Item 1A. Risk Factors
You should carefully consider the risk factors set forth below, as well as the other information contained in this Form 10-K, including our consolidated financial statements and related notes. This Form 10-K contains forward-looking statements that involve risks and uncertainties. Any of the following risks could materially and adversely affect our business, financial condition and results of operations. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect our business, financial condition and results of operations. The following risk factors are not necessarily presented in order of relative importance and should not be considered to represent a complete set of all potential risks that could affect our business, financial condition and results of operations.
RISKS RELATING TO OUR BUSINESS
Market conditions, as well as global and regional economic downturns that adversely affect the demand for our end-use products, could adversely affect the results of our operations and the prices at which we can sell our products, thus, negatively impacting our financial results.
Our revenue and results of operations are significantly dependent on sales of TiO 2 products and zircon. Demand for these products historically have been linked to global, regional and local GDP and discretionary spending, which can be negatively impacted by regional and world events or economic and market conditions. Such events can cause a decrease in demand for our products and market prices to fall, which may have an adverse effect on our results of operations and financial condition. A substantial portion of our products and raw materials are commodities that reprice as market supply and demand fundamentals change, and we have recently been experiencing a depressed trend in the commodity cycle for TiO 2 . Accordingly, product margins and the results of operations tend to vary with changes in the business cycle.
A significant portion of the demand for our TiO 2 products comes from manufacturers of paint and plastics. A significant portion of the demand for zircon comes from the construction and other industrial end markets. Our customers may experience significant fluctuations in demand for their own end products because of economic conditions, changes in consumer demand, or increases in raw material and energy costs. In addition, with respect to the zircon market, we believe that China currently accounts for approximately 50% of the world’s demand for zircon. However, there is currently a weakening demand in the domestic Chinese ceramics end-market as well as an increase in domestic Chinese zircon sand production, partially attributable to the Chinese continued focus on mining rare earth bearing minerals, which is adding to the global zircon supply. A prolonged economic downturn in China could result in reduced zircon and TiO 2 demand in China as well as Chinese domestic zircon producers increasing exports of zircon at low prices which could have a material adverse effect on our business and financial results.
The price of our products, in particular, TiO 2 , zircon, and pig iron, have been, and in the future may be, volatile. Price declines for our products will negatively affect our financial position and results of operations.
Historically, the global market for TiO 2, zircon and pig iron have been volatile, and those markets are likely to remain volatile in the future. Prices for TiO 2, zircon and pig iron may fluctuate in response to relatively minor changes in the supply of,
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and demand for, these products, market uncertainty and other factors beyond our control, and we have recently been experiencing a depressed trend in the commodity cycle for TiO 2 . Factors that affect the price of our products include, among other things:
• overall economic conditions;
• the level of customer demand particularly in the paint, plastics and construction industries;
• the level of production and exports of our products globally, including the impact of competitors increasing their capacity and exports, in particular Chinese competitors, as well as the price of such exports being offered to customers at lower prices;
• the level of production and cost of materials, such as chlorine, sulfuric acid, sulfur, and anthracite, used to produce our products, including rising prices of raw materials due to inflation;
• the cost of energy consumed in the production of TiO 2 , feedstock and zircon, including the price of natural gas, pet coke and electricity, in particular, the increasing electricity costs relating to our South African operations;
• domestic and foreign governmental regulations, tariffs or other trade disputes, regulations and taxes;
• political conditions or hostilities and unrest in regions where we manufacture and/or export our TiO 2 , zircon and feedstock/other products; and
• major public health issues which could cause, among other things, macroeconomic disruptions.
Pricing pressure, along with demand fluctuations, with respect to our TiO 2 products, zircon and pig iron can make it difficult to predict the cash we may have on hand at any given time, and a continued period of price declines and/or demand declines may materially and adversely affect our financial position, cash generation, liquidity, ability to service and repay our debt, pay dividends, operate our business, fund our liquidity and capital needs, including through the capital markets and for the purpose of financing planned capital expenditures and results of operations.
Our industry and the end-use markets in which we compete are highly competitive and are characterized by excessive production capacity, particularly in China. Competition and excess production capacity may adversely affect our results of operations and operating cash flows.
Each of our markets is highly competitive. Competition in the TiO 2 industry is based on a number of factors such as price, product quality, and service. We face significant competition from major international and smaller regional competitors, especially producers in China. Chinese producers have significantly expanded their TiO 2 production capacity in recent years and the volume of their exports and certain Chinese producers have also publicly announced their intention to continue to expand their TiO 2 production capacity and aggressive exports efforts. Moreover, the increased Chinese TiO 2 production capacity, along with the prolonged economic downturn in China, is resulting in increasing quantities of TiO 2 being exported to other regions of the world in which we compete typically at lower prices.
We compete with a large number of mining companies with respect to zircon. Zircon producers generally compete on the basis of price, quality, logistics, delivery, payment terms and consistency of supply. Moreover, increased Chinese production of zircon from both heavy mineral concentrates imported from Africa and Australia, and the mining of monazite to support the Chinese domestic rare earth industry, along with the prolonged economic downturn in China, is resulting in increasing quantities of zircon being exported by China to other regions of the world in which we compete typically at lower prices.
In addition, we face substantial risk that our customers could switch to our competitors’ products in response to any number of developments including lower price offerings by our competitors for substantially the same products, new product development by competitors, or with respect to zircon customers, switching to lower priced substitute products. Our inability to develop, produce or market our products to compete effectively against our competitors could have a material adverse effect on our business, financial condition, results of operations and cash flow.
Although certain jurisdictions have imposed anti-dumping duties or similar duties against TiO 2 imports from China, there can be no assurance that such duties will benefit our business, and if such duties are reduced, removed or not extended, it could have a material adverse effect on our results of operations and financial position.
The European Commission, Brazil, India, and the Kingdom of Saudi Arabia have imposed definitive anti-dumping duties on the importation of TiO 2 products originating in China. The anti-dumping duties imposed by the European Commission in January 2025 will remain in effect for an initial period of five years until January 2030 with the possibility of an extension for an additional five years. The anti-dumping duties imposed by Brazil’s Chamber of Foreign Trade in October 2025 are also definitive and will be in place for an initial period of five years until October 2030 with the possibility of an extension for an additional five years. The antidumping duties imposed by the Kingdom of Saudi Arabia in October 2025 will also be in place for an initial period
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of five years until October 2030 with the possibility of an extension for an additional five years. The Indian anti-dumping duties became definitive in May 2025, but such duties were stayed by an Indian state court due to perceived procedural issues. Although we believe such definitive duties will ultimately be reinstated, we cannot predict when such duties will be reinstated, or if they will be reinstated at all. If reinstated, the Indian duties will also have the possibility of an extension for an additional five years when they expire in May 2030.
We may benefit from these duties due to the impact they may have on the price at which Chinese importers sell TiO 2 in these jurisdiction as well as on the volume of exports of Chinese-made TiO 2 to these jurisdictions. However, there can be no assurance that these duties will prove effective in increasing the price at which such Chinese producers sell TiO 2 in the jurisdictions that have or will impose anti-dumping duties nor in decreasing the volume of TiO 2 sold by Chinese exporters. In addition, Chinese TiO2 producers are also increasingly looking for alternative ways to evade such anti-dumping duties, including through the acquisition of non-Chinese TiO2 pigment plants. Any of these outcomes could have a material adverse effect on our results of operations and financial position. Anti-dumping duties are generally subject to periodic reviews and, occasionally, legal challenges, which can result in their revocation, suspension or reduction. If these anti-dumping duties and tariffs were to be revoked or reduced in the future, or if they do not adequately combat China’s trade practices, our results of operations and financial position could be impacted.
We also benefit from the duties issued by the U.S. government pursuant to Section 301 of the Trade Act of 1974 on Chinese-origin TiO 2 products, which are currently set at 25% (“Section 301 Duties”). Similar to anti-dumping duties, these duties impact the volume and price of Chinese TiO 2 products originating in China imported into the United States. Section 301 Duties may be modified, removed, extended, reduced or increased by executive action, or TiO 2 could be excluded from the Section 301 Duties in the future. Any such changes to the Section 301 Duties on TiO 2 products could have a material adverse effect on our results of operations and financial position.
An increase in the price of energy or other raw materials, or an interruption in our energy or other raw material supply, could have a material adverse effect on our business, financial condition and results of operations.
Our mining, beneficiation, smelting and production processes consume significant amounts of energy and raw materials, the costs of which can be subject to worldwide, as well as, local supply and demand, as well as other factors beyond our control. Fuel and energy linked to commodities, such as diesel, natural gas, heavy fuel oil and pet coke, and other consumables, such as chlorine, sulfuric acid, illuminating paraffin, electrodes, sulfur and anthracite, consumed in our TiO 2 manufacturing and mining operations form an important part of our TiO 2 operating costs. We have no control over the costs of these consumables, many of which are linked to some degree to the price of oil, and the costs of many of these raw materials may fluctuate widely for a variety of reasons, including changes in availability, major capacity additions or reductions, or significant facility operating problems. In addition, certain key raw materials used in our operations are currently primarily sourced from China so any export restrictions or limits imposed by the Chinese government on such raw materials could have a material adverse effect on our operations. Moreover, the ongoing Russia and Ukraine conflict has resulted in, and may continue to result in, increased uncertainty with respect to the supply of energy and other energy-dependent commodities for our TiO 2 production facilities located in the European Union and the United Kingdom, as well as other raw materials, such as anthracite, for our slag furnaces located in South Africa. Increased costs of electricity and in the supply of electricity due to long-standing operational issues at the sole, state-owned energy supplier in the Republic of South Africa, Eskom, could increase the costs of production, or operations, at our mines and beneficiation operations in that country. Availability of such consumables could also be impacted by transportation capacity constraints or other . These fluctuations could affect our operating margins, our results of operations or planned capital expenditures. In addition, due to our global footprint and reliance on key raw materials from around the world, we are particularly reliant on shipping vessels to transport such raw materials as well as our finished goods. If the costs of raw materials, utilities, transportation and similar costs rise, our operating expenses will increase and could affect our business, especially if we are to pass price increases relating to raw materials, utilities, transportation and similar costs through to our customers.
The markets for many of our products have seasonally affected sales patterns.
Historically, the demand for our products is subject to seasonal fluctuations. TiO 2 is widely used in paint and other coatings where demand increases prior to the painting season in the Northern Hemisphere (spring and summer). Additionally, although zircon is generally a non-seasonal product, it is negatively impacted by the winter and Chinese New Year celebrations due to reduced zircon demand from China. We may be adversely affected by existing or future cyclical changes, and such conditions may be sustained or further aggravated by anticipated or unanticipated changes in regional weather conditions. For example, poor weather conditions in a region can lead to an abbreviated painting season, which can depress consumer sales of paint products that use TiO 2 .
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We are dependent on, and compete with other mining and chemical businesses for, key human resources in the countries in which we operate, and our business will suffer if we are unable to hire or deploy highly skilled employees.
We compete with other chemical and mining companies, and other companies generally, in the countries in which we operate to attract and retain key human resources at all levels with the appropriate technical skills and operating and managerial experience necessary to continue operating and expanding our businesses. These operations use modern techniques and equipment and accordingly require various types of skilled workers. The success of our business will be materially dependent upon the skills, experience and efforts of our key officers and skilled employees. Competition for skilled employees may cost us in terms of higher labor costs or reduced productivity. In addition, certain of our production facilities and mining operations are situated in remote locations which may make it more difficult to attract and retain the skilled workers required. As a result, we may not be able to attract, retain and deploy skilled and experienced employees. Should we lose any of our key personnel or fail to attract, retain and deploy key qualified personnel or other skilled employees, our business may be harmed and our operational results and financial condition could be affected.
Given the nature of our chemical, mining and smelting operations, we face a material risk of liability, production delays and additional expenditures from industrial accidents.
Our business is exposed to, among other things, industrial accidents the occurrence of which could delay production, suspend operations, increase repair, maintenance or medical costs and, due to the vertical integration of our operations, could have an adverse effect on the productivity and results of operations of a particular manufacturing facility or on our business as a whole. Furthermore, during operational breakdowns resulting from any such industrial accident, the relevant facility may not be restored to full operations within the anticipated timeframe, which could result in further business losses. Over our operating history, we have incurred incidents of this nature. If any of the equipment on which we depend were severely damaged or were destroyed by fire or otherwise, we may be unable to replace or repair it in a timely manner or at a reasonable cost, which would impact our ability to produce and ship our products, which would have a material effect on our business, financial condition and results of operations.
Equipment failures and deterioration of assets may lead to production curtailments, shutdowns or additional expenditures.
Our operations depend upon critical equipment that must be periodically maintained and upgraded in order to avoid suffering unanticipated breakdowns or failures. The occurrence of equipment failures or deterioration of assets could delay production, suspend operations, increase repair, maintenance or medical costs and, due to the vertical integration of our operations, could have an adverse effect on the productivity and results of operations of a particular manufacturing facility or on our business as a whole. In addition, assets critical to our mining and chemical processing operations may deteriorate due to wear and tear or otherwise sooner than we currently estimate. Such deterioration may result in additional maintenance spending and additional capital expenditures. If these assets do not generate the amount of future cash flows that we expect, and we are not to refurbish them or procure replacement assets in an economically feasible manner, our future results of operations may be materially and affected.
Our results of operations and financial condition could be seriously impacted by security breaches, including cybersecurity incidents.
We rely on information technology systems across our operations to manage our business including, but not limited to, our accounting, finance, and supply chain functions. Our information technology is provided by a combination of internal and external services and service providers. Further, our business involves the use, processing, storage and transmission of information about customers, suppliers and employees using such information technology systems. Our ability to effectively operate our business depends on the security, reliability and capacity of these systems.
Like most major corporations, during the normal course of business, we have been the target of cyberattacks, including phishing or ransomware attacks, from time to time, and we expect to be the target of such cyberattacks in the future. For instance, the Cristal business we acquired in April 2019 was subject to a significant cybersecurity attack in 2017. Failure to effectively prevent, detect and recover from security breaches, including attacks on information technology and infrastructure by hackers; viruses; breaches due to employee error or actions; or other disruptions could seriously harm our operations as well as the operations of our customers and suppliers. Such serious harm can involve, among other things, misuse of our assets, business disruptions, loss of data, access to trade secrets and confidential business information, access to personal information, legal or proceedings, reporting , processing , media attention, reputational , of sales, remediation and increased insurance costs, and with regulatory compliance. We have experienced, and expect to continue to experience, these types of cybersecurity and , which may be material.
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We have put in place training and security measures designed to protect against cyberattacks, phishing, security breaches and misappropriation or corruption of our systems, intentional or unintentional disclosure of confidential information, or disruption of our operations. As these threats continue to evolve, particularly around cybersecurity, we may be required to expend significant resources to enhance our control environment, processes, practices and other protective measures. Despite these efforts, we may not be able to prevent cyberattacks and other security breaches and such events could materially adversely affect our business, financial condition and results of operations.
Our ore resources and reserve estimates are based on a number of assumptions, including mining and recovery factors, future cash costs of production and ore demand and pricing. As a result, ore resources and reserve quantities actually produced may differ from current estimates.
The mineral resource and reserve estimates are estimates of the quantity and ore grades in our mines based on the interpretation of geological data obtained from drill holes and other sampling techniques, as well as from feasibility studies. The accuracy of these estimates is dependent on the assumptions and judgments made in interpreting the geological data in accordance with established guidelines and standards. Our mineral reserves represent the amount of ore that we believe can be economically mined and processed, and are estimated based on a number of factors.
There is significant uncertainty in any mineral reserve or mineral resource estimate. Factors that are beyond our control, such as the ability to secure mineral rights, the sufficiency of mineralization to support mining and beneficiation practices and the suitability of the market may significantly impact mineral resource and reserve estimates. The actual deposits encountered and the economic viability of mining a deposit may differ materially from our estimates. Since these mineral resources and reserves are estimates based on assumptions, we may revise these estimates in the future as we become aware of new developments. To maintain TiO 2 feedstock and zircon production beyond the expected lives of our existing mines or to increase production materially above projected levels, we will need to access additional reserves through exploration or discovery.
If we are unable to innovate and successfully introduce new products, or new technologies or processes reduce the demand for our products or the price at which we can sell products, our results of operations could be adversely affected.
Our industries and the end-use markets into which we sell our products experience periodic technological change and product improvement. Our financial condition and results of operations could be adversely affected if we are unable to gauge the direction of commercial and technological progress in key end-use markets or if we fail to fund and successfully develop, manufacture and market products in such changing end-use markets.
In addition, new technologies or processes have the potential to replace or provide lower-cost alternatives to our products, such as new processes that reduce the amount of TiO 2 or zircon content in consumer products which in turn could depress the demand and pricing for TiO 2 or zircon, respectively. We cannot predict whether technological innovations will, in the future, result in a lower demand for our products or affect the competitiveness of our business. We may be required to invest significant resources to adapt to changing technologies, markets and competitive environments.
The Company may not be successful in arranging required financing and/or developing a financeable structure for its rare earth initiatives, and even if the required financing is obtained and/or a financing structure is achieved, the Company may not be successful in developing a viable rare earth supply chain.
The Company's ability to successfully implement its rare earth initiatives is contingent upon arranging adequate financing and/or structuring a financeable model. In 2025, for example, we received coordinated, non-binding and conditional letters of support / interest from Export Finance Australia and Export-Import Bank of the United States, respectively, for up to an aggregate of $600 million in limited or non-recourse financing to support the development of Tronox's rare earth supply chain. There can be no assurance that the required funding will be available on acceptable terms - or at all - or that the Company will be able to satisfy any conditions imposed by potential governmental agencies or other third-party lenders, investors, or partners, including without limitation as to structuring. Additionally, the Company's plans to develop a rare earth supply chain outside of China, in particular in the US and Australia, depend on numerous uncertain factors, including but not limited to, the outcomes of pre-feasibility studies, negotiations with third parties, access to processing and infrastructure, regulatory approvals, favorable market demand, availability of skilled personnel, and geopolitical considerations. Failure to secure the necessary funding or to achieve in developing such supply chains and structuring could materially affect the Company's ability to meaningfully develop a rare earth business. In addition, historically, the Company has sold the monazite contained in its mines in unconcentrated form as a waste product rather than processing it into rare earth oxide, and the Company has no experience in managing a standalone rare earth business. There can be no assurance that the Company will be in this regard.
RISKS RELATING TO THE GLOBAL NATURE OF OUR BUSINESS
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We are exposed to the risks of operating a global business.
We have operations in jurisdictions around the globe which subjects us to a number of risks, including:
• adapting to unfamiliar regional and geopolitical conditions and demands, including political instability, civil unrest, expropriation, nationalization of properties by a government, imposition of sanctions, changes to import or export regulations and fees, renegotiation or nullification of existing agreements, mining leases and permits;
• increased difficulties with regard to political and social attitudes, laws, rules, regulations and policies within countries that favor domestic companies over non-domestic companies, including customer- or government-supported efforts to promote the development and growth of local competitors;
• economic and commercial instability risks, including those caused by sovereign and private debt default, corruption, and new and unfamiliar laws and regulations at national, regional and local levels, including taxation regimes, tariffs and trade barriers, including any additional tariffs in the United States or retaliatory tariffs imposed by other governments, exchange controls, repatriation of earnings, and labor and environmental and health and safety laws and regulations;
• implementation of additional technological and cybersecurity measures and cost reduction efforts, including restructuring activities, which may adversely affect our ability to capitalize on opportunities;
• major public health issues which could cause, and have caused, disruptions in our operations or workforce;
• war, political conditions, hostilities, including, but not limited to, the ongoing Russia and Ukraine and Middle East conflicts, or terrorist activities;
• difficulties enforcing intellectual property and contractual rights in certain jurisdictions; and
• unexpected events, including fires or explosions at facilities, and natural disasters, including as a result of climate-related events.
South Africa, where we have large mining assets and derive a significant portion of our revenue and profit, poses distinct operational risks which could affect our business, financial condition and results of operations.
In South Africa, we currently operate two significant mining assets, as well as accompanying separation plants and smelting operations, and derive a significant portion of our profit from the sale of zircon. Our mining and smelting operations depend on the electrical grid operated by Eskom, the sole-state-owned energy supplier, as well as the electrical power generated by Eskom. In the past, Eskom has not been able to reliably provide electrical power and there is no assurance that such reliability of electrical power and the associated energy grid will continue in the future which could have a material adverse effect on our business, financial condition and results of operations. In addition, we have also recently experienced increased electricity prices in South Africa and although we have been trying to reduce our dependency on Eskom through the use of renewable energy sources, there can be no assurance that we will be able to effectively mitigate any future electricity prices that are expected to occur in the future. If Eskom continues to increase the price of electricity in the future and we are unable to effectively mitigate such prices it could have a material adverse effect on our business, financial condition and results of operations.
Our operations in South Africa are reliant on services provided by the State-owned, sole provider of rail transport, Transnet Freight Rail and ocean transport, Transnet National Port Authority (collectively "Transnet"). Furthermore, Transnet provides extensive dockside services at both the ports of Richards Bay and Saldanha Bay from where we export bulk quantities of TiO 2 feedstock to our pigment plants worldwide and pig iron. Like Eskom, Transnet faces chronic operational and financial challenges. In the past, the Port of Richards Bay, which is owned and operated by Transnet, was impacted by two separate events, including a significant fire, which damaged part of the Port's infrastructure, causing increased shipment delays and costs to us. Currently, Transnet's rail transport services at the Port of Richards Bay is not operational, and as such, we are presently using trucking services to transport all of our raw material from our KZN operations to the port of Richards Bay. Shipment delays at the port of Richards Bay have persisted for the last several years, including 2025, and we believe such delays will continue in 2026 and beyond. Delays or interruptions at either the rail service or the ports in which we receive and/or export material could have a impact on our business, financial condition and results of operations.
In addition, our KZN Sands operations currently use approximately 316,000 gigajoules of Sasol gas annually, which is currently available only from Sasol Limited (Sasol). As such, an interruption in the supply of gas from Sasol could have a material adverse effect on our business, financial conditions and results of operations.
In addition, under South African law, our South African mining operations are subject to various environmental authorizations that govern each operation. These authorizations require, among other conditions, that mining operations maintain certain environmental standards, including air and water quality limits and post-rehabilitation obligations. Any changes by governmental authorities to these limits and license conditions could increase our costs of operations thereby affecting our operational results and financial condition.
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The aforementioned operational risks, as well as any other foreseen or unforeseen operational risks primarily related to doing business in South Africa, could have a material adverse effect on our business, financial condition and results of operations.
As an emerging market, South Africa poses a challenging array of long-term political, social and economic risks.
South Africa continues to undergo political, social and economic challenges. South Africa has also experienced instances of civil unrest which resulted in significant damage to the national supply chains and logistics. The area near our KZN operations is one of the areas in which such unrest has occurred. Changes to, or instability in, the economic, social or political environment in South Africa which cause civil unrest, shortages of production materials, interruptions to transportation networks, or labor unrest could result in production delays and production shortfalls, and materially impact our production and results of operations.
The South African government has recently embarked on a process of identifying and securing land for persons who were previously dispossessed of such land as a result of Apartheid policies. For instance, the South African government has released a draft land expropriation bill which contemplates that, where it is in the “public interest”, land may be expropriated by the South African government, without compensation being payable to the current owners. While the South African government has indicated that such measures will be applied initially to state-owned land, it is possible that such measures may extend to agricultural and mining areas. In the event that the land on which the Namakwa Sands and KZN Sands operations are situated become the subject of a land claim under any such proposed or future land expropriation bill, it may have a material adverse effect on our business, financial condition and results of operations.
The South African government's exchange control regulations require resident companies to obtain the prior approval of the South African Reserve Bank to raise capital in any currency other than the Rand, and restrict the export of capital from South Africa. While the South African government has relaxed exchange controls in recent years, it is difficult to predict whether or how it will further change or abolish exchange control measures in the future. These exchange control restrictions could hinder our financial and strategic flexibility, particularly our ability to use South African capital to fund acquisitions, capital expenditures, and new projects outside of South Africa.
Our South African operations have been affected by inflation in South Africa in recent years. Employment costs and wages in South Africa have increased in recent years, resulting in significant cost pressures for the mining industry. Prolonged or heightened inflation and associated cost pressures could have a material adverse effect on our business, financial condition and results of operations.
Our South African operations have entered into various collective agreements with organized labor regulating wages and working conditions at our mines and smelter operations. There have been periods when various stakeholders have been unable to agree on dispute resolution processes, leading to threats of disruptive industrial action disputes. Due to the high level of employee union membership, our South African operations are at risk of production stoppages for indefinite periods due to strikes and other labor disputes. Although we believe that we have good labor relations with our South African employees, we may experience labor disputes in the future.
In addition, although we believe that our relationships with our various local communities are good, the areas in which our South African operations are situated are the traditional homelands of various tribal groupings that are historically politically volatile. This volatility persists today and frequently results in violent, destructive behaviors. In addition, the physical security situation continues to deteriorate and we have been the victim of immaterial theft and are aware that other industrial mining operations near ours are frequently the target of sophisticated mineral syndicates capable of stealing industrial minerals on a relatively large scale. Increased volatility, related civil unrest and further deterioration in the security situation may result in production stoppages and/or the destruction and theft of assets, any of which could have a material effect on our business, financial condition and results of operations.
Political and social instability, and unrest, and actual, or potential, armed conflicts in the Middle East region may affect the Company's results of operations and financial position.
Our operations in KSA have been affected in the past, and may be affected in the future, by political, social and economic conditions from time to time prevailing in, or affecting, KSA or the wider Middle East region, including by rocket attacks from armed rebel groups. For example, since 2011, a number of countries in the Middle East region have witnessed, and are currently witnessing, significant social unrest, including widespread public demonstrations, and, in certain cases, armed conflict, terrorist attacks, diplomatic disputes, foreign military intervention and a change of government. In addition, in the recent past there have been a number of attacks related to the conflicts in the Middle East on commercial shipping vessels in and around the Red Sea which could ultimately impact the availability of shipping routes and/or ocean freight, as well as increase the shipping costs, for raw material to our Yanbu pigment plant as well as TiO 2 exports out of our Yanbu plant. Specifically, KSA faces a number of
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challenges arising mainly from the relatively high levels of unemployment among the Saudi youth population, requests for political and social changes, and the security threat posed by certain groups. Should KSA experience similar political and social unrest as found in other countries in the Middle East, the Saudi Arabian economy could be adversely affected, our TiO 2 plant located in Yanbu could be temporarily disrupted or materially adversely affected and our business and operating results could be materially adversely affected.
Our results of operations may be adversely affected by fluctuations in currency exchange rates.
The financial condition and results of operations of our operating entities outside the U.S. are reported in various foreign currencies, primarily the South African Rand, Australian Dollars, Euros, Pound Sterling and Brazilian Real and then converted into U.S. dollars at the applicable exchange rate for inclusion in the financial statements. A significant portion of our costs are denominated in currencies other than the U.S. dollar. As a result, any volatility of the U.S. dollar against these foreign currencies creates uncertainty for, and may have a negative impact on, reported sales and operating margin. In addition, our operating entities often need to convert currencies they receive for their products into currencies in which they purchase raw materials or pay for services, which could result in a gain or loss depending on fluctuations in exchange rates. In order to manage this risk, we have from time to time, entered into forward contracts to buy and sell foreign currencies.
RISKS RELATING TO OUR DEBT AND CAPITAL STRUCTURE
We may need additional capital in the future and may not be able to obtain it on favorable terms or at all, including as a result of downgrades in our credit ratings, which may make it difficult for us to meet our financial commitments.
Our ability to obtain cash or other credit from external sources is impacted by many factors, including (i) debt covenants that limit our total borrowing capacity; (ii) the total amount of our outstanding secured and unsecured debt and the financial ratios and metrics thereof; (iii) increasing interest rates applicable to our floating rate debt; (iv) increasing demands from third parties for financial assurance or credit enhancement; (v) credit rating downgrades, which could limit our access to additional debt; (vi) a decrease in the market prices or value of our common stock and outstanding debt obligations; and (vii) volatility in public debt and equity markets.
Our substantial level of indebtedness increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of our indebtedness, and could limit our ability to obtain additional financing to fund future working capital, capital expenditures, or other general corporate requirements; require a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, and other general corporate purposes; and increase our vulnerability to general adverse economic and general industry conditions.
For example, our credit ratings may impact the cost and availability of future borrowings and, accordingly, our overall cost of capital. Our credit ratings reflect each rating organization’s opinion of our financial strength, operating performance, and ability to meet our debt obligations. The Company’s credit ratings were downgraded in 2025 by both Moody’s Ratings and S&P Global Ratings to “B2” and “CCC+,” respectively. Ratings by rating agencies may be changed or withdrawn at any time and no assurance can be given that we will not be subject to further downgrades. There is no guarantee that debt or equity financings will be available in the future to fund working capital, capital expenditures, or other general corporate purposes, or that such financing will be available on favorable terms or at all. See “Liquidity and Capital Resources” in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 15 of notes to consolidated financial statements.
In addition, the market price of our debt obligations is based upon many factors, including expectations regarding the likelihood of future ability to effectuate repayment, the amount recoverable in the event of a default, our ability to pay interest and other ongoing debt service obligations, and the risk tolerance of each debt holder. If these or other factors cause the market price of our debt obligations to decrease, it may make it difficult or impossible for us to obtain additional capital in the future or meet our financial commitments.
Our capital expenditure projects may need additional capital in the future and may not realize expected investment returns.
Our business is capital intensive, and our success depends to a significant degree on our ability to maintain our manufacturing operations and invest in those operations to expand capacity and remain competitive from a cost perspective. We may require additional capital in the future to finance capital investments, for a variety of purposes, including (i) replacement of mines that are end of life, (ii) repair, maintenance, expansion, or optimization of existing production facilities or mining operations, (iii) ongoing research and development activities, (iv) business development opportunities in rare earth or other critical minerals, and (v) general working capital needs. For instance, we have substantially implemented the multi-year global business transformation that
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began in 2020 and includes the acquisition and implementation of new operational and financial systems, technology and processes, including a global ERP system, with additional work that will be necessary to complete projects in certain countries. Although we have taken, and will continue to take, significant steps to mitigate the potential negative impact of the implementation of such new digital systems, there can be no assurance that these procedures will be completely successful.
Additionally, if we undertake other capital expenditure projects, they may not be completed on schedule, at the budgeted cost, or at all. Moreover, our revenue may not increase immediately upon the expenditure of funds on a particular project. As a result, we may not be able to realize our expected investment return, which could adversely affect our results of operations and financial condition and ability to access additional sources of capital.
We are a holding company that is dependent on cash flows from our operating subsidiaries to fund our debt obligations, capital expenditures and ongoing operations.
All of our operations are conducted, and all of our assets are owned, by our operating companies, which are our subsidiaries. We intend to continue to conduct our operations at the operating company level. Consequently, our cash flows and our ability to meet our obligations or make cash distributions depends upon the cash flows of our operating companies, and the payment of funds by our operating companies in the form of dividends or otherwise. The ability of our operating companies to make any payments to us depends on their earnings, ability to generate cash, the terms of their indebtedness, including the terms of any credit facilities, or indentures, and legal restrictions regarding the transfer of funds.
Our ability to service our debt and fund our planned capital expenditures and ongoing operations will depend on our ability to generate and increase positive cash flows, and our access to additional liquidity sources. Our ability to generate and increase positive cash flows is dependent on many factors, including many of the other risks described in this section entitled “Risk Factors”.
The agreements and instruments governing our debt contain restrictions and limitations that could affect our ability to operate our business, as well as impact our liquidity.
As of December 31, 2025, our total principal amount of debt outstanding was approximately $3.2 billion. Our credit facilities and senior secured notes indenture contain covenants that could adversely affect our ability to operate our business, our liquidity, and our results of operations. These covenants may restrict, among other things, our and our subsidiaries' ability to:
• incur or guarantee additional indebtedness;
• complete asset sales, acquisitions or mergers;
• make investments and capital expenditures;
• prepay other indebtedness;
• enter into transactions with affiliates; and
• fund additional dividends or repurchase shares.
Certain of our credit facilities and notes indentures include requirements relating to the ratio of indebtedness or certain fixed charges to adjusted EBITDA. For instance, our Credit Agreement (as defined elsewhere herein) contains a springing financial covenant solely for the benefit of the revolving lenders of the Cash Flow Revolver (as defined elsewhere herein) under the Credit Agreement. The springing financial covenant requires compliance with a maximum first lien net leverage ratio of not greater than 4.75x (measuring the ratio of Consolidated First Lien Debt to Consolidated EBITDA, each as defined in the Credit Agreement) if, on the last day of any fiscal quarter, revolving exposure (excluding undrawn or cash collateralized letters of credit) exceeds 35% of the aggregate principal amount of all revolving commitments under the Cash Flow Revolver. In addition, the breach of any covenants or obligations in our credit facilities or notes indentures, not otherwise waived or amended, could result in a default under the applicable debt obligations (and potentially cross-defaults to certain other debt obligations) and could trigger acceleration of those obligations, which in turn could trigger other cross defaults under other existing or future agreements governing our long-term indebtedness. In addition, the secured lenders under the credit facilities and/or secured noteholders under our secured indenture could on their collateral, which includes substantially all our assets (including, among other things, inventory, receivables and related assets, and equipment, equity interests in subsidiaries and material real property, in each case subject to certain and exceptions), and exercise other rights generally available to secured creditors. Any under those credit facilities and/or secured indenture, could affect our growth, our financial condition, our results of operations and our ability to make payments on our credit facilities, notes, and other financial obligations, and could us to seek the protection of laws.
RISKS RELATING TO OUR LEGAL AND REGULATORY ENVIRONMENT
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Our South African mining rights are subject to onerous regulatory requirements imposed by legislation and the Department of Mineral Resources and Energy, the compliance with which could have a material adverse effect on our business, financial condition and results of operations.
Black economic empowerment (BEE) legislation was introduced in South Africa to address inequalities from the Apartheid system by including historically disadvantaged South Africans in the mainstream economy. BEE legislation requires certain operations to be partially owned by historically disadvantaged South Africans and comply with provisions related to procurement and employment opportunities. On March 1, 2019, Mining Charter III came into effect requiring a 30% BEE shareholding structured through a special purpose vehicle as well as setting forth stringent requirements for procurement, employment quotas, and workers' living conditions. In September 2021, the South African High Court ruled certain provisions of Mining Charter III unconstitutional, creating uncertainty about its status. Prior to Mining Charter III, Mining Charter II governed BEE in the mining sector, with a 26% ownership obligation. Our two South African operating subsidiaries are considered "once empowered always empowered" meaning that those companies with the requisite shareholding base as of December 31, 2014, will always qualify as "empowered" for retaining existing mining rights. This principle was confirmed by the South African High Court and applies to the renewal and transfer of mining rights. However, there is no assurance that any new legislation won't this ruling, potentially having a material effect on the South African companies ownership regime, requiring re-empowerment which will impact our business, financial condition and results of operations. However, there is no assurance that new legislation will not be enacted that would the court's ruling regarding the applicability of "once always " to the renewal and transfer of mining rights. In the event that "once always " does not ultimately apply to the renewal or transfer of mining rights it could have a material effect on our business, financial condition and results of operations.
Our failure to comply with the anti-corruption laws of the U.S. and various international jurisdictions could negatively impact our reputation and results of operations.
Doing business on a global basis requires us to comply with the laws and regulations of the U.S. government and those of various international jurisdictions, and our failure to successfully comply with these rules and regulations may expose us to liabilities. In particular, our operations are subject to U.S. and foreign anti-corruption laws and regulations, such as the U.S. Foreign Corrupt Practices Act (“FCPA”), the U.K. Bribery Act 2010 (“U.K. Bribery Act”), as well as anti-corruption laws of the various jurisdictions in which we operate. Our global operations may expose us to the risk of violating, or being accused of violating, the foregoing or other anti-corruption laws. Such violations could be punishable by , , civil , of profits, , and exclusion from government contracts, as well as other remedial measures. of can be very expensive, , and to our reputation. Although we have implemented anti- policies and procedures, there can be no guarantee that these policies, procedures, and training will effectively prevent by our employees or representatives in the future. Additionally, we face a risk that our distributors and other business partners may the FCPA, the U.K. Act, or similar laws or regulations. Such could us to FCPA and U.K. Act liability and/or our reputation may potentially be by their and resulting sanctions and .
We are subject to many environmental, health and safety regulations.
Our operations and production facilities are subject to extensive environmental and health and safety laws and regulations at national, international and local levels in numerous jurisdictions relating to use of natural resources, pollution, protection of the environment, mine site remediation, transporting and storing raw materials and finished products, and storing and disposing of hazardous wastes among other materials. Moreover, certain environmental laws impose joint and several and/or strict liability for costs to clean up and restore sites where pollutants have been disposed or otherwise spilled or released. We cannot be certain that we will not incur significant costs and liabilities for remediation or damage to property, natural resources or persons as a result of spills or releases from our operations or those of a third party.
The costs of compliance with the extensive environmental, health and safety laws and regulations or the inability to obtain, update or renew permits required for operation or expansion of our business could negatively impact our results of operations or otherwise adversely affect our business. If we fail to comply with the conditions of our permits governing the production and management of regulated materials, mineral sands mining licenses or leases or the provisions of the relevant jurisdictional laws in which we operate, these permits, mining licenses or leases and mining rights could be canceled or suspended, and we could be prevented from obtaining new mining and prospecting rights, which could materially and adversely affect our business, operating results and financial condition. Additionally, we could incur substantial costs, including fines, damages, criminal or civil sanctions and remediation costs, or experience interruptions in our operations, for arising under these laws and regulations, including operating without the required permits, mining licenses or leases and/or mining rights. In the event of a involving any of the raw materials we use, or chemicals or mineral products we produce, we could incur material costs as a result of addressing the consequences of such event.
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Changes to existing laws governing operations, especially changes in laws relating to transportation of mineral resources, the treatment of land and infrastructure, contaminated land, the remediation of mines, tax royalties, waste handling and management, exchange control restrictions, environmental remediation, mineral rights, ownership of mining assets, or the rights to prospect and mine may have a material adverse effect on our future business operations and financial performance. There is risk that onerous conditions may be attached to authorizations in the form of mining rights, water-use licenses, miscellaneous licenses and environmental approvals, or that the grant of these approvals may be delayed or not granted.
Our TiO 2 products are subject to increased regulatory scrutiny, that may impede or inhibit widespread usage of TiO 2 and / or diminish the Company’s ability to sustain or grow its business or may add significant costs of doing business.
Current regulatory and societal demands for increased protection against products which may cause cancer, genetic mutations or other long-term health problems are resulting in increased pressure for more stringent regulation of our TiO 2 products. We expect these trends to continue and the ultimate cost of compliance could be material. In particular, changes to product safety regulations could limit the use of, and demand for, our TiO 2 products, require investment in new product development or the way we manufacture our existing products, and increase regulatory compliance expenditures for us and our suppliers.
For instance, the Health and Safety Executive in the U.K. has published the U.K.’s mandatory classification and labelling list, which includes the classification of TiO 2 as a suspected carcinogen (in a powder form containing 1% or more of particles with aerodynamic diameter ≤ 10 μm). The classification became mandatory in the U.K. in October 2021.
In May 2021, the European Food Safety Authority (EFSA) announced new guidelines which concluded that a certain digestible form of TiO 2 known as E171 is no longer considered safe as a food additive due to uncertainty for genotoxicity. Though we do not manufacture E171, the EFSA guidelines indicate additional regulatory review of our TiO 2 products is likely which could result in more stringent qualifications and use-restriction being applied or to the introduction of further classifications. It is also possible that heightened regulatory scrutiny could lead to claims by consumers or those involved in the production of such products alleging adverse health impacts. Any adverse outcomes with respect to regulatory investigations into the ongoing use of TiO 2 in various sectors could have a material adverse effect on our business, financial condition and results of operations. In addition, there is no assurance that other materials which we add to our TiO 2 products could be subject to increased regulations which could negatively impact our business.
Sustainability issues as they may be applicable to certain jurisdictions, including those related to climate change, may subject us to additional costs and restrictions, including increased energy and raw material costs, which could have an adverse effect on our business, financial condition and results of operations, as well as damage our reputation.
Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere could present risks to our present and future operations from natural disasters and extreme weather conditions, such as flooding, hurricanes, earthquakes and wildfires. Such extreme weather conditions could pose physical risks to our facilities and disrupt the operation of our supply chain, increase operational costs and have a material adverse effect on our business and results of operations. In addition, if any of the equipment on which we depend were severely damaged or were destroyed by environmental hazards or otherwise, we may be unable to replace or repair it in a timely manner or at a reasonable cost, which would impact our ability to produce and ship our products, which would have a material adverse effect on our business, financial condition or results of operations. For instance, in the fourth quarter of 2022, the region of New South Wales, Australia where our Eastern Operations mining operations are located experienced historic flooding which resulted in, among other things, a in the commissioning of our Atlas mine as well as prevented feedstock mined at such site from being transported to our Australian pigment plants in a timely manner. Such flooding had an effect on our business, financial condition and results of operations in 2022 and 2023. Moreover, the impacts of climate change on global water resources may result in water scarcity, which could impact our ability to access sufficient quantities of water in certain locations and result in increased costs. For instance, we use significant amounts of water in our South Africa operations. Certain regions of South Africa have experienced in the past, and are to, conditions resulting in water restrictions being imposed in such areas. A in a region of South Africa where our operations are located may lead to water use restrictions which could have a material effect on our business, financial condition and results of operations.
The majority of our greenhouse gas emissions are generated from our TiO 2 slag furnaces in South Africa, synthetic rutile kiln in Australia, and TiO 2 pigment plants in the United States, United Kingdom, France, Brazil, Australia, and Saudi Arabia. Concerns about the relationship between greenhouse gases and global climate change, and an increased focus on carbon neutrality, may result in new or increased legal and regulatory requirements on both national and supranational levels, to monitor, regulate, control and tax emissions of carbon dioxide and other greenhouse gases. A number of governmental bodies have already introduced, or are contemplating, regulatory changes in response to climate change, including regulating greenhouse gas emissions. Any laws or regulations that are adopted to reduce emissions of greenhouse gases could, among other things, (i) cause
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an increase to our raw material costs, (ii) increase our costs to operate and maintain our facilities including potentially causing the operation or maintenance of certain sites to be uneconomical, and (iii) increase costs to administer and manage emissions programs.
In addition, companies across all industries are facing increasing scrutiny relating to their sustainability policies. Increased focus and activism related to sustainability may hinder the Company’s access to capital, as investors may reconsider their capital investment as a result of their assessment of the Company’s sustainability practices. In particular, customers, investors and other stakeholders are increasingly focusing on environmental issues, including climate change, water use, and other sustainability concerns. Moreover, increased regulatory requirements, including in relation to various aspects of sustainability including disclosure requirements, may result in increased compliance or input costs of energy, raw materials or compliance with emissions standards, which may cause disruptions in the manufacture of our products or an increase in operating costs. Any failure to achieve our sustainability goals or a perception of our failure to act responsibly with respect to the environment or to effectively respond to new, or changes in, legal or regulatory requirements concerning environmental or other sustainability matters, or increased operating or manufacturing costs due to increased regulation, could adversely affect our business, financial condition and results of operations, as well as our reputation.
If our intellectual property were compromised or copied by competitors, or if competitors were to develop similar intellectual property independently, our results of operations could be negatively affected. Further, third parties may claim that we infringe on their intellectual property rights which could result in costly litigation.
Our success depends to a significant degree upon our ability to protect and preserve our patents and unpatented proprietary technology, operational knowledge and other trade secrets (collectively "intellectual property rights"). The undetected or unremedied unauthorized use of our intellectual property rights or the legitimate development or acquisition of intellectual property related to our industry by third parties could reduce or eliminate any competitive advantage we have as a result of our intellectual property rights. If we must take legal action to protect, defend or enforce our intellectual property rights, any suits or proceedings could result in significant costs and diversion of our resources and our management’s attention, and we may not prevail in any such suits or proceedings. A failure to protect, defend or enforce our intellectual property rights could have an adverse effect on our financial condition and results of operations.
Although there are currently no pending or threatened proceedings or claims known to us that are material relating to alleged infringement, misappropriation or violation of the intellectual property rights of others, we may be subject to legal proceedings and claims in the future in which third parties allege that their patents or other intellectual property rights are infringed, misappropriated or otherwise violated by us or our products or processes. In the event that any such infringement, misappropriation or violation of the intellectual property rights of others is found, we may need to obtain licenses from those parties or substantially re-engineer our products or processes to avoid such infringement, or . We might not be to obtain the necessary licenses on acceptable terms or be to re-engineer our products or processes . Moreover, if we are found by a court of law to , or otherwise the intellectual property rights of others, we could be required to pay substantial or be from making, using or selling the products or technology. We also could be from making, using or selling the products or technology pending the final outcome of the suit. Any of the foregoing could affect our financial condition and results of operations.
We may be subject to litigation, the disposition of which could have a material adverse effect on our results of operations.
The nature of our operations and status as a public company exposes us to possible litigation claims, including disputes with competitors, customers, shareholders (including purported class actions), equipment vendors, environmental groups and other non-governmental organizations, providers of shipping services as well as governmental agencies. Some of the lawsuits may seek fines or penalties and damages in large or indeterminable amounts, or seek to restrict our business activities. Because of the uncertain nature of any litigation and coverage decisions, we cannot predict the outcome of these matters or whether insurance claims may mitigate any damages to us. Litigation is very costly, and the costs associated with prosecuting and matters could have a material effect on our results of operations and financial condition. See Note 20 of notes to our consolidated financial statements, included elsewhere in this Form 10-K for further information regarding our commitments and contingencies.
We may be subject to claims that arise from activities prior to our emergence from bankruptcy in 2011.
On November 30, 2010, the U.S. Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) confirmed our plan of reorganization (the “Plan”), which became effective in February 2011. The Plan included a discharge and release of any and all claims based on liabilities arising prior to emergence from the bankruptcy. Nonetheless, from time to time, we have received and in the future may receive inquiries or notices of potential or asserted claims arising under certain environmental laws or regulations with respect to properties our predecessor companies, or companies they acquired, may have
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owned or operated before our emergence from bankruptcy. We believe that the Plan confirmed by the Bankruptcy Court extinguished all such claims, and intend to vigorously defend against such claim. However, there can be no assurance that we will be successful in defending against such claims and any adverse outcomes with respect to such claims could have a material adverse effect on our business, financial condition and results of operations.
Our flexibility in managing our labor force may be adversely affected by labor and employment laws in the jurisdictions in which we operate, many of which are more onerous than those of the U.S.; and some of our labor force has substantial workers' council or trade union participation, which creates a risk of disruption from labor disputes and new laws affecting employment policies.
The vast majority of our employees are located outside the U.S. In most of those countries, labor and employment laws are more onerous than in the U.S. and, in many cases, grant significant job protection to employees, including rights on termination of employment. Moreover, many of our workforce outside the U.S. belong to unions and/or are represented by a collective bargaining agreement. As such, in such jurisdictions we are required to consult with, and seek the consent or advice of, various employee groups or works’ councils that represent our employees for any changes to our activities or employee benefits. This requirement could have a significant impact on our flexibility in managing costs and responding to market changes.
RISKS RELATING TO ACCOUNTING AND TAXATION
If our intangible assets or other long-lived assets become impaired, we may be required to record a significant noncash charge to earnings.
We have a significant amount of intangible assets and other long-lived assets on our consolidated balance sheets. Under U.S. GAAP, we review our intangible assets and other long-lived assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances, indicating that the carrying value of our intangible assets and other long-lived assets may not be recoverable, include, but are not limited to, a significant decline in share price and market capitalization, changes in the industries in which we operate, particularly the impact of a downturn in the global economy, as well as competition or other factors leading to reduction in expected long-term sales or results of operations. We may be required to record a significant noncash charge in our financial statements during the period in which any impairment of our intangible assets and other long-lived assets is determined, negatively impacting our results of operations.
Our ability to use our tax attributes to offset future income may be limited.
Our ability to use net operating losses (“NOLs”) and Section 163(j) interest expense carryforwards generated by us could be substantially limited if we were to experience an “ownership change” as defined under Section 382 of the U.S. Internal Revenue Code of 1986, as amended ("the Code"). In general, an ownership change would occur if our “5-percent shareholders,” as defined under Section 382 of the Code and including certain groups of persons treated as “5-percent shareholders,” collectively increased their ownership in us by more than 50 percentage points over a rolling three-year period. Although we believe we have sufficient protection of our approximately $4.3 billion of NOLs and/or approximately $370 million of Section 163(j) interest expense carryforwards, there can be no assurance that an ownership change for U.S. federal and applicable state income tax purposes will not occur in the future. A corporation that experiences an ownership change will generally be subject to an annual limitation on the use of certain pre-ownership change losses and/or credits. Such a limitation could, for any given year, have the effect of increasing the amount of our U.S. federal and/or state income tax liability, which would negatively impact our financial condition and the amount of after-tax cash available for distribution to holders of our ordinary shares if declared by our board of directors.
We could be subject to changes in tax rates, adoption of new tax laws or additional tax liabilities.
We are subject to taxation in all of the jurisdictions in which we operate. Our future effective tax rate could be affected by, among other things, changes in statutory rates and other legislative changes, or changes in determinations regarding the jurisdictions in which we are subject to tax or changes in the valuation of our deferred tax assets and liabilities. From time to time, the U.S. federal, state and local and foreign governments make substantive changes to tax rules and their application, which could result in higher corporate taxes than would be incurred under existing tax law and could have an adverse effect on our results of operations or financial condition. From time to time, we are also subject to tax audits by various taxing authorities. For instance, we are currently under audit by the Australian Taxation Office for the calendar years 2017 - 2022. Although we believe our tax positions are appropriate, the final determination of any future tax audits could be materially different from our income tax provisions, accruals and reserves and any such unfavorable outcome from a future tax audit could have a material adverse effect on our results of operations or financial condition.
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Failure to meet some or all of our key financial and non-financial targets could negatively impact the value of our business and adversely affect our stock price.
From time to time, we may announce certain key financial and non-financial targets that are expected to serve as benchmarks for our performance for a given time period, such as, projections for our future revenue growth, Adjusted EBITDA, Adjusted diluted earnings per share and free cash flow. Our failure to meet one or more of these key financial targets may negatively impact our results of operations, stock price, shareholder returns and the prices of our debt securities. The factors influencing our ability to meet these key financial targets include, but are not limited to, changes in the global economic environment relating to our TiO 2 products and zircon, changes in our competitive landscape, including our relationships with new or existing customers, our ability to introduce new products, applications, or technologies, our inability to complete strategic projects on budget or on schedule, our undertaking an acquisition, joint venture, or other strategic arrangement, and other factors described within this Item 1A – Risk Factors, many of which are beyond our control.
RISKS RELATING TO INVESTING IN OUR ORDINARY SHARES
Concentrated ownership of our ordinary shares by Cristal may prevent minority shareholders from influencing significant corporate decisions and may result in conflicts of interest.
As of December 31, 2025, Cristal International Holdings B.V. (formerly known as Cristal Inorganic Chemical Netherlands Cooperatief W.A.), an affiliate of the National Titanium Dioxide Company Limited ("Cristal"), owned approximately 24% of our outstanding ordinary shares. As such, Cristal International may be able to influence fundamental corporate matters and transactions. This concentration of ownership, may delay, deter or prevent acts that would be favored by our other shareholders. The interests of Cristal International may not always coincide with our interests or the interests of our other shareholders. Also, Cristal International may seek to cause us to take courses of action that, in their judgment, could enhance their investment in us, but which might involve risks to our other shareholders or adversely affect us or our other shareholders.
In addition, under the shareholders agreement (the “Cristal Shareholders Agreement”) we entered into at the closing of the Cristal transaction with Cristal, as long as Cristal International and the three shareholders of Cristal (collectively, the “Cristal Shareholders”) collectively beneficially own at least 24,900,000 or more of our ordinary shares, they have the right to designate for nomination two directors of our board of directors (the “Board”). As long as the Cristal Shareholders collectively beneficially own at least 12,450,000 ordinary shares but less than 24,900,000 ordinary shares, they have the right to designate for nomination one director of the Board. The Cristal Shareholders Agreement also provides that as long as the Cristal Shareholders collectively beneficially own at least 12,450,000 ordinary shares they have certain preemptive rights. Also, pursuant to the Cristal Shareholders Agreement, Cristal has certain registration rights requiring the Company to register with the SEC shares that are owned and may be resold by Cristal.
As a result of these or other factors, including as a result of any offering of shares by Cristal, or the perception that such sales may occur, the market price of our ordinary shares could decline. In addition, this concentration of share ownership may adversely affect the trading price of our ordinary shares because investors may perceive disadvantages in owning shares in a company with significant shareholders or with significant outstanding shares with registration rights.
English law and provisions in our articles of association may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our shareholders, and may prevent attempts by our shareholders to replace or remove our current management.
Certain provisions of the U.K. Companies Act 2006 (the “Companies Act”) and our articles of association may have the effect of delaying or preventing a change in control of us or changes in our management. For example, our articles of association include provisions that:
• maintain an advance notice procedure for proposed nominations of persons for election to our board of directors;
• provide certain mandatory offer provisions, including, among other provisions, that a shareholder, together with persons acting in concert, that acquires 30 percent or more of our issued shares without making an offer to all of our other shareholders that is in cash or accompanied by a cash alternative would be at risk of certain sanctions from our board of directors unless they acted with the prior consent of our board of directors or the prior approval of the shareholders; and
• provide that vacancies on our board of directors may be filled by a vote of the directors or by an ordinary resolution of the shareholders.
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In addition, public limited companies are prohibited under the Companies Act from taking shareholder action by written resolution. These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.
Although we do not anticipate being subject to the U.K. City Code on Takeovers and Mergers, such Takeover Code may still have anti-takeover effects in the event the Takeover Panel determines that such Code is applicable to us.
The U.K. City Code on Takeovers and Mergers (the “Takeover Code”) applies, among other things, to an offer for a public company whose registered office is in the U.K. (or the Channel Islands or the Isle of Man) and whose securities are not admitted to trading on a regulated market in the U.K. (or on any stock exchange in the Channel Islands or the Isle of Man) if the company is considered by the Panel on Takeovers and Mergers (the “Takeover Panel”) to have its place of central management and control in the U.K. (or the Channel Islands or the Isle of Man). This is known as the “residency test.” The test for central management and control under the Takeover Code is different from that used by the U.K. tax authorities. Under the Takeover Code, the Takeover Panel will determine whether we have our place of central management and control in the U.K. by looking at various factors, including the structure of our board of directors, the functions of the directors and where they are resident.
Given that currently all of the members of our Board of Directors reside outside the United Kingdom, we do not anticipate that we will be subject to the Takeover Code. However, if at the time of a takeover offer, the Takeover Panel determines that we have our place of central management and control in the U.K., we would be subject to a number of rules and restrictions, including but not limited to the following: (1) our ability to enter into deal protection arrangements with a bidder would be extremely limited; (2) we might not, without the approval of our shareholders, be able to perform certain actions that could have the effect of frustrating an offer, such as issuing shares or carrying out acquisitions or disposals; and (3) we would be obliged to provide equality of information to all bona fide competing bidders.
As a public limited company incorporated in England and Wales, certain capital structure decisions requires approval of our shareholders, which may limit our flexibility to manage our capital structure.
The Companies Act generally provides that a board of directors of a public limited company may only allot shares (or grant rights to subscribe for or convertible into shares) with the prior authorization of shareholders, such authorization stating the maximum amount of shares that may be allotted under such authorization and specifying the date on which such authorization will expire, being not more than five years, each as specified in the articles of association or relevant shareholder resolution. We obtained previous shareholder authority to allot additional shares for a period from May 7, 2025 through the end of the Company's 2026 annual general meeting of shareholder, or if earlier, the close of business on the date that is fifteen (15) months after May 7, 2025.
The Companies Act generally provides that existing shareholders of a company have statutory pre-emption rights when new shares in such company are allotted and issued for cash. However, it is possible for such statutory pre-emption right to be disapplied by either shareholders passing a special resolution at a general meeting, being a resolution passed by at least 75% of the votes cast, or by inclusion of relevant provisions in the articles of association of the company. Such a disapplication of statutory pre-emption rights may not be for more than five years. We obtained previous shareholder authority to disapply statutory pre-emption rights for a period from May 7, 2025 through the end of the Company's 2026 annual general meeting of shareholder, or if earlier, the close of business on the date that is fifteen (15) months of May 7, 2025.
The Companies Act generally prohibits a public limited company from repurchasing its own shares without the prior approval of its shareholders by ordinary resolution, being a resolution passed by a simple majority of votes cast, and subject to compliance with other statutory formalities. Such authorization may not be for more than five years from the date on which such ordinary resolution is passed. We obtained previous shareholder authority to repurchase shares for a period from May 7, 2025 through the end of the Company's 2026 annual general meeting of shareholder, of if earlier, the close of business on the date that is fifteen (15) months after May 7, 2025.
Transfers of our ordinary shares outside The Depository Trust may be subject to stamp duty or stamp duty reserve tax in the U.K., which would increase the cost of dealing in our shares.
Except for ordinary shares received by a holder deemed to be an affiliate of us for purposes of U.S. securities laws, our ordinary shares have been issued to a nominee for The Depository Trust Company (“DTC”) and corresponding book-entry interests credited in the facilities of DTC. On the basis of current law and HM Revenue and Customs (“HMRC”) practice, no charges to U.K. stamp duty or stamp duty reserve tax (“SDRT”) are expected to arise on the issue of the ordinary shares into DTC’s facilities or on transfers of book-entry interests in ordinary shares within DTC’s facilities.
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Shareholders are strongly encouraged to hold their ordinary shares in book entry form through DTC. Transfers of shares held in book entry form through DTC currently do not attract a charge to stamp duty or SDRT in the U.K. A transfer of title in the shares from within the DTC system out of DTC, including to certificate shares, and any subsequent transfers that occur entirely outside the DTC system will attract a charge to stamp duty at a rate of 0.5% of any consideration, which is payable by the transferee of the shares. Any such duty must be paid (and the relevant transfer document, if any, stamped by HMRC) before the transfer can be registered in our books. However, if those shares are redeposited into DTC, the redeposit will attract stamp duty or SDRT at the rate of 1.5% to be paid by the transferor.
We have put arrangements in place such that directly held ordinary shares cannot be transferred into the DTC system until the transferor of the ordinary shares has first delivered the ordinary shares to a depositary specified by us so that SDRT may be collected in connection with the initial delivery to the depositary. Any such ordinary shares will be evidenced by a receipt issued by the depositary. Before the transfer can be registered in our books, the transferor will also be required to put the depositary in funds to settle the resultant liability to SDRT, which will be charged at a rate of 1.5% of the value of the shares.
Our articles of association provide that the courts of England and Wales have exclusive jurisdiction to determine any dispute brought by a shareholder in that shareholder's capacity as such and certain other matters.
Our articles of association provide that the courts of England and Wales have exclusive jurisdiction to determine any dispute brought by a shareholder in that shareholder's capacity as such, or related to or connected with any derivative claim in respect of a cause of action vested in us or seeking relief on our behalf, against us and/or the board and/or any of the directors, former directors, officers, employees or shareholders individually, arising out of or in connection with our articles of association or (to the maximum extent permitted by applicable law) otherwise. This choice of forum provision may limit a shareholder's ability to bring a claim in a judicial forum that the shareholder believes is favorable for disputes with us or our directors, former directors, officers, employees or shareholders which may discourage lawsuits against us and our directors, former directors, officers, employees or shareholders.
There may be difficulty in effecting service of legal process and enforcing judgments against us and our directors and management.
We are incorporated under the laws of England and Wales and a substantial portion of our assets are located outside of the U.S. The U.S. and the U.K. do not currently have a treaty providing for the recognition and enforcement of judgments, other than arbitration awards, in civil and commercial matters. The enforceability of any judgment of a U.S. federal or state court in the U.K. will depend on the laws and any treaties in effect at the time, including conflicts of laws principles (such as those bearing on the question of whether a U.K. court would recognize the basis on which a U.S. court had purported to exercise jurisdiction over a defendant). In this context, there is doubt as to the enforceability in the U.K. of civil liabilities based solely on the federal securities laws of the U.S. In addition, awards for punitive damages in actions brought in the U.S. or elsewhere may be unenforceable in the U.K.. An award for monetary damages under U.S. securities laws would likely be considered punitive if it did not seek to compensate the claimant for or and was intended to punish the .
