CENTURY ALUMINUM CO

Century Aluminum Company is a global producer of primary aluminum and operates aluminum reduction facilities, or smelters, in the United States and Iceland. The company also has a 55% ¹ joint venture interest in the Jamalco bauxite mining operation and alumina refinery in Jamaica, with the remaining 45% ² interest indirectly owned by the Government of Jamaica. Additionally, Century owns a carbon anode production facility located in the Netherlands, Vlissingen, which supplies carbon anodes to the Grundartangi smelter. The company's current annual production capacity was approximately 770,000 tonnes per year as of December 31, 2025 ³, and it produced approximately 638,000 tonnes of primary aluminum in 2025 ⁴. Century's share of Jamalco's production capacity is approximately 770,000 tpy ⁵.

The company faces global competition from larger, often vertically integrated producers with superior cost positions, as well as from producers of alternative materials such as steel, copper, carbon fiber, composites, plastic, and glass. Key competitive advantages cited by management include a focus on primary aluminum, strong internal growth opportunities, a low-carbon footprint through its Natur-Al product line, duty-free access to major customer markets (the U.S. and E.U.), close proximity to customers in the two shortest aluminum markets in the world, a diverse value-added product portfolio, access to market-based power, and an experienced management team. For the year ended December 31, 2025, the company derived approximately 54.0% ⁶ of its consolidated sales from Glencore plc and its affiliates, which beneficially owns 36.4% ⁷ of Century's outstanding common stock.

Century generates revenue primarily through the production and sale of primary aluminum and alumina. The price for primary aluminum is determined by the London Metal Exchange price plus regional premiums (such as the Midwest premium for U.S. sales and the European Duty Paid premium for European sales) and value-added product premiums. The company also sells alumina, a key raw material for aluminum production, with a substantial portion consumed internally at its smelters. Revenue is recognized when control of the product is transferred to the customer, generally upon shipment or delivery. The customer base is highly concentrated, with a small number of customers accounting for substantially all of net sales.

The company's primary aluminum smelters include Grundartangi in Iceland, with a production capacity of approximately 320,000 tonnes ⁸ and actual 2025 production of 260,000 tonnes ⁹; Sebree in Kentucky, with a capacity of approximately 220,000 tonnes ¹⁰ and actual 2025 production of 217,000 tonnes ¹¹; and Mt. Holly in South Carolina, with a capacity of approximately 230,000 tonnes ¹² and actual 2025 production of 161,000 tonnes ¹³. Grundartangi produces standard-grade aluminum ingot and primary foundry alloy. Sebree produces standard-grade aluminum and value-added billet. Mt. Holly produces standard-grade aluminum and value-added billet and foundry products. The Vlissingen carbon anode facility has an annual production capacity of approximately 161,000 tonnes ¹⁴ of carbon anodes, supplying between 93% and 98% ¹⁵ of Grundartangi's requirements. Jamalco has an alumina production capacity of approximately 1.4 million tonnes ¹⁶ and produced approximately 1.0 million tonnes of alumina in 2025 ¹⁷ and approximately 1.1 million tonnes of alumina in 2024 ¹⁸.

In October 2025, Grundartangi was forced to temporarily idle production on its larger potline due to an electrical equipment failure, reducing production by approximately two-thirds ¹⁹. The company expects losses from this event, less applicable deductibles, to be covered under insurance policies and estimates resumption of production of the idled potline by the end of April 2026. In August 2025, Century began a project to restore the remaining curtailed capacity at Mt. Holly, expecting to achieve full production by the end of June 2026. On July 22, 2025, the company issued $400.0 million ²⁰ in aggregate principal amount of 6.875% senior secured notes due 2032, using proceeds to redeem its 7.5% senior secured notes due 2028 at a redemption price of 101.875% ²¹ for a total of approximately $261.1 million ²², and to repay all $116.4 million ²³ in outstanding borrowings under the Grundartangi Casthouse Facility. On January 26, 2026, the company announced a joint development agreement with Emirates Global Aluminium to build a new primary aluminum smelter in Inola, Oklahoma, expected to produce 750,000 tonnes ²⁴ of aluminum per year, with EGA owning 60% ²⁵ and Century owning 40% ²⁶. On February 2, 2026, the company completed the sale of its Hawesville facility for $200.0 million ²⁷ in cash and a 6.8% ²⁸ non-dilutive minority equity interest in a data center project.

For the year ended December 31, 2025, total net sales were $2,527.9 million ²⁹, compared to $2,220.3 million ³⁰ in 2024. Gross profit was $256.4 million ³¹ versus $172.0 million ³² in the prior year. Net income attributable to Century stockholders was $41.8 million ³³, compared to $336.8 million ³⁴ in 2024, which included a $245.9 million ³⁵ bargain purchase gain from the Jamalco acquisition. Diluted earnings per share was $0.42 ³⁶ versus $3.27 ³⁷ in the prior year. Net cash provided by operating activities was $185.0 million ³⁸ in 2025, compared to cash used in operating activities of $24.6 million ³⁹ in 2024.

A major growth vector is the new smelter project in Inola, Oklahoma, announced on January 26, 2026, under a joint development agreement with Emirates Global Aluminium. The new plant is expected to produce 750,000 tonnes ⁴⁰ of aluminum per year, more than doubling current U.S. production. Construction is expected to start by the end of 2026, subject to completion of detailed engineering, negotiation of a competitive long-term power supply agreement with Public Service Company of Oklahoma, and a definitive joint venture agreement. The company also has a $500 million ⁴¹ Cooperative Agreement with the U.S. Department of Energy to support construction of this new smelter. Another growth vector is the restart of curtailed capacity at Mt. Holly, which began in August 2025, with full production expected by the end of June 2026.

The company's cost structure is heavily influenced by alumina and electrical power, which together with carbon products, labor, and other controllable costs represented over 84% ⁴² of Cost of goods sold for 2025. The company manages alumina cost exposure through supply contracts with prices tied to the LME price of aluminum, providing a natural hedge. For power, approximately 70% ⁴³ of Grundartangi's power requirements are fully indexed to the LME price, while Sebree operates under a market-based contract exposing it to price volatility. The company also benefits from the Section 45X production tax credit under the Inflation Reduction Act, equal to 10% ⁴⁴ of eligible domestic production costs, which offsets cost of goods sold. The One Big Beautiful Bill Act, signed into law on July 4, 2025, will phase out this credit beginning in 2031, reducing it by 25% each year to 0% in 2034 ⁴⁵.

Operationally, the company is focused on restoring production at Grundartangi following the October 2025 equipment failure, with resumption of the idled potline expected by the end of April 2026. The company is also executing the restart of curtailed capacity at Mt. Holly, targeting full production by June 2026. Capital expenditures for 2026 are estimated to be approximately $170 to $180 million ⁴⁶, including $60 to $70 million ⁴⁷ for repairs at Grundartangi expected to be reimbursed by insurance, approximately $45 million ⁴⁸ for the Mt. Holly restart, and approximately $25 million ⁴⁹ for investments in the Jamalco facility. The company had 2,906 ⁵⁰ employees as of December 31, 2025, with 55% ⁵¹ represented by labor unions.

Capital allocation priorities include funding capital expenditures, debt service, and growth investments. The company estimates total capital spending in 2026 of approximately $170 to $180 million ⁵². As of December 31, 2025, the company had $43.7 million ⁵³ remaining under its $130.0 million ⁵⁴ stock repurchase program authorization, though no repurchases were made in 2025, 2024, or 2023. The company did not declare dividends on its common stock in 2025 or 2024 and does not plan to do so in the foreseeable future. The company's debt agreements contain restrictions limiting its ability to pay dividends.

A key headwind is the temporary reduction in production at Grundartangi due to the October 2025 electrical equipment failure, which reduced output by approximately two-thirds ⁵⁵. The company faces execution risk in restoring full production by the end of April 2026. Another headwind is the potential for increased energy costs, as Sebree operates under a market-based power contract exposing it to price volatility from factors such as coal and natural gas prices, weather events, and regulatory changes. The company also faces risks from the phase-out of the Section 45X tax credit beginning in 2031, which could increase future tax liabilities. Additionally, the company's ability to benefit from the $500 million ⁵⁶ DOE funding is subject to negotiation of specific terms and compliance with requirements.

Structural constraints include the company's exposure to global aluminum price volatility, which is influenced by factors beyond its control such as global supply-demand balance, inventory levels, and geopolitical conditions. The company's operations in Iceland, the Netherlands, and Jamaica expose it to political, economic, regulatory, and currency risks. The Jamalco joint venture structure poses unique risks, including the need for partner capital contributions and the complexity of the unincorporated joint venture structure, which led to a restatement of financial statements. The company also faces risks from its concentrated customer base, with Glencore accounting for approximately 54.0% ⁵⁷ of consolidated sales in 2025.

The company's operating results are highly sensitive to declines in the market price of primary aluminum, which consists of the LME base price, regional premiums, and value-added product premiums, all of which are subject to significant volatility from factors such as global supply-demand imbalances, inventory levels, and geopolitical conditions. A second material risk is the potential for increases in energy costs or disruptions in power supply, as electrical power represents one of the largest components of cost of goods sold; the Sebree plant operates under a market-based contract exposing it to price volatility, and the October 2025 equipment failure at Grundartangi reduced production by approximately two-thirds ⁵⁸. A third key risk is the company's reliance on a small number of customers, with Glencore accounting for approximately 54.0% ⁵⁹ of consolidated net sales in 2025 and beneficially owning 36.4% ⁶⁰ of outstanding common stock, creating concentration risk and potential conflicts of interest. Additionally, the company faces risks related to its Jamalco joint venture, including the complexity of the unincorporated structure which led to a restatement of financial statements, and the identification of a material weakness in internal control over financial reporting related to business process level controls at Jamalco and financial reporting controls over its consolidation. Finally, the company's ability to utilize its federal net operating loss carryforwards of approximately $1,544.9 million ⁶¹ to offset future taxable income may be significantly limited if it experiences an ownership change under Section 382 of the Internal Revenue Code.

Management's message emphasizes a focus on maintaining a strong balance sheet across commodity cycles while investing to lower costs, expand production capacity, and increase competitiveness. Key strategic priorities include the restart of curtailed capacity at Mt. Holly to achieve full production by June 2026, the restoration of Grundartangi to full production following the October 2025 equipment failure, and the development of the new smelter project in Oklahoma with Emirates Global Aluminium. Management also highlights the company's commitment to sustainability through its Natur-Al low-carbon aluminum product line and its vertical integration with the Jamalco alumina refinery.