Albemarle
Annual Report 2018

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549________________________________________FORM 10-K________________________________________xAnnual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the fiscal year ended December 31, 2018or¨Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the transition period from to Commission file number 001-12658ALBEMARLE CORPORATION(Exact name of registrant as specified in its charter)VIRGINIA 54-1692118(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.)4250 Congress Street, Suite 900Charlotte, North Carolina 28209(Address of principal executive offices) (Zip Code)Registrant’s telephone number, including area code: (980) 299-5700Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of each exchange on which registeredCOMMON STOCK, $.01 Par Value NEW YORK STOCK EXCHANGEIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No xIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for at least the past 90 days. Yes x No ¨Indicate by check mark whether the registrant has submitted electronically and posted on its Corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorterperiod that the registrant was required to submit and post such files). Yes x No ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not becontained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K. xIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or anemerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company”in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer x Accelerated filer ¨Non-accelerated filer ¨ Smaller reporting company ¨ Emerging growth company ¨If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with anynew or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No xThe aggregate market value of the voting and non-voting common equity stock held by non-affiliates of the registrant was approximately $10.2 billionbased on the last reported sale price of common stock on June 30, 2018, the last business day of the registrant’s most recently completed second quarter.Number of shares of common stock outstanding as of February 20, 2019: 105,753,864Documents Incorporated by ReferencePortions of Albemarle Corporation’s definitive Proxy Statement for its 2019 Annual Meeting of Shareholders to be filed with the U.S. Securities andExchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, are incorporated by reference into Part III of thisForm 10-K.Albemarle Corporation and Subsidiaries Index to Form 10-KYear Ended December 31, 2018 PagePART I Item 1.Business3 Item 1A.Risk Factors9 Item 1B.Unresolved Staff Comments22 Item 2.Properties22 Item 3.Legal Proceedings24 Item 4.Mine Safety Disclosures25 Executive Officers of the Registrant25 PART II Item 5.Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities26 Item 6.Selected Financial Data27 Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations27 Item 7A.Quantitative and Qualitative Disclosures About Market Risk56 Item 8.Financial Statements and Supplementary Data58 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure114 Item 9A.Controls and Procedures114 Item 9B.Other Information114 PART III Item 10.Directors, Executive Officers and Corporate Governance114 Item 11.Executive Compensation115 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters115 Item 13.Certain Relationships and Related Transactions, and Director Independence115 Item 14.Principal Accountant Fees and Services115 PART IV Item 15.Exhibits and Financial Statement Schedules115 Item 16.Form 10-K Summary120 Signatures121Albemarle Corporation and Subsidiaries PART IItem 1.Business.Albemarle Corporation was incorporated in Virginia in 1993. Our principal executive offices are located at 4250 Congress Street, Suite 900, Charlotte,North Carolina 28209. Unless the context otherwise indicates, the terms “Albemarle,” “we,” “us,” “our” or “the Company” mean Albemarle Corporation andits consolidated subsidiaries.We are a leading global developer, manufacturer and marketer of highly-engineered specialty chemicals that are designed to meet our customers’ needsacross a diverse range of end markets. The end markets we serve include energy storage, petroleum refining, consumer electronics, construction, automotive,lubricants, pharmaceuticals, crop protection and custom chemistry services. We believe that our commercial and geographic diversity, technical expertise,innovative capability, flexible, low-cost global manufacturing base, experienced management team and strategic focus on our core base technologies willenable us to maintain leading market positions in those areas of the specialty chemicals industry in which we operate.We and our joint ventures currently operate 29 production and research and development (“R&D”) facilities, as well as a number of administrative andsales offices, around the world. As of December 31, 2018, we served approximately 2,300 customers, none of which individually represents more than 10% ofnet sales of the Company, in approximately 100 countries. For information regarding our unconsolidated joint ventures see Note 10, “Investments,” to ourconsolidated financial statements included in Part II, Item 8 of this report.Business SegmentsEffective January 1, 2018, the PCS product category merged with our former Refining Solutions reportable segment to form a global business focusedon catalysts. As a result, our three reportable segments include Lithium, Bromine Specialties and Catalysts. Each segment has a dedicated team of sales,research and development, process engineering, manufacturing and sourcing, and business strategy personnel and has full accountability for improvingexecution through greater asset efficiency, market focus, agility and responsiveness. We expect this change to provide further clarity into the performance ofeach business. Financial results and discussion about our segments included in this Annual Report on Form 10-K are organized according to these categoriesexcept where noted.For financial information regarding our reportable segments and geographic area information, see Note 24, “Segment and Geographic AreaInformation,” to our consolidated financial statements included in Part II, Item 8 of this report.Lithium SegmentOur Lithium business develops lithium materials for a wide range of industries and end markets. We are a low-cost producer of one of the most diverseproduct portfolios of lithium derivatives in the industry.We develop and manufacture a broad range of basic lithium compounds, including lithium carbonate, lithium hydroxide, lithium chloride, and value-added lithium specialties and reagents, including butyllithium and lithium aluminum hydride. Lithium is a key component in products and processes used ina variety of applications and industries, which include lithium batteries used in consumer electronics and electric vehicles, high performance greases,thermoplastic elastomers for car tires, rubber soles and plastic bottles, catalysts for chemical reactions, organic synthesis processes in the areas of steroidchemistry and vitamins, various life science applications, as well as intermediates in the pharmaceutical industry, among other applications. We also developand manufacture cesium products for the chemical and pharmaceutical industries, and zirconium, barium and titanium products for various pyrotechnicalapplications, including airbag initiators.In addition to developing and supplying lithium compounds, we provide technical services, including the handling and use of reactive lithiumproducts. We also offer our customers recycling services for lithium-containing by-products resulting from synthesis with organolithium products, lithiummetal and other reagents. We plan to continue to focus on the development of new products and applications.CompetitionThe global lithium market consists of producers primarily located in the Americas, Asia and Australia. Major competitors in lithium compoundsinclude Livent Corporation, Sociedad Quimica y Minera de Chile S.A., Sichuan Tianqi Lithium, and Jiangxi Ganfeng Lithium. In the cesium and otherspecialty metal business, key competitors include Cabot Corporation and Sigma-Aldrich Corporation. Competition in the global lithium market is largelybased on product quality, product diversity, reliability of supply and customer service.3Albemarle Corporation and Subsidiaries Raw Materials and Significant Supply ContractsWe obtain lithium through solar evaporation of our ponds at the Salar de Atacama, in Chile, and in Silver Peak, Nevada. After we obtain the lithiumbrine from the Salar de Atacama, we process it into lithium carbonate and lithium chloride at a plant in nearby La Negra, Chile. The lithium brine from ourSilver Peak site is processed into lithium carbonate at our plant in Silver Peak. Subsequently, in other locations in the United States (“U.S.”), Germany, Franceand Taiwan, we further process the materials into various derivatives, depending on the markets we serve. In addition, in December 2018, we purchasedundeveloped land with access to a lithium resource in Antofalla, within the Catamarca Province of Argentina from Bolland Minera S.A. If necessary, we canalso obtain lithium from other sources.Our mineral rights with respect to the Salar de Atacama in Chile consist exclusively of our right to access lithium brine, covering an area ofapproximately 16,700 hectares, pursuant to a long-term contract with the Chilean government, originally entered into in January 1975 by one of ourpredecessors and subsequently amended and restated. The amended agreement provides us with sufficient lithium to produce over 80,000 metric tonsannually of technical and battery grade lithium salts over the next 25 years at our expanding battery grade manufacturing facilities in La Negra, Chile. Inaddition, the amended agreement provides for commission payments to the Chilean government based on sales price/metric ton, our support of research anddevelopment in Chile in lithium applications and solar energy, and our support of local communities in Northern Chile. In March 2018, we received approvalfrom Chilean Economic Development Agency (“CORFO”) to increase lithium production quota in Chile to as much as 145,000 metric tons of lithiumcarbonate equivalent annually through 2043, after developing an innovative technology that could lead to a sustainable increase in total lithium productionin Chile without the need for additional brine pumping at the Salar de Atacama.Our mineral rights in Silver Peak, Nevada consist of our right to access lithium brine pursuant to our permitted and certified senior water rights, asettlement agreement with the U.S. government, originally entered into in June 1991, and our patented and unpatented land claims. Pursuant to the 1991agreement, our water rights and our land claims, we have rights to all lithium that we can remove economically from the Clayton Valley Basin in Nevada. Wehave been operating at the Silver Peak site since 1966. Our Silver Peak site covers a surface of approximately 15,301 acres, 10,826 acres of which we ownthrough a subsidiary. The remaining acres are owned by the U.S. government from whom we lease the land pursuant to unpatented land claims that arerenewed annually. Based on our 2018 production levels, we believe that the amount of lithium brine we can economically obtain from our Silver Peak,Nevada site pursuant to our rights could support the current levels of lithium carbonate production for approximately 20 years. Assuming certain operatingconditions are satisfied, our annual lithium carbonate production capacity is estimated to be at least 6,000 metric tons at our Silver Peak facility. However, noassurance can be given that the indicated levels of production of lithium carbonate at either Silver Peak or La Negra will be realized.We also obtain lithium through hard rock mining via our 49% interest in Windfield Holdings Pty. Ltd., which directly owns 100% of the equity ofTalison Lithium Pty. Ltd., a company incorporated in Australia (“Talison”). Talison, through its wholly-owned subsidiaries, owns and operates a lithiummine in Greenbushes, Western Australia and mines lithium ore, which is then milled and processed to separate lithium concentrate from the rest of the ore.The ore is processed into battery-grade lithium carbonate and lithium hydroxide at our Jiangxi and Sichuan, China facilities. Talison currently sells thelithium concentrate to its shareholders. Talison has a leading position in two categories of lithium concentrates: (i) technical-grade lithium concentrateswhich have low iron content for use in the manufacture of glass, ceramics and heat-proof cookware; and (ii) a high-yielding chemical-grade lithiumconcentrate, used to produce lithium chemicals which form the basis for the manufacture of lithium-ion batteries for laptop computers, mobile phones,electric bicycles and electric vehicles. Assuming certain operating conditions are satisfied, the annual lithium carbonate equivalent production capacity atthe Talison facility is estimated to be approximately 105,000 metric tons and will be approximately 190,000 metric tons upon completion of an expansioncurrently underway, with commissioning expected in 2019. However, no assurance can be given that the indicated levels of production of lithiumconcentrate at Talison will be realized.In December 2018, we entered into a definitive agreement to acquire a 50% interest in Mineral Resources Limited's Wodgina hard rock lithium mineproject (“Wodgina Project”) and form a joint venture with Mineral Resources Limited to own and operate the Wodgina Project to produce spodumeneconcentrate and battery grade lithium hydroxide. Under this agreement, we would jointly fund, design, build and operate a battery grade lithium hydroxideplant in stages at Wodgina, located in the Pilbara region of Western Australia. This transaction is subject to regulatory approvals and other customary closingconditions, and is expected to close in the second half of 2019.Bromine Specialties SegmentOur bromine and bromine-based business includes products used in fire safety solutions and other specialty chemicals applications. Our fire safetytechnology enables the use of plastics in high performance, high heat applications by enhancing the flame resistant properties of these materials. End marketproducts that benefit from our fire safety technology include plastic4Albemarle Corporation and Subsidiaries enclosures for consumer electronics, printed circuit boards, wire and cable products, electrical connectors, textiles and foam insulation. Our bromine-basedbusiness also includes specialty chemicals products such as elemental bromine, alkyl bromides, inorganic bromides, brominated powdered activated carbonand a number of bromine fine chemicals. These specialty products are used in chemical synthesis, oil and gas well drilling and completion fluids, mercurycontrol, water purification, beef and poultry processing and various other industrial applications. Other specialty chemicals that we produce include tertiaryamines for surfactants, biocides, and disinfectants and sanitizers. A number of customers of our bromine business operate in cyclical industries, including theconsumer electronics and oil field industries. As a result, demand from our customers in such industries is also cyclical.CompetitionOur bromine business serves the markets in the Americas, Asia, Europe and the Middle East, each of which is highly competitive. Product performanceand quality, price and contract terms are the primary factors in determining which qualified supplier is awarded a contract. Research and development,product and process improvements, specialized customer services, the ability to attract and retain skilled personnel and maintenance of a good safety recordhave also been important factors to compete effectively in the marketplace. Our most significant competitors are Lanxess AG and Israel Chemicals Ltd.Raw Materials and Significant Supply ContractsThe bromine we use is sourced from two locations: Arkansas and the Dead Sea. Our bromine production operations in Arkansas are supported by anactive brine rights leasing program. We estimate that, at current production levels, we will be able to produce bromine in Arkansas for decades. In addition,through our 50% interest in Jordan Bromine Company Limited (“JBC”), a consolidated joint venture with operations in Safi, Jordan, we source bromine fromthe Dead Sea, which is believed to have indefinite quantities of brine.Catalysts SegmentOur three main product lines in this segment are (i) Clean Fuels Technologies (“CFT”), which is primarily composed of hydroprocessing catalysts(“HPC”) together with isomerization and akylation catalysts; (ii) fluidized catalytic cracking (“FCC”) catalysts and additives; and (iii) performance catalystsolutions (“PCS”), which is primarily composed of organometallics and curatives.We offer a wide range of HPC products, which are applied throughout the refining industry. Their application enables the upgrading of oil fractions toclean fuels and other usable oil feedstocks and products by removing sulfur, nitrogen and other impurities from the feedstock. In addition, they improveproduct properties by adding hydrogen and in some cases improve the performance of downstream catalysts and processes. We continuously seek to addmore value to refinery operations by offering HPC products that meet our customers’ requirements for profitability and performance in the very demandingrefining market.We provide our customers with customized FCC catalyst systems. FCC catalysts assist in the high yield cracking of refinery petroleum streams intoderivative, higher-value products such as transportation fuels and petrochemical feedstocks like propylene. Our FCC additives are used to reduce emissionsof sulfur dioxide and nitrogen oxide in FCC units and to increase liquefied petroleum gas olefins yield, such as propylene, and to boost octane in gasoline.Albemarle offers unique refinery catalysts to crack and treat the lightest to the heaviest feedstocks while meeting refinery yield and product needs.Within our PCS product line, we manufacture organometallic co-catalysts (e.g., aluminum, magnesium and zinc alkyls) used in the manufacture ofalpha-olefins (i.e., hexene, octene, decene), polyolefins (polyethylene and polypropylene) and electronics. Our curatives include a range of curing agentsused in polyurethanes, epoxies and other engineered resins.In 2018, the number of refineries world-wide was approximately 615. Over the long-term, we expect to see some smaller refineries shutting down andbeing replaced by larger scale and more complex refineries, with growth concentrated in the Middle East and Asia. Oil refining has again increasedmoderately compared to the previous year. We estimate that there are currently approximately 565 FCC units being operated globally, each of which requiresa constant supply of FCC catalysts. In addition, we estimate that there are approximately 3,200 HPC units being operated globally, or a capacity ofapproximately 46 million barrels per day, each of which typically requires replacement HPC catalysts once every one to four years.On April 3, 2018, we completed the sale of the polyolefin catalysts and components portion of the PCS business (“Polyolefin Catalysts Divestiture”) toW.R. Grace & Co. for net cash proceeds of $413.6 million. The transaction included Albemarle’s Process Development Center located in Baton Rouge,Louisiana, and operations at the Yeosu, South Korea site. The sale did not include our organometallics or curatives portion of the PCS business. ThePolyolefin Catalysts Divestiture reflects the Company’s commitment to investing in the future growth of its high priority businesses and returning capital toshareholders.5Albemarle Corporation and Subsidiaries CompetitionOur Catalysts segment serves the global market including the Americas, Asia, Europe and the Middle East, each of which is highly competitive.Competition in these markets is driven by a variety factors. Product performance and quality, price and contract terms, product and process improvements,specialized customer services, the ability to attract and retain skilled personnel, and the maintenance of a good safety record are the primary factors tocompete effectively in the catalysts marketplace. In addition, through our research and development programs, we strive to differentiate our business bydeveloping value-added products and products based on proprietary technologies.Our major competitors in the CFT catalysts market include Criterion Catalysts and Technologies, Advanced Refining Technologies and HaldorTopsoe. Our major competitors in the FCC catalysts market include W.R. Grace & Co., BASF Corporation and China Petrochemical Corporation (Sinopec). Inthe PCS market, our major competitors include Nouryon, Lanxess AG and Lonza.Raw Materials and Significant Supply ContractsThe major raw materials we use in our Catalysts operations include sodium silicate, sodium aluminate, kaolin, aluminum, ethylene, alpha-olefins,isobutylene, toluene and rare earths and metals, such as molybdenum, nickel and cobalt, most of which are readily available from numerous independentsuppliers and are purchased or provided under contracts at prices we believe are competitive. The cost of raw materials is generally based on market prices,although we may use contracts with price caps or other tools, as appropriate, to mitigate price volatility.Sales, Marketing and DistributionWe have an international strategic account program that uses cross-functional teams to serve large global customers. This program emphasizes creativestrategies to improve and strengthen strategic customer relationships with emphasis on creating value for customers and promoting post-sale service.Complementing this program are regional Albemarle sales personnel around the world who serve numerous additional customers globally. We also utilizecommissioned sales representatives and specialists in specific market areas.Research and DevelopmentWe believe that in order to generate revenue growth, maintain our margins and remain competitive, we must continually invest in research anddevelopment, product and process improvements and specialized customer services. Our research and development efforts support each of our businesssegments. The objective of our research and development efforts is to develop innovative chemistries and technologies with applications relevant withintargeted key markets through both process and new product development. Through research and development, we continue to seek increased margins byintroducing value-added products and proprietary processes and innovative green chemistry technologies. Our green chemistry efforts focus on thedevelopment of products in a manner that minimizes waste and the use of raw materials and energy, avoids the use of toxic reagents and solvents and utilizessafe, environmentally friendly manufacturing processes. Green chemistry is encouraged with our researchers through periodic focus group discussions andspecial rewards and recognition for outstanding new green developments.Intellectual PropertyOur intellectual property, including our patents, licenses and trade names, is an important component of our business. As of December 31, 2018, weowned approximately 2,100 active patents and approximately 600 pending patent applications in key strategic markets worldwide. We also have acquiredrights under patents and inventions of others through licenses, and we license certain patents and inventions to third parties.RegulationOur business is subject to a broad array of employee health and safety laws and regulations, including those under the Occupational Safety and HealthAct (“OSHA”). We also are subject to similar state laws and regulations as well as local laws and regulations for our non-U.S. operations. We devotesignificant resources and have developed and implemented comprehensive programs to promote the health and safety of our employees and we maintain anactive health, safety and environmental program. We finished 2018 with an OSHA occupational injury and illness incident rate of 0.58 for Albemarleemployees and nested contractors, compared to 0.63 in 2017.Our business and our customers are subject to significant requirements under the European Community Regulation for the Registration, Evaluation,Authorization and Restriction of Chemicals (“REACH”). REACH imposes obligations on European Union manufacturers and importers of chemicals andother products into the European Union to compile and file comprehensive reports, including testing data, on each chemical substance, and perform chemicalsafety assessments.6Albemarle Corporation and Subsidiaries Additionally, substances of high concern, as defined under REACH, are subject to an authorization process. Authorization may result in restrictions in the useof products by application or even banning the product. REACH regulations impose significant additional responsibilities on chemical producers, importers,downstream users of chemical substances and preparations, and the entire supply chain. Our significant manufacturing presence and sales activities in theEuropean Union require significant compliance costs and may result in increases in the costs of raw materials we purchase and the products we sell. Increasesin the costs of our products could result in a decrease in their overall demand; additionally, customers may seek products that are not regulated by REACH,which could also result in a decrease in the demand of certain products subject to the REACH regulations.In June 2016, modifications to the Toxic Substances Control Act (“TSCA”) in the U.S. were signed into law, requiring chemicals to be assessed againsta risk-based safety standard and calling for the elimination of unreasonable risks identified during risk evaluation. Other pending initiatives potentially willrequire toxicological testing and risk assessments of a wide variety of chemicals, including chemicals used or produced by us. These initiatives include theVoluntary Children's Chemical Evaluation Program, and High Production Volume Chemical Initiative in the U.S., as well as new initiatives in Asia and otherregions. These assessments may result in heightened concerns about the chemicals involved and additional requirements being placed on the production,handling, labeling or use of the subject chemicals. Such concerns and additional requirements could also increase the cost incurred by our customers to useour chemical products and otherwise limit the use of these products, which could lead to a decrease in demand for these products.Historically, there has been scrutiny of certain brominated flame retardants by regulatory authorities, legislative bodies and environmental interestgroups in various countries. We manufacture a broad range of brominated flame retardant products, which are used in a variety of applications. Concern aboutthe impact of some of our products on human health or the environment may lead to regulation or reaction in our markets independent of regulation.Environmental RegulationWe are subject to numerous foreign, federal, state and local environmental laws and regulations, including those governing the discharge of pollutantsinto the air and water, the management and disposal of hazardous substances and wastes and the cleanup of contaminated properties. Ongoing compliancewith such laws and regulations is an important consideration for us. Key aspects of our operations are subject to these laws and regulations. In addition, weincur substantial capital and operating costs in our efforts to comply with them.We use and generate hazardous substances and wastes in our operations and may become subject to claims for personal injury and/or property damagerelating to the release of such substances into the environment. In addition, some of our current properties are, or have been, used for industrial purposes,which could contain currently unknown contamination that could expose us to governmental requirements or claims relating to environmental remediation,personal injury and/or property damage. Liabilities associated with the investigation and cleanup of hazardous substances, as well as personal injury,property damages or natural resource damages arising from the release of, or exposure to, such hazardous substances, may be imposed in many situationswithout regard to violations of laws or regulations or other fault, and may also be imposed jointly and severally (so that a responsible party may be heldliable for more than its share of the losses involved, or even the entire loss). Such liabilities also may be imposed on many different entities with arelationship to the hazardous substances at issue, including, for example, entities that formerly owned or operated the property affected by the hazardoussubstances and entities that arranged for the disposal of the hazardous substances at the affected property, as well as entities that currently own or operatesuch property. We are subject to such laws, including the federal Comprehensive Environmental Response, Compensation and Liability Act, commonlyknown as CERCLA or Superfund, in the U.S., and similar foreign and state laws. We may have liability as a potentially responsible party (“PRP”) with respectto active off-site locations under CERCLA or state equivalents. We have sought to resolve our liability as a PRP at these sites through indemnification bythird parties and settlements, which would provide for payment of our allocable share of remediation costs. Because the cleanup costs are estimates and aresubject to revision as more information becomes available about the extent of remediation required, and in some cases we have asserted a defense to anyliability, our estimates could change. Moreover, liability under CERCLA and equivalent state statutes may be joint and several, which could require us topay in excess of our pro rata share of remediation costs. Our understanding of the financial strength of other PRPs has been considered, where appropriate, inestimating our liabilities. Accruals for these matters are included in the environmental reserve. Our management is actively involved in evaluatingenvironmental matters and, based on information currently available to us, we have concluded that our outstanding environmental liabilities for unresolvedwaste sites currently known to us should not have a material effect on our operations.See “Safety and Environmental Matters” in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for furtherdetails.7Albemarle Corporation and Subsidiaries Climate ChangeThe growing concerns about climate change and the related increasingly stringent regulations may provide us with new or expanded businessopportunities. We provide solutions to companies pursuing alternative fuel products and technologies (such as renewable fuels, gas-to-liquids and others),emission control technologies (including mercury emissions), alternative transportation vehicles and energy storage technologies and other similar solutions.As demand for, and legislation mandating or incentivizing the use of, alternative fuel technologies that limit or eliminate greenhouse gas emissions increase,we continue to monitor the market and offer solutions where we have appropriate technology and believe we are well positioned to take advantage ofopportunities that may arise from such demand or legislation.Recent Acquisitions, Joint Ventures and DivestituresDuring recent years, we have devoted resources to acquisitions and joint ventures, including the subsequent integration of acquired businesses. Theseacquisitions and joint ventures have expanded our base business, provided our customers with a wider array of products and presented new alternatives fordiscovery through additional chemistries. In addition, we have pursued opportunities to divest businesses which do not fit our high priority business growthprofile. Following is a summary of our significant acquisitions, joint ventures and divestitures over the last three years.In December 2018, we entered into a definitive agreement to acquire a 50% interest in Mineral Resources Limited's Wodgina Project, located in thePilbara region of Western Australia, and form a joint venture with Mineral Resources Limited to own and operate the Wodgina Project to produce spodumeneconcentrate and battery grade lithium hydroxide, for a purchase price of $1.15 billion. This transaction is subject to regulatory approvals and other customaryclosing conditions, and is expected to close in the second half of 2019.On April 3, 2018, we completed the Polyolefin Catalysts Divestiture to W.R. Grace & Co. for net cash proceeds of approximately $413.6 million. Thetransaction includes Albemarle’s Product Development Center located in Baton Rouge, Louisiana, and operations at our Yeosu, South Korea site. The saledoes not include the organometallics or curatives portion of the PCS business.On December 31, 2016, we completed the acquisition of the lithium hydroxide and lithium carbonate conversion assets of Jiangxi Jiangli NewMaterials Science and Technology Co. Ltd. (“Jiangli New Materials”) for a purchase price of approximately $145 million. This includes manufacturing assetsand supporting business functions located in both Jiangxi and Sichuan, China focused on the production of battery-grade lithium carbonate and lithiumhydroxide. We believe this acquisition will enable us to supply premium lithium salts to an expanded global customer base while solidifying our leadingposition in the lithium industry.On December 14, 2016, we completed the sale of the Chemetall Surface Treatment business to BASF SE for net cash proceeds of approximately $3.1billion. The Chemetall Surface Treatment business was originally part of our previously reported 2015 acquisition of Rockwood Holdings, Inc.(“Rockwood”).On January 4, 2016, we completed the sale of our metal sulfides business to Treibacher Industrie AG for net proceeds of approximately $137 million.Included in the transaction were sites in Vienna and Arnoldstein, Austria, and Tribotecc’s proprietary sulfide synthesis process. On February 1, 2016, wecompleted the sale of our minerals-based flame retardants and specialty chemicals business to Huber Engineered Materials, a division of J.M. HuberCorporation, for net proceeds of approximately $187 million. The transaction included Albemarle’s Martinswerk GmbH subsidiary and manufacturingfacility located in Bergheim, Germany, and Albemarle’s 50% ownership interest in Magnifin Magnesiaprodukte GmbH, a joint-venture with RadexHeraklith Industriebeteiligung AG at Breitenau, Austria.These transactions reflect our commitment to investing in future growth of our high priority businesses, maintaining leverage flexibility and returningcapital to our shareholders.EmployeesAs of December 31, 2018, we had approximately 5,900 employees, including employees of our consolidated joint ventures, of whom 2,800, or 48%, areemployed in the U.S. and Latin America; 1,500, or 25%, are employed in Europe; 1,200, or 20%, are employed in Asia and 400, or 7%, are employed in theMiddle East or other areas. Approximately 35% of these employees are represented by unions or works councils. We believe that we generally have a goodrelationship with our employees, and with those unions and works councils.8Albemarle Corporation and Subsidiaries Available InformationOur website address is www.albemarle.com. We make available free of charge through our website our Annual Report on Form 10-K, Quarterly Reportson Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities ExchangeAct of 1934, as amended (“Exchange Act”), as well as beneficial ownership reports on Forms 3, 4 and 5 filed pursuant to Section 16 of the Exchange Act, assoon as reasonably practicable after such documents are electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”). Theinformation on our website is not, and shall not be deemed to be, a part of this report or incorporated into any other filings we make with the SEC. The SECalso maintains a website at www.sec.gov that contains reports, proxy statements and other information regarding SEC registrants, including Albemarle.Our Corporate Governance Guidelines, Code of Conduct and the charters of the Audit and Finance, Health, Safety and Environment, ExecutiveCompensation, and Nominating and Governance Committees of our Board of Directors are also available on our website and are available in print to anyshareholder upon request by writing to Investor Relations, 4250 Congress Street, Suite 900, Charlotte, North Carolina 28209, or by calling (980) 299-5700.Item 1A.Risk Factors.You should consider carefully the following risks when reading the information, including the financial information, contained in this Annual Reporton Form 10-K.Risks Related to Our BusinessOur substantial international operations subject us to risks of doing business in foreign countries, which could adversely affect our business, financialcondition and results of operations.We conduct a substantial portion of our business outside the U.S., with approximately 74% of our sales to foreign countries. We operate and/or sell ourproducts to customers in approximately 100 countries. We currently have many production facilities, research and development and administrative facilities,as well as sales offices located outside the U.S., as detailed in Item 2. Properties. Accordingly, our business is subject to risks related to the differing legal,political, social and regulatory requirements and economic conditions of many jurisdictions. Risks inherent in international operations include thefollowing:•fluctuations in foreign currency exchange rates may affect product demand and may adversely affect the profitability in U.S. dollars of products andservices we provide in international markets where payment for our products and services is made in the local currency;•transportation and other shipping costs may increase, or transportation may be inhibited;•increased cost or decreased availability of raw materials;•changes in foreign laws and tax rates or U.S. laws and tax rates with respect to foreign income may unexpectedly increase the rate at which our incomeis taxed, impose new and additional taxes on remittances, repatriation or other payments by subsidiaries, or cause the loss of previously recorded taxbenefits;•foreign countries in which we do business may adopt other restrictions on foreign trade or investment, including currency exchange controls;•trade sanctions by or against these countries could result in our losing access to customers and suppliers in those countries;•unexpected adverse changes in foreign laws or regulatory requirements may occur;•our agreements with counterparties in foreign countries may be difficult for us to enforce and related receivables may be difficult for us to collect;•compliance with the variety of foreign laws and regulations may be unduly burdensome;•compliance with anti-bribery and anti-corruption laws (such as the Foreign Corrupt Practices Act) as well as anti-money-laundering laws may becostly;•unexpected adverse changes in export duties, quotas and tariffs and difficulties in obtaining export licenses may occur;•general economic conditions in the countries in which we operate could have an adverse effect on our earnings from operations in those countries;•our foreign operations may experience staffing difficulties and labor disputes;•termination or substantial modification of international trade agreements may adversely affect our access to raw materials and to markets for ourproducts outside the U.S.;9Albemarle Corporation and Subsidiaries •foreign governments may nationalize or expropriate private enterprises;•increased sovereign risk (such as default by or deterioration in the economies and credit worthiness of local governments) may occur; and•political or economic repercussions from terrorist activities, including the possibility of hyperinflationary conditions and political instability, mayoccur in certain countries in which we do business.In addition, certain of our joint ventures operate, and we have ongoing capital projects, in regions of the world such as the Middle East and SouthAmerica, that are of high risk due to significant civil, political and security instability. Unanticipated events, such as geopolitical changes, could result in awrite-down of our investment in the affected joint venture or a delay or cause cancellation of those capital projects, which could negatively impact our futuregrowth and profitability. Our success as a global business will depend, in part, upon our ability to succeed in differing legal, regulatory, economic, social andpolitical conditions by developing, implementing and maintaining policies and strategies that are effective in each location where we and our joint venturesdo business.Furthermore, we are subject to rules and regulations related to anti-bribery and anti-trust prohibitions of the U.S. and other countries, as well as exportcontrols and economic embargoes, violations of which may carry substantial penalties. For example, export control and economic embargo regulations limitthe ability of our subsidiaries to market, sell, distribute or otherwise transfer their products or technology to prohibited countries or persons. Failure tocomply with these regulations could subject our subsidiaries to fines, enforcement actions and/or have an adverse effect on our reputation and the value ofour common stock.Our inability to secure key raw materials, or to pass through increases in costs and expenses for other raw materials and energy, on a timely basis or at all,could have an adverse effect on the margins of our products and our results of operations.The long-term profitability of our operations will, in part, depend on our ability to continue to economically obtain resources, including energy andraw materials. For example, our lithium and bromine businesses rely upon our continued ability to produce, or otherwise obtain, lithium and bromine ofsufficient quality and in adequate amounts to meet our customers’ demand. If we fail to secure and retain the rights to continue to access these key rawmaterials, we may have to restrict or suspend our operations that rely upon these key resources, which could harm our business, results of operations andfinancial condition. In addition, in some cases access to these raw materials by us and our competitors is subject to decisions or actions by governmentalauthorities, which could adversely impact us. Furthermore, other raw material and energy costs account for a significant percentage of our total costs ofproducts sold, even if they can be obtained on commercially reasonable terms. Our raw material and energy costs can be volatile and may increasesignificantly. Increases are primarily driven by tightening of market conditions and major increases in the pricing of key constituent materials for ourproducts such as crude oil, chlorine and metals (including molybdenum and rare earths which are used in the refinery catalysts business). We generallyattempt to pass through changes in the prices of raw materials and energy to our customers, but we may be unable to do so (or may be delayed in doing so). Inaddition, raising prices we charge to our customers in order to offset increases in the prices we pay for raw materials could cause us to suffer a loss of salesvolumes. Our inability to efficiently and effectively pass through price increases, or inventory impacts resulting from price volatility, could adversely affectour margins.Competition within our industry may place downward pressure on the prices and margins of our products and may adversely affect our businesses andresults of operations.We compete against a number of highly competitive global specialty chemical producers. Competition is based on several key criteria, includingproduct performance and quality, product price, product availability and security of supply, and responsiveness of product development in cooperation withcustomers and customer service. Some of our competitors are larger than we are and may have greater financial resources. These competitors may also be ableto maintain significantly greater operating and financial flexibility. As a result, these competitors may be better able to withstand changes in conditionswithin our industry. Competitors’ pricing decisions could compel us to decrease our prices, which could negatively affect our margins and profitability. Ourability to maintain or increase our profitability is, and will continue to be, dependent upon our ability to offset decreases in the prices and margins of ourproducts by improving production efficiency and volume and other productivity enhancements, shifting to production of higher margin chemical productsand improving existing products through innovation and research and development. If we are unable to do so or to otherwise maintain our competitiveposition, we could lose market share to our competitors.In addition, Albemarle’s brands, product image and trademarks represent the unique product identity of each of our products and are important symbolsof the Company’s reputation. Accordingly, the performance of our business could be adversely affected by any marketing and promotional materials used byour competitors that make adverse claims, whether with or without merit, against our Company or its products, imply or assert immoral or improper conductby us, or are otherwise10Albemarle Corporation and Subsidiaries disparaging of our Company or its products. Further, our own actions could hurt such brands, product image and trademarks if our products underperform orwe otherwise draw negative publicity.Our research and development efforts may not succeed in addressing changes in our customers’ needs, and our competitors may develop more effective orsuccessful products.Our industries and the end markets into which we sell our products experience technological change and product improvement. Manufacturersperiodically introduce new products or require new technological capacity to develop customized products. Our future growth depends on our ability togauge the direction of the commercial and technological progress in all key end markets in which we sell our products and upon our ability to fund andsuccessfully develop, manufacture and market products in such changing end markets. As a result, we must commit substantial resources each year to researchand development. There is no assurance that we will be able to continue to identify, develop, market and, in certain cases, secure regulatory approval for,innovative products in a timely manner or at all, as may be required to replace or enhance existing products, and any such inability could have a materialadverse effect on our profit margins and our competitive position.In addition, our customers use our specialty chemicals for a broad range of applications. Changes in our customers’ products or processes may enableour customers to reduce consumption of the specialty chemicals that we produce or make our specialty chemicals unnecessary. Customers may also findalternative materials or processes that do not require our products. Should a customer decide to use a different material due to price, performance or otherconsiderations, we may not be able to supply a product that meets the customer’s new requirements. Consequently, it is important that we develop newproducts to replace the sales of products that mature and decline in use. Our business, results of operations, cash flows and margins could be materiallyadversely affected if we are unable to manage successfully the maturation of our existing products and the introduction of new products.Despite our efforts, we may not be successful in developing new products and/or technology, either alone or with third parties, or licensing intellectualproperty rights from third parties on a commercially competitive basis. Our new products may not be accepted by our customers or may fail to receiveregulatory approval. Moreover, new products may have lower margins than the products they replace. Furthermore, ongoing investments in research anddevelopment for the future do not yield an immediate beneficial impact on our operating results and therefore could result in higher costs without aproportional increase in revenues.Adverse conditions in the economy, and volatility and disruption of financial markets can negatively impact our customers, suppliers and other businesspartners and therefore have a material adverse effect on our business and results of operations.A global, regional or localized economic downturn may reduce customer demand or inhibit our ability to produce our products, negatively impactingour operating results. Our business and operating results have been and will continue to be sensitive to the many challenges that can affect national, regionaland global economies, including economic downturns (including credit market tightness, which can impact our liquidity as well as that of our customers,suppliers and other business partners), declining consumer and business confidence, fluctuating commodity prices and volatile exchange rates. Our customersmay experience deterioration of their businesses, cash flow shortages and difficulty obtaining financing, leading them to delay or cancel plans to purchaseproducts, and they may not be able to fulfill their obligations in a timely fashion. Further, suppliers and other business partners may experience similarconditions, which could impact their ability to fulfill their obligations to us. Also, it could be difficult to find replacements for business partners withoutincurring significant delays or cost increases.Downturns in our customers’ industries could adversely affect our sales and profitability.Downturns in the businesses that use our specialty chemicals may adversely affect our sales. Many of our customers are in industries, including theelectronics, building and construction, oilfield and automotive industries, which are cyclical in nature, or which are subject to secular market downturns.Historically, cyclical or secular industry downturns have resulted in diminished demand for our products, excess manufacturing capacity and lower averageselling prices, and we may experience similar problems in the future. A decline in our customers’ industries may have a material adverse effect on our salesand profitability.Our results are subject to fluctuation because of irregularities in the demand for our HPC catalysts and certain of our agrichemicals.Our HPC catalysts are used by petroleum refiners in their processing units to reduce the quantity of sulfur and other impurities in petroleum products.The effectiveness of HPC catalysts diminishes with use, requiring the HPC catalysts to be replaced, on average, once every one to four years. The sales of ourHPC catalysts, therefore, are largely dependent on the11Albemarle Corporation and Subsidiaries useful life cycle of the HPC catalysts in the processing units and may vary materially by quarter. In addition, the timing and profitability of HPC catalystssales can have a significant impact on revenue and profit in any one quarter. Sales of our agrichemicals are also subject to fluctuation as demand variesdepending on climate and other environmental conditions, which may prevent or reduce farming for extended periods. In addition, crop pricing and thetiming of when farms alternate from one crop to another crop in a particular year can also alter sales of agrichemicals.Regulation, or the threat of regulation, of some of our products could have an adverse effect on our sales and profitability.We manufacture or market a number of products that are or have been the subject of attention by regulatory authorities and environmental interestgroups. For example, over the past decade, there has been increasing scrutiny of certain brominated flame retardants by regulatory authorities, legislativebodies and environmental interest groups in various countries. We manufacture a broad range of brominated flame retardant products, which are used in avariety of applications to protect people, property and the environment from injury and damage caused by fire. Concern about the impact of some of ourproducts on human health or the environment may lead to regulation, or reaction in our markets independent of regulation, that could reduce or eliminatemarkets for such products.Agencies in the European Union (“E.U.”) continue to evaluate the risks to human health and the environment associated with certain brominated flameretardants such as tetrabromobisphenol A and decabromodiphenylethane, both of which we manufacture. Additional government regulations, includinglimitations or bans on the use of brominated flame retardants, could result in a decline in our net sales of brominated flame retardants and have an adverseeffect on our sales and profitability. In addition, the threat of additional regulation or concern about the impact of brominated flame retardants on humanhealth or the environment could lead to a negative reaction in our markets that could reduce or eliminate our markets for these products, which could have anadverse effect on our sales and profitability.Our business and our customers are subject to significant requirements under REACH, which imposes obligations on E.U. manufacturers and importersof chemicals and other products into the E.U. to compile and file comprehensive reports, including testing data, on each chemical substance, and performchemical safety assessments. Additionally, substances of high concern, as defined under REACH, are subject to an authorization process, which may result inrestrictions in the use of products by application or even banning the product. REACH regulations impose significant additional burdens on chemicalproducers, importers, downstream users of chemical substances and preparations, and the entire supply chain. See “Regulation” in Item 1. Business. Oursignificant manufacturing presence and sales activities in the E.U. requires significant compliance costs and may result in increases in the costs of rawmaterials we purchase and the products we sell. Increases in the costs of our products could result in a decrease in their overall demand; additionally,customers may seek products that are not regulated by REACH, which could also result in a decrease in the demand of certain products subject to the REACHregulations.In June 2016, modifications to the TSCA in the U.S. were signed into law, requiring chemicals to be assessed against a risk-based safety standard andfor the elimination of unreasonable risks identified during risk evaluation. Other pending initiatives potentially will require toxicological testing and riskassessments of a wide variety of chemicals, including chemicals used or produced by us. These initiatives include the Voluntary Children's ChemicalEvaluation Program, and High Production Volume Chemical Initiative in the U.S., as well as new initiatives in Asia and other regions. These assessments mayresult in heightened concerns about the chemicals involved and additional requirements being placed on the production, handling, labeling or use of thesubject chemicals. Such concerns and additional requirements could also increase the cost incurred by our customers to use our chemical products andotherwise limit the use of these products, which could lead to a decrease in demand for these products. Such a decrease in demand would likely have anadverse impact on our business and results of operations.We could be subject to damages based on claims brought against us by our customers or lose customers as a result of the failure of our products to meetcertain quality specifications.Our products provide important performance attributes to our customers’ products. If a product fails to perform in a manner consistent with qualityspecifications or has a shorter useful life than guaranteed, a customer of ours could seek the replacement of the product or damages for costs incurred as aresult of the product failing to perform as guaranteed. These risks apply to our refinery catalysts in particular because, in certain instances, we sell our refinerycatalysts under agreements that contain limited performance and life cycle guarantees. Also, because many of our products are integrated into our customers’products, we may be requested to participate in, or fund in whole or in part the costs of, a product recall conducted by a customer. For example, some of ourbusinesses supply products to customers in the automotive industry. In the event one of these customers conducts a product recall that it believes is related toone of our products, we may be asked to participate in, or fund in whole or in part, such a recall.Our customers often require our subsidiaries to represent that our products conform to certain product specifications provided by our customers. Anyfailure to comply with such specifications could result in claims or legal action against us. 12Albemarle Corporation and Subsidiaries A successful claim or series of claims against us could have a material adverse effect on our financial condition and results of operations and couldresult in our loss of one or more customers.Our business is subject to hazards common to chemical and natural resource extraction businesses, any of which could injure our employees or otherpersons, damage our facilities or other properties, interrupt our production and adversely affect our reputation and results of operations.Our business is subject to hazards common to chemical manufacturing, storage, handling and transportation, as well as natural resource extraction,including explosions, fires, severe weather, natural disasters, mechanical failure, unscheduled downtime, transportation interruptions, remediation, chemicalspills, discharges or releases of toxic or hazardous substances or gases and other risks. These hazards can cause personal injury and loss of life to ouremployees and other persons, severe damage to, or destruction of, property and equipment and environmental contamination. In addition, the occurrence ofdisruptions, shutdowns or other material operating problems at our facilities due to any of these hazards may diminish our ability to meet our output goals.Accordingly, these hazards and their consequences could adversely affect our reputation and have a material adverse effect on our operations as a whole,including our results of operations and cash flows, both during and after the period of operational difficulties.Our business could be adversely affected by environmental, health and safety laws and regulations.The nature of our business, including historical operations at our current and former facilities, exposes us to risks of liability under environmental lawsand regulations due to the production, storage, use, transportation and sale of materials that can cause contamination or personal injury if released into theenvironment. In the jurisdictions in which we operate, we are subject to numerous U.S. and non-U.S. national, federal, state and local environmental, healthand safety laws and regulations, including those governing the discharge of pollutants into the air and water, the management and disposal of hazardoussubstances and wastes and the cleanup of contaminated properties. We currently use, and in the past have used, hazardous substances at many of ourfacilities, and we have in the past been, and may in the future be, subject to claims relating to exposure to hazardous materials. We also have generated, andcontinue to generate, hazardous wastes at a number of our facilities. Some of our facilities also have lengthy histories of manufacturing or other activities thatmay have resulted in site contamination. Liabilities associated with the investigation and cleanup of hazardous substances, as well as personal injury,property damages or natural resource damages arising from the release of, or exposure to, such hazardous substances, may be imposed in many situationswithout regard to violations of laws or regulations or other fault, and may also be imposed jointly and severally (so that a responsible party may be heldliable for more than its share of the losses involved, or even the entire loss). Such liabilities may also be imposed on many different entities, including, forexample, current and prior property owners or operators, as well as entities that arranged for the disposal of the hazardous substances. Such liabilities may bematerial and can be difficult to identify or quantify.Further, some of the raw materials we handle are subject to government regulation. These regulations affect the manufacturing processes, handling, usesand applications of our products. In addition, our production facilities and a number of our distribution centers require numerous operating permits. Due tothe nature of these requirements and changes in our operations, our operations may exceed limits under permits or we may not have the proper permits toconduct our operations. Ongoing compliance with such laws, regulations and permits is an important consideration for us and we incur substantial capitaland operating costs in our compliance efforts.Compliance with environmental laws generally increases the costs of manufacturing, registration/approval requirements, transportation and storage ofraw materials and finished products, and storage and disposal of wastes, and could have a material adverse effect on our results of operations. We may incursubstantial costs, including fines, damages, criminal or civil sanctions and remediation costs, or experience interruptions in our operations, for violationsarising under these laws or permit requirements. Additional information may arise in the future concerning the nature or extent of our liability with respect toidentified sites, and additional sites may be identified for which we are alleged to be liable, that could cause us to materially increase our environmentalaccrual or the upper range of the costs we believe we could reasonably incur for such matters. Furthermore, environmental laws are subject to change andhave become increasingly stringent in recent years. We expect this trend to continue and to require materially increased capital expenditures and operatingand compliance costs.We may be subject to indemnity claims and liable for other payments relating to properties or businesses we have divested. In connection with the sale of certain properties and businesses, we have agreed to indemnify the purchasers of such properties for certain types ofmatters, such as certain breaches of representations and warranties, taxes and certain environmental matters. With respect to environmental matters, thediscovery of contamination arising from properties that we have divested may expose us to indemnity obligations under the sale agreements with the buyersof such properties or cleanup obligations and other damages under applicable environmental laws. We may not have insurance coverage for such indemnity13Albemarle Corporation and Subsidiaries obligations or cash flows to make such indemnity or other payments. Further, we cannot predict the nature of and the amount of any indemnity or otherobligations we may have to the applicable purchaser. Such payments may be costly and may adversely affect our financial condition and results ofoperations.At several of our properties where hazardous substances are known to exist (including some sites where hazardous substances are being investigated orremediated), we believe we are entitled to contractual indemnification from one or more former owners or operators; however, in the event we make a claim,the indemnifier may disagree with us regarding, or not have the financial capacity to fulfill, its indemnity obligation. If our contractual indemnity is notupheld or effective, our accrual and/or our costs for the investigation and cleanup of hazardous substances could increase materially.We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar foreign anti-corruption laws.The U.S. Foreign Corrupt Practices Act (the “FCPA”) and similar foreign anti-corruption laws in other jurisdictions around the world generally prohibitcompanies and their intermediaries from making improper payments or providing anything of value to non-U.S. government officials for the purpose ofobtaining or retaining business or securing an unfair advantage. We operate in some parts of the world that have experienced governmental corruption tosome degree, and, in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices. Although we haveestablished formal policies or procedures for prohibiting or monitoring this conduct, we cannot assure you that our employees or other agents will not engagein such conduct for which we might be held responsible. In the event that we believe or have reason to believe that our employees, agents or distributors haveor may have violated applicable anti-corruption laws, including the FCPA, we may be required to investigate or have outside counsel investigate the relevantfacts and circumstances, which can be expensive and require significant time and attention from senior management. If we are found to be liable forviolations of the FCPA or other applicable anti-corruption laws (either due to our own acts or our inadvertence, or due to the acts or inadvertence of others,including employees of our joint ventures), we could suffer from civil and criminal penalties or other sanctions, which could have a material adverse effect onour business and results of operations.As previously reported in 2018, following receipt of information regarding potential improper payments being made by third party sales representativesof our Refining Solutions business, within our Catalysts segment, we promptly retained outside counsel and forensic accountants to investigate potentialviolations of the Company’s Code of Conduct, the FCPA, and other potentially applicable laws. Based on this internal investigation, we have voluntarilyself-reported potential issues relating to the use of third party sales representatives in our Refining Solutions business, within our Catalysts segment, to theU.S. Department of Justice (“DOJ”), the SEC, and Dutch Public Prosecutor (“DPP”), and are cooperating with the DOJ, the SEC, and the DPP in their review ofthese matters. In connection with our internal investigation, we have implemented, and are continuing to implement, appropriate remedial measures.At this time, we are unable to predict the duration, scope, result or related costs associated with the investigations by the DOJ, the SEC, or DPP. We alsoare unable to predict what, if any, action may be taken by the DOJ, the SEC, or DPP, or what penalties or remedial actions they may seek. Any determinationthat our operations or activities are not in compliance with existing laws or regulations could result in the imposition of fines, penalties, disgorgement,equitable relief, or other losses.We are subject to extensive foreign government regulation that can negatively impact our business.We are subject to government regulation in non-U.S. jurisdictions in which we conduct our business. The requirements for compliance with these lawsand regulations may be unclear or indeterminate and may involve significant costs, including additional capital expenditures or increased operatingexpenses, or require changes in business practice, in each case that could result in reduced profitability for our business. Our having to comply with theseforeign laws or regulations may provide a competitive advantage to competitors who are not subject to comparable restrictions or prevent us from takingadvantage of growth opportunities. Determination of noncompliance can result in penalties or sanctions that could also adversely impact our operatingresults and financial condition.Our inability to protect our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.Protection of our proprietary processes, methods and compounds and other technology is important to our business. We generally rely on patent, tradesecret, trademark and copyright laws of the U.S. and certain other countries in which our products are produced or sold, as well as licenses and nondisclosureand confidentiality agreements, to protect our intellectual property rights. The patent, trade secret, trademark and copyright laws of some countries, or theirenforcement, may not protect our intellectual property rights to the same extent as the laws of the U.S. Failure to protect our intellectual property rights mayresult in the loss of valuable proprietary technologies. Additionally, some of our technologies are not covered by any patent or14Albemarle Corporation and Subsidiaries patent application and, even if a patent application has been filed, it may not result in an issued patent. If patents are issued to us, those patents may notprovide meaningful protection against competitors or against competitive technologies. We cannot assure you that our intellectual property rights will not bechallenged, invalidated, circumvented or rendered unenforceable.We also conduct research and development activities with third parties and license certain intellectual property rights from third parties and we plan tocontinue to do so in the future. We endeavor to license or otherwise obtain intellectual property rights on terms favorable to us. However, we may not be ableto license or otherwise obtain intellectual property rights on such terms or at all. Our inability to license or otherwise obtain such intellectual property rightscould have a material adverse effect on our ability to create a competitive advantage and create innovative solutions for our customers, which will adverselyaffect our net sales and our relationships with our customers.We could face patent infringement claims from our competitors or others alleging that our processes or products infringe on their proprietarytechnologies. If we are found to be infringing on the proprietary technology of others, we may be liable for damages and we may be required to change ourprocesses, redesign our products partially or completely, pay to use the technology of others, stop using certain technologies or stop producing the infringingproduct entirely. Even if we ultimately prevail in an infringement suit, the existence of the suit could prompt customers to switch to products that are not thesubject of infringement suits. We may not prevail in intellectual property litigation and such litigation may result in significant legal costs or otherwiseimpede our ability to produce and distribute key products.We also rely upon unpatented proprietary manufacturing expertise, continuing technological innovation and other trade secrets to develop andmaintain our competitive position. While we generally enter into confidentiality agreements with our employees and third parties to protect our intellectualproperty, we cannot assure you that our confidentiality agreements will not be breached, that they will provide meaningful protection for our trade secretsand proprietary manufacturing expertise or that adequate remedies will be available in the event of an unauthorized use or disclosure of our trade secrets ormanufacturing expertise. In addition, our trade secrets and know-how may be improperly obtained by other means, such as a breach of our informationtechnologies security systems or direct theft.Our inability to acquire or develop additional reserves that are economically viable could have a material adverse effect on our future profitability.Our lithium reserves will, without more, decline as we continue to extract these raw materials. Accordingly, our future profitability depends upon ourability to acquire additional lithium reserves that are economically viable to replace the reserves we will extract. Exploration and development of lithiumresources are highly speculative in nature. Exploration projects involve many risks, require substantial expenditures and may not result in the discovery ofsufficient additional resources that can be extracted profitably. Once a site with potential resources is discovered, it may take several years of developmentuntil production is possible, during which time the economic viability of production may change. Substantial expenditures are required to establishrecoverable proven and probable reserves and to construct extraction and production facilities. As a result, there is no assurance that current or futureexploration programs will be successful and there is a risk that depletion of reserves will not be offset by discoveries or acquisitions.We utilize feasibility studies to estimate the anticipated economic returns of an exploration project. The actual project profitability or economicfeasibility may differ from such estimates as a result of factors such as, but not limited to, changes in volumes, grades and characteristics of resources to bemined and processed; changes in labor costs or availability of adequate and skilled labor force; the quality of the data on which engineering assumptionswere made; adverse geotechnical conditions; availability, supply and cost of water and power; fluctuations in inflation and currency exchange rates; delaysin obtaining environmental or other government permits or approvals or changes in the laws and regulations related to our operations or projectdevelopment; changes in royalty agreements, laws and/or regulations around royalties and other taxes; and weather or severe climate impacts.For our existing operations, we utilize geological and metallurgical assumptions, financial projections and price estimates. These estimates areperiodically updated to reflect changes in our operations, including modifications to our proven and probable reserves and mineralized material, revisions toenvironmental obligations, changes in legislation and/or social, political or economic environment, and other significant events associated with naturalresource extraction operations. There are numerous uncertainties inherent in estimating quantities and qualities of lithium and costs to extract recoverablereserves, including many factors beyond our control, that could cause results to differ materially from expected financial and operating results or result infuture impairment charges.15Albemarle Corporation and Subsidiaries There is risk to the growth of lithium markets.Our lithium business is significantly dependent on the development and adoption of new applications for lithium power and the growth in demand forplug-in hybrid electric vehicles and battery electric vehicles. To the extent that such development, adoption and growth do not occur in the volume and/ormanner that we contemplate, the long-term growth in the markets for lithium products may be adversely affected, which would have a material adverse effecton our business, financial condition and operating results.Our business and operations could suffer in the event of cybersecurity breaches, information technology system failures, or network disruptions.Attempts to gain unauthorized access to our information technology systems become more sophisticated over time. These attempts, which might berelated to industrial or other espionage, include covertly introducing malware to our computers and networks and impersonating authorized users, amongothers. We seek to detect and investigate all security incidents and to prevent their recurrence, but in some cases we might be unaware of an incident or itsmagnitude and effects. The theft, unauthorized use or publication of our intellectual property and/or confidential business information could harm ourcompetitive position, reduce the value of our investment in research and development and other strategic initiatives or otherwise adversely affect ourbusiness. To the extent that any cybersecurity breach results in inappropriate disclosure of our customers’ or licensees’ confidential information, we mayincur liability as a result. The devotion of additional resources to the security of our information technology systems in the future could significantly increasethe cost of doing business or otherwise adversely impact our financial results.In addition, risks associated with information technology systems failures or network disruptions, including risks associated with upgrading oursystems or in successfully integrating information technology and other systems in connection with the integration of businesses we acquire, could disruptour operations by impeding our processing of transactions, financial reporting and our ability to protect our customer or company information, which couldadversely affect our business and results of operations.The occurrence or threat of extraordinary events, including domestic and international terrorist attacks, may disrupt our operations and decrease demandfor our products.Chemical-related assets may be at greater risk of future terrorist attacks than other possible targets in the U.S. and around the world. As a result, we aresubject to existing federal rules and regulations (and may be subject to additional legislation or regulations in the future) that impose site securityrequirements on chemical manufacturing facilities, which increase our overhead expenses.We are also subject to federal regulations that have heightened security requirements for the transportation of hazardous chemicals in the U.S. Webelieve we have met these requirements but additional federal and local regulations that limit the distribution of hazardous materials are being considered.We ship and receive materials that are classified as hazardous. Bans on movement of hazardous materials through cities, like Washington, D.C., could affectthe efficiency of our logistical operations. Broader restrictions on hazardous material movements could lead to additional investment to produce hazardousraw materials and change where and what products we manufacture.The Chemical Facility Anti-Terrorism Standards program (“CFATS Program”), which is administered by the Department of Homeland Security (“DHS”),identifies and regulates chemical facilities to ensure that they have security measures in place to reduce the risks associated with potential terrorist attacks onchemical plants located in the U.S. In December 2014, the Protecting and Securing Chemical Facilities from Terrorist Attacks Act of 2014 (“CFATS Act”) wasenacted. The CFATS Act reauthorizes the CFATS Program for four years. DHS has released an interim final rule under the CFATS Program that imposescomprehensive federal security regulations for high-risk chemical facilities in possession of specified quantities of chemicals of interest. This rule establishesrisk-based performance standards for the security of the U.S.'s chemical facilities. It requires covered chemical facilities to prepare Security VulnerabilityAssessments, which identify facility security vulnerabilities, and to develop and implement Site Security Plans, which include measures that satisfy theidentified risk-based performance standards. We cannot determine with certainty the costs associated with any security measures that DHS may require.The occurrence of extraordinary events, including future terrorist attacks and the outbreak or escalation of hostilities, cannot be predicted, and theiroccurrence can be expected to continue to negatively affect the economy in general, and the markets for our products in particular. The resulting damagefrom a direct attack on our assets, or assets used by us, could include loss of life and property damage. In addition, available insurance coverage may not besufficient to cover all of the damage incurred or, if available, may be prohibitively expensive.16Albemarle Corporation and Subsidiaries Natural disasters and weather-related matters could impact our results of operations.Historically, major hurricanes have caused significant disruption to the operations on the U.S. Gulf Coast for many of our customers and our suppliersof certain raw materials, which had an adverse impact on volume and cost for some of our products. Our operations in Chile could be subject to significantrain events and earthquakes. If similar weather-related matters or other natural disasters occur in the future, they could negatively affect the results ofoperations at our sites in the affected regions as well as have adverse impacts on the global economy.Our insurance may not fully cover all potential exposures.We maintain property, business interruption, casualty, and other insurance, but such insurance may not cover all risks associated with the hazards of ourbusiness and is subject to limitations, including deductibles and coverage limits. We may incur losses beyond the limits, or outside the coverage, of ourinsurance policies, including liabilities for environmental remediation. In addition, from time to time, various types of insurance for companies in thespecialty chemical industry have not been available on commercially acceptable terms or, in some cases, have not been available at all. We are potentially atadditional risk if one or more of our insurance carriers fail. Additionally, severe disruptions in the domestic and global financial markets could adverselyimpact the ratings and survival of some insurers. Future downgrades in the ratings of enough insurers could adversely impact both the availability ofappropriate insurance coverage and its cost. In the future, we may not be able to obtain coverage at current levels, if at all, and our premiums may increasesignificantly on coverage that we maintain.We may be exposed to certain regulatory and financial risks related to climate change.Growing concerns about climate change may result in the imposition of additional regulations or restrictions to which we may become subject. Climatechanges include changes in rainfall and in storm patterns and intensities, water shortages, significantly changing sea levels and increasing atmospheric andwater temperatures, among others. For example, there have been concerns regarding the declining water level of the Dead Sea, from which our joint venture,JBC, produces bromine. A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to climatechange, including regulating greenhouse gas emissions. Potentially, additional U.S. federal regulation will be forthcoming with respect to greenhouse gasemissions (including carbon dioxide) and/or “cap and trade” legislation that could impact our operations. In addition, we have operations in the E.U., Brazil,China, Japan, Jordan, Saudi Arabia, Singapore and the United Arab Emirates, which have implemented measures to achieve objectives under the KyotoProtocol, an international agreement linked to the United Nations Framework Convention on Climate Change (“UNFCC”), which set binding targets forreducing greenhouse gas emissions.The outcome of new legislation or regulation in the U.S. and other jurisdictions in which we operate may result in new or additional requirements,additional charges to fund energy efficiency activities, and fees or restrictions on certain activities. While certain climate change initiatives may result in newbusiness opportunities for us in the area of alternative fuel technologies and emissions control, compliance with these initiatives may also result in additionalcosts to us, including, among other things, increased production costs, additional taxes, reduced emission allowances or additional restrictions on productionor operations. Any adopted future climate change regulations could also negatively impact our ability to compete with companies situated in areas notsubject to such limitations. Even without such regulation, increased public awareness and adverse publicity about potential impacts on climate changeemanating from us or our industry could harm us. We may not be able to recover the cost of compliance with new or more stringent laws and regulations,which could adversely affect our business and negatively impact our growth. Furthermore, the potential impact of climate change and related regulation onour customers is highly uncertain and there can be no assurance that it will not have an adverse effect on our financial condition and results of operations.Economic conditions and regulatory changes relating to the United Kingdom’s withdrawal from the European Union could adversely impact our business.Following a referendum in 2016, voters in the United Kingdom (“U.K.”) approved that country’s exit from the E.U., a process often referred to as“Brexit.” Subsequently, in March 2017, the U.K. invoked Article 50 of the Lisbon Treaty, which provides a two-year time period through March 2019 for theU.K. and the remaining E.U. countries to negotiate a withdrawal agreement. The future effects of Brexit will depend on any agreements the U.K. makes toretain access to the E.U. or other markets either during a transitional period or more permanently. Given the lack of comparable precedent and the uncertaintyaround the terms upon which the U.K. will leave the E.U., it is unclear what financial, trade and legal implications Brexit would have and how suchwithdrawal would affect our Company. We derive a significant portion of our revenues from sales outside the U.S., including 16% from E.U. countries. Theconsequences of Brexit, together with what may be protracted negotiations around the terms of Brexit (including the possibility of a so-called “Hard Brexit,”where no formal agreement is made between the E.U. and U.K. prior to the U.K.’s exit from the E.U.), could introduce significant uncertainties into globalfinancial markets,17Albemarle Corporation and Subsidiaries including volatility in foreign currencies, and adversely impact the markets in which we and our customers operate. Although we are not experiencing anyimmediate adverse impact on our financial condition as a result of Brexit, adverse consequences such as deterioration in economic conditions, volatility incurrency exchange rates or adverse changes in regulation could have a negative impact on our future operations, operating results and financial condition.All of these potential consequences could be further magnified if additional countries were to exit the E.U.If we are unable to retain key personnel or attract new skilled personnel, it could have an adverse effect on our business.Our success depends on our ability to attract and retain key personnel, including our management team. In light of the specialized and technical natureof our business, our performance is dependent on the continued service of, and on our ability to attract and retain, qualified management, scientific, technical,marketing and support personnel. Competition for such personnel is intense, and we may be unable to continue to attract or retain such personnel. Inaddition, because of our reliance on our senior management team, the unanticipated departure of any key member of our management team could have anadverse effect on our business. Our future success depends, in part, on our ability to identify and develop or recruit talent to succeed our senior managementand other key positions throughout the organization. If we fail to identify and develop or recruit successors, we are at risk of being harmed by the departuresof these key employees. Effective succession planning is also important to our long-term success. Failure to ensure effective transfer of knowledge andsmooth transitions involving key employees could hinder our strategic planning and execution.Some of our employees are unionized, represented by works councils or are employed subject to local laws that are less favorable to employers than thelaws of the U.S.As of December 31, 2018, we had approximately 5,900 employees, including employees of our consolidated joint ventures. Approximately 35% ofthese employees are represented by unions or works councils. In addition, a large number of our employees are employed in countries in which employmentlaws provide greater bargaining or other rights to employees than the laws of the U.S. Such employment rights require us to work collaboratively with thelegal representatives of those employees to effect any changes to labor arrangements. For example, most of our employees in Europe are represented by workscouncils that must approve any changes in conditions of employment, including salaries and benefits and staff changes, and may impede efforts to restructureour workforce. Although we believe that we have a good working relationship with our employees, a strike, work stoppage, slowdown or significant disputewith our employees could result in a significant disruption of our operations or higher labor costs.Our joint ventures may not operate according to their business plans if our partners fail to fulfill their obligations, which may adversely affect our resultsof operations and may force us to dedicate additional resources to these joint ventures.We currently participate in a number of joint ventures and may enter into additional joint ventures in the future. The nature of a joint venture requiresus to share control with unaffiliated third parties. If our joint venture partners do not fulfill their obligations, the affected joint venture may not be able tooperate according to its business plan. In that case, our results of operations may be adversely affected and we may be required to materially change the levelof our commitment to the joint venture. Also, differences in views among joint venture participants may result in delayed decisions or failures to agree onmajor issues. If these differences cause the joint ventures to deviate from their business plans, our results of operations could be adversely affected.Risks Related to Our Financial ConditionOur required capital expenditures can be complex, may experience delays or other difficulties, and the costs may exceed our estimates.Our capital expenditures generally consist of expenditures to maintain and improve existing equipment, facilities and properties, and substantialinvestments in new or expanded equipment, facilities and properties. Execution of these capital expenditures can be complex, and commencement ofproduction requires start-up, commission and certification of product quality by our customers, which may impact the expected output and timing of sales ofproduct from such facilities. Construction of large chemical operations is subject to numerous risks and uncertainties, including, among others, the ability tocomplete a project on a timely basis and in accordance with the estimated budget for such project and our ability to estimate future demand for our products.In addition, our returns on these capital expenditures may not meet our expectations.Future capital expenditures may be significantly higher, depending on the investment requirements of each of our business lines, and may also varysubstantially if we are required to undertake actions to compete with new technologies in our industry. We may not have the capital necessary to undertakethese capital investments. If we are unable to do so, we may not be able to effectively compete in some of our markets.18Albemarle Corporation and Subsidiaries We will need a significant amount of cash to service our indebtedness and our ability to generate cash depends on many factors beyond our control.Our ability to generate sufficient cash flow from operations or use existing cash balances to make scheduled payments on our debt depends on a rangeof economic, competitive and business factors, many of which are outside our control. Our business may not generate sufficient cash flow from operations toservice our debt obligations. If we are unable to service our debt obligations, we may need to refinance all or a portion of our indebtedness on or beforematurity, reduce or delay capital expenditures, sell assets or raise additional equity. We may not be able to refinance any of our indebtedness, sell assets orraise additional equity on commercially reasonable terms or at all, which could cause us to default on our obligations and impair our liquidity. Our inabilityto generate sufficient cash flow or use existing cash balances to satisfy our debt obligations, or to refinance our obligations on commercially reasonableterms, could have a material adverse effect on our business and financial condition.Restrictive covenants in our debt instruments may adversely affect our business.Our senior credit facilities and the indentures governing our senior notes contain select restrictive covenants. These covenants provide constraints onour financial flexibility. The failure to comply with these or other covenants governing other indebtedness, including indebtedness incurred in the future,could result in an event of default, which, if not cured or waived, could have a material adverse effect on our business, financial condition and results ofoperations, including cross-defaults to other debt facilities. See “Financial Condition and Liquidity—Long-Term Debt” in Item 7. Management’s Discussionand Analysis of Financial Condition and Results of Operations.Changes in credit ratings issued by nationally recognized statistical rating organizations could adversely affect our cost of financing, the market price ofour securities and our debt service obligations.Credit rating agencies rate our debt securities on factors that include our operating results, actions that we take, their view of the general outlook for ourindustry and their view of the general outlook for the economy. Actions taken by the rating agencies can include maintaining, upgrading or downgrading thecurrent rating or placing us on a watch list for possible future downgrades. Downgrading the credit rating of our debt securities or placing us on a watch listfor possible future downgrades would likely increase our cost of future financing, limit our access to the capital markets and have an adverse effect on themarket price of our securities.Borrowings under a portion of our debt facilities bear interest at floating rates, and are subject to adjustment based on the ratings of our seniorunsecured long-term debt. The downgrading of any of our ratings or an increase in any of the benchmark interest rates would result in an increase of theinterest expense on our variable rate borrowings.We are exposed to fluctuations in currency exchange rates, which may adversely affect our operating results and net income.We conduct our business and incur costs in the local currency of most of the countries in which we operate. Changes in exchange rates between foreigncurrencies and the U.S. Dollar will affect the recorded levels of our assets, liabilities, net sales, cost of goods sold and operating margins and could result inexchange losses. The primary currencies to which we have exposure are the E.U. Euro, Japanese Yen, Chinese Renminbi, South Korean Won, AustralianDollar, Chilean Peso and Taiwan Dollar. Exchange rates between these currencies and the U.S. Dollar in recent years have fluctuated significantly and may doso in the future. With respect to our potential exposure to foreign currency fluctuations and devaluations, for the year ended December 31, 2018,approximately 32% of our net sales were denominated in currencies other than the U.S. Dollar. Significant changes in these foreign currencies relative to theU.S. Dollar could also have an adverse effect on our ability to meet interest and principal payments on any foreign currency-denominated debt outstanding.In addition to currency translation risks, we incur currency transaction risks whenever one of our operating subsidiaries or joint ventures enters into either apurchase or a sales transaction using a different currency from its functional currency. Our operating results and net income may be affected by any volatilityin currency exchange rates and our ability to manage effectively our currency transaction and translation risks.Changes in, or the interpretation of, tax legislation or rates throughout the world could materially impact our results.Our effective tax rate and related tax balance sheet attributes could be impacted by changes in tax legislation throughout the world. Currently, themajority of our net sales are generated from customers located outside the U.S., and a substantial portion of our assets and employees are located outside ofthe U.S.We have not accrued income taxes or foreign withholding taxes on undistributed earnings for most non-U.S. subsidiaries, because those earnings areintended to be indefinitely reinvested in the operations of those subsidiaries. Certain tax proposals19Albemarle Corporation and Subsidiaries with respect to such earnings could substantially increase our tax expense, which would substantially reduce our income and have a material adverse effecton our results of operations and cash flows from operating activities.Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, expirations of taxholidays or rulings, changes in the assessment regarding the realization of the valuation of deferred tax assets, or changes in tax laws and regulations or theirinterpretation. Recent developments, including the European Commission’s investigations on illegal state aid, the Organisation for Economic Co-operationand Development (“OECD”) project on Base Erosion and Profit Shifting and the enacted U.S tax reform legislation commonly referred to as the U.S. Tax Cutsand Jobs Act (“TCJA”) during the fourth quarter of 2017 may result in changes to long-standing tax principles, which could adversely affect our effective taxrates or result in higher cash tax liabilities.We are subject to the regular examination of our income tax returns by various tax authorities. Examinations in material jurisdictions or changes inlaws, rules, regulations or interpretations by local taxing authorities could result in impacts to tax years open under statute or to foreign operating structurescurrently in place. We regularly assess the likelihood of adverse outcomes resulting from these examinations or changes in laws, rules, regulations orinterpretations to determine the adequacy of our provision for taxes. It is possible the outcomes from these examinations will have a material adverse effecton our financial condition and operating results.We may be subject to increased tax exposure resulting from Rockwood pre-acquisition periods. Under the terms of certain purchase agreements, third party sellers have agreed to substantially indemnify us for tax liabilities pertaining toRockwood’s periods prior to its acquisition by us. These indemnity obligations will continue generally until the applicable statutes of limitations expire. Tothe extent that such companies fail to indemnify or satisfy their obligations, or if any amount is not covered by the terms of the indemnity, our earnings couldbe negatively impacted in future periods through increased tax expense.Future events may impact our deferred tax asset position and U.S. deferred federal income taxes on undistributed earnings of international affiliates thatare considered to be indefinitely reinvested.We evaluate our ability to utilize deferred tax assets and our need for valuation allowances based on available evidence. This process involvessignificant management judgment about assumptions that are subject to change from period to period based on changes in tax laws or variances betweenfuture projected operating performance and actual results. We are required to establish a valuation allowance for deferred tax assets if we determine, based onavailable evidence at the time the determination is made, that it is more likely than not that some portion or all of the deferred tax assets will not be utilized.In making this determination, we evaluate all positive and negative evidence as of the end of each reporting period. Future adjustments (either increases ordecreases), to the deferred tax asset valuation allowance are determined based upon changes in the expected realization of the net deferred tax assets. Theutilization of our deferred tax assets ultimately depends on the existence of sufficient taxable income in either the carry-back or carry-forward periods underthe applicable tax law. Due to significant estimates used to establish the valuation allowance and the potential for changes in facts and circumstances, it isreasonably possible that we will be required to record adjustments to the valuation allowance in future reporting periods. Changes to the valuation allowanceor the amount of deferred tax liabilities could have a materially adverse effect on our business, financial condition and results of operations. Further, shouldwe change our assertion regarding the permanent reinvestment of the undistributed earnings in foreign operations, a deferred tax liability may need to beestablished.Our business and financial results may be adversely affected by various legal and regulatory proceedings.We are involved from time to time in legal and regulatory proceedings, which may be material in the future. The outcome of proceedings, lawsuits andclaims may differ from our expectations, leading us to change estimates of liabilities and related insurance receivables.Legal and regulatory proceedings, whether with or without merit, and associated internal investigations, may be time-consuming and expensive toprosecute, defend or conduct, may divert management’s attention and other resources, inhibit our ability to sell our products, result in adverse judgments fordamages, injunctive relief, penalties and fines, and otherwise negatively affect our business.Because a significant portion of our operations is conducted through our subsidiaries and joint ventures, our ability to service our debt may be dependenton our receipt of distributions or other payments from our subsidiaries and joint ventures.A significant portion of our operations is conducted through our subsidiaries and joint ventures. As a result, our ability to service our debt may bepartially dependent on the earnings of our subsidiaries and joint ventures and the payment of those20Albemarle Corporation and Subsidiaries earnings to us in the form of dividends, loans or advances and through repayment of loans or advances from us. Payments to us by our subsidiaries and jointventures are contingent upon our subsidiaries’ or joint ventures’ earnings and other business considerations and may be subject to statutory or contractualrestrictions. In addition, there may be significant tax and other legal restrictions on the ability of our non-U.S. subsidiaries or joint ventures to remit money tous.Although our pension plans currently meet minimum funding requirements, events could occur that would require us to make significant contributions tothe plans and reduce the cash available for our business.We have several defined benefit pension plans around the world, including in the U.S., U.K., Germany, Belgium and Japan. We are required to makecash contributions to our pension plans to the extent necessary to comply with minimum funding requirements imposed by the various countries’ benefit andtax laws. The amount of any such required contributions will be determined annually based on an actuarial valuation of the plans as performed by the plans’actuaries.In previous years, we have made voluntary contributions to our U.S. qualified defined benefit pension plans. We anticipate approximately $7.0 millionof required cash contributions during 2019 for our defined benefit pension plans. Additional voluntary pension contributions in and after 2019 may varydepending on factors such as asset returns, interest rates, and legislative changes. The amounts we may elect or be required to contribute to our pension plansin the future may increase significantly. These contributions could be substantial and would reduce the cash available for our business.Further, an economic downturn or recession or market disruption in the capital and credit markets may adversely impact the value of our pension planassets, our results of operations, our statement of changes in stockholders’ equity and our liquidity. Our funding obligations could change significantly basedon the investment performance of the pension plan assets and changes in actuarial assumptions for local statutory funding valuations. Any deterioration ofthe capital markets or returns available in such markets may negatively impact our pension plan assets and increase our funding obligations for one or moreof these plans and negatively impact our liquidity. We cannot predict the impact of this or any further market disruption on our pension funding obligations.We may not be able to consummate future acquisitions or integrate acquisitions into our business, which could result in unanticipated expenses and losses.We believe that our customers are increasingly looking for strong, long-term relationships with a few key suppliers that help them improve productperformance, reduce costs, and support new product development. To satisfy these growing customer requirements, our competitors have been consolidatingwithin product lines through mergers and acquisitions.As part of our business growth strategy, we have acquired businesses and entered into joint ventures in the past and intend to pursue acquisitions andjoint venture opportunities in the future. Our ability to implement this component of our growth strategy will be limited by our ability to identify appropriateacquisition or joint venture candidates and our financial resources, including available cash and borrowing capacity. The expense incurred in consummatingacquisitions or entering into joint ventures, the time it takes to integrate an acquisition or our failure to integrate businesses successfully, could result inunanticipated expenses and losses. Furthermore, we may not be able to realize any of the anticipated benefits from acquisitions or joint ventures.The process of integrating acquired operations into our existing operations may result in unforeseen operating difficulties and may require significantfinancial resources that would otherwise be available for the ongoing development or expansion of existing operations. Some of the risks associated with theintegration of acquisitions include:•potential disruption of our ongoing business and distraction of management;•unforeseen claims and liabilities, including unexpected environmental exposures;•unforeseen adjustments, charges and write-offs;•problems enforcing the indemnification obligations of sellers of businesses or joint venture partners for claims and liabilities;•unexpected losses of customers of, or suppliers to, the acquired business;•difficulty in conforming the acquired businesses’ standards, processes, procedures and controls with our operations;•in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic,currency, political and regulatory risks associated with specific countries;•variability in financial information arising from the implementation of purchase price accounting;•inability to coordinate new product and process development;21Albemarle Corporation and Subsidiaries •loss of senior managers and other critical personnel and problems with new labor unions and cultural challenges associated with integratingemployees from the acquired company into our organization; and•challenges arising from the increased scope, geographic diversity and complexity of our operations.We may continue to expand our business through acquisitions and we may incur additional indebtedness, including indebtedness related to acquisitions.We have historically expanded our business primarily through acquisitions. A part of our business strategy is to continue to grow through acquisitionsthat complement our existing technologies and accelerate our growth. Our credit facilities have limited financial maintenance covenants. In addition, theindenture and other agreements governing our senior notes do not limit our ability to incur additional indebtedness in connection with acquisitions orotherwise. As a result, we may incur substantial additional indebtedness in connection with acquisitions.Any such additional indebtedness and the related debt service obligations could have important consequences and risks for us, including:•reducing flexibility in planning for, or reacting to, changes in our businesses, the competitive environment and the industries in which we operate,and to technological and other changes;•lowering credit ratings;•reducing access to capital and increasing borrowing costs generally or for any additional indebtedness to finance future operating and capitalexpenses and for general corporate purposes;•reducing funds available for operations, capital expenditures, share repurchases, dividends and other activities; and•creating competitive disadvantages relative to other companies with lower debt levels.If our goodwill, intangible assets or long-lived assets become impaired, we may be required to record a significant charge to earnings.Under U.S. Generally Accepted Accounting Principles (“GAAP”), we review our intangible assets and long-lived assets for impairment when events orchanges in circumstances indicate the carrying value may not be recoverable. Goodwill is tested for impairment on October 31 of each year, or morefrequently if required. Factors that may be considered a change in circumstances, indicating that the carrying value of our goodwill, intangible assets or long-lived assets may not be recoverable, include, but are not limited to, a decline in our stock price and market capitalization, reduced future cash flow estimates,and slower growth rates in our industry. We may be required to record a significant charge in our financial statements during the period in which anyimpairment of our goodwill, intangible assets or long-lived assets is determined, negatively impacting our results of operations and financial condition.Item 1B.Unresolved Staff Comments.NONEItem 2.Properties.We operate globally, with our principal executive offices located in Charlotte, NC, our corporate office located in Baton Rouge, LA and regionalshared services offices located in Budapest, Hungary and Dalian, China. All of these properties are leased. We and our affiliates also operate regional salesand administrative offices in various locations throughout the world, which are generally leased.We believe that our production facilities, research and development facilities, and sales and administrative offices are generally well maintained,effectively used and are adequate to operate our business. During 2018, the Company’s manufacturing plants operated at approximately 78% capacity, in theaggregate.Set forth below is information regarding our significant production facilities operated by us and our affiliates:Location Business Segment Principal Use Owned/LeasedAmsterdam, theNetherlands Catalysts Production of refinery catalysts, research and productdevelopment activities Owned Baton Rouge,Louisiana Bromine Specialties Research and product development activities, and productionof flame retardants Leased 22Albemarle Corporation and Subsidiaries Location Business Segment Principal Use Owned/LeasedBitterfeld, Germany Catalysts Refinery catalyst regeneration, rejuvenation, and sulfiding Owned by Eurecat S.A., a joint ventureowned 50% by each of Axens Group andus Greenbushes,Australia Lithium Production of lithium spodumene minerals and lithiumconcentrate Owned by Windfield Holdings Pty Ltd, ajoint venture in which we own 49%, andSichuan Tianqi Lithium Industries Inc.which owns the remaining interest Jubail, Saudi Arabia Catalysts Manufacturing and marketing of organometallics Owned by Saudi OrganometallicChemicals Company LLC, a joint ventureowned 50% by each of Saudi SpecialtyChemicals Company (a SABIC affiliate)and us Kings Mountain,North Carolina Lithium Production of technical and battery grade lithium hydroxide,lithium salts and battery grade lithium metal products Owned La Negra, Chile Lithium Production of lithium carbonate and lithium chloride Owned Langelsheim, Germany Lithium Production of butyllithium, lithium chloride, specialtyproducts, lithium hydrides, cesium and special metals Owned Louvain-la-Neuve,Belgium Lithium; Bromine Specialties;Catalysts; All Other Regional offices and research and customer technical serviceactivities Owned La Voulte, France Catalysts Refinery catalysts regeneration and treatment, research anddevelopment activities Owned by Eurecat S.A., a joint ventureowned 50% by each of Axens Group andus Magnolia, Arkansas Bromine Specialties Production of flame retardants, bromine, inorganic bromides,agricultural intermediates and tertiary amines Owned McAlester, Oklahoma Catalysts Refinery catalyst regeneration, rejuvenation, pre-reclaim burnoff, as well as specialty zeolites and additives marketingactivities Owned by Eurecat S.A., a joint ventureowned 50% by each of Axens Group andus Meishan, China Lithium Production of lithium carbonate and lithium hydroxide Owned Mobile, Alabama Catalysts Production of tin stabilizers Owned by PMC Group, Inc. whichoperates the plant for Stannica LLC, ajoint venture owned 50% by each ofPMC Group Inc. and us New Johnsonville,Tennessee Lithium Production of specialty products Owned Niihama, Japan Catalysts Production of refinery catalysts Leased by Nippon Ketjen CompanyLimited, a joint venture owned 50% byeach of Sumitomo Metal MiningCompany Limited and us Pasadena, Texas Catalysts; All Other Production of aluminum alkyls, alkenyl succinic anhydride,orthoalkylated anilines, and other specialty chemicals Owned Pasadena, Texas Catalysts Production of refinery catalysts, research and developmentactivities Owned 23Albemarle Corporation and Subsidiaries Location Business Segment Principal Use Owned/LeasedPasadena, Texas Catalysts Refinery catalysts regeneration services Owned by Eurecat U.S. Incorporated, ajoint venture in which we own a 57.5%interest and a consortium of entities invarious proportions owns the remaininginterest Safi, Jordan Bromine Specialties Production of bromine and derivatives and flame retardants Owned and leased by JBC, a jointventure owned 50% by each of ArabPotash Company Limited and us Salar de Atacama,Chile Lithium Production of lithium brine and potash Owned; however ownership will revert tothe Chilean government once we havesold all remaining amounts under ourcontract with the Chilean governmentpursuant to which we obtain lithium brinein Chile Santa Cruz, Brazil Catalysts Production of catalysts, research and product developmentactivities Owned by Fábrica Carioca deCatalisadores S.A, a joint venture owned50% by each of Petrobras Química S.A.—PETROQUISA and us Silver Peak, Nevada Lithium Production of lithium brine and lithium carbonate Owned South Haven,Michigan All Other Production of custom fine chemistry products includingpharmaceutical actives Owned Taichung, Taiwan Lithium Production of butyllithium Owned Takaishi City, Osaka,Japan Catalysts Production of aluminum alkyls Owned by Nippon Aluminum Alkys, ajoint venture owned 50% by each ofMitsui Chemicals, Inc. and us Twinsburg, Ohio Bromine Specialties Production of bromine-activated carbon Leased Tyrone, Pennsylvania All Other Production of custom fine chemistry products, agriculturalintermediates, performance polymer products and research anddevelopment activities Owned Xinyu, China Lithium Production of lithium carbonate and lithium hydroxide OwnedItem 3.Legal Proceedings.We are involved in litigation incidental to our business and are a party to a number of legal actions and claims, various governmental proceedings andprivate civil lawsuits, including, but not limited to, those related to environmental and hazardous material exposure matters, product liability, and breach ofcontract. Some of the legal proceedings include claims for compensatory as well as punitive damages. While the final outcome of these matters cannot bepredicted with certainty, considering, among other things, the legal defenses available and liabilities that have been recorded along with applicableinsurance, it is currently the opinion of management that none of these pending items will have a material adverse effect on our financial condition, results ofoperations or liquidity.As previously reported in 2018, following receipt of information regarding potential improper payments being made by third party sales representativesof our Refining Solutions business, within our Catalysts segment, we promptly retained outside counsel and forensic accountants to investigate potentialviolations of the Company’s Code of Conduct, the FCPA, and other potentially applicable laws. Based on this internal investigation, we have voluntarilyself-reported potential issues relating to the use of third party sales representatives in our Refining Solutions business, within our Catalysts segment, to theDOJ, the SEC, and DPP, and are cooperating with the DOJ, the SEC, and DPP in their review of these matters. In connection with our internal investigation,we have implemented, and are continuing to implement, appropriate remedial measures.At this time, we are unable to predict the duration, scope, result or related costs associated with the investigations by the DOJ, the SEC, or DPP. We alsoare unable to predict what, if any, action may be taken by the DOJ, the SEC or DPP, or what24Albemarle Corporation and Subsidiaries penalties or remedial actions they may seek to impose. Any determination that our operations or activities are not in compliance with existing laws orregulations could result in the imposition of fines, penalties, disgorgement, equitable relief, or other losses. We do not believe, however, that any such fines,penalties, disgorgement, equitable relief or other losses would have a material adverse effect on our financial condition or liquidity.An unexpected adverse resolution of one or more of these items, however, could have a material adverse effect on our financial condition, results ofoperations or liquidity in that particular period.Item 4.Mine Safety Disclosures.Not applicable.Executive Officers of the Registrant.The names, ages and biographies of our executive officers, as of February 20, 2019, are set forth below. The term of office of each officer is until themeeting of the Board of Directors following the next annual shareholders’ meeting (May 7, 2019).Name Age PositionLuther C. Kissam IV 54 Chairman, President and Chief Executive OfficerKaren G. Narwold 59 Executive Vice President, Chief Administrative Officer, Corporate SecretaryScott A. Tozier 53 Executive Vice President, Chief Financial OfficerDonald J. LaBauve, Jr. 52 Vice President, Corporate Controller, Chief Accounting OfficerLuther C. Kissam IV was elected as Chairman of the Board of Directors in November 2016. Mr. Kissam was first elected to our Board of Directorseffective November 2011. He was elected as Chief Executive Officer effective September 2011 and as our President effective May 2013. Previously, Mr.Kissam served as President from March 2010 until March 2012, Executive Vice President, Manufacturing, Law and HS&E from May 2009 until March 2010,and as Senior Vice President, Manufacturing and Law and Corporate Secretary from January 2008 until May 2009. Mr. Kissam joined us in October 2003 andserved as Vice President, General Counsel and Corporate Secretary from that time until December 2005, when he was promoted to Senior Vice President,General Counsel and Corporate Secretary. Before joining us, Mr. Kissam served as Vice President, General Counsel and Secretary of Merisant Company(manufacturer and marketer of sweetener and consumer food products), having previously served as Associate General Counsel of Monsanto Company(provider of agricultural products and solutions). Mr. Kissam serves on the Advisory Committee of the Specialty Products Division at DowDupont since June2018.Karen G. Narwold joined us in September of 2010 and currently serves as Executive Vice President, Chief Administrative Officer, General Counseland Corporate Secretary. Ms. Narwold has over 25 years of legal, management and business experience with global industrial and chemical companies. Afterfive years in private practice, she served as Vice President, General Counsel, Human Resources and Secretary of GrafTech International Ltd., a global graphiteand carbon manufacturer and former subsidiary of Union Carbide. She then served as Vice President and Strategic Counsel of Barzel Industries, a NorthAmerican steel processor and distributor. Ms. Narwold resigned from Barzel in November 2009, after Barzel reached an agreement to sell substantially all ofits assets in a planned transaction that was consummated in a sale pursuant to Section 363 of the U.S. Bankruptcy Code. Prior to joining Albemarle,Ms. Narwold served as Special Counsel with Kelley Drye & Warren LLP and with Symmetry Advisors where she worked in the areas of strategic, financial andcapital structure planning and restructuring for public and private companies. Ms. Narwold was appointed as a member of the Board of Directors of IngevityCorporation on February 20, 2019.Scott A. Tozier was elected as our Executive Vice President and Chief Financial Officer effective January 2011. Mr. Tozier also served as our ChiefAccounting Officer from January 2013 until February 2014. Mr. Tozier has over 25 years of diversified international financial management experience.Following four years of assurance services with the international firm Ernst & Young, LLP, Mr. Tozier joined Honeywell International, Inc., where his 16 yearcareer spanned senior financial positions in the U.S., Australia and Europe. His roles of increasing responsibilities included management of financialplanning, analysis and reporting, global credit and treasury services and Chief Financial Officer of Honeywell’s Transportation Systems, Turbo Technologiesand Building Solutions divisions. Most recently, Mr. Tozier served as Vice President of Finance, Operations and Transformation of Honeywell International,Inc. Mr. Tozier has served as a member of the board of directors of Garrett Motion Inc. since October 2018.Donald J. LaBauve Jr. was elected Vice President, Corporate Controller effective February 2013, and Chief Accounting Officer effective February2014, after having previously served as Vice President, Finance - Business Operations since April25Albemarle Corporation and Subsidiaries 2009. Mr. LaBauve served as Chief Financial Officer, Fine Chemistry from April 2007 until April 2009, and prior to that time held the role of Controller,Polymer Solutions from January 2006 through March 2007. Since joining the Company in 1990, Mr. LaBauve has held various staff and leadership positionsof increasing responsibility within the finance function, including an assignment to our European headquarters in Belgium in April 2000, where he held theregional finance leadership role from July 2002 through June 2005.PART IIItem 5.Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.Our common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “ALB.” There were 105,753,864 shares of common stock heldby 2,444 shareholders of record as of February 20, 2019. On February 26, 2019, we declared a dividend of $0.3675 per share of common stock, payableApril 1, 2019. We expect to continue to declare and pay dividends to our shareholders in the future, however, dividends are declared solely at the discretionof our Board of Directors and there is no guarantee that the Board of Directors will continue to declare dividends in the future.The following table summarizes our repurchases of equity securities for the three-month period ended December 31, 2018:Period Total Number ofShares Repurchased Average Price PaidPer Share Total Number ofShares Repurchasedas Part of PubliclyAnnounced Plans orPrograms(a) Maximum Numberof Shares that MayYet Be RepurchasedUnder the Plans orProgramsOctober 1, 2018 to October 31, 2018 — $— — 7,993,299November 1, 2018 to November 30, 2018 — — — 7,993,299December 1, 2018 to December 31, 2018(b) 597,036 96.83 597,036 7,396,263Total 597,036 597,036 (a)Our stock repurchase plan, which was authorized by our Board of Directors, permits the Company to repurchase up to a maximum of 15,000,000 shares. The stock repurchaseplan will expire when we have repurchased all shares authorized for repurchase thereunder, unless the stock repurchase plan is earlier terminated by action of our Board ofDirectors or further shares are authorized for repurchase.(b)In the third quarter of 2018, we paid $250 million under the accelerated share repurchase (“ASR”) agreement. Under the terms of the agreement, in December 2018, the ASRagreement was completed and we received and retired a final settlement of 597,036 shares. The Average Price Paid Per Share was calculated using the daily Rule 10b-18volume-weighted average prices of our common stock over the term of the ASR agreement, less an agreed discount. See Note 5, “Earnings Per Share,” to our consolidatedfinancial statements included in Part II, Item 8 of this report.Stock Performance GraphThe graph below shows the cumulative total shareholder return assuming the investment of $100 in our common stock on December 31, 2013 and thereinvestment of all dividends thereafter. The information contained in the graph below is furnished and therefore not to be considered “filed” with the SEC,and is not incorporated by reference into any document that incorporates this Annual Report on Form 10-K by reference.26Albemarle Corporation and Subsidiaries Item 6.Selected Financial Data.The information for the five years ended December 31, 2018, is contained in the “Five-Year Summary” included in Part IV, Item 15, Exhibit 99.1 andincorporated herein by reference.Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations.Forward-looking StatementsSome of the information presented in this Annual Report on Form 10-K, including the documents incorporated by reference, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on our currentexpectations, which are in turn based on assumptions that we believe are reasonable based on our current knowledge of our business and operations. We haveused words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “would,” “will” and variations of such words andsimilar expressions to identify such forward-looking statements.These forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficultto predict and many of which are beyond our control. There can be no assurance that our actual results will not differ materially from the results andexpectations expressed or implied in the forward-looking statements. Factors that could cause actual results to differ materially from the outlook expressed orimplied in any forward-looking statement include, without limitation, information related to:•changes in economic and business conditions;•changes in financial and operating performance of our major customers and industries and markets served by us;•the timing of orders received from customers;•the gain or loss of significant customers;•competition from other manufacturers;•changes in the demand for our products or the end-user markets in which our products are sold;•limitations or prohibitions on the manufacture and sale of our products;•availability of raw materials;•increases in the cost of raw materials and energy, and our ability to pass through such increases to our customers;•changes in our markets in general;27Albemarle Corporation and Subsidiaries •fluctuations in foreign currencies;•changes in laws and government regulation impacting our operations or our products;•the occurrence of regulatory actions, proceedings, claims or litigation;•the occurrence of cyber-security breaches, terrorist attacks, industrial accidents, natural disasters or climate change;•hazards associated with chemicals manufacturing;•the inability to maintain current levels of product or premises liability insurance or the denial of such coverage;•political unrest affecting the global economy, including adverse effects from terrorism or hostilities;•political instability affecting our manufacturing operations or joint ventures;•changes in accounting standards;•the inability to achieve results from our global manufacturing cost reduction initiatives as well as our ongoing continuous improvement andrationalization programs;•changes in the jurisdictional mix of our earnings and changes in tax laws and rates;•changes in monetary policies, inflation or interest rates that may impact our ability to raise capital or increase our cost of funds, impact theperformance of our pension fund investments and increase our pension expense and funding obligations;•volatility and uncertainties in the debt and equity markets;•technology or intellectual property infringement, including through cyber-security breaches, and other innovation risks;•decisions we may make in the future;•the ability to successfully execute, operate and integrate acquisitions and divestitures; and•the other factors detailed from time to time in the reports we file with the SEC.We assume no obligation to provide revisions to any forward-looking statements should circumstances change, except as otherwise required bysecurities and other applicable laws. The following discussion should be read together with our consolidated financial statements and related notes includedin this Annual Report on Form 10-K.The following is a discussion and analysis of our results of operations for the years ended December 31, 2018, 2017 and 2016. A discussion of ourconsolidated financial condition and sources of additional capital is included under a separate heading “Financial Condition and Liquidity” on page 49.OverviewWe are a leading global developer, manufacturer and marketer of highly-engineered specialty chemicals that are designed to meet our customers’ needsacross a diverse range of end markets. The end markets we serve include energy storage, petroleum refining, consumer electronics, construction, automotive,lubricants, pharmaceuticals, crop protection and custom chemistry services. We believe that our commercial and geographic diversity, technical expertise,innovative capability, flexible, low-cost global manufacturing base, experienced management team and strategic focus on our core base technologies willenable us to maintain leading market positions in those areas of the specialty chemicals industry in which we operate.Secular trends favorably impacting demand within the end markets that we serve combined with our diverse product portfolio, broad geographicpresence and customer-focused solutions will continue to be key drivers of our future earnings growth. We continue to build upon our existing greensolutions portfolio and our ongoing mission to provide innovative, yet commercially viable, clean energy products and services to the marketplace. Webelieve our disciplined cost reduction efforts and ongoing productivity improvements, among other factors, position us well to take advantage ofstrengthening economic conditions as they occur, while softening the negative impact of the current challenging global economic environment.2018 Highlights•In the first quarter, we increased our quarterly dividend for the 24th consecutive year, to $0.335 per share.•We received approval from CORFO for an increase in our lithium quota to sustainably increase lithium production in Chile to as much as 145,000metric tons of lithium carbonate equivalent annually through 2043.•On April 3, 2018, we completed the Polyolefin Catalysts Divestiture to W.R. Grace & Co. for net cash proceeds of approximately $413.6 million andrecorded a gain of $210.4 million before income taxes related to the sale of this business.28Albemarle Corporation and Subsidiaries •In June 2018, we entered into a revolving, unsecured credit agreement that provides for borrowings of up to $1.0 billion and matures on June 21, 2023(the “2018 Credit Agreement”) to replace our existing revolving, unsecured credit agreement.•We announced our exclusive collaboration with DuPont as the primary hydroprocessing catalyst manufacturer for the DuPont™ IsoTherming®hydroprocessing technology, making clean fuels production more cost efficient for refiners. IsoTherming® is an innovative hydroprocessingtechnology that can lower capital and operational costs.•We launched XPLORE™, a new platform for the clean transportation fuels market. The XPLORE catalyst platform is the result of breakthroughresearch in hyrdroprocessing catalyst technology allowing refineries to produce clean transportation fuels in a more efficient way. The new PULSARfamily, with KF 787 PULSAR™ as its first grade product, is a cutting-edge, premium catalyst line, designed for the production of clean diesel.•We entered into two separate $250 million ASR agreements in May and August 2018, respectively. We completed these ASR agreements inSeptember and December 2018, respectively, receiving and retiring a total of 5,262,654 shares.•We successfully completed the commissioning of our La Negra facility in Chile (“La Negra II”), which has a nameplate capacity of 20,000 metric tonsof lithium carbonate. Upon completion of the ramp-up of La Negra II, the total capacity of our facilities in La Negra, Chile will be 44,000 metric tons.•We completed pre-commissioning activities related to our new facility in Xinyu, China and began start-up activities. This expansion will result in anadditional 20,000 metric tons of lithium hydroxide, bringing total site capacity to 30,000 metric tons, with significant volumes expected from thenew unit in 2019.•We entered into a definitive agreement to acquire a 50% interest in Mineral Resources Limited's Wodgina Project in Western Australia and form ajoint venture with Mineral Resources Limited to own and operate the Wodgina Project to produce spodumene concentrate and battery grade lithiumhydroxide, for a purchase price of $1.15 billion. The joint venture will ultimately construct a battery grade lithium hydroxide plant at the resourcesite. This transaction is subject to regulatory approvals and other customary closing conditions, and is expected to close in the second half of 2019.•We received the required environmental approvals from Australian federal and state government for the Company’s proposed Kemerton lithiumhydroxide conversion site in Western Australia. This plant will have an initial capacity of 60,000 metric tons of lithium hydroxide with an ability toexpand to 100,000 metric tons over time. The commissioning of this site is expected to start in stages during the course of 2021.•In December 2018, we exercised an $18 million option to purchase undeveloped land with access to a lithium resource in Antofalla, within theCatamarca Province of Argentina from Bolland Minera S.A. We believe this asset could be certified as the largest lithium resource in Argentina.•We achieved earnings of $693.6 million during 2018 as compared to $54.9 million for 2017. Cash flows from operations in 2018 were $546.2 million.Earnings for 2018 included a $169.9 million after-tax gain from the Polyolefin Catalysts Divestiture, while earnings for 2017 were negativelyimpacted by the $366.9 million net income tax expense resulting from the enactment of the TCJA. In addition, earnings for 2018 includes pensionand other postretirement benefit (“OPEB”) actuarial losses of $10.6 million after income taxes, compared to pension and OPEB actuarial gains of $7.3million after income taxes in 2017.OutlookThe current global business environment presents a diverse set of opportunities and challenges in the markets we serve. In particular, the market forlithium battery and energy storage continues to accelerate, providing the opportunity to continue to develop high quality and innovative products whilemanaging the high cost of expanding capacity. The other markets we serve continue to present various opportunities for value and growth as we havepositioned ourselves to manage the impact on our business of changing global conditions, such as slow and uneven global growth, currency exchangevolatility, crude oil price fluctuation, a dynamic pricing environment, an ever-changing landscape in electronics, the continuous need for cutting edgecatalysts and technology by our refinery customers and increasingly stringent environmental standards. Amidst these dynamics, we believe our businessfundamentals are sound and that we are strategically well-positioned as we remain focused on increasing sales volumes, optimizing and improving the valueof our portfolio primarily through pricing and product development, managing costs and delivering value to our customers and shareholders. We believe thatour businesses remain well-positioned to capitalize on new business opportunities and long-term trends driving growth within our end markets and torespond quickly to changes in economic conditions in these markets.Lithium: We expect a similar rate of growth in 2019 as in 2018 in Lithium, led by continued strong demand in battery-grade applications, priceimprovement and increased conversion capacity.29Albemarle Corporation and Subsidiaries On a longer term basis, we believe that demand for lithium will continue to grow as new lithium applications advance and the use of plug-in hybridelectric vehicles and full battery electric vehicles increases. This demand for lithium is supported against a favorable backdrop of steadily declining lithiumion battery costs, increasing battery performance and an increasingly favorable global public policy toward acceptance of e-mobility/renewable energyusage. Our long-term outlook is also bolstered by our successful negotiation of long-term supply agreements with our key strategic customers, reflecting ourstanding as a preferred global lithium partner, highlighted by our scale, access to geographically diverse, low-cost resource base and long-term focus onexecution.Bromine Specialties: We expect to see continued growth in net sales and profitability in 2019, due to healthy demand and pricing for our flameretardants and other derivatives. However, with sustained low oil prices, we expect stable, albeit low, drilling completion fluid demand throughout the year.While it is possible oil prices could continue to rebound some in 2019, the short-term impact will be to increase raw material costs. Offshore well completionslag oil pricing, so any benefit in completion fluid volumes would likely extend throughout the year.On a longer term basis, we continue to believe that improving global standards of living, widespread digitization, increasing demand for datamanagement capacity and the potential for increasingly stringent fire safety regulations in developing markets are likely to drive continued demand for firesafety products. Absent an increase in regulatory pressure on offshore drilling, we would expect this business to follow a long-term growth trajectory once oilprices recover from recent levels as we expect that deep water drilling will continue to increase around the world. We are focused on profitably growing ourglobally competitive bromine and derivatives production network to serve all major bromine consuming products and markets. We believe the globalsupply/demand gap could tighten as demand for existing and possible new uses of bromine expands over time. The combination of solid, long-term businessfundamentals, with our strong cost position, product innovations and effective management of raw material costs will enable us to manage our businessthrough end market challenges and to capitalize on opportunities that are expected with favorable market trends in select end markets.Catalysts: We expect to see continued headwinds from rising raw material costs in both our CFT and FCC businesses, similar to 2018.On a longer term basis, we believe increased global demand for transportation fuels, new refinery start-ups and ongoing adoption of cleaner fuels willbe the primary drivers of growth in our Catalysts business. We believe delivering superior end-use performance continues to be the most effective way tocreate sustainable value in the refinery catalysts industry. We believe our technologies continue to provide significant performance and financial benefits torefiners challenged to meet tighter regulations around the world, including those managing new contaminants present in North America tight oil, and those inthe Middle East and Asia seeking to use heavier feedstock while pushing for higher propylene yields. Longer term, we believe that the global crude supplywill get heavier and more sour, a trend that bodes well for our catalysts portfolio. With superior technology and production capacities, and expected growthin end market demand, we believe that Catalysts remains well-positioned for the future. In PCS, we expect growth in our organometallic business due togrowing global demand for plastics driven by rising standards of living and infrastructure spending.On April 3, 2018, we completed the Polyolefin Catalysts Divestiture to W.R. Grace & Co. for net cash proceeds of approximately $413.6 million.All Other: The fine chemistry services business will continue to be reported outside the Company’s reportable segments as it does not fit in theCompany’s core businesses. We expect the near future to be impacted by a challenging agriculture industry environment and the timing of customer orders inpharmaceuticals. We continue to work to reinvigorate the pipeline of new products and services to these markets.Corporate: We continue to focus on cash generation, working capital management and process efficiencies. We expect our global effective tax rate for2019 to be between 23% and 24%; however, our rate will vary based on the locales in which income is actually earned and remains subject to potentialvolatility from changing legislation in the U.S., including the TCJA, and other tax jurisdictions.In the first quarter of 2019, we increased our quarterly dividend rate to $0.3675 per share. During 2018, we received and retired approximately 5.3million shares of our common stock under our share repurchase program and ASR agreements, and we may periodically repurchase shares in the future on anopportunistic basis as approved by our share repurchase program.Actuarial gains and losses related to our defined benefit pension and OPEB plan obligations are reflected in Corporate as a component of non-operatingpension and OPEB plan costs under mark-to-market accounting. Results for the year ended30Albemarle Corporation and Subsidiaries December 31, 2018 include an actuarial loss of $14.0 million ($10.6 million after income taxes), as compared to a gain of $11.4 million ($7.3 million afterincome taxes) for the year ended December 31, 2017.We remain committed to evaluating the merits of any opportunities that may arise for acquisitions or other business development activities that willcomplement our business footprint. Additional information regarding our products, markets and financial performance is provided at our web site,www.albemarle.com. Our web site is not a part of this document nor is it incorporated herein by reference.Results of OperationsThe following data and discussion provides an analysis of certain significant factors affecting our results of operations during the periods included inthe accompanying consolidated statements of income.31Albemarle Corporation and Subsidiaries Selected Financial DataYear Ended December 31, Percentage Change 2018 2017 2016 2018 vs. 2017 2017 vs. 2016 (In thousands, except percentages and per share amounts)NET SALES$3,374,950 $3,071,976 $2,677,203 10 % 15 %Cost of goods sold2,157,694 1,965,700 1,706,897 10 % 15 %GROSS PROFIT1,217,256 1,106,276 970,306 10 % 14 %GROSS PROFIT MARGIN36.1% 36.0% 36.2% Selling, general and administrative expenses446,090 450,286 353,765 (1)% 27 %Research and development expenses70,054 84,330 80,475 (17)% 5 %Gain on sales of businesses, net(210,428) — (122,298) * (100)%Acquisition and integration related costs— — 57,384 — % (100)%OPERATING PROFIT911,540 571,660 600,980 59 % (5)%OPERATING PROFIT MARGIN27.0% 18.6% 22.4% Interest and financing expenses(52,405) (115,350) (65,181) (55)% 77 %Other expenses, net(64,434) (9,512) (20,535) 577 % (54)%INCOME FROM CONTINUING OPERATIONSBEFORE INCOME TAXES AND EQUITY IN NETINCOME OF UNCONSOLIDATED INVESTMENTS794,701 446,798 515,264 78 % (13)%Income tax expense144,826 431,817 96,263 (66)% 349 %Effective tax rate18.2% 96.6% 18.7% INCOME FROM CONTINUING OPERATIONSBEFORE EQUITY IN NET INCOME OFUNCONSOLIDATED INVESTMENTS649,875 14,981 419,001 * (96)%Equity in net income of unconsolidated investments (net oftax)89,264 84,487 59,637 6 % 42 %NET INCOME FROM CONTINUING OPERATIONS739,139 99,468 478,638 643 % (79)%Income from discontinued operations (net of tax)— — 202,131 — % (100)%NET INCOME739,139 99,468 680,769 643 % (85)%Net income attributable to noncontrolling interests(45,577) (44,618) (37,094) 2 % 20 %NET INCOME ATTRIBUTABLE TO ALBEMARLECORPORATION$693,562 $54,850 $643,675 * (91)%NET INCOME FROM CONTINUING OPERATIONS ASA PERCENTAGE OF NET SALES21.9% 3.2% 17.9% Basic earnings per share: Continuing operations$6.40 $0.49 $3.93 * (88)%Discontinued operations— — 1.80 — % (100)% $6.40 $0.49 $5.73 * (91)%Diluted earnings per share: Continuing operations$6.34 $0.49 $3.90 * (87)%Discontinued operations— — 1.78 — % (100)% $6.34 $0.49 $5.68 * (91)%* Percentage calculation is not meaningful.32Albemarle Corporation and Subsidiaries Comparison of 2018 to 2017Net SalesFor the year ended December 31, 2018, we recorded net sales of $3.37 billion, a 10% increase compared to net sales of $3.07 billion for thecorresponding period of 2017. Net sales increased, including in all three reportable segments, due to $210.6 million of higher volumes, $141.0 million offavorable pricing impacts and $30.6 million of favorable currency exchange. This was partially offset by $78.9 million of net sales from the PolyolefinCatalysts Divestiture.Gross ProfitFor the year ended December 31, 2018, our gross profit increased $111.0 million, or 10%, compared to the corresponding period of 2017. Cost of goodssold for the year ended December 31, 2018 included a decrease of $13.4 million in acquisition, integration and restructuring related costs from varioussignificant projects compared to the corresponding period in 2017, and $8.8 million related to non-routine labor and compensation related costs in Chile thatare outside normal compensation arrangements. In addition, Gross profit for the year ended December 31, 2017 included a $23.1 million charge related to themarkup of inventory purchased as part of the acquisition of Jiangli New Materials and $30.4 million of gross profit from the Polyolefin Catalysts Divestiture.In addition, gross profit increased $19.6 million in Catalysts and Bromine Specialties due to the year over year impact of hurricane Harvey, which includes apartial insurance claim reimbursement of $4.2 million in 2018. Excluding the impact of these items, gross profit increased by $93.9 million, or 8.3%, due to$141.0 million in favorable pricing impacts and approximately $77 million of higher volumes, more than offsetting higher material and utility costs ofapproximately $60 million and price-related royalties of approximately $30 million. Additionally higher production costs and the negative impact ofcurrency exchange on material and production costs in foreign locations resulted in approximately $30 million in offsets. Overall, these factors contributedto a gross profit margin for the years ended December 31, 2018 and 2017 of 36.1% and 36.0%, respectively.Selling, General and Administrative ExpensesFor the year ended December 31, 2018, our selling, general and administrative (“SG&A”) expenses decreased $4.2 million, or 1%, from the year endedDecember 31, 2017. SG&A expenses for the year ended December 31, 2018 included $16.2 million of charitable contributions beyond the Company’sordinary, recurring charitable contributions, a decrease in restructuring and other costs related to several locations of $4.7 million and $3.9 million lessacquisition and integration related costs for various significant projects. The remaining decrease was primarily due to lower compensation related costs,particularly incentive compensation, and professional fees. As a percentage of net sales, SG&A expenses were 13.2% in 2018, compared to 14.7% in 2017.Research and Development ExpensesFor the year ended December 31, 2018, our R&D expenses decreased $14.3 million, or 17%, from the year ended December 31, 2017. Included in R&Dexpenses for the year ended December 31, 2017 are $5.7 million of restructuring costs related to our Lithium sites in Germany. The remaining decrease wasprimarily due to $4.5 million of R&D expenses related to the Polyolefin Catalysts Divestiture. As a percentage of net sales, R&D expenses were 2.1% in2018, compared to 2.7% in 2017.Gain on Sales of Businesses, NetThe year ended December 31, 2018 included a gain before income taxes of $210.4 million related to the Polyolefin Catalysts Divestiture, which wecompleted in the second quarter of 2018.Interest and Financing ExpensesInterest and financing expenses for the year ended December 31, 2018 decreased $62.9 million to $52.4 million from the corresponding 2017 period,due mainly to a loss on early extinguishment of debt of $52.8 million in 2017 relating to the tender premiums, fees, unamortized discounts and unamortizeddeferred financing costs from the repayment of the 3.00% Senior notes in full, €307.0 million of the 1.875% Senior notes and $174.7 million of the 4.50%Senior notes. The remaining difference is primarily related to the impact of higher capitalized interest from increased capital expenditures in 2018.Other Expenses, NetOther expenses, net, for the year ended December 31, 2018 was $64.4 million compared to $9.5 million for the corresponding 2017 period. Otherexpenses, net for 2018 included approximately $5.3 million of pension and OPEB costs (including mark-to-market actuarial losses of $14.0 million) ascompared to $16.1 million of pension and OPEB benefits33Albemarle Corporation and Subsidiaries (including mark-to-market actuarial gains of $11.4 million) in 2017. In addition, during the year ended December 31, 2018, we incurred $27.0 million oflegal expenses related to products that Albemarle no longer manufactures and a previously disposed business, $19.7 million to increase an indemnificationliability related to the settlement of an ongoing audit of a previously disposed business in Germany and $15.6 million of environmental charges related to asite formerly owned by Albemarle, partially offset by a $2.1 million gain in the fair value of our investment in private equity securities. During the year endedDecember 31, 2017, we recorded a $28.7 million reserve recorded against a note receivable in one of our European entities no longer deemed probable ofcollection, $11.0 million of charges related to previously disposed properties or businesses, partially offset by a $10.6 million gain related to the reversal ofliabilities recorded as part of purchase accounting from a previous acquisition, a $6.2 million gain related to the acquisition of the 50% interest of an equityinvestment and $1.1 million related to a reversal of a liability associated with the previous disposal of a property. The remaining change was primarily due toa decrease in foreign exchange losses totaling $0.6 million and a decrease in interest income.The mark-to-market actuarial loss in 2018 is primarily attributable to a lower return on pension plan assets in 2018 than was expected, as a result ofoverall market and investment portfolio performance. The weighted-average actual return on our U.S. and foreign pension plan assets was (4.55)% versus anexpected return of 6.73%. The mark-to-market actuarial loss in 2018 was partially offset by an increase in the weighted-average discount rate to 4.59% from4.03% for our U.S. pension plans and to 2.15% from 1.94% for our foreign pension plans to reflect market conditions as of the December 31, 2018measurement date.The mark-to-market actuarial gain in 2017 is primarily attributable to a higher return on pension plan assets in 2017 than was expected, as a result ofoverall market and investment portfolio performance. The weighted-average actual return on our U.S. and foreign pension plan assets was 14.31% versus anexpected return of 6.73%. The mark-to-market actuarial gain in 2017 was partially offset by a decrease in the weighted-average discount rate to 4.03% from4.43% for our U.S. pension plans and to 1.94% from 2.00% for our foreign pension plans to reflect market conditions as of the December 31, 2017measurement date.Income Tax ExpenseThe effective income tax rate for 2018 was 18.2% compared to 96.6% for 2017. Our effective income tax rate for 2018 was primarily affected by a taxbenefit of $42.3 million related to the refinement of the one-time transition tax during the period defined by Staff Accounting Bulletin No. 118 (“SAB 118”).In addition, our effective income tax rate was impacted by the mix of earnings in countries with differing statutory rates.Our effective income tax rate for 2017 was primarily affected by the enactment of the TCJA in December 2017. During 2017, provisional tax effects ofthe TCJA were recorded in connection with the one-time transition tax expense of $429.2 million, partially offset by the remeasurement of deferred tax assetsand liabilities due to a decrease in corporate tax rate from 35% to 21% of $62.3 million tax benefit. Exclusive of the enactment of the TCJA, the Company’seffective tax rate differs from the U.S. Federal statutory income tax rate due to the impact of earnings from outside the U.S., mainly attributable to our share ofthe income of our JBC joint venture, a Free Zones company under the laws of the Hashemite Kingdom of Jordan. In addition, income tax expense for the yearended December 31, 2017, included foreign rate changes of $16.2 million and a $5.1 million out-of-period adjustment due to changes in our deferred taxliabilities for basis differences in Chilean fixed assets, partially offset by a $10.9 million benefit from the release of valuation allowances due to a foreignrestructuring plan that was initiated during the second quarter of 2017 and a $8.8 million benefit from excess tax benefits realized from stock-basedcompensation arrangements.See Note 20, “Income Taxes” to our consolidated financial statements included in Part II, Item 8 of this report for a reconciliation of the U.S. Federalstatutory income tax rate to our effective rate for 2018 and 2017.Equity in Net Income of Unconsolidated InvestmentsEquity in net income of unconsolidated investments was $89.3 million for the year ended December 31, 2018 compared to $84.5 million in the sameperiod last year. This increase of $4.8 million was primarily due to higher equity income reported by our Lithium segment joint venture, Windfield HoldingsPty. Ltd., partially offset by a decrease in equity income in our Catalysts segment.Net Income Attributable to Noncontrolling InterestsFor the year ended December 31, 2018, net income attributable to noncontrolling interests was $45.6 million compared to $44.6 million in the sameperiod of 2017. This increase of $1.0 million was primarily due to an increase in consolidated income related to our JBC joint venture from higher salesvolumes in the current year.34Albemarle Corporation and Subsidiaries Net Income Attributable to Albemarle CorporationNet income attributable to Albemarle Corporation increased to $693.6 million for the year ended December 31, 2018, from $54.9 million for thecorresponding period of 2017. The increase is primarily due to the net impact to income tax expense of $366.9 million as a result of the enactment of theTCJA and a $52.8 million loss on early extinguishment of debt related to the repayment of senior notes recorded in 2017, as well as the after-tax gain of$169.9 million related to the Polyolefin Catalysts Divestiture in 2018. In addition, the increase was driven by favorable pricing impacts of $141.0 millionand increased sales volumes in all reportable segments, reduced acquisition and integration, and restructuring and other costs in 2018. This was partiallyoffset by $27.0 million of legal expenses related to products that Albemarle no longer manufactures and a previously disposed business, $16.2 million ofcharitable contributions beyond the Company’s ordinary, recurring charitable contributions, $15.6 million related to environmental charges related to a siteformerly owned by Albemarle recorded in 2018 and a $6.2 million gain related to the acquisition of the 50% interest of an equity investment in 2017.Other Comprehensive (Loss) Income, Net of TaxTotal other comprehensive loss, after income taxes, was $125.2 million in 2018 compared to $187.6 million in 2017. This change is primarily due tochanges in foreign currency translations. We translate our foreign subsidiary financial statements from their local currencies to U.S. Dollars. In 2018, othercomprehensive loss from foreign currency translation adjustments was $150.3 million, mainly as a result of unfavorable movements in the Euro ofapproximately $114 million, the Chinese Renminbi of approximately $14 million, the Brazilian Real of approximately $12 million, the Korean Won ofapproximately $5 million and a net unfavorable variance in various other currencies totaling approximately $5 million. Also included in total othercomprehensive loss for 2018 is a gain of $25.8 million in connection with the revaluation of our Euro-based 1.875% Senior notes which have beendesignated as a hedge of our net investment in foreign operations. In 2017, other comprehensive income from foreign currency translation adjustments was$227.4 million, mainly as a result of favorable movements in the Euro of approximately $192 million, the Korean Won of approximately $16 million, theChinese Renminbi of approximately $13 million and the Taiwan Dollar of approximately $4 million. Also included in total other comprehensive income for2017 is a loss of $41.8 million in connection with the revaluation of our Euro-based 1.875% Senior notes which have been designated as a hedge of our netinvestment in foreign operations.Segment Information Overview. We have identified three reportable segments according to the nature and economic characteristics of our products aswell as the manner in which the information is used internally by the Company’s chief operating decision maker to evaluate performance and make resourceallocation decisions. Our reportable business segments consist of: (1) Lithium, (2) Bromine Specialties and (3) Catalysts.Summarized financial information concerning our reportable segments is shown in the following tables. Results for 2017 have been recast to reflect thechange in segments previously noted. The “All Other” category includes only the fine chemistry services business, that does not fit into any of our corebusinesses.The Corporate category is not considered to be a segment and includes corporate-related items not allocated to the operating segments. Pension andOPEB service cost (which represents the benefits earned by active employees during the period) and amortization of prior service cost or benefit are allocatedto the reportable segments, All Other, and Corporate, whereas the remaining components of pension and OPEB benefits cost or credit (“Non-operatingpension and OPEB items”) are included in Corporate. Segment data includes intersegment transfers of raw materials at cost and allocations for certaincorporate costs.The Company’s chief operating decision maker uses adjusted EBITDA (as defined below) to assess the ongoing performance of the Company’sbusiness segments and to allocate resources. The Company defines adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, asadjusted on a consistent basis for certain non-recurring or unusual items in a balanced manner and on a segment basis. These non-recurring or unusual itemsmay include acquisition and integration related costs, utilization of inventory markup, gains or losses on sales of businesses, restructuring charges, facilitydivestiture charges, non-operating pension and OPEB items and other significant non-recurring items. In addition, management uses adjusted EBITDA forbusiness planning purposes and as a significant component in the calculation of performance-based compensation for management and other employees. TheCompany has reported adjusted EBITDA because management believes it provides transparency to investors and enables period-to-period comparability offinancial performance. Adjusted EBITDA is a financial measure that is not required by, or presented in accordance with, U.S. GAAP. Adjusted EBITDAshould not be considered as an alternative to Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculatedand reported in accordance with U.S. GAAP, or any other financial measure reported in accordance with U.S. GAAP.35Albemarle Corporation and Subsidiaries Year Ended December 31, Percentage Change 2018 % 2017 % 2018 vs. 2017 (In thousands, except percentages)Net sales: Lithium $1,228,171 36.4 % $1,018,885 33.2 % 21 %Bromine Specialties 917,880 27.2 % 855,143 27.8 % 7 %Catalysts 1,101,554 32.6 % 1,067,572 34.7 % 3 %All Other 127,186 3.8 % 128,914 4.2 % (1)%Corporate 159 — % 1,462 0.1 % (89)%Total net sales $3,374,950 100.0 % $3,071,976 100.0 % 10 % Adjusted EBITDA: Lithium $530,773 52.7 % $446,652 50.4 % 19 %Bromine Specialties 288,116 28.6 % 258,901 29.2 % 11 %Catalysts 284,307 28.3 % 283,883 32.1 % — %All Other 14,091 1.4 % 13,878 1.6 % 2 %Corporate (110,623) (11.0)% (117,834) (13.3)% (6)%Total adjusted EBITDA $1,006,664 100.0 % $885,480 100.0 % 14 %36Albemarle Corporation and Subsidiaries See below for a reconciliation of adjusted EBITDA, the non-GAAP financial measure, from Net income attributable to Albemarle Corporation, the mostdirectly comparable financial measure calculated and reported in accordance with U.S. GAAP, (in thousands): Lithium BromineSpecialties Catalysts ReportableSegments Total All Other Corporate ConsolidatedTotal2018 Net income (loss) attributable to AlbemarleCorporation$428,212 $246,509 $445,604 $1,120,325 $6,018 $(432,781) $693,562Depreciation and amortization95,193 41,607 49,131 185,931 8,073 6,694 200,698Restructuring and other(a)— — — — — 3,838 3,838Gain on sale of business(b)— — (210,428) (210,428) — — (210,428)Acquisition and integration related costs(c)— — — — — 19,377 19,377Interest and financing expenses— — — — — 52,405 52,405Income tax expense— — — — — 144,826 144,826Non-operating pension and OPEB items— — — — — 5,285 5,285Legal accrual(d)— — — — — 27,027 27,027Environmental accrual(e)— — — — — 15,597 15,597Albemarle Foundation contribution(f)— — — — — 15,000 15,000Indemnification adjustments(g)— — — — — 25,240 25,240Other(h)7,368 — — 7,368 — 6,869 14,237Adjusted EBITDA$530,773 $288,116 $284,307 $1,103,196 $14,091 $(110,623) $1,006,6642017 Net income (loss) attributable to AlbemarleCorporation$342,992 $218,839 $230,665 $792,496 $5,521 $(743,167) $54,850Depreciation and amortization87,879 40,062 54,468 182,409 8,357 6,162 196,928Utilization of inventory markup(i)23,095 — — 23,095 — — 23,095Restructuring and other(j)— — — — — 17,056 17,056Gain on acquisition(k)(6,221) — — (6,221) — — (6,221)Acquisition and integration related costs(c)— — — — — 33,954 33,954Interest and financing expenses(l)— — — — — 115,350 115,350Income tax expense— — — — — 431,817 431,817Non-operating pension and OPEB items— — — — — (16,125) (16,125)Note receivable reserve(m)— — — — — 28,730 28,730Other(n)(1,093) — (1,250) (2,343) — 8,389 6,046Adjusted EBITDA$446,652 $258,901 $283,883 $989,436 $13,878 $(117,834) $885,480(a)Expected severance payments as part of a business reorganization plan, $0.1 million recorded in Cost of goods sold and $3.7 million recorded in Selling, general andadministrative expenses. These severance payments have been made during the year ended December 31, 2018.(b)See “Gain on Sale of Businesses, Net” on page 33 for a description of this gain.(c)Included amounts for the years ended December 31, 2018 and 2017 recorded in (1) Cost of goods sold of $3.7 million and $14.3 million, respectively; and (2) Selling, generaland administrative expenses of $15.7 million and $19.6 million, respectively, relating to various significant projects.(d)Included in Other expenses, net is a $16.2 million expense resulting from a jury rendered verdict against Albemarle related to certain business concluded under a 2014 salesagreement for products that Albemarle no longer manufactures and a $10.8 million expense resulting from a settlement of a legal matter related to guarantees from a previouslydisposed business.(e)Increase in environmental reserve to indemnify the buyer of a formerly owned site recorded in Other expenses, net. As defined in the agreement of sale, this indemnificationhas a set cutoff date in 2024, at which point we will no longer be required to provide financial coverage.(f)Included in Selling, general and administrative expenses is a charitable contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to theAlbemarle Foundation, a non-profit organization that sponsors grants, health and social projects, educational initiatives, disaster relief, matching gift programs, scholarshipsand other charitable initiatives in locations where our employees live and operate. This contribution is in addition to the ordinary annual contribution made to the AlbemarleFoundation by the37Albemarle Corporation and Subsidiaries Company, and is significant in size and nature in that it is intended to provide more long-term benefits in the communities where we live and operate.(g)Included in Other expenses, net is $19.7 million related to the proposed settlement of an ongoing audit of a previously disposed business in Germany, and $5.5 million relatedto the revision of indemnifications previously recorded from disposed businesses.(h)Included amounts for the year ended December 31, 2018 recorded in:•Cost of goods sold - $4.9 million for the write-off of fixed assets related to a major capacity expansion in our Jordanian joint venture and $8.8 million related to non-routine labor and compensation related costs in Chile that are outside normal compensation arrangements.•Selling, general and administrative expenses - $2.3 million of shortfall contributions for our multiemployer plan financial improvement plan and a $1.2 millioncontribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to schools in the state of Louisiana for qualified tuition purposes. Thiscontribution is significant in size and is intended to provide long-term benefits for families in the Louisiana community. This was partially offset by a $1.5 million gainrelated to a refund from Chilean authorities due to an overpayment made in a prior year.•Other expenses, net - $1.5 million gain related to the reversal of previously recorded liabilities of disposed businesses.(i)In connection with the acquisition of Jiangli New Materials, the Company valued inventory purchased from Jiangli New Materials at fair value, which resulted in a markup ofthe underlying net book value of the inventory totaling approximately $23.1 million. The utilization of this inventory markup was included in Cost of goods sold during theyear ended December 31, 2017, the estimated remaining selling period.(j)During 2017, we initiated action to reduce costs in each of our reportable segments at several locations, primarily at our Lithium sites in Germany. Based on the restructuringplans, we have recorded expenses of $2.9 million in Cost of goods sold, $8.4 million in Selling, general and administrative expenses, and $5.7 million in Research anddevelopment expenses, primarily related to expected severance payments. The unpaid balance is recorded in Accrued expenses at December 31, 2018, with the expectation thatthe remaining balance will be paid by the end of 2019.(k)Gain recorded in Other expenses, net related to the acquisition of the remaining 50% interest in Salmag. See Note 2, “Acquisitions,” to our consolidated financial statementsincluded in Part II, Item 8 of this report for additional information.(l)Included in Interest and financing expenses is a loss on early extinguishment of debt of $52.8 million. See Note 14, “Long-Term Debt,” to our consolidated financialstatements included in Part II, Item 8 of this report for additional information.(m)Reserve recorded in Other expenses, net against a note receivable on one of our European entities no longer deemed probable of collection.(n)Included amounts for the year ended December 31, 2017 recorded in:•Cost of goods sold - $1.3 million reversal of deferred income related to an abandoned project at an unconsolidated investment.•Selling, general and administrative expenses - $3.3 million of shortfall contributions for our multiemployer plan financial improvement plan, partially offset by $1.0million related to a reversal of an accrual recorded as part of purchase accounting from a previous acquisition.•Other expenses, net - $3.2 million of asset retirement obligation charges related to the revision of an estimate at a site formerly owned by Albemarle, losses of $8.7million related to adjustments of settlements and indemnifications of previously disposed businesses, the revision of tax indemnification expenses of $3.7 millionprimarily related to the filing of tax returns and a competent authority agreement for a previously disposed business and $1.0 million related to the settlement of a legalclaim. This is partially offset by gains of $10.6 million and $1.1 million related to the reversal of liabilities recorded as part of purchase accounting from a previousacquisition and the previous disposal of a property, respectively.LithiumLithium segment net sales for the year ended December 31, 2018 were $1.23 billion, up $209.3 million, or 21%, compared to the corresponding periodof 2017. The increase was primarily driven by $105.3 million of higher sales volumes largely in battery grade salts and specialty downstream products due tostrong demand, $87.4 million of favorable pricing due to strong demand of our contracted customers for battery grade materials and $17.0 million offavorable currency translation resulting from the weaker U.S. Dollar against the Euro. Adjusted EBITDA for Lithium increased 19%, or $84.1 million, to$530.8 million for the year ended December 31, 2018, compared to the corresponding period of 2017, primarily driven by favorable pricing due to strongdemand, increases of approximately $33 million from higher volumes and $4.2 million of favorable currency translation. These increases were partially offsetby approximately $30 million in higher price-related royalties and approximately $12 million of higher SG&A costs to support business growth.Bromine SpecialtiesBromine Specialties segment net sales for the year ended December 31, 2018 were $917.9 million, up $62.7 million, or 7%, compared to thecorresponding period of 2017. The increase was driven primarily by $36.9 million in favorable pricing due to continued constrained production of elementalbromine by Chinese bromine companies, $19.9 million in higher sales volumes in flame-retardants and other bromine derivatives due to continued strongdemand, and $5.9 million of favorable currency translation resulting from the weaker U.S. Dollar against the Euro. Adjusted EBITDA for Bromine Specialtiesincreased 11%, or $29.2 million, to $288.1 million for the year ended December 31, 2018, compared to the corresponding period of 2017, primarily due tofavorable pricing across most products, which was partially offset by higher raw material costs38Albemarle Corporation and Subsidiaries of approximately $19 million. The improvement in adjusted EBITDA was also due to $5.1 million of favorable currency translation related to the Euro, andhigher sales volumes due to continued strong demand.CatalystsCatalysts segment net sales for the year ended December 31, 2018 were $1.10 billion, an increase of $34.0 million, or 3%, compared to thecorresponding period of 2017. This increase was primarily due to $83.5 million of higher sales volumes driven by refining catalyst products due to favorablemix in hydro-processing catalysts, $21.6 million of favorable pricing, mainly in CFT and FCC catalysts as a result of strong demand for transportation fuels,and $7.7 million of favorable currency translation resulting from the weaker U.S. Dollar against the Euro. These increases were partially offset by $78.9million of net sales impact from Polyolefin Catalysts Divestiture. Catalysts adjusted EBITDA increased $0.4 million, to $284.3 million for the year endedDecember 31, 2018 compared to the corresponding period of 2017. Strong volumes resulting in approximately $57 million of adjusted EBITDA, includingthe 2017 negative impact of hurricane Harvey of $13.8 million, were partially offset by $30.4 million of adjusted EBITDA impact from the PolyolefinCatalysts Divestiture. Favorable pricing of $21.6 million and partial insurance claim reimbursements of $4.2 million received in 2018 related to hurricaneHarvey, were more than offset by higher raw material and utility costs, resulting in a net unfavorable impact of approximately $9 million.All OtherAll Other net sales for the year ended December 31, 2018 were $127.2 million, a decrease of $1.7 million compared to the year ended December 31,2017. This decrease was primarily due to unfavorable pricing, partially offset by higher volumes for the fine chemistry services business. All Other adjustedEBITDA was up 2%, or $0.2 million, for the year ended December 31, 2018 in comparison to the same period of 2017.CorporateCorporate adjusted EBITDA was a charge of $110.6 million for the year ended December 31, 2018, a decrease of $7.2 million, compared to the yearended December 31, 2017, primarily due to lower SG&A spend related to compensation related costs and professional fees.Comparison of 2017 to 2016Net SalesFor the year ended December 31, 2017, we recorded net sales of $3.07 billion, a 15% increase compared to net sales of $2.68 billion for thecorresponding period of 2016. Net sales increased due to $272.2 million of higher volumes, $157.8 million of favorable pricing impacts and $3.4 million offavorable currency exchange impacts, partially offset by the $38.6 million impact of the sale of the minerals-based flame retardants and specialty chemicalsbusiness.Gross ProfitFor the year ended December 31, 2017, our gross profit increased $136.0 million, or 14%, compared to the corresponding period of 2016. Included inCost of goods sold for the year ended December 31, 2017 are: (1) a $23.1 million charge related to the markup of inventory purchased as part of theacquisition of the lithium hydroxide and lithium carbonate conversion business of Jiangli New Materials; (2) $14.3 million of acquisition and integrationrelated costs resulting from the Jiangli New Materials acquisition; and (3) restructuring costs of $2.9 million related to a plan to reduce costs at severallocations. In addition, gross profit decreased $3.1 million related to the divested minerals-based flame retardants and specialty chemicals business in the firstquarter of 2016. Excluding the impact of these items, gross profit increased by $179.4 million, or 19%, primarily due to higher overall sales volumes andfavorable price impacts, partially offset by increased costs in Lithium and a $15.4 million negative impact from hurricane Harvey. Overall, these factorscontributed to a gross profit margin for the years ended December 31, 2017 and 2016 of 36.0% and 36.2%, respectively. Excluding the impact of the chargesnoted above, gross profit margin was 37.3% for the year ended December 31, 2017 as compared to 36.1% for the year ended December 31, 2016.Selling, General and Administrative ExpensesFor the year ended December 31, 2017, our SG&A expenses increased $96.5 million, or 27%, from the year ended December 31, 2016. The year endedDecember 31, 2017 included $19.6 million of acquisition and integration related costs, primarily resulting from the acquisition of Jiangli New Materials,$8.4 million of restructuring costs related to several locations, primarily our Lithium sites in Germany and $3.3 million of multiemployer plan financialimprovement plan shortfall contributions for our employees. Excluding the impact of these charges, SG&A expenses increased by $65.2 million, or 18%,primarily due to increased compensation costs, Lithium growth spending and professional fees, partially offset by savings from39Albemarle Corporation and Subsidiaries our restructuring. As a percentage of net sales, SG&A expenses were 14.7% in 2017, compared to 13.2% in 2016. Excluding the impact of these charges,SG&A expenses as a percentage of net sales were 13.6% in 2017 and 13.2% in 2016.Research and Development ExpensesFor the year ended December 31, 2017, our R&D expenses increased $3.9 million, or 5%, from the year ended December 31, 2016. Included in R&Dexpenses for the year ended December 31, 2017 are $5.7 million of restructuring costs related to our Lithium sites in Germany. As a percentage of net sales,R&D expenses were 2.7% in 2017, compared to 3.0% in 2016.Gain on Sales of Businesses, NetThe year ended December 31, 2016 included gains before income taxes of $11.5 million and $112.3 million related to the sales of the metal sulfidesbusiness and the minerals-based flame retardants and specialty chemicals business, respectively, both of which closed in the first quarter of 2016. In addition,Gain on sales of businesses, net, for the year ended December 31, 2016, included a loss of $1.5 million on the sale of our wafer reclaim business. Acquisition and Integration Related CostsAcquisition and integration related costs for the year ended December 31, 2017 are reported in Cost of goods sold and SG&A expenses, as noted above.The year ended December 31, 2016 included $52.1 million of acquisition and integration related costs directly related to the acquisition of Rockwood(mainly consisting of professional services, costs to achieve synergies, relocation costs, and other integration costs) and $5.3 million of costs in connectionwith other significant projects.Interest and Financing ExpensesInterest and financing expenses for the year ended December 31, 2017 increased $50.2 million to $115.4 million from the corresponding 2016 period,due mainly to a loss of $52.8 million on early extinguishment of debt related to the tender premiums, fees, unamortized discounts and unamortized deferredfinancing costs from the repayment of the 3.00% Senior notes in full, €307.0 million of the 1.875% Senior notes and $174.7 million of the 4.50% Seniornotes.Other Expenses, NetOther expenses, net, for the year ended December 31, 2017 was $9.5 million versus $20.5 million for the corresponding 2016 period. Other expenses,net for 2017 included approximately $16.1 million of pension and OPEB benefits (including mark-to-market actuarial gains of $11.4 million) allocated toOther expenses, net, as compared to $26.4 million of pension and OPEB costs (including mark-to-market actuarial losses of $26.7 million) allocated to Otherexpenses, net in 2016. In addition, during the year ended December 31, 2017, we recorded a $28.7 million reserve recorded against a note receivable in oneof our European entities no longer deemed probable of collection, $11.0 million of charges related to previously disposed properties or businesses, partiallyoffset by a $10.6 million gain related to the reversal of liabilities recorded as part of purchase accounting from a previous acquisition, a $6.2 million gainrelated to the acquisition of the 50% interest of an equity investment and $1.1 million related to a reversal of a liability associated with the previous disposalof a property. The remaining change was primarily due to an increase in foreign exchange losses of $13.5 million and a $2.9 million gain in the fair value ofour investment in private equity securities recorded during the third quarter of 2016.The mark-to-market actuarial gain in 2017 is primarily attributable to a higher return on pension plan assets in 2017 than was expected, as a result ofoverall market and investment portfolio performance. The weighted-average actual return on our U.S. and foreign pension plan assets was 14.31% versus anexpected return of 6.73%. The mark-to-market actuarial gain in 2017 was partially offset by a decrease in the weighted-average discount rate to 4.03% from4.43% for our U.S. pension plans and to 1.94% from 2.00% for our foreign pension plans to reflect market conditions as of the December 31, 2017measurement date.The mark-to-market actuarial loss in 2016 is primarily attributable to a decrease in the weighted-average discount rate to 4.43% from 4.67% for our U.S.pension plans and to 2.00% from 2.76% for our foreign pension plans to reflect market conditions as of the December 31, 2016 measurement date. The mark-to-market actuarial loss in 2016 was partially offset by a higher return on pension plan assets in 2016 than was expected, as a result of overall market andinvestment portfolio performance. The weighted-average actual return on our U.S. and foreign pension plan assets was 8.11% versus an expected return of6.85%.40Albemarle Corporation and Subsidiaries Income Tax ExpenseThe effective income tax rate for 2017 was 96.6% compared to 18.7% for 2016. Our effective income tax rate for 2017 was primarily affected by theenactment of the TCJA in December 2017. The tax effects of the TCJA are recorded in connection with the one-time transition tax expense of $429.2 million,partially offset by the remeasurement of deferred tax assets and liabilities due to a decrease in corporate tax rate from 35% to 21% of $62.3 million taxbenefit. Exclusive of the enactment of the TCJA, the Company’s effective tax rate differs from the U.S. Federal statutory income tax rate due to the impact ofearnings from outside the U.S., mainly attributable to our share of the income of our JBC joint venture, a Free Zones company under the laws of theHashemite Kingdom of Jordan. In addition, income tax expense for the year ended December 31, 2017, included foreign rate changes of $16.2 million and a$5.1 million out-of-period adjustment due to changes in our deferred tax liabilities for basis differences in Chilean fixed assets offset by a $10.9 millionbenefit from the release of valuation allowances due to a foreign restructuring plan that was initiated during the second quarter of 2017 and a $8.8 millionbenefit from excess tax benefits realized from stock-based compensation arrangements.Our effective tax rate for 2016 was affected by discrete net tax expense items of $20.2 million related mainly to a tax gain from restructuring theownership of a foreign subsidiary, foreign tax rate changes, provision to return adjustments and changes in valuation allowances necessary due to therestructuring. See Note 20, “Income Taxes,” to our consolidated financial statements included in Part II, Item 8 of this report for a reconciliation of the U.S.Federal statutory income tax rate to our effective rate for 2017 and 2016.Equity in Net Income of Unconsolidated InvestmentsEquity in net income of unconsolidated investments was $84.5 million for the year ended December 31, 2017 compared to $59.6 million in the sameperiod last year. This increase of $24.9 million was primarily due to higher equity income reported by our Lithium segment joint venture, WindfieldHoldings Pty. Ltd., resulting from favorable pricing and volumes in our lithium business.Income from Discontinued Operations (Net of Tax)The year ended December 31, 2016 income from discontinued operations, after income taxes, of $202.1 million included a pre-tax gain of $388.0million ($135.0 million after income taxes) related to the sale of our Chemetall Surface Treatment business, which closed on December 14, 2016. This gainrepresents the difference between the carrying value of the related assets and their fair value as determined by the sales price less estimated costs to sell, andincluded the reversal of $81.4 million of foreign currency translation loss out of Accumulated other comprehensive loss.Net Income Attributable to Noncontrolling InterestsFor the year ended December 31, 2017, net income attributable to noncontrolling interests was $44.6 million compared to $37.1 million in the sameperiod of 2016. This increase of $7.5 million was due primarily to changes in consolidated income related to our JBC joint venture resulting from highersales volumes.Net Income Attributable to Albemarle CorporationNet income attributable to Albemarle Corporation decreased to $54.9 million for the year ended December 31, 2017, from $643.7 million for thecorresponding period of 2016. The year ended December 31, 2017 was negatively impacted by the one-time transition tax expense of $429.2 millionrecorded as a result of the enactment of the TCJA in December 2017. In addition, the year ended December 31, 2017 included a $52.8 million loss on earlyextinguishment of debt and $17.1 million of restructuring and other costs, while the year ended December 31, 2016 included net gains of $250.5 million afterincome taxes related to the sale of businesses, including discontinued operations. Excluding these items, net income attributable to Albemarle increased by$160.8 million. The increase was primarily due to the increase in gross profit from higher overall sales volumes and favorable price impacts, theremeasurement of deferred tax assets and liabilities due to a decrease in corporate tax rate from 35% to 21% of $62.3 million tax benefit resulting from theenactment of the TCJA, and lower acquisition and integration related costs, partially offset by an increase in SG&A expenses, income before taxes fromdiscontinued operations in 2016 and the negative impact of hurricane Harvey.Other Comprehensive Income, Net of TaxTotal other comprehensive income, after income taxes, was $187.6 million in 2017 compared to $8.3 million in 2016. This change is primarily due tochanges in foreign currency translations. We translate our foreign subsidiary financial statements from their local currencies to U.S. Dollars. In 2017, othercomprehensive income from foreign currency translation41Albemarle Corporation and Subsidiaries adjustments was $227.4 million, mainly as a result of favorable movements in the Euro of approximately $192 million, the Korean Won of approximately$16 million, the Chinese Renminbi of approximately $13 million and the Taiwan Dollar of approximately $4 million. Also included in total othercomprehensive income for 2017 is a loss of $41.8 million in connection with the revaluation of our Euro-based 1.875% Senior notes which have beendesignated as a hedge of our net investment in foreign operations. In 2016, other comprehensive loss from foreign currency translation adjustments was $20.8million, mainly as a result of unfavorable movements in the British Pound Sterling of approximately $25 million, the Chinese Renminbi of approximately$12 million, the Korean Won of approximately $6 million, the Turkish Lira of approximately $6 million, partially offset by favorable movements in the Euroof approximately $15 million and the Brazilian Real of approximately $13 million. Included in the currency movements for 2016 is the favorable effect of$81.4 million in accumulated foreign currency translation losses that were reversed as a result of the sale of the Chemetall Surface Treatment business. Alsoincluded in total other comprehensive income for 2016 is income of $26.1 million in connection with the revaluation of our Euro-based 1.875% Senior notesand which have been designated as a hedge of our net investment in foreign operations.Segment Information Overview. Summarized financial information concerning our reportable segments is shown in the following tables. Results for2017 and 2016 have been recast to reflect the change in segments previously noted. Year Ended December 31, Percentage Change 2017 % 2016 % 2017 vs. 2016 (In thousands, except percentages)Net sales: Lithium $1,018,885 33.2 % $668,852 25.0 % 52 %Bromine Specialties 855,143 27.8 % 792,425 29.6 % 8 %Catalysts 1,067,572 34.7 % 1,031,501 38.5 % 3 %All Other 128,914 4.2 % 180,988 6.8 % (29)%Corporate 1,462 0.1 % 3,437 0.1 % (57)%Total net sales $3,071,976 100.0 % $2,677,203 100.0 % 15 % Adjusted EBITDA: Lithium $446,652 50.4 % $285,714 37.7 % 56 %Bromine Specialties 258,901 29.2 % 226,926 29.9 % 14 %Catalysts 283,883 32.1 % 316,609 41.8 % (10)%All Other 13,878 1.6 % 14,772 1.9 % (6)%Corporate (117,834) (13.3)% (85,804) (11.3)% 37 %Total adjusted EBITDA $885,480 100.0 % $758,217 100.0 % 17 %42Albemarle Corporation and Subsidiaries See below for a reconciliation of adjusted EBITDA, the non-GAAP financial measure, from Net income attributable to Albemarle Corporation, the mostdirectly comparable financial measure calculated and reported in accordance with GAAP, (in thousands): Lithium BromineSpecialties Catalysts ReportableSegments Total All Other Corporate ConsolidatedTotal2017 Net income (loss) attributable to AlbemarleCorporation$342,992 $218,839 $230,665 $792,496 $5,521 $(743,167) $54,850Depreciation and amortization87,879 40,062 54,468 182,409 8,357 6,162 196,928Utilization of inventory markup(a)23,095 — — 23,095 — — 23,095Restructuring and other(b)— — — — — 17,056 17,056Gain on acquisition(c)(6,221) — — (6,221) — — (6,221)Acquisition and integration related costs(d)— — — — — 33,954 33,954Interest and financing expenses(e)— — — — — 115,350 115,350Income tax expense— — — — — 431,817 431,817Non-operating pension and OPEB items— — — — — (16,125) (16,125)Note receivable reserve(f)— — — — — 28,730 28,730Other(g)(1,093) — (1,250) (2,343) — 8,389 6,046Adjusted EBITDA$446,652 $258,901 $283,883 $989,436 $13,878 $(117,834) $885,4802016 Net income (loss) attributable to AlbemarleCorporation$198,852 $187,364 $265,416 $651,632 $131,301 $(139,258) $643,675Depreciation and amortization86,862 39,562 51,193 177,617 7,302 6,056 190,975(Gain) loss on sales of businesses, net(h)— — — — (123,831) 1,533 (122,298)Acquisition and integration related costs(i)— — — — — 57,384 57,384Interest and financing expenses— — — — — 65,181 65,181Income tax expense— — — — — 96,263 96,263Income from discontinued operations (net of tax)— — — — — (202,131) (202,131)Non-operating pension and OPEB items— — — — — 25,589 25,589Other(j)— — — — — 3,579 3,579Adjusted EBITDA$285,714 $226,926 $316,609 $829,249 $14,772 $(85,804) $758,217(a)In connection with the acquisition of Jiangli New Materials, the Company valued inventory purchased from Jiangli New Materials at fair value, which resulted in a markup ofthe underlying net book value of the inventory totaling approximately $23.1 million. The utilization of this inventory markup was included in Cost of goods sold during theyear ended December 31, 2017, the estimated remaining selling period.(b)During 2017, we initiated action to reduce costs in each of our reportable segments at several locations, primarily at our Lithium sites in Germany. Based on the restructuringplans, we have recorded expenses of $2.9 million in Cost of goods sold, $8.4 million in Selling, general and administrative expenses, and $5.7 million in Research anddevelopment expenses, primarily related to expected severance payments. The unpaid balance is recorded in Accrued expenses at December 31, 2018, with the expectation thatthe remaining balance will be paid by the end of 2019.(c)Gain recorded in Other expenses, net related to the acquisition of the remaining 50% interest in Salmag. See Note 2, “Acquisitions,” to our consolidated financial statementsincluded in Part II, Item 8 of this report for additional information.(d)Acquisition and integration related costs of $14.3 million and $19.6 million were included in Cost of goods sold and Selling, general and administrative expenses, respectively,for the year ended December 31, 2017 primarily resulting from the Jiangli New Materials acquisition, including non-routine compensation related costs negotiated specificallyas a result of this acquisition that are outside the Company’s normal compensation arrangements.(e)Included in Interest and financing expenses is a loss on early extinguishment of debt of $52.8 million. See Note 14, “Long-Term Debt,” to our consolidated financialstatements included in Part II, Item 8 of this report for additional information.(f)Reserve recorded in Other expenses, net against a note receivable on one of our European entities no longer deemed probable of collection.(g)Included amounts for the year ended December 31, 2017 recorded in:•Cost of goods sold - $1.3 million reversal of deferred income related to an abandoned project at an unconsolidated investment.43Albemarle Corporation and Subsidiaries •Selling, general and administrative expenses - $3.3 million of shortfall contributions for our multiemployer plan financial improvement plan, partially offset by $1.0million related to a reversal of an accrual recorded as part of purchase accounting from a previous acquisition.•Other expenses, net - $3.2 million of asset retirement obligation charges related to the revision of an estimate at a site formerly owned by Albemarle, losses of $8.7million related to adjustments of settlements and indemnifications of previously disposed businesses, the revision of tax indemnification expenses of $3.7 millionprimarily related to the filing of tax returns and a competent authority agreement for a previously disposed business and $1.0 million related to the settlement of a legalclaim. This is partially offset by gains of $10.6 million and $1.1 million related to the reversal of liabilities recorded as part of purchase accounting from a previousacquisition and the previous disposal of a property, respectively.(h)See “Gain on Sales of Businesses, Net” on page 40 for a description of these items.(i)See “Acquisition and Integration Related Costs” on page 40 for a description of these items.(j)Included amounts for the year ended December 31, 2016 recorded in:•Selling, general and administrative expenses - $0.9 million related to the net loss on the sales of properties.•Research and development expenses - $1.4 million related to the write-off of fixed assets in China.•Other expenses, net - $2.4 million related to environmental charges related to a site formerly owned by Albemarle, partially offset by a gain related to a previouslydisposed of site in China of $1.1 million.LithiumLithium segment net sales for the year ended December 31, 2017 were $1.02 billion, up $350.0 million, or 52%, in comparison to the same period in2016. The increase was primarily driven by $163.2 million of favorable Lithium sales volumes, largely from battery grade applications, due to marketdemand and $186.3 million of favorable Lithium price impacts due primarily to price increases in our battery grade lithium salts. Adjusted EBITDA forLithium increased 56%, or $160.9 million, to $446.7 million for the year ended December 31, 2017, compared to the corresponding period of 2016, primarilydue to favorable pricing and higher overall sales volumes, partially offset by Lithium growth spending and $0.4 million of unfavorable currency translationimpacts.Bromine SpecialtiesBromine Specialties segment net sales for the year ended December 31, 2017 were $855.1 million, up $62.7 million, or 8%, compared to thecorresponding period of 2016. The increase was driven primarily by $60.4 million of higher sales volumes due to strong demand in flame retardants andreduced production in 2017 by Chinese bromine companies, and $2.3 million of favorable pricing on certain bromine derivatives. Adjusted EBITDA forBromine Specialties increased 14%, or $32.0 million, to $258.9 million for the year ended December 31, 2017, compared to the corresponding period of2016, primarily due to higher overall sales volumes and favorable pricing, partially offset by higher variable and fixed costs and a $1.5 million negativeimpact from hurricane Harvey.CatalystsCatalysts segment net sales for the year ended December 31, 2017 were $1.07 billion, an increase of $36.1 million, or 3%, compared to thecorresponding period of 2016. This increase was primarily due to $48.7 million of higher volumes from strong demand in our customer base and $2.8 millionof favorable currency exchange impacts, partially offset by $15.5 million of unfavorable price impacts due to customer and product mix and the bankruptcyfiling of one of our customers. Catalysts adjusted EBITDA decreased 10%, or $32.7 million, to $283.9 million for the year ended December 31, 2017compared to the corresponding period of 2016, primarily due to unfavorable price and mix impacts, higher costs and a $13.8 million negative impact fromhurricane Harvey, partially offset by $2.3 million of favorable currency translation impacts.All OtherAll Other net sales for the year ended December 31, 2017 were $128.9 million, a decrease of $52.1 million compared to the year ended December 31,2016. This decrease was primarily due to the impact of the sale of the minerals-based flame retardants and specialty chemicals business of $38.6 million, aswell as unfavorable fine chemistry services pricing impacts due to a contract formula change which did not impact earnings. All Other adjusted EBITDA wasdown 6%, or $0.9 million, for the year ended December 31, 2017 in comparison to the same period of 2016. The year ended December 31, 2016 included theimpact of the sale of the minerals-based flame retardants and specialty chemicals business of $3.4 million and a $2.9 million gain in the fair value of ourinvestment in private equity securities.44Albemarle Corporation and Subsidiaries CorporateCorporate adjusted EBITDA was a charge of $117.8 million for the year ended December 31, 2017, an increase of $32.0 million, compared to the yearended December 31, 2016, primarily due to increased compensation costs, professional fees and $13.5 million of unfavorable currency impacts.Summary of Critical Accounting Policies and EstimatesEstimates, Assumptions and ReclassificationsThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reportedamounts of revenues, expenses, assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Listed below arethe estimates and assumptions that we consider to be critical in the preparation of our financial statements.Certain amounts in the accompanying consolidated financial statements and notes thereto have been reclassified to conform to the current presentation.Property, Plant and Equipment. We assign the useful lives of our property, plant and equipment based upon our internal engineering estimates whichare reviewed periodically. The estimated useful lives of our property, plant and equipment range from two to sixty years and depreciation is recorded on thestraight-line method, with the exception of our long-term mineral rights, which are depleted on a units-of-production method. We evaluate the recovery ofour property, plant and equipment by comparing the net carrying value of the asset group to the undiscounted net cash flows expected to be generated fromthe use and eventual disposition of that asset group when events or changes in circumstances indicate that its carrying amount may not be recoverable. If thecarrying amount of the asset group is not recoverable, the fair value of the asset group is measured and if the carrying amount exceeds the fair value, animpairment loss is recognized.Acquisition Method of Accounting. We recognize the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in theacquiree at their estimated fair values on the date of acquisition for acquired businesses. Determining the fair value of these items requires management’sjudgment, the utilization of independent valuation experts and involves the use of significant estimates and assumptions with respect to the timing andamounts of future cash inflows and outflows, discount rates, customer attrition rates, royalty rates, market prices and tax rates, among other items. Thejudgments made in the determination of the estimated fair value assigned to the assets acquired, the liabilities assumed and any noncontrolling interest in theinvestee, as well as the estimated useful life of each asset and the duration of each liability, can materially impact the financial statements in periods afteracquisition, such as through depreciation and amortization expense. For more information on our acquisitions and application of the acquisition method, seeNote 2, “Acquisitions,” to our consolidated financial statements included in Part II, Item 8 of this report.Income Taxes. We assume the deductibility of certain costs in our income tax filings, and we estimate the future recovery of deferred tax assets,uncertain tax positions and indefinite investment assertions.Environmental Remediation Liabilities. We estimate and accrue the costs required to remediate a specific site depending on site-specific facts andcircumstances. Cost estimates to remediate each specific site are developed by assessing (i) the scope of our contribution to the environmental matter, (ii) thescope of the anticipated remediation and monitoring plan and (iii) the extent of other parties’ share of responsibility.Actual results could differ materially from the estimates and assumptions that we use in the preparation of our financial statements.Revenue RecognitionRevenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services, and is recognizedwhen performance obligations are satisfied under the terms of contracts with our customers. A performance obligation is deemed to be satisfied when controlof the product or service is transferred to our customer. The transaction price of a contract, or the amount we expect to receive upon satisfaction of allperformance obligations, is determined by reference to the contract’s terms and includes adjustments, if applicable, for any variable consideration, such ascustomer rebates, noncash consideration or consideration payable to the customer, although these adjustments are generally not material. Where a contractcontains more than one distinct performance obligation, the transaction price is allocated to each performance obligation based on the standalone sellingprice of each performance obligation, although these situations do not occur frequently and are generally not built into our contracts. Any unsatisfiedperformance obligations are not material. Standalone selling prices are based on prices we charge to our customers, which in some cases is based onestablished market45Albemarle Corporation and Subsidiaries prices. Sales and other similar taxes collected from customers on behalf of third parties are excluded from revenue. Our payment terms are generally between30 to 90 days, however, they vary by market factors, such as customer size, creditworthiness, geography and competitive environment.All of our revenue is derived from contracts with customers, and almost all of our contracts with customers contain one performance obligation for thetransfer of goods where such performance obligation is satisfied at a point in time. Control of a product is deemed to be transferred to the customer uponshipment or delivery. Significant portions of our sales are sold free on board shipping point or on an equivalent basis, while delivery terms of othertransactions are based upon specific contractual arrangements. Our standard terms of delivery are generally included in our contracts of sale, orderconfirmation documents and invoices, while the timing between shipment and delivery generally ranges between 1 and 45 days. Costs for shipping andhandling activities, whether performed before or after the customer obtains control of the goods, are accounted for as fulfillment costs.The Company currently utilizes the following practical expedients, as permitted by Accounting Standards Codification (“ASC”) 606, Revenue fromContracts with Customers:•All sales and other pass-through taxes are excluded from contract value;•In utilizing the modified retrospective transition method, no adjustment was necessary for contracts that did not cross over the reporting year;•We will not consider the possibility of a contract having a significant financing component (which would effectively attribute a portion of the salesprice to interest income) unless, if at contract inception, the expected payment terms (from time of delivery or other relevant criterion) are more thanone year;•If our right to customer payment is directly related to the value of our completed performance, we recognize revenue consistent with the invoicingright; and•We expense as incurred all costs of obtaining a contract incremental to any costs/compensation attributable to individual product sales/shipmentsfor contracts where the amortization period for such costs would otherwise be one year or less.Certain products we produce are made to our customer’s specifications where such products have no alternative use or would need significant reworkcosts in order to be sold to another customer. In management’s judgment, control of these arrangements is transferred to the customer at a point in time (uponshipment or delivery) and not over the time they are produced. Therefore revenue is recognized upon shipment or delivery of these products.Costs incurred to obtain contracts with customers are not significant and are expensed immediately as the amortization period would be one year or less.When the Company incurs pre-production or other fulfillment costs in connection with an existing or specific anticipated contract and such costs arerecoverable through margin or explicitly reimbursable, such costs are capitalized and amortized to Cost of goods sold on a systematic basis that is consistentwith the pattern of transfer to the customer of the goods or services to which the asset relates, which is less than one year. We record bad debt expense inspecific situations when we determine the customer is unable to meet its financial obligation.Goodwill and Other Intangible AssetsWe account for goodwill and other intangibles acquired in a business combination in conformity with current accounting guidance which requiresgoodwill and indefinite-lived intangible assets to not be amortized.We test goodwill for impairment by comparing the estimated fair value of our reporting units to the related carrying value. Our reporting units are eitherour operating business segments or one level below our operating business segments for which discrete financial information is available and for whichoperating results are regularly reviewed by the business management. We estimate the fair value based on present value techniques involving future cashflows. Future cash flows include assumptions about sales volumes, selling prices, raw material prices, labor and other employee benefit costs, capitaladditions, income taxes, working capital, and other economic or market-related factors. Significant management judgment is involved in estimating thesevariables, and they include inherent uncertainties since they are forecasting future events. We perform a sensitivity analysis by using a range of inputs toconfirm the reasonableness of these estimates being used in the goodwill impairment analysis. We use a Weighted Average Cost of Capital (“WACC”)approach to determine our discount rate for goodwill recoverability testing. Our WACC calculation incorporates industry-weighted average returns on debtand equity from a market perspective. The factors in this calculation are largely external to the Company and, therefore, are beyond our control. We test ourrecorded goodwill for impairment in the fourth quarter of each year or upon the occurrence of events or changes in circumstances that would more likely thannot reduce the fair value of our reporting units below their carrying amounts. The Company performed its annual goodwill impairment test as of October 31,2018 and concluded there was no46Albemarle Corporation and Subsidiaries impairment as of that date. In addition, no material indications of impairment in any of our reporting units were indicated by the sensitivity analysis.We assess our indefinite-lived intangible assets, which include trade names, for impairment annually and between annual tests if events or changes incircumstances indicate that it is more likely than not that the asset is impaired. The indefinite-lived intangible asset impairment standard allows us to firstassess qualitative factors to determine if a quantitative impairment test is necessary. Further testing is only required if we determine, based on the qualitativeassessment, that it is more likely than not that the indefinite-lived intangible asset’s fair value is less than its carrying amount. If we determine based on thequalitative assessment that it is more likely than not that the asset is impaired, an impairment test is performed by comparing the fair value of the indefinite-lived intangible asset to its carrying amount.Definite-lived intangible assets, such as purchased technology, patents and customer lists, are amortized over their estimated useful lives generally forperiods ranging from five to twenty-five years. Except for customer lists and relationships associated with the majority of our Lithium business, which areamortized using the pattern of economic benefit method, definite-lived intangible assets are amortized using the straight-line method. We evaluate therecovery of our definite-lived intangible assets by comparing the net carrying value of the asset group to the undiscounted net cash flows expected to begenerated from the use and eventual disposition of that asset group when events or changes in circumstances indicate that its carrying amount may not berecoverable. If the carrying amount of the asset group is not recoverable, the fair value of the asset group is measured and if the carrying amount exceeds thefair value, an impairment loss is recognized. See Note 12, “Goodwill and Other Intangibles,” to our consolidated financial statements included in Part II, Item8 of this report.Resource Development ExpensesWe incur costs in resource exploration, evaluation and development during the different phases of our resource development projects. Explorationcosts incurred before obtaining legal rights to explore an area are generally expensed as incurred. After obtaining legal rights, exploration costs are expensedin areas where we have uncertainty about obtaining proven resources. In areas where we have substantial knowledge about the area and consider it probableto obtain commercially viable proven resources, exploration and evaluation costs are capitalized.If technical feasibility studies have been obtained, resource evaluation expenses are capitalized when the study demonstrates proven or probableresources for which future economic returns are expected, while costs for projects that are not considered viable are expensed. Development costs that arenecessary to bring the property to commercial production or increase the capacity or useful life are capitalized. Costs to maintain the production capacity in aproperty under production are expensed as incurred.Capitalized resource costs are depleted using the units-of-production method. Our resource development assets are evaluated for impairment whenevents or changes in circumstances indicate that the carrying amount may not be recoverable.Pension Plans and Other Postretirement BenefitsUnder authoritative accounting standards, assumptions are made regarding the valuation of benefit obligations and the performance of plan assets. Asrequired, we recognize a balance sheet asset or liability for each of our pension and OPEB plans equal to the plan’s funded status as of the measurement date.The primary assumptions are as follows:•Discount Rate—The discount rate is used in calculating the present value of benefits, which is based on projections of benefit payments to be made inthe future.•Expected Return on Plan Assets—We project the future return on plan assets based on prior performance and future expectations for the types ofinvestments held by the plans as well as the expected long-term allocation of plan assets for these investments. These projected returns reduce the netbenefit costs recorded currently.•Rate of Compensation Increase—For salary-related plans, we project employees’ annual pay increases, which are used to project employees’ pensionbenefits at retirement.•Mortality Assumptions—Assumptions about life expectancy of plan participants are used in the measurement of related plan obligations.Actuarial gains and losses are recognized annually in our consolidated statements of income in the fourth quarter and whenever a plan is determined toqualify for a remeasurement during a fiscal year. The remaining components of pension and OPEB plan expense, primarily service cost, interest cost andexpected return on assets, are recorded on a monthly basis. The market-related value of assets equals the actual market value as of the date of measurement.47Albemarle Corporation and Subsidiaries During 2018, we made changes to assumptions related to discount rates and expected rates of return on plan assets. We consider available informationthat we deem relevant when selecting each of these assumptions.Our U.S. defined benefit plans for non-represented employees are closed to new participants, with no additional benefits accruing under these plans asparticipants’ accrued benefits have been frozen. In selecting the discount rates for the U.S. plans, we consider expected benefit payments on a plan-by-planbasis. As a result, the Company uses different discount rates for each plan depending on the demographics of participants and the expected timing of benefitpayments. For 2018, the discount rates were calculated using the results from a bond matching technique developed by Milliman, which matched the futureestimated annual benefit payments of each respective plan against a portfolio of bonds of high quality to determine the discount rate. We believe our selecteddiscount rates are determined using preferred methodology under authoritative accounting guidance and accurately reflect market conditions as of theDecember 31, 2018 measurement date.In selecting the discount rates for the foreign plans, we look at long-term yields on AA-rated corporate bonds when available. Our actuaries havedeveloped yield curves based on the yields of constituent bonds in the various indices as well as on other market indicators such as swap rates, particularly atthe longer durations. For the Eurozone, we apply the Aon Hewitt yield curve to projected cash flows from the relevant plans to derive the discount rate. Forthe U.K., the discount rate is determined by applying the Aon Hewitt yield curve for typical schemes of similar duration to projected cash flows ofAlbemarle’s U.K. plan. In other countries where there is not a sufficiently deep market of high-quality corporate bonds, we set the discount rate by referencingthe yield on government bonds of an appropriate duration.At December 31, 2018, the weighted-average discount rate for the U.S. and foreign pension plans was increased to 4.59% and 2.15%, respectively, from4.03% and 1.94%, respectively, at December 31, 2017 to reflect market conditions as of the December 31, 2018 measurement date. The discount rate for theOPEB plans at December 31, 2018 and 2017 was 4.55% and 3.99%, respectively.In estimating the expected return on plan assets, we consider past performance and future expectations for the types of investments held by the plan aswell as the expected long-term allocations of plan assets to these investments. For the years 2018 and 2017, the weighted-average expected rate of return onU.S. pension plan assets was 6.89%, and the weighted-average expected rate of return on foreign pension plan assets was 5.52% and 6.16%, respectively.Effective January 1, 2019, the weighted-average expected rate of return on U.S. and foreign pension plan assets is 6.89% and 5.69%, respectively. Theweighted-average expected rate of return on plan assets for our OPEB plans was 7.00% during 2018 and 2017.In projecting the rate of compensation increase, we consider past experience in light of movements in inflation rates. At December 31, 2018 and 2017,the assumed weighted-average rate of compensation increase was 3.63% and 3.18%, respectively, for our foreign pension plans.In October 2017, the Society of Actuaries (“SOA”) published an updated Mortality Improvement Scale, MP-2017. The updated improvement scaleincorporates an additional year of mortality data (2015). We utilized the same base, SOA RP-2014 Adjusted to 2006 Total Dataset Mortality, but we revisedour mortality assumption to incorporate the MP-2017 Mortality Improvement Scale for purposes of measuring our U.S. pension and OPEB obligations atDecember 31, 2017. In October 2018, the SOA published an updated Mortality Improvement Scale, MP-2018. The updated Improvement Scale incorporatesan additional year of mortality data (2016). We utilized the same base mortality, SOA RP-2014 Adjusted to 2006 Total Dataset Mortality, but we revised ourmortality assumption to incorporate the MP-2018 Mortality Improvement Scale for purposes of measuring our U.S. pension and OPEB obligations atDecember 31, 2018.At December 31, 2018, the assumed rate of increase in the pre-65 and post-65 per capita cost of covered health care benefits for U.S. retirees was zero asthe employer-paid premium caps (pre-65 and post-65) were met starting January 1, 2013.48Albemarle Corporation and Subsidiaries A variance in the assumptions discussed above would have an impact on the projected benefit obligations, the accrued OPEB liabilities, and the annualnet periodic pension and OPEB cost. The following table reflects the sensitivities associated with a hypothetical change in certain assumptions, primarily inthe U.S. (in thousands): (Favorable) Unfavorable 1% Increase 1% Decrease Increase (Decrease)in Benefit Obligation Increase (Decrease)in Benefit Cost Increase (Decrease)in Benefit Obligation Increase (Decrease)in Benefit CostActuarial Assumptions Discount Rate: Pension$(94,999) $3,492 $116,592 $(5,024)Other postretirement benefits$(4,403) $239 $5,226 $(298)Expected return on plan assets: Pension* $(5,595) * $5,595Other postretirement benefits* $— * $—* Not applicable.Of the $583.7 million total pension and postretirement assets at December 31, 2018, $72.0 million, or approximately 12%, are measured using the netasset value as a practical expedient. Gains or losses attributable to these assets are recognized in the consolidated balance sheets as either an increase ordecrease in plan assets. See Note 15, “Pension Plans and Other Postretirement Benefits,” to our consolidated financial statements included in Part II, Item 8 ofthis report.Income TaxesWe use the liability method for determining our income taxes, under which current and deferred tax liabilities and assets are recorded in accordancewith enacted tax laws and rates. Under this method, the amounts of deferred tax liabilities and assets at the end of each period are determined using the taxrate expected to be in effect when taxes are actually paid or recovered. Future tax benefits are recognized to the extent that realization of such benefits is morelikely than not. In order to record deferred tax assets and liabilities, we are following guidance under ASU 2015-17, which requires deferred tax assets andliabilities to be classified as noncurrent on the balance sheet, along with any related valuation allowance. Tax effects are released from Accumulated OtherComprehensive Income using either the specific identification approach or the portfolio approach based on the nature of the underlying item.Deferred income taxes are provided for the estimated income tax effect of temporary differences between the financial statement carrying amounts andthe tax basis of existing assets and liabilities. Deferred tax assets are also provided for operating losses, capital losses and certain tax credit carryovers. Avaluation allowance, reducing deferred tax assets, is established when it is more likely than not that some portion or all of the deferred tax assets will not berealized. The realization of such deferred tax assets is dependent upon the generation of sufficient future taxable income of the appropriate character.Although realization is not assured, we do not establish a valuation allowance when we believe it is more likely than not that a net deferred tax asset will berealized.We only recognize a tax benefit after concluding that it is more likely than not that the benefit will be sustained upon audit by the respective taxingauthority based solely on the technical merits of the associated tax position. Once the recognition threshold is met, we recognize a tax benefit measured asthe largest amount of the tax benefit that, in our judgment, is greater than 50% likely to be realized. Interest and penalties related to income tax liabilities areincluded in Income tax expense on the consolidated statements of income.We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Due to the statute of limitations, we are no longer subject to U.S. federalincome tax audits by the Internal Revenue Service (“IRS”) for years prior to 2011. Due to the statute of limitations, we also are no longer subject to U.S. stateincome tax audits prior to 2011.With respect to jurisdictions outside the U.S., several audits are in process. We have audits ongoing for the years 2006 through 2017 related to Germany,Taiwan, Italy, India, Belgium, and Chile, some of which are for entities that have since been divested.While we believe we have adequately provided for all tax positions, amounts asserted by taxing authorities could be greater than our accrued position.Accordingly, additional provisions on federal and foreign tax-related matters could be recorded in the future as revised estimates are made or the underlyingmatters are settled or otherwise resolved.49Albemarle Corporation and Subsidiaries Since the timing of resolutions and/or closure of tax audits are uncertain, it is difficult to predict with certainty the range of reasonably possiblesignificant increases or decreases in the liability related to uncertain tax positions that may occur within the next twelve months. Our current view is that it isreasonably possible that we could record a decrease in the liability related to uncertain tax positions, relating to a number of issues, up to approximately $4.4million as a result of closure of tax statutes. As a result of the sale of the Chemetall Surface Treatment business in 2016, we agreed to indemnify certainincome and non-income tax liabilities, including uncertain tax positions, associated with the entities sold. The associated liability is recorded in Othernoncurrent liabilities. See Note 16, “Other Noncurrent Liabilities,” and Note 20, “Income Taxes,” for further details.We have designated the undistributed earnings of a portion of our foreign operations as indefinitely reinvested and as a result we do not provide fordeferred income taxes on the unremitted earnings of these subsidiaries. Our foreign earnings are computed under U.S. federal tax earnings and profits (“E&P”)principles. In general, to the extent our financial reporting book basis over tax basis of a foreign subsidiary exceeds these E&P amounts, deferred taxes havenot been provided, as they are essentially permanent in duration. The determination of the amount of such unrecognized deferred tax liability is notpracticable. We provide for deferred income taxes on our undistributed earnings of foreign operations that are not deemed to be indefinitely invested. We willcontinue to evaluate our permanent investment assertion taking into consideration all relevant and current tax laws.On December 22, 2017, the TCJA was signed into law in the U.S. The TCJA contains several key tax provisions including, among other things, thereduction of the corporate income tax rate from 35% to 21% effective January 1, 2018, the requirement of companies to pay a one-time transition tax onearnings of certain foreign subsidiaries that were previously tax deferred, and the creation of new taxes on certain foreign sourced earnings such as globalintangible low-taxed income (“GILTI”). A company can elect an accounting policy to account for GILTI as a period charge in the future period the tax arisesor as part of deferred taxes related to the investment or subsidiary. The Company has elected to account for GILTI as a period cost.Stock-based Compensation ExpenseThe fair value of restricted stock awards, restricted stock unit awards and performance unit awards with a service condition are determined based on thenumber of shares or units granted and the quoted price of our common stock on the date of grant, and the fair value of stock options is determined using theBlack-Scholes valuation model. The fair value of performance unit awards with a service and a market condition are estimated on the date of grant using aMonte Carlo simulation model. The fair value of these awards is determined after giving effect to estimated forfeitures. Such value is recognized as expenseover the service period, which is generally the vesting period of the equity grant. To the extent restricted stock awards, restricted stock unit awards,performance unit awards and stock options are forfeited prior to vesting in excess of the estimated forfeiture rate, the corresponding previously recognizedexpense is reversed as an offset to operating expenses.Financial Condition and LiquidityOverviewThe principal uses of cash in our business generally have been capital investments and resource development costs, funding working capital andservice of debt. We also make contributions to our defined benefit pension plans, pay dividends to our shareholders and repurchase shares of our commonstock. Historically, cash to fund the needs of our business has been principally provided by cash from operations, debt financing and equity issuances.We are continually focused on working capital efficiency particularly in the areas of accounts receivable and inventory. We anticipate that cash onhand, cash provided by operating activities, proceeds from divestitures and borrowings will be sufficient to pay our operating expenses, satisfy debt serviceobligations, fund capital expenditures and other investing activities, fund pension contributions and pay dividends for the foreseeable future.Cash FlowOur cash and cash equivalents were $555.3 million at December 31, 2018 as compared to $1.14 billion at December 31, 2017. Cash provided byoperating activities was $546.2 million, $304.0 million and $735.5 million during the years ended December 31, 2018, 2017 and 2016, respectively.The increase in cash provided by operating activities in 2018 versus 2017 was primarily due to higher income tax payments in 2017, includingapproximately $257 million of income taxes from the gain on sale of the Chemetall Surface Treatment business. In addition, 2018 benefited from increasedearnings in each of our reportable segments, increased dividends received from unconsolidated investments and lower interest payments. This was partiallyoffset by increased50Albemarle Corporation and Subsidiaries receivables from higher net sales during 2018 and the build-up of inventory in our Lithium and Catalysts segments due to higher forecasted sales. Thedecrease in cash provided by operating activities in 2017 versus 2016 was primarily due to the 2017 income tax payment noted above that was recorded inincome taxes payable in 2016. In addition, the decrease resulted from the build-up of inventory in the Lithium reportable segment in 2017. This was partiallyoffset by increased overall sales volumes and prices, lower acquisition and integration related costs and lower interest payments in 2017 as compared to2016.During 2018, cash on hand, cash provided by operations and $413.6 million of net proceeds from divestitures funded $114.7 million of commercialpaper repayments, net of borrowings, $500.0 million of accelerated share repurchase programs, $700.0 million of capital expenditures for plant, machineryand equipment, and mining resource development, dividends to shareholders of $144.6 million, and pension and postretirement contributions of $15.2million. During 2017, cash on hand, cash provided by operations and net borrowings of $138.8 million funded $778.2 million of debt repayments, $317.7million of capital expenditures for plant, machinery and equipment, a $250.0 million accelerated share repurchase program, dividends to shareholders of$140.6 million, and pension and postretirement contributions of $13.3 million. During 2016, cash on hand, cash provided by operations and $3.33 billion ofcash proceeds from divestitures funded $1.42 billion of debt repayments, $196.7 million of capital expenditures for plant, machinery and equipment,dividends to shareholders of $135.4 million, and pension and postretirement contributions of $20.1 million. In addition, during the years ended December31, 2018, 2017 and 2016, our consolidated joint venture, JBC, paid dividends of approximately $40.0 million, $102.5 million and $105.0 million,respectively, which resulted in dividends to noncontrolling interests of $14.8 million, $36.8 million and $35.9 million, respectively.On April 3, 2018, we completed the Polyolefin Catalysts Divestiture to W.R. Grace & Co. for net cash proceeds of approximately $413.6 million andrecorded a gain of $210.4 million before income taxes in 2018 related to the sale of this business. The transaction includes Albemarle’s Product DevelopmentCenter located in Baton Rouge, Louisiana, and operations at our Yeosu, South Korea site. The sale did not include the organometallics or curatives portion ofthe PCS business. The Polyolefin Catalysts Divestiture reflects our commitment to investing in the future growth of our high priority businesses and returningcapital to our shareholders.On December 14, 2016, we completed the sale of the Chemetall Surface Treatment business to BASF SE for cash proceeds of approximately $3.1billion, net of purchase price adjustments. As a result of the sale, we recorded a gain of $388.0 million before income taxes and a tax liability of $253.0million related to the difference between the sales price and the proportionate carrying value of the interests sold in 2016. We used the proceeds tosignificantly reduce leverage, including repaying the outstanding balance of the September 2015 Term Loan in full and approximately $153 million ofCommercial Paper Notes in December 2016. In addition, during the first quarter of 2017, we repaid the 3.00% Senior notes in full, €307.0 million of the1.875% Senior notes and $174.7 million of the 4.50% Senior notes, as well as related redemption premiums of $45.2 million.In 2016, we also completed the sales of our metal sulfides business and our mineral-based flame retardants and specialty chemicals businesses for netproceeds of approximately $137 million and $187 million, respectively. The net proceeds from both sales were used to repay a portion of the outstandingbalance under the September 2015 Term Loan Agreement.Capital expenditures were $700.0 million, $317.7 million and $196.7 million for the years ended December 31, 2018, 2017 and 2016, respectively, andwere incurred mainly for plant, machinery and equipment, and mining resource development. The increase in capital expenditures during the year endedDecember 31, 2018 was primarily driven by expansion in our Lithium business. Capital expenditures for discontinued operations were $19.3 million for theyear ended December 31, 2016. We expect our capital expenditures to be between $800 million and $900 million in 2019 for Lithium growth, miningresource development and capacity increases, as well as productivity and continuity of operations projects in all segments. Of the total capital expenditures,our projects related to the continuity of operations is expected to remain in the range of 4-6% of net sales, similar to prior years.During 2018, we incurred $19.4 million of acquisition and integration related costs related to various significant projects. During 2017, we incurred$33.9 million of acquisition and integration related costs related to various significant projects, including the Jiangli New Materials acquisition, whichcontains non-routine compensation related costs negotiated specifically as a result of this acquisition that are outside of the Company’s ordinary coursecompensation arrangements. During 2016, we incurred $52.1 million of acquisition and integration related costs directly related to the acquisition ofRockwood (mainly consisting of professional services, costs to achieve synergies, relocation costs, and other integration costs) and $5.3 million of costs inconnection with other significant projects.In November 2016, our Board of Directors authorized an increase in the number of shares the Company is permitted to repurchase under our sharerepurchase program, pursuant to which the Company was permitted to repurchase up to a maximum51Albemarle Corporation and Subsidiaries of 15,000,000 shares, including those previously authorized but not yet repurchased. Under our existing Board authorized share repurchase program, during2018 and 2017, the Company repurchased approximately 5.3 million shares and 2.3 million shares of our common stock, respectively, which reduced theCompany’s weighted average shares outstanding for purposes of calculating basic and diluted earnings per share for the years ended December 31, 2018 and2017, respectively. All of the shares repurchased in 2018 and 2017 were also repurchased pursuant to the terms of ASR agreements with major financialinstitutions. As of December 31, 2018, there were 7,396,263 remaining shares available for repurchase under the Company’s authorized share repurchaseprogram. There were no shares of our common stock repurchased during 2016.Net current assets decreased to approximately $815.2 million at December 31, 2018 from $1.28 billion at December 31, 2017, with the decrease beinglargely due to the reduction in cash and cash equivalents to fund the ASR programs we entered into during 2018 and capital expenditure projects. Additionalchanges in the components of net current assets are primarily due to the timing of the sale of goods and other ordinary transactions leading up to the balancesheet dates and are not the result of any policy changes by the Company, and do not reflect any change in either the quality of our net current assets or ourexpectation of success in converting net working capital to cash in the ordinary course of business.On February 26, 2019, we increased our quarterly dividend rate to $0.3675 per share, a 10% increase from the quarterly rate of $0.335 per share paid in2018.At December 31, 2018 and December 31, 2017, our cash and cash equivalents included $525.8 million and $1.10 billion, respectively, held by ourforeign subsidiaries. The majority of these foreign cash balances are associated with earnings that we have asserted are indefinitely reinvested and which weplan to use to support our continued growth plans outside the U.S. through funding of capital expenditures, acquisitions, research, operating expenses orother similar cash needs of our foreign operations. From time to time, we repatriate cash associated with earnings from our foreign subsidiaries to the U.S. fornormal operating needs through intercompany dividends, but only from subsidiaries whose earnings we have not asserted to be indefinitely reinvested orwhose earnings qualify as “previously taxed income” as defined by the Internal Revenue Code. For the years ended December 31, 2018, 2017 and 2016, werepatriated approximately $621.8 million, $20.5 million and $53.7 million of cash, respectively, as part of these foreign earnings cash repatriation activities.A portion of the cash repatriations was used to repay a net amount of $114.7 million of commercial paper during 2018.While we continue to closely monitor our cash generation, working capital management and capital spending in light of continuing uncertainties inthe global economy, we believe that we will continue to have the financial flexibility and capability to opportunistically fund future growth initiatives.Additionally, we anticipate that future capital spending including business acquisitions, share repurchases and other cash outlays, should be financedprimarily with cash flow provided by operations and cash on hand, with additional cash needed, if any, provided by borrowings. The amount and timing ofany additional borrowings will depend on our specific cash requirements.Long-Term DebtWe currently have the following senior notes outstanding:Issue Month/Year Principal (in millions) Interest Rate Interest Payment Dates Maturity DateDecember 2014 €393.0 1.875% December 8 December 8, 2021November 2014 $425.0 4.15% June 1December 1 December 1, 2024November 2014 $350.0 5.45% June 1December 1 December 1, 2044December 2010 $175.3 4.50% June 15December 15 December 15, 2020Our senior notes are senior unsecured obligations and rank equally with all our other senior unsecured indebtedness from time to time outstanding. Thesenior notes are effectively subordinated to any of our existing or future secured indebtedness and to the existing and future indebtedness of our subsidiaries.As is customary for such long-term debt instruments, each senior note outstanding has terms that allow us to redeem the notes before its maturity, in whole atany time or in part from time to time, at a redemption price equal to the greater of (i) 100% of the principal amount of the senior notes to be redeemed, or (ii)the sum of the present values of the remaining scheduled payments of principal and interest thereon (exclusive of interest accrued to the date of redemption)discounted to the redemption date on a semi-annual basis using the comparable government rate (as defined in the indentures governing the senior notes)plus between 25 and 40 basis points, depending on the note, plus, in each case, accrued interest thereon to the date of redemption. Holders may require us topurchase such notes at 101% upon a change of control triggering event, as defined in the indentures. The senior notes are subject to typical events of default,including bankruptcy and insolvency events, nonpayment and the acceleration of certain subsidiary indebtedness of $40 million or more caused by anonpayment default.52Albemarle Corporation and Subsidiaries On June 21, 2018, we entered into the 2018 Credit Agreement to replace our revolving, unsecured credit agreement dated as of February 7, 2014, asamended. The 2018 Credit Agreement currently provides for borrowings of up to $1.0 billion and matures on June 23, 2023. Borrowings under the 2018Credit Agreement bear interest at variable rates based on an average London inter-bank offered rate (“LIBOR”) for deposits in the relevant currency plus anapplicable margin which ranges from 0.910% to 1.500%, depending on the Company’s credit rating from Standard & Poor’s Rating Services, Moody’sInvestors Services and Fitch Ratings. The applicable margin on the facility was 1.125% as of December 31, 2018. There were no borrowings outstandingunder the 2018 Credit Agreement as of December 31, 2018.Borrowings under the 2018 Credit Agreement are conditioned upon satisfaction of certain conditions precedent, including the absence of defaults. TheCompany is subject to one financial covenant, as well as customary affirmative and negative covenants. The financial covenant requires that the Company’sconsolidated funded debt to consolidated EBITDA ratio (as such terms are defined in the 2018 Credit Agreement) to be less than or equal to 3.50:1.00,subject to adjustments in accordance with the terms of the 2018 Credit Agreement relating to a consummation of an acquisition where the considerationincludes cash proceeds from issuance of funded debt in excess of $500 million. The 2018 Credit Agreement also contains customary default provisions,including defaults for non-payment, breach of representations and warranties, insolvency, non-performance of covenants and cross-defaults to other materialindebtedness. The occurrence of an event of default under the 2018 Credit Agreement could result in all loans and other obligations becoming immediatelydue and payable and the credit facility being terminated.On May 29, 2013, we entered into agreements to initiate a commercial paper program on a private placement basis under which we may issue unsecuredcommercial paper notes (the “Commercial Paper Notes”) from time-to-time up to a maximum aggregate principal amount outstanding at any time of $750.0million. The proceeds from the issuance of the Commercial Paper Notes are expected to be used for general corporate purposes, including the repayment ofother debt of the Company. Our 2018 Credit Agreement is available to repay the Commercial Paper Notes, if necessary. Aggregate borrowings outstandingunder the 2018 Credit Agreement and the Commercial Paper Notes will not exceed the $1.0 billion current maximum amount available under the 2018 CreditAgreement. The Commercial Paper Notes will be sold at a discount from par, or alternatively, will be sold at par and bear interest at rates that will vary basedupon market conditions at the time of issuance. The maturities of the Commercial Paper Notes will vary but may not exceed 397 days from the date of issue.The definitive documents relating to the commercial paper program contain customary representations, warranties, default and indemnification provisions. AtDecember 31, 2018, we had $306.6 million of Commercial Paper Notes outstanding bearing a weighted-average interest rate of approximately 2.91% and aweighted-average maturity of 38 days. During 2018, we repaid a net amount of $114.7 million of commercial paper notes using cash on hand. TheCommercial Paper Notes are classified as Current portion of long-term debt in our consolidated balance sheets at December 31, 2018 and December 31, 2017.The non-current portion of our long-term debt amounted to $1.40 billion at December 31, 2018, compared to $1.42 billion at December 31, 2017. Inaddition, at December 31, 2018, we had the ability to borrow $693.4 million under our commercial paper program and the 2018 Credit Agreement, and$251.0 million under other existing lines of credit, subject to various financial covenants under our 2018 Credit Agreement. We have the ability and intent torefinance our borrowings under our other existing credit lines with borrowings under the 2018 Credit Agreement, as applicable. Therefore, the amountsoutstanding under those credit lines, if any, are classified as long-term debt. We believe that as of December 31, 2018 we were, and currently are, incompliance with all of our debt covenants. For additional information about our long-term debt obligations, see Note 14, “Long-Term Debt,” to ourconsolidated financial statements included in Part II, Item 8 of this report.Off-Balance Sheet ArrangementsIn the normal course of business with customers, vendors and others, we have entered into off-balance sheet arrangements, including bank guaranteesand letters of credit, which totaled approximately $71.8 million at December 31, 2018. None of these off-balance sheet arrangements has, or is likely to have,a material effect on our current or future financial condition, results of operations, liquidity or capital resources.53Albemarle Corporation and Subsidiaries Other ObligationsThe following table summarizes our contractual obligations for capital projects, various take or pay and throughput agreements, long-term debt,operating leases and other commitments as of December 31, 2018 (in thousands): 2019 2020 2021 2022 2023 ThereafterLong-term debt obligations(a)$307,294 $175,302 $446,996 $— $7,216 $778,720Expected interest payments on long-term debtobligations(b)53,004 53,004 45,119 36,738 36,738 418,213Operating lease obligations (rental)25,608 17,918 12,478 10,794 10,109 87,085Take or pay / throughput agreements(c)26,570 17,293 9,018 7,541 5,595 15,737Letters of credit and guarantees45,342 12,924 1,883 1,277 — 10,389Transition tax on foreign earnings(d)14,379 14,379 30,230 30,442 44,497 198,197Capital projects256,165 89 — — — —Total$728,362 $290,909 $545,724 $86,792 $104,155 $1,508,341(a)Amounts represent the expected principal payments of our long-term debt and do not include any fair value adjustments, premiums or discounts. Obligations in 2019 includeour outstanding Commercial Paper Notes of $306.6 million with a weighted average maturity of 38 days.(b)Interest on our fixed rate borrowings was calculated based on the stated rates of such borrowings. A weighted average interest rate of approximately 0.35% was used for ourremaining long-term debt obligations.(c)These amounts primarily relate to contracts entered into with certain third party vendors in the normal course of business to secure raw materials for our production processes.In order to secure materials, sometimes for long durations, these contracts mandate a minimum amount of product to be purchased at predetermined rates over a set timeframe.(d)In December 2017, the TCJA was signed into law imposing a one-time transition tax on foreign earnings, payable over an eight-year period. The one-time transition taximposed by the TCJA is based on our total post-1986 earnings and profits that we previously deferred from U.S. income taxes.Amounts in the table above exclude required employer pension contributions. Contributions to our domestic and foreign qualified and nonqualifiedpension plans, including our supplemental executive retirement plan (“SERP”), are expected to approximate $12 million in 2019. We may choose to makeadditional pension contributions in excess of this amount. We made contributions of approximately $12.9 million to our domestic and foreign pension plans(both qualified and nonqualified) during the year ended December 31, 2018.The liability related to uncertain tax positions, including interest and penalties, recorded in Other noncurrent liabilities totaled $22.9 million and $24.4million at December 31, 2018 and 2017, respectively. Related assets for corresponding offsetting benefits recorded in Other assets totaled $13.0 million and$14.6 million at December 31, 2018 and 2017, respectively. We cannot estimate the amounts of any cash payments during the next twelve months associatedwith these liabilities and are unable to estimate the timing of any such cash payments in the future at this time.Liquidity OutlookWe anticipate that cash on hand and cash provided by operating activities, divestitures, including the Polyolefin Catalysts Divestiture, and borrowingswill be sufficient to pay our operating expenses, satisfy debt service obligations, fund any capital expenditures and share repurchases, make acquisitions,make pension contributions and pay dividends for the foreseeable future. Our main focus over the next three years, in terms of uses of cash, will be investingin growth of the businesses and the return of value to shareholders. Additionally, we will continue to evaluate the merits of any opportunities that may arisefor acquisitions of businesses or assets, which may require additional liquidity. For example, we expect that the purchase price for the announced acquisitionof the Wodgina Project, of approximately $1.15 billion, will be funded with available cash and new debt borrowings.Our cash flows from operations may be negatively affected by adverse consequences to our customers and the markets in which we compete as a resultof moderating global economic conditions and reduced capital availability.While we maintain business relationships with a diverse group of financial institutions, an adverse change in their credit standing could lead them tonot honor their contractual credit commitments, decline funding under existing but uncommitted lines of credit, not renew their extensions of credit or notprovide new financing. While the global corporate bond and bank loan markets remain strong, periods of elevated uncertainty related to global economicand/or geopolitical concerns may limit54Albemarle Corporation and Subsidiaries efficient access to such markets for extended periods of time. If such concerns heighten, we may incur increased borrowing costs and reduced credit capacityas our various credit facilities mature. When the U.S. Federal Reserve or similar national reserve banks in other countries decide to tighten the monetarysupply in response, for example, to improving economic conditions, we may incur increased borrowing costs as interest rates increase on our variable ratecredit facilities, as our various credit facilities mature or as we refinance any maturing fixed rate debt obligations, although these cost increases would bepartially offset by increased income rates on portions of our cash deposits.Overall, with generally strong cash-generative businesses and no significant long-term debt maturities before 2020, we believe we have, and willmaintain, a solid liquidity position.As previously reported in 2018, following receipt of information regarding potential improper payments being made by third party sales representativesof our Refining Solutions business, within our Catalysts segment, we promptly retained outside counsel and forensic accountants to investigate potentialviolations of the Company’s Code of Conduct, the FCPA, and other potentially applicable laws. Based on this internal investigation, we have voluntarilyself-reported potential issues relating to the use of third party sales representatives in our Refining Solutions business, within our Catalysts segment, to theDOJ, the SEC, and the DPP, and are cooperating with the DOJ, the SEC, and DPP in their review of these matters. In connection with our internalinvestigation, we have implemented, and are continuing to implement, appropriate remedial measures.At this time, we are unable to predict the duration, scope, result or related costs associated with the investigations by the DOJ, the SEC, or DPP. We areunable to predict what, if any, action may be taken by the DOJ, the SEC, or DPP, or what penalties or remedial actions they may seek to impose. Anydetermination that our operations or activities are not in compliance with existing laws or regulations could result in the imposition of fines, penalties,disgorgement, equitable relief, or other losses. We do not believe, however, that any such fines, penalties, disgorgement, equitable relief or other losses wouldhave a material adverse effect on our financial condition or liquidity.We had cash and cash equivalents totaling $555.3 million as of December 31, 2018, of which $525.8 million is held by our foreign subsidiaries. Thiscash represents an important source of our liquidity and is invested in bank accounts or money market investments with no limitations on access. The cashheld by our foreign subsidiaries is intended for use outside of the U.S. We anticipate that any needs for liquidity within the U.S. in excess of our cash held inthe U.S. can be readily satisfied with borrowings under our existing U.S. credit facilities or our commercial paper program.Safety and Environmental MattersWe are subject to federal, state, local and foreign requirements regulating the handling, manufacture and use of materials (some of which may beclassified as hazardous or toxic by one or more regulatory agencies), the discharge of materials into the environment and the protection of the environment.To our knowledge, we are currently complying and expect to continue to comply in all material respects with applicable environmental laws, regulations,statutes and ordinances. Compliance with existing federal, state, local and foreign environmental protection laws is not expected to have a material effect oncapital expenditures, earnings or our competitive position, but the costs associated with increased legal or regulatory requirements could have an adverseeffect on our operating results.Among other environmental requirements, we are subject to the federal Superfund law, and similar state laws, under which we may be designated as aPRP, and may be liable for a share of the costs associated with cleaning up various hazardous waste sites. Management believes that in cases in which we mayhave liability as a PRP, our liability for our share of cleanup is de minimis. Further, almost all such sites represent environmental issues that are quite matureand have been investigated, studied and in many cases settled. In de minimis situations, our policy generally is to negotiate a consent decree and to pay anyapportioned settlement, enabling us to be effectively relieved of any further liability as a PRP, except for remote contingencies. In other than de minimis PRPmatters, our records indicate that unresolved PRP exposures should be immaterial. We accrue and expense our proportionate share of PRP costs. Becausemanagement has been actively involved in evaluating environmental matters, we are able to conclude that the outstanding environmental liabilities forunresolved PRP sites should not have a material adverse effect upon our results of operations or financial condition.Our environmental and safety operating costs charged to expense were $42.9 million, $40.1 million and $34.4 million in 2018, 2017 and 2016,respectively, excluding depreciation of previous capital expenditures, and are expected to be in the same range in the next few years. Costs for remediationhave been accrued and payments related to sites are charged against accrued liabilities, which at December 31, 2018 totaled approximately $49.6 million, anincrease of $9.8 million from $39.8 million at December 31, 2017. See Note 17, “Commitments and Contingencies” to our consolidated financial statementsincluded in Part II, Item 8 of this report for a reconciliation of our environmental liabilities for the years ended December 31, 2018, 2017 and 2016.55Albemarle Corporation and Subsidiaries We believe that any sum we may be required to pay in connection with environmental remediation and asset retirement obligation matters in excess ofthe amounts recorded should occur over a period of time and should not have a material adverse effect upon our results of operations, financial condition orcash flows on a consolidated annual basis, although any such sum could have a material adverse impact on our results of operations, financial condition orcash flows in a particular quarterly reporting period.Capital expenditures for pollution-abatement and safety projects, including such costs that are included in other projects, were approximately $47.3million, $28.1 million and $28.8 million in 2018, 2017 and 2016, respectively. In the future, capital expenditures for these types of projects may increase dueto more stringent environmental regulatory requirements and our efforts in reaching sustainability goals. Management’s estimates of the effects ofcompliance with governmental pollution-abatement and safety regulations are subject to (a) the possibility of changes in the applicable statutes andregulations or in judicial or administrative construction of such statutes and regulations and (b) uncertainty as to whether anticipated solutions to pollutionproblems will be successful, or whether additional expenditures may prove necessary.Recently Issued Accounting PronouncementsSee Note 1, “Summary of Significant Accounting Policies” to our consolidated financial statements included in Part II, Item 8 of this report for adiscussion of our Recently Issued Accounting Pronouncements.Item 7A.Quantitative and Qualitative Disclosures About Market Risk.The primary currencies to which we have foreign currency exchange rate exposure are the Euro, Japanese Yen, Chinese Renminbi, South Korean Won,Australian Dollar, Chilean Peso and Taiwan Dollar. In response to greater fluctuations in foreign currency exchange rates in recent periods, we have increasedthe degree of exposure risk management activities to minimize the potential impact on earnings.We manage our foreign currency exposures by balancing certain assets and liabilities denominated in foreign currencies and through the use, from timeto time, of foreign currency forward contracts. The principal objective of such contracts is to minimize the financial impact of changes in foreign currencyexchange rates. The counterparties to these contractual agreements are major financial institutions with which we generally have other financialrelationships. We are exposed to credit loss in the event of nonperformance by these counterparties. However, we do not anticipate nonperformance by thecounterparties. We do not utilize financial instruments for trading or other speculative purposes.The primary method we use to reduce foreign currency exposure is to identify natural hedges, in which the operating activities denominated inrespective currencies across various subsidiaries balance in respect to timing and the underlying exposures. In the event a natural hedge is not available, wemay employ a forward contract to reduce exposure, generally expiring within one year. While these contracts are subject to fluctuations in value, suchfluctuations are intended to offset the changes in the value of the underlying exposures being hedged. Unless otherwise noted, gains and losses on foreigncurrency forward contracts are recognized currently in Other expenses, net, and generally do not have a significant impact on results of operations.At December 31, 2018, our financial instruments subject to foreign currency exchange risk consisted of foreign currency forward contracts with anaggregate notional value of $626.5 million and with a fair value representing a net asset position of $0.4 million. Fluctuations in the value of these contractsare intended to offset the changes in the value of the underlying exposures being hedged. We conducted a sensitivity analysis on the fair value of our foreigncurrency hedge portfolio assuming an instantaneous 10% change in select foreign currency exchange rates from their levels as of December 31, 2018, with allother variables held constant. A 10% appreciation of the U.S. Dollar against foreign currencies that we hedge would result in a decrease of approximately$24.4 million in the fair value of our foreign currency forward contracts. A 10% depreciation of the U.S. Dollar against these foreign currencies would resultin an increase of approximately $26.8 million in the fair value of our foreign currency forward contracts. The sensitivity of the fair value of our foreigncurrency hedge portfolio represents changes in fair values estimated based on market conditions as of December 31, 2018, without reflecting the effects ofunderlying anticipated transactions. When those anticipated transactions are realized, actual effects of changing foreign currency exchange rates could havea material impact on our earnings and cash flows in future periods.On December 18, 2014, the carrying value of our 1.875% Euro-denominated senior notes was designated as an effective hedge of our net investment inforeign subsidiaries where the Euro serves as the functional currency, and beginning on the date of designation, gains or losses on the revaluation of thesesenior notes to our reporting currency have been and will be recorded in Accumulated other comprehensive loss. In January 2017, we repaid €307.0 millionof these senior notes using proceeds from56Albemarle Corporation and Subsidiaries the sale of the Chemetall Surface Treatment business. This repayment did not impair the designated hedge of our net investment in foreign subsidiaries wherethe Euro serves as the functional currency.We are exposed to changes in interest rates that could impact our results of operations and financial condition. We manage global interest rate andforeign exchange exposure as part of our regular operational and financing strategies. We had variable interest rate borrowings of $313.8 million and $426.6million outstanding at December 31, 2018 and 2017, respectively. These borrowings represented 18% and 23% of total outstanding debt and bore averageinterest rates of 2.85% and 1.78% at December 31, 2018 and 2017, respectively. A hypothetical 10% increase (approximately 29 basis points) in the averageinterest rate applicable to these borrowings would change our annualized interest expense by approximately $0.9 million as of December 31, 2018. We mayenter into interest rate swaps, collars or similar instruments with the objective of reducing interest rate volatility relating to our borrowing costs.Our raw materials are subject to price volatility caused by weather, supply conditions, political and economic variables and other unpredictable factors.Historically, we have not used futures, options or swap contracts to manage the volatility related to the above exposures. However, the refinery catalystsbusiness has used financing arrangements to provide long-term protection against changes in metals prices. We seek to limit our exposure by entering intolong-term contracts when available, and we seek price increase limitations through contracts. These contracts do not have a significant impact on our resultsof operations.57Albemarle Corporation and Subsidiaries Item 8. Financial Statements and Supplementary Data.MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTINGOur management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rule13a-15(f) and 15d-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in theUnited States. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect the transactions and dispositions of assets; (ii) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States, and that receiptsand expenditures of the Company are being made only in accordance with management’s and our directors’ authorizations; and (iii) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on thefinancial statements.Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, weconducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2018. In making this assessment,management used the criteria for effective internal control over financial reporting described in the Internal Control—Integrated Framework 2013 set forthby the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the assessment, management concluded that, as ofDecember 31, 2018, our internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States. Theconcept of reasonable assurance is based on the recognition that there are inherent limitations in all systems of internal control. Because of its inherentlimitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to futureperiods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies orprocedures may deteriorate.The effectiveness of our internal control over financial reporting as of December 31, 2018 has been audited by PricewaterhouseCoopers LLP, anindependent registered public accounting firm, as stated in their report which is included herein./S/ LUTHER C. KISSAM IV Luther C. Kissam IVChairman, President and Chief Executive Officer(principal executive officer)February 27, 201958Albemarle Corporation and Subsidiaries Report of Independent Registered Public Accounting FirmTo the Board of Directors and Shareholders of Albemarle Corporation:Opinions on the Financial Statements and Internal Control over Financial ReportingWe have audited the accompanying consolidated balance sheets of Albemarle Corporation and its subsidiaries (the “Company”) as of December 31,2018 and 2017, and the related consolidated statements of income, comprehensive income (loss), changes in equity and cash flows for each of the three yearsin the period ended December 31, 2018, including the related notes (collectively referred to as the “consolidated financial statements”). We also have auditedthe Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control—Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company asof December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018 inconformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all materialrespects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control—Integrated Framework(2013) issued by the COSO.Change in Accounting PrincipleAs discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for revenues from contractswith customers in 2018.Basis for OpinionsThe Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financialreporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report onInternal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on theCompany’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company AccountingOversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities lawsand the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtainreasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whethereffective internal control over financial reporting was maintained in all material respects.Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidatedfinancial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a testbasis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principlesused and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit ofinternal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a materialweakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also includedperforming such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’sinternal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management and directors of the59Albemarle Corporation and Subsidiaries company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’sassets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate./s/ PricewaterhouseCoopers LLPCharlotte, North CarolinaFebruary 27, 2019We have served as the Company’s auditor since 1994.60Albemarle Corporation and SubsidiariesCONSOLIDATED STATEMENTS OF INCOME(In Thousands, Except Per Share Amounts)Year Ended December 312018 2017 2016Net sales$3,374,950 $3,071,976 $2,677,203Cost of goods sold2,157,694 1,965,700 1,706,897Gross profit1,217,256 1,106,276 970,306Selling, general and administrative expenses446,090 450,286 353,765Research and development expenses70,054 84,330 80,475Gain on sales of businesses, net(210,428) — (122,298)Acquisition and integration related costs— — 57,384Operating profit911,540 571,660 600,980Interest and financing expenses(52,405) (115,350) (65,181)Other expenses, net(64,434) (9,512) (20,535)Income from continuing operations before income taxes and equity in net income ofunconsolidated investments794,701 446,798 515,264Income tax expense144,826 431,817 96,263Income from continuing operations before equity in net income of unconsolidatedinvestments649,875 14,981 419,001Equity in net income of unconsolidated investments (net of tax)89,264 84,487 59,637Net income from continuing operations739,139 99,468 478,638Income from discontinued operations (net of tax)— — 202,131Net income739,139 99,468 680,769Net income attributable to noncontrolling interests(45,577) (44,618) (37,094)Net income attributable to Albemarle Corporation$693,562 $54,850 $643,675Basic earnings per share: Continuing operations$6.40 $0.49 $3.93Discontinued operations— — 1.80 $6.40 $0.49 $5.73Diluted earnings per share: Continuing operations$6.34 $0.49 $3.90Discontinued operations— — 1.78 $6.34 $0.49 $5.68Weighted-average common shares outstanding—basic108,427 110,914 112,379Weighted-average common shares outstanding—diluted109,458 112,380 113,239See accompanying notes to the consolidated financial statements.61Albemarle Corporation and SubsidiariesCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(In Thousands)Year Ended December 312018 2017 2016Net income$739,139 $99,468 $680,769Other comprehensive (loss) income, net of tax: Foreign currency translation(150,258) 227,439 (20,825)Pension and postretirement benefits(138) (97) 834Net investment hedge25,786 (41,827) 26,133Interest rate swap(585) 2,116 2,116Total other comprehensive (loss) income, net of tax(125,195) 187,631 8,258Comprehensive income613,944 287,099 689,027Comprehensive income attributable to noncontrolling interests(45,396) (45,505) (36,477)Comprehensive income attributable to Albemarle Corporation$568,548 $241,594 $652,550See accompanying notes to the consolidated financial statements.62Albemarle Corporation and SubsidiariesCONSOLIDATED BALANCE SHEETS(In Thousands)December 312018 2017Assets Current assets: Cash and cash equivalents$555,320 $1,137,303Trade accounts receivable, less allowance for doubtful accounts (2018—$4,460; 2017—$10,425)605,712 534,326Other accounts receivable52,059 37,937Inventories700,540 592,781Other current assets84,790 136,064Assets held for sale— 39,152Total current assets1,998,421 2,477,563Property, plant and equipment, at cost4,799,063 4,124,335Less accumulated depreciation and amortization1,777,979 1,631,025Net property, plant and equipment3,021,084 2,493,310Investments528,722 534,064Noncurrent assets held for sale— 139,813Other assets80,135 74,164Goodwill1,567,169 1,610,355Other intangibles, net of amortization386,143 421,503Total assets$7,581,674 $7,750,772Liabilities and Equity Current liabilities: Accounts payable$522,516 $418,537Accrued expenses257,323 268,336Current portion of long-term debt307,294 422,012Dividends payable35,169 35,165Liabilities held for sale— 1,938Income taxes payable60,871 54,937Total current liabilities1,183,173 1,200,925Long-term debt1,397,916 1,415,360Postretirement benefits46,157 52,003Pension benefits285,396 294,611Noncurrent liabilities held for sale— 614Other noncurrent liabilities526,942 599,174Deferred income taxes382,982 370,389Commitments and contingencies (Note 17) Equity: Albemarle Corporation shareholders’ equity: Common stock, $.01 par value (authorized 150,000 shares), issued and outstanding — 105,616 in 2018 and110,547 in 20171,056 1,105Additional paid-in capital1,368,897 1,863,949Accumulated other comprehensive loss(350,682) (225,668)Retained earnings2,566,050 2,035,163Total Albemarle Corporation shareholders’ equity3,585,321 3,674,549Noncontrolling interests173,787 143,147Total equity3,759,108 3,817,696Total liabilities and equity$7,581,674 $7,750,772See accompanying notes to the consolidated financial statements.63Albemarle Corporation and SubsidiariesCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(In Thousands, Except Share Data) Common Stock AdditionalPaid-inCapital Accumulated OtherComprehensive(Loss) Income RetainedEarnings Total AlbemarleShareholders’Equity NoncontrollingInterests Total EquityShares Amounts Balance at January 1, 2016 112,219,351 $1,122 $2,059,151 $(421,288) $1,615,407 $3,254,392 $146,921 $3,401,313Net income 643,675 643,675 37,094 680,769Other comprehensive income(loss) 8,876 8,876 (618) 8,258Cash dividends declared, $1.22per common share (137,151) (137,151) (35,855) (173,006)Stock-based compensation andother 16,251 16,251 16,251Exercise of stock options 212,343 2 9,400 9,402 9,402Tax benefit related to stock plans 1,811 1,811 1,811Issuance of common stock, net 131,596 1 (1) — —Shares withheld for withholdingtaxes associated with commonstock issuances (39,500) — (2,194) (2,194) (2,194)Balance at December 31, 2016 112,523,790 $1,125 $2,084,418 $(412,412) $2,121,931 $3,795,062 $147,542 $3,942,604Balance at January 1, 2017 112,523,790 $1,125 $2,084,418 $(412,412) $2,121,931 $3,795,062 $147,542 $3,942,604Net income 54,850 54,850 44,618 99,468Other comprehensive income 186,744 186,744 887 187,631Cash dividends declared, $1.28per common share (141,618) (141,618) (36,756) (178,374)Stock-based compensation andother 16,505 16,505 16,505Exercise of stock options 210,432 2 8,236 8,238 8,238Shares repurchased (2,341,083) (23) (249,977) (250,000) (250,000)Issuance of common stock, net 243,024 2 (2) — —Termination of Tianqi LithiumCorporation option agreement 13,144 13,144 (13,144) —Shares withheld for withholdingtaxes associated with commonstock issuances (89,489) (1) (8,375) (8,376) (8,376)Balance at December 31, 2017 110,546,674 $1,105 $1,863,949 $(225,668) $2,035,163 $3,674,549 $143,147 $3,817,696Balance at January 1, 2018 110,546,674 $1,105 $1,863,949 $(225,668) $2,035,163 $3,674,549 $143,147 $3,817,696Net income 693,562 693,562 45,577 739,139Other comprehensive loss (125,014) (125,014) (181) (125,195)Cash dividends declared, $1.34per common share (144,601) (144,601) (14,756) (159,357)Cumulative adjustments fromadoption of income tax standardupdates (Note 1) (18,074) (18,074) (18,074)Stock-based compensation andother 18,506 18,506 18,506Exercise of stock options 94,031 1 3,632 3,633 3,633Shares repurchased (5,262,654) (53) (499,947) (500,000) (500,000)Issuance of common stock, net 383,974 4 (4) — —Shares withheld for withholdingtaxes associated with commonstock issuances (145,997) (1) (17,239) (17,240) (17,240)Balance at December 31, 2018 105,616,028 $1,056 $1,368,897 $(350,682) $2,566,050 $3,585,321 $173,787 $3,759,108See accompanying notes to the consolidated financial statements.64Albemarle Corporation and SubsidiariesCONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands)Year Ended December 312018 2017 2016Cash and cash equivalents at beginning of year$1,137,303 $2,269,756 $213,734Cash flows from operating activities: Net income739,139 99,468 680,769Adjustments to reconcile net income to cash flows from operating activities: Depreciation and amortization200,698 196,928 226,169Gain on acquisition— (6,221) —Gain on sales of businesses, net(210,428) — (510,278)Stock-based compensation15,228 19,404 17,031Equity in net income of unconsolidated investments (net of tax)(89,264) (84,487) (61,534)Dividends received from unconsolidated investments and nonmarketable securities57,415 39,386 43,759Pension and postretirement expense (benefit)10,410 (12,436) 41,546Pension and postretirement contributions(15,236) (13,341) (20,068)Unrealized gain on investments in marketable securities(527) (3,135) (3,655)Loss on early extinguishment of debt— 52,801 1,921Deferred income taxes49,164 (41,941) 21,121Changes in current assets and liabilities, net of effects of acquisitions and divestitures: (Increase) in accounts receivable(97,448) (74,545) (42,816)(Increase) decrease in inventories(124,067) (101,545) 25,974(Increase) decrease in other current assets(2,181) (213) 1,808Increase in accounts payable73,730 53,421 43,953(Decrease) increase in accrued expenses and income taxes payable(1,999) (269,381) 210,276Other, net(58,469) 449,816 59,548Net cash provided by operating activities546,165 303,979 735,524Cash flows from investing activities: Acquisitions, net of cash acquired(11,403) (44,367) (126,747)Cash payments related to acquisitions and other— — (81,987)Capital expenditures(699,991) (317,703) (196,654)Cash proceeds from divestitures, net413,569 6,857 3,325,571(Investments in) sales of marketable securities, net(270) (275) 305Repayments from joint ventures— 1,250 —Investments in equity and other corporate investments(5,600) (3,565) —Net cash (used in) provided by investing activities(303,695) (357,803) 2,920,488Cash flows from financing activities: Proceeds from borrowings of other long-term debt— 27,000 —Repayments of long-term debt— (778,209) (1,252,302)Other (repayments) borrowings, net(113,567) 138,751 (163,721)Fees related to early extinguishment of debt— (46,959) —Dividends paid to shareholders(144,596) (140,557) (135,353)Dividends paid to noncontrolling interests(14,756) (36,756) (35,855)Repurchases of common stock(500,000) (250,000) —Proceeds from exercise of stock options3,633 8,238 9,401Withholding taxes paid on stock-based compensation award distributions(17,240) (8,376) (2,194)Net cash used in financing activities(786,526) (1,086,868) (1,580,024)Net effect of foreign exchange on cash and cash equivalents(37,927) 8,239 (19,966)(Decrease) increase in cash and cash equivalents(581,983) (1,132,453) 2,056,022Cash and cash equivalents at end of year$555,320 $1,137,303 $2,269,756See accompanying notes to the consolidated financial statements.65Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTE 1—Summary of Significant Accounting Policies:Basis of ConsolidationThe consolidated financial statements include the accounts and operations of Albemarle Corporation and our wholly owned, majority owned andcontrolled subsidiaries. Unless the context otherwise indicates, the terms “Albemarle,” “we,” “us,” “our” or “the Company” mean Albemarle Corporation andits consolidated subsidiaries. For entities that we control and are the primary beneficiary, but own less than 100%, we record the minority ownership asnoncontrolling interest. We apply the equity method of accounting for investments in which we have an ownership interest from 20% to 50% or where weexercise significant influence over the related investee’s operations. All significant intercompany accounts and transactions are eliminated in consolidation.Discontinued OperationsA component or group of components that is classified as held for sale or that has been disposed of by sale, and which represents a strategic shift thathas or will have a major effect on our operations and financial results, is reported as discontinued operations beginning in the period when these criteria aremet. Our assets and liabilities held for sale at December 31, 2017 related to the polyolefin catalysts and components business did not meet the criteria to bepresented as discontinued operations.On December 14, 2016, the Company closed the sale of the Chemetall Surface Treatment business to BASF SE. In accordance with the applicableaccounting guidance, the Company began accounting for this business as discontinued operations in the consolidated statements of income and excludedthe business from segment results for the year ended December 31, 2016. See Note 3, “Divestitures,” for additional information.Estimates, Assumptions and ReclassificationsThe preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) requiresmanagement to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and disclosure of contingentassets and liabilities at the date of the financial statements. Actual results could differ from those estimates.Certain amounts in the accompanying consolidated financial statements and notes thereto have been reclassified to conform to the current presentation.Income tax expense for the year ended December 31, 2017 includes expense of $5.1 million due to an adjustment in the Company’s deferred tax liabilities forbasis differences in Chilean fixed assets related to the year ended December 31, 2016. The Company does not believe this adjustment is material to theconsolidated financial statements for the years ended December 31, 2017 or 2016. In addition, for the year ended December 31, 2017, the Company beganreporting its acquisition and integration related costs and restructuring and other costs in Cost of goods sold, Selling, general and administrative expensesand Research and development expenses. See Note 2, “Acquisitions,” and Note 24, “Segment and Geographic Area Information,” for further details.Revenue RecognitionEffective January 1, 2018, we adopted Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” and all relatedamendments using the modified retrospective method. There was no material impact to our results of operations or financial position upon adoption, and noadjustment was made to Retained earnings in our consolidated balance sheets because such adjustment was determined to be immaterial. In addition, newpresentation requirements, including separate disclosure of net sales from sources other than customers on our consolidated statements of income andseparate disclosures of contract assets or liabilities on our consolidated balance sheets, generally did not have a material impact. However, businesscircumstances, including the nature of customer contracts, can change and as such, we have expanded processes and controls to recognize such changes, andas necessary, consider whether any of these currently immaterial items might differ in the future.Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services, and is recognizedwhen performance obligations are satisfied under the terms of contracts with our customers. A performance obligation is deemed to be satisfied when controlof the product or service is transferred to our customer. The transaction price of a contract, or the amount we expect to receive upon satisfaction of allperformance obligations, is determined by reference to the contract’s terms and includes adjustments, if applicable, for any variable consideration, such ascustomer rebates, noncash consideration or consideration payable to the customer, although these adjustments are generally not material. Where a contractcontains more than one distinct performance obligation, the transaction price is allocated to each performance obligation based on the standalone sellingprice of each performance obligation, although these situations do not66Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSoccur frequently and are generally not built into our contracts. Any unsatisfied performance obligations are not material. Standalone selling prices are basedon prices we charge to our customers, which in some cases is based on established market prices. Sales and other similar taxes collected from customers onbehalf of third parties are excluded from revenue. Our payment terms are generally between 30 to 90 days, however, they vary by market factors, such ascustomer size, creditworthiness, geography and competitive environment.All of our revenue is derived from contracts with customers, and almost all of our contracts with customers contain one performance obligation for thetransfer of goods where such performance obligation is satisfied at a point in time. Control of a product is deemed to be transferred to the customer uponshipment or delivery. Significant portions of our sales are sold free on board shipping point or on an equivalent basis, while delivery terms of othertransactions are based upon specific contractual arrangements. Our standard terms of delivery are generally included in our contracts of sale, orderconfirmation documents and invoices, while the timing between shipment and delivery generally ranges between 1 and 45 days. Costs for shipping andhandling activities, whether performed before or after the customer obtains control of the goods, are accounted for as fulfillment costs.The Company currently utilizes the following practical expedients, as permitted by Accounting Standards Codification (“ASC”) 606, Revenue fromContracts with Customers:•All sales and other pass-through taxes are excluded from contract value;•In utilizing the modified retrospective transition method, no adjustment was necessary for contracts that did not cross over the reporting year;•We will not consider the possibility of a contract having a significant financing component (which would effectively attribute a portion of the salesprice to interest income) unless, if at contract inception, the expected payment terms (from time of delivery or other relevant criterion) are more thanone year;•If our right to customer payment is directly related to the value of our completed performance, we recognize revenue consistent with the invoicingright; and•We expense as incurred all costs of obtaining a contract incremental to any costs/compensation attributable to individual product sales/shipmentsfor contracts where the amortization period for such costs would otherwise be one year or less.Certain products we produce are made to our customer’s specifications where such products have limited alternative use or would need significantrework costs in order to be sold to another customer. In management’s judgment, control of these arrangements is transferred to the customer at a point in time(upon shipment or delivery) and not over the time they are produced. Therefore revenue is recognized upon shipment or delivery of these products.Costs incurred to obtain contracts with customers are not significant and are expensed immediately as the amortization period would be one year or less.When the Company incurs pre-production or other fulfillment costs in connection with an existing or specific anticipated contract and such costs arerecoverable through margin or explicitly reimbursable, such costs are capitalized and amortized to Cost of goods sold on a systematic basis that is consistentwith the pattern of transfer to the customer of the goods or services to which the asset relates, which is less than one year. We record bad debt expense inspecific situations when we determine the customer is unable to meet its financial obligation.Included in Trade accounts receivable at December 31, 2018 is approximately $590.3 million arising from contracts with customers. The remainingbalance of Trade accounts receivable at December 31, 2018 primarily includes value-added taxes collected from customers on behalf of various taxingauthorities.Cash and Cash EquivalentsCash and cash equivalents include cash and money market investments with insignificant interest rate risks and no limitations on access.InventoriesInventories are stated at lower of cost and net realizable value with cost determined primarily on the first-in, first-out basis. Cost is determined on theweighted-average basis for a small portion of our inventories at foreign plants and our stores, supplies and other inventory. A portion of our domesticproduced finished goods and raw materials are determined on the last-in, first-out basis.67Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSProperty, Plant and EquipmentProperty, plant and equipment include costs of assets constructed, purchased or leased under a capital lease, related delivery and installation costs andinterest incurred on significant capital projects during their construction periods. Expenditures for renewals and betterments also are capitalized, butexpenditures for normal repairs and maintenance are expensed as incurred. Costs associated with yearly planned major maintenance are generally deferredand amortized over 12 months or until the same major maintenance activities must be repeated, whichever is shorter. The cost and accumulated depreciationapplicable to assets retired or sold are removed from the respective accounts, and gains or losses thereon are included in income.We assign the useful lives of our property, plant and equipment based upon our internal engineering estimates which are reviewed periodically. Theestimated useful lives of our property, plant and equipment range from two to sixty years and depreciation is recorded on the straight-line method, with theexception of our long-term mineral rights, which are depleted on a units-of-production method.We evaluate the recovery of our property, plant and equipment by comparing the net carrying value of the asset group to the undiscounted net cashflows expected to be generated from the use and eventual disposition of that asset group when events or changes in circumstances indicate that its carryingamount may not be recoverable. If the carrying amount of the asset group is not recoverable, the fair value of the asset group is measured and if the carryingamount exceeds the fair value, an impairment loss is recognized.Resource Development ExpensesWe incur costs in resource exploration, evaluation and development during the different phases of our resource development projects. Explorationcosts incurred before obtaining legal rights to explore an area are generally expensed as incurred. After obtaining legal rights, exploration costs are expensedin areas where we have uncertainty about obtaining proven resources. In areas where we have substantial knowledge about the area and consider it probableto obtain commercially viable proven resources, exploration and evaluation costs are capitalized.If technical feasibility studies have been obtained, resource evaluation expenses are capitalized when the study demonstrates proven or probableresources for which future economic returns are expected, while costs for projects that are not considered viable are expensed. Development costs that arenecessary to bring the property to commercial production or increase the capacity or useful life are capitalized. Costs to maintain the production capacity in aproperty under production are expensed as incurred.Capitalized resource costs are depleted using the units-of-production method. Our resource development assets are evaluated for impairment whenevents or changes in circumstances indicate that the carrying amount may not be recoverable.InvestmentsInvestments are accounted for using the equity method of accounting if the investment gives us the ability to exercise significant influence, but notcontrol, over the investee. Significant influence is generally deemed to exist if we have an ownership interest in the voting stock of the investee between 20%and 50%, although other factors, such as representation on the investee’s board of directors and the impact of commercial arrangements, are considered indetermining whether the equity method of accounting is appropriate. Under the equity method of accounting, we record our investments in equity-methodinvestees in the consolidated balance sheets as Investments and our share of investees’ earnings or losses together with other-than-temporary impairments invalue as Equity in net income of unconsolidated investments in the consolidated statements of income. We evaluate our equity method investments forimpairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. If a decline in the value ofan equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period.Certain mutual fund investments are accounted for as trading equities and are marked-to-market on a periodic basis through the consolidatedstatements of income. Investments in joint ventures and nonmarketable securities of immaterial entities are estimated based upon the overall performance ofthe entity where financial results are not available on a timely basis.Environmental Compliance and RemediationEnvironmental compliance costs include the cost of purchasing and/or constructing assets to prevent, limit and/or control pollution or to monitor theenvironmental status at various locations. These costs are capitalized and depreciated based on estimated useful lives. Environmental compliance costs alsoinclude maintenance and operating costs with respect to pollution68Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSprevention and control facilities and other administrative costs. Such operating costs are expensed as incurred. Environmental remediation costs of facilitiesused in current operations are generally immaterial and are expensed as incurred. We accrue for environmental remediation costs and post-remediation coststhat relate to existing conditions caused by past operations at facilities or off-plant disposal sites in the accounting period in which responsibility isestablished and when the related costs are estimable. In developing these cost estimates, we evaluate currently available facts regarding each site, withconsideration given to existing technology, presently enacted laws and regulations, prior experience in remediation of contaminated sites, the financialcapability of other potentially responsible parties and other factors, subject to uncertainties inherent in the estimation process. If the amount and timing ofthe cash payments for a site are fixed or reliably determinable, the liability is discounted, if the calculated discount is material. Additionally, these estimatesare reviewed periodically, with adjustments to the accruals recorded as necessary.Research and Development ExpensesOur research and development expenses related to present and future products are expensed as incurred. These expenses consist primarily of personnel-related costs and other overheads, as well as outside service and consulting costs incurred for specific programs. Our U.S. facilities in Michigan,Pennsylvania, Texas and Louisiana and our global facilities in the Netherlands, Germany, Belgium and Korea form the capability base for our contractresearch and custom manufacturing businesses. These business areas provide research and scale-up services primarily to innovative life science companies.Goodwill and Other Intangible AssetsWe account for goodwill and other intangibles acquired in a business combination in conformity with current accounting guidance that requires thatgoodwill and indefinite-lived intangible assets not be amortized.We test goodwill for impairment by comparing the estimated fair value of our reporting units to the related carrying value. Our reporting units are eitherour operating business segments or one level below our operating business segments for which discrete financial information is available and for whichoperating results are regularly reviewed by the business management. We estimate the fair value based on present value techniques involving future cashflows. Future cash flows include assumptions about sales volumes, selling prices, raw material prices, labor and other employee benefit costs, capitaladditions, income taxes, working capital, and other economic or market-related factors. Significant management judgment is involved in estimating thesevariables and they include inherent uncertainties since they are forecasting future events. We perform a sensitivity analysis by using a range of inputs toconfirm the reasonableness of these estimates being used in the goodwill impairment analysis. We use a Weighted Average Cost of Capital (“WACC”)approach to determine our discount rate for goodwill recoverability testing. Our WACC calculation incorporates industry-weighted average returns on debtand equity from a market perspective. The factors in this calculation are largely external to the Company and, therefore, are beyond our control. We test ourrecorded goodwill for impairment in the fourth quarter of each year or upon the occurrence of events or changes in circumstances that would more likely thannot reduce the fair value of our reporting units below their carrying amounts. The Company performed its annual goodwill impairment test as of October 31,2018 and concluded there was no impairment as of that date. In addition, no material indications of impairment in any of our reporting units were indicatedby the sensitivity analysis.We assess our indefinite-lived intangible assets, which include trade names, for impairment annually and between annual tests if events or changes incircumstances indicate that it is more likely than not that the asset is impaired. The indefinite-lived intangible asset impairment standard allows us to firstassess qualitative factors to determine if a quantitative impairment test is necessary. Further testing is only required if we determine, based on the qualitativeassessment, that it is more likely than not that the indefinite-lived intangible asset’s fair value is less than its carrying amount. If we determine based on thequalitative assessment that it is more likely than not that the asset is impaired, an impairment test is performed by comparing the fair value of the indefinite-lived intangible asset to its carrying amount.Definite-lived intangible assets, such as purchased technology, patents and customer lists, are amortized over their estimated useful lives generally forperiods ranging from five to twenty-five years. Except for customer lists and relationships associated with the majority of our Lithium business, which areamortized using the pattern of economic benefit method, definite-lived intangible assets are amortized using the straight-line method. We evaluate therecovery of our definite-lived intangible assets by comparing the net carrying value of the asset group to the undiscounted net cash flows expected to begenerated from the use and eventual disposition of that asset group when events or changes in circumstances indicate that its carrying amount may not berecoverable. If the carrying amount of the asset group is not recoverable, the fair value of the asset group is measured and if the carrying amount exceeds thefair value, an impairment loss is recognized. See Note 12, “Goodwill and Other Intangibles.”69Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSPension Plans and Other Postretirement BenefitsUnder authoritative accounting standards, assumptions are made regarding the valuation of benefit obligations and the performance of plan assets. Asrequired, we recognize a balance sheet asset or liability for each of our pension and other postretirement benefit (“OPEB”) plans equal to the plan’s fundedstatus as of the measurement date. The primary assumptions are as follows:•Discount Rate—The discount rate is used in calculating the present value of benefits, which is based on projections of benefit payments to be made inthe future.•Expected Return on Plan Assets—We project the future return on plan assets based on prior performance and future expectations for the types ofinvestments held by the plans, as well as the expected long-term allocation of plan assets for these investments. These projected returns reduce the netbenefit costs recorded currently.•Rate of Compensation Increase—For salary-related plans, we project employees’ annual pay increases, which are used to project employees’ pensionbenefits at retirement.•Mortality Assumptions—Assumptions about life expectancy of plan participants are used in the measurement of related plan obligations.Actuarial gains and losses are recognized annually in our consolidated statements of income in the fourth quarter and whenever a plan is determined toqualify for a remeasurement during a fiscal year. The remaining components of pension and OPEB plan expense, primarily service cost, interest cost andexpected return on assets, are recorded on a monthly basis. The market-related value of assets equals the actual market value as of the date of measurement.During 2018, we made changes to assumptions related to discount rates and expected rates of return on plan assets. We consider available informationthat we deem relevant when selecting each of these assumptions.In selecting the discount rates for the U.S. plans, we consider expected benefit payments on a plan-by-plan basis. As a result, the Company usesdifferent discount rates for each plan depending on the demographics of participants and the expected timing of benefit payments. For 2018, the discountrates were calculated using the results from a bond matching technique developed by Milliman, which matched the future estimated annual benefit paymentsof each respective plan against a portfolio of bonds of high quality to determine the discount rate. We believe our selected discount rates are determinedusing preferred methodology under authoritative accounting guidance and accurately reflect market conditions as of the December 31, 2018 measurementdate.In selecting the discount rates for the foreign plans, we look at long-term yields on AA-rated corporate bonds when available. Our actuaries havedeveloped yield curves based on the yields on the constituent bonds in the various indices as well as on other market indicators such as swap rates,particularly at the longer durations. For the Eurozone, we apply the Aon Hewitt yield curve to projected cash flows from the relevant plans to derive thediscount rate. For the United Kingdom (“U.K.”), the discount rate is determined by applying the Aon Hewitt yield curve for typical schemes of similarduration to projected cash flows of Albemarle’s U.K. plan. In other countries where there is not a sufficiently deep market of high-quality corporate bonds, weset the discount rate by referencing the yield on government bonds of an appropriate duration.In estimating the expected return on plan assets, we consider past performance and future expectations for the types of investments held by the plan aswell as the expected long-term allocation of plan assets to these investments. In projecting the rate of compensation increase, we consider past experience inlight of movements in inflation rates.In October 2017, the Society of Actuaries (“SOA”) published an updated Mortality Improvement Scale, MP-2017. The updated improvement scaleincorporates an additional year of mortality data (2015). We utilized the same base mortality, SOA RP-2014 Adjusted to 2006 Total Dataset Mortality, but werevised our mortality assumption to incorporate the MP-2017 Mortality Improvement Scale for purposes of measuring our U.S. pension and OPEBobligations at December 31, 2017. In October 2018, the SOA published an updated Mortality Improvement Scale, MP-2018. The updated Improvement Scaleincorporates an additional year of mortality (2016). We utilized the same base mortality, SOA RP-2014 Adjusted to 2006 Total Dataset Mortality, but werevised our mortality assumption to incorporate the MP-2018 Mortality Improvement Scale for purposes of measuring our U.S. pension and OPEBobligations at December 31, 2018.Stock-based Compensation ExpenseThe fair value of restricted stock awards, restricted stock unit awards and performance unit awards with a service condition are determined based on thenumber of shares or units granted and the quoted price of our common stock on the date of grant, and the fair value of stock options is determined using theBlack-Scholes valuation model. The fair value of performance unit awards with a service condition and a market condition are estimated on the date of grantusing a Monte Carlo70Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSsimulation model. The fair value of these awards is determined after giving effect to estimated forfeitures. Such value is recognized as expense over theservice period, which is generally the vesting period of the equity grant. To the extent restricted stock awards, restricted stock unit awards, performance unitawards and stock options are forfeited prior to vesting in excess of the estimated forfeiture rate, the corresponding previously recognized expense is reversedas an offset to operating expenses.Income TaxesWe use the liability method for determining our income taxes, under which current and deferred tax liabilities and assets are recorded in accordancewith enacted tax laws and rates. Under this method, the amounts of deferred tax liabilities and assets at the end of each period are determined using the taxrate expected to be in effect when taxes are actually paid or recovered. Future tax benefits are recognized to the extent that realization of such benefits is morelikely than not. In order to record deferred tax assets and liabilities, we are following guidance under Financial Accounting Standards Board (“FASB”) ASU2015-17, which requires deferred tax assets and liabilities to be classified as noncurrent on the balance sheet, along with any related valuation allowance. Taxeffects are released from Accumulated Other Comprehensive Income using either the specific identification approach or the portfolio approach based on thenature of the underlying item.Deferred income taxes are provided for the estimated income tax effect of temporary differences between the financial statement carrying amounts andthe tax basis of existing assets and liabilities. Deferred tax assets are also provided for operating losses, capital losses and certain tax credit carryovers. Avaluation allowance, reducing deferred tax assets, is established when it is more likely than not that some portion or all of the deferred tax assets will not berealized. The realization of such deferred tax assets is dependent upon the generation of sufficient future taxable income of the appropriate character.Although realization is not assured, we do not establish a valuation allowance when we believe it is more likely than not that a net deferred tax asset will berealized.We only recognize a tax benefit after concluding that it is more likely than not that the benefit will be sustained upon audit by the respective taxingauthority based solely on the technical merits of the associated tax position. Once the recognition threshold is met, we recognize a tax benefit measured asthe largest amount of the tax benefit that, in our judgment, is greater than 50% likely to be realized. Under current accounting guidance for uncertain taxpositions, interest and penalties related to income tax liabilities are included in Income tax expense on the consolidated statements of income.We have designated the undistributed earnings of a portion of our foreign operations as indefinitely reinvested and as a result we do not provide fordeferred income taxes on the unremitted earnings of these subsidiaries. Our foreign earnings are computed under U.S. federal tax earnings and profits, or E&P,principles. In general, to the extent our financial reporting book basis over tax basis of a foreign subsidiary exceeds these E&P amounts, deferred taxes havenot been provided as they are essentially permanent in duration. The determination of the amount of such unrecognized deferred tax liability is notpracticable. We provide for deferred income taxes on our undistributed earnings of foreign operations that are not deemed to be indefinitely invested.Management’s assertion of indefinite reinvestment of undistributed foreign earnings was unchanged within the measurement period ending December 22,2018, as allowed under Staff Accounting Bulletin (“SAB”) 118. We will continue to evaluate our permanent investment assertion taking into considerationall relevant, current tax laws.On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was signed into law in the U.S. The TCJA contains several key tax provisions including,among other things, the reduction of the corporate income tax rate from 35% to 21% effective January 1, 2018, the requirement of companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and the creation of new taxes on certain foreign sourcedearnings such as global intangible low-taxed income (“GILTI”). A company can elect an accounting policy to account for GILTI as a period charge in thefuture period the tax arises or as part of deferred taxes related to the investment or subsidiary. The Company has elected to account for GILTI as a period cost.Accumulated Other Comprehensive LossAccumulated other comprehensive loss comprises principally foreign currency translation adjustments, amounts related to the revaluation of our euro-denominated senior notes which were designated as a hedge of our net investment in foreign operations in 2014, a realized loss on a forward starting interestrate swap entered into in 2014 which was designated as a cash flow hedge, and deferred income taxes related to the aforementioned items.Foreign Currency TranslationThe assets and liabilities of all foreign subsidiaries were prepared in their respective functional currencies and translated into U.S. Dollars based on thecurrent exchange rate in effect at the balance sheet dates, while income and expenses were71Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTStranslated at average exchange rates for the periods presented. Translation adjustments are reflected as a separate component of equity.Foreign exchange transaction and revaluation (losses) gains were ($10.5) million, ($11.1) million and $2.4 million for the years ended December 31,2018, 2017 and 2016, respectively, and are included in Other expenses, net, in our consolidated statements of income, with the unrealized portion includedin Other, net, in our consolidated statements of cash flows.Derivative Financial InstrumentsWe manage our foreign currency exposures by balancing certain assets and liabilities denominated in foreign currencies and through the use of foreigncurrency forward contracts from time to time, which generally expire within one year. The principal objective of such contracts is to minimize the financialimpact of changes in foreign currency exchange rates. While these contracts are subject to fluctuations in value, such fluctuations are generally expected tobe offset by changes in the value of the underlying foreign currency exposures being hedged. Unless otherwise noted, gains and losses on foreign currencyforward contracts are recognized currently in Other expenses, net, and generally do not have a significant impact on results of operations.We may also enter into interest rate swaps, collars or similar instruments from time to time, with the objective of reducing interest rate volatility relatingto our borrowing costs.The counterparties to these contractual agreements are major financial institutions with which we generally have other financial relationships. We areexposed to credit loss in the event of nonperformance by these counterparties. However, we do not anticipate nonperformance by the counterparties. We donot utilize financial instruments for trading or other speculative purposes. Our foreign currency forward contracts outstanding at December 31, 2018 and2017 have not been designated as hedging instruments under ASC 815, Derivatives and Hedging.Recently Issued Accounting PronouncementsIn May 2014, the FASB issued accounting guidance designed to enhance comparability of revenue recognition practices across entities, industries,jurisdictions and capital markets. The core principle of the guidance is that revenue recognized from a transaction or event that arises from a contract with acustomer should reflect the consideration to which an entity expects to be entitled in exchange for goods or services provided. To achieve that core principlethe new guidance sets forth a five-step revenue recognition model that will need to be applied consistently to all contracts with customers, except those thatare within the scope of other topics in the ASC. Also required are new disclosures to help users of financial statements better understand the nature, amount,timing and uncertainty of revenues and cash flows from contracts with customers. The new disclosures include qualitative and quantitative information aboutcontracts with customers, significant judgments made in applying the revenue guidance, and assets recognized related to the costs to obtain or fulfill acontract. During 2016, the FASB issued amendments to this new guidance that provided clarification, technical corrections and practical expedients. Topicsof potential relevance to the Company include principal versus agent considerations, collectability, presentation of sales tax from customers, contractmodifications at transition and accounting transition. These new requirements became effective on January 1, 2018 and did not have a material impact on ourconsolidated financial statements. We adopted the new standard using the modified retrospective method. We have implemented appropriate changes to thebusiness processes, controls and control activities to support recognition, presentation and disclosure under the new standard for the first quarter of 2018,however, we have not made any significant changes to our existing systems as a result of this new standard.In February 2016, the FASB issued accounting guidance that requires assets and liabilities arising from leases to be recorded on the balance sheet.Additional disclosures are required regarding the amount, timing, and uncertainty of cash flows from leases. This new guidance will be effective for fiscalyears beginning after December 15, 2018, including interim periods within those fiscal years, and is to be applied using a modified retrospective approach. InJuly 2018, the FASB issued an amendment which would allow entities to initially apply this new standard at the adoption date and recognize a cumulativeeffect adjustment to the opening balance of retained earnings. The Company adopted this standard on January 1, 2019 using this transition method. Weevaluated our existing lease contracts and believe this standard will have a material impact on the consolidated financial statements and related disclosures.The implementation of this standard will result in the addition of right-of-use assets and lease liabilities on our balance sheet by approximately $135 million.We have made the decision to adopt several practical expedients as allowed by this new standard, such as the short-term lease exemption and the reliefpackage. In addition, we have implemented new software, as well as changes to controls that support recognition and disclosure under this new standard.72Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSIn June 2016, the FASB issued accounting guidance that, among other things, changes the way entities recognize impairment of financial assets byrequiring immediate recognition of estimated credit losses expected to occur over the remaining life of the financial asset. Additional disclosures are requiredregarding an entity’s assumptions, models and methods for estimating the expected credit loss. This guidance will be effective for fiscal years beginning afterDecember 15, 2019, including interim periods within those fiscal years, and is to be applied using a modified retrospective approach. Early adoption ispermitted. We currently do not expect this guidance to have a significant impact on our consolidated financial statements.In October 2016, the FASB issued accounting guidance that eliminated the deferral of tax effects of intra-entity asset transfers other than inventory. As aresult, the tax expense from the intercompany sale of assets, other than inventory, and associated changes to deferred taxes will be recognized when the saleoccurs even though the pre-tax effects of the transaction have not been recognized as they are eliminated in consolidation. This guidance was effective usingthe modified retrospective method as of January 1, 2018, which resulted in an $11.2 million cumulative adjustment to decrease Retained earnings and is notreflected in periods prior to this date.In November 2016, the FASB issued accounting guidance that requires restricted cash and restricted cash equivalents to be included with cash and cashequivalents when reconciling the beginning and end of period total amounts shown on the statement of cash flows. This guidance became effective onJanuary 1, 2018 and did not have a significant impact on our consolidated financial statements.In January 2017, the FASB issued accounting guidance to clarify the definition of a business for determining whether transactions should be accountedfor as acquisitions (or disposals) of assets or businesses. This guidance became effective on January 1, 2018 and did not have a significant impact on ourconsolidated financial statements.In January 2017, the FASB issued accounting guidance to simplify the accounting for goodwill impairment. The guidance removes Step 2 of thegoodwill impairment test, which requires a reporting unit to calculate the implied fair value of goodwill by assigning the fair value of a reporting unit to allof its assets and liabilities as if that reporting unit has been acquired in a business combination. A goodwill impairment will now be the amount by which areporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remainunchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. Thisguidance will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and is to be applied on aprospective basis. Early adoption is permitted for goodwill impairment tests performed after January 1, 2017. We expect to adopt this guidance on January 1,2020 and do not expect it to have a significant impact on our consolidated financial statements.In March 2017, the FASB issued accounting guidance that changes the presentation of net periodic pension and postretirement benefit cost (“netbenefit cost”) in the income statement. This new guidance requires service cost to be presented as part of operating income (expense) and all othercomponents of net benefit cost are to be shown outside of operations. This guidance became effective on January 1, 2018 and did not have a significantimpact on our consolidated financial statements. The consolidated statements of income for the years ended December 31, 2017 and 2016 have been recast toconform to the current presentation required by this guidance. See Note 15, “Pension Plans and Other Postretirement Benefits,” for additional details.In May 2017, the FASB issued accounting guidance to clarify when to account for a change to the terms or conditions of a share-based payment awardas a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of theaward (as equity or liability) changes as a result of the change in terms or conditions. This new guidance became effective on January 1, 2018 and did nothave a significant impact on our consolidated financial statements.In August 2017, the FASB issued accounting guidance to better align an entity’s risk management activities with hedge accounting, simply theapplication of hedge accounting, and increase transparency as to the scope and results of hedging programs. This guidance will make more financial andnonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companiesassess effectiveness. In October 2018, the FASB issued additional guidance that permits the use of the Overnight Index Swap Rate based on the SecuredOvernight Financing Rate as a U.S. benchmark interest rate for hedge accounting purposes under ASC 815, Derivatives and Hedging. These newrequirements will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and are to be applied ona prospective basis. Early adoption is permitted. We currently do not expect this guidance to have a significant impact on our consolidated financialstatements.73Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSIn February 2018, the FASB issued accounting guidance that gives companies the option to reclassify stranded tax effects caused by the TCJA fromaccumulated other comprehensive income to retained earnings. As allowed by its provisions, we early-adopted this new guidance in the fourth quarter of2018, which resulted in a $6.9 million cumulative adjustment to decrease Retained earnings and is not reflected in periods prior to this date.In August 2018, the FASB issued accounting guidance that, among other things, eliminates certain disclosure requirements for fair value measurements.Under the new guidance, entities will no longer be required to disclose (a) the amount of and reasons for transfers between Level 1 and Level 2 of the fairvalue hierarchy and (b) the policy for timing of transfers between levels of the fair value hierarchy. As allowed by its provisions, we early-adopted this newguidance in the third quarter of 2018. The adoption of this new guidance did not have a significant impact on our consolidated financial statements.In August 2018, the FASB issued accounting guidance that, among other things, eliminates certain disclosure requirements for defined benefit pensionand other postretirement benefit plans. Under the new guidance, entities will no longer be required to disclose the amounts in accumulated othercomprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year. As allowed by its provisions, we early-adopted this new guidance in the third quarter of 2018. The adoption of this new guidance did not have a significant impact on our consolidated financialstatements.In August 2018, the FASB issued accounting guidance that requires implementation costs incurred in a cloud computing arrangement that is a servicecontract to be capitalized. Entities will be required to recognize the capitalized implementation costs to expense over the noncancellable term of the cloudcomputing arrangement. As allowed by its provisions, we early-adopted this new guidance in the first quarter of 2019, although we do not expect it to have amaterial impact on our consolidated financial statements. NOTE 2—Acquisitions:Sales de Magnesio, Ltda.On February 1, 2017, the Company acquired the remaining 50% interest in the Sales de Magnesio Ltda. (“Salmag”) joint venture in Chile from SQMSalar S.A. for approximately $8.3 million, net of cash acquired. In connection with the acquisition, the Company recorded a gain of $6.2 million, calculatedbased on the difference between the purchase price and the book value of the investment in Other expenses, net on the consolidated statements of income forthe year ended December 31, 2017.Jiangxi Jiangli New Materials Science and Technology Co. Ltd.On December 31, 2016, we completed the acquisition of all equity interests in the lithium hydroxide and lithium carbonate conversion business ofJiangxi Jiangli New Materials Science and Technology Co. Ltd. (“Jiangli New Materials”) for a cash purchase price of approximately $145 million. Thisincludes manufacturing assets located in both Jiangxi and Sichuan, China focused on the production of battery-grade lithium carbonate and lithiumhydroxide. This acquisition has enabled us to supply premium lithium salts to an expanded global customer base, while solidifying our leading position inthe lithium industry.The aggregate purchase price was allocated to the major categories of assets and liabilities acquired based upon their estimated fair values as ofDecember 31, 2016, which were based, in part, upon outside preliminary appraisals for certain assets. The allocation of the Jiangli New Materials acquisitionwas finalized in the fourth quarter of 2017. The fair values of the assets and liabilities acquired were primarily related to Accounts receivable of $0.6 million,Property, plant and equipment of $24.1 million, Other intangibles of $46.3 million, Accounts payable of $2.8 million and Deferred tax liabilities of $6.3million. In addition, the estimated fair value of the remaining net working capital acquired was $6.2 million, however, an equal liability was recorded inAccrued expenses, as it will be repaid to the previous owners of the acquired business. The excess of the purchase price over the estimated fair value of the netassets acquired was approximately $83.1 million and was recorded as goodwill.During the year ended December 31, 2017, the Company purchased inventory with a fair value of $37.1 million in connection with the Jiangli NewMaterials acquisition. The fair value included the markup of the underlying book value of $23.1 million, which was expensed in Cost of goods sold duringthe year ended December 31, 2017, the estimated remaining selling period.Goodwill arising from the acquisition consists largely of the anticipated synergies and economies of scale from the combined assets and the overallstrategic importance of the acquired assets to Albemarle. The goodwill attributable to the acquisition will not be amortizable or deductible for tax purposes.The weighted-average amortization periods for the other74Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSintangible assets acquired are 20 years for patents and technology, 13 years for customer lists and relationships and 20 years for other. The weighted-averageamortization period for all definite-lived intangible assets acquired is 17 years.Acquisition and integration related costs for the years ended December 31, 2018 and 2017 of $3.7 million and $14.3 million, respectively, wereincluded in Cost of goods sold and $15.7 million and $19.6 million, respectively, were included in Selling, general and administrative expenses on ourconsolidated statements of income. These acquisition and integration related costs relate to various significant projects, including the Jiangli New Materialsacquisition, which contains non-routine compensation related costs negotiated specifically as a result of this acquisition that are outside of the Company’sordinary compensation arrangements. Included in Acquisition and integration related costs on our consolidated statements of income for the year endedDecember 31, 2016 is $52.1 million of integration costs resulting from the acquisition of Rockwood Holdings, Inc. (“Rockwood”) (mainly consisting ofprofessional services fees, costs to achieve synergies, relocation costs, and other integration costs) and $5.3 million of costs in connection with othersignificant projects.NOTE 3—Divestitures:Polyolefin Catalysts and Components BusinessOn December 14, 2017, the Company signed a definitive agreement to sell the polyolefin catalysts and components portion of its Performance CatalystSolutions (“PCS”) business (“Polyolefin Catalysts Divestiture”) to W.R. Grace & Co., with the sale closing on April 3, 2018. We received net cash proceeds ofapproximately $413.6 million and have recorded a gain of $210.4 million before income taxes in 2018 related to the sale of this business. The transactionincludes Albemarle’s Product Development Center located in Baton Rouge, Louisiana, and operations at its Yeosu, South Korea site. The sale does notinclude the Company’s organometallics or curatives portion of its PCS business. The Polyolefin Catalysts Divestiture reflects the Company’s commitment toinvesting in the future growth of its high priority businesses and returning capital to shareholders.In the fourth quarter of 2017, we determined that the assets held for sale criteria in accordance with ASC 360, Property, Plant and Equipment, were metfor this business. As such, the assets and liabilities of this business were included in Assets held for sale and Liabilities held for sale, respectively, in theconsolidated balance sheet as of December 31, 2017.The carrying amounts of the major classes of assets and liabilities that were classified as held for sale at December 31, 2017, are as follows (inthousands): December 31, 2017Assets Current assets$39,152Net property, plant and equipment121,759Goodwill14,422Other intangibles, net of amortization3,632Assets held for sale$178,965Liabilities Current liabilities$1,938Noncurrent liabilities614Liabilities held for sale$2,552The results of operations of the business classified as held for sale is included in continuing operations within the consolidated statements of income.This business did not qualify for discontinued operations treatment because the Company’s management does not consider the sale as representing a strategicshift that had or will have a major effect on the Company’s operations and financial results.Chemetall Surface Treatment BusinessOn June 17, 2016, we entered into a definitive agreement to sell the Chemetall Surface Treatment business to BASF SE. On December 14, 2016, theCompany closed the sale of this business and received cash proceeds of approximately $3.1 billion.75Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSIncluded in Income from discontinued operations (net of tax) for the year ended December 31, 2016 is a pre-tax gain of $388.0 million ($135.0 million afterincome taxes) related to the sale of this business, which included a reversal of $81.4 million of foreign currency translation loss out of Accumulated othercomprehensive loss. This gain represents the difference between the carrying value of the related net assets and their fair value as determined by the salesprice less estimated costs to sell. During the second quarter of 2017, we received a final working capital settlement of $6.9 million related to the sale of thisbusiness. The sale of the Chemetall Surface Treatment business reflects the Company’s commitment to investing in the future growth of its high prioritybusinesses, maintaining leverage flexibility and returning capital to shareholders.The Chemetall Surface Treatment business, a separate reportable segment, was acquired on January 12, 2015 as part of the acquisition of Rockwood.This sale qualified for discontinued operations treatment because it represented a strategic shift that will have a major effect on the Company’s operationsand financial results. As a result, in the second quarter of 2016, the Company accounted for this business as discontinued operations in the consolidatedstatements of income and excluded the business from segment results for the year ended December 31, 2016. As of the date this business qualified fordiscontinued operations treatment, the Company stopped recording depreciation and amortization expense on assets of the Chemetall Surface Treatmentbusiness.The major components of Income from discontinued operations (net of tax) for the year ended December 31, 2016 were as follows (in thousands): Year Ended December 31,2016Net sales$813,285Cost of goods sold416,934Operating expenses, net(a)268,402Interest and financing expenses(b)38,227Other income, net(2,485)Gain on sale of discontinued operations(387,980)Income before income taxes480,187Income tax expense(c)278,056Income from discontinued operations (net of tax)$202,131(a)Operating expenses, net for discontinued operations includes mark-to market actuarial losses of $8.5 million during the year ended December 31, 2016.(b)Interest and financing expenses included the allocation of interest expense not directly attributable to other operations as well as interest expense related to debt to be assumedby the buyer. The allocation of interest expense to discontinued operations was based on the ratio of net assets held for sale to the sum of total net assets plus consolidated debt.(c)Income tax expense for the year ended December 31, 2016 included a charge of $253.0 million related to the gain on sale of discontinued operations.Depreciation and amortization and capital expenditures from discontinued operations for the year ended December 31, 2016 were as follows (inthousands): Year Ended December 31,2016Depreciation and amortization$35,194Capital expenditures$19,281Other DivestituresOn January 4, 2016, we completed the sale of our metal sulfides business to Treibacher Industrie AG for net proceeds of $137 million and recorded again of $11.5 million before income taxes in 2016 related to the sale of this business. Included in the transaction were sites in Vienna and Arnoldstein,Austria, and Tribotecc’s proprietary sulfide synthesis process. In addition, on February 1, 2016, we completed the sale of our minerals-based flame retardantsand specialty chemicals business to Huber Engineered Materials, a division of J.M. Huber Corporation, for net proceeds of approximately $187 million andrecorded a gain of $112.3 million before income taxes in 2016 related to the sale of these businesses. The transaction included Albemarle’s MartinswerkGmbH subsidiary and manufacturing facility located in Bergheim, Germany, and Albemarle’s 50% ownership76Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSinterest in Magnifin Magnesiaprodukte GmbH, a joint-venture with Radex Heraklith Industriebeteiligung AG at Breitenau, Austria. Also included in Gain onsales of businesses, net, for the year ended December 31, 2016 was a loss of $1.5 million on the sale of our wafer reclaim business.These businesses did not qualify for discontinued operations treatment because the Company’s management did not consider their sale as representinga strategic shift that had or will have a major effect on the Company’s operations and financial results.NOTE 4—Supplemental Cash Flow Information:Supplemental information related to the consolidated statements of cash flows is as follows (in thousands): Year Ended December 31, 2018 2017 2016Cash paid during the year for: Income taxes (net of refunds of $21,459, $17,522 and $9,270 in 2018, 2017 and2016, respectively)(a)$157,758 $320,222 $143,404Interest (net of capitalization)$49,762 $61,243 $96,948 Supplemental non-cash disclosures related to investing activities: Capital expenditures included in Accounts payable$134,784 $89,188 $33,622(a)Includes approximately $41 million of income taxes paid in 2018 from the gain on sale of the Polyolefin Catalysts Divestiture, and $257 million of income taxes paid in 2017from the gain on sale of the Chemetall Surface Treatment business.Other, net within Cash flows from operating activities on the consolidated statements of cash flows for the year ended December 31, 2018 included$28.4 million representing the reclassification of the current portion of the one-time transition tax resulting from the enactment of the TCJA, from Othernoncurrent liabilities to Income taxes payable within current liabilities. Included in Other, net for the year ended December 31, 2017 is $394.9 million relatedto the noncurrent portion of the one-time transition tax resulting from the enactment of the TCJA. For additional information, see Note 20, “Income Taxes.”In addition, included in Other, net for the years ended December 31, 2018, 2017 and 2016 is $10.5 million, $11.1 million and $40.8 million, respectively,related to losses on fluctuations in foreign currency exchange rates.77Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTE 5—Earnings Per Share:Basic and diluted earnings per share from continuing operations are calculated as follows (in thousands, except per share amounts): Year Ended December 31, 2018 2017 2016Basic earnings per share from continuing operations Numerator: Net income from continuing operations$739,139 $99,468 $478,638Net income from continuing operations attributable to noncontrolling interests(45,577) (44,618) (37,094)Net income from continuing operations attributable to Albemarle Corporation$693,562 $54,850 $441,544Denominator: Weighted-average common shares for basic earnings per share108,427 110,914 112,379Basic earnings per share from continuing operations$6.40 $0.49 $3.93Diluted earnings per share from continuing operations Numerator: Net income from continuing operations$739,139 $99,468 $478,638Net income from continuing operations attributable to noncontrolling interests(45,577) (44,618) (37,094)Net income from continuing operations attributable to Albemarle Corporation$693,562 $54,850 $441,544Denominator: Weighted-average common shares for basic earnings per share108,427 110,914 112,379Incremental shares under stock compensation plans1,031 1,466 860Weighted-average common shares for diluted earnings per share109,458 112,380 113,239Diluted earnings per share from continuing operations$6.34 $0.49 $3.90At December 31, 2018, there were 123,730 common stock equivalents not included in the computation of diluted earnings per share because theireffect would have been anti-dilutive.Included in the calculation of basic earnings per share are unvested restricted stock awards that contain nonforfeitable rights to dividends. AtDecember 31, 2018, there were 8,400 unvested shares of restricted stock awards outstanding.We have the authority to issue 15 million shares of preferred stock in one or more classes or series. As of December 31, 2018, no shares of preferredstock have been issued.In November 2016, our Board of Directors authorized an increase in the number of shares the Company is permitted to repurchase under our sharerepurchase program, pursuant to which the Company is now permitted to repurchase up to a maximum of 15 million shares, including those previouslyauthorized but not yet repurchased.Under our existing Board authorized share repurchase program, during 2018, the Company entered into two separate accelerated share repurchase(“ASR”) agreements with financial institutions. Under each ASR agreement, the Company paid $250 million from available cash on hand. Under the terms ofthe first ASR agreement, which was completed on September 28, 2018, the Company received and retired a total of 2,680,704 shares, calculated based on thedaily Rule 10b-18 volume-weighted average prices of the Company’s common stock over the term of the ASR agreement, less an agreed discount. Under theterms of the second ASR agreement, which was completed on December 7, 2018, the company received and retired a total of 2,581,950 shares, calculatedbased on the daily Rule 10b-18 weighted average prices of the Company’s common stock over the terms of the ASR agreement, less an agreed discount. TheCompany determined that each ASR agreement met the criteria to be accounted for as a forward contract indexed to its stock and was therefore treated as anequity instrument. In total, we received and retired 5,262,654 shares under these agreements, which reduced the Company’s weighted average sharesoutstanding for purposes of calculating basic and diluted earnings per share for the year ended December 31, 2018.Under our existing Board authorized share repurchase program, the Company entered into an ASR agreement with a financial institution on March 1,2017. Under the ASR agreement, in March 2017, the Company paid $250 million from available cash on hand and received and retired an initial delivery of1,948,178 shares of our common stock. Under the terms of78Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSthe ASR agreement, on June 16, 2017, the transaction was completed and we received and retired a final settlement of 392,905 shares, calculated based on thedaily Rule 10b-18 volume-weighted average prices of the Company’s common stock over the term of the ASR agreement, less an agreed discount. TheCompany determined that the ASR agreement met the criteria to be accounted for as a forward contract indexed to its stock and was therefore treated as anequity instrument. In total, we received and retired 2,341,083 shares under the ASR agreement, which reduced the Company’s weighted average sharesoutstanding for purposes of calculating basic and diluted earnings per share for the year ended December 31, 2017.There were no shares of the Company’s common stock repurchased during the year ended December 31, 2016. As of December 31, 2018, there were7,396,263 remaining shares available for repurchase under the Company’s authorized share repurchase program.NOTE 6—Other Accounts Receivable:Other accounts receivable consist of the following at December 31, 2018 and 2017 (in thousands): December 31, 2018 2017Value added tax/consumption tax$40,480 $23,158Other11,579 14,779Total$52,059 $37,937NOTE 7—Inventories:The following table provides a breakdown of inventories at December 31, 2018 and 2017 (in thousands): December 31, 2018 2017Finished goods(a)$482,355 $404,239Raw materials and work in process(b)158,290 132,891Stores, supplies and other59,895 55,651Total(c)$700,540 $592,781(a)Increase primarily due to the build-up of inventory in our Lithium segment for a forecasted increase in sales in 2019.(b)Included $71.4 million and $59.6 million at December 31, 2018 and 2017, respectively, of work in process related to lithium brine.(c)As of December 31, 2017, $24.7 million of Inventories were classified as Assets held for sale in the consolidated balance sheets. See Note 3, “Divestitures,” for additionalinformation.Approximately 10% and 17% of our inventories are valued using the last-in, first-out (“LIFO”) method at December 31, 2018 and 2017, respectively.The portion of our domestic inventories stated on the LIFO basis amounted to $69.2 million and $99.6 million at December 31, 2018 and 2017, respectively,which are below replacement cost by approximately $32.8 million and $33.1 million, respectively.NOTE 8—Other Current Assets:Other current assets consist of the following at December 31, 2018 and 2017 (in thousands): December 31, 2018 2017Income tax receivables$40,116 $47,130Prepaid expenses43,172 86,348Other1,502 2,586Total$84,790 $136,06479Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTE 9—Property, Plant and Equipment:Property, plant and equipment, at cost, consist of the following at December 31, 2018 and 2017 (in thousands): UsefulLives(Years) December 31,2018 2017Land — $123,518 $118,428Land improvements 10 – 30 63,349 63,328Buildings and improvements 10 – 45 251,980 245,482Machinery and equipment(a) 2 – 45 2,780,478 2,627,667Long-term mineral rights and production equipment costs 7 – 60 696,033 675,832Construction in progress — 883,705 393,598Total(b) $4,799,063 $4,124,335(a)Consists primarily of (1) short-lived production equipment components, office and building equipment and other equipment with estimated lives ranging 2 – 7 years,(2) production process equipment (intermediate components) with estimated lives ranging 8 – 19 years, (3) production process equipment (major unit components) withestimated lives ranging 20 – 29 years, and (4) production process equipment (infrastructure and other) with estimated lives ranging 30 – 45 years.(b)As of December 31, 2017, $215.9 million of Property, plant and equipment, at cost, was classified as Assets held for sale in the consolidated balance sheets. See Note 3,“Divestitures,” for additional information.The cost of property, plant and equipment is depreciated generally by the straight-line method. Depletion of long-term mineral rights is based on theunits-of-production method. Depreciation expense, including depletion, amounted to $170.0 million, $169.5 million and $178.8 million during the yearsended December 31, 2018, 2017 and 2016, respectively. Depreciation expense related to discontinued operations was $8.9 million during the year endedDecember 31, 2016. Interest capitalized on significant capital projects in 2018, 2017 and 2016 was $19.3 million, $7.4 million and $6.8 million,respectively.NOTE 10—Investments:Investments include our share of unconsolidated joint ventures, nonmarketable securities and marketable equity securities. The following table detailsour investment balances at December 31, 2018 and 2017 (in thousands): December 31, 2018 2017Joint ventures $486,032 $499,756Nonmarketable securities 9,177 3,655Marketable equity securities 33,513 30,653Total $528,722 $534,064Our ownership positions in significant unconsolidated investments are shown below: December 31, 2018 2017 2016* Windfield Holdings Pty. Ltd. - a joint venture with Sichuan Tianqi Lithium Industries, Inc., that mines lithium ore andproduces lithium concentrate49% 49% 49%* Nippon Aluminum Alkyls - a joint venture with Mitsui Chemicals, Inc. that produces aluminum alkyls50% 50% 50%* Nippon Ketjen Company Limited - a joint venture with Sumitomo Metal Mining Company Limited that producesrefinery catalysts50% 50% 50%* Eurecat S.A. - a joint venture with Axens Group for refinery catalysts regeneration services50% 50% 50%* Fábrica Carioca de Catalisadores S.A. - a joint venture with Petrobras Quimica S.A. - PETROQUISA that producescatalysts and includes catalysts research and product development activities50% 50% 50%Our investment in the significant unconsolidated joint ventures above amounted to $466.1 million and $479.1 million as of December 31, 2018 and2017, respectively, and the amount included in Equity in net income of unconsolidated investments (net of tax) in the consolidated statements of incometotaled $88.8 million, $86.8 million and $56.8 million for the years ended80Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2018, 2017 and 2016, respectively. Undistributed earnings attributable to our significant unconsolidated investments representedapproximately $159.9 million and $127.5 million of our consolidated retained earnings at December 31, 2018 and 2017, respectively. All of theunconsolidated joint ventures in which we have investments are private companies and accordingly do not have a quoted market price available.The following summary lists the assets, liabilities and results of operations for our significant unconsolidated joint ventures presented herein (inthousands): December 31, 2018 2017Summary of Balance Sheet Information: Current assets $476,460 $503,043Noncurrent assets 1,159,866 1,041,519Total assets $1,636,326 $1,544,562 Current liabilities $191,971 $133,670Noncurrent liabilities 422,769 405,662Total liabilities $614,740 $539,332 Year Ended December 31, 2018 2017 2016Summary of Statements of Income Information: Net sales $829,590 $687,561 $590,980Gross profit $456,518 $353,577 $267,241Income before income taxes $332,632 $267,805 $189,016Net income $225,791 $184,777 $126,872We have evaluated each of the unconsolidated investments pursuant to current accounting guidance and none qualify for consolidation. Dividendsreceived from our significant unconsolidated investments were $56.4 million, $38.1 million and $42.1 million in 2018, 2017 and 2016, respectively.At December 31, 2018 and 2017, the carrying amount of our investments in unconsolidated joint ventures differed from the amount of underlyingequity in net assets by approximately $0.4 million and $13.8 million, respectively. These amounts represent the differences between the value of certainassets of the joint ventures and our related valuation on a U.S. GAAP basis. As of December 31, 2018 and 2017, $0.1 million and $0.4 million, respectively,remained to be amortized over the remaining useful lives of the assets with the balance of the difference primarily representing our share of the joint ventures’goodwill.The Company holds a 49% equity interest in Windfield Holdings Pty. Ltd. (“Windfield”), which we acquired in the Rockwood acquisition. Withregards to the Company’s ownership in Windfield, the parties share risks and benefits disproportionate to their voting interests. As a result, the Companyconsiders Windfield to be a variable interest entity (“VIE”). However, the Company does not consolidate Windfield as it is not the primary beneficiary. Thecarrying amount of our 49% equity interest in Windfield, which is our most significant VIE, was $349.6 million and $355.2 million at December 31, 2018and December 31, 2017, respectively. The Company’s aggregate net investment in all other entities which it considers to be VIE’s for which the Company isnot the primary beneficiary was $8.1 million and $8.7 million at December 31, 2018 and December 31, 2017, respectively. Our unconsolidated VIEs arereported in Investments in the consolidated balance sheets. The Company does not guarantee debt for, or have other financial support obligations to, theseentities, and its maximum exposure to loss in connection with its continuing involvement with these entities is limited to the carrying value of theinvestments.As part of the original Windfield joint venture agreement, Tianqi Lithium Corporation (“Tianqi”) was granted an option to purchase from 20% to 30%of the equity interests in Rockwood Lithium GmbH, a wholly-owned German subsidiary of Albemarle, and its subsidiaries. In February 2017, Albemarle andTianqi terminated the option agreement, and as a result, we will retain 100% of the ownership interest in Rockwood Lithium GmbH and its subsidiaries.Following the termination of the option agreement, the $13.1 million fair value of the option agreement originally recorded in Noncontrolling interests wasreversed and recorded as an adjustment to Additional paid-in capital.81Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSThe Company holds a 50% equity interest in Jordan Bromine Company Limited (“JBC”), reported in the Bromine Specialties segment. The Companyconsolidates this venture as it is considered the primary beneficiary due to its operational and financial control.We maintain a Benefit Protection Trust (the “Trust”) that was created to provide a source of funds to assist in meeting the obligations of our ExecutiveDeferred Compensation Plan (“EDCP”), subject to the claims of our creditors in the event of our insolvency. Assets of the Trust, in conjunction with ourEDCP, are accounted for as trading securities in accordance with authoritative accounting guidance. The assets of the Trust consist primarily of mutual fundinvestments and are marked-to-market on a monthly basis through the consolidated statements of income. As of December 31, 2018 and 2017, thesemarketable securities amounted to $26.3 million and $25.5 million, respectively.NOTE 11—Other Assets:Other assets consist of the following at December 31, 2018 and 2017 (in thousands): December 31, 2018 2017Deferred income taxes(a)$17,029 $25,108Assets related to unrecognized tax benefits(a)12,984 14,601Other(b)50,122 34,455Total$80,135 $74,164(a)See Note 1, “Summary of Significant Accounting Policies” and Note 20, “Income Taxes.”(b)As of December 31, 2018 and 2017, a $28.7 million reserve was recorded against a note receivable on one of our European entities no longer deemed probable of collection.NOTE 12—Goodwill and Other Intangibles:The following table summarizes the changes in goodwill by reportable segment for the years ended December 31, 2018 and 2017 (in thousands): Lithium BromineSpecialties Catalysts All Other TotalBalance at December 31, 2016(a)$1,326,980 $20,319 $186,147 $6,586 $1,540,032Acquisitions(b)(26,151) — — — (26,151)Reclass to assets held for sale(c)— — (14,422) — (14,422)Foreign currency translation adjustments and other88,260 — 22,636 — 110,896Balance at December 31, 2017(a)1,389,089 20,319 194,361 6,586 1,610,355Foreign currency translation adjustments and other(34,310) — (8,876) — (43,186)Balance at December 31, 2018$1,354,779 $20,319 $185,485 $6,586 $1,567,169(a)The December 31, 2016 and 2017 balances have been recast to reflect a change in segments. See Note 24, “Segment and Geographic Area Information,” for additionalinformation.(b)Primarily represents final purchase price adjustments for the Jiangli New Materials acquisition recorded for the year ended December 31, 2017. See Note 2, “Acquisitions,” foradditional information.(c)Represents Goodwill of the Polyolefin Catalysts Divestiture. See Note 3, “Divestitures,” for additional information.82Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSOther intangibles consist of the following at December 31, 2018 and 2017 (in thousands): Customer Listsand Relationships Trade Names andTrademarks(a) Patents andTechnology Other TotalGross Asset Value Balance at December 31, 2016$387,893 $16,514 $38,434 $18,844 $461,685Acquisitions(b)19,225 1,429 20,381 18,847 $59,882Reclass to assets held for sale(c)— — — (4,228) (4,228)Foreign currency translation adjustments and other32,194 1,038 2,803 3,793 39,828Balance at December 31, 2017439,312 18,981 61,618 37,256 557,167Foreign currency translation adjustments and other(10,940) (528) (5,817) 6,452 (10,833)Balance at December 31, 2018$428,372 $18,453 $55,801 $43,708 $546,334Accumulated Amortization Balance at December 31, 2016$(49,165) $(7,952) $(31,683) $(18,321) $(107,121)Amortization(21,288) — (1,412) (2,379) (25,079)Reclass to assets held for sale(c)— — — 596 596Foreign currency translation adjustments and other(4,251) (343) (2,108) 2,642 (4,060)Balance at December 31, 2017(74,704) (8,295) (35,203) (17,462) (135,664)Amortization(23,402) — (1,450) (3,127) (27,979)Foreign currency translation adjustments and other2,309 119 1,405 (381) 3,452Balance at December 31, 2018$(95,797) $(8,176) $(35,248) $(20,970) $(160,191)Net Book Value at December 31, 2017$364,608 $10,686 $26,415 $19,794 $421,503Net Book Value at December 31, 2018$332,575 $10,277 $20,553 $22,738 $386,143(a)Includes only indefinite-lived intangible assets.(b)Represents final purchase price adjustments for the Jiangli New Materials acquisition and the acquisition of the remaining equity interest in Salmag. See Note 2,“Acquisitions,” for additional information.(c)Represents Other intangibles and related amortization of the Polyolefin Catalysts Divestiture. See Note 3, “Divestitures,” for additional information.Useful lives range from 13 – 25 years for customer lists and relationships; 8 – 20 years for patents and technology; and primarily 5 – 25 years for other.Amortization of other intangibles amounted to $28.0 million, $25.1 million and $19.0 million for the years ended December 31, 2018, 2017 and 2016,respectively. Included in amortization for the years ended December 31, 2018, 2017 and 2016 is $19.7 million, $17.7 million and $15.9 million,respectively, of amortization using the pattern of economic benefit method. Amortization of other intangibles related to discontinued operations was $26.3million for the year ended December 31, 2016.Total estimated amortization expense of other intangibles for the next five fiscal years is as follows (in thousands): Estimated AmortizationExpense2019$27,2192020$24,8782021$24,6002022$24,0062023$23,39583Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTE 13—Accrued Expenses:Accrued expenses consist of the following at December 31, 2018 and 2017 (in thousands): December 31, 2018 2017Employee benefits, payroll and related taxes$77,814 $93,393Other(a)179,509 174,943Total$257,323 $268,336(a)No individual component exceeds 5% of total current liabilities.NOTE 14—Long-Term Debt:Long-term debt consisted of the following at December 31, 2018 and 2017 (in thousands): December 31, 2018 20171.875% Senior notes, net of unamortized discount and debt issuance costs of $2,841 at December 31, 2018 and$3,971 at December 31, 2017444,155 463,5754.15% Senior notes, net of unamortized discount and debt issuance costs of $2,884 at December 31, 2018 and$3,372 at December 31, 2017422,116 421,6284.50% Senior notes, net of unamortized discount and debt issuance costs of $589 at December 31, 2018 and$891 at December 31, 2017174,626 174,3255.45% Senior notes, net of unamortized discount and debt issuance costs of $4,004 at December 31, 2018 and$4,159 at December 31, 2017345,996 345,841Commercial paper notes306,606 421,321Variable-rate foreign bank loans7,216 5,298Other4,495 5,384Total long-term debt1,705,210 1,837,372Less amounts due within one year307,294 422,012Long-term debt, less current portion$1,397,916 $1,415,360Aggregate annual maturities of long-term debt as of December 31, 2018 are as follows (in millions): 2019—$307.3; 2020—$175.3; 2021—$447.0;2022—$0.0; 2023—$7.2; thereafter—$778.7.Senior NotesIn the fourth quarter of 2014, we issued a series of senior notes (collectively, the “2014 Senior Notes”) as follows:•€700.0 million aggregate principal amount of senior notes, issued on December 8, 2014, bearing interest at a rate of 1.875% payable annually onDecember 8 of each year, beginning in 2015. The effective interest rate on these senior notes is approximately 2.10%. These senior notes mature onDecember 8, 2021.•$250.0 million aggregate principal amount of senior notes, issued on November 24, 2014, bearing interest at a rate of 3.00% payable semi-annuallyon June 1 and December 1 of each year, beginning June 1, 2015. The effective interest rate on these senior notes is approximately 3.18%. Thesesenior notes mature on December 1, 2019.•$425.0 million aggregate principal amount of senior notes, issued on November 24, 2014, bearing interest at a rate of 4.15% payable semi-annuallyon June 1 and December 1 of each year, beginning June 1, 2015. The effective interest rate on these senior notes is approximately 5.06%. Thesesenior notes mature on December 1, 2024.•$350.0 million aggregate principal amount of senior notes, issued on November 24, 2014, bearing interest at a rate of 5.45% payable semi-annuallyon June 1 and December 1 of each year, beginning June 1, 2015. The effective interest rate on these senior notes is approximately 5.50%. Thesesenior notes mature on December 1, 2044.Our $350.0 million aggregate principal amount of senior notes, issued on December 10, 2010, bear interest at a rate of 4.50% payable semi-annually onJune 15 and December 15 of each year. The effective interest rate on these senior notes is approximately 4.70%. These senior notes mature on December 15,2020.In the first quarter of 2017, using a portion of the proceeds from the sale of the Chemetall Surface Treatment business, we repaid the 3.00% Senior notesin full, €307.0 million of the 1.875% Senior notes and $174.7 million of the 4.50% Senior notes,84Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSas well as related tender premiums of $45.2 million. As a result, Interest and financing expenses on the consolidated statements of income includes a loss onearly extinguishment of debt of $52.8 million for the year ended December 31, 2017, representing the tender premiums, fees, unamortized discounts andunamortized deferred financing costs from the redemption of these senior notes.On January 22, 2014, we entered into a pay fixed, receive variable rate forward starting interest rate swap, with a notional amount of $325.0 million,with J.P. Morgan Chase Bank, N.A., to be effective October 15, 2014. Our risk management objective and strategy for undertaking this hedge was to eliminatethe variability in the interest rate and partial credit spread on the 20 future semi-annual coupon payments that we will pay in connection with our 4.15%senior notes. On October 15, 2014, the swap was settled, resulting in a payment to the counterparty of $33.4 million. This amount was recorded inAccumulated other comprehensive loss and is being amortized to interest expense over the life of the 4.15% senior notes. The amount to be reclassified tointerest expense from Accumulated other comprehensive loss during the next twelve months is approximately $3.3 million.On December 18, 2014, the carrying value of the 1.875% Euro-denominated senior notes was designated as an effective hedge of our net investment inforeign subsidiaries where the Euro serves as the functional currency, and beginning on the date of designation, gains or losses on the revaluation of thesesenior notes to our reporting currency have been and will be recorded in Accumulated other comprehensive loss. During the years ended December 31, 2018,2017 and 2016, gains (losses) of $25.8 million, ($41.8) million and $26.1 million (net of income taxes), respectively, were recorded in Accumulated othercomprehensive loss in connection with the revaluation of these senior notes to our reporting currency.September 2015 Term Loan AgreementOn September 14, 2015, we entered into a new $1.25 billion term loan agreement (the “September 2015 Term Loan Agreement”) with JPMorgan ChaseBank, N.A. (the “Administrative Agent”) and certain other lenders. During the year ended December 31, 2016, the Company repaid the September 2015 TermLoan Agreement in full, primarily with proceeds from the sales of the Chemetall Surface Treatment business, the metal sulfides business and the minerals-based flame retardants and specialty chemicals business. The interest rate on both Term loan facilities was LIBOR plus 1.375%.Credit AgreementOn June 21, 2018, we entered into a revolving, unsecured credit agreement (“2018 Credit Agreement”) to replace our revolving, unsecured creditagreement dated as of February 7, 2014, as amended. The 2018 Credit Agreement currently provides for borrowings of up to $1.0 billion and matures on June21, 2023. Borrowings under the 2018 Credit Agreement bear interest at variable rates based on an average London inter-bank offered rate (“LIBOR”) fordeposits in the relevant currency plus an applicable margin which ranges from 0.910% to 1.500%, depending on the Company’s credit rating from Standard& Poor’s Ratings Services (“S&P”), Moody’s Investors Services (“Moody’s”) and Fitch Ratings (“Fitch”). The applicable margin on the facility was 1.125%as of December 31, 2018. There were no borrowings outstanding under the 2018 Credit Agreement as of December 31, 2018.Borrowings under the 2018 Credit Agreement are conditioned upon satisfaction of certain conditions precedent, including the absence of defaults. TheCompany is subject to one financial covenant, as well as customary affirmative and negative covenants. The financial covenant requires that the Company’sconsolidated funded debt to consolidated EBITDA ratio (as such terms are defined in the 2018 Credit Agreement) to be less than or equal to 3.50:1.00,subject to adjustments in accordance with the terms of the 2018 Credit Agreement relating to a consummation of an acquisition where the considerationincludes cash proceeds from issuance of funded debt in excess of $500 million. The 2018 Credit Agreement also contains customary default provisions,including defaults for non-payment, breach of representations and warranties, insolvency, non-performance of covenants and cross-defaults to other materialindebtedness. The occurrence of an event of default under the 2018 Credit Agreement could result in all loans and other obligations becoming immediatelydue and payable and the credit facility being terminated.Commercial Paper NotesOn May 29, 2013, we entered into agreements to initiate a commercial paper program on a private placement basis under which we may issue unsecuredcommercial paper notes (the “Commercial Paper Notes”) from time-to-time up to a maximum aggregate principal amount outstanding at any time of $750.0million. The proceeds from the issuance of the Commercial Paper Notes are expected to be used for general corporate purposes, including the repayment ofother debt of the Company. Our 2018 Credit Agreement is available to repay the Commercial Paper Notes, if necessary. Aggregate borrowings outstandingunder the 2018 Credit Agreement and the Commercial Paper Notes will not exceed the $1.0 billion current maximum amount available under the 2018 CreditAgreement. The Commercial Paper Notes will be sold at a discount from par, or alternatively, will be85Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSsold at par and bear interest at rates that will vary based upon market conditions at the time of issuance. The maturities of the Commercial Paper Notes willvary but may not exceed 397 days from the date of issue. The definitive documents relating to the commercial paper program contain customaryrepresentations, warranties, default and indemnification provisions. At December 31, 2018, we had $306.6 million of Commercial Paper Notes outstandingbearing a weighted-average interest rate of approximately 2.91% and a weighted-average maturity of 38 days. During the year ended December 31, 2018, werepaid a net amount of $114.7 million of commercial paper notes using cash on hand.OtherWe have additional uncommitted credit lines with various U.S. and foreign financial institutions that provide for borrowings of up to approximately$263 million at December 31, 2018. Outstanding borrowings under these agreements were $7.2 million and $5.3 million at December 31, 2018 and 2017,respectively. The average interest rate on borrowings under these agreements during 2018, 2017 and 2016 was approximately 0.69%, 1.26% and 0.94%,respectively.At December 31, 2018 and 2017, we had the ability and intent to refinance our borrowings under our other existing credit lines with borrowings underthe 2018 Credit Agreement. Therefore, the amounts outstanding under those credit lines, if any, are classified as long-term debt at December 31, 2018 and2017. At December 31, 2018, we had the ability to borrow $693.4 million under our commercial paper program and the 2018 Credit Agreement.We believe that as of December 31, 2018, we were, and currently are, in compliance with all of our debt covenants.NOTE 15—Pension Plans and Other Postretirement Benefits:We maintain various noncontributory defined benefit pension plans covering certain employees, primarily in the U.S., the U.K., Germany and Japan.We also have a contributory defined benefit plan covering certain Belgian employees. The benefits for these plans are based primarily on compensationand/or years of service. Our U.S. and U.K. defined benefit plans for non-represented employees are closed to new participants, with no additional benefitsaccruing under these plans as participants’ accrued benefits have been frozen. The funding policy for each plan complies with the requirements of relevantgovernmental laws and regulations. The pension information for all periods presented includes amounts related to salaried and hourly plans.86Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSThe following provides a reconciliation of benefit obligations, plan assets and funded status, as well as a summary of significant assumptions, for ourdefined benefit pension plans (in thousands): Year Ended December 31, 2018 Year Ended December 31, 2017 U.S. Pension Plans Foreign Pension Plans U.S. Pension Plans Foreign Pension PlansChange in benefit obligations: Benefit obligation at January 1$685,963 $275,006 $665,688 $246,280Service cost1,043 3,919 985 2,547Interest cost26,804 5,144 28,614 5,128Plan amendments— 233 — —Actuarial (gain) loss(36,844) (17,885) 30,539 2,783Benefits paid(41,100) (9,974) (39,863) (9,524)Employee contributions— 182 — 215Foreign exchange (gain) loss— (12,632) — 30,711Settlements/curtailments— (3,628) — (3,065)Other— (62) — (69)Benefit obligation at December 31$635,866 $240,303 $685,963 $275,006 Change in plan assets: Fair value of plan assets at January 1$580,396 $79,478 $538,082 $68,875Actual return on plan assets(28,457) (1,593) 80,613 6,260Employer contributions2,236 10,700 1,564 9,316Benefits paid(41,100) (9,974) (39,863) (9,524)Employee contributions— 182 — 215Foreign exchange (loss) gain— (4,519) — 7,470Settlements/curtailments— (3,628) — (3,065)Other— (62) — (69)Fair value of plan assets at December 31$513,075 $70,584 $580,396 $79,478 Funded status at December 31$(122,791) $(169,719) $(105,567) $(195,528) December 31, 2018 December 31, 2017 U.S. Pension Plans Foreign Pension Plans U.S. Pension Plans Foreign Pension PlansAmounts recognized in consolidated balancesheets: Current liabilities (accrued expenses)$(1,342) $(5,772) $(1,267) $(5,217)Noncurrent liabilities (pension benefits)(121,449) (163,947) (104,300) (190,311)Net pension liability$(122,791) $(169,719) $(105,567) $(195,528) Amounts recognized in accumulated othercomprehensive (loss) income: Prior service benefit$— $(409) $(60) $(269)Net amount recognized$— $(409) $(60) $(269) Weighted-average assumptions used to determinebenefit obligations at December 31: Discount rate4.59% 2.15% 4.03% 1.94%Rate of compensation increase—% 3.63% —% 3.18%87Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSThe accumulated benefit obligation for all defined benefit pension plans was $867.4 million and $949.0 million at December 31, 2018 and 2017,respectively.Postretirement medical benefits and life insurance is provided for certain groups of U.S. retired employees. Medical and life insurance benefit costshave been funded principally on a pay-as-you-go basis. Although the availability of medical coverage after retirement varies for different groups ofemployees, the majority of employees who retire before becoming eligible for Medicare can continue group coverage by paying a portion of the cost of amonthly premium designed to cover the claims incurred by retired employees subject to a cap on payments allowed. The availability of group coverage forMedicare-eligible retirees also varies by employee group with coverage designed either to supplement or coordinate with Medicare. Retirees generally pay aportion of the cost of the coverage. Plan assets for retiree life insurance are held under an insurance contract and are reserved for retiree life insurance benefits.In 2005, the postretirement medical benefit available to U.S. employees was changed to provide that employees who are under age 50 as of December 31,2005 would no longer be eligible for a company-paid retiree medical premium subsidy. Employees who are of age 50 and above as of December 31, 2005 andwho retire after January 1, 2006 will have their retiree medical premium subsidy capped. Effective January 1, 2008, our medical insurance for certain groupsof U.S. retired employees is now insured through a medical carrier.The following provides a reconciliation of benefit obligations, plan assets and funded status, as well as a summary of significant assumptions, for ourpostretirement benefit plans (in thousands): Year Ended December 31, 2018 2017 Other PostretirementBenefits Other PostretirementBenefitsChange in benefit obligations: Benefit obligation at January 1$56,647 $56,141Service cost117 121Interest cost2,168 2,340Actuarial (gain) loss(5,661) 2,008Benefits paid(2,881) (3,963)Benefit obligation at December 31$50,390 $56,647 Change in plan assets: Fair value of plan assets at January 1$834 $2,232Actual return on plan assets(253) 104Employer contributions2,300 2,461Benefits paid(2,881) (3,963)Fair value of plan assets at December 31$— $834 Funded status at December 31$(50,390) $(55,813)88Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2018 2017 Other PostretirementBenefits Other PostretirementBenefitsAmounts recognized in consolidated balance sheets: Current liabilities (accrued expenses)$(4,233) $(3,810)Noncurrent liabilities (postretirement benefits)(46,157) (52,003)Net postretirement liability$(50,390) $(55,813) Amounts recognized in accumulated other comprehensive (loss) income: Prior service benefit$— $48Net amount recognized$— $48 Weighted-average assumptions used to determine benefit obligations at December 31: Discount rate4.55% 3.99%Rate of compensation increase3.50% 3.50%The components of pension benefits cost (credit) from continuing operations are as follows (in thousands): Year Ended Year Ended Year Ended December 31, 2018 December 31, 2017 December 31, 2016 U.S. PensionPlans Foreign PensionPlans U.S. PensionPlans Foreign PensionPlans U.S. PensionPlans Foreign PensionPlansService cost$1,043 $3,919 $985 $2,547 $1,028 $3,133Interest cost26,804 5,144 28,614 5,128 30,514 6,570Expected return on assets(38,621) (4,204) (36,243) (4,441) (36,445) (4,027)Actuarial loss (gain)30,234 (10,833) (13,910) 483 5,988 19,418Amortization of prior service benefit60 34 75 56 75 859Total net pension benefits cost (credit)(a)$19,520 $(5,940) $(20,479) $3,773 $1,160 $25,953 Weighted-average assumption percentages: Discount rate4.03% 1.94% 4.43% 2.00% 4.67% 2.76%Expected return on plan assets6.89% 5.52% 6.89% 6.16% 6.89% 6.66%Rate of compensation increase—% 3.18% —% 3.18% —% 3.16%(a)For the year ended December 31, 2016, $10.8 million of net pension benefits credit is included in Income from discontinued operations (net of tax) in the consolidatedstatements of income. See Note 3, “Divestitures,” for additional information.Effective January 1, 2019, the weighted-average expected rate of return on plan assets for the U.S. and foreign defined benefit pension plans is 6.89%and 5.69%, respectively.89Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSThe components of postretirement benefits (credit) cost from continuing operations are as follows (in thousands): Year Ended December 31, 2018 2017 2016 Other PostretirementBenefits Other PostretirementBenefits Other PostretirementBenefitsService cost$117 $121 $115Interest cost2,168 2,340 2,483Expected return on assets(7) (110) (187)Actuarial (gain) loss(5,400) 2,014 1,275Amortization of prior service benefit(48) (95) (95)Total net postretirement benefits (credit) cost$(3,170) $4,270 $3,591 Weighted-average assumption percentages: Discount rate3.99% 4.35% 4.59%Expected return on plan assets7.00% 7.00% 7.00%Rate of compensation increase3.50% 3.50% 3.50%As a result of the adoption of new accounting guidance effective January 1, 2018, on a retrospective basis, all components of net benefit cost (credit),other than service cost, are to be shown outside of operations on the consolidated statements of income. We recast these components of net benefit cost(credit), which resulted in an increase (reduction) of $3.7 million and $0.3 million in Cost of goods sold, respectively, and $12.4 million and ($26.7) millionin Selling, general and administrative expenses, respectively, with an offsetting impact of $16.1 million and ($26.4) million in Other expenses, net,respectively, for the years ended December 31, 2017 and 2016. There was no impact to Net income attributable to Albemarle Corporation.The mark-to-market actuarial loss in 2018 is primarily attributable to a lower return on pension plan assets in 2018 than was expected, as a result ofoverall market and investment portfolio performance. The weighted-average actual return on our U.S. and foreign pension plan assets was (4.55)% versus anexpected return of 6.73%. The mark-to-market actuarial loss in 2018 was partially offset by an increase in the weighted-average discount rate to 4.59% from4.03% for our U.S. pension plans and to 2.15% from 1.94% for our foreign pension plans to reflect market conditions as of the December 31, 2018measurement date.The mark-to-market actuarial gain in 2017 is primarily attributable to a higher return on pension plan assets in 2017 than was expected, as a result ofoverall market and investment portfolio performance. The weighted-average actual return on our U.S. and foreign pension plan assets was 14.31% versus anexpected return of 6.73%. The mark-to-market actuarial gain in 2017 was partially offset by a decrease in the weighted-average discount rate to 4.03% from4.43% for our U.S. pension plans and to 1.94% from 2.00% for our foreign pension plans to reflect market conditions as of the December 31, 2017measurement date.The mark-to-market actuarial loss in 2016 is primarily attributable to a decrease in the weighted-average discount rate to 4.43% from 4.67% for our U.S.pension plans and to 2.00% form 2.76% for our foreign pension plans to reflect market conditions as of the December 31, 2016 measurement date. The mark-to-market actuarial loss in 2016 was partially offset by a higher return on pension plan assets in 2016 than was expected, as a result of overall market andinvestment portfolio performance. The weighted-average return on our U.S. and foreign pension plan assets was 8.11% versus an expected return of 6.85%. 90Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between marketparticipants at the measurement date (exit price). The inputs used to measure fair value are classified into the following hierarchy:Level 1Unadjusted quoted prices in active markets for identical assets or liabilities Level 2Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similarassets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability Level 3Unobservable inputs for the asset or liabilityWe endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on thelowest level of input that is significant to the fair value measurement. Investments for which market quotations are readily available are valued at the closingprice on the last business day of the year. Listed securities for which no sale was reported on such date are valued at the mean between the last reported bidand asked price. Securities traded in the over-the-counter market are valued at the closing price on the last business day of the year or at bid price. The netasset value of shares or units is based on the quoted market value of the underlying assets. The market value of corporate bonds is based on institutionaltrading lots and is most often reflective of bid price. Government securities are valued at the mean between bid and ask prices. Holdings in private equitysecurities are typically valued using the net asset valuations provided by the underlying private investment companies.The following tables set forth the assets of our pension and postretirement plans that were accounted for at fair value on a recurring basis as ofDecember 31, 2018 and 2017 (in thousands): December 31, 2018 Quoted Prices inActive Markets forIdentical Items (Level1) Quoted Prices inActive Markets forSimilar Items (Level 2) Unobservable Inputs(Level 3)Pension Assets: Domestic Equity(a)$113,355 $111,665 $1,690 $—International Equity(b)114,554 90,651 23,903 —Fixed Income(c)254,437 219,124 35,313 —Absolute Return Measured at Net Asset Value(d)71,987 — — —Cash29,326 29,326 — —Total Pension Assets$583,659 $450,766 $60,906 $— December 31, 2017 Quoted Prices inActive Markets forIdentical Items (Level1) Quoted Prices inActive Markets forSimilar Items (Level 2) Unobservable Inputs(Level 3)Pension Assets: Domestic Equity(a)$163,160 $160,976 $2,184 $—International Equity(b)130,935 101,366 29,569 —Fixed Income(c)269,365 231,506 37,859 —Absolute Return Measured at Net Asset Value(d)96,414 — — —Total Pension Assets$659,874 $493,848 $69,612 $—Postretirement Assets: Fixed Income(c)$834 $— $834 $—(a)Consists primarily of U.S. stock funds that track or are actively managed and measured against the S&P 500 index.(b)Consists primarily of international equity funds which invest in common stocks and other securities whose value is based on an international equity index or an underlyingequity security or basket of equity securities.(c)Consists primarily of debt obligations issued by governments, corporations, municipalities and other borrowers. Also includes insurance policies.(d)Consists primarily of funds with holdings in private investment companies. See additional information about the Absolute Return investments below. Holdings in privateinvestment companies are measured at fair value using the net asset value per share as a practical expedient and have not been categorized in the fair value hierarchy. The fairvalue amounts of $72.0 million and $96.4 million as of91Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2018 and 2017, respectively, are included in this table to permit reconciliation to the reconciliation of plan assets table above.The Company’s pension plan assets in the U.S. and U.K. represent approximately 97% of the total pension plan assets. The investment objective ofthese pension plan assets is to achieve solid returns while preserving capital to meet current plan cash flow requirements. Assets should participate in risingmarkets, with defensive action in declining markets expected to an even greater degree. Depending on market conditions, the broad asset class targets mayrange up or down by approximately 10%. These asset classes include but are not limited to hedge fund of funds, bonds and other fixed income vehicles, highyield fixed income securities, equities and distressed debt. At December 31, 2018 and 2017, equity securities held by our pension and OPEB plans did notinclude direct ownership of Albemarle common stock.The weighted-average target allocations as of the measurement date are as follows: Target AllocationEquity securities43%Fixed income44%Absolute return13%Our Absolute Return investments consist primarily of our investments in hedge fund of funds. These are holdings in private investment companies withfair values that are based on significant unobservable inputs including assumptions where there is little, if any, market activity for the investment. Investmentmanagers or fund managers associated with these investments provide valuations of the investments on a monthly basis utilizing the net asset valuationapproach for determining fair values. These valuations are reviewed by the Company for reasonableness based on applicable sector, benchmark and companyperformance to validate the appropriateness of the net asset values as a fair value measurement. Where available, audited financial statements are obtainedand reviewed for the investments as support for the manager’s investment valuation. In general, the investment objective of these funds is high risk-adjustedreturns with an emphasis on preservation of capital. The investment strategies of each of the funds vary; however, the objective of our Absolute Returninvestments is complementary to the overall investment objective of our U.S. pension plan assets.We made contributions to our defined benefit pension and OPEB plans of $15.2 million, $13.3 million and $20.1 million during the years endedDecember 31, 2018, 2017 and 2016, respectively, related to continuing and discontinued operations. We expect contributions to our domestic nonqualifiedand foreign qualified and nonqualified pension plans to approximate $12 million in 2019. Also, we expect to pay approximately $4 million in premiums toour U.S. postretirement benefit plan in 2019. However, we may choose to make additional voluntary pension contributions in excess of these amounts.The current forecast of benefit payments, which reflects expected future service, amounts to (in millions): U.S. Pension Plans Foreign Pension Plans Other PostretirementBenefits2019$42.0 $12.9 $4.22020$43.0 $9.4 $4.02021$43.5 $9.7 $3.82022$43.9 $9.2 $3.82023$44.3 $12.1 $3.72024-2028$220.6 $52.1 $17.4We have a supplemental executive retirement plan (“SERP”), which provides unfunded supplemental retirement benefits to certain management orhighly compensated employees. The SERP provides for incremental pension benefits to offset the limitations imposed on qualified plan benefits by federalincome tax regulations. (Credits) costs relating to our SERP were ($0.8) million, $2.6 million and $1.6 million for the years ended December 31, 2018, 2017and 2016, respectively. The projected benefit obligation for the SERP recognized in the consolidated balance sheets at December 31, 2018 and 2017 was$21.9 million and $24.8 million, respectively. The benefit expenses and obligations of this SERP are included in the tables above. Benefits of $1.3 millionare expected to be paid to SERP retirees in 2019. On October 1, 2012, our Board of Directors approved amendments to the SERP, such that effectiveDecember 31, 2014, no additional benefits shall accrue under this plan92Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSand participants’ accrued benefits shall be frozen as of that date to reflect the same changes as were made under the U.S. qualified defined benefit plan.At December 31, 2018, the assumed rate of increase in the pre-65 and post-65 per capita cost of covered health care benefits for U.S. retirees was zero asthe employer-paid premium caps (pre-65 and post-65) were met starting January 1, 2013.Defined Contribution PlansOn March 31, 2004, a new defined contribution pension plan benefit was adopted under the qualified defined contribution plan for U.S. non-represented employees hired after March 31, 2004. On October 1, 2012 our Board of Directors approved certain plan amendments, such that effective January1, 2013, the defined contribution pension plan benefit is expanded to include non-represented employees hired prior to March 31, 2004, and revised thecontribution for all participants to be based on 5% of eligible employee compensation. The employer portion of contributions to our U.S. definedcontribution pension plan amounted to $11.8 million, $10.3 million, and $15.1 million in 2018, 2017 and 2016, respectively, related to continuing anddiscontinued operations.Certain of our employees participate in our defined contribution 401(k) employee savings plan, which is generally available to all U.S. full-timesalaried and non-union hourly employees and to employees who are covered by a collective bargaining agreement that provides for such participation. ThisU.S. defined contribution plan is funded with contributions made by the participants and us. Our contributions to the 401(k) plan amounted to $12.7 million,$11.3 million and $12.7 million in 2018, 2017 and 2016, respectively, related to continuing and discontinued operations.In 2006, we formalized a new plan in the Netherlands similar to a collective defined contribution plan. The collective defined contribution plan issupported by annuity contracts through an insurance company. The insurance company unconditionally undertakes the legal obligation to provide specificbenefits to specific individuals in return for a fixed amount of premiums. Our obligation under this plan is limited to a variable calculated employer match foreach participant plus an additional fixed amount of contributions to assist in covering estimated cost of living and salary increases (indexing) andadministrative costs for the overall plan. We paid approximately $10.2 million, $9.9 million and $9.5 million in 2018, 2017 and 2016, respectively, inannual premiums and related costs pertaining to this plan.Multiemployer PlanCertain current and former employees participate in a multiemployer plan in Germany, the Pensionskasse Dynamit Nobel Versicherungsverein aufGegenseitigkeit, Troisdorf (“DN Pensionskasse”) that provides monthly payments in the case of disability, death or retirement. The risks of participating in amultiemployer plan are different from single-employer plans in the following ways: (a) assets contributed to the multiemployer plan by one employer may beused to provide benefits to employees of other participating employers, and (b) if a participating employer stops contributing to the plan due to financialinability to provide funding, the unfunded obligation of the plan may be borne by remaining participating employers.Some participants in the plan are subject to collective bargaining arrangements, which have no fixed expiration date. The contribution and benefitlevels are not negotiated or significantly influenced by these collective bargaining arrangements. Also, the benefit levels generally are not subject toreduction. Under German insurance law, the DN Pensionskasse must be fully funded at all times. The DN Pensionskasse was fully funded as of December 31,2017, the date of the most recently available information for the plan. This funding level would correspond to the highest funding zone status (at least 80%funded) under U.S. pension regulation. Since the plan liabilities need to be fully funded at all times according to local funding requirements, it is unlikelythat the DN Pensionskasse plan will fail to fulfill its obligations, however, in such an event, the Company is liable for the benefits of its employees whoparticipate in the plan. Additional information of the DN Pensionskasse is available in the public domain.The majority of the Company’s contributions are tied to employees’ contributions, which are generally calculated as a percentage of basecompensation, up to a certain statutory ceiling. Our normal contributions to this plan for continuing operations were approximately $1.5 million in 2018 and2017 and $1.7 million in 2016. Contributions for discontinued operations were approximately $1.3 million in 2016. The Company’s contributionsrepresented more than 5% of total contributions to the DN Pensionskasse in 2018.Effective July 1, 2016, the DN Pensionskasse is subject to a financial improvement plan which expires on December 31, 2022, with the finalcontribution in the second quarter of 2023. This financial improvement plan calls for increased capital reserves to avoid future underfunding risk. During theyears ended December 31, 2018 and 2017, we made contributions for our employees covered under this plan of approximately $2.3 million and $3.3 million,respectively, recorded in Selling, general and administrative expenses, as a result of this financial improvement plan. The value of the additional fundingrequired under93Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSthe financial improvement plan each year is determined upon the completion of the annual financial statements and are payable in the second quarter of thefollowing year. A portion of the additional funding necessary for the year will be based on an estimate prepared on September 30 of each year and payable inthe fourth quarter of that same year.NOTE 16—Other Noncurrent Liabilities:Other noncurrent liabilities consist of the following at December 31, 2018 and 2017 (in thousands): December 31, 2018 2017Transition tax on foreign earnings(a)$317,745 $394,878Liabilities related to uncertain tax positions(b)22,877 24,369Executive deferred compensation plan obligation26,292 25,494Environmental liabilities(c)40,376 37,518Asset retirement obligations(c)41,489 40,450Tax indemnification liability(d)45,347 42,707Other(e)32,816 33,758Total$526,942 $599,174(a)Noncurrent portion of one-time transition tax on foreign earnings. See Note 20, “Income Taxes,” for additional information.(b)See Note 20, “Income Taxes.”(c)See Note 17, “Commitments and Contingencies.”(d)Indemnification of certain income and non-income tax liabilities associated with the Chemetall Surface Treatment entities sold, as well as the proposed settlement of an ongoingaudit of a previously disposed business in Germany.(e)No individual component exceeds 5% of total liabilities.NOTE 17—Commitments and Contingencies:In the ordinary course of business, we have commitments in connection with various activities. We believe that amounts recorded are adequate forknown items which might become due in the current year. The most significant commitments are as follows:EnvironmentalWe had the following activity in our recorded environmental liabilities for the years ended December 31, 2018, 2017 and 2016 (in thousands): Year Ended December 31, 2018 2017 2016Balance, beginning of year$39,808 $34,919 $31,436Expenditures(6,885) (1,818) (2,667)Accretion of discount1,283 896 793Additions and changes in estimates(a)17,039 3,344 4,004Foreign currency translation adjustments and other(1,676) 2,467 1,353Balance, end of year49,569 39,808 34,919Less amounts reported in Accrued expenses9,193 2,290 2,324Amounts reported in Other noncurrent liabilities$40,376 $37,518 $32,595(a)Increase in additions primarily related to the indemnification of the buyer of a formerly owned site. As defined in the agreement of sale, this indemnification has a set cutoffdate in 2024, at which point we will no longer be required to provide financial coverage.Environmental remediation liabilities included discounted liabilities of $40.4 million and $28.1 million at December 31, 2018 and 2017, respectively,discounted at rates with a weighted-average of 3.7% and 3.6%, respectively, with the undiscounted amount totaling $74.5 million and $68.2 million atDecember 31, 2018 and 2017, respectively. For certain locations where the Company is operating groundwater monitoring and/or remediation systems, priorowners or insurers have assumed all or most of the responsibility.The amounts recorded represent our future remediation and other anticipated environmental liabilities. These liabilities typically arise during thenormal course of our operational and environmental management activities or at the time of94Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSacquisition of the site, and are based on internal analysis as well as input from outside consultants. As evaluations proceed at each relevant site, changes inrisk assessment practices, remediation techniques and regulatory requirements can occur, therefore such liability estimates may be adjusted accordingly. Thetiming and duration of remediation activities at these sites will be determined when evaluations are completed. Although it is difficult to quantify thepotential financial impact of these remediation liabilities, management estimates (based on the latest available information) that there is a reasonablepossibility that future environmental remediation costs associated with our past operations, could be an additional $10 million to $35 million before incometaxes, in excess of amounts already recorded. The variability of this range is primarily driven by possible environmental remediation activity at a formerlyowned site where we indemnify the buyer through a set cutoff date in 2024.We believe that any sum we may be required to pay in connection with environmental remediation matters in excess of the amounts recorded wouldlikely occur over a period of time and would likely not have a material adverse effect upon our results of operations, financial condition or cash flows on aconsolidated annual basis although any such sum could have a material adverse impact on our results of operations, financial condition or cash flows in aparticular quarterly reporting period.Asset Retirement ObligationsThe following is a reconciliation of our beginning and ending asset retirement obligation balances for 2018 and 2017 (in thousands): Year Ended December 31, 2018 2017Balance, beginning of year$40,450 $36,296Additions and changes in estimates740 3,859Accretion of discount1,500 1,532Liabilities settled(786) (789)Foreign currency translation adjustments and other(415) (448)Balance, end of year$41,489 $40,450Our asset retirement obligations are recorded in Other noncurrent liabilities in the consolidated balance sheets. Asset retirement obligations primarilyrelate to post-closure reclamation of brine wells and sites involved in the surface mining and manufacturing of lithium. We are not aware of any conditionalasset retirement obligations that would require recognition in our consolidated financial statements.Rental ExpenseOur rental expenses include a number of operating lease agreements, primarily for office space, transportation equipment and storage facilities. Thefollowing schedule details the future non-cancelable minimum lease payments for the next five years and thereafter (in thousands): Operating Leases2019$25,6082020$17,9182021$12,4782022$10,7942023$10,109Thereafter$87,085Rental expense was approximately $37.6 million, $31.2 million, and $31.4 million for 2018, 2017 and 2016, respectively. Rental expense related todiscontinued operations was approximately $11.8 million for 2016. Rental expense is shown net of sublease income which was minimal during 2018, 2017and 2016.LitigationWe are involved from time to time in legal proceedings of types regarded as common in our business, including administrative or judicial proceedingsseeking remediation under environmental laws, such as the federal Comprehensive Environmental Response, Compensation and Liability Act, commonlyknown as CERCLA or Superfund, products liability,95Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSbreach of contract liability and premises liability litigation. Where appropriate, we may establish financial reserves for such proceedings. We also maintaininsurance to mitigate certain of such risks. Costs for legal services are generally expensed as incurred.As previously reported in 2018, following receipt of information regarding potential improper payments being made by third party sales representativesof our Refining Solutions business, within our Catalysts segment, we promptly retained outside counsel and forensic accountants to investigate potentialviolations of the Company’s Code of Conduct, the Foreign Corrupt Practices Act (“FCPA”), and other potentially applicable laws. Based on this internalinvestigation, we have voluntarily self-reported potential issues relating to the use of third party sales representatives in our Refining Solutions business,within our Catalysts segment, to the U.S. Department of Justice (“DOJ”), the Securities and Exchange Commission (“SEC”), and the Dutch Public Prosecutor(“DPP”), and are cooperating with the DOJ, the SEC, and DPP in their review of these matters. In connection with our internal investigation, we haveimplemented, and are continuing to implement, appropriate remedial measures.At this time, we are unable to predict the duration, scope, result or related costs associated with the investigations by the DOJ, the SEC, or DPP. We areunable to predict what, if any, action may be taken by the DOJ, the SEC, or DPP, or what penalties or remedial actions they may seek to impose. Anydetermination that our operations or activities are not in compliance with existing laws or regulations could result in the imposition of fines, penalties,disgorgement, equitable relief, or other losses. We do not believe, however, that any such fines, penalties, disgorgement, equitable relief or other losses wouldhave a material adverse effect on our financial condition or liquidity.During the year ended December 31, 2018, we recorded a charge of $16.2 million in Other expenses, net resulting from a jury rendering a verdict againstAlbemarle in a legal matter related to certain business concluded under a 2014 sales agreement for products that Albemarle no longer manufactures. Inaddition, during the year ended December 31, 2018, we recorded a charge of $10.8 million in Other expenses, net due to a settlement of a legal matter relatedto guarantees from a previously disposed business. Both matters have been resolved and paid during the year ended December 31, 2018.IndemnitiesWe are indemnified by third parties in connection with certain matters related to acquired and divested businesses. Although we believe that thefinancial condition of those parties who may have indemnification obligations to the Company is generally sound, in the event the Company seeksindemnity under any of these agreements or through other means, there can be no assurance that any party who may have obligations to indemnify us willadhere to their obligations and we may have to resort to legal action to enforce our rights under the indemnities.The Company may be subject to indemnity claims relating to properties or businesses it divested, including properties or businesses of acquiredbusinesses that were divested prior to the completion of the acquisition. In the opinion of management, and based upon information currently available, theultimate resolution of any indemnification obligations owed to the Company or by the Company is not expected to have a material effect on the Company’sfinancial condition, results of operations or cash flows. See Note 16, “Other Noncurrent Liabilities,” for the tax indemnification liability related to the sale ofthe Chemetall Surface Treatment business and other divested businesses.OtherThe Company has standby letters of credit and guarantees with various financial institutions. The following table summarizes our letters of credit andguarantee agreements (in thousands): 2019 2020 2021 2022 2023 ThereafterLetters of credit and other guarantees$45,342 $12,924 $1,883 $1,277 $— $10,389The outstanding letters of credit are primarily related to insurance claim payment guarantees. The majority of the Company’s other guarantees haveterms of one year and mainly consist of performance and environmental guarantees, as well as guarantees to customs and port authorities. The guaranteesarose during the ordinary course of business.We do not have recorded reserves for the letters of credit and guarantees as of December 31, 2018. We are unable to estimate the maximum amount ofthe potential future liability under guarantees and letters of credit. However, we accrue for any potential loss for which we believe a future payment isprobable and a range of loss can be reasonably estimated. We believe our liability under such obligations is immaterial.96Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSWe currently, and are from time to time, subject to transactional audits in various taxing jurisdictions and to customs audits globally. We do not expectthe financial impact of any of these audits to have a material adverse effect on the Company’s results of operations, financial condition or cash flows.NOTE 18—Stock-based Compensation Expense:Incentive PlansWe have various share-based compensation plans that authorize the granting of (i) stock options to purchase shares of our common stock, (ii) restrictedstock and restricted stock units, (iii) performance unit awards and (iv) stock appreciation rights (“SARs”) to employees and non-employee directors. Theplans provide for payment of incentive awards in one or more of the following at our option: cash, shares of our common stock, qualified and non-qualifiedstock options, SARs, restricted stock awards, restricted stock unit awards and performance unit awards. The share-based awards granted by us generallycontain vesting provisions ranging from one to five years, and with respect to stock options granted by us, have a term of not more than ten years from thedate of grant. Stock options granted to employees generally vest over three years and have a term of ten years. Restricted stock and restricted stock unitawards vest in periods ranging from one to five years from the date of grant. Performance unit awards are earned at a level ranging from 0% to 200%contingent upon the achievement of specific performance criteria over periods ranging from one to three years. Distribution of earned units occurs generally50% upon completion of the applicable measurement period with the remaining 50% distributed one year thereafter.We granted 63,259, 82,204 and 141,661 stock options during 2018, 2017 and 2016, respectively. There were no significant modifications made to anyshare-based grants during these periods.In May 2017, the Company adopted the Albemarle Corporation 2017 Incentive Plan (the “Incentive Plan”), which replaced the Albemarle Corporation2008 Incentive Plan. The maximum number of shares available for issuance to participants under the Incentive Plan is 4,500,000 shares. The adoption of theIncentive Plan did not affect awards already granted under the Albemarle Corporation 2008 Incentive Plan. Under the Albemarle Corporation 2013 StockCompensation and Deferral Election Plan for Non-Employee Directors (the “Non-Employee Directors Plan”), a maximum aggregate number of 500,000 sharesof our common stock is authorized for issuance to the Company’s non-employee directors; any shares remaining available for issuance under the prior planswere canceled. The aggregate fair market value of shares that may be issued to a director during any compensation year (as defined in the agreement,generally July 1 to June 30) shall not exceed $150,000. At December 31, 2018, there were 4,280,607 shares available for grant under the Incentive Plan and388,179 shares available for grant under the Non-Employee Directors Plan.Total stock-based compensation expense associated with our incentive plans for the years ended December 31, 2018, 2017 and 2016 amounted to$15.2 million, $19.4 million and $17.0 million, respectively, and is included in Cost of goods sold and Selling, general and administrative expenses in theconsolidated statements of income. Total related recognized tax benefits for the years ended December 31, 2018, 2017 and 2016 amounted to $2.6 million,$7.0 million and $6.2 million, respectively. As a result of the sale of the Chemetall Surface Treatment business in 2016, we converted previously grantedincentive awards owed to Chemetall employees to a cash liability to be paid on the original vesting dates of the awards. The Company recognized expense of$5.8 million, included in Income from discontinued operations for the year ended December 31, 2016 related to these awards. At December 31, 2018, $2.2million and $1.2 million of this cash liability were included in Accrued liabilities and Other noncurrent liabilities, respectively.The following table summarizes information about the Company’s fixed-price stock options as of and for the year ended December 31, 2018: Shares Weighted-AverageExercise Price Weighted-AverageRemainingContractual Term(Years) AggregateIntrinsic Value(in thousands)Outstanding at December 31, 20171,401,718 $56.10 5.1 $100,632Granted63,259 118.75 Exercised(94,031) 38.64 Forfeited(54,213) 75.72 Outstanding at December 31, 20181,316,733 $59.55 4.3 $26,438Exercisable at December 31, 2018911,011 $54.28 3.2 $20,87297Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSThe fair value of each option granted during the years ended December 31, 2018, 2017 and 2016 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: Year Ended December 31, 2018 2017 2016Dividend yield1.44% 1.56% 1.84%Volatility32.48% 32.70% 33.08%Average expected life (years)6 6 6Risk-free interest rate3.06% 2.51% 1.96%Fair value of options granted$37.35 $27.99 $16.06Dividend yield is the average of historical yields and those estimated over the average expected life. The stock volatility is based on historicalvolatilities of our common stock. The average expected life represents the weighted average period of time that options granted are expected to beoutstanding giving consideration to vesting schedules and our historical exercise patterns. The risk-free interest rate is based on the U.S. Treasury strip ratewith stripped coupon interest for the period equal to the contractual term of the share option grant in effect at the time of grant.The intrinsic value of options exercised during the years ended December 31, 2018, 2017 and 2016 was $6.2 million, $15.6 million and $7.9 million,respectively. The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option.Total compensation cost not yet recognized for nonvested stock options outstanding as of December 31, 2018 is approximately $3.0 million and isexpected to be recognized over a remaining weighted-average period of 1.5 years. Cash proceeds from stock options exercised and tax benefits related tostock options exercised were $3.6 million and $1.5 million for the year ended December 31, 2018, respectively. The Company issues new shares of commonstock upon exercise of stock options and vesting of restricted common stock awards.The following table summarizes activity in performance unit awards as of and for the year ended December 31, 2018: Shares Weighted-AverageGrant DateFair Value PerShareNonvested, beginning of period433,003 $75.55Granted70,274 155.65Vested(164,303) 61.72Forfeited(21,537) 120.49Nonvested, end of period317,437 97.39The weighted average grant date fair value of performance unit awards granted in 2018, 2017 and 2016 was $10.9 million, $9.6 million and $10.9million, respectively. The fair value of each performance unit awards was estimated on the date of grant using the Monte Carlo simulation model as theseequity awards are tied to a service and market condition. The calculation used the following weighted-average assumptions: Year Ended December 31, 2018 2017 2016Volatility29.92% 30.34% 27.69%Risk-free interest rate2.36% 1.34% 0.91%The weighted average fair value of performance unit awards that vested during 2018, 2017 and 2016 was $20.0 million, $11.9 million and $4.6 million,respectively, based on the closing prices of our common stock on the dates of vesting. Total compensation cost not yet recognized for nonvested performanceunit awards outstanding as of December 31, 2018 is approximately $11.6 million, calculated based on current expectation of specific performance criteria,and is expected to be recognized over a remaining weighted-average period of approximately 1.0 years. Each performance unit represents one share ofcommon stock.98Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSThe following table summarizes activity in non-performance based restricted stock and restricted stock unit awards as of and for the year endedDecember 31, 2018: Shares Weighted-AverageGrant DateFair Value PerShareNonvested, beginning of period223,338 $71.95Granted104,513 104.36Vested(48,178) 66.93Forfeited(22,155) 78.98Nonvested, end of period257,518 85.44The weighted average grant date fair value of restricted stock and restricted stock unit awards granted in 2018, 2017 and 2016 was $10.9 million, $8.2million and $8.8 million, respectively. The weighted average fair value of restricted stock and restricted stock unit awards that vested in 2018, 2017 and2016 was $4.9 million, $3.1 million and $3.2 million, respectively, based on the closing prices of our common stock on the dates of vesting. Totalcompensation cost not yet recognized for nonvested, non-performance based restricted stock and restricted stock units as of December 31, 2018 isapproximately $12.6 million and is expected to be recognized over a remaining weighted-average period of 2.0 years. The fair value of the non-performancebased restricted stock and restricted stock units was estimated on the date of grant adjusted for a dividend factor, if necessary.99Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTE 19—Accumulated Other Comprehensive (Loss) Income:The components and activity in Accumulated other comprehensive (loss) income (net of deferred income taxes) consisted of the following during theyears ended December 31, 2018, 2017 and 2016 (in thousands): ForeignCurrencyTranslation(a) Pension andPost-RetirementBenefits(b) Net InvestmentHedge Interest RateSwap(c) TotalAccumulated other comprehensive (loss) income - balance atDecember 31, 2015$(463,914) $(758) $62,245 $(18,861) $(421,288)Other comprehensive (loss) income before reclassifications(102,246) — 26,133 — (76,113)Amounts reclassified from accumulated other comprehensive loss81,421 834 — 2,116 84,371Other comprehensive (loss) income, net of tax(20,825) 834 26,133 2,116 8,258Other comprehensive loss attributable to noncontrolling interests618 — — — 618Accumulated other comprehensive (loss) income - balance atDecember 31, 2016$(484,121) $76 $88,378 $(16,745) $(412,412)Other comprehensive income (loss) before reclassifications227,439 — (41,827) — 185,612Amounts reclassified from accumulated other comprehensive loss— (97) — 2,116 2,019Other comprehensive income (loss), net of tax227,439 (97) (41,827) 2,116 187,631Other comprehensive income attributable to noncontrollinginterests(887) — — — (887)Accumulated other comprehensive (loss) income - balance atDecember 31, 2017$(257,569) $(21) $46,551 $(14,629) $(225,668)Other comprehensive (loss) income before reclassifications(150,258) — 15,695 — (134,563)Amounts reclassified from accumulated other comprehensiveloss(d)— (138) 10,091 (585) 9,368Other comprehensive (loss) income, net of tax(150,258) (138) 25,786 (585) (125,195)Other comprehensive loss attributable to noncontrolling interests181 — — — 181Accumulated other comprehensive (loss) income - balance atDecember 31, 2018$(407,646) $(159) $72,337 $(15,214) $(350,682)(a)Amount reclassified from accumulated other comprehensive loss for the year ended December 31, 2016 is included in Income from discontinued operations (net of tax) for theyear ended December 31, 2016 and resulted from the release of cumulative foreign currency translation adjustments into earnings upon the sale of our Chemetall SurfaceTreatment business which closed on December 14, 2016. See Note 3, “Divestitures,” for additional information.(b)The pre-tax portion of amounts reclassified from accumulated other comprehensive loss consists of amortization of prior service benefit, which is a component of pension andpostretirement benefits cost (credit). See Note 15, “Pension Plans and Other Postretirement Benefits,” for additional information.(c)The pre-tax portion of amounts reclassified from accumulated other comprehensive loss is included in interest expense.(d)Amounts reclassified from accumulated other comprehensive loss include a net benefit of $6.9 million, which was reclassified to Retained earnings for stranded tax effectscaused by the TCJA. See “Recently Issued Accounting Pronouncements,” included in Note 1, “Summary of Significant Accounting Policies,” for additional information.100Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSThe amount of income tax benefit (expense) allocated to each component of Other comprehensive (loss) income for the years ended December 31,2018, 2017 and 2016 is provided in the following tables (in thousands): Foreign CurrencyTranslation Pension andPostretirementBenefits Net InvestmentHedge Interest RateSwap2018 Other comprehensive (loss) income, before tax$(150,262) $(128) $20,424 $3,336Income tax benefit (expense)4 (10) 5,362 (3,921)Other comprehensive (loss) income, net of tax$(150,258) $(138) $25,786 $(585) 2017 Other comprehensive income (loss), before tax$228,508 $(96) $(65,958) $3,336Income tax (expense) benefit(1,069) (1) 24,131 (1,220)Other comprehensive income (loss), net of tax$227,439 $(97) $(41,827) $2,116 2016 Other comprehensive (loss) income, before tax$(20,849) $839 $41,209 $3,336Income tax benefit (expense)24 (5) (15,076) (1,220)Other comprehensive (loss) income, net of tax$(20,825) $834 $26,133 $2,116NOTE 20—Income Taxes:On December 22, 2017, the TCJA was signed into law in the U.S. The TCJA contains several key tax provisions including, among other things, thereduction of the corporate income tax rate from 35% to 21% effective January 1, 2018, the requirement of companies to pay a one-time transition tax onearnings of certain foreign subsidiaries that were previously tax deferred, and the creation of new taxes on certain foreign sourced earnings such as GILTI.Under ASC 740, Income Taxes, the effect of changes in tax rates and laws are recognized in the period in which the new legislation is enacted. However,the SEC staff issued SAB 118, which allowed us to record provisional amounts during a measurement period ending December 22, 2018. In accordance withSAB 118, income tax effects of the TCJA could be refined as additional analysis was completed based on obtaining, preparing, or analyzing additionalinformation about facts and circumstances that existed as of the enactment date that were not initially reported as provisional amounts. In addition, theprovisional amounts could also be affected upon additional TCJA guidance issued during the measurement period.As of December 31, 2018, we have completed our accounting for the effects of enactment of the TCJA and adjustments made to the provisionalamounts allowed under SAB 118 were identified and recorded. During the year ended December 31, 2018, we recorded income tax expense of $0.4 millionrelated to the remeasurement of our deferred tax assets and liabilities for the reduction in the Federal statutory tax rate. We also recognized an income taxbenefit of $42.3 million for the refinement of the tax liability calculation related to the one-time transition tax. Additionally, during the year ended December31, 2018 we recognized income tax expense of $2.1 million related to excess executive employee remuneration for awards determined not to begrandfathered consistent with Notice 2018-68.The TCJA provides for a territorial tax system, beginning in 2018, which includes tax imposed on GILTI. The Company has elected to account forGILTI tax in the period in which it is incurred. The GILTI provisions require the Company to include in its U.S. income tax return foreign subsidiary earningsin excess of an allowable return on the foreign subsidiary’s tangible assets. As of December 31, 2018, we recorded income tax expense of $6.4 million forGILTI, as well as $4.1 million related to excess employee remuneration that became effective in 2018 under the TCJA.As additional regulations or guidance in relation to TCJA continues to be issued, the Company will analyze and record the necessary impacts in thequarter in which guidance is received.101Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSIncome from continuing operations before income taxes and equity in net income of unconsolidated investments, and current and deferred income taxexpense (benefit) are composed of the following (in thousands): Year Ended December 31, 2018 2017 2016Income from continuing operations before income taxes and equity in net income ofunconsolidated investments: Domestic$223,702 $(8,293) $49,630Foreign570,999 455,091 465,634Total$794,701 $446,798 $515,264 Current income tax expense (benefit): Federal$(2,712) $394,747 $7,717State6,793 323 1,407Foreign91,581 78,688 63,957Total$95,662 $473,758 $73,081 Deferred income tax (benefit) expense: Federal$15,573 $(58,640) $12,230State1,614 (2,288) (1,715)Foreign31,977 18,987 12,667Total$49,164 $(41,941) $23,182 Total income tax expense$144,826 $431,817 $96,263The decrease in the current income tax expense is primarily related to the tax impact of the one-time transition tax imposed by the TCJA in 2017. Theincrease in the deferred tax expense in 2018 is primarily related to the tax impact associated with the remeasurement of deferred tax assets and liabilitiesunder the recently enacted tax legislation from a statutory rate of 35% to 21% recorded in 2017.The reconciliation of the U.S. federal statutory rate to the effective income tax rate is as follows: % of Income Before Income Taxes 2018 2017 2016Federal statutory rate21.0 % 35.0 % 35.0 %State taxes, net of federal tax benefit0.9 (0.5) (0.1)Change in valuation allowance (a)0.7 (1.4) 3.7Impact of foreign earnings, net(b)(0.3) (13.5) (19.3)Global intangible low tax inclusion0.8 — —Change in U.S. federal statutory rate(c)0.1 (14.0) —Transition tax on deferred foreign earnings(d)(5.3) 96.1 —Subpart F income0.9 2.0 0.2Undistributed earnings of foreign subsidiaries— (2.2) 0.1Stock-based compensation(0.7) (1.9) —Depletion(0.6) (1.4) (1.0)Revaluation of unrecognized tax benefits/reserve requirements— (0.7) (0.4)Domestic manufacturing tax deduction— — (0.9)Other items, net0.7 (0.9) 1.4Effective income tax rate18.2 % 96.6 % 18.7 %(a)The year ended December 31, 2018 includes an $8.2 million expense due to the establishment of a valuation allowance due to a foreign restructuring plan and a $1.5 millionbenefit due to the release of a foreign valuation allowance due to changes in expected profitability. 2017 includes a $10.9 million benefit from the release of valuationallowances due to a foreign restructuring plan.(b)Our statutory rate is decreased by of our share of the income of JBC, a Free Zones company under the laws of the Hashemite Kingdom of Jordan. The applicable provisions ofthe Jordanian law, and applicable regulations thereunder, do not have a termination provision and102Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSthe exemption is indefinite. As a Free Zones company, JBC is not subject to income taxes on the profits of products exported from Jordan, and currently, substantially all ofthe profits are from exports. This resulted in a rate benefit of 3.3%, 8.9%, and 7.3% for 2018, 2017, and 2016, respectively.(c)At December 31, 2017 we have made a reasonable estimate of the tax impact of the U.S. enacted tax law on our business and our consolidated financial statements and haverecorded a provisional tax benefit of $62.3 million related to the remeasurement of our deferred tax assets and liabilities for the reduction in the Federal statutory tax rate from35% to 21%. In 2018, the updates to our calculation of the remeasurement of deferred tax assets and liabilities resulted in income tax expense of $0.4 million.(d)At December 31, 2017 we made a reasonable estimate of the tax impact of the U.S. enacted tax law on our business and our consolidated financial statements and recognized aprovisional tax expense of $429.2 million for the one-time transition tax. During 2018, the impact of the refined one-time transition tax calculation was an income tax benefit of$42.3 million.Deferred income tax assets and liabilities recorded on the consolidated balance sheets as of December 31, 2018 and 2017 consist of the following (inthousands): December 31, 2018 2017Deferred tax assets: Accrued employee benefits$18,462 $21,463Operating loss carryovers(a)1,210,377 459,644Pensions61,308 64,799Tax credit carryovers1,270 11,634Other35,895 44,714Gross deferred tax assets1,327,312 602,254Valuation allowance(a)(1,213,750) (458,288)Deferred tax assets113,562 143,966 Deferred tax liabilities: Depreciation(337,503) (334,162)Intangibles(88,871) (113,792)Hedge of net investment of foreign subsidiary(21,854) (17,028)Other(31,287) (24,265)Deferred tax liabilities(479,515) (489,247) Net deferred tax liabilities$(365,953) $(345,281)Classification in the consolidated balance sheets: Noncurrent deferred tax assets$17,029 $25,108Noncurrent deferred tax liabilities(382,982) (370,389)Net deferred tax liabilities$(365,953) $(345,281)(a)During 2018, the Company recognized intercompany losses at a foreign entity related to international restructuring resulting in an increase to the deferred tax asset for netoperating losses and an associated and equal valuation allowance of $749.8 million.Changes in the balance of our deferred tax asset valuation allowance are as follows (in thousands): Year Ended December 31, 2018 2017 2016Balance at January 1$(458,288) $(69,900) $(84,137)Additions(766,012) (408,252) (20,568)Deductions10,550 19,864 34,805Balance at December 31$(1,213,750) $(458,288) $(69,900)At December 31, 2018, we had approximately $1.3 million of domestic credits available to offset future payments of income taxes, expiring in varyingamounts between 2019 and 2027. We have established valuation allowances for $0.3 million of those domestic credits since we believe that it is more likelythan not that the related deferred tax assets will not be realized. We believe that sufficient taxable income will be generated during the carryover period inorder to utilize the other remaining credit carryovers.103Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAt December 31, 2018, we have on a pre-tax basis, domestic state net operating losses of $152.7 million, expiring between 2019 and 2038, which havepre-tax valuation allowances of $58.3 million established. In addition, we have on a pre-tax basis $4.64 billion of foreign net operating losses, of which amajority have an indefinite life, which have pre-tax valuation allowances for $4.61 billion established. We have established valuation allowances for thesedeferred tax assets since we believe that it is more likely than not that the related deferred tax assets will not be realized. For the same reason, we establishedpre-tax valuation allowances of $9.9 million and $55.2 million for other state and foreign deferred tax assets, respectively, unrelated to net operating losses.The realization of the deferred tax assets is dependent on the generation of sufficient taxable income in the appropriate tax jurisdictions. Although realizationis not assured, we believe it is more likely than not that the remaining deferred tax assets will be realized. However, the amount considered realizable couldbe reduced if estimates of future taxable income change.As of December 31, 2018, we have not recorded taxes on approximately $505.6 million of cumulative undistributed earnings of our non-U.S.subsidiaries and joint ventures. We generally do not provide for taxes related to our undistributed earnings because such earnings either would not be taxablewhen remitted or they are considered to be indefinitely reinvested. If in the foreseeable future, we can no longer demonstrate that these earnings areindefinitely reinvested, a deferred tax liability will be recognized. A determination of the amount of the unrecognized deferred tax liability related to theseundistributed earnings is not practicable due to the complexity and variety of assumptions necessary based on the manner in which the undistributedearnings would be repatriated.Liabilities related to uncertain tax positions were $22.9 million and $24.4 million at December 31, 2018 and 2017, respectively, inclusive of interestand penalties of $3.2 million and $2.9 million at December 31, 2018 and 2017, respectively, and are reported in Other noncurrent liabilities as provided inNote 16, “Other Noncurrent Liabilities.” These liabilities at December 31, 2018 and 2017 were reduced by $13.0 million and $14.6 million, respectively, foroffsetting benefits from the corresponding effects of potential transfer pricing adjustments, state income taxes and rate arbitrage related to foreign structure.These offsetting benefits are recorded in Other assets as provided in Note 11, “Other Assets.” The resulting net liabilities of $6.7 million and $6.9 million atDecember 31, 2018 and 2017, respectively, if recognized and released, would favorably affect earnings.The liabilities related to uncertain tax positions, exclusive of interest, were $19.7 million and $21.4 million at December 31, 2018 and 2017,respectively. The following is a reconciliation of our total gross liability related to uncertain tax positions for 2018, 2017 and 2016 (in thousands): Year Ended December 31, 2018 2017 2016Balance at January 1$21,438 $25,384 $95,715Divestitures(a)— — (55,881)Additions for tax positions related to prior years874 — 548Reductions for tax positions related to prior years— (1,933) (1,253)Additions for tax positions related to current year1,091 1,132 1,271Lapses in statutes of limitations/settlements(3,578) (4,198) (12,591)Foreign currency translation adjustment(83) 1,053 (2,425)Balance at December 31$19,742 $21,438 $25,384(a)Reclassified to Other noncurrent liabilities as a result of the indemnification of certain income tax liabilities associated with the Chemetall Surface Treatment entities sold. SeeNote 16, “Other Noncurrent Liabilities.”We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Due to the statute of limitations, we are no longer subject to U.S. federalincome tax audits by the Internal Revenue Service (“IRS”) for years prior to 2011. Due to the statute of limitations, we also are no longer subject to U.S. stateincome tax audits prior to 2011.With respect to jurisdictions outside the U.S., several audits are in process. We have audits ongoing for the years 2006 through 2017 related toGermany, Taiwan, Italy, India, Belgium, and Chile, some of which are for entities that have since been divested.While we believe we have adequately provided for all tax positions, amounts asserted by taxing authorities could be greater than our accrued position.Accordingly, additional provisions on federal and foreign tax-related matters could be recorded in the future as revised estimates are made or the underlyingmatters are settled or otherwise resolved.104Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSSince the timing of resolutions and/or closure of tax audits is uncertain, it is difficult to predict with certainty the range of reasonably possiblesignificant increases or decreases in the liability related to uncertain tax positions that may occur within the next twelve months. Our current view is that it isreasonably possible that we could record a decrease in the liability related to uncertain tax positions, relating to a number of issues, up to approximately $4.4million as a result of closure of tax statutes.NOTE 21—Fair Value of Financial Instruments:In assessing the fair value of financial instruments, we use methods and assumptions that are based on market conditions and other risk factors existingat the time of assessment. Fair value information for our financial instruments is as follows:Long-Term Debt—the fair values of our senior notes are estimated using Level 1 inputs and account for the difference between the recorded amountand fair value of our long-term debt. The carrying value of our remaining long-term debt reported in the accompanying consolidated balance sheetsapproximates fair value as substantially all of such debt bears interest based on prevailing variable market rates currently available in the countries in whichwe have borrowings. December 31, 2018 2017 Recorded Amount Fair Value Recorded Amount Fair Value (In thousands)Long-term debt$1,712,003 $1,731,271 $1,845,309 $1,949,638Foreign Currency Forward Contracts—we enter into foreign currency forward contracts in connection with our risk management strategies in an attemptto minimize the financial impact of changes in foreign currency exchange rates. These derivative financial instruments are used to manage risk and are notused for trading or other speculative purposes. The fair values of our foreign currency forward contracts are estimated based on current settlement values. AtDecember 31, 2018 and 2017, we had outstanding foreign currency forward contracts with notional values totaling $626.5 million and $357.4 million,respectively, hedging our exposure to various currencies including the Euro and Chinese Renminbi. Our foreign currency forward contracts outstanding atDecember 31, 2018 and 2017 have not been designated as hedging instruments under ASC 815, Derivatives and Hedging. The following table summarizesthe fair value of our foreign currency forward contracts included in the consolidated balance sheets as of December 31, 2018 and 2017 (in thousands): December 31, 2018 2017Foreign currency forward contracts - Other accounts receivable$431 $—Foreign currency forward contracts - Accrued expenses$— $4,954Gains and losses on foreign currency forward contracts are recognized currently in Other expenses, net; further, fluctuations in the value of thesecontracts are generally expected to be offset by changes in the value of the underlying exposures being hedged, which are also reported in Other expenses,net. The following table summarizes these net (losses) gains recognized in our consolidated statements of income during the years ended December 31, 2018,2017 and 2016 (in thousands): Year Ended December 31, 2018 2017 2016Foreign currency forward contracts (losses) gains$(19,851) $4,588 $16,095In addition, for the years ended December 31, 2018, 2017 and 2016, we recorded losses (gains) of $19.9 million, ($4.6) million and ($16.1) million,respectively, related to the change in the fair value of our foreign currency forward contracts, and net cash (settlements) receipts of ($25.2) million, $9.4million and $16.0 million, respectively, in Other, net, in our consolidated statements of cash flows.The counterparties to our foreign currency forward contracts are major financial institutions with which we generally have other financial relationships.We are exposed to credit loss in the event of nonperformance by these counterparties. However, we do not anticipate nonperformance by the counterparties.105Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTE 22—Fair Value Measurement:Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between marketparticipants at the measurement date (exit price). The inputs used to measure fair value are classified into the following hierarchy:Level 1Unadjusted quoted prices in active markets for identical assets or liabilities Level 2Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similarassets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability Level 3Unobservable inputs for the asset or liabilityWe endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on thelowest level of input that is significant to the fair value measurement. The following tables set forth our financial assets and liabilities that were accounted forat fair value on a recurring basis as of December 31, 2018 and 2017 (in thousands): December 31,2018 Quoted Prices inActive Markets forIdentical Items (Level1) Quoted Prices in ActiveMarkets for SimilarItems (Level 2) Unobservable Inputs(Level 3)Assets: Investments under executive deferred compensation plan(a)$26,292 $26,292 $— $—Private equity securities(b)$26 $26 $— $—Private equity securities measured at net asset value(b)(c)$7,195 $— $— $—Foreign currency forward contracts(d)$431 $— $431 $— Liabilities: Obligations under executive deferred compensation plan (a)$26,292 $26,292 $— $— December 31,2017 Quoted Prices inActive Markets forIdentical Items (Level1) Quoted Prices in ActiveMarkets for SimilarItems (Level 2) Unobservable Inputs(Level 3)Assets: Investments under executive deferred compensation plan(a)$25,494 $25,494 $— $—Private equity securities(b)$38 $38 $— $—Private equity securities measured at net asset value(b)(c)$5,121 $— $— $— Liabilities: Obligations under executive deferred compensation plan (a)$25,494 $25,494 $— $—Foreign currency forward contracts(d)$4,954 $— $4,954 $—(a)We maintain an EDCP that was adopted in 2001 and subsequently amended. The purpose of the EDCP is to provide current tax planning opportunities as well as supplementalfunds upon the retirement or death of certain of our employees. The EDCP is intended to aid in attracting and retaining employees of exceptional ability by providing them withthese benefits. We also maintain a Benefit Protection Trust (the “Trust”) that was created to provide a source of funds to assist in meeting the obligations of the EDCP, subjectto the claims of our creditors in the event of our insolvency. Assets of the Trust are consolidated in accordance with authoritative guidance. The assets of the Trust consistprimarily of mutual fund investments (which are accounted for as trading securities and are marked-to-market on a monthly basis through the consolidated statements ofincome) and cash and cash equivalents. As such, these assets and obligations are classified within Level 1.(b)Primarily consists of private equity securities classified as available-for-sale and are reported in Investments in the consolidated balance sheets. The changes in fair value arereported in Other expenses, net, in our consolidated statements of income.(c)Holdings in private equity securities are measured at fair value using the net asset value per share (or its equivalent) practical expedient and have not been categorized in the fairvalue hierarchy. The fair value amounts of $7.2 million and $5.1 million as of December 31,106Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS2018 and 2017, respectively, are included in this table to permit reconciliation to the marketable equity securities presented in Note 10, “Investments.”(d)As a result of our global operating and financing activities, we are exposed to market risks from changes in foreign currency exchange rates, which may adversely affect ouroperating results and financial position. When deemed appropriate, we minimize our risks from foreign currency exchange rate fluctuations through the use of foreign currencyforward contracts. Unless otherwise noted, these derivative financial instruments are not designated as hedging instruments under ASC 815, Derivatives and Hedging. Theforeign currency forward contracts are valued using broker quotations or market transactions in either the listed or over-the-counter markets. As such, these derivativeinstruments are classified within Level 2.NOTE 23—Related Party Transactions:Our consolidated statements of income include sales to and purchases from unconsolidated affiliates in the ordinary course of business as follows (inthousands): Year Ended December 31, 2018 2017 2016Sales to unconsolidated affiliates$35,094 $29,514 $29,651Purchases from unconsolidated affiliates(a)$256,701 $209,266 $130,287(a)Purchases from unconsolidated affiliates primarily relate to purchases from our Windfield joint venture.Our consolidated balance sheets include accounts receivable due from and payable to unconsolidated affiliates in the ordinary course of business asfollows (in thousands): December 31, 2018 2017Receivables from related parties(a)$14,348 $2,406Payables to related parties$68,357 $55,801(a)Increase in receivables from related parties balance due to timing of payments in the normal course of business from one of our Catalysts joint ventures. NOTE 24—Segment and Geographic Area Information:In the first quarter of 2018, the PCS product category merged with our former Refining Solutions reportable segment to form a global business focusedon catalysts. As a result, our three reportable segments include: (1) Lithium; (2) Bromine Specialties; and (3) Catalysts. On June 17, 2016, the Companysigned a definitive agreement to sell its Chemetall Surface Treatment business, a separate reportable segment, to BASF SE. This business was classified asdiscontinued operations and its results are excluded from segment results for all periods presented. Each segment has a dedicated team of sales, research anddevelopment, process engineering, manufacturing and sourcing, and business strategy personnel and has full accountability for improving execution throughgreater asset and market focus, agility and responsiveness. This business structure aligns with the markets and customers we serve through each of thesegments. This structure also facilitates the continued standardization of business processes across the organization, and is consistent with the manner inwhich information is presently used internally by the Company’s chief operating decision maker to evaluate performance and make resource allocationdecisions.Summarized financial information concerning our reportable segments is shown in the following tables. Results for 2017 and 2016 have been recast toreflect the change in segments noted above.The “All Other” category includes only the fine chemistry services business that does not fit into any of our core businesses.The Corporate category is not considered to be a segment and includes corporate-related items not allocated to the operating segments. Pension andOPEB service cost (which represents the benefits earned by active employees during the period) and amortization of prior service cost or benefit are allocatedto the reportable segments, All Other, and Corporate, whereas the remaining components of pension and OPEB benefits cost or credit (“Non-operatingpension and OPEB items”) are included in Corporate. Segment data includes intersegment transfers of raw materials at cost and allocations for certaincorporate costs.The Company’s chief operating decision maker uses adjusted EBITDA (as defined below) to assess the ongoing performance of the Company’sbusiness segments and to allocate resources. The Company defines adjusted EBITDA as107Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSearnings before interest, taxes, depreciation and amortization, as adjusted on a consistent basis for certain non-recurring or unusual items in a balancedmanner and on a segment basis. These non-recurring or unusual items may include acquisition and integration related costs, utilization of inventory markup,gains or losses on sales of businesses, restructuring charges, facility divestiture charges, non-operating pension and OPEB items and other significant non-recurring items. In addition, management uses adjusted EBITDA for business planning purposes and as a significant component in the calculation ofperformance-based compensation for management and other employees. The Company has reported adjusted EBITDA because management believes itprovides transparency to investors and enables period-to-period comparability of financial performance. Adjusted EBITDA is a financial measure that is notrequired by, or presented in accordance with, U.S. GAAP. Adjusted EBITDA should not be considered as an alternative to Net income attributable toAlbemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP, or any other financialmeasure reported in accordance with U.S. GAAP. Year Ended December 31, 2018 2017 2016 (In thousands)Net sales: Lithium$1,228,171 $1,018,885 $668,852Bromine Specialties917,880 855,143 792,425Catalysts1,101,554 1,067,572 1,031,501All Other127,186 128,914 180,988Corporate159 1,462 3,437Total net sales$3,374,950 $3,071,976 $2,677,203 Adjusted EBITDA: Lithium$530,773 $446,652 $285,714Bromine Specialties288,116 258,901 226,926Catalysts284,307 283,883 316,609All Other14,091 13,878 14,772Corporate(110,623) (117,834) (85,804)Total adjusted EBITDA$1,006,664 $885,480 $758,217108Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSSee below for a reconciliation of adjusted EBITDA, the non-GAAP financial measure, from Net income attributable to Albemarle Corporation, the mostdirectly comparable financial measure calculated and reported in accordance with U.S. GAAP (in thousands): Lithium BromineSpecialties Catalysts ReportableSegments Total All Other Corporate ConsolidatedTotal2018 Net income (loss) attributable to AlbemarleCorporation$428,212 $246,509 $445,604 $1,120,325 $6,018 $(432,781) $693,562Depreciation and amortization95,193 41,607 49,131 185,931 8,073 6,694 200,698Restructuring and other(a)— — — — — 3,838 3,838Gain on sale of business(b)— — (210,428) (210,428) — — (210,428)Acquisition and integration related costs(c)— — — — — 19,377 19,377Interest and financing expenses— — — — — 52,405 52,405Income tax expense— — — — — 144,826 144,826Non-operating pension and OPEB items— — — — — 5,285 5,285Legal accrual(d)— — — — — 27,027 27,027Environmental accrual(e)— — — — — 15,597 15,597Albemarle Foundation contribution(f)— — — — — 15,000 15,000Indemnification adjustments(g)— — — — — 25,240 25,240Other(h)7,368 — — 7,368 — 6,869 14,237Adjusted EBITDA$530,773 $288,116 $284,307 $1,103,196 $14,091 $(110,623) $1,006,6642017 Net income (loss) attributable to AlbemarleCorporation$342,992 $218,839 $230,665 $792,496 $5,521 $(743,167) $54,850Depreciation and amortization87,879 40,062 54,468 182,409 8,357 6,162 196,928Utilization of inventory markup(i)23,095 — — 23,095 — — 23,095Restructuring and other(j)— — — — — 17,056 17,056Gain on acquisition(k)(6,221) — — (6,221) — — (6,221)Acquisition and integration related costs(c)— — — — — 33,954 33,954Interest and financing expenses(l)— — — — — 115,350 115,350Income tax expense— — — — — 431,817 431,817Non-operating pension and OPEB items— — — — — (16,125) (16,125)Note receivable reserve(m)— — — — — 28,730 28,730Other(n)(1,093) — (1,250) (2,343) — 8,389 6,046Adjusted EBITDA$446,652 $258,901 $283,883 $989,436 $13,878 $(117,834) $885,4802016 Net income (loss) attributable to AlbemarleCorporation$198,852 $187,364 $265,416 $651,632 $131,301 $(139,258) $643,675Depreciation and amortization86,862 39,562 51,193 177,617 7,302 6,056 190,975(Gain) loss on sales of businesses, net(b)— — — — (123,831) 1,533 (122,298)Acquisition and integration related costs(c)— — — — — 57,384 57,384Interest and financing expenses— — — — — 65,181 65,181Income tax expense— — — — — 96,263 96,263Income from discontinued operations (net of tax)— — — — — (202,131) (202,131)Non-operating pension and OPEB items— — — — — 25,589 25,589Other(o)— — — — — 3,579 3,579Adjusted EBITDA$285,714 $226,926 $316,609 $829,249 $14,772 $(85,804) $758,217(a)Expected severance payments as part of a business reorganization plan, $0.1 million recorded in Cost of goods sold and $3.7 million recorded in Selling, general andadministrative expenses. These severance payments have been made during the year ended December 31, 2018.(b)See Note 3, “Divestitures,” for additional information.(c)See Note 2, “Acquisitions,” for additional information.(d)Included in Other expenses, net. See Note 17, “Commitments and Contingencies,” for additional information.109Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(e)Increase in environmental reserve to indemnify the buyer of a formerly owned site recorded in Other expenses, net. As defined in the agreement of sale, this indemnificationhas a set cutoff date in 2024, at which point we will no longer be required to provide financial coverage.(f)Including in Selling, general and administrative expenses is a charitable contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to theAlbemarle Foundation, a non-profit organization that sponsors grants, health and social projects, educational initiatives, disaster relief, matching gift programs, scholarshipsand other charitable initiatives in locations where our employees live and operate. This contribution is in addition to the normal annual contribution made to the AlbemarleFoundation by the Company, and is significant in size and nature in that it is intended to provide more long-term benefits in the communities where we live and operate.(g)Included in Other expenses, net is $19.7 million related to the proposed settlement of an ongoing audit of a previously disposed business in Germany, and $5.5 million relatedto the revision of indemnifications previously recorded from disposed businesses.(h)Included amounts for the year ended December 31, 2018 recorded in:•Cost of goods sold - $4.9 million for the write-off of fixed assets related to a major capacity expansion in our Jordanian joint venture and $8.8 million related to non-routine labor and compensation related costs in Chile that are outside normal compensation arrangements.•Selling, general and administrative expenses - $2.3 million of shortfall contributions for our multiemployer plan financial improvement plan and a $1.2 millioncontribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to schools in the state of Louisiana for qualified tuition purposes. Thiscontribution is significant in size and is intended to provide long-term benefits for families in the Louisiana community. This was partially offset by a $1.5 million gainrelated to a refund from Chilean authorities due to an overpayment made in a prior year.•Other expenses, net - $1.5 million gain related to the reversal of previously recorded liabilities of disposed businesses.(i)In connection with the acquisition of Jiangli New Materials, the Company valued inventory purchased from Jiangli New Materials at fair value, which resulted in a markup ofthe underlying net book value of the inventory totaling approximately $23.1 million. The utilization of this inventory markup was included in Costs of goods sold during theyear ended December 31, 2017, the estimated remaining selling period.(j)During 2017, we initiated action to reduce costs in each of our reportable segments at several locations, primarily at our Lithium sites in Germany. Based on the restructuringplans, we have recorded expenses of $2.9 million in Cost of goods sold, $8.4 million in Selling, general and administrative expenses, and $5.7 million in Research anddevelopment expenses, primarily related to expected severance payments. The unpaid balance is recorded in Accrued expenses at December 31, 2018, with the expectation thatthe remaining balance will be paid by the end of 2019.(k)Gain recorded in Other expenses, net related to the acquisition of the remaining 50% interest in Salmag. See Note 2, “Acquisitions,” for additional information.(l)Included in Interest and financing expenses is a loss on early extinguishment of debt of $52.8 million. See Note 14, “Long-Term Debt,” for additional information.(m)Reserve recorded in Other expenses, net against a note receivable on one of our European entities no longer deemed probable of collection.(n)Included amounts for the year ended December 31, 2017 recorded in:•Cost of goods sold - $1.3 million reversal of deferred income related to an abandoned project at an unconsolidated investment.•Selling, general and administrative expenses - $3.3 million of shortfall contributions for our multiemployer plan financial improvement plan, partially offset by $1.0million related to a reversal of an accrual recorded as part of purchase accounting from a previous acquisition.•Other expenses, net - $3.2 million of asset retirement obligation charges related to the revision of an estimate at a site formerly owned by Albemarle, losses of $8.7million related to adjustments of settlements and indemnifications of previously disposed businesses, the revision of tax indemnification expenses of $3.7 millionprimarily related to the filing of tax returns and a competent authority agreement for a previously disposed business and $1.0 million related to the settlement of a legalclaim. This is partially offset by gains of $10.6 million and $1.1 million related to the reversal of liabilities recorded as part of purchase accounting from a previousacquisition and the previous disposal of a property, respectively.(o)Included amounts for the year ended December 31, 2016 recorded in:•Selling, general and administrative expenses - $0.9 million related to the net loss on the sales of properties.•Research and development expenses - $1.4 million related to the write-off of fixed assets in China.•Other expenses, net -$2.4 million related to environmental charges related to a site formerly owned by Albemarle, partially offset by a gain related to a previouslydisposed of site in China of $1.1 million.110Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2018 2017 2016 (In thousands) Identifiable assets: Lithium(a)$4,605,070 $3,979,615 $3,499,302Bromine Specialties753,157 745,007 724,218Catalysts1,134,975 1,332,599 1,224,504All Other128,185 126,486 130,595Corporate(a)(b)960,287 1,567,065 2,582,588Total identifiable assets$7,581,674 $7,750,772 $8,161,207Goodwill: Lithium$1,354,779 $1,389,089 $1,326,980Bromine Specialties20,319 20,319 20,319Catalysts185,485 194,361 186,147All Other6,586 6,586 6,586Total goodwill$1,567,169 $1,610,355 $1,540,032(a)The identifiable assets at December 31, 2017, have been revised to correct an error in the previously reported amounts, which understated the Lithium segment and overstatedthe Corporate category by $238.5 million. There is no impact to the financial statements or total identifiable assets at December 31, 2017.(b)Decrease in Corporate identifiable assets at December 31, 2018 primarily due to the net use of cash and cash equivalents for items such as capital expenditures, sharerepurchases and commercial paper repayments. As of December 31, 2016, Corporate included the net proceeds received from the sale of the Chemetall Surface Treatmentbusiness completed on December 14, 2016, less the repayment of the term loans and commercial paper using those proceeds. See Note 3, “Divestitures,” and Note 14, “Long-Term Debt” for additional details about these transactions. Year Ended December 31, 2018 2017 2016 (In thousands) Depreciation and amortization: Lithium$95,193 $87,879 $86,862Bromine Specialties41,607 40,062 39,562Catalysts49,131 54,468 51,193Discontinued Operations— — 35,194All Other8,073 8,357 7,302Corporate6,694 6,162 6,056Total depreciation and amortization$200,698 $196,928 $226,169Capital expenditures: Lithium$500,849 $192,318 $72,038Bromine Specialties79,357 46,427 46,414Catalysts52,019 46,808 47,475Discontinued Operations— — 19,281All Other5,232 3,657 9,251Corporate62,534 28,493 2,195Total capital expenditures$699,991 $317,703 $196,654 Year Ended December 31, 2018 2017 2016 (In thousands) Net Sales(a): United States$887,416 $840,589 $797,267Foreign(b)2,487,534 2,231,387 1,879,936Total$3,374,950 $3,071,976 $2,677,203111Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(a)Net sales are attributed to countries based upon shipments to final destination.(b)In 2018, net sales to Korea, China and Japan represented 13%, 12%, and 10%, respectively, of total net sales. In 2017 and 2016, net sales to China represented 15% and 13%,respectively, of total net sales. No net sales in any other foreign country exceed 10% of total net sales. As of December 31, 2018 2017 2016 (In thousands) Long-Lived Assets(a): United States$929,291 $833,002 $850,689Chile1,406,478 1,069,859 922,878Australia407,141 364,624 288,553Jordan254,800 242,626 227,222Netherlands166,853 171,980 145,917Germany101,168 115,305 117,027China91,160 50,532 31,564France43,698 40,852 39,470Brazil40,464 47,255 46,380Korea(b)111 495 65,963Other foreign countries65,826 60,131 57,936Total$3,506,990 $2,996,661 $2,793,599(a)Long-lived assets are comprised of the Company’s Property, plant and equipment and Investments.(b)The reduction as of December 31, 2017, relates to the assets of the Polyolefin Catalysts Divestiture that are included in Assets held for sale in the consolidated balance sheet.NOTE 25—Quarterly Financial Summary (Unaudited): First Quarter Second Quarter Third Quarter Fourth Quarter (In thousands, except per share amounts)2018 Net sales$821,629 $853,874 $777,748 $921,699Gross profit$304,979 $311,356 $280,537 $320,384(Gain) loss on sales of businesses, net(a)$— $(218,705) $— $8,277Net income$138,925 $310,686 $143,479 $146,049Net income attributable to noncontrolling interests(7,165) (8,225) (13,734) (16,453)Net income attributable to Albemarle Corporation$131,760 $302,461 $129,745 $129,596Basic earnings per share$1.19 $2.76 $1.21 $1.22Shares used to compute basic earnings per share110,681 109,671 107,315 106,042Diluted earnings per share$1.18 $2.73 $1.20 $1.21Shares used to compute diluted earnings per share111,867 110,659 108,302 107,005112Albemarle Corporation and SubsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS First Quarter Second Quarter Third Quarter Fourth Quarter (In thousands, except per share amounts)2017 Net sales$722,063 $737,258 $754,866 $857,789Gross profit$254,956 $271,960 $275,657 $303,703Net income (loss)$62,657 $113,689 $130,193 $(207,071)Net income attributable to noncontrolling interests(11,444) (10,356) (11,523) (11,295)Net income (loss) attributable to Albemarle Corporation$51,213 $103,333 $118,670 $(218,366)Basic earnings (loss) per share$0.46 $0.93 $1.07 $(1.98)Shares used to compute basic earnings per share111,986 110,686 110,476 110,510Diluted earnings (loss) per share$0.45 $0.92 $1.06 $(1.95)Shares used to compute diluted earnings per share113,289 112,105 111,975 112,152(a)Represents the gain (loss) on the Polyolefin Catalysts Divestiture. See Note 3, “Divestitures,” for additional information.As discussed in Note 1, “Summary of Significant Accounting Policies,” actuarial gains and losses related to our defined benefit pension and OPEB planobligations are recognized annually in our consolidated statements of income in the fourth quarter and whenever a plan is determined to qualify for aremeasurement during a fiscal year. During the year ended December 31, 2018, actuarial losses were recognized as follows: fourth quarter—$14.0 million($10.6 million after income taxes) as a result of the annual remeasurement process. During the year ended December 31, 2017, actuarial gains were recognizedas follows: fourth quarter—$11.4 million ($7.3 million after income taxes) as a result of the annual remeasurement process.113Albemarle Corporation and Subsidiaries Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.NONEItem 9A.Controls and Procedures.Evaluation of Disclosure Controls and ProceduresUnder the supervision and with the participation of our management, including our principal executive officer and principal financial officer, weconducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of the end of the period covered by this report. Based on thisevaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosurecontrols and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, isrecorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated andcommunicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisionsregarding required disclosure.Design and Evaluation of Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rule13a-15(f) and 15d-15(f). Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2018. In making thisassessment, management used the criteria for effective internal control over financial reporting described in the “Internal Control-Integrated Framework”(2013) set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the assessment, management concluded that,as of December 31, 2018, our internal control over financial reporting was effective based on those criteria.The effectiveness of our internal control over financial reporting as of December 31, 2018 has been audited by PricewaterhouseCoopers LLP, anindependent registered public accounting firm, as stated in their report, which is included herein. Management’s report and the independent registered publicaccounting firm’s report are included in Item 8 under the captions entitled “Management’s Report on Internal Control over Financial Reporting” and “Reportof Independent Registered Public Accounting Firm” and are incorporated herein by reference.Changes in Internal Control over Financial ReportingNo change in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) occurred during the fiscal quarterended December 31, 2018 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.Item 9B.Other Information.NONEPART IIIItem 10.Directors, Executive Officers and Corporate Governance.The information required by this Item 10 will be contained in the Proxy Statement and is incorporated herein by reference. In addition, the informationin “Executive Officers of the Registrant” appearing after Item 4 in Part I of this Annual Report, is incorporated herein by reference.Code of ConductWe have adopted a code of conduct and ethics for directors, officers and employees, known as the Albemarle Code of Conduct. The Albemarle Code ofConduct is available on our website, www.albemarle.com. Shareholders may also request a free copy of the Albemarle Code of Conduct from: AlbemarleCorporation, Attention: Investor Relations, 4250 Congress Street, Suite 900, Charlotte, North Carolina 28209. We will disclose any amendments to, orwaivers from, a provision of our Code of Conduct that applies to the principal executive officer, principal financial officer, principal accounting officer orcontroller, or persons performing similar functions that relates to any element of the Code of Conduct as defined in Item 406 of Regulation S-K by postingsuch information on our website.114Albemarle Corporation and Subsidiaries New York Stock Exchange CertificationsBecause our common stock is listed on the New York Stock Exchange (“NYSE”), our Chief Executive Officer is required to make, and he has made, anannual certification to the NYSE stating that he was not aware of any violation by us of the corporate governance listing standards of the NYSE. Our ChiefExecutive Officer made his annual certification to that effect to the NYSE as of June 7, 2018. In addition, we have filed, as exhibits to this Annual Report onForm 10-K, the certifications of our principal executive officer and principal financial officer required under Sections 906 and 302 of the Sarbanes-Oxley Actof 2002 to be filed with the Securities and Exchange Commission regarding the quality of our public disclosure.Additional information will be contained in the Proxy Statement and is incorporated herein by reference.Item 11.Executive Compensation.The information required by this Item 11 will be contained in the Proxy Statement and is incorporated herein by reference.Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.The information required by this Item 12 will be contained in the Proxy Statement and is incorporated herein by reference.Item 13.Certain Relationships and Related Transactions, and Director Independence.The information required by this Item 13 will be contained in the Proxy Statement and is incorporated herein by reference.Item 14.Principal Accountant Fees and Services.The information required by this Item 14 will be contained in the Proxy Statement and is incorporated herein by reference.PART IVItem 15.Exhibits and Financial Statement Schedules.(a)(1) The following consolidated financial and informational statements of the registrant are included in Part II Item 8 on pages 58 to 113:Management’s Report on Internal Control Over Financial ReportingReport of Independent Registered Public Accounting FirmConsolidated Balance Sheets as of December 31, 2018 and 2017Consolidated Statements of Income, Comprehensive Income, Changes in Equity and Cash Flows for the years ended December 31, 2018, 2017 and 2016Notes to the Consolidated Financial Statements(a)(2) No Financial Statement Schedules are provided in accordance with Item 15(a)(2) as the information is either not applicable, not required or has beenfurnished in the Consolidated Financial Statements or Notes thereto.(a)(3) Exhibits The following documents are filed as exhibits to this Annual Report on Form 10-K pursuant to Item 601 of Regulation S-K: 2.1 Agreement and Plan of Merger, dated as of July 15, 2014, among Albemarle Corporation, Albemarle Holdings Corporation andRockwood Holdings, Inc. [filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K (No. 1-12658) filed on July 18, 2014, andincorporated herein by reference].115Albemarle Corporation and Subsidiaries 2.2 Share Purchase Agreement, dated as of June 17, 2016, between Albemarle Corporation and BASF SE [filed as Exhibit 2.1 to theCompany’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 (No. 1-12658), filed on August 5, 2016, and incorporatedherein by reference]. 2.3 First Amendment to the Share Purchase Agreement, dated December 7, 2016, between Albemarle Corporation and BASF SE [filed asExhibit 2.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (No. 1-12658), and incorporatedherein by reference]. 2.4 Second Amendment to the Share Purchase Agreement, dated December 14, 2016, between Albemarle Corporation and BASF SE [filed asExhibit 2.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (No. 1-12658), and incorporatedherein by reference]. 3.1 Amended and Restated Articles of Incorporation (including Amendment thereto) of Albemarle Corporation [filed as Exhibit 4.1 to theCompany’s Registration Statement on Form S-3 (No. 333-119723) filed on October 13, 2004, and incorporated herein by reference]. 3.2 Amended and Restated Articles of Incorporation of Albemarle Corporation [filed as Exhibit 3.1 to the Company’s Current Report onForm 8-K (No. 1-12658) filed on May 12, 2017, and incorporated herein by reference]. 3.3 Amended and Restated Bylaws, effective May 12, 2017, of Albemarle Corporation [filed as Exhibit 3.2 to the Company’s Current Reporton Form 8-K (No. 1-12658) filed on May 12, 2017, and incorporated herein by reference]. 4.1 Indenture, dated as of January 20, 2005, between Albemarle Corporation and The Bank of New York, as trustee [filed as Exhibit 4.1 tothe Company’s Current Report on Form 8-K (No. 1-12658) filed on January 20, 2005, and incorporated herein by reference]. 4.2 Second Supplemental Indenture, dated as of December 10, 2010, between Albemarle Corporation and The Bank of New York MellonTrust Company, N.A., as successor trustee to The Bank of New York [filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K(No. 1-12658) filed on December 10, 2010, and incorporated herein by reference]. 4.3 Third Supplemental Indenture, dated as of November 24, 2014, among Albemarle Corporation, Albemarle Holdings Corporation (nowRockwood Holdings, Inc.) and Albemarle Holdings II Corporation (now Rockwood Specialties Group, Inc.) and U.S. Bank NationalAssociation, as trustee [filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K (No. 1-12658) filed on November 24, 2014,and incorporated herein by reference]. 4.4 Fourth Supplemental Indenture, dated as of January 29, 2015, among Albemarle Corporation, Rockwood Holdings, Inc. (as successor bymerger to Albemarle Holdings Corporation), Rockwood Specialties Group, Inc. (as successor by merger to Albemarle Holdings IICorporation), The Bank of New York Mellon Trust Company, N.A., a national banking association, as successor to The Bank of NewYork, as resigning trustee, and U.S. Bank National Association, as successor trustee [filed as Exhibit 4.1 to the Company’s Current Reporton Form 8-K (No. 1-12658) filed on January 29, 2015, and incorporated herein by reference]. 4.5 Form of Global Security for the 4.50% Senior Notes due 2020 [filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K (No. 1-12658) filed on December 10, 2010, and incorporated herein by reference]. 4.6 Form of Global Security for the 4.150% Senior Notes due 2024 [filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K (No.1-12658) filed on November 24, 2014, and incorporated herein by reference]. 4.7 Form of Global Security for the 5.450% Senior Notes due 2044 [filed as Exhibit 4.4 to the Company’s Current Report on Form 8-K (No.1-12658) filed on November 24, 2014, and incorporated herein by reference]. 4.8 Form of Global Security for the 1.875% Senior Notes due 2021 [filed as Exhibit 4.8 to the Company’s Annual Report on Form 10-K forthe fiscal year ended December 31, 2014 (No. 1-12658), and incorporated herein by reference]. 116Albemarle Corporation and Subsidiaries #10.1 2013 Stock Compensation and Deferral Election Plan for Non-Employee Directors of Albemarle Corporation [filed as Annex A to theCompany’s definitive Proxy Statement on Schedule 14A (No. 1-12658) filed on March 28, 2013, and incorporated herein by reference]. #10.2 First Amendment to the Albemarle Corporation Stock Compensation and Deferral Election Plan [filed as Exhibit 10.1 to the Company’sQuarterly Report on Form 10-Q for the quarter ended June 30, 2016 (No. 1-12658), and incorporated herein by reference]. #10.3 Compensation Arrangement with Luther C. Kissam, IV, dated August 29, 2003 [filed as Exhibit 10.10 to the Company’s Annual Reporton Form 10-K for the year ended December 31, 2005 (No. 1-12658), and incorporated herein by reference]. #10.4 Notice of Option Grant [filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 1-12658) filed on February 25, 2013,and incorporated herein by reference]. #10.5 Notice of Option Grant [filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 1-12658) filed on February 28, 2014,and incorporated herein by reference]. #10.6 Notice of Option Grant [filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 1-12658) filed on March 2, 2015, andincorporated herein by reference]. #10.7 Notice of Option Grant [filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 1-12658) filed on March 2, 2016, andincorporated herein by reference]. #10.8 Notice of Restricted Stock Unit Award [filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K (No. 1-12658) filed on March2, 2016, and incorporated herein by reference]. #10.9 Notice of TSR Performance Unit Award [filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K (No. 1-12658) filed onMarch 2, 2016, and incorporated herein by reference]. #10.10 Form Notice of Option Grant under the Albemarle Corporation 2008 Incentive Plan [filed as Exhibit 10.3 to the Company’s CurrentReport on Form 8-K (No. 1-12658) filed on December 9, 2016, and incorporated herein by reference]. #10.11 Form Notice of Restricted Stock Unit Award under the Albemarle Corporation 2008 Incentive Plan [filed as Exhibit 10.4 to theCompany’s Current Report on Form 8-K (No. 1-12658) filed on December 9, 2016, and incorporated herein by reference]. #10.12 Form Notice of TSR Performance Unit Award under the Albemarle Corporation 2008 Incentive Plan [filed as Exhibit 10.5 to theCompany’s Current Report on Form 8-K (No. 1-12658) filed on December 9, 2016, and incorporated herein by reference]. #10.13 Notice of TSR Performance Unit Award [filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (No. 1-12658) filed onMay 9, 2018, and incorporated herein by reference]. #10.14 Notice of Option Grant [filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (No. 1-12658) filed on May 9, 2018, andincorporated herein by reference]. #10.15 Notice of Restricted Stock Unit Award [filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (No. 1-12658) filed onMay 9, 2018, and incorporated herein by reference]. #10.16 Amended and Restated Albemarle Corporation Supplemental Executive Retirement Plan, effective as of January 1, 2005 [filed as Exhibit10.13 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (No. 1-12658), and incorporatedherein by reference]. #10.17 First Amendment to the Albemarle Corporation Supplemental Executive Retirement Plan, dated December 1, 2010 [filed as Exhibit10.14 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (No. 1-12658), and incorporatedherein by reference]. 117Albemarle Corporation and Subsidiaries #10.18 Second Amendment to the Albemarle Corporation Supplemental Executive Retirement Plan, dated December 18, 2011 [filed as Exhibit10.15 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (No. 1-12658), and incorporatedherein by reference]. #10.19 Third Amendment to the Albemarle Corporation Supplemental Executive Retirement Plan, dated December 2, 2013 [filed as Exhibit10.16 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (No. 1-12658), and incorporatedherein by reference]. #10.20 Form of Severance Compensation Agreement (Pension-Eligible Employees) [filed as Exhibit 10.19 to the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 2015 (No. 1-12658), and incorporated herein by reference]. #10.21 Form of Severance Compensation Agreement (Non-Pension-Eligible Employees) [filed as Exhibit 10.20 to the Company’s AnnualReport on Form 10-K for the fiscal year ended December 31, 2015 (No. 1-12658), and incorporated herein by reference]. #10.22 Form of Amendment to Severance Compensation Agreement [filed as Exhibit 10.21 to the Company’s Annual Report on Form 10-K forthe fiscal year ended December 31, 2015 (No. 1-12658), and incorporated herein by reference]. #10.23 Second Amendment to Severance Compensation Agreement between Luther C. Kissam, IV and Albemarle Corporation [filed as Exhibit10.1 to the Company’s Current Report on Form 8-K (No. 1-12658) filed on December 9, 2016, and incorporated herein by reference]. #10.24 Form of Second Amendment to Severance Compensation Agreement between each of Karen Narwold and Scott Tozier, and AlbemarleCorporation [filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K (No. 1-12658) filed on December 9, 2016, andincorporated herein by reference]. #10.25 Albemarle Corporation Severance Pay Plan, as revised effective as of December 13, 2006 [filed as Exhibit 10.6 to the Company’s CurrentReport on Form 8-K (No. 1-12658) filed on December 18, 2006, and incorporated herein by reference]. #10.26 Amended and Restated Albemarle Corporation Benefits Protection Trust, effective as of December 13, 2006 [filed as Exhibit 10.9 to theCompany’s Current Report on Form 8-K (No. 1-12658) filed on December 18, 2006, and incorporated herein by reference]. #10.27 Albemarle Corporation Employee Relocation Policy [filed as Exhibit 10.33 to the Company’s Quarterly Report on Form 10-Q for thequarter ended June 30, 2008 (No. 1-12658), and incorporated herein by reference]. #10.28 Albemarle Corporation 2008 Incentive Plan, as amended and restated as of April 20, 2010 [filed as Exhibit 10.1 to the Company’sRegistration Statement on Form S-8 (No. 333-166828) filed on May 14, 2010, and incorporated herein by reference]. #10.29 Amended and Restated Albemarle Corporation Executive Deferred Compensation Plan, effective as of January 1, 2013 [filed as Exhibit10.23 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (No. 1-12658), and incorporatedherein by reference]. #10.30 First Amendment to the Albemarle Corporation Executive Deferred Compensation Plan, dated as of November 14, 2014 [filed as Exhibit10.24 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (No. 1-12658), and incorporatedherein by reference]. #10.31 Second Amendment to the Albemarle Corporation Executive Deferred Compensation Plan, dated as of February 12, 2015 [filed asExhibit 10.28 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (No. 1-12658), andincorporated herein by reference]. #10.32 Third Amendment to the Albemarle Corporation Executive Deferred Compensation Plan, dated as of July 31, 2015 [filed as Exhibit10.29 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (No. 1-12658), and incorporatedherein by reference]. 118Albemarle Corporation and Subsidiaries #10.33 Fourth Amendment to the Albemarle Corporation Executive Deferred Compensation Plan, dated as of December 17, 2015 [filed asExhibit 10.30 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (No. 1-12658), andincorporated herein by reference]. #10.34 Fifth Amendment to the Albemarle Corporation Executive Deferred Compensation Plan, dated as of March 31, 2017 [filed as Exhibit10.38 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (No. 1-12658), and incorporatedherein by reference]. #10.35 Sixth Amendment to the Albemarle Corporation Executive Deferred Compensation Plan, dated as of July 5, 2017 [filed as Exhibit 10.39to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (No. 1-12658), and incorporated herein byreference]. #10.36 Seventh Amendment to the Albemarle Corporation Executive Deferred Compensation Plan, dated as of November 9, 2017 [filed asExhibit 10.40 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (No. 1-12658), andincorporated herein by reference]. #10.37 Albemarle Corporation 2017 Incentive Plan, adopted May 12, 2017 [filed as Appendix A to the Company’s Definitive Proxy Statementfiled on March 30, 2017, and incorporated herein by reference]. #10.38 Albemarle Corporation Compensation Recoupment and Forfeiture Policy effective July 10, 2017 [filed as Exhibit 10.1 to the Company’sQuarterly Report on Form 10-Q for the quarter ended June 30, 2017 (No. 1-12658), and incorporated herein by reference]. #10.39 Form of letter agreement dated February 26, 2018 between the Company and each of Luther C. Kissam, IV, Karen Narwold, Scott Tozierand Donald J. LaBauve, Jr. [filed as Exhibit 10.43 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,2017 (No. 1-12658), and incorporated herein by reference]. 10.40 Credit Agreement, dated as of June 21, 2018, among Albemarle Corporation, Albemarle Global Finance Company SCA and AlbemarleEurope SPRL, as borrowers, certain of the Company’s subsidiaries that from time to time become parties thereto, the several banks andother financial institutions as may from time to time become parties thereto, and Bank of America, N.A., as Administrative Agent andSwing Line Lender [filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (No. 1-12658) filed on August 7, 2018, andincorporated herein by reference]. *10.41 Asset Sale and Share Subscription Agreement, dated December 14, 2018, by and among Albemarle Corporation, Albemarle Wodgina PtyLtd, a wholly-owned subsidiary of Albemarle Corporation, Mineral Resources Limited and Wodgina Lithium Pty Ltd, a wholly-ownedsubsidiary of Mineral Resources Limited. *10.42 Form of Wodgina Joint Venture Agreement by and among Wodgina Lithium Pty Ltd, Albemarle Wodgina Pty Ltd and Wodgina LithiumOperations Pty Ltd. *21.1 Subsidiaries of the Company. *23.1 Consent of PricewaterhouseCoopers LLP. *31.1 Certification of Chief Executive Officer pursuant to Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended. *31.2 Certification of Chief Financial Officer pursuant to Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended. *32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002. *32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002. *99.1 Five-Year Summary. 119Albemarle Corporation and Subsidiaries *101 Interactive Data Files (Annual Report on Form 10-K, for the fiscal year ended December 31, 2018, furnished in XBRL (eXtensibleBusiness Reporting Language)). Attached as Exhibit 101 to this report are the following documents formatted in XBRL: (i) the Consolidated Statements of Income for thefiscal years ended December 31, 2018, 2017 and 2016, (ii) the Consolidated Statements of Comprehensive Income for the fiscal yearsended December 31, 2018, 2017 and 2016, (iii) the Consolidated Balance Sheets at December 31, 2018 and 2017, (iv) the ConsolidatedStatements of Changes in Equity for the fiscal years ended December 31, 2018, 2017 and 2016, (v) the Consolidated Statements of CashFlows for the fiscal years ended December 31, 2018, 2017 and 2016 and (vi) the Notes to Consolidated Financial Statements.#Management contract or compensatory plan or arrangement.*Included with this filing.Item 16.Form 10-K Summary.NONE120Albemarle Corporation and Subsidiaries SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned thereunto duly authorized. ALBEMARLE CORPORATION(Registrant) By: /S/ LUTHER C. KISSAM IV (Luther C. Kissam IV) Chairman, President and Chief Executive OfficerDated: February 27, 2019Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities indicated as of February 27, 2019.Signature Title /S/ LUTHER C. KISSAM IV Chairman, President and Chief Executive Officer (principal executive(Luther C. Kissam IV) officer) /S/ SCOTT A. TOZIER Executive Vice President, Chief Financial Officer (principal financial(Scott A. Tozier) officer) /S/ DONALD J. LABAUVE, JR. Vice President, Corporate Controller and Chief Accounting Officer (principal accountingofficer)(Donald J. LaBauve, Jr.) /S/ LAURIE BRLAS Director(Laurie Brlas) /S/ WILLIAM H. HERNANDEZ Director(William H. Hernandez) /S/ DOUGLAS L. MAINE Director(Douglas L. Maine) /S/ J. KENT MASTERS Director(J. Kent Masters) /S/ JAMES J. O’BRIEN Director(James J. O’Brien) /S/ DIARMUID B. O’CONNELL Director(Diarmuid B. O’Connell) /S/ DEAN L. SEAVERS Director(Dean L. Seavers) /S/ GERALD A. STEINER Director(Gerald A. Steiner) /S/ HARRIETT TEE TAGGART Director(Harriett Tee Taggart) /S/ ALEJANDRO D. WOLFF Director(Alejandro D. Wolff) 121Exhibit 10.41Asset Sale and Share Subscription AgreementWodgina ProjectWodgina Lithium Pty LtdAlbemarle Wodgina Pty LtdMineral Resources LimitedAlbemarle CorporationContents Page1Defined terms and interpretation1 1.1Definitions in the Dictionary1 1.2Interpretation12Conditions to Completion2 2.1Conditions precedent2 2.2Satisfaction of the Conditions2 2.3Extension of the Conditions Precedent Date3 2.4Waiver3 2.5Notice3 2.6Termination and failure to Complete33Subscription and allotment of Subscription Shares4 3.1Registration of WLOPL4 3.2Subscription4 3.3Constitution5 3.4Equal ranking54Sale and purchase of Sale Interest5 4.1Sale and purchase5 4.2Reserved Rights5 4.3Purchase Price5 4.4Payments to reduce Purchase Price5 4.5Method of making payments55Incomplete Infrastructure and Tantalum Assets6 5.1Construction and commissioning by Seller6 5.2CCC Handover6 5.3Warranties from suppliers and manufacturers7 5.4Tantalum Assets76Interim Period7 page | 1  6.1Third Party Agreements7 6.2Information and access7 6.3General Conduct – Sale Interest and Project8 6.4Initial Mine Plan and Budget9 6.5Registration of this agreement10 6.6General Conduct – WLOPL10 6.7Compliance with clause 6 and Permitted Acts11 6.8Tax Notice117Completion11 7.1Date and place for Completion11 7.2Obligations of the Seller and WLOPL at Completion11 7.3Buyer’s obligations at Completion13 7.4Security Interest13 7.5Interdependence14 7.6Effect of Completion – title and risk14 7.7Tenement Applications14 7.8Assigned Tenements148Completion Adjustment15 8.1Completion Adjustment15 8.2Completion Statement15 8.3Dispute15 8.4Payment of Completion Adjustment179Conduct after Completion17 9.1Duty17 9.2Transfer of Petroleum Pipeline Licences18 9.3Registration18 9.4Dealings18 9.5Non-Transferring Approvals1910Third Party Agreements19 page | 2  10.1Assignment and Novation of Third Party Agreements19 10.2Obligations pending or if no novation19 10.3Third Party Agreements20 10.4Indemnity by Buyer in respect of Third Party Agreement Liabilities20 10.5No liability20 10.6Indemnity from Buyer and Seller21 10.7Implementation of documents2111Liabilities21 11.1Acknowledgment21 11.2Benefit of pre-existing warranties, representations and indemnities21 11.3Retained Liabilities22 11.4Indemnity by Seller in respect of Retained Liability2212Transferring Employees22 12.1Transferring Employees22 12.2Seller's payment obligations22 12.3Seller's indemnity2313Insurance23 13.1Insurance policies to remain in force23 13.2Making of claims24 13.3Provision of information relevant to future insurances2414Seller Group Warranties and limitations of Claims24 14.1Definition24 14.2Giving of Seller Group Warranties24 14.3Matters disclosed25 14.4No liability26 14.5Consequential Loss26 14.6Tax or other benefit26 14.7Disclaimer27 14.8Exclusion of warranties and statutory actions28 page | 3  14.9Notice and time limits on Claims28 14.10Minimum amount of Claims28 14.11Maximum liability29 14.12No double recovery29 14.13Disclosure regarding Third Party Claims29 14.14Conduct in respect of Third Party Claims30 14.15Recovery30 14.16Insured Claim or loss31 14.17Duty to mitigate31 14.18Independent limitations31 14.19Damages only remedy31 14.20No knowledge of breach3115Buyer Warranties31 15.1Buyer Warranties31 15.2Reliance32 15.3Independent Buyer Warranties32 15.4Survival3216Seller Guarantor Warranties32 16.1Seller Guarantor Warranties32 16.2Reliance33 16.3Independent Seller Guarantor Warranties33 16.4Survival33 16.5Indemnity3317Buyer Guarantor Warranties33 17.1Buyer Guarantor Warranties33 17.2Reliance34 17.3Independent Buyer Guarantor Warranties34 17.4Survival34 17.5Indemnity34 page | 4 18Confidentiality34 18.1Confidentiality obligation34 18.2Exceptions35 18.3Information Recipient's obligations35 18.4Media announcement35 18.5Confidentiality Agreement3619Seller Guarantee and indemnity36 19.1Consideration36 19.2Seller Guarantee36 19.3Indemnity36 19.4Extent of Seller Guarantee and indemnity37 19.5Payments37 19.6Continuing guarantee and indemnity37 19.7Enforcement against Seller Guarantor38 19.8Limitation3820Buyer Guarantee and indemnity38 20.1Consideration38 20.2Buyer Guarantee38 20.3Indemnity38 20.4Extent of Buyer Guarantee and indemnity39 20.5Payments39 20.6Continuing guarantee and indemnity39 20.7Enforcement against Buyer Guarantor40 20.8Limitation4021Dispute resolution40 21.1Dispute Notice40 21.2Continuance of Contract4022Duty, costs and expenses40 22.1Duty40 page | 5  22.2Costs and expenses41 22.3Costs of performance4123GST41 23.1Supply of a going concern41 23.2Taxable Supplies4124Foreign resident capital gains withholding42 24.1Application of foreign resident capital gains withholding42 24.2Clearance Certificate given by Seller43 24.3Buyer entitled to withhold43 24.4Buyer’s obligation to pay Withholding Amount to the Commissioner43 24.5Payment of the Withholding Amount after Completion43 24.6Discharge of liability43 24.7Definitions and interpretation4325PPS Act registration44 25.1Protecting interests44 25.2Notices4426Notices44 26.1General44 26.2How to give a communication44 26.3Particulars for delivery44 26.4Communications by post46 26.5Communications by email46 26.6Process service46 26.7After hours communications4627General46 27.1Consents and approvals46 27.2Entire agreement47 27.3Further assurances47 27.4Rights cumulative47 page | 6  27.5Survival and merger47 27.6Variation47 27.7Waiver47 27.8Governing law47 27.9Counterparts48 27.10Default interest48 27.11Interest payable on overdue amounts48 27.12Invalidity48 27.13Operation of indemnities48 27.14Payments49 27.15Relationship49 27.16Assignment, novation and other dealings49 27.17Third party rights49Schedule 1 Dictionary50Schedule 2 Seller Group Warranties66Schedule 3 Tenements74Schedule 4 Completed Infrastructure87Schedule 5 Incomplete Infrastructure88Schedule 6 Excluded Infrastructure99Schedule 7 Third Party Agreements100Schedule 8 Mobile Equipment105Schedule 9 Permitted Security Interest112Schedule 10 Approvals113Schedule 11 Non-Transferring Approvals115Schedule 12 Share Subscription Application116Schedule 13 Completion Adjustment117Schedule 14 Completion Adjustment pro-forma119Execution page 124 page | 7 Attachment A Agreed form JVAAttachment B Mine Development PlanAttachment C Parent GuaranteeAttachment D Deed of Cross SecurityAttachment E Chargee’s Priority Deed page | 8 Date: 2018Parties1Wodgina Lithium Pty Ltd ACN 611 488 932 of 1 Sleat Road, Applecross WA 6153 (Seller)2Albemarle Wodgina Pty Ltd ABN 69 630 509 303 of Minter Ellison Building, Level 3, 25 National Circuit, Forrest ACT 2603 (Buyer)3Mineral Resources Limited ACN 118 549 910 of 1 Sleat Road, Applecross WA 6153 (Seller Guarantor)4Albemarle Corporation of 4350 Congress Street, Suite 700, Charlotte, NC 28209 (Buyer Guarantor)BackgroundAThe Seller is the beneficial and (except where expressly provided in this agreement) legal owner of the Sale Interest.BThe Seller has agreed to sell to the Buyer, and the Buyer has agreed to purchase from the Seller, the Sale Interest on the terms andconditions set out in this agreement.CThe Buyer has agreed to subscribe for, and the Seller has agreed to procure that WLOPL will allot and issue, the Subscription Shareson the terms and conditions set out in this agreement such that on and from Completion, the Buyer and the Seller will each hold 50%of the Ordinary Shares in WLOPL.DThe Seller Guarantor has agreed to guarantee the obligations of the Seller under this agreement.EThe Buyer Guarantor has agreed to guarantee the obligations of the Buyer under this agreement.The parties agree1Defined terms and interpretation1.1Definitions in the DictionaryA term or expression starting with a capital letter:(a)which is defined in the Dictionary in Schedule 1, has the meaning given to it in the Dictionary;(b)which is defined in the Corporations Act, but is not defined in the Dictionary, has the meaning given to it in the CorporationsAct; and(c)which is defined in the GST Law, but is not defined in the Dictionary or the Corporations Act, has the meaning given to it in theGST Law.1.2InterpretationThe interpretation clause in Schedule 1 sets out rules of interpretation for this agreement. page | 1 2Conditions to Completion2.1Conditions precedentClauses 3, 4 and 7 do not become binding on the parties and are of no force and effect until each of the following Conditions havebeen satisfied or waived in accordance with clauses 2.2 and 2.4:(a)Regulatory approvals:(i)either:(A)the Buyer receiving notice in writing from the Federal Treasurer or his or her agent to the effect that there are no objections under theAustralian Government's foreign investment policy or under FATA to the Buyer acquiring the Sale Interest and the SubscriptionShares in accordance with this agreement; or(B)the Treasurer being, by reason of lapse of time, no longer empowered to make an order under FATA in respect of the acquisitioncontemplated by this agreement; and(ii)either:(A)a merger filing, if required, having been made by the parties to, and accepted by, SAMR pursuant to the Anti-Monopoly Law andSAMR having issued a decision confirming that it will not conduct further review of the transactions evidenced by this agreement or itwill allow the transactions evidenced by this agreement to proceed without conditions or, subject to clause 2.2(b) on conditionsreasonably acceptable to the parties; or(B)that all applicable waiting periods under the Anti-Monopoly Law in respect of the review of the transaction contemplated by thisagreement have expired.(b)Ministerial consent for Tenements: the Seller and the Buyer have received all necessary consents and approvals by theMinister under the Mining Act to the transfer of the Tenements (to the extent of the Sale Interest) on terms reasonablyacceptable to the Seller and Buyer.(c)Title Agreements: the consents or approvals of all Counterparties which are required under or pursuant to the Title Agreementsin relation to the transactions evidenced by this agreement have been obtained on terms reasonably acceptable to the Buyerand the Seller, including the provision of duly executed unconditional and irrevocable releases of caveats, mortgages and otherencumbrances over the Tenements the subject of the Title Agreements.2.2Satisfaction of the Conditions(a)The Buyer must use all reasonable endeavours to satisfy the Condition in clause 2.1(a)(i) by the Conditions Precedent Date.(b)Each of the Buyer and the Seller must use all reasonable endeavours to satisfy the Conditions in clauses 2.1(a)(ii), 2.1(b) and2.1(c) by the Conditions Precedent Date, provided that in respect of the Condition in clause 2.1(a)(ii), neither party will berequired to offer, propose or agree to any conditions to SAMR’s approval of the transaction evidenced by this agreement untilthe impact on the Project of such conditions have been agreed between the parties and the Transaction Documents have beenrevised to reflect such impact, if necessary, on terms reasonably satisfactory to each party. page | 2 (c)The Buyer and the Seller must cooperate with each other in doing anything reasonably necessary to satisfy the Conditions.(d)The Seller must duly seek all necessary consents and approvals by the Minister under the Mining Act in connection with theCondition in clauses 2.1(b) within 10 Business Days following the Execution Date.2.3Extension of the Conditions Precedent Date(a)If a Condition has not been satisfied, or is unlikely to be satisfied by the Conditions Precedent Date, the Seller or the Buyermay, by giving a written notice (Extension Notice) to the other party at any time prior to the Conditions Precedent Date,extend the Conditions Precedent Date in respect of that Condition to any date on or before the Final Conditions PrecedentDate.(b)The Seller and the Buyer may only issue one Extension Notice each and provided that the date specified in any ExtensionNotice is no later than the Final Conditions Precedent Date.2.4Waiver(a)The Conditions in clause 2.1(a) and 2.1(b) are for the benefit of both the Seller and the Buyer and may only be waived bywritten agreement between the Seller and the Buyer.(b)The Condition in clause 2.1(c) is for the benefit of both Seller and the Buyer and may be waived by either the Seller or theBuyer.2.5NoticeThe Buyer and the Seller must:(a)keep the other party fully informed (by notices in writing) in relation to progress towards the satisfaction of the Conditions; and(b)promptly notify the other in writing if it becomes aware that a Condition is satisfied or incapable of being satisfied before theConditions Precedent Date.2.6Termination and failure to Complete(a)The Buyer or the Seller may terminate this agreement before Completion by giving written notice to the other of the Buyer orthe Seller (as the case may be) if:(i)a Condition is not satisfied or waived by the Conditions Precedent Date;(ii)a Condition (which has not been waived) becomes incapable of being satisfied by the Final Conditions Precedent Date;(iii)the parties agree that a Condition cannot be satisfied by the Conditions Precedent Date (unless that Condition is satisfied beforetermination of this agreement); or page | 3 (iv)the other of the Buyer or the Seller (as is relevant) suffers an Insolvency Event,and provided that the terminating party is not in breach of a material obligation under this agreement (including that theterminating party must have complied with its obligations in clause 2.2).(b)Provided the Conditions have been satisfied or waived, if either the Seller Group or the Buyer Group (Defaulting Party) doesnot Complete when required to do so under this agreement, other than as a result of default by the other group (Non-DefaultingParty), the Non-Defaulting Party may give the Defaulting Party notice requiring it to Complete within 10 Business Days ofreceipt of the notice. When a notice is given under this clause 2.6(b), time will be of the essence under this agreement in allrespects.(c)If the Defaulting Party does not Complete within the period specified in clause 2.6(b), the Non-Defaulting Party may chooseeither to seek specific performance or terminate this agreement, without limitation to any accrued rights.(d)If this agreement is terminated, then:(i)if any Transaction Document does not automatically terminate in accordance with its terms on termination of this agreement, theparties will procure that each other Transaction Document that has been executed is terminated;(ii)each party is released from its obligations to further perform its obligations under this agreement and each Transaction Document,except those expressed to survive termination; and(iii)each party retains the rights it has against the other in respect of any breach of this agreement occurring before termination.3Subscription and allotment of Subscription Shares3.1Registration of WLOPLThe parties acknowledge and agree that the Seller will procure the registration of WLOPL under the Corporations Act no earlier than 2Business Days prior to the Completion Date or as otherwise agreed in writing between the Seller and the Buyer.3.2SubscriptionSubject to the terms and conditions of this agreement, the Seller will procure that WLOPL allots and issues, and the Buyer mustsubscribe for, the Subscription Shares:(a)for the Subscription Amount;(b)with effect on and from Completion;(c)free from any Security Interest; and(d)on the terms and conditions of this agreement. page | 4 3.3ConstitutionThe Buyer agrees to be bound by the WLOPL Constitution upon issue of the Subscription Shares.3.4Equal rankingThe Subscription Shares rank equally in all respects with all other Ordinary Shares.4Sale and purchase of Sale Interest4.1Sale and purchaseThe Seller agrees to sell the Sale Interest to the Buyer and the Buyer agrees to buy the Sale Interest:(a)for the Purchase Price;(b)with effect from Completion;(c)free from any Security Interest (other than a Permitted Security Interest); and(d)on the terms and conditions of this agreement.4.2Reserved RightsThe parties acknowledge that the Tantalum Rights and the Iron Ore Rights do not form part of the Sale Interest.4.3Purchase PriceThe consideration for the sale and purchase of the Sale Interest is the payment by the Buyer of the Purchase Price.4.4Payments to reduce Purchase PriceAny payment received by the Buyer after Completion in relation to any breach by the Seller of a Seller Group Warranty or under anIndemnity must be treated as a reduction in and refund of the Purchase Price.4.5Method of making payments(a)All payments required to be made under this agreement must be paid without deduction or set-off in Immediately AvailableFunds to the bank account or accounts nominated in writing before the due date for payment by the party to whom the paymentis due.(b)Any nomination referred to in clause 4.5(a) must be made at least 2 Business Days before the payment is due. page | 5 5Incomplete Infrastructure and Tantalum Assets5.1Construction and commissioning by Seller(a)Subject to clause 5.2(c), the Seller must at its cost construct and successfully Commission, or must procure the constructionand successful Commissioning of, all Incomplete Infrastructure.(b)The Seller must use all reasonable endeavours to complete the construction and successful Commissioning, or to procure thecompletion of the construction and successful Commissioning, of all Incomplete Infrastructure by no later than 30 September2019 (or, if not possible by that date, as soon as possible after that date).(c)The Seller must, at its cost, take all steps required to obtain the Approvals required for the construction and operation of theIncomplete Infrastructure (including those set out in Schedule 5) and must (on Completion or if later following construction andsuccessful commissioning) transfer all Approvals for the Incomplete Infrastructure to the Buyer, to the extent of the SaleInterest, or to WLOPL (as applicable).5.2CCC Handover(a)On completion of construction and successful Commissioning of each item of Incomplete Infrastructure the Seller must handover care, custody and control of the relevant item of Incomplete Infrastructure to WLOPL (CCC Handover).(b)At the later of Completion or the date of CCC Handover for each item of Incomplete Infrastructure:(i)the Seller must transfer title to each item of Incomplete Infrastructure to the Buyer in proportion to the Sale Interest;(ii)to the extent not provided at Completion where Completion occurs prior to CCC Handover for an item of Incomplete Infrastructure, theSeller must provide a duly executed deed of release of security in respect of 50% of the item of Incomplete Infrastructure from theSecurity Trustee; and(iii)the Seller and the Buyer will procure that WLOPL undertakes operational ramp up of that item of Incomplete Infrastructure.(c)Without limiting clause 5.1(a), in respect of each item of Incomplete Infrastructure (including to satisfy clause 5.2(d)), the Selleris solely responsible for rectifying any defects (including omissions) in the construction and supply of goods, materials andequipment incorporated within the Incomplete Infrastructure that exist or become apparent prior to the later of Completion andthe date of CCC Handover of the Incomplete Infrastructure.(d)In order to be considered to have been constructed and successfully Commissioned, each item of Incomplete Infrastructuremust meet the requirements and pass the commissioning tests set out in Schedule 5 to the extent applicable to that item ofIncomplete Infrastructure. page | 6 5.3Warranties from suppliers and manufacturers(a)On or about the date of the CCC Handover, the Seller must assign or use all reasonable endeavours to procure the assignmentof the benefit of all guarantees, representations, warranties and indemnities given in favour of the Seller or its Related BodiesCorporate (or which the Seller or its Related Bodies Corporate have a right to assignment of) and which are capable ofassignment in respect of the Incomplete Infrastructure and from subcontractors, manufacturers and suppliers of plant,equipment and materials incorporated into the Incomplete Infrastructure (Subcontractors) (including where such warrantiescontinue to operate beyond the expiration of any applicable defects liability period), to WLOPL which guarantees,representations, warranties and indemnities may, at the direction of the Buyer be, held on trust by WLOPL for the Seller andthe Buyer (or to the extent not able to be assigned or transferred to WLOPL, held on trust by the Seller or its Related BodiesCorporate).(b)The Seller must use all reasonable endeavours to procure that the agreements entered into with Subcontractors after theExecution Date allow for all guarantees, representations, warranties and indemnities (including guarantees, representations,warranties and indemnities given by the Subcontractors' contractors) to be directly enforced by the Seller and Buyer against theparties giving the warranties.(c)For any guarantees, representations, warranties and indemnities not able to be assigned or transferred to WLOPL under clause5.3(a), the Seller or its Related Bodies Corporate (as applicable) must, for and on behalf of WLOPL, pursue and seek to enforceits rights against under those guarantees, representations, warranties and indemnities in good faith and acting reasonably (andtaking account of the Buyer's and WLOPL's interest under this clause 5).5.4Tantalum AssetsThe parties acknowledge and agree that any Deed of Assignment and Assumption in relation to the contract for the construction,installation and operation of the Tantalum Assets will bind the Buyer only in respect of matters relating to the operation andmaintenance (but not the construction and installation) of the Tantalum Assets.6Interim Period6.1Third Party AgreementsWithout limiting clause 10, during the Interim Period:(a)the Seller and the Buyer must each use all reasonable endeavours to obtain from the relevant Counterparties all necessaryapprovals, consents to the assignment or novation of the relevant Third Party Agreement and/or waivers of any pre-emptiverights arising as a result of the transactions contemplated by this agreement; and(b)to the extent required by the terms of a Third Party Agreement, the Seller, the Buyer and each Counterparty must enter into aDeed of Assignment and Assumption on terms acceptable to the Buyer and the Seller (acting reasonably).6.2Information and access page | 7 (a)The Seller must provide to the Buyer, as soon as reasonably practicable after it becomes aware of the information, details(including copies where relevant) of all material information in relation to the Project, the Sale Interest or the SubscriptionShares that the Seller, its Related Bodies Corporate or Representative become aware of during the Interim Period (includingcopies of all notices in respect of the Sale Interest and Subscription Shares received during the Interim Period, including fromGovernment Agencies, contract counterparties or any other party).(b)During the Interim Period, the Seller must, to the extent permitted by law and subject to clauses 6.2(c) and 18:(i)give the Buyer and its representatives reasonable access to the Tenements, the Records and the Sale Interest during normalbusiness hours and on reasonable notice (provided that the Buyer complies with the Seller's reasonable safety requirements); and(ii)provide information relating to the Project, the Sale Interest and WLOPL as the Buyer reasonably requires to enable the Buyer tobecome familiar with the Project (and the Buyer may make copies of such information).(c)The Buyer may only exercise its rights under clause 6.2(b) to the extent it does not unreasonably interfere with the conduct ofthe activities and operations of the Seller.(d)During the Interim Period, two Representatives of each of the Seller and the Buyer must meet not less than once everyfortnight at such time and place (which may be by teleconference) agreed between the Seller and the Buyer to discuss theProject (including the progress regarding the construction of the Incomplete Infrastructure).6.3General Conduct – Sale Interest and ProjectDuring the Interim Period, except as expressly provided in, or permitted or contemplated by this agreement or as consented to by theBuyer in writing, the Seller must, and must procure that the Seller's other Related Bodies Corporate involved in the operation of theProject, use all reasonable endeavours to carry on the Project (including construction and successful Commissioning of theIncomplete Infrastructure), and hold the Sale Interest, in the ordinary course, in good faith and substantially consistent with pastpractice and must:(a)use all reasonable endeavours to carry on the Project in accordance with the Mine Development Plan and the OperationalSpares Plan, in each case as amended with the written approval of the Buyer;(b)comply with all applicable laws in relation to the Sale Interest and Subscription Shares and the terms and conditions of theTenements, the Petroleum Pipeline Licences and the Approvals;(c)not, and not take any steps to, surrender or relinquish the Tenements or the Petroleum Pipeline Licences, or agree to avariation of the terms of the Tenements or the Petroleum Pipeline Licences, except to the extent required by law;(d)use all reasonable endeavours to procure the grant of the Tenement Applications and the transfer of the Assigned Tenementsto the Seller;(e)consult the Buyer and take upmost account of the Buyer’s views for the contracting and procurement strategy for the Projecthaving regard to the Mine Development Plan, including with respect to the gas supply and water supply arrangements for theProject; page | 8 (f)not transfer, grant or permit the registration of any Security Interest over (other than a Permitted Security Interest) or otherwisedeal with the Tenements, Sale Interest or Subscription Shares or its interest in them;(g)not vary in a material manner, voluntarily terminate, take any action that might give rise to a termination right or waive any rightunder a Third Party Agreement, other than the amendment and restatement of the agreement referred to in items 23 and 25 ofSchedule 7 on arm’s length terms in respect of the Project following consultation with the Buyer of whose views the Seller shalltake upmost account;(h)comply with its obligations under the Third Party Agreements;(i)not enter into any joint venture, partnership, unincorporated association, alliance or similar arrangement with any person inrespect of the Sale Interest or the Project;(j)except as permitted under clause 6.3(o), not enter into any agreement with respect to the Product or Ore (or any other materialderived from the Product or Ore) which relates to the period after the Completion Date;(k)not take any steps which would frustrate, impede or reduce the benefit of any Transaction Document;(l)without limiting clause 6.3(g), not enter into, amend or terminate (or agree to enter into, amend or terminate) a contract orcommitment in respect of the Sale Interest or the Project that will result in aggregate annual receipts or expenditure in excessof $100,000, otherwise than in the ordinary course of business (which includes any gas transportation agreement on arm’slength terms);(m)not enter into or amend (or agree to enter into or amend) a contract or commitment with a Related Body Corporate of the Sellerin respect of the Sale Interest or the Project;(n)not enter into any agreement otherwise than on arm's length or enter into any abnormal or unusual transaction, in each case inrespect of the Sale Interest or the Project; and(o)not enter into any agreement for the sale of Product or Ore, except for spot agreements for the sale of single shipments ofProduct or Ore mined or produced prior to the Completion Date, and which do not include any obligation to deliver Product orOre after the date that is one month after the date of execution of such agreement.6.4Initial Mine Plan and Budget(a)On or before 28 February 2019, the Seller must provide to the Buyer a draft business plan for the Life of Mine, including theamount of any proposed Called Sum for each of the Buyer and the Seller on the basis of, and in accordance with, the JVA (asif the JVA was in place) to be called from and paid to WLOPL by each of the Seller and the Buyer at Completion.(b)Within 20 Business Days after provision of the draft business plan to the Buyer in accordance with clause 6.4(a), the Buyermust, acting reasonably, either approve the business plan or give the Seller any comments or amendments to the draftbusiness plan.(c)If the Buyer gives any comments or amendments to the draft business plan or if either party reasonably requests a change to abusiness plan approved or agreed page | 9 between the parties (including the amount of any proposed Called Sum at Completion), the Seller and the Buyer must use allreasonable endeavours to agree the terms of the draft business plan as soon as is reasonably practicable and in any case priorto Completion.(d)The last draft business plan for the Life of Mine approved by the Buyer in accordance with clause 6.4(b) or agreed between theSeller and the Buyer in accordance with clause 6.4(c) (if any) is the Initial Mine Plan and Budget.(e)During the Interim Period, the Buyer and the Seller must meet within 5 Business Days of the end of each month in order toreview and update (where necessary) the Initial Mine Plan and Budget. Any variations to an approved Initial Mine Plan andBudget (including any changes to the amount of any proposed Called Sum at Completion), must be approved by the Buyeracting reasonably or otherwise agreed between the Seller and the Buyer in accordance with clause 6.4(c) (as applicable).(f)For the avoidance of doubt neither party will be bound to implement, or take any steps towards implementation of, the InitialMine Plan and Budget, unless and until Completion occurs.6.5Registration of this agreement(a)The Buyer must within 60 days of the Execution Date make an application as required by section 47 of the Petroleum PipelinesAct for:(i)approval of the dealings evidenced by this agreement; and(ii)the entry of such dealings into the register maintained under the Petroleum Pipelines Act.(b)Without limiting the generality of clause 6.5(a), the Buyer and the Seller:(i)must cooperate with each other and supply all necessary and appropriate information for the purpose of enabling registration of thedealings evidenced by this agreement to be obtained in the manner set out in clause 6.5(a);(ii)must supply to each other copies of all applications made and all information supplied for the purpose of obtaining registration of thedealings evidenced by this agreement as required by this clause 6.5; and(iii)inform each other once notice of approval and registration of the dealings is obtained.6.6General Conduct – WLOPLExcept as expressly provided in, or permitted or contemplated by this agreement or as consented to by the Buyer in writing, theSeller must not take any action in respect of WLOPL, and must procure that WLOPL does not take any action, prior to Completionexcept as expressly authorised by a Transaction Document and must not, and must procure that WLOPL does not:(a)issue any shares, options or securities that are convertible into shares in WLOPL;(b)buy back any of WLOPL's shares; page | 10 (c)trade or undertake any activity or enter into any agreement except as expressly authorised by a Transaction Document; and(d)alter the WLOPL Constitution.6.7Compliance with clause 6 and Permitted Acts(a)In complying with its obligations under this clause 6, the Seller:(i)is not required to do, to omit to do, or allow to be done anything which would breach, or would reasonably be expected to breach:(A)any law or regulation (including any competition or anti-trust laws); or(B)a Third Party Agreement; and(ii)may take such action as is:(A)required to reasonably and prudently respond to an emergency or disaster (including a situation giving rise to a risk of personal injuryor damage to property);(B)authorised by a Transaction Document; or(C)agreed in writing between the Seller and the Buyer.(b)The Buyer must not unreasonably withhold or delay any consent required under clause 6.3.(c)The Seller and the Buyer must each ensure that at all times during the Interim Period it has nominated one or more persons asits Representative (each a Seller's Nominee or Buyer’s Nominee, as is relevant) for the purpose of clause 6.2(d). The Seller'sNominee and Buyer’s Nominee shall have authority to act on behalf of the Seller and Buyer (respectively) in relation to anyqueries, consents or approvals required under clause 6.3.6.8Tax NoticeTo the extent any part of the Sale Interest constitutes capital works within the meaning of Division 43 of the Tax Act, the Seller must,give the Buyer as and when requested, to its satisfaction, a notice under section 262A(4AJA) of the Tax Act that contains enoughinformation about the Seller's holding of that part of the Sale Interest to enable the Buyer to determine how Division 43 of the Tax Actwill apply to the Buyer in respect of that part of the Sale Interest.7Completion7.1Date and place for CompletionSubject to clause 2, Completion will commence at or around 11am (Perth time) on the Completion Date, and will take place at theoffice of the Seller in Perth (or at such other time and place as the parties may agree).7.2Obligations of the Seller and WLOPL at Completion(a)At Completion, the Seller must: page | 11 (i)give the Buyer:(A)Transfer Instruments duly executed by the Seller;(B)such signed original counterparts of each Deed of Assignment and Assumption duly executed by the Seller and the relevantCounterparty as the Seller has been able to obtain in accordance with clause 6.1;(C)letters to the Department from, or on behalf of, the holders of each of the consent caveats in respect of the Tenements that areincluded as a Permitted Security Interest, stating that they have no objection to the transfer of the relevant Tenements to the Buyerand seeking the consent of the Warden pursuant to section 122D(1) of the Mining Act;(D)a duly executed deed of release in respect of the Sale Interest from any person holding a Security Interest over the PetroleumPipeline Licences;(E)all forms required to transfer all Approvals which the Buyer will be required to hold from Completion in connection with the SaleInterest, completed and executed by the Seller;(F)the documents and information referred to in clause 7.4;(G)any other documents required to register the transfer or assignment to the Buyer of any component of the Sale Interest, provided thatthe Seller will not be required to deliver instruments of title where they are already lodged with the relevant Government Agency forthe registration of other dealings provided the Seller gives an undertaking to the Buyer to so deliver on receipt of possession orcontrol of such documents;(H)a Tax Invoice in respect of the payment of the Purchase Price;(I)signed original counterparts of each Transaction Document duly executed by the Seller or relevant Seller Group Member that is aparty thereto; and(J)copies of the Records; and(K)to the extent required by clause 5.2(b)(ii), a duly executed deed of release of security in respect of the Sale Interest from the SecurityTrustee; and(ii)if an Initial Mine Plan and Budget has been approved or agreed in accordance with clause 6.4, pay WLOPL (or as WLOPL directs) theamount of the Called Sum proposed at Completion as set out in the Initial Mine Plan and Budget.(b)At Completion, the Seller must procure that:(i)a meeting of the directors of WLOPL is held at which the directors resolve:(A)to allot and issue the Subscription Shares to the Buyer in consideration of the Subscription Amount; and page | 12 (B)to approve the appointment of the persons nominated by the Buyer as directors of WLOPL in accordance with the JVA with effectfrom Completion;(ii)WLOPL gives to the Buyer a certified copy of the resolution referred to in clause 7.2(b)(i);(iii)upon receipt of the Subscription Amount and the Share Subscription Application, WLOPL:(A)issues and allots the Subscription Shares to the Buyer; and(B)registers the Subscription Shares in WLOPL’s register of shareholders, in the name of the Buyer, free from any Security Interest; and(iv)WLOPL gives to the Seller and the Buyer signed original counterparts of each Transaction Document duly executed by WLOPL.7.3Buyer’s obligations at CompletionAt Completion, the Buyer must:(a)pay to the Seller the Purchase Price:(i)plus the amount of the absolute value of the Completion Adjustment if the Completion Adjustment is negative; or(ii)less the amount of the Completion Adjustment if the Completion Adjustment is positive,in accordance with clause 4.5;(b)if an Initial Mine Plan and Budget has been approved or agreed in accordance with clause 6.4, pay WLOPL (or as WLOPLdirects) the amount of the Called Sum proposed at Completion as set out in the Initial Mine Plan and Budget;(c)give the Seller signed original counterparts of each Transaction Document duly executed by the Buyer;(d)to the extent not signed and exchanged between the parties prior to Completion give to the Seller signed original counterpartsof each Deed of Assignment and Assumption duly executed by the Buyer;(e)provide WLOPL with an application to subscribe for the Subscription Shares in the form set out in Schedule 12 (ShareSubscription Application); and(f)pay the Subscription Amount to WLOPL in accordance with clause 4.5.7.4Security InterestThe Seller must in respect of each PPS Security Interest over the Sale Interest (other than a Permitted Security Interest) which isregistered on the PPS Register immediately before Completion, give to the Buyer at Completion a deed executed by the personnamed in the PPS Register as the Secured Party in relation to the PPS Security Interest releasing the PPS Security Interest over theSale Interest with effect from Completion and: page | 13 (a)except in relation to the Security Trustee Security, an undertaking to procure the removal of the PPS Security Interest over theSale Interest from the PPS Register as soon as practicable and in any event no later than 5 Business Days after Completion;and(b)in relation to the Security Trustee Security any undertaking or document required for the transfer of legal title to the SaleInterest to the Buyer, to the extent that the Buyer is entitled to such legal title.7.5Interdependence(a)The obligations of the Buyer and the Seller under this clause 7 are interdependent.(b)Unless otherwise stated, all actions required to be performed by a party at Completion are taken to have occurredsimultaneously at Completion.(c)Completion will not occur unless all of the obligations of the Buyer and the Seller to be performed at Completion under thisclause 7 are complied with and fully effective.7.6Effect of Completion – title and risk(a)Risk in and possession of the Sale Interest passes to the Buyer upon Completion and, subject to the registration of theTransfer Instruments and subject to clause 7.7 and clause 7.8, title to the Sale Interest passes to the Buyer upon Completion.(b)For the avoidance of doubt, beneficial title to a 50% interest in the Tenements and the Petroleum Pipeline Licences passes tothe Buyer upon Completion regardless of whether the registration of the relevant Transfer Instruments has occurred and theSeller holds the legal title to a 50% interest in the Tenements and the Petroleum Pipeline Licences on trust for the Buyer untilthe registration of the relevant Transfer Instruments has occurred.7.7Tenement Applications(a)Where a Tenement Application has not been granted prior to Completion, the Seller will account to the Buyer, to the extent ofthe Sale Interest, for all amounts or other benefits (of whatsoever nature) it receives, or is otherwise entitled to receive, inrespect of the relevant Tenement Application (Granted Tenement) the Seller and Buyer shall do all things necessary totransfer the relevant Sale Interest portion in the Granted Tenement to the Buyer and have that transfer registered under theMining Act.(b)The Buyer acknowledges and agrees that the Seller makes no warranty or representation, and gives no assurance, in respectof the likelihood of grant, or the terms of grant, of any exploration or mining tenement pursuant to any Tenement Application.7.8Assigned TenementsWhere an Assigned Tenement has not been transferred to the Seller prior to Completion, the Seller will account to the Buyer, to theextent of the Sale Interest, for all amounts or other benefits (of whatsoever nature) it receives, or is otherwise entitled to receive, inrespect of the Assigned Tenements and upon the transfer of the Assigned Tenement to the Seller, the Seller and the Buyer shall doall things necessary to transfer the relevant Sale Interest in the portion of the Assigned Tenement to the Buyer and have that transferregistered under the Mining Act. page | 14 8Completion Adjustment8.1Completion AdjustmentThe Purchase Price will be adjusted by the Completion Adjustment by way of a decrease to the Purchase Price (if the amount of theCompletion Adjustment is positive) or by way of an increase to the Purchase Price (if the amount of the Completion Adjustment isnegative).8.2Completion Statement(a)Within 20 Business Days after the Completion Date, the Seller must provide the Buyer with a written statement containing theCompletion Accounts and giving the Seller’s calculation of the final amount of the Completion Adjustment (CompletionStatement).(b)The Completion Accounts must be prepared, and the Completion Adjustment calculated, in accordance with Schedule 13.(c)The Seller must provide (and the Seller and the Buyer must procure that WLOPL provide) the Buyer with such information anddocuments as are reasonably requested by the Buyer in relation to the Completion Statement.(d)If the Buyer does not issue any notice (Completion Adjustment Dispute Notice) to the Seller that it disagrees with theamount of the Completion Adjustment set out in the Completion Statement within 30 Business Day after receipt of theCompletion Statement, then the Completion Statement shall become final and binding.(e)If the Buyer issues a Completion Adjustment Dispute Notice, the Seller and the Buyer must use all reasonable endeavours toseek to agree on the amount of the Completion Adjustment.8.3Dispute(a)If the Seller and Buyer fail to agree the amount of the Completion Adjustment within 10 Business Days of the CompletionAdjustment Dispute Notice, the parties' Representatives must meet at least once and confer in good faith in attempt to agreethe amount of the Completion Adjustment.(b)If the parties' Representatives do not resolve the Dispute in respect of the Completion Adjustment Dispute Notice, or otherwisefail to meet, then each party shall within 20 Business Days after the Completion Adjustment Dispute Notice refer the Dispute tothe Chief Executive Officers of their respective Ultimate Holding Companies to settle the Dispute. The Chief Executive Officersmust meet within 30 Business Days of the Completion Adjustment Dispute Notice (or such longer period agreed in writing) andconfer in good faith until such time that they resolve the Dispute.(c)If the Chief Executive Officers have met but not resolved the Dispute, or otherwise fail to meet, within 40 Business Days fromthe date of the Completion Adjustment Dispute Notice (or such longer period agreed in writing) the Completion Statement mustpromptly be submitted for determination to the Independent Accountant to determine the matter or matters in dispute inaccordance with the following provisions of this clause 8.3. page | 15 (d)The Independent Accountant must be agreed by the Seller and the Buyer. If the Seller and the Buyer cannot agree theIndependent Accountant within 45 Business Days of a Completion Adjustment Dispute Notice, then either the Seller or theBuyer may request that the Chair of the Resolution Institute (Chair) nominate the Independent Accountant. If it is not possiblefor the parties to request that the Chair nominate the Independent Accountant or the Chair otherwise fails to nominate theIndependent Accountant, either the Buyer or the Seller may request that the President of the Western Australia Law Society(President) nominate the Independent Accountant (in which case all references to ‘Chair’ in clause 8.3(e) and clause 8.3(i) areto be read as references to ‘President’).(e)If the Seller or the Buyer requests that the Chair nominate the Independent Accountant, the parties must comply with allrequirements of the Chair for the provision of that nomination including to provide the Chair with:(i)a copy of relevant provisions of this agreement;(ii)an executed copy of any release or similar document required by the Chair;(iii)a description of the dispute or issue to be resolved by the Independent Accountant, being the dispute in relation to the CompletionStatement; and(iv)the approximate value of, and the technical area involved in, the dispute.If the Chair nominates a list of persons to be the Independent Accountant rather than one particular person, the first personnamed on that list will be the Independent Accountant.(f)The disputed matters must be referred to the Independent Accountant by written submission which must include theCompletion Statement, the Completion Adjustment Dispute Notice, any response to the Completion Adjustment Dispute Noticeand an extract of the relevant provisions of this agreement. The Independent Accountant must also be instructed to finish itsdetermination no later than 20 Business Days after its appointment (or another period agreed by the Seller and the Buyer).(g)The Seller and the Buyer must promptly supply the Independent Accountant with any information, assistance and cooperationrequested in writing by the Independent Accountant in connection with its determination. All correspondence from theIndependent Accountant to a party must be copied to the other parties. The Independent Accountant must promptly provide theparties with any correspondence received from other parties, provided that if the Independent Accountant has requestedsubmissions or information from the Seller and the Buyer on the same topic, it must only provide such correspondence to theSeller and the Buyer after it has received a substantive response from both the Seller and the Buyer.(h)The Independent Accountant must act as an expert and not as an arbitrator and its written determination will be final andbinding on the parties in the absence of manifest error and the Completion Statement will be deemed to be amendedaccordingly and will be taken to comprise the final Completion Statement and will be final and binding on the parties.(i)The costs of the:(i)Chair (if requested) in providing his or her nomination of the Independent Accountant; and page | 16 (ii)Independent Accountant (if instructed),will be borne by the Seller as to one half, and the Buyer as to one half unless, in respect of the costs of the IndependentAccountant only, the Independent Accountant decides otherwise having regard to the relative position of the parties on thedisputed matters.8.4Payment of Completion Adjustment(a)If the amount of the Completion Adjustment is:(i)positive, the Seller must pay the amount of the Completion Adjustment to the Buyer; or(ii)negative, the Buyer must pay the amount of the Completion Adjustment to the Seller.(b)Payment of the Completion Adjustment must be made within 10 Business Days after the Completion Adjustment is final andbinding or otherwise following agreement or determination of the Completion Adjustment under clause 8.3.(c)Where some, but not all items of the Completion Statement are in dispute, the relevant party must make payment (within 5Business Days of the Buyer giving a Dispute Notice) of an interim Completion Adjustment calculated based on the value of theCompletion Statement, excluding all items that are not in dispute. Once any dispute the subject of a Dispute Notice has beenresolved, the parties must, within 5 Business Days of such resolution, make such payment as between them as are necessary(taking into account any interim Completion Adjustments paid).9Conduct after Completion9.1Duty(a)Subject to clause 9.1(b), the Buyer must lodge this agreement, the Transfer Instruments and any other instrumentcontemplated by this agreement for assessment of Duty (and must pay the Duty assessed) within the time required under therelevant legislation.(b)The Seller:(i)must pay to the Buyer, prior to the due date for payment, the amount of any Duty payable in respect of this agreement, the TransferInstruments and any other instrument contemplated by this agreement which is assessed by reference to, or is otherwise attributableto, the value of rights that the Seller or any other person other than the Buyer has to mine or otherwise benefit from Iron Ore andTantalum in the Tenements, including any Duty on any transfer of the Iron Ore and Tantalum Rights contemplated by this agreement;and(ii)indemnifies the Buyer from and against any Liabilities suffered or incurred by the Buyer arising from, or in connection with such Duty.(c)To the extent that the Buyer is not entitled to a tax deduction in respect of any Duty or Liability, the amount payable under thisindemnity must be increased by an amount calculated as: page | 17 1(1 - Tax Rate)where Tax Rate means the applicable Australian income tax rate for the Buyer, other than to the extent that such increase hasalready been taken into account in calculating the amount of the Liability for which the Buyer has been indemnified.(d)The Buyer will lodge the stamped Transfer Instruments and any other instrument contemplated by this agreement at theDepartment for registration against the Tenements and the Petroleum Pipeline Licences (as applicable) as soon as reasonablypracticable after payment of the Duty assessment.(e)The Buyer will pay the costs of registering the Transfer Instruments at the Department.9.2Transfer of Petroleum Pipeline Licences(a)The Buyer must within 5 Business Days of the Completion Date submit the Transfer Instruments in relation to the PetroleumPipeline Licences to the Department to be approved and registered as required by section 44 of the Petroleum Pipelines Act.(b)The Buyer and the Seller must co-operate with each other and do all things reasonably necessary to obtain approval andregistration of the Transfer Instruments in relation to the Petroleum Pipeline Licences as soon as practicable after theCompletion Date.9.3Registration(a)The Buyer must notify the Seller as soon as reasonably practicable, and in any case within 5 Business Days, after the Buyerbecomes aware that registration of the Transfer Instruments has occurred.(b)The Seller will provide all assistance reasonably required (including providing its consent) to enable the Buyer to register acaveat over the Assigned Tenements in respect of the Sale Interest.9.4Dealings(a)The Buyer must within 60 days of the Execution Date make an application as required by section 47 of the Petroleum PipelinesAct for:(i)approval of the dealings evidenced by the JVA; and(ii)the entry of such dealings into the register maintained under the Petroleum Pipelines Act.(b)Without limiting the generality of clause 9.4, the Buyer and the Seller:(i)must cooperate with each other and supply all necessary and appropriate information for the purpose of enabling registration of thedealings evidenced by the JVA to be obtained in the manner set out in clause 9.4;(ii)must supply to each other copies of all applications made and all information supplied for the purpose of obtaining registration of thedealings evidenced by the JVA as required by clause 9.4; and page | 18 (iii)inform each other once notice of approval and registration of the dealings is obtained.9.5Non-Transferring ApprovalsAfter Completion, the Seller will hold the Non-Transferring Approvals for the Seller and the Buyer and will authorise WLOPL to actunder the Non-Transferring Approvals.10Third Party Agreements10.1Assignment and Novation of Third Party Agreements(a)Subject to clause 2, in respect of each Third Party Agreement, the Seller and the Buyer must, to the extent required by theterms of a Third Party Agreement, use all reasonable endeavours to:(i)procure the novation or assignment of the rights and liabilities of the Seller, to the extent of the Sale Interest, under the Third PartyAgreement to the Buyer; and(ii)procure that the novation or assignment takes effect on and from Completion on a several and not joint and several basis.(b)The obligation in this clause 10.1 to use all reasonable endeavours does not require any party to make any payment to procurethe novation or assignment other than its out of pocket expenses directly referable to the novation or assignment.(c)Where the novation or assignment of a Third Party Agreement required under clause 10.1(a) has not occurred by Completion,the parties must each continue to use all reasonable endeavours to procure the novation or assignment of the Third PartyAgreement in accordance with clause 10.1(a) as soon as reasonably practicable after Completion.(d)The Seller indemnifies the Buyer from and against any Liabilities suffered or incurred by the Buyer arising from, or inconnection with a Deed of Assignment and Assumption in respect of any Key Third Party Agreement or any Title Agreementnot having been executed at or before Completion, except to the extent arising from a breach of clause 7.3(d) by the Buyer or ifthe Buyer has waived the Condition in clause 2.1(c) in accordance with clause 2.4(b).10.2Obligations pending or if no novationIf any of the Third Party Agreements are not novated or assigned by Completion under clause 10.1 then, from Completion untilnovation or assignment occurs:(a)if the Seller is not prohibited from delegating or subcontracting performance of obligations under the Third Party Agreement, theBuyer must perform on behalf of the Seller all obligations of the Seller, to the extent of the Sale Interest, under the Third PartyAgreement in respect of the period following Completion;(b)if the Seller is prohibited under the Third Party Agreement from delegating or subcontracting performance of obligations underthe Third Party Agreement, then:(i)the Seller must perform or discharge those obligations in accordance with the terms of the Third Party Agreement; page | 19 (ii)the Buyer must, to the extent of the Sale Interest, pay to the Seller on demand the Seller's direct costs and expenses of performingor discharging those obligations in accordance with the terms of the Third Party Agreement; and(iii)the Buyer must provide to the Seller all reasonable assistance as the Seller may reasonably request to enable the Seller to complywith its obligations under clause 10.2(b)(i);(c)the Seller must account to the Buyer for any amounts paid by a Counterparty to the Seller to the extent they relate to the SaleInterest and for any other benefits received by the Seller after Completion in respect of the Third Party Agreement to the extentthey relate to the Sale Interest; and(d)the Seller must perform and pay all of the Liabilities of the Seller under the Third Party Agreement in respect of the periodfollowing Completion that do not relate to the Sale Interest.10.3Third Party AgreementsUpon Completion and subject to clause 10.1(d) and11.3, save in respect of the obligations to be performed by the Seller in relation tothe Iron Ore Rights, the Buyer accepts and assumes responsibility for 50% of all Liabilities of the Seller incurred or arising on andfrom Completion (including, for the avoidance of doubt, the Liability for payments due by the Seller on and from Completion under theEquipment Leases) in relation to any Third Party Agreements which are not novated or assigned by Completion under clause 10.1(Third Party Agreement Liabilities).10.4Indemnity by Buyer in respect of Third Party Agreement Liabilities(a)From Completion and subject to clause 10.1(d) and 11.3, the Buyer indemnifies the Seller, its Related Bodies Corporate andtheir Representatives from and against all Liabilities suffered or incurred by the Seller arising from or in connection with anyThird Party Agreement Liability.(b)If the Seller or any person on behalf of the Seller pays, performs or discharges a Third Party Agreement Liability (asapplicable), the Buyer must reimburse or compensate the Seller for the Third Party Agreement Liability within 5 Business Daysafter the Buyer receives evidence of that payment, performance or discharge.10.5No liabilitySave in relation to any Title Agreement, without limiting the Seller’s obligations under clauses 10.1 and 10.2, the Buyer:(a)accepts that it is not entitled to withhold or delay:(i)Completion; or(ii)the payment of the whole or part of the Purchase Price,if the novation or assignment of a Third Party Agreement in accordance with clause 10.1 does not occur by Completion (or atall); and(b)acknowledges and agrees that, subject to compliance by the Seller with its obligations under this agreement (including thisclause 10), it has no rights whatsoever against the Seller in relation to, or in connection with, any requirement under the termsof any Third Party Agreement to obtain any consent to assignment page | 20 or novation, or the consequences arising from any such consent not having been obtained by Completion or at all.10.6Indemnity from Buyer and Seller(a)The Buyer indemnifies the Seller from and against any Liabilities suffered or incurred by the Seller arising from, or inconnection with, a breach of this clause 10 by the Buyer.(b)The Seller indemnifies the Buyer from and against any Liabilities suffered or incurred by the Buyer arising from, or inconnection with, a breach of this clause 10 by the Seller.10.7Implementation of documents(a)The Buyer and the Seller must sign all documents which are required in order to effect a novation or assignment of the SaleInterest under the Third Party Agreement including without limitation all such documents as required to be signed to effect thenovation or assignment in accordance with the terms of the relevant Third Party Agreement.(b)The Buyer and Seller acknowledge that the process of novation of the Third Party Agreements under clause 10.1 may reflectthe parties’ preference that the Seller hold a Third Party Agreement as agent for and on behalf the Buyer and the Seller inaccordance with their percentage interest on Completion on a several and not joint and several basis.11Liabilities11.1AcknowledgmentThe Seller and the Buyer acknowledge that, subject to and as set out in this agreement, Liabilities incurred in relation to the Projecton and from Completion will be addressed under the JVA.11.2Benefit of pre-existing warranties, representations and indemnities(a)The Seller must pursue and seek to enforce its rights against GAM, GAMG, GAMW or Atlas (as applicable) under the GAMSale Agreement or Atlas Exit Agreement in good faith and acting reasonably (and taking account of the Buyer's interest underthis clause 11.2), but only where such rights relate to or affect the value of the Project or the Sale Interest.(b)If the Seller receives any payment or other benefit under or in relation to the GAM Sale Agreement or Atlas Exit Agreement inrelation to the Sale Interest after the Execution Date, the Seller must within 5 Business Days of receipt (or, if later, atCompletion) pay 50% of that amount (less 50% of the costs incurred in securing payment thereof including reasonable legalcosts) to the Buyer.(c)The Seller must not compromise or otherwise deal with any rights under the GAM Sale Agreement or Atlas Exit Agreementwithout the Buyer's prior written consent (such consent not to be unreasonably withheld or delayed). page | 21 11.3Retained LiabilitiesThe Seller retains, accepts and assumes responsibility for and must assume, pay, perform and discharge any and all Liability inrelation to the Project arising from or in connection with:(a)any conduct by the Seller or any Related Body Corporate or Representative of the Seller:(i)in breach of any law, Approval or condition of a Tenement or Petroleum Pipeline Licence in the MRL Ownership Period;(ii)in breach of a Third Party Agreement or other agreement with a Third Party in relation to the Project or Project Assets in the MRLOwnership Period; and(b)any Claim by a Third Party relating to the Project or Project Assets to the extent related to the MRL Ownership Period,(Retained Liability).11.4Indemnity by Seller in respect of Retained Liability(a)From Completion, the Seller indemnifies the Buyer, its Related Bodies Corporate and their Representatives from and against allLiabilities to the extent suffered or incurred by the Buyer, its Related Bodies Corporate and their Representatives:(i)arising from or in connection with any Retained Liability; or(ii)arising from or in connection with the Seller failing to comply with clause 11.3.(b)Without limitation, if the Buyer or any person on behalf of the Buyer pays, performs or discharges a Retained Liability, theSeller must reimburse or compensate the Buyer for the Retained Liability within 5 Business Days after the Seller receivesevidence of that payment, performance or discharge.12Transferring Employees12.1Transferring Employees(a)The Seller and the Buyer must use all reasonable endeavours to agree on the list of Employees who will be offeredemployment by WLOPL and the terms of such employment.(b)The Seller must procure that no Employee is offered employment by WLOPL otherwise than in accordance with the agreementof the Buyer in accordance with clause 12.1(a), acting reasonably.12.2Seller's payment obligationsOn the Completion Date, the Seller must, in respect of each Transferring Employee, pay or procure payment: (a)to the Transferring Employee, all amounts to which that Transferring Employee is or may become entitled by law, statute orunder any industrial instrument, award, agreement or arrangement, on termination of employment in connection with page | 22 wages, salary, leave entitlements, notice, redundancy, commission, bonuses or allowances accruing or arising in respect ofthe period up to and including the Completion Date; and(b)to the Transferring Employee's nominated superannuation fund, all employer Superannuation Commitments due to be made bythe Seller in respect of the period of employment up to and including the Completion Date in respect of that TransferringEmployee.12.3Seller's indemnitySubject to Completion occurring, the Seller must indemnify and agree to hold harmless the Buyer and WLOPL against all Liabilitiessuffered, paid or incurred by the Buyer or WLOPL from or in relation to:(a)any entitlement owed or accruing to a Transferring Employee arising from the Transferring Employee's service with the Seller(which has not been paid in accordance with clause 12.2(a)), including any transferring or contingent entitlements or benefitarising in relation to a Transferring Employee under law, contract or industrial agreement of award;(b)any Claim by or in relation to any Transferring Employee or class of Transferring Employee for any wages, salary, leave,notice, redundancy, commission, bonuses, Superannuation Commitments and other benefits or entitlements accruing to theTransferring Employee in respect of the period before, on or after the Completion Date; and(c)any Claim by or in relation to any Transferring Employee in relation to their employment status, rights or entitlements arisingfrom any service provided to the Seller prior to the Completion; and(d)any breach by the Seller or its Related Bodies Corporate or the WLOPL of statutory, contractual or other legal obligations to orin relation to any Transferring Employee before or on Completion or relating to Completion.13Insurance13.1Insurance policies to remain in force(a)The Seller must or must procure that its Related Bodies Corporate, maintain in force (or procure and maintain asappropriate) the Insurances (in all material respects on the same terms and similar level of cover prevailing at the ExecutionDate) until the Completion Date, save that the Seller or its Related Bodies Corporate may amend the Insurances maintained forthe benefit of the Seller if such amended policies are substantially the same as those generally applicable to the Seller Groupas a whole (provided reasonable prior notice of any such change is given to the Buyer); and(b)The Seller must procure that, within 7 Business Days of the Execution Date, an endorsement is issued for any Insuranceswhich provide coverage in respect of property damage to or loss of use of any asset forming part of the Sale Interest noting theinterest of the Buyer (subject to Completion). page | 23 13.2Making of claims(a)The Seller must use all reasonable endeavours to make (or procure that its Related Bodies Corporate make) all claims underthe Insurances in respect of losses or liabilities covered by such policies arising in the Interim Period, at the cost of the Seller,promptly and in accordance with the requirements of the relevant policy.(b)To the extent that the Seller (or its Related Bodies Corporate) receives the proceeds of any claim under the Insurancesdescribed in clause 13.2(a), the Seller must use all reasonable endeavours to apply (or procure that the relevant Related BodyCorporate applies) the proceeds to, as appropriate:(i)repair the damage or otherwise replace or reinstate the property;(ii)extinguish or reduce the relevant first party loss; or(iii)discharge the relevant liability,and to the extent not so applied, the proceeds, less the Seller's reasonable costs in pursuing the relevant claim, will be for thebenefit of the Buyer and the Seller together and will, if received by the Seller (or its Related Bodies Corporate), be paid to theBuyer in proportion to the Sale Interest.13.3Provision of information relevant to future insurancesIn the Interim Period, the Seller must, within a reasonable time of a request by the Buyer, provide (or procure the provision of) thefollowing to enable the Buyer to arrange insurance coverage from the Completion Date for the Sale Interest:(a)loss histories in respect of the Sale Interest;(b)insurance notifications and claims histories (including, for the avoidance of doubt, current claims) for the Seller in connectionwith Insurances which provide cover for liabilities; and(c)declarations of written complaints or written claims by third parties in respect of the Seller or the Sale Interest.14Seller Group Warranties and limitations of Claims14.1DefinitionFor the purposes of this clause 14 a reference to “Claim” means a Claim for breach of a Seller Group Warranty.14.2Giving of Seller Group Warranties(a)The Seller:(i)warrants to the Buyer that each of the Seller Group Warranties:(A)is true, accurate and complete and not misleading as at the Execution Date; and(B)will be true, accurate and complete and not misleading as at the Completion Date; and page | 24 (ii)acknowledges that the Buyer has entered into this agreement in reliance on the Seller Group Warranties.(b)Each Seller Group Warranty must be construed independently and is not limited by reference to another Seller Group Warranty.(c)The Seller Group Warranties survive Completion of this agreement.14.3Matters disclosed(a)The Seller Group Warranties are given subject to and are qualified by, and the Liability of the Seller in respect of any breach ofany Seller Group Warranty or for any Claim or Loss by the Buyer in respect of a Seller Group Warranty, will be reduced orextinguished (as the case may be) to the extent that the facts, matter or circumstance giving rise to the breach:(i)arise in connection with the transactions contemplated or authorised by this agreement or the Transaction Documents;(ii)have been fairly disclosed to the Buyer in the information contained in the Disclosure Material;(iii)are within the actual knowledge of the Buyer Individuals;(iv)would have been disclosed to the Buyer had the Buyer conducted searches in respect of GAM, the Seller, the Seller Guarantor, PMIor CSI (Identified Group) of records open to public inspection maintained by:(A)ASIC and which are available as a current company extract, or as part of the insolvency notices publication website only in respect ofany member of the Identified Group;(B)the Australian Financial Security Authority on the PPS Register only in respect of any member of the Identified Group;(C)IP Australia only in respect of trade marks, patents and designs in respect of any member of the Identified Group;(D)the Department on its “Mineral Titles Online” or “Tengraph” system database only in respect of the Tenements; and(E)the High Court of Australia, the Federal Court of Australia, the Supreme Court of Western Australia and the District Court of WesternAustralia only in respect of any member of the Identified Group,in each case, at the Cut-off Time.(b)To the extent any of the Seller Group Warranties are given in relation to facts, matters or circumstances occurring prior to thecommencement of the MRL Ownership Period, such Seller Group Warranties are given subject to and are qualified by theSeller's awareness of the relevant matter as at the Execution Date (on the basis that the Seller's awareness of the relevantmatter is deemed to include such awareness as the Seller would have had if the Seller had made reasonable enquiries inrelation to the matter for a person in the position of the Seller as the owner or Seller of the Sale Interest). page | 25 14.4No liabilityThe Seller is not liable to the Buyer for any Claim or Loss under this agreement:(a)to the extent that the Claim or Loss would not have arisen but for anything done or not done after Completion by the Buyer or aRelated Body Corporate of the Buyer or any person acting, or purporting to act, on behalf of the Buyer or a Related BodyCorporate of the Buyer including any failure by the Buyer or a Related Body Corporate of the Buyer after Completion to seek tomitigate its Loss, except to the extent the things done or not done were required by law or a contractual obligation to a thirdparty arising prior to Completion to be done or not done, as the case may be;(b)to the extent that the Claim or the Loss would not have arisen but for:(i)the enactment or amendment of any legislation or regulations;(ii)a change in the judicial or administrative interpretation of the law; or(iii)a change in the practice or policy of any Government Agency,after the Execution Date, including legislation, regulations, amendments, interpretation, practice or policy that has aretrospective effect;(c)to the extent that the Buyer recovers any amount in respect of the Claim or Loss or from the circumstances out of which theClaim or Loss arises (net of costs of the recovery) from any third party (including under any insurance policy);(d)to the extent that the Claim or Loss would not have arisen but for an act, omission, transaction or arrangement carried out bythe Seller with the express written approval of the Buyer before Completion; or(e)except in relation to any Indemnity, if the Liability for that Claim or Loss is a contingent liability, unless and until the Liability isan actual liability and is due and payable.14.5Consequential LossNotwithstanding any other provision of this agreement and to the maximum extent permitted by law, neither the Seller or the Buyer isliable for or with respect to any Consequential Loss arising in connection with this agreement, except:(a)in the case of fraud of the Seller or the Buyer (as applicable); or(b)if a Defaulting Party does not Complete within the period specified in clause 2.6(b) and the Non-Defaulting Party has elected toterminate this agreement in accordance with clause 2.6(c).14.6Tax or other benefitIn calculating the Loss of the Buyer in relation to a Claim under, in relation to or arising out of this agreement, there must be takeninto account:(a)any benefit received by the Buyer or any of its Related Bodies Corporate (including any Tax Relief obtained by the Buyer orany of its Related Bodies Corporate and any amount by which any Tax or Duty for which the Buyer or any of its Related page | 26 Bodies Corporate is liable to be assessed or accountable is reduced or extinguished); and(b)any Tax that would be payable in relation to the payment to be made by the Seller to the Buyer in relation to the Loss underthis agreement,arising as a result of the subject matter of that Claim.14.7DisclaimerThe Buyer acknowledges that, in considering whether or not to make an offer for the Sale Interest and Subscription Shares and inproceeding to engage in due diligence enquiries, it did so on the basis that all the information it received from or on behalf of theSeller concerning the Sale Interest and Subscription Shares (including without limitation the Disclosure Material) expressly excludedany reliance on information given to the Buyer or statements (including resources and reserve estimates) or representations of theSeller (whether verbal or written), other than the Seller Group Warranties. The Buyer acknowledges and represents and warrants tothe Seller that:(a)in conducting its due diligence and in entering into this agreement and proceeding to Completion, it did not rely and is notrelying on any statement (including resources and reserve estimates), representation, warranty, forecast, opinion or statementof belief made by or on behalf of the Seller or its Representatives or on any other conduct engaged in by the Seller or itsRepresentatives, other than the Seller Group Warranties;(b)it has read and understood the information fairly disclosed in the Information Memorandum and has had the opportunity toreview the materials in the Data Room and otherwise conduct its own due diligence in relation to the Sale Interest andSubscription Shares (including to ask questions in a question and answer facility);(c)it understands the risks and uncertainties of the mining industry and the general economic, regulatory and other risks thatimpact on or could impact on the Sale Interest, and its results, operations, financial position and prospects;(d)any estimates (including resources and reserve estimates), budgets or forecasts made, or opinion expressed, in relation to theprospects of the Sale Interest (whether written or oral) were made or expressed to and accepted by the Buyer, and thisagreement is entered into, on the basis and condition that, except as provided for in the Seller Group Warranties:(i)neither the Seller nor its Representatives have made nor makes any representation or warranty as to the accuracy or completenessof such estimate (including resources and reserve estimates), budget, forecast or expression of opinion or that any such estimate(including resources and reserve estimates), budget, forecast or expression of opinion will be achieved; and(ii)neither the Seller nor its Representatives will be liable to the Buyer or its Representatives in the event that, for whatever reason, suchestimate (including resources and reserve estimates), budget, forecast or expression of opinion is or becomes inaccurate, incompleteor misleading in any respect; and(e)neither the Seller nor its Officers, agents, employees or advisers has made or makes any representation or warranty as to theaccuracy or completeness of the disclosures regarding the Sale Interest and Subscription Shares (including, the information,forecasts and statements of intent contained in the Disclosure Material page | 27 or made in management presentations), other than as contained in the Seller Group Warranties14.8Exclusion of warranties and statutory actionsThe Buyer agrees that:(a)any Claim by the Buyer must be based solely on and limited to express provisions of this agreement and, to the maximumextent permitted by law, all terms and conditions that may be implied by law or under statute in any jurisdiction and which arenot expressly set out in this agreement are excluded (and to the extent that any terms and conditions of this type cannot beexcluded then the Buyer irrevocably waives all rights and remedies that it may have in relation to, and releases the Seller fromany terms and conditions of this type); and(b)to the maximum extent permitted by law, the Buyer will not make and waives any right it may have to make any Claim againstthe Seller under the Australian Consumer Law (including sections 4, 18 and 29 of the Australian Consumer Law), theCorporations Act (including section 1041H of that Act), the Australian Securities and Investments Commission Act 2001 (Cth)or the corresponding provision of any other federal, state or territory legislation, or a similar provision under any applicable law,for any act or omission concerning the transactions contemplated by this agreement or for any statement or representationconcerning any of those things.14.9Notice and time limits on Claims(a)The Buyer must notify the Seller in writing of any Claim it has against the Seller under this agreement (including any breach ofany Seller Group Warranty), setting out reasonable details of the facts, matters or circumstances giving rise to the Claim andthe nature of the Claim as soon as practicable after it becomes aware of it.(b)The Buyer may not make, and the Seller is not liable for, any Claim for a breach of a Seller Group Warranty unless full detailsof the Claim have been notified to the Seller within 15 months after the Completion Date. For the purposes of this clause, theBuyer may give details of a Claim even if that Claim is contingent, or if the Buyer is temporarily prevented from making a Claimunder another clause of this agreement.(c)A Claim will not be enforceable against the Seller and is to be taken for all purposes to have been withdrawn unless legalproceedings in connection with the Claim are commenced within 12 months after written notice of the Claim is served on theSeller in accordance with clause 14.9(a).14.10Minimum amount of ClaimsThe Seller is not liable for any Claim unless:(a)the amount finally agreed or determined to be payable in respect of that Claim or a series of related Claims exceedsUS$1,000,000 (each such Claim, a Permitted Claim); and(b)the aggregate amount of all such Permitted Claims against the Seller exceeds US$5,000,000, page | 28 in which event the Seller is liable for the full amount of the Permitted Claims, and not just the amount in excess of US$1,000,000 orUS$5,000,000 (as applicable).14.11Maximum liability(a)Subject to clause 14.11(b) the Seller’s total Liability for Loss (in aggregate) arising in respect of all Claims under or inconnection with this agreement is limited in aggregate to the amount of 50% of the sum of the Purchase Price and theSubscription Amount.(b)The Seller’s total Liability for Loss or damage arising in respect of a breach of a Seller Group Warranty in items 1, 7(a), 7(b),7(c), 8(a), 8(b), 8(c) and 8(d) of Schedule 2 is limited in aggregate to the sum of the Purchase Price and the SubscriptionAmount.14.12No double recoveryThe Buyer is not entitled to recover Loss or obtain payment, reimbursement, restitution or Indemnity more than once in respect of anyone Liability or Loss.14.13Disclosure regarding Third Party Claims(a)The Buyer must notify the Seller if:(i)a Third Party Claim is made against the Buyer; or(ii)the Buyer becomes aware of any events, matters or circumstances (including any potential threatened Third Party Claim) against theBuyer that may give rise to a Claim against the Seller.(b)The Buyer must include in a notice under clause 14.13(a) all relevant details (including the amount) then known to the Buyer of:(i)the Third Party Claim; and(ii)the events, matters or circumstances giving rise or which may give rise to the Claim (as appropriate).(c)The Buyer must also include in a notice given under clause 14.13(a) an extract of:(i)any part of a Demand that identifies the Liability or amount to which the Claim relates or other evidence of the amount of the Demandto which the Claim relates; and(ii)if available or relevant, any corresponding part of any adjustment sheet or other explanatory material issued by a Government Agencythat specifies the basis for the Demand to which the Claim relates or other evidence of that basis.(d)The Buyer must provide a copy of any document referred to in clause 14.13(c) to the Seller as soon as practicable and, in anyevent, within 10 Business Days after the receipt of that document by the Buyer.(e)The Buyer must also, on an ongoing basis, keep the Seller informed of all developments in relation to the Claim notified underclause 14.13(a). page | 29 14.14Conduct in respect of Third Party Claims(a)Subject to the Seller first accepting liability for and agreeing to indemnify the Buyer without limit in relation to a Third PartyClaim, the Buyer will not:(i)accept, compromise or pay;(ii)agree to arbitrate, compromise or settle; or(iii)make any admission or take any action in relation to,a Third Party Claim without the Seller’s prior written approval (which must not be unreasonably withheld or delayed).(b)Following receipt of a notice in respect of a Claim which arises from or involves a Third Party Claim, the Seller may, by writtennotice to the Buyer, assume the conduct of the defence of the Third Party Claim.(c)If the Seller advises the Buyer that the Seller wishes to assume the conduct of the defence of the Third Party Claim:(i)provided that the Seller provides the Buyer with an Indemnity against all Liabilities which the Buyer shall incur or which may resultfrom the Third Party Claim, the Buyer must take all action reasonably requested by the Seller to avoid, contest, compromise ordefend the Third Party Claim; and(ii)in conducting any proceedings or actions in respect of that Third Party Claim, the Seller must:(A)act in good faith;(B)liaise with the Buyer in relation to the defence of the Third Party Claim; and(C)provide the Buyer with reasonable access to a copy of any notice, correspondence or other document relating to the Third PartyClaim.(d)If the Seller advises the Buyer that the Seller does not wish to assume the conduct of the defence of the Third Party Claim,then the Buyer must:(i)act in good faith;(ii)liaise with the Seller in relation to the defence of the Third Party Claim; and(iii)provide the Seller with reasonable access to a copy of any notice, correspondence or other document relating to the Third PartyClaim.14.15RecoveryWhere the Buyer is or may be entitled to recover from some other person any sum in respect of any matter or event which could giverise to a Claim, the Buyer must co-operate with the Seller and:(a)use all reasonable endeavours to recover that sum before making the Claim;(b)keep the Seller at all times fully and promptly informed of the conduct of such recovery; and page | 30 (c)reduce the amount of the Claim to the extent that sums are recovered.If the recovery is delayed until after the Claim has been paid by the Seller to the Buyer, the recovered sum will be paid to the Seller tothe extent that the Claim would have been reduced under this clause 14.15 had the recovery occurred prior to the payment of theClaim by the Seller and less the costs (including reasonable legal costs and disbursements of the Buyer's lawyers) incurred by theBuyer in relation to the Claim.14.16Insured Claim or lossThe Seller will not be liable for any claim under or in relation to or arising out of this agreement including a breach of any Seller GroupWarranty to the extent the Buyer has the right to claim under any insurance policy held by the Buyer to cover that claim, unless anduntil that claim has been denied in whole or partly by the relevant insurer, or if the claim is allowed by the relevant insurer, to theextent the claim is paid by the insurer.14.17Duty to mitigateEach party is under a duty to act reasonably to mitigate its Loss in relation to any Claim and the Seller’s Liability in respect of anybreach of any Seller Group Warranty or in respect of an Indemnity will be reduced or extinguished (as the case may be) to the extentthat the Buyer has failed to so act.14.18Independent limitationsEach qualification and limitation in this clause 14 is to be construed independently of the others and is not limited by any otherqualification or limitation.14.19Damages only remedyIf any of the Seller Group Warranties are incorrect, untrue or misleading, the Buyer’s only remedy is in damages and the Buyer maynot rescind, terminate or revoke the agreement.14.20No knowledge of breachThe Buyer:(a)has not already formulated an intention to make a Seller Group Warranty Claim; and(b)does not presently have actual knowledge (except as disclosed in the Disclosure Material) of any circumstances which itbelieves may entitle it to make a Claim in respect of a Seller Group Warranty.15Buyer Warranties15.1Buyer WarrantiesThe Buyer represents and warrants to the Seller that each of the following statements is true, accurate and complete and notmisleading, as at the Execution Date and will be true, accurate and complete and not misleading as at the Completion Date:(a)it is duly incorporated and validly exists under the law of its place of incorporation; page | 31 (b)the execution and delivery of this agreement has been properly authorised by all necessary corporate action of the Buyer;(c)it has full corporate power and lawful authority to execute and deliver this agreement and to consummate and perform or causeto be performed its obligations under this agreement;(d)this agreement constitutes a legal, valid and binding obligation of the Buyer enforceable in accordance with its terms;(e)the execution, delivery and performance by the Buyer of this agreement does not or will not (with or without the lapse of time,the giving of notice or both) contravene, conflict with or result in a breach of or default under:(i)any provision of the constitution of the Buyer;(ii)any material term or provision of any security arrangement (including any Security Interest), undertaking, agreement or agreement towhich it is bound;(iii)any writ, order or injunction, judgement, or law to which it is a party or is subject or by which it is bound;(f)no Insolvency Event has occurred in relation to the Buyer; and(g)so far as it is aware, there are no facts, matters or circumstances which give any person the right to apply to liquidate or windup the Buyer.15.2RelianceThe Buyer acknowledges that the Seller has entered into this agreement in reliance on the Buyer Warranties.15.3Independent Buyer WarrantiesEach Buyer Warranty must be construed independently and is not limited by reference to another Buyer Warranty.15.4SurvivalThe Buyer Warranties survive Completion of this agreement.16Seller Guarantor Warranties16.1Seller Guarantor WarrantiesThe Seller Guarantor represents and warrants to the Buyer that each of the following statements is true, accurate and complete andnot misleading, as at the Execution Date and will be true, accurate and complete and not misleading as at the Completion Date:(a)it is duly incorporated and validly exists under the law of its place of incorporation;(b)the execution and delivery of this agreement has been properly authorised by all necessary corporate action of the SellerGuarantor; page | 32 (c)it has full corporate power and lawful authority to execute and deliver this agreement and to consummate and perform or causeto be performed its obligations under this agreement;(d)this agreement constitutes a legal, valid and binding obligation of the Seller Guarantor enforceable in accordance with its terms;(e)the execution, delivery and performance by the Seller Guarantor of this agreement does not or will not (with or without the lapseof time, the giving of notice or both) contravene, conflict with or result in a breach of or default under:(i)any provision of the constitution of the Seller Guarantor;(ii)any material term or provision of any security arrangement (including any Security Interest), undertaking, agreement or agreement towhich it is bound;(iii)any writ, order or injunction, judgement, or law to which it is a party or is subject or by which it is bound;(f)no Insolvency Event has occurred in relation to the Seller Guarantor; and(g)so far as it is aware, there are no facts, matters or circumstances which give any person the right to apply to liquidate or windup the Seller Guarantor.16.2RelianceThe Seller Guarantor acknowledges that the Buyer has entered into this agreement in reliance on the Seller Guarantor Warranties.16.3Independent Seller Guarantor WarrantiesEach Seller Guarantor Warranty must be construed independently and is not limited by reference to another Seller GuarantorWarranty.16.4SurvivalThe Seller Guarantor Warranties survive Completion of this agreement.16.5IndemnityThe Seller Guarantor indemnifies the Buyer against any Loss which the Buyer may incur to the extent caused by any breach of theSeller Guarantor Warranties.17Buyer Guarantor Warranties17.1Buyer Guarantor WarrantiesThe Buyer Guarantor represents and warrants to the Seller that each of the following statements is true, accurate and complete andnot misleading, as at the Execution Date and will be true, accurate and complete and not misleading as at the Completion Date:(a)it is duly incorporated and validly exists under the law of its place of incorporation;(b)the execution and delivery of this agreement has been properly authorised by all necessary corporate action of the BuyerGuarantor; page | 33 (c)it has full corporate power and lawful authority to execute and deliver this agreement and to consummate and perform or causeto be performed its obligations under this agreement;(d)this agreement constitutes a legal, valid and binding obligation of the Buyer Guarantor enforceable in accordance with itsterms;(e)the execution, delivery and performance by the Buyer Guarantor of this agreement does not or will not (with or without the lapseof time, the giving of notice or both) contravene, conflict with or result in a breach of or default under:(i)any provision of the constitution of the Buyer Guarantor;(ii)any material term or provision of any security arrangement (including any Security Interest), undertaking, agreement or agreement towhich it is bound;(iii)any writ, order or injunction, judgement, or law to which it is a party or is subject or by which it is bound;(f)no Insolvency Event has occurred in relation to the Buyer Guarantor; and(g)so far as it is aware, there are no facts, matters or circumstances which give any person the right to apply to liquidate or windup the Buyer Guarantor.17.2RelianceThe Buyer Guarantor acknowledges that the Seller has entered into this agreement in reliance on the Buyer Guarantor Warranties.17.3Independent Buyer Guarantor WarrantiesEach Buyer Guarantor Warranty must be construed independently and is not limited by reference to another Buyer GuarantorWarranty.17.4SurvivalThe Buyer Guarantor Warranties survive Completion of this agreement.17.5IndemnityThe Buyer Guarantor indemnifies the Seller against any Loss which the Seller may incur to the extent caused by any breach of theBuyer Guarantor Warranties.18Confidentiality18.1Confidentiality obligationEach party (Information Recipient):(a)may use Confidential Information of a Disclosing Party only for the purposes of this agreement and the transactionscontemplated by this agreement; and(b)must keep confidential all Confidential Information of each Disclosing Party except for disclosures permitted under clause 18.2. page | 34 18.2ExceptionsClause 18.1 does not apply to an Information Recipient to the extent that the relevant disclosure or use:(a)has the prior written consent of the Disclosing Party;(b)is a media announcement in the form agreed between the Buyer and the Seller in accordance with clause 18.4;(c)is to its Officers, employees, professional advisers, consultants, financiers and Related Bodies Corporate to whom (and to theextent to which) it is necessary to disclose the information in order to properly perform its obligations under this agreement;(d)is necessary to enforce its rights or to defend any Claim or Action under this agreement or for use in legal proceedingsregarding this agreement or the transaction contemplated by this agreement;(e)is necessary to obtain any consent or approval contemplated by this agreement; or(f)is necessary to comply with any applicable law, legal process, any order or rule of any Government Agency, the rules of arecognised stock exchange or in a prospectus or other document with statutory content requirements prepared for a transactioninvolving a party, after first consulting with the other party to the extent practicable having regard to those obligations about theform and content of the disclosure,and provided that, before disclosure:(g)in the case of the Information Recipient's (and their Related Body Corporate's) Officers and employees, those persons havebeen directed by the Information Recipient to keep confidential all Confidential Information of the Disclosing Party; and(h)in the case of other persons (except those disclosures under clauses 18.2(b), 18.2(d), 18.2(e) and 18.2(f)), those persons haveagreed in writing with the Information Recipient to comply with substantially the same obligations in respect of ConfidentialInformation of the Disclosing Party as those imposed on the Information Recipient under this agreement,(each a Direction).18.3Information Recipient's obligationsAn Information Recipient must:(a)ensure that each person to whom it discloses Confidential Information of a Disclosing Party under clause 18.2 complies with itsDirection; and(b)notify the Disclosing Party of, and take all reasonable steps to prevent or stop, any suspected or actual breach of a Direction.18.4Media announcement(a)No party may, before or after Completion, make or send a public announcement, communication or circular concerning thisagreement or the transactions referred page | 35 to in this agreement unless it has first obtained the written consent of the other party, which consent is not to be unreasonablywithheld or delayed.(b)Clause 18.4(a) does not apply to a public announcement, communication or circular required by law or the requirements of aregulatory body (including the ASX and any other relevant stock exchange), if the party required to make or send it has, ifpracticable, first consulted and taken into account the reasonable requirements of the other parties, provided that the partymust only disclose such information necessary to comply with the requirements of law or the applicable regulatory body.18.5Confidentiality AgreementThe parties acknowledge and agree that the Confidentiality Agreement terminates in accordance with its terms on the ExecutionDate.19Seller Guarantee and indemnity19.1ConsiderationThe Seller Guarantor acknowledges that the Buyer is acting in reliance on the Seller Guarantor incurring obligations and giving rightsunder this Seller Guarantee.19.2Seller Guarantee(a)The Seller Guarantor unconditionally and irrevocably guarantees to the Buyer the due and punctual performance by the Sellerof all its obligations under this agreement, including each obligation to pay money (the Seller Guaranteed Obligations).(b)If the Seller fails to perform the Seller Guaranteed Obligations in full and on time, the Seller Guarantor agrees to comply withthe Seller Guaranteed Obligations on demand from the Buyer. A demand may be made whether or not the Buyer has madedemand on the Seller.19.3Indemnity(a)The Seller Guarantor:(i)unconditionally and irrevocably indemnifies the Buyer against any Loss or Claim which may be incurred or sustained by the Buyerarising from or in relation to any default or delay by the Seller in the due and punctual performance of any of the Seller GuaranteedObligations, including any Loss or Claim incurred or sustained by the Buyer arising from or in relation to the enforcement of this SellerGuarantee; and(ii)agrees to pay amounts due under this clause 19.3 on demand from the Buyer.(b)The Buyer need not incur expense or make payment before enforcing this right of indemnity. page | 36 19.4Extent of Seller Guarantee and indemnity(a)The Seller Guarantor will be responsible to the Buyer in respect of the Seller Guaranteed Obligations in the same manner as ifthe Seller Guarantor was the Seller under this agreement.(b)The rights given to the Buyer pursuant to this Seller Guarantee, and the Seller Guarantor’s liability under it, are not affected byany act, omission or other thing which might otherwise affect it in law or in equity including one or more of the following:(i)an Insolvency Event affecting a person or the death of a person;(ii)a change in the constitution, membership, or partnership of a person;(iii)the partial performance of the Seller Guaranteed Obligations;(iv)the Seller Guaranteed Obligations not being enforceable at any time against any person other than the Seller Guarantor;(v)the Buyer granting any time or other indulgence or concession to, compounding or compromising with, or wholly or partially releasingthe Seller or Seller Guarantor of an obligation;(vi)any novation of a right of the Buyer;(vii)acquiescence, delay, acts, omissions or mistakes on the part of the Buyer; or(viii)the occurrence of any other thing which might otherwise release, discharge or affect the obligations of the Seller Guarantor under thisagreement, except to the extent that that thing also releases, discharges or affects the obligations of the Seller to the Buyer.19.5PaymentsThe Seller Guarantor agrees to make payments under this clause 19:(a)in full without set-off or counterclaim, and without any deduction in respect of Taxes unless prohibited by law; and(b)in the currency in which the payment is due, and otherwise in Australian dollars, in Immediately Available Funds.19.6Continuing guarantee and indemnityThis clause 19:(a)extends to cover this agreement as amended, varied or replaced, whether with or without the consent of the Seller Guarantor;(b)is a principal obligation and is not to be treated as ancillary or collateral to another right or obligation;(c)is independent of and not in substitution for or affected by any other security interest or guarantee or other document oragreement which the Buyer may hold concerning the Seller Guaranteed Obligations; and page | 37 (d)is a continuing guarantee and indemnity despite any intervening payment, settlement or other thing and extends to all of theSeller’s obligations arising from or in relation to this agreement and, despite Completion, remains in full force and effect for solong as the Seller has any liability or obligation to the Buyer under this agreement and until all of those liabilities or obligationshave been fully discharged.19.7Enforcement against Seller GuarantorThe Seller Guarantor waives any right it has of first requiring the Buyer to commence proceedings or enforce any other right againstthe Seller or any other person before claiming from the Seller Guarantor under this Seller Guarantee.19.8LimitationIn no event will the Seller Guarantor's Liability under this agreement exceed the amount that would have been recoverable from theSeller in respect of the same subject matter.20Buyer Guarantee and indemnity20.1ConsiderationThe Buyer Guarantor acknowledges that the Seller is acting in reliance on the Buyer Guarantor incurring obligations and giving rightsunder this Buyer Guarantee.20.2Buyer Guarantee(a)The Buyer Guarantor unconditionally and irrevocably guarantees to the Seller the due and punctual performance by the Buyerof all its obligations under this agreement, including each obligation to pay money (the Buyer Guaranteed Obligations).(b)If the Buyer fails to perform the Buyer Guaranteed Obligations in full and on time, the Buyer Guarantor agrees to comply withthe Buyer Guaranteed Obligations on demand from the Seller. A demand may be made whether or not the Seller has madedemand on the Buyer.20.3Indemnity(a)The Buyer Guarantor:(i)unconditionally and irrevocably indemnifies the Seller against any Loss or Claim which may be incurred or sustained by the Sellerarising from or in relation to any default or delay by the Buyer in the due and punctual performance of any of the Buyer GuaranteedObligations, including any Loss or Claim incurred or sustained by the Seller arising from or in relation to the enforcement of this BuyerGuarantee; and(ii)agrees to pay amounts due under this clause 20.3 on demand from the Seller.(b)The Seller need incur expense or make payment before enforcing this right of indemnity. page | 38 20.4Extent of Buyer Guarantee and indemnity(a)The Buyer Guarantor will be responsible to the Seller in respect of the Buyer Guaranteed Obligations in the same manner as ifthe Buyer Guarantor was the Buyer under this agreement.(b)The rights given to the Seller pursuant to this Buyer Guarantee, and the Buyer Guarantor’s liability under it, are not affected byany act, omission or other thing which might otherwise affect it in law or in equity including one or more of the following:(i)an Insolvency Event affecting a person or the death of a person;(ii)a change in the constitution, membership, or partnership of a person;(iii)the partial performance of the Buyer Guaranteed Obligations;(iv)the Buyer Guaranteed Obligations not being enforceable at any time against any person other than the Buyer Guarantor;(v)the Seller granting any time or other indulgence or concession to, compounding or compromising with, or wholly or partially releasingthe Buyer or Buyer Guarantor of an obligation;(vi)any novation of a right of the Seller;(vii)acquiescence, delay, acts, omissions or mistakes on the part of the Seller; or(viii)the occurrence of any other thing which might otherwise release, discharge or affect the obligations of the Buyer Guarantor under thisagreement, except to the extent that that thing also releases, discharges or affects the obligations of the Buyer to the Seller.20.5PaymentsThe Buyer Guarantor agrees to make payments under this clause 20:(a)in full without set-off or counterclaim, and without any deduction in respect of Taxes unless prohibited by law; and(b)in the currency in which the payment is due, and otherwise in Australian dollars, in Immediately Available Funds.20.6Continuing guarantee and indemnityThis clause 20:(a)extends to cover this agreement as amended, varied or replaced, whether with or without the consent of the Buyer Guarantor;(b)is a principal obligation and is not to be treated as ancillary or collateral to another right or obligation;(c)is independent of and not in substitution for or affected by any other security interest or guarantee or other document oragreement which the Seller may hold concerning the Buyer Guaranteed Obligations; and page | 39 (d)is a continuing guarantee and indemnity despite any intervening payment, settlement or other thing and extends to all of theBuyer’s obligations arising from in relation to this agreement and, despite Completion, remains in full force and effect for solong as the Buyer has any liability or obligation to the Seller under this agreement and until all of those liabilities or obligationshave been fully discharged.20.7Enforcement against Buyer GuarantorThe Buyer Guarantor waives any right it has of first requiring the Seller to commence proceedings or enforce any other right againstthe Buyer or any other person before claiming from the Buyer Guarantor under this Buyer Guarantee.20.8LimitationIn no event will the Buyer Guarantor's Liability under this agreement exceed the amount that would have been recoverable from theBuyer in respect of the same subject matter.21Dispute resolution21.1Dispute Notice(a)If a Dispute arises then either party may give to the other party a Dispute Notice.(b)Within 14 days after service of a Dispute Notice, the parties’ Representatives must meet at least once and confer in good faithto attempt to resolve the Dispute.(c)If the parties' Representatives cannot resolve the Dispute, then each party shall within 21 days after service of a DisputeNotice refer the Dispute to their respective Chief Executive Officers to settle the Dispute. The Chief Executive Officers mustmeet within 14 days of the Dispute being referred to them (or such longer period agreed in writing) and confer in good faith untilsuch time that they resolve the Dispute.(d)If the Chief Executive Officers have met but not resolved the Dispute, or otherwise fail to meet, within 2 months from the datethe Dispute was referred to them (or such longer period agreed in writing) either party may commence legal proceedings.21.2Continuance of Contract(a)Compliance with this clause 21 is a condition precedent to a party being entitled to commence legal proceedings in any court inrespect of a Dispute except for proceedings seeking urgent injunctive relief.(b)Prior to the resolution of a Dispute, the parties must continue to perform their respective obligations in this agreement insofaras those obligations are not the subject matter of the Dispute.22Duty, costs and expenses22.1Duty page | 40 Subject to clause 9.1(b), all Duty which may be payable on or in connection with this agreement and any instrument executed underor in connection with or any transaction evidenced by this agreement is payable by the Buyer.22.2Costs and expensesEach party must pay its own costs and expenses of negotiating, preparing, signing, delivering and registering this agreement and anyother agreement or document entered into or signed under this agreement (including each novation or assignment agreement oragreement).22.3Costs of performanceA party must bear the costs and expenses of performing its obligations under this agreement, unless otherwise provided in thisagreement.23GST23.1Supply of a going concern(a)The parties agree that the Supply made by the Seller to the Buyer under this agreement (Business Supply) is a Supply of aGoing Concern for the purposes of section 38‑325 of the GST Act and will be treated as being a GST-free Supply such thatclause 23.2 does not apply to it.(b)The Seller warrants and represents that it:(i)will supply to the Buyer all of the things that are necessary for the continued operation of an Enterprise; and(ii)will continue to carry on the Enterprise without interruption until and including the Completion Date.(c)The Buyer warrants that it is registered or required to be registered for GST under the GST Law as at the Completion Date.(d)If there is an assessment by the Commissioner of Taxation that GST is payable on the Business Supply, then clause 23.2applies to the Business Supply such that an additional amount will be payable on account of GST (Additional Amount),except that:(i)any Additional Amount payable under clause 23.2 is payable by the Buyer within 10 Business Days of receipt of a Tax Invoice for theBusiness Supply; and(ii)the Additional Amount must be refunded to the Buyer if the assessment is overturned by the Commissioner of Taxation, a Court ortribunal.23.2Taxable Supplies(a)Any consideration or amount payable under this agreement, including any non-monetary consideration (as reduced inaccordance with clause 23.2(e) if required) (Consideration) is exclusive of GST.(b)If GST is or becomes payable on a Supply made under or in connection with this agreement, an Additional Amount is payableby the party providing the page | 41 Consideration for the Supply (Recipient) equal to the amount of GST payable on that Supply as calculated by the party makingthe Supply (Supplier) in accordance with the GST Law.(c)The Additional Amount payable under clause 23.2(b) is payable without set off, demand or deduction at the same time and inthe same manner as the Consideration for the Supply, and the Supplier must provide the Recipient with a Tax Invoice as a pre-condition to payment of the Additional Amount.(d)If for any reason (including, without limitation, the occurrence of an Adjustment Event) the amount of GST payable on a Supplymade under or in connection with this agreement (taking into account any Decreasing or Increasing Adjustments in relation tothe Supply) varies from the Additional Amount payable by the Recipient under clause 23.2(b):(i)the Supplier must provide a refund or credit to the Recipient, or the Recipient must pay a further amount to the Supplier, asappropriate;(ii)the refund, credit or further amount (as the case may be) will be calculated by the Supplier in accordance with the GST Law; and(iii)the Supplier must notify the Recipient of the refund, credit or further amount within 10 Business Days after becoming aware of thevariation to the amount of GST payable. Any refund or credit must accompany such notification or the Recipient must pay any furtheramount within 7 days after receiving such notification, as appropriate. If there is an Adjustment Event in relation to the Supply, therequirement for the Supplier to notify the Recipient will be satisfied by the Supplier issuing to the Recipient an Adjustment Note within10 Business Days after becoming aware of the occurrence of the Adjustment Event.(e)Despite any other provision in this agreement:(i)if an amount payable under or in connection with this agreement (whether by way of reimbursement, indemnity or otherwise) iscalculated by reference to an amount incurred by a party, whether by way of cost, expense, outlay, disbursement or otherwise(Amount Incurred), the amount payable must be reduced by the amount of any Input Tax Credit to which that party is entitled inrespect of that Amount Incurred; and(ii)no Additional Amount is payable under clause 23.2(b) in respect of a Supply made under or in connection with this agreement towhich section 84-5 of the GST Act applies.(f)Any reference in this clause to an Input Tax Credit to which a party is entitled includes an Input Tax Credit arising from aCreditable Acquisition by that party but to which the Representative Member of the GST Group of which that party is a memberis entitled.24Foreign resident capital gains withholding24.1Application of foreign resident capital gains withholdingClauses 24.3 to 24.6 do not apply if:(a)the sale of the Sale Interest and the subscription of the Subscription Shares is a transaction that is excluded under section 14-215(1); or page | 42 (b)the Seller gives to the Buyer a Clearance Certificate for a period covering the Completion Date on or before the date that is 5Business Days before Completion.24.2Clearance Certificate given by SellerIf clause 24.1(b) applies, the Buyer acknowledges and agrees that:(a)the Buyer is not required to pay a Withholding Amount; and(b)the Buyer may not withhold a Withholding Amount from the Purchase Price payable on Completion to the Seller.24.3Buyer entitled to withholdIf the Buyer is required to pay an amount to the Commissioner under section 14-200, the Buyer is entitled to withhold from thePurchase Price payable on Completion an amount equal to the Withholding Amount.24.4Buyer’s obligation to pay Withholding Amount to the CommissionerAt Completion, the Buyer must either:(a)give to the Seller a copy of a receipt showing that the Withholding Amount has been paid to the Commissioner beforeCompletion; or(b)produce a cheque, drawn on a Bank, payable to the Commissioner for an amount equal to the Withholding Amount.24.5Payment of the Withholding Amount after CompletionIf clause 24.4(b) applies, the Buyer must:(a)pay the Withholding Amount to the Commissioner, by mailing or delivering the cheque to the Commissioner, before the end ofthe first Business Day after Completion; and(b)provide to the Seller within 2 Business Days after Completion, evidence showing that the Withholding Amount has been paid tothe Commissioner.24.6Discharge of liabilityOn the payment of the Withholding Amount to the Commissioner, the Buyer is discharged from all liability to pay the WithholdingAmount to the Seller.24.7Definitions and interpretationFor the purposes of this clause 24:(a)all section references are to those provisions of Schedule 1 to the Taxation Administration Act 1953 (Cth);(b)Clearance Certificate means a certificate issued by the Commissioner under section 14-220 that applies to the Seller and isfor a period covering the time that the transaction is entered into;(c)Commissioner means the Commissioner of Taxation of Australia; and page | 43 (d)Withholding Amount means an amount that the Buyer is required to pay to the Commissioner, determined in accordance withsection 14-200(3).25PPS Act registration25.1Protecting interests(a)The parties agree to do all things as may be reasonably necessary including:(i)providing information and executing or ensuring the execution of documents; and(ii)ensuring that relevant third parties do all things reasonably necessary,to protect the interests of a party to this agreement as a result of the application of the PPS Law to this agreement or thetransactions the subject of this agreement, including, without limitation to ensure that a PPS Security Interest created under orin connection with this agreement is enforceable, perfected in accordance with the PPS Law and otherwise effective.(b)A grantor of a PPS Security Interest under or in connection with this agreement consents to the registration of the PPSSecurity Interest on any relevant register and any notification made or given in respect of that PPS Security Interest.25.2NoticesA party need not give any notice under the PPS Law (including notice of a verification statement) to the other party unless the noticeis required by the PPS Law and cannot be excluded.26Notices26.1GeneralA notice, demand, certification, process or other communication relating to this agreement must be in writing in English and may begiven by an agent of the sender.26.2How to give a communicationIn addition to any other lawful means, a communication may be given by being:(a)personally delivered;(b)left at the party’s current delivery address for notices;(c)sent to the party’s current postal address for notices by pre-paid ordinary mail or, if the address is outside Australia, by pre-paid airmail;(d)sent by email to the party’s current email address for notices; or(e)sent by such other form of communication as the parties and WLOPL may from time to time agree.26.3Particulars for delivery page | 44 (a)The particulars for delivery of notices are initially:(i)in the case of the Seller:Delivery address: 1 Sleat RoadAPPLECROSS, WA 6153Postal address: Locked Bag 3, Canning BridgeAPPLECROSS, WA 6153Email: simon.rushton@mineralresources.com.auAttention: Simon Rushton(ii)in the case of the Buyer:Delivery address:4350 Congress Street, Suite 700, Charlotte, NC 28209Postal address:4350 Congress Street, Suite 700, Charlotte, NC 28209Email: Ander.Krupa@albemarle.comCopy: Brenda.Mareski@albemarle.comAttention: Ander KrupaCopy: Brenda Mareski(iii)in the case of the Seller Guarantor:Delivery address: 1 Sleat RoadAPPLECROSS, WA 6153Postal address: Locked Bag 3, Canning BridgeAPPLECROSS, WA 6153Email: simon.rushton@mineralresources.com.auAttention: Simon Rushton(iv)in the case of the Buyer Guarantor:Delivery address: 4350 Congress Street, Suite 700, Charlotte, NC 28209Postal address: 4350 Congress Street, Suite 700, Charlotte, NC 28209Email: terry.hammons@albemarle.comCopy: Alex.Gutierrez@albemarle.comAttention: Terrance HammonsCopy: Alejandro Gutierrez page | 45 (b)Each party may change its particulars for delivery of notices by notice to each other party.26.4Communications by postSubject to clause 26.7, a communication is given if posted:(a)within Australia to an Australian postal address, three (3) Business Days after posting; or(b)outside of Australia to an Australian postal address or within Australia to an address outside of Australia, ten (10) BusinessDays after posting.26.5Communications by email(a)Subject to clause 26.7, a communication is given if sent by email, upon the earlier of:(i)the time the sender receives an automated message from the intended recipient’s information system confirming delivery of theemail;(ii)the time that the email is first opened or read by the intended recipient, or an employee or Officer of the intended recipient; and(iii)four (4) hours after the time the email is sent (as recorded on the device from which the sender sent the email) unless the senderreceives, within that four (4) hour period, an automated message that the email has not been delivered.(b)Despite anything to the contrary in this agreement, a notice given under clause 2.6 must not be given by email.26.6Process serviceAny process or other document relating to litigation, administrative or arbitral proceedings in relation to this agreement may be servedby any method contemplated by this clause 26 or in accordance with any applicable law.26.7After hours communicationsIf a communication is given:(a)after 5.00 pm in the place of receipt; or(b)on a day which is a Saturday, Sunday or bank or public holiday in the place of receipt,it is taken to have been given at 9.00am on the next day which is not a Saturday, Sunday or bank or public holiday in that place.27General27.1Consents and approvals page | 46 Except as expressly provided in this agreement, a party may conditionally or unconditionally in its absolute discretion give or withholdany consent or approval under this agreement.27.2Entire agreement(a)This agreement is the entire agreement between the parties about its subject matter and replaces all previous agreements,understandings, representations and warranties about that subject matter.(b)Each party represents and warrants that it has not relied on any representations or warranties about the subject matter of thisagreement except as expressly provided in this agreement.27.3Further assurancesExcept as expressly provided in this agreement, each party must, at its own expense, do all things reasonably necessary to give fulleffect to this agreement and the matters contemplated by it.27.4Rights cumulativeExcept as expressly provided in this agreement, the rights of a party under this agreement are cumulative and are in addition to anyother rights of that party.27.5Survival and merger(a)No term of this agreement merges on completion of any transaction contemplated by this agreement.(b)Clauses 18, 22, 23, 26 and 27 survive termination or expiry of this agreement together with any other term which by its natureis intended to do so.27.6VariationNo variation of this agreement is effective unless made in writing and signed by each party.27.7Waiver(a)No waiver of a right or remedy under this agreement is effective unless it is in writing and signed by the party granting it. It isonly effective in the specific instance and for the specific purpose for which it is granted.(b)A single or partial exercise of a right or remedy under this agreement does not prevent a further exercise of that or of any otherright or remedy.(c)Failure to exercise or delay in exercising a right or remedy under this agreement does not operate as a waiver or prevent furtherexercise of that or any other right or remedy.27.8Governing law(a)This agreement is governed by the laws of Western Australia. page | 47 (b)Each party irrevocably and unconditionally submits to the exclusive jurisdiction of the courts of Western Australia including, forthe avoidance of doubt, the Federal Court of Australia sitting in Western Australia.27.9CounterpartsThis agreement may be executed in any number of counterparts and all counterparts taken together constitute one document.27.10Default interest(a)If a party fails to pay any amount payable under this agreement on the due date for payment, that party must pay interest onthe amount unpaid at the higher of:(i)the Interest Rate; or(ii)the rate of interest per annum (if any) fixed or payable under any judgment or other thing into which the liability to pay the amountbecomes merged.(b)The interest payable under clause 27.10(a):(i)accrues from day to day from and including the due date for payment up to the actual date of payment, before and, as an additionaland independent obligation, after any judgment or other thing into which the liability to pay the amount becomes merged; and(ii)may be capitalised by the person to whom it is payable at monthly intervals.(c)The right to require payment of interest under this clause is without prejudice to any other rights the non-defaulting party mayhave against the defaulting party at law or in equity.27.11Interest payable on overdue amountsIf any party fails to pay the whole or part of any amount payable under this agreement on or before the due date, such defaulting partymust, on demand, pay to the party entitled to receive payment interest on such unpaid amount at the Interest Rate calculated ondaily balances, and capitalised monthly, from (and including) the due date for payment to (but excluding) the date of actual payment.27.12Invalidity(a)If a provision of this agreement or a right or remedy of a party under this agreement is invalid or unenforceable in a particularjurisdiction:(i)it is read down or severed in that jurisdiction only to the extent of the invalidity or unenforceability; and(ii)it does not affect the validity or enforceability of that provision in another jurisdiction or the remaining provisions in any jurisdiction.(b)This clause is not limited by any other provision of this agreement in relation to severability, prohibition or enforceability.27.13Operation of indemnities page | 48 (a)Each Indemnity contained in this agreement is an additional, separate and independent obligation and no one Indemnity limitsthe generality of another Indemnity.(b)Each Indemnity contained in this agreement survives Completion under this agreement.27.14PaymentsA payment which is required to be made under this agreement must be in cash or by bank cheque or in other Immediately AvailableFunds and in Australian dollars.27.15RelationshipExcept as expressly provided in this agreement:(a)nothing in this agreement is intended to constitute a relationship of employment, trust, agency or partnership or any otherfiduciary relationship between the parties; and(b)no party has authority to bind any other party.27.16Assignment, novation and other dealings(a)Subject to clause 27.16(b), a party must not assign or novate this agreement or otherwise deal with the benefit of it or a rightunder it, or purport to do so, without the prior written consent of each other party which consent may be withheld at the absolutediscretion of the party from whom consent is sought.(b)Clause 27.16(a) does not apply to any benefit or right under a Transaction Document from Completion.27.17Third party rightsExcept as expressly provided in this agreement:(a)each person who executes this agreement does so solely in its own legal capacity and not as agent or trustee for or a partnerof any other person; and(b)only those persons who execute this agreement have a right or benefit under it. page | 49 Schedule 1Dictionary1DictionaryIn this agreement:Accounting Standards means:(a)the accounting standards applicable for the purposes of the Corporations Act;(b)the requirements of the Corporations Act for the preparation and content of financial statements, directors' reports and auditor'sreports; and(c)generally accepted and consistently applied accounting principles and practices in Australia (including Australian InternationalFinancial Reporting Standards), except those inconsistent with the standards of requirements referred to in paragraphs (a) or(b).Action means an action, dispute, Claim, investigation, inquiry, prosecution, litigation, proceeding, arbitration, mediation or disputeresolution process.Additional Amount has the same meaning as it does in clause 23.1(d) or 23.2(b) (as appropriate).Amount Incurred has the same meaning as it does in clause 23.2(e)(i).Approvals means any licence, consent, approval, permit, registration, accreditation, certification or other authorisation (or anyvariations thereof) given or issued by any Government Agency or any other person held by the Seller which relates to the SaleInterest or the Project and which is capable of being assigned to the Buyer or WLOPL (as applicable), including those specified inSchedule 10.Anti-Monopoly Law means the Anti-Monopoly Law of the People's Republic of China.Assigned Tenements means:(a)the mining tenements specified in Part 2 of Schedule 3; and(b)to the extent that they are held by the Seller, any renewals, conversions, amalgamations or substitutions of the miningtenements referred to in paragraph (a).Associate has the meaning given to that term by sections 10 to 17 of the Corporations Act.Associated Rights means:(a)a perpetual, royalty-free license to use and benefit from all Intellectual Property Rights in connection with the Project; and(b)the benefit of any contracts (whether written or oral) between the Seller and the provider of the Mining Information for productionof that information, including any actual or implied warranties as to the accuracy of that information.Atlas means Atlas Iron Limited ACN 110 396 168. Schedule 1 – Dictionary | page | 50Atlas Exit Agreement means the exit agreement – Wodgina dated 13 April 2017 between the Seller and Atlas.ASX means ASX Limited (ABN 98 008 624 691).Australian Consumer Law means Schedule 2 of the Competition and Consumer Act 2010 (Cth).Business Day means a day on which banks are open for business excluding Saturdays, Sundays and public holidays in Perth,Western Australia.Business Supply has the same meaning as it does in clause 23.1(a).Buyer Group means the Buyer and Buyer Guarantor.Buyer Guarantee means the guarantee and indemnity in clause 20.Buyer Guaranteed Obligations has the meaning given in clause 20.2(a).Buyer Guarantor Warranties means the representations and warranties set out in clause 17.1.Buyer Individuals means:(a)Jeffrey Bachrach;(b)Kraig Houser;(c)Alex Gutierrez;(d)Matt Lynch;(e)Clint Parham;(f)Andrew Purvis;(g)Edward Tatum;(h)Brian Tessin; and(i)Chris Yandell.Buyer Warranties means the representations and warranties set out in clause 15.1.Called Sum has the meaning given in the JVA.CCC Handover has the meaning given in clause 5.2(a).Chargee’s Priority Deed means a chargee's priority deed as defined in in the JVA, to be entered into between the Seller, the Buyer,WLOPL and the Security Trustee in the form scheduled as Attachment E.Claim means any allegation, debt, cause of action, Liability, claim, proceeding, suit or demand of any nature howsoever arising andwhether present or future, fixed or unascertained, actual or contingent whether at law, in equity, under statute or otherwise. Schedule 1 – Dictionary | page | 51Commercial Terms Agreement means the agreement of that name between the Buyer and the Seller entered into on or around thedate of this agreement which sets out the commercial terms agreed between the Buyer and the Seller in relation to certain of theTransaction Documents.Commissioned means, in respect of each item of Incomplete Infrastructure:(a)the infrastructure being ready for use, having all necessary approvals and not requiring any further construction steps; and(b)the 'Requirements for Commissioning' set out in Schedule 5 being satisfied in respect of that item of Incomplete Infrastructure.Completed Infrastructure means the assets described in Schedule 4.Completion means completion of the sale and purchase of the Sale Interest and the allotment of the Subscription Shares underclause 7.Completion Adjustment means the amount determined in accordance with clause Schedule 13.Completion Adjustment Dispute Statement has the meaning given in clause 8.2(d).Completion Date means the date which is 5 Business Days after the last of the Conditions are satisfied or waived in accordancewith clause 2 or such other date as the parties may agree in writing.Completion Statement has the meaning given in clause 8.2(a).Concentrate means spodumene concentrate derived from Ore.Condition means a condition precedent set out in clause 2.1.Conditions Precedent Date means 15 June 2019, subject to extension under clause 2.3, or such other date as the parties mayagree in writing.Confidential Information of a party (Disclosing Party) means:(a)the nature and existence of this agreement and the terms of this agreement, its schedules and annexures; and(b)all information treated by the Disclosing Party as confidential and disclosed by the Disclosing Party to another party or of whichanother party becomes aware, whether before or after the Execution Date, except information:(i)another party creates (whether alone or jointly with any third person) independently of the Disclosing Party;(ii)which was lawfully obtained by a party before the Discloser disclosed it to the Recipient;(iii)which is received in good faith by a party from a third party entitled to disclose it; or(iv)is public knowledge (otherwise than as a result of a breach of confidentiality by another party or any of its permitted disclosees). Schedule 1 – Dictionary | page | 52Confidentiality Agreement means the confidentiality deed between Albemarle Lithium Pty Ltd and Mineral Resources Limited dated30 July 2018.Consideration has the same meaning as it does in clause 23.2(a).Consequential Loss means loss of revenue, loss of profit, loss or denial of opportunity, loss of access to markets or market share,loss of goodwill, loss of business reputation, loss of use of capital, increased overhead costs and whether arising in contract, tort(including negligence), equity or under statute.Construction Equipment means all plant, assets and equipment used exclusively in connection with the construction of theIncomplete Infrastructure (but not operation of that infrastructure once complete), including any mobile vehicles and equipment usedfor such construction and which is not expressly defined as Mobile Equipment.Consumables means oil, diesel, greases, lubricants, hydraulic fluids, cleaning products, explosives and all other consumables usedin connection with the Project immediately prior to Completion.Contracted Product means the Product located in the Stockpiles or in transit that is, as at 9am on the Completion Date, subject toan existing spot offtake arrangement entered into in accordance with clause 6.3(o).Corporations Act means Corporations Act 2001 (Cth).Counterparty means a counterparty to a Third Party Agreement.CSI means Crushing Services International Pty Ltd (ACN 069 303 377).Cut-off Time means 10.00am (Perth time) on 12 December 2018.Data Room means the Project Lion online data room located at https://dataroom.ansarada.com/project.lion.dr, maintained by or onbehalf of the Seller and made available to the Buyer and its Representatives.Data Room Index means the index attached to the Disclosure Letter.Data Room Information means:(a)the information and documents made available to the Buyer and its Representatives on or before the Cut-off Time in the DataRoom as listed in the Data Room Index; and(b)the written answers or written confirmations provided to the Buyer or its Representatives in the Data Room as attached to theDisclosure Letter on or before the Cut-off Time in response to requests for information.Deed of Assignment and Assumption means each deed of assignment and assumption, deed of covenant or deed of novationrequired by the terms of each Third Party Agreement, and otherwise in the form reasonably required by the Seller and the Buyer, toeffect the transfer to the Buyer of the rights, interests, liabilities and obligations of the Seller, to the extent of the Sale Interest on aseveral and not joint and several basis.Deed of Cross Security has the meaning given in the JVA and scheduled as Attachment D. Schedule 1 – Dictionary | page | 53Defaulting Party has the meaning given in clause 2.6(b).Demand means a written notice of, or demand for, an amount payable or a written notice by a third party in relation to a Third PartyClaim.Department means the Department of Mines, Industry Regulation and Safety for the State of Western Australia or such other body,department or instrumentality responsible for administration of the Mining Act and the Petroleum Pipelines Act (as applicable) fromtime to time and includes any registrar or warden.Disclosure Letter means the letter from the Seller addressed to the Buyer and dated and delivered to it prior to the execution of thisagreement, disclosing matters in relation to the Seller Group Warranties, in the form agreed between the Seller and the Buyer andincludes all of its schedules and annexures (as relevant).Disclosure Material means the written information relating to the Sale Interest and the Subscription Shares provided to the Buyerprior to the Execution Date, comprising:(a)the Information Memorandum;(b)all written information and data provided or communicated to a Buyer Individual (whether by electronic mail, portable electronicadvice or in any other manner) by Representatives of the Seller (directly or indirectly) prior to the Cut-off Time;(c)the Disclosure Letter;(d)this agreement, including the schedules and annexures thereto, and all documents referred to therein; and(e)the Data Room Information.Dispute means any matter in dispute between the parties in connection with this agreement.Dispute Notice means a written notice from one party to another regarding a Dispute, which includes the following details:(a)the party's position in respect of the Dispute;(b)the facts on which the party relies in support of its position;(c)the contractual or common law basis for the party's position; and(d)the remedy sought by the party.Duty means any stamp, transfer, transaction or registration duty or similar charge imposed by any Government Agency and includesany interest, fine, penalty, charge or other amount imposed in respect of any of them, but excludes any Tax or Royalty.Economic Effective Date means the date on which the first train of the Processing Plant has been Commissioned.Employee means any employee of the Seller and any person who becomes an employee of the Seller between the date of thisagreement and Completion and who, in either case, remains employed by the Seller immediately before Completion.Environment means components of the earth including: Schedule 1 – Dictionary | page | 54(a)land, air and water;(b)any layer of the atmosphere;(c)any organic or inorganic matter and any living organism; and(d)human-made or modified structures and areas and includes interacting natural ecosystems that include any components of thekind referred to in paragraphs (a) to (c) of this definition.Environmental Law means a provision of law, or a law, which relates to:(a)any aspect of the Environment; and(b)the use of substances or conduct which may harm the Environment or be hazardous or otherwise harmful to human health,in each case in relation to activities on the Tenements or the Petroleum Pipeline Licences.Equipment Leases means the equipment leases, hire purchase agreements, conditional purchase agreements and other hiringarrangements entered into by the Seller in relation to the Mobile Equipment.Excluded Assets means:(a)the Contracted Product;(b)the Old Crusher;(c)the New Crusher;(d)the Excluded Infrastructure;(e)the Construction Equipment;(f)the Iron Ore Rights; and(g)the GAMG Assets.Excluded Infrastructure means the plant, equipment, machinery, facilities and other infrastructure owned by a third party that isleased, hired or otherwise used in the Project that is set out in Schedule 6.Execution Date means the date that the last party executes this agreement.Extension Notice has the meaning given to that term in clause 2.3(a).FATA means Foreign Acquisitions and Takeovers Act 1975 (Cth).Final Conditions Precedent Date means 15 December 2019.GAM means Global Advanced Metals Pty Ltd (ACN 139 987 465).GAM Sale Agreement means the asset sale agreement dated 27 June 2016 between GAMW, GAM, the Seller Guarantor and theSeller. Schedule 1 – Dictionary | page | 55GAMG means Global Advanced Metals Greenbushes Pty Ltd (ACN 125 585 284).GAMG Assets means the Tantalum Rights and the Tantalum Assets.GAMG Mineral Rights Agreement means the document entitled ‘Mineral Rights Agreement’ originally between GAMW, GAMG andGAM dated 8 September 2016, as subsequently amended and assigned.GAMW means Global Advanced Metals Wodgina Pty Ltd (ACN 125 585 239), formerly Talison Wodgina Pty Ltd.Government Agency means a government or governmental, semi‑governmental, legislative, administrative, fiscal, quasi-judicial orjudicial entity, authority, department, commission, authority, tribunal, agency or entity or other body, whether foreign, federal, state,territorial or local (including any self-regulatory organisation established under statute or any recognised stock exchange).GST means goods and services tax, or a similar value added tax, levied or imposed in Australia under the GST Law.GST Act means the A New Tax System (Goods and Services Tax) Act 1999 (Cth).GST Law has the meaning given to it in the GST Act.Immediately Available Funds means cash, bank cheque or telegraphic or other electronic means of transfer of cleared funds into abank account.Incomplete Infrastructure means the facilities, installations and assets specified in Schedule 5, other than the Tantalum Assets.Indemnity means an indemnity given under this agreement.Information Memorandum means the information memorandum in relation to the Wodgina investment opportunity prepared andissued by the Seller dated July 2018 (including any supplement to it or replacement of it).Information Recipient has the meaning given in clause 18.1.Initial Mine Plan and Budget has the meaning given in clause 6.4(d).Insolvency Event means the occurrence of any one or more of the following events in relation to any person:(a)an application is made to a court for an order, or an order is made, that it be wound up, declared bankrupt or that a provisionalliquidator or receiver or receiver and manager be appointed, and the application is not withdrawn, struck out or dismissed within15 Business Days of it being made;(b)a liquidator or provisional liquidator is appointed;(c)an administrator is appointed to it under sections 436A, 436B or 436C of the Corporations Act;(d)a Controller (as defined in section 9 of the Corporations Act) is appointed to it or any of its Sale Interest;(e)a receiver is appointed to it or any of its Sale Interest; Schedule 1 – Dictionary | page | 56(f)it enters into an arrangement or composition with one or more of its creditors, or an assignment for the benefit of one or more ofits creditors, in each case other than to carry out a reconstruction or amalgamation while solvent;(g)it proposes a winding-up, dissolution or reorganisation, moratorium, agreement of company arrangement or other administrationinvolving one or more of its creditors;(h)it is insolvent as disclosed in its accounts or otherwise, states that it is insolvent, is presumed to be insolvent under anapplicable law (including under sub-section 459C(2) or section 585 of the Corporations Act) or otherwise is, or states that it is,unable to pay all its debts as and when they become due and payable;(i)it is taken to have failed to comply with a statutory demand as a result of sub-section 459F(1) of the Corporations Act;(j)a notice is issued under sections 601AA or 601AB of the Corporations Act and not withdrawn or dismissed within 15 BusinessDays;(k)a writ of execution is levied against it or its property which is not dismissed within 15 Business Days;(l)it ceases to carry on business or threatens to do so, other than for reorganisation or restructuring in accordance with the termsof this agreement; or(m)anything occurs under the law of any jurisdiction which has a substantially similar effect to any of the events set out in theabove paragraphs of this definition.Insurances has the meaning given in warranty 13.1 of Schedule 2.Interest Rate means, for any day in a calendar month, the annual interest rate that is the sum of 3% and the “Cash Rate Target”quoted by the Reserve Bank of Australia on its public website for the last trading day of the previous calendar month.Intellectual Property Rights means all intellectual property and proprietary rights (whether registered or unregistered) including anyconfidential information, trade secrets, copyright, letters patent, trade marks, service marks, trade names, designs, business namesor other similar industrial, commercial or intellectual property rights, used in connection with the Project Assets.Interim Period means the period from (and including) the Execution Date up to Completion or the earlier termination of thisagreement.Iron Ore means iron ore and any by-product that is directly associated with the form of iron ore mineralogy.Iron Ore Rights means the right to explore for, mine or otherwise benefit from Iron Ore in the Tenements, whether arising under:(a)any Third Party Agreement; or(b)the terms of grant of the Tenements, including any right to apply for a variation to such terms to include the right to explore ormine for Iron Ore.JVA means the unincorporated joint venture agreement between the Seller, the Buyer and WLOPL in relation to the Projectsubstantially in the form set out in Attachment A. Schedule 1 – Dictionary | page | 57Key Third Party Agreements means the Third Party Agreements numbered 4, 7, 15, 23, 25, 28, 36, 37, 38 and 39 in Schedule 7.Liability means any Claims, liability, obligation, debts, losses, charges, expenses, costs, outgoings, payments and damages of anykind and however arising (whether actual, contingent or prospective), including for any Loss irrespective of when the acts, events orthings giving rise to the liability occurred and those the amount of which for the time being is not ascertained or ascertainable.Life of Mine has the meaning given in the JVA.Loss means any cost, damages, debt, expense, liability or loss and includes Taxes and Duties.Mine Development Plan means the mine development plan in relation to the Project in the form set out in Attachment B.Minerals means all naturally occurring substances on or under the surface of the land that is the subject of the Tenements.Mining Act means the Mining Act 1978 (WA).Mining Information means all technical information in the possession or control of the Seller or its Related Bodies Corporate relatingto the Tenements including (without limitation) geological, geochemical and geophysical maps and reports, surveys, mosaics, aerialphotographs, electromagnetic tapes, electromagnetic or optical disks, sketches, drawings, memoranda, samples, drill cores, drilllogs, drill pulp, logs of drill cores, assay results, maps and plans, whether in physical, written or electronic form, but excluding data orinformation that relates in part to tenements other than the Tenements (except where it is reasonably practicable for the Seller toextract such information as relates only to the Tenements).Mining Tenements means:(a)the mining tenements specified in Part 1 of Schedule 3; and(b)to the extent that they are held by the Seller, any renewals, conversions, amalgamations or substitutions of the miningtenements referred to in paragraph (a).Minister means the Minister of the Crown in the right of the State of Western Australia responsible for the administration of theMining Act and the Petroleum Pipelines Act (as applicable) from time to time.Mobile Equipment means all heavy mobile and ancillary equipment (including tooling) which are listed in Schedule 8.MRL Ownership Period means the period from 9 September 2016 to Completion.New Crusher means the crusher that as of the date of this agreement is in the process of being built, and will be owned and operatedby the Seller Guarantor or a Related Body Corporate of the Seller Guarantor for the benefit of the parties under the JVA pursuant tothe contract referred to in paragraph (c) of the definition of Transaction Documents.Non-Defaulting Party has the meaning given in clause 2.6(b). Schedule 1 – Dictionary | page | 58Non-Transferring Approvals means any licence, consent, approval, permit, registration, accreditation, certification or otherauthorisation (or any variations thereof) given or issued by any Government Agency or any other person held by the Seller whichrelates to the Sale Interest and which is not capable of being assigned to the Buyer or WLOPL (as applicable), including thosespecified in Schedule 11.Officer means, in relation to a body corporate, a director or company secretary assistant secretary, chief executive officer, chieffinancial officer, general manager or other officer of that body corporate.Old Crusher means the crusher owned by the Seller Guarantor that was previously built and has been operated at the Project prior tothe Execution Date.Operational Spares Plan means the 'Wodgina Benefication Plant Operational Spares First Fill Requirements', as attached to theDisclosure Letter.Ordinary Share means an ordinary share in the capital of WLOPL that carries both the economic and voting rights of an ordinaryshare.Ore means the ore derived from the Project.Parent Guarantee means the parent guarantee between the Seller, the Seller’s Guarantor, the Buyer, the Buyer’s Guarantor andWLOPL in relation to the guarantee of obligations under the JVA in the form set out in Attachment C.Permitted Security Interest means the permitted security interests specified in Schedule 9.Petroleum Pipeline Licences means petroleum pipeline licences PL 55, PL 56 and PL 116 granted under the Petroleum PipelinesAct which are held by the Seller and any renewals, conversions, amalgamations or substitutions of those petroleum pipeline licences.Petroleum Pipelines Act means the Petroleum Pipelines Act 1969 (WA).PMI means Process Minerals International Pty Ltd ACN 063 988 894.PPS Act means the Personal Property Securities Act 2009 (Cth).PPS Law means:(a)the PPS Act;(b)any regulations made at any time under the PPS Act;(c)any legislative instrument made at any time under the PPS Act;(d)any amendment to any of the above, made at any time; or(e)any amendment made at any time to any other legislation as a consequence of a PPS Law referred to in paragraphs (a) to (d).PPS Register means the Personal Property Securities Register established under the PPS Act.PPS Security Interest means a security interest as defined in the PPS Act. Schedule 1 – Dictionary | page | 59Processing Plant means the components of plant and other infrastructure described under the heading “Processing Plant” inSchedule 5.Product means Concentrate.Project means the project to develop and operate, in accordance with this agreement and the Transaction Documents, the mine siteknown as the Wodgina Lithium mine site, located in the Pilbara region of Western Australia and situated on the Tenements.Project Assets means the Completed Infrastructure, the Incomplete Infrastructure and the Mobile Equipment (but excluding theExcluded Assets).Purchase Price means US$1.15 billion.Recipient has the meaning given in clause 23.2(b).Records means the Mining Information and (to the extent in the possession or control of the Seller and WLOPL) all original and copyrecords, documents, books, files, reports, accounts and plans including (without limitation) certificates of registration, minute books,statutory books and registers, books of account, originals of any tenement instruments held by the Seller and WLOPL, in each case,belonging to any or all of the Seller and WLOPL.Related Body Corporate has the meaning given to that term in the Corporations Act.Representatives means, in relation to a person, that person’s Officers, employees, agents, professional advisers (including legaladvisers) or financiers or any other person acting on behalf of that person in relation to the transactions contemplated by thisagreement.Retained Liabilities has the meaning given in clause 11.3.Rights includes rights, benefits, powers, privileges, authorities, discretions, remedies and immunities, whether actual, prospective orcontingent and, when used in respect of any item of property, includes all the relevant party’s right, title and interest in and to thatproperty.Royalty means any royalty payable to a Government Agency in relation to the mining or extraction of minerals, and includes anypenalty or interest payable to a Government Agency in relation to such royalties, but excludes Duty and Tax.Sale Interest means a 50% legal and beneficial interest as tenant in common in:(a)the Tenements;(b)the Mining Information;(c)the Approvals;(d)the Project Assets;(e)the Consumables and Spares;(f)the Third Party Agreements (subject to any exclusions identified in this agreement and to the extent that they relate to theTenements only);(g)the Petroleum Pipeline Licences; Schedule 1 – Dictionary | page | 60(h)the Stockpiles (but excluding Contracted Product); and(i)the Associated Rights,but excludes the Excluded Assets.SAMR means the State Administration of Market Regulation of the People’s Republic of China.Secured Party has the meaning given under section 10 of the PPS Act.Security Interest means:(a)any third party rights or interests including a mortgage, bill of sale, charge, lien, pledge, trust, encumbrance, power or titleretention arrangement, right of set off, assignment of income, garnishee order, monetary claim, flawed deposit arrangement orany other arrangement having a similar effect; and(b)a PPS Security Interest,(c)and includes any agreement to create any of them or allow them to exist.Security Trustee means National Australia Bank Limited ACN 004 044 937 of Level 25, 255 George Street, Sydney, New SouthWales.Security Trustee Security means the general security deed granted by the Seller in favour of the Security Trustee.Seller Group means the Seller and Seller Guarantor.Seller Group Warranty means the warranties in Schedule 2.Seller Guarantee means the guarantee and indemnity in clause 19.Seller Guaranteed Obligations has the meaning given in clause 19.2(a).Seller Guarantor Warranties means the representations and warranties set out in clause 16.1.Stockpiles means all Ore and Product held in the Wodgina stockpiles and stockyards and in the New Crusher, Old Crusher orProcessing Plant at the Completion Date by or on behalf of the Seller.Spares means spare parts that the Seller holds in connection with the Project Assets to ensure the continuous, efficient and safeoperation of the Project Assets.Subscription Amount means $50.Subscription Shares means that number of Ordinary Shares equal to the number of Ordinary Shares on issue at the time of thesubscription referred to in clause 3.Superannuation Commitment means any obligation, liability or duty to make any payment to any person in respect of anysuperannuation or retirement benefits or pensions that are or may be provided to any present or former employees of the Seller ortheir respective dependants or any present or former contractors of the Seller that are deemed to be employees. Schedule 1 – Dictionary | page | 61Supplier has the same meaning as it does in clause 23.2(b).Tantalum means tantalum pentoxide (Ta2O5) and tantalum pentoxide bearing ore.Tantalum Assets means the assets known as the ‘tantalum circuit’ forming part of the Processing Plant and owned by GAMGpursuant to the Tantalum Circuit Installation and Processing Agreement dated 9 September 2016 between the Seller, the SellerGuarantor, GAM and GAMG.Tantalum Rights means the rights to Tantalum retained by GAMG in relation to certain of the Mining Tenements pursuant to theGAMG Mineral Rights Agreement.Tax means a tax, levy, charge, impost, fee, deduction, compulsory loan or withholding any nature, including, without limitation, anygoods and services tax (including GST), value added tax or consumption tax, which is assessed, levied, imposed or collected by aGovernment Agency, except where the context requires otherwise. This includes, but is not limited to, any interest, fine, penalty,charge, fee or other amount imposed in addition to those amounts, but excludes any Duty and Royalty.Tax Act means the Income Tax Assessment Act 1936 (Cth) or the Income Tax Assessment Act 1997 (Cth), as the context requires.Tax Relief means any relief, allowance, exemption, exclusion, set-off, deduction, loss, rebate, refund, right to repayment or creditgranted or available in respect of a Tax or Duty under any law.Tenement Applications means:(a)the mining tenement applications specified in Part 3 of Schedule 3 and those applications once granted;(b)to the extent that they are held by the Seller, any renewals, conversions, amalgamations or substitutions of the miningtenements referred to in paragraph (a); and(c)any mining tenement applications relating to the Project during the Interim Period and those applications once granted.Tenements means:(a)the Mining Tenements;(b)the Assigned Tenements; and(c)the Tenement Applications.Third Party means a person that is not a party or an Associate of a party.Third Party Agreement means the Equipment Leases, each of the agreements specified in Schedule 7 and any additionalagreements entered into by the Seller in respect of the Project in the ordinary course of business and in accordance with thisagreement during the Interim Period.Third Party Claim means any Claim brought by a person or entity (other than the Seller or the Buyer) which may give rise, orotherwise relates, to a Claim by the Buyer against the Seller. Schedule 1 – Dictionary | page | 62Title Agreements means the Third Party Agreements numbered 34 and 35 in Schedule 7.Transaction Documents means, collectively:(a)the JVA;(b)the Deed of Cross Security;(c)the Chargee's Priority Deed;(d)the Commercial Terms Agreement;(e)the crushing contract for the provision of crushing, mining and processing services between WLOPL, CSI and the SellerGuarantor, to be entered into substantially on the terms described in the Commercial Terms Agreement;(f)the camp and accommodation contract for the provision of operating and maintenance services for the camp and airportbetween WLOPL, PMI and the Seller Guarantor, to be entered into substantially on the terms described in the CommercialTerms Agreement;(g)the logistics contract for the provision of haulage, port, loading and shipping services between the Seller, the Buyer, PMI andthe Seller Guarantor, to be entered into substantially on the terms described in the Commercial Terms Agreement;(h)the marketing agreement for the provision of marketing services for the Product between the Seller and Albemarle US, Inc, tobe entered into substantially on the terms described in the Commercial Terms Agreement;(i)the intellectual property licensing agreement for the licensing of intellectual property to the Project between the Seller, theBuyer, WLOPL and Albemarle US, Inc., to be entered into substantially on the terms described in the Commercial TermsAgreement;(j)the Parent Guarantee;(k)the WLOPL Shareholders Agreement(l)the WLOPL Constitution; and(m)any other agreement the parties agree is a Transaction Document for the purposes of this agreement.Transfer Instruments means the instruments of transfer in registrable form (subject to stamping) which effect or record the transferfrom the Seller to the Buyer of a 50% interest in each Tenement and each Petroleum Pipeline Licence.Transferring Employee means any Employee who, by Completion or within 3 months of the Completion Date, has accepted an offerof employment from WLOPL.Treasurer means the Treasurer of the Commonwealth of Australia.Ultimate Holding Company has the meaning given to that term in section 9 of the Corporations Act. Schedule 1 – Dictionary | page | 63WLOPL means Wodgina Lithium Operations Pty Ltd, being a proprietary company to be registered with that name under theCorporations Act as required under clause 3.1 of this agreement.WLOPL Constitution means the constitution governing WLOPL in the form agreed between the parties and initialled for identification.WLOPL Shareholders Agreement means the shareholders agreement between WLOPL, the Seller and the Buyer in the form agreedbetween the parties and initialled for identification.2InterpretationIn this agreement headings are for convenience only and do not affect the interpretation of this agreement and the following rules ofinterpretation apply unless the contrary intention appears:(a)the singular includes the plural and vice versa;(b)words that are gender neutral or gender specific include each gender;(c)where a word or phrase is given a particular meaning, other parts of speech and grammatical forms of that word or phrase havecorresponding meanings;(d)the words 'such as', 'including', 'particularly' and similar expressions are not used as, nor are intended to be, interpreted aswords of limitation;(e)a reference to:(i)a person includes a natural person, partnership, joint venture, government agency, association, corporation or other body corporate;(ii)a thing (including, but not limited to, a chose in action or other right) includes a part of that thing, unless the context denotesotherwise;(iii)a party includes its successors and permitted assigns;(iv)a document includes all amendments or supplements to that document;(v)a clause, term, party, schedule or attachment is a reference to a clause or term of, or party, schedule or attachment to thisagreement;(vi)this agreement includes all schedules and attachments to it;(vii)a law includes a constitutional provision, treaty, decree, convention, statute, regulation, ordinance, by-law, judgment, rule of commonlaw or equity and is a reference to that law as amended, consolidated or replaced;(viii)an agreement includes an undertaking, or legally enforceable arrangement or understanding, whether or not in writing; and(ix)unless expressly stated otherwise in this agreement, a monetary amount is in Australian dollars; Schedule 1 – Dictionary | page | 64(f)when the day on which something must be done is not a Business Day, that thing must be done on the following BusinessDay;(g)in determining the time of day, where relevant to this agreement, the relevant time of day is:(i)for the purposes of giving or receiving notices, the time of day where a party receiving a notice is located; or(ii)for any other purpose under this agreement, the time of day in the place where the party required to perform an obligation is located;(h)no rule of construction applies to the disadvantage of a party because that party was responsible for the preparation of thisagreement or any part of it; and(i)a reference to so far as the Seller is aware, or words to that effect, in relation to a fact, matter or circumstance is to the actualknowledge of any of the following persons as at the Execution Date having made due and proper enquiries prior to 5.00 pm onthe day prior to the Execution Date:(i)Chris Ellison;(ii)Mark Wilson;(iii)Simon Rushton;(iv)Tim Williams;(v)Mark Mitchell;(vi)Rohan O’Grady;(vii)Darren Killeen;(viii)Tim Berryman;(ix)Dave Geraghty; and(x)Nick Rohr. Schedule 1 – Dictionary | page | 65Schedule 2Seller Group Warranties1General1.1IncorporationThe Seller is duly incorporated and validly exists under the law of its place of incorporation.1.2Capacity(a)The Seller has full corporate power and authority to own the Project Assets, the Sale Interest and to sell and transfer the SaleInterest and cause the issue of the Subscription Shares.(b)The execution and delivery of this agreement has been properly authorised by all necessary corporate action of the Seller.(c)The Seller has full corporate power and lawful authority to execute and deliver this agreement and, subject to clause 2, toconsummate and perform or cause to be performed its obligations under this agreement.(d)This agreement constitutes a legal, valid and binding obligation of the Seller, enforceable in accordance with its terms.1.3No default(a)The execution, delivery and (subject to satisfaction of the Conditions) performance by the Seller of this agreement does not orwill not (with or without the lapse of time, the giving of notice or both) contravene, conflict with or result in a breach of or defaultunder:(i)any agreement or instrument to which the Seller is a party;(ii)any provision of the constitution of the Seller; and(iii)any writ, order or injunction, judgement, or law to which it is a party or is subject or by which it is bound.1.4Ownership(a)There are no Security Interests over the Sale Interest (other than a Permitted Security Interest or, prior to Completion, theSecurity Trustee Security).(b)Except as expressly provided in this agreement, the Seller has not granted any option or right of pre-emption or first refusal inrespect of any of the Sale Interest to any other person and subject to clause 2 and clause 5.2, the Seller will:(i)at Completion be able to transfer legal and beneficial ownership and title to all of the Sale Interest to the Buyer other than theAssigned Tenements and the Incomplete Infrastructure in each case which are not yet legally owned by the Seller, but in respect ofwhich the Seller will transfer ownership of and a 50% beneficial interest; and Schedule 2 | page | 66(ii)immediately after Completion, hold the remaining 50% legal and beneficial interest in the Project other than the Assigned Tenementsand the Incomplete Infrastructure, in which the Seller will hold the remaining 50% beneficial interest.1.5Insolvency(a)No Insolvency Event has occurred in relation to the Seller.(b)So far as it is aware, there are no facts, matters or circumstances which give any person the right to apply to liquidate or windup the Seller.1.6Share capital(a)At Completion, the Subscription Shares will constitute 50% of the issued ordinary share capital of WLOPL.(b)At Completion, there will be no shares in WLOPL allotted or on issue apart from Ordinary Shares and the Ordinary Shares willbe fully paid.(c)At Completion, other than in accordance with this agreement and the Transaction Documents, WLOPL is not obliged to issueor allot any Shares or other securities of WLOPL, and WLOPL has not granted any person the right to call for the issue orallotment of any Shares or other securities of WLOPL.2Operation of the assets2.1Licences, authorisations and consents(a)The Seller has all material licences, authorisations and consents required for the activities it carries on in respect of the Projectand the Seller has not received a written notice that it is in default under any such licence, authorisation or consent.(b)So far as the Seller is aware, the Approvals comprise all of the material licences and authorisations which are legally capableof being transferred to the Buyer or WLOPL and which were used by the Seller in activities in respect of the Project asconducted immediately prior to Completion including, without limitation, all material licences and authorisations which arenecessary for the Seller to discharge in all material respects its contractual obligations which it owed to any third partyimmediately prior to Completion (but excluding any licences and authorisations which are held by third parties as required byapplicable law).2.2Compliance with laws and regulationsThe Seller has not received written notice from any Government Agency that it is in violation of any applicable law or regulation orany order or judgment of any court with respect to its activities in respect of the Project Assets where such violation would have amaterial adverse effect on the assets or financial position of the Seller.2.3LitigationExcept as claimant in the collection of debts arising in the ordinary course of business, as at the Execution Date, the Seller is notengaged in any litigation, arbitration or administrative proceeding which is in progress with respect to any asset that forms part of theSale Interest and which is material in relation to the Seller nor, so far as the Seller is aware, has any such proceeding been expresslythreatened in writing by or against it. Schedule 2 | page | 673Sale Interest(a)If the Economic Effective Date occurs prior to or on the Completion Date, at Completion the Sale Interest, together with the Seller's50% interest in the Project, the Non-Transferring Approvals, the Excluded Assets and the Transaction Documents described inparagraph (e), (f) and (g) of the definition of Transaction Documents, comprises all of the material assets required for the productionof Concentrate at the site of the Project, except for the supply of goods and services that can only be procured by WLOPL afterCompletion.(b)Save for the Excluded Assets and the Non-Transferring Approvals, at Completion, there are no material assets owned by the Seller orany of its Related Bodies Corporate which were used by the Seller to produce Concentrate at the site of the Project prior toCompletion and which are not included in the Sale Interest and are required for the production of Concentrate at the site of theProject.(c)The Seller Group Warranties in this paragraph 3 are given only at Completion.4DisclosureSo far as the Seller is aware, the Data Room Information:(a)was submitted in, and (where the information was subject to judgments, estimates or assumptions of the Seller) prepared in,good faith; and(b)other than the information referred to in the parentheses in paragraph (a) above, as at the Execution Date, is true and accuratein all material respects.5Contracts(a)Except as disclosed in the Disclosure Material or otherwise disclosed to the Buyer by separate arrangement, copies of all ThirdParty Agreements as at the Execution Date are contained in the Data Room Information.(b)Aside from the Third Party Agreements, there are no agreements, arrangements or understandings to which the Seller is partywhich are material to the operation of the Project Assets having regard to their state of completion as at the Execution Date.(c)As at the Execution Date, the Seller has not received any notice of termination, rescission or, invalidation or claim pursuant toany actual or alleged breach or default of any Third Party Agreement to which the Seller is a party or any claim by any party tobe able to terminate, rescind or invalidate any contract to which the Seller is a party by reason of any actual or alleged breachof that contract.(d)So far as the Seller is aware:(i)all Third Party Agreements then in existence are in full force and effect and binding in accordance with their terms (subject to anyapplicable insolvency laws);(ii)as at the Execution Date, there is no material default or material breach of any Third Party Agreement which may have a materialadverse effect on the Project or the Project Assets; Schedule 2 | page | 68(iii)it is not in material default or material breach of any Third Party Agreement which may have a material adverse effect on the Projector the Project Assets; and(iv)as at the Execution Date, there are no current or threatened material disputes or material claims in respect of any Third PartyAgreement.(e)So far as the Seller is aware, with respect to each Equipment Lease:(i)no party to the contract is in material breach of it or otherwise in default as described in such Equipment Leases;(ii)there are no grounds for rescission, avoidance or repudiation of that Equipment Lease;(iii)no party has given notice to terminate it or has sought to repudiate or disclaim it or intends to do so;(iv)there are no facts or circumstances which are likely to give rise to any of the above; and(v)it is not terminable by virtue of the sale of the Sale Interest.(f)The Equipment Leases constitute all the equipment leases, hire purchase agreements, conditional purchase agreements andother hiring arrangements for assets used in the Project comprising part of the Sale Interest.(g)The Disclosure Material contains copies of each Equipment Lease in existence at the Execution Date.6Environmental(a)In this warranty 6:(i)Dangerous Substance means any natural or artificial substance likely to cause significant damage to the environment; and(ii)Environmental Licence means any permit, licence, authorisation, consent or other approval required under or in relation to anyEnvironmental Law.(b)The Seller has all Environmental Licences necessary to own and operate the Project Assets in the state they exist as at theExecution Date and the Seller has not received written notice that it is materially in default under any such licence and, so faras the Seller is aware, there are no circumstances likely to give rise to such material default.(c)As at the Execution Date, the Seller has not received any notice that it is in violation of any Environmental Law where suchviolation would have a material adverse effect on the Project, the Sale Interest or the Tenements.(d)As at the Execution Date, the Seller has not received any notices, orders or directions issued by any Government Authorityunder any Environmental Law in respect of the Tenements or the Petroleum Pipeline Licences that have not been completelysatisfied, and so far as the Seller is aware no such notice, order or direction is pending or has been threatened by anyGovernment Authority and the Seller is not aware of any circumstance that would cause or might reasonably be expected tocause, or contribute to, the issue of such a notice, order or direction. Schedule 2 | page | 69(e)So far as the Seller is aware, as at the Execution Date, there are no proceedings taken by any Government Authority inrespect of the Tenements or the Petroleum Pipeline Licences and no such proceedings are pending or have been threatened byany Government Authority in writing, and the Seller is not aware of any investigations being carried out or proposed by anyGovernment Agency in respect of any breach or alleged breach of or non-compliance with any Environmental Law relevant tothe Tenements or the Petroleum Pipeline Licences by the Seller.(f)As at the Execution Date, the Seller is not engaged in any litigation, arbitration or administrative proceeding concerningEnvironmental Law or Dangerous Substances which is in progress and which is material in relation to the Project Assets or theSale Interest nor, as far as the Seller is aware, have any such proceeding been threatened in writing by or against the Seller.7Tenements and Petroleum Pipeline Licences(a)Other than the Assigned Tenements and the Tenement Applications, the Tenements are legally and beneficially owned solelyby the Seller and at Completion will be free and clear of all Security Interests (other than Permitted Security Interests).(b)The Assigned Tenements are beneficially owned by the Seller and the Seller is entitled to become the legal owner of theAssigned Tenements and after transfer to the Buyer will be free and clear of all Security Interests (other than the PermittedSecurity Interests).(c)The Seller will, on grant of the Tenement Applications, be the sole legal and beneficial owner of the Tenement Applications andat Completion, the Tenement Applications will be free and clear of all Security Interests (other than Permitted SecurityInterests).(d)There are no material breaches of any of the terms and conditions of the Tenements (other than the Assigned Tenements) orthe Petroleum Pipeline Licences and, so far as the Seller is aware, the Assigned Tenements.(e)So far as the Seller is aware:(i)each of the Tenements is in good standing and in full effect in accordance with its terms and the Mining Act;(ii)each of the Petroleum Pipeline Licences is in good standing and in full effect in accordance with its terms and the PetroleumPipelines Act;(iii)except as disclosed in the Disclosure Material, as at the Execution Date. the Seller has not received any written notice of anypotential native title claims which have been lodged in respect of any of the Tenements;(iv)except as disclosed in the Disclosure Material, as at the Execution Date, there is not in existence any current compensationagreement with the owner or occupier of any land which is subject to the Tenements or the Petroleum Pipeline Licences; and Schedule 2 | page | 70(v)none of the Tenements or the Petroleum Pipeline Licences are liable to forfeiture, cancellation or suspension and there is no matterlikely to prejudice the renewal of the Tenements or the Petroleum Pipeline Licences or which might adversely affect the rights orbenefits conferred by the Tenements or the Petroleum Pipeline Licences.8Project Assets(a)The Seller is:(i)the legal and beneficial owner of the Completed Infrastructure;(ii)entitled to become the legal and beneficial owner of the Incomplete Infrastructure; and(iii)the beneficial owner of all other Project Assets.(b)There will be no Security Interest (other than a Permitted Security Interest) over or affecting any Project Assets and the Selleris not party to any agreement to grant any Security Interest over any Project Assets.(c)So far as the Seller is aware, no person has a continuing claim of an entitlement to a Security Interest (other than a PermittedSecurity Interest) over or affecting any Project Assets other than as provided for in the Third Party Agreements.(d)Each item of Completed Infrastructure:(i)is (to the extent any purchase moneys are due and payable) fully paid for;(ii)is not the subject of any lease or hire purchase agreement or agreement for purchase on deferred terms, other than in the ordinarycourse of business;(iii)is located at the Tenements or otherwise within the physical possession or control of the Seller;(iv)is in the physical possession or control of the Seller; and(v)not the subject of any agreements or arrangements to dispose or not to dispose or which otherwise restrict their use or disposal bythe Seller.(e)Each item of the Project Assets, to the extent they are complete and operational:(i)is as at the Execution Date in a good and safe state of repair and condition and is in satisfactory working order for its age; and(ii)between the Execution Date and Completion, has in all material respects been operated and maintained in accordance with thestandard that would reasonably be expected of persons operating and maintaining equipment similar to the Project Assets in themining industry in Australia.9RecordsSo far as the Seller is aware, the Records:(a)have been properly maintained; and Schedule 2 | page | 71(b)do not contain material inaccuracies or discrepancies of any kind.10Real propertyThe Seller (and, at Completion, WLOPL) does not own, lease, sub-lease, licence or otherwise have any interest (other than under or inrespect of the Tenements or the Petroleum Pipeline Licences) in any real property.11Intellectual Property Rights(a)So far as the Seller is aware, the Seller's use of any Intellectual Property Rights in connection with the Project Assets whichare material in the context of the Project as a whole, does not infringe, breach an obligation of confidence or wrongfully use anyconfidential information, trade secrets, copyright, letters patent, trade marks, service marks, trade names, designs, businessnames or other similar industrial, commercial or intellectual property rights of any corporation or person.(b)So far as the Seller is aware, as at the Execution Date, no Claims have been asserted challenging the Seller's use of theIntellectual Property Rights.12Anti-bribery and corruption(a)So far as the Seller is aware, neither the Seller nor any of their Representatives has in relation to the Project Assets:(i)offered, paid, promised to pay, or authorised the payment of any money, or has offered, given, promised to give, or authorised thegiving of anything of value, including, but not limited to, cash, cheques, wire transfers, tangible and intangible gifts, favours, services,and those entertainment and travel expenses, to any Governmental Authority, political party or candidate for government office, norprovided or promised anything of value or which may constitute an undue advantage to any other person while knowing that all or aportion of that thing of value would or will be offered, given, or promised, directly or indirectly, to any Governmental Authority, politicalparty or candidate for government office, for the purpose of improperly:(A)influencing any act or decision of such official, party or candidate in his official capacity, inducing such official, party or candidate todo or omit to do any act in violation of their lawful duty, or securing any improper advantage; or(B)inducing such official, party or candidate to use his influence with his government or instrumentality to affect or influence any act ordecision of such government or instrumentality, in order to assist in obtaining or retaining business for or with, or directing businessto, any person;(ii)violated any applicable anti-corruption laws;(iii)violated any applicable anti-money laundering laws; or(iv)otherwise made, offered, sought, provided or received any bribe, payoff, influence payment, kickback, or other similar unlawfulpayment or an undue advantage to obtain favourable treatment in securing business for the Seller or the Project. Schedule 2 | page | 72(b)Without limiting the foregoing, there are and have been no enforcement actions or, investigations (internal or governmental)involving or, so far as the Seller is aware, allegations or disclosures to, Governmental Authorities, related to actual or potentialviolations of any anti-corruption or anti-money laundering laws or regulations relating to any improper conduct of the Seller inrelation to the Project Assets, and so far as the Seller is aware there are no circumstances likely to give rise to any Claimrelating to any such improper conduct of the Seller in relation to the Project Assets. The Seller has not received any notice,request, or citation for any actual or potential non-compliance with any of the foregoing in this Warranty 12.2 as it relates to theProject.(c)The Seller maintains and utilises controls procedures and internal accounting control systems that are consistent with therequirements of any applicable anti-corruption laws.13Insurance(a)The Disclosure Materials contain, as at the Execution Date, complete and accurate particulars of all current insurance policiestaken out in respect of the Project Assets (Insurances).(b)Each Insurance policy is currently in full force and effect.(c)So far as the Seller is aware, as at the Execution Date, nothing has been done or omitted to be done that would make anyInsurance void or voidable or that would permit an insurer to cancel the Insurance or refuse or materially reduce a claim.14TaxAny Tax (other than income tax), Duty or Royalty that is payable in relation to the ownership, occupation, or use for the mining orextraction of minerals on or in relation to:(a)the Tenements (other than the Assigned Tenements) has been paid; and(b)the Assigned Tenements, so far as the Seller is aware, has been paid. Schedule 2 | page | 73Schedule 13Completion Adjustment1CalculationThe Completion Adjustment will be determined as the following calculation, to be made in accordance with the principles set out in thisSchedule 13, and provided that the Completion Adjustment cannot be less than negative US$25 million or more than positive US$25 million:Completion Adjustment = 0.5 x [EBITDA - Inventory]where EBITDA means the sum of all income earned less all expenses incurred by the Seller in respect of the Project during the period between theEffective Date and the Completion Date; andInventory means an amount equal to the sum of:(a)the value of all operational spares at Completion minus the value of all operational spares at the Economic Effective Date, ineach case to the extent that the operational spares are for use in connection with the Project;(b)the value of all Ore and Product on the Stockpile as at the Economic Effective Date (valued at cost); and(c)the value of all oil, diesel, greases, lubricants, hydraulic fluids, cleaning products, explosives and all other consumables usedin connection with the Project as at the Economic Effective Date (valued at cost).2Principles and Policies2.1General PrinciplesThe Completion Statement used to determine the Completion Adjustment must be prepared in accordance with:(a)the pro-forma income statement set out in Schedule 14 and must:(i)only include income and expenses falling within categories included in that pro-forma income statement;(ii)exclude any income and expenses of a categories identified as 'EXCLUDED' in that pro-forma income statement; and(iii)not include any expense incurred otherwise than in accordance with this agreement (including clause 6);and(b)except to the extent set out in clause 2.1(a) above, in accordance with the Accounting Standards.2.2Specific principles, policies and proceduresThe following specific principles, policies and procedures will apply to the preparation of the Completion Statement used to determinethe Completion Adjustment: Schedule 13 | page | 117(a)no item shall be included more than once;(b)no item shall be included or excluded solely on the grounds of materiality;(c)any item that has or will otherwise be provided for under any Transaction Document shall be excluded from the CompletionStatement to the extent that the inclusion would result in two payments in respect of the same item; and(d)all amounts in a currency other than US dollars are to be converted to US dollars at the closing Reserve Bank of Australia rateon the Completion Date or as otherwise agreed between the parties. Schedule 13 | page | 118Execution pageExecuted as an agreement.Executed by Wodgina Lithium Pty Ltd ACN 611 488 932 inaccordance with section 127 of the Corporations Act 2001 (Cth) by:/s/ Chris Ellison /s/ Mark Gregory WilsonSignature of directorChris Ellison Signature of director/secretaryMark Gregory WilsonName of director (print) Name of director/secretary (print)Executed by Albemarle Wodgina Pty Ltd ACN 630 509 303 inaccordance with section 127 of the Corporations Act 2001 (Cth) by:/s/ Terrence Hammons /s/ Mathew Shane ZaunerSignature of directorTerrence Hammons Signature of director/secretaryMathew Shane ZaunerName of director (print) Name of director/secretary (print)Executed by Mineral Resources Limited ACN 118 549 910 inaccordance with section 127 of the Corporations Act 2001 (Cth) by:/s/ Chris Ellison /s/ Mark Gregory WilsonSignature of directorChris Ellison Signature of director/secretaryMark Gregory WilsonName of director (print) Name of director/secretary (print) Execution | page | 124Executed by Albemarle Corporation in the presence of:/s/ A. Chanler Krupa /s/ Ander KrupaSignature of witnessA. Chanler Krupa Signature of authorised signatoryAnder KrupaName of witness (print) Name of authorised signatory (print) Execution | page | 125Exhibit 10.42Wodgina Joint Venture AgreementWodgina ProjectWodgina Lithium Pty LtdAlbemarle Wodgina Pty LtdWodgina Lithium Operations Pty LtdContents Page1Defined terms and interpretation1 1.1Definitions in the Dictionary1 1.2Interpretation12Joint Venture1 2.1Formation of Joint Venture1 2.2Purposes of Joint Venture1 2.3Reserved Rights2 2.4Exercise of Iron Ore Rights2 2.5Transfer of incomplete Project Facilities4 2.6Name4 2.7Relationship of Participants4 2.8Entitlement to Product5 2.9Tenants in common5 2.1No partition5 2.11Rights and obligations several5 2.12Mutual obligations6 2.13Protection of Tenements and Pipeline Licences6 2.14Maintain Tenements and Pipeline Licences6 2.15Rehabilitation6 2.16Party warranties73Term and termination8 3.1Term of Joint Venture8 3.2Disposal of Joint Venture Assets upon termination8 3.3Certain obligations continue beyond termination94Manager9 4.1Initial Manager9 4.2Shareholding in the Manager9 4.3Removal of Manager9  4.4No transfer of Manager’s interest10 4.5Delivery of property on change of Manager10 4.6Liability of Manager and indemnity11 4.7Attorney115Powers and duties of Manager11 5.1Conduct of Joint Venture Operations11 5.2Insurance14 5.3Funding of the Manager15 5.4Conduct of operations15 5.5Independent status of Manager15 5.6Delegation15 5.7Manager's custody of Joint Venture Assets15 5.8Contracts with Affiliates of Manager16 5.9Contracts with Third Parties17 5.10No profit or loss by Manager18 5.11Good faith18 5.12Ratify actions of Manager186Management Committee18 6.1Establishment of Management Committee18 6.2Composition of Management Committee19 6.3Meetings19 6.4Notice of meetings20 6.5Quorum20 6.6Chairperson20 6.7Senior management personnel of the Manager20 6.8Voting rights21 6.9Ordinary Resolutions22 6.10Special Resolutions22 6.11Deadlocks22 6.12Stage 2 Decision23  6.13Advisers27 6.14Authority of Representatives27 6.15Resolution without meeting27 6.16Manager’s delegate27 6.17Minutes28 6.18Sub-committees28 6.19Services28 6.20Recommendations and decisions of sub-committees297Budgets, planning and contributions29 7.1Commencement under Initial Mine Plan and Budget29 7.2Preparation and approval of the Business Plan29 7.3Contents of Business Plan29 7.4Revision of Business Plan32 7.5Approval of Business Plan and revisions32 7.6Temporary operating plan if Business Plan not approved32 7.7Business Plan is binding on the Manager33 7.8Urgent action338Provision of funds34 8.1Obligation to contribute34 8.2Manager may apply funds held34 8.3Monthly Cash Call34 8.4Payment of Called Sum35 8.5Emergency Cash Call36 8.6Bank account36 8.7Disbursements from bank accounts37 8.8Repayment of surplus funds37 8.9Accounting for Called Sums379Records, accounts and reports37 9.1Manager to keep records and accounts37 9.2Place for records38  9.3Annual financial statement38 9.4Monthly report38 9.5Forecasts39 9.6Other reporting requirements40 9.7Information and data40 9.8Copies of reports to Participants42 9.9Format42 9.10Additional reporting4210Audit and access42 10.1Audit42 10.2Participant’s access to records43 10.3Access to Joint Venture Area and Joint Venture Assets4311Confidential Information44 11.1Information to be kept confidential44 11.2Protection of Confidential Information45 11.3Announcements45 11.4Continuing confidentiality obligation45 11.5MRL Standstill45 11.6Albemarle Standstill4612Assignments and charges47 12.1Restrictions on assignments and charges47 12.2Permitted transfer to Subsidiaries48 12.3Sale of Participant's lithium business48 12.4Transfer of Participant’s Joint Venture Interest48 12.5Right of last refusal49 12.6Requirements of offer to Continuing Participants51 12.7Charge of Participant’s Joint Venture Interest52 12.8Notice of intention to create Security Interest52 12.9Sale of Joint Venture Interest by Chargee52 12.10Set-off53  12.11Assumption of Joint Venture obligations by Transferee53 12.12Change in Control5413Defaults and remedies58 13.1Event of Default58 13.2Notices of default58 13.3Payment of interest upon default59 13.4Rights following an Event of Default59 13.5Payment of Unpaid Called Sum60 13.6Delivery of Cross Security60 13.7Option to acquire Joint Venture Interest of Defaulting Participant61 13.8Value of Joint Venture Interest of Defaulting Participant64 13.9Remedies not exclusive6514Force Majeure6515Notices66 15.1General66 15.2How to give a communication66 15.3Particulars for delivery66 15.4Communications by post67 15.5Communications by email67 15.6Process service68 15.7After hours communications6816GST68 16.1Construction68 16.2Consideration GST exclusive68 16.3Payment of GST69 16.4Timing of GST payment69 16.5Tax invoice69 16.6Adjustment event69 16.7Reimbursements69 16.8Calculations based on other amounts69  16.9No merger69 16.10GST joint venture7017Expert determination70 17.1When appointed70 17.2Appointment70 17.3Instructions71 17.4Procedure71 17.5Costs7118Dispute resolution71 18.1Dispute resolution process71 18.2Dispute Notice71 18.3Meeting of the parties' designated representatives72 18.4Meeting of Senior Executives and Chief Executive Officers72 18.5Court proceedings72 18.6Urgent interlocutory relief7219General72 19.1Consents and approvals72 19.2Duty72 19.3Legal costs73 19.4No liability for consequential losses73 19.5Entire agreement73 19.6Further assurances73 19.7Rights cumulative73 19.8Severability73 19.9Survival and merger74 19.10PPS Act74 19.11Variation74 19.12Waiver74 19.13Governing law74 19.14Counterparts74  19.15Ipso Facto Stay74 19.16Relationship with Shareholders' Deed75 19.17Remote conferencing75Schedule 1 Dictionary76Schedule 2 Tenements92Schedule 3 Special Resolutions93Schedule 4 Accounting Procedure95Schedule 5 Deed of Assignment and Assumption96Execution page 97Attachment A Initial Mine Plan and BudgetAttachment B Confidentiality UndertakingAttachment C Deed of Cross Security Date: Parties1Wodgina Lithium Pty Ltd ACN 611 488 932 of 1 Sleat Road, Applecross WA 6153 (WLPL)2Albemarle Wodgina Pty Ltd ACN 630 509 303 of [insert address] (AWPL)3Wodgina Lithium Operations Pty Ltd ACN [insert ACN] of [insert address] (WLOPL)The parties agree1Defined terms and interpretation1.1Definitions in the DictionaryA term or expression starting with a capital letter:(a)which is defined in the Dictionary in Schedule 1, has the meaning given to it in the Dictionary;(b)which is defined in the Corporations Act, but is not defined in the Dictionary, has the meaning given to it in the CorporationsAct; and(c)which is defined in the GST Law, but is not defined in the Dictionary or the Corporations Act, has the meaning given to it in theGST Law.1.2InterpretationThe interpretation clause in Schedule 1 sets out rules of interpretation for this agreement.2Joint Venture2.1Formation of Joint VentureThe Participants agree to associate themselves on and from the Effective Date as an unincorporated joint venture under which theinitial Joint Venture Interests of the Participants are as follows:WLPL’s Joint Venture InterestAWPL’s Joint Venture Interest50%50%2.2Purposes of Joint Venture page | 1The purposes of the Joint Venture are:(a)the exploration, development, mining, processing and production of Minerals from the Joint Venture Area upon the terms andconditions set out in this agreement;(b)the construction and operation of a Refinery Plant on such part of the Joint Venture Area as determined by the ManagementCommittee upon the terms and conditions set out in this agreement;(c)to implement the Business Plan;(d)to carry out any other activities as the Participants may agree; and(e)all such other matters and things as may be incidental to the foregoing, including Rehabilitation of the Tenements and MineClosure.2.3Reserved Rights(a)The parties acknowledge that:(i)WLPL is the holder of Iron Ore Rights, and such rights permit WLPL to conduct certain exploration and mining activities on theTenements in respect of Iron Ore, for so long as the Iron Ore Rights exist, and such rights do not form part of the Joint VentureAssets; and(ii)pursuant to the GAMG Mineral Rights Agreement, rights to conduct certain exploration and mining activities on the Tenements inrespect of Tantalum were granted to GAMG, and such rights do not form part of the Joint Venture Assets.(b)AWPL acknowledges that WLPL may apply for a variation to the terms of grant of the Tenements to the extent necessary sothat the terms of grant include the right to explore or mine for Iron Ore and that upon such variation being granted, such IronOre Rights will be reserved to WLPL (and in such case AWPL will consent to such application and sign any required forms andapplications in that regard), subject to WLPL indemnifying AWPL in relation to any taxes or duties (including stamp duty)payable by AWPL in relation to such variation or reservation).2.4Exercise of Iron Ore Rights(a)Except as may be expressly permitted under the terms of a Notice of Consent, WLPL must exercise its Iron Ore Rights insuch a manner so as to not adversely interfere with or impair the Exploration Operations and/or Mining Operations of the JointVenture, which WLPL acknowledges takes precedence over WLPL’s rights to conduct Exploration Operations and MiningOperations in respect of Iron Ore.(b)If WLPL intends to commence any Exploration Operations or Mining Operations pursuant to its Iron Ore Rights it must firstgive a notice (Notice of Proposed Activity) to the Manager containing the following particulars (Proposed Activity):(i)in the case of Exploration Operations:(A) the general nature and methods of Exploration Operations proposed on any part of the area of the Tenements;(B) the approximate number of Personnel and the general nature of the plant and machinery which it proposes to take on to the area ofthe Tenements for the purpose of conducting such Exploration Operations; and page | 2(C) the areas within each of the Tenements which it proposes to enter upon for the purpose of conducting such ExplorationOperations; and(ii)in the case of Mining Operations:(A) a proposed Mine Development plan;(B) such relevant information as is reasonably necessary for the Manager to effectively consider the proposal to commence MiningOperations; and(C) the date that it intends to commence Mining Operations.(c)Upon receipt of a Notice of Proposed Activity, the Manager must convene a meeting of the Management Committee toconsider the Notice of Proposed Activity. The Manager will give the Participants at least 45 days’ prior notice of such meeting.(d)If the Management Committee resolves (acting reasonably) that WLPL’s Proposed Activity may adversely interfere with orimpair the Joint Venture's Mining Operations or currently existing Exploration Operations or areas identified as prospective forMinerals other than Iron Ore and Tantalum (Other Minerals) through any prior Exploration Operations, then the Manager mustwithin five (5) Business Days of such resolution give a notice of objection to WLPL (Notice of Objection).(e)If the Management Committee resolves (acting reasonably) that WLPL’s Proposed Activity will not adversely interfere with orimpair the Joint Venture's Mining Operations or currently existing Exploration Operations or areas identified as prospective forOther Minerals through any prior Exploration Operations (or, subject to clause 2.4(f)(ii), will not if WLPL complies withconditions determined by the Management Committee), the Manager must within five (5) Business Days of such resolutiongive a notice of consent to WLPL (Notice of Consent).(f)If the Manager:(i)does not issue a notice in accordance with either clause 2.4(d) or clause 2.4(e); or(ii)issues a notice in accordance with clause 2.4(e) and, within five (5) Business Days of receipt of such notice, WLPL notifies theManager that it does not accept the conditions determined by the Management Committee which attach to such notice,it shall be deemed to have issued a Notice of Objection.(g)A resolution of the Management Committee to issue a Notice of Objection or a Notice of Consent shall be by a SpecialResolution.(h)WLPL may not proceed with its Proposed Activity unless it has received a Notice of Consent from the Manager.(i)Subject to clause 2.4(f), upon receipt of a Notice of Consent from the Manager, WLPL may proceed to implement itsExploration Operations or Mining Operations (as applicable) in accordance with the relevant Notice of Proposed Activity subjectto and in compliance with any conditions set out in the Notice of Consent, and provided it continues to use its best endeavoursto minimise any adverse interference with the Joint Venture Operations. page | 3(j)Within five (5) days of a Notice of Objection being given, the Manager, AWPL and WLPL shall meet and discuss WLPL’sProposed Activity and any objections to it in a bona fide endeavour to resolve the matter by agreement, and such discussionsmay include amendment or variation by:(i)WLPL of the extent or timing of the Proposed Activity or conditions it will comply with in relation to the Proposed Activity; or(ii) the Manager of the affected Mining Operations or Exploration Operations program given in its Notice of Objection.(k)If, notwithstanding the discussions between WLPL, AWPL and the Manager, they are unable to resolve the Manager’sobjections set out in the Notice of Objection within fourteen (14) days of the Notice of Objection being received by WLPL, thena Participant may issue a Dispute Notice in accordance with clause 18.2 to attempt to resolve the matter.(l)If the Participants are unable to resolve the matter in accordance with clause 18.2, then the Proposed Activity may notproceed.(m)The Participants agree that (as between themselves):(i)the area of the Wodgina Resource is deemed to be a Development Area (as defined in the Mineral Rights Agreement) for Mineralsother than Iron Ore and WLPL will not during the term of the Joint Venture issue a Notice of Proposed Activity in the exercise of itsIron Ore Rights in that area;(ii)subject to clause 2.4(m)(i), the process in this clause 2.4 will apply in substitution of the 'Notice of Proposal to Mine' process inclause 6.9 of the Mineral Rights Agreement, which for the avoidance of doubt means that the Participants (including AWPL) are notrequired to comply clause 6.9 of the Mineral Rights Agreement; and(iii)this agreement prevails to the extent of any inconsistency with the Iron Ore Rights.2.5Transfer of incomplete Project FacilitiesThe parties acknowledge that certain Project Facilities may not have reached practical completion at the Effective Date. The partiesacknowledge that the transfer of ownership of such Project Facilities will occur in accordance with clause the Asset Sale and ShareSubscription Agreement and will at that time become Joint Venture Assets.2.6NameThe name of the Joint Venture is the “Wodgina Joint Venture”.2.7Relationship of Participants(a)Nothing contained in a Joint Venture Document will be deemed to constitute a Participant being the partner of any otherParticipant.(b)Except as otherwise specifically provided for in a Joint Venture Document, nothing contained in a Joint Venture Document willbe construed so as to constitute a Participant an agent or representative of any other Participant or to create any trust for anypurpose howsoever, except to the extent to which the Manager is the agent of the Participants. page | 4(c)No Participant shall be under any fiduciary or other duty to the other which will prevent it from engaging in or enjoying thebenefits of any competing endeavours, subject to the express provisions of this agreement.2.8Entitlement to Product(a)Each Participant shall be entitled and obliged, unless otherwise agreed by the Participants, to take in kind and separatelydispose of, in proportion to its Joint Venture Interest, all Product as and when produced by the Joint Venture.(b)The Manager must deliver each Participant’s Joint Venture Interest share of Product to the Participant at the Delivery Point,and if separately delivered, by use of equipment and techniques which are specifically designed and intended not to favour anyone Participant over another.(c)Title to, and the risk of loss of, or damage to, the Product passes to the relevant Participant at the Delivery Point.(d)Upon commencement of operation of the Refinery Plant, each Participant will cause such amount of its Lithium recovered fromthe Tenements to be refined using the Refinery Plant as specified in the Refinery Plant Business Plan.(e)If the Sole Risk Participant develops the Alternative Refinery Plant in accordance with clause 6.12(h), the Sole Risk Participantwill not be obliged to refine any of the Non-consenting Participant’s Product in the Alternative Refinery Plant.2.9Tenants in common(a)The Joint Venture Assets will be beneficially owned by the Participants as tenants in common in proportion to their respectiveJoint Venture Interests, notwithstanding that the legal title may be held by one or some only of the Participants or the Manager.(b)The Manager or any Participant which holds the legal title to any Joint Venture Asset, holds such Joint Venture Asset as agentfor the Participants in proportion to their respective Joint Venture Interests.2.10No partitionEach Participant waives its rights to partition of the Joint Venture Assets and, to that end, agrees that it will not seek or be entitled topartition of any Joint Venture Asset, whether by way of physical partition, judicial sale or otherwise, until after termination of the JointVenture.2.11Rights and obligations severalThe rights and obligations of each Participant in respect of the Joint Venture will be, in every case, several in proportion to theirrespective Joint Venture Interests from time to time and will not be, or be construed to be, either joint or joint and several. page | 52.12Mutual obligationsEach Participant will perform, observe and fulfil each and every one of its obligations under or arising out of each of the Joint VentureDocuments.2.13Protection of Tenements and Pipeline LicencesA Participant will not knowingly do or omit to do, and will at all times take proper care to ensure that it does not do or omit to do, anyact, deed, matter or thing which may place any Tenement or Pipeline Licences at risk of being cancelled, forfeited, lost, refused orsurrendered, or which may otherwise jeopardise any Tenement in any way.2.14Maintain Tenements and Pipeline LicencesUnless otherwise determined by a Special Resolution of the Management Committee, the Tenements and Pipeline Licences will bemaintained in force and renewed during the term of this agreement, and each Participant will take all action necessary on its part tomaintain and renew the Tenements and the Pipeline Licences.2.15Rehabilitation(a)Subject to clause 2.15(b), with effect from the Effective Date, the Participants shall bear the responsibility for RehabilitationObligations and the payment of the Rehabilitation Levy applicable to the Tenements in accordance with their respective JointVenture Interests.(b)WLPL agrees that it is responsible for such amount of the Rehabilitation Levy paid by AWPL under clause 2.15(a) (or by theManager on behalf of AWPL) and any costs incurred by AWPL in respect of Rehabilitation Obligations which are attributable to:(i)acts, errors or omissions of WLPL, its Affiliates or their Personnel which were in breach of a law, Approval or Tenement condition,during the WLPL Ownership Period;(ii)any exploration for or mining of Iron Ore on the Tenements occurring after the Effective Date; and(iii)any exploration for or mining of Tantalum on the Tenements occurring after the Effective Date pursuant to the exercise of mining orexploration rights for Tantalum in circumstances where GAMG is no longer the holder of the rights under the GAMG Mineral RightsAgreement and such rights have reverted to WLPL (including by WLPL becoming the successor to the GAMG under the GAMGMineral Rights Agreement),(Rehabilitation Liability Costs).(c)WLPL must reimburse AWPL within 5 Business Days after it receives evidence of the payment by AWPL of any RehabilitationLiability Costs.(d)As soon as reasonably practicable after the Effective Date, WLPL must provide AWPL with any information WLPL hascompiled in relation to the Tenements for the purposes of calculating the Rehabilitation Levy.(e)Without limitation to clause 2.15(a), WLPL must indemnify AWPL against any loss, cost, damage or liability in relation to theexploration, mining and other related activities occurring on or after the Effective Date in respect of: page | 6(i)Iron Ore; and(ii)Tantalum (but only in circumstances where GAMG is no longer the holder of the rights under the GAMG Mineral Rights Agreementand such rights have reverted to WLPL),including in relation to the reservation of those rights to WLPL, any statutory and private royalties, any compensation paymentto any persons, the holding of and exercise of the rights by WLPL, and taxes and duties (including stamp duty) on any dealingwith such rights (whether before, on or after the Effective Date) by WLPL and any dealing by AWPL with its Joint VentureInterest to the extent related to the holding by and reservation of such rights to WLPL.To the extent that AWPL is required to include any amount payable under the indemnity provided in this clause 2.15(e) for taxpurposes as assessable income or capital gain in a year and is not entitled to a tax deduction in that year for the full amount ofany such loss, cost, damage or liability, the amount payable under the indemnity provided in this clause 2.15(e) must beincreased by a factor calculated as follows:where Tax Rate means the applicable Australian income tax rate for AWPL.2.16Party warranties(a)Each party represents and warrants to each of the other parties that each of the following statements is true, accurate andcomplete and not misleading as at the Effective Date:(i)it is duly incorporated and validly exists under the law of its place of incorporation;(ii) the execution and delivery of this agreement has been properly authorised by all necessary corporate action;(iii)it has full corporate power and lawful authority to execute and deliver this agreement and to consummate and perform or cause to beperformed its obligations under this agreement;(iv)this agreement constitutes a legal, valid and binding obligation on it enforceable in accordance with its terms;(v)the execution, delivery and performance by it of this agreement does not or will not (with or without the lapse of time, the giving ofnotice or both) contravene, conflict with or result in a breach of or default under:(A)any provision of its constitution;(B)any material term or provision of any security arrangement (including any Security Interest), undertaking, agreement or deed to whichit is bound;(C)any writ, order or injunction, judgement or law to which it is a party or is subject or by which it is bound;(vi)no Insolvency Event has occurred in relation to it; and page | 7(vii)so far as it is aware, there are no facts, matters or circumstances which give any person the right to apply to liquidate it or wind it up.(b)Each party acknowledges that each of the other parties has entered into this agreement in reliance on the warranties providedin clause 2.16(a).(c)Each of the warranties in clause 2.16(a) must be construed independently and is not limited by reference to another warrantyprovided in clause 2.16(a).(d)Each party indemnifies each of the other parties against any Loss which the other party may incur to the extent caused by anybreach of the warranties provided in clause 2.16(a).3Term and termination3.1Term of Joint VentureThis agreement and the Joint Venture will commence on the Effective Date and, subject to the provisions of this agreement, willcontinue until completion of the winding up of all Joint Venture Operations after the first to occur of:(a)the Participants agreeing to terminate the Joint Venture;(b)the Management Committee by a Special Resolution determining:(i)that there are no economically recoverable reserves of Minerals in the Joint Venture Area and that the Tenements should besurrendered; or(ii)that all the reserves of economically recoverable Minerals in the Joint Venture Area have been recovered; or(c)there being less than two (2) Participants holding an interest in the Joint Venture Assets.3.2Disposal of Joint Venture Assets upon termination(a)Upon the occurrence of a termination event under clause 3.1 (other than clause 3.1(c)), the Manager must commence windingup the Joint Venture Operations including:(i)satisfying all Rehabilitation Obligations and Mine Closure Obligations;(ii)taking such steps to dispose of the Joint Venture Assets in accordance with such instructions (if any) as the Manager may receivefrom the Management Committee; and(iii)otherwise complying with the Approved Closure Plan.(b)The net proceeds of realisation of the Joint Venture Assets, after satisfying all Rehabilitation Obligations and Mine ClosureObligations, will be distributed to the Participants in proportion to their respective Joint Venture Interests.(c)For the avoidance of doubt, all costs and expenses incurred by the Manager as a result of the termination of the Joint Venturewill be Joint Venture Costs and will be paid by the Participants in proportion to their respective Joint Venture Interests. page | 83.3Certain obligations continue beyond terminationUpon termination of this agreement for any reason, all rights and obligations of the parties cease, other than:(a)the obligation to pay any actual or contingent liabilities relating to Joint Venture Operations, including the cost of allRehabilitation Obligations and Mine Closure Obligations and any severance, sickness and other employee benefit costsincurred or imposed in connection with Joint Venture Operations, or otherwise arising from this agreement, that have not beendischarged as at the date of termination; and(b)any other obligations expressed to survive termination.4Manager4.1Initial ManagerThe Participants appoint WLOPL as the manager of the Joint Venture from the Effective Date, and WLOPL accepts that appointmentupon and subject to the terms and conditions contained in this agreement.4.2Shareholding in the Manager(a)As at the date of this agreement, the entire issued share capital in the Manager is held by the Participants in the sameproportions as their respective Joint Venture Interests.(b)If a Participant transfers the whole or any part of its Joint Venture Interest under clause 12 or clause 13, the transferringParticipant must ensure that such number of shares in the Manager are transferred to the applicable transferee as is necessaryto ensure that a Participant’s shareholding in the Manager remains in proportion to its Joint Venture Interest.4.3Removal of Manager(a)The Manager may only be removed by Special Resolution of the Management Committee, provided that the Manager may onlybe removed if the Management Committee, in the same meeting, appoints a replacement Manager by Special Resolution asthe new Manager on the terms and conditions contained in this agreement, provided that if no new Manager can be appointedby such a vote, then, in circumstances where the Participants do not hold equal Joint Venture Interests, the Participant withthe largest Joint Venture Interest will be deemed to be the Manager. If there is more than one Participant with the largest JointVenture Interest, then those Participants will appoint the Manager and failing agreement between them, the matter will bereferred to an Expert to be determined in accordance with clause 17.(b)The removal of the Manager under clause 4.3(a) will take effect immediately, but such removal does not prevent the Managerfrom recovering Joint Venture Costs incurred up to that date from the Participants, as well as other unavoidable, pre-committedor existing Joint Venture Costs incurred after that date. page | 94.4No transfer of Manager’s interestThe Manager must not, without the prior written consent of the Participants, transfer any of its rights or interest under this agreement.4.5Delivery of property on change of ManagerOn the effective date of the removal of the Manager under clause 4.3(a), the Manager will:(a)deliver to its successor (or as the Participants may otherwise direct):(i)all Joint Venture Assets in its possession or under its control;(ii)the Joint Venture Records and Accounts;(iii)all Confidential Information;(iv)the results of all work undertaken by or for the Manager for the purposes of the Joint Venture, including all Mining Information and theresults of any tests undertaken by or for the Manager; and(v)all exploration, mining, engineering and other reports or studies prepared by or for the Manager;(b)transfer title to any Joint Venture Assets to its successor (or as the Participants, acting unanimously, may otherwise direct);(c)transfer any Security Interest it holds over Joint Venture Assets to its successor;(d)deliver documents regarding the novation or assignment of the rights and liabilities of the Manager under any contract enteredinto in its capacity as Manager to the successor which takes effect on and from the effective date of the Manager’s removal,and where the novation or assignment of such a contract has not occurred by the effective date of the Manager’s removal, theParticipants and the outgoing Manager must each continue to use all reasonable endeavours to procure the novation orassignment of the contract as soon as reasonably practicable;(e)to the maximum extent legally permissible, transfer any authorisations from any Government Agency that can be transferred inrelation to the Joint Venture Assets, and in respect of any such authorisations which cannot be transferred by the Manager toits successor, it must do all things reasonably necessary to assist the successor in applying for new authorisations, and ifrequested by the successor, terminate, surrender or cancel those authorisations once the successor has obtained the relevantauthorisation or to enable the successor to apply for a replacement authorisation; and(f)provide assistance to the Participants as requested, for up to 90 days and on a cost reimbursement basis, to allow themanagement, supervision and conduct of Joint Venture Operations to continue without interruption or adverse effect and tofacilitate the orderly transfer of responsibility for and conduct of the Joint Venture Operations to its successor,and the outgoing Manager and the Participants must sign, and must ensure the replacement Manager signs, all documentsnecessary to effect the assignment to the replacement Manager of the rights and interests of the outgoing Manager under the Deed page | 10of Cross Security with effect as at the effective date of the appointment of the replacement Manager.4.6Liability of Manager and indemnityThe Manager shall not have any liability to the Participants for losses sustained or liabilities incurred by the Joint Venture, and theManager, its directors, officers, employees, agents and contractors (Indemnified Persons) shall be indemnified by each Participant,severally to the extent of its Joint Venture Interest, in respect of the same except where such loss or liability arises as a direct resultof the Indemnified Person’s fraud, Wilful Misconduct or Gross Negligence.4.7AttorneyEach Participant hereby irrevocably appoints the Manager from time to time as its lawful attorney to act for it in its name or otherwiseas the Manager (acting reasonably) deems fit for the purposes of doing all such acts and executing all such documents, as mayreasonably appear to the Manager to be necessary or desirable to keep the Joint Venture Assets in good standing. The Participantsshall be bound by all acts of the Manager as attorney pursuant to this clause 4.9 and shall, subject to clause 4.8, indemnify theManager for all costs and liabilities incurred or arising from the exercise of the Manager’s powers pursuant to this clause 4.9.5Powers and duties of Manager5.1Conduct of Joint Venture Operations(a)Subject to the terms and conditions of this agreement, and to such instructions as it may from time to time receive from theManagement Committee, the Manager will, and is empowered to exercise all powers necessary to:(i)manage, supervise and conduct Joint Venture Operations on behalf of, and as agent for, the Participants; and(ii)implement the Business Plan and exercise and discharge its powers and duties under this agreement in accordance with theBusiness Plan.(b)Without limiting the generality of the foregoing, the Manager will:(i)perform and attend to all acts, matters and things required of the Manager in accordance with the Joint Venture Documents;(ii)subject to clause 5.1(d), perform on behalf of the Participants their obligations under the Tenements and the Pipeline Licences, andtheir obligations under any agreement entered into by the Participants (or by the Manager on behalf of the Participants) for thepurposes of Joint Venture Operations;(iii)pay:(A)all rentals and other charges payable under the Tenements and the Pipeline Licences;(B)all rates and taxes (other than taxes based upon or measured by income) payable on or assessed with respect to Joint VentureOperations or any Joint Venture Asset; and page | 11(C)the Rehabilitation Levy in respect of the Tenements, subject to the terms set out in clause 2.15(b);(iv)generally do all things necessary to maintain the Tenements and the Pipeline Licences in good standing and perform the JointVenture Operations;(v)prepare and file all reports and returns (except returns with respect to taxes based upon or measured by income) required by law or bythe Tenements, the Pipeline Licences or any agreement with the State, the Commonwealth or other Government Agency with respectto Joint Venture Operations or the Joint Venture Assets;(vi)comply with all laws applicable to Joint Venture Operations, including laws pertaining to safety and environmental protection;(vii)comply with any decision or instruction of the Management Committee or the Participants made or given in accordance with thisagreement;(viii)maintain the Project Facilities and the Refinery Plant in good working order;(ix)act as the Participant's representative in respect of matters relating to Native Title Claims and Native Title Rights, and negotiateagreements with persons holding Native Title Rights and with parties to Native Title Claims, provided that the Manager may notexecute any such agreements, without the prior approval of the Management Committee by Ordinary Resolution;(x)comply or procure compliance with all contracts entered into by the Manager or the Participants in relation to the Joint VentureOperations (including any native title or heritage agreement) and ensure any proposed Business Plans are prepared to ensurecompliance with any requirements under those agreements;(xi)replace any Project Facilities as the Manager determines are necessary or desirable so that Joint Venture Operations may be safely,efficiently and lawfully conducted at all times;(xii)sell or otherwise dispose of any Project Facilities or supplies that may be worn out, surplus or no longer required for Joint VentureOperations, provided that any contract or arrangement for sale of such assets which have a book value, net of accumulateddepreciation of:(A)more than $100,000 but less than $250,000 must be first approved by the Management Committee by an Ordinary Resolution;and(B)$250,000 or more must be first approved by the Management Committee by a Special Resolution;(xiii)ensure that health, safety and environmental management systems are developed, implemented and maintained in respect of theJoint Venture Operations to the satisfaction of the Management Committee;(xiv)endeavour to ensure that contractors engaged for the Joint Venture Operations develop, implement and maintain health, safety andenvironmental management systems to standards that comply with health, safety and environment plans approved by theManagement Committee; page | 12(xv)in the case of any emergency or accident, take such action as the Manager considers is necessary or advisable for the protection oflife or the Joint Venture Assets;(xvi)acquire all materials, supplies, machinery, equipment and services necessary for the conduct of Joint Venture Operations;(xvii)subject to the requirements of Schedule 3, engage (which may be by secondment), dismiss, supervise and control all management,technical and labour personnel necessary for the performance of its obligations under this agreement including determining the termsand conditions of such engagement and conducting all industrial relations;(xviii)arrange for the transportation, handling, loading, treatment and delivery of Product to the Delivery Point;(xix)notify the Participants as soon as practicable after becoming aware of any event or circumstance of which it is aware which is likelyto result in:(A)litigation, arbitration or similar proceedings;(B)a material breach of any licence, authority, approval, direction, instrument or other similar matter;(C)a material breach of any applicable legal requirement;(D)a material breach of any Joint Venture Document or of any other material agreement of the Joint Venture; or(E)Force Majeure;(xx)subject to the requirements of Schedule 3, institute, defend, compromise or settle any court or arbitration proceedings or insuranceclaims commenced or threatened by or against the Manager or a Participant affecting or relating to Joint Venture Operations or JointVenture Assets, provided that unless otherwise instructed by a Participant, the Manager may conduct such proceedings or claims forand on behalf of and in the name of each Participant;(xxi)subject to the requirements of Schedule 3, take forward cover for, or hedge, foreign currency obligations or pre-pay or take any otherappropriate action to avoid currency losses, in each case in relation to Joint Venture Operations, but in no circumstances is theManager responsible for or entitled to any currency gains and losses, such losses and gains being borne by or credited to theParticipants pro rata in proportion to their respective Joint Venture Interests;(xxii)carry out the Rehabilitation Obligations and Mine Closure Obligations and comply with the Approved Closure Plan;(xxiii)keep each of the Participants fully informed on all current material matters and developments arising out of Joint Venture Operations;and(xxiv)generally do all such acts and things as may be necessary or desirable for the efficient conduct of Joint Venture Operations, theprotection of the Joint Venture Assets and the attainment of the objects of the Joint Venture. page | 13(c)Subject always to this agreement, the Manager has the power to enter into agreements and bind the Participants in the exercise of itsduties in accordance with this agreement.(d)Despite any other provision of this agreement, the Participants agree that if GAMG gives a notice of proposed activity under theGAMG Mineral Rights Agreement then:(i)subject to 5.1(d)(ii), if the proposed activity might materially adversely affect a known or possible deposit of Iron Ore capable ofcommercial exploitation, then WLPL may determine whether to issue a notice of objection to GAMG and may have conduct of anyexpert determination process under the GAMG Mineral Rights Agreement on behalf of the tenement holders in relation to that noticeof objection and will indemnify AWPL against the costs of any such expert determination process;(ii)if the proposed activity might materially adversely affect known or possible deposits of both Iron Ore and any other Mineral (excludingTantalum), which are each capable of commercial exploitation, including in respect of Iron Ore and any other Mineral (excludingTantalum) in the Wodgina Resource, then either WLPL or AWPL may determine whether to issue a notice of objection to GAMG andhave conduct of any expert determination under the GAMG Mineral Rights Agreement on behalf of the tenement holders in relation tothat notice of objection, and if WLPL has issued a notice of objection in respect of Iron Ore only, WLPL will indemnify AWPL againstthe costs of any such expert determination process; and(iii)in all other circumstances, the Participants agree to jointly exercise their rights under the GAMG Mineral Rights Agreement throughthe Manager.(e)A Participant has the right to participate, at its own expense, in litigation or administrative proceedings initiated by the Manager onbehalf of the Participants.5.2InsuranceThe Manager shall in respect of Joint Venture Operations and the Joint Venture Assets:(a)take out and keep in full force and effect, all in the name of the Participants, insurance required by the laws in force in WesternAustralia or by virtue of any contractual obligations entered into for the purposes of the Joint Venture;(b)effect and maintain in the name of the Participants public and product liability insurance for an amount of not less than$50,000,000 in respect of each occurrence and unlimited in the aggregate in respect of all incidents occurring during the periodof insurance;(c)without limiting clause 5.2(d), effect and maintain in the name of the Participants such other insurances suitable for the JointVenture Operations which may (without limitation) include pollution legal liability insurance, excess liability insurance, motorvehicle insurance, transit insurance and mining operations insurance, each for amounts and on such terms as may bedetermined by the Management Committee from time to time;(d)effect and maintain in the name of the Participants such other insurances as may be determined by the ManagementCommittee from time to time; and page | 14(e)if requested, provide full details of all such insurances and certificates of currency to a Participant.5.3Funding of the ManagerThe performance by the Manager of its duties under this agreement will be subject to it receiving sufficient funds from eachParticipant in accordance with this agreement.5.4Conduct of operationsThe Manager will perform all of its duties under this agreement in a good, safe, workmanlike and commercially reasonable manner inaccordance with good exploration and mining and other applicable industry standards and practices.5.5Independent status of Manager(a)The Manager will report to, and be subject to, the general supervision and direction of the Management Committee. Subject tothat supervision, and to the terms of this agreement, the Manager will have the authority, discretions and powers of anindependent contractor in its management, supervision and conduct of Joint Venture Operations.(b)The Manager may perform its obligations under this agreement itself or through its employees or such agents or contractors asit may decide (subject to clause 5.8). However, the use of an agent or contractor by the Manager in the performance of any ofthe duties of the Manager will not relieve the Manager of responsibility to the Participants for those duties.5.6DelegationThe Manager may delegate its rights and obligations as Manager, provided that:(a)any delegation of the whole or a large part of its obligations requires the prior approval by Special Resolution of theManagement Committee;(b)any delegation of any of its obligations to a Participant or an Affiliate of a Participant requires the prior approval by SpecialResolution of the Management Committee;(c)it remains liable for any acts or omissions of its delegates as if they were the acts or omissions of the Manager;(d)the Manager promptly informs the Management Committee of the identity of the delegate and the matter which has beendelegated; and(e)the delegation is at no additional cost to the Participants.5.7Manager's custody of Joint Venture Assets(a)Subject to the provisions of this agreement, the Manager will have the custody and control of the Joint Venture Assets.(b)The Manager will hold any Joint Venture Asset which stands in its name as agent for the Participants in proportion to theirrespective Joint Venture Interests.(c)Except: page | 15(i) where permitted by this agreement;(ii) with the prior approval of the Management Committee; or(iii) in the case of Permitted Security Interests,the Manager must not mortgage, pledge, charge, encumber, sub-lease or otherwise dispose of or create any Security Interestor lien over or trust in respect of (or purport or attempt to do so) the Joint Venture Assets or any other real or personal propertyor money in which any Participant has an interest.5.8Contracts with Affiliates of Manager(a)Subject to clause 5.8(b), the Manager agrees that:(i)any agreements which are entered into by the Manager in the performance of its duties under this agreement with any of its Affiliatesor with a Participant or any of its Affiliates (Related Party Contracts), will be on normal ‘arm's length’ commercial terms consistentwith the provisions of this clause;(ii)the terms of such agreements will be no less commercially reasonable in the particular circumstances of such agreements thanwould have been the case had such agreements been entered into with Third Parties which are not Affiliates of the Manager or anyParticipant; and(iii)any such agreements (or material amendments to such agreements) will be submitted to the Management Committee for approval bySpecial Resolution before the Manager enters into them.(b)The Participants will procure that the Manager enters into (as Manager for and on behalf of the Participants):(i)the Crushing Services Agreement with the Crushing Services Provider;(ii)the Camp Services Agreement with the Camp Services Provider; and(iii)the Intellectual Property Licence Agreement with the Licence Provider,on or after the Effective Date and acknowledge and agree that:(iv)each of the Crushing Services Provider and the Camp Services Provider is an Affiliate of WLPL;(v)the Licence Provider is an Affiliate of AWPL; and(vi)the provisions of clause 5.8(a) do not apply in relation to the entry into the agreements listed in this clause 5.8(b).(c)Notwithstanding clause 5.8(b), the Manager agrees that any material amendment to any of the agreements listed in clause 5.8(b)(i) to5.8(b)(iii) will be submitted to the Management Committee for approval by Special Resolution before the Manager agrees to suchamendment. page | 165.9Contracts with Third Parties(a)Unless otherwise decided by the Management Committee, all contracts or other arrangements with Third Parties entered into by theManager for the purposes of or in the course of Joint Venture Operations will be entered into by the Manager as agent for theParticipants, with the result that:(i)wherever possible, using the Manager’s reasonable endeavours, the Participants will be severally liable under such contracts andarrangements as principals in proportion to their respective Joint Venture Interests, and not jointly or jointly and severally liable; and(ii)in the event of any breach or default on the part of a Third Party under such contracts and arrangements, proceedings may bebrought against such Third Party to recover each Participant's loss.(b)Where, despite the Manager’s reasonable endeavours under clause 5.9(a)(i), the Participants are or become jointly or jointly andseverally liable under a contract or other arrangement with a Third Party, the Participants agree that as between themselves, allliabilities under or in respect of any such contract (Contract Liability) will be borne by the Participants in proportion to their respectiveJoint Venture Interests, notwithstanding the terms of the contract.(c)In respect of clause 5.9(b):(i)if a Participant (Discharging Participant) or any person on behalf of a Participant pays, performs or discharges a Contract Liability ofanother Participant, then that Participant must reimburse or compensate the Discharging Participant within 5 Business Days after itreceives evidence of that payment, performance or discharge; and(ii)each Participant (Indemnifying Participant) indemnifies each of the other Participants (Other Participants) for and against allContract Liability suffered or incurred by the Other Participants:(A)arising from or in connection with the Other Participants taking any reasonable action to avoid, resist or defend themselvesagainst any Contract Liability of the Indemnifying Participant; and(B)arising from or in connection with the Indemnifying Participant failing to comply with this clause 5.9(c).(d)The Manager must not enter into any contract where:(i)it does not have sufficient approval to commit to the Operating Costs or Capital Cost in accordance with clauses 7.7 or 7.8;(ii)the expected expenditure would be worth greater than $1,000,000 (annualised if applicable) unless the contract has first beensubmitted to the Management Committee and approved by an Ordinary Resolution; or(iii)there is a multi-year expenditure commitment (whether by reason of minimum expenditure, take or pay, termination fees or inability toterminate the contract without a claim for damages) of at least $1,000,000 (annualised), unless the contract has first been submittedto the Management Committee and approved by a Special Resolution. page | 17(e)The Manager must not enter into any contract requiring a Special Resolution unless the contract has first been submitted to theManagement Committee and approved by a Special Resolution.(f)The Manager must, upon a request by any Participant, disclose to the Participants details and, if requested, copies of all contracts orother arrangements with Third Parties entered into by the Manager for the purposes of or in the course of Joint Venture Operations.5.10No profit or loss by ManagerUnless otherwise agreed between the Manager and all of the Participants, the Manager will perform its duties under this agreement ona no profit or loss basis to the intent that:(a)the Manager will neither gain nor lose by performing its duties under this agreement;(b)the Manager will not be entitled to any fee margin or other remuneration from the Participants for the performance of its dutiesunder this agreement; and(c)all costs, expenses and liabilities of the Manager arising out of the proper performance by the Manager of its obligations underthis agreement, in accordance with the terms of this agreement, will be Joint Venture Costs and will be borne by theParticipants in proportion to their respective Joint Venture Interests.5.11Good faith(a)The Manager will at all times act reasonably and in good faith in all its dealings with the Participants and in the performance ofits duties under this agreement.(b)The Manager will at all times act in the best interests of the Joint Venture as a whole.5.12Ratify actions of ManagerEach Participant agrees to ratify and confirm all actions taken by the Manager in the due and proper performance of its duties and inaccordance with the terms of this agreement.6Management Committee6.1Establishment of Management Committee(a)The Participants will prior to the Effective Date establish a Management Committee in accordance with this clause 6.(b)The Management Committee is empowered to make all decisions in relation to matters within the scope of the Joint Venture, otherthan:(i)matters expressly reserved by this agreement for the Participants’ determination, decision, approval or consent; or(ii)matters which have been expressly delegated in accordance with this agreement to a Participant or the Manager. page | 186.2Composition of Management Committee(a)Each Participant will be entitled to appoint Representatives on the Management Committee as follows:(i)a Participant with a Joint Venture Interest of 10% or greater, but less than 25%, may appoint one (1) Representative;(ii)a Participant with a Joint Venture Interest of 25% or greater, but less than 50%, may appoint two (2) Representatives; and(iii)a Participant with a Joint Venture Interest of 50% or greater may appoint three (3) Representatives.(b)Each Participant may also appoint an alternate for each of its Representatives who will be entitled to attend and vote at meetings ofthe Management Committee in which the relevant Representative does not participate.(c)Each Participant will appoint its Representatives and alternates (if any) by notice in writing to the Manager and the other Participants.(d)A Participant may replace any of its Representatives or alternates, or revoke any such appointment, at any time by giving notice inwriting to the Manager and the other Participants. The relevant appointment or removal will take effect immediately on receipt of thatnotice.(e)A Participant whose Joint Venture Interest falls below 10% will cease to have any right to appoint Representatives to the ManagementCommittee, and any such appointments will cease to have effect immediately upon its Joint Venture Interest falling below 10%.6.3Meetings(a)Meetings of the Management Committee will (unless otherwise agreed by Special Resolution of the Management Committee):(i)be held at the Manager’s office in Perth or at such other place in Perth as the Management Committee may from time to timedetermine; and(ii)be held at least once in each Quarter or at such other intervals as the Management Committee may determine.(b)In addition, the Manager may at any time, and will within five (5) Business Days of being requested to do so by a Participant orParticipants who, in aggregate, hold a Joint Venture Interest of 25% or more, convene a meeting of the Management Committee. Anyrequest by a Participant or Participants for a meeting to be convened must set out the matters to be considered at the meeting.(c)Each Participant will bear the travel and other expenses of its Representatives attending meetings.(d)Meetings of the Management Committee may be held in person or by telephone, video conference or other means of instantaneouscommunication.(e)Each Participant will ensure its Representatives convene and attend meetings expeditiously to ensure the continuity of Joint VentureOperations. page | 196.4Notice of meetings(a)Except as otherwise expressly stated otherwise in this agreement, the Manager will give to each Participant at least ten (10) BusinessDays’ notice of each meeting of the Management Committee (or at least two (2) Business Days' notice for a reconvened meeting),which notice must outline the business to be conducted at the meeting. Such notice will not be required where the Representatives ofeach Participant agree to waive notice of the meeting. Each Participant may give a notice to the Manager and each other Participantat least five (5) Business Days prior to the meeting to include any additional items of business to be conducted at the meeting.(b)Business not mentioned in a notice of meeting will not be dealt with at the meeting unless all Representatives (not just those presentat the meeting) unanimously agree.6.5Quorum(a)The quorum for a meeting of the Management Committee will be at least one Representative of each Participant entitled to vote.(b)If a quorum is not present within one hour after the time appointed for the meeting:(i)the meeting will stand adjourned to the same hour on the next Business Day at the same venue; and(ii)the Manager will endeavour to contact the Representatives who were not present at the first meeting to advise them of the adjournedmeeting.(c)The quorum at an adjourned meeting will be those Representatives present at the adjourned meeting.6.6Chairperson(a)The chairperson at meetings of the Management Committee (Chairperson) will be selected by the Participant with the largest JointVenture Interest from the Representatives of that Participant.(b)If two or more Participants have equal Joint Venture Interests and are the largest Joint Venture Interest holders, then the Chairpersonwill be selected by those Participants (from their appointed Representatives) respectively on a 12 month rotating basis (such 12 Monthperiods to cover a Financial Year).(c)From the Effective Date until 30 June 2020, one of the Representatives of WLPL shall be the Chairperson.(d)The Chairperson will not have a casting vote.6.7Senior management personnel of the Manager(a)WLPL will have the right to appoint the initial chief executive officer of the Manager from the Effective Date (for a period of no morethan 2 years (unless agreed otherwise by AWPL) and after that AWPL, and then WLPL on rotation on the same basis.(b)AWPL will have the right to appoint the initial chief financial officer of the Manager from the Effective Date (for a period of no morethan 2 years (unless agreed otherwise by WLPL) and after that WLPL, and then AWPL on rotation on the same basis. page | 20(c)The salary of any chief executive officer or chief financial officer to be paid by the Manager or secondment fee if seconded by therelevant appointor shall be capped at an equal amount agreed by the Participants or as otherwise determined by Ordinary Resolutionof the Management Committee.(d)AWPL will have the right to appoint the manager of the Refinery Plant, other than any Alternative Refinery Plant developed by WLPL.(e)In exercising their appointment rights under this clause 6.7, WLPL and AWPL must consult with the other, and must appoint suitablyqualified persons with the requisite expertise and demeanour.(f)Clauses 6.7(a) and 6.7(b) only apply while the Joint Venture Interest of each Participant is 50% of the aggregate Joint VentureInterests of all Participants.6.8Voting rights(a)The Representatives of a Participant present and entitled to vote at any meeting of the Management Committee will have betweenthem that number of votes which is equal to the Joint Venture Interest of the Participant who appointed those Representatives. Byway of example, the Representatives of a Participant whose Joint Venture Interest is 50% will have between them 50 votes. Any oneRepresentative appointed by a Participant shall be entitled to cast all votes of the Representatives appointed by such Participant.(b)Subject to clause 6.8(d), a Representative may attend and vote on a matter at a meeting of the Management Committeenotwithstanding there is a conflict of interest in respect of that matter with the Participant appointing that Representative. However atthe start of the relevant meeting before the vote is taken, the existence of this conflict of interest must be declared if not alreadyknown by the other Participants. Subject to the foregoing, clause 6.8(d) does not prevent a Representative who has a personal conflictof interest in respect of a matter from attending and voting on a matter at a meeting of the Management Committee, provided that thematter does not relate to the matters described in clauses 6.8(d)(i) to 6.8(d)(v).(c)A Representative who decides (at his or her election) to withdraw from a meeting of the Management Committee due to a conflict ofinterest will be treated as not being entitled to vote at that meeting and such withdrawal will not result in the meeting lacking quorum.(d)In circumstances where there is a meeting of the Management Committee at which a resolution is proposed regarding:(i)the enforcement by the Manager of a right against a Participant, or any Affiliate of the Participant, in relation to a right under orperformance in accordance with any contract, or a liability, loss, cost, charge or expense paid, suffered or incurred by the JointVenture from an act or omission of that person;(ii)the execution of any Related Party Contract (other than the execution of the Related Party Contracts by the Manager in accordancewith clause 5.8(b)); page | 21(iii)the enforcement or waiver of any rights of the Manager under any Related Party Contract;(iv)the issuing by the Manager of a Notice of Objection or a Notice of Consent under clause 2.4; or(v)any delegation by the Manager under clause 5.6(b),and the resolution is not passed at such meeting of the Management Committee, then the Deadlock procedure in clause 6.11shall not apply and any Participant other than a Participant which is or is an Affiliate of the applicable person (includingdelegate or counterparty) referred to in sub-clauses (i) to (v) of this clause 6.8(d) (Conflicted Participant) may, immediatelyfollowing such meeting, convene another meeting of the Management Committee. At the reconvened meeting, theRepresentatives of the Conflicted Participant:(vi)will not have the right to vote at the meeting;(vii)will not be counted for the purpose of determining the quorum for the meeting; and(viii)any resolution dealing with that matter may be passed pursuant to the decision making threshold applicable to that decision, withthose thresholds being adjusted such that the voting entitlement of the Representatives appointed by the Participants other than theConflicted Participant will in aggregate be deemed equal to 100% total votes of all Representatives present and entitled to vote (andwhich for the avoidance of doubt shall exclude the Representatives appointed by the Conflicted Participant).(e)For the purposes of clause 6.8(d), if the Manager resolves to commence enforcement action against a Conflicted Participant or any ofits Affiliates in respect of a Related Party Contract, the Conflicted Participant and its Representatives shall have no involvement in(other than its independent rights to defend against such action), and no right to receive information in respect of the conduct of, thatenforcement action by the Manager on behalf of the Joint Venture and the Manager shall implement appropriate information handlingprotocols.6.9Ordinary ResolutionsSubject to clause 6.10, decisions at any meeting of the Management Committee will be made by the affirmative vote of one or moreRepresentatives of those Participants present and entitled to vote at the meeting having more than 50% of the total votes of allRepresentatives present and entitled to vote.6.10Special ResolutionsDecisions taken by the Management Committee with respect to the matters set out in Schedule 3 and as otherwise specified in thisagreement will require the affirmative vote of one or more Representatives of those Participants present and entitled to vote at themeeting having 75% or more of the total votes of all Representatives present and entitled to vote.6.11Deadlocks(a)Following a meeting of the Management Committee at which one (or more) Participants (via their Representatives) have voted infavour of a proposed resolution and other Participants (via their Representatives) have voted against the proposed resolution of thedecision that is the subject matter of the proposed resolution and such proposed resolution was not passed in accordance with theagreement (Deadlock), a Participant page | 22(Initiating Participant) may give written notice (Deadlock Notice) to the other Participants (Other Participants) which:(i)identifies the proposed resolution which was not passed at the meeting of the Management Committee; and(ii)designates a senior representative of the Initiating Participant who will have the authority to resolve the Deadlock on its behalf.(b)Within five (5) Business Days of the date of the Deadlock Notice, the Other Participants must promptly designate, by written notice tothe Initiating Participant, senior representatives who will have authority to resolve the Deadlock on their behalf.(c)Each Participant's senior representatives designated under clauses 6.11(a) and 6.11(b) must meet and use all reasonable endeavoursacting in good faith to resolve the Deadlock within ten (10) Business Days after the date of the Deadlock Notice.(d)If the Deadlock is not resolved under clause 6.11(c), then within fifteen (15) Business Days of the date of the Deadlock Notice, eachchief executive officer of the Ultimate Holding Company of each Participant must (including by telephone or video conference) meetand use all reasonable endeavours acting in good faith to resolve the Deadlock.(e)Any resolution of a Deadlock under this clause 6.11 will be a valid resolution of the Management Committee to the extent that thesenior representatives or chief executive officers (as applicable) agree that the resolution will have such effect.(f)If:(i)the Joint Venture Interest of each Participant is no longer 50% of the aggregate Joint Venture Interests of all Participants; or(ii)Albemarle and MRL cease to be the Ultimate Holding Companies of AWPL and WLPL, respectively (or of any of their respectiveTransferee Subsidiaries under clause 12.2),then the Participants will use reasonable endeavours to negotiate and agree to amend this agreement to make provision for theresolution of Deadlocks other than on, or in addition, to the terms of this clause 6.11.6.12Stage 2 Decision(a)Without limiting any other provision of this agreement, the Participants agree that they will proceed with the construction andcommissioning of the Initial Refinery Plant.(b)The Participants agree to act reasonably and work together to progress the Initial Refinery Plant, including by agreeing the budget forpreparation of and directing the Manager to prepare, as soon as reasonably practicable, a Refinery Plant Business Plan for a RefineryPlant Development for consideration and, if appropriate, approval by the Management Committee as soon as practicable after theEffective Date. page | 23(c)If following a meeting of the Management Committee at which one Participant (via its Representatives) has proposed a resolutionregarding a Stage 2 Decision and voted in favour of such proposed resolution and the other Participant (via its Representatives) hasvoted against the proposed resolution, then if the Deadlock process in clause 6.11 has been followed and the Deadlock has not beenresolved, or if the Participant who voted against the proposed resolution failed to comply with the Deadlock process, then subject toclause 6.12(e), the Participant who voted in favour of the resolution (Sole Risk Participant) may no later than 3 months after the dateof the Management Committee meeting at which the proposed resolution was not passed, give written notice (Alternative RefineryPlant Notice) to the other Participant (Non-consenting Participant) of its intention to develop an Alternative Refinery Plant outside theterms of the Joint Venture, which such notice shall include a detailed design of the Alternative Refinery Plant.(d)If, after the Effective Date, a Participant or any of its Affiliates commences construction of any new facilities (or enters intocontractual arrangements, including arrangements for the acquisition of such facilities, which have substantially the same effect asthe construction of new facilities by that Participant or any of its Affiliates) located anywhere in the world (excluding AWPL and itsAffiliates' modules with designed production capacity at Kemerton of up to 75ktpa plus debottlenecking or efficiency improvements)which will provide that Participant or any of its Affiliates with additional production capacity for lithium hydroxide monohydrate orlithium carbonate fed by spodumene of greater than 20ktpa, other than as a result of debottlenecking or efficiency improvements atexisting or new lithium production facilities (Additional Production Capacity), that Participant must (in good faith) and as soon asreasonably practicable issue a notice in writing to the other Participant(s) notifying the other Participant(s) of such occurrence (Noticeof Additional Production Capacity).(e)An Alternative Refinery Plant Notice may only be issued in circumstances where prior to the issue of the Alternative Refinery PlantNotice, the Non-consenting Participant or any of its Affiliates has issued a Notice of Additional Production Capacity, provided that aNotice of Additional Production Capacity will be deemed to have been issued if no Notice of Additional Production Capacity has beengiven and the Sole Risk Participant can provide evidence, acting reasonably, to each Non-consenting Participant that such AdditionalProduction Capacity of the Non-consenting Participant has commenced construction and the Non-consenting Participant (actingreasonably) has not, within ten (10) Business Days of being provided with such evidence, issued a Dispute Notice to the Sole RiskParticipant in relation to such matter.(f)Within twenty (20) Business Days of the date of the Alternative Refinery Plant Notice, the Non-consenting Participant must:(i)confirm in writing its intention to participate in the Stage 2 Refinery Plant, in which case the Stage 2 Decision will be deemed to havebeen passed;(ii)confirm in writing that it will not participate in the Stage 2 Refinery Plant at that time; or(iii)request in writing a meeting with the chief executive officer of the Ultimate Holding Company of the Sole Risk Participant.(g)If the Non-consenting Participant issues a request under clause 6.12(f)(iii), each chief executive officer of the Ultimate HoldingCompany of each Participant must meet within five (5) Business Days of the date of the request issued under clause 6.12(f)(iii) anduse all reasonable endeavours (acting in good faith) to resolve the matter in respect of the proposed Stage 2 Decision. Any resolutionof a matter under this clause 6.12(g) will be deemed to be a valid resolution of the Management Committee approving a Stage 2Decision. page | 24(h)If:(i)the Non-consenting Participant does not comply with clause 6.12(d) and the Sole Risk Participant has given a notice to the Non-consenting Participant in accordance with clause 6.12(e) and in relation to which no Dispute Notice has been given to the Sole RiskParticipant in accordance with clause 6.12(e);(ii)the Non-consenting Participant issues a confirmation under clause 6.12(f)(ii) that it will not participate; or(iii)the steps set out in clauses 6.12(f)(iii) and 6.12(g) have been taken and the matter in respect of the proposed Stage 2 Decision is notresolved within the ten (10) Business Days of the date of the request issued under clause 6.12(f)(iii),then subject to clause 6.12(i) and clause 6.12(n), the Sole Risk Participant may (subject to clause (j)6.12(j)) in itsabsolute discretion construct, commission and operate the Alternative Refinery Plant outside the terms of the Joint Venture (such thatthe Alternative Refinery Plant will not be a Joint Venture Operation, will not form part of the Joint Venture Assets and this agreementwill not govern the Alternative Refinery Plant) and the Non-consenting Participant will not participate in the Alternative Refinery Plant.(i)The Sole Risk Participant must not construct, commission and operate the Alternative Refinery Plant in circumstances where it wouldhave an adverse impact on the costs of, operation of or production output of the Initial Refinery Plant or other Joint VentureOperations, including in relation to the availability of water, power, feedstock or other utilities, accommodation and site facilities. Insuch circumstances the Sole Risk Participant will be permitted to alter the method or design of construction, commissioning oroperation of the Alternative Refinery Plant to the extent required to remedy such adverse impact.(j)If a Sole Risk Participant has not commenced construction of the Alternative Refinery Plant notified under an Alternative RefineryPlant Notice within 12 months of the date it is permitted to proceed with the construction, commissioning and operation of theAlternative Refinery Plant, then the right to do so will end, and the Sole Risk Participant may give another Alternative Refinery PlantNotice (without the need to first call a meeting of the Management Committee or propose a resolution regarding a Stage 2 Decision)and the Participants must again comply with this clause 6.12.(k)If the Sole Risk Participant, at its own cost and risk, develops the Alternative Refinery Plant outside of the Joint Venture inaccordance with clause 6.12(h), it will be entitled to:(i)construct and operate the Alternative Refinery Plant on an appropriate area of the Tenements which is suitable for a lithium hydroxidemonohydrate plant (Designated Area), provided that the Sole Risk Participant must not deliver any of its share of Lithium recoveredfrom the Tenements into the Alternative Refinery Plant unless the Sole Risk Participant delivers on an ongoing basis its proportionateshare of Lithium recovered from the Tenements to facilitate the operation of the Initial Refinery Plant at its maximum productioncapacity; page | 25(ii)access (for itself, its Affiliates and its and its Affiliates' Personnel) the Designated Area for the purposes of constructing andoperating the Alternative Refinery Plant;(iii)use any Intellectual Property Rights in any Joint Venture feasibility studies conducted in respect of the development of a lithiumhydroxide monohydrate plant;(iv)receive from the Joint Venture all required goods and services which are requested by the Sole Risk Participant to construct andoperate the Alternative Refinery Plant on a cost basis (including but not limited to power, accommodation and site facilities), providedthat any expansion of any facilities which are required to accommodate the needs of the Sole Risk Participant will be borne solely bythe Sole Risk Participant, and subject to such goods and services being available without adversely impacting on the productionoutput of the Initial Refinery Plant; and(v)where WLPL is the Sole Risk Participant, enter into an agreement with the Licence Provider on terms equivalent to the IntellectualProperty Licence Agreement.(l)The Sole Risk Participant must obtain any further Approvals required for the development of the Alternative Refinery Plant and mustindemnify the Non-consenting Participant against:(i)the costs of developing, operating and maintaining and ultimately closing the Sole Risk Participant's Alternative Refinery Plant; and(ii)any:(A)Rehabilitation Obligations; and(B)any other losses sustained or liabilities incurred (except where such loss or liability arises as a direct result of the Non-ConsentingParticipant's fraud, Wilful Misconduct or Gross Negligence),arising from or in connection with the Alternative Refinery Plant.(m)Prior to commencing construction of the Alternative Refinery Plant, the Sole Risk Participant must offer to the Non-consentingParticipant to construct any foundations, pipework or other shared or potentially shared infrastructure at the cost of the Non-consenting Participant, which would facilitate the future construction by the Non-consenting Participant of a further AlternativeRefinery Plant under clause 6.12(n) and facilitate its interconnection and integration with the Sole Risk Participant's AlternativeRefinery Plant.(n)If the Sole Risk Participant develops an Alternative Refinery Plant in accordance with this clause 6.12, the Non-consenting Participantmay at any time develop its own Alternative Refinery Plant, subject to the requirements and principles in clauses 6.12(i) to 6.12(l) atthe cost and risk of the Non-consenting Participant, which shall not form part of the Joint Venture Assets and shall not be governed bythis agreement. If the Non-consenting Participant has developed an Alternative Refinery Plant in accordance with this clause 6.12(n),the Participants may agree to include each Alternative Refinery Plant in the Joint Venture Assets, to be governed by the terms of thisagreement. page | 26(o)No Alternative Refinery Plant Notice may be given and the Sole Risk Participant may not commence construction of an AlternativeRefinery Plant the Joint Venture Interest of any Participant is less than 50% of the aggregate Joint Venture Interests of allParticipants.(p)Upon request from the Sole Risk Participant, and subject to clause 6.12(q), the Manager shall, in good faith, acting reasonably,consider reasonable modifications to the manner in which it operates the Initial Refinery Plant in order to avoid an adverse impact onthe production output of the Initial Refinery Plant resulting from the operation of the Alternative Refinery Plant.(q)The Sole Risk Participant agrees to indemnify the Manager and the Non- consenting Participant for the costs of any modifications tothe Initial Refinery Plant and any related future costs (including in operation and maintenance) which are made under clause 6.12(p)(including any increase in the cost of goods and services procured by the Joint Venture in connection with the Initial Refinery Plant).6.13AdvisersA Participant may arrange at its own expense for consultants or other technical personnel (Advisers) and up to two otherpersons (Observers) to be present at meetings of the Management Committee to assist its Representatives, or in the case of theObservers to observe but not participate in the meeting, provided that:(a)the Participant must ensure that each Adviser and Observer is under a duty of confidentiality in relation to all information andmaterials to which the Adviser or Observer gains access as a consequence of the Adviser or Observer being present at a meeting ofthe Management Committee; and(b)a Participant must inform the other Participants of its intention to have an Adviser or Observer attend a meeting of the ManagementCommittee on behalf of the Participant at least two (2) Business Days before the meeting (and such notice must include the name andorigin of each Adviser and Observer).6.14Authority of RepresentativesEach Representative will have full power and authority to represent the Participant who appointed the Representative in all matterswithin the powers of the Management Committee and all acts done by the Representative under this authority will be deemed to bethe act of the Participant who appointed the Representative.6.15Resolution without meeting(a)A resolution of the Management Committee which is signed by a Representative of each Participant who is entitled to vote (CircularResolution) will be as valid and effective as if it had been passed at a meeting of the Management Committee properly convened andheld.(b)A Circular Resolution may consist of one or more documents in identical terms, signed by a Representative of each Participant.6.16Manager’s delegate(a)The Manager will by notice in writing to the Participants designate a delegate to the Management Committee. page | 27(b)The Manager may change its delegate at any time by giving notice in writing to the Participants.(c)The Manager will cause its delegate, who may be accompanied by Advisers, to be present at each meeting of the ManagementCommittee. Such delegate and Advisers will have no voting rights and the Manager must ensure that its delegate and Advisers areunder a duty of confidentiality in relation to all information and materials to which the delegate or the Advisers gains access as aconsequence of the Adviser or delegate being present at a meeting of the Management Committee.(d)The Manager’s delegate is not entitled to vote at meetings of the Management Committee.6.17Minutes(a)The Manager must arrange for minutes of each Management Committee meeting and each sub-committee meeting as describedunder clause 6.18 to be taken. The Manager’s costs and expenses in providing this service will be included in Joint Venture Costs.(b)A copy of the minutes of each Management Committee meeting and each sub-committee meeting must be given to each Participantas soon as practicable, but no later than 21 days after each meeting.(c)If a Participant wishes to make any comments in respect of the minutes, it must do so within 21 days after receiving the minutes byproviding a notice to the Manager.(d)The minutes of a Management Committee meeting or subcommittee meeting, respectively, will be considered and approved (with orwithout amendments) at the next meeting of the Management Committee or relevant sub-committee (as applicable), and are to besigned by the Chairperson of the relevant Management Committee meeting or the chairperson of the relevant sub-committee meetingas described in clause 6.18(c), and are then conclusive evidence of the proceedings and decisions of the meeting to which theyrelate.6.18Sub-committees(a)The Management Committee may establish one or more sub-committees to consider and make recommendations or, if theManagement Committee unanimously and expressly confers such a power, decisions on such matters as the ManagementCommittee may from time to time refer to any such sub-committee.(b)Each Participant will be entitled, but will not be obliged, to be represented on each sub-committee.(c)The Participant who has nominated the Chairperson of the Management Committee will appoint the chairperson of any sub-committee.6.19ServicesThe Management Committee may:(a)require the Manager to provide it with such services as the Management Committee may request; and(b)engage advisers and consultants as required, page | 28and all expenses incurred in connection with the exercise of this power will be regarded as Joint Venture Costs and may be paid by theManager accordingly even if not included in an Approved Budget.6.20Recommendations and decisions of sub-committeesRecommendations and (where applicable) decisions of any sub-committee of the Management Committee must be by unanimousvote. If unanimity cannot be achieved on any matter, such inability and the reasons for that will be reported to the ManagementCommittee.7Budgets, planning and contributions7.1Commencement under Initial Mine Plan and BudgetThe parties agree that in respect of the period from the Effective Date until 30 June 2020, the Manager, on behalf of the Participants,will undertake Joint Venture Operations in accordance with the Initial Mine Plan and Budget.7.2Preparation and approval of the Business PlanThe parties agree that, subject to constraints of applicable competition rules:(a)prior to 28 February of each year, the Manager will consult with each of the Participants to discuss and agree the assumptions(including metal price, exchange rates, diesel price and other key commodities consumed, discount rate and inflation rate) tobe used in preparing the draft Business Plan and Proposed Budget;(b)prior to 30 April of each year, the Manager will submit to each Participant a draft Business Plan (incorporating a ProposedBudget) which, among other periods, covers the period commencing on the following 1 July;(c)the Participants will promptly review the draft Business Plan (incorporating a Proposed Budget) in consultation with theManager. The Manager will update the draft Business Plan (incorporating a Proposed Budget) to include agreed changes, priorto submission of the Business Plan (incorporating a Proposed Budget) to the Management Committee for consideration andapproval at least a Month prior to the end of the current Financial Year; and(d)at the relevant meeting of the Management Committee in the final Quarter of each Financial Year, or at such other time as theParticipants may otherwise agree, the Management Committee will consider and may approve all or part of the draft BusinessPlan and the Proposed Budget in accordance with clause 7.5(a), with or without amendment; and(e)the Participants agree to, and will procure that the Manager completes, a similar process to the process described in clauses7.2(a) to 7.2(d) for the purpose of updating the Business Plan approved by the Management Committee under clause 7.2(d) tofacilitate AWPL or its Affiliates' fiscal year (currently on a calendar year basis), if any are different (at no cost to AWPL or itsAffiliates).7.3Contents of Business Plan(a)Each Business Plan will set out and cover the following separate areas: page | 29(i)detailed information in relation to the proposed Joint Venture Operations and Joint Venture Costs in each Month during the first twoFinancial Years covered by the Business Plan, which information must be presented in accordance with the relevant categories setout in clause 7.3(c) (in respect of the LOM Business Plan) and clause 7.3(d) (in respect of the Refinery Plant Business Plan); and(ii)to the extent reasonably practical, information in relation to proposed Joint Venture Operations and Joint Venture Costs for eachsubsequent Financial Year during the then estimated Life of Mine, which information must be presented in accordance with therelevant categories set out in clause 7.3(c) (in respect of the LOM Business Plan) and clause 7.3(d) (in respect of the Refinery PlantBusiness Plan).(b)Each Proposed Budget will set out detailed information in relation to the proposed Joint Venture Operations and Joint VentureCosts in each Month during the new Financial Year, which information must be presented in accordance with the relevantcategories set out in clause 7.3(c) (in respect of the LOM Business Plan) and clause 7.3(d) (in respect of the Refinery PlantBusiness Plan).(c)For the purposes of clauses 7.3(a) and 7.3(b), the monthly and annual information set out in a LOM Business Plan must bedivided into the following separate plan categories (except to the extent that no expenditure or activity is anticipated for therelevant category):(i)(Mine Development / evaluation plan): this must contain details of proposed Mine Development and reasonable justification forprojects proposed for Mine Development and evaluation activities.(ii)(mining physicals / mine metal plan): this must contain details of ore tonnes moved, waste, production risk rating.(iii)(Capital Costs plan): this must contain details and reasonable justification for any proposed Capital Works and a ranking of thepriority of each proposed Capital Work. Assets to be scrapped or disposed of as a result of proceeding with any new Capital Workshould be identified.(iv)(Operating Costs plan): this must reflect the guidance and directions of the Management Committee as to the grade of ore to bemined, the amount of Minerals to be produced, and other matters relating to Operating Costs, including utilisation and availability ofequipment.(v)(exploration plan): A plan for Exploration Operations including details and reasonable justification for projects together with a budgetfor those works, split into work on the Development Area (if appropriate) and work on other areas of the Tenements as proposed.(vi)(Rehabilitation plan): this must describe anticipated works to be carried out to meet Rehabilitation Obligations and clearly identifythe expenditure to be charged against existing provisions and the expenditure which is not covered by existing provisions.(vii)(care and maintenance plan): this must describe the care and maintenance activities to be undertaken (if any) and the associatedcosts.(viii)(Closure Plan): this must describe the anticipated activities to be carried out to meet the Mine Closure Obligations. page | 30(ix)(manpower plan): this must be a plan setting out the staffing and manpower required in connection with the implementation of anyproposed Joint Venture Operations referred to in this clause 7.3(c) or any other approved work programme or Joint VentureOperations under this agreement.(x)(budget): this must show:(A)working capital: expected movement in the individual significant components of working capital for the following year.(B)cash flow: the relevant periodic cash requirements for each of the categories in the LOM Business Plan and clearly distinguishbetween Capital Costs and Operating Costs.(C)Called Sum forecast: the extent to which the periodic cash requirements can be satisfied from cash on hand, and will include a CalledSums forecast showing the estimated periodic contribution required from each Participant.(d)For the purposes of clauses 7.3(a) and 7.3(b), the monthly and annual information set out in a Refinery Plant Business Planmust be divided into the following separate plan categories (except to the extent that no expenditure or activity is anticipatedfor the relevant category):(i)(Refinery Plant Development / evaluation plan): this must contain details of the proposed Refinery Plant Development andreasonable justification for projects proposed for Refinery Plant Development and evaluation activities.(ii)(Capital Costs plan): this must contain details and reasonable justification for any proposed Capital Works and a ranking of thepriority of each proposed Capital Work. Assets to be scrapped or disposed of as a result of proceeding with any new Capital Workshould be identified.(iii)(Operating Costs plan): this must reflect the guidance and directions of the Management Committee as to the grade and amount oflithium hydroxide monohydrate to be produced, and other matters relating to Operating Costs, including utilisation and availability ofequipment.(iv)(manpower plan): this must be a plan setting out the staffing and manpower required in connection with the implementation of anyproposed Joint Venture Operations referred to in this clause 7.3(d) or any other approved work programme or Joint VentureOperations under this agreement.(v)(budget): this must show:(A)working capital: expected movement in the individual significant components of working capital for the following year.(B)cash flow: the relevant periodic cash requirements for each of the categories in the Refinery Plant Business Plan and clearlydistinguish between Capital Costs and Operating Costs.(C)Called Sum forecast: the extent to which the periodic cash requirements can be satisfied from cash on hand, and will include a CalledSums forecast showing the estimated periodic contribution required from each Participant. page | 317.4Revision of Business Plan(a)At any time prior to the approval and adoption of the next succeeding Business Plan (including the Proposed Budget), theManager may propose revisions to the Business Plan (incorporating the Approved Budget) for approval by the ManagementCommittee in accordance with the terms of this agreement.(b)The Manager must prepare proposed revisions to the Business Plan (incorporating the Approved Budget) if, at any time, itbecomes necessary to make a material alteration in respect of any of the plans specified in the most recent Business Planand/or Approved Budget (including if there is a Refinery Plant Decision), or if the Management Committee otherwise requestssuch an amendment, and submit the proposed revisions for approval by the Management Committee in accordance with theterms of this agreement.(c)The Manager must promptly provide the Participants with any revisions to the Business Plan (incorporating the ApprovedBudget) approved by the Management Committee.7.5Approval of Business Plan and revisions(a)A proposed Business Plan (incorporating a Proposed Budget) may be approved in whole or in part by the ManagementCommittee by Ordinary Resolution.(b)Subject to clause 7.7(d), a revision or variation to the approved Business Plan (including the Approved Budget) requiresapproval by the Management Committee by Ordinary Resolution.7.6Temporary operating plan if Business Plan not approvedIf the Management Committee has not approved all or part of a proposed Business Plan (including the Proposed Budget) for thefollowing Financial Year (Relevant Year), by no later than one Month prior to the commencement of the Relevant Year, the followingprovisions will apply for so long as the unapproved part of that proposed Business Plan or Proposed Budget has not been soapproved:(a)the portions of the Business Plan and Proposed Budget for the Relevant Year which are approved by the ManagementCommittee will apply (to the extent practicable);(b)the relevant portions of the Business Plan for the Relevant Year from the most recently approved Business Plan will apply (tothe extent they are applicable and were approved and including, at a minimum, ensuring that the expenditure obligationsprescribed under each of the Tenements and all unavoidable obligations contained in agreements related to the Joint VentureOperations are properly met) to the portions of the Business Plan and Proposed Budget for the Relevant Year which are notapproved by the Management Committee;(c)the portions of the plans and budgets referred to in clauses 7.6(a) and 7.6(b) will together be deemed to be an Approved Budgetfor the Relevant Year and implemented by the Manager in accordance with this agreement; and(d)when the Management Committee approves any unapproved portion of the new Business Plan under the terms of thisagreement, the Manager will, as soon as practicable, vary its activities and expenditure so as to continue in accordance withthe new and approved Business Plan (including the Approved Budget). page | 327.7Business Plan is binding on the Manager(a)The most recent Business Plan (including the component plans and Approved Budget), as approved or revised and amendedby the Management Committee in accordance with this agreement, will be binding on the Manager and the Participants.(b)Except as otherwise required or allowed under this agreement, the Manager must carry on the development, construction,maintenance and conduct of the Joint Venture Operations in accordance with the Business Plan (including the ApprovedBudget).(c)The Manager is obliged and authorised to conduct Joint Venture Operations and to incur expenditure and make disbursementsapproved, or for which an allowance or provision is made, in an Approved Budget and in accordance with the Approved Budget.(d)The Manager must use all reasonable endeavours not to incur any expenditure (including Capital Costs and Operating Costs) inexcess of the amount budgeted in an Approved Budget except as provided below:(i)aggregate over-expenditure on Operating Costs of:(A)10% or less of the total expenditure under the Approved Budget is permitted without approval of the Management Committee;(B)more than 10% but less than 20% of the total expenditure under the Approved Budget is permitted if approved in advance by OrdinaryResolution of the Management Committee; and(C)20% or more of the total expenditure under the Approved Budget is permitted if approved in advance by Special Resolution of theManagement Committee;(ii)aggregate unbudgeted Capital Costs (including any overruns on budgeted Capital Costs) of:(A)the lesser of 20% of the individual line item or up to $5,000,000 from that under the Approved Budget is permitted without approval ofthe Management Committee;(B)between $5,000,000 and $25,000,000 from that under the Approved Budget is permitted if approved in advance by OrdinaryResolution of the Management Committee; and(C)$25,000,000 or more from that under the Approved Budget is permitted if approved in advance by Special Resolution of theManagement Committee; and(iii)reasonable expenditure to fund urgent action under clause 7.8 is permitted without approval of the Management Committee.7.8Urgent action(a)Subject to clause 7.8(c), the Manager may take such emergency action as, in the Manager’s judgement, is necessary topreserve property, avoid, mitigate or prevent material risk of harm or damage to persons, property or the environment and toensure Participants comply with their respective contractual and legal obligations in relation to the Joint Venture Operations. page | 33(b)The Manager must promptly notify the Participants as and when any costs of the nature referred to in clause 7.8(a) above areincurred.(c)To the extent that time permits, the Manager must use reasonable endeavours to:(i)seek the approval of the Management Committee as otherwise required of it under this agreement; or(ii)consult with the Participants and the Management Committee,as soon as reasonably practicable after becoming aware of the need to take urgent action.8Provision of funds8.1Obligation to contributeEach Participant must contribute to Joint Venture Costs in proportion to their respective Joint Venture Interests, and Cash Callsissued under this clause 8 will be prepared accordingly.8.2Manager may apply funds heldThe Manager will be entitled to apply funds held by the Manager for the account of a Participant under this agreement to satisfy thatParticipant’s share of Joint Venture Costs.8.3Monthly Cash Call(a)At or prior to the Effective Date, the Manager will notify the Participants of the estimated funding requirements required by theManager for the period from the Effective Date up to the date the next Called Sum is payable by Participants underclause 8.4(a), including details of the estimated disbursements to be made for Joint Venture Costs during that period. Theamount specified will comprise a Called Sum and is payable within five (5) Business Days after the Effective Date inaccordance with clause 8.4(b).(b)Based upon the Business Plan (including the Approved Budget, as revised by the Management Committee from time to time)or where applicable any Approved Budget under clause 7.6, the Manager must submit to each Participant, on or before the 15thday of each Month, a statement (Cash Call) showing:(i)the estimated disbursements to be made for Joint Venture Costs during the following Month (showing Operating Costs and CapitalCosts separately);(ii)the extent, if any, to which such disbursements can be satisfied by funds already held by the Manager for the account of theParticipants under this agreement;(iii)the amount (Called Sum) required to be paid by each Participant (which, for the avoidance of doubt, is the cash amount which isrequired to be paid by a Participant after application of funds held by the Manager to the account of the Participant in accordance withclause 8.3(b)(ii)); page | 34(iv)the place or places where, and manner in which, payment is to be made; and(v)such other details as the Management Committee may from time to time direct.(c)Subject to clause 8.5, a Called Sum for a Month may be for an amount which is:(i)under 120% of the monthly Called Sum forecast for that Month under the then current Approved Budget without approval of theManagement Committee;(ii)120% or more, but less than 140%, of the monthly Called Sum forecast for that Month under the then current Approved Budget, ifapproved by an Ordinary Resolution of the Management Committee; or(iii)140% or more of the monthly Called Sum forecast for that Month under the then current Approved Budget, if approved by a SpecialResolution of the Management Committee,provided that:(iv)if at any time after the first three (3) Months of the Financial Year, the “Year to Date” Called Sum and the proposed Called Sum forthe next Month would be greater than 110% of the Called Sum forecast for that period under the then current Approved Budget, theproposed Called Sum requires approval by an Ordinary Resolution of the Management Committee; and(v)if at any time after the first three (3) Months of the Financial Year, the “Year to Date” Called Sum and the proposed Called Sum forthe next Month would be greater than 120% of the Called Sum forecast for that period under the then current Approved Budget, theproposed Called Sum requires approval by a Special Resolution of the Management Committee.8.4Payment of Called Sum(a)Each Participant must pay to the Manager the Called Sum applicable to it by the later of:(i)10 Business Days after a Cash Call is made; and(ii)the fifth Business Day of the Month following the Month in which the Cash Call is made.(b)Called Sums must be paid to the Manager:(i)within the timeframe prescribed by this clause 8.4;(ii)in Immediately Available Funds;(iii)free of set-off, deduction or counterclaim;(iv)unless specified in an Approved Budget or as otherwise agreed, in the currency requested by the Manager (Requested Currencies),it being agreed that unless otherwise agreed between the Participants, the Requested Currencies are limited to $Australian, $US, theEuro and Chinese Yuan and the breakdown of denominations requested must be consistent with the denomination of Managerexpenditures; and page | 35(v)at the place or places, and in the manner, specified in the Cash Call.(c)Nothing in this clause 8.4 prevents a Participant paying a Called Sum on behalf of another Participant pursuant to anyagreement which may exist between them or their Affiliates, and any such payment shall be credited as a payment by theParticipant against whom the Cash Call was made.8.5Emergency Cash Call(a)If at any time the Manager is, or is likely to be, required to take urgent action under clause 7.8 which requires funds in excessof the funds then available to the Manager, and which have not been provided for in the most recent Cash Call, the Managermay issue an emergency Cash Call to each Participant stating:(i)the amount of funds required for Joint Venture Costs;(ii)the Called Sum required to be paid by each Participant;(iii)the place or places where, and manner in which, payment is to be made; and(iv)the circumstances, in reasonable detail, giving rise to the necessity for obtaining such funds.(b)Each Participant must, as soon as practicable (and in any event within five (5) Business Days) after receipt of an emergencyCash Call, pay to the Manager the Called Sum applicable to it.(c)The parties acknowledge that clause 8.3(a) does not apply to any Cash Calls made under this clause 8.5.8.6Bank account(a)All Called Sums and other moneys received or earned by the Manager on behalf of the Joint Venture will be deposited into adesignated account or accounts in the name of the Manager, as manager of the Joint Venture, maintained at a branch orbranches of a bank authorised to carry on a banking business under the Banking Act 1959 (Cth) selected by the Manager.Such bank must offer full on-line account visibility (on a read-only basis) to Participants.(b)Subject to clause8.6(d), the Manager alone will be entitled to operate such account or accounts and may from time to timetemporarily invest any surplus funds in such account in accordance with such short term investment policies as may from timeto time be approved by the Management Committee.(c)No such investment will have a maturity exceeding the time within which the funds so invested are required to be disbursed onaccount of Joint Venture Costs.(d)All funds in any account opened by the Manager (including any short term investments acquired with such funds) will remainthe beneficial property of the Participants in proportion to their Joint Venture Interests until such time as those funds aredisbursed on account of Joint Venture Costs. page | 36(e)The Manager may only open a bank account with the approval of the Participants by Special Resolution and must notify theParticipants when the Manager opens or closes any such bank account acting as agent for the Participants.8.7Disbursements from bank accountsThe Manager will make from the accounts referred to in clause 8.6 all disbursements which are required to be made from time to timeon account of Joint Venture Costs.8.8Repayment of surplus funds(a)The Manager will, if directed by the Management Committee, repay to each Participant (other than a Participant in respect ofwhich there is an Event of Default or which is in default in the payment of any Called Sum) any funds which are in excess ofthat Participant’s share of the estimated disbursements for the following Month and the amount of working capital deemednecessary by the Manager for Joint Venture Operations as set out in the Cash Call provided to that Participant in accordancewith clause 8.3.(b)The Manager will not be obliged to repay any such funds to a Participant if the amount is less than $100,000, unless requestedto do so by that Participant.8.9Accounting for Called SumsThe Manager will use Called Sums, and any assets acquired by the use of such funds, for the purpose of Joint Venture Operations orfor payment to Participants as provided in clause 8.8, and for no other purpose.9Records, accounts and reports9.1Manager to keep records and accounts(a)The Manager will, in accordance with the Accounting Procedure and generally accepted accounting principles and customarycost accounting practices in the mining industry, keep, or cause to be kept, comprehensive, true and accurate records andaccounts of:(i)Joint Venture Operations;(ii)the Joint Venture Assets;(iii)all Called Sums received by the Manager from (or on behalf of) each Participant;(iv)all contracts and transactions entered into by or on behalf of the Participants in connection with the Joint Venture;(v)the Joint Venture Cost and expenses of all transactions entered into by or on behalf of the Participants;(vi)all approvals of requisitions, purchase orders, invoices, contracts, authorisation for capital expenditure requests;(vii)all approvals required in connection with this agreement, including minutes of meetings, Ordinary Resolutions and SpecialResolutions; page | 37(viii)agendas, minutes and documents provided to members for the Management Committee and any sub committees; and(ix)Personnel of the Manager subject to applicable laws, including in relation to privacy,(Joint Venture Records and Accounts).(b)Without limiting the generality of the foregoing, the Joint Venture Records and Accounts will be maintained in such manner asmay be reasonably necessary to enable each Participant to meet its reporting, accounting and tax return requirements(including deadlines).9.2Place for records(a)The Manager will determine the place or places within Australia where the Joint Venture Records and Accounts are kept.(b)The Manager must keep each Participant informed as to each location where the Joint Venture Records and Accounts arekept.(c)The Manager will make appropriate use of IT systems, including separate instances of systems and software utilised by therespective Participants, so as to maximise efficiency, effectiveness, transparency and visibility of the Joint Venture Recordsfor the Participants and the Manager's costs in performing its obligations under this clause will form part of the Joint VentureCosts.9.3Annual financial statement(a)The Manager must, in respect of each Financial Year, provide to each Participant as soon as practicable (and no later than 30days) after the end of each Financial Year (commencing with the Financial Year in which the Effective Date occurs) a financialstatement reflecting:(i)all receipts, expenditures and transactions made by the Manager on behalf of the Participants in connection with the Joint Ventureduring that Financial Year;(ii)all Joint Venture Assets in the custody or control of the Manager as at the end of that Financial Year; and(iii)all Joint Venture liabilities as at the end of that Financial Year.(b)The Manager will also provide comparable information to the information described in clause 9.3(a) as required by AWPL,including GAAP adjustments as applicable, as of the end of each AWPL or its Affiliates' fiscal years (currently ending 31December).(c)All costs incurred by the Manager in complying with this clause will form part of Joint Venture Costs.9.4Monthly reportThe Manager will provide to each Participant, within five (5) Business Days after the end of each Month, a written report detailing: page | 38(a)the progress and results of Joint Venture Operations during the Month just ended (with commentary on any material departuresfrom the Business Plan, including the Approved Budget);(b)all outgoings incurred and payments made during that Month;(c)a running reconciliation of actual incurred expenditures to date against costs under the Approved Budget (with commentary onany material departures);(d)all proposed outgoings and payments to be incurred or made during the next Month (with commentary on any material proposeddepartures from the Approved Budget);(e)estimate on quantity of stockpiles and estimated Mineral content including Lithium; and(f)a statement of the assets and liabilities of the Joint Venture and each Participant’s investment in the Joint Venture,in sufficient detail to satisfy the respective Participant’s (or if requested by the Participant those of its Ultimate Holding Company)corporate reporting requirements and to a level which is at least the same or similar to that which the Manager may provide to itssenior management or Affiliates. Notwithstanding the foregoing, the Manager will make available sufficient financial information foreach Participant to close their books within their normal procedures and timelines as will be communicated by each Participant to theother and to the Manager, and to avoid doubt, the Manager's costs in complying with this obligation will form part of the Joint VentureCosts.9.5ForecastsThe Manager will prepare the following forecasts each Month (except as otherwise specified below) and issue such forecasts to eachParticipant within five Business Days of Month end:(a)operational forecasting for the next three full calendar Months (broken down by Month) which includes:(i)spodumene production forecast in metric tonnes per day;(ii)maintenance plan on the Processing Plant; and(iii)if the Initial Refinery Plant or other lithium hydroxide monohydrate plant that is a Joint Venture Asset is to operate in the relevantperiod:(A)lithium hydroxide monohydrate production in metric tonnes per day;(B)maintenance plan on lithium hydroxide monohydrate plant sodium; and(C)sulphate production forecast in metric tonnes per day;(b)operational forecasting for the next 18 full calendar Months which includes:(i)spodumene production forecast in metric tonnes per day; page | 39(ii)if the Initial Refinery Plant or other lithium hydroxide monohydrate plant that is a Joint Venture Asset is to operate in the relevantperiod, lithium hydroxide monohydrate production in metric tonnes per day; and(iii)timing of expected extended plant maintenance and turnarounds;(c)financial forecasting for the next 12 full calendar Months, including at a minimum:(i)sales volume and cost of production by product family;(ii)other cost of goods sold;(iii)selling and administrative;(iv)depreciation and amortisation;(v)any other items that would be included in the income statement;(vi)operational spending broken down by cost centre; and(vii)capital project spending;(d)cash forecasting for the next full 12 calendar weeks, broken down by week, to be provided weekly; and(e)cash forecasting for the next full 12 calendar Months, broken down by Month.9.6Other reporting requirementsThe Manager must provide the following reports to each Participant:(a)immediately after the occurrence of any event which causes, or is likely to cause, material damage to the Joint Venture Assetsor delay or adversely affect the Joint Venture Operations, a report of the event and an estimate of likely resultant costs, to theextent it can be reasonably estimated at that time;(b)as soon as practicable after the occurrence of any lost time injury, any legal or threatened claim valued above $250,000,significant environmental incident, damage or destruction of property valued at over $250,000 or other event that requires areport to be filed or notification to be lodged with a Government Agency, notice of that occurrence or event;(c)within ten (10) Business Days after a written request from a Participant, all reports and information required by a Participant (orany of its Affiliates) to comply with its (or any of its Affiliates’) periodic reporting and disclosure obligations under the rules ofany applicable stock exchange, including in respect of mineral reserves and resources; and(d)as soon as practicable after notice to the Manager, a report on the status and conduct of any actual or threatened court orarbitration proceedings or insurance claims.9.7Information and data(a)The Manager will provide all information, data and material concerning Joint Venture Operations which the Participant (or itsAffiliate) may reasonably require to meet its statutory reporting, audit and disclosure obligations under the page | 40Corporations Act, the ASX Listing Rules, the rules and regulations of the New York Stock Exchange, the applicable laws or therules of any other recognised stock exchange or Government Agency as applicable.(b)The Manager will ensure that Exploration Information and Resources and Reserves are calculated and reported to theParticipants in a manner that complies with the JORC Code.(c)Subject to clause 9.9, the Manager will provide reports on the Exploration Information and Resources and Reserves that are ina format reasonably required by a Participant (or its Affiliate) to meet its reporting and disclosure requirements referred to inclause 9.7(a). To the extent compliance with those reporting and disclosure requirements requires the consent of a CompetentPerson, the Manager must obtain that consent on behalf of the Participants (or its Affiliate) in the form reasonably required bythe Participant (or its Affiliate).(d)The Manager will (in conjunction with the relevant Competent Person) be responsible for determining the assumptions to beused for the calculation of Resources and Reserves but will, so far as is practical, notify the Participants of those assumptionsin advance of finalising any estimates of Resources and Reserves. Subject to being advised by the Participants of the relevantdeadlines, the Manager will use all reasonable endeavours to provide the details of those assumptions to enable the Participantto comply with applicable regulatory reporting deadlines (of the Participant and/or its Affiliates), if it disagrees with theassumptions adopted by the Manager. If any Participant does not agree with the assumptions used by the Manager, theManager will, upon request of any Participant, promptly provide to the Participants an electronic copy of the model used togenerate the estimates of Resources and Reserves in such a form and with such content as will enable the Participant (or itsAffiliate) to alter the relevant assumptions and generate its own estimates of Resources and Reserves. The Manager mustprovide the Participant (or its Affiliate) with such reasonable assistance as the Participant (or its Affiliate) may require in orderto operate and assess the model for that purpose. In that event, the Participant (or its Affiliate) will be responsible for obtainingthe necessary Competent Person consent for the estimates of Resource and Reserves that it generates.(e)To enable Participants (and their Affiliates) who have a financial year end of 30 June, or 31 December, or is required to publisha half-yearly or quarterly report to comply with their statutory reporting obligations, the Manager will provide those Participants(and their Affiliates) with the following information in relation to the Joint Venture for (as applicable) the year ending on, or as at,30 June and/or 31 December or half year ending 30 June, or quarter year ending 31 March, 30 June, 30 September:(i)statement of financial position;(ii)income statement;(iii)cash flow statement;(iv)trial balance;(v)asset register of the Joint Venture Assets;(vi)inventory;(vii)employee leave balance, payroll tax returns and superannuation payments; page | 41(viii)cash balance;(ix)details of calculation of contingent liabilities and capital commitments;(x)Business Activity Statements, all sales tax, fringe benefits tax, customs duty, excise duty and diesel fuel rebates returns orstatements;(xi)royalty statements in relation to the royalties payable to the State; and(xii)accounting policies,prepared in accordance with International Financial Reporting Standards or GAAP (as applicable) and any supporting materialsprepared by or on behalf of the Manager in preparing this information.9.8Copies of reports to ParticipantsUpon request by a Participant, the Manager must provide to the Participant:(a)copies of all reports prepared by the Manager in connection with Joint Venture Operations; and(b)copies of all material reports and other significant written communications to or from any government, government minister orGovernment Agency relating to any Tenement or Joint Venture Operations.9.9FormatThe Manager must consult with the Participants, when requested by a Participant, in relation to the format of reports to be providedpursuant to this clause 9 and have regard to the information requirements of the Participants (and its Affiliates). The Manager alsoacknowledges that, accordingly, the format of the reports may change from time to time.9.10Additional reportingExcept where expressly provided otherwise, where a Participant (or its Affiliate) requires any particular reporting or informationrequirements that differ from that which the Manager would otherwise give under this clause, the additional external costs incurred bythe Manager in providing information requested under this clause must be paid by the requesting Participant, provided that the costsare material. To the extent any costs are not required to be met by the requesting Participant under this clause, they will constituteJoint Venture Costs under this agreement.10Audit and access10.1Audit(a)The Manager must provide to each Participant, within 30 days (or such later date agreed by the Participants) after the relevantend of each Financial Year, a report by an internationally recognised and qualified independent auditor registered in accordancewith Part 9.2 of the Corporations Act appointed by AWPL after having first obtained the consent of WLPL (not to beunreasonably withheld) (Auditor), in which the Auditor reports to the Participants that the Auditor has examined the JointVenture Records and Accounts, the basis for provision of funds to the Manager and the financial statement for the relevantFinancial Year and is satisfied page | 42as to their accuracy or, if the Auditor is not so satisfied, the reason why the Auditor is not so satisfied.(b)The audit will be conducted in accordance with Australian Auditing Standards ASQC1 – Quality Control for Firms that PerformAudits and Reviews of Financial Reports and Other Financial Information, Other Assurance Engagements and RelatedServices Engagements (Complied) and will confirm that the financial report presents fairly, the financial position of the JointVenture as at the balance date in accordance with the basis of preparation described in the Joint Venture financial statements.An objective of the audit is that the Participants and their Affiliates may rely on that audit for the purposes of preparing itsaudited financial statements as required by applicable laws. Notwithstanding, the audit will also be conducted in a mannerconsistent with the standards of the US PCAOB or of other US regulators applicable to audits of US publicly-held companies.(c)Each Participant will have the right of direct communication with the Auditor.(d)Without limiting this clause 10.2, AWPL has the right to request that in addition to the above audit, a similar audit be performedunder GAAP and PCAOB auditing standards for relevant periods corresponding to AWPL or its Affiliates’ fiscal years' end(currently ending 31 December) and such costs will constitute Joint Venture Costs under this agreement.10.2Participant’s access to recordsThe Manager will, if requested:(a)permit a Participant to inspect and copy;(b)provide to a Participant copies of; and(c)provide to a Participant statements compiled from,the Joint Venture Records and Accounts and the results of all work undertaken by, or on behalf of, the Manager for the purposes ofthe Joint Venture (including plans, maps, geological and engineering reports, cores, samples, logs and surveys and other documentsunder the control of the Manager or any sub-contractor of the Manager). The requesting Participant will be required to pay anyexternal costs and copying costs incurred by the Manager in providing information requested under this clause provided that thecosts are material and to the extent that any such information may require further interpretation/clarification, the Manager will makerelevant Personnel available to the requesting Participant. To the extent any costs are not required to be met by the requestingParticipant under this clause, they will constitute Joint Venture Costs under this agreement.10.3Access to Joint Venture Area and Joint Venture Assets(a)Each Participant and its properly authorised representatives will be entitled at all reasonable times, and at the risk and expenseof such Participant, to have:(i)access to, and the right to inspect, the Joint Venture Assets and the Joint Venture Area, provided the Participants and their officers,employees, agents and contractors must comply with the directions of the Manager when doing so;(ii)the right to consult with the employees of the Manager and with any independent contractors (and their employees) which have beenengaged by the Manager concerning page | 43Joint Venture Operations and the performance by the Manager of its duties under this agreement;(iii)the right to take such samples of material employed by or produced from the Joint Venture Operations as are reasonably requested;and(iv)the right to appoint an independent Auditor to audit the affairs of the Joint Venture and the Manager, including the basis for theprovision of funds by the Participants under clause 8.(b)Information and access will be provided promptly on request, provided that it does not unreasonably disrupt the conduct of theJoint Venture Operations.(c)The Manager must co-operate with Participants and any Auditor appointed to enable them to obtain information and samplescontemplated by clause 10.3(a).11Confidential Information11.1Information to be kept confidentialThis agreement, and all information which is made available to or obtained by a Participant or the Manager from or in connection withJoint Venture Operations, or under any Joint Venture Document, and which is not a matter of public knowledge or lawfully availablefrom any other source and the Mining Information (collectively Confidential Information) will be and will remain confidential betweenthe Participants and the Manager, and will not, without the prior written consent of the other Participants (which consent must not beunreasonably withheld), be disclosed to any third person other than:(a)a Participant or its directors, officers, employees and agents;(b)an Affiliate of a Participant or that Affiliate’s directors, officers, employees and agents;(c)the Manager;(d)any government, government minister, or Government Agency, which requires it or has power to require it under any applicablelaw, rule or regulation;(e)any court of competent jurisdiction which has directed it;(f)any bank or other recognised financial institution making a loan or giving accommodation to a Participant or to an Affiliate of aParticipant;(g)any person to whom disclosure is permitted under the terms of any Joint Venture Document;(h)any person which in good faith is seeking to purchase or otherwise acquire the whole or part of the Joint Venture Interest of aParticipant, or shares in a Participant or an Affiliate of a Participant, provided that an undertaking as to confidentiality by theperson in a form set out in Attachment B is first obtained;(i)any professional legal adviser subject to professional obligations of confidentiality;(j)any other professional or other independent consultant or adviser engaged by a Participant or the Manager provided that anundertaking as to confidentiality by the person, in a form set out in Attachment B, is first obtained; page | 44(k)as may be required by law or by the rules of any recognised stock exchange on which shares or other securities of aParticipant or its Affiliates are listed, except that the parties agree to the extent permitted that they will not disclose informationof the kind described by section 275(1) of the PPS Act, except as permitted by any other provision of this clause or required byany other law or regulation. For the avoidance of doubt, this does not permit the disclosure of information under section 275(4)of the PPS Act unless section 275(7) applies;(l)to satisfy legal disclosure obligations in a disclosure document issued by a Participant or its Affiliates to raise funds orimplement or propose a corporate transaction involving the Participant or its Affiliates; or(m)for the purposes of any arbitration or court proceeding in respect of any dispute arising out of any Joint Venture Document.11.2Protection of Confidential InformationEach Participant and the Manager must take or cause to be taken such reasonable precautions as may be necessary to prevent thedisclosure of any Confidential Information.11.3AnnouncementsIf any Participant (or its Affiliate) wishes to publish any public statement (including a press release) relating to or in any wayconnected with Joint Venture Operations or the terms of any Joint Venture Document, then, to the extent permitted by law or therules of any recognised stock exchange applying to the Participant or its Affiliates, that Participant must notify and, wherepracticable, provide a copy of the public statement to, the Manager and the other Participants before issuing the public statement.11.4Continuing confidentiality obligation(a)This clause 11 will apply to:(i)any Participant which ceases to be a Participant for a period of three (3) years after the date upon which such Participant ceases tobe a Participant; and(ii)a Manager which ceases to be a Manager for a period of three (3) years after the date upon which such Manager was removed.(b)Upon the termination of this agreement, this clause 11 will, notwithstanding such termination, apply to the Participants and theManager at the date of termination, for a period of three (3) years after such termination.11.5MRL Standstill(a)The Participants acknowledge and agree that some or all of the Confidential Information may be relevant to the price or valueof the securities of MRL. Each Participant (other than WLPL) undertakes (which undertaking is given for the benefit of MRL)that it will not (and must ensure that its Affiliates will not) do anything that breaches the insider trading provisions of theCorporations Act from time to time.(b)During the period commencing on the date of this agreement and ending on the earliest of the following dates: page | 45(i)two (2) months after a Participant ceases to be a Participant;(ii)the date a person or persons jointly or in concert (other than a Participant or its Affiliates), publicly announce their intention tocommence a Control Transaction which, at the time of announcement, is unanimously recommended by the board of directors ofMRL; and(iii)the date MRL publicly announces that its board of directors has approved an agreement which contemplates a Control Transaction,the Participants must not, and must ensure that no Affiliates:(iv)announce any intention to commence a Control Transaction in relation to MRL;(v)enter into any swap, derivative or other similar instrument the effect of which is to give the Participant an economic interest insecurities (including shares) in the capital of MRL;(vi)acquire, agree to acquire or make any invitation or proposal to acquire, a relevant interest (as defined in the Corporations Act) directlyor indirectly in any securities (including shares) in the capital of MRL; or(vii)advise, assist or encourage any other person in connection with any of the foregoing,unless this restriction is first waived in writing by MRL.(c)The Participants acknowledge that MRL may enforce the undertaking given by the Participants in this clause 11.5 despite thefact that it is not a party to this agreement.(d)For the avoidance of doubt, the provisions of this clause 11.5 will cease to apply if neither WLPL nor any of its Affiliates is aParticipant.(e)The provisions of this clause 11.5 will cease to apply if MRL ceases to be the Ultimate Holding Company of any Participant.11.6Albemarle Standstill(a)The Participants acknowledge and agree that some or all of the Confidential Information may be relevant to the price or valueof the securities of Albemarle. Each Participant (other than AWPL) undertakes (which undertaking is given for the benefit ofAlbemarle that it will not (and must ensure that its Affiliates will not) do anything that breaches the insider trading provisions ofthe Corporations Act or any other law or regulation from time to time.(b)During the period commencing on the date of this agreement and ending on the earliest of the following dates:(i)two (2) months after a Participant ceases to be a Participant;(ii)the date a person or persons jointly or in concert (other than a Participant or its Affiliates), publicly announce their intention tocommence a Control Transaction which, at the time of announcement, is unanimously recommended by the board of directors ofAlbemarle; and page | 46(iii)the date Albemarle publicly announces that its board of directors has approved an agreement which contemplates a ControlTransaction,the Participants must not, and must ensure that no Affiliates:(iv)announce any intention to commence a Control Transaction in relation to Albemarle;(v)enter into any swap, derivative or other similar instrument the effect of which is to give the Participant an economic interest insecurities (including shares) in the capital of Albemarle;(vi)acquire, agree to acquire or make any invitation or proposal to acquire, a beneficial interest directly or indirectly in any securities(including shares) in the capital of Albemarle; or(vii)advise, assist or encourage any other person in connection with any of the foregoing,unless this restriction is first waived in writing by Albemarle.(c)The Participants acknowledge that Albemarle may enforce the undertaking given by the Participants in this clause 11.6 despitethe fact that it is not a party to this agreement.(d)For the avoidance of doubt, the provisions of this clause 11.6 will cease to apply if neither AWPL nor any of its Affiliates is aParticipant.(e)The provisions of this clause 11.6 will ceases to apply if Albemarle ceases to be the Ultimate Holding Company of anyParticipant.12Assignments and charges12.1Restrictions on assignments and charges(a)Subject to clause 12.1(b), except as permitted in this clause 12, or as required under clause 13, no Participant will:(i)sell, convey, assign, transfer, novate, lease, sublease or otherwise dispose of; or(ii)create or permit to exist any Security Interest (other than a Permitted Security Interest) in respect of,the whole or any part of its Joint Venture Interest.(b)Nothing in this clause 12 will operate to prevent a Participant from selling or otherwise disposing of its share of Product in theordinary course of the Participant’s business.(c)Notwithstanding any other provision of this agreement (and, in particular, clauses 12.2 and 12.3), a Participant must not makeany sale, transfer or other disposition if, upon completion of that sale, transfer or other disposition, that Participant or theassignee would have a Joint Venture Interest less than 10% but greater than zero (in other words, each Participant must havea Joint Venture Interest of at least 10%). page | 47(d)For the purposes of clause 12 and 13 of this agreement, a Participant's Joint Venture Interest will be deemed to include thewhole or the same proportionate part of that Participant's ownership interest in an Alternative Refinery Plant not forming part ofthe Joint Venture Assets.12.2Permitted transfer to SubsidiariesA Participant which is not in default in the payment of any Called Sum, and with respect to which an Event of Default is not then inexistence (Transferor), may at any time, subject to the provisions of clause 12.11, transfer the whole or any part of its Joint VentureInterest to a Subsidiary of the Ultimate Holding Company of the Transferor (Transferee).12.3Sale of Participant's lithium business(a)A Participant that is WLPL (or any Transferee Subsidiary of WLPL under clause 12.2) which is not in default in the payment ofany Called Sum, and with respect to which an Event of Default is not then in existence, and provided that MRL is the UltimateHolding Company of that Participant, may at any time subject to provisions of clause 12.11, transfer the whole of its JointVenture Interest to a Third Party, provided that the transfer is affected as part of a sale of all or substantially all of MRL'slithium business which, as at the Effective Date, includes MRL's and its Affiliates' direct and indirect legal and beneficialownership interest of:(i)the Participant's Joint Venture Interest; and(ii)its share of the Mount Marion Lithium Project.(b)A Participant that is AWPL (or any Transferee Subsidiary of AWPL under clause 12.2), which is not in default in the payment ofany Called Sum, and with respect to which an Event of Default is not then in existence, and provided that Albemarle is theUltimate Holding Company of that Participant, may at any time, subject to provisions of clause 12.11, transfer the whole or anypart of its Joint Venture Interest to a Third Party, provided that the transfer is affected as part of a sale of all or substantially allof its global lithium business as described in its annual corporate filings from time to time.12.4Transfer of Participant’s Joint Venture InterestA Participant which is not in default in the payment of any Called Sum, and with respect to which an Event of Default is not then inexistence (Selling Participant), may at any time, subject to the provisions of clause 12.11, agree to sell for a cash consideration ora non-cash consideration which is readily convertible to a cash equivalent, the whole or any part of its Joint Venture Interest, providedthat the sale must not proceed to completion unless:(a)the provisions of clause 12.5 have first been complied with; and(b)in the case of an assignment to a person who is not a Participant or its Affiliate, that assignee must be approved by the otherParticipants, which approval cannot be withheld if the assignee has:(i)the financial capacity to meet both the purchase price for acquiring the Selling Participant’s Joint Venture Interest, and the financialcommitments of a Participant under this agreement to the extent of the assigned Joint Venture Interest, whether through its ownfinancial standing or through the provision of satisfactory security, which may include page | 48a parent company guarantee from an entity with the requisite financial capacity or other satisfactory security; and(ii)the technical and operational capacity to meet the obligations of a Participant under this agreement.12.5Right of last refusalThe following provisions apply in respect of any sale referred to in clause 12.4:(a)the Selling Participant must give notice of the proposed sale to each of the other Participants, and must include in the notice(Proposed Sale Notice):(i)the name and address of the person to whom the Selling Participant’s Joint Venture Interest is proposed to be sold (ProposedBuyer);(ii)the portion of the Selling Participant’s Joint Venture Interest which is the subject of the proposed sale (Sale Interest);(iii)the cash consideration or cash equivalent of the non-cash consideration for which the Selling Participant’s Joint Venture Interest isproposed to be sold; and(iv)all the other terms and conditions of the proposed sale;(b)the Selling Participant must include with the Proposed Sale Notice an offer to sell the Sale Interest to such of the otherParticipants who are not then in default in the payment of any Called Sums, and with respect to which an Event of Default isnot then in existence (Continuing Participants), in proportion to their respective Joint Venture Interests, at the same price(being in the case of non-cash consideration, unless the Continuing Participants agree otherwise in relation to a royalty, thecash equivalent determined under this clause 12.5) and, subject to clause 12.6, on the same terms and conditions on which itis willing to sell the Sale Interest to the Proposed Buyer. The offer must be in a form which is capable of immediateacceptance by the Continuing Participants;(c)if the consideration notified by the Selling Participant to the Continuing Participants under the Proposed Sale Notice is non-cash consideration, the Selling Participant must bona fide convert the non-cash consideration to a cash equivalent on a basisthat is transparent and disclosed in the Proposed Sale Notice;(d)if any Continuing Participant does not agree with the basis on which the non-cash consideration has been converted to a cashequivalent, that party must so notify the Selling Participant and the other Continuing Participants within seven (7) days of itreceiving the Proposed Sale Notice;(e)on a Continuing Participant so notifying the Selling Participant, all of the Participants will promptly meet and endeavour toreach agreement on the amount of the cash equivalent of the non-cash consideration. If agreement is reached, the SellingParticipant must issue a new Proposed Sale Notice including the agreed cash equivalent. The period of 60 days referred to inclause 12.5(h) will be deemed to commence on the date that the Selling Participant issues a fresh Proposed Sale Notice andthe original notification to the Continuing Participants will be deemed never to have been made. If within 14 days after their firstmeeting, the Selling Participant and the Continuing Participants have not reached agreement on the amount of the cashequivalent of the non-cash consideration, the matter will be referred to an Expert in accordance with clause 17 to determinewhether or not the Selling Participant’s calculation of the cash equivalent was fair page | 49and reasonable and, if not, to determine the Expert’s calculation of the amount of the cash equivalent;(f)if the Expert determines that the Selling Participant’s calculation of the cash equivalent was fair and reasonable:(i)the period of 60 days referred to in clause 12.5(h) will be deemed to have commenced on the date the Proposed Sale Notice wasgiven provided that if the period of 60 days has expired or would expire prior to 14 days after the date upon which the Expert notifiesthe Participants of his determination, the 60 day period will be extended to the date which is 14 days after the date upon which theExpert notifies the Participants of the Expert’s determination; and(ii)the Expert’s costs will be borne by the Continuing Participant who objected to the Selling Participant’s calculation of the cashequivalent;(g)if the Expert determines that the Selling Participant’s calculation of the cash equivalent was not fair and reasonable:(i)the Selling Participant must issue a fresh Proposed Sale Notice to the Continuing Participants in accordance with the requirements ofclause 12.5(a) including the cash equivalent as determined by the Expert and the original Proposed Sale Notice will be deemed neverto have been made; and(ii)the Expert’s costs will be borne by the Selling Participant;(h)the Continuing Participants will have the right to accept the offer set out in the Proposed Sale Notice at any time within a periodof 60 days from the date the Proposed Sale Notice is given (subject to any extension under clause 12.5(f)), and such offermust remain open for that period;(i)if one or more (but not all) of the Continuing Participants accept the offer within such 60 day period, the Selling Participantmust notify the accepting Continuing Participant or Continuing Participants of details of the unaccepted portion of the SaleInterest and such Continuing Participant or Continuing Participants will have the right within a period of 60 days after the SellingParticipant’s notice is given to accept the unaccepted part of the Sale Interest in proportion to their respective Joint VentureInterests (or as they may otherwise agree) at the same price and on the same terms and conditions;(j)if:(i)the whole of the Sale Interest is not accepted by one or more of the Continuing Participants; or(ii)the whole of the Sale Interest is accepted by one or more of the Continuing Participants but the contract or contracts for transfer ofthe Sale Interest to the accepting Continuing Participant or Continuing Participants is terminated before completion for reasons otherthan for a default on the part of the Selling Participant,then the Selling Participant may complete the sale of the Sale Interest to the Proposed Buyer in accordance with the terms andconditions of the proposed sale as set out in the Proposed Sale Notice (or on other terms no more favourable to the ProposedBuyer than those terms and conditions), within a period of 60 days (which period shall be extended until the 5th day followingreceipt of all Transfer Approvals (which must be sought with all reasonable dispatch), to the extent not page | 50obtained during the initial 60 day period, provided that the initial period can only be extended up to a maximum of 12 months)after:(iii)in the circumstances outlined in clause 12.5(j)(i), the end of either the 60 day period referred to in clause 12.5(h) or the 60 day periodreferred to in clause 12.5(i) as the case may be; and(iv)in the circumstances outlined in clause 12.5(j)(ii), the date of termination of the contract or contracts for transfer of the Sale Interestto the accepting Continuing Participant or Continuing Participants;(k)if the whole of the Sale Interest is accepted by one or more of the Continuing Participants, then the Selling Participant willtransfer the Sale Interest to those Continuing Participants in accordance with the terms and conditions of the resultingcontracts with those Continuing Participants. For the avoidance of doubt, the transfer of the Sale Interest to those ContinuingParticipants is not subject to any further rights of last refusal under this clause 12.5; and(l)for the avoidance of doubt, an offer made under clause 12.5(b) must relate only to the Sale Interest and must not include orrelate to any other assets.12.6Requirements of offer to Continuing Participants(a)An offer to sell the Sale Interest to the Continuing Participants under clause 12.5(b) must:(i)contain a condition or conditions to the effect that the sale is conditional upon the Continuing Participants who accept the offerobtaining all Transfer Approvals either unconditionally or on conditions acceptable to such Continuing Participants (actingreasonably); and(ii)provide for a date for the satisfaction of any conditions precedent, and a date for completion of the sale, which would result in anyContinuing Participants who accept the offer having a period of time for satisfaction of conditions precedent (as may have beenextended in clause 12.5(j)) and for completion not less than the corresponding periods of time that the Proposed Buyer would havehad under the contract signed by it,and may contain a condition to the effect that if two or more Continuing Participants accept the offer made to them underclause 12.5(b), the sale of the relevant portions of the Sale Interest to each such Continuing Participant will be conditional uponthe contemporaneous completion of each such sale occurring.(b)For the purposes of the offer to sell the Sale Interest to the Continuing Participants under clause 12.5(b):(i)the requirement for a cash consideration does not preclude the consideration for the sale of the Sale Interest consisting partly of cashand partly of other valuable promises (e.g. a royalty to the extent agreed under clause 12.5) that have been offered by the ProposedBuyer, provided that the Continuing Participants are objectively capable of giving and fulfilling those same promises and are notinherently disadvantaged (when compared to the Proposed Buyer) by the inclusion of those promises as part of the consideration; page | 51(ii)the consideration for the sale of the Sale Interest will be a cash consideration even though:(A)payment of the purchase price may occur in two or more tranches;(B)some or all of the purchase price may be paid after the date of transfer of the Sale Interest to the buyer;(C)the payment of some or all of the purchase price may be subject to a contingency (provided that the contingency is not such that it isinherently more likely to be satisfied where the Continuing Participants are the buyer of the Sale Interest than where the ProposedBuyer is the buyer of the Sale Interest); and(D)the amount of the purchase price, or some component of it, is not fixed and ascertainable at the date of the offer to sell the SaleInterest to the Continuing Participants (provided that the offer clearly sets out the basis upon which the purchase price, or therelevant component of it, is to be calculated, and the basis of calculation is not inherently likely to result in the ContinuingParticipants paying a higher price for the Sale Interest than the Proposed Buyer would pay if it were the buyer).12.7Charge of Participant’s Joint Venture Interest(a)A Participant (Chargor) may create a Security Interest upon all or part of its Joint Venture Interest in favour of any person(Chargee) if the Chargee has entered into a deed (Chargee's Priority Deed) with the other Participants and the Manager, in aform acceptable to the other Participants and the Manager acting reasonably, under which the Chargee agrees that thisagreement, the Deed of Cross Security, all other Joint Venture Documents and the constituent documents of the Manager willhave priority over the Chargee’s Security Interest and any enforcement of that Security Interest will be subject to compliancewith the provisions of this agreement, the Deed of Cross Security, all other Joint Venture Documents and the constituentdocuments of the Manager.(b)The Participants acknowledge that the Chargee’s Priority Deed will also contain provisions under which the Chargee is entitledto receive prior notice of any default by the Chargor or other circumstances that may result in enforcement of remedies underthis agreement or the Deed of Cross Security against the Chargor and to take action to step-in or take other measures to avoidthe exercise of such remedies. The Participants will negotiate such provisions reasonably and in good faith and will notunreasonably withhold their agreement to provisions proposed by the Chargee which are consistent with normal financepractice.12.8Notice of intention to create Security InterestAny Participant proposing the creation of any Security Interest (other than a Permitted Security Interest) must give prior written noticeof its intention to create such Security Interest to the other Participants, together with a copy of the proposed instrument creatingsuch Security Interest and the name and address of the proposed Chargee.12.9Sale of Joint Venture Interest by Chargee(a)A Chargee of a Participant's Joint Venture Interest may, without the consent of any Participant, in the exercise of any power ofsale or the enforcement of any other rights conferred by law or by the instrument creating such Security Interest, upon thehappening of any event of default specified in the Security Interest, sell (but not otherwise dispose of) the whole or part of theJoint Venture Interest of such Participant (Defaulting Participant). page | 52(b)Any proposed sale (whether by private treaty or public auction) by a Chargee of the whole or part of a Defaulting Participant’sJoint Venture Interest will be subject to the rights of last refusal of the other Participants under clauses 12.3, 12.5 and 12.6 andthe Chargee’s Priority Deed must acknowledge this.12.10Set-off(a)A Non-Defaulting Participant may, in connection with its purchase of the Joint Venture Interest or part of the Joint VentureInterest of a Defaulting Participant under this clause 12, credit against the purchase price payable by such Participant theamount of any debt due and payable to such Participant by the Defaulting Participant under clause 13.5.(b)Except to the extent of such credit, the Chargee must pay to the Manager (for the account of the other Participants) from theproceeds of such sale, all amounts due and payable under any of the Joint Venture Documents by the Defaulting Participant,or in the event such amounts have been paid on behalf of the Defaulting Participant by any other Participant, will reimbursesuch other Participant the amounts so paid together with interest as provided in clause 13.5.12.11Assumption of Joint Venture obligations by TransfereeAny sale, transfer or other disposition of the whole or any part of the Joint Venture Interest by a Participant under this clause 12 willbe effective only upon:(a)the execution and delivery by the transferee and the other Participants of a deed of assignment and assumption in the formprovided in Schedule 5:(i)evidencing the agreement of such transferee (to the extent of the Joint Venture Interest being transferred):(A)to become a Participant, or if already a Participant, to increase its Joint Venture Interest;(B)to be bound by the provisions of the Joint Venture Documents; and(C)to assume all of the liabilities and to perform all of the obligations and duties under the Joint Venture Documents of the Participantwhose Joint Venture Interest, or part of whose Joint Venture Interest, is to be sold, transferred or disposed of to the extent of theJoint Venture Interest being sold, transferred or disposed of; and(ii)evidencing the agreement of the other Participants that such transferee (to the extent of the Joint Venture Interest being transferred)will be entitled to all of the rights and benefits of a Participant under the Joint Venture Documents; and(b)the execution and delivery by the transferee of a deed of charge in, or substantially in, the form of the Deed of Cross Security. page | 5312.12Change in Control(a)If there is a Change in Control of a Participant or of a Holding Company of a Participant (except when the Participant or HoldingCompany the subject of the Change in Control is listed on a stock exchange, or in the circumstances described in clause12.12(b)), then unless the other Participants have consented in writing to such Change in Control, the relevant Participant(Changed Participant) must immediately notify the other Participants of the Change in Control.(b)For the purposes of this clause 12.2, no Change in Control of a Participant or of a Holding Company of a Participant will bedeemed to have occurred in circumstances where:(i)if the Participant is WLPL (or any Transferee Subsidiary under clause 12.2), MRL has affected a sale of all or substantially all ofMRL's lithium business which, as at the Effective Date, includes MRL's and its Affiliates' direct and indirect legal and beneficialownership interest of:(A)the Participant's Joint Venture Interest; and(B)its share of the Mount Marion Lithium Project; and(ii)if the Participant is AWPL (or any Transferee Subsidiary under clause 12.2), Albemarle has affected a sale of all or substantially all ofits global lithium business as described in its annual corporate filings from time to time.For the avoidance of doubt, this clause 12.12(b) will only apply for so long as Albemarle and MRL are Ultimate HoldingCompanies of AWPL and WLPL respectively, (or of any of their Transferee Subsidiaries of under clause 12.2).(c)Any other Participant may, within ten (10) Business Days after receiving the notice under clause 12.12(a), give a notice to theChanged Participant requiring that the Changed Participant must determine the value of its Joint Venture Interest (the OfferedInterest). That value will be the value agreed between the parties using reasonable endeavours and acting in good faith toagree the value within 20 days from the date of the notice under clause 12.12(a). If the parties are unable to agree upon thevalue of the Offered Interest within 30 days from the date of the notice under clause 12.12(a), then the parties must endeavourto agree upon the appointment of two Valuers. If the parties are unable to agree upon the appointment of the Valuers within 40days from the date of the notice under clause 12.12(a), then the Valuers will be two (2) suitably qualified and experiencedpersons nominated by the President (or acting President) for the time being of the Minerals Council of Australia or theirnominee at the request of any other Participant. The following provisions apply where the value of the Offered Interest isrequired to be determined by the Valuers:(i)the Valuers must be engaged on terms which require the Valuers to use their best endeavours to make independently a determinationwithin 30 days after their appointment, or such other timeframes as the parties may agree;(ii)each Valuer will determine the value of the Offered Interest, on the following basis:(A)the price that would have been paid by a knowledgeable and willing (but not anxious) buyer to a knowledgeable and willing (but notanxious) seller dealing at arm's length; page | 54(B)any Rehabilitation Obligations and Mine Closure Obligations relating to the Offered Interest are to be taken into consideration;(C)the Offered Interest is to be valued on a stand-alone basis, and without taking into account any element of control that the otherParticipants may obtain as a result of acquiring all or part of the Changed Participant's Joint Venture Interest in addition to the otherParticipant's existing Joint Venture Interest;(D)the valuation is to be determined independently and generally in accordance with the VALMIN Code of the Australasian Institute ofMining and Metallurgy; and(E)otherwise the valuation methodologies to be applied are to be determined by the Valuer in its own discretion, taking into accountusual and prudent industry practices;(iii)the value of the Offered Interest will be deemed to be the average of the two Valuer's determinations;(iv)in making the determination, each Valuer will be deemed to be acting as an expert and not as an arbitrator, and the laws relating tocommercial arbitration will not apply to either Valuer, the Valuer's determination or the means by which each Valuer makes thedetermination;(v)each Participant will be entitled to submit such evidence to each Valuer as the Valuer may reasonably allow or require, and willprovide all information, written or oral, which the Valuer may reasonably request, provided that:(A)all oral evidence must be presented in the presence of the other parties; and(B)copies of all written evidence must be given to all other parties;(vi)each Valuer may consult such legal, technical and financial experts as the Valuer, in his or her absolute discretion, thinks fit;(vii)the costs of the Valuers, and of any legal, technical and financial experts consulted by the Valuers, will be borne by the ChangedParticipant; and(viii)the determination of the Valuer will be final and binding on the parties without appeal so far as the law allows and except in the caseof manifest error.(d)Once the value of the Offered Interest has been agreed or determined as contemplated by clause 12.12(b), the ChangedParticipant will within 5 Business Days notify the other Participants and will be deemed to have offered to assign the OfferedInterest to such of the other Participants who are not then in default of payment of any Called Sums, and with respect to whichan Event of Default is not then in existence (Other Participants), in proportion to their respective Joint Venture Interests, at aprice equal to the value of the Offered Interest. The Other Participants will be entitled to accept that offer 60 days of themaking of the offer.(e)If one or more (but not all) of the Continuing Participants accept the offer within such 60 day period, the Changed Participantmust notify the accepting Continuing Participant or Continuing Participants of details of the unaccepted portion of the OfferedInterest and such Continuing Participant or Continuing Participants will have the right within a period of 60 days after theChanged Participant’s notice is given to accept the unaccepted part of the Offered Interest in proportion to their respectiveJoint Venture Interests (or as they may otherwise agree) at the same price. page | 55(f)If the whole of the Offered Interest is accepted by one or more of the Continuing Participants (Accepting Participants), thenthe Changed Participant and the Accepting Participants will be deemed to have entered into a contract for the sale to theAccepting Participants (in the proportions that their respective Joint Venture Interests bear to the aggregate of their JointVenture Interests) of the Changed Participant’s Joint Venture Interest upon the following terms and conditions:(i)The liability of the Accepting Participants (including obligations to pay money) will be several in the proportions that their respectiveJoint Venture Interests bear to the aggregate of their Joint Venture Interests.(ii)The sale will be conditional upon the parties obtaining all Transfer Approvals, which may include, without limitation:(A)Ministerial consents required under the Mining Act for the assignment of the Changed Participant's Joint Venture Interest in theTenements; and(B)approval for the sale from the Foreign Investment Review Board (if applicable).(iii)The parties must execute all documents and do all other things reasonably necessary to apply for and obtain the Transfer Approvalsas expeditiously as possible.(iv)If the Transfer Approvals:(A)have not all been obtained within 90 days after the date of expiry of the 60 day period referred to in clause 12.12(d), the AcceptingParticipants may elect to terminate the contract for the sale of the Changed Participant's Joint Venture Interest;(B)have all been obtained or the Accepting Participants have not elected to terminate the contract for the sale of the ChangedParticipant's Joint Venture Interest under clause 12.12(f)(iv)(A), then completion of the sale of the Changed Participant's Joint VentureInterest will take place at the place in Western Australia nominated by the Accepting Participants by notice in writing to the ChangedParticipant and on the date which is 30 days after the date upon which the last of the necessary Approvals was obtained, or suchearlier date agreed by the Accepting Participants, provided that if all Transfer Approvals have not been obtained within 12 months ofthe offer described in clause 12.12(d), this clause 12.12 shall cease to apply in respect of that Change in Control event;(C)have all been obtained by some but not all Accepting Participants within 90 days after the date of expiry of the 60 day period referredto in clause 12.12(d), then:(1)those Accepting Participants who have not obtained all necessary Approvals may elect to withdraw from thecontract for the sale of the Changed Participant's Joint Venture Interest; and page | 56(2)if, within a further 14 days after the end of the 90 day period (or such longer period agreed by the AcceptingParticipants), any remaining Accepting Participants who have obtained all Transfer Approvals (within the 12month limitation period described in clause 12.12(f)(iv)(B)) agree to purchase the Changed Participant's JointVenture Interest, either in the proportions that those Accepting Participants' respective Joint Venture Interestsbear to the aggregate of their Joint Venture Interests, or in such other proportions that those remainingAccepting Participants otherwise agree, then:(AA)the contract for the sale of the Changed Participant's Joint Venture Interest will be deemed to bebetween the Changed Participant and those remaining Accepting Participants, and in such proportionsas those Accepting Participants agree; and(BB)completion of the sale of the Changed Participant's Joint Venture Interest will take place at the place inWestern Australia nominated by the relevant Accepting Participants by notice in writing to the ChangedParticipant on the date which is 14 days after the end of the 14 day period specified in clause 12.12(f)(iv)(C)(2).(v)At completion:(A)the Changed Participant must transfer its Joint Venture Interest to the relevant Accepting Participants free from all Security Interests(subject to the Permitted Security Interests which apply to the Joint Venture Interest). The relevant Accepting Participants will beentitled to a transfer of the Joint Venture Interest of the Changed Participant in the proportions that their respective Joint VentureInterests bear to the aggregate of their Joint Venture Interests or in such other proportions as the relevant Accepting Participantsagree;(B)the Changed Participant must execute and deliver all instruments of sale, assignment, conveyance and transfer and all otherdocuments, and take such other action, as the relevant Accepting Participants may reasonably request to effect such transfer; and(C)in return for the transfer of the Changed Participant's Joint Venture Interest, the relevant Accepting Participants must pay to theChanged Participant, or as the Changed Participant's solicitor may direct, the amount that is equal to the value of the ChangedParticipant's Joint Venture Interest (as agreed or determined in accordance with clause 12.12(b)).(g)For the avoidance of doubt, a Change in Control of a Participant or its Holding Company does not constitute a transfer orproposed transfer for the purposes of clause 12.3. page | 5713Defaults and remedies13.1Event of DefaultAny one or more of the following events with respect to any Participant is an Event of Default:(a)any failure by the Participant to pay a Called Sum (under clauses 8.3 or 8.5) in accordance with clause 8.4 within five (5)Business Days after notice has been given by the Manager or a Participant under clause 13.2;(b)subject to clause 19.15, an Insolvency Event occurs in relation to the Participant;(c)any default by the Participant in the performance of any material obligation under a Joint Venture Document (other than onereferred to in clauses 13.1(a) or 13.1(b) above):(i)which is capable of remedy, and which default is not remedied within 30 Business Days after receipt of written notice from any otherParticipant or the Manager given under clause 13.2;(ii)but if the default is not reasonably capable of being remedied within 30 Business Days after receipt of written notice from any otherParticipant or the Manager given under clause 13.2, the Participant fails to commence or has not otherwise taken bona fide steps toremedy the relevant default within 30 Business Days of receiving such notice and does not remedy that default within 50 BusinessDays after receipt of written notice from any other Participant or the Manager given under clause 13.2 (or such longer period agreedby the Management Committee, where any Defaulting Participant or its Affiliates does not vote); or(d)any default by the Participant in the performance of any material obligation under a Joint Venture Document which is notcapable of remedy (other than one referred to in clauses 13.1(a) or 13.1(b) above), where the Defaulting Participant has not paidmonetary compensation to the Non-Defaulting Participants within 30 Business Days of receipt of notification of the amount ofcompensation payable as determined under clause 13.2(d).13.2Notices of default(a)If any Participant:(i)fails to pay when due any amount due by it referred to in clause 13.1(a); or(ii)defaults in the performance of any of its material obligations under any of the Joint Venture Documents,the Manager must, as soon as practicable after it becomes aware of that default, notify the Defaulting Participant and each ofthe other Participants (Non-Defaulting Participants) of that default.(b)Failure by the Manager to give such notice will not release the Defaulting Participant from any of its obligations under the JointVenture Documents.(c)If a Participant becomes aware that another Participant has defaulted in the performance of any of its obligations under theJoint Venture Documents but the Manager has not given a notice of default to the Defaulting Participant under page | 58clause 13.2(a), the Participant may notify the Defaulting Participant, the Manager and each of the other Non-DefaultingParticipants of that default.(d)If a default of a material obligation is not capable of being remedied, the Participants must agree in writing the amount ofadequate monetary compensation to be paid by the Defaulting Participant to compensate for that default. If the Participantshave not reached agreement within 14 days after the date on which notice of default is given, that amount must be referred toan Expert for determination in accordance with clause 17, who must make such determination within 30 days of his or herappointment. On agreement or determination of the amount of adequate monetary compensation under this clause, thatamount, and any interest and costs payable or reimbursable under this agreement, becomes money due and payable under thisagreement within the 30 Business Day period referred to in clause 13.1(d).13.3Payment of interest upon defaultIf a Participant defaults in paying the whole or part of any Called Sum, that Defaulting Participant must pay to the Manager, for theaccount of the Non-Defaulting Participants, interest on such unpaid amount at the Interest Rate calculated on daily balances, andcapitalised monthly, from the due date for payment to the date of actual payment.13.4Rights following an Event of DefaultSubject to clause 19.15, if an Event of Default occurs, then until such Event of Default has been rectified (and the DefaultingParticipant has paid all amounts due but unpaid by it in relation to the default under any Joint Venture Document):(a)the Representatives of the Defaulting Participant:(i)will not have the right to vote at meetings of the Management Committee;(ii)will not be counted for the purposes of determining the relevant quorum; and(iii)if Chairperson of the Management Committee, will cease to be Chairperson and the next entitled Non-Defaulting Participant mayappoint the Chairperson;(b)if the Event of Default is a circumstance described in clause 13.1(a), the Defaulting Participant will not have a right toparticipate in the management of the Joint Venture or to participate in any determinations under this agreement and theRepresentatives appointed by the Defaulting Participant will not have the right to vote at Management Committee meetings, butwill be entitled to attend and otherwise participate in those meetings;(c)the Defaulting Participant will have no further right to take and dispose of its share of Product and the Manager may take anddispose of what would otherwise be the Defaulting Participant’s share of Product on such terms as the Manager considersreasonable and must credit the net proceeds of sale after deducting all costs incurred in effecting the sale, towards the moneysowed by the Defaulting Participant;(d)the Defaulting Participant will continue to have the right to receive the reports and information from the Manager under clause9; page | 59(e)the Non-Defaulting Participants and the Manager may exercise each and every power and remedy provided in the Deed ofCross Security executed by the Defaulting Participant and use and apply any moneys realised from such exercise inaccordance with the Deed of Cross Security; and(f)the Non-Defaulting Participants may acquire the Joint Venture Interest of the Defaulting Participant subject to and inaccordance with clause 13.7.13.5Payment of Unpaid Called Sum(a)Subject to clause 13.5(b), if requested by written notice from the Manager, the Non-Defaulting Participants will, in the proportionthat their respective Joint Venture Interests bear to the aggregate of their Joint Venture Interests, pay on behalf of theDefaulting Participant all or any part nominated by the Manager of the amounts owing by such Defaulting Participant (includingunder clause 13.3), such payment to be made by the Non-Defaulting Participants within such time as the Manager mayreasonably determine.(b)The Manager will exercise its rights under the Deed of Cross Security (as contemplated in clause 13.4(e)), and take and sellwhat would otherwise be the Defaulting Participant’s Joint Venture Interest share of Product under clause 13.4(c), in priority tocalling upon the Non-Defaulting Participants to pay any amounts owing by the Defaulting Participant (as contemplated in clause13.5(a)), if the Manager is of the opinion that exercising its rights under the Deed of Cross Security or against the share ofProduct will result in it obtaining payment of the relevant outstanding amounts, within a timeframe that will enable Joint VentureOperations to continue without disruption.(c)If any Non-Defaulting Participant pays any amount on behalf of a Defaulting Participant under clause 13.5(a), the amount sopaid will constitute a debt due and payable by the Defaulting Participant to such Non-Defaulting Participant, and will bearinterest at the Interest Rate calculated on daily balances, and capitalised monthly, from the date such debt became due to theNon-Defaulting Participant until the date such debt is paid by the Defaulting Participant.13.6Delivery of Cross Security(a)It is acknowledged that, for the purposes of securing the performance of their obligations under the Joint Venture Documents,each Participant has executed and delivered the Deed of Cross Security, creating a charge upon the Participant's Joint VentureInterest and its shares in the Manager in favour of the other Participants and the Manager and creating a charge upon theParticipant's Joint Venture Interest in favour of the Manager.(b)Each Participant (and each Transferee of a Joint Venture Interest which has executed a similar deed of charge in accordancewith clause 12.11(b)) will as soon as practicable after the creation of the Deed of Cross Security promptly register the Deed ofCross Security, or will file or record such other notices or documents relating to the Deed of Cross Security, in each jurisdictionwhere such registration, filing or recording may be required to perfect the security created by the Deed of Cross Security and toprotect further the rights of the Manager and other Participants under the Deed of Cross Security. page | 6013.7Option to acquire Joint Venture Interest of Defaulting Participant(a)Upon the occurrence of an Event of Default, the Manager (or failing the Manager doing so, any Participant) will notify theParticipants of the Event of Default (EOD Notice).(b)Upon the occurrence of an Event of Default, and until such Event of Default has been rectified, each Non-Defaulting Participantwill have the option to acquire the whole of the Joint Venture Interest of the Defaulting Participant.(c)Such option may be exercised by notice in writing (Exercise Notice) given to the Defaulting Participant at any time during the60 day period immediately following the later of the occurrence of the Event of Default and the date that the Manager (or aParticipant) gives the Participants an EOD Notice (Option Exercise Period), provided the Event of Default giving rise to suchoption remains unremedied as at the date of the Exercise Notice.(d)The Non-Defaulting Participant must give a copy of the Exercise Notice to:(i)the Manager; and(ii)the other Non-Defaulting Participants,at the same time as giving the Exercise Notice to the Defaulting Participant.(e)If:(i)one or more Non-Defaulting Participants give an Exercise Notice within the Option Exercise Period; and(ii)at least the first of such Exercise Notices was given at a point in time when the Event of Default which gave rise to the optionremained unremedied,then, upon expiry of the Option Exercise Period, the value of the Joint Venture Interest of the Defaulting Participant must bedetermined in accordance with clause 13.8.(f)Within 14 days after the value of the Joint Venture Interest of the Defaulting Participant has been determined in accordancewith clause 13.8, any Non-Defaulting Participant who had given an Exercise Notice may, by notice in writing (Notice toProceed) given to the Defaulting Participant (with copies to the Manager and the other Non-Defaulting Participants) advise thatthe Non-Defaulting Participant wishes to proceed with the acquisition of the Joint Venture Interest of the Defaulting Participant.(g)If one or more Non-Defaulting Participants (Acquiring Participants) give a Notice to Proceed, the Defaulting Participant andthe Acquiring Participants will be deemed to have entered into a contract for the sale to the Acquiring Participants (in theproportions that their respective Joint Venture Interests bear to the aggregate of their Joint Venture Interests) of the DefaultingParticipant’s Joint Venture Interest upon the following terms and conditions:(i)The liability of the Acquiring Participants (including obligations to pay money) will be several in the proportions that their respectiveJoint Venture Interests bear to the aggregate of their Joint Venture Interests. page | 61(ii)The sale will be conditional upon the parties obtaining all Governmental Agency consents, approvals or clearances required in respectof the sale (Approvals), which may include, without limitation:(A)Ministerial consents required under the Mining Act for the assignment of a Defaulting Participant’s Joint Venture Interest in theTenements; and(B)approval for the sale from the Foreign Investment Review Board (if applicable).(iii)The parties must execute all documents and do all other things reasonably necessary to apply for and obtain the necessaryApprovals as expeditiously as possible.(iv)If the necessary Approvals:(A)have not all been obtained within 90 days after the date of expiry of the 14 day period referred to in clause 13.7(f), the AcquiringParticipants may elect to terminate the contract for the sale of the Defaulting Participant’s Joint Venture Interest;(B)have all been obtained or the Acquiring Participants have not elected to terminate the contract for the sale of the DefaultingParticipant’s Joint Venture Interest under clause 13.7(g)(iv)(A), then completion of the sale of the Defaulting Participant’s JointVenture Interest will take place at the place in Western Australia nominated by the Acquiring Participants by notice in writing to theDefaulting Participant and on the date which is 30 days after the date upon which the last of the necessary Approvals was obtained,or such earlier date agreed by the Acquiring Participants;(C)have all been obtained by some but not all Acquiring Participants within 90 days after the date of expiry of the 14 day period referredto in clause 13.7(f), then:(1)those Acquiring Participants who have not obtained all necessary Approvals may elect to withdraw from thecontract for the sale of the Defaulting Participant’s Joint Venture Interest; and(2)if, within a further 14 days after the end of the 90 day period (or such longer period agreed by the AcquiringParticipants), any remaining Acquiring Participants who have obtained all necessary Approvals agree topurchase the Defaulting Participant’s Joint Venture Interest, either in the proportions that those AcquiringParticipants’ respective Joint Venture Interests bear to the aggregate of their Joint Venture Interests, or insuch other proportions that those remaining Acquiring Participants otherwise agree, then:(AA)the contract for the sale of the Defaulting Participant’s Joint Venture Interest will be deemed to bebetween the Defaulting Participant and those remaining Acquiring Participants, and in such proportionsas those Acquiring Participants agree; and page | 62(BB)completion of the sale of the Defaulting Participant’s Joint Venture Interest will take place at the placein Western Australia nominated by the relevant Acquiring Participants by notice in writing to theDefaulting Participant on the date which is 14 days after the end of the 14 day period specified inclause 13.7(g)(iv)(C)(2).(v)At completion:(A)the Defaulting Participant must transfer its Joint Venture Interest to the relevant Acquiring Participants free from all Security Interests(subject to the Permitted Security Interests which apply to the Joint Venture Interest). The relevant Acquiring Participants will beentitled to a transfer of the Joint Venture Interest of the Defaulting Participant in the proportions that their respective Joint VentureInterests bear to the aggregate of their Joint Venture Interests or in such other proportions as the relevant Acquiring Participantsagree;(B)the Defaulting Participant must execute and deliver all instruments of sale, assignment, conveyance and transfer and all otherdocuments, and take such other action, as the relevant Acquiring Participants may reasonably request to effect such transfer;(C)in return for the transfer of the Defaulting Participant’s Joint Venture Interest, the relevant Acquiring Participants must pay to theDefaulting Participant, or as the Defaulting Participant’s solicitor may direct, the amount that is equal to 95% of the value of theDefaulting Participant’s Joint Venture Interest (as determined in accordance with clause 13.8) less the following amounts:(1)all amounts due but unpaid under any of the Joint Venture Documents by the Defaulting Participant, whichamounts must, immediately following completion, be paid by the relevant Acquiring Participants on behalf ofthe Defaulting Participant;(2)the amount of the debt owed by the Defaulting Participant to the acquiring Participants under clause 13.5(c);and(3)the amount (as reasonably determined by the Non-Defaulting Participants) of all other outstanding liabilitiesand obligations of the Defaulting Participant under any of the Joint Venture Documents which are to beassumed by the relevant Acquiring Participants; and(4)all amounts of any stamp and other duties, levies, imposts or other taxes, together with any interest orpenalty thereon, imposed by the State or the Commonwealth or any taxing authority, paid or which maythereafter be payable by the relevant Acquiring Participants in connection with the exercise of the option andthe transfers effected consequent upon its exercise; and(D)the amount payable to the Defaulting Participant under clause 13.7(g)(v)(C) must be paid by electronic transfer of clear and availablefunds into a bank account in Australia nominated by the Defaulting Participant for this purpose. page | 63(vi)To secure the rights of the Acquiring Participants under this clause, the Defaulting Participant hereby irrevocably appoints eachrelevant Acquiring Participant, the Manager and their respective directors as the several attorneys of the Defaulting Participant withpower to sign all documents and do all other things in the name of the Defaulting Participant which are reasonably necessary to:(A)apply for and obtain the necessary Government Agency consents, approvals and clearances referred to in clause 13.7(g); and(B)effect the transfer of the Defaulting Participant’s Joint Venture Interest as contemplated in clauses 13.7(g)(v)(A) and 13.7(g)(v)(B).(vii)The Defaulting Participant and the relevant Acquiring Participants must sign any deed of covenant and deed of charge that is requiredunder clause 12.11(b).13.8Value of Joint Venture Interest of Defaulting ParticipantThe following provisions apply where, under clause 13.7, the value of the Joint Venture Interest of a Defaulting Participant is requiredto be determined:(a)The Defaulting Participant and the Non-Defaulting Participants who have given an Exercise Notice must endeavour to agree thevalue of the Joint Venture Interest of the Defaulting Participant.(b)If the parties are unable to agree upon the value of the Joint Venture Interest of the Defaulting Participant within 14 days afterthe expiry of the Option Exercise Period, the parties must endeavour to agree upon the appointment of two Valuers.(c)If the parties are unable to agree upon the appointment of the Valuers within 14 days after the expiry of the Option ExercisePeriod, then the Valuers will be two (2) suitably qualified and experienced persons nominated by the President (or actingPresident) for the time being of the Minerals Council of Australia or their nominee at the request of Non-Defaulting Participantswho have given an Exercise Notice.(d)The Valuers must be engaged on terms which require the Valuers to use their best endeavours to make independently adetermination within 30 days after their appointment, or such other timeframes as the Defaulting Participant and Non-DefaultingParticipants who have given an Exercise Notice may agree.(e)Each Valuer will determine the value of the Joint Venture Interest of the Defaulting Participant, as at the date of the firstExercise Notice given, on the following basis:(i)the price that would have been paid by a knowledgeable and willing (but not anxious) buyer to a knowledgeable and willing (but notanxious) seller dealing at arm’s length;(ii)any Rehabilitation Obligations and Mine Closure Obligations relating to the Joint Venture Interest are to be taken into consideration;(iii)the Joint Venture Interest is to be valued on a stand-alone basis, and without taking into account any element of control that a Non-Defaulting Participant may obtain as a result of acquiring all or part of the Defaulting Participant’s Joint Venture Interest in addition tothe Non-Defaulting Participant’s existing Joint Venture Interest; page | 64(iv)the valuation is to be determined independently and generally in accordance with the VALMIN Code of the Australasian Institute ofMining and Metallurgy; and(v)otherwise the valuation methodologies to be applied are to be determined by the Valuer in its own discretion, taking into accountusual and prudent industry practices.(f)The value of the Joint Venture Interest of the Defaulting Participant will be deemed to be the average of the two Valuer’sdeterminations.(g)In making the determination, each Valuer will be deemed to be acting as an expert and not as an arbitrator, and the lawsrelating to commercial arbitration will not apply to either Valuer, the Valuer’s determination or the means by which each Valuermakes the determination.(h)Each Participant will be entitled to submit such evidence to each Valuer as the Valuer may reasonably allow or require, and willprovide all information, written or oral, which the Valuer may reasonably request, provided that:(i)all oral evidence must be presented in the presence of the other parties; and(ii)copies of all written evidence must be given to all other parties.(i)Each Valuer may consult such legal, technical and financial experts as the Valuer, in his or her absolute discretion, thinks fit.(j)The costs of the Valuers, and of any legal, technical and financial experts consulted by the Valuers, will be borne by theDefaulting Participant.(k)The determination of the Valuer will be final and binding on the parties without appeal so far as the law allows and except in thecase of manifest error.13.9Remedies not exclusive(a)Each and every power and remedy given to the Non-Defaulting Participants in this clause 13 are in addition to every otherpower and remedy existing at law or in equity, and each and every power and remedy may be exercised from time to time andsimultaneously and as often and in such order as may be deemed expedient.(b)All such powers and remedies will be cumulative, and the exercise of one will not be deemed a waiver of the right to exerciseany other or others.(c)No delay or omission in the exercise of any such power or remedy will impair any such power or remedy or will be construed tobe a waiver of any default.14Force Majeure(a)If a party (Affected Party) is prevented or hindered by Force Majeure from fully or partly complying with any obligation (exceptfor the payment of money) under this agreement, that obligation is suspended for the duration of, and to the extent affected by,such Force Majeure.(b)If the Affected Party wishes to claim the benefit of this clause it must give prompt notice of the Force Majeure occurrence tothe other parties including reasonable details of: page | 65(i)the Force Majeure occurrence and why it constitutes Force Majeure;(ii)the effect of the Force Majeure occurrence on the performance of the Affected Party’s obligations; and(iii)the likely duration of the delay in performance of those obligations.(c)The Affected Party must use its best endeavours to remove or overcome the cause and/or effect of the Force Majeureprovided that nothing in this clause requires the Affected Party to:(i)settle any strike, or other labour dispute; or(ii)contest the validity or enforceability of any law or legally enforceable order by way of legal proceedings,on terms not acceptable to it solely for the purpose of removing the event of Force Majeure.(d)If the Force Majeure event cannot be removed or overcome to an extent that allows resumption of performance within six (6)Months (or such other period as the Participants agree) from the date the notice is given under clause 14(b)(i), the parties mustconsider and determine whether this agreement should be modified or terminated.(e)Notwithstanding the Force Majeure, the Participants must continue to pay any Called Sum called by the Manager inaccordance with clauses 8.3 and 8.5 to the extent such monies are necessary to maintain the Joint Venture Assets in goodcondition and keep the Tenements and the Petroleum Pipelines in good standing.15Notices15.1GeneralA notice, demand, certification, process or other communication relating to this agreement must be in writing in English and may begiven by an agent of the sender.15.2How to give a communicationIn addition to any other lawful means, a communication may be given by being:(a)personally delivered;(b)left at the party’s current delivery address for notices;(c)sent to the party’s current postal address for notices by pre-paid ordinary mail or, if the address is outside Australia, by pre-paid airmail;(d)sent by email to the party’s current email address for notices; or(e)sent by such other form of communication as the Participants and the Manager may from time to time agree.15.3Particulars for delivery page | 66(a)The particulars for delivery of notices are initially:(i)in the case of WLPL:Delivery address: 1 Sleat RoadAPPLECROSS WA 6153Postal address: Locked Bag 3, Canning BridgeAPPLECROSS WA 6153Email: [insert]Attention: [insert](ii)in the case of AWPL:Delivery address: [insert]Postal address: [insert]Email: [insert]Attention: [insert](iii)in the case of the Manager:Delivery address: [insert]Postal address: [insert]Email: [insert]Attention: [insert](b)Each party may change its particulars for delivery of notices by notice to each other party.15.4Communications by postSubject to clause 15.7, a communication is given if posted:(a)within Australia to an Australian postal address, three (3) Business Days after posting; or(b)outside of Australia to an Australian postal address or within Australia to an address outside of Australia, ten (10) BusinessDays after posting.15.5Communications by email(a)Subject to clause 15.7, a communication is given if sent by email, upon the earlier of:(i)the time the sender receives an automated message from the intended recipient’s information system confirming delivery of theemail; page | 67(ii)the time that the email is first opened or read by the intended recipient, or an employee or officer of the intended recipient; and(iii)four (4) hours after the time the email is sent (as recorded on the device from which the sender sent the email) unless the senderreceives, within that four (4) hour period, an automated message that the email has not been delivered.(b)Despite anything to the contrary in this agreement, the following communications must not be given by email:(i)a notice given by the Manager under clause 13.2(a) or any Participant under clause 13.2(c); and(ii)an EOD Notice given under clause 13.7.15.6Process serviceAny process or other document relating to litigation, administrative or arbitral proceedings in relation to this agreement may be servedby any method contemplated by this clause 15 or in accordance with any applicable law.15.7After hours communicationsIf a communication is given:(a)after 5.00 pm in the place of receipt; or(b)on a day which is a Saturday, Sunday or bank or public holiday in the place of receipt,it is taken to have been given at 9.00am on the next day which is not a Saturday, Sunday or bank or public holiday in that place.16GST16.1ConstructionIn this clause 16:(a)unless there is a contrary indication, words and expressions which are not defined in this agreement but which have a definedmeaning in the GST Law have the same meaning as in the GST Law;(b)references to GST payable and input tax credit entitlements include:(i)notional GST payable by, and notional input tax credit entitlements of the Commonwealth, a State or a Territory (including agovernment, government body, authority, agency or instrumentality of the Commonwealth, a State or a Territory); and(ii)GST payable by, and the input tax credit entitlements of, the representative member of a GST group of which the entity is a member.16.2Consideration GST exclusive page | 68Unless otherwise expressly stated, all consideration, whether monetary or non-monetary, payable or to be provided under or inconnection with this agreement is exclusive of GST (GST-Exclusive Consideration).16.3Payment of GSTIf GST is or becomes payable on any supply made by:(a)a party; or(b)an entity that is taken under the GST Law to make the supply by reason of the capacity in which a party acts,(Supplier) under or in connection with this agreement, the recipient of the supply, or the party providing the consideration for thesupply, must pay to the Supplier an amount equal to the GST payable on the supply as calculated in accordance with the GST Law,subject to clause 16.5.16.4Timing of GST paymentThe amount referred to in clause 16.3 must be paid in addition to and at the same time and in the same manner (without any set-offor deduction) that the GST-Exclusive Consideration for the supply is payable or to be provided.16.5Tax invoiceThe Supplier must deliver a tax invoice or an adjustment note to the recipient of a taxable supply before the Supplier is entitled topayment of an amount under clause 16.3.16.6Adjustment eventIf an adjustment event arises in respect of a supply made by a Supplier under or in connection with this agreement, any amount thatis payable under clause 16.3 will be calculated or recalculated to reflect the adjustment event and a payment will be made by therecipient to the Supplier or by the Supplier to the recipient as the case requires.16.7ReimbursementsNotwithstanding any other provision in this agreement, where a party is required under or in connection with this agreement to pay for,reimburse or contribute to any expense, loss, liability or outgoing suffered or incurred by another party or indemnify another party inrelation to such an expense, loss, liability or outgoing (Reimbursable Expense), the amount required to be paid, reimbursed orcontributed by the first party will be reduced by the amount of any input tax credits to which the other party (or the representativemember of the GST group of which the other party is a member) is entitled in respect of the Reimbursable Expense.16.8Calculations based on other amountsIf an amount of consideration payable or to be provided under or in connection with this agreement is to be calculated by reference toany price, value, sales, proceeds, revenue or similar amount (Revenue), that reference will be to that Revenue determined bydeducting from it an amount equal to the GST payable on the supply for which it is consideration.16.9No merger page | 69This clause 16 does not merge on the completion, rescission or other termination of this agreement or on the transfer of any propertysupplied under this agreement.16.10GST joint ventureThe Manager and the Participants will, in good faith, consider taking action to register the Joint Venture as a GST joint venture afterthe Effective Date. If the Joint Venture is registered as a GST joint venture then the parties contemplate that the Manager will beresponsible for administration of any GST.17Expert determination17.1When appointedWherever under this agreement:(a)any matter is expressly to be referred to an Expert; or(b)the parties agree that a point of difference between them will be resolved by an Expert,then unless specifically provided otherwise, the matter in issue will be referred to an Expert for determination and this clause willapply. Unless otherwise agreed by the parties to the dispute, any Expert appointed under this agreement must be someone who isindependent of the parties to the dispute, does not have an interest or duty which conflicts or may conflict with the functions as theexpert and is not an employee, representative of a person that provides consultancy services on a regular basis to any party to thedispute.17.2AppointmentThe procedure for the appointment of an Expert will be as follows:(a)the party wishing the appointment to be made will give notice in writing to that effect to the other parties and give details of thematter which it proposes will be resolved by the Expert;(b)within ten (10) Business Days from the date of that notice, the parties will meet in an endeavour to agree upon a single Expert(who will be independent of the parties and will have qualifications and experience appropriate to the matter in dispute) to whomthe matter in dispute will be referred for determination; and(c)if within that ten (10) Business Days the parties fail to agree upon the appointment of a single Expert then any party mayrequest the nomination of an Expert by:(i)the President of the Australasian Institute of Mining and Metallurgy to appoint the Expert, if the subject matter of the dispute relatesto a technical issue;(ii)the President of the Institute of Chartered Accountants in Australia, if the subject matter of the dispute relates to a financial issue;(iii)the President of the Western Australian Law Society, if the subject matter of the dispute relates to a legal issue; and page | 70(iv)the National Chairman of the Australian Institute of Company Directors, if the subject matter of the dispute relates to any other issue,(collectively an Independent Body), which nominee the parties must appoint.(d)If an Independent Body fails to nominate an Expert within ten (10) Business Days of being requested to do so, or otherwiserefuses to make such an appointment, then any party may request the nomination of an Expert by the President of theResolution Institute of Australia, which nominee the parties must appoint.17.3InstructionsThe Expert will be instructed to:(a)determine the dispute within the shortest practicable time; and(b)deliver a report stating his opinion with respect to the matters in dispute and setting out the reasons for the decision.17.4Procedure(a)The Expert will determine the procedures for the conduct of the process in order to resolve the dispute and must provide eachparty with a fair opportunity to make submissions in relation to the matter in issue.(b)Any process or determination of the dispute by the Expert will be made as an expert and not as an arbitrator and thedetermination of the Expert will be final and binding on the parties without appeal so far as the law allows and except in thecase of manifest error or where a party to the matter in issue has not been provided with a fair opportunity to makesubmissions in relation to the matter in issue.17.5CostsEach party will bear its own costs of and incidental to any proceedings under this clause 17. The costs of the Expert will be JointVenture Costs, except as otherwise may be provided in this agreement.18Dispute resolution18.1Dispute resolution processExcept to the extent otherwise expressly referred to Expert determination in accordance with clause 17 or otherwise expresslyprescribed by this agreement in relation to particular types of dispute, the parties must deal with any dispute, controversy, claim ordifference (Dispute) arising out of, connected with or relating to this agreement or any breach, termination or claimed invalidity of thisagreement in accordance with the dispute resolution process set out in this clause 18.18.2Dispute Notice(a)A party claiming a Dispute (Initiating Party) must give notice (Dispute Notice) to the other party which:(i)identifies the subject matter of the Dispute; and page | 71(ii)designates a senior representative for the Dispute who will have the authority to settle the Dispute on its behalf.(b)The other party must then promptly designate, by notice to the Initiating Party, its senior representative for the Dispute who willhave authority to settle the Dispute on its behalf.18.3Meeting of the parties' designated representativesThe parties’ designated representatives must meet and use all reasonable endeavours acting in good faith to resolve the Dispute,within five (5) Business Days after the receipt of the Dispute Notice.18.4Meeting of Senior Executives and Chief Executive Officers(a)If the Dispute is not resolved under clause 18.3, then within ten (10) Business Days of the Dispute Notice, a senior executiveof the Ultimate Holding Company of each party to the Dispute (Disputing Parties) must meet and use all reasonableendeavours acting in good faith to resolve the Dispute.(b)If the Dispute is not resolved under clause 18.4(a), then within 20 Business Days of the date the Dispute Notice has beengiven, each chief executive officer of the Ultimate Holding Company of each Disputing Party must meet and use all reasonableendeavours acting in good faith to resolve the Dispute.18.5Court proceedingsA party may commence court proceedings in respect of the Dispute if:(a)the steps under clauses 18.3, 18.4(a) and 18.4(b) have been taken and one or other of the chief executive officers of theUltimate Holding Companies of the Disputing Parties has stated that they consider that the Dispute will not be resolved within40 Business Days from the date of the Dispute Notice; or(b)one of the parties has attempted to follow the steps in clauses 18.3, 18.4(a) and 18.4(b) and the other party has not compliedwith its obligations under those clauses.18.6Urgent interlocutory reliefThis clause 18 does not prevent a party from seeking urgent interlocutory relief from a court of competent jurisdiction where, in thatparty's reasonable opinion, that action is necessary to protect that party's rights.19General19.1Consents and approvalsExcept as expressly provided in this agreement, a party may conditionally or unconditionally in its absolute discretion give or withholdany consent or approval under this agreement.19.2Duty page | 72(a)Except as expressly stated otherwise in this agreement (including as provided in clause 2.15), the Manager, as between theparties, is liable for and must pay all duty (including any fine, interest or penalty except where it arises from default by anotherparty) on or relating to this agreement, any agreement executed under it or any dutiable transaction evidenced or effected by it.(b)If a party other than the Manager pays any duty (including any fine, interest or penalty) on or relating to this agreement, anydocument executed under it or any dutiable transaction evidenced or effected by it, the Manager must pay that amount to thepaying party on demand.(c)All amounts payable by the Manager under clauses 19.2(a) and 19.2(b) will form part of Joint Venture Costs.19.3Legal costs(a)Except as expressly stated otherwise in this agreement, each party must pay its own legal and other costs and expenses ofnegotiating, preparing, executing and performing its obligations under this agreement.(b)The legal costs of the Manager in negotiating, preparing, and executing this agreement do not form part of Joint Venture Costs,however the legal costs of the Manager in performing its obligations under this agreement form part of Joint Venture Costs.19.4No liability for consequential lossesExcept in the case of Wilful Misconduct or Gross Negligence, no party will be liable to the other parties in any circumstances for anyloss of use, loss of revenue, loss of profit, loss of production, business interruption, loss of business opportunity, loss of savings,loss of use of capital or loss of good will, arising out of or in connection with this agreement, whether or not foreseeable at theEffective Date.19.5Entire agreement(a)This agreement is the entire agreement between the parties about its subject matter and replaces all previous agreements,understandings, representations and warranties about that subject matter.(b)Each party represents and warrants that it has not relied on any representations or warranties about the subject matter of thisagreement except as expressly provided in this agreement.19.6Further assurancesExcept as expressly provided in this agreement, each party must, at its own expense, do all things reasonably necessary to give fulleffect to this agreement and the matters contemplated by it.19.7Rights cumulativeExcept as expressly stated otherwise in this agreement, the rights of a party under this agreement are cumulative and are in additionto any other rights of that party.19.8Severability page | 73Any term of this agreement which is wholly or partially void or unenforceable is severed to the extent that it is void or unenforceable.The validity or enforceability of the remainder of this agreement is not affected.19.9Survival and merger(a)No term of this agreement merges on completion of any transaction contemplated by this agreement.(b)Clause 11 survives termination or expiry of this agreement together with any other term which by its nature is intended to doso.19.10PPS Act(a)Each party waives the right to receive any notice under the PPS Act (including a notice of verification statement) unless thenotice is required under the PPS Act and the obligation to give it cannot be excluded.(b)Unless expressed to the contrary, a reference to a term which is defined in the PPS Act has the meaning it has in the PPSAct.19.11VariationNo variation of this agreement is effective unless made in writing and signed by each party.19.12Waiver(a)No waiver of a right or remedy under this agreement is effective unless it is in writing and signed by the party granting it. It isonly effective in the specific instance and for the specific purpose for which it is granted.(b)A single or partial exercise of a right or remedy under this agreement does not prevent a further exercise of that or of any otherright or remedy.(c)Failure to exercise or delay in exercising a right or remedy under this agreement does not operate as a waiver or prevent furtherexercise of that or any other right or remedy.19.13Governing law(a)This agreement is governed by the laws of Western Australia.(b)Each party irrevocably and unconditionally submits to the exclusive jurisdiction of the courts of Western Australia including, forthe avoidance of doubt, the Federal Court of Australia sitting in Western Australia.19.14CounterpartsThis agreement may be executed in any number of counterparts and signatures on behalf of a party may be on different counterparts.19.15Ipso Facto StayThe provisions of this agreement are subject to any Ipso Facto Stay which may operate to prevent the enforcement of rights underthis agreement. To the extent that there is any page | 74conflict between the provisions of this agreement and the Ipso Facto Stay, this agreement is to be interpreted subject to the IpsoFacto Stay.19.16Relationship with Shareholders' DeedWhere this agreement and the Shareholders' Deed deal with the same or similar topic differently, this agreement is to prevail.19.17Remote conferencingWhere this agreement calls for or requires a meeting between the Participants, their Representatives, the Manager or any of theManager's or Participants' officers, employees, contractors or agents, such meetings may be attended by telephone, videoconferencing or any other means of electronic conferencing. page | 75Schedule 1Dictionary1DictionaryIn this agreement:Accepting Participants has the meaning given to that term in clause 12.12(f).Accounting Procedure means the accounting procedure set out in Schedule 4.Acquiring Participants has the meaning given to that term in clause 13.7(g).Additional Production Capacity has the meaning given to that term in clause 6.12(d).Adviser has the meaning given to that term in clause 6.13.Affected Party has the meaning given to that term in clause 14(a).Affiliate means, with respect to any corporation, another corporation which Controls, is Controlled by, or is under common Controlwith, such corporation.Albemarle means Albemarle Corporation.Alternative Refinery Plant means a plant capable of converting spodumene concentrate produced from the Mine into lithiumhydroxide monohydrate consisting of one module with a designed production capacity of approximately 25ktpa, and otherwise havingsubstantially the same specifications as the Initial Refinery Plant.Alternative Refinery Plant Notice has the meaning given to that term in clause 6.12(a).Approvals means any licence, consent, approval, permit, registration, accreditation, certification or other authorisation given orissued by any Government Agency or any other person which relate to the Joint Venture Operations, including those specified theAsset Sale and Share Subscription Agreement.Approved Budget means a Proposed Budget approved by the Management Committee in accordance with clause 7, as amended orupdated from time to time in accordance with clause 7.Approved Closure Plan means the Closure Plan as approved by the Department as at the Effective Date, as amended, updated orsupplemented from time to time in accordance with this agreement and in compliance with applicable laws.Asset Sale and Share Subscription Agreement means the document entitled ‘Asset Sale and Share Subscription Agreement —Wodgina Lithium Project’ between the Participants, MRL and Albemarle dated [insert date].Assigned Tenements means the mining tenements specified in Part 2 of Schedule 2.Associated Rights means:(a)all Intellectual Property Rights that the Participants or the Manager holds pertaining to the Mining Information including rightssubsisting under copyright, design, trade mark, patent or similar legislation, together with rights recognised at common law; and Schedule 1 – Dictionary | page | 76(b)the benefit of any contracts (whether written or oral) between the Manager and the provider of the Mining Information forproduction of that information, including any actual or implied warranties as to the accuracy of that information.ASX Listing Rules means the official listing rules from time to time of the Australian Securities Exchange, as amended, modified orwaived from time to time.Atlas means Atlas Iron Limited (ACN 110 396 168).Auditor has the meaning given to that term in clause 10.1(a).Business Day means a day on which banks are open for business excluding Saturdays, Sundays and public holidays in Perth,Western Australia.Business Plan means the LOM Business Plan and the Refinery Plant Business Plan.Called Sum has the meaning given to that term in clause 8.3(b)(iii).Camp Services Agreement means [the Wodgina Camp Services Agreement] between the Manager and the Camp Services Providerdated on or around the date of this agreement.Camp Services Provider means Process Minerals International Pty Ltd (ACN 063 988 894).Capital Costs means all costs of a type which are treated as capital costs in accordance with International Financial ReportingStandards.Capital Works means capital works and services associated with a future expansion project or other development in respect of theJoint Venture Operations or to further support, sustain, expand, suspend, rehabilitate or abandon Joint Venture Operations, whereapplicable as approved by the Management Committee.Cash Call has the meaning given to that term in clause 8.3(b).Chairperson has the meaning given to that term in clause 6.6(a).Change in Control means, in relation to any entity (the first mentioned entity):(a)a change in the entity that Controls the first mentioned entity (other than if the Ultimate Holding Company of the first mentionedentity remains the same following the change);(b)an entity that Controls the first mentioned entity ceases to Control that entity (other than if the Ultimate Holding Company ofthe first mentioned entity remains the same following the change); or(c)if the first mentioned entity is not Controlled, another entity acquires Control of the first mentioned entity.Changed Participant has the meaning given to that term in clause 12.12(a).Chargee has the meaning given to that term in clause 12.7(a).Chargee’s Priority Deed has the meaning given to that term in clause 12.7(a).Chargor has the meaning given to that term in clause 12.7(a). Schedule 1 – Dictionary | page | 77Circular Resolution has the meaning given to that term in clause 6.15(a).Closure Plan means the plan for Rehabilitation and Mine Closure.Competent Person means a person who qualifies as a “Competent Person” for purposes of the JORC Code.Confidential Information has the meaning given to that term in clause 11.1.Conflicted Participant has the meaning given to that term in clause 6.8(d).Continuing Participants has the meaning given to that term in clause 12.5(b).Contract Liability has the meaning given to that term in clause 5.9(b).Contracted Concentrate means spodumene concentrate derived from Ore located in the stockpiles on the Tenements or in transitthat is the subject of offtake arrangements entered into prior to the Effective Date by WLPL or its agent in accordance with the AssetSale and Share Subscription Agreement.Control has the meaning given to that term in section 50AA of the Corporations Act, and Controlled has a corresponding meaning.Control Transaction means:(a)in respect of MRL, any transaction or dealing which would result, on completion, in a Change in Control of MRL and includes,for the purposes of this definition, any person or group of persons acting jointly or in concert, acquiring a relevant interest (asdefined in the Corporations Act) in 20% or more of MRL’s issued shares; and(b)in respect of Albemarle, any transaction or dealing which would result, on completion, in a Change in Control of Albemarle andincludes, for the purposes of this definition, any person or group of persons acting jointly or in concert, acquiring a beneficialinterest in 20% or more of Albemarle's issued shares.Corporations Act means Corporations Act 2001 (Cth).Crusher means the crusher to be funded, built, owned and, pursuant to the Crushing Services Agreement, operated by the CrushingServices Provider.Crushing Services Agreement means [the Wodgina Crushing Services Agreement] between the Manager and the Crushing ServicesProvider dated on or around the date of this agreement.Crushing Services Provider means Crushing Services International Pty Ltd (ACN 069 303 377).Deadlock has the meaning given to that term in clause 6.11(a).Deed of Cross Security means the Deed of Cross Security in, or substantially in, the form of the deed contained in Attachment Cexecuted contemporaneously with this agreement by the Participants and the Manager, and includes each other similar deed ofcharge executed by a new Participant in accordance with clause 12.11(b).Defaulting Participant means a Participant in respect of which an Event of Default has occurred. Schedule 1 – Dictionary | page | 78Delivery Point means the place at which Product is delivered to and becomes the property of an individual Participant, being thedelivery point determined by the Management Committee from time to time.Department means the Department of Mines, Industry Regulation and Safety for Western Australia or such other body, department orinstrumentality responsible for the administration of the Mining Act from time to time and includes any registrar or warden.Designated Area has the meaning given to that term in clause 6.12(k)(i).Development Area means the areas of the Tenements that are, from time to time, the subject of any of the following:(a)feasibility level study work; or(b)Mining Operations.Dispute has the meaning given to that term in clause 18.1.Dispute Notice has the meaning given to that term in clause 18.2.Effective Date means the date of completion under the Asset Sale and Share Subscription Agreement.EOD Notice has the meaning given to that term in clause 13.7(a).Event of Default has the meaning given to that term in clause 13.1.Excluded Assets means:(a)the Contracted Concentrate;(b)the Excluded Infrastructure;(c)the Retained Mineral Rights;(d)the GAMG Assets; and(e)the WLPL Assets.Excluded Infrastructure means the plant, equipment, machinery, facilities and other infrastructure owned by a third party that isleased, hired or used in the Joint Venture, including the Crusher.Expert means a person appointed in accordance with clause 17.2.Exploration Information means Exploration Results and Exploration Targets (as those terms are defined in the JORC Code) relatingto the Tenements.Exploration Operations means all activities as are necessary or expedient for the purpose of exploring the Joint Venture Area.Financial Year means the twelve (12) Month period ending 30 June each year, or such other period adopted by the ManagementCommittee from time to time as the Financial Year for the Joint Venture.Force Majeure means any event or circumstance which: Schedule 1 – Dictionary | page | 79(a)is beyond the control of the Affected Party;(b)was not directly or indirectly caused or materially contributed to by the Affected Party; and(c)could not have been reasonably prevented by the Affected Party,and includes, subject to the requirements of paragraphs (a) to (c), any of the following:(d)act of God;(e)law, rule, regulation or order of any government or Government Agency;(f)executive or administrative orders or acts of either general or particular application of any official acting under the authority ofany government, or of any official acting under the authority of such government;(g)act of war (declared or undeclared);(h)public disorder;(i)riot, insurrection, rebellion, sabotage or act of terrorists;(j)fire, flood, drought, earthquake, storm, hail, lightning, severe weather conditions or other natural calamity;(k)explosion, breakdown or injury to or expropriation, confiscation or requisitioning of production, manufacturing, selling,transportation or delivery facilities;(l)shortage or unavailability (whether permanent or temporary) of water, electricity, gas, telecommunications or other essentialgoods or services;(m)inability to access all or any part of the Joint Venture Area because of Native Title Claims or Native Title Rights or otherwise;(n)quarantine or customs restrictions;(o)the decision of any court or other body of competent jurisdiction; and(p)strike, boycott, lockout or other labour disturbance.GAAP means the Generally Accepted Accounting Principles adopted by the US Securities and Exchange Commission.GAMG means Global Advanced Metals Greenbushes Pty Ltd (ACN 125 585 284).GAMG Assets means the Tantalum Rights and the Tantalum Assets.GAMG Mineral Rights Agreement means the document entitled 'Mineral Rights Agreement' originally between GAMW, GAMG andGlobal Advanced Metals Pty Ltd (ACN 139 987 465), dated 8 September 2016, as subsequently amended and assigned.GAMW means Global Advanced Metals Wodgina Pty Ltd (ACN 125 585 239), formerly Talison Wodgina Pty Ltd.Government Agency means a government or any governmental, semi-governmental, legislative, administrative, fiscal, quasi-judicialor judicial entity, authority, department, Schedule 1 – Dictionary | page | 80commission, authority, tribunal, agency or entity or other body, whether foreign, federal, State, Territorial or local (including any self-regulatory organisation established under statute or any recognised stock exchange).Gross Negligence means such reckless conduct in breach of a duty of care as demonstrates a conscious or reckless disregard forthe harmful, foreseeable, proximate and avoidable consequences which result or may result from that conduct.GST means a goods and services tax, or a similar value added tax, levied or imposed under the GST Law.GST Law has the meaning given to it in the A New Tax System (Goods and Services Tax) Act 1999 (Cth).Holding Company has the meaning given to that term in section 9 of the Corporations Act.Immediately Available Funds means cash, bank cheque or telegraphic or other electronic means of transfer of cleared funds into abank account.Initial Mine Plan and Budget means the LOM Business Plan (including the Approved Budget) for the development of the WodginaResource as developed and agreed under the Asset Sale and Share Subscription Agreement and as set out in Attachment A, asamended pursuant to clause 7.5.Initial Refinery Plant means a plant capable of converting spodumene concentrate produced from the Mine into lithium hydroxidemonohydrate, consisting of two modules each designed to be capable of producing approximately 25ktpa of lithium hydroxidemonohydrate, and designed to have a total production capacity of at least 50ktpa of lithium hydroxide monohydrate.Insolvency Event means the happening of any of the following events in relation to a Participant or the Manager (the InsolventParty):(a)it is, or states that it is, unable to pay all of its debts as and when they become due and payable, or it has failed to comply witha statutory demand as provided in section 459F(1) of the Corporations Act;(b)an application or order is made for the winding up or dissolution, or a resolution is passed or any steps are taken to pass aresolution for the winding up or dissolution, of the Insolvent Party (other than for the purposes of a solvent reconstruction,amalgamation or other like corporate reorganisation), and the application is not dismissed, the order is not set aside or theresolution is not withdrawn (as applicable) within 14 days;(c)an administrator, provisional liquidator, liquidator or person having a similar or analogous function under the laws of anyrelevant jurisdiction is appointed in respect of the Insolvent Party or any action is taken to appoint any such person and theaction is not stayed, withdrawn or dismissed within 14 days;(d)a controller (as defined in the Corporations Act) is appointed in respect of any property of the Insolvent Party;(e)the Insolvent Party is deregistered under the Corporations Act;(f)a distress, attachment or execution is levied or becomes enforceable against any property of the Insolvent Party; Schedule 1 – Dictionary | page | 81(g)the Insolvent Party enters into, or takes any action to enter into, an arrangement (including a scheme of arrangement or deedof company arrangement), composition or compromise with, or assignment for the benefit of, all or any class of its creditors ormembers or a moratorium involving any of them; or(h)anything analogous to or of a similar effect to anything described above under the law of any relevant jurisdiction occurs inrespect of the Insolvent Party.Intellectual Property Licence Agreement means [the Hydroxide Intellectual Property Licence Agreement] between the Manager asagent for the Participants and the Licence Provider executed on or around the date of this agreement.Intellectual Property Rights means all intellectual property rights of whatever nature throughout the world including all rightsconferred under statute, common law or equity, whether existing now or at any time in future, including rights in all copyright, patents,trade marks, business names, trade names, domain names, designs, Confidential Information, trade secrets and know-how.Interest Rate means, on any day, the interest rate that is the aggregate of:(a)6% per annum; plus(b)the Reserve Bank of Australia’s cash rate, or, if that rate cannot be so determined, the rate (expressed as a percentage yieldper annum to maturity) quoted at or about such time by Westpac Banking Corporation as the rate at which it would be preparedto purchase bills of exchange accepted by an Australian trading bank and having a tenor of 90 days and of an amount of$100,000.International Financial Reporting Standards means, at any time, the International Financial Reporting Standards issued by theInternational Accounting Standards Board at that time, consistently applied.Ipso Facto Stay means any limitation on enforcement of rights or self-executing provisions in a contract, agreement or arrangementpursuant to sections 415D, 415F, 415FA, 434J, 434J, 434L, 434LA, 451E, 451G or 451GA of the Corporations Act.Iron Ore means iron ore and any by-product that is directly associated with the form of iron ore mineralogy.Iron-Ore Rights has the meaning given to that term in the Asset Sale and Share Subscription Agreement.Joint Venture means the joint venture formed pursuant to clause 2.1.Joint Venture Area means the area of the Tenements or such other area as is agreed by all Participants.Joint Venture Assets means all rights, titles, interests, claims, benefits and all other assets and property of whatsoever kind, real orpersonal, from time to time acquired, created or held for use by or on behalf of the Participants in connection with the Joint Ventureand for the conduct of Joint Venture Operations, including:(a)the Tenements;(b)the Pipeline Licences;(c)the Mining Information; Schedule 1 – Dictionary | page | 82(d)the Project Facilities;(e)the Approvals;(f)the Third Party Agreements (subject to any exclusions identified in this agreement and to the extent that they relate to theTenements or Pipeline Licences only);(g)the stockpiles (but excluding Contracted Concentrate);(h)the Associated Rights;(i)Product, prior to it being taken in kind by a Participant in accordance with clause 2.8 (for the avoidance of doubt, Product towhich a Participant is entitled to take in kind in accordance with clause 2.8, contracts with respect to the sale of Product andproceeds from the sale of Product are not Joint Venture Assets); and(j)the Refinery Plant,but excludes the Excluded Assets.Joint Venture Costs means all expenditure and liabilities incurred by or for the Participants in accordance with this agreement andincludes:(a)all expenditure expressed to be part of Joint Venture Costs in this agreement; and(b)all expenditure and liabilities incurred by the Manager in accordance with this agreement including those set out in Schedule 4.Joint Venture Documents means:(a)this agreement;(b)the Tenements;(c)the Shareholders’ Deed;(d)the Deed of Cross Security; and(e)all other agreements entered into by the Participants from time to time in connection with the Joint Venture (whether or notthere are also other parties to such agreements) which the Participants agree will be a Joint Venture Document,together with all amendments made from time to time to such documents, but does not include:(f)any contract for the sale by a Participant of its share of Product;(g)any agreement whereby a Participant appoints an agent or representative to perform duties and functions in relation to the saleof its share of Product;(h)any agreement entered into by a Participant for separately financing its obligations in connection with the Joint Venture; or(i)any other agreement entered into by the Participants from time to time which:(j)is not in connection with the Joint Venture; or Schedule 1 – Dictionary | page | 83(k)the Participants agree will not be a Joint Venture Document.Joint Venture Interest means the following obligations, benefits and rights of a Participant expressed as a percentage determined inaccordance with this agreement:(a)the obligation, subject to the terms of this agreement, to contribute that percentage of all Joint Venture Costs;(b)the ownership of and right and benefit as a tenant in common to receive in kind and to dispose of for its own account thatpercentage of Minerals produced by the Joint Venture;(c)the rights, duties, obligations and liabilities of the Participants arising from the Joint Venture Documents; and(d)the beneficial ownership as a tenant in common of an undivided share in that percentage of all Joint Venture Assets.Joint Venture Operations means all activities as are necessary or desirable in order to implement and give full effect to theprovisions and purposes of this agreement including Exploration Operations, Mining Operations and, subject to the ManagementCommittee making a Refinery Plant Decision, the Refinery Operations.Joint Venture Records and Accounts has the meaning given to that term in clause 9.1(a).JORC Code means The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2012 Edition)prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, the Australian Institute ofGeoscientists and the Minerals Council of Australia, as amended or replaced from time to time.Licence Provider means [insert].Life of Mine means, in relation to the Joint Venture Operations, the expected term of Mining Operations and subsequentRehabilitation and Mine Closure activities.Lithium means all naturally occurring lithium mineral obtained or obtainable by Joint Venture Operations carried out on or under thesurface of the land the subject of the Tenements.LOM Business Plan means the business plan for the remaining Life of Mine approved by the Management Committee in theprevious Financial Year in accordance with clause 7, as amended or updated from time to time in accordance with clause 7 (whichincorporates the Approved Budget) or in respect of Joint Venture Operations relating to the period from the Effective Date until 30June 2020, the Initial Mine Plan and Budget.Loss means any cost, damages, debt, expense, liability or loss.Management Committee means the committee established pursuant to clause 6.Manager means WLOPL as appointed under clause 4.1 or any successor or permitted assignee as may be appointed from time totime as manager of the Joint Venture in accordance with this agreement. Schedule 1 – Dictionary | page | 84Mine means the mine site known as the Wodgina Lithium mine site, located in the Pilbara region of Western Australia, situated onthe Tenements and including all associated infrastructure.Mine Closure means all or any action or conduct by the Manager for the purpose of suspending or abandoning all, or a severable partof, the Joint Venture Operations or Joint Venture Assets under this agreement whether by way of demolition, removal, destruction,conversion, placement on permanent care and maintenance or other basis, or any similar action or conduct, and all other action orconduct as the Manager considers necessary to comply with the Mine Closure Obligations.Mine Closure Obligations means the obligations of the holder(s) of the Tenements in relation to Mine Closure during or pertaining tothe term of this agreement and which relate to the land the subject of the Tenements under:(a)the Mining Act (including the terms and conditions of the Tenements);(b)authorisations, approvals or licences granted by any Government Agency; and(c)all other applicable statutory and contractual obligations relating to Mine Closure and the requirements of good mining industrypractice on and following Mine Closure.Mine Development means the location, opening and development of mines and all activities necessary, expedient, conducive orincidental thereto including without limitation pre-stripping and the removal and disposal of over-burden and waste.Mineral Rights Agreement means the MRA (Exploration Licences) and the MRA (Mining Leases).Minerals means all naturally occurring substances on or under the surface of the land the subject of the Tenements.Mining Act means the Mining Act 1978 (WA) or any amendment or statutory replacement of that Act and includes regulations andorders made under that Act.Mining Information means all technical information including (without limitation) geological, geochemical and geophysical maps andreports, surveys, mosaics, aerial photographs, electromagnetic tapes, electromagnetic or optical disks, sketches, drawings,memoranda, samples, drill core, drill logs, drill pulp, logs of drill cores, assay results, maps and plans relating to the Tenements or toJoint Venture Operations, whether in physical, written or electronic form.Mining Operations means commercial mining operations and all activities necessary, expedient, conducive or incidental theretoincluding without limitation:(a)Mine Development; and(b)the weighing, sampling, assaying, mining, extraction, crushing, refining, treatment, transportation, handling, storage, loadingand delivery of Minerals.Mining Tenements means the mining tenements specified in Part 1 of Schedule 2.Month means a calendar month or such other period as is agreed by the Participants to comprise a Month. Schedule 1 – Dictionary | page | 85MRA (Exploration Licences) means the Sale of Mining Property and Grant of Minerals Rights Agreement (for Exploration Licences)between Atlas and Talison Wodgina Pty Ltd dated 7 May 2008 as amended.MRA (Mining Leases) means the Sale of Mining Property and Grant of Mineral Rights Agreement (for Mining Leases) between Atlasand Talison Wodgina Pty Ltd dated 1 July 2008 as amended.MRL means Mineral Resources Limited (ACN 118 549 910).Native Title Act means the Native Title Act 1993 (Cth).Native Title Claims means any claim, application or proceeding in respect of either:(a)Native Title Rights which is accepted by the Native Title Tribunal or the Registrar thereof pursuant to the Native Title Act; or(b)Native Title Interests.Native Title Interests includes those rights, interests and statutory protections of and relating to aboriginal persons as set out in theAboriginal Heritage Act 1972 (WA), Aboriginal Affairs Planning Authority Act 1972 (WA) or the Aboriginal and Torres Strait IslanderHeritage Protection Act 1984 (Cth).Native Title Rights includes:(a)“native title” or “native title rights and interests” as defined in section 223(1) of the Native Title Act; and(b)Native Title Interests.Non-consenting Participant has the meaning given to that term in clause 6.12(a).Non-Defaulting Participants has the meaning given to that term in clause 13.2(a).Notice of Consent has the meaning given to that term in clause 2.4(e).Notice of Objection has the meaning given to that term in clause 2.4(d).Notice of Proposed Activity has the meaning given to that term in clause 2.4(b).Observer has the meaning given to that term in clause 6.13.Offered Interest has the meaning given to that term in clause 12.12(b).Operating Costs means all costs, expenses, losses and charges incurred by the Manager for the account of the Participantsseverally, in accordance with this agreement, in carrying out the Joint Venture Operations (other than Capital Costs).Option Exercise Period has the meaning given to that term in clause 13.7(c).Ordinary Resolution means a decision or determination of the Management Committee which satisfies the voting thresholds inclause 6.9.Ore means ore derived from the Wodgina Resource. Schedule 1 – Dictionary | page | 86Participants means WLPL and AWPL and their respective successors and permitted assigns and (where applicable) legal personalrepresentatives of any person which at any time hereafter becomes a Participant and each of those persons constitutes aParticipant for the purposes of this agreement.PCAOB means the Public Company Accounting Oversight Board of the US.Permitted Security Interest means:(a)any lien arising by operation of law:(i)for the unpaid balance of purchase moneys under an instalment contract entered into in the ordinary course of business; or(ii)in the ordinary course of day to day trading and securing obligations not more than 30 days old;(b)any bankers’ lien or right of set-off or combination arising by operation of law or practice over property or moneys depositedwith a banker in the ordinary course of ordinary business of the depositor;(c)any Security Interest arising under an operating lease or finance lease entered into in the ordinary course of business and notarising as a result of any default or omission by any Participant;(d)any retention of title arrangement in connection with the acquisition of goods on arm's length terms in the ordinary course ofordinary business on the suppliers' usual terms of sale;(e)any Security Interest created by statute in favour of Government Agency securing the payment of taxes, except as createdbecause of any failure to duly pay any taxes; and(f)a deemed Security Interest under section 12(3) of the PPS Act that does not secure payment or performance of an obligation.Personnel means in relation to a party, that party’s directors, officers, employees, agents, consultants, contractors andsubcontractors.Petroleum Pipelines Act means the Petroleum Pipelines Act 1969 (WA);Pipeline Licences means petroleum pipeline licences PL 55, PL 56 and PL 116 granted under the Petroleum Pipelines Act, and anyrenewals, conversions, extensions, amalgamations or amendments of, and substitutions for these petroleum pipeline licences.PPS Act means the Personal Property Securities Act 2009 (Cth).Processing Plant means [insert description].Product means Minerals recovered from the Tenements in the form in which it is to be made available to each Participant at theDelivery Point, initially in accordance with the Initial Mine Plan and Budget and the Refinery Plant Development Plan.Project Facilities means the plant, equipment, machinery, facilities and other infrastructure used for the purposes of conducting theJoint Venture Operations, including those described in the Asset Sale and Share Subscription Agreement. Schedule 1 – Dictionary | page | 87Proposed Activity has the meaning given to that term in clause 2.4(b).Proposed Budget means a work programme and budget for a given Financial Year, or other relevant period, in relation to the conductof Joint Venture Operations, proposed in accordance with the corresponding Business Plan.Proposed Buyer has the meaning given to that term in clause 12.5(a)(i).Proposed Sale Notice has the meaning given to that term in clause 12.5(a).Quarter means a period of three Months commencing on the first day of January, April, July and October, as the case may be.Refinery Operations means the construction and operation of the Refinery Plant.Refinery Plant means the Initial Refinery Plant as may be expanded by a decision of the Management Committee, including by aStage 2 Decision.Refinery Plant Business Plan means the business plan adopted for the construction, operation and maintenance of the RefineryPlant approved by the Management Committee in the previous Financial Year in accordance with clause 7, as amended or updatedfrom time to time in accordance with clause 7 (which incorporates the Approved Budget).Refinery Plant Decision means a resolution of the Management Committee to proceed with the construction of a Refinery Plant.Refinery Plant Development means the development, construction and commissioning of the Refinery Plant and all activitiesnecessary, expedient, conducive or incidental thereto.Rehabilitation means all undertakings, works and efforts for the rehabilitation, reclamation, revegetation, decontamination andcleaning up of the Tenements.Rehabilitation Levy means the mining rehabilitation levy under the Mining Rehabilitation Fund Act 2012 (WA).Rehabilitation Obligations means the obligations of the holder(s) of the Tenements in relation to Rehabilitation required to beundertaken during or pertaining to the term of this agreement (regardless of when the activity giving rise to that Rehabilitationobligation arose) and which relate to the land the subject of the Tenements under:(a)the Mining Act (including the terms and conditions of the Tenements); and(b)authorisations, approvals or licences granted by any Government Agency; andall other applicable statutory and contractual obligations relating to the Rehabilitation of the Tenements.Related Party Contracts has the meaning given to that term in clause 5.8(a)(i).Representative means a person for the time being appointed by a Participant as its representative on the Management Committeeand includes any alternate of that person appointed under clause 6.2(b).Resources and Reserves means Mineral Resources, Ore Reserves and Mineral Reserves, as those terms are defined in the JORCCode, located on the Tenements. Schedule 1 – Dictionary | page | 88Retained Mineral Rights means the Iron Ore Rights retained by WLPL.Sale Interest has the meaning given to that term in clause 12.5(a)(ii).Security Interest means any mortgage, pledge, lien, charge, assignment, hypothecation, security interest, title retention, preferentialright or trust arrangement and any other security agreement or arrangement securing obligations or liabilities, whether absolute orcontingent and includes a security interest under the PPS Act.Selling Participant has the meaning given to that term in clause 12.4.Shareholders’ Deed means the Shareholders' Deed between WLPL and AWPL dated on or around the date of this agreement.Sole Risk Participant has the meaning given to that term in clause 6.12(a).Special Resolution means a decision or determination of the Management Committee which satisfies the voting thresholds set outin clause 6.10.Stage 2 Decision means a decision of the Management Committee to proceed with an expansion of the Initial Refinery Plant up to adesigned production capacity of approximately 100ktpa of lithium hydroxide monohydrate.Stage 2 Refinery Plant means the expansion of the Initial Refinery Plant capable of converting additional spodumene concentrateproduced from the Mine into lithium hydroxide monohydrate, consisting of a further two modules each designed to be capable ofproducing approximately 25ktpa of lithium hydroxide monohydrate, and taking the Initial Refinery Plant with the expansion up to adesigned production capacity of approximately 100ktpa of lithium hydroxide monohydrate.Subsidiary means a body corporate (first body) in which another body corporate holds the entire issued share capital or the first bodyis a subsidiary of a subsidiary of the other body corporate.Tantalum means tantalum pentoxide (Ta2O5) and tantalum pentoxide bearing ore.Tantalum Assets means the assets known as the ‘tantalum circuit’ forming part of the Processing Plant and owned by GAMG.Tantalum Rights means the rights to Tantalum retained by GAMG in relation to the Tenements pursuant to the GAMG MineralRights AgreementTenement Applications means the mining tenements specified in Part 3 of Schedule 2;Tenements means:(a)the Mining Tenements;(b)the Assigned Tenements;(c)the Tenement Applications;(d)all other permits, licences and leases under the Mining Act (if any) granted to, or applied for by or on behalf of, the Participantsfor the purposes of the Joint Venture from time to time; and Schedule 1 – Dictionary | page | 89(e)all renewals, conversions, extensions, amalgamations or amendments of, and substitutions for, the tenements and applicationsmentioned in paragraphs (a) to (d).Third Party means a person not a party, or an Affiliate of a party, to this agreement.Third Party Agreement means each of the contracts for the provisions of goods or services relating to the Joint Venture, includingthose described in the Asset Sale and Share Subscription Agreement.Transfer Approvals means necessary Government Agency consents, approvals or clearances and any consents or approvalsrequired under competition laws and the foreign investment laws of Australia or any relevant foreign jurisdiction that are required toaffect a transfer of a Participant's Joint Venture Interest as described in clauses 12.5(j), 12.6(a) and 12.12(f)(ii).Transferee has the meaning given to that term in clause 12.2.Transferor has the meaning given to that term in clause 12.2.Ultimate Holding Company has the meaning given to that term in section 9 of the Corporations Act.US means the United States of America.Valuer means a suitably qualified and experienced person, having at least 10 years' experience in valuing mining assets, todetermine the value of:(a)the Offered Interest; or(b)the Joint Venture Interest of the Defaulting Participant,as applicable.Wilful Misconduct means an intentional and conscious disregard of any provision of this agreement, but does not include any errorof judgement or mistake made by the person alleged to be culpable or by any director, employee, agent or contractor of that person inthe exercise, in good faith, of any function, power, authority or discretion conferred on that person under this agreement or under anylaw.WLPL Assets means the New Crusher and the Old Crusher (each as defined in the Asset Sale and Share Subscription Agreement).WLPL Ownership Period means the period from 9 September 2016 to the Effective Date.Wodgina Resource means the lithium resource identified within the area of the Tenements and the subject of MRL’s ASXannouncements dated 21 March 2017 and 28 April 2017.2InterpretationIn this agreement headings are for convenience only and do not affect the interpretation of this agreement and the following rules ofinterpretation apply unless the contrary intention appears: Schedule 1 – Dictionary | page | 90(a)the singular includes the plural and vice versa;(b)words that are gender neutral or gender specific include each gender;(c)where a word or phrase is given a particular meaning, other parts of speech and grammatical forms of that word or phrase havecorresponding meanings;(d)the words 'such as', 'including', 'particularly' and similar expressions are not used as, nor are intended to be, interpreted aswords of limitation;(e)a reference to:(i)a person includes a natural person, partnership, joint venture, Government Agency, association, corporation or other body corporate;(ii)a thing (including, but not limited to, a chose in action or other right) includes a part of that thing;(iii)a party includes its successors and permitted assigns;(iv)a document includes all amendments or supplements to that document;(v)a clause, term, party, schedule or attachment is a reference to a clause or term of, or party, schedule or attachment to thisagreement;(vi)this agreement includes all schedules and attachments to it;(vii)a law includes a constitutional provision, treaty, decree, convention, statute, regulation, ordinance, by-law, judgment, rule of commonlaw or equity and is a reference to that law as amended, consolidated or replaced;(viii)an agreement other than this agreement includes an undertaking, or legally enforceable arrangement or understanding, whether or notin writing; and(ix)a monetary amount is in Australian dollars;(f)when the day on which something must be done is not a Business Day, that thing must be done on the following BusinessDay;(g)in determining the time of day, where relevant to this agreement, the relevant time of day is:(i)for the purposes of giving or receiving notices, the time of day where a party receiving a notice is located; or(ii)for any other purpose under this agreement, the time of day in the place where the party required to perform an obligation is located;(h)A reference to AWPL and WLPL, includes in each case each of their respective successors and permitted assigns and (whereapplicable) legal personal representatives which at any time hereafter becomes a Participant; and(i)no rule of construction applies to the disadvantage of a party because that party was responsible for the preparation of thisagreement or any part of it. Schedule 1 – Dictionary | page | 91Schedule 1Special ResolutionsAny of the following matters and things may be done, decided or authorised by the Management Committee, but only by SpecialResolution:(a)The disposition or surrender or relinquishment of a Tenement other than as required by the Mining Act or terms and conditionsof the Tenement.(b)A sale, lease or exchange of all or substantially all of the Joint Venture Assets or merger or consolidation of any of the ProjectFacilities or the Joint Venture Operations with any other business or entity.(c)The disposal or sale of any Project Facilities referred to in clause 5.1(b)(xii) or other Joint Venture Assets, the written downbook value of which exceeds $500,000.(d)Placing the Joint Venture Operations on “care and maintenance”.(e)Suspending the Joint Venture Operations for more than 60 days, other than due to Force Majeure.(f)The appointment of the Manager or any successor Manager.(g)Changing the Manager’s remuneration.(h)The selection of a new Auditor.(i)The Manager taking forward cover for, or hedging, foreign currency obligations or pre-paying or taking any other appropriateaction to avoid currency losses, in each case in relation to Joint Venture Operations.(j)Any of the following actions by the Manager:(i)borrowing of money;(ii)entering into any financing arrangement or any commitment with respect to financial derivatives; or(iii)any leasing or finance leasing of assets.(k)Granting by the Manager of any Security Interest over any or all or substantially all of the Joint Venture Assets other thanPermitted Security Interests or as otherwise permitted by this agreement.(l)The initiation, defence, compromise or settlement of any court or arbitration proceedings affecting or relating to the JointVenture Operations or Joint Venture Assets where the total claim amount is reasonably estimated by the Manager to exceed$250,000 (provided that the Manager may initiate or defend a court or arbitration proceeding affecting or relating to the JointVenture Operations or Joint Venture Assets if it reasonably decides that it must take immediate action in order to protect therights of the Participants).(m)The approval of any Closure Plan prior to submission to any Government Agency.(n)The ratification of expenditure outside of the authority of the Manager. Schedule 393(o)Any other matter which the Management Committee may from time to time, by Special Resolution, resolve shall only be doneor authorised by such a vote and any other matter which is expressed under this agreement to require a Special Resolution. Schedule 394Execution pageExecuted as an agreement.Signed by Wodgina Lithium Pty Ltd in accordance with section 127of the Corporations Act 2001 (Cth) by: Signature of director Signature of director/secretaryName of director (print) Name of director/secretary (print)Signed by Albemarle Wodgina Pty Ltd in accordance with section127 of the Corporations Act 2001 (Cth) by: Signature of director Signature of director/secretaryName of director (print) Name of director/secretary (print)Signed by Wodgina Lithium Operations Pty Ltd in accordance withsection 127 of the Corporations Act 2001 (Cth) by: Signature of director Signature of director/secretaryName of director (print) Name of director/secretary (print) Execution | page | 97Exhibit 21.1SUBSIDIARIES OF ALBEMARLE CORPORATIONNAME PLACE OF FORMATIONACI Cyprus, L.L.C. DelawareAlbemarle Argentina SRL ArgentinaAlbemarle Brazil Holdings LTDA. BrazilAlbemarle Care Fund VirginiaAlbemarle Catalysts Company B.V. NetherlandsAlbemarle Chemical Canada Ltd. CanadaAlbemarle Chemicals (Shanghai) Company Limited ChinaAlbemarle Chemicals Ltd. CyprusAlbemarle Chemicals Private Limited IndiaAlbemarle Chemicals S.A.S. FranceAlbemarle Chemicals South Africa (PTY) Ltd. South AfricaAlbemarle de Venezuela C.A. VenezuelaAlbemarle Delaware Holdings 1 LLC DelawareAlbemarle Delaware Holdings 2 LLC DelawareAlbemarle Dutch Holdings B.V. NetherlandsAlbemarle Dutch Holdings 2 B.V. NetherlandsAlbemarle Europe Sprl BelgiumAlbemarle Finance Company B.V. NetherlandsAlbemarle Foundation VirginiaAlbemarle Germany Gmbh GermanyAlbemarle Hilfe GmbH Unterstutzungskasse GermanyAlbemarle Holdings Company Limited Turks & Caicos IslandsAlbemarle Holdings Limited Hong KongAlbemarle Hungary Ltd. HungaryAlbemarle Italy S.R.L. ItalyAlbemarle Japan Corporation JapanAlbemarle Japan Holdings B.V. NetherlandsAlbemarle Knight Lux 1 Holdings Corporation DelawareAlbemarle Korea Corporation KoreaAlbemarle Limitada ChileAlbemarle Lithium Holding Corporation DelawareAlbemarle Lithium Holding GmbH GermanyAlbemarle Lithium Pty Ltd AustraliaAlbemarle Management (Shanghai) Co., Ltd. ChinaAlbemarle Middle East Corporation FZE United Arab EmiratesAlbemarle Netherlands B.V. NetherlandsAlbemarle New Holding GmbH GermanyAlbemarle Overseas Employment Corporation VirginiaAlbemarle Quimica LTDA BrazilAlbemarle Saudi Trading Company Saudi ArabiaAlbemarle Singapore PTE LTD SingaporeAlbemarle Spain S.L.U. SpainAlbemarle Taiwan Limited TaiwanNAME PLACE OF FORMATIONAlbemarle U.S., Inc. DelawareAlbemarle Wodgina Pty Ltd AustraliaDNVJ Vermögensverwaltung GmbH GermanyDynamit Nobel GmbH GermanyDynamit Nobel Unterstützungsfonds GmbH GermanyExcalibur Realty Company DelawareExcalibur II Realty Company DelawareFoote Chile Holding Company DelawareFoote Minera e Inversiones Ltda. ChileJiangxi Albemarle Lithium Co., Ltd. ChinaJordan Bromine Company Limited JordanKnight Lux 1 S.à r.l. LuxembourgKnight Lux 2 S.à r.l. LuxembourgMetalon Environmental Management & Solutions GmbH GermanyRockwood Holdings, Inc. DelawareRockwood Lithium India Pvt. Ltd. IndiaRockwood Lithium Japan K.K. JapanRockwood Lithium Korea LLC South KoreaRockwood Lithium Shanghai Co., Ltd. ChinaRockwood Lithium Taiwan Co., Ltd. TaiwanRockwood Lithium (UK) Ltd. United KingdomRockwood Specialties GmbH GermanyRockwood Specialties Group, Inc. DelawareRockwood Specialties LLC DelawareRockwood Specialties Limited United KingdomRT Lithium Limited United KingdomRSG Immobilien GmbH GermanySales de Magnesio Limitada ChileShandong Sinobrom Albemarle Bromine Chemicals Company Limited ChinaSichuan Guorun New Material Co., Ltd. ChinaExhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 33-75622, 333-150694, 333-166828, 333-188599 and333-223167) of Albemarle Corporation of our report dated February 27, 2019 relating to the financial statements and the effectiveness of internal controlover financial reporting, which appears in this Form 10-K./s/ PricewaterhouseCoopers LLPCharlotte, North CarolinaFebruary 27, 2019Exhibit 31.1CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICERI, Luther C. Kissam IV, certify that:1.I have reviewed this Annual Report on Form 10-K of Albemarle Corporation for the period ended December 31, 2018;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. Date:February 27, 2019/s/ LUTHER C. KISSAM IVLuther C. Kissam IVChairman, President and Chief Executive OfficerExhibit 31.2CERTIFICATION OF CHIEF FINANCIAL OFFICERI, Scott A. Tozier, certify that:1.I have reviewed this Annual Report on Form 10-K of Albemarle Corporation for the period ended December 31, 2018;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. Date:February 27, 2019/s/ SCOTT A. TOZIERScott A. TozierExecutive Vice President and Chief Financial OfficerExhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report on Form 10-K of Albemarle Corporation (the “Company”) for the period ended December 31, 2018 as filed withthe Securities and Exchange Commission on the date hereof (the “Report”), I, Luther C. Kissam IV, principal executive officer of the Company, certify,pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:(1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company./s/ LUTHER C. KISSAM IVLuther C. Kissam IVChairman, President and Chief Executive OfficerFebruary 27, 2019Exhibit 32.2CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report on Form 10-K of Albemarle Corporation (the “Company”) for the period ended December 31, 2018 as filed withthe Securities and Exchange Commission on the date hereof (the “Report”), I, Scott A. Tozier, Chief Financial Officer of the Company, certify, pursuant to 18U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:(1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company./s/ SCOTT A. TOZIERScott A. TozierExecutive Vice President and Chief Financial OfficerFebruary 27, 2019Exhibit 99.1FIVE-YEAR SUMMARY (In Thousands, Except for Per Share Amounts and Footnote Data) Year Ended December 31 2018 2017(a) 2016(a)(b) 2015(a)(b)(c) 2014(a)Results of Operations Net sales $3,374,950 $3,071,976 $2,677,203 $2,826,429 $2,445,548Costs and expenses(d) 2,463,410 2,500,316 2,076,223 2,516,596 2,049,557Operating profit 911,540 571,660 600,980 309,833 395,991Interest and financing expenses (52,405) (115,350) (65,181) (81,650) (41,358)Other (expenses) income, net (64,434) (9,512) (20,535) 82,561 (141,454)Income from continuing operations before incometaxes and equity in net income of unconsolidatedinvestments 794,701 446,798 515,264 310,744 213,179Income tax expense 144,826 431,817 96,263 11,134 18,484Income from continuing operations before equity innet income of unconsolidated investments 649,875 14,981 419,001 299,610 194,695Equity in net income of unconsolidated investments(net of tax) 89,264 84,487 59,637 27,978 35,742Net income from continuing operations 739,139 99,468 478,638 327,588 230,437Income (loss) from discontinued operations (net oftax)(e) — — 202,131 32,476 (69,531)Net income 739,139 99,468 680,769 360,064 160,906Net income attributable to noncontrolling interests (45,577) (44,618) (37,094) (25,158) (27,590)Net income attributable to Albemarle Corporation $693,562 $54,850 $643,675 $334,906 $133,316Financial Position and Other Data Total assets(f) $7,581,674 $7,750,772 $8,161,207 $9,597,954 $5,202,437Operations: Working capital $815,248 $1,276,638 $2,166,515 $214,317 $2,208,964Current ratio 1.69 2.06 2.90 1.13 2.94Depreciation and amortization $200,698 $196,928 $226,169 $260,076 $103,572Capital expenditures $699,991 $317,703 $196,654 $227,649 $110,576Acquisitions, net of cash acquired $11,403 $44,367 $208,734 $2,100,490 $—Cash proceeds from divestitures, net $413,569 $6,857 $3,325,571 $8,883 $104,718Research and development expenses $70,054 $84,330 $80,475 $89,187 $88,310Gross profit as a % of net sales 36.1 36.0 36.2 30.4 31.5Total long-term debt(f) $1,705,210 $1,837,372 $2,369,262 $3,817,157 $2,913,465Total equity(g) $3,759,108 $3,817,696 $3,942,604 $3,401,313 $1,488,635Total long-term debt as a % of total capitalization 31.2 32.5 37.5 52.9 66.2Net debt as a % of total capitalization(h) 23.4 15.5 2.5 51.4 22.2Common Stock Basic earnings (loss) per share Continuing operations $6.40 $0.49 $3.93 $2.72 $2.57Discontinued operations $— $— $1.80 $0.29 $(0.88)Shares used to compute basic earnings per share 108,427 110,914 112,379 111,182 78,696Diluted earnings (loss) per share Continuing operations $6.34 $0.49 $3.90 $2.71 $2.57Discontinued operations $— $— $1.78 $0.29 $(0.88)Shares used to compute diluted earnings per share 109,458 112,380 113,239 111,556 79,102Cash dividends declared per share $1.34 $1.28 $1.22 $1.16 $1.10Total equity per share(g) $35.59 $34.53 $35.04 $30.31 $19.08Return on average total equity 18.3% 1.4% 17.5% 13.7% 8.3%Footnotes:(a)As a result of the adoption of new accounting guidance effective January 1, 2018, on a retrospective basis, all components of net benefit cost(credit), other than service cost, are to be shown outside of operations on the consolidated statements of income. We recast these components of netbenefit cost (credit), which resulted in an increase (reduction) of $3.7 million, $0.3 million, $3.7 million and ($34.4) million in Cost of goods sold,respectively, and $12.4 million, ($26.7) million, $31.6 million and ($90.3) million in Selling, general and administrative expenses, respectively,with an offsetting impact of $16.1 million, ($26.4) million, $35.3 million and ($124.7) million in Other (expenses) income, net, respectively, for theyears ended December 31, 2017, 2016, 2015 and 2014. There was no impact to Net income attributable to Albemarle Corporation.(b)On December 14, 2016 the Company sold the Chemetall Surface Treatment business, which qualifies for discontinued operations treatment becauseit represents a strategic shift that will have a major effect on the Company’s operations and financial results. As a result, in the second quarter of2016, the Company began accounting for this business as discontinued operations in the consolidated statements of income and excluded thebusiness from segment results for the years ended December 31, 2016 and 2015, the periods this business was owned by Albemarle. Related assetsand liabilities are classified as held for sale for 2015.(c)On January 12, 2015, we completed the acquisition of Rockwood Holdings, Inc. Results for 2015 include the operations of Rockwood commencingon January 13, 2015.(d)The year ended December 31, 2018 included a gain before income taxes of $210.4 million related to the sale of the polyolefin catalysts andcomponents portion of the Performance Catalysts Solutions business. The year ended December 31, 2016 included gains before income taxes of$11.5 million and $112.3 million related to the sales of the metal sulfides business and the minerals-based flame retardants and specialty chemicalsbusiness, respectively.(e)Included in Income (loss) from discontinued operations (net of tax) for the year ended December 31, 2016 is a pre-tax gain of $388.0 million ($135.0million after income taxes) related to the sale of the Chemetall Surface Treatment business. The year ended December 31, 2014 includes a pre-taxloss of $85.5 million ($65.7 million after income taxes) related to the sale of the antioxidant, ibuprofen and propofol businesses.(f)As a result of the adoption of new accounting guidance effective January 1, 2016 on a retrospective basis, unamortized debt issuance costs are nowdeducted from the carrying amount of the associated debt liability on the balance sheet. The reclassification of these unamortized debt issuancecosts resulted in reductions of Long-term debt and Other assets on the consolidated balance sheets of $17.1 million in 2015 and $20.6 million in2014.(g)Equity reflects the repurchase of common shares amounting to: 2018—5,262,654; 2017—2,341,083; 2016—0; 2015—0; and 2014—2,190,254.2015 also includes the impact of 34,113,064 shares of common stock issued in connection with the acquisition of Rockwood.(h)We define net debt as total debt plus the portion of outstanding joint venture indebtedness guaranteed by us (or less the portion of outstanding jointventure indebtedness consolidated but not guaranteed by us), less cash and cash equivalents.

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