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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 10-K
  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2019
 OR
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 001-34474
 CENTURY ALUMINUM COMPANY
 (Exact name of registrant as specified in its charter)
Delaware
13-3070826
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
One South Wacker Drive
60606
Suite 1000
(Zip Code)
Chicago
 
Illinois
 
(Address of principal executive offices)
 
 Registrant’s telephone number, including area code:  (312) 696-3101
 Securities registered pursuant to Section 12(b) of the Act:
Title of each class:
Trading Symbol(s)
Name of each exchange on which registered:
Common Stock, $0.01 par value per share
CENX
NASDAQ Stock Market LLC
 
 
(NASDAQ Global Select Market)
 
Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.         Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.         Yes      No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.         Yes      No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).         Yes      No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one)
Large Accelerated Filer
Accelerated Filer
Non-Accelerated Filer

Smaller Reporting Company
Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).         Yes    No
Based upon the closing price of the registrant’s common stock on the NASDAQ Global Select Market on June 30, 2019, the approximate aggregate market value of the common stock held by non-affiliates of the registrant was approximately $345,000,000.  As of February 20, 2020, 89,185,661 shares of common stock of the registrant were issued and outstanding.
Documents Incorporated by Reference:



All or a portion of Items 10 through 14 in Part III of this Form 10-K are incorporated by reference to the Registrant’s definitive proxy statement on Schedule 14A for its 2020 Annual Meeting of Stockholders, which will be filed within 120 days after the close of the fiscal year covered by this report on Form 10-K, or if the Registrant’s Schedule 14A is not filed within such period, will be included in an amendment to this Report on Form 10-K which will be filed within such 120 day period.



TABLE OF CONTENTS
PAGE
 
PART I
 
 
PART II
 
 
PART III
 
 
PART IV
 
 



Forward-Looking Statements
This Annual Report on Form 10-K includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to the "safe harbor" created by section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements are statements about future events and are based on our current expectations. These forward-looking statements may be identified by the words "believe," "expect," "hope," "target," "anticipate," "intend," "plan," "seek," "estimate," "potential," "project," "scheduled," "forecast" or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," "might," or "may."
Forward-looking statements in this Annual Report and in our other reports with the Securities and Exchange Commission (the "SEC"), for example, may include statements regarding:

The future financial and operating performance of the Company and its subsidiaries, including financial and operating estimates or projections from the restart of curtailed capacity, as a result of future raw material costs or otherwise;
Our assessment of the aluminum market and aluminum prices (including premiums);
Our assessment of alumina pricing and costs associated with our other key raw materials, including power;
Our ability to successfully manage market risk and to control or reduce costs;
Our plans and expectations with respect to future operations, including any plans and expectations to curtail or restart production;
Our plans and ability to bring our Hawesville smelter back to full production and expectations as to the costs and benefits associated with this project, including expected incremental production or earnings and cash flow as well as benefits from investments in new technology and other production improvements;
Our ability to successfully obtain long-term competitive power arrangements for our operations, including at Mt. Holly;
Our assessment of global and local financial and economic conditions;
The impact of Section 232 relief, including tariffs or other trade remedies, the extent to which any such remedies may be changed, including through exclusions or exemptions, and the duration of any trade remedy;
The impact of any new or changed law, regulation, including, without limitation, sanctions or other similar remedies or restrictions;
Our anticipated tax liabilities, benefits or refunds including the realization of U.S. and certain foreign deferred tax assets and liabilities;
Our ability to access existing or future financing arrangements and the terms of any such future financing arrangements;
Our ability to repay or refinance debt in the future;
Our ability to recover losses from our insurance;
Estimates of our pension and other postretirement liabilities, legal and environmental liabilities and other contingent liabilities;
Our assessment of any future tax or insurance claims;
Negotiations with labor unions; and
Our future business objectives, plans, strategies and initiatives, including our competitive position and prospects.

Where we express an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from future results expressed, projected or implied by those forward-looking statements. Important factors that could cause actual results and events to differ from those described in such forward-looking statements can be found in the risk factors and forward-looking statements cautionary language contained in Item 1A. Risk Factors in this Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and in other filings made with the SEC.  Although we have attempted to identify those material factors that could cause actual results or events to differ from those described in such forward-looking statements, there may be other factors that could cause actual results or events to differ from those anticipated, estimated or intended. Many of these factors are beyond our ability to control or predict. Given these uncertainties, the reader is cautioned not to place undue reliance on our forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

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PART I
Throughout this Annual Report on Form 10-K, and unless expressly stated otherwise or as the context otherwise requires, "Century Aluminum Company," "Century Aluminum," "Century," the "Company," "we," "us," and "our" refer to Century Aluminum Company and its subsidiaries.
Item 1.  Business
Overview
Century Aluminum Company is a global producer of primary aluminum and operates aluminum reduction facilities, or "smelters," in the United States and Iceland.  Aluminum is an internationally traded commodity, and its price is effectively determined on the London Metal Exchange (the "LME"), plus applicable regional and product premiums. Our primary aluminum reduction facilities produce standard-grade and value-added primary aluminum products.  Our current annual production capacity is approximately 1,016,000 tonnes per year ("tpy"). We produced approximately 805,000 tonnes of primary aluminum in 2019.
In addition to our primary aluminum assets, we own a carbon anode production facility located in the Netherlands ("Vlissingen"). Carbon anodes are consumed in the production of primary aluminum. Vlissingen supplies carbon anodes to our aluminum smelter in Grundartangi, Iceland. Each of our aluminum smelters in the United States produces anodes at on-site facilities.
We operate our business through one reportable segment, primary aluminum. Additional information about our segment reporting and certain geographic information is available in Note 18. Business Segments to the consolidated financial statements included herein.
Century Aluminum Company is a Delaware corporation with our principal executive offices located at One South Wacker Drive, Suite 1000, Chicago, Illinois 60606.
Strategic Objective
Our strategic objective is to serve our various constituencies (which, importantly, includes the creation of long-term value for our stockholders) by: (a) optimizing our safety and environmental performance; (b) improving the competitiveness of our existing assets by managing costs and improving productivity and efficiency; (c) pursuing upstream investment opportunities; and (d) expanding our primary aluminum business by improving and investing in the facilities we currently own as well as constructing, investing in or acquiring additional production capacity. 
Primary Aluminum Facilities
Overview of Facilities
We operate three U.S. aluminum smelters, in Hawesville, Kentucky ("Hawesville"), Robards, Kentucky ("Sebree") and Goose Creek, South Carolina ("Mt. Holly"), and one aluminum smelter in Grundartangi, Iceland ("Grundartangi").
Grundartangi
The Grundartangi facility, located in Grundartangi, Iceland, is a primary aluminum reduction facility owned and operated by our wholly-owned subsidiary, Nordural Grundartangi ehf, and is our most modern facility. Grundartangi is currently in the process of a multi-year expansion project that has brought the annual primary aluminum production capacity from 280,000 tonnes to current capacity of approximately 317,000 tonnes and is expected to ultimately increase annual production capacity at Grundartangi to approximately 325,000 tonnes.  Grundartangi produces standard-grade aluminum ingot and a primary foundry alloy product, which is a value-added product that is sold at a premium to standard-grade aluminum.
Hawesville 
Hawesville, located adjacent to the Ohio River near Hawesville, Kentucky, is a primary aluminum reduction facility owned and operated by our wholly-owned subsidiary, Century Kentucky, Inc. ("CAKY"). Hawesville has an annual production capacity of approximately 250,000 tonnes of primary aluminum.

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Approximately 60% of Hawesville's capacity was curtailed in the fourth quarter of 2015 as a result of significant declines in the LME price for aluminum. We are currently in the process of a multi-year project at Hawesville to restart this previously curtailed capacity, rebuild the two potlines that we continued to operate past their expected life cycle, and implement new technology across all production. In early 2019, we completed the first phase of this project, which involved restarting production on the three potlines that had been curtailed since the fourth quarter of 2015. The second phase of this project involves the rebuilding the two potlines that had been continuously operating and implementation of certain new technology across all production at Hawesville. The first of these potlines is currently in the process of being rebuilt and is expected to return to production in early 2020. The rebuild of the fifth and final potline at Hawesville and completion of planned technology upgrades are expected to be completed over the next several years, subject to market conditions. Each potline at Hawesville represents incremental production capacity of approximately 50,000 tonnes.
Hawesville produces standard-grade and high purity aluminum that can be cast into sow or delivered directly to nearby customers as molten metal.
Hawesville is our largest U.S. smelter and is the largest producer of high purity primary aluminum in North America. Four of Hawesville's five potlines are capable of producing high purity aluminum which is sold at a premium to standard-grade aluminum and is used extensively by the defense industry as well as for aerospace and other applications.  

Sebree 

Sebree, located adjacent to the Green River near Robards, Kentucky, is a primary aluminum reduction facility owned and operated by our wholly-owned subsidiary, Century Aluminum Sebree LLC ("Century Sebree"). Sebree has an annual production capacity of approximately 220,000 tonnes of primary aluminum. Sebree produces standard-grade aluminum that can be cast into sow and value-added products, including billet, that are sold at a premium to standard-grade aluminum or delivered directly to nearby customers as molten metal. In 2019, we expanded the smelter’s overall output by adding 20,000 tonnes of additional secondary (scrap reprocessing) capacity.
Mt. Holly
Mt. Holly, located in Goose Creek, South Carolina, is a primary aluminum reduction facility owned and operated by our wholly-owned subsidiary, Century Aluminum of South Carolina, Inc. ("CASC"). Mt. Holly has an annual production capacity of approximately 229,000 tonnes. The Mt. Holly facility is currently operating at approximately 50% of capacity while CASC pursues a long-term power solution. See "Key Production Costs — Electrical Power Supply Agreements" below for further discussion of our power arrangements at Mt. Holly.
Mt. Holly produces standard-grade aluminum that is cast into tee bars as well as several value-added products, including billet and foundry products. These value-added primary aluminum products are sold at a premium to standard-grade aluminum. 
Primary Aluminum Production Capacity
Our primary aluminum smelters and their respective primary aluminum capacities are shown in the following table:
Facility
 
Ownership Percentage
 
Operational
 
Annual Production Capacity (tpy) (1)
 
Actual 2019 Annual Production (tpy)
 
Grundartangi, Iceland
 
100%
 
1998
 
317,000
 
316,000
 
Hawesville, Kentucky, USA
 
100%
 
1970
 
250,000
 
156,000
 
Sebree, Kentucky, USA
 
100%
 
1973
 
220,000
 
219,000
 
Mt. Holly, South Carolina, USA
 
100%
 
1980
 
229,000
 
114,000
 
 
 
 
 
 
 
1,016,000
 
805,000
 

(1) 
The tonnes per year (tpy) figures in this column reflect an estimate of the facility's total production capacity based on plant design, historical operating results and operating efficiencies and does not necessarily represent each facility’s maximum production capability.


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Primary Aluminum Shipment Volume
The following table shows our primary aluminum shipment volumes since 2015(1).
chart-2f015e38a952534f8de.jpg
(1) 
Shipment volumes reflect (i) the partial curtailment of our Hawesville and Mt. Holly operations during the fourth quarter of 2015 and (ii) incremental production from the restart of capacity at Hawesville beginning in 2018, offset by lower production due to a temporary potline outage at Sebree in 2018.

Primary Aluminum Projects

Helguvik project

The Helguvik project is a greenfield project for an aluminum reduction facility in Helguvik, Iceland ("Helguvik" or the "Helguvik project"), owned by our wholly-owned subsidiary, Nordural Helguvik ehf ("Nordural Helguvik"). The Helguvik project site is located approximately 30 miles from the city of Reykjavik, Iceland.  Construction activity and spending on the project have been curtailed since 2008.

Carbon Products Facilities

Vlissingen    
    
In addition to our primary aluminum assets, we own a carbon anode production facility located in Vlissingen, the Netherlands, which is owned and operated by our wholly-owned subsidiary, Century Aluminum Vlissingen B.V. Vlissingen has an annual carbon anode production capacity of approximately 157,000 tonnes. We acquired Vlissingen in 2012 and restarted the facility in late 2013 with an initial carbon anode production capacity of 75,000 tonnes. In 2015, we completed a project to expand Vlissingen’s annual production capacity to 145,000 tonnes; and in 2019, we completed the rebuild and expansion of one of the baking furnaces at Vlissingen which is expected to further increase annual carbon anode production capacity by an

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additional 12,000 tonnes. With these expansion projects in place, we expect Vlissingen will be able to supply approximately 90% of Grundartangi’s carbon anodes requirements at current production levels. Each of our smelters in the United States produces anodes at on-site facilities.
Pricing
Pricing for primary aluminum products is typically comprised of three components: (i) the base commodity price which is based on quoted prices on the LME, plus (ii) any regional premium (e.g., the Midwest premium for metal sold in the United States and the European Duty Paid premium for metal sold into Europe) plus (iii) any product premium. Our operating results are highly sensitive to changes in the LME price of primary aluminum and the amount of regional premiums and product premiums.  As a result, from time to time, we assess the appropriateness of mitigating the effects of fluctuations in the aluminum price through the use of fixed-price commitments, LME-linked supply contracts and other financial instruments. See Item 7A. Quantitative and Qualitative Disclosures about Market Risk for further discussion of how we manage our exposure to market risk.
Customer Base
We have historically derived substantially all of our consolidated net sales from a small number of customers. For the year ended December 31, 2019, we derived approximately 65% of our consolidated sales from Glencore plc and its affiliates (together, "Glencore") and approximately 13% of our consolidated sales from Southwire Company ("Southwire"). We currently have agreements in place to sell a substantial portion of our 2020 production to these customers. We expect that the rest of our 2020 customer base will remain fairly concentrated among a small number of customers under short-term contracts.
Both Glencore and Southwire purchase aluminum produced at our U.S. smelters at prices based on the LME price for primary aluminum plus the Midwest regional premium plus any additional market-based product premiums. Glencore also purchases aluminum produced at our Grundartangi, Iceland smelter at prices based on the LME plus the European Duty Paid premium plus any additional market-based product premiums. Glencore beneficially owns 42.9% of our outstanding common stock (46.9% on a fully diluted basis).
Key Production Costs
Alumina, electrical power, calcined petroleum coke and liquid pitch (the key raw materials for carbon anodes), and labor are the principal components of our cost of production.  These components together represented over 75% of our cost of goods sold for the year ended December 31, 2019.  For a description of certain risks related to our raw materials, supplies, power and labor, see Item 1A. Risk Factors in this Annual Report on Form 10-K.
Alumina Supply Agreements
While Century may enter into other purchases of alumina as market conditions change, a summary of our principal alumina supply agreements is provided below:
Supplier
 
Quantity
 
Term
 
Pricing (2)
Noble Resources
 
Approximately 180,000 tpy
 
Through December 2020
 
LME-linked
Concord Resources Ltd.
 
Approximately 180,000 tpy
 
Through December 2022
 
LME-linked
Concord Resources Ltd.
 
Approximately 600,000 tpy
 
Through December 2024
 
Fixed, LME-linked, and API-linked components
Glencore(1)
 
Variable
 
Through December 2021
 
API and LME-linked
(1) 
Under the terms of this agreement, Glencore provides alumina supply for all of Century's requirements net of other contractual commitments.
(2) 
"API" refers to a published alumina price index.


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Electrical Power Supply Agreements
The table below summarizes our long-term power supply agreements:
 
 
Facility
 
 
Supplier
 
 
Term
 
 
Pricing
 
Grundartangi
 
Landsvirkjun
 
Through 2023 - 2036
 
Variable rate linked to (i) the LME price for primary aluminum or (ii) the Nord Pool power market
 
 
Orkuveita Reykjavíkur ("OR")
 
 
 
HS Orka hf ("HS")
 
 
Hawesville
 
Kenergy Corporation ("Kenergy")
 
Through December 31, 2023
 
Variable rate based on market prices
 
Sebree
 
Kenergy
 
Through December 31, 2023
 
Variable rate based on market prices
 
Mt. Holly
 
South Carolina Public Service Authority
 
Through December 31, 2020
 
Variable rate based in part on a cost of service charge and in part on natural gas prices
 
Helguvik
 
OR
 
Approximately 25 years from the dates of each phase of power delivery
 
Variable rate based on the LME price for primary aluminum
 
Electrical power represents one of the largest components of our cost of goods sold. From time to time, we may enter into forward contracts or other hedging arrangements to mitigate our electrical power or natural gas price risk. The paragraphs below summarize the sources of power and the long-term power arrangements for each of our operations.
Grundartangi. Power is currently supplied to Grundartangi from hydroelectric and geothermal sources under long-term power purchase agreements with HS, Landsvirkjun and OR. Historically, all of the power supplied to Grundartangi has been delivered at prices indexed to the price of primary aluminum. Beginning in November 2019, the price of approximately thirty percent (30%) of Grundartangi’s power requirements began to be linked to the market price for power in the Nord Pool power market, the trading market for power in the Nordic countries and certain other areas of Europe. As of December 31, 2019, we had entered into financial contracts to fix the forward price of approximately 4% of Grundartangi's total power requirements for the period from November 1, 2019 through December 31, 2020, and we may enter into further similar financial contracts in the future.
Grundartangi's power purchase agreements expire on various dates from 2023 through 2036 (subject to extension). Each power purchase agreement contains take-or-pay obligations with respect to a significant percentage of the total committed and available power under such agreement.
Hawesville. CAKY is party to a power supply arrangement with Kenergy and EDF Trading North America, LLC ("EDF") which provides market-based power to the Hawesville smelter. Under this arrangement, the power companies purchase power on the open market and pass it through to Hawesville at Midcontinent Independent System Operator ("MISO") pricing plus transmission and other costs. The power supply arrangement with Kenergy has an effective term through December 2023. The arrangement with EDF to act as our market participant with MISO has an effective term through May 2021. Both of these agreements extend automatically year to year thereafter unless a one year notice of termination is given by either party.
Sebree. Century Sebree is party to a power supply arrangement with Kenergy and EDF which provides market-based power to the Sebree smelter. Similar to the arrangement at Hawesville, the power companies purchase power on the open market and pass it through to Sebree at MISO pricing plus transmission and other costs. The power supply arrangement with Kenergy has an effective term through December 2023. The arrangement with EDF to act as our market participant with MISO has an effective term through May 2021. Both of these agreements extend automatically year to year thereafter unless a one year notice of termination is given by either party.
Mt. Holly. CASC is party to a power agreement with the South Carolina Public Service Authority ("Santee Cooper") for power to the Mt. Holly smelter. Under this contract, 25% of Mt. Holly's electric power requirements is supplied from Santee Cooper's generation at cost-of-service based rates. The remaining 75% of Mt. Holly's electric power requirements is supplied

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from third-party generation at rates based on natural gas prices. The agreement with Santee Cooper has a term through December 31, 2020 and can be terminated by Mt. Holly on 120 days' notice. The agreement with the other power supplier has a term through December 31, 2020 and may be terminated by Mt. Holly on 60 days' notice.
Mt. Holly's inability to access the open market for 100% of its power requirements significantly impacts its ability to be competitive in the aluminum industry and puts its continued operation at risk. As a result of such uncompetitive power prices, Mt. Holly has already curtailed 50% of its production capacity. See Item 1A. Risk Factors. If we are unable to enter into a long term, market-based power arrangement for Mt. Holly, we may choose, or be forced, to further curtail operations at the plant.
Helguvik. Nordural Helguvik is party to a power agreement with OR for a portion of Helguvik’s expected power requirements to the Helguvik project. The agreement would provide power at LME-based variable rates and contain take-or-pay obligations with respect to a significant percentage of the total committed and available power under such agreement. The first stage of power under the OR power purchase agreement (approximately 47.5 megawatts ("MW")) became available in the fourth quarter of 2011 and is currently being utilized at Grundartangi. The agreement contains certain conditions to OR’s obligations with respect to the remaining phases and OR has alleged that certain of these conditions have not been satisfied.
See Note 15. Commitments and Contingencies to the consolidated financial statements included herein for additional information concerning our power arrangements.
Employees
As of December 31, 2019, we had 2,079 employees.
Labor Agreements
The bargaining unit employees at our Grundartangi, Vlissingen, Hawesville and Sebree facilities are represented by labor unions, representing 65% of our total workforce.  Our employees at Mt. Holly are not represented by a labor union.
A summary of our key labor agreements is provided below:
Facility
 
Organization
 
Term
Grundartangi
 
Icelandic labor unions
 
Through December 31, 2019
Hawesville
 
United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (“USW”)
 
Through April 1, 2020
Sebree
 
USW
 
Through October 28, 2023
Vlissingen
 
Federation for the Metal and Electrical Industry (“FME”)
 
Through December 1, 2020
Approximately 86% of Grundartangi’s workforce is represented by five labor unions, governed by a labor agreement that establishes wages and work rules for covered employees. This agreement expired on December 31, 2019. Since such time, we have been operating under the terms of the expired agreement while we engage in negotiations with the unions regarding the terms of a new agreement.
100% of Vlissingen's workforce is represented by the FME. The FME negotiates working conditions with trade unions on behalf of its members. The current labor agreement is effective through December 1, 2020.
Approximately 56% of our U.S. based workforce is represented by the USW. CAKY's Hawesville employees represented by the USW are under a collective bargaining agreement that expires on April 1, 2020. Century Sebree's employees represented by USW are under a collective bargaining agreement that expires on October 28, 2023.



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Competition
The market for primary aluminum is global, and demand for aluminum varies widely from region to region.  We compete with aluminum producers within the U.S. and internationally as well as with producers of alternative materials such as steel, copper, carbon fiber, composites, plastic and glass, each of which may be substituted for aluminum in certain applications. Our competitive position depends, in part, on the availability of electricity, alumina and our other key raw materials to our operations at competitive prices. We face global competition from companies who may have access to these key production costs at lower prices. Many of our competitors are also larger than we are and have vertically integrated operations with superior cost positions. As a result, these companies may be better able to withstand reductions in price or other adverse industry or economic conditions.
Competitive Advantages
While we face significant competition, we also have several competitive advantages. We believe our key competitive advantages are:
Focus on Primary Aluminum Business. We operate principally in the production of primary aluminum. By concentrating our activities in primary aluminum production, we are able to focus our resources on optimizing the cost effectiveness of our existing operations, minimizing overhead costs and maintaining a market position where our products are ultimately targeted toward a broad range of end uses.

Strong Internal Growth Opportunities. Over the past several years, we have undertaken expansion programs at all of our operating facilities with the exception of Mt. Holly, and continue to pursue additional internal growth opportunities. We are currently in the process of a multi-year project at Hawesville to restart previously curtailed capacity, rebuild two potlines that we had continued to operate past their expected life cycle, and implement new technology across all production. Bringing Hawesville back to full capacity would allow us to increase our annual production capacity of aluminum by approximately 150,000 tonnes from pre-restart levels. At Sebree, in 2019, we expanded the smelter’s overall output by adding 20,000 tonnes of additional secondary (scrap reprocessing) capacity.

At our Grundartangi, Iceland smelter, we are in the process of a multi-year project that has brought Grundartangi's annual primary aluminum production capacity from 280,000 tonnes to current capacity of approximately 317,000 tonnes and is expected to ultimately increase annual production capacity to approximately 325,000 tonnes. At Vlissingen, in 2019, we completed the rebuild and expansion of one of the baking furnaces which is expected to increase annual carbon anode production capacity by 12,000 tonnes and to allow Vlissingen to supply approximately 90% of Grundartangi’s carbon anode requirements at current production levels.

We continue to pursue additional internal growth opportunities to maximize efficiencies and improve overall performance.
Duty Free Access to our Major Customer Markets. Our facilities benefit from international and national trade laws and regulations. For example, the European Union imposes import tariffs on primary aluminum from producers outside the European Economic Area (the "EEA"), which includes Iceland, and the U.S. imposes a 10% tariff on certain primary aluminum imports into the United States. Our U.S. and Icelandic businesses currently access these respective markets duty-free which provides us with an advantage over our competitors who sell into these markets under these tariff regimes.
Close Proximity to our Major Customers. Our U.S. facilities benefit from the proximity to our U.S. customer base, allowing us to capture the Midwest regional premium and providing a competitive advantage in freight costs over our competitors. The proximity to our customers also allows us to deliver a portion of our Kentucky production in molten form, saving casting costs, and providing a competitive advantage over other potential suppliers. In Iceland, our proximity to European markets provides a competitive advantage for Grundartangi, allowing us to capture the European Duty Paid Premium and other logistical benefits compared to our competitors outside the EEA.
Access to Competitive Power. Our Kentucky operations benefit from market-based power contracts that provide electricity to these operations at competitive prices. The price of approximately thirty percent (30%) of Grundartangi’s power requirements is linked to the market price for power in the Nord Pool power market, the trading market for power in the Nordic countries and certain areas of Europe. Approximately seventy percent (70%) of the power requirements for our Grundartangi plant is indexed to the price of primary aluminum, which reduces our exposure to power price fluctuations and provides a natural hedge against movements in the aluminum price. We continue to seek the ability to access the open market for 100% of our power requirements at Mt. Holly.

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Diverse Value Added Product and Secondary Market Portfolio. We have the ability across our operations to cast a variety of aluminum products, both in terms of shapes and alloys. These high purity and value-added primary aluminum products are sold at a premium to standard-grade aluminum. Our Hawesville plant is the largest producer of high purity aluminum in North America. Four of Hawesville’s five potlines are capable of producing high purity aluminum, which is used extensively by the defense industry as well as for certain aerospace applications. Both Sebree and Mt. Holly have value-added casthouses that have the ability to produce large volumes of billet, slab and other value-added products.

Sustainability. Our Natur-Al™ aluminum produced at our Grundartangi, Iceland smelter has one of the lowest carbon footprints in the industry due to Grundartangi’s access to clean hydroelectric and geothermal power sources. Our Grundartangi smelter has also been certified against the Aluminum Stewardship Initiative (ASI) Performance Standard for responsible production, sourcing and stewardship of aluminum. In addition to providing additional value to our customers, our low carbon footprint in Iceland mitigates our exposure to current or future carbon regulations.
Experienced Management Team. Our management team includes executives and managers with significant experience in the aluminum industry, the broader metals and mining sector, the development of large and complex projects and the functional disciplines we require to manage and grow our business. In addition, the managers of our production facilities have substantial backgrounds and expertise in the technical and operational aspects of these plants.
For additional information, see Item 1A. Risk Factors. We may be unable to continue to compete successfully in the highly competitive markets in which we operate.

Divestitures

Sale of our Interest in BHH

On May 22, 2019, Century Aluminum Asia Holdings Ltd. ("CAHL"), a wholly-owned subsidiary of Century Aluminum Company, entered into an equity transfer agreement (the "Equity Transfer Agreement") with Guangxi Qiangqiang Carbon Co., Ltd. ("GQQ") pursuant to which GQQ acquired all of our 40% interest in Baise Haohai Carbon Co., Ltd. ("BHH"), a former joint venture with GQQ, that owns and operates a carbon anode and cathode facility located in the Guangxi Zhuang Autonomous Region of south China. As consideration for the sale, GQQ paid us the full purchase price of RMB144.9 million ($20.8 million) in cash in 2019.
Environmental Matters
We are subject to various environmental laws and regulations in the countries in which we operate.  We have spent, and expect to continue to spend, significant amounts for compliance with those laws and regulations.  In addition, some of our past manufacturing activities or those of our predecessors have resulted in environmental consequences that require remedial measures.  Under certain environmental laws, which may impose liability regardless of fault, we may be liable for the costs of remediation of contaminated property, including our current and formerly owned or operated properties or adjacent areas, or for the amelioration of damage to natural resources. We believe, based on currently available information, that our current environmental liabilities are not likely to have a material adverse effect on Century.  However, we cannot predict the requirements of future environmental laws and future requirements at current or formerly owned or operated properties or adjacent areas or the outcome of certain existing litigation to which we are a party.  Such future requirements or events may result in unanticipated costs or liabilities that may have a material adverse effect on our financial condition, results of operations or liquidity.  More information concerning our environmental contingencies can be found in Note 15. Commitments and Contingencies to the consolidated financial statements included herein.
Intellectual Property
We own or have rights to use a number of intellectual property rights relating to various aspects of our operations. We do not consider our business to be materially dependent on any of these intellectual property rights.

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Available Information
Additional information about Century may be obtained from our website, which is located at www.centuryaluminum.com.  Our website provides access to periodic filings we have made through the EDGAR filing system of the SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports. We also make available on our website a copy of our code of ethics that applies to all employees and ownership reports filed on Forms 3, 4 and 5 by our directors, executive officers and beneficial owners of more than 10% of our outstanding common stock. Reports that we have filed with the SEC are also available on the SEC website at www.sec.gov.  In addition, we will make available free of charge copies of our Forms 10-K, Forms 10-Q and Forms 8-K upon request.  Requests for these documents can be made by contacting our Investor Relations Department by mail at: One South Wacker Drive, Suite 1000, Chicago, IL 60606, or by phone at: (312) 696-3101.  Information contained in our website is not incorporated by reference in, and should not be considered a part of, this Annual Report on Form 10-K.

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Item 1A. Risk Factors
The following describes certain of the risks and uncertainties we face that could materially and adversely affect our business, financial condition and results of operation, and cause our future results to differ materially from our current results and from those anticipated in our forward-looking statements.  These risk factors should be considered together with the other risks and uncertainties described in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere herein.  This list of significant risk factors is not all-inclusive or necessarily in order of importance.

Declines in aluminum prices could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our operating results depend on the market for primary aluminum which can be volatile and subject to many factors beyond our control. The overall price of primary aluminum consists of three components: (i) the base commodity price, which is based on quoted prices on the LME; plus (ii) any regional premium (e.g., the Midwest premium for metal sold in the United States and the European Duty Paid premium for metal sold into Europe); plus (iii) any product premium. Each of these three components has its own drivers of variability.

The aluminum price is influenced by a number of factors, including global supply-demand balance, inventory levels, speculative activities by market participants, production activities by competitors, political and economic conditions, as well as production costs in major production regions. These factors can be highly speculative and difficult to predict which can lead to significant volatility in the aluminum price. A deterioration in global economic conditions or a worldwide financial downturn also has the potential to adversely affect future demand and prices for aluminum. Geopolitical uncertainty of any kind, including the United Kingdom’s exit from the European Union (commonly referred to as Brexit), major public health issues (such as an outbreak of a pandemic or epidemic like the novel coronavirus COVID-19) or other unexpected events have the potential to negatively impact business confidence and increase price volatility.  Such events may also impact prices by causing disruptions in our operations, supply chain, or workforce.

Declines in aluminum prices could cause us to curtail production at our operations or take other actions to reduce our cost of production, including deferring certain capital expenditures and maintenance costs and implementing workforce reductions. Any deferred costs achieved through such curtailments and other cost cutting measures could ultimately result in higher capital expenditures and maintenance costs than would have been incurred had such costs not been deferred and increase the costs to restore production capacity if market forces warrant. Declines in aluminum prices also negatively impact our liquidity by lowering our borrowing availability under our asset-based revolving credit facilities (due to a lower market value of our inventory and accounts receivable). These factors may have a material adverse effect on our liquidity, the amount of cash flow we have available for our capital expenditures and other operating expenses, our ability to access the credit and capital markets and our results of operations.
Curtailment of aluminum production at our facilities could have a material adverse effect on our business, financial position, results of operations and liquidity.
The continued operation of our smelters depends on the market for primary aluminum and our underlying cost of production. Due to significant declines in the aluminum price during 2015, we made the decision to curtail three potlines representing 60% of production at our Hawesville smelter, which potlines have recently been rebuilt and returned to production. We are also currently operating our Mt. Holly smelter at 50% capacity as a result of uncompetitive power prices. There can be no assurance that future deterioration in the price of aluminum or increases in our costs of production will not result in additional production curtailments at our smelters.
Curtailing production requires us to incur substantial expenses, both at the time of the curtailment and on an ongoing basis. Our facilities are subject to contractual and other fixed costs that continue even if we curtail operations at these facilities. These costs reduce the cost saving advantages of curtailing unprofitable aluminum production. If we are unable to realize the intended cost saving effects of any production curtailment, we may have to seek bankruptcy protection or be forced to divest some or all of our assets.  The process of restarting production following curtailment is also expensive and time consuming. As a result, any decision to restart production would likely require market conditions significantly better than the market conditions at the time the decision to curtail was made. Any curtailments of our operations, or actions taken to seek bankruptcy protection or divest some or all of our assets, could have a material adverse effect on our business, financial position, results of operations and liquidity.

Excess capacity and over production of aluminum products may materially disrupt world aluminum markets causing price deterioration which, in turn, could adversely impact our sales, margins and profitability.

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World aluminum prices have been significantly depressed in recent years primarily due to large amounts of excess capacity and over production in China and other regions. Significant portions of world aluminum production would not be possible without financial and other support from governments and state-owned entities. This oversupply has caused world aluminum prices to be adversely impacted. Over production and the improper export of heavily subsidized aluminum products may result in depressed prices and, in turn, have a material adverse impact on our operating results, sales, margins and profitability.

Changes in trade laws or regulation may have an adverse effect on our sales margins and profitability.

Our businesses compete in a global marketplace and are subject to international and national trade laws and regulations. The breadth of these laws and regulations continues to expand. For example, both the European Union and the U.S. impose import tariffs on primary aluminum from certain foreign producers. Our Icelandic and U.S. businesses are currently able to access these respective markets duty-free. Any change to these import duties, including the granting of exemptions, a reduction in the tariff rate or a full repeal of the tariff scheme, could lessen or potentially eliminate the benefit we realize from these tariffs and could negatively impact our profitability. These or other changes in trade laws and regulations could affect the ultimate price we receive for our products, the prices and availability of our raw materials or our ability to access certain markets and could have a material adverse effect on our business, financial position, results of operations and liquidity.
Increases in our raw material costs and disruptions in our supply adversely affect our business.
Our business depends upon the adequate supply of alumina, aluminum fluoride, calcined petroleum coke, pitch, carbon anodes and cathodes and other materials. The availability of our raw materials at competitive prices is critical to the profitability of our operations and increases in pricing and/or disruptions in our supply could have a material adverse effect on our business, financial position, results of operations and liquidity.

For some of these production inputs, such as alumina, coke and pitch, we do not have any internal production and rely on a limited number of suppliers for all of our requirements. Many of our supply agreements are short term or expire in the next few years. There is no assurance that we will be able to renew such agreements on commercially favorable terms, if at all. Certain of our principal raw materials are commodities for which, at times, availability and pricing can be volatile due to a number of factors beyond our control, including general economic conditions, domestic and worldwide demand, labor costs, competition, weather conditions and other transportation delays, major force majeure events, tariffs, sanctions and currency exchange rates. Because we rely on a limited number of suppliers, if our suppliers cannot meet their contracted volume commitments or other contractual requirements, it may be difficult for us to source our raw materials from alternative suppliers at commercially reasonable prices or within the time periods required by our operations. If we are unable to source from alternative suppliers, we could be forced to curtail production or use raw materials that do not meet our requirements, which could cause inefficiencies in our operations, increase costs or impact our production capabilities, any of which could have a material adverse effect on our business, financial position, results of operations and liquidity.
We are also exposed to price risk for each of these commodities. For example, the pricing under certain of our current alumina supply contracts is based on a published alumina index. As a result, our cost structure is exposed to market fluctuations and price volatility. During 2018, for example, external events in the alumina markets, including the partial curtailment of the Alunorte alumina refinery in Brazil due to environmental concerns following severe weather and U.S. sanctions impacting UC Rusal’s ability to supply alumina to the market, caused significant price volatility. As a result of these events, the alumina index price reached a high of $710 per tonne in April 2018 compared to an average price of $332 per tonne for 2019 and $354 per tonne for 2017.
Because we sell our products based on the LME price for primary aluminum, we are not able to pass on to our customers any increased cost of raw materials that are not linked to the LME price. Material disruptions in availability of our raw materials at competitive prices could impact our ability to operate our smelters which may have a material adverse effect on our business, financial position, results of operations and liquidity.

Increases in energy costs adversely affect our business, financial position, results of operations and liquidity.

Electrical power represents one of the largest components of our cost of goods sold. As a result, the availability of electricity at competitive prices is critical to the profitability of our operations.

In the U.S., our Hawesville and Sebree plants receive all of their electricity requirements under market-based electricity

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contracts, and our Mt. Holly plant receives 75% of its electricity requirements under a market-based electricity contract. Starting in November 2019, the price of approximately thirty percent (30%) of Grundartangi’s power requirements is linked to the market price for power in the Nord Pool power market, which exposes us to price volatility and fluctuations due to factors beyond our control and without any direct relationship to the price of primary aluminum. Market-based electricity contracts expose us to market price volatility and fluctuations driven by, among other things, coal and natural gas prices, renewable energy production, regulatory changes and weather events, in each case, without any direct relationship to the price of aluminum. There can be no assurance that our market-based power supply arrangements will result in favorable electricity costs. Any increase in our electricity and energy prices not tied to corresponding increases in the LME price could have a material adverse effect on our business, financial position, results of operations and liquidity.

If we are unable to enter into a long term, market-based, power arrangement for Mt. Holly, we may choose, or be forced, to further curtail operations at the Mt. Holly plant.

Mt. Holly is currently required to purchase 25% of its power requirements from Santee Cooper's generation at a standard cost-based industrial rate, which is substantially higher than the market-based rate Mt. Holly pays for the remaining 75% of its power. Mt. Holly's inability to access the open market for 100% of its power requirements significantly impacts its ability to be competitive in the aluminum industry. As a result of such uncompetitive power prices, Mt. Holly has curtailed approximately 50% of its production capacity. We continue to seek the ability to access the open market for 100% of our power requirements at Mt. Holly and to pursue every reasonable alternative available to us to achieve this objective. There can be no assurance, however, that we will be successful in these efforts. If we are unable to secure a long term power arrangement for 100% of Mt. Holly's power requirements on competitive terms, we may choose, or be forced, to further curtail operations at the plant.

Closure of the Mt. Holly facility would impose various costs on us that could have a material adverse effect on our business, financial condition, results of operations and liquidity and could cause us to write down the book value of the Mt. Holly facility. In addition, the ongoing uncertainty regarding the future operation of Mt. Holly may damage our relationships with our customers, suppliers, employees and other stakeholders and decrease the price we receive for our products, whether or not Mt. Holly is ultimately closed. Such actions and events could have a material adverse effect on our business, financial condition, results of operations and liquidity.

Disruptions in our supply of power and other events could adversely affect our operations.

We use large amounts of electricity to produce primary aluminum.  Any loss or disruption of the power supply which reduces the amperage to our equipment or causes an equipment shutdown would result in a reduction in the volume of molten aluminum produced, and prolonged losses of power may result in the hardening or "freezing" of molten aluminum in the pots where it is produced, which could require an expensive and time consuming restart process. 

Disruptions in the supply of electrical power to our facilities can be caused by a number of circumstances, including unusually high demand, blackouts, equipment or transformer failure, human error, malicious acts, natural disasters or other catastrophic events.  Our market-based power supply arrangements further increase the risk that disruptions in the supply of electrical power to our domestic operations could occur. Under these arrangements, we have greater exposure to transmission line outages, problems with grid stability and limitations on energy import capability. An alternative supply of power in the event of a disruption may not be feasible. 

Power disruptions have had a material negative impact on our results of operations. An equipment failure at our Sebree smelter in May 2018, for example, caused us to lose power to one of the three potlines at Sebree and forced us to temporarily stop production from that potline. We operate our smelters at close to peak amperage.  Accordingly, even partial failures of high voltage equipment could affect our production. Disruptions in the supply of electrical power that do not result in production curtailment could cause us to experience pot instability that could decrease levels of productivity and incur losses.
 
We maintain property and business interruption insurance to mitigate losses resulting from catastrophic events, but are required to pay significant amounts under the deductible provisions of those insurance policies.  In addition, the coverage under those policies may not be sufficient to cover all losses, or may not cover certain events.  Certain of our insurance policies do not cover any losses that may be incurred if our suppliers are unable to provide power under certain circumstances.  Certain losses or prolonged interruptions in our operations may trigger a default under certain of our outstanding indebtedness and could have a material adverse effect on our business, financial position, results of operations and liquidity.

The restart of production at our Hawesville smelter is subject to certain risks and uncertainties.

We are currently in the process of a multi-year project at our Hawesville, Kentucky aluminum smelter to restart

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previously curtailed capacity, rebuild two potlines that we had continued to operate past their expected life cycle, and implement new technology across all production. In early 2019, we completed the first phase of this project, which involved restarting production on the three potlines that had been curtailed since the fourth quarter of 2015 and upgrading the cell technology on these potlines. The second phase of this project involves rebuilding the two potlines that had been continuously operating and implementation of certain new technology across all production at Hawesville. The first of these potlines is currently in the process of being rebuilt and is expected to return to production in early 2020. The rebuild of the fifth and final potline at Hawesville is expected to be completed over the next several years, subject to market conditions. The decision to continue with the Hawesville restart project is based on certain market assumptions that are subject to risks outside of our control, specifically the LME price of aluminum, raw materials and premiums. Changes in these inputs may result in actual costs and returns that materially differ from the estimated costs and returns and our financial position and results of operations may be negatively affected as a result. Changes in these inputs may also make the Hawesville restart project uneconomic and we may decide at any time to discontinue the unfinished portions of the project.

There can be no assurance that we will be able to restore Hawesville to full production within our projected budget and schedule. In addition to changes in market assumptions, other unforeseen difficulties could increase the cost of the project, delay the project or render the project not feasible. Our ability to finance the project could also be impacted by our cash position and results of operations. Any delay in the completion of the project, unexpected or increased costs or inability to fund the project could have a material adverse effect on our business, financial position, results of operations and liquidity.
We may be unable to realize the expected benefits of our capital projects.
From time to time, we undertake strategic capital projects in order to enhance, expand and/or upgrade our facilities and operational capabilities. For instance, within the past several years, we have undertaken expansion projects at our Sebree, Hawesville, Grundartangi and Vlissingen facilities. Our ability to complete these projects and the timing and costs of doing so are subject to various risks, many of which are beyond our control. Additionally, the start-up of operations after such projects have been completed is also subject to risk. Our ability to achieve the anticipated increased revenues or otherwise realize acceptable returns on these investments is subject to a variety of market, operational, regulatory and labor-related factors. Any failure to complete these projects, or any delays or failure to achieve the anticipated results from the implementation of any such projects, could have a material adverse effect on our business, financial condition, results of operations and liquidity.
Our failure to maintain satisfactory labor relations could adversely affect our business.
The bargaining unit employees at our Grundartangi, Hawesville, Sebree and Vlissingen facilities are represented by labor unions, representing approximately 65% of our total workforce as of December 31, 2019. Our Grundartangi labor agreement expired on December 31, 2019. Since such time, we have been operating under the terms of the expired agreement while we engage in negotiations with the unions regarding the terms of a new agreement. In addition, our Vlissingen labor agreement is scheduled to expire on December 1, 2020. Our Hawesville and Sebree labor agreements are scheduled to expire April 1, 2020 and October 28, 2023, respectively.
While we are hopeful to reach agreement with the labor unions to renew these agreements on acceptable terms, there is no assurance that we will be successful in doing so. If we fail to maintain satisfactory relations with any labor union representing our employees, our labor contracts may not prevent a strike or work stoppage at any of these facilities in the future.  As part of any negotiation with a labor union, we may reach agreements with respect to future wages and benefits that may have a material adverse effect on our future business, financial condition, results of operations and liquidity. In addition, negotiations could divert management attention or result in strikes, lock-outs or other work stoppages. Any threatened or actual work stoppage in the future or inability to renegotiate our collective bargaining agreements could prevent or significantly impair our production capabilities subject to these collective bargaining agreements, which could have a material adverse effect on our business, financial position, results of operations and liquidity.
Certain of our raw material and services contracts contain "take-or-pay" obligations.
We have obligations under certain contracts to take-or-pay for specified raw materials or services over the term of those contracts regardless of our operating requirements.  To the extent that we curtail production at any of our operations, we may continue to be obligated to take or pay for goods or services under these contracts as if we were operating at full production, which reduces the cost savings advantages of curtailing aluminum production. Our financial position and results of operations may also be adversely affected by the market price for such materials or services as we will continue to incur costs under these contracts to meet or settle our contractual take-or-pay obligations.  If we were unable to use such materials or services in our operations or sell them at prices consistent with or greater than our contract costs, we could incur significant losses under these

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contracts.  In addition, these commitments may also limit our ability to take advantage of favorable changes in the market prices for such materials and may have a material adverse effect on our business, financial position, results of operations and liquidity.
We have historically derived substantially all of our revenue from a small number of customers, and we could be adversely affected by the loss of a major customer or changes in the business or financial condition of our major customers.
We have historically derived substantially all of our consolidated net sales from a small number of customers. For the year ended December 31, 2019 we derived approximately 78% of our consolidated net sales from two major customers and we currently have agreements in place to sell a substantial portion of our 2020 production to these same customers. We expect that the rest of our 2020 customer base will remain fairly concentrated among a small number of customers under short-term contracts.
Any material non-payment or non-performance by one of these customers, a significant dispute with one of these customers, a significant downturn or deterioration in the business or financial condition of any of these customers, early termination of our sales agreement with any of these customers, or any other event significantly negatively impacting the contractual relationship with one of these customers could adversely affect our financial condition and results of operations. If, in such an event, we are unable to sell the affected production volume to another customer, or we sell the affected production to another customer on terms that are materially less advantageous to us, our revenues could be negatively impacted.
International operations expose us to political, regulatory, currency and other related risks.
We receive a significant portion of our revenues and cash flow from our operations in Iceland and the Netherlands.  These operations expose us to risks, including unexpected changes in foreign laws and regulations, political and economic instability, challenges in managing foreign operations, increased costs to adapt our systems and practices to those used in foreign countries, taxes, export duties, currency restrictions and exchange, tariffs and other trade barriers, and the burdens of complying with a wide variety of foreign laws and regulations.  Changes in foreign laws and regulations are generally beyond our ability to control, influence or predict and future adverse changes in these laws could have a material adverse effect on our business, financial position, results of operations and liquidity.
In addition, we may be exposed to fluctuations in currency exchange rates. As a result, an increase in the value of foreign currencies relative to the U.S. dollar could increase the U.S. dollar cost of our operating expenses which are denominated and payable in those currencies. To the extent we explore additional opportunities outside the U.S., our currency risk with respect to foreign currencies may increase.
We require substantial resources to pay our operating expenses and fund our capital expenditures.
We require substantial resources to pay our operating expenses and fund our capital expenditures.  If we are unable to generate funds from our operations to pay our operating expenses and fund our capital expenditures and other obligations, our ability to continue to meet these cash requirements in the future could require substantial liquidity and access to sources of funds, including from capital and credit markets.
If funding is not available when needed, or is available only on unacceptable terms, we may be unable to respond to competitive pressures, take advantage of market opportunities or fund operations, capital expenditure or other obligations, any of which could have a material adverse effect on our business, financial position, results of operations and liquidity.

A deterioration in our financial condition or credit rating could limit our ability to access the credit and capital markets on acceptable terms or to enter into hedging and financial transactions, lead to our inability to access liquidity facilities, and could adversely affect our financial condition and our business relationships.

Our credit rating has been adversely affected by unfavorable market and financial conditions. Our existing credit rating, or any future negative actions the credit agencies may take affecting our credit rating, could expose us to significant borrowing costs and less favorable credit terms, limiting our ability to access the credit and capital markets, and have an adverse effect on our relationships with customers, suppliers and hedging counterparties. An inability to access the credit and capital markets when needed in order to refinance our existing debt or raise new debt or equity could have a material adverse effect on our business, financial position, results of operations and liquidity.


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We may be unable to generate sufficient cash flow to meet our debt service requirements which may have a material adverse effect on our business, financial position, results of operations and liquidity.

As of December 31, 2019, we had an aggregate of approximately $301.0 million of outstanding debt (including $250.0 million aggregate principal amount of senior secured notes due June 2021). Our ability to pay interest on and to repay or refinance our debt will depend upon our access to additional sources of liquidity and future operating performance, which is subject to general economic, financial, competitive, legislative, regulatory, business and other factors, including market prices for primary aluminum, that are beyond our control. Accordingly, there can be no assurance that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to pay debt service obligations, refinance our existing debt or to fund our other liquidity needs. If we are unable to meet our debt service obligations or fund our other liquidity needs, we could attempt to restructure or refinance our debt or seek additional equity or debt capital. There can be no assurance that we would be able to accomplish those actions on satisfactory terms, or at all. If we are unable to ultimately meet our debt service obligations and fund our other liquidity needs, it may have a material adverse effect on our business, financial position, results of operations and liquidity.

Our substantial indebtedness or any future additional indebtedness could adversely affect our business, results of operations or financial condition.

Our substantial indebtedness and the significant cash flow required to service such debt increases our vulnerability to adverse economic and industry conditions, reduces cash available for other purposes and limits our operational flexibility. Despite our substantial indebtedness, we may incur substantial additional debt in the future. Although the agreements governing our existing debt limit our ability and the ability of certain of our subsidiaries to incur additional debt, these restrictions are subject to a number of qualifications and exceptions and, under certain circumstances, debt incurred in compliance with these restrictions could be substantial.  In addition, these agreements may also allow us to incur certain obligations that do not constitute debt as defined in these agreements.  To the extent that we incur additional debt or such other obligations, the risks associated with our substantial debt described above, including our possible inability to service and meet our debt or other obligations, would increase.

We are subject to interest rate risk, which could adversely affect our borrowing costs, financial condition and results of operations.

Our industrial revenue bonds ("IRBs") and borrowings on our U.S. and Iceland revolving credit facilities as well as the Hawesville Term Loan are currently at variable interest rates, and future borrowings required to fund working capital at our businesses, capital expenditures, acquisitions, or other strategic opportunities may be at variable rates, which exposes us to interest rate risk. An increase in interest rates would increase our debt service obligations under our existing debt instruments and potentially any future debt instruments, further limiting cash flow available for other uses. Any increase in interest rates could adversely affect our borrowing costs, financial condition and results of operations.

Our debt instruments subject us to covenants and restrictions.

Our existing debt instruments contain various covenants that restrict the way we conduct our business and limit our ability to incur debt, pay dividends and engage in transactions such as acquisitions and investments, among other things, which may impair our ability to obtain additional liquidity and grow our business. Any failure to comply with those covenants would likely constitute a breach under such debt instruments which may result in the acceleration of all or a substantial portion of our outstanding indebtedness and termination of commitments under our revolving credit facility. If our indebtedness is accelerated, we may be unable to repay the required amounts and our secured lenders could foreclose on any collateral securing our secured debt. Any of the foregoing actions could have a material adverse effect on our business, financial condition, results of operations and liquidity.

We depend upon intercompany transfers from our subsidiaries to meet our debt service obligations.

We are a holding company and conduct all of our operations through our subsidiaries.  As a holding company, our results of operations depend on the results of operations of our subsidiaries. Moreover, our ability to meet our debt service obligations depends upon the receipt of intercompany transfers from our subsidiaries.  The ability of our subsidiaries to pay dividends or make other payments or advances to us will depend on their operating results and will be subject to applicable laws and any restrictions or prohibitions on intercompany transfers by those subsidiaries contained in agreements governing the debt or other obligations of such subsidiaries.

The failure of our information technology systems, network disruptions, cyber-attacks or other breaches in data

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security could have a material adverse effect on our business, results of operations and financial position.

We depend on our information technology systems to effectively manage significant aspects of our business including, without limitation, production process control, metal inventory management, shipping and receiving, and reporting financial and operational results. Any disruptions, delays, or deficiencies in our information systems or network connectivity could result in increased costs, disruptions in our business, and/or adversely affect our ability to timely report our financial results.

Our information technology systems are vulnerable to damage or interruption from circumstances largely beyond our control, including, without limitation, fire, natural disasters, power outages, systems failure, security breaches, and cyber- attacks, which include viruses, malware, and ransomware attacks. While we have disaster recovery and business continuity plans in place, if our information technology systems are damaged or interrupted for any reason, and, if the disaster recovery and business continuity plans do not effectively resolve such issues on a timely basis, we may be unable to manage or conduct our business operations, suffer reputational harm, and may be subject to governmental investigations and litigation, any of which may adversely impact our business, results of operations, cash flows and financial condition.

Cybersecurity incidents, in particular, are increasing in frequency and continue to become more sophisticated and include, but are not limited to, attempts to gain unauthorized system access to install malicious software such as ransomware or malware, direct fraudulent payments to fictitious vendors, disrupt production process control and financial systems, and release of confidential or otherwise protected information and data.
  
Due to the evolving nature of cybersecurity threats, the scope and impact of any incident cannot be predicted. While the Company continually works to safeguard our systems and mitigate potential risks, there is no assurance that such actions will be sufficient to prevent cyber-attacks or security breaches that damage or interrupt access to information systems or networks, compromise confidential or otherwise protected information, destroy or corrupt data, or otherwise disrupt our operations.  In addition, we may not be able to contain a targeted cybersecurity incident to any one particular operating location. Furthermore, although the Company does maintain insurance in its operations, such insurance may not cover all liabilities affiliated with any sort of cyber incident or security breach. The occurrence of such events could negatively impact our reputation and our competitive position and could result in litigation with third parties, regulatory action, loss of business, potential liability and increased remediation costs, any of which could have a material adverse effect on our financial condition and results of operations. Such security breaches could also result in a violation of applicable U.S. and international privacy and other laws and could have a material adverse effect on our business, results of operations and financial position.
Climate change, climate change legislation or environmental regulations may adversely impact our operations.

Governmental regulatory bodies in the United States and other countries where we operate have adopted, or may in the future adopt, laws or other regulatory changes in response to the potential impacts of climate change. Laws and regulations could have a variety of adverse effects on our business.
For example, electricity represents our single largest operating cost and the availability of electricity at competitive prices is critical to the profitability of our operations.  Some of the power we purchase in the United States is generated at coal-based power plants, which have been, and are likely to continue to be, significantly impacted by these regulations.  Any resulting increase in our operating costs could have a material adverse effect on our business, financial position, results of operations and liquidity.  Even small increases in power prices could have a disproportionate impact on our business if such price increases are not supported by then current aluminum prices. 
In addition, as a member of the EEA and a signatory to the Kyoto Protocol, Iceland has implemented legislation to abide by the Kyoto Protocol and Directive 2003/87/EC of the European Parliament (the "Directive") which establishes a "cap and trade" scheme for greenhouse gas emission allowance trading.  Iceland is complying with the Directive by participating in the European Union ("EU") Emission Trading System which requires us to purchase carbon dioxide allowances for our Grundartangi smelter. We currently receive approximately 70% of needed emission allowances for the Grundartangi smelter free of charge, although changes to these regulations, or the implementation of new regulations, could cause our cost of allowances to rise or impose other costs.
The future impact of these or other potential regulatory changes is uncertain and may be either voluntary or legislated and may impact our operations directly or indirectly through our customers or our supply chain.  We may incur increased capital expenditures resulting from compliance with such regulatory changes, increased energy costs, costs associated with a "cap and trade" system, increased insurance premiums and deductibles, a change in competitive position relative to industry peers and changes to profit or loss arising from increased or decreased demand for goods produced by us and indirectly, from changes in cost of goods sold.  For example, "cap and trade" legislation may impose significant additional costs to our power suppliers that

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could lead to significant increases in our energy costs.  In addition, the potential physical impacts of climate change on our operations are highly uncertain and will be particular to the geographic circumstances. These may include changes in rainfall patterns, shortages of water or other natural resources, changing sea levels, changing storm patterns and intensities, and changing temperature levels. Any adverse regulatory and physical changes may have a material adverse effect on our business, financial position, results of operations and liquidity.
We and our suppliers are subject to a variety of environmental laws and regulations that may have a material adverse effect on our business, financial position, results of operations and liquidity.
Our operations may impact the environment and our properties may have environmental contamination, which could result in material liabilities to us. We are obligated to comply with various foreign, federal, state and other environmental laws and regulations, including the environmental laws and regulations of the United States, Iceland and the EU. Environmental laws and regulations may expose us to costs or liabilities relating to our manufacturing operations or property ownership. We incur operating costs and capital expenditures on an ongoing basis to comply with applicable environmental laws and regulations. We also are currently, and may in the future be, responsible for the cleanup of contamination at some of our current and former facilities or for the amelioration of damage to natural resources.  Environmental laws may impose cleanup liability on owners and occupiers of contaminated property, including past or divested properties, regardless of whether the owners or occupiers caused the contamination or whether the activity that resulted in the contamination was lawful at the time it was conducted. Liability may also be imposed on a joint and several basis, such that we may be held responsible for more than our share of the contamination or other damages.
If more stringent compliance or cleanup standards under environmental laws or regulations are imposed, previously unknown environmental conditions or damages to natural resources are discovered or alleged, or if contributions from other responsible parties with respect to sites for which we have cleanup responsibilities are not available, we may be subject to additional liability, which may have a material adverse effect on our business, financial condition, results of operations and liquidity. Further, additional environmental matters for which we may be liable may arise in the future at our present sites where no problem is currently known, with respect to sites previously owned or operated by us, by related corporate entities or by our predecessors, or at sites that we may acquire or operate in the future. In addition, overall production costs may become prohibitively expensive and prevent us from effectively competing in price sensitive markets if future capital expenditures and costs for environmental compliance or cleanup are significantly greater than expected.
In addition, many of our key suppliers are subject to environmental laws and regulations that may affect their costs of production resulting in an increase in the price of the products that we purchase from them. Application of existing and new environmental laws and regulations to us and/or our key suppliers may have a material adverse effect on our business, financial position, results of operations and liquidity.
Our operations are subject to a variety of laws that regulate the protection of the health and safety of our employees, and changes in health and safety regulation could result in significant costs, which could have a material adverse effect on our business, financial position, results of operations and liquidity.
We are subject to various foreign, federal and state laws that regulate the protection of the health and safety of our workers. Changes in existing laws, possible future laws and regulations or more restrictive interpretations of current laws and regulations by governmental authorities, could cause additional expense, capital expenditures or impose restrictions on our operations. For example, we are subject to the requirements of the U.S. Occupational Safety and Health Administration (“OSHA”). On January 9, 2017, OSHA published a new standard for workplace exposure to beryllium, contained in alumina. The new standard would, among other things, lower the permissible exposure limits and establish new requirements for respiratory protection, personal protective clothing and equipment, medical surveillance, hazard communication, and recordkeeping, among others. Companies are required to comply with various elements of the new standard between March 2018 and March 2020; however, we have filed a petition with the U.S. Court of Appeals for the Eighth Circuit to review the final rule and are in negotiations with OSHA regarding certain changes to the rule and its application to us. In the event we are unable to reach an agreement with OSHA, we will proceed with our petition challenging the rule. Compliance with the new standard could require significant capital expenditure and would likely increase our production costs. The ultimate impact, if any, of this new standard will depend on the nature and extent of the final rule as implemented, the cost of and our ability to meet the new standard, the potential impact on alumina costs, and other factors. Failure to comply with applicable laws and regulations that regulate the protection of the health and safety of our workers may result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, which may require corrective measures including capital expenditures, installation of additional equipment or remedial actions. Any such penalties, fines, sanctions or shutdowns could have a material adverse effect on our business and results of operations.


17


We are subject to litigation and may be subject to additional litigation in the future.

We are currently, and may in the future become, subject to litigation, arbitration or other legal proceedings with other parties. The outcome of such matters is often difficult to assess or quantify and the cost to defend future proceedings may be significant.  If decided adversely to us, these legal proceedings, or others that could be brought against us in the future, could have a material adverse effect on our financial position, cash flows and results of operations. Furthermore, to the extent we sell or reduce our interest in certain assets, we may give representations and warranties and indemnities for such transactions and we may agree to retain responsibility for certain liabilities related to the period prior to the sale. As a result, we may incur liabilities in the future associated with assets we no longer own or in which we have a reduced interest. For a more detailed discussion of pending litigation, see Item 3. Legal Proceedings and Note 15. Commitments and Contingencies to the consolidated financial statements included herein.

In the event of a dispute arising at our foreign operations, we may be subject to the exclusive jurisdiction of foreign courts or arbitral panels, or may not be successful in subjecting foreign persons to the jurisdiction of courts or arbitral panels in the United States. Our inability to enforce our rights and the enforcement of rights on a prejudicial basis by foreign courts or arbitral panels could have an adverse effect on our results of operations and financial position.
Glencore may exercise substantial influence over us, and they may have interests that differ from those of our other stockholders.
Glencore beneficially owns approximately 42.9% of our outstanding common stock and all of our outstanding Series A Convertible Preferred Stock. In addition, one of our five directors is a Glencore employee. During the year ended December 31, 2019, we derived approximately 65% of our consolidated sales from Glencore and we expect to sell a significant portion of our production to Glencore in 2020. Century and Glencore enter into various transactions from time to time such as the purchase and sale of primary aluminum, purchase and sale of alumina, tolling agreements as well as forward financial contracts and borrowing and other debt transactions. Because of the interests described above, Glencore may have substantial influence over our business, and, to the extent of their ownership of our common stock, on the outcome of any matters submitted to our stockholders for approval.
In addition, certain decisions concerning our operations or financial structure may present conflicts of interest between Glencore and our other stockholders. For example, Glencore may in the future engage in a wide variety of activities in our industry that may result in conflicts of interest with respect to matters affecting us. Glencore may also make investments in businesses that directly or indirectly compete with us, or may pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us.
Acquisitions could disrupt our operations and harm our operating results.
We have a history of making acquisitions and we expect to opportunistically seek to make acquisitions in the future.  We are subject to numerous risks as a result of our acquisition strategy, including the following:
we may spend time and money pursuing acquisitions that do not close;
acquired companies may have contingent or unidentified liabilities;
it may be challenging for us to manage our existing business as we integrate acquired operations; and
we may not achieve the anticipated benefits from our acquisitions.
We are subject to numerous risks following the consummation of any acquisition, including, for example, that we may incur costs and expenses associated with any unidentified or potential liabilities, we may not achieve anticipated revenue and cost benefits from the acquisitions and unforeseen difficulties may arise in integrating the acquired operations into our existing operations. Accordingly, our past or future acquisitions might not ultimately improve our competitive position and business prospects as anticipated and may subject us to additional liabilities that could have a material adverse effect on our business, financial position, results of operations and liquidity.

18


Our ability to utilize certain net operating loss carryforwards to offset future taxable income may be significantly limited if we experience an "ownership change" under the Internal Revenue Code.
As of December 31, 2019, we had federal net operating loss carryforwards of approximately $1,519.9 million which could offset future taxable income.  Our ability to utilize our deferred tax assets to offset future federal taxable income may be significantly limited if we experience an "ownership change" as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"). In general, an ownership change would occur if our "five-percent shareholders," as defined under the Code, collectively increase their ownership in us by more than fifty percentage points over a rolling three-year period.  Future transactions in our stock that may not be in our control may cause us to experience such an ownership change and thus limit our ability to utilize net operating losses, tax credits and other tax assets to offset future taxable income.
We may be unable to continue to compete successfully in the highly competitive markets in which we operate.
We are engaged in a highly competitive industry. Aluminum also competes with other materials, such as steel, copper, plastics, composite materials and glass, among others, for various applications. Many of our competitors are larger than we are and have greater financial and technical resources than we do. These larger competitors may be better able to withstand reductions in price or other adverse industry or economic conditions. Similarly, many of our competitors have vertically integrated upstream operations with resulting superior cost positions to ours and may be better able to withstand reductions in price or other adverse industry or economic conditions. If we are not able to compete successfully, our business, financial position, results of operations and cash flows could be materially and adversely affected.
Unpredictable events may interrupt our operations, which, may adversely affect our business.
Our operations may be susceptible to unpredictable events, including accidents, transportation and supply interruptions, labor disputes, equipment failure, information system breakdowns, natural disasters, dangerous weather conditions, river conditions, political unrest and other events. Operational malfunctions or interruptions at one or more of our facilities could result in substantial losses in our production capacity, personal injury or death, damage to our properties or the properties of others, monetary losses and potential legal liability.
Iceland, for example, has suffered several natural disasters and extreme weather events, including significant volcanic eruptions and earthquakes which can lead to disruption in power transmission or other impacts to our operations. Insufficient rain in Iceland has and could in the future lead to low water levels in the reservoirs which has resulted and may again result in curtailments in power which is provided to our Grundartangi smelter from hydroelectric and geothermal sources.
We accept delivery of necessary raw materials to our operations using public infrastructure such as river systems and seaports. Deterioration of such infrastructure and/or other adverse conditions could result in transportation delays or interruptions and increased costs, as occurred during the third quarter of 2017 when lock closures on the Ohio River impacted our alumina supply and forced us to find alternative means to transport alumina to our Kentucky operations at increased cost. Any delay in the delivery of raw materials necessary for our production could impact our ability to operate our plants and have a material adverse effect on our business, financial condition or results of operation.
Future unpredictable events may adversely affect our ability to conduct business and may require substantial capital expenditures and operating expenses to remediate damage and restore operations at our production facilities. Although we maintain insurance to mitigate losses resulting from such events, our coverage may not be sufficient to cover all losses, may have high deductibles or may not cover certain events at all. To the extent these losses are not covered by insurance, our financial condition, results of operations and cash flows could be materially and adversely affected.

Item 1B. Unresolved Staff Comments
We have no unresolved comments from the staff of the SEC.

19



Item 2. Properties
Our principal executive office is located at 1 South Wacker Drive, Suite 1000, Chicago, Illinois 60606. We own and operate aluminum smelters in the United States and Iceland. We also own a carbon anode production facility located in the Netherlands. We lease certain of our facilities under long-term operating leases, however we do not believe that this fact materially affects the continued use of these properties. We believe all of our facilities are suitable and adequate for our current operations.  Our significant properties are listed below. Additional information about the age, location and productive capacity of our facilities is available in the "Overview" section of Item 1. Business.
Facility
 
Ownership
Hawesville
 
100% Owned
Sebree
 
100% Owned
Mt. Holly
 
100% Owned
Grundartangi
 
Facility 100% owned; long-term ground lease
Helguvik
 
Facility 100% owned; long-term ground lease
Vlissingen
 
Facility 100% owned; long-term ground lease
Chicago Corporate Office
 
Long-term office lease


Item 3. Legal Proceedings
We are a party from time to time in various legal actions arising in the normal course of business, the outcomes of which, in the opinion of management, neither individually nor in the aggregate are likely to result in a material adverse effect on our financial position, operating results and cash flows. For information regarding material legal proceedings pending against us at December 31, 2019, refer to Note 15. Commitments and Contingencies to the consolidated financial statements included herein.

Item 4. Mine Safety Disclosures
Not applicable.

20



PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock trades on the NASDAQ Global Market under the symbol: CENX.
Holders
As of February 20, 2020, there were 99 holders of record of our common stock, which does not include the number of beneficial owners whose common stock was held in street name or through fiduciaries.
Dividend Information
We did not declare dividends on our common stock in 2019 or 2018.  We do not plan to declare cash dividends in the foreseeable future. Any declaration of dividends is at the discretion of our Board of Directors.
Our agreements governing our existing debt contain restrictions which limit our ability to pay dividends.  Additional information about the terms of our long-term borrowing agreements is available at Note 6. Debt to the consolidated financial statements included herein.

21



Stock Performance Graph
The following line graph compares Century Aluminum Company’s cumulative total return to stockholders with the cumulative total return of the S&P 500 Index and the Morningstar Aluminum Index.  These comparisons assume the investment of $100 on December 31, 2014 and the reinvestment of dividends.
chart-8a052c35a63e5fff9fd.jpg

Comparison of Cumulative Total Return to Stockholders from December 31, 2014 through December 31, 2019

As of December 31,
2014
 
2015
 
2016
 
2017
 
2018
 
2019
Century Aluminum Company
$
100

 
$
18

 
$
35

 
$
80

 
$
30

 
$
31

Morningstar Aluminum Index
100

 
63

 
77

 
141

 
70

 
74

S&P 500 Index
100

 
101

 
114

 
138

 
132

 
174



Issuer Purchases of Equity Securities during the three months ended December 31, 2019

There were no issuer purchases of equity securities during the three months ended December 31, 2019. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources Other Items for a discussion of the current stock repurchase authorization.

22


Item 6. Selected Financial Data
The following table presents selected consolidated financial data for each of the last five fiscal years and should be read in conjunction with Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 8. Financial Statements and Supplementary Data and notes thereto.

 
Year Ended December 31,
 
2019 (6)
 
2018
 
2017 (5)
 
2016 (1) (5)
 
2015 (2) (5)
 
(dollars in millions, except per share amounts)
Net sales
$
1,836.6

 
$
1,893.2

 
$
1,589.1

 
$
1,319.1

 
$
1,949.9

Gross profit (loss)
(23.9
)
 
(22.9
)
 
131.3

 
(6.1
)
 
38.7

Operating income (loss)
(72.1
)
 
(59.0
)
 
97.2

 
(227.9
)
 
(36.5
)
Net income (loss)
(80.8
)
 
(66.2
)
 
48.6

 
(252.4
)
 
(59.3
)
Earnings (loss) per share:
 
 
 

 
 

 
 

 
 

Basic and Diluted
$
(0.91
)
 
$
(0.76
)
 
$
0.51

 
$
(2.90
)
 
$
(0.68
)
 
 
 
 
 
 
 
 
 
 
Total assets
$
1,499.7

 
$
1,537.5

 
$
1,581.6

 
$
1,540.3

 
$
1,752.5

Total debt (3)
301.0

 
279.7

 
256.0

 
255.5

 
255.1

Long-term debt obligations (4)
269.2

 
248.6

 
248.2

 
247.7

 
247.3

 
 
 
 
 
 
 
 
 
 
Other information
 
 
 
 
 
 
 
 
 
Primary aluminum shipments, in tonnes:
 
 
 
 
 
 
 
 
 
Direct
811,244

 
749,850

 
743,198

 
687,700

 
823,751

Toll

 

 

 
46,125

 
98,207

Average price per tonne:
 
 
 
 
 
 
 
 
 
Direct shipments
$
2,184

 
$
2,505

 
$
2,126

 
$
1,825

 
$
2,169

Toll shipments

 

 

 
1,172

 
1,374

LME
1,792

 
2,110

 
1,968

 
1,604

 
1,663

Midwest premium
396

 
420

 
199

 
169

 
279

European Duty Paid premium
142

 
164

 
148

 
132

 
236



(1) 
In 2016, the Helguvik project in Iceland was determined to be impaired and charges of $152.2 million were recorded.
(2) 
In 2015, our Ravenswood smelter was permanently closed. Also, in the fourth quarter of 2015, operations at Hawesville and Mt. Holly were partially curtailed.
(3) 
Total debt includes all long-term debt obligations and any debt classified as short-term obligations, net of any debt discounts, including current portion of long-term debt, current portion of the Hawesville Term Loan, borrowings under our revolving credit facilities and the IRBs.
(4) 
Long-term debt obligations are all payment obligations under long-term borrowing arrangements, excluding the current portion of the long-term debt.
(5) 
As adjusted due to the adoption of ASU 2017- 07 "Compensation- Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Benefit Cost."
(6) 
In 2019, we recognized a loss of $4.3 million related to the sale of our 40% interest in BHH. This is reflected in 2019 net income (loss).

23


Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis (“MD&A”) provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of Century Aluminum Company and its subsidiaries (collectively, “Century,” the “Company,” “our” and “we”) and should be read in conjunction with the accompanying consolidated financial statements and related notes thereto in Item 8. Financial Statements and Supplementary Data and in Item 1A. Risk Factors. This MD&A contains “forward-looking statements” - See “Forward-Looking Statements” above.
Overview
We are a global producer of primary aluminum with aluminum reduction facilities, or "smelters," in the United States and Iceland. The key determinants of our results of operations and cash flow from operations are as follows:
the price of primary aluminum, which is based on the London Metal Exchange ("LME"), plus any regional premiums and value-added product premiums;
the cost of goods sold, the principal components of which are electrical power, alumina, carbon products and labor, which in aggregate represent more than 75% of our cost of goods sold; and
our production volume.
Pricing of aluminum
The overall price of primary aluminum consists of three components: (i) the base commodity price, which is based on quoted prices on the LME; plus (ii) any regional premium (e.g., the Midwest premium for metal sold in the United States ("MWP") and the European Duty Paid premium for metal sold into Europe); plus (iii) any product premium. Each of these price components has its own drivers and variability.
The aluminum price is influenced by a number of factors, including global supply-demand balance, inventory levels, speculative activities by market participants, production activities by competitors and political and economic conditions, as well as production costs in major production regions. These factors can be highly speculative and difficult to predict which can lead to significant volatility in the aluminum price. Increases or decreases in primary aluminum prices result in increases and decreases in our revenues (assuming all other factors are unchanged). Information regarding financial contracts is included in Note 19. Derivatives.

24


The historic volatility of the price of aluminum is reflected in the chart below:
chart-782ca8608c2759a88c3.jpg
The average LME price for primary aluminum was $1,792 per tonne in 2019, compared to $2,110 per tonne in 2018, and $1,968 in 2017. The average MWP price was $396 per tonne in 2019 compared to $420 per tonne in 2018 and $199 per tonne in 2017. The average European Duty Paid premium was $142 per tonne in 2019 compared to $164 per tonne in 2018 and $148 per tonne in 2017.
Energy, Key Supplies and Raw Materials
Our operating costs are significantly impacted by changes in the prices of the materials used in the production of aluminum, including alumina, electrical power and carbon products. Because we sell our products based principally on the LME price for primary aluminum, regional premiums and product premiums, we are unable to pass increased production costs on to our customers. Although we attempt to mitigate the effects of price fluctuations from time to time through the use of various fixed-price commitments, financial instruments and also by negotiating LME-based pricing in some of our raw materials and electrical power contracts, these efforts also limit our ability to take advantage of favorable changes in the market prices for primary aluminum or raw materials and may affect our financial position, results of operations and cash flows.
Alumina and electrical power represent the two largest components of our cost of goods sold. As a result, the availability of these cost components at competitive prices is critical to the profitability of our operations. The pricing under our alumina supply contracts is variable. A certain portion of our alumina requirements is indexed to the price of primary aluminum, which provides a natural hedge to one of our largest production costs. We also purchase alumina based on a published alumina index and at fixed prices. The alumina price is influenced by a number of factors, including global supply-demand balance and other factors outside of our control.  Various external events in the alumina markets during 2018 caused significant increases in the price of alumina resulting in the ratio of alumina prices to aluminum prices to well exceed historical levels, which persisted throughout 2018 and much of 2019. By the end of 2019, the relationship between alumina and aluminum prices returned to historical levels following the resolution of these supply dislocations. The average alumina index price for 2019 was $332 per tonne compared to $473 per tonne for 2018 and $354 per tonne for 2017.
Electrical power is our other largest operating cost. Currently, our Hawesville and Sebree plants receive all of their electricity requirements under market-based power agreements and our Mt. Holly plant receives 75% of its electricity requirements under a market-based contract. In the U.S., market-based energy prices are driven in large part by coal and natural

25


gas prices and weather-influenced electric loads. In 2019, both coal and natural gas prices were relatively low and weather conditions were moderate.
Our Mt. Holly aluminum smelter is currently required to purchase 25% of its power requirements from Santee Cooper at a standard cost-based industrial rate, which is substantially higher than the rate Mt. Holly pays for market power. Mt. Holly's inability to access the open market for 100% of its power requirements significantly impacts its ability to be competitive in the aluminum industry and puts its continued operation at risk. As a result of such uncompetitive power prices, Mt. Holly has already curtailed 50% of its production capacity. We continue to seek the ability to access the open market for 100% of our power requirements at Mt. Holly but there can be no assurance that we will be successful in these efforts. See Item 1A. Risk Factors. If we are unable to enter into a long-term, market-based, power arrangement for Mt. Holly, we may choose, or be forced, to further curtail operations at the plant.
In Iceland, approximately seventy percent (70%) of the power requirements for our Grundartangi plant is indexed to the price of primary aluminum, which provides a natural hedge of one of our largest production costs. The price of the remaining thirty percent (30%) of Grundartangi’s power requirements is linked to the market price for power in the Nord Pool power market, the trading market for power in the Nordic countries and certain other areas of Europe.
Production/Shipment Volumes
Shipment volume is another key determinant of our financial results.  In normal circumstances, fluctuations in production and shipment volumes, other than through acquisitions or expansions, are generally small period over period. U.S. shipments for 2019 reflect incremental production from the Hawesville restart project and return to full operations at Sebree after the equipment failure in 2018. Any adverse changes in the conditions that affect shipment volumes could have a material adverse effect on our results of operations and cash flows.
The following table sets forth, for the periods indicated, the shipment volumes and revenues for primary aluminum shipments:
SHIPMENTS - PRIMARY ALUMINUM(1)
 
 
 
 
 
United States
 
Iceland
 
Total
 
Tonnes
 
Revenue $
 
Tonnes
 
Revenue $
 
Tonnes
 
Revenue $
 
(dollars in millions)
2019
495,096

 
$
1,143.8

 
316,148

 
$
628.3

 
811,244

 
$
1,772.1

2018
428,389

 
1,126.4

 
321,461

 
752.3

 
749,850

 
1,878.7

2017
425,669

 
929.6

 
317,529

 
650.7

 
743,198

 
1,580.3

(1) Excludes scrap aluminum and alumina sales
Results of Operations
    
The following discussion for the year ended December 31, 2019 reflects increases from the Hawesville restart and return to full operation at Sebree after the equipment failure in 2018. Results for the year reflect no change in Mt. Holly or Grundartangi production capacities.
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Net sales: Net sales for the twelve months ended December 31, 2019 decreased $56.6 million compared to the same period in 2018, driven by lower price realizations of $249.5 million primarily resulting from decreases in the LME price offset by $136.2 million in favorable volume and product mix year over year.
Gross profit: Gross profit for the twelve months ended December 31, 2019 decreased by $1.0 million compared to the same period in 2018, driven primarily by lower price realizations of $249.5 million due to decreases in the LME.  The decrease to gross profit is offset by favorable price realizations of alumina and other raw materials of $170.7 million, power price realizations of $47.2 million, volume and product mix of $24.2 million, and operating expenses of $5.6 million.

26


Selling, general and administrative expenses: Selling, general and administrative expenses increased $7.2 million in 2019 compared to 2018, primarily due to increases in compensation cost in the current year (favorable stock compensation expense in 2018, reflecting our lower stock price).
Net (gain) loss on forward and derivative contracts: In 2019, we recognized gains of $12.0 million primarily related to LME and MWP fixed forward financial sales contracts. The gains were primarily driven by decreases in the LME and MWP prices during 2019. In 2018, we recognized gains of $6.3 million primarily related to Nord Pool and LME fixed forward financial sales contracts which settle from November 2019 through December 2020. These gains were primarily driven by the increase in the Nord Pool price.
Income tax expense: We have a valuation allowance against all of our U.S. and certain foreign deferred tax assets. We recognized a $8.4 million income tax benefit in 2019 as compared to income tax benefit of $0.2 million in 2018. The increase in income tax benefit year over year primarily relates to a decrease in earnings of certain of our foreign entities.
Year Ended December 31, 2018 Compared to Year Ended December 31, 2017
Net sales: Net sales for the twelve months ended December 31, 2018 improved $304.1 million compared to the same period in 2017, driven by higher price realizations of $265.1 million primarily resulting from increases in the LME and U.S. Midwest premium prices for primary aluminum and $39.0 million in volume and product mix year over year.
Gross profit: Gross profit for the twelve months ended December 31, 2018 decreased by $154.2 million compared to the same period in 2017, driven primarily by higher alumina and other raw material price realizations of $301.7 million, unfavorable operating expenses of $92.7 million (due to increased production volume at Hawesville, the Sebree equipment failure, and lower of cost or net realizable value from increasing alumina prices), and unfavorable power prices of $28.8 million. These decreases to gross profit are partially offset by favorable price realizations of the LME and U.S. Midwest premium of $265.1 million and net favorable volume and product mix impacts of $3.9 million.
Selling, general and administrative expenses: Selling, general and administrative expenses decreased $4.6 million in 2018 compared to 2017, due primarily to favorable decreases in stock compensation expense (reflecting our lower stock price) and professional fees.

Helguvik (gains) losses: During 2018 and 2017, we extinguished a portion of our contractual commitments associated with the construction of the Helguvik project. Such extinguishment resulted in a gain in 2018 of $4.5 million recognized in Helguvik (gains) losses in the consolidated statements of operations compared to a gain of $7.3 million for the year ended 2017.

Ravenswood (gains) losses: In 2017, the Ravenswood retiree medical class action lawsuit was settled. As a result, we recognized a non-cash gain of $5.5 million in 2017 reflecting the present value discount of the original settlement agreement of $23.0 million which was recorded in 2016 - see Note 15. Commitments and Contingencies. There were no gains or losses recorded for the year ended 2018.
Net (gain) loss on forward and derivative contracts: In 2018, we recognized gains of $6.3 million primarily related to Nord Pool and LME fixed forward financial sales contracts entered into in early 2017 for power consumption starting November 2019 through December 2020; the gains were primarily driven by the increase in the Nord Pool price during 2018. In 2017, we recorded losses of $16.5 million primarily related to LME fixed forward financial sales contracts that were entered into in early 2016 for shipments through December 31, 2017; the losses were driven by the increase in the LME during 2017.
Income tax expense: We have a valuation allowance against all of our U.S. and certain foreign tax assets. We recognized a $0.2 million income tax benefit in 2018 as compared to income tax expense of $7.6 million in 2017. The reduction in tax expense year over year primarily relate to a decrease in earnings of certain of our foreign entities.

Liquidity and Capital Resources 
Liquidity
Our principal sources of liquidity are available cash and cash flow from operations. We also have borrowing capacity under our existing revolving credit facilities. We have also raised capital in the past through the public equity and debt markets, and we regularly explore various other financing alternatives.  Our principal uses of cash include the funding of operating costs

27


(including post-retirement benefits), debt service requirements, the funding of capital expenditures, investments in our growth activities and in related businesses, working capital and other general corporate requirements. Although we believe that cash provided from operations and financing activities will be adequate to cover our operations and business needs over the next 12 months, adverse changes in the price of aluminum or our principal costs of production could materially impact our ability to generate and raise cash. For an analysis of risks facing our business see Item 1A. Risk Factors.
Available Cash
Our available cash and cash equivalents balance at December 31, 2019 was $38.9 million compared to $38.9 million at December 31, 2018.
Sources and Uses of Cash
Our cash flows from operating, investing and financing activities as reflected in the consolidated statement of cash flows for the twelve months ended December 31, 2019, 2018 and 2017 are summarized below:
 
Twelve months ended December 31,
 
2019
 
2018
 
2017
 
(dollars in millions)
Net cash provided by (used in) operating activities
$
17.7

 
$
(69.1
)
 
$
51.5

Net cash (used in) investing activities
(38.8
)
 
(82.9
)
 
(17.4
)
Net cash provided by financing activities
21.1

 
23.7

 
0.4

Change in cash, cash equivalents and restricted cash
$

 
$
(128.3
)
 
$
34.5


Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Net cash provided by operating activities for 2019 was $17.7 million, compared to net cash used in operating activities of $69.1 million for 2018. The increase in net cash provided by operating activities was primarily driven by lower inventory costs and a decrease in accounts receivable due to timing of receivable collections.
The decrease in net cash used in investing activities was due to lower capital expenditures related to Hawesville restart activities and the receipt of $20.8 million from the sale of our interest in BHH during 2019.
Net cash provided by financing activities decreased by $2.6 million during 2019 due to lower net borrowings under our U.S. revolving credit facility, offset by proceeds from the term loan agreement with Glencore Ltd. pursuant to which the Company borrowed $40.0 million (the "Hawesville Term Loan"). Borrowings on our U.S. revolving credit facility are short term in nature to fund working capital requirements and are repaid on a continuous basis. Borrowings on our Hawesville Term Loan are required to be paid ratably over 24 months beginning in January 2020 and are used to partially finance the second phase of the Hawesville restart project.
Year Ended December 31, 2018 Compared to Year Ended December 31, 2017
Net cash used in operating activities for 2018 was $69.1 million, compared to net cash provided by operating activities of $51.5 million for 2017. The increase in net cash used in operating activities was primarily driven by the year-over-year net loss compared to net income.
The increase in net cash used in investing activities was due to higher capital expenditures related to our investment in the Hawesville restart project in 2018, compared with proceeds from the sale of our Ravenswood facility received in 2017 that partially offset purchases of property, plant, and equipment.
Net cash provided by financing activities increased by $23.3 million during 2018 due to outstanding borrowings on our U.S. revolving credit facility. Borrowings are short term in nature to fund working capital requirements and are repaid on a continuous basis.
Availability Under Our Credit Facilities

28



The U.S. revolving credit facility, dated May 2018, provides for borrowings of up to $175.0 million in the aggregate including up to $110.0 million under a letter of credit sub-facility, and also includes an uncommitted accordion feature whereby borrowers may increase the capacity of the U.S. revolving credit facility by up to $50.0 million, subject to agreement with the lenders. The U.S. revolving credit facility matures on the sooner of May 2023 or six months before the stated maturity of our outstanding senior secured notes. Any letters of credit issued and outstanding under the U.S. revolving credit facility reduce our borrowing availability on a dollar-for-dollar basis.

We have also entered into, through our wholly-owned subsidiary Nordural Grundartangi ehf ("Grundartangi"), a $50.0 million revolving credit facility, dated November 2013, as amended (the "Iceland revolving credit facility"). The Iceland revolving credit facility matures in November 2022.
The availability of funds under our credit facilities is limited by a specified borrowing base consisting of certain accounts receivable, inventory and qualified cash deposits which meet the lenders' eligibility criteria. Restarts of previously curtailed operations increase our borrowing base by increasing our accounts receivable and inventory balances; whereas, curtailments of production capacity decrease our borrowing base by reducing our accounts receivable and inventory balances. As of December 31, 2019, our U.S. revolving credit facility had $4.0 million in borrowings and $41.4 million in letters of credit outstanding. Of the outstanding letters of credit, $24.1 million related to our domestic power commitments and the remainder secured certain debt and workers’ compensation commitments.
As of December 31, 2019, our credit facilities had $161.6 million of net availability after consideration of our outstanding borrowings and letters of credit. We may borrow and make repayments under our credit facilities in the ordinary course based on a number of factors, including the timing of payments from our customers and payments to our suppliers.
Our credit facilities contain customary covenants, including restrictions on mergers and acquisitions, indebtedness, affiliate transactions, liens, dividends and distributions, dispositions of collateral, investments and prepayments of indebtedness, including, a springing financial covenant that requires us to maintain a fixed charge coverage ratio of at least 1.0 to 1.0 any time availability under the U.S. revolving credit facility is less than or equal to $17.5 million. Our Icelandic credit facility also contains a covenant that requires Grundartangi to maintain a minimum equity ratio. As of December 31, 2019, we were in compliance with all such covenants.
Senior Secured Notes
We have $250 million aggregate principal of 7.5% senior secured notes that will mature in June 2021 ("2021 Notes"). Interest on the 2021 Notes is payable semi-annually.
The indenture governing the 2021 Notes contains customary covenants which may limit our ability, and the ability of certain of our subsidiaries, to: (i) incur additional debt; (ii) incur additional liens; (iii) pay dividends or make distributions in respect of capital stock; (iv) purchase or redeem capital stock; (v) make investments or certain other restricted payments; (vi) sell assets; (vii) issue or sell stock of certain subsidiaries; (viii) enter into transactions with shareholders or affiliates; and (ix) effect a consolidation or merger.
Hawesville Term Loan
On April 29, 2019, we entered into a term loan agreement with Glencore Ltd. pursuant to which the Company borrowed $40.0 million. Borrowings under the Hawesville Term Loan are being used to partially finance the second phase of the Hawesville restart project. The Hawesville Term Loan matures on December 31, 2021 and is to be repaid in twenty-four (24) equal monthly installments of principal beginning on January 31, 2020. The Hawesville Term Loan bears interest, due monthly beginning on April 30, 2019, at a floating rate equal to LIBOR plus 5.375% per annum. The Hawesville Term Loan is not secured by any collateral.
Contingent Commitments
We have a contingent obligation in connection with the “unwind” of a contractual arrangement between Century Aluminum Kentucky ("CAKY"), Big Rivers and a third party and the execution of a long-term cost-based power contract with Kenergy, a member of a cooperative of Big Rivers, in July 2009. This contingent obligation consists of the aggregate payments made to Big Rivers by the third party on CAKY’s behalf in excess of the agreed upon base amount under the long-term cost-based power contract with Kenergy.  As of December 31, 2019, the principal and accrued interest for the contingent obligation

29


was $25.2 million, which was fully offset by a derivative asset. We may be required to make installment payments for the contingent obligation in the future. These payments are contingent based on the LME price of primary aluminum and the level of Hawesville’s operations. Based on the LME forward market at December 31, 2019 and management’s estimate of the LME forward market beyond the quoted market period, we believe that we will not be required to make payments on the contingent obligation during the term of the agreement, which expires in 2028. There can be no assurance that circumstances will not change thus accelerating the timing of such payments.
Employee Benefit Plan Contributions
In 2013, we entered into a settlement agreement with the Pension Benefit Guaranty Corporation ("PBGC") regarding an alleged "cessation of operations" at our Ravenswood facility.  Pursuant to the terms of the agreement, we agreed to make additional contributions (above any minimum required contributions) to our defined benefit pension plans totaling approximately $17.4 million. Under certain circumstances, in periods of lower primary aluminum prices relative to our cost of operations, we are able to defer one or more of these payments, but would then be required to provide the PBGC with acceptable security for deferred payments. We did not make any contributions during the years ended December 31, 2019, 2018 and 2017. We have elected to defer certain payments under the PBGC agreement and have provided the PBGC with the appropriate security. The remaining contributions under this agreement are approximately $9.6 million.
Section 232 Aluminum Tariff
On March 23, 2018, the U.S. implemented a 10% tariff on imported primary aluminum products into the U.S. These tariffs are intended to protect U.S. national security by incentivizing the restart of primary aluminum production in the U.S., reducing reliance on imports and ensuring that domestic producers, like Century, can supply all the aluminum necessary for critical industries and national defense.  In addition to primary aluminum products, the tariffs also cover certain other semi-finished products. All imports that directly compete with our products are covered by the tariff, with the exception of imports from Australia, Argentina, Canada and Mexico or imports that receive a product exclusion from the Department of Commerce.
Other Items
On May 22, 2019, Century Aluminum Asia Holdings Ltd. ("CAHL"), a wholly-owned subsidiary of the Company, entered into an equity transfer agreement ("the Equity Transfer Agreement") with Guangxi Qiangqiang Carbon Co., Ltd. ("GQQ") pursuant to which GQQ acquired all of CAHL’s forty percent (40%) interest in Baise Haohai Carbon Co. Ltd ("BHH"), a carbon anode and cathode facility in China. Prior to the sale, BHH was operated as a joint venture between CAHL and GQQ. GQQ paid CAHL the full purchase price of RMB144.9 million ($20.8 million) in cash in 2019. In connection with this sale, a loss of $4.3 million is recorded in the Consolidated Statements of Operations during the twelve months ended December 31, 2019.
We previously announced our intention to return our Hawesville smelter to full production and upgrade its existing reduction technology. We project that the total cash requirements for the restart project, including the technology upgrade, will be approximately $150.0 million from the commencement of the project in 2018 through its completion. The first phase of the project, which involved the restart of the three potlines that had been curtailed in 2015, was successfully completed on budget and ahead of schedule in early 2019. This restart of 150,000 tonnes of curtailed production cost approximately $75.0 million. The second phase is expected to cost an additional $75.0 million and involves the rebuilding of the pots associated with the 100,000 tonnes of production from the two potlines that had continued to operate past their expected life cycle and the implementation of certain new technology across all production. The first of the these potlines is currently in the process of being rebuilt and is expected to return to production in early 2020. The rebuild of the fifth and final potline and the completion of the technology upgrades is expected to be completed over the next several years, subject to market conditions. In April 2019, we entered a term loan agreement, of $40.0 million to partially finance the cost of the second phase of the project. See Note 6. Debt to the consolidated financial statements included herein for additional information. We expect to fund the remaining amounts required to complete the project through operating cash flows and existing cash.
In May 2018, we temporarily curtailed one potline at our Sebree aluminum smelter due to an equipment failure. We returned the curtailed potline at Sebree back to service during the third quarter. We expect all losses arising from the Sebree equipment failure will be covered under our insurance policies, less $7.0 million in deductibles. As of December 31, 2019, we received $18.4 million of insurance proceeds to offset against such losses.
In 2011, our Board of Directors approved a $60.0 million common stock repurchase program and subsequently increased this program by $70.0 million in the first quarter of 2015. Under the program, Century is authorized to repurchase up

30


to $130.0 million of our outstanding shares of common stock, from time to time, on the open market at prevailing market prices, in block trades or otherwise. The timing and amount of any shares repurchased will be determined by our management based on its evaluation of market conditions, the trading price of our common stock and other factors. We made no repurchases during the years ended 2019, 2018, and 2017. As of December 31, 2019, we had $43.7 million remaining under the repurchase program authorization. The repurchase program may be expanded, suspended or discontinued by our Board, in its sole discretion, at any time.
In November 2009, Century Aluminum of West Virginia ("CAWV") filed a class action complaint for declaratory judgment against the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union ("USW"), the USW’s local and certain CAWV retirees, individually and as class representatives ("CAWV Retirees"), seeking a declaration of CAWV’s rights to modify/terminate retiree medical benefits.  Later in November 2009, the USW and representatives of a retiree class filed a separate suit against CAWV, Century Aluminum Company, Century Aluminum Master Welfare Benefit Plan, and various John Does with respect to the foregoing.
On August 18, 2017, the District Court for the Southern District of West Virginia approved a settlement agreement in respect of these actions. Under the terms of the settlement agreement, CAWV agreed to make payments into a trust for the benefit of the CAWV Retirees in the aggregate amount of $23.0 million over the course of ten years. Upon approval of the settlement, we paid $5.0 million to the aforementioned trust in September 2017 and agreed to pay the remaining amounts under the settlement agreement in annual increments of $2.0 million for nine years. At December 31, 2019, we had $2.0 million in other current liabilities and $8.7 million in other liabilities related to this agreement.
We are a defendant in several actions relating to various aspects of our business. While it is impossible to predict the ultimate disposition of any litigation, we do not believe that any of these lawsuits, either individually or in the aggregate, will have a material adverse effect on our financial condition, results of operations or liquidity. See Note 15. Commitments and Contingencies to the consolidated financial statements included herein for additional information.
Capital Resources
We intend to finance our future recurring capital expenditures from available cash, cash flow from operations and available borrowing capacity under our existing revolving credit facilities. For major investment projects we would likely seek financing from various capital and loan markets and may potentially pursue the formation of strategic alliances. We may be unable, however, to issue additional debt or equity securities, or enter into other financing arrangements on attractive terms, or at all, due to a number of factors including a lack of demand, unfavorable pricing, poor economic conditions, unfavorable interest rates, or our financial condition or credit rating at the time. Future uncertainty in the U.S. and international markets and economies may adversely affect our liquidity, our ability to access the debt or capital markets and our financial condition.
Capital expenditures for the year ended December 31, 2019 were $28.2 million, excluding expenditures of $34.4 million associated with the restart at Hawesville. We estimate our total capital spending excluding the Hawesville restart in 2020 will be approximately $20.0 million, primarily related to our ongoing maintenance and investment projects at our smelters.
Critical Accounting Estimates
Our significant accounting policies are described in Note 1. Summary of Significant Accounting Policies to the consolidated financial statements.  The preparation of the financial statements requires that management make judgments, assumptions and estimates in applying these accounting policies.  Those judgments are normally based on knowledge and experience about past and current events and on assumptions about future events.  Critical accounting estimates require management to make assumptions about matters that are highly uncertain at the time of the estimate and a change in these estimates may have a material impact on our financial position or results of operations.  Significant judgments and estimates made by our management include expenses and liabilities related to inventories, pensions and other postretirement benefits ("OPEB"), deferred tax assets and property, plant and equipment.  Our management has discussed the development and selection of these critical accounting estimates with the audit committee of our Board of Directors and the Audit Committee has reviewed our disclosure.
Inventories
Our inventories are stated at lower of cost or net realizable value ("NRV").

31


Our estimate of the market value of our inventories involves establishing a net realizable value for both finished goods and the components of inventory that will be converted to finished goods, raw materials and work in process. This requires management to use its judgment when making assumptions about future selling prices and the costs to complete our inventory during the period in which it will be sold.
Our assumptions are subject to inherent uncertainties given the volatility surrounding the market price for primary aluminum sales and the market price for our major inputs, alumina and electrical power.
Although we believe that the assumptions used to estimate the market value of our inventory are reasonable, actual market conditions at the time our inventory is sold may be more or less favorable than management’s current estimates.
Pension and Other Postretirement Benefit Liabilities
We sponsor several pension and other OPEB plans.  Our liabilities under these defined benefit plans are determined using methodologies that involve several actuarial assumptions, the most significant of which are the discount rate, health care cost inflation rate and the long-term rate of return on plan assets. We review our actuarial assumptions on an annual basis and make modifications to the assumptions when appropriate.
Discount Rate Selection
We select a discount rate for purposes of measuring obligations under defined benefit plans by matching cash flows separately for each plan to the yields on high-quality zero coupon bonds.  We use the Ryan Above Median Yield Curve (the "Ryan Curve"). We believe the projected cash flows used to determine the Ryan Curve rate provide a good approximation of the timing and amounts of our defined benefit payments under our plans and no adjustment to the Ryan Curve rate has been made.  
Weighted Average Discount Rate Assumption for:
2019
 
2018
Pension plans
3.26%
 
4.39%
OPEB plans
3.07%
 
4.27%
A change of a half percentage point in the discount rate for our defined benefit plans would have the following effects on our obligations under these plans as of December 31, 2019:
Effect of changes in the discount rates on the Projected Benefit Obligations for:
50 basis point increase
 
50 basis point decrease
 
(dollars in millions)
Pension plans
$
(21.1
)
 
$
23.5

OPEB plans
(5.2
)
 
5.4

Medical Trend Rate
Measurement of our postretirement benefit obligations requires the use of several assumptions about factors that will affect the amount and timing of future benefit payments. The assumed health care cost trend rates are the most critical estimates for measurement of the postretirement benefit obligation.  Changes in the health care cost trend rates have a significant effect on the amounts reported for the health care benefit obligation.

32


Medical cost inflation is initially estimated to be 6.4% and 7.05% for pre and post-65 participants, respectively, declining to 4.5% over eleven years and thereafter.  A one-percentage-point change in the assumed health care cost trend rate would have had the following effects in 2019
 
1% Increase
 
1% Decrease
 
(dollars in millions)
Effect on total of service and interest cost components
$
0.6

 
$
(0.5
)
Effect on accumulated postretirement benefit obligation
10.1

 
(8.7
)
Long-term Rate of Return on Plan Assets Assumption
Our expected long-term rate of return on plan assets is derived from our asset allocation strategies and anticipated future long-term performance of individual asset classes. Our analysis gives consideration to recent plan performance and historical returns; however, the assumptions are primarily based on long-term, prospective rates of return. The weighted average long-term rate of return on plan assets for our defined benefit pension plans is 7.25% for 2019.
Based on information provided by independent actuaries and other relevant sources, the Company believes that the assumptions used to estimate expenses, assets and liabilities of pensions and other postretirement benefits are reasonable; however, changes in these assumptions could impact the Company’s financial position, results of operations or cash flows.
Deferred Income Tax Assets
We regularly assess the likelihood that deferred tax assets will be recovered from future taxable income.  To the extent we believe that it is more likely than not that a deferred tax asset will not be realized, a valuation allowance is established.  The amount of a valuation allowance is based upon our best estimate of our ability to realize the net deferred tax assets.  We have a valuation allowance of $492.4 million recorded for all of our U.S. deferred tax assets and a portion of our Icelandic deferred tax assets as of December 31, 2019.
Property, Plant and Equipment Impairment
We review our property, plant and equipment for impairment whenever events or circumstances indicate that the carrying amount of these assets (asset group) may not be recoverable.  The carrying amount of the assets (asset group) is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the assets (asset group).  In that case, an impairment loss would be recognized for the amount by which the carrying amount exceeds the fair value of the assets (asset group), with the fair value determined using a discounted cash flow calculation.  These estimates of future cash flows include management’s assumptions about the expected use of the assets (asset group), the remaining useful life, expenditures to maintain the service potential, market and cost assumptions.
Determination as to whether and how much an asset is impaired involves significant management judgment involving highly uncertain matters, including estimating the future sales volumes, future selling prices and costs, alternative uses for the asset, and estimated proceeds from the disposal of the asset.
Other Contingencies
We are a defendant in several actions relating to various aspects of our business. While it is impossible to predict the ultimate disposition of any litigation, we do not believe that any of these lawsuits, either individually or in the aggregate, will have a material adverse effect on our financial condition, results of operations or liquidity. See Note 15. Commitments and Contingencies to the consolidated financial statements included herein for additional information.
Recently Issued Accounting Standards Updates
Information regarding recently issued accounting pronouncements is included in Note 1. Summary of Significant Accounting Policies to the consolidated financial statements included herein.

33


Contractual Obligations
In the normal course of business, we have entered into various contractual obligations that will be settled in cash. These obligations consist primarily of long-term debt obligations and purchase obligations.  The expected future cash flows required to meet these obligations through the year 2029 are shown in the table below.  More information is available about these contractual obligations in the notes to the consolidated financial statements included herein.
 
Payments Due by Period
 
Total
 
 
2020
 
2021
 
2022
 
2023
 
2024
 
Thereafter
 
(dollars in millions)
Long-term debt (1)
$
298

 
 
$
20

 
$
270

 
$

 
$

 
$

 
$
8

Estimated interest payments (2)
30

 
 
21

 
9

 

 

 

 

Operating lease obligations (3)
43

 
 
5

 
3

 
3

 
2

 
2

 
28

Purchase obligations (4)
1,864

 
 
555

 
309

 
317

 
254

 
220

 
209

Other long-term liabilities (5)
19

 
 
8

 
3

 
2

 
1

 
5

 

Total
$
2,254

 
 
609

 
594

 
322

 
257

 
227

 
245


(1) 
Long-term debt includes principal repayments on our 2021 Notes, Hawesville Term Loan, and the IRB.  Payments are based on the assumption that all outstanding debt instruments will remain outstanding until their respective due dates. For our contingent obligation, based on the LME forward market prices for primary aluminum at December 31, 2019 and management's estimate of the LME forward market for periods beyond the quoted periods, we believe that we will not have any payment obligations through the term of the agreement, which expires in 2028.
(2) 
Estimated interest payments on our long-term debt assume that all outstanding debt instruments will remain outstanding until their respective due dates.  Our estimated future interest payments for any debt with a variable rate are based on the assumption that the December 31, 2019 rate for that debt continues until the respective due date.  We assume that no interest payments on the contingent obligation will be paid through the term of agreement, see above.
(3) 
Operating leases include long-term leases for land, office space, automobiles, and mobile equipment.
(4) 
Purchase obligations include long-term alumina and power contracts, excluding market-based power and raw material requirements contracts.  For contracts with LME-based pricing provisions, including our long-term Icelandic power contracts, we assumed a LME price using the LME forward curve as of December 31, 2019.
(5) 
Other long-term liabilities include asset retirement obligations.  Asset retirement obligations are primarily estimated disposal costs for spent potliner used in the reduction cells of our domestic smelters.


Material Commitments
We also have outstanding commitments related to pension, supplemental executive retirement benefit ("SERB") plans, OPEB and workers' compensation obligations. As of December 31, 2019, estimated future payments related to these obligations through the year 2029 amount to approximately $187 million, $17 million, $69 million and $10 million, respectively.
Item 7A.  Quantitative and Qualitative Disclosures about Market Risk
Commodity Price and Raw Material Costs Sensitivities
Aluminum is an internationally traded commodity, and its price is effectively determined on the LME plus any regional premium (e.g. the Midwest premium for aluminum sold in the United States and the European Duty Paid premium for metal sold into Europe) and any product premiums. From time to time, we may manage our exposure to fluctuations in the LME price of primary aluminum and/or the regional premium through financial instruments designed to protect our downside price risk exposure. From time to time, we also enter into financial contracts to offset fixed price sales arrangements with certain of our customers (the "fixed for floating swaps").   
We are also exposed to price risk for alumina which is one of the largest components of our cost of goods sold. Some of the alumina we purchase is priced based on a published alumina index. As a result, our cost structure is exposed to market fluctuations and price volatility. Because we sell our products based principally on the LME price for primary aluminum, regional premiums and value-added product premiums, we are not able to directly pass on increased production costs to our

34


customers. From time to time, we may manage our exposure to fluctuations in our alumina costs by purchasing certain of our alumina requirements under supply contracts with prices tied to the same indices as our aluminum sales contracts (the LME price of primary aluminum).
Market-Based Power Price Sensitivity
Market-Based Electrical Power Agreements
Hawesville and Sebree have market-based electrical power agreements pursuant to which EDF and Kenergy purchase electrical power on the open market and pass it through at MISO energy pricing, plus transmission and other costs incurred by them. Seventy-five percent (75%) of Mt. Holly's electric power requirements were supplied at rates based on natural gas prices. See Item 1. Business - Key Production Costs - Electrical Power Supply Agreements for additional information about these market-based power agreements.
Power is supplied to Grundartangi from hydroelectric and geothermal sources under long-term power purchase agreements. These power purchase agreements, which will expire on various dates from 2023 through 2036 (subject to extension), primarily provide power at LME-based variable rates. However, the price of approximately thirty percent (30%) of Grundartangi's power requirements is linked to the market price for power in the Nord Pool power market. From time to time, we may manage our exposure to fluctuations in the market price of power through financial instruments designed to protect our downside risk exposure. 
Electrical Power Price Sensitivity
With the movement toward market-based power supply agreements, we have increased our electrical power price risk for our operations, whether due to fluctuations in the price of power available on the MISO or Nord Pool power markets or the price of natural gas. Power represents one of our largest operating costs, so changes in the price and/or availability of market power could significantly impact the profitability and viability of our operations. Transmission line outages, problems with grid stability or limitations on energy import capability could also increase power prices, disrupt production through pot instability or force a curtailment of all or part of the production at these facilities. In addition, indirect factors that lead to power cost increases, such as any increasing prices for natural gas or coal, fluctuations in or extremes in weather patterns or new or more stringent environmental regulations may severely impact our financial condition, results of operations and liquidity.
The consumption shown in the table below reflects each operation at 100% production capacity and does not reflect partial production curtailments.
Electrical power price sensitivity by location:
 
Hawesville
 
Sebree
 
Mt. Holly
 
Grundartangi
 
Total
Expected average load (in megawatts ("MW"))
482

 
385

 
400

 
537

 
1,804

Annual expected electrical power usage (in megawatt hours ("MWh"))
4,222,320

 
3,372,600

 
3,504,000

 
4,704,120

 
15,803,040

Annual cost impact of an increase or decrease of $1 per MWh (in millions)
$
4.2

 
$
3.4

 
$
3.5

 
$
4.7

 
$
15.8

Foreign Currency
We are exposed to foreign currency risk due to fluctuations in the value of the U.S. dollar as compared to the Iceland krona ("ISK"), the euro, the Chinese renminbi and other currencies. Grundartangi’s labor costs, part of its maintenance costs and other local services are denominated in ISK and a portion of its anode costs are denominated in euros and Chinese renminbi.  We also have deposits denominated in ISK in Icelandic banks, and our estimated payments of Icelandic income taxes and any associated refunds are denominated in ISK. Further, Vlissingen's labor costs, maintenance costs and other local services are denominated in euros and our existing Nord Pool power price swaps described above are settled in euros. As a result, an increase or decrease in the value of those currencies relative to the U.S. dollar would affect Grundartangi’s operating margins.
We may manage our exposure by entering into foreign currency forward contracts or option contracts for forecasted transactions and projected cash flows for foreign currencies in future periods.  In 2018, we entered into financial contracts to hedge the risk of fluctuations associated with the euro under our power price swaps described above (the "FX swaps").

35


Natural Economic Hedges
Any analysis of our exposure to the commodity price of aluminum should consider the impact of natural hedges provided by certain contracts that contain pricing indexed to the LME price for primary aluminum. In 2019, certain of our alumina contracts and a substantial portion of Grundartangi’s electrical power requirements were indexed to the LME price for primary aluminum and provide a natural hedge for a portion of our production.
Risk Management
Any metals, power, natural gas and foreign currency risk management activities are subject to the control and direction of senior management within guidelines established by Century’s Board of Directors.  These activities are regularly reported to Century’s Board of Directors.

Fair Values and Sensitivity Analysis
The following tables present the fair value of our derivative asset and liabilities as of year end 2019 and 2018 and the effect on the fair value of a hypothetical ten percent (10%) adverse change in the market prices in effect at December 31, 2019 and 2018. Our risk management activities do not include any trading or speculative transactions.
 
Asset Fair Value
 
Fair Value with 10% Adverse Price Change
 
2019
2018
 
2019
2018
Commodity contracts (1)
$
19.7

$
8.2

 
$
(2.7
)
$
(1.1
)
Foreign exchange contracts (2)


 


   Total
$
19.7

$
8.2

 
$
(2.7
)
$
(1.1
)
 
Liability Fair Value
 
Liability Fair Value with 10% Adverse Price Change
 
2019
2018
 
2019
2018
Commodity contracts (1)
$
3.6

$
2.2

 
$
7.1

$
5.4

Foreign exchange contracts (2)
0.6

0.3

 
1.2

1.6

   Total
$
4.2

$
2.5

 
$
8.3

$
7.0


(1) Commodity contracts reflect our outstanding LME forward financial sales contracts, MWP forward financial sales contracts, contracts relating to the restart of Hawesville's Line 4 ("Hawesville L4 power price swaps"), fixed for floating swaps, and Nord Pool power price swaps.
(2) Foreign exchange contracts reflect our outstanding "FX swaps."





36



Item 8. Financial Statements and Supplementary Data

INDEX TO FINANCIAL STATEMENTS
 
Page
 
 
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Operations for the Years Ended December 31, 2019, 2018 and 2017
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2019, 2018 and 2017
Consolidated Balance Sheets at December 31, 2019 and 2018
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2019, 2018 and 2017
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2018 and 2017
Notes to the Consolidated Financial Statements



37



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Century Aluminum Company
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Century Aluminum Company and subsidiaries (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity, and cash flows, for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 27, 2020, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.


/s/ Deloitte & Touche LLP

Chicago, Illinois  
February 27, 2020  

We have served as the Company's auditor since 1992.






















38


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Century Aluminum Company
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Century Aluminum Company and subsidiaries (the “Company”) as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the Company and our report dated February 27, 2020, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


/s/ Deloitte & Touche LLP

Chicago, Illinois 
February 27, 2020



39


CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
 
Year Ended December 31,
 
2019
 
2018
 
2017
NET SALES:
 

 
 
 
 
Related parties
$
1,191.6

 
$
1,204.5

 
$
1,198.1

Other customers
645.0

 
688.7

 
391.0

Total net sales
1,836.6

 
1,893.2

 
1,589.1

Cost of goods sold
1,860.5

 
1,916.1

 
1,457.8

Gross profit (loss)
(23.9
)
 
(22.9
)
 
131.3

Selling, general and administrative expenses
47.4

 
40.2

 
44.8

Helguvik (gains) losses

 
(4.5
)
 
(7.3
)
Ravenswood (gains) losses

 

 
(5.5
)
Other operating expense - net
0.8

 
0.4

 
2.1

Operating income (loss)
(72.1
)
 
(59.0
)
 
97.2

Interest expense – term loan
(2.1
)
 

 

Interest expense
(23.0
)
 
(22.4
)
 
(22.2
)
Interest income
0.8

 
1.5

 
1.4

Net gain (loss) on forward and derivative contracts
12.0

 
6.3

 
(16.5
)
Other income (expense) - net
(1.1
)
 
3.0

 
(4.5
)
Income (loss) before income taxes and equity in earnings of joint ventures
(85.5
)
 
(70.6
)
 
55.4

Income tax benefit (expense)
8.4

 
0.2

 
(7.6
)
Income (loss) before equity in earnings of joint ventures
(77.1
)
 
(70.4
)
 
47.8

Loss on sale of BHH
(4.3
)
 

 

Equity in earnings of joint ventures
0.6

 
4.2

 
0.8

Net income (loss)
$
(80.8
)
 
$
(66.2
)
 
$
48.6

 
 
 
 
 
 
INCOME (LOSS) PER COMMON SHARE:
 

 
 

 
 

Basic and diluted
$
(0.91
)
 
$
(0.76
)
 
$
0.51



See notes to consolidated financial statements.



40


CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions)
 
Year Ended December 31,
 
2019
 
2018
 
2017
Comprehensive income (loss):
 
 
 
 
 
Net income (loss)
$
(80.8
)
 
$
(66.2
)
 
$
48.6

Other comprehensive income (loss) before income tax effect:
 
 
 
 
 
Net income (loss) on foreign currency cash flow hedges reclassified as income
(0.2
)
 
(0.2
)
 
(0.2
)
Defined benefit plans and other postretirement benefits:
 
 
 
 
 
Net gain (loss) arising during the period
(12.7
)
 
(6.8
)
 
(7.2
)
Prior service benefit (cost) arising during the period

 
(0.6
)
 
27.4

Amortization of prior service benefit (cost) during the period
(4.8
)
 
(7.1
)
 
(4.9
)
Amortization of net gain (loss) during the period
8.9

 
9.2

 
8.6

Other comprehensive income (loss) before income tax effect
(8.8
)
 
(5.5
)
 
23.7

Income tax effect
(1.0
)
 
(1.5
)
 
(1.5
)
Other comprehensive income (loss)
(9.8
)
 
(7.0
)
 
22.2

Total comprehensive income (loss)
$
(90.6
)
 
$
(73.2
)
 
$
70.8


See notes to consolidated financial statements.



41


CENTURY ALUMINUM COMPANY
CONSOLIDATED BALANCE SHEETS
(in millions)
 
December 31,
 
2019
 
2018
ASSETS
 
 
 
Cash and cash equivalents
$
38.9

 
$
38.9

Restricted cash
0.8

 
0.8

Accounts receivable - net
70.1

 
82.5

Due from affiliates
30.1

 
22.7

Inventories
320.6

 
343.8

Derivative assets
14.6

 
4.1

Prepaid and other current assets
12.2

 
13.9

   Total current assets
487.3

 
506.7

Property, plant and equipment - net
949.2

 
967.3

Other assets
62.7

 
63.5

Due from affiliates - less current portion
0.5

 
$

   TOTAL
$
1,499.7

 
$
1,537.5

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
LIABILITIES:
 

 
 
Accounts payable, trade
$
97.1

 
$
119.4

Due to affiliates
32.9

 
10.3

Accrued and other current liabilities
65.5

 
75.8

Accrued employee benefits costs
10.4

 
11.0

Hawesville term loan
20.0

 

Industrial revenue bonds
7.8

 
7.8

   Total current liabilities
233.7

 
224.3

  Senior notes payable
249.2

 
248.6

  Hawesville term loan - less current portion
20.0

 

  Accrued pension benefits costs - less current portion
60.8

 
50.9

  Accrued postretirement benefits costs - less current portion
100.7

 
101.2

  Other liabilities
42.4

 
46.0

  Leases - right of use liabilities
22.8

 

  Deferred taxes
95.1

 
104.3

     Total noncurrent liabilities
591.0

 
551.0

COMMITMENTS AND CONTINGENCIES (NOTE 15)

 

SHAREHOLDERS’ EQUITY:
 

 
 
  Preferred stock (Note 7)
0.0

 
0.0

  Common stock (Note 7)
1.0

 
1.0

  Additional paid-in capital
2,526.5

 
2,523.0

  Treasury stock, at cost
(86.3
)
 
(86.3
)
  Accumulated other comprehensive loss
(109.8
)
 
(98.7
)
  Accumulated deficit
(1,656.4
)
 
(1,576.8
)
     Total shareholders’ equity
675.0

 
762.2

     TOTAL
$
1,499.7

 
$
1,537.5


See notes to consolidated financial statements.

42


CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in millions)
 
 
Preferred stock
 
Common stock
 
Additional paid-in capital
 
Treasury stock, at cost
 
Accumulated other comprehensive loss
 
Accumulated
deficit
 
Total shareholders’ equity
Balance, December 31, 2016
 
$

 
$
0.9

 
$
2,515.1

 
$
(86.3
)
 
$
(113.9
)
 
$
(1,559.3
)
 
$
756.7

Net income – 2017
 

 

 

 

 

 
48.6

 
48.6

Other comprehensive income
 

 

 

 

 
22.2

 

 
22.2

Share-based compensation
 

 
0.0

 
2.3

 

 

 

 
2.3

Conversion of preferred stock to common stock
 

 
0.0

 
0.0

 

 

 

 

Balance, December 31, 2017
 
$
0.0

 
$
0.9

 
$
2,517.4

 
$
(86.3
)
 
$
(91.7
)
 
$
(1,510.7
)
 
$
829.6

Net loss – 2018