Investments

9 Months Ended

Sep. 30, 2022

Equity Method Investments and Joint Ventures [Abstract]

Investments

Investments:The Company holds a 49% equity interest in Windfield Holdings Pty. Ltd. (“Talison”), where the ownership parties share risks and benefits disproportionate to their voting interests. As a result, the Company considers Talison to be a variable interest entity (“VIE”), however this investment is not consolidated as the Company is not the primary beneficiary. The carrying

amount of our 49% equity interest in Windfield, which is our most significant VIE, was $706.5 million and $476.6 million at September 30, 2022 and December 31, 2021, respectively. The Company’s aggregate net investment in all other entities which it considers to be VIEs of which the Company is not the primary beneficiary was $7.2 million at September 30, 2022 and $8.0 million at December 31, 2021. The Company’s unconsolidated VIEs are reported in Investments on the consolidated balance sheets. The Company does not guarantee debt for, or have other financial support obligations to, these entities, and its maximum exposure to loss in connection with its continuing involvement with these entities is limited to the carrying value of the investments.

Effective September 30, 2022 the Company began recording the balance of deferred profits on sales from its equity method investments to the Company to Inventories, specifically finished goods. Historically this balance was recorded in Investments in the consolidated balance sheets. As a result, the historical balances have been reclassified to reflect the current period presentation. This change in presentation was made to better align the location of these deferred profits with their respective inventory balances until they are sold to a third party. Deferred profits from equity method investments totaled $222.1 million and $14.3 million as of September 30, 2022 and December 31, 2021, respectively, with the increase primarily driven by increased pricing and volume of sales from the Talison joint venture. There was no impact to the statements of income, comprehensive (loss) income, changes in equity or cash flows for any period as a result of this change in presentation. In addition, the Company does not believe this change in presentation is material to the consolidated financial statements for any prior period.

As part of the proceeds from the sale of the FCS business on June 1, 2021, Grace issued Albemarle preferred equity of a Grace subsidiary having an aggregate stated value of $270 million. The preferred equity can be redeemed at Grace’s option under certain conditions and will accrue PIK dividends at an annual rate of 12% beginning two years after issuance. This preferred equity had a fair value of $253.7 million and $246.5 million at September 30, 2022 and December 31, 2021, respectively, which is reported in Investments in the consolidated balance sheets.