enhance our global Innovation (research and development or “R&D”) function activities.

Our Innovation function’s leading center of excellence is located in Cologne (Germany) to support and enhance our global innovation function or R&D activities.

This center includes applications technology laboratories and process development staff, co-located with our pilot process development facilities.

Staffing in our Cologne technical center includes physicists, chemists and engineers who can effectively and efficiently collaborate to create and analyze various carbon black properties with a goal to

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develop new products to meet customer requirements.

Common processes and information technology tools further enhance coordination and communication with our regional technical centers located in China, South Korea and the U.S.

Orion Engineered Carbons S.A

• Applications Technology— Our goal is to remain at the forefront of the industry in terms of product development by having dedicated applications technology facilities.

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We initiate and maintain patents and trademarks, with varying expiration dates, on a number of our products and processes.

We sell our products under a variety of patents and trademarks we own and take reasonable measures to protect them.

In connection with the separation of our business from Evonik Industries AG, Germany (“Evonik”), Evonik assigned to us its intellectual property that was exclusively used in its carbon black business, as well as certain intellectual property rights that are still in use in its retained business.

However, we may be restricted in leveraging our intellectual property that we use on the basis of a license from Evonik or the intellectual property that is subject to grant-back license to expand our business into fields outside of carbon black.

We sell our products under a variety of patents and trademarks we own and we take reasonable measures to protect them.

In connection with the separation of our business from Evonik Industries AG, Germany (“Evonik”), Evonik assigned to us its intellectual property that was exclusively used in its carbon black business and granted certain intellectual property rights that are still also in use in Evonik’s retained business in turn for us granting certain intellectual property rights to Evonik for fields outside of carbon black.

Consequently, we may be restricted in leveraging intellectual property that we use on the basis of a license from Evonik or the intellectual property that is subject to grant-back licenses when expanding our business into fields outside of carbon black.

For additional information, see “ Item 1A.

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Human Capital

We are a group of people who share one common passion:

We are a group of individuals who share one common passion:

carbon black.

Our success depends on attracting, recruiting, training and developing a diverse, talented global workforce.

We are committed to providing our employees with equal opportunities for learning and personal growth in an environment where their voices can be heard and creativity and innovation are encouraged.

To this end, our aspiration is to be the employer of choice in our industry.

Aligning employee engagement and enablement is integral to the continued success of Orion.

We are committed to providing our employees with opportunities for learning and career growth in an environment where their knowledge and inputs are valued and creativity and innovation are encouraged.

To this end, our aspiration is to be the employer of choice in our industry and the communities where we are located.

Aligning employee engagement and enablement remains a key component for the continued success of Orion.

We have built a value system around a foundation of appreciating our employees through trust, respect and development.

To ensure our employees are both motivated to do their work and are equipped with the right tools and training to be successful, we start with listening.

We use employee surveys and listening sessions to help ensure all the voices of our employees are heard.

We used the feedback from our employee surveys and listening sessions to prioritize our human capital strategy and make investments in a new learning platform and performance management system.

Further, we have upgraded our talent management and development programs, focusing on specific actions to improve attraction, engagement, learning and development, and retention.

Orion is made up of over 1,475 employees with plants, laboratories and offices in 23 locations across 13 countries in all 3 regions (Americas, Asia/Pacific (“APAC”) and Europe/Middle East/Africa (“EMEA”)).

To ensure our employees are both motivated to do their work and equipped with the right tools and training to be successful, we start with listening.

We use employee surveys and feedback sessions to help ensure all the voices of our employees are heard.

We continue to use the feedback from our employee surveys and other feedback sessions to prioritize our human capital strategy and continue to upgrade our talent management programs, focusing on specific actions to improve learning and to promote employee development and career growth.

Our talent programs are made up of several components:

• formal learning programs to equip individual employees with the technical and functional skills required for their current and future roles;

• on-the-job training through assignments that provide new roles and projects;

• formal and informal mentoring programs;

• succession planning;

• formal and informal performance reviews with line managers and others;

• individual development plans.

Orion is made up of approximately 1,600 employees with manufacturing plants, laboratories and offices in 24 locations across 13 countries in three regions (Americas, Asia/Pacific (“APAC”) and Europe/Middle East/Africa (“EMEA”)).

Inspiring the entire Orion workforce to function as one team is critical to our success.

We believe this is possible when we accept and value each individual for who they are.

Indeed, valuing people is one of Orion’s core values which define who we are and the expectation we have of Orion colleagues in our interactions with other employees, customers, suppliers and within the communities where we operate.

Building on this foundation, we value our people irrespective of their nationality, race, gender, citizenship status, ethnic origin, sexual orientation, gender identification, religion or philosophy, disability and age, among others;

and we strive to put this into practice when hiring, developing and retaining talents.

A focus on promoting from within has led to continued increases in internal fill rates and the involvement of business leaders across the organization in talent reviews to assess employees on performance and future potential.

These talent reviews continue to uncover talent gaps, identify high potential employees, build bench strength, increase retention, and help us identify our future leaders and innovators.

We believe this is possible when we accept and value each individual.

Indeed, valuing people is one of Orion’s core values, which define who we are and the expectation we have of all Orion colleagues in our interactions with other employees, customers, suppliers and within the communities where we operate.

Building on this foundation, we value our people

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irrespective of their nationality, race, gender, citizenship status, ethnic origin, sexual orientation, gender identification, religion or philosophy, disability and age, among others;

and we strive to put this into practice when hiring, developing and retaining talent.

A focus on promoting from within has led to continued increases in internal fill rates for open positions and the involvement of business leaders across the organization in talent reviews to assess employees on performance and future potential.

These talent reviews continue to identify high potential employees, build bench strength, increase retention and help us identify our future leaders and innovators.

These reviews also allow us to identify gaps in our organization and the actions needed to fill those gaps.

We uphold the freedom of association and fully recognize the right of collective bargaining.

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We value exchanging information and views with the local unions and works councils with the view to finding solutions to our common issues and ensuring success for both our employees and the Company.

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Labor Relations

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Our integrated global management system with established standards and processes is based on the principles of the Responsible Care, International Organization for Standardization’s (“ISO”) 9001 Quality Management System, ISO 14001 Environmental Management Systems and ISO 45001 Safety Management Systems.

All of our operating sites with the exception of our facility in France are third-party certified to ISO 14001 and ISO 9001 standards.

Our facility in France is ISO 9001 certified and we plan to get ISO 14001 third party certified in 2022.

The global management system outlines our processes and procedures practiced in relation to environmental protection, occupational and process safety, health protection and quality management as well as sustainable compliance, social accountability and product stewardship.

Our sustainability report is accessible on our webpage:

All of our operating sites are third-party certified to ISO 14001 and ISO 9001 standards.

Our global management system outlines our processes and procedures practiced in relation to environmental protection, occupational safety, industrial hygiene and quality management as well as sustainable compliance and product stewardship.

Our annual sustainability report is accessible on our webpage:

www.orioncarbons.com.

Our operations involve the use, processing, handling, storage and transportation of materials that are subject to supranational, national and local environmental and safety laws and regulations.

Our production facilities require operating permits that are subject to renewal or modification.

Our sustainability report is not incorporated by reference into this Annual Report in Form 10-K.

Our operations involve the use, processing, handling, storage and transportation of materials that are subject to international, national and local environmental and safety laws and regulations.

All of our production facilities require operating permits.

We believe that our operations are currently in substantial compliance with all applicable environmental, health and safety laws and regulations.

Although our management systems and practices are designed to ensure compliance with laws and regulations, future developments and increasingly stringent regulation could require us to make additional unforeseen environmental, health and safety expenditures.

Our management systems and practices are designed to ensure compliance with laws and regulations, and increasingly stringent regulation may require us to make additional unforeseen environmental, health and safety expenditures.

Environmental

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In order to maintain compliance with emission requirements in certain jurisdictions, we utilize various desulfurization and de-NOx processes.

We control the particulate matter by using our bag filter technology.

We control the particulate matter by using bag filter technology.

In the European Union, we are subject to the EU Directive No.

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In addition to the IED Directive and its implementation, European jurisdictions in which we operate may provide for further regulations regarding emission reduction and safety technology standards that apply to our facilities (for example, the German Emissions Control Act).

The EU Commission is currently doing a revision of EU measures addressing pollution from large industrial installations, as announced in the European Green Deal.

The EU Commission is currently revising EU measures addressing pollution from large industrial installations, as announced in the European Green Deal.

The aims of the revision are to progress towards the EU’s zero pollution ambition for a toxic-free environment and to support climate, energy and circular economy policies.

This includes the revision of the IEC Directive.

In the U.S., we are subject to emissions limitations under the federal Clean Air Act (“CAA”) and a consent decree entered into with the U.S.

Environmental Protection Agency (“EPA”) as described in more detail below under “ —Environmental Proceedings”, as well as analogous state and local laws, which regulate the emission of air pollutants from our facilities and impose significant monitoring, record keeping and reporting requirements.

This includes the revision of the IED Directive.

Orion Engineered Carbons S.A

In the U.S., we are subject to emissions limitations on prevention of significant deterioration (“PSD”) permits issued under the federal Clean Air Act (“CAA”) and a consent decree (“CD”) entered into with the U.S.

Environmental Protection Agency (“EPA”) , as well as analogous state and local laws, which regulate the emission of air pollutants from our facilities and impose significant monitoring, record keeping and reporting requirements.

Commitments and Contingencies ” to the Company’s audited financial statements included in this Annual Report in Form 10-K for a description of the EPA CD.

In addition, these laws and regulations require us to obtain pre-approval for the construction or modification of facilities expected to produce or significantly increase air emissions and to obtain and comply with air permits that include stringent conditions on air emissions and operations.

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We have incurred, and expect to continue to incur, substantial administrative and capital expenditures to maintain compliance with CAA requirements.

Pursuant to the CAA, the EPA has developed industry-specific National Emission Standards for Hazardous Air Pollutants (“NESHAPs”) for stationary sources classified as “major” on the basis of their hazardous air pollutant emissions under which we are required to comply with Maximum Achievable Control Technology (“MACT”) standards.

facilities are subject to MACT standards applicable to

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carbon black facilities, as well as MACT standards applicable to industrial boilers.

The EPA is promulgating carbon black MACT which will impose operating requirements for our U.S.

plants are generally compliant already and we will start a program of verifying that we meet these new requirements in 2022 with the aim of being fully compliant based on the EPA’s schedule.

Under these, we are required to comply with Maximum Achievable Control Technology (“MACT”) standards.

facilities are subject to MACT standards applicable to carbon black facilities, as well as MACT standards applicable to industrial boilers.

The EPA amended existing carbon black MACT standards, which increased stack testing frequency and imposed more stringent startup and operating requirements for our U.S.

plants are generally already compliant.

We are in the process of confirming that we met the EPA requirements in 2022.

In China and South Korea, our operations have been subject to increasingly strict air quality regulations in recent years.

These regulation changes in China and South Korea in recent years have been complied with.

Those to come may require additional capital and operating expenditures for specific equipment or technologies to control emissions, and we have projects underway to address the new requirements.

We believe we are in substantial compliance with these regulatory changes in China and South Korea.

We expect that future regulations may require additional capital and operating expenditures for specific equipment or technologies to control emissions that are being developed as needed to meet these new requirements.

Greenhouse Gas Regulation and Emissions Trading— Our facilities also emit significant volumes of CO 2 .

In the European Union, all of our production facilities (except for our manufacturing site in France) are subject to the European Emission Trading System (“ETS”) for CO 2 emissions.

Industrial sites to which the ETS applies receive a certain volume of allowances in metric tons to emit greenhouse gasses (“GHGs”) and must surrender allowances in equivalent volume for each metric ton of greenhouse gas (“GHG”) emitted.

In the European Union (“EU”), all of our production facilities (except for our manufacturing site in France) are subject to the European Emission Trading System (“EU ETS”) for CO 2 emissions.

Industrial sites to which the EU ETS applies receive a certain volume of allowances in metric tons to emit greenhouse gasses (“GHG”) and must surrender allowances in equivalent volume for each metric ton of greenhouse gas (“GHG”) emitted.

Carbon black production is currently listed on the carbon leakage list, which allows receiving the significant share of needed emission allowances free of charge.

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The actual EU ETS is expected to be subject to regular reviews and possible changes in order to ensure the way to achieve those climate reduction targets.

The design concept of the South Korean ETS is similar to the European EU ETS.

The design concept of the South Korean ETS is similar to the EU ETS.

We may need to purchase emission rights to cover the shortfall where emissions exceed the quantity of free allowances, incurring additional costs.

In the United States, the EPA regulates GHG emissions under the Clean Air Act, and has adopted rules that require reporting of GHG emissions by owners and operators of facilities in certain source categories, which include our facilities.

At the state level, some states have already taken legal measures to reduce emissions of GHGs, primarily through the planned development of GHG emission inventories and/or regional GHG cap-and-trade programs.

Currently none of our plants are located in states that implemented GHG cap-and-trade programs, but there is no assurance that future changes would not materially affect our operations or require material capital expenditures.

The adoption of legislation or regulations that require reporting of GHGs, establish permitting thresholds based on GHG emissions or otherwise limit or impose compliance obligations for emissions of GHGs from our equipment and operations could require us to incur costs to obtain and comply with permits, reduce emissions of GHGs associated with our operations or purchase carbon offsets or allowances.

In the United States, the EPA regulates GHG emissions under the CAA and has adopted rules that require reporting of GHG emissions by owners and operators of facilities in certain source categories, which include our facilities.

At the state level, some states have already taken legal measures to reduce emissions of GHG, primarily through the planned development of GHG emission inventories and/or regional GHG cap-and-trade programs.

Currently none of our plants are located in states that have implemented GHG cap-and-trade programs, but there is no assurance that future changes will not materially affect our operations or require material capital expenditures.

The adoption of legislation or regulations that require reporting of GHG, establish permitting thresholds based on GHG emissions or otherwise limit or impose compliance obligations for emissions of GHG from our equipment and operations could require us to incur costs to obtain and comply with permits, reduce emissions of GHG associated with our operations or purchase carbon offsets or allowances.

There are also ongoing discussions and regulatory initiatives in other countries in which we have facilities, regarding GHG emission reduction programs.

For instance, South Africa has adopted CO2 tax regime.

For instance, South Africa has adopted a CO 2 tax regime.

Water Quality— Our plants are net consumers of water and are generally subject to laws and regulations related to water management.

Most of our plants recycle a substantial amount of the water used in the manufacturing process, which is used as “quench water” in the cooling process.

Contamination— As we handle chemicals that could cause water or soil contamination, we may be subject to remediation obligations under national law.

Additionally, third parties may be able to file claims for personal injury and property damage allegedly caused by the release of hazardous substances or other pollutants into the environment.

Contamination— As we handle chemicals that could cause water or soil contamination, we may be subject to remediation obligations under national laws.

Additionally, third parties have in the past and may in the future be able to file claims for personal injury and property damage allegedly caused by the release of hazardous substances or other pollutants into the environment.

In particular, the German Federal Act on Soil Protection requires the prevention of soil contamination by taking adequate precautions.

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Our sites have areas currently and formerly used as landfills that are subject to regulation under RCRA, and certain of our facilities have been investigated and remediated under RCRA.

These laws and regulations may also expose us to liability for acts that were in compliance with applicable laws at the time we performed those acts.

These laws and regulations may

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also expose us to liability for acts that were in compliance with applicable laws at the time we performed those acts.

We could incur significant costs in connection with investigation and remediation activities or claims asserted at current or former facilities or third-party sites.

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We generate both hazardous and non-hazardous wastes at our facilities that we manage in accordance with applicable regulations.

Waste streams generated at our facilities include but not limited to office trash, carbon black, solvents, refractory materials, catalyst materials, and non-saleable sulfuric acid.

Certain facilities have on-site landfills permitted for the current disposal of non-hazardous solid waste.

Energy Surcharge— The German Renewable Energies Act (“EEG”) grants above-market payments to the producers of energy generated from renewable sources.

To balance these payments, an energy surcharge is imposed on the consumers of such energy.

Certain exemptions regarding that surcharge are provided in the EEG, in particular for energy intensive industries and captive usage.

It is expected that the

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exemption from the energy surcharge regarding electricity generated for the Company’s own consumption will continue to be grandfathered.

However, there is no assurance that we can maintain the exemption status permanently.

Waste streams generated at our facilities include but are not limited to office trash, carbon black, solvents, refractory materials, catalyst materials, and non-saleable sulfuric acid.

Certain facilities have on-site landfills permitted for the disposal of non-hazardous solid waste, but we are not currently using these landfills to dispose of waste.

Any waste that is not recycled or reused is managed off site in compliance with local regulations.

Chemical Regulations— Some jurisdictions we operate in have established regimes to regulate or control chemical products to ensure the safe manufacture, use and disposal of chemicals.

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Registration has to be made with the European Chemicals Agency (“ECHA”), and the use of certain “highly hazardous chemicals” must be authorized by ECHA.

Furthermore, REACh Regulation contains rules on bringing substances to the market that have been identified as substances of very high concern.

Furthermore, REACH contains rules on bringing substances to the market that have been identified as substances of very high concern.

In the United States, we are subject to federal and state chemical regulations.

In particular, we are subject to the California Safe Drinking Water and Toxic Enforcement Act, which imposes labeling and record keeping requirements.

In South Korea, under the Chemical Control Act, coal-based feedstock oils such as crude coal tar (“CCT”), coal tar distillate (“CTD”) and soft pitch oil (“SPO”) containing more than 0.1% quinoline are treated as hazardous chemicals requiring production sites to be duly licensed.

Under the Toxic Substances Control Act (“TSCA”), the EPA is required to maintain a list of each chemical substance that is manufactured or processed, including imports.

This inventory plays a central role in the regulation of most industrial chemicals in the United States.

Carbon black is listed and maintained as an active substance in the TSCA Chemical Substance Inventory, and all our facilities are subject to chemical data reporting rules (“CDR”).

Under CDR we are required to submit basic exposure information to EPA every five years.

In California, we are subject to the California Safe Drinking Water and Toxic Enforcement Act, which imposes labeling and record keeping requirements.

In South Korea, under its Chemical Control Act, coal-based feedstock oils such as crude coal tar (“CCT”), coal tar distillate (“CTD”) and soft pitch oil (“SPO”) containing more than 0.1% quinoline are treated as hazardous chemicals requiring production sites to be duly licensed.

We are a member of the International Carbon Black Association (the “ICBA”).

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Health and Safety— The health and safety of our employees and customers is one of our highest priorities.

We maintain very good performance in occupational injury and illness rates.

New employees and contractors working on site are given environmental, health and safety (“EHS”) training and we keep track of EHS concerns and issues.

Employees are required to report and log incidents including near misses into the electronic EHS management system.

We strive to continually improve and attain the top performance on occupational injury and illness rates as compared to the chemical industry.

New employees and contractors working and visitors on site are given environmental, health and safety (“EHS”) training, and we keep track of EHS concerns and issues from our employees.

Employees are required to report incidents including “near misses” into the electronic EHS management system.

Our sites are required to implement and report EHS leading and lagging indicators for EHS performance.

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Leading and lagging indicator data and incidents are reviewed by senior management on a monthly basis.

Carbon black is produced under controlled conditions and has high purity levels.

Product Stewardship — Carbon black is produced under controlled conditions and has high purity levels.

It therefore differs from other combustion products that may contain high concentrations of hazardous compounds.

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We have communicated IARC’s classification of carbon black to our customers and employees in accordance with applicable regulatory requirements.

The Permanent Senate Commission for the Investigation of Health Hazards of Chemical Compounds in the Work Area (the “MAK Commission”) of the German Research Foundation ( Deutsche Forschungsgemeinschaft ), which uses a different rating system, classifies carbon black as a suspect carcinogen (Category 3B).

To the best our knowledge, other national and international health organizations have not rated carbon black.

Based on IARC’s classification some regulatory jurisdictions now classify carbon black as a possible carcinogen.

Any risk reclassification of our raw materials, intermediates or finished product could result in increased operating costs or affect product lines or sales.

The Community Rolling Action Plan (“CoRAP”) indicates substances for evaluation by the European Member States.

The Community Rolling Action Plan (“CoRAP”) indicates substances for evaluation by the member states of the European Union.

The evaluation aims to clarify the initial concern that manufacturing and/or use of shortlisted substances could pose a risk to human health or the environment.

With ECHA's update of the CoRAP list in March 2016 Carbon black was included in CoRAP for substance evaluation in 2018 though it has been postponed several times.

With ECHA's update of the CoRAP list in March 2016, Carbon black was included in CoRAP for substance evaluation in 2018 though such evaluation has been postponed several times.

With ECHA’s most recent update from December 2022, the carbon black substance evaluation is proposed to be further delayed to 2025.

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The initial reasons of concern raised by the French Agency for Food, Environmental and Occupational Health & Safety (“ANSES”) relate to carbon black being an alleged carcinogenic substance and a suspected reproduction toxicant.

Orion is working as a member of the cb4reach Consortium and ICBA to address the reasons for nomination.

Orion is working as a member of the

Orion Engineered Carbons S.A

cb4REACH Consortium and ICBA to address the reasons for nomination.

The conclusion of the evaluation may have significant business impact should ANSES conclude that carbon black poses a risk to human health.

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These developments may significantly affect our business, including increasing costs of doing business.

According to the recommendation of October 18, 2011 (2011/696/EU), carbon black is defined as a nanomaterial in Europe.

Afterwards the ISO developed the ISO TC 229 “Nanotechnologies,” which considers carbon black as a “nano-structured material.” Other countries (such as, US, Canada, France, Belgium, Sweden, Switzerland, etc.) have implemented notification schemes related to nano materials.

In Europe, Commission Regulation (EU) 2018/1881 as of December 3, 2018 amending the REACh regulation introduced new information requirements for substances with forms meeting the definition criteria of EU COM 2011/696/EU.

According to the recommendation of October 18, 2011 (EU COM 2011/696/EU), the majority of carbon black grades are defined as a nanomaterial in Europe.

This status for carbon black has not changed with the most recent update of the recommendation of June 10, 2022 (2022/C 229/01).

The ISO developed the ISO TC 229 “Nanotechnologies,” which considers carbon black as a “nano-structured material.” Other countries (such as, the U.S., Canada, France, Belgium, Sweden, Switzerland, etc.) have implemented notification schemes related to nanomaterials.

In Europe, Commission Regulation (EU) 2018/1881 as of December 3, 2018 amending REACH introduced new information requirements for substances with forms meeting the definition criteria of EU COM 2011/696/EU.

The notification of carbon black under the different notification schemes as well as meeting the new nano-related information requirements under REACH requires capital and resource commitments to compile and file dossiers.

Furthermore, more and more specific requirements for substances regarded as

Orion Engineered Carbons S.A

nanomaterials are emerging with Europe.

Furthermore, more and more specific requirements for substances regarded as nanomaterials are emerging within Europe.

For example, Germany is planning to introduce a more stringent “Occupational Exposure Limit” for nanomaterials.

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Further Regulatory Matters

We are subject to further governmental regulation from national, European Union and other international regulatory authorities concerning, among other things:

We are subject to further governmental regulation from state, national, European Union and other international regulatory authorities concerning, among other things:

product safety, export and import control regulations and other customs regulations, data protection and our competitive and marketplace conduct.

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

What changed 10-K

Item 1. Business