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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FORM 10-K
For the fiscal year ended: December 31, 2018
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to ________
Commission file number: 001-36062
CINER RESOURCES LP
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of
Incorporation or Organization)
46-2613366
(I.R.S. Employer
Identification No.)
Five Concourse Parkway
Suite 2500
Atlanta, Georgia 30328
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (770) 375-2300
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common units representing limited partnership interests
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is
not contained herein, and will not be contained, 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 any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Emerging growth company
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Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes
No
The aggregate market value, as of June 30, 2018, of the common units held by non-affiliates of the registrant, based on the reported
closing price of such units on the New York Stock Exchange on such date ($26.28 per common unit), was approximately $134.5
million.
The registrant had 19,744,301 common units and 399,000 general partner units outstanding at March 1, 2019, the most recent
practicable date.
Documents Incorporated by Reference: None
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CINER RESOURCES LP
ANNUAL REPORT ON FORM 10-K
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References in this Annual Report on Form 10-K (“Report”) to the “Partnership,” “CINR,” “Ciner Resources,” “we,” “our,”
“us,” or like terms refer to Ciner Resources LP and its subsidiary, Ciner Wyoming LLC, which is the consolidated subsidiary of the
Partnership and referred to herein as “Ciner Wyoming.” References to “our general partner” or “Ciner GP” refer to Ciner Resource
Partners LLC, the general partner of Ciner Resources LP and a direct wholly-owned subsidiary of Ciner Wyoming Holding Co.
(“Ciner Holdings”), which is a direct wholly-owned subsidiary of Ciner Resources Corporation (“Ciner Corp”). Ciner Corp is a direct
wholly-owned subsidiary of Ciner Enterprises Inc. (“Ciner Enterprises”), which is a direct wholly-owned subsidiary of WE Soda Ltd.,
a U.K. corporation (“WE Soda”). WE Soda is a direct wholly-owned subsidiary of KEW Soda Ltd., a U.K. corporation (“KEW
Soda”), which is a direct wholly-owned subsidiary of Akkan Enerji ve Madencilik Anonim irketi (“Akkan”). Akkan is directly and
wholly owned by Turgay Ciner, the Chairman of the Ciner Group (“Ciner Group”), a Turkish conglomerate of companies engaged in
energy and mining (including soda ash mining), media and shipping markets. All of our soda ash processed is currently sold to
various domestic and international customers, including American Natural Soda Ash Corporation (“ANSAC”), which is an affiliate for
export sales.
We include cross references to captions elsewhere in this Report where you can find related additional information. The
following table of contents tells you where to find these captions.
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Cautionary Statement Concerning Forward-Looking Statements
PART I
Item 1.
Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Item 6.
Selected Financial Data
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
Item 11.
Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13.
Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accounting Fees and Services
PART IV
Item 15.
Item 16.
Exhibits, Financial Statement Schedules
Form 10-K Summary
Signatures
Glossary of Industry Terms
Exhibit Index
Page
Number
5
6
19
43
43
43
44
45
48
49
62
63
90
90
92
93
97
114
116
118
119
119
123
124
120
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Report contains, and our other public filings and oral and written statements by us and our management may include,
statements that constitute “forward-looking statements” within the meaning of the United States securities laws. Forward-looking
statements include the information concerning our possible or assumed future results of operations, reserve estimates, business
strategies, financing plans, competitive position, potential growth opportunities, potential operating performance, the effects of
competition and the effects of future legislation or regulations. Forward-looking statements include all statements that are not
historical facts and in some cases may be identified by the use of forward-looking terminology such as the words “believe,” “expect,”
“plan,” “intend,” “seek,” “anticipate,” “estimate,” “predict,” “forecast,” “project,” “potential,” “continue,” “may,” “will,” “could,”
“should” or the negative of these terms or similar expressions. Examples of forward-looking statements include, but are not limited to,
statements concerning cash available for distribution and future distributions, if any, and such distributions are subject to the approval
of the board of directors of our general partner and will be based upon circumstances then existing. We have based our forward-
looking statements on management’s beliefs and assumptions and on information currently available to us.
Forward-looking statements involve risks, uncertainties and assumptions. You should not put undue reliance on any forward-
looking statements. After the date of this Report, we do not have any intention or obligation to update any forward-looking statement,
whether as a result of new information or future events, and expressly disclaim any obligation to do so except as required by
applicable law.
The risk factors discussed in Item 1A. “Risk Factors” and the factors discussed in Item 7. “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” could cause our actual results to differ materially from those expressed in
forward-looking statements. These factors should not be construed as exhaustive and there may also be other risks that we are unable
to predict at this time. All forward-looking statements included in this Report are expressly accompanied and qualified in their entirety
by these cautionary statements.
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Item 1. Business
Overview
PART I
The Partnership was formed in April 2013 by Ciner Holdings. The Partnership owns a controlling interest comprised of 51.0%
membership interest in Ciner Wyoming, which is one of the largest and lowest cost producers of natural soda ash in the world, serving
a global market from our facility in the Green River Basin of Wyoming. Our facility has been in operation for more than 50 years.
The following table sets forth certain operating data regarding our business:
Year Ended December 31,
2018
2017
2016
2015
2014
Operating and Other Data:
Trona ore consumed
Ore to ash ratio(1)
Ore grade(2)
Soda ash volume produced
Soda ash volume sold
4,018.3
(thousands of short tons, except for ratio data)
4,050.4
4,001.3
4,040.3
3,869.5
1.54: 1.0
1.50: 1.0
1.50: 1.0
1.52: 1.0
1.52: 1.0
85.8%
88.4%
87.5%
85.8%
86.4%
2,613.4
2,613.2
2,666.9
2,705.4
2,695.3
2,735.7
2,662.9
2,655.4
2,543.9
2,548.3
(1) Ore to ash ratio expresses the number of short tons of trona ore used to produce one short ton of soda ash and liquor and
includes our deca rehydration recovery process. In general, a lower ore to ash ratio results in lower costs and improved
efficiency.
(2) Ore grade is the percentage of raw trona ore that is recoverable as soda ash free of impurities. A higher ore grade will
produce more soda ash than a lower ore grade.
Trona, a naturally occurring soft mineral, is also known as sodium sesquicarbonate and consists primarily of sodium carbonate,
or soda ash, sodium bicarbonate and water. We process trona ore into soda ash, which is an essential raw material in flat glass,
container glass, detergents, chemicals, paper and other consumer and industrial products. The vast majority of the world’s accessible
trona reserves are located in the Green River Basin. According to historical production statistics, approximately one-quarter of global
soda ash is produced by processing trona, with the remainder being produced synthetically through chemical processes. The
processing of soda ash from trona is the cheapest manner in which to produce soda ash. The costs associated with procuring the
materials needed for synthetic production are greater than the costs associated with mining trona for trona-based production. In
addition, trona-based production consumes less energy and produces fewer undesirable by-products than synthetic production.
Our principal executive offices are located at Five Concourse Parkway, Suite 2500, Atlanta, Georgia 30328, and our telephone
number is (770) 375-2300. We make available, free of charge on our website at www.ciner.us.com our annual report on Form 10-K,
quarterly reports on 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 Exchange Act of 1934, as amended, or the Exchange Act, as soon as reasonably practicable after we
electronically file such material with, or furnish such material to, the U.S. Securities and Exchange Commission (“SEC”), or the SEC.
A hard copy of our annual report on Form 10-K may also be requested free of charge by emailing investorrelations@ciner.us.com.
Our website also includes certain governance documents and policies such as our Code of Conduct, our Supplier Code of
Conduct, our Corporate Governance Guidelines, our Internal Reporting and Whistleblower Protection Policy, our Insider Trading
Policy and the charters of our Audit Committee and Conflicts Committee. The information on our website, or information about us on
any other website, is not incorporated by reference into this Report. The SEC maintains an internet site at www.sec.gov that contains
reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
Our Competitive Strengths
We believe that the following competitive strengths better enable us to execute our business strategies and to achieve our
objective of generating and growing cash available for distribution to our unitholders:
Safety Is a Value and the Most Important Part Of Our Business. We pride ourselves on our safety record, and we are
continually one of the leaders in the U.S. mining industry in relation to low incident rates and workplace injuries. We maintain a
rigorous safety program, which includes training, site audits and hazard identification. Ciner Corp and its affiliates, our employees
and all contractors who operate our assets or work at our facility are involved in our safety programs. As a direct result of this
commitment, we have achieved many recognitions such as the Sentinels of Safety by the National Mining Association, The Industrial
Minerals Association-North America Safety Achievement Award (Large Category) three times, Safe Sam Award by the Wyoming
Mining Association, and the Wyoming State Mine Inspector’s Large Mine award multiple times. During the year ended December 31,
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2018, our facility had zero lost work day injuries and two recordable injuries as reported by MSHA. We also boast and support some
of the nation’s best mine rescue teams. In 2018, we were awarded MSHA’s Overall Mine Rescue Championship. This MSHA
sponsored competition includes over 40 mine rescue teams from around the country.
Cost Advantages of Producing Soda Ash from Trona. We believe that as a producer of soda ash from trona, we have a
significant competitive advantage compared to the synthetically produced soda ash manufactured in other parts of the world. The
manufacturing and processing costs for producing soda ash from trona are lower than other manufacturing techniques partly because
the costs associated with procuring the materials needed for synthetic production are greater than the costs associated with mining
trona for trona-based production. In addition, we believe trona-based production consumes less energy and produces fewer undesirable
by-products than synthetic production. We believe the average cost of production per short ton of soda ash (before freight and logistics
costs) from trona is approximately 40% to 50% the cost per short ton of soda ash from synthetic production. In addition, synthetic
producers of soda ash incur additional costs associated with storing or disposing of, or attempting to resell, the by-products the
synthetic processes produce. Even after taking into account the higher freight costs associated with our soda ash exports, we believe
we can be cost competitive with synthetic soda ash operations in most parts of the world, which are typically located closer to
customers than we are. Today, we estimate that roughly 25% of global production is produced from trona based sources, while 75% is
produced using various synthetic methods.
Synergies created from Ciner Group. Since Ciner Group’s acquisition of our business, Ciner Group is now the largest global
producer of natural soda ash derived from trona-based sources, with production assets in both Turkey and the US. Ciner Group has
long-standing relationships with many global customers that we believe will improve our positioning with key customer accounts in
North America and Europe. Ciner Group also owns and operates port facilities in Turkey, and one of its other North American
subsidiaries entered into an agreement in 2017 to exclusively import soda ash into a port on the east coast of the U.S. Ciner Corp,
which is the exclusive sales agent for the Partnership, will serve as the exclusive sales agent of that material and receive a commission
on those sales. We believe by having access to that material, Ciner Corp will be able to offer its customers an improved level of
service, greater certainty of supply to the Partnership’s end customers, and over time lower our overall costs to serve and subsequently
charged to the Partnership. In addition, we believe there are opportunities to leverage technologies across the group to enhance our
relative competitive cost position.
Substantial Reserve Life from Significant Reserves. Our reserve estimate, as of December 31, 2018, was prepared by our
internal staff of mine engineers (the “Ciner Resources staff”). As of December 31, 2018, the Ciner Resources staff estimated we had
proven and probable reserves of approximately 236.1 million short tons of trona, which is equivalent to 128.8 million short tons of
soda ash. Based on our current mining rate of approximately 4.0 million short tons of trona per year, we believe we have enough
proven and probable trona reserves to continue mining trona using current methods for approximately 59 years. Please see Item 1,
Business, “Trona Reserves” and “Risk Factors-Risks Inherent in our Business and Industry - Our reserve data are estimates based on
assumptions that may be inaccurate and are based on existing economic and operating conditions that may change in the future,
which could materially and adversely affect the quantities and value of our reserves” for more information.
Certain Operational Advantages Compared to Other U.S. Trona-Based Producers. We believe we have certain operational
advantages over other soda ash producers in the Green River Basin due to the operational characteristics of our facilities as described
below. These advantages are manifested in our high productivity and efficiency rates.
•
Location of our mining beds and high purity trona. Our mining beds are located 800 to 1,100 feet below the surface, which is
significantly closer to the surface than the mining beds of other operators in the Green River Basin. The relatively shallow
depth of our beds compared to other Green River Basin trona mines contributes to favorable ground conditions and improved
mining efficiency. We have a competitive advantage because we can mine the trona and roof bolt simultaneously on our
continuous miner equipment. In addition, the trona in our mining beds has a higher concentration of soda ash as compared to
the trona mined at other locations in the Green River Basin, which is typically imbedded or mixed with greater amounts of
halite and other impurities. Our trona ore is generally composed of approximately 80% to 89% pure trona.
• Advantageous facility layout. Our surface site includes a high capacity network of ponds that we use to recapture soda ash
lost in processing trona through a process we introduced in 2009 called deca rehydration (“DECA”). While other producers in
the Green River Basin also utilize deca rehydration, our pond complex enables us to spread deca-saturated water over a large
surface area, which facilitates evaporation and access to the resulting deca. Additionally, we can transfer water from one pond
to another, a process we call “de-watering,” leaving the first pond dry. De-watering enables us to use front loaders and other
hauling equipment to move dry deca from that “de-watered” pond to our processing facility. Other producers in the area
instead need to utilize costly dredging techniques to extract deca from their ponds, and the recovered deca is wet, and
therefore requires more energy to process than dry deca. Introducing dry deca into our process has also reduced our energy
consumption per short ton of soda ash produced. At our current utilization rates we will deplete our DECA supply in 2023.
Please read “Risk Factor-Risks Inherent in Our Business and Industry-Our deca stockpiles will substantially deplete by 2023
and our production rates will decline approximately 200,000 short tons per year if we do not make further investments” for
more information about this process.
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Partly due to these operational advantages over other domestic producers, we believe we have the most efficient soda ash
production facility in the Green River Basin both in terms of short tons of soda ash produced per employee and in energy consumed
per short ton of soda ash produced. In 2018, we used approximately 3.8 MMBtus of energy per short ton of soda ash processed, as
compared to an average of 5.5 MMBtus of energy for the other three operators in the Green River Basin according to the Wyoming
Department of Environmental Quality (“WDEQ”) and our internal estimates. For the year ended December 31, 2018, we produced
approximately 5,355 short tons of soda ash per employee.
Stable Domestic Customer Relationships. We have more than 70 domestic customers in industries such as flat glass, container
glass, detergents, chemicals, paper and other consumer and industrial products. We have long-term relationships with many of our
customers due to our competitive pricing, reliable shipping and high quality soda ash. For the year ended December 31, 2018, the
majority of our domestic net sales were made to customers with whom we have done business for over ten years and their contracts
are typically for a one year period. We believe that these relationships promote more stable cash flows.
Experienced Management and Workforce. Our facility has been in continuous operation for 56 years. We are able to build on
the collective knowledge gained from our experience during this period to continually improve our operations and introduce
innovative processes. In addition, many members of Ciner Wyoming’s senior management team have more than 20 years of relevant
industry experience. Our executives lead a highly productive workforce with an average tenure of approximately 15.1 years. We
believe our institutional knowledge, coupled with the relative seniority of our workforce, engenders a strong sense of teamwork and
collegiality, which has led to one of the safest and most efficient operations in the industry today.
Our Business Strategies
Our primary business objective is to generate stable cash flows through consistent growth in the production of soda ash,
allowing us to make quarterly cash distributions to our common unitholders while growing our business. To achieve our objective, we
intend to execute the following key business strategies:
Capitalize on the Growing Demand for Soda Ash. Since 2013, we have invested just over $74.8 million for de-bottlenecking
projects that have improved our production capacity by 305,000 tons of soda ash per year. We believe we have further opportunities to
debottleneck our facility over the next several years up to a maximum capacity of 2,800,000 tons per year. We are currently
evaluating engineering and design options to further expand our capacity up to at least 3,000,000 tons per year. We believe that as one
of the leading low-cost producers of trona-based soda ash, we are well-positioned to capitalize on the worldwide growth of soda ash.
While consumption of soda ash within the United States is expected to remain relatively stable in the near future, overall worldwide
demand for soda ash, based on third-party historical production statistics, is projected to grow from an estimated 59.6 million metric
tons (equivalent to approximately 65.7 million short tons) in 2018 to almost 65.7 million metric tons (equivalent to approximately 72.4
million short tons) in 2023, which represents a compounded annual growth rate of 2.5%. Through ANSAC (until December 31, 2021),
Ciner Group’s logistics network, as well as our long-standing relationship with domestic customers, we believe that as global demand
increases, we will be well positioned to maintain our market share in the principal markets in which we operate. Please read
“Customers” below for a discussion about our withdrawal from American Natural Soda Ash Corporation (“ANSAC”).
Continuous Improvement Initiatives to Lower our Operating Expenses and Increase Utilization. We are building a culture of
continuous improvement. We commenced initiatives in 2017 that continued into 2018 to improve the consistency of our ore flow to
the surface and revamped our preventive maintenance practices. Both of these should lead to lowering our overall cost to produce
soda ash and increase the consistency and overall output of our production. In addition, in 2018 we commenced construction on a new
electricity/steam cogeneration facility that will provide roughly one-third of our electricity and steam demands. We expect to
commence operating the new co-generation facility in the second half of 2019 and lower our annual electricity spend by $7 - 10
million per year once fully operational.
Leverage our Sponsor’s Capability to Build a Global Soda Ash Brand. Our facility in Wyoming, coupled with Ciner Group’s
locations in Turkey, produce more than 7.0 million tons of soda ash, making it the world’s largest producer of low cost natural soda
ash. Our sponsor’s platform includes unique low cost technology, logistics assets including ports and bulk ships, and world class cost
competitive production assets geographically located to serve most key markets around the world. Starting in 2018, our sponsor has
entered into an agreement for a new port on the eastern seaboard of the U.S. to import soda ash for supply to select customers on the
east coast. Ciner Corp, which is the sales agent for the Partnership, will serve as the exclusive marketing agent for that material and
will have inventory to ship from not only Wyoming, but also this new port on the east coast that will ultimately improve security of
supply to our customers in the region. We believe this will help Ciner Corp offer a unique value proposition to our customers and
ultimately improve the cash flow and profitability of our domestic business. In addition, upon Ciner Corp’s termination from ANSAC
to be effective as of December 31, 2021 (as discussed further under “Customers” below) Ciner Corp will begin marketing soda ash
directly into international markets that are currently being served by ANSAC and intends to utilize the distribution network that has
already been established by the global Ciner Group. We believe by combining our volumes with Ciner Group’s soda ash exports from
Turkey, our withdrawal from ANSAC will allow us to leverage the larger, global Ciner Group soda ash operations, which we expect
will eventually lower our cost position and improve our ability to optimize our market share both domestically and internationally.
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Maintain Financial Flexibility. We intend to maintain a disciplined financial policy and conservative capital structure by
balancing the funding of expansion capital expenditures and acquisitions with internally generated operating cash flows and external
financing sources, including commercial bank borrowings and the issuance of debt and equity securities. See Part II, Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Debt”
for additional information.
Expand Operations Strategically. In addition to capacity expansions and process improvements at our current facility, we plan
to grow our business through various methods as they become available to us. This would include acquisitions of other businesses
that are involved in mining and processing minerals, such as soda ash, and logistics assets that could improve our efficiencies and
grow our cash flows.
We can provide no assurance that we will be able to utilize our strengths described above. For further discussion of the risks that
we face, see Item 1A, “Risk Factors.”
Our Organizational Structure
The following chart depicts our ownership structure as of March 8, 2019 and approximate ownership percentages:
Our Operations
Our Green River Basin surface operations are situated on approximately 880 acres in Wyoming, and our mining operations
consist of approximately 23,500 acres of leased and licensed subsurface mining area. Our facility is accessible by both road and rail.
We use seven large continuous mining machines and fourteen underground shuttle cars in our mining operations. Our processing
assets consist of material sizing units, conveyors, calciners, dissolver circuits, thickener tanks, drum filters, evaporators and rotary
dryers.
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The following map provides an aerial overview of our surface operations:
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The following map shows the known sodium leasing area within the Green River Basin, including the boundaries of our leased
and licensed subsurface mining area:
The Green River Basin geological formation holds the largest, and one of the highest purity, known deposits of trona ore in the
world. Our reserves contain trona deposits having a purity between 80% to 89% by weight, which means that insoluble impurities and
water make up approximately 11% to 20% of our trona.
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Our mining leases and license are located in two mining beds, designated by the U.S. Geological Survey as beds 24 and 25, at
depths of 800 to 1100 feet, respectively, below the surface. Mining these beds affords us several competitive advantages. First, the
depth of our beds is shallower than other actively mined beds in the Green River Basin, which allows us to use a continuous mining
technique to mine trona and roof bolt the ceiling simultaneously. In addition, mining two beds that are on top of one another allows for
production efficiencies because we are able to use a single hoisting shaft to service both beds.
The following graphic shows a cross-section of the strategic areas of the Green River Basin where we mine trona:
Source: Management.
We remove insoluble materials and other impurities by thickening and filtering the liquor. We then add activated carbon to our
filters to remove organic impurities, which can cause color contamination in the final product. The resulting clear liquid is then
crystallized in evaporators, producing sodium carbonate monohydrate. The crystals are then drawn off and passed through a centrifuge
to remove excess water. We then dry the resulting material in a product dryer to form anhydrous sodium carbonate, or soda ash. The
resulting processed soda ash is then stored in on-site storage silos to await shipment by bulk rail or truck to distributors and end
customers. Our storage silos can hold up to 65,000 short tons of processed soda ash at any given time. Our facility is in good working
condition and has been in service for 56 years.
Deca Rehydration. The evaporation stage of our trona ore processing produces a precipitate and natural by-product called
deca. “Deca”, short for sodium carbonate decahydrate, is one part soda ash and ten parts water. Solar evaporation causes deca to
crystallize and precipitate to the bottom of the four main surface ponds at our Green River Basin facility. In 2009, we implemented a
process called deca rehydration, which enables us to recover soda ash from the deca-rich purged liquor as a by-product of our refining
process. We capture the soda ash contained in deca by allowing the deca crystals to evaporate in the sun and separating the dehydrated
crystals from the soda ash. We then blend the separated deca crystals with partially processed trona ore at the dissolving stage of our
production process described above. This process enables us to reduce our waste storage needs and convert what is typically a waste
product into a usable raw material. Please read “Risk Factor-Risks Inherent in Our Business and Industry-Our deca stockpiles will
substantially deplete by 2023 and our production rates will decline approximately 200,000 short tons per year if we do not make
further investments” for more information about this process.
Energy Consumption. We believe we have one of the most efficient mining and soda ash production surface operations in the
world. In 2018, we used approximately 3.8 MMBtus of energy in the form of electricity and natural gas to produce each short ton of
soda ash. In addition, we believe this to be the lowest energy consumption of any soda ash producer in North America. We and other
producers of soda ash in the Green River Basin benefit from relatively low cost and stable supplies of coal and natural gas in
Wyoming, which further enhances our competitive cost advantage over other regions of the world. To reduce the impact of the
volatility in natural gas prices, we hedge a portion of our natural gas consumption requirements, which enables us to set the price for a
portion of our forecasted natural gas purchases. In addition, we have begun installation of a new electricity/steam co-generation
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facility that is estimated to reduce our electricity spend by roughly one-third per year. We expect to commence operating the new co-
generation facility in the second half of 2019.
Shipping and Logistics. All of our soda ash is shipped by rail or truck from our Green River Basin operations. For the year
ended December 31, 2018, we shipped approximately 93.5% of our soda ash to our customers initially via a single rail line owned and
controlled by Union Pacific Railroad Company (“Union Pacific”), and our plant receives rail service exclusively from Union Pacific.
Our agreement with Union Pacific expires on December 31, 2019 and there can be no assurance that it will be renewed on terms
favorable to us or at all. If we do not ship at least a significant portion of our soda ash production on the Union Pacific rail line during
a twelve-month period, we must pay Union Pacific a shortfall payment under the terms of our transportation agreement. For the year
ended December 31, 2018, we assisted the majority of our domestic customers in arranging their freight services. During 2018, we had
no shortfall payments and do not expect to make any such payments in the future. Ciner Corp leases a fleet of more than 2,000 hopper
cars that serve as dedicated modes of shipment to our domestic customers. For export, we ship our soda ash on unit trains consisting of
more than 100 cars to two primary ports: Port Arthur, Texas and Portland, Oregon. From these ports, our soda ash is loaded onto ships
for delivery to ports all over the world. ANSAC currently provides logistics and support services for all of our export sales. For
domestic sales, Ciner Corp provides similar services.
Customers
Our largest customer currently is ANSAC, which buys soda ash from us (through Ciner Corp, which serves as our sales agent in
our agreement with ANSAC) and other of its member companies for export to its customers. For the year ended December 31, 2018,
ANSAC accounted for approximately 52.0% of our net sales. No other individual customer accounted for more than 10% of our net
sales. ANSAC takes soda ash orders directly from its overseas customers and then purchases soda ash for resale from its member
companies pro rata based on each member’s allocated volumes. ANSAC is the exclusive distributor for its members to the markets it
serves. However, Ciner Corp, on our behalf, negotiates directly with, and we export to, customers in markets not served by ANSAC.
During 2017, international sales were made through ANSAC as well as to Ciner Ic ve Dis Ticaret Anonim Sirketi (“CIDT”), both of
which are our export affiliates. We began selling soda ash in late 2016 to CIDT and continued into 2017. There were no sales to CIDT
during the year ended December 31, 2018, as the contract terminated in 2017.
For customers in North America, Ciner Corp, on our behalf, typically enters into contracts, having terms ranging from one to
three years. Under these contracts, our customers generally agree to purchase either minimum estimated volumes of soda ash or a
certain percentage of their estimated soda ash requirements at a fixed price for a given calendar year. Although we do not have a “take
or pay” arrangement with our customers, substantially all of our sales are made pursuant to written agreements and not through spot
sales. In 2018, we had more than 70 domestic customers and in general, we have long-term relationships with the majority of our
customers, meaning we have been a supplier to them for more than ten years.
Our customers, including end users to whom ANSAC makes sales overseas, consist primarily of:
• Glass manufacturing companies, which account for 50% or more of the consumption of soda ash around the world; and
• The majority of the remainder is comprised of chemical and detergent manufacturing companies.
On November 9, 2018, we were informed that Ciner Corp had delivered a notice to terminate its membership in ANSAC, a
cooperative that serves as the primary international distribution channel for us as well as two other U.S. manufacturers of trona-based
soda ash. The effective termination date is December 31, 2021 (the “ANSAC termination date”). ANSAC was our largest customer for
the years ended December 31, 2018, 2017 and 2016, accounting for 52.0%, 44.7% and 55.2%, respectively, of our net sales. Although
ANSAC has been our largest customer for the years ended December 31, 2018, 2017, and 2016, we anticipate that the impact of such
termination on our net sales, net income and liquidity will be limited. We made this determination primarily based upon the belief that
we will continue to be one of the lowest cost producers of soda ash in the global market that has historically seen demand for soda ash
exceed supply of soda ash, and therefore we anticipate being able to find export customers regardless of market conditions. Between
now and the ANSAC Termination Date, Ciner Corp will continue to have full ANSAC membership benefits and services. After the
ANSAC Termination Date, we expect Ciner Corp will begin marketing soda ash directly into international markets which are currently
being served by ANSAC and intends to utilize the distribution network that has already been established by the global Ciner Group.
We believe by combining our volumes with Ciner Group’s soda ash exports from Turkey, our withdrawal from ANSAC will allow us
to leverage the larger, global Ciner Group soda ash operations which we expect will eventually lower our cost position and improve
our ability to optimize our market share both domestically and internationally. Please read “Risk Factors-Risks Inherent in our
Business and Industry-A significant portion of our historical international sales of soda ash have been to ANSAC, and therefore, Ciner
Corp’s decision to terminate its membership in ANSAC could adversely affect our ability to compete in certain international markets,
materially adversely impact our business, results of operations and financial condition and limit our ability to make distributions to
our unitholders.”
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Leases and License
We are party to several mining leases and one license, as noted in the table below, which give us subsurface mining rights. Some
of our leases are renewable at our option upon expiration. We pay royalties to the State of Wyoming, the U.S. Bureau of Land
Management and Rock Springs Royalty Company LLC (“RSRC”), an affiliate of Anadarko Petroleum, which are calculated based
upon a percentage of the value of soda ash and related products sold at a certain stage in the mining process. These royalty payments
may be subject to a minimum domestic production volume from our Green River Basin facility. We are also obligated to pay annual
rentals to our lessors and licensor regardless of actual sales. In addition, we pay a production tax to Sweetwater County, and trona
severance tax to the State of Wyoming that is calculated based on a formula that utilizes the volume of trona ore mined and the value
of the soda ash produced.
The royalty rates we pay to our lessors and licensor may change upon our renewal or renegotiation of such leases and license.
On June 28, 2018, Ciner Wyoming amended its License Agreement, dated July 18, 1961 (the “License Agreement”), with RSRC, to,
among other things, (i) extend the term of the License Agreement to July 18, 2061 and for so long thereafter as Ciner Wyoming
continuously conducts operations to mine and remove sodium minerals from the licensed premises in commercial quantities; and (ii)
revise the production royalty rate for each sale of sodium mineral products produced from ore extracted from the licensed premises at
the royalty rate of eight percent (8%) of the net sales of such sodium mineral products. Any increase in the royalty rates we are
required to pay to our lessors and licensor, or any failure by us to renew any of our leases and license, could have a material adverse
impact on our results of operations, financial condition or liquidity, and, therefore, may affect our ability to distribute cash to
unitholders.
The following is a summary of the material terms of our leases and our license as of December 31, 2018:
Name of Lessor or
Licensor
License with Rock Springs
Leases with the U.S. Government
Leases with the State of Wyoming
Number of
Leases or
Licenses as of
December 31,
2018
Total
Approximate
Acreage as of
December 31,
2018
Expiration
Date Range
1
4
5
12,445 acres
2061
7,934 acres
2027-2028
3,079 acres
2019
Renewals
License will renew so long as we
continuously conduct operations
to mine and remove sodium
minerals from the licensed
premises in commercial
quantities.
These leases will renew so long
as we file an application for
renewal with the Department of
the Interior, Bureau of Land
Management, within 90 days of
expiration of the leases(1)
No contractual right to renewal,
but leases have been historically
renewed for consecutive 10-year
periods
Year of
Commencement
Royalty Rate
1961
8% of net sales
1961
6% of gross output
1969
6% of gross value
(1) Renewals are typically for ten-year periods.
The foregoing descriptions of the material terms of our leases and our license do not purport to be complete descriptions of our
leases and our license, and are qualified in their entirety by reference to the full text of the leases and license,as amedned copies of
which have been filed or incorporated by reference as exhibits to this Report. See Part IV, Item 15, “Exhibits and Financial Statement
Schedules— Exhibit Index” for more information.
Trona Reserves
As of December 31, 2018, the Ciner Resources Staff had estimated proven and probable reserves of approximately 236.1
million short tons, which is equivalent to 128.8 million short tons of soda ash. The estimates of our proven and probable reserves were
prepared by Ciner Resources Internal Staff for the year ended December 31, 2018 based off prior established estimates by a third
party. Based on our current mining rate of approximately 4.0 million short tons of trona per year, we have enough proven and probable
trona reserves to continue mining trona using current methods for approximately 59 years.
Ciner Resources Staff calculated a mineral reserve estimate on our trona mineral assets, which are contained in beds 24 and 25
of the Green River Basin, at depths of 800 and 1,100 feet below the surface, respectively. The Ciner Resources staff estimates are
based on geological data generated from historical exploration drill holes, borings within the mine space, and mine observations and
measurements, including core samples. In addition, Ciner Resources Staff reviewed and analyzed our reserve base maps and current
mining plans, and developed a life of mine plan with respect to the predicted life of our reserves using a non-subsidence design.
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Our trona reserve estimates include reserves that can be economically and legally extracted and processed into soda ash at the
time of their determination. Our trona reserves are categorized as “proven (measured) reserves” and “probable (indicated) reserves,”
which are defined as follows:
• Proven (Measured) Reserves—Reserves for which: (a) quantity is computed from dimensions revealed in outcrops, trenches,
workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for
inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape,
depth and mineral content of reserves are well-established.
• Probable (Indicated) Reserves—Reserves for which quantity and grade and/or quality are computed from information similar
to that used for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are
otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high
enough to assume continuity between points of observation.
For purposes of categorizing our proven reserves, Ciner Resources Staff estimates applied exploration and mine measurements
and drill hole data within a one-quarter mile radius, and required at least 8-feet of trona thickness and a trona ore grade of at least 85%
(with 15% of clays, shales and other impurities). To assess the economic viability of our reserves, Ciner Resources Staff reviewed our
cost of products sold and average sales price of soda ash for the three years ended December 31, 2018.
In determining whether our reserves meet these proven and probable standards, Ciner Resources Staff applied certain
assumptions regarding the remaining life of our reserves, including, among other things, that:
•
•
our cost of products sold per short ton will remain consistent with our cost of products sold for the three years ended
December 31, 2018, which was approximately $80 per short ton of soda ash;
the weighted average net sales per short ton will remain consistent with our weighted average net sales price per short ton for
three years ended December 31, 2018, which was approximately $181 per short ton of soda ash;
• we will achieve an annual mining rate of approximately 4.0 million short tons of trona;
• we will process soda ash with a 90% recovery rate without accounting for our deca rehydration process;
•
the ore to ash ratio for the stated trona reserves is 1.835:1.0 (short tons of trona run-of-mine to short tons of soda ash,
excluding our deca rehydration recovery process);
•
our run-of-mine ore estimate contains dilution from the mining process;
• we will, in approximately 20-30 years, make necessary equipment modifications to operate at a seam height of 7-feet,
although our current mining limit is 9.5 to 10 feet;
• we will, within the next one to six years, conduct “two-seam mining,” which means to perform continuous mining
simultaneously on beds 24 and 25 in close proximity;
our mining costs will remain consistent with 2018 levels;
our processing costs will remain consistent with 2018 levels;
•
•
• we will continue to conduct only conventional mining using the room and pillar method and a non-subsidence mine design;
• we have and will continue to have valid leases and license in place with respect to the reserves, and that these leases and
license can be renewed for the life of the mine based on our extensive history of renewing leases and license;
• we have and will continue to have the necessary permits to conduct mining operations with respect to the reserves;
• we will maintain the necessary tailings storage capacity to maintain tailings disposal between the mine and surface placement
for the life-of-mine;
•
trona ore grade will be 80 to 89%.
Our reserves are subject to leases with the State of Wyoming and the U.S. Bureau of Land Management and a license with Rock
Springs. See “Leases and License” above for a summary of these leases and our license, including expiration date ranges.
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The following table presents our estimated proven and probable trona reserves at December 31, 2018:
Right of Access and
Extraction
License with Rock Springs
Leases with the U.S. Government
Leases with the State of Wyoming
Total(5)
Proven
Trona
Reserves
56.8
48.7
6.9
112.4
Average
Run-of-Mine
Grade of
Proven
Trona
Reserves
(% Trona)(1)
Probable Trona
Reserves
Average
Run-of-Mine
Grade of
Probable
Trona
Reserves
(% Trona)(1)
Total Proven and
Probable Trona
Reserves(2)
Soda Ash Produced
from Total Proven
and Probable Trona
Reserves(3)
(In millions of short tons except percentages)(4)
88.8%
89.0%
89.4%
88.9%
57.7
47.9
18.1
123.7
89.0%
88.7%
88.7%
88.9%
114.5
96.6
25.0
236.1
62.4
52.7
13.7
128.8
(1) For purposes of these estimates, the minimum grade for reported tonnage is 85%.
(2) The average run-of-mine trona grade, or the percentage of the raw trona mined that comprises soda ash, of our proven and
probable trona reserves is approximately 88.9%. These estimates assume out-of-seam dilution of 4 inches. The price used to
estimate our proven and probable trona reserves was our historical average CIF (carriage, insurance and freight) sales price
for the three years ended December 31, 2018, which was approximately $181 per short ton of soda ash.
(3) Soda ash conversion assumes a 90% recovery rate, resulting in an ore to ash ratio of 1.835:1.0.
(4) The sums of some of the rows and columns may not foot due to rounding.
(5) Except percentages, which are averages.
Our reserve estimates will change from time to time as a result of mining activities, analysis of new engineering and geologic
data, modification of mining plans or mining methods and other factors. For additional information, see Item 1A, Risk Factors, “Risks
Inherent in our Business and Industry” for more information regarding risks surrounding our reserves.
Competition
Soda ash is a commodity natural resource traded globally with numerous producers and consumers worldwide. We compete with
both North American and international soda ash producers. There are two ways to consider how we compete: (1) versus our fellow
North American competitors; and (2) versus our worldwide competitors. Against our principal North American competitors, which
include subsidiaries of Genesis, Solvay and Tata in the Green River Basin and Searles Valley Minerals in California, we believe we
have a number of competitive advantages, including operational advantages that improve our relative cost position, life of our mineral
reserves, our strong safety record, customer relationships and an experienced management team and workforce. Against our principal
worldwide competitors, Solvay, Tata and various Chinese producers, virtually all of their production is manufactured from synthetic
processes and we believe, as a producer of soda ash from trona, we have competitive advantages, even after considering the fact that
we generally have higher logistics costs to move the soda ash from Wyoming to regions around the world. The costs associated with
procuring the materials needed for synthetic production are greater than the costs associated with mining trona. In addition, we believe
trona-based production consumes less energy and produces fewer undesirable by-products than synthetic production. See “Our
Competitive Strengths” above for additional information.
Insurance
Because all of our operations are conducted at a single facility, an event such as an explosion, fire, equipment malfunction or
severe weather conditions could significantly disrupt our trona mining or soda ash production operations and our ability to supply soda
ash to our customers. These hazards can also cause personal injury and loss of life, pollution or environmental damage and suspension
of our surface and subsurface operations. To mitigate this risk, Ciner Enterprises or its affiliates maintains, on our behalf, property,
casualty and business interruption insurance in amounts and with coverage and deductibles that we believe are adequate for our
current operations. We regularly evaluate our policy limits and deductibles as they relate to the overall cost and scope of our insurance
coverage to account for changes or growth in our business.
Environmental Matters
Our mining and processing operations, which have been conducted at our Green River Basin facility for many years, are subject
to strict regulation by federal, state and local authorities with respect to protection of the environment. We have a rigorous compliance
program to ensure that our facilities comply with environmental laws and regulations. However, we are involved from time to time in
administrative and judicial proceedings and inquiries relating to environmental matters. Modifications or changes in enforcement of
existing laws and regulations or the adoption of new laws and regulations in the future, particularly with respect to environmental or
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climate change, or changes in the operation of our business or the discovery of additional or unknown environmental contamination,
could require expenditures that might be material to our results of operations or financial condition.
We summarize below certain environmental laws applicable to us that regulate discharges of substances into the air and water,
the management and disposal of hazardous substances and wastes, the clean-up of contaminated sites, the protection of groundwater
quality and availability, plant and wildlife protection, and climate change. Our failure to comply with any of the below laws may result
in the assessment of administrative, civil and criminal penalties, the imposition of clean-up and site restoration costs and liens, the
issuance of injunctions to limit or cease operations, the suspension or revocation of permits and other enforcement measures that could
have the effect of limiting production from our operations.
Clean Air Act
The federal Clean Air Act and comparable state laws restrict the emission of air pollutants from many sources. Under the Clean
Air Act, our facility has been issued a Title V operating permit, which regulates emissions to air from our operations. In particular, our
operations are subject to technology-based standards pursuant to the Clean Air Act’s New Source Performance Standards for
Nonmetallic Mineral Processing Plants, which limit particulate matter emissions. Under associated Clean Air Act regulations our
operation is also subject to Best Available Control Technology (BACT) requirements. In addition, our boilers are subject to
technology-based standards pursuant to the Clean Air Act’s National Emission Standards for Hazardous Air Pollutants for Major
Source: Industrial, Commercial and Institutional Boilers and Process Heaters, which were published in final form in January 2013.
These laws and regulations may require us to obtain pre-approval for the construction or modification of certain projects or facilities
expected to produce or significantly increase air emissions, obtain and strictly comply with stringent air permit requirements or utilize
specific equipment or technologies to control emissions of certain pollutants.
Clean Water Act
The Federal Water Pollution Control Act, which we refer to as the Clean Water Act, and comparable state laws impose
restrictions and controls regarding the discharge of pollutants into regulated waters. The discharge of pollutants into regulated waters
is prohibited, except in accordance with the terms of a permit issued by the federal EPA or the state. We do not discharge any
wastewater from our operations into the Green River, the nearest river system to our Green River Basin facility. However, the
discharge of storm water runoff from our facility is governed by a general permit issued by the WDEQ. In particular, the general
permit requires our compliance with a Storm Water Pollution Prevention Plan. We periodically monitor groundwater wells at our
processing facility, most of which are proximate to our surface pond complex, for salinity, conductivity and other parameters pursuant
to permits issued by the WDEQ. Permitted interceptor trenches are used to collect saline groundwater to prevent discharge and impact
to the Green River.
Resource Conservation and Recovery Act
The federal Resource Conservation and Recovery Act, or RCRA, and analogous state laws, impose requirements for the careful
generation, handling, storage, treatment and disposal of nonhazardous and hazardous solid wastes. Based on the amount of hazardous
waste our operations generate (less than 100 kilograms per month), we have been classified under RCRA as a conditionally exempt
small quantity generator.
Comprehensive Environmental Response, Compensation, and Liability Act
The federal Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA (otherwise known as
“Superfund”), and comparable state laws impose liability in connection with the release of hazardous substances into the environment.
CERCLA imposes liability, without regard to fault or the legality of the original conduct, on certain classes of persons that are
considered to have contributed to the release of a hazardous substance into the environment. These persons include the current and
past owner or operator of the disposal site or the site where the release occurred and those who disposed or arranged for the disposal of
the hazardous substances at the site where the release occurred. Under CERCLA, such persons may be subject to joint and several
liability for the costs of cleaning up the hazardous substances that have been released into the environment and for damages to natural
resources. Wyoming’s Environmental Quality Act also creates the potential for liability in connection with the release of hazardous
substances into the environment, and has been construed to impose liability without regard to fault. We have not received notice that
we are a potentially responsible party at any Superfund site.
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Climate Change Legislation and Regulations
In response to findings that emissions of carbon dioxide, methane and other greenhouse gases, or GHGs, present an
endangerment to public health and the environment, the EPA has adopted rules requiring the monitoring and annual reporting of GHG
emissions from specified sources, including soda ash processors like us. We are monitoring and reporting GHG emissions from our
operations, and we believe we are in substantial compliance with the rules. In the past, the U.S. Congress has considered, but not
enacted, legislation that would impose requirements to reduce emissions of GHGs. The State of California has enacted regulations
establishing a so-called GHG “cap-and-trade” system designed to reduce GHG emissions. Our operations are not currently subject to
any federal or state requirement to reduce GHG emissions. Although it is not possible at this time to predict how legislation or new
regulations that may be adopted to address GHG emissions would impact our business, any such future laws and regulations limiting,
or otherwise imposing a tax or financial penalty for, emissions of GHGs from our equipment and operations might be material to our
results of operations or financial condition.
Wyoming Department of Environmental Quality—Land Quality Division
Our operations are subject to oversight by the Land Quality Division of the WDEQ. In particular, our principal mine permit
issued by the Land Quality Division requires us to “self-bond” for the estimated future cost to reclaim the area of our processing
facility, surface pond complex and on-site sanitary landfill. As of December 31, 2018, the amount of the self-bond was $32.9 million.
The amount of the bond is subject to change based upon periodic re-evaluation by the Land Quality Division. Also, our ability to self-
bond may be impacted by future legislation. Please see Item IA, “Risk Factors--Risks Inherent in our Business and Industry--Our
inability to acquire, maintain or renew financial assurances related to the reclamation and restoration of mining property could have
a material adverse effect on our business, financial condition and results of operations.” for more information.
Mining and Workplace Safety
The U.S. Mine Safety and Health Administration, or MSHA, is the primary regulatory organization governing safety matters
associated with trona ore mining. Accordingly, MSHA regulates underground mines and the industrial mineral processing facilities
associated with trona ore mines. MSHA administers the provisions of the Federal Mine Safety and Health Act of 1977 and enforces
compliance with that statute’s mandatory safety and health standards. As part of MSHA’s oversight, representatives perform at least
four unannounced inspections annually for our entire facility, as well as spot check every five days in our underground facility due to
our Green River Basin facility being classified as a gassy mine. For 2018; we averaged 0.32 citations per inspection day, which is
below the industry average of 1.26 citations per inspection day.
We also are subject to the requirements of the U.S. Occupational Safety and Health Act, or OSHA, and comparable state statutes
that regulate the protection of the health and safety of workers. In addition, the OSHA Hazard Communication Standard requires that
information be maintained about hazardous materials used or produced in operations and that this information be provided to
employees, state and local government authorities and the public.
Our Green River Basin facility maintains a rigorous safety program. Ciner Corp and its affiliates’ employees and contractors
who operate our assets are required to complete 40 hours of initial training, as well as eight-hour annual refresher sessions. These
training programs cover all of the potential site-specific hazards present at the facility. As a direct result of our commitment to safety,
the Green River Basin facility has had an exceptional safety record in recent years. During the year ended December 31, 2018, our
facility had zero lost work-day injuries and two recordable injuries as reported by MSHA. During the five years ended December 31,
2018, the Green River Basin facility averaged 1.0 lost work day injuries per year and averaged 4.6 recordable injuries per year as
reported by MSHA, which we believe to be better than the industry average.
Employees/Labor Relations
The personnel who operate our assets are employees of Ciner Corp and its affiliates. Under the joint venture agreement
governing Ciner Wyoming, Ciner Wyoming reimburses us for the time and cost of employees who operate our assets and for support
provided to Ciner Wyoming. As of December 31, 2018, Ciner Corp and its U.S. affiliates had approximately 488 full-time employees,
of which 446 are employees who operate the mine at our facility in the Green River Basin. None of these employees was covered by a
collective bargaining agreement as of December 31, 2018. We consider our relations with our employees to be satisfactory.
In addition, under the Services Agreement, dated October 25, 2015, among the Partnership, our general partner and Ciner Corp
(the “Services Agreement”), Ciner Corp has agreed to provide the Partnership with certain corporate, selling, marketing, and general
and administrative services, in return for which the Partnership has agreed to pay Ciner Corp an annual management fee and
reimburse Ciner Corp for certain third-party costs incurred in connection with providing such services.
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Glossary of Industry Terms
Industry terms are defined in the Glossary of Industry Terms, included at the end of this Report.
ITEM 1A. Risk Factors
Limited partner interests are inherently different from the capital stock of a corporation, although many of the business risks
to which we are subject are similar to those that would be faced by a corporation engaged in a similar business. You should
carefully consider the following risk factors together with all of the other information included in this Report in evaluating an
investment in our common units.
If any of the following risks were to occur, our business, financial condition, results of operations and our ability to
distribute cash could be materially adversely affected. In that case, we might not be able to make distributions on our common
units, the trading price of our common units could decline, and you could lose all or part of your investment.
Risks Inherent in our Business and Industry
We may not have sufficient cash from operations following the establishment of cash reserves and payment of fees and
expenses, including cost reimbursements to our general partner and its affiliates, to enable us to maintain the current
distribution level or pay any quarterly distribution on our units.
We may not have sufficient available cash each quarter to pay the quarterly distribution at the current distribution level of
$0.567 per unit, or $2.268 per unit on an annualized basis, or at all. In order to pay the quarterly distribution at the current
distribution level, we will require available cash of approximately $11.4 million per quarter, or $46.5 million per year, based on the
number of common and general partner units currently outstanding.
The amount of cash we can distribute on our units principally depends upon the amount of cash we generate from our
operations, which will fluctuate from quarter to quarter based on several factors, some of which are beyond our control, including,
among other things:
•
•
•
•
•
•
•
•
•
•
•
•
us;
the market prices for soda ash in the markets in which we sell;
the volume of natural and synthetic soda ash produced worldwide;
domestic and international demand for soda ash in the flat glass, container glass, detergent, chemical and paper
industries in which our customers operate or serve;
the freight costs we pay to transport our soda ash to customers or various delivery points;
the cost of electricity and natural gas used to power our operations;
the amount of royalty payments we are required to pay to our lessors and licensor and the duration of our leases
and license;
political disruptions in the markets we or our customers serve, including any changes in trade barriers;
our relationships with our customers and our or our sales agent’s ability to renew contracts on favorable terms to
the creditworthiness of our customers;
regulatory action affecting the supply of, or demand for, soda ash, our ability to mine trona ore, our
transportation logistics, our operating costs or our operating flexibility;
new or modified statutes, regulations, governmental policies and taxes or their interpretations; and
prevailing U.S. and international economic conditions and foreign exchange rates.
In addition, the actual amount of cash we will have available for distribution will depend on other factors, some of which
are beyond our control, including, among other things:
•
•
•
•
the level and timing of capital expenditures we make;
the level of our operating, maintenance and general and administrative expenses, including reimbursements to
our general partner for services provided to us;
the cost of acquisitions, if any;
our debt service requirements and other liabilities;
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•
•
•
•
•
fluctuations in our working capital needs;
our ability to borrow funds and access capital markets;
restrictions on distributions contained in debt agreements to which we, Ciner Wyoming or our affiliates are a
party;
the amount of cash reserves established by our general partner; and
other business risks affecting our cash levels.
Soda ash prices have been and in the future may be volatile, and lower soda ash prices will negatively affect our financial
position and results of operations.
Our only product is soda ash, and the market price of soda ash directly affects the profitability of our operations. If the
market price for soda ash declines, our revenue may decrease. Historically, the global market and, to a lesser extent, the domestic
market for soda ash have been volatile, and those markets are likely to remain volatile in the future. In the past, we have reduced
production to mitigate the impact of low soda ash prices. Volatility in soda ash prices can make it difficult to predict the cash we
may have on hand at any given time, and a prolonged period of low soda ash prices may materially and adversely affect our
financial position, liquidity (including our borrowing capacity under the Ciner Wyoming Credit Facility), ability to finance planned
capital expenditures and results of operations.
Prices for soda ash may fluctuate in response to relatively minor changes in the supply of and demand for soda ash, market
uncertainty and other factors beyond our control. These factors include, among other things:
•
•
•
•
•
•
•
applicable;
•
•
overall economic conditions;
additional supply from suppliers selling into markets that we serve;
the level of customer demand, including in the glassmaking industry;
the level of production and exports of soda ash globally;
the level of production of materials used to produce soda ash, including trona ore or synthetic materials, globally;
the cost of energy consumed in the production of soda ash, including the price of natural gas, electricity and coal;
the impact of our competitors changing their prices or increasing their capacity, exports and /or imports as
domestic and foreign governmental relations, regulations and taxes; and
political conditions or hostilities and unrest in regions where we export soda ash.
A substantial portion of our costs are attributable to transportation and freight costs. Increases in freight costs could increase
our costs significantly and adversely affect our results of operations.
Most soda ash is sold inclusive of transportation costs, which make up a substantial portion of the total delivered cost to the
customer. We transport our soda ash by rail or truck and ocean vessel. As a result, our business and financial results are sensitive to
increases in rail freight, trucking and ocean vessel rates. Increases in transportation costs, including increases resulting from
emission control requirements, port taxes and fluctuations in the price of fuel, could make soda ash a less competitive product for
glass manufacturers when compared to glass substitutes or recycled glass, or could make our soda ash less competitive than soda
ash produced by competitors that have other means of transportation or are located closer to their customers. Our rail freight rates
may increase year-over-year. Also, we may be unable to pass on our freight and other transportation costs in full because market
prices for soda ash are generally determined by supply and demand forces.
A significant portion of our international sales of soda ash has been to ANSAC, a U.S. export cooperative, and therefore
adverse developments at ANSAC or its customers, or in any of the markets in which we make direct international sales, could
adversely affect our ability to compete in certain international markets.
We, along with two other U.S. trona-based soda ash producers, currently utilize ANSAC as our exclusive export vehicle for
sales to customers in all countries excluding Canada, South Africa and members of the European Community and European Free
Trade Area. Because ANSAC makes sales to its end customers directly and then allocates a portion of such sales to each member,
we do not have direct access to ANSAC’s customers and we have no direct control over the credit or other terms ANSAC extends
to its customers. As a result, we are indirectly vulnerable to ANSAC’s customer relationships and the credit and other terms
ANSAC extends to its customers, and if, prior to Ciner Corp’s expected termination from ANSAC as of December 31, 2021,
ANSAC ceased to exist, we could face costs and risks of securing those customers and related logistics arrangements on favorable
terms. Any adverse change in ANSAC’s customer relationships, while Ciner Corp remains a member in ANSAC, could have a
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direct impact on ANSAC’s ability to make sales and our ability to make sales to ANSAC. In addition, to the extent ANSAC
extends credit or other favorable terms to its end customers and those customers subsequently default under sales contracts or
otherwise fail to perform, we would have no direct recourse against them.
For more information about ANSAC, see Item 1, “Business—Customers” and “Risk Factors-Risks Inherent in our Business
and Industry- “A significant portion of our historical international sales of soda ash have been to ANSAC, and therefore, Ciner
Corp’s decision to terminate its membership in ANSAC could adversely affect our ability to compete in certain international
markets, materially adversely impact our business, results of operations and financial condition and limit our ability to make
distributions to our unitholders.”
A significant portion of our historical international sales of soda ash have been to ANSAC, and therefore, Ciner Corp’s decision
to terminate its membership in ANSAC could adversely affect our ability to compete in certain international markets, materially
adversely impact our business, results of operations and financial condition and limit our ability to make distributions to our
unitholders.
Ciner Corp notified ANSAC that Ciner Corp intends to terminate its membership in ANSAC, with an effective termination
date of December 31, 2021 (the “ANSAC Termination Date”). ANSAC has historically been our largest customer for the years ended
December 31, 2018, 2017 and 2016, accounting for 52.0%, 44.7% and 55.2%, respectively, of our net sales. As a result, we cannot
be assured that we will be able to retain existing foreign customers or secure new foreign customers or the related logistics arrangements
on favorable terms after the ANSAC Termination Date, which could materially adversely impact our business, results of operations
and financial condition and limit our ability to make distributions to our unitholders.
An increase in natural gas prices, or an interruption in our natural gas supply, would negatively impact our competitive cost
position when compared to other foreign and domestic soda ash producers.
We rely on natural gas as the main energy source in our soda ash production process, and therefore the cost of natural gas is
a significant component of the total production cost for our soda ash. The monthly Henry Hub natural gas settlement prices, over
the past five years, have ranged between $1.73 and $6.00. For the years ended December 31, 2018 and 2017, the average monthly
Henry Hub natural gas settlement prices were $3.17 and $2.99 per MMBtu, respectively. Furthermore, the price of natural gas
could increase as a result of reduced domestic drilling and production activity. Drilling and production operations are subject to
extensive federal, state, local and foreign laws and government regulations concerning, among other things, emissions of pollutants
and greenhouse gases, hydraulic fracturing, and the handling of natural gas and other substances used in connection with natural
gas operations, such as drilling fluids and wastewater. In addition, natural gas operations are subject to extensive federal, state and
local taxation. More stringent legislation, regulation or taxation of natural gas drilling activity in the United States could directly
curtail such activity or increase the cost of drilling, resulting in reduced levels of drilling activity and therefore increased natural
gas prices.
Any material increase in natural gas prices could adversely impact our operations by making us less competitive with other
soda ash producers who do not use natural gas as a key input. If U.S. natural gas prices were to increase to a level where foreign
soda ash producers were able to improve their competitive position on a unit cost basis, this would negatively affect our
competitive cost position.
All of our operations are conducted at one facility. Any adverse developments at our facility could have a material adverse effect
on our results of operations and therefore our ability to make cash distributions to our unitholders.
Because all of our operations are conducted at a single facility, an event such as an explosion, substantial gas leak such as
methane, fire, equipment malfunction or severe weather conditions that adversely affect our facility could significantly disrupt our
trona mining or soda ash production operations and our ability to supply soda ash to our customers. For example, in the fourth
quarter of 2016, MSHA required us to make temporary operational modifications, which caused us to lose a significant amount of
ore production. While Ciner Enterprises or its affiliates maintains business interruption insurance, our policy includes a time
element deductible, per occurrence, and is subject to customary limitations and exclusions. Any sustained disruption in our ability
to meet our obligations under our sales agreements could have a material adverse effect on our results of operations and therefore
our ability to distribute cash to unitholders.
Due to our lack of product diversification, adverse developments in the soda ash industry would adversely affect our results of
operations and our ability to make cash distributions to our unitholders.
We rely exclusively on the revenues generated from the production and sale of soda ash. An adverse development in the
market for soda ash in U.S. or foreign markets would have a significantly greater impact on our operations and cash available for
distribution to our unitholders than it would on other companies that have a more diverse asset and product base. Some of the soda
ash producers with which we compete sell a more diverse range of products to broader markets.
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For the year ended December 31, 2018, approximately 93.5% of our soda ash was shipped via rail, and we rely on one rail line
to service our facility under a contract that expires in 2019. Interruptions of service on this rail line could adversely affect our
results of operations and our ability to make cash distributions to our unitholders.
For the year ended December 31, 2018, we shipped approximately 93.5% of our soda ash from our facility on a single rail
line owned and controlled by Union Pacific. Our current transportation contract with Union Pacific expires on December 31, 2019.
There can be no assurance that this contract will be renewed on terms favorable to us or at all. For the year ended December 31,
2018 and 2017, we assisted the majority of our domestic customers in arranging their freight services. Rail operations are subject
to various risks that may result in a delay or lack of service at our facility, including mechanical problems, extreme weather
conditions, work stoppages, labor strikes, terrorist attacks and operating hazards. Moreover, if Union Pacific’s financial condition
were adversely affected, it could decide to cease or suspend service to our facility. If we are unable to ship soda ash by rail, it
would be impracticable to ship all of our soda ash by truck and it would be cost-prohibitive to construct a rail connection to the
closest alternative rail line that is approximately 135 miles from our facility. Any delay or failure in the rail services on which we
rely could have a material adverse effect on our financial condition and results of operations and our ability to make distributions
to our unitholders. Moreover, if we do not ship at least a significant portion of our soda ash production on the Union Pacific rail
line during a twelve-month period, we must pay Union Pacific a shortfall payment under the terms of our transportation agreement.
During the years ended December 31, 2018 and 2017, we had no shortfall payments under the transportation agreement.
A significant portion of the demand for soda ash comes from glass manufacturers and other industrial end users whose
businesses can be adversely affected by economic downturns.
A significant portion of the demand for soda ash comes from glass manufacturers and other industrial customers. Companies
that operate in the industries that glass manufacturers serve, including the automotive, construction and glass container industries,
may experience significant fluctuations in demand for their own end products because of economic conditions, changes in
consumer demand, or increases in raw material and energy costs. In addition, many large end users of soda ash depend upon the
availability of credit on favorable terms to make purchases of raw materials such as soda ash. As interest rates increase or if our
customers’ creditworthiness deteriorates, this credit may be expensive or difficult to obtain. If these customers cannot obtain credit
on favorable terms, they may be forced to reduce their purchases of soda ash. These and other factors may lead some customers to
purchase less under or seek renegotiation or cancellation of their existing arrangements with us, which could have a material
adverse effect on our results of operations and our ability to distribute cash to unitholders.
If the percentage of our international sales increases as a percentage of total sales, our gross margin could decrease and the
average trade credit payment period of our customers could increase, which could adversely affect our financial position and
our ability to distribute cash to our unitholders.
For the year ended December 31, 2018, our international sales of soda ash as a percentage of total sales was 52.0%. Our
gross margin for international sales is lower than our gross margin for domestic sales because our average price of soda ash sold
internationally is lower than our average price of soda ash sold domestically. Lower margins could adversely affect our financial
position and our ability to distribute cash to our unitholders.
We typically receive payment for our domestic sales quicker than we receive payment for our international sales. Therefore,
an increase in our international sales and a decrease in domestic sales would extend the average time period for our receipt of
payment for our soda ash, which could expose us to greater credit risk from our customers, increase our working capital
requirements and negatively affect the amount of cash available for distribution to our unitholders.
Our deca stockpiles will substantially deplete by 2023 and our production rates will decline approximately 200,000 short tons
per year if we do not make further investments.
In 2023, our deca stockpiles will be substantially depleted. We are evaluating future investments at the site that will offset
this decline as well as provide additional soda ash production above our current rates. We cannot guarantee that any such
investments will be executed successfully or in a timely manner to enable us to maintain our current rates of production.
Ciner Corp, on our behalf, typically enters into contracts and arrangements with our customers that have terms of one to three
years, and our customers are not obligated to purchase any specific amount of soda ash from us.
The terms of our customer contracts vary, including by geography. Most of our domestic contracts have terms of one to three
years. We understand that ANSAC’s customer contract terms also vary by region. Moreover, some of our customer contracts are
not exclusive dealing and none are take-or-pay arrangements. Additionally, we may lose a customer for any number of reasons,
including as a result of a merger or acquisition, the selection of another provider of soda ash, Ciner Corps’ termination from
ANSAC as of the ANSAC termination date, business failure or bankruptcy of the customer or dissatisfaction with our performance
or pricing. Loss of any of our major customers could adversely affect our business, results of operations and cash flow.
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Increased use of glass substitutes and recycled glass may affect demand for soda ash, which could adversely affect our results
of operations.
Increased use of glass substitutes or recycled glass in the container industry could have a material adverse effect on our
results of operations and financial condition. Container glass production is one of the principal end markets for soda ash.
Competition from increased use of glass substitutes, such as plastic and recycled glass, has had a negative effect on demand for
soda ash. Demand for soda ash by the U.S. glass container industry has generally declined over the last ten years; However,
international demand for glass containers is growing at close to GDP rate. We believe that the use of containers made with
alternative materials such as plastic and aluminum will continue to affect negatively the growth in domestic demand for soda ash in
the U.S.
We are exposed to trade credit risk in the ordinary course of our business activities.
We extend credit to our customers as a normal part of our business and as such are subject to the credit risk of our customers,
including the risk of loss resulting from nonpayment or nonperformance. Typical industry contract terms are net 30 days from the
date of shipment for domestic U.S. customers and 120-150 days from the date of shipment for international customers. We have
experienced nonperformance by our customers and counterparties in the past, and we may take reserves for accounts more than
90 days past due. Some of our customers and counterparties may be highly leveraged and subject to their own operating and
regulatory risks. Our credit procedures and policies may not be adequate to eliminate customer credit risk, and we may not
adequately assess the creditworthiness of existing or future customers. In addition, even if our procedures work properly, our
customers may experience unanticipated deterioration of their creditworthiness. Material nonpayment or nonperformance by our
customers could have a material adverse effect on our financial condition and results of operations and on our ability to distribute
cash to our unitholders.
We face intense competition, including from companies that have capital resources greater than ours and that have more
diversified operations.
We face competition from a number of soda ash producers in the United States, Europe and Asia, some of which have greater
market share and greater financial, production and other resources than we do. Some of our competitors are diversified global
corporations that have many lines of business. Some of our competitors have greater capital resources and may be in a better
position to withstand a long term deterioration in the soda ash market. Other competitors, even if smaller in size, may have greater
experience and stronger relationships in their local markets. Competitive pressures could make it more difficult for us to retain our
existing customers and attract new customers, which could have a material adverse effect on our business, financial condition,
results of operations and ability to distribute cash to our unitholders. Competition could also intensify the negative impact of
factors that decrease demand for soda ash in the markets we serve, such as adverse economic conditions, weather, higher fuel costs
and taxes or other governmental or regulatory actions that directly or indirectly increase the cost or limit the use of soda ash. In
addition, China is the largest producer of synthetic soda ash in the world and historically has exported only a small percentage of
its production. If Chinese producers, which we believe are supported by government subsidies, and other producers were to begin
producing significantly more quantities of soda ash than are produced today then the supply of soda ash in the global market could
materially increase and put downward pressure on pricing.
Unfavorable economic conditions may reduce demand for our products, which could adversely affect our results of operations.
Worldwide soda ash demand correlates to global economic growth. Worsening economic conditions or factors that negatively
affect the economic health of the United States and other parts of the world into which we or ANSAC sells soda ash could reduce
our revenues and adversely affect our results of operations. We believe that deterioration of economic conditions or a prolonged
period of economic weakness would have an adverse impact on our results of operations, business and financial condition, as well
as our ability to distribute cash to our unitholders.
Our reserve data are estimates based on assumptions that may be inaccurate and are based on existing economic and operating
conditions that may change in the future, which could materially and adversely affect the quantities and value of our reserves.
Our reserve estimates may vary substantially from the actual amounts of minerals we are be able to recover economically
from our reserves. There are numerous uncertainties inherent in estimating quantities of reserves, including many factors beyond
our control. Estimates of reserves necessarily depend upon a number of variables and assumptions, any one of which may, if
incorrect, result in an estimate that varies considerably from actual results. These factors and assumptions relate to, among other
aspects:
•
•
•
future prices of soda ash, mining and production costs, capital expenditures and transportation costs;
future mining technology and processes;
the effects of regulation by governmental agencies; and
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•
geologic and mining conditions, which may not be identified by available exploration data and may differ from our
experiences in areas where we currently mine.
Please read Item 1, “Business-Trona Reserves” for more information including pertinent additional assumptions regarding
our reserve estimates in this Report. Actual production, revenue and expenditures with respect to our reserves will likely vary from
our estimates, and these variations may be material.
Provisions in the Facilities Agreement could limit our ability to grow the business and restrict our operational and financial
flexibility.
On August 1, 2018, Ciner Enterprises, the entity that indirectly owns and controls our general partner, refinanced its existing
credit agreement and entered into a new facilities agreement, to which WE Soda and Ciner Enterprises (as borrowers), and KEW
Soda, WE Soda, certain related parties and Ciner Enterprises, Ciner Holdings and Ciner Corp (as original guarantors and together
with the borrowers, the “Ciner obligors”), are parties (as amended and restated or otherwise modified, the “Facilities Agreement”),
and certain related finance documents. The Facilities Agreement expires on August 1, 2025.
Even though neither we nor Ciner Wyoming is a party or a guarantor under the Facilities Agreement, while any amounts are
outstanding under the Facilities Agreement, we will be indirectly affected by certain affirmative and restrictive covenants that apply
to WE Soda and its subsidiaries (which include us). Besides the customary covenants and restrictions, the Facilities Agreement includes
provisions that, without a waiver or amendment approved by lenders whose commitments are more than 66-2/3% of the total
commitments under the Facilities Agreement to undertake such action, would (i) prevent transactions with our affiliates that could
reasonably be expected to materially and adversely affect the interests of certain finance parties, (ii) restrict the ability to amend our
limited partnership agreement or our general partner’s limited liability company agreement or our other constituency documents if
such amendment could reasonably be expected to materially and adversely affect the interests of the lenders to the Facilities Agreement;
and (iii) prevent actions that enables certain restrictions or prohibitions on our ability to upstream cash (including via distributions)
to the borrowers under the Facilities Agreement.
Any debt instruments that Ciner Enterprises or any of its affiliates enter into in the future, including any amendments to the
Facilities Agreement or the related finance documents, may include additional or more restrictive limitations that may impact our
ability to conduct our business. These additional restrictions could adversely affect our ability to finance our future operations or
capital needs or engage in, expand or pursue our business activities.
Each of Ciner Holdings and Ciner Corp, the sole member of Ciner Holdings, which is in turn the sole member of our general
partner, is a guarantor under, and its respective equity interests in us and Ciner Holdings are pledged as collateral under, the
Facilities Agreement; if any of the Ciner obligors is unable to meet its obligations under the Facilities Agreement, or is declared
bankrupt, the lenders under the Facilities Agreement may gain control of the sole member of our general partner or, in the case
of bankruptcy, our partnership may be dissolved.
Ciner Holdings, the sole member of our general partner, is a guarantor under the Facilities Agreement, and Ciner Corp, the sole
member of Ciner Holdings, is also a guarantor thereunder. Ciner Corp’s membership interests in Ciner Holdings and Ciner Holdings’
limited partnership interests in us are subject to a lien under the Facilities Agreement. If any of the Ciner obligors is unable to satisfy
its obligations under the Facilities Agreement and the lenders foreclose on the applicable collateral, the lenders would own the sole
member of our general partner, and effectively all of its assets, which include 100% of the membership interest in the general partner.
In such event, the lenders would own and control our general partner, the entity that controls our management and operation. In
addition, such a change of control could result in our indebtedness becoming due. Please read the risks factors in this Report, including
the discussion under the following risk factors: “Restrictions in the Ciner Resources Credit Facility could adversely affect our business,
financial condition, results of operations and ability to make quarterly cash distributions to our unitholders” and “Restrictions in
the agreements governing Ciner Wyoming’s indebtedness, including the Ciner Wyoming Credit Facility, could limit its operations and
adversely affect our business, financial condition, results of operations and ability to make quarterly cash distributions to our
unitholders.”
Restrictions in the agreements governing Ciner Wyoming’s indebtedness, including the Ciner Wyoming Credit Facility, could
limit its operations and adversely affect our business, financial condition, results of operations and ability to make quarterly
cash distributions to our unitholders.
On August 1, 2017, Ciner Wyoming entered into a $225.0 million senior unsecured revolving credit facility (the “Ciner
Wyoming Credit Facility”). The Ciner Wyoming Credit Facility contains various covenants and restrictive provisions that limit
(subject to certain exceptions) Ciner Wyoming’s ability to:
• make distributions on or redeem or repurchase its units;
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•
incur or guarantee additional debt;
• make certain investments and acquisitions;
•
•
incur certain liens or permit them to exist;
enter into certain types of transactions with affiliates of Ciner Wyoming;
• merge or consolidate with another company; and
•
transfer, sell or otherwise dispose of assets.
The Ciner Wyoming Credit Facility also contains covenants requiring Ciner Wyoming to maintain certain financial ratios.
Ciner Wyoming is subject to a consolidated interest coverage ratio (as defined in the Ciner Wyoming Credit Facility) of not less
than 3.00 to 1.00 and a consolidated leverage ratio (as defined in the Ciner Wyoming Credit Facility) of not greater than 3.00 to
1.00. Ciner Wyoming’s ability to meet those financial ratios and tests can be affected by events beyond our control, and we cannot
assure you that Ciner Wyoming will meet those ratios and tests.
In addition, the Ciner Wyoming Credit Facility contains events of default customary for transactions of this nature, including
(1) failure to make payments required under the Ciner Wyoming Credit Facility, (2) events of default resulting from Ciner
Wyoming’s failure to comply with covenants and financial ratios in the Ciner Wyoming Credit Facility, (3) the institution of
insolvency or similar proceedings against Ciner Wyoming, (4) the occurrence of a default under any other material indebtedness
Ciner Wyoming may have, and (5) the occurrence of a change of control.
Under the Ciner Wyoming Credit Facility, a change of control is triggered if Ciner Corp and its wholly-owned subsidiaries,
in the aggregate, directly or indirectly, cease to own all of the equity interests, or cease to have the ability to elect a majority of the
board of directors (or equivalent governing body) of Ciner GP (or any entity that performs the functions of our general partner). In
addition, a change of control would be triggered if we cease to own at least 50.1% of the economic interests in Ciner Wyoming or
cease to have the ability to elect a majority of the members of Ciner Wyoming’s board of managers.
The provisions of the Ciner Wyoming Credit Facility may affect Ciner Wyoming’s ability to obtain future financing and
pursue attractive business opportunities and its flexibility in planning for, and reacting to, changes in business conditions. In
addition, Ciner Wyoming’s failure to comply with the provisions of the Ciner Wyoming Credit Facility could result in an event of
default, which could enable its lenders, subject to the terms and conditions of the Ciner Wyoming Credit Facility, to terminate all
outstanding commitments and declare any outstanding principal of that debt, together with accrued and unpaid interest, to be
immediately due and payable. If the payment of Ciner Wyoming’s debt is accelerated, its assets may be insufficient to repay such
debt in full. As a result, our results of operations and, therefore, our ability to distribute cash to unitholders, could be materially and
adversely affected, and our unitholders could experience a partial or total loss of their investment. Please read Part II, Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—
Debt—Ciner Wyoming Credit Facility” for more information.
If we are not able to renew our leases, it will have a material adverse effect on us. Under the terms of our subsurface mining
leases, we are required to make minimum royalty payments or annual rentals, and the royalty rates we are required to pay may
change with little or no notice to us.
All of our reserves are held under leases with the State of Wyoming and the U.S. Bureau of Land Management and a license
with Rock Springs. As of December 31, 2018, leases covering approximately 13.1% of our acreage are scheduled to expire during
2019. If we are not able to renew our leases, it will have a material adverse effect on our results of operations and cash available
for distribution to unitholders. Each of those leases and the license requires that minimum royalties or annual rentals be paid
regardless of production levels. If our operations do not meet production goals, then it could have an adverse effect on our ability
to pay cash distributions due to the ongoing requirement to pay minimum royalty payments despite a lack of production and the
corresponding net sales.
The royalty rates we pay to our lessors may change upon our renewal of such leases. Any increase in the royalty rates we are
required to pay to our lessors, or any failure by us to renew any of our leases, could have a material adverse impact on our results
of operations, financial condition or liquidity, and, therefore, may affect our ability to distribute cash to unitholders.
Defects in title or loss of any leasehold interests in our properties could limit our ability to conduct mining operations on these
properties or result in significant unanticipated costs.
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All of our trona reserves are leased or licensed. A title defect in our leased, licensed or owned property or the loss of any
lease or license upon expiration of its term, upon a default or otherwise could adversely affect our ability to mine the associated
reserves and/or process the trona that we mine. In some cases, we rely on title information or representations and warranties
provided by our lessors, licensor or grantor. We cannot rely on any such representations or warranties with respect to the surface
land on which our facility is located because we acquired the surface land in 1991 by quitclaim deed. We have no title insurance
for our interests in this property. Any challenge to our title or leasehold interests could delay our operations and could ultimately
result in the loss of some or all of our interest in the property. From time to time we also may be in default with respect to leases or
the license for properties on which we have mining operations. In such events, we may have to close down or alter significantly the
sequence of such mining operations, which may adversely affect our future soda ash production and future revenues. If we mine on
property that we do not own, lease or license, we could incur liability for such mining and be subject to regulatory sanction and
penalties. Also, in any such case, the investigation and resolution of title issues would divert management’s time from our business,
and our results of operations could be adversely affected. As a result, our results of operations, business and financial condition, as
well as our ability to pay distributions to our unitholders may be materially adversely affected.
We may not achieve the acquisition component of our growth strategy.
Acquisitions are a component of our growth strategy. We can offer no assurance that we will be able to identify any
acquisition opportunities, that we will be able to grow our business through acquisitions, or that any assets or business we acquire
will perform in accordance with our expectations or that our assessment concerning the value, strengths and weaknesses of assets
or business acquired will prove to be correct. We have not made any acquisitions in the past, and there are currently a limited
number of producers in North America with businesses similar to ours and potentially legal and regulatory hurdles, such as
extensive evaluation under antitrust laws to determine whether the acquisition would be permissible. In connection with future
acquisitions, if any, we may incur debt and contingent liabilities, increased interest expense and amortization expense and
significant charges relative to integration costs. In addition, our financial condition and results of operations would be adversely
affected if we overpay for acquisitions.
Acquisitions involve a number of special risks, including:
•
•
•
•
•
unforeseen difficulties extending internal control over financial reporting and performing the required assessment at the
newly acquired business or assets;
potential adverse short-term effects on operating results through increased costs or otherwise;
diversion of management’s attention and failure to recruit new, and retain existing, key personnel of the acquired business
or assets;
failure to implement infrastructure, logistics and systems integration successfully; and
the risks inherent in the systems of the acquired business and risks associated with unanticipated events or liabilities, any
of which could have a material adverse effect on our business, financial condition and results of operations.
Mining development, exploration and processing operations pose numerous hazards and uncertainties that may negatively
affect our business.
Mining and processing operations involve many hazards and uncertainties, including, among other things:
•
•
•
•
•
•
•
seismic activity;
ground failures;
industrial accidents;
environmental contamination or leakage, including gas leaks;
fires and explosions;
unusual and unexpected rock formations or water conditions;
flooding and periodic interruptions due to inclement or hazardous weather conditions or other acts of nature; and
• mechanical equipment failure and facility performance problems.
These occurrences could damage or destroy our properties or production facilities, or result in personal injury or wrongful
death claims, environmental damage to our properties or the properties of others, delays in, or prohibitions on, mining or
processing, increased production costs, asset write downs, monetary losses and legal liability, which could have an adverse effect
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on our results of operations and financial condition. In particular, underground mining and related processing activities present
inherent risks of injury to persons and damage to equipment. Our insurance policies provide limited coverage for some of these
risks but will not fully cover these risks. Please read “Risk Factors—Risks Inherent in our Business and Industry—Our business is
subject to inherent risk, including risk relating to natural disasters, and our insurance coverage for such risks may not be adequate
or available to us. If an accident or event occurs that is not fully insured, it could materially affect our business.” Significant mine
accidents could occur, potentially resulting in a mine shutdown or leading to liabilities, which could have a material adverse effect
on our results of operations, financial condition and cash flows.
We may be unable to obtain, maintain or renew permits necessary for our operations, which could impair our ability to conduct
our operations and limit our ability to make distributions to unitholders.
Our facility and operations require us to obtain a number of permits that impose strict regulations on various environmental
and operational matters in connection with mining trona ore and producing soda ash. These include permits issued by various
federal, state and local agencies and regulatory bodies. The permitting rules, and the interpretations of these rules, are complex,
change frequently and are subject to discretionary interpretations by our regulators, all of which may make compliance difficult or
impractical and may impair our existing operations or the development of future facilities. The public, including non-governmental
organizations, environmental groups and individuals, have certain statutory rights to comment upon and submit objections to
requested permits and environmental impact statements prepared in connection with applicable regulations and otherwise engage
in the permitting process, including bringing citizen’s lawsuits to challenge the issuance or renewal of permits, the validity of
environmental impact statements or the performance of mining activities. If permits are not issued or renewed in a timely fashion
or at all or are conditioned in a manner that restricts our ability to conduct our operations economically, our cash flows may
decline, which could limit our ability to distribute cash to unitholders.
Equipment upgrades, equipment failures and deterioration of assets may lead to production curtailments, shutdowns or
additional expenditures.
Our operations depend upon critical equipment that require scheduled upgrades and maintenance and may suffer
unanticipated breakdowns or failures. As a result, our mining operations and processing may be interrupted or curtailed, which
could have a material adverse effect on our results of operations.
As our mine ages and we deplete our trona reserves, in order to maintain current production rates over the next five to ten
years, we expect to need to utilize a two seam mining technique, which could increase our mining costs. In addition, our
maintenance capital expenditures do not include actual or estimated capital expenditures for replacement of our trona reserves.
In addition, assets critical to our trona ore mining and soda ash production operations may deteriorate due to wear and tear or
otherwise sooner than we currently estimate. Such deterioration may result in additional maintenance spending and additional
capital expenditures. If these assets do not generate the amount of future cash flows that we expect, and we are not able to procure
replacement assets in an economically feasible manner, our future results of operations may be materially and adversely affected.
If any of the equipment on which we depend were severely damaged or were destroyed by fire, abnormal wear and tear,
flooding, or otherwise, we may be unable to replace or repair it in a timely manner or at a reasonable cost, which would impact our
ability to produce and ship soda ash, which would have a material adverse effect on our results of operations, financial condition
and our ability to distribute cash to our unitholders.
We may record impairment charges on our assets, including our reserves, that would adversely impact our results of operations
and financial condition.
We are required to perform impairment tests on our assets, including our trona reserves, whenever events or changes in
circumstances modify the estimated useful life of or estimated future cash flows from an asset that would indicate that the carrying
amount of such asset may not be recoverable or whenever management’s plans change with respect to such asset. An impairment in
one period may not be reversed in a later period even if prices increase. If we are required to recognize impairment charges in the
future, our results of operations and financial condition may be materially and adversely affected.
A shortage of skilled workers could reduce our labor productivity and increase our costs, which could negatively affect our
business.
Our mining and processing operations require personnel with specialized skills and experience. Our ability to be productive
and profitable will depend upon our ability to employ and retain skilled workers. If we experience shortages of skilled workers in
the future, our labor costs and overall productivity could be materially and adversely affected. If our labor costs increase or if we
experience materially increased health and benefits costs, our results of operations could be materially and adversely affected.
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We also depend on good relationships with our workforce generally. Any disruption in our relationships with our personnel,
including as a result of potential union organizing activities, work actions or other labor issues, could substantially affect our operations
and results.
Severe weather conditions could have a material adverse impact on our business.
Our business could be materially adversely affected by severe weather conditions. Severe weather conditions may affect our
mining and processing operations by resulting in weather-related damage to our facility and equipment or impact our ability to
transport soda ash from our facility. In addition, severe weather conditions could hinder our operations by causing us to halt or
delay our operations, which could have a material adverse effect on our results of operations and financial condition.
Our business is subject to inherent risk, including risk relating to natural disasters, and our insurance coverage for such risks
may not be adequate or available to us. If an accident or event occurs that is not fully insured, it could materially affect our
business.
We are covered by insurance policies maintained by Ciner Enterprises or its affiliates. These insurance policies provide
limited coverage for some, but not all, of the potential risks and liabilities associated with our business. For some risks, we do not
obtain insurance or are covered by Ciner Enterprises’, or its affiliates’, policies if we believe the cost of available insurance is
excessive relative to the risks presented. As a result of market conditions, premiums and deductibles for certain insurance policies
can increase substantially, and certain types of insurance may become unavailable or available only for reduced amounts of
coverage. As a result, we may not be able to renew our or its existing insurance policies or procure other desirable insurance on
commercially reasonable terms, if at all. In addition, we cannot insure against certain environmental, safety and pollution risks.
Even where insurance coverage applies, insurers may contest their obligations to make payments. Our insurance coverage may not
be adequate to cover us against losses we incur, and coverage under these policies may be depleted or may not be available to us to
the extent that we otherwise exhaust its coverage limits. Our results of operations, and therefore our ability to distribute cash to
unitholders, could be materially and adversely affected by losses and liabilities from uninsured or under-insured events, as well as
by delays in the payment of insurance proceeds or the failure by insurers to make payments.
We also may incur costs and liabilities resulting from claims for damages to property or injury to persons arising from our
operations. We must compensate employees for work-related injuries. If we do not make adequate provision for our workers’
compensation liabilities, such claims could harm our future operating results. If we are required to pay for these fines, costs and
liabilities, our financial condition, results of operations, and therefore our ability to distribute cash to unitholders, could be
adversely affected.
We may be subject to litigation, the disposition of which could have a material adverse effect on our results of operations.
The nature of our operations exposes us to possible litigation claims, including disputes with customers and providers of
shipping services. Some of the lawsuits may seek fines or penalties and damages in large amounts, or seek to restrict our business
activities. Because of the uncertain nature of litigation and coverage decisions, we cannot predict the outcome of these matters or
whether insurance claims may mitigate any damages to us. Litigation is very costly, and the costs associated with prosecuting and
defending litigation matters could have a material adverse effect on our results of operations.
Expansion or improvement of our existing facilities may not result in revenue increases and will be subject to regulatory,
environmental, political, legal and economic risks, which could adversely affect our results of operations and financial
condition.
One of the ways we may grow our business is through the expansion or improvement of our existing facility. The
construction of additions or modifications to our existing facility involve numerous regulatory, environmental, political, legal and
economic uncertainties that are beyond our control. Such expansion or improvement projects may also require the expenditure of
significant amounts of capital, and financing may not be available on economically acceptable terms or at all. If we undertake these
projects, they may not be completed on schedule, at the budgeted cost, or at all. Moreover, our revenue may not increase
immediately upon the expenditure of funds on a particular project. As a result, we may not be able to realize our expected
investment return, which could adversely affect our results of operations and financial condition.
We conduct our operations through a joint venture, which subjects us to additional risks that could have a material adverse
effect on our financial condition and results of operations.
The Partnership is a holding company that conducts its primary operations through Ciner Wyoming, a joint venture with an
affiliate of NRP. The amount of cash Ciner Wyoming can distribute to the Partnership depends primarily on cash flows generated
from Ciner Wyoming’s operations, which may fluctuate depending on, among other things, revenues it receives and costs it incurs,
including for capital expenditure projects undertaken by Ciner Wyoming.
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We may also enter into other joint venture arrangements with third parties in the future. NRP has, and these third parties may
have, obligations that are important to the success of the joint venture, such as the obligation to pay their share of capital and other
costs of the joint venture. The performance of these third party obligations, including the ability of our joint venture partner in
Ciner Wyoming, to satisfy their respective obligations, is outside our control. If these parties do not satisfy their obligations under
the arrangement, our business may be adversely affected.
Our joint venture arrangement may involve risks not otherwise present without such partner, including, for example:
•
•
•
•
our joint venture partner shares certain blocking rights over transactions between Ciner Wyoming and its affiliates,
including us;
our joint venture partner may propose changes to our capital expenditure programs;
our joint venture partner may take actions contrary to our instructions or requests or contrary to our policies or objectives;
although we control Ciner Wyoming, we owe contractual duties to Ciner Wyoming and its other owners, which may
conflict with our interests and the interests of our unitholders; and
•
disputes between us and our joint venture partner may result in delays, litigation or operational impasses.
The risks described above or any failure to continue our joint venture or to resolve disagreements with our joint venture
partner could adversely affect our ability to transact the business that is the subject of such joint venture, which would, in turn,
negatively affect our financial condition, results of operations and ability to distribute cash to our unitholders.
Restrictions in the Ciner Resources Credit Facility could adversely affect our business, financial condition, results of
operations and ability to make quarterly cash distributions to our unitholders.
On August 1, 2017, the Partnership entered into a $10.0 million senior secured revolving credit facility (the “Ciner Resources
Credit Facility”). The Ciner Resources Credit Facility contains various covenants and restrictive provisions that limit (subject to
certain exceptions) our ability (and the ability of our subsidiaries, including Ciner Wyoming) to:
• make distributions on or redeem or repurchase units;
•
incur or guarantee additional debt;
• make certain investments and acquisitions;
•
•
incur certain liens or permit them to exist;
enter into certain types of transactions with our affiliates;
• merge or consolidate with another company; and
•
transfer, sell or otherwise dispose of assets.
The Ciner Resources Credit Facility also contains a covenant requiring us to maintain a consolidated leverage ratio (as
defined in the Ciner Resources Credit Facility) of not greater than 3.00 to 1.00 and a consolidated interest coverage ratio of not less
than 3.00 to 1.00. Our ability to meet that financial ratio and test can be affected by events beyond our control, and we cannot
assure you that we will meet that ratio and test.
In addition, the Ciner Resources Credit Facility contains events of default customary for transactions of this nature, including
(1) failure to make payments required under the Ciner Resources Credit Facility, (2) events of default resulting from our failure to
comply with covenants and financial ratios in the Ciner Resources Credit Facility, (3) the institution of insolvency or similar
proceedings against us, (4) the occurrence of a default under any other material indebtedness we (or any of our subsidiaries) may
have, including the Ciner Wyoming Credit Facility, and (5) the occurrence of a change of control. In addition, our obligations
under the Ciner Resources Credit Facility are secured by a pledge of substantially all of our assets (subject to certain exceptions),
including the membership interests in Ciner Wyoming held by us.
Under the Ciner Resources Credit Facility, a change of control is triggered if Ciner Corp and its wholly-owned subsidiaries,
in the aggregate, directly or indirectly, cease to own all of the equity interests, or cease to have the ability to elect a majority of the
board of directors (or equivalent governing body) of, Ciner Holdings or Ciner GP (or any entity that performs the functions of our
general partner). In addition, a change of control would be triggered if we cease to own at least 50.1% of the economic interests in
Ciner Wyoming or cease to have the ability to elect a majority of the members of Ciner Wyoming’s board of managers.
The provisions of the Ciner Resources Credit Facility may affect our ability to obtain future financing and pursue attractive
business opportunities and our flexibility in planning for, and reacting to, changes in business conditions. In addition, a failure to
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comply with the provisions of the Ciner Resources Credit Facility could result in an event of default, which could enable our
lenders to, subject to the terms and conditions of the Ciner Resources Credit Facility, terminate all outstanding commitments and
declare any outstanding principal of that debt, together with accrued and unpaid interest, to be immediately due and payable. If the
payment of our debt is accelerated, our assets may be insufficient to repay such debt in full, the lenders could foreclose on our
assets, including without limitation our ownership interests in Ciner Wyoming, and our unitholders could experience a partial or
total loss of their investment. Please read Part II, Item 8, Financial Statements and Supplementary Data - Note 9, “Debt-Ciner
Resources Credit Facility.”
Our level of indebtedness may increase, reducing our financial flexibility.
In the future, we may incur significant indebtedness in order to make future acquisitions or to develop or expand our
facilities and mining capabilities. Our level of indebtedness could affect our operations in several ways, including:
•
•
•
•
•
•
a significant portion of our cash flows could be used to service our indebtedness;
a high level of debt would increase our vulnerability to general adverse economic and industry conditions;
the covenants contained in the agreements governing our outstanding indebtedness will limit our ability to borrow
additional funds, dispose of assets, pay distributions and make certain investments;
a high level of debt may place us at a competitive disadvantage compared to our competitors that are less leveraged, and
therefore may be able to take advantage of opportunities that our indebtedness would prevent us from pursuing;
our debt covenants may also affect our flexibility in planning for, and reacting to, changes in the economy and our
industry; and
a high level of debt may impair our ability to obtain additional financing in the future for working capital, capital
expenditures, acquisitions, distributions or for general corporate or other purposes.
A high level of indebtedness increases the risk that we may default on our debt obligations. Our ability to meet our debt
obligations and to reduce our level of indebtedness depends on our future performance. General economic conditions and financial,
business and other factors affect our operations and our future performance. Many of these factors are beyond our control. We may
not be able to generate sufficient cash flows to pay the interest on our debt, and future working capital, borrowings or equity
financing may not be available to pay or refinance such debt. Factors that will affect our ability to raise cash through an offering of
our units or a refinancing of our debt include financial market conditions, the value of our assets and our performance at the time
we need capital.
We are subject to stringent environmental laws and regulations that may expose us to significant costs and liabilities.
Our operations are subject to stringent and complex federal, state and local environmental laws and regulations that govern
the discharge of materials into the environment or otherwise relate to environmental protection. Examples of these laws include:
•
•
•
•
•
•
the federal Clean Air Act and analogous state laws that impose obligations related to air emissions;
the federal Comprehensive Environmental Response, Compensation and Liability Act, known as CERCLA or the
Superfund law, and analogous state laws that regulate the cleanup of hazardous substances that may be or have been
released at properties currently or previously owned or operated by us or at locations to which our wastes are or have been
transported for disposal;
the federal Water Pollution Control Act, or the Clean Water Act, and analogous state laws that regulate discharges from
our facilities into state and federal waters, including wetlands and the Green River;
the federal Resource Conservation and Recovery Act, or RCRA, and analogous state laws that impose requirements for
the storage, treatment and disposal of solid and hazardous waste from our facilities;
the Endangered Species Act, or ESA; and
the Toxic Substances Control Act, or TSCA, and analogous state laws that impose requirements on the use, storage and
disposal of various chemicals and chemical substances at our facility.
These laws and regulations may impose numerous obligations that are applicable to our operations, including the acquisition
of permits to conduct regulated activities, the incurrence of capital or operating expenditures to limit or prevent releases of
materials from our facility, and the imposition of substantial liabilities and remedial obligations for pollution resulting from our
operations. Numerous governmental authorities, such as the U.S. Environmental Protection Agency, or the EPA, and analogous
state agencies, have the power to enforce compliance with these laws and regulations and the permits issued under them,
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oftentimes requiring difficult and costly corrective actions. Failure to comply with these laws, regulations and permits may result in
the assessment of administrative, civil and criminal penalties, the imposition of remedial obligations and the issuance of
injunctions limiting or preventing some or all of our operations. In addition, we may experience a delay in obtaining or be unable
to obtain required permits or regulatory authorizations, which may cause us to lose potential and current customers, interrupt our
operations and limit our growth and revenue. In addition, future changes in environmental or other laws may result in additional
compliance expenditures that have not been pre-funded and which could adversely affect our business and results of operations and
our ability to make cash distributions to our unitholders.
There is a risk that we may incur costs and liabilities in connection with our operations due to historical industry operations
and waste disposal practices, our handling of wastes and potential emissions and discharges related to our operations. Private
parties, including the owners of the properties on which we operate, may have the right to pursue legal actions to require
remediation of contamination or enforce compliance with environmental requirements as well as to seek damages for personal
injury or property damage. For example, an accidental release from our facility could subject us to substantial liabilities arising
from environmental cleanup and restoration costs, claims made by neighboring landowners and other third parties for personal
injury and property damage and fines or penalties for related violations of environmental laws or regulations. In addition, changes
in environmental laws occur frequently, and any such changes that result in more stringent and costly waste handling, storage,
transport, disposal or remediation requirements could have a material adverse effect on our operations or financial position. We
may not be able to recover all or any of these costs from insurance. Please read Item 1, “Business—Environmental Matters” for
more information.
The adoption of climate change legislation at the global, federal, state or local level could result in increased operating costs
and reduced demand for the soda ash we produce.
Many nations have agreed to limit emissions of “greenhouse gases,” or GHGs, pursuant to the United Nations Framework
Convention on Climate Change, also known as the “Kyoto Protocol.” Methane, a primary component of natural gas, and carbon
dioxide, a by-product of the burning of coal, oil, natural gas and refined petroleum products, are GHGs regulated by the Kyoto
Protocol. The United States signed, but did not ratify, the Kyoto Protocol. In December 2015, the United States was one of 195
countries to sign the so-called Paris Agreement. The Paris Agreement came into effect in November 2016. However, in June 2017,
the Trump administration announced plans to withdraw from the Paris Agreement. President Trump also issued an executive order
on promoting energy independence and economic growth. Recently, the EPA issued a report covering plans on how to implement
the president’s executive order including plans to review and possibly repeal all greenhouse-gas related regulations, including the
Clean Power Plan. In August 2018, the EPA proposed the Affordable Clean Energy rule, which is intended to replace the Clean
Power Plan.
The U.S. Congress has from time to time considered adopting legislation to reduce emissions of GHGs, and almost one-half
of the states have already taken legal measures to reduce emissions of GHGs, primarily through the planned development of GHG
emission inventories and/or regional GHG “cap and trade” programs. Although the U.S. Congress has not adopted such legislation
at this time, many states continue to pursue regulations to reduce GHG emissions. Most of these cap and trade programs work by
requiring major sources of emissions, such as electric power plants, or major producers of fuels, such as refineries and natural gas
processing plants, to acquire and surrender emission allowances corresponding with their annual emissions of GHGs. These
programs work by reducing the number of allowances available for purchase each year until the overall GHG emission reduction
goal is achieved. As the number of GHG emission allowances declines each year, the cost or value of allowances is expected to
escalate significantly. Restrictions on GHG emissions that may be imposed in various states could adversely affect the soda ash
industry.
In addition, there has been public discussion that climate change may be associated with extreme weather conditions, such as
more intense hurricanes, thunderstorms, tornados and snow or ice storms, as well as rising sea levels. Another possible
consequence of climate change is increased volatility in seasonal temperatures. Some studies indicate that climate change could
cause some areas to experience temperatures substantially colder than their historical averages. Extreme weather conditions can
interfere with our production and increase our costs, and damage resulting from extreme weather may not be fully insured.
However, at this time, we are unable to determine the extent to which climate change may lead to increased storm or weather
hazards affecting our operations.
We are subject to strict laws and regulations regarding employee and process safety, and failure to comply with these laws and
regulations could have a material adverse effect on our results of operations, financial condition and ability to distribute cash
to unitholders.
We are subject to a number of federal and state laws and regulations related to safety, including the Occupational Safety and
Health Administration, or OSHA, the Mine Safety and Health Administration, or MSHA, and comparable state statutes, the
purposes of which are to protect the health and safety of workers. In addition, OSHA requires that we maintain information about
hazardous materials used or produced in our operations and that we provide this information to employees, state and local
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governmental authorities, and local residents. Failure to comply with OSHA and MSHA requirements and related state regulations,
including general industry standards and record keeping requirements, and to monitor and control occupational exposure to
regulated substances, could have a material adverse effect on our results of operations, financial condition and ability to make cash
distributions if we are subjected to significant penalties, fines or compliance costs, including any shutdown of one or more of our
miners or the shutdown of our mine.
The amount of cash we have available for distribution to holders of our units depends primarily on our cash flow and not solely
on profitability, which may prevent us from making cash distributions during periods when we record net income.
The amount of cash we have available for distribution depends primarily upon our cash flow, including cash flow from
reserves and working capital or other borrowings, and not solely on profitability, which will be affected by non-cash items. As a
result, we may pay cash distributions during periods when we record net losses for financial accounting purposes and may not pay
cash distributions during periods when we record net income.
Failure to maintain effective quality control systems at our mining, processing and production facilities could have a material
adverse effect on our business and operations.
The performance and quality of our products are critical to the success of our business. These factors depend significantly on
the effectiveness of our quality control systems, which, in turn, depends on a number of factors, including the design of our quality
control systems, our quality-training program and our ability to ensure that employees who operate our assets adhere to our quality
control policies and guidelines. Any significant failure or deterioration of our quality control systems could have a material adverse
effect on our business, financial condition and results of operations.
Our inability to acquire, maintain or renew financial assurances related to the reclamation and restoration of mining property
could have a material adverse effect on our business, financial condition and results of operations.
Mining operations are generally obligated under federal, state and local laws to restore property in accordance with
regulatory standards and an approved reclamation plan after it has been mined, and generally must also maintain financial
assurances, such as surety bonds, to secure such obligations. To fulfill the financial assurances requirement, the WDEQ allows us
to “self-bond,” which commits us to pay directly for reclamation costs rather than obtaining a traditional surety bond. As of
December 31, 2018, the amount of our self-bond agreement with the WDEQ was $32.9 million. The Land Quality Division of the
WDEQ periodically re-evaluates the amount of the bond; so the current amount is subject to increase. Currently, the Land Quality
Division of the WDEQ is considering legislation that would limit self-bonding to no more than 70% of the required financial
assurances. If such legislation is passed and becomes applicable to trona operations we may be required to purchase a surety bond
for an amount up to the total reclamation costs.
Our inability to secure financial assurances satisfactory to WDEQ could subject us to fines and penalties as well as the
revocation of our operating permits. Such inability could result from a variety of factors, including:
•
•
•
•
•
the State of Wyoming’s future decision to require mining operations to maintain surety bonds instead of self-bonds;
continued increases in the amount of our self-bond;
the lack of availability, high expense, or unreasonable terms of financial assurances;
the ability of future financial assurance counterparties to require collateral; and
the exercise by financial assurance counterparties of any rights to refuse to renew the financial assurance instruments.
Our inability to acquire, maintain, or renew necessary financial assurances related to the reclamation and restoration of
mining property could have a material adverse effect on our business, financial condition, and results of operations.
Federal or state regulatory agencies have the authority to order certain of our mines to be temporarily or permanently closed
under certain circumstances, which could materially and adversely affect our ability to meet our customers’ demands.
Federal or state regulatory agencies have the authority under certain circumstances following significant health and safety
incidents, to order a mine to be temporarily or permanently closed. If this occurred, we may also be required to incur significant
operating or capital expenditures to re-open the mine. In the event that these agencies order the closing of our Green River Basin
facility, our soda ash sales contracts generally permit us to issue force majeure notices which suspend our obligations to deliver
soda ash under these contracts. However, our customers may challenge our issuances of force majeure notices. If these challenges
are successful, we may have to purchase soda ash from third-party sources, if it is available, to fulfill these obligations, incur
capital expenditures to re-open the mine and/or negotiate settlements with the customers, which may include price reductions, the
reduction of commitments, the extension of time for delivery or the termination of customers’ contracts. Any of these actions
could have a material adverse effect on our business and results of operations.
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Risks Inherent in an Investment in Us
Ciner Enterprises indirectly owns and controls our general partner, which has sole responsibility for conducting our business
and managing our operations. Our general partner and its affiliates, including Ciner Enterprises, have conflicts of interest with
us and our unitholders and limited duties to us and our unitholders, and they may favor their own interests to the detriment of
us and our unitholders.
Ciner Enterprises indirectly owns and controls our general partner and Ciner Holdings will appoint all of the directors of our
general partner, who in turn will appoint all of our general partner’s officers. Although our general partner has a duty to manage us
in a manner that is beneficial to us and our unitholders, the executive officers and directors of our general partner have a fiduciary
duty to manage our general partner in a manner beneficial to Ciner Enterprises. Therefore, conflicts of interest will arise between
Ciner Enterprises or any of its affiliates, including our general partner, on the one hand, and us or any of our unitholders, on the
other hand. In resolving these conflicts of interest, our general partner may favor its own interests and the interests of its affiliates
over the interests of our common unitholders. These conflicts include the following situations:
•
•
neither our partnership agreement nor any other agreement requires Ciner Enterprises to pursue a business strategy that
favors us, and the directors and officers of Ciner Enterprises have a fiduciary duty to make these decisions in the best
interests of Ciner Enterprises, which may be contrary to our interests. Ciner Enterprises may choose to shift the focus of
its investment and growth to areas not served by our assets;
our general partner is allowed to take into account the interests of parties other than us, such as Ciner Enterprises, in
exercising certain rights under our partnership agreement, which may effectively limit its duty to our unitholders;
• many of the officers and three of the directors of our general partner are also officers and/or directors of Ciner Corp, a
subsidiary of Ciner Enterprises, and will owe fiduciary duties to Ciner Corp and Ciner Enterprises. The officers of our
general partner that are also officers of Ciner Corp will devote significant time to the business of Ciner Corp and will be
compensated by Ciner Corp accordingly;
•
•
•
our partnership agreement replaces the fiduciary duties that would otherwise be owed by our general partner with
contractual standards governing its duties, limits our general partner’s liabilities and restricts the remedies available to our
unitholders for actions that, without such limitations, might constitute breaches of fiduciary duty;
except in limited circumstances, our general partner has the power and authority to conduct our business without
unitholder approval;
our largest customer is ANSAC, of which our affiliate, Ciner Corp, is one of three current members, and certain officers of
our general partner periodically serve as board members of ANSAC;
• Ciner Enterprises and its affiliates are not limited in their ability to compete with us and may directly or indirectly
compete with us for acquisition opportunities and customers. For example, we face competition from Ciner Group’s
trona-based soda ash production in Turkey and Ciner Corp, our sales agent for soda ash, acts as sales agent for soda ash
imports by Ciner Group to the U.S.;
•
•
•
•
our general partner determines the amount and timing of asset purchases and sales, borrowings, issuances of additional
partnership securities and the level of reserves, each of which can affect the amount of cash that we distribute to our
unitholders;
our general partner determines the amount and timing of any capital expenditure and whether a capital expenditure is
classified as a maintenance capital expenditure, which reduces operating surplus, or an expansion or investment capital
expenditure, which does not reduce operating surplus. Our partnership agreement does not set a limit on the amount of
maintenance capital expenditures that our general partner may determine to be necessary or appropriate. Please read Part
II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and
Capital Resources—Capital Expenditures” for a discussion regarding when a capital expenditure constitutes a
maintenance capital expenditure or an expansion capital expenditure. This determination can affect the amount of cash
that is distributed to our unitholders;
our general partner may cause us to borrow funds to pay cash distributions, even if the purpose or effect of the borrowing
is to make incentive distributions;
our partnership agreement permits us to classify up to $20.0 million as operating surplus, even if it is generated from asset
sales, non-working capital borrowings or other sources that would otherwise constitute capital surplus. This cash may be
used to fund distributions or to our general partner in respect of the incentive distribution rights;
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•
•
•
•
•
•
•
•
our general partner generally determines which costs incurred by it and its affiliates are reimbursable by us;
our partnership agreement does not restrict our general partner from causing us to pay our general partner or its affiliates
for any services rendered to us or from entering into additional contractual arrangements with its affiliates on our behalf;
our general partner intends to limit its liability regarding our contractual and other obligations;
our general partner may exercise its right to call and purchase our common units if it and its affiliates own more than 80%
of the common units;
our general partner controls the enforcement of obligations that it and its affiliates owe to us, including Ciner Corp’s
obligations under the Service Agreement and its commercial agreement with us;
our general partner decides whether to retain separate counsel, accountants or others to perform services for us;
our general partner may transfer its incentive distribution rights without unitholder approval; and
our general partner may elect to cause us to issue common units to it in connection with a resetting of the target
distribution levels related to our general partner’s incentive distribution rights without the approval of the conflicts
committee of the board of directors of our general partner or the unitholders. Any such election may result in lower
distributions to the common unitholders in certain situations.
Operating performance and current and anticipated capital needs, including investments in expansion capital expenditures and
acquisitions, may affect the amount distributed to unit holders.
We intend to pay a quarterly distribution to our unit holders, to the extent we have sufficient cash from our operations after
establishment of cash reserves, which may include current and anticipated expansion capital expenditures and acquisitions. We
intend to maintain a disciplined financial policy and conservative capital structure by balancing the funding of expansion capital
expenditures and acquisitions with internally generated operating cash flows and external financing sources, including commercial
bank borrowings and the issuance of debt and equity securities. We are currently increasing our maintenance capital to $25 million
per year and expansion capital is expected to range between $35 to $40 million in 2019. We are currently also evaluating a multi-
year expansion project that could increase our production up to at least 3 million tons per year. If the amount needed to fund
expansion capital expenditures or acquisitions is significant, we may need to adjust our cash distribution levels.
To the extent we issue additional units in connection with any acquisitions or expansion capital expenditures, the payment of
distributions on those additional units may increase the risk that we will be unable to maintain or increase our per unit distribution
level. There are no limitations in our partnership agreement or the Ciner Resources Credit Facility on our ability to issue additional
units, including units ranking senior to the common units. The incurrence of additional commercial borrowings or other debt to
finance our growth strategy will increase our interest expense, which, in turn, may impact the cash that we have available to
distribute to our unitholders.
Our partnership agreement does not contain a requirement for us to pay distributions to our unitholders, and we do not
guarantee that we will pay the minimum quarterly distribution (as defined in our partnership agreement) or any distribution on
the units in any quarter.
Our partnership agreement does not contain a requirement for us to pay distributions to our unitholders, and we do not
guarantee that we will pay any distribution on the units in any quarter.
Our partnership agreement replaces our general partner’s fiduciary duties to holders of our common units with contractual
standards governing its duties.
Our partnership agreement contains provisions that eliminate and replace the fiduciary standards to which our general partner
would otherwise be held by Delaware law regarding fiduciary duty and replace those duties with several different contractual
standards. For example, our partnership agreement permits our general partner to make a number of decisions in its individual
capacity, as opposed to in its capacity as our general partner, free of any duties to us and our unitholders other than the implied
contractual covenant of good faith and fair dealing, which means that a court will enforce the reasonable expectations of the
partners where the language in the partnership agreement does not provide for a clear course of action. This provision entitles our
general partner to consider only the interests and factors that it desires and relieves it of any duty or obligation to give any
consideration to any interest of, or factors affecting, us, our affiliates or our limited partners. Examples of decisions that our
general partner may make in its individual capacity include:
•
how to allocate business opportunities among us and its affiliates;
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• whether to exercise its limited call right or assign it to one of its affiliates;
• whether to seek approval of the resolution of a conflict of interest by the conflicts committee of the board of directors of
our general partner;
•
how to exercise its voting rights with respect to the units it owns;
• whether to exercise its registration rights;
• whether to elect to reset target distribution levels;
• whether to transfer the incentive distribution rights or any units it owns to a third party; and
• whether or not to consent to any merger, consolidation or conversion of the partnership or amendment to the partnership
agreement.
By purchasing a common unit, a unitholder is treated as having consented to the provisions in the partnership agreement,
including the provisions discussed above.
Our partnership agreement restricts the remedies available to holders of our units for actions taken by our general partner that
might otherwise constitute breaches of fiduciary duty.
Our partnership agreement contains provisions that restrict the remedies available to unitholders for actions taken by our
general partner that might otherwise constitute breaches of fiduciary duty under Delaware law regarding fiduciary duty under state
fiduciary duty law. For example, our partnership agreement provides that:
• whenever our general partner, the board of directors of our general partner or any committee thereof (including the
conflicts committee) makes a determination or takes, or declines to take, any other action in their respective capacities,
our general partner, the board of directors of our general partner and any committee thereof (including the conflicts
committee), as applicable, is required to make such determination, or take or decline to take such other action, in good
faith, meaning that it subjectively believed that the decision was in the best interests of our partnership, and, except as
specifically provided by our partnership agreement, will not be subject to any other or different standard imposed by our
partnership agreement, Delaware law, or any other law, rule or regulation, or at equity;
•
•
our general partner will not have any liability to us or our unitholders for a decision made in its capacity as a general
partner so long as such decisions are made in good faith;
our general partner and its officers and directors will not be liable for monetary damages to us or our limited partners
resulting from any act or omission unless there has been a final and non-appealable judgment entered by a court of
competent jurisdiction determining that our general partner or its officers and directors, as the case may be, acted in bad
faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct
was criminal; and
•
our general partner will not be in breach of its obligations under the partnership agreement or its duties to us or our limited
partners if a transaction with an affiliate or the resolution of a conflict of interest is:
approved by the conflicts committee of the board of directors of our general partner, although our general partner
is not obligated to seek such approval;
approved by the vote of a majority of the outstanding common units, excluding any common units owned by our
general partner and its affiliates;
determined by the board of directors of our general partner to be on terms no less favorable to us than those
generally being provided to or available from unrelated third parties; or
determined by the board of directors of our general partner to be fair and reasonable to us, taking into account the
totality of the relationships among the parties involved, including other transactions that may be particularly
favorable or advantageous to us.
In connection with a situation involving a transaction with an affiliate or a conflict of interest, any determination by our
general partner or the conflicts committee must be made in good faith. If an affiliate transaction or the resolution of a conflict of
interest is not approved by our common unitholders or the conflicts committee and the board of directors of our general partner
determines that the resolution or course of action taken with respect to such affiliate transaction or conflict of interest satisfies
either of the standards set forth in the third and fourth bullets above, then it will be presumed that, in making its decision, the board
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of directors acted in good faith, and in any proceeding brought by or on behalf of any limited partner or the partnership challenging
such determination, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption.
Ciner Enterprises and other affiliates of our general partner are not restricted in their ability to compete with us.
Our partnership agreement provides that our general partner will be restricted from engaging in any business activities other
than acting as our general partner and those activities incidental to its ownership of interests in us. Affiliates of our general partner,
including Ciner Enterprises and its other subsidiaries, are not prohibited from owning assets or engaging in businesses that
compete directly or indirectly with us. Ciner Enterprises may make investments in and purchases of entities that acquire, own and
operate other soda ash producing assets. For example, Ciner Corp, our sales agent for soda ash, acts as sales agent for Ciner
Group’s Turkish soda ash imports to the U.S. Ciner Enterprises will be under no obligation to make any acquisition opportunities
available to us. Moreover, while Ciner Enterprises may offer us the opportunity to buy additional assets from it, it is under no
contractual obligation to accept any offer we might make with respect to such opportunity.
Pursuant to the terms of our partnership agreement, the doctrine of corporate opportunity, or any analogous doctrine, does not
apply to our general partner or any of its affiliates, including its executive officers and directors and Ciner Enterprises. Any such
person or entity that becomes aware of a potential transaction, agreement, arrangement or other matter that may be an opportunity
for us will not have any duty to communicate or offer such opportunity to us. Any such person or entity will not be liable to us or to
any limited partner for breach of any fiduciary duty or other duty by reason of the fact that such person or entity pursues or
acquires such opportunity for itself, directs such opportunity to another person or entity or does not communicate such opportunity
or information to us. This may create actual and potential conflicts of interest between us and affiliates of our general partner and
result in less than favorable treatment of us and our common unitholders.
Our general partner, or any transferee holding a majority of the incentive distribution rights, may elect to cause us to issue
common units to it in connection with a resetting of the minimum quarterly distribution (as defined in our partnership
agreement) and target distribution levels related to its incentive distribution rights, without the approval of the conflicts
committee of our general partner or the holders of our common units. This election could result in lower distributions to
holders of our common units in certain situations.
The holder or holders of a majority of the incentive distribution rights, which is initially our general partner, have the right, at
any time when there are no subordinated units outstanding and it has received incentive distributions at the highest level to which it
is entitled (48.0%) for each of the prior four consecutive fiscal quarters (and the amount of each such distribution did not exceed
adjusted operating surplus for each such quarter), to reset the minimum quarterly distribution and the initial target distribution
levels at higher levels based on our cash distribution at the time of the exercise of the reset election. Following such a reset
election, the minimum quarterly distribution will be reset to an amount equal to the average cash distribution per unit for the two
fiscal quarters immediately preceding the reset election (such amount is referred to as the “reset minimum quarterly distribution”),
and the target distribution levels will be reset to correspondingly higher levels based on percentage increases above the reset
minimum quarterly distribution. Our general partner has the right to transfer the incentive distribution rights at any time, in whole
or in part, and any transferee holding a majority of the incentive distribution rights will have the same rights as our general partner
with respect to resetting target distributions.
In the event of a reset of our minimum quarterly distribution and target distribution levels, our general partner will be entitled
to receive, in the aggregate, a number of common units equal to that number of common units that would have entitled the holder
of such units to an aggregate quarterly cash distribution in the two-quarter period prior to the reset election equal to the distribution
to our general partner on the incentive distribution rights in the quarter prior to the reset election prior two quarters. Our general
partner will also be issued the number of general partner units necessary to maintain its general partner interest in us that existed
immediately prior to the reset election (approximately 2.0%). We anticipate that our general partner would exercise this reset right
to facilitate acquisitions or internal growth projects that would not be sufficiently accretive to cash distributions per common unit
without such conversion. However, our general partner or a transferee could also exercise this reset election at a time when it is
experiencing, or expects to experience, declines in the cash distributions it receives related to its incentive distribution rights and
may, therefore, desire to be issued common units rather than retain the right to receive incentive distributions based on target
distribution levels that are less certain in the then-current business environment. This risk could increase if our incentive
distribution rights have been transferred to a third-party. As a result, a reset election may cause our common unitholders to
experience dilution in the amount of cash distributions that they otherwise would have received had we not issued new common
units to our general partner in connection with resetting the target distribution levels.
Holders of our common units have limited voting rights and are not entitled to appoint our general partner or its directors,
which could reduce the price at which our common units will trade.
Unlike the holders of common stock in a corporation, unitholders have only limited voting rights on matters affecting our
business and, therefore, limited ability to influence management’s decisions regarding our business. Unitholders will have no right
on an annual or ongoing basis to appoint our general partner or its board of directors. The board of directors of our general partner,
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including the independent directors, is chosen entirely by Ciner Holdings as a result of its ownership in our general partner and not
by our unitholders. As a result of these limitations, the secondary market price at which the common units will trade could decline
because of the absence or reduction of a takeover premium in the trading price. Unlike publicly traded corporations, we will not
conduct annual meetings of our unitholders to appoint directors or to conduct other matters routinely conducted at annual meetings
of stockholders of corporations. Our partnership agreement also contains provisions limiting the ability of unitholders to call
meetings or to acquire information about our operations, as well as other provisions limiting the unitholders’ ability to influence the
manner or direction of management.
Even if holders of our common units are dissatisfied, they cannot initially remove our general partner without its consent.
If our unitholders are dissatisfied with the performance of our general partner, they will have limited ability to remove our
general partner. The vote of the holders of at least 66-2/3% of all outstanding common units voting together as a single class is
required to remove our general partner. As of March 1, 2019, Ciner Holdings owned 14,551,000 common units, which constitutes
an aggregate of 73.7% of the common units in us.
Our general partner interest or the control of our general partner may be transferred to a third party without unitholder
consent.
Our general partner may transfer its general partner interest to a third party in a merger or in a sale of all or substantially all
of its assets or otherwise without the consent of our unitholders. Furthermore, our partnership agreement does not restrict the
ability of Ciner Enterprises or, another entity that controls Ciner Enterprises, to transfer or otherwise dispose of the corresponding
indirect ownership interest in our general partner to a third party. In such a situation, the new owner of our general partner would
be in a position to replace the board of directors and executive officers of our general partner with its own designees and thereby
exert significant control over the decisions taken by the board of directors and executive officers of our general partner. This
effectively permits a “change of control” without the vote or consent of our unitholders.
The incentive distribution rights held by our general partner, or indirectly held by Ciner Enterprises, may be transferred to a
third party without unitholder consent.
Our general partner or Ciner Enterprises may transfer the incentive distribution rights to a third party at any time without the
consent of our unitholders. If Ciner Enterprises transfers the incentive distribution rights to a third party but retains its ownership
interest in our general partner, our general partner may not have the same incentive to grow our partnership and increase quarterly
distributions to unitholders over time as it would if Ciner Enterprises had retained ownership of the incentive distribution rights.
For example, a transfer of incentive distribution rights by Ciner Enterprises could reduce the likelihood of Ciner Enterprises
accepting offers made by us to purchase assets owned by it, as it would have less of an economic incentive to grow our business,
which in turn would impact our ability to grow our asset base.
Our general partner has a limited call right that may require unitholders to sell their common units at an undesirable time or
price.
If at any time our general partner and its affiliates own more than 80% of the common units, our general partner will have the
right, which it may assign to any of its affiliates or to us, but not the obligation, to acquire all, but not less than all, of the common
units held by unaffiliated persons at a price equal to the greater of (1) the average of the daily closing price of the common units
over the 20 trading days preceding the date three days before notice of exercise of the call right is first mailed and (2) the highest
per-unit price paid by our general partner or any of its affiliates for common units during the 90-day period preceding the date such
notice is first mailed. We refer to this right in this Report as the limited call right. As a result, unitholders may be required to sell
their common units at an undesirable time or price and may receive no return or a negative return on their investment. Unitholders
may also incur a tax liability upon a sale of their units. Our general partner is not obligated to obtain a fairness opinion regarding
the value of the common units to be repurchased by it upon exercise of the limited call right. There is no restriction in our
partnership agreement that prevents our general partner from issuing additional common units and exercising its limited call right.
If our general partner exercised its limited call right, the effect would be to take us private and, if the units were subsequently
deregistered, we would no longer be subject to the reporting requirements of the Exchange Act. As of March 1, 2019, Ciner
Holdings owned an aggregate of 73.7% of our common units.
We may issue additional units, including units ranking senior to common units, without unitholder approval, which would
dilute existing unitholder ownership interests.
Our partnership agreement does not limit the number of additional limited partner interests we may issue at any time without
the approval of our unitholders. Any additional partnership interests that we issue may be senior to the common units in right of
distribution, liquidation and voting. The issuance of additional common units or other equity interests of equal or senior rank will
have the following effects:
•
our existing unitholders’ proportionate ownership interest in us will decrease;
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•
•
•
•
•
•
•
the amount of cash available for distribution on each unit may decrease;
because the amount payable to holders of incentive distribution rights is based on a percentage of the total cash available
for distribution, the distributions to holders of incentive distribution rights will increase even if the per unit distribution on
common units remains the same;
the ratio of taxable income to distributions may increase;
the relative voting strength of each previously outstanding unit may be diminished;
the market price of the common units may decline;
the amounts available for distributions to our common unitholders may be reduced or eliminated; and
the claims of the common unitholders to our assets in the event of our liquidations may be subordinated.
Our general partner intends to limit its liability regarding our obligations.
Our general partner intends to limit its liability under contractual arrangements so that the counterparties to such
arrangements have recourse only against our assets, and not against our general partner or its assets. Our general partner may
therefore cause us to incur indebtedness or other obligations that are nonrecourse to our general partner. Our partnership agreement
permits our general partner to limit its liability, even if we could have obtained more favorable terms without the limitation on
liability. In addition, we are obligated to reimburse or indemnify our general partner to the extent that it incurs obligations on our
behalf. Any such reimbursement or indemnification payments would reduce the amount of cash otherwise available for distribution
to our unitholders.
Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units.
Our partnership agreement restricts unitholders’ voting rights by providing that any units held by a person or group that owns
20% or more of any class of units then outstanding, other than our general partner and its affiliates, their transferees and persons
who acquired such units with the prior approval of the board of directors of our general partner, cannot vote on any matter.
Cost reimbursements due to our general partner and its affiliates for services provided to us or on our behalf will reduce our
earnings and therefore our ability to distribute cash to our unitholders. The amount and timing of such reimbursements will be
determined by our general partner.
Prior to making any distribution on the common units, we will reimburse our general partner and its affiliates for all expenses
they incur and payments they make on our behalf. Our partnership agreement does not set a limit on the amount of expenses for
which our general partner and its affiliates may be reimbursed. These expenses include salary, bonus, incentive compensation and
other amounts paid to persons who perform services for us or on our behalf pursuant to the Services Agreement and expenses
allocated to us by our general partner or its affiliates. Our partnership agreement provides that our general partner will determine in
good faith the expenses that are allocable to us, including those allocated to us pursuant to the Services Agreement. The
reimbursement of expenses and payment of fees, if any, to our general partner and its affiliates will reduce our earnings and
therefore our ability to distribute cash to our unitholders.
Your liability may not be limited if a court finds that unitholder action constitutes control of our business.
A general partner of a partnership generally has unlimited liability for the obligations of the partnership, except for those
contractual obligations of the partnership that are expressly made without recourse to the general partner. Our partnership is
organized under Delaware law, and we conduct business primarily in Wyoming and Georgia. The limitations on the liability of
holders of limited partner interests for the obligations of a limited partnership have not been clearly established in some
jurisdictions. You could be liable for any and all of our obligations as if you were a general partner if a court or government agency
were to determine that:
• we were conducting business in a state but had not complied with that particular state’s partnership statute; or
•
your right to act with other unitholders to remove or replace the general partner, to approve some amendments to our
partnership agreement or to take other actions under our partnership agreement constitute “control” of our business.
Unitholders may have liability to repay distributions and in certain circumstances may be personally liable for the obligations
of the partnership.
Under certain circumstances, unitholders may have to repay amounts wrongfully returned or distributed to them. Under
Section 17-607 of the Delaware Revised Uniform Limited Partnership Act, we may not make a distribution to our unitholders if the
distribution would cause our liabilities to exceed the fair value of our assets. Delaware law provides that, for a period of three years
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from the date of the impermissible distribution, limited partners who received a distribution and who knew at the time of such
distribution that it violated Delaware law will be liable to the limited partnership for the distribution amount. Transferees of
common units are liable both for the obligations of the transferor to make contributions to the partnership that were known to the
transferee at the time of transfer and for those obligations that were unknown if the liabilities could have been determined from the
partnership agreement. Liabilities to partners on account of their partnership interests and liabilities that are non-recourse to the
partnership are not counted for purposes of determining whether a distribution is permitted.
The New York Stock Exchange does not require a publicly-traded partnership like us to comply with certain of its corporate
governance requirements.
Our common units are listed on the NYSE under the symbol “CINR.” Because we are a publicly-traded partnership, the NYSE
does not require us to have a majority of independent directors on our general partner’s board of directors or to establish a
compensation committee or a nominating and corporate governance committee. Accordingly, unitholders do not have the same
protections afforded to certain corporations that are subject to all of the NYSE corporate governance requirements.
The market price of our common units could be adversely affected by sales of substantial amounts of our common units in the
public markets, including sales by our existing unitholders.
Under our partnership agreement, we have agreed to register for resale under the Securities Act and applicable state securities
laws any common units or other limited partner interests proposed to be sold by our general partner or any of its affiliates or their
assignees if an exemption from the registration requirements of the Securities Act is not otherwise available. These registration
rights continue for two years following any withdrawal or removal of our general partner. The sale or disposition of a substantial
number of our common units in the public markets could have a material adverse effect on the price of our common units or could
impair our ability to obtain capital through an offering of equity securities. We do not know whether any such sales would be made
in the public market or in private placements, nor do we know what impact such potential or actual sales would have on our unit
price in the future.
Our unitholders who fail to furnish certain information requested by our general partner or who our general partner, upon
receipt of such information, determines are not eligible citizens are not entitled to receive distributions or allocations of income
or loss on their common units and their common units will be subject to redemption.
Our general partner may require each limited partner to furnish information about his nationality, citizenship or related
status. If a limited partner fails to furnish information about his nationality, citizenship or other related status within 30 days after a
request for the information or our general partner determines after receipt of the information that the limited partner is not an
eligible citizen, the limited partner may be treated as a non-citizen assignee. A non-citizen assignee does not have the right to
direct the voting of his units and may not receive distributions in kind upon our liquidation. Furthermore, we have the right to
redeem all of the common units of any holder that is not an eligible citizen or fails to furnish the requested information. The
redemption price will be paid in cash or by delivery of a promissory note, as determined by our general partner.
We are dependent on information technology and our systems and infrastructure face certain risks, including cybersecurity
risks and data leakage risks.
We are dependent on information technology systems and infrastructure. Any significant breakdown, invasion, destruction
or interruption of these systems by employees, others with authorized access to our systems, or unauthorized persons could
negatively impact operations. There is also a risk that we could experience a business interruption, theft of information, or
reputational damage as a result of a cyber-attack, such as an infiltration of a data center, or data leakage of confidential information
either internally or at our third-party providers. While we have invested in the protection of our data and information technology to
reduce these risks and periodically test the security of our information systems network, there can be no assurance that our efforts
will prevent breakdowns or breaches in our systems that could adversely affect our business.
The recent implementation of a new Enterprise Resource Planning information system may negatively impact our operations.
We recently implemented a replacement Enterprise Resource Planning (“ERP”) business solution to replace our prior ERP
system for financial reporting and other services and are in a phase of stabilizing this new environment. This ERP implementation
includes integrating major facets of our organization in order to improve planning, development, processes, sales, human resources
management and other applications as they affect our evolving business model. Stabilizing this environment includes executing
new processes and procedures. Any failure(s) during the stabilization process of this replacement ERP solution to maintain
effective internal controls or to improve our internal controls could harm our operating results or cause us to fail to meet our
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reporting obligations. Given the difficulties inherent in the design and operation of internal controls over a replacement ERP
system implementation, we can provide no assurance as to our, or our independent registered public accounting firm’s conclusions
about the effectiveness of our internal controls, and we may incur significant costs in our efforts to comply with Section 404.
Ineffective internal controls could subject us to regulatory scrutiny and a loss of confidence in our reported financial information,
which could have an adverse effect on our business and would likely have a negative effect on the trading price of our common
units.
Changes in accounting standards issued by the Financial Accounting Standards Board (“FASB”) could have a material effect on
our balance sheet, revenue and results of operations, and could require a significant expenditure of time, attention and resources,
especially by senior management.
Our accounting and financial reporting policies conform to GAAP, which are periodically revised and/or expanded. The application
of accounting principles is also subject to varying interpretations over time. Accordingly, we are required to adopt new or revised
accounting standards or comply with revised interpretations that are issued from time to time by various parties, including
accounting standard setters and those who interpret the standards, such as the FASB and the SEC and our independent registered
public accounting firm. Such new financial accounting standards may result in significant changes that could adversely affect our
financial condition and results of operations.
Refer to Note 2 “Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements” of the Notes to the
Consolidated Financial Statements for further discussion of these new accounting standards, including the implementation status
and potential impact to our consolidated financial statements.
Tax Risks to Common Unitholders
Our tax treatment depends on our status as a partnership for U.S. federal income tax purposes, as well as our not being subject
to a material amount of entity-level taxation by individual states. If the Internal Revenue Service (“IRS”) were to treat us as a
corporation for U.S. federal income tax purposes or we were otherwise subject to a material amount of entity-level taxation, then
our ability to distribute cash to our unitholders could be substantially reduced.
The anticipated after-tax economic benefit of an investment in our common units depends largely on our being treated as a
partnership for U.S. federal income tax purposes. Despite the fact that we are organized as a limited partnership under Delaware law,
we will be treated as a corporation for U.S. federal income tax purposes unless we satisfy a “qualifying income” requirement. Based
upon our current operations, we believe we satisfy the qualifying income requirement. Failing to meet the qualifying income
requirement or a change in current law could cause us to be treated as a corporation for U.S. federal income tax purposes or otherwise
subject us to taxation as an entity.
If we were treated as a corporation for U.S. federal income tax purposes, we would pay U.S. federal income tax on our taxable
income at the corporate tax rate and we would also likely pay additional state and local income taxes at varying rates. Distributions
to our unitholders would generally be taxed again as corporate distributions, which would be taxable as dividends for U.S. federal
income tax purposes to the extent paid out of our current or accumulated earnings and profits as determined for U.S. federal income
tax purposes, and no income, gains, losses, deductions or credits recognized by us would flow through to our unitholders. Because
tax would be imposed upon us as a corporation, our cash available for distribution to our unitholders would be substantially reduced.
At the state level, several states have been evaluating ways to subject partnerships to entity-level taxation through the imposition
of state income, franchise or other forms of taxation. Imposition of a material amount of any of these taxes in the jurisdictions in
which we own assets or conduct business could substantially reduce the cash available for distribution to our unitholders.
If we were treated as a corporation for U.S. federal income tax purposes or otherwise subjected to a material amount of entity-
level taxation, there would be a material reduction in the anticipated cash flow and after-tax return to our unitholders, likely causing
a substantial reduction in the value of our common units.
Our partnership agreement provides that if a law is enacted or existing law is modified or interpreted in a manner that subjects
us to taxation as a corporation or otherwise subjects us to entity-level taxation for U.S. federal, state or local income tax purposes,
the target distribution amounts may be adjusted to reflect the impact of that law on us.
The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential legislative,
judicial or administrative changes and differing interpretations, possibly on a retroactive basis.
The present U.S. federal income tax treatment of publicly traded partnerships, including us, or an investment in our common
units may be modified by administrative, legislative or judicial changes or differing interpretations at any time. For example, from
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time to time, members of Congress have proposed and considered substantive changes to the existing U.S. federal income tax laws
that would affect publicly traded partnerships, including elimination of partnership tax treatment for publicly traded partnerships.
Recently enacted U.S. federal income tax legislation provides for certain changes to the taxation of individuals, including, a
reduction in the maximum marginal income tax rate for individuals and a new individual deduction relating to certain income from
partnerships. Although the recently enacted legislation did not impact our treatment as a partnership for U.S. federal income tax
purposes, many of the provisions in the legislation, including the reduction in individual income tax rates and the deduction related
to certain income from partnerships, are temporary and, without additional legislation, will sunset on December 31, 2025. We are
unable to predict such additional legislation or any other tax-related proposals will ultimately be enacted. Any modification to the
U.S. federal income tax laws may be applied retroactively and could make it more difficult or impossible to meet the exception for
certain publicly traded partnerships to be treated as partnerships for U.S. federal income tax purposes. and could negatively impact
the value of an investment in our common units.
In addition, Treasury Regulations under Section 7704(d)(1)(E) of the Code interpret the scope of the qualifying income
requirement for publicly traded partnerships by providing industry-specific guidance. We believe the income that we treat as qualifying
satisfies the requirements under these regulations. However, there are no assurances that the regulations will not be revised to take a
position that is contrary to our interpretation of current law.
Unitholders are required to pay taxes on their respective shares of our income even if they do not receive any cash distributions
from us.
Each unitholder is treated as a partner to whom we will allocate taxable income even if the unitholder does not receive any cash
distributions from us. Unitholders are required to pay U.S. federal income taxes and, in some cases, state and local income taxes, on
their respective shares of our taxable income, whether or not they receive cash distributions from us. Our unitholders may not receive
cash distributions from us equal to their respective shares of our taxable income or even equal to the actual tax due from them with
respect to that income.
Tax gain or loss on the disposition of our common units could be more or less than expected.
If our unitholders sell their common units, they will recognize a gain or loss equal to the difference between the amount realized
and their tax basis in those common units. Because distributions in excess of their allocable share of our net taxable income result in
a decrease in their tax basis in their common units, the amount, if any, of such prior excess distributions with respect to the units they
sell will, in effect, become taxable income to them if they sell such units at a price greater than their tax basis in those units, even if
the price they receive is less than their original cost. Furthermore, a substantial portion of the amount realized, whether or not
representing gain, may be taxed as ordinary income due to potential recapture of depreciation, depletion or certain other expense
deductions and certain other items. In addition, because the amount realized includes a unitholder’s share of our liabilities, if they sell
their units, they may incur a tax liability in excess of the amount of cash they receive from the sale.
Unitholders may be subject to limitations on their ability to deduct interest expense we incur.
Our ability to deduct business interest expense will be limited for federal income tax purposes to an amount equal to our business
interest income and 30% of our “adjusted taxable income” during the taxable year computed without regard to any business interest
income or expense, and in the case of taxable years beginning before 2022, any deduction allowable for depreciation, amortization,
or depletion. Business interest expense that we are not entitled to fully deduct will be allocated to each unitholder as excess business
interest and can be carried forward by the unitholder to successive taxable years and used to offset any excess taxable income allocated
by us to the unitholder. Any excess business interest expense allocated to a unitholder will reduce the unitholder’s tax basis in its
partnership interest in the year of the allocation even if the expense does not give rise to a deduction to the unitholder in that year.
Tax-exempt entities face unique tax issues from owning common units that may result in adverse tax consequences to them.
Investment in common units by tax-exempt entities, such as employee benefit plans and individual retirement accounts, or
“IRAs”, raises issues unique to them. For example, virtually all of our income allocated to organizations that are exempt from U.S.
federal income tax, including IRAs and other retirement plans, will be unrelated business taxable income and will be taxable to them.
Tax-exempt entities with multiple unrelated trades or businesses cannot aggregate losses from one unrelated trade or business to
offset income from another to reduce total unrelated business taxable income. As a result, it may not be possible for tax-exempt entities
to utilize losses from an investment in us to offset unrelated business taxable income from another unrelated trade or business and
vice versa. Tax-exempt entities should consult a tax advisor before investing in our common units.
Non-U.S. unitholders will be subject to U.S. federal income taxes and withholding with respect to income and gain from owning
our common units.
Non-U.S. persons are generally taxed and subject to U.S. federal income tax filing requirements on income effectively connected
with a U.S. trade or business. Income allocated to our unitholders and any gain from the sale of our units will generally be considered
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to be “effectively connected” with a U.S. trade or business. As a result, distributions to a non-U.S. unitholder will be subject to
withholding at the highest applicable effective tax rate and a non-U.S. unitholder who sells or otherwise disposes of a common unit
will also be subject to federal income tax on the gain realized from the sale or disposition of that unit.
Recently enacted legislation also imposes a federal income tax withholding obligation of 10% of the amount realized upon a
non-U.S. person’s sale or exchange of an interest in a partnership that is engaged in a U.S. trade or business. However, application of
this withholding rule to dispositions of publicly traded partnership interests has been temporarily suspended by the IRS until regulations
or other guidance have been issued. It is not clear when or if such regulations or guidance will be issued. Non-U.S. persons should
consult a tax advisor before investing in our common units.
If the IRS contests the U.S. federal income tax positions we take, the market for our common units may be adversely impacted
and our cash flow available for distribution to our unitholders might be substantially reduced.
The IRS may adopt positions that differ from the conclusions of our counsel or from the positions we take, and the IRS’s position
may ultimately be sustained. It may be necessary to resort to administrative or court proceedings to sustain some or all of our counsel’s
conclusions or the positions we take and such positions may not ultimately be sustained. A court may not agree with some or all of
our counsel’s conclusions or the positions we take. Any contest by the IRS may materially and adversely impact the market for our
common units and the price at which they trade. In addition, our costs of any contest with the IRS will be borne indirectly by our
unitholders and our general partner because the costs will reduce our distributable cash flow.
Pursuant to legislation applicable for partnership tax years beginning after 2017, if the IRS makes audit adjustments to our
partnership tax returns, it may assess and collect any taxes (including any applicable penalties and interest) resulting from such
audit adjustments directly from us. To the extent possible under these rules our general partner may elect to either pay the taxes
(including any applicable penalties and interest) directly to the IRS in the year in which the audit is completed or, if we are eligible,
issue a revised information statement to each current and former unitholder with respect to an audited and adjusted partnership tax
return. Although our general partner may elect to have our current and former unitholders take such audit adjustment into account
and pay any resulting taxes (including applicable penalties or interest) in accordance with their interests in us during the tax year
under audit, there can be no assurance that such election will be practical, permissible or effective in all circumstances. If we make
payments of taxes and any penalties and interest directly to the IRS in the year in which the audit is completed, our cash available
for distribution to our unitholders might be substantially reduced, in which case our current unitholders may bear some or all of the
tax liability resulting from such audit adjustment, even if the unitholders did not own units in us during the tax year under audit.
We treat each purchaser of our common units as having the same tax benefits without regard to the actual common units purchased.
The IRS may challenge this treatment, which could adversely affect the value of the common units.
Because we cannot match transferors and transferees of common units, our depreciation, depletion and amortization positions
may not conform to all aspects of existing Treasury Regulations. A successful IRS challenge to those positions could adversely affect
the amount of tax benefits available to our unitholders. It also could affect the timing of these tax benefits or the amount of gain from
the sale of common units and could have a negative impact on the value of our common units or result in audit adjustments to a
unitholder’s tax returns.
We prorate our items of income, gain, loss and deduction between transferors and transferees of our units based upon the ownership
of our units on the first day of each month, instead of on the basis of the date a particular unit is transferred. The IRS may challenge
this treatment, which could change the allocation of items of income, gain, loss and deduction among our unitholders.
We generally prorate our items of income, gain, loss and deduction between transferors and transferees of our common units
based upon the ownership of our common units on the first day of each month, instead of on the basis of the date a particular common
unit is transferred. Although Treasury Regulations allow publicly traded partnerships to use a similar monthly simplifying convention
to allocate tax items among transferor and transferee unitholders, such tax items must be prorated on a daily basis and these regulations
do not specifically authorize all aspects of our proration method. If the IRS were to successfully challenge our proration method, we
may be required to change the allocation of items of income, gain, loss, and deduction among our unitholders.
A unitholder whose common units are the subject of a securities loan (e.g., a loan to a “short seller” to cover a short sale of common
units) may be considered as having disposed of those common units. If so, the unitholder would no longer be treated for tax
purposes as a partner with respect to those common units during the period of the loan and may recognize gain or loss from the
disposition.
Because there is no tax concept of loaning a partnership interest, a unitholder whose common units are the subject of a securities
loan may be considered as having disposed of the loaned units. In that case, the unitholder may no longer be treated for tax purposes
as a partner with respect to those common units during the period of the loan to the short seller and the unitholder may recognize gain
or loss from such disposition. Moreover, during the period of the loan, any of our income, gain, loss or deduction with respect to those
common units may not be reportable by the unitholder and any cash distributions received by the unitholder as to those common units
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could be fully taxable as ordinary income. Our unitholders desiring to assure their status as partners and avoid the risk of gain recognition
from a loan to a short seller are urged to consult a tax advisor to discuss whether it is advisable to modify any applicable brokerage
account agreements to prohibit their brokers from loaning their common units.
We have adopted certain valuation methodologies in determining a unitholder’s allocations of income, gain, loss and deduction.
The IRS may challenge these methodologies or the resulting allocations, and such a challenge could adversely affect the value of
our common units.
In determining the items of income, gain, loss and deduction allocable to our unitholders, we must routinely determine the fair
market value of our assets. Although we may from time to time consult with professional appraisers regarding valuation matters, we
make many fair market value estimates ourselves using a methodology based on the market value of our common units as a means
to determine the fair market value of our assets. The IRS may challenge these valuation methods and the resulting allocations of
income, gain, loss and deduction.
A successful IRS challenge to these methods or allocations could adversely affect the timing, character or amount of taxable
income or loss being allocated to our unitholders. It also could affect the amount of gain from our unitholders’ sale of common units
and could have a negative impact on the value of the common units or result in audit adjustments to our unitholders’ tax returns without
the benefit of additional deductions.
As a result of investing in our common units, our unitholders may become subject to state and local taxes and return filing
requirements in jurisdictions where we operate or own or acquire properties.
In addition to U.S. federal income taxes, our unitholders may be subject to other taxes, including state and local income taxes,
unincorporated business taxes and estate, inheritance or intangible taxes that are imposed by the various jurisdictions in which we
conduct business or control property now or in the future, even if they do not live in any of those jurisdictions. Further, unitholders
may be subject to penalties for failure to comply with those requirements. As we make acquisitions or expand our business, we may
own assets or conduct business in additional states or foreign jurisdictions that impose a personal income tax. It is a unitholder’s
responsibility to file all applicable U.S. federal, foreign, state and local tax returns.
ITEM 1B. Unresolved Staff Comments
None.
ITEM 2. Properties
In addition to the information provided below, information regarding our properties is included in Item 1. “Business — Our
Operations,” “Leases and License” and “Trona Reserves” and is incorporated by reference in this Item.
Our Green River Basin facility is situated on approximately 880 acres in the Green River Basin of Wyoming. We own the
surface land and its improvements in fee, which we acquired pursuant to a quitclaim deed in 1991. See Item 1A, “Risk Factors—Risks
Inherent in our Business and Industry—Defects in title or loss of any leasehold interests in our properties could limit our ability to
conduct mining operations on these properties or result in significant unanticipated costs” for more information. We have operated
our facility since 1996, prior to which Rhône-Poulenc was the operator. In addition, we have approximately 23,500 acres of subsurface
leased/licensed mining areas. Four ponds on the property of our Green River Basin facility enable us to store the by-products from our
refining process. We draw the water necessary for our refining processes from the nearby Green River. Our mining assets consist of
two mining beds with five active mining faces at any one given time. The mine is served by three separate mine shafts.
Ciner Corp leases 21,688 square feet of office space for its headquarters in Atlanta, Georgia.
We believe that the size of our facilities is adequate for our current and anticipated needs.
Item 3. Legal Proceedings
From time to time we are party to various claims and legal proceedings related to our business. Although the outcome of
these proceedings cannot be predicted with certainty, management does not currently expect any of the legal proceedings we are
involved in to have a material effect on our business, financial condition and results of operations. We cannot predict the nature of any
future claims or proceedings, nor the ultimate size or outcome of existing claims and legal proceedings and whether any damages
resulting from them will be covered by insurance.
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Item 4. Mine Safety Disclosures
Information regarding mine safety violations and other regulatory matters required by Section 1503(a) of the Dodd-Frank
Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 to this Report.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common units are listed on the NYSE under the symbol “CINR.” As of March 1, 2019, Ciner Holdings owned
14,551,000 common units. The closing sales price of our common units on NYSE on March 1, 2019 was $24.77. Ciner Holdings has
approximately 74% ownership interest in us and the public owned 5,193,301 common units which constitutes an approximately 26%
ownership interest in us. There are 18 record holders of our outstanding common units as of March 1, 2019.
The following table sets forth, for the periods indicated, the range of the high and low sales prices of our common units and
cash distributions declared per unit.
Quarter Ended
2018
2017
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Sales Price per Common Units
High
Low
Quarterly Cash
Distribution
Declared per
Unit
Distribution Date
Record Date
$
27.70
$
19.75
$
28.36
27.89
28.76
26.20
24.37
25.74
$
26.25
$
24.16
$
27.97
29.30
32.22
23.57
27.00
27.23
0.567
0.567
0.567
0.567
0.567
0.567
0.567
0.567
2/28/2019
11/20/2018
8/20/2018
5/21/2018
2/27/2018
11/20/2017
8/21/2017
5/15/2017
2/11/2019
11/5/2018
8/6/2018
5/7/2018
2/12/2018
11/6/2017
8/7/2017
5/1/2017
Distributions of Available Cash from Operating Surplus and Capital Surplus
General
Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute our available cash to
unitholders of record on the applicable record date.
Definition of Available Cash
Available cash generally means, for any quarter, all cash and cash equivalents on hand at the end of that quarter:
less, the amount of cash reserves established by our general partner to:
•
•
•
provide for the proper conduct of our business (including reserves for our future capital expenditures and for
anticipated future credit needs subsequent to that quarter);
comply with applicable law, any of our debt instruments or other agreements; or
provide funds for distributions to our unitholders and to our general partner for any one or more of the next four
quarters (provided that our general partner may not establish cash reserves for distributions if the effect of the
establishment of such reserves will prevent us from distributing the minimum quarterly distribution on all common
units and any cumulative arrearages on such common units for the current quarter);
plus, if our general partner so determines, all or any portion of the cash on hand on the date of determination of available
cash for the quarter, resulting from working capital borrowings made subsequent to the end of such quarter.
The purpose and effect of the last bullet point above is to allow our general partner, if it so decides, to use cash received by us after the
end of the quarter but on or before the date of determination of available cash for the quarter, including cash on hand from working
capital borrowings made after the end of the quarter but on or before the date of determination of available cash for that quarter, to pay
distributions to unitholders. Under our partnership agreement, working capital borrowings are generally borrowings that are made
under a credit facility, commercial paper facility or similar financing arrangement, and in all cases are used solely for working capital
purposes or to pay distributions to partners, and with the intent of the borrower to repay such borrowings within 12 months with funds
other than from additional working capital borrowings.
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Any distributions we make will be characterized as made from “operating surplus” or “capital surplus.” Distributions of
available cash from operating surplus are made differently than distributions of available cash that we would make from capital
surplus. Operating surplus distributions will be made first to our unitholders. If our quarterly distributions exceed the first target
distribution level described below, then operating surplus distributions will also be made to the holder of our incentive distribution
rights (“IDRs”). We do not anticipate that we will make any distributions from capital surplus. If we do make any capital surplus
distribution, however, we will distribute such amount pro rata to all unitholders. The holder of the IDRs would generally not
participate in any capital surplus distributions with respect to those rights.
In determining operating surplus and capital surplus, we will only take into account our proportionate share of our interest in
our consolidated subsidiaries, so long as they are not wholly owned, as well as our proportionate share of entities accounted for under
the equity method.
Operating Surplus
We define operating surplus as:
• $20.0 million; plus
• all of our cash receipts, including amounts received by us from OCI Enterprises under the Omnibus Agreement for periods
prior to the consummation of Ciner Enterprises’ indirect acquisition of approximately 72% limited partner interests in us, as well as,
our approximate 2.0% general partner interest and all of our incentive distribution rights (the “Transaction”), and, Ciner Corp under
the Service Agreement for periods subsequent to the consummation of the Transaction, in each case, to the extent such amounts offset
operating expenditures or lost revenue, and excluding cash from interim capital transactions (as defined below) and, under certain
circumstances, the termination of hedge contracts; plus
• working capital borrowings, if any, made after the end of a period but on or before the date of determination of operating
surplus for the period; plus
• cash distributions paid in respect of equity issued (including incremental distributions on IDRs), to finance all or a portion of
replacement, improvement or expansion capital expenditures in respect of the period from such financing until the earlier to occur of
(1) the date the related capital improvement commences commercial service and (2) the date that it is abandoned or disposed of; plus
• cash distributions paid in respect of debt or equity issued (including incremental distributions on IDRs) to pay the
construction period interest on debt incurred, or to pay construction period distributions on equity issued, to finance the expansion
capital expenditures referred to above, in each case, in respect of the period from such financing until the earlier to occur of (1) the
date the capital asset is placed in service and (2) the date that it is abandoned or disposed of; less
• all of our operating expenditures (as defined below); less
• the amount of cash reserves or our proportionate share of cash reserves in the case of subsidiaries that are not wholly owned
established by our general partner to provide funds for future operating expenditures; less
• all working capital borrowings not repaid within twelve months after having been incurred, or repaid within such twelve-
month period with the proceeds of additional working capital borrowings; less
• any cash loss realized on disposition of an investment capital expenditure.
We will include in operating surplus, when collected, cash receipts equal to our proportionate share of accounts receivable
that are retained by Ciner Corp.
As described above, operating surplus does not reflect actual cash on hand that is available for distribution to our unitholders
and is not limited to cash generated by our operations. For example, it includes a basket of $20.0 million that will enable us, if we
choose, to distribute as operating surplus cash we receive in the future from non-operating sources such as asset sales, issuances of
securities and long-term borrowings that would otherwise be distributed as capital surplus. In addition, by including, as described
above, certain cash distributions on equity interests in operating surplus, we will increase operating surplus by the amount of any such
cash distributions. As a result, we may also distribute as operating surplus up to the amount of any such cash that we receive from non-
operating sources.
The proceeds of working capital borrowings increase operating surplus, and repayments of working capital borrowings are
generally operating expenditures, as described below. Therefore, we will reduce operating surplus when we repay working capital
borrowings. However, if we do not repay a working capital borrowing during the twelve-month period following such borrowing, it
will be deemed to be repaid at the end of such period, thereby decreasing operating surplus at such time. When such working capital
borrowing is, in fact, repaid, it will be excluded from operating expenditures because operating surplus will have been previously
reduced by the deemed repayment.
We define operating expenditures in our partnership agreement, which generally means all of our cash expenditures, including:
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• taxes,
• reimbursement of expenses to our general partner or its affiliates,
• payments made in the ordinary course of business under interest rate hedge agreements or commodity hedge agreements
(provided that (1) with respect to amounts paid in connection with the initial purchase of an interest rate hedge contract or a
commodity hedge contract, we will amortize such amounts over the life of the applicable interest rate hedge contract or commodity
hedge contract, and (2) we will include in operating expenditures payments made in connection with the termination of any interest
rate hedge contract or commodity hedge contract prior to the expiration of its stipulated settlement or termination date of such
contracts in equal quarterly installments over the remaining scheduled life of such contract),
• compensation of officers and directors of our general partner,
• repayment of working capital borrowings,
• debt service payments, and
• payments made in the ordinary course of business under any hedge contracts.
However, operating expenditures will not include:
• repayment of working capital borrowings deducted from operating surplus pursuant to the penultimate bullet point of the
definition of operating surplus above when such repayment actually occurs;
• payments (including prepayments and prepayment penalties) of principal of and premium on indebtedness, other than
working capital borrowings;
• expansion capital expenditures;
• investment capital expenditures;
• payment of transaction expenses relating to interim capital transactions;
• distributions to our partners (including distributions in respect of our IDRs); or
• repurchases of equity interests except to fund obligations under employee benefit plans.
Capital Surplus
Capital surplus is defined in our partnership agreement as any available cash distributed in excess of our operating surplus.
Accordingly, we will generate capital surplus generally only by the following (which we refer to as “interim capital transactions”):
• borrowings, refinancings or refundings of indebtedness other than working capital borrowings and other than for items
purchased on open account or for a deferred purchase price in the ordinary course of business;
• sales of our equity and debt securities;
• sales or other dispositions of assets, other than inventory, accounts receivable and other assets sold in the ordinary course of
business or as part of normal retirement or replacement of assets; and
• capital contributions received.
Quarterly Distributions
On January 31, 2019, the Partnership declared its fourth quarter 2018 quarterly distribution. The quarterly cash distribution of
$0.567 per unit was paid on February 28, 2019 to unitholders of record on February 11, 2019.
Percentage Allocations of Distributions from Operating Surplus
The following table illustrates the percentage allocations of distributions from operating surplus between the unitholders and
our general partner based on the specified target distribution levels. The amounts set forth under the column heading “Marginal
Percentage Interest in Distributions” are the percentage interests of our general partner and the unitholders in any distributions from
operating surplus we distribute up to and including the corresponding amount in the column “Total Quarterly Distribution per Unit
Target Amount.” The percentage interests shown for our unitholders and our general partner for the minimum quarterly distribution
also apply to quarterly distribution amounts that are less than the minimum quarterly distribution. The percentage interests set forth
below for our general partner (1) include a 2.0% general partner interest, (2) assume that our general partner has contributed any
additional capital necessary to maintain its 2.0% general partner interest, (3) assume that our general partner has not transferred its
IDRs and (4) assume there are no arrearages on common units.
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Minimum Quarterly Distribution
First Target Distribution
Second Target Distribution
Third Target Distribution
Thereafter
Total Quarterly
Distribution per Unit
Target Amount
$0.5000
above $0.5000 up to $0.5750
above $0.5750 up to $0.6250
above $0.6250 up to $0.7500
above $0.7500
Marginal Percentage
Interest in
Distributions
Unitholders
98.0%
98.0%
85.0%
75.0%
50.0%
General Partner
2.0%
2.0%
15.0%
25.0%
50.0%
Securities Authorized for Issuance under Equity Compensation Plan
See Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information
relating to compensation plans under which the Partnership’s securities are authorized for issuance.
During the three months ended December 31, 2018, the Partnership did not repurchase any of its equity securities.
Item 6. Selected Financial Data
The following table provides selected historical financial data of the Partnership for the periods and as of the dates indicated.
The financial data provided should be read in conjunction with management’s discussion and analysis of financial condition and
results of operations and our audited consolidated financial statements and related notes included elsewhere in this Annual Report on
Form 10-K.
Statement of operations data:
($ in millions, except per unit data)
Results of Operations:
Net sales
Cost of products sold including freight costs (excludes depreciation,
depletion and amortization expense set forth separately below)
Depreciation, depletion and amortization expense
Selling, general and administrative expenses
Impairment and loss on disposal of assets, net
Litigation settlement gain
Operating income
Total interest and other income/(expense), net
Net income
Net income attributable to non-controlling interest
Net income attributable to Ciner Resources LP
Net income per limited partner unit:
Net income per limited partner unit (basic)
Net income per limited partner unit (diluted)
Limited partner units outstanding:
Weighted average limited partner units outstanding (basic)
Weighted average limited partner units outstanding (diluted)
Cash distribution declared per unit
Adjusted EBITDA (1)
Distributable cash flow
Distribution coverage ratio
2018
For the years ended December 31,
2016
2017
2015
2014
$ 486.7
$ 497.3
$ 475.2
$ 486.4
$ 465.0
355.0
28.4
24.5
—
(27.5)
106.3
(3.3)
$ 103.0
53.1
$ 49.9
356.7
27.1
22.4
1.6
—
89.5
(3.1)
$ 86.4
44.8
$ 41.6
335.6
26.1
23.3
0.3
—
89.9
(3.6)
$ 86.3
44.9
$ 41.4
332.4
23.7
20.0
0.2
—
110.1
(3.9)
$ 106.2
54.7
$ 51.5
$ 2.48
$ 2.08
$ 2.08
$ 2.58
$ 2.48
$ 2.07
$ 2.08
$ 2.58
$
$
$
$
19.7
19.7
19.6
19.7
19.6
19.6
19.6
19.6
$ 2.27
$ 2.27
$ 2.27
$ 2.19
$
325.3
22.4
20.3
1.0
—
96.0
(4.1)
91.9
47.4
44.5
2.23
2.23
19.6
19.6
2.06
$ 136.5
$ 58.4
1.28
$ 120.1
$ 52.0
1.14
$ 116.5
$ 133.9
$ 120.5
$ 50.4
$ 56.8
$
1.10
1.27
53.5
1.29
(1) Adjusted EBITDA is defined as net income (loss) plus net interest expense, income tax, depreciation, depletion and
amortization and certain other expenses that are non-cash charges or that we consider not to be indicative of ongoing
operations. Please see non-GAAP reconciliations in, Item 7, “Management’s Discussion and Analysis of Financial Condition
and Results of Operations - Non-GAAP Financial Measures” for additional information.
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Balance sheet data (at period end):
($ in millions)
Total assets
Long-term debt
Partners’ capital attributable to Ciner Resources LP
Non-controlling interests
Total equity
Cash flow data (at period end):
($ in millions)
Cash provided by (used in):
Operating activities
Investing activities (primarily capital expenditures)
Financing activities
As of December 31,
2018
$ 434.6
2017
$ 453.2
2016
$ 413.1
2015
$ 423.2
$
99.0
153.9
106.2
260.1
138.0
148.4
99.8
248.2
89.4
153.3
105.9
259.2
110.0
156.0
107.2
263.2
2014
447.4
145.0
147.6
100.9
248.5
For the years ended December 31,
2018
$ 162.2
(39.4)
(142.8)
$
2017
79.3
(24.7)
(44.1)
2016
$ 128.3
(25.3)
(103.7)
2015
$ 150.2
(35.7)
(125.1)
2014
$ 106.1
(27.2)
(94.8)
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References
References in this Annual Report on Form 10-K (“Report”) to the “Partnership,” “CINR,” “Ciner Resources,” “we,” “our,”
“us,” or like terms refer to Ciner Resources LP and its subsidiary, Ciner Wyoming LLC, which is the consolidated subsidiary of the
Partnership and referred to herein as “Ciner Wyoming.” References to “our general partner” or “Ciner GP” refer to Ciner Resource
Partners LLC, the general partner of Ciner Resources LP and a direct wholly-owned subsidiary of Ciner Wyoming Holding Co.
(“Ciner Holdings”), which is a direct wholly-owned subsidiary of Ciner Resources Corporation (“Ciner Corp”). Ciner Corp is a direct
wholly-owned subsidiary of Ciner Enterprises Inc. (“Ciner Enterprises”), which is a direct wholly-owned subsidiary of WE Soda Ltd.,
a U.K. corporation (“WE Soda”). WE Soda is a direct wholly-owned subsidiary of KEW Soda Ltd., a U.K. corporation (“KEW
Soda”), which is a direct wholly-owned subsidiary of Akkan Enerji ve Madencilik Anonim irketi (“Akkan”). Akkan is directly and
wholly owned by Turgay Ciner, the Chairman of the Ciner Group (“Ciner Group”), a Turkish conglomerate of companies engaged in
energy and mining (including soda ash mining), media and shipping markets. All of our soda ash processed is currently sold to
various domestic and international customers, including American Natural Soda Ash Corporation (“ANSAC”), which is an affiliate for
export sales.
You should read the following management's discussion and analysis of financial condition and results of operations in
conjunction with the historical consolidated financial statements, and notes thereto, included elsewhere in this Report.
Overview
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our
consolidated financial statements and notes to consolidated financial statements included elsewhere in this Report. The following
discussion and analysis contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance.
Our actual results and financial condition may differ materially from those implied or expressed by these forward-looking statements.
Please read “Cautionary Statement Concerning Forward-Looking Statements” and the risk factors discussed in Item 1A " Risk
Factors" of this Report.
We are a Delaware limited partnership formed by Ciner Holdings to own a 51% membership interest in, and to operate the trona
ore mining and soda ash production business of, Ciner Wyoming. Ciner Wyoming is currently one of the world’s largest producers of
soda ash, serving a global market from its facility in the Green River Basin of Wyoming. Our facility has been in operation for more
than 50 years.
NRP Trona LLC, a wholly owned subsidiary of Natural Resource Partners L.P. ("NRP") currently owns a 49% membership
interest in Ciner Wyoming.
Recent Developments
Notice to Terminate Membership in ANSAC
On November 9, 2018, we were informed that Ciner Corp delivered a notice to terminate its membership in ANSAC, a cooperative
that serves as the primary international distribution channel for us as well as two other U.S. manufacturers of trona-based soda ash.
The effective termination date is expected to be December 31, 2021 (the”ANSAC Termination Date”). ANSAC was our largest
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customer for the years ended December 31, 2018, 2017 and 2016, accounting for 52.0%, 44.7% and 55.2%, respectively, of our net
sales. Although ANSAC has been our largest customer for the years ended December 31, 2018, 2017, and 2016, we anticipate that the
impact of such termination on our net sales, net income and liquidity will be limited. We made this determination primarily based
upon the belief that we will continue to be one of the lowest cost producers of soda ash in the global market that has historically seen
demand for soda ash exceed supply of soda ash, and therefore we anticipate being able to find export customers regardless of our
membership status. Between now and the ANSAC Termination Date Ciner Corp will continue to have full ANSAC membership
benefits and services. After the termination period, Ciner Corp will begin marketing soda ash directly into international markets that
are currently being served by ANSAC and intends to utilize the distribution network that has already been established by the global
Ciner Group. We believe by combining our volumes with Ciner Group’s soda ash exports from Turkey, our withdrawal from ANSAC
will allow us to leverage the larger, global Ciner Group soda ash operations, which we expect will eventually lower our cost position
and improve our ability to optimize our market share both domestically and internationally. The ANSAC agreement provides that in
the event an ANSAC member exits or the ANSAC cooperative is dissolved, the exiting members are obligated for their respective
portion of the residual net assets or deficit of the cooperative. As of December 31, 2018, we have not recognized an asset or liability
related to the exit from ANSAC as such an amount is not currently probable or estimable. Please read “Risk Factors-Risks Inherent in
our Business and Industry-“A significant portion of our historical international sales of soda ash have been to ANSAC, and therefore
Ciner Corp’s decision to terminate its membership in ANSAC could adversely affect our ability to compete in certain international
markets, materially adversely impact our business, results of operations and financial condition and limit our ability to make
distributions to our unitholders.”
Factors Affecting Our Results of Operations
Soda Ash Supply and Demand
Our net sales, earnings and cash flow from operations are primarily affected by the global supply of, and demand for, soda
ash, which, in turn, directly impacts the prices we and other producers charge for our products.
Demand for soda ash in the United States is driven in large part by general economic growth and activity levels in the
end-markets that the glass-making industry serves, such as the automotive and construction industries. Because the United States is
a well-developed market, we expect that domestic demand levels will remain stable for the near future. Because future U.S.
capacity growth is expected to come from the four major producers in the Green River Basin, we also expect that U.S. supply
levels will remain relatively stable in the near term.
Soda ash demand in international markets has continued to grow in conjunction with GDP. We expect that future global
economic growth will positively influence global demand, which will likely result in increased exports, primarily from the United
States, Turkey and to a limited extent, from China, the largest suppliers of soda ash to international markets.
Sales Mix
We will adjust our sales mix based upon what is the best margin opportunity for the business between domestic and
international. Our operations have been and continue to be sensitive to fluctuations in freight and shipping costs and changes in
international prices, which have historically been more volatile than domestic prices. Our gross profit will be impacted by the mix
of domestic and international sales as a result of changes in logistics costs and our average selling prices.
International Commercial Restructuring and Expansion
After the ANSAC Termination Date, we expect Ciner Corp will begin marketing soda ash directly into international
markets that are currently being served by ANSAC and intends to utilize the distribution network that has already been established
by the global Ciner Group. We believe by combining our volumes with Ciner Group’s soda ash exports from Turkey, our
withdrawal from ANSAC will allow us to leverage the larger, global Ciner Group soda ash operations, which we expect will
eventually lower our cost position and improve our ability to optimize our market share both domestically and internationally.
Energy Costs
One of the primary impacts to our profitability is our energy costs. Because we depend upon natural gas and electricity to
power our trona ore mining and soda ash processing operations, our net sales, earnings and cash flow from operations are sensitive
to changes in the prices we pay for these energy sources. Our cost of energy, particularly natural gas, has been relatively low in
recent years, and, despite the historic volatility of natural gas prices, we believe that we will continue to benefit from relatively low
prices in the near future. However, we expect to continue to hedge a portion of our forecasted natural gas purchases to mitigate
volatility. In addition, we have begun installation of a new electricity/steam co-generation facility that is estimated to reduce our
electricity spend by roughly one-third per year. We expect to commence operations of the co-generation facility in the second half
of 2019.
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How We Evaluate Our Business
Productivity of Operations
Our soda ash production volume is primarily dependent on the following three factors: (1) operating rate, (2) quality of our
mined trona ore and (3) recovery rates. Operating rate is a measure of utilization of the effective production capacity of our facility
and is determined in large part by productivity rates and mechanical on-stream times, which is the percentage of actual run times over
the total time scheduled. We implement two planned outages of our mining and surface operations each year, typically in the second
and third quarters. During these outages, which are scheduled to last approximately one week each, we repair and replace equipment
and parts. Periodically, we may experience minor unplanned outages or unplanned extensions to planned outages caused by various
factors, including equipment failures, power outages or service interruptions. The quality of our mine ore is determined by measuring
the trona ore recovered as a percentage of the deposit, which includes both trona ore and insolubles. Plant recovery rates are generally
determined by calculating the soda ash produced divided by the sum of the soda ash produced plus soda ash that is not recovered from
the process. All of these factors determine the amount of trona ore we require to produce one short ton of soda ash and liquor, which
we refer to as our “ore to ash ratio.” Our ore to ash ratio for the years ended December 31, 2018, 2017 and 2016, was 1.54: 1.0; 1.50:
1.0 and 1.50: 1.0, respectively.
Freight and Logistics
The soda ash industry is logistics intensive and involves careful management of freight and logistics costs. These freight costs
make up a large portion of the total delivered cost to the customer. Delivered costs to most domestic customers and ANSAC primarily
relates to rail freight services. Some domestic customers may elect to arrange their own freight and logistic services. Delivered costs
to non-ANSAC international customers primarily consists of both rail freight services to the port of embarkation and the additional
ocean freight to the port of disembarkation.
Union Pacific is our largest provider of domestic rail freight services and accounted for 78.6%, 74.3% and 83.1% of our total
freight costs for the years ended December 31, 2018, 2017 and 2016, respectively. The increase in the percentage of freight that is
related to Union Pacific is due to a greater portion of sales to domestic customers and ANSAC primarily consisting of only rail freight
services. During 2017, freight charges included ocean freight charges related to sales to Ciner Ic ve Dis Ticaret Anonim Sirketi
(“CIDT”) which were not a contributor to our total freight costs during the year ended December 31, 2018 as the previous contract
with CIDT concluded in the 2017 year. Our transportation agreement with Union Pacific expires on December 31, 2019, and there can
be no assurance that it will be renewed on terms favorable to us or at all. Please read “Risk Factors-Risks Inherent in our Business and
Industry-“For the year ended December 31, 2018, approximately 93.5% of our soda ash was shipped via rail, and we rely on one rail
line to service our facility under a contract that expires in 2019. Interruptions of service on this rail line could adversely affect our
results of operations and our ability to make cash distributions to our unitholders.” If we do not ship at least a significant portion of
our soda ash production on the Union Pacific rail lined during a twelve-month period, we must pay Union Pacific a shortfall payment
under the terms of our transportation agreement. For the years ended December 31, 2018, 2017 and 2016, we had no shortfall
payments and do not expect such payments in the future.
Net Sales
Net sales include the amounts we earn on sales of soda ash. We recognize revenue from our sales when control of goods
transfers to the customer. Control typically transfers when goods are delivered to the carrier for shipment, which is the point at which
the customer has the ability to direct the use of and obtain substantially all remaining benefits from the asset. The time at which
delivery and transfer of title occurs, for the majority of our contracts with customers, is the point when the product leaves our facility,
thereby rendering our performance obligation fulfilled. Substantially all of our sales are derived from sales of soda ash, which we sell
through our exclusive sales agent, Ciner Corp. A small amount of our sales is derived from sales of production purge, which is a by-
product liquor solution containing soda ash that is produced during the processing of trona ore. For the purposes of our discussion
below, we include these transactions in domestic sales of soda ash and in the volume of domestic soda ash sold.
Sales prices for sales through ANSAC include the cost of freight to the ports of embarkation for overseas export or to Laredo,
Texas for sales to Mexico. Sales prices for other international sales may include the cost of rail freight to the port of embarkation, the
cost of ocean freight to the port of disembarkation for import by the customer and the cost of inland freight required for delivery to the
customer.
In November 2016, Ciner Corp, on behalf of Ciner Wyoming, entered into a soda ash sales agreement with CIDT to sell soda
ash to markets not served by ANSAC. In 2017, sales to CIDT include the cost of rail freight to the port of embarkation and the
additional ocean freight to the port of disembarkation. There were no sales to CIDT during the year ended December 31, 2018, as the
contract terminated in 2017.
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Cost of products sold
Expenses relating to employee compensation, energy, including natural gas and electricity, royalties and maintenance
materials constitute the greatest components of cost of products sold. These costs generally increase in line with increases in sales
volume.
Energy. A major item in our cost of products sold is energy, comprised primarily of natural gas and electricity. We primarily
use natural gas to fuel our above-ground processing operations, including the heating of calciners, and we use electricity to power our
underground mining operations, including our continuous mining machines, or continuous miners, and shuttle cars. The monthly
Henry Hub natural gas settlement prices, over the past five years, have ranged between $1.73 and $6.00. The average monthly Henry
Hub natural gas settlement prices for the years ended December 31, 2018 and 2017, were $3.17 and $2.99 per MMBtu, respectively.
In order to mitigate the risk of gas price fluctuations, we hedge a portion of our forecasted natural gas purchases by entering into
physical or financial gas hedges generally ranging between 20% and 80% of our expected monthly gas requirements, on a sliding
scale, for approximately the next five years. See Item 7A, “Quantitative and Qualitative Disclosures about Market Risk - Commodity
Price Risks,” for additional information.
Employee Compensation. See Item 8, Financial Statements and Supplementary Data—Note 11, “Employee Compensation,”
for information on the various plans.
Royalties. We pay royalties to the State of Wyoming, the U.S. Bureau of Land Management and Rock Springs Royalty
Company, LLC (“RSRC”), an affiliate of Anadarko Petroleum, which are calculated based upon a percentage of the value of soda ash
and related products sold at a certain stage in the mining process. These royalty payments may be subject to a minimum domestic
production volume from our Green River Basin facility. We are also obligated to pay annual rentals to our lessors and licensor
regardless of actual sales. In addition, we pay a production tax to Sweetwater County, and trona severance tax to the State of Wyoming
that is calculated based on a formula that utilizes the volume of trona ore mined and the value of the soda ash produced.
The royalty rates we pay to our lessors and licensor may change upon our renewal or renegotiation of such leases and license.
On June 28, 2018, Ciner Wyoming amended its License Agreement, dated July 18, 1961 (the “License Agreement”), with RSRC,
LLC, to, among other things, (i) extend the term of the License Agreement to July 18, 2061 and for so long thereafter as Ciner
Wyoming continuously conducts operations to mine and remove sodium minerals from the licensed premises in commercial
quantities; and (ii) revise the production royalty rate for each sale of sodium mineral products produced from ore extracted from the
licensed premises at the royalty rate of eight percent (8%) of the net sales of such sodium mineral products.
Any increase in the royalty rates we are required to pay to our lessors and licensor through renewal or renegotiation of leases or
license, or any failure by us to renew any of our leases and license, could have a material adverse impact on our results of operations,
financial condition or liquidity, and, therefore, may affect our ability to distribute cash to unitholders.
Selling, general and administrative expenses
Selling, general and administrative expenses incurred by our affiliates on our behalf are allocated to us based on the time the
employees of those companies spend on our business and the actual direct costs they incur on our behalf. Selling, general and
administrative expenses incurred by ANSAC on our behalf are allocated to us based on the proportion of ANSAC’s total volumes sold
for a given period attributable to the soda ash sold by us to ANSAC. On October 23, 2015, the Partnership entered into a Services
Agreement (the “Services Agreement”), among the Partnership, our general partner and Ciner Corp. Pursuant to the Services
Agreement, Ciner Corp has agreed to provide the Partnership with certain corporate, selling, marketing, and general and
administrative services, in return for which the Partnership has agreed to pay Ciner Corp an annual management fee, subject to
quarterly adjustments, and reimburse Ciner Corp for certain third-party costs incurred in connection with providing such services. In
addition, under the joint venture agreement governing Ciner Wyoming, Ciner Wyoming reimburses us for employees who operate our
assets and for support provided to Ciner Wyoming.
Results of Operations
A discussion and analysis of the factors contributing to our results of operations is presented below for the periods and as of the
dates indicated. The financial statements, together with the following information, are intended to provide investors with a reasonable
basis for assessing our historical operations, but should not serve as the only criteria for predicting our future performance.
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The following tables set forth our results of operations for the years ended December 31, 2018, 2017 and 2016.
($ in millions; except for operating and other data section)
Net sales
Cost of products sold:
Cost of products sold (excludes depreciation, depletion and amortization expense set
forth separately below)
Depreciation, depletion and amortization expense
Freight costs
Total cost of products sold
Gross profit
Operating expenses:
Selling, general and administrative expenses
Impairment and loss on disposal of assets, net
Litigation settlement gain
Total operating expenses
Operating income
Other income/(expenses):
Interest income
Interest expense
Other - net
Total other expense, net
Net income
Net income attributable to non-controlling interest
Net income attributable to Ciner Resources LP
Operating and Other Data:
Trona ore consumed (thousands of short tons)
Ore to ash ratio(1)
Ore grade(2)
Soda ash volume produced (thousands of short tons)
Soda ash volume sold (thousands of short tons)
Adjusted EBITDA(3)
Years Ended December 31,
2017
497.3
$
$
2018
486.7
215.9
28.4
139.1
383.4
103.3
24.5
—
(27.5)
(3.0)
106.3
1.9
(5.1)
(0.1)
(3.3)
103.0
53.1
49.9
$
$
211.0
27.1
145.7
383.8
113.5
22.4
1.6
—
24.0
89.5
1.7
(4.6)
(0.2)
(3.1)
86.4
44.8
41.6
$
$
2016
475.2
216.0
26.1
119.6
361.7
113.5
23.3
0.3
—
23.6
89.9
—
(3.6)
—
(3.6)
86.3
44.9
41.4
$
$
$
4,018.3
1.54: 1.0
85.8%
2,613.4
2,613.2
4,001.3
1.50: 1.0
88.4%
2,666.9
2,705.4
4,050.4
1.50: 1.0
87.5%
2,695.3
2,735.7
$
136.5
$
120.1
$
117.1
(1) Ore to ash ratio expresses the number of short tons of trona ore needed to produce one short ton of soda ash and liquor and
includes our deca rehydration recovery process. In general, a lower ore to ash ratio results in lower costs and improved
efficiency.
(2) Ore grade is the percentage of raw trona ore that is recoverable as soda ash free of impurities. A higher ore grade will
produce more soda ash than a lower ore grade.
(3) For a discussion of the non-GAAP financial measure Adjusted EBITDA, please read “Non-GAAP Financial Measures” of
this Management’s Discussion and Analysis.
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Analysis of Results of Operations
The following table sets forth a summary of net sales, sales volumes and average sales price, and the percentage change between
the periods:
($ in millions, except per ton data)
Net sales:
Domestic
International
Total net sales
Sales volumes (thousands of short tons):
Domestic (thousands of short tons)
International (thousands of short tons)
Total soda ash volume sold (thousands of short tons)
Average sales price (per short ton):
Domestic
International
Average
Percent of net sales:
Domestic sales
International sales
Total percent of net sales
Percent of sales volumes:
Domestic volume
International volume
Total percent of volume sold
2018 compared to 2017
Consolidated Results
Years Ended
December 31,
2018
2017
2016
Percent Increase/
(Decrease)
2018 vs
2017
2017 vs
2016
$ 233.4
253.3
$ 486.7
$ 192.8
304.5
$ 497.3
$ 192.6
282.6
$ 475.2
21.1 %
(16.8)%
(2.1)%
0.1 %
7.7 %
4.7 %
1,057.1
1,556.1
2,613.2
877.4
1,828.0
2,705.4
888.3
1,847.4
2,735.7
20.5 % (1.2)%
(14.9)% (1.1)%
(3.4)% (1.1)%
$ 220.79
$ 162.78
$ 186.25
$ 219.74
$ 166.58
$ 183.82
$ 216.77
$ 152.99
$ 173.70
0.5 %
(2.3)%
1.3 %
1.4 %
8.9 %
5.8 %
48.0%
52.0%
100.0%
40.5%
59.5%
100.0%
38.8%
61.2%
100.0%
32.4%
67.6%
100.0%
40.5% 23.7 % (4.2)%
2.9 %
59.5% (15.0)%
100.0%
32.5% 25.0 % (0.3)%
0.1 %
67.5% (12.0)%
100.0%
Net sales. Net sales decreased by 2.1% to $486.7 million for the twelve months ended December 31, 2018 from $497.3 million
for the twelve months ended December 31, 2017, driven by a decrease in soda ash volumes sold of 3.4% primarily as a result of
unexpected equipment repairs needed, which were resolved during our second quarter, as well as lower production volume in the third
quarter primarily due to ore grade degradation. The decrease in international sales prices was driven by the absence of international
sales to CIDT in 2018. During 2017, international average sales prices reflected the increase in freight costs driven by export sales
volume to CIDT.
Cost of products sold. Cost of products sold, including depreciation, depletion and amortization expense and freight costs,
decreased slightly to $383.4 million for the twelve months ended December 31, 2018 from $383.8 million for the twelve months
ended December 31, 2017, primarily due to a decrease in freight costs of 4.5% to $139.1 million for the twelve months ended
December 31, 2018, compared to $145.7 million for the twelve months ended December 31, 2017. The decrease in freight costs was
driven by no export sales volumes to CIDT during the twelve months ended December 31, 2018 compared to the prior year in addition
to lower volumes sold compared to the prior year. The decrease in freight costs was partially offset by an increase in employee
compensation, medical claims, as well as higher plant consulting fees, for the twelve months ended December 31, 2018 compared to
the prior year.
Selling, general and administrative expenses. Our selling, general and administrative expenses increased 9.4% to $24.5 million
for the twelve months ended December 31, 2018, compared to $22.4 million for the twelve months ended December 31, 2017. The
primary drivers for the increase were higher annual selling and administrative fees relating to our affiliate, ANSAC, which directly
correlates with the volume we sell to ANSAC, higher employee compensation expenses and higher expenses from our Enterprise
Resource Planning (“ERP”) implementation project.
Litigation settlement gain. During the twelve months ended December 31, 2018 we recognized $27.5 million gain related to the
settlement of an action initially filed against RSRC in 2016, related to royalty overpayment under Ciner Wyoming’s mineral
exploration license with RSRC. The case was settled on June 28, 2018.
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Operating income. As a result of the foregoing and primarily due to the litigation settlement, operating income increased by
18.8% to $106.3 million for the twelve months ended December 31, 2018, compared to $89.5 million for the twelve months ended
December 31, 2017.
Net income. As a result of the foregoing, net income increased by 19.2% to $103.0 million for the twelve months ended
December 31, 2018, compared to $86.4 million for the twelve months ended December 31, 2017.
2017 compared to 2016
Consolidated Results
Net sales. Net sales increased by 4.7% to $497.3 million for the twelve months ended December 31, 2017 from $475.2 million
for the twelve months ended December 31, 2016, driven by an increase in total average sales price of 5.8%, partially offset by a
decrease in soda ash volumes sold of 1.1%. The increased international average sales price reflects the increase in freight costs driven
by higher non-ANSAC export sales volume, primarily to CIDT. The decrease in sales volumes are primarily due to lower production
output compared to the prior period.
Cost of products sold. Cost of products sold, including freight costs, depreciation, depletion and amortization expense,
increased by 6.1% to $383.8 million for the twelve months ended December 31, 2017 from $361.7 million for the twelve months
ended December 31, 2016, primarily due to an increase in freight costs of 21.8% to $145.7 million for the twelve months ended
December 31, 2017, compared to $119.6 million for the twelve months ended December 31, 2016. The increase in freight costs was
driven by higher non-ANSAC export sales volumes, primarily to CIDT. The higher incremental freight costs on non-ANSAC export
sales is also reflected in the higher average international sales price. In the twelve months ended December 31, 2016, international
sales primarily consisted of transactions to ANSAC. During the twelve months ended December 31, 2017, we also had higher
maintenance expense that was partially offset by lower employee benefit costs, primarily resulting from changes to our postretirement
plan.
Selling, general and administrative expenses. Our selling, general and administrative expenses decreased 3.9% to $22.4 million
for the twelve months ended December 31, 2017, compared to $23.3 million for the twelve months ended December 31, 2016. The
decrease was primarily driven by lower selling and administrative fees relating to our affiliate, ANSAC, and a higher proportion of
employee time spent on Ciner Corp related activities in 2017.
Impairment and loss on disposal of assets, net. During the twelve months ended December 31, 2017, we incurred a $1.6
million asset impairment charge relating to certain assets, which became obsolete as a result of energy sourcing initiatives at our
Wyoming facility.
Gross profit. Gross profit remained flat at $113.5 million for the year ended December 31, 2017, compared to the year ended
December 31, 2016.
Operating income. As a result of the foregoing, operating income decreased slightly by 0.4% to $89.5 million for the twelve
months ended December 31, 2017, compared to $89.9 million for the twelve months ended December 31, 2016.
Net income. As a result of the foregoing, net income increased slightly by 0.1% to $86.4 million for the twelve months ended
December 31, 2017, compared to $86.3 million for the twelve months ended December 31, 2016.
Liquidity and Capital Resources
Sources of liquidity include cash generated from operations and borrowings under credit facilities and capital calls from
partners. We use cash and require liquidity primarily to finance and maintain our operations, fund capital expenditures for our
property, plant and equipment, make cash distributions to holders of our partnership interests, pay the expenses of our general partner
and satisfy obligations arising from our indebtedness. Our ability to meet these liquidity requirements will depend on our ability to
generate cash flow from operations.
Our sources of liquidity include:
• cash generated from our operations;
• Approximately $126.0 million ($225.0 million, less $99.0 million outstanding) is available for borrowing and
undrawn under the Ciner Wyoming Credit Facility as of December 31, 2018, subject to availability; during the twelve months
ended December 31, 2018, we had borrowings of $104.0 million under the Ciner Wyoming Credit Facility, offset by
repayments of $143.0 million as well as $11.4 million of repayments on other long-term debt; and
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• $10.0 million available for borrowing under the Ciner Resources Credit Facility as of December 31, 2018, subject to
availability.
We expect our ongoing working capital and capital expenditures to be funded by cash generated from operations and
borrowings under the Ciner Wyoming Credit Facility. We are currently considering plans to increase maintenance and expansion
capital expenditures at our Wyoming facility to both adequately maintain the physical assets and to increase our operating income and
operational capacity needs at the Wyoming facility. The amount, timing and classification of any such capital expenditures could
affect the amount of cash that is available to be distributed to our unitholders. In addition, we are subject to business and operational
risks that could adversely affect our cash flow and access to borrowings under the Ciner Resources Credit Facility and the Ciner
Wyoming Credit Facility. Our ability to satisfy debt service obligations, to fund planned capital expenditures and to make acquisitions
will depend upon our future operating performance, which, in turn, will be affected by prevailing economic conditions, our business
and other factors, some of which are beyond our control.
In addition, we are subject to business and operational risks that could adversely affect our cash flow and access to
borrowings under the Ciner Resources Credit Facility and the Ciner Wyoming Credit Facility. Our ability to satisfy debt service
obligations, to fund planned capital expenditures and to make acquisitions will depend upon our future operating performance, which,
in turn, will be affected by prevailing economic conditions, our business and other factors, some of which are beyond our control.
On January 31, 2019, the Partnership declared a cash distribution approved by the board of directors of our general partner.
The cash distribution for the fourth quarter of 2018 of $0.567 per unit was paid on February 28, 2019 to unitholders of record on
February 11, 2019. See Part II, Item 8, Financial Statements and Supplementary Data - Note 3, “Net income per unit and cash
distribution”, for more information.
We intend to pay a quarterly distribution to unitholders of record, to the extent we have sufficient cash from our operations
after establishment of cash reserves, funding of any acquisitions and expansion capital expenditures and payment of fees and
expenses, including payments to our general partner and its affiliates.
Capital Requirements
Working capital is the amount by which current assets exceed current liabilities. Our working capital requirements have been,
and will continue to be, primarily driven by changes in accounts receivable and accounts payable, which generally fluctuate with
changes in volumes, contract terms and market prices of soda ash in the normal course of our business. Other factors impacting
changes in accounts receivable and accounts payable could include the timing of collections from customers and payments to
suppliers, as well as the level of spending for maintenance and growth capital expenditures. A material adverse change in operations or
available financing under the Ciner Resources Credit Facility and the Ciner Wyoming Credit Facility could impact our ability to fund
our requirements for liquidity and capital resources. Historically, we have not made working capital borrowings to finance our
operations. As of December 31, 2018, we had a working capital balance of $76.9 million as compared to a working capital balance of
$127.7 million as of December 31, 2017. The decrease in our working capital balance was primarily due to a decrease in due-from
affiliates, as a result of payments made to the Partnership by CIDT. Proceeds from due from affiliates were used to reduce debt during
the year ended December 31, 2018.
Capital Expenditures
Our operations require investments to expand, upgrade or enhance existing operations and to meet evolving environmental
and safety regulations. We distinguish between maintenance and expansion capital expenditures. Maintenance capital expenditures
(including expenditures for the construction or development of new capital assets or the replacement, improvement or expansion of
existing capital assets) are made to maintain, over the long term, our operating income or operating capacity. Examples of
maintenance capital expenditures are expenditures to upgrade and replace mining equipment and to address equipment integrity, safety
and environmental laws and regulations. Our maintenance capital expenditures do not include actual or estimated capital expenditures
for replacement of our trona reserves. Expansion capital expenditures are incurred for acquisitions or capital improvements made to
increase, over the long term, our operating income or operating capacity. Examples of expansion capital expenditures include the
acquisition and/or construction of complementary assets to grow our business and to expand existing facilities, such as projects that
increase production from existing facilities, to the extent such capital expenditures are expected to increase our long-term operating
capacity or operating income.
The following table below summarizes our capital expenditures, on an accrual basis:
($ in millions)
Maintenance
Expansion
Total
Years Ended December 31,
2018
2017
2016
15.1
37.3
52.4
$
$
11.1
10.8
21.9
$
$
10.7
15.5
26.2
$
$
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We are currently planning to increase maintenance and expansion capital expenditures at our Wyoming facility to both adequately
maintain the physical assets and to increase our operating income and operational reliability. The increase in expansion capital expenditures
during the year ended December 31, 2018 as compared to the same period ended 2017 was driven by starting phase one of our co-
generation facility and the execution of our ERP implementation project. Looking ahead, we are evaluating our investment plans to not
only improve the sustainability of our existing assets, but also to increase production levels up to at least 3 million tons of soda ash per
year. We intend to maintain our disciplined financial policy with a conservative capital structure. Improving operating performance should
give us more flexibility to use a balanced approach of both operating cash flow and debt to fund these investments.
Cash Flows Discussion
The following is a summary of cash provided by or used in each of the indicated types of activities:
($ in millions)
Cash provided by (used in):
Operating activities
Investing activities
Financing activities
Operating Activities
Years Ended December 31,
Percent Increase/(Decrease)
2018
2017
2016
2018 vs
2017
2017 vs
2016
$
$
162.2
(39.4)
(142.8)
$
79.3
(24.7)
(44.1)
128.3
(25.3)
(103.7)
104.5%
59.5%
223.8%
(38.2)%
(2.4)%
(57.5)%
Our operating activities during the twelve months ended December 31, 2018 provided cash of $162.2 million, an increase of
104.5% from the $79.3 million of cash provided during the twelve months ended December 31, 2017, primarily as a result of the
following:
•
$28.4 million of working capital provided by operating activities during the twelve months ended December 31, 2018, as
compared to $37.8 million of working capital used in operating activities during the twelve months ended December 31,
2017. The $66.2 million increase in working capital provided by operating activities was primarily due to the $28.2 million
decrease in due-from affiliates compared to a $37.7 million increase in 2017.
Investing Activities
We used cash flows of $39.4 million in investing activities during the twelve months ended December 31, 2018, compared to
$24.7 million during the twelve months ended December 31, 2017, for capital projects as described in “Capital Expenditures” above.
Financing Activities
Cash used in financing activities of $142.8 million during the twelve months ended December 31, 2018 increased by 223.8%
over the prior-year, largely due to net repayments of long-term debt of $50.4 million during the twelve months ended December 31,
2018 compared to the $50.3 million in net borrowings and debt issuance costs during the twelve months ended December 31, 2017,
partly offset by, the decrease in distributions paid during the twelve months ended December 31, 2018 of $92.1 million compared to
the twelve months ended December 31, 2017 of $94.4 million.
Borrowings under the Ciner Wyoming Credit Facility were at variable interest rates.
($ in millions)
Short-term borrowings from banks:
As of and for
the quarter
ended
As of and for
the year
ended
As of and for
the year ended
As of and for the
year ended
December 31,
2018
December 31,
2017
December 31,
2016
Outstanding amount at period ending
Weighted average interest rate at period ending(1)
Average daily amount outstanding for the period
Weighted average daily interest rate for the period(1)
Maximum month-end amount outstanding during the period $
$
$
99.0
4.11%
110.4
4.02%
116.5
$
$
$
99.0
4.11%
118.8
2.60%
137.0
$
$
$
138.0
2.99%
112.5
3.03%
142.0
$
$
$
78.0
3.00%
81.5
3.04%
88.5
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(1)Weighted average interest rates set forth in the table above include the impacts of our interest rate swap contracts designated
as cash flow hedges. As of December 31, 2018, the interest rate swap contracts had an aggregate notional value of $50.0
million.
Debt
See Part II, Item 8, Financial Statements and Supplementary Data - Note 9, “Debt”, for details of our outstanding debt.
Contractual Obligations
The following table sets forth a summary of our significant contractual obligations as of December 31, 2018:
2019
2020
2021
2022
2023
Thereafter
Total
Payments Due by Period
($ in millions)
Long-term debt
Purchase obligations (1)
Interest payments (2)
Lease obligations (3)
Asset retirement Obligation (4)
Total
$
— $
— $
— $
99.0
$
— $
— $
25.1
4.0
0.1
—
19.6
4.0
0.1
—
13.8
4.0
0.1
—
8.8
4.0
0.1
—
7.7
2.3
0.1
—
99.0
78.8
18.3
1.8
3.8
—
1.3
145.1
145.1
$
29.2
$
23.7
$
17.9
$ 111.9
$
10.1
$
150.2
$
343.0
(1) Purchase obligations primarily include agreement to purchase goods or services that are enforceable and legally binding
and that specify all significant terms. We have certain long-term utility contracts with various terms extending through
2023. These commitments are designed to assure source of supply for our normal requirements. The amounts include
physical and financial natural gas hedge commitments, as well as, purchase obligations under a contract for the
transportation of gas, which may be cancelled by either upon 12 months’ advance written notice to the other party.
(2) Long-term debt interest payments set forth in the table above are based on our contractual rates, or in the case of variable
interest rate obligations, the weighted average interest rates as of December 31, 2018.
(3) Minimum contractual rental commitments of various operating leases, including renewal periods. Not included in the
table above are the operating lease contracts that Ciner Corp, typically enters into with various lessors for railcars to
transport product to customer locations and warehouses. Rail car leases under these contractual commitments range for
periods from one to ten years. Ciner Corp's obligation related to these rail car leases are $11.1 million in 2019, $8.5
million in 2020, $6.0 million in 2021, $3.8 million in 2022, $1.4 million in 2023 and $4.7 million in 2024 and thereafter.
(4) Asset retirement obligations are the liability for the present value of cost we estimate we will incur to retire certain assets.
The amount reported in the Contractual Obligations table above, represents the undiscounted estimated cost to retire such
assets. The estimated average timing of these obligations is in excess of thirty years.
Impact of Inflation
Although the impact of inflation has slowed in recent years, it is still a factor in the U.S. economy and may increase our cost to
acquire or replace properties, plant and equipment. Inflation may also increase our costs of labor and supplies. To the extent permitted
by competition, regulation and existing agreements, we pass along increased costs to our customers in the form of higher selling
prices, and we expect to continue this practice.
Off-Balance Sheet Arrangements
See Part II, Item 8, Financial Statements and Supplementary Data - Note 14, Commitments and Contingencies - “Off-Balance-
Sheet Arrangements”, for more information regarding our off-balance-sheet arrangements.
Non-GAAP Financial Measures
We report our financial results in accordance with generally accepted accounting principles in the United States (“GAAP”). We
also present the non-GAAP financial measures of:
• Adjusted EBITDA;
• distributable cash flow; and
• distribution coverage ratio.
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We define Adjusted EBITDA as net income (loss) plus net interest expense, income tax, depreciation, depletion and
amortization, equity-based compensation expense and certain other expenses that are non-cash charges or that we consider not to be
indicative of ongoing operations. Distributable cash flow is defined as Adjusted EBITDA less net cash paid for interest, maintenance
capital expenditures and income taxes, each as attributable to Ciner Resources LP. The Partnership may fund expansion-related
capital expenditures with borrowings under existing credit facilities such that expansion-related capital expenditures will have no
impact on cash on hand or the calculation of cash available for distribution. In certain instances, the timing of the Partnership’s
borrowings and/or its cash management practices will result in a mismatch between the period of the borrowing and the period of the
capital expenditure. In those instances, the Partnership adjusts designated reserves (as provided in the partnership agreement) to take
account of the timing difference. Accordingly, expansion-related capital expenditures have been excluded from the presentation of
cash available for distribution. Distributable cash flow will not reflect changes in working capital balances. We define distribution
coverage ratio as the ratio of distributable cash flow as of the end of the period to cash distributions payable with respect to such
period.
Adjusted EBITDA, distributable cash flow and distribution coverage ratio are non-GAAP supplemental financial measures that
management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating
agencies, may use to assess:
•
•
•
•
our operating performance as compared to other publicly traded partnerships in our industry, without regard
to historical cost basis or, in the case of Adjusted EBITDA, financing methods;
the ability of our assets to generate sufficient cash flow to make distributions to our unitholders;
our ability to incur and service debt and fund capital expenditures; and
the viability of capital expenditure projects and the returns on investment of various investment opportunities.
We believe that the presentation of Adjusted EBITDA, distributable cash flow and distribution coverage ratio provide useful
information to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable
to Adjusted EBITDA and distributable cash flow are net income and net cash provided by operating activities. Our non-GAAP
financial measures of Adjusted EBITDA, distributable cash flow and distribution coverage ratio should not be considered as
alternatives to GAAP net income, operating income, net cash provided by operating activities, or any other measure of financial
performance or liquidity presented in accordance with GAAP. Adjusted EBITDA and distributable cash flow have important
limitations as analytical tools because they exclude some, but not all items that affect net income and net cash provided by operating
activities. Investors should not consider Adjusted EBITDA, distributable cash flow and distribution coverage ratio in isolation or as a
substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA, distributable cash flow and distribution
coverage ratio may be defined differently by other companies, including those in our industry, our definition of Adjusted EBITDA,
distributable cash flow and distribution coverage ratio may not be comparable to similarly titled measures of other companies, thereby
diminishing its utility.
The table below presents a reconciliation of the non-GAAP financial measures of Adjusted EBITDA and distributable cash flow
to the GAAP financial measures of net income and net cash provided by operating activities:
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($ in millions, except per unit data)
Reconciliation of Adjusted EBITDA to net income:
Net income
Add backs:
Year Ended
December 31,
2018
2017
2016
$
103.0
$
86.4
$
86.3
Depreciation, depletion and amortization expense
28.4
27.1
26.1
Asset impairment charges
Interest expense, net
Restructuring charges and other, net (included in selling, general and administrative
expense)
Equity-based compensation expense
Adjusted EBITDA
Less: Adjusted EBITDA attributable to non-controlling interest
Adjusted EBITDA attributable to Ciner Resources LP
—
3.2
0.1
1.8
1.6
2.9
0.8
1.3
—
3.6
0.5
0.6
136.5
68.3
68.2
$
120.1
60.4
59.7
$
117.1
59.3
57.8
$
Reconciliation of distributable cash flow to Adjusted EBITDA attributable to Ciner Resources LP:
Adjusted EBITDA attributable to Ciner Resources LP
$
68.2
$
59.7
$
57.8
Less: Cash interest expense, net attributable to Ciner Resources LP
Less: Maintenance capital expenditures attributable to Ciner Resources LP
Distributable cash flow attributable to Ciner Resources LP
Cash distribution declared per unit
Total distributions to unitholders and general partner
Distribution coverage ratio
2.2
7.6
58.4
2.268
45.7
1.28
$
$
$
1.8
5.9
52.0
2.268
45.6
1.14
$
$
$
1.6
5.8
50.4
2.265
45.4
1.10
$
$
$
Reconciliation of Adjusted EBITDA to net cash from operating activities:
Net cash provided by operating activities
$
162.2
$
79.3
$
128.3
Add/(less):
Amortization of long-term loan financing
Net change in working capital
Interest expense, net
Restructuring charges and other, net (included in selling, general and administrative
expense)
Other non-cash items
Adjusted EBITDA
Less: Adjusted EBITDA attributable to non-controlling interest
Adjusted EBITDA attributable to Ciner Resources LP
Less: Cash interest expense, net attributable to Ciner Resources LP
Less: Maintenance capital expenditures attributable to Ciner Resources LP
(0.3)
(28.4)
3.2
0.1
(0.3)
136.5
68.3
68.2
2.2
7.6
(0.4)
37.8
2.9
0.8
(0.3)
120.1
60.4
59.7
1.8
5.9
(0.4)
(14.2)
3.6
—
(0.2)
117.1
59.3
57.8
1.6
5.8
Distributable cash flow attributable to Ciner Resources LP
$
58.4
$
52.0
$
50.4
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and
assumptions regarding matters that are inherently uncertain and that ultimately affect the reported amounts of assets, liabilities, revenues
and expenses, and the disclosure of contingent assets and liabilities. The estimates and assumptions are based on management’s experience
and understanding of current facts and circumstances. These estimates may differ from actual results. Certain of our accounting policies
are considered critical, as they are both important to reflect our financial position and results of operations and require significant or
complex judgment on the part of management. Our significant accounting policies are disclosed in Item 8, "Financial Statements and
Supplementary Data - Note 2 , “Summary of Significant Accounting Policies.”
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Recently Issued Accounting Standards
Accounting standards recently issued are discussed in Part II, Item 8. "Financial Statements and Supplementary Data" - Note 2
- Summary of Significant Accounting Policies, in the notes to the consolidated financial statements.
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Supplementary Selected Quarterly Financial Data
The following is selected unaudited condensed consolidated data for Ciner Resources LP for the quarters indicated:
($ in millions, except per unit data)
Q4 -18
Q3 -18
Q2 -18
Q1 -18
Q4 -17
Q3 -17
Q2 -17
Q1 -17
Net sales
Cost of products sold
Gross profit
Operating expenses
Operating income
Interest and other income/(expense), net
Net income
Net income attributable to non-controlling interest
Net income attributable to Ciner Resources LP
$
$ 132.2
$ 123.4
$ 109.9
$ 121.2
$ 128.5
$ 122.5
$ 119.7
$ 126.6
96.9
35.3
5.6
29.7
(1.1)
28.6
14.6
14.0
97.3
26.1
6.1
20.0
(1.0)
19.0
10.0
96.0
13.9
(21.1)
35.0
(0.5)
34.5
17.7
$
9.0
$ 16.8
$
93.2
28.0
6.4
21.6
(0.7)
20.9
10.8
10.1
95.2
33.3
5.8
27.5
(0.3)
27.2
13.9
$ 13.3
$
95.0
27.5
7.3
20.2
(0.9)
19.3
10.1
9.2
95.5
24.2
5.8
18.4
(0.9)
17.5
9.3
8.2
$
98.1
28.5
5.1
23.4
(1.0)
22.4
11.5
$ 10.9
Operating and Other Data:
Trona ore consumed (thousands of short tons)
Ore to ash ratio(1)
Ore grade(2)
Soda ash volume produced (thousands of short tons)
Soda ash volume sold (thousands of short tons)
1,077.0
1,004.8
899.1
1,059.3
1,059.3
1,025.0
933.2
983.9
1.52: 1.0
1.53: 1.0
1.55: 1.0
1.55: 1.0
1.53: 1.0
1.51: 1.0
1.45: 1.0
1.51: 1.0
85.6%
85.1%
86.1%
86.0%
87.7%
88.6%
88.7%
88.4%
708.8
704.4
656.5
656.6
579.0
584.6
692.4
706.7
692.4
706.7
680.0
676.6
643.0
651.3
651.5
670.8
Net income per limited partner unit:
Common - Public and Ciner Holdings (basic)
Common - Public and Ciner Holdings (diluted)
$
$
Limited partner units outstanding:
0.70
$ 0.44
$ 0.83
$
0.67
$ 0.67
0.70
$ 0.44
$ 0.83
$
0.67
$ 0.66
$
$
0.46
$ 0.41
$ 0.54
0.46
$ 0.41
$ 0.54
Weighted average common units outstanding (basic)
19.7
19.7
19.7
19.6
19.6
19.7
19.7
19.7
Weighted average common units outstanding
(diluted)
19.7
19.7
19.7
19.6
19.7
19.7
19.7
19.7
Cash distribution declared per unit
$ 0.567
$ 0.567
$ 0.567
$ 0.567
$ 0.567
$ 0.567
$ 0.567
$ 0.567
(1) Ore to ash ratio expresses the number of short tons of trona ore needed to produce one short ton of soda ash and liquor and
includes our deca rehydration recovery process.
(2) Ore grade is the percentage of raw trona ore that is recoverable as soda ash free of impurities. A higher ore grade will
produce more soda ash than a lower ore grade.
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk
Our exposure to the financial markets consists of changes in interest rates relative to the balance of our outstanding debt
obligations and derivatives that we have employed from time to time to manage our exposure to changes in market interest rates,
foreign currency rate and commodity prices. We do not use financial instruments or derivatives for trading or other speculative
purposes.
Interest Rate Risks
The aggregate principal amount of variable rate debt we had outstanding under our debt instruments as of December 31, 2018
was $99.0 million (as of December 31, 2017: $149.4 million). This debt had a weighted average interest rate, inclusive of designated
interest rate swap contracts, of 4.11% as of December 31, 2018 (as of December 31, 2017: 2.99%). Based on the variable rate debt in
our debt instruments as of December 31, 2018, a change in interest rate of 1% would result in an increase or a decrease of our annual
interest expense of approximately $1.2 million.
We have interest rate swap contracts, designated as cash flow hedges, to mitigate our exposure to possible increases in
interest rates. The swap contracts consist of four individual $12.5 million swaps with an aggregate notional value of $50.0 million as
of December 31, 2018 and have various maturities through 2022. The fair value liability of these interest rate swaps were $0.3 million
62
Table of Contents
as of December 31, 2018. Our previous interest rate swap contracts, with an aggregate notional value of $70.0 million as of
December 31, 2017, expired on July 18, 2018.
Foreign Exchange Rate Risks
Our sales to ANSAC are denominated in U.S. dollars but our sales to other international customers may be denominated in a
foreign currency, which exposes us to foreign currency fluctuations.
Commodity Price Risks
Energy costs represent a large part of our cost of products sold. Natural gas is a large component of that expense. We
purchase natural gas primarily from two suppliers: BP Energy and Enstor. The purchase price we pay does not include the cost of
transportation so we must arrange and pay for the cost of transporting the natural gas from the gas compressor facility approximately
20 miles from the plant to our facility. We have a separate contract for the transportation of gas. We pay a fixed amount to reserve
capacity on a daily basis. In order to mitigate the risk of gas price fluctuations, we hedge a portion of our forecasted natural gas
purchases by entering into physical or financial gas hedges generally ranging between 20% and 80% of our expected monthly gas
requirements, on a sliding scale, for approximately the next five years. We can give no assurance that we will continue this practice.
Historically, we have taken physical delivery under our physical gas contract and we intend to take physical delivery in the future. In
addition, to manage our exposure to fluctuating natural gas prices, we enter into financial gas forward purchase contracts. We
generally designate our financial gas forward contracts with financial counter-parties as cash flow hedges. Any outstanding contracts
are valued at market with the offset going to other comprehensive income (loss), and any material hedge ineffectiveness is recognized
in cost of goods sold. Any gain or loss is recognized in cost of goods sold in the same period or periods during which the hedged
transaction affects earnings. The aggregate notional value of our financial gas forward purchase contracts as of December 31, 2018
was $41.2 million and net fair value liability of $7.4 million. As of December 31, 2017, the aggregate notional value and fair value
liability were $37.0 million and $7.2 million, respectively.
ITEM 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2018 and 2017
Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2018, 2017 and
2016
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016
Consolidated Statements of Equity for the years ended December 31, 2018, 2017 and 2016
Notes to the Consolidated Financial Statements
Page
Number
64
65
66
67
68
69
63
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Partners of
Ciner Resources LP
Atlanta, Georgia
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Ciner Resources LP (a majority-owned subsidiary of Ciner
Wyoming Holding Co.) and its subsidiary (the “Partnership”) as of December 31, 2018 and 2017, and the related consolidated
statements of operations and comprehensive income, cash flows, and equity for each of the three years in the period ended December
31, 2018 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Partnership as of 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, in conformity with accounting
principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB) (United
States), the Partnership’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 and our
report dated March 8, 2019 expressed an unqualified opinion on the Partnership’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the
Partnership’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to
be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
March 8, 2019
We have served as the Partnership’s auditor since 2008.
64
CINER RESOURCES LP
CONSOLIDATED BALANCE SHEETS
December 31,
2018
December 31,
2017
Table of Contents
(In millions)
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable -affiliates
Accounts receivable, net
Inventory
Other current assets
Total current assets
Property, plant and equipment, net
Other non-current assets
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt
Accounts payable
Due to affiliates
Accrued expenses
Total current liabilities
Long-term debt
Other non-current liabilities
Total liabilities
Commitments and Contingencies (See Note 14)
Equity:
Common unitholders - Public and Ciner Holdings (19.7 units issued and outstanding at
December 31, 2018 and December 31, 2017)
General partner unitholders - Ciner Resource Partners LLC (0.4 units issued and outstanding at
December 31, 2018 and December 31, 2017)
Accumulated other comprehensive loss
Partners’ capital attributable to Ciner Resources LP
Non-controlling interest
Total equity
Total liabilities and partners’ equity
See accompanying notes.
65
$
$
$
$
$
10.2
70.1
36.9
22.3
2.0
141.5
266.7
26.4
434.6
$
— $
17.6
2.6
44.4
64.6
99.0
10.9
174.5
153.8
3.9
(3.8)
153.9
106.2
260.1
434.6
$
30.2
98.3
34.2
19.8
1.8
184.3
249.3
19.6
453.2
11.4
14.5
3.0
27.7
56.6
138.0
10.4
205.0
148.3
3.8
(3.7)
148.4
99.8
248.2
453.2
Table of Contents
CINER RESOURCES LP
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years Ended December 31,
2017
2016
2018
$
$
253.3
233.4
486.7
$
304.5
192.8
497.3
271.2
204.0
475.2
215.9
28.4
139.1
383.4
103.3
17.6
6.9
—
(27.5)
(3.0)
106.3
1.9
(5.1)
(0.1)
(3.3)
103.0
53.1
49.9
(0.2)
102.8
53.0
49.8
2.48
2.48
19.7
19.7
$
$
$
$
$
211.0
27.1
145.7
383.8
113.5
216.0
26.1
119.6
361.7
113.5
16.9
5.5
1.6
—
24.0
89.5
1.7
(4.6)
(0.2)
(3.1)
86.4
44.8
41.6
(4.0)
82.4
42.9
39.5
2.08
2.07
19.6
19.7
$
$
$
$
$
18.7
4.6
0.3
—
23.6
89.9
—
(3.6)
—
(3.6)
86.3
44.9
41.4
0.9
87.2
45.3
41.9
2.08
2.08
19.6
19.6
$
$
$
$
$
(In millions, except per unit data)
Net sales:
Sales - affiliates
Sales - others
Total net sales
Cost of products sold:
Cost of products sold (excludes depreciation, depletion and amortization expense set forth
separately below)
Depreciation, depletion and amortization expense
Freight costs
Total cost of products sold
Gross profit
Operating expenses:
Selling, general and administrative expenses—affiliates
Selling, general and administrative expenses—others
Impairment and loss on disposal of assets, net
Litigation settlement gain
Total operating expenses
Operating income
Other income/(expenses):
Interest income
Interest expense
Other - net
Total other expense, net
Net income
Net income attributable to non-controlling interest
Net income attributable to Ciner Resources LP
Other comprehensive income/(loss):
Income (loss) on derivative financial instruments
Comprehensive income
Comprehensive income attributable to non-controlling interest
Comprehensive income attributable to Ciner Resources LP
Net income per limited partner unit:
Net income per limited partner unit (basic)
Net income per limited partner unit (diluted)
Limited partner units outstanding:
Weighted average limited partner units outstanding (basic)
Weighted average limited partner units outstanding (diluted)
See accompanying notes.
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CINER RESOURCES LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization expense
Impairment and loss on disposal of assets, net
Equity-based compensation expense
Other non-cash items
Changes in operating assets and liabilities:
(Increase)/decrease in:
Accounts receivable - net
Accounts receivable - affiliates
Inventory
Other current and other non-current assets
Increase/(decrease) in:
Accounts payable
Due to affiliates
Accrued expenses and other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Net cash used in investing activities
Cash flows from financing activities:
Borrowings on Ciner Wyoming credit facility
Repayments on Ciner Wyoming credit facility
Repayments on other long-term debt
Debt issuance costs
Common units surrendered for taxes
Distributions to common unitholders
Distributions to subordinated unitholders
Distributions to general partner
Distributions to non-controlling interest
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental disclosure of cash flow information:
Interest paid during the year
Supplemental disclosure of non-cash investing activities:
Capital expenditures on account
Years Ended December 31,
2018
2017
2016
$
103.0
$
86.4
$
86.3
28.7
—
1.8
0.3
(2.7)
28.2
(3.0)
(0.2)
2.4
(0.4)
4.1
162.2
(39.4)
(39.4)
104.0
(143.0)
(11.4)
—
(0.3)
(44.6)
—
(0.9)
(46.6)
(142.8)
(20.0)
30.2
10.2
5.1
$
$
27.5
1.6
1.3
0.3
0.2
(37.7)
0.5
(0.2)
1.7
(1.2)
(1.1)
79.3
(24.7)
(24.7)
88.5
(28.5)
(8.6)
(1.1)
—
(44.5)
—
(0.9)
(49.0)
(44.1)
10.5
19.7
30.2
4.1
$
$
14.0
$
1.0
$
26.5
0.3
0.6
0.4
0.4
2.4
7.0
0.2
1.1
(0.4)
3.5
128.3
(25.3)
(25.3)
15.0
(27.0)
—
—
—
(22.2)
(22.0)
(0.9)
(46.6)
(103.7)
(0.7)
20.4
19.7
3.2
3.9
$
$
$
See accompanying notes.
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CINER RESOURCES LP
CONSOLIDATED STATEMENTS OF EQUITY
Limited Partners
(In millions)
Balance at January 1, 2016
Partnership net income
Other comprehensive income/(loss)
Equity-based compensation plan activity
Distributions
Conversion of subordinated units to common units
Balance at December 31, 2016
Net income
Other comprehensive loss
Equity-based compensation plan activity
Distributions
Balance at December 31, 2017
Partnership net income
Other comprehensive income/(loss)
Equity-based compensation plan activity
Distributions
Common
Units
Subordinated
Units
General
Partner
Accumulated
Other
Comprehensive
Loss
Partners’
Capital
Attributable
to Ciner
Resources LP
Equity
Noncontrolling
Interests
Total
Equity
$ 110.8
$
25.2
—
0.5
(22.2)
36.7
$
43.3
15.4
—
—
(22.0)
(36.7)
$ 151.0
$
— $
40.8
—
1.0
(44.5)
—
—
—
—
$ 148.3
$
— $
48.9
—
1.2
(44.6)
—
—
—
—
4.0
0.8
—
—
(0.9)
—
3.9
0.8
—
—
(0.9)
3.8
1.0
—
—
(0.9)
3.9
$
$
$
$
(2.1) $
—
0.5
—
—
—
(1.6) $
—
(2.1)
—
—
(3.7) $
—
(0.1)
—
—
(3.8) $
156.0
$
107.2
$ 263.2
41.4
0.5
0.5
(45.1)
—
44.9
0.4
—
(46.6)
—
86.3
0.9
0.5
(91.7)
—
153.3
$
105.9
$ 259.2
41.6
(2.1)
1.0
(45.4)
148.4
49.9
(0.1)
1.2
(45.5)
153.9
$
$
44.8
(1.9)
—
(49.0)
99.8
53.1
(0.1)
—
(46.6)
106.2
86.4
(4.0)
1.0
(94.4)
$ 248.2
103.0
(0.2)
1.2
(92.1)
$ 260.1
Balance at December 31, 2018
$ 153.8
$
— $
See accompanying notes.
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1. GENERAL
Nature of Operations
CINER RESOURCES LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As used in this Report, the terms “Ciner Resources LP,” “the “Partnership,” “CINR,” “we,” “us,” or “our” may refer to Ciner
Resources LP, formerly OCI Resources LP, a publicly traded Delaware limited partnership formed in April 2013 by Ciner Wyoming
Holding Co. (“Ciner Holdings” or ), formerly OCI Wyoming Holding Co. Ciner Holdings, a wholly-owned subsidiary of Ciner
Resources Corporation (“Ciner Corp”), formerly OCI Chemical Corporation, wholly-owned Ciner Resource Partners LLC (our
“general partner” or “Ciner GP”), formerly OCI Resource Partners LLC. Ciner Corp is a direct wholly-owned subsidiary of Ciner
Enterprises Inc. (“Ciner Enterprises”), which is directly wholly-owned by WE Soda Ltd. (“WE Soda”), which is directly wholly-
owned by KEW Soda Ltd. (“KEW Soda”), which is directly wholly-owned by Akkan Enerji ve Madencilik Anonim irketi (“Akkan”),
which in turn is directly wholly-owned by Turgay Ciner, the Chairman of the Ciner Group, a Turkish conglomerate of companies
engaged in energy and mining (including soda ash mining), media and shipping markets. Ciner Wyoming LLC (“Ciner Wyoming”),
formerly OCI Wyoming LLC, is in the business of mining trona ore to produce soda ash, and a majority-owned subsidiary of the
Partnership. The Partnership’s operations consist solely of its investment in Ciner Wyoming. The Partnership owns a controlling
interest comprised of 51.0% membership interest in Ciner Wyoming. All our soda ash processed is sold to various domestic and
European customers, and to Ciner Ic ve Dis Ticaret Anonim Sirketi (“CIDT”) and American Natural Soda Ash Corporation
(“ANSAC”) which are affiliates for export sales. During 2018, there were no sales to CIDT, an affiliate for export sales, as the
previous contract concluded in the 2017 year. All mining and processing activities of Ciner Wyoming take place in one facility located
in the Green River Basin of Wyoming.
NRP Trona LLC, a wholly owned subsidiary of Natural Resource Partners L.P. (“NRP”), currently owns a 49.0% membership
interest in Ciner Wyoming.
On February 22, 2018, Akkan transferred its direct 100% ownership in Ciner Enterprises to KEW Soda, a UK company,
which transferred such ownership to WE Soda, a UK company. WE Soda is 100% owned by KEW Soda, and KEW Soda is wholly
owned by Akkan. This reorganization is a part of Ciner Group’s strategy to combine the global soda ash business under a common
structure in the UK.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Significant Accounting Policies
The accompanying consolidated financial statements of the Partnership and its subsidiary have been prepared in conformity
with U.S. generally accepted accounting principles and reflect all adjustments, consisting of normal recurring accruals, which are
necessary for fair presentation of the results of operations, financial position and cash flows for the periods presented. All significant
intercompany transactions, balances, revenue and expenses have been eliminated in consolidation and unless otherwise noted, the
financial information for the Partnership is presented before non-controlling interest.
Non-Controlling Interests
In connection with the conversion of Ciner Wyoming from a Delaware limited partnership (“LP”) to a Delaware limited
liability company (“LLC”), in June 2014, NRP’s general partner interest and limited partnership interest were converted into a single-
class of membership interests in Ciner Wyoming, which currently consists of a 49.0% membership interest in Ciner Wyoming. Prior to
the conversion of Ciner Wyoming from a Delaware LP to a Delaware LLC, non-controlling interests in the consolidated financial
statements of the Partnership consisted of a 39.37% general partner interest and a 9.63% limited partner interest in Ciner Wyoming
owned by NRP.
Use of Estimates
The preparation of consolidated financial statements, in accordance with accounting principles generally accepted in the United
States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
On May 28, 2014 the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Codification (“ASC”)
606, Revenue from Contracts with Customers (Topic 606), that requires companies to recognize revenue when a customer obtains
control rather than when companies have transferred substantially all risks and rewards of a good or service. The Partnership has
applied the provisions of this ASC and notes that our adoption of ASC 606 does not materially change the amount or timing of
revenues recognized by us, nor does it materially affect our financial position. The majority of our revenues generated are recognized
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upon delivery and transfer of title to the product to our customers. The time at which delivery and transfer of title occurs, for the
majority of our contracts with customers, is the point when the product leaves our facility, thereby rendering our performance
obligation fulfilled. Additionally, the Partnership has made an accounting policy election to account for shipping and handling
activities as fulfillment costs. The Partnership adopted this ASC effective January 1, 2018, as permitted by the ASC, using the
modified retrospective method and we have not made any adjustment to opening retained earnings.
Freight Costs
The Partnership includes freight costs billed to customers for shipments administered by the Partnership in gross sales. The
related freight costs along with cost of products sold are deducted from gross sales to determine gross profit.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments purchased with an original maturity of three months or less to be cash
equivalents. Cash equivalents consist primarily of money market deposit accounts.
Accounts Receivable
Accounts receivable are carried at the original invoice amount less an estimate for doubtful receivables. We generally do not
require collateral against outstanding accounts receivable. The allowance for doubtful accounts is based on specifically identified
amounts that the Partnership believes to be uncollectible. An additional allowance is recorded based on certain percentages of aged
receivables, which are determined based on management’s assessment of the general financial conditions affecting the Partnership’s
customer base. We determined that no allowance for doubtful accounts was required against receivables from affiliates as of
December 31, 2018 and 2017. If actual collection experience changes, revisions to the allowance may be required. Accounts
receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when
received. During the years ended 2018, 2017 and 2016, there were no significant accounts receivable bad debt expenses, write-offs or
recoveries.
Inventory
Inventory is carried at the lower of cost or market. Cost is determined using the first-in, first-out method for raw material and
finished goods inventory and the weighted average cost method for stores inventory. Costs include raw materials, direct labor and
manufacturing overhead. Market is based on current replacement cost for raw materials and net realizable value for stores inventory
and finished goods.
• Raw material inventory includes material, chemicals and natural resources being used in the mining and refining process.
• Finished goods inventory is the finished product soda ash.
• Stores inventory includes parts, materials and operating supplies which are typically consumed in the production of
soda ash and currently available for future use. Inventory expected to be consumed within the year is classified as current assets
and remainder is classified as non-current assets.
Property, Plant, and Equipment
Property, plant, and equipment are stated at cost less accumulated depreciation. Depreciation is computed over the estimated
useful lives of depreciable assets, using the straight-line method. The estimated useful lives applied to depreciable assets are as
follows:
Land improvements
Depletable land
Buildings and building improvements
Computer hardware
Machinery and equipment
Furniture and fixtures
Useful Lives
10 years
15-60 years
10-30 years
3-5 years
5-20 years
10 years
The Partnership’s policy is to evaluate property, plant, and equipment for impairment whenever events or changes in
circumstances indicate that its carrying amount may not be recoverable. An indicator of potential impairment would include situations
when the estimated future undiscounted cash flows are less than the carrying value. The amount of any impairment then recognized
would be calculated as the difference between estimated fair value and the carrying value of the asset.
Derivative Instruments and Hedging Activities
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The Partnership may enter into derivative contracts from time to time to manage exposure to the risk of exchange rate changes
on its foreign currency transactions, the risk of changes in natural gas prices, and the risk of the variability in interest rates on
borrowings. Gains and losses on derivative contracts qualifying for hedge accounting are reported as a component of the underlying
transactions. The Partnership follows hedge accounting for its hedging activities. All derivative instruments are recorded on the
balance sheet at their fair values. The accounting for changes in the fair value of a derivative depends on the intended use of the
derivative and the resulting designation. The Partnership designates its derivatives based upon criteria established for hedge
accounting under generally accepted accounting principles. For a derivative designated as a fair value hedge, the gain or loss is
recognized in earnings in the period of change together with the offsetting gain or loss on the hedged item attributed to the risk being
hedged. For a derivative designated as a cash flow hedge, the effective portion of the derivative’s gain or loss is initially reported as a
component of accumulated other comprehensive income (loss) and subsequently reclassified into earnings when the hedged exposure
affects earnings. Any significant ineffective portion of the gain or loss is reported in earnings immediately. For derivatives not
designated as hedges, the gain or loss is reported in earnings in the period of change. The natural gas physical forward contracts are
accounted for under the normal purchases and normal sales scope exception.
Income Tax
We are organized as a pass-through entity for federal income tax purposes and therefore are not subject to federal or certain
state income taxes. As a result, our partners are responsible for federal income taxes based on their respective share of taxable income.
Net income for financial statement purposes may differ significantly from taxable income reportable to unitholders as a result of
differences between the tax basis and financial reporting basis of assets and liabilities and the taxable income allocation requirements
under the partnership agreement.
Reclamation Costs
The Partnership is obligated to return the land beneath its refinery and tailings ponds to its natural condition upon completion of
operations and is required to return the land beneath its rail yard to its natural condition upon termination of the various lease
agreements.
The Partnership accounts for its land reclamation liability as an asset retirement obligation, which requires that obligations
associated with the retirement of a tangible long-lived asset be recorded as a liability when those obligations are incurred, with the
amount of the liability initially measured at fair value. Upon initially recognizing a liability for an asset retirement obligation, an entity
must capitalize the cost by recognizing an increase in the carrying amount of the related long-lived asset. Over time, the liability is
accreted to its present value each period, and the capitalized cost is depreciated over the estimated useful life of the related asset. Upon
settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement.
The estimated original liability calculated in 1996 for the refinery and tailing ponds was calculated based on the estimated
useful life of the mine, which was 80 years, and on external and internal estimates as to the cost to restore the land in the future and
state regulatory requirements. During 2018, 2017 and 2016, the remaining life was 60, 66 and 67 years, respectively. In 2019, the
mining reserve will be amortized over a remaining life of 59 years. The decline in estimated mining reserves estimated remaining life
is based on the results of a recent independent mine reserve analysis conducted as of December 31, 2017. The independent mine
reserve analysis is routine and performed approximately every three years.The liability was discounted using a weighted average
credit-adjusted risk-free rates of approximately 6% and is being accreted throughout the estimated life of the related assets to equal the
total estimated costs with a corresponding charge being recorded to cost of products sold.
During 2011, the Partnership constructed a rail yard to facilitate loading and switching of rail cars. The Partnership is required
to restore the land on which the rail yard is constructed to its natural conditions. The original estimated liability for restoring the rail
yard to its natural condition was calculated based on the land lease life of 30 years and on external and internal estimates as to the cost
to restore the land in the future. The liability is discounted using a credit-adjusted risk-free rate of 4.25% and is being accreted
throughout the estimated life of the related assets to equal the total estimated costs with a corresponding charge being recorded to cost
of products sold.
Fair Value of Financial Instruments
Fair value is determined using a valuation hierarchy, generally by reference to an active trading market, quoted market prices or
model-derived valuations for the same or similar financial instruments. See Note 17, “Fair Value Measurements,” for more
information.
Equity-Based Compensation
We recognize compensation expense related to equity-based awards, with service conditions, granted to employees based on the
estimated fair value of the awards on the date of grant, net of estimated forfeitures. The grant date fair value of the equity-based
awards is generally recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the
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respective awards. Equity-based awards with market conditions are fair valued using a Monte Carlo Simulation model. See Note 12,
“Equity-Based Compensation,” for additional information.
Subsequent Events
We have evaluated subsequent events through the filing of this Annual Report on Form 10-K. See Note 19, “Subsequent Events”
for additional information.
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The update amends existing standards for accounting for
leases by lessees, with accounting for leases by lessors remaining largely unchanged from current guidance. The update requires that
lessees recognize a lease liability and a right of use asset for all leases (with the exception of short-term leases) at the commencement
date of the lease and disclose key information about leasing arrangements. For leases less than 12 months, an entity is permitted to
make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this
election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The Partnership will
make this election upon adoption. In preparation for the new requirements, the Partnership has completed its evaluation of the lease
agreements. The Partnership will adopt ASC 842 effective January 1, 2019 using a modified transition approach under which prior
comparative periods will not be adjusted, as permitted by the guidance. The Partnership has determined that the adoption of the new
standard will not have a material impact on the balance sheet or statement of operations because the Partnership has no material long
term leases that are subject to ASC 842. Ciner Corp was determined to be the ultimate lessee for rail car lease agreements under ASC
842, and the Partnership will continue to incur an allocation of rent expense in relation to the use of rail cars leased by Ciner Corp.
In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (ASC Topic 815) – Targeted Improvements to
Accounting for Hedging Activities. This ASU aims to improve the financial reporting of hedging relationships to better portray the
economic results of an entity’s risk management activities in its financial statements. In addition, this ASU makes certain targeted
improvements to simplify the application of the existing hedge accounting guidance. This ASU is effective for us beginning in the first
quarter of 2019, with early application permitted. The Partnership adopted this ASU effective January 1, 2019 and concluded there is
no material impact to the Partnership’s consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09–Compensation - Stock Compensation (Topic 718): Scope of Modification
Accounting. ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require
an entity to apply modification accounting. The Partnership adopted this ASU effective January 1, 2018 and concluded there is no
material impact to the Partnership’s consolidated financial statements.
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3. NET INCOME PER UNIT AND CASH DISTRIBUTION
Allocation of Net Income
Net income per unit applicable to limited partners is computed by dividing limited partners’ interest in net income attributable to
Ciner Corp, after deducting the general partner’s interest and any incentive distributions, by the weighted average number of
outstanding common and subordinated units. Our net income is allocated to the general partner and limited partners in accordance
with their respective partnership percentages, after giving effect to priority income allocations for incentive distributions, if any, to our
general partner, pursuant to our partnership agreement. Earnings in excess of distributions are allocated to the general partner and
limited partners based on their respective ownership interests. Payments made to our unitholders are determined in relation to actual
distributions declared and are not based on the net income allocations used in the calculation of net income per unit.
In addition to the common units, we have also identified the general partner interest and incentive distribution rights (“IDRs”) as
participating securities and use the two-class method when calculating the net income per unit applicable to limited partners, which is
based on the weighted-average number of common units outstanding during the period. Anti-dilutive units outstanding were
immaterial for all periods presented.
The net income attributable to common and subordinated unitholders and the weighted average units for calculating basic and
diluted net income per common and subordinated units were as follows:
(In millions, except per unit data)
Net income attributable to Ciner Resources LP
Less: General partner’s interest in net income
Limited partners’ interest in net income
Weighted average limited partner units outstanding:
Common - Public and Ciner Holdings (basic)
Subordinated - Ciner Holdings (basic)
Total weighted average limited partner units outstanding (basic)
Common - Public and Ciner Holdings (diluted)
Subordinated - Ciner Holdings (diluted)
Total weighted average limited partner units outstanding (diluted)
Net income per limited partner unit:
Common - Public and Ciner Holdings (basic)
Subordinated - Ciner Holdings (basic)
Net income per limited partner units (basic)
Common - Public and Ciner Holdings (diluted)
Subordinated - Ciner Holdings (diluted)
Net income per limited partner units (diluted)
$
$
$
$
$
$
$
$
Year Ended December 31,
2018
2017
2016
49.9
1.0
48.9
$
$
41.6
0.8
40.8
$
$
19.7
—
19.7
19.7
—
19.7
2.48
$
— $
2.48
2.48
$
$
— $
2.48
$
19.6
—
19.6
19.7
—
19.7
2.08
$
— $
2.08
2.07
$
$
— $
2.07
$
41.4
0.8
40.6
12.3
7.3
19.6
12.3
7.3
19.6
2.06
2.11
2.08
2.06
2.11
2.08
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The calculation of limited partners’ interest in net income is as follows:
(In millions, except per unit data)
Net income attributable to common unitholders:
Distributions (1)
(Distributions in excess of net income)/undistributed earnings
Common unitholders’ interest in net income
Net income attributable to subordinated unitholders:
Distributions (1)
(Distributions in excess of net income)/undistributed earnings
Subordinated unitholders’ interest in net income
(1) Distributions declared per unit for the year
Conversion of subordinated units
Year Ended December 31,
2018
2017
2016
$
$
$
$
44.6
4.3
48.9
$
$
44.5
(3.7)
40.8
$
$
— $
—
— $
— $
—
— $
2.268
2.268
27.9
(2.7)
25.2
16.6
(1.2)
15.4
2.265
Upon payment of the quarterly distribution for the third quarter of 2016, the conditions for conversion of the Partnership’s
subordinated units were satisfied. Accordingly, effective on November 14, 2016, the Partnership’s 9,775,500 subordinated units
converted into common units on a one-for-one basis. For purposes of calculating net income per common and subordinated units, the
conversion of the subordinated units were deemed to have occurred on October 1, 2016.
Quarterly Distribution
On January 31, 2019, the Partnership declared its fourth quarter 2018 quarterly distribution. The quarterly cash distribution of
$0.567 per unit was paid on February 28, 2019 to unitholders of record on February 11, 2019.
Our general partner has considerable discretion in determining the amount of available cash, the amount of distributions and the
decision to make any distribution. Although our partnership agreement requires that we distribute all of our available cash quarterly,
there is no guarantee that we will make quarterly cash distributions to our unitholders at our current quarterly distribution level, at the
minimum quarterly distribution level or at any other rate, and we have no legal obligation to do so. However, our partnership
agreement does contain provisions intended to motivate our general partner to make steady, increasing and sustainable distributions
over time.
General Partner Interest and Incentive Distribution Rights
Our partnership agreement provides that our general partner initially will be entitled to 2.0% of all distributions that we make
prior to our liquidation. Our general partner has the right, but not the obligation, to contribute up to a proportionate amount of capital
to us in order to maintain its 2.0% general partner interest if we issue additional units. Our general partner’s approximate 2.0%
interest, and the percentage of our cash distributions to which our general partner is entitled from such approximate 2.0% interest, will
be proportionately reduced if we issue additional units in the future (other than the issuance of common units upon a reset of the
IDRs), and our general partner does not contribute a proportionate amount of capital to us in order to maintain its approximate 2.0%
general partner interest. Our partnership agreement does not require that our general partner fund its capital contribution with cash. It
may, instead, fund its capital contribution by contributing to us common units or other property.
IDRs represent the right to receive increasing percentages (13.0%, 23.0% and 48.0%) of quarterly distributions from
operating surplus after we have achieved the minimum quarterly distribution and the target distribution levels. Our general partner
currently holds the IDRs, but may transfer these rights separately from its general partner interest, subject to certain restrictions in our
partnership agreement.
Percentage Allocations of Distributions from Operating Surplus
The following table illustrates the percentage allocations of distributions from operating surplus between the unitholders and
our general partner based on the specified target distribution levels. The amounts set forth under the column heading "Marginal
Percentage Interest in Distributions" are the percentage interests of our general partner and the unitholders in any distributions from
operating surplus we distribute up to and including the corresponding amount in the column "Total Quarterly Distribution per Unit
Target Amount." The percentage interests shown for our unitholders and our general partner for the minimum quarterly distribution
also apply to quarterly distribution amounts that are less than the minimum quarterly distribution. The percentage interests set forth
below for our general partner (1) include a 2.0% general partner interest, (2) assume that our general partner has contributed any
additional capital necessary to maintain its 2.0% general partner interest, (3) assume that our general partner has not transferred its
incentive distribution rights and (4) assume there are no arrearages on common units.
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Minimum Quarterly Distribution
First Target Distribution
Second Target Distribution
Third Target Distribution
Thereafter
4. ACCOUNTS RECEIVABLE, NET
Marginal Percentage
Interest in
Distributions
Total Quarterly
Distribution per Unit
Target Amount
Unitholders
$0.5000
above $0.5000 up to $0.5750
above $0.5750 up to $0.6250
above $0.6250 up to $0.7500
above $0.7500
98.0%
98.0%
85.0%
75.0%
50.0%
General Partner
2.0%
2.0%
15.0%
25.0%
50.0%
Accounts receivable, net consisted of the following as of December 31:
(In millions)
Trade receivables
Other receivables
Total
5. INVENTORY
Inventory consisted of the following as of December 31:
(In millions)
Raw materials
Finished goods
Stores inventory, current
Total
6. PROPERTY, PLANT, AND EQUIPMENT, NET
Property, plant, and equipment, net consisted of the following as of December 31:
(In millions)
Land and land improvements
Depletable land
Buildings and building improvements
Computer hardware
Machinery and equipment
Mining reserves
Total
Less accumulated depreciation, depletion and amortization
Total net book value
Construction in progress
2018
2017
$
$
31.0
5.9
36.9
$
$
27.5
6.7
34.2
2018
2017
10.9
$
5.1
6.3
22.3
$
10.1
3.2
6.5
19.8
$
$
2018
2017
$
$
0.3
3.0
137.1
4.7
677.7
65.3
888.1
(667.7)
220.4
46.3
0.3
3.0
135.0
5.3
652.6
65.3
861.5
(644.7)
216.8
32.5
249.3
Total property, plant, and equipment, net
$
266.7
$
Depreciation, depletion and amortization expense on property, plant, and equipment was $28.4 million, $27.1 million and $26.1
million for the years ended December 31, 2018, 2017 and 2016, respectively.
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7. OTHER NON-CURRENT ASSETS
Other non-current assets consisted of the following as of December 31:
(In millions)
Stores inventory, non-current
Internal-use software
Deferred financing costs and other
Total
2018
2017
19.4
$
6.2
0.8
26.4
$
18.6
—
1.0
19.6
$
$
In accordance with ASC 350-40, Internal Use Software, we capitalize certain internal use software development costs
associated with creating and enhancing internally developed software related to our enterprise resource planning system that was
implemented in 2018 and went live on January 1, 2019. Software development activities generally consist of three stages (i) the
research and planning stage, (ii) the application and infrastructure development stage, and (iii) the post-implementation stage. Costs
incurred in the planning and post-implementation stages of software development, or other maintenance and development expenses
that do not meet the qualification for capitalization are expensed as incurred. Costs incurred in the application and infrastructure
development stage, including significant enhancements and upgrades, are capitalized. As a result, we have capitalized $6.2 million of
software development costs and zero of accumulated amortization, as an intangible asset within “other non-current assets” in the
consolidated balance sheet as of December 31, 2018. These software development costs are amortized on a straight-line basis over the
estimated useful life of five to ten years under depreciation and amortization expense in the consolidated statements of operations.
Amortization for these capitalized costs is expected to be $0.6 million per year.
8. ACCRUED EXPENSES
Accrued expenses consisted of the following as of December 31:
(In millions)
Accrued capital expenditures
Accrued energy costs
Accrued royalty costs
Accrued employee compensation & benefits
Accrued other taxes
Accrued derivatives
Other accruals
Total
9. DEBT
2018
2017
$
13.0
$
6.6
6.5
7.5
4.7
1.9
4.2
1.0
5.2
4.5
6.8
4.8
1.9
3.5
$
44.4
$
27.7
Long-term debt consisted of the following as of December 31:
(In millions)
Variable Rate Demand Revenue Bonds, principal due October 1, 2018, interest payable monthly,
bearing an interest rate of 1.82% at December 31, 2017
Ciner Wyoming Credit Facility, unsecured principal expiring on August 1, 2022, variable interest
rate as a weighted average rate of 3.99% at December 31, 2018 and 3.08% at December 31, 2017
Total Debt
Current portion of long-term debt
Total long-term debt
2018
2017
$
$
— $
11.4
99.0
99.0
—
99.0
$
$
138.0
149.4
11.4
138.0
Aggregate maturities required on long-term debt at December 31, 2018 are due in future years as follows:
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2019
2020
2021
2022
2023
Thereafter
Total
Demand Revenue Bond
Amount
—
—
—
99.0
—
—
99.0
$
$
On October 1, 2018 the Partnership fully extinguished the $11.4 million 2018 Variable Rate Demand Revenue Bonds due on
that day. The Bonds were paid in full, including all accrued interest and without penalties. Additionally, the extinguishment of the
bonds relieved Ciner Wyoming of maintaining the related standby letters of credit.
Ciner Wyoming Credit Facility
On August 1, 2017, Ciner Wyoming entered into a Credit Agreement (“Ciner Wyoming Credit Facility”) with each of the
lenders listed on the respective signature pages thereof and PNC Bank, National Association, as administrative agent, swing line
lender and a Letter of Credit (“ L/C”) issuer. The Ciner Wyoming Credit Facility replaces the former Credit Facility (“Former Ciner
Wyoming Credit Facility”), dated as of July 18, 2013, by and among Ciner Wyoming, the lenders party thereto and Bank of America,
N.A., as administrative agent, swing line lender and L/C issuer, as amended, which was terminated on August 1, 2017 upon entry into
the Ciner Wyoming Credit Facility. This arrangement was accounted for as a modification of debt in accordance with ASC 470-50.
The Ciner Wyoming Credit Facility is a $225.0 million senior unsecured revolving credit facility with a syndicate of lenders,
which will mature on the fifth anniversary of the closing date of such credit facility. The Ciner Wyoming Credit Facility provides for
revolving loans to fund working capital requirements, capital expenditures, to consummate permitted acquisitions and for all other
lawful partnership purposes. The Ciner Wyoming Credit Facility has an accordion feature that allows Ciner Wyoming to increase the
available revolving borrowings under the facility by up to an additional $75.0 million, subject to Ciner Wyoming receiving increased
commitments from existing lenders or new commitments from new lenders and the satisfaction of certain other conditions. In addition,
the Ciner Wyoming Credit Facility includes a sublimit up to $20.0 million for same-day swing line advances and a sublimit up to
$40.0 million for letters of credit. Ciner Wyoming’s obligations under the Ciner Wyoming Credit Facility are unsecured.
The Ciner Wyoming Credit Facility contains various covenants and restrictive provisions that limit (subject to certain
exceptions) Ciner Wyoming’s ability to:
• make distributions on or redeem or repurchase units;
• incur or guarantee additional debt;
• make certain investments and acquisitions;
• incur certain liens or permit them to exist;
• enter into certain types of transactions with affiliates of Ciner Wyoming;
• merge or consolidate with another company; and
• transfer, sell or otherwise dispose of assets.
The Ciner Wyoming Credit Facility also requires quarterly maintenance of a consolidated leverage ratio (as defined in the Ciner
Wyoming Credit Facility) of not more than 3.00 to 1.00 and a consolidated interest coverage ratio (as defined in the Ciner Wyoming
Credit Facility) of not less than 3.00 to 1.00.
The Ciner Wyoming Credit Facility contains events of default customary for transactions of this nature, including (i) failure to
make payments required under the Ciner Wyoming Credit Facility, (ii) events of default resulting from failure to comply with
covenants and financial ratios in the Ciner Wyoming Credit Facility, (iii) the occurrence of a change of control, (iv) the institution of
insolvency or similar proceedings against Ciner Wyoming and (v) the occurrence of a default under any other material indebtedness
Ciner Wyoming may have. Upon the occurrence and during the continuation of an event of default, subject to the terms and conditions
of the Ciner Wyoming Credit Facility, the administrative agent shall, at the request of the Required Lenders (as defined in the Ciner
Wyoming Credit Facility), or may, with the consent of the Required Lenders, terminate all outstanding commitments under the Ciner
Wyoming Credit Facility and may declare any outstanding principal of the Ciner Wyoming Credit Facility debt, together with accrued
and unpaid interest, to be immediately due and payable.
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Under the Ciner Wyoming Credit Facility, a change of control is triggered if Ciner Corp and its wholly-owned subsidiaries,
directly or indirectly, cease to own all of the equity interests, or cease to have the ability to elect a majority of the board of directors (or
similar governing body) of our general partner (or any entity that performs the functions of the Partnership’s general partner). In
addition, a change of control would be triggered if the Partnership ceases to own at least 50.1% of the economic interests in Ciner
Wyoming or cease to have the ability to elect a majority of the members of Ciner Wyoming’s board of managers.
Loans under the Ciner Wyoming Credit Facility bear interest at Ciner Wyoming’s option at either:
•
a Base Rate, which equals the highest of (i) the federal funds rate in effect on such day plus 0.50%, (ii) the
administrative agent’s prime rate in effect on such day or (iii) one-month LIBOR plus 1.0%, in each case, plus an applicable
margin; or
•
Eurodollar Rate plus an applicable margin.
The unused portion of the Ciner Wyoming Credit Facility is subject to an unused line fee ranging from 0.225% to 0.300% per
annum based on Ciner Wyoming’s then current consolidated leverage ratio.
At December 31, 2018, Ciner Wyoming was in compliance with all financial covenants of the Ciner Wyoming Credit Facility.
Ciner Resources Credit Facility
On August 1, 2017, the Partnership entered into a Credit Agreement (the “Ciner Resources Credit Facility”) with each of the
lenders listed on the respective signature pages thereof and PNC Bank, National Association, as administrative agent, swing line
lender and an L/C issuer. The Ciner Resources Credit Facility replaces the former Credit Facility, dated as of July 18, 2013, by and
among the Partnership, the lenders party thereto and Bank of America, N.A., as administrative agent, swing line lender and L/C issuer,
as amended (the “Former Revolving Credit Facility”), which was terminated on August 1, 2017 upon entry into the Ciner Resources
Credit Facility.
The Ciner Resources Credit Facility is a $10.0 million senior secured revolving credit facility with a syndicate of lenders, which
will mature on the fifth anniversary of the closing date of such credit facility. The Ciner Resources Credit Facility provides for revolving
loans to be available to fund distributions on the Partnership’s units and working capital requirements and capital expenditures, to
consummate permitted acquisitions and for all other lawful partnership purposes. The Ciner Resources Credit Facility includes a sublimit
up to $5.0 million for same-day swing line advances and a sublimit up to $5.0 million for letters of credit. The Partnership’s obligations
under the Ciner Resources Credit Facility are guaranteed by each of the Partnership’s material domestic subsidiaries other than Ciner
Wyoming LLC (“Ciner Wyoming”). In addition, the Partnership’s obligations under the Ciner Resources Credit Facility are secured by
a pledge of substantially all of the Partnership’s assets (subject to certain exceptions), including the membership interests held in Ciner
Wyoming by the Partnership.
The Ciner Resources Credit Facility contains various covenants and restrictive provisions that limit (subject to certain
exceptions) the Partnership’s ability to (and the ability of the Partnership’s subsidiaries, including without limitation, Ciner Wyoming
to):
• make distributions on or redeem or repurchase units;
• incur or guarantee additional debt;
• make certain investments and acquisitions;
• incur certain liens or permit them to exist;
• enter into certain types of transactions with affiliates;
• merge or consolidate with another company; and
• transfer, sell or otherwise dispose of assets.
The Ciner Resources Credit Facility also requires quarterly maintenance of a consolidated leverage ratio (as defined in the
Ciner Resources Credit Facility) of not more than 3.00 to 1.00 and a consolidated interest coverage ratio (as defined in the Ciner
Resources Credit Facility) of not less than 3.00 to 1.00.
In addition, the Ciner Resources Credit Facility contains events of default customary for transactions of this nature, including
(i) failure to make payments required under the Ciner Resources Credit Facility, (ii) events of default resulting from failure to comply
with covenants and financial ratios, (iii) the occurrence of a change of control, (iv) the institution of insolvency or similar proceedings
against the Partnership or its material subsidiaries and (v) the occurrence of a default under any other material indebtedness the
Partnership (or any of its subsidiaries) may have, including the Ciner Wyoming Credit Facility. Upon the occurrence and during the
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continuation of an event of default, subject to the terms and conditions of the Ciner Resources Credit Facility, the lenders may
terminate all outstanding commitments under the Ciner Resources Credit Facility and may declare any outstanding principal of the
Ciner Resources Credit Facility debt, together with accrued and unpaid interest, to be immediately due and payable.
Under the Ciner Resources Credit Facility, a change of control is triggered if Ciner Corp and its wholly-owned subsidiaries,
directly or indirectly, cease to own all of the equity interests, or cease to have the ability to elect a majority of the board of directors (or
similar governing body) of, Ciner Holdings or Ciner GP (or any entity that performs the functions of the Partnership’s general
partner). In addition, a change of control would be triggered if the Partnership ceases to own at least 50.1% of the economic interests
in Ciner Wyoming or ceases to have the ability to elect a majority of the members of Ciner Wyoming’s board of managers.
Loans under the Ciner Resources Credit Facility bear interest at our option at either:
• a Base Rate, which equals the highest of (i) the federal funds rate in effect on such day plus 0.50%, (ii) the
administrative agent’s prime rate in effect on such day or (iii) one-month LIBOR plus 1.0%, in each case, plus an applicable
margin; or
• Eurodollar Rate plus an applicable margin.
The unused portion of the Ciner Resources Credit Facility is subject to an unused line fee ranging from 0.225% to 0.300%
based on our then current consolidated leverage ratio.
At December 31, 2018, the Partnership has not drawn upon the $10.0 million of availability under this facility. Additionally, at
December 31, 2018, the Partnership was in compliance with all financial covenants of the Ciner Resources Credit Facility.
WE Soda and Ciner Enterprises Facilities Agreement
On August 1, 2018, Ciner Enterprises, the entity that indirectly owns and controls our General Partner, refinanced its existing
credit agreement and entered into a new facilities agreement, to which WE Soda and Ciner Enterprises (as borrowers), and KEW
Soda, WE Soda, certain related parties and Ciner Enterprises, Ciner Holdings and Ciner Corp (as original guarantors and together with
the borrowers, the “Ciner obligors”), are parties (as amended and restated or otherwise modified, the “Facilities Agreement”), and
certain related finance documents. The Facilities Agreement expires on August 1, 2025.
Even though neither the Partnership nor Ciner Wyoming is a party or a guarantor under the Facilities Agreement, while any
amounts are outstanding under the Facilities Agreement we will be indirectly affected by certain affirmative and restrictive covenants
that apply to WE Soda and its subsidiaries (which include us). Besides the customary covenants and restrictions, the Facilities
Agreement includes provisions that, without a waiver or amendment approved by lenders whose commitments are more than 66-2/3%
of the total commitments under the Facilities Agreement to undertake such action, would (i) prevent transactions with our affiliates
that could reasonably be expected to materially and adversely affect the interests of certain finance parties, (ii) restrict the ability to
amend our limited partnership agreement or the General Partner’s limited liability company agreement or our other constituency
documents if such amendment could reasonably be expected to materially and adversely affect the interests of the lenders to the
Facilities Agreement; and (iii) prevent actions that enable certain restrictions or prohibitions on our ability to upstream cash (including
via distributions) to the borrowers under the Facilities Agreement. In addition, while the General Partner’s interest is not subject to a
lien under the Facilities Agreement, Ciner Enterprises’ ownership in Ciner Holdings, which directly owns the General Partner, is
subject to a lien under the Facilities Agreement, which enables the lenders under the Facilities Agreement to foreclose on such
collateral and take control of the General Partner if any of WE Soda or KEW Soda or certain of their related parties, or Ciner
Enterprises, Ciner Corp or Ciner Holdings is unable to satisfy its respective obligations under the Facilities Agreement.
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10. OTHER NON-CURRENT LIABILITIES
Other non-current liabilities consisted of the following as of December 31:
(In millions)
Reclamation reserve
Derivative instruments and hedges, fair value liabilities
Total
A reconciliation of the Partnership’s reclamation reserve liability is as follows:
(In millions)
Reclamation reserve balance at beginning of year
Accretion expense
Reclamation adjustments (1)
Reclamation reserve balance at end of year
2018
2017
$
$
$
$
$
5.4
5.5
10.9
2018
5.1
0.3
$
$
$
— $
5.4
$
5.1
5.3
10.4
5.5
0.3
(0.7)
5.1
2017
(1) The reclamation adjustments are primarily a result of changes in the self-bond agreement with the Wyoming Department of
Environmental Quality. See Note 14 “Commitments and Contingencies” for additional information on our reclamation reserve.
11. EMPLOYEE COMPENSATION
The Partnership participates in various benefit plans offered and administered by Ciner Corp and is allocated its portions of the
annual costs related thereto. The specific plans are as follows:
Retirement Plans - Benefits provided under the pension plan for salaried employees and pension plan for hourly employees
(collectively, the “Retirement Plans”) are based upon years of service and average compensation for the highest 60 consecutive
months of the employee’s last 120 months of service, as defined. Each plan covers substantially all full-time employees hired before
May 1, 2001. Ciner Corp’s pension plans had a net unfunded liability balance of $56.9 million and $57.4 million at December 31,
2018 and December 31, 2017, respectively. Ciner Corp’s funding policy is to contribute an amount within the range of the minimum
required and the maximum tax-deductible contribution. The Partnership’s allocated portion of the pension plan’s net periodic pension
costs for the twelve months ended December 31, 2018, 2017 and 2016 were $0.4 million, $1.4 million and $2.0 million, respectively.
The decrease in pension costs during the twelve months ended December 31, 2018 was driven by reduced service costs from
retirements and asset gains from the prior year.
Savings Plan - The 401(k) retirement plan (the “401(k) Plan”) covers all eligible hourly and salaried employees. Eligibility is
limited to all domestic residents and any foreign expatriates who are in the United States indefinitely. The plan permits employees to
contribute specified percentages of their compensation, while the Partnership makes contributions based upon specified percentages of
employee contributions. Participants hired on or subsequent to May 1, 2001, will receive an additional contribution from the
Partnership based on a percentage of the participant’s base pay. Contributions made to the 401(k) Plan for the twelve months ended
December 31, 2018, 2017 and 2016 were $2.8 million, $3.7 million and $1.6 million, respectively. The decrease during the twelve
months ended December 31, 2018 was primarily due to the additional profit sharing contributions made during 2017 that did not occur
during the current year.
Postretirement Benefits - Most of the Partnership’s employees are eligible for postretirement benefits other than pensions if
they reach retirement age while still employed.
The postretirement benefits are accounted for by Ciner Corp on an accrual basis over an employee’s period of service. The
postretirement plan, excluding pensions, are not funded, and Ciner Corp has the right to modify or terminate the plan. The post-
retirement plan had a net unfunded liability of $9.9 million and $11.5 million at December 31, 2018 and December 31, 2017,
respectively. The decrease in the obligation as of December 31, 2018 as compared to December 31, 2017 is due to the Ciner Corp
amending its postretirement benefit plan during 2017 to increase eligibility requirements at which participants may begin receiving
benefits, implementing a subsidy rather than a premium for the benefit plan, and eliminating plan eligibility for individuals hired after
December 31, 2016. The result of these changes have resulted in a postretirement (benefit) cost being amortized to the liability
recorded at Ciner Corp during the latter half of 2017 and into 2018.
The Partnership’s allocated portion of postretirement (benefit) cost for the twelve months ended December 31, 2018, 2017 and
2016, were $(2.9) million, $(2.8) million and $1.4 million, respectively.
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12. EQUITY - BASED COMPENSATION
In July 2013, our general partner established the Ciner Resource Partners LLC 2013 Long-Term Incentive Plan (as amended to
date,the “Plan” or “LTIP”). The Plan is intended to provide incentives that will attract and retain valued employees, officers,
consultants and non-employee directors by offering them a greater stake in our success and a closer identity with us, and to encourage
ownership of our common units by such individuals. The Plan provides for awards in the form of common units, phantom units,
distribution equivalent rights (“DERs”), cash awards and other unit-based awards.
All employees, officers, consultants and non-employee directors of us and our parents and subsidiaries are eligible to be
selected to participate in the Plan. As of December 31, 2018, subject to further adjustment as provided in the Plan, a total of 0.7
million common units were available for awards under the Plan. Any common units tendered by a participant in payment of the tax
liability with respect to an award, including common units withheld from any such award, will not be available for future awards
under the Plan. Common units awarded under the Plan may be reserved or made available from our authorized and unissued common
units or from common units reacquired (through open market transactions or otherwise). Any common units issued under the Plan
through the assumption or substitution of outstanding grants from an acquired company will not reduce the number of common units
available for awards under the Plan. If any common units subject to an award under the Plan are forfeited, any common units counted
against the number of common units available for issuance pursuant to the Plan with respect to such award will again be available for
awards under the Plan.
Non-employee Director Awards
During the twelve months ended December 31, 2018, a total of 6,807 common units were granted and fully vested to non-
employee directors, and 7,887 were grants during the twelve months ended December 31, 2017. The grant date average fair value per
unit of these awards was $27.55 and $28.53 for the twelve months ended December 31, 2018 and 2017, respectively. The total fair
value of these awards were approximately $0.2 million during the twelve months ended December 31, 2018 and 2017, respectively.
Time Restricted Unit Awards
We grant restricted unit awards in the form of common units to certain employees which vest over a specified period of time,
usually between one to three years, with vesting based on continued employment as of each applicable vesting date. Award recipients
are entitled to distributions subject to the same restrictions as the underlying common unit. The awards are classified as equity
awards, and are accounted for at fair value at grant date.
The following table presents a summary of activity on the Time Restricted Unit Awards for the years ended December 31:
(Units in whole numbers)
Unvested at the beginning of year
Granted (1)
Vested
Forfeited
Unvested at the end of the year
2018
2017
Grant-Date
Average
Fair Value
per Unit (1)
27.22
$
26.13
25.73
27.12
27.56
$
Number
of Units
94,791
37,914
(42,989)
(18,280)
71,436
Grant-Date
Average
Fair Value
per Unit (1)
22.50
$
28.41
22.50
24.90
27.22
$
Number
of Units
39,170
80,370
(13,055)
(11,694)
94,791
(1) Determined by dividing the aggregate grant date fair value of awards by the number of awards issued. No estimated
forfeiture rate was applied to the awards as of December 31, 2018 as all awards granted are expected to vest.
Total Return Performance Unit Awards
We grant TR Performance Unit Awards to certain employees. The TR Performance Unit Awards represent the right to receive a
number of common units at a future date based on the achievement of market-based performance requirements in accordance with the
TR Unit Performance Award agreement, and also include Distribution Equivalent Rights (“DERs”). DERs are the right to receive an
amount equal to the accumulated cash distributions made during the period with respect to each common unit issued upon vesting.
The TR Performance Unit Awards vest at the end of the performance period, usually between two to three years from the date of the
grant. Performance is measured on the achievement of a specified level of total return, or TR, relative to the TR of a peer group
comprised of other limited partnerships. The potential payout ranges from 0-200% of the grant target quantity and is adjusted based
on our TR performance relative to the peer group. For purposes of the table below the number of units are included at target quantity.
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We utilized a Monte Carlo simulation model to estimate the grant date fair value of TR Performance Unit Awards granted to
employees. These type of awards, with market conditions, require the input of highly subjective assumptions, including expected
volatility and expected distribution yield. Historical and implied volatilities were used in estimating the fair value of these awards.
The following table presents a summary of activity on the TR Performance Unit Awards for the years ended December 31:
(Units in whole numbers)
Unvested at the beginning of year
Granted
Forfeited
Unvested at the end of the year
2018
2017
Grant-Date
Average
Fair Value
per Unit (1)
42.93
$
41.52
41.53
42.22
$
Number
of Units
26,177
33,994
(7,197)
52,974
Grant-Date
Average
Fair Value
per Unit (1)
43.93
$
42.73
43.47
42.93
$
Number of
Units
5,787
22,849
(2,459)
26,177
(1) Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.
Unrecognized Compensation Expense
A summary of the Partnership’s unrecognized compensation expense for its unvested restricted time and performance based
units, and the weighted-average periods over which the compensation expense is expected to be recognized are as following:
Year Ended
December 31, 2018
Year Ended
December 31, 2017
Unrecognized
Compensation
Expense
(In millions)
Weighted
Average to
be
Recognized
(In years)
Unrecognized
Compensation
Expense
(In millions)
$
$
1.3
1.2
2.5
1.60
1.78
$
$
1.7
0.8
2.5
Weighted
Average to
be
Recognized
(In years)
2.03
1.88
Time-based units
Performance-based units
Total
13. ACCUMULATED OTHER COMPREHENSIVE LOSS
Accumulated Other Comprehensive loss
Accumulated other comprehensive loss, attributable to Ciner Resources LP, includes unrealized gains and losses on
derivative financial instruments. Amounts recorded in accumulated other comprehensive loss as of December 31, 2018, 2017 and
2016, and changes within the period, consisted of the following:
(In millions)
Balance at January 1, 2016
Other comprehensive loss before reclassification
Amounts reclassified from accumulated other comprehensive loss
Net current-period other comprehensive income
Balance at December 31, 2016
Other comprehensive loss before reclassification
Amounts reclassified from accumulated other comprehensive loss
Net current-period other comprehensive loss
Balance at December 31, 2017
Other comprehensive loss before reclassification
Amounts reclassified from accumulated other comprehensive loss
Net current period other comprehensive loss
Balance at December 31, 2018
82
Gains and Losses
on Cash Flow
Hedges
$
$
$
$
$
(2.1)
(0.5)
1.0
0.5
(1.6)
(2.8)
0.7
(2.1)
(3.7)
(0.6)
0.5
(0.1)
(3.8)
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Other Comprehensive Income/(Loss)
Other comprehensive income/(loss), including portion attributable to non-controlling interest, is derived from adjustments to
reflect the unrealized gains/(loss) on derivative financial instruments.
The components of other comprehensive income/(loss) consisted of the following for the years ended December 31:
(In millions)
Unrealized gain/(loss) on derivatives:
Mark to market adjustment on interest rate swap contracts
Mark to market adjustment on natural gas forward contracts
Income/(loss) on derivative financial instruments
Reclassifications for the period
2018
2017
2016
$
$
(0.2) $
—
(0.2) $
$
0.4
(4.4)
(4.0) $
0.4
0.5
0.9
The components of other comprehensive income/(loss), attributable to Ciner Resources LP, that have been reclassified
consisted of the following for the years ended December 31:
(In millions)
2018
2017
2016
Affected Line Items on
the Consolidated
Statements of Operations
and Comprehensive
Income
Details about other comprehensive income/(loss) components:
Gains and losses on cash flow hedges:
Interest rate swap contracts
Natural gas forward contracts
Total reclassifications for the period
14. COMMITMENTS AND CONTINGENCIES
Lease and License Commitments
$ — $
$
$
0.5
0.5
$
$
0.2
0.5
0.7
$
$
$
0.4
Interest expense
0.6 Cost of products sold
1.0
The Partnership leases and licenses mineral rights from the U.S. Bureau of Land Management, the state of Wyoming, Rock
Springs Royalty Company, LLC, an affiliate of Anadarko Petroleum, and other private parties. All of these leases and the licnese
provide for royalties based upon production volume. The remaining leases provide for minimum lease payments as detailed in the
table below. The Partnership has a perpetual right of first refusal with respect to these leases and license and intends to continue
renewing the leases as has been its practice.
The Partnership entered into a 10-year rail yard switching and maintenance agreement with a third party, Watco Companies,
LLC (“Watco”), on December 1, 2011. Under the agreement, Watco provides rail-switching services at the Partnership’s rail yard. The
Partnership’s rail yard is constructed on land leased by Watco from Rock Springs Grazing Association and on land by which Watco
holds an easement from Anadarko Land Corp; the Rock Springs Grazing Association land lease is renewable every 5 years for a total
period of 30 years, while the Anadarko Land Corp. easement lease is perpetual. The Partnership has an option agreement with Watco
to assign these leases to the Partnership at any time during the land lease term. An immaterial annual rental is paid under the easement
and lease.
The Partnership entered into two track lease agreements, collectively, not to exceed 10 years with Union Pacific for certain
rail tracks used in connection with the rail yard.
As of December 31, 2018, the total minimum contractual rental commitments under the Partnership’s various operating
leases, including renewal periods, are as follows:
(In millions)
2019
2020
2021
2022
2023
Thereafter
Total
Leased
Land
0.10
0.10
0.10
0.10
0.10
1.30
1.8
$
Track
Leases
0.10
0.10
0.03
—
—
—
$ 0.2
Total
Minimum
Lease
Payments
0.20
0.20
0.13
0.10
0.10
1.30
2.0
$
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Ciner Corp typically enters into operating lease contracts with various lessors for railcars to transport product to customer
locations and warehouses. Rail car leases under these contractual commitments range for periods from one to ten years. Ciner Corp's
obligation related to these rail car leases are $11.1 million in 2019, $8.5 million in 2020, $6.0 million in 2021, $3.8 million in 2022,
$1.4 million in 2023 and $4.7 million in 2024 and thereafter. Total lease expense allocated to the Partnership from Ciner Corp was
approximately $13.9 million, $14.6 million and $14.5 million for the years ended December 31, 2018, 2017 and 2016, respectively,
and is recorded in cost of products sold.
Purchase Commitments
We have physical and financial natural gas supply contracts to mitigate volatility in the price of natural gas. As of
December 31, 2018, these contracts totaled approximately $56.0 million for the purchase of a portion of our natural gas requirements
over approximately the next five years. The supply purchase agreements have specific commitments of $21.3 million in 2019, $15.8
million in 2020, $10.0 million in 2021, $5.0 million in 2022 and $3.9 million in 2023. We have a separate contract that expires in 2021
and renews annually thereafter, for transportation of natural gas with an average annual cost of approximately $3.8 million per year.
Legal Proceedings
From time to time we are party to various claims and legal proceedings related to our business. Although the outcome of
these proceedings cannot be predicted with certainty, management does not currently expect any of the legal proceedings we are
involved in to have a material effect on our business, financial condition and results of operations. We cannot predict the nature of any
future claims or proceedings, nor the ultimate size or outcome of existing claims and legal proceedings and whether any damages
resulting from them will be covered by insurance.
Litigation Settlement
On February 2, 2016, amended on January 3, 2017, Ciner Wyoming filed suit against Rock Springs Royalty Company, LLC
(“RSRC”) in the Third Judicial District Court in Sweetwater County, Wyoming, Case No. C-16-77-L, seeking, among other things, to
recover approximately $32 million in royalty overpayments. The royalty payments arose under our license with RSRC, an affiliate of
Anardarko Petroleum Corporation, to mine sodium minerals from lands located in Sweetwater County, Wyoming (“License”). The
License sets the applicable royalty rate based on a most favored nation clause, where either the royalty rate is set at the same royalty
rate we pay to other licensors in Sweetwater County for sodium minerals, or, if certain conditions are met, the royalty rate is set by the
rate paid by a third party to Anadarko Petroleum Corporation under a separate license. In the lawsuit, we claim that RSRC has, for at
least the last ten years, been charging an arbitrarily high royalty rate in contradiction of the License terms. In addition, we sought a
modification of the expiration term of the License land-lease between Ciner Wyoming and RSRC to those terms granted to other
licensors in accordance with the most favored nation clause.
On June 28, 2018, RSRC and Ciner Wyoming signed a Settlement Agreement and Release (the “Settlement Agreement”) which
among other things (i) required RSRC to pay Ciner Wyoming $27.5 million which was received on July 2, 2018, and (ii) concurrently
amended selected sections of the License land-lease including among other things, (a) extension of the term of the License Agreement
to July 18, 2061 and for so long thereafter as Ciner Wyoming continuously conducts operations to mine and remove sodium minerals
from the licensed premises in commercial quantities; and (b) revises the production royalty rate for each sale of sodium mineral
products produced from ore extracted from the licensed premises at the royalty rate of eight percent (8%) of the net sales of such
sodium mineral products. There are no unresolved conditions or uncertainties associated with the Settlement Agreement and
management determined the $27.5 million settlement payment was related to the historical overpayment of royalties.
Off-Balance Sheet Arrangements
We have a self-bond agreement with the Wyoming Department of Environmental Quality under which we commit to pay
directly for reclamation costs at our Green River, Wyoming plant site. The amount of the bond was $32.9 million as of December 31,
2018 and December 31, 2017, which is the amount we would need to pay the State of Wyoming for reclamation costs if we cease
mining operations currently. The amount of this self-bond is subject to change upon periodic re-evaluation by the Land Quality
Division.
15. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
Ciner Corp is the exclusive sales agent for the Partnership and through its membership in ANSAC, Ciner Corp is responsible
for promoting and increasing the use and sale of soda ash and other refined or processed sodium products produced. ANSAC operates
on a cooperative service-at-cost basis to its members such that typically any annual profit or loss is passed through to the members. In
the event an ANSAC member exits or the ANSAC cooperative is dissolved, the exiting members are obligated for their respective
portion of the residual net assets or deficit of the cooperative. On November 9, 2018, Ciner Corp delivered a notice to terminate its
membership in ANSAC. The termination from ANSAC will be effective as of December 31, 2021. As of December 31, 2018, we have
not recognized an asset or liability related to its exit from ANSAC as such an amount is not currently probable or estimable.
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All actual sales and marketing costs incurred by Ciner Corp are charged directly to the Partnership. Selling, general and
administrative expenses also include amounts charged to the Partnership by its affiliates principally consisting of salaries, benefits,
office supplies, professional fees, travel, rent and other costs of certain assets used by the Partnership. On October 23, 2015, the
Partnership entered into a Services Agreement (the “Services Agreement”), among the Partnership, our general partner and Ciner
Corp. Pursuant to the Services Agreement, Ciner Corp has agreed to provide the Partnership with certain corporate, selling, marketing,
and general and administrative services, in return for which the Partnership has agreed to pay Ciner Corp an annual management fee
and reimburse Ciner Corp for certain third-party costs incurred in connection with providing such services. In addition, under the
limited liability company agreement governing Ciner Wyoming, Ciner Wyoming reimburses us for employees who operate our assets
and for support provided to Ciner Wyoming. These transactions do not necessarily represent arm's length transactions and may not
represent all costs if the Company operated on a standalone basis.
The total selling, general and administrative costs charged to the Partnership by affiliates were as follows:
(In millions)
Ciner Corp
ANSAC (1)
Total selling, general and administrative expenses - affiliates
Years Ended December 31,
2018
2017
2016
14.6
3.0
17.6
$
14.5
2.4
16.9
$
14.9
3.8
18.7
$
(1) ANSAC allocates its expenses to its members using a pro rata calculation based on sales.
Cost of products sold includes an allocation of Ciner Corp's railcar lease expense (refer to Note 14 “Commitments and
Contingencies”) and logistics services charged by ANSAC. For the years ended December 31, 2018, 2017 and 2016 these ANSAC
logistics costs were zero, $19.8 million and $3.3 million, respectively. When we elect to use ANSAC to provide freight services for
our other non-ANSAC international sales, ANSAC separately and directly charges the Partnership for such services. During the year
ended 2018 we did not use ANSAC for non-ANSAC international sales. The decrease in freight costs charged by ANSAC was due to
a decrease in non-ANSAC international sales, to CIDT, during the year ended December 31, 2018 compared to 2017. There were no
sales to CIDT during the year ended December 31, 2018, as the previous contract concluded in the 2017 year.
Net sales to affiliates were as follows:
(In millions)
ANSAC
CIDT
Total
Years Ended December 31,
2018
2017
2016
$
$
253.3
—
253.3
$
$
222.2
82.3
304.5
$
$
262.2
9.0
271.2
The Partnership had accounts receivable from affiliates and due to affiliates as follows:
(In millions)
ANSAC
CIDT
Ciner Resources Corporation
Total
As of December 31,
2018
2017
2018
2017
Accounts receivable from
affiliates
Due to affiliates
48.7
7.1
14.3
70.1
$
$
57.7
32.9
7.7
$
98.3
$
0.7
—
1.9
2.6
$
$
1.3
—
1.7
3.0
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16. MAJOR CUSTOMERS AND SEGMENT REPORTING
Our operations are similar in geography, nature of products we provide, and type of customers we serve. As the Partnership
earns substantially all of its revenues through the sale of soda ash mined at a single location, we have concluded that we have one
operating segment for reporting purposes.
The net sales by geographic area consisted of the following:
(In millions)
Domestic
International
ANSAC
CIDT
Other
Total international
Total net sales
Years Ended December 31,
2018
2017
2016
$
233.4
$
192.8
$
192.6
253.3
—
—
253.3
222.2
82.3
—
304.5
$
486.7
$
497.3
$
262.2
9.0
11.4
282.6
475.2
17. FAIR VALUE MEASUREMENTS
The Partnership measures certain financial and non-financial assets and liabilities at fair value on a recurring basis. Fair value
is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market
in an orderly transaction between market participants on the measurement date. Fair value disclosures are reflected in a three-level
hierarchy, maximizing the use of observable inputs and minimizing the use of unobservable inputs.
A three-level valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the
measurement date. The three levels are defined as follows:
Level 1-inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active
market.
Level 2-inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or
model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability.
Level 3-inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or
liability.
Financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, derivative
financial instruments and long-term debt. The carrying amounts of cash and cash equivalents, accounts receivable and accounts
payable approximate their fair value because of the nature of such instruments. Our long-term debt and derivative financial
instruments are measured at their fair values with Level 2 inputs based on quoted market values for similar but not identical financial
instruments.
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
Derivative Financial Instruments
We have interest rate swap contracts, designated as cash flow hedges, to mitigate our exposure to possible increases in
interest rates. The swap contracts consist of four individual $12.5 million swaps with an aggregate notional value of $50.0 million at
December 31, 2018 and have various maturities through 2022. Our previous interest rate swap contracts, with an aggregate notional
value of $70.0 million as of December 31, 2017, expired on July 18, 2018.
We enter into natural gas financial forward contracts, designated as cash flow hedges, to mitigate volatility in the price of
natural gas related to a portion of the natural gas we consume. These contracts generally have various maturities through 2023. These
contracts had an aggregate notional value of $41.2 million and $37.0 million at December 31, 2018 and December 31, 2017,
respectively.
The following table presents the fair value of derivative assets and liability derivatives and the respective locations on our
consolidated balance sheets as of December 31, 2018 and December 31, 2017:
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(In millions)
Derivatives designated as hedges:
Assets
Liabilities
2018
2017
2018
2017
Balance
Sheet
Location
Fair
Value
Balance
Sheet
Location
Fair
Value
Balance Sheet
Location
Fair
Value
Balance Sheet
Location
Fair
Value
Interest rate swap contracts - current
$
—
$
—
Accrued
Expenses
$
0.3
Accrued
Expenses
$
—
Natural gas forward contracts - current
Other
Current
Assets
Natural gas forward contracts - non-current
Total fair value of derivatives designated
as hedging instruments
—
—
—
$
Accrued
Expenses
Other non-
current
liabilities
—
—
—
$
Accrued
Expenses
Other non-
current
liabilities
1.6
5.5
1.9
5.3
$
7.4
$
7.2
Financial Assets and Liabilities not Measured at Fair Value
The carrying value of our long-term debt materially reflects the fair value of our long-term debt as rates are variable and its
key terms are similar to indebtedness with similar amounts, durations and credit risks. See Note 9 “Debt” for additional information on
our debt arrangements.
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18. REVENUE
We have one reportable segment and our revenue is derived from the sale of soda ash which is our sole and primary good and service.
We account for revenue in accordance with ASC 606, Revenue from Contracts with Customers, which we adopted on January 1, 2018,
using the modified retrospective method.
Performance Obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer,
and is the unit of account in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and
recognized as revenue when, or as, the performance obligation is satisfied. At contract inception, we assess the goods and services
promised in contracts with customers and identify performance obligations for each promise to transfer to the customer, a good or
service that is distinct. To identify the performance obligations, the Partnership considers all goods and services promised in the
contract regardless of whether they are explicitly stated or are implied by customary business practices. From its analysis, the
Partnership determined that the sale of soda ash is currently its only performance obligation. Many of our customer volume
commitments are short-term and our performance obligations for the sale of soda ash are generally limited to single purchase orders.
When performance obligations are satisfied. Substantially all of our revenue is recognized at a point-in-time when control of
goods transfers to the customer.
Transfer of Goods. The Partnership uses standard shipping terms across each customer contract with very few exceptions.
Shipments to customers are made with terms stated as Free on Board (“FOB”) Shipping Point. Control typically transfers
when goods are delivered to the carrier for shipment, which is the point at which the customer has the ability to direct the use
of and obtain substantially all remaining benefits from the asset.
Payment Terms. Our payment terms vary by the type and location of our customers. The term between invoicing and when
payment is due is not significant and consistent with typical terms in the industry.
Variable Consideration. We recognize revenue as the amount of consideration that we expect to receive in exchange for
transferring promised goods or services to customers. We do not adjust the transaction price for the effects of a significant
financing component, as the time period between control transfer of goods and services and expected payment is one year or
less. At the time of sale, we estimate provisions for different forms of variable consideration (discounts, rebates, and pricing
adjustments) based on historical experience, current conditions and contractual obligations, as applicable. The estimated
transaction price is typically not subject to significant reversals. We adjust these estimates when the most likely amount of
consideration we expect to receive changes, although these changes are typically immaterial.
Returns, Refunds and Warranties. In the normal course of business, the Partnership does not accept returns, nor does it
typically provide customers with the right to a refund.
Freight. In accordance with ASC 606, the Partnership made a policy election to treat freight and related costs that occur after
control of the related good transfers to the customer as fulfillment activities instead of separate performance obligations.
Therefore freight is recognized at the point in which control of soda ash has transfered to the customer.
Revenue disaggregation. In accordance with ASC 606-10-50, the Partnership disaggregates revenue from contracts with customers
into geographical regions. The Partnership determined that disaggregating revenue into these categories achieved the disclosure
objectives to depict how the nature, timing, amount and uncertainty of revenue and cash flows are affected by economic factors. Refer
to Note 16, “Major Customers and Segment Reporting” for revenue disaggregated into geographical regions.
Contract Balances. The timing of revenue recognition, billings and cash collections results in billed receivables, unbilled receivables
(contract assets), and customer advances and deposits (contract liabilities).
Contract Assets. At the point of shipping, the Partnership has an unconditional right to payment that is only dependent on the
passage of time. In general, customers are billed and a receivable is recorded as goods are shipped. These billed receivables
are reported as “Accounts Receivable, net” on the Consolidated Balance Sheet as of December 31, 2018. There were no
contract assets as of December 31, 2018 or as of the date of adoption of ASC 606.
Contract Liabilities. There may be situations where customers are required to prepay for freight and insurance prior to
shipment. The Partnership has elected the practical expedient for its treatment of freight and therefore, such prepayments are
considered a part of the single obligation to provide soda ash. In such instances, a contract liability for prepaid freight will
be recorded. For the twelve months ended December 31, 2018, there were no customers that required prepaid freight. There
were no contract liabilities as of December 31, 2018 or as of the date of adoption of ASC 606.
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Practical and Expedients Exceptions
Incremental costs of obtaining contracts. We generally expense costs related to sales, including sales force salaries and
marketing expenses, when incurred because the amortization period would have been one year or less. These costs are
recorded within sales and marketing expenses.
Unsatisfied performance obligations. We do not disclose the value of unsatisfied performance obligations for contracts with
an original expected length of one year or less.
19. SUBSEQUENT EVENTS
Distribution Declaration
On February 14, 2019, the members of the Board of Managers of Ciner Wyoming, approved a cash distribution to the
members of Ciner Wyoming in the aggregate amount of $20.0 million. This distribution was payable and paid on February 15, 2019.
On January 31, 2019, the Partnership declared a cash distribution approved by the board of directors of its general partner.
The cash distribution for the fourth quarter of 2018 of $0.567 per unit was paid on February 28, 2019 to unitholders of record on
February 11, 2019.
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Management’s Annual Report on Internal Control over Financial Reporting
The Partnership’s management is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control system is designed under the supervision of
the Partnership’s principal executive officer and principal financial officer to provide reasonable assurance to the Partnership’s
management and our general partner’s Board of Directors regarding the preparation and fair presentation of published financial
statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2018. In
making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in its 2013 Internal Control—Integrated Framework. Based on this assessment, our management has
concluded that as of December 31, 2018 our internal control over financial reporting is effective.
Evaluation of Disclosure Controls and Procedures
Based on an evaluation under the supervision and with the participation of the Partnership’s management, the Partnership’s
principal executive officer and principal financial officer have concluded that the Partnership’s disclosure controls and procedures
as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were effective as of December 31, 2018 to ensure that
information required to be disclosed by the Partnership in reports that it files or submits under the Exchange Act is (i) recorded,
processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms
and (ii) accumulated and communicated to the Partnership’s management, including its principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in the Partnership’s internal control over financial reporting during the fourth quarter of fiscal year
December 31, 2018, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15
and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Partnership’s
internal control over financial reporting.
Attestation Report of Registered Public Accounting Firm
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Partners of
Ciner Resources LP
Atlanta, Georgia
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Ciner Resources LP (a majority-owned subsidiary of Ciner Wyoming
Holding Co.) and its subsidiary (the “Partnership”) 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 Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31,
2018 based on criteria established Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the consolidated financial statements as of and for the year ended December 31, 2018, of the Partnership and our report dated March
8, 2019 expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Partnership’s management is responsible for maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal
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control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to
be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of
the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
March 8, 2019
We have served as the Partnership’s auditor since 2008.
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Item 9B. Other Information
Not applicable
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Item 10. Directors, Executive Officers and Corporate Governance
PART III
Our general partner manages our operations and activities on our behalf through its directors and officers. Ciner
Holdings, an indirect, wholly-owned subsidiary of Ciner Enterprises, owns all of the membership interests in our general
partner and has the right to appoint the entire board of directors of our general partner, including our independent directors. Our
unitholders are not entitled to elect the directors of our general partner’s board of directors or to directly or indirectly participate
in our management or operations. In addition, our general partner owes certain duties to our unitholders as well as a fiduciary
duty to its owners. References to “our directors” or “our executive officers” refer to the directors or executive officers of our
general partner.
The Board of Directors of Our General Partner
The board of directors of our general partner (the “Board”) oversees our operations. The Board’s directors hold
office until their successors have been elected or qualified or until the earlier of their death, resignation, removal or
disqualification. Executive officers serve at the discretion of the Board. There are no family relationships among any of our
directors or executive officers. The Board held seven meetings during the fiscal year ended December 31, 2018.
Our common units are traded on the NYSE. The NYSE does not require publicly traded partnerships listed on its
exchange, such as ours, to have, and we do not intend to have, a majority of independent directors on the Board or to establish a
compensation committee or a nominating and corporate governance committee.
At the date of this Report, the Board consists of the following members: Kirk H. Milling, Atilla Ciner, Do an Pençe,
O uz Erkan, Michael E. Ducey, Thomas W. Jasper and Alec G. Dreyer. The Board has determined that each of Michael E.
Ducey, Thomas W. Jasper and Alec G. Dreyer qualifies as an independent director under applicable SEC rules and regulations
and the rules of the NYSE. Under the NYSE's listing standards, a director will not be deemed independent unless the Board
affirmatively determines that the director has no material relationship with us. Based upon information requested from and
provided by each director concerning his or her background, diversity, personal characteristics, business experience and
affiliations, including commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, the
Board has determined that each of its independent directors has no material relationship with Ciner Enterprises or us, either
directly or as a partner, stockholder or officer of an organization that has a relationship with us, and is therefore independent
under the NYSE's listing standards and applicable SEC rules and regulations.
Director Experience and Qualifications
In identifying and evaluating candidates as possible director-nominees of our general partner, Ciner Holdings will
assess the experience and personal characteristics of the possible nominee against the following individual qualifications,
which Ciner Holdings may modify from time to time:
•
•
•
•
•
•
•
•
•
•
possesses integrity, competence, insight, creativity and dedication together with the ability to work with
colleagues while challenging one another to achieve superior performance;
has attained prominence in his or her field of endeavor;
possesses broad business experience;
has ability to exercise sound business judgment;
is able to draw on his or her past experience relative to significant issues facing us;
has experience in our industry or in another industry or endeavor with practical application to our needs;
has sufficient time and dedication for preparation as well as participation in board and committee
deliberations;
has no conflict of interest;
meets such standards of independence and financial knowledge as may be required or desirable; and
possesses attributes deemed appropriate given the then current needs of the board.
Executive Officers of Our General Partner
The Board appoints all of our executive officers, all of whom are employed by Ciner Corp and devote such portion of
their productive time to our business and affairs as is required to manage and conduct our operations. Our executive officers
manage the day-to-day affairs of our business and conduct our operations. We will also utilize a significant number of
employees of Ciner Corp to operate our business and provide us with general and administrative services.
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Directors, Executive Officers and Other Significant Employees of Our General Partner
The following table shows information for the current directors and executive officers of our general partner:
Name
Kirk H. Milling
Nicole C. Daniel
Chris L. DeBerry
Eduard Freydel
Atilla Ciner
Michael E. Ducey
Thomas W. Jasper
Alec G. Dreyer
Age
52
Position
Chairman of the Board, President and Chief Executive Officer of our General Partner
50
51
34
35
50
41
70
70
60
Vice President, General Counsel and Secretary of our General Partner
Principal Financial Officer and Chief Accounting Officer of our General Partner
Vice President, Finance of our General Partner
Director of our General Partner
Director of our General Partner
Director of our General Partner
Director of our General Partner
Director of our General Partner
Director of our General Partner
Kirk H. Milling was appointed as a director and President and Chief Executive Officer of our general partner in April
2013, and as Chairman of the Board in October 2015. He has served in positions of increasing responsibility for Ciner since
1999. He has also been a Director of American Natural Soda Ash Corporation (ANSAC) since 2001. Mr. Milling also served as
Chairman of ANSAC from 2011 to 2013 and during 2017. Mr. Milling has a Bachelor of Science in Biochemistry from Texas
A&M University and a Master of Business Administration from the University of Connecticut. We believe that Mr. Milling’s
many years of senior level experience in the chemical industry provide him with a deep understanding of Ciner Wyoming’s
industry, business needs and strategies, and qualify him to serve as a member of the board of directors and as President and
Chief Executive Officer of our general partner.
Nicole C. Daniel was appointed Vice President, General Counsel and Secretary of our general partner in July 2013. She
has been a director of ANSAC since October 2016. Prior to joining our general partner, from 2002 to 2013, Ms. Daniel was
with Albemarle Corporation, a specialty chemical company, most recently serving as Vice President, Deputy General Counsel
and Chief Compliance Officer. Ms. Daniel received a Bachelor of Arts degree in Government from The College of William and
Mary and a Juris Doctor from Indiana University Maurer School of Law.
Chris L. DeBerry was appointed Chief Accounting Officer of our general partner in July 2017 and principal financial
officer of our general partner effective January 1, 2019. Mr. DeBerry served as Controller of the Partnership from October 2014
to July 2017. Prior to joining the Partnership, Mr. DeBerry served as the Assistant Corporate Controller with Axiall Corporation
from September 2006 to August 2014. Mr. DeBerry earned his Masters of Accounting and Bachelors of Science in Accounting
degrees from Florida State University and is a certified public accountant in the state of Georgia. We believe that Mr. DeBerry's
financial acumen and knowledge of business matters provide him with the necessary skills to be Chief Accounting Officer of
our general partner.
Eduard Freydel was appointed Vice President, Finance of our general partner effective January 1, 2019. Mr. Freydel has
served as Director, Strategic Development of the General Partner since he joined the Partnership on April 1, 2015. Prior to
joining the Partnership, Mr. Freydel worked as an Associate at Evercore Partners from 2011-2015. Prior to working at Evercore,
Mr. Freydel was an Asst. Vice President at Chaffe & Associates. Mr. Freydel earned his BS in Finance and Sociology from
Tulane University in 2006. He is also a Chartered Financial Analyst (CFA).
Atilla Ciner was appointed as a director of our general partner in September 2017. Mr. Ciner is also Vice President of the
Ciner Group. Most recently, he was Vice President at Eti Soda from 2016 to June 2017. Previously, he was Chairman and
President of Ciner Yapi Teknik, a construction planning, engineering and excavation business for the mining industry in Turkey
from 2012 through 2016. Mr. Ciner is the son of Turgay Ciner, the Chairman and ultimate beneficial owner of the Ciner Group.
Mr. Atilla Ciner holds a Bachelor’s degree in Journalism from Yeditepe University and is fluent in both Turkish and English
languages. We believe that Mr. Ciner’s acumen and knowledge of business matters provide him with the necessary skills to be a
member of the board of directors of our general partner.
Do an Pençe was reappointed as a director of our general partner in April 2017. He previously served as director of our
general partner from October 2015 to July 2016. Mr. Pençe has also been a board member responsible for finance and strategy
for Park Holding A.S. of the Ciner Group since December 2009, and he was the Group CFO of Park Holding from December
2009 to March 2016. Prior to joining Park Holding, Mr. Pençe served as Executive Vice President of Credits VakifBank A.S.,
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one of the largest banks in Turkey. Mr. Pençe holds a Bachelor’s degree in Political Science from Istanbul University. We
believe that Mr. Pençe’s financial acumen and knowledge of business matters provide him with the necessary skills to be a
member of the board of directors of our general partner.
O uz Erkan was appointed as a director of our general partner in July 2016. Since November 2015, Mr. Erkan has served
as Director of International Operations & Coordination at our ultimate U.S. parent company, Ciner Enterprises Inc. From
January 2015 to November 2015, Mr. Erkan served as Director for Ciner Group in London, UK. Prior to this assignment, from
June 2012 until January 2015 Mr. Erkan served as General Manager of Kasimpasa AS, a subsidiary of Ciner Group, and from
2009 to 2012 he served as a Project Director for Middle East and North Africa. Mr. Erkan holds a Bachelor’s Degree in
Marketing and International Business from Northwest Missouri State University. We believe that Mr. Erkan’s familiarity with
Ciner Group’s businesses and his business acumen provide him with the necessary skills to be a member of the board of
directors of our general partner.
Michael E. Ducey was appointed as a director of our general partner in September 2014 and as lead independent director
in February 2017. Mr. Ducey is the retired President, CEO and Director of Compass Minerals International, Inc., the second
largest salt producer in North America and the largest in the U.K. Prior to joining Compass Minerals, he was a 30-year veteran
of Borden Chemical, Inc., where he worked in various management, sales, marketing, planning and commercial development
roles culminating in President, CEO and Director. He serves on the board of HaloSource, Inc., Fenner PLC and Apollo Global
Management LLC. Mr. Ducey is a graduate of Otterbein College, where he earned a Bachelor of Arts; he earned a Master of
Business Administration from the University of Dayton. We believe that Mr. Ducey’s comprehensive corporate background and
experience in the mining industry, and his experience serving on various boards and committees, add significant value to the
board of directors of our general partner.
Thomas W. Jasper was appointed as a director of our general partner in January 2016 and as chair of the conflicts
committee in February 2017. Mr. Jasper has served as Managing Partner of Manursing Partners, LLC, since 2011, and also
previously served as Chief Executive Officer of Primus Guaranty, Ltd. from 2001 to 2010. Prior to joining Primus, Mr. Jasper
served for 17 years as a key executive of Salomon Brothers, Inc. and its successor companies. Mr. Jasper’s accomplishments at
Salomon included: establishing its interest rate swap business, running its Debt Capital Markets platform, serving as Chief
Operating Officer of the Asia Pacific Region based in Hong Kong and as Global Treasurer. In 1984 while at Salomon, Mr.
Jasper co-founded the International Swaps and Derivatives Association and served as its first Co-Chairman. Mr. Jasper
currently serves on the Board of Directors and as Chair of the Audit Committee of the Blackstone funds Blackstone/GSO
Senior Loan Fund, Blackstone/GSO Long-Short Credit Income Fund, Blackstone/GSO Strategic Credit Fund, Blackstone/GSO
Floating Rate Enhanced Income Fund and Blackstone Real Estate Investment Fund. Mr. Jasper also serves on the board of three
non-profits: Phoenix House Foundation, where he is Chairman of the Board; Wellspring Foundation and the SMU Cox School
of Business. He received his BBA from Southern Methodist University and his MBA from the University of Texas. We believe
that Mr. Jasper’s financial acumen and knowledge of business matters provide him with the necessary skills to be a member of
the board of directors of our general partner.
Alec G. Dreyer was appointed director to our General Partner in July 2018. Mr. Dreyer has served since 2012 as a Senior
Advisor to IFM Investors, a leading investment management company with over $75 billion under management. He also served
as Chairman of the Board of Managers and Audit Committee Chair for Essential Power Investments LLC, an IFM Investors
holding prior to its sale in 2016. Mr. Dreyer served as Chairman of the Board, Lead Director and Audit Committee Chair for
Comverge, Inc., a clean energy company when it was listed on NASDAQ. Mr. Dreyer also served on the Board of Directors for
EcoSecurities Group plc when it was listed on the London Stock Exchange. Prior to his Board tenure, Mr. Dreyer has served as
Chief Executive Officer of the Port of Houston Authority, one of the nation’s leading ports. He also was Chief Executive
Officer for Horizon Wind Energy LLC, when it was a wholly-owned subsidiary of Goldman Sachs & Co. He also has held
senior leadership positions at Dynegy Inc., Illinova Corporation, and Illinois Power Company. Mr. Dreyer started his career
with Price Waterhouse in St. Louis. Mr. Dreyer is a Certified Public Accountant, is a Phi Beta Kappa graduate in Political
Science and Pre-Law from the University of Illinois, and holds a Masters of Business Administration Degree with distinction
from Washington University in St. Louis. We believe that Mr. Dreyer’s previous leadership positions and knowledge of
business matters provide him with the necessary skills to be a member of the board of directors of our general partner.
Committees of the Board of Directors
The Board has established an audit committee and a conflicts committee. Michael E. Ducey, Thomas W. Jasper and
Alec G. Dreyer are the members of the audit committee, and Thomas W. Jasper serves as chairperson. Michael E. Ducey,
Thomas W. Jasper and Alec G. Dreyer are the members of our conflicts committee; and Thomas W. Jasper serves as the
chairman. The Board will determine whether to refer a matter to the conflicts committee on a case-by-case basis in accordance
with our partnership agreement. We do not have a compensation committee, but rather the Board approves equity grants to and
compensation of our directors, and Ciner Corp approves compensation of our officers subject to our review and approval under
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the Services Agreement. We do not have a nominating and corporate governance committee in view of the fact that Ciner
Holdings, which owns our general partner, controls appointments to the Board.
Audit Committee
We are required to have an audit committee of at least three members who meet the independence and experience
standards established by the NYSE and the Exchange Act. In accordance with the rules of the NYSE, we have appointed three
independent directors of the audit committee. The Board has determined that each director appointed to the audit committee is
“financially literate,” and Michael E. Ducey and Alec G. Dreyer, who are members of the audit committee, and Thomas W.
Jasper, who serves as chairperson of the audit committee, each has “accounting or related financial management expertise” and
constitutes an “audit committee financial expert” in accordance with SEC and NYSE rules and regulations. The audit
committee operates pursuant to a written charter, an electronic copy of which is available on our website at www.ciner.us.com
under the Investor Overview - Governance Documents tab.
The audit committee assists the Board in its oversight of the integrity of our financial statements and our compliance
with legal and regulatory requirements and partnership policies and controls. The audit committee operates under a written
charter and has been given the sole authority to (1) retain and terminate our independent registered public accounting firm, (2)
approve all auditing services and related fees and the terms thereof performed by our independent registered public accounting
firm, (3) establish policies and procedures for pre-approval of all audit, non-audit and internal control related services to be
rendered by our independent registered public accounting firm and (4) review and evaluate all related party transactions or
dealings with parties related to us and disclosures of such transactions or dealings in our annual report on Form 10-K. The audit
committee is also responsible for confirming the independence and objectivity of our independent registered public accounting
firm. Our independent registered public accounting firm has been given unrestricted access to the audit committee and our
management, as necessary. The audit committee met eight times during the fiscal year ended December 31, 2018.
Conflicts Committee
The conflicts committee reviews specific matters that may involve conflicts of interest between our general partner or
any of its affiliates, on the one hand, and us, our partners and any of our subsidiaries, on the other hand, in accordance with the
terms of our partnership agreement. The conflicts committee operates pursuant to a written charter, an electronic copy of which
is available on our website at www.ciner.us.com under the Investor Overview - Governance Documents tab. The members of
the conflicts committee may not be officers or employees of our general partner or directors, officers or employees of its
affiliates, including Ciner Holdings; may not hold an ownership interest in our general partner or its affiliates other than
common units or awards under any long-term incentive plan, equity compensation plan or similar plan implemented by our
general partner or the partnership; and must meet the independence standards established by the NYSE and the Exchange Act
to serve on an audit committee of a board of directors. Any matters approved by the conflicts committee will be conclusively
deemed to be in our best interest, approved by all of our partners and not a breach by our general partner of any duties it may
owe us or our unitholders. Any unitholder challenging any matter approved by the conflicts committee will have the burden of
proving that the members of the conflicts committee did not believe that the matter was in the best interests of our partnership.
Moreover, any acts taken or omitted to be taken in reliance upon the advice or opinions of experts such as legal counsel,
accountants, appraisers, management consultants and investment bankers, where our general partner (or any members of the
Board including any member of the conflicts committee) reasonably believes the advice or opinion to be within such person's
professional or expert competence, shall be conclusively presumed to have been done or omitted in good faith. The conflicts
committee did not meet in 2018.
Board Leadership Structure and Role in Risk Oversight
The Board does not mandate the separation of the offices of chairperson of the Board and chief executive officer.
Instead, that relationship is defined and governed by the first amended and restated limited liability company agreement, as
amended, of our general partner, which permits the same person to hold both offices. The Board believes that whether the
offices of Chairperson of the Board and Chief Executive Officer are combined or separated should be decided by the Board,
from time to time, in its business judgment after considering relevant circumstances. Mr. Milling currently serves as Chairman
of the Board. Directors of the Board are designated or elected by Ciner Holdings. Accordingly, unlike holders of common
stock in a corporation, our unitholders have only limited voting rights on matters affecting our business or governance, subject
in all cases to any specific unitholder rights contained in our partnership agreement.
Our corporate governance guidelines provide that the Board is responsible for reviewing the process for assessing the
major risks facing us and the options for their mitigation. This responsibility is largely satisfied by our audit committee, which
is responsible for reviewing and discussing with management and our independent registered public accounting firm our major
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risk exposures and the policies management has implemented to monitor such exposures, including our financial risk
exposures and risk management policies.
Executive Sessions of Independent Directors and Lead Independent Director
Effective on February 10, 2017, the Board appointed Michael E. Ducey as the Board’s Lead Independent Director.
Under our Corporate Governance Guidelines, the Lead Independent Director is responsible for:
•
presiding at executive sessions of the independent directors of the Board;
• working with the committee chairs to set agendas and lead the discussion of regular meetings of the directors
outside the presence of management;
•
•
providing feedback regarding these meetings to the Chairman of the Board; and
otherwise serves as a liaison between the independent directors and the Chairman of the Board.
The Board holds regular executive sessions in which the independent directors of the Board meet without any
members of management present. The purpose of these executive sessions is to promote open and candid discussion among
the independent directors. Pursuant to our Corporate Governance Guidelines, we have our Lead Independent Director preside
over these executive sessions.
Communication with the Board of Directors
A holder of our units or other interested party who wishes to communicate with the non-management directors or
independent directors of our general partner may do so by contacting our corporate secretary at the address or phone number
appearing on the front page of this Report. Communications will be relayed to the intended recipient of the Board except in
instances where it is deemed unnecessary or inappropriate to do so. Any communications withheld will nonetheless be
recorded and available for any director who wishes to review them.
Section 16(a) Beneficial Ownership Reporting Compliance
Based on a review of our records, we believe all reports required to be filed during the 2018 fiscal year pursuant to
Section 16(a) of the Exchange Act were filed on a timely basis.
Code of Conduct
We have adopted a code of conduct that applies to our principal executive officer, principal financial officer, principal
accounting officer or controller or persons performing similar functions, as well as other employees. We intend to disclose any
amendments to or waivers of the code of conduct on behalf of our Chief Executive Officer, principal financial officer, Chief
Accoutning Officer and persons performing similar functions on our website at www.ciner.us.com under the Investor
Overview - Governance Documents tab. Additionally, the Board has adopted corporate governance guidelines for the
directors and the Board. The code of conduct and the corporate governance guidelines may be found on our website at
www.ciner.us.com under the Investor Overview - Governance Documents tab.
ITEM 11. Executive Compensation
Background
This “Compensation Discussion and Analysis” or “CD&A” sets forth an overview of the philosophy, objectives and elements
of the executive compensation program for executives who perform services on our behalf and the key executive compensation
decisions that were made by us or Ciner Corp for 2018. This CD&A provides context and background for the compensation earned
by and awarded to our general partners’ named executive officers (“NEOs”), as reflected in the compensation tables contained in
the CD&A.
For 2018, our general partners’ NEOs were:
Scott R. Humphrey, Chief Financial Officer
• Kirk H. Milling, Chairman of the Board, President and Chief Executive Officer
•
• Nicole C. Daniel, Vice President, General Counsel and Secretary
• Christopher L. DeBerry, Chief Accounting Officer
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These NEOs were the only “executive officers” of us or our general partner for 2018, because these NEOs were the sole
persons during 2018 in charge of our principal business units, divisions or functions and are the only persons who performed
policy-making functions for us during 2018.
Mr. Humphrey resigned as Chief Financial Officer of our general partner, effective December 31, 2018. In connection with
notice of his resignation, Mr. DeBerry was appointed as principal financial officer, and Mr. Freydel was appointed to Vice President,
Finance and recognized by our general partner’s board of directors (“our Board”) as an executive officer under Rule 3b-7 of the
Securities and Exchange Act of 1934, as amended (the “Exchange Act”), in each case, effective as of January 1, 2019.
Executive Summary
We are managed by our general partner and neither we nor our general partner directly employs any of the persons responsible
for managing our business. Instead, the executive officers of our general partner are employees of Ciner Corp. Other than awards
that may be granted by our Board under our general partner’s 2013 Long-Term Incentive Plan (as amended to date, the “Plan”), it
is Ciner Corp that has ultimate-decision making authority to determine and approve the compensation program and individual
compensation of the employees who perform services on our behalf, including the NEOs. Ciner Corp indirectly owns and controls
our general partner and indirectly owns approximately 72% of the outstanding limited partner interests in us and all of our incentive
distribution rights. We reimburse Ciner Corp for such services and compensation, and our reimbursement is governed by the Services
Agreement, dated as of October 23, 2015 (the “Services Agreement”), by and among us, our general partner and Ciner Corp, under
which we have agreed to pay Ciner Corp an annual management fee, subject to quarterly adjustments, with estimates of such
proposed annual fees and costs subject to initial review and approval by our Board. The annual management fee proposed by Ciner
Corp is determined based on the estimated time the employees are expected to spend on our business, and the costs for such
employees, including the NEOs, are determined based on Ciner Corp’s compensation policies and practices. Each of the NEOs
devoted a majority of their time to our business for the year ended December 31, 2018.
Neither we nor our general partner maintains any employee benefit plans or arrangements, or any defined benefit pension
plans, nonqualified deferred compensation plans or retirement plans. Rather, the NEOs are eligible to participate under the same
plans that Ciner Corp offers to similarly situated employees and we reimburse Ciner Corp for amounts allocated to the NEOs under
such plans to the extent such expenses are allocated to the Partnership under the Services Agreement.
In addition, neither we, our general partner or Ciner Corp have any employment agreements or severance agreements with
the NEOs.
Determination of Compensation Decisions
Other than awards that may be granted under the Plan, Ciner Corp determines and sets the compensation of the employees
that perform services on our behalf, including the NEOs, and, as a result, retains ultimate decision-making authority as to the
compensation philosophy for its employees, including the NEOs. We reimburse Ciner Corp for such services and compensation,
and our reimbursement is governed by the Services Agreement, under which we have agreed to pay Ciner Corp an annual management
fee, subject to quarterly adjustments, with estimates of such proposed annual fees and costs subject to initial review and approval
by our Board. The annual management fee proposed by Ciner Corp is determined based on the estimated time the employees,
including the NEOs, are expected to spend on our business, and the costs for such employees, including the NEOs, are determined
based on Ciner Corp’s compensation policies and practices. We have no control over and do not direct or establish Ciner Corp’s
executive compensation policies and practices, but instead our Board annually reviews the estimated annual management fee
proposed by Ciner Corp and reviews any quarterly adjustments made by Ciner Corp to such fee.
Because neither we nor our general partner directly employ any of the NEOs and because Ciner Corp has ultimate decision-
making authority as to the compensation for the NEOs to manage our business and affairs, we did not provide traditional fixed or
discretionary compensation (e.g., salary or bonus) to the NEOs in 2018. Rather, we reimburse Ciner Corp for those amounts and
other benefits provided by Ciner Corp or its parents to the NEOs that are allocated to us and subject to reimbursement under our
Services Agreement. At the same time, we believe that the NEOs should have an ongoing stake in our success, that their interests
should be aligned with those of our unitholders and that the best interests of our unitholders will be most effectively advanced by
enabling the NEOs who are responsible for our management, growth and success, to receive compensation in the form of long-
term incentive awards. Accordingly, our Board periodically grants long-term incentives in the form of awards under the Plan, which
was adopted in connection with our initial public offering and is administered by our Board. The Plan provides for awards in the
form of common units, phantom units, distribution equivalent rights, cash awards and other unit-based awards. All awards granted
under the Plan are approved by our Board. All employees, officers, consultants and non-employee directors of us and our parents
and subsidiaries are eligible to be selected to participate in the Plan.
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Our Board’s decisions with respect to the amount of awards made under the Plan to the NEOs are governed by the following
objectives:
•
•
•
to motivate and retain our general partner’s key executives;
to align the long-term economic interests of our general partner’s executives with those of our unitholders; and
to reward excellence and performance by our general partner’s executives that increase the value of our units.
Our Board believes that mix of base salary, incentive cash awards and other employment benefit plan or arrangements
determined by Ciner Corp and allocated to us under the Services Agreement and equity-based awards granted by our Board under
the Plan fit the Partnership’s overall compensation objectives. Our Board believes this mix of compensation provides competitive
compensation opportunities to align and drive employee performance in support of the Partnership’s business strategies, as well as
Ciner Corp’s, and to attract, motivate and retain high-quality talent with the skills and competencies required by the Partnership
and Ciner Corp.
Aside from awards granted by our Board under the Plan, neither we nor our general partner anticipate setting the compensation
or benefit arrangements for the NEOs in the near future. Rather, it is anticipated that Ciner Corp will continue to direct the
compensation policies and practices for the NEOs, and we will reimburse Ciner Corp under the Services Agreement for our allocated
portion of such services, compensation and benefits. Our Board intends to grant restricted unit awards and performance-based unit
awards to the NEOs that are employed by our general partner in 2019, as part of our annual compensation cycle.
Elements of Compensation
Overview
Ciner Corp provides compensation to its executives in the form of (i) base salaries, (ii) annual performance-based cash incentive
awards under an incentive compensation plan of Ciner Corp (the “Short-Term Bonus”) that provides cash incentive compensation
to its executive employees and salaried employees tied to our annual EBITDA and distributable cash flow, (iii) time-based and
performance-based cash incentive awards under a long-term cash incentive plan of Ciner Corp (the “Cash LTIP”), and (iv)
participation in various other employment plans and arrangements, including (1) medical, dental, vision, disability and life insurance
plans for its employees, (2) pension plans for those who were hired by the predecessor of Ciner Corp before May 1, 2001, based
upon years of service and average compensation for the highest 60 consecutive months of the employee’s last 120 months of service,
which include a tax-qualified pension plan (the “Ciner Pension Plan”) and a benefit equalization plan that enables Ciner Corp to
restore certain benefits capped under the Ciner Pension Plan due to Internal Revenue Code limits (the “Ciner Benefit Equalization
Plan”), (3) a 401(k) retirement plan (the “401(k) Plan”), which permits employees to contribute specified percentages of their
compensation, (4) a post-retirement benefit plan (“Post-Retirement Plan”), which enables its employees to obtain postretirement
benefits, other than pensions, accounted for on an accrual basis over an employee’s period of service, if such employees reach
retirement age while still employed, and (5) deferred-compensation plans (“Deferred Compensation Plans”), which allow a select
group of management employees to defer compensation to a future date. Other than our Board’s review of the management fee
under the Services Agreement, all determinations with respect to such benefits are made by Ciner Corp, or the plans, as the case
may be, without input from us or our general partner or our Board, and we only bear the cost of such program or benefits that are
charged back to us pursuant to the Services Agreement.
In addition to such aforementioned compensation, our Board grants long-term equity awards under the Plan to the NEOs from
time to time, which to date have consisted of restricted unit awards and performance-based awards that are described further below.
Our Board has not adopted any formal or informal policies or guidelines for allocating compensation between long-term and current
compensation, between cash and non-cash compensation or among different forms of compensation other than its belief that in
addition to reimbursement of the annual management fee under the Services Agreement, equity-based compensation should be
made to the NEOs for the reasons set forth above. The decision to grant awards under the Plan by our Board is strictly made on a
subjective and individual basis after consideration of the relevant factors discussed herein.
While the NEOs are not subject to any agreements or arrangements with us or our general partner pursuant to which they
would receive any payments or benefits in connection with a termination of their employment or a change in control of us or our
general partner, our current restricted unit awards and performance-based unit awards granted to the NEOs under the Plan contain
provisions that could accelerate vesting of the award in certain situations and we could be required to reimburse Ciner Corp for
amounts awarded to the NEOs and allocated to us under the Short-Term Bonus or the Cash LTIP in connection with such event.
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Base Salary.
As discussed above, we reimburse Ciner Corp for an annual management fee under our Services Agreement. Base salaries
allocated to the NEOs under the Services Agreement are generally designed by Ciner Corp to provide competitive fixed rates of
pay recognizing employees’ different levels of responsibility and performance. In setting base salaries for its officers, Ciner Corp
considers factors including, but not limited to, the scope of the officer’s responsibilities, individual contribution, experience and
sustained performance, general economic conditions, industry specific business conditions, base salaries for comparable positions
in similar industries, the tenure of the officers and base salaries of the officers relative to one another. Adjustments are made generally
by Ciner Corp in accordance with the considerations described above and to maintain base salaries at competitive levels. The annual
management fee proposed by Ciner Corp is determined based on the estimated time such employees are expected to spend on our
business and the compensation principles set forth above.
The allocable portion of the base salaries paid to the NEOs during the fiscal year ended December 31, 2018 are set forth in
the table below and in the “Salary” column of the “Summary Compensation Table”:
Named Executive Officer
Kirk H. Milling
Scott R. Humphrey
Nicole C. Daniel
Christopher L. DeBerry
Cash Incentive Awards.
2018 Total Base Salary
Allocable to Us
(%)
80%
99%
68%
81%
In addition to reimbursing Ciner Corp under the Services Agreement for allocable portions of the base salaries of the NEOs,
we also reimburse Ciner Corp for the amounts of annual cash incentive awards provided to the NEOs under the Short-Term Bonus
that are allocated to the Partnership. Annual cash incentive awards are used by Ciner Corp to motivate and reward its executives
and employees for the achievement of objectives aligned with value creation and/or to recognize individual contributions to our
performance. The amount of any annual cash incentive payment to the NEOs are generally set by Ciner Corp using a target bonus
amount at the percentage of each NEO’s annual base salary. Ciner Corp then determines the actual amount of such annual cash
incentive payment to the NEOs based upon the Partnership’s actual performance and such NEO’s individual performance. Other
than our periodic review of the amount reimbursable under our Services Agreement, such annual incentive bonuses are determined
on a discretionary basis solely by Ciner Corp without input from us, our general partner or our Board. Unless otherwise determined,
awards have historically been subject to an individual’s continued employment through the end of the calendar year.
For 2018, annual incentive bonuses were targeted at the percentage of each NEO’s annual base salary as shown below:
Named Executive Officer
Kirk H. Milling
Scott R. Humphrey
Nicole C. Daniel
Christopher L. DeBerry
2018 Target Bonus as a
Percent of Base Salary
55%
35%
45%
25%
For 2018, each NEO was eligible to receive an annual incentive bonus based on achievement of pre-established EBITDA and
distributable cash flow targets for the Partnership of approximately $118.2 million and $49.6 million, respectively. For the purpose
of calculation under the Short-Term Bonus, EBITDA was defined as earnings before interest, taxes, depreciation and amortization.
Under the Short-Term Bonus, bonus payments are based 80% and 20% on meeting or exceeding target EBITDA and DCF goals,
respectively, as well as individual performance in connection with achievement of such targets. An individual performance multiplier
ranging from 0 to 1.25 is applied based on the NEOs 2018 performance rating. There are generally no payouts for results below
75% of the threshold target and the maximum payout multiplier for EBITDA and DCF targets is capped at 2.0x.
EBITDA and DCF used by Ciner Corp for each NEOs’ bonus calculation excluded the financial impact from the Anadarko
settlement and was calculated for the year ended December 31, 2018 as: $109,702,673 (“2018 EBITDA”) and $44,752,722 (“2018
DCF”), respectively. Based on 2018 EBITDA and 2018 DCF of $109,702,673 and $44,752,722, respectively, achieved by the
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Partnership, Messrs. Milling, Humphrey and DeBerry and Ms. Daniel earned annual incentive bonuses allocable to us equal to
$151,007, $68,883, $34,889 and $73,845, respectively, representing 42%, 27%, 20% and 35% of their annual 2018 base salary.
Long-Term Cash Incentive Awards.
In addition to reimbursing Ciner Corp under the Services Agreement for allocable portions of the base salaries and the
annual cash incentive awards provided to the NEOs under the Short-Term Bonus, we also reimburse Ciner Corp for the amounts
of cash incentive awards provided to the NEOs under the Cash LTIP. 50% of the cash award under the Cash LTIP is vested in
substantially equal one-third increments over three years, so long as the award recipient remains continuously employed through
each applicable vesting date, unless otherwise vesting earlier pursuant to the terms of the plan regard to “change in control” or a
participant’s death or disability (as described below).
The other 50% of the cash award under the Cash LTIP is performance-based. Vesting of the performance-based portion of
the cash awards under the Cash LTIP is dependent on the relative performance of the Partnership’s common units compared to an
initial peer group consisting of other publicly traded partnerships (provided that the awardee remains continuously employed through
the end of the performance period and certification of the results, except in certain cases of “change in control” or in the event of
a participant’s death or disability (as described below)). Vested performance-based cash awards are settled in cash with the amount
payable under the award to be calculated by multiplying the target number provided in the award by a performance percentage,
which may range from 0% to 250%, depending on the relative performance of the Partnership’s common units over the performance
period compared to common units of each member of the peer group.
No new awards were issued under the Cash LTIP for 2018. Payment under this plan in 2018 included amounts granted in
prior years that vested in 2018.
Long-Term Equity Incentive Awards.
In addition to the salaries and cash incentive awards paid by Ciner Corp to the NEOs and reimbursable by us under the Services
Agreement, our Board administers the Plan and approves awards granted under the Plan to the NEOs. The Plan is intended to
provide incentives that will attract, motivate and retain valued employees, offering them a greater stake in our success and a closer
identity with us in order to better align them with the long-term interests of our unitholders, and to reward excellence and performance
that increases the value of our units. The Plan provides for awards in the form of common units, phantom units, distribution equivalent
rights, cash awards and other unit-based awards.
As of December 31, 2018, and subject to adjustments as provided in the Plan, there were a total of 722,894 common units
available for issuance under the Plan. Any common units tendered by a participant in payment of the tax liability with respect to
an award, including common units withheld from any such award, will not be available for future awards under the Plan. Common
units awarded under the Plan may be reserved or made available from our authorized and unissued common units or from common
units reacquired (through open market transactions or otherwise). Any common units issued under the Plan through the assumption
or substitution of outstanding grants from an acquired company will not reduce the number of common units available for awards
under the Plan. If any common units subject to an award under the Plan are forfeited, any common units counted against the number
of common units available for issuance pursuant to the Plan with respect to such award will again be available for awards under
the Plan. To date, awards under the Plan that have been granted to the NEOs include time-based vesting conditions (“restricted unit
awards”) and performance-based vesting conditions linked to the relative performance of the Partnership’s common units during
a pre-determined performance period (“performance-based unit awards”).
The restricted unit awards provide the NEOs with the rights of a unitholder in the Partnership with respect to a restricted unit,
except cash distribution paid by the Partnership with respect to such a restricted unit will be credited to a separate account for such
restricted unit and, subject to any tax withholding considerations, will be paid to the recipient at the time such restricted unit vests.
Historically, the restricted unit awards granted to the NEOs have vested in substantially equal one-third increments so that any
restricted unit award (and any related restricted cash distribution) will be 100% vested three-years from the grant date, so long as
the award recipient remains continuously employed by the Partnership Entities (as defined in the corresponding restricted unit
award agreement) from the date of grant through each applicable vesting date, unless otherwise vesting earlier pursuant to the terms
of the restricted unit award with regard to “Change in Control” (as defined in the Plan), death or disability. If an award recipient’s
service with the Partnership Entities or membership on the Board, as applicable, is terminated prior to full vesting of the restricted
units, then the award recipient will forfeit all unvested restricted units and related restricted cash distributions, except that upon a
“Change in Control” or termination of the participant due to death or disability all unvested restricted units and related restricted
cash distributions will become immediately vested in full.
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Historically, the vesting of the performance-based unit awards, and number of common units of the Partnership distributable
pursuant to such vesting, is dependent on the relative performance of the Partnership’s common units compared to an initial peer
group consisting of other publicly traded partnerships (provided that the participant remains continuously employed with our general
partner or its affiliates or satisfies other service-related criteria through the end of the performance period and certification of the
results, except in certain cases of “Change in Control” or the particiapnt’s death or disability). Vested performance-based unit awards
are to be settled in the Partnership’s common units, with the number of such units payable under the award to be calculated by
multiplying the target number provided in the performance-based unit award agreement by a performance percentage, which may
range from 0% to 200%, depending on the relative performance of the Partnership’s common units over the performance period
compared to common units of each member of the peer group. In addition, upon vesting of the performance-based unit award, the
award recipient is entitled to receive a cash payment equal to the distribution equivalents accumulated with respect to the target
number provided in the performance-based unit award agreement, multiplied by the performance percentage described in the
immediately preceding sentence. The typical performance cycle has been a three-year period.
On April 26, 2018, our Board approved grants to Mr. Milling, Mr. Humphrey, Ms. Daniel, and Mr. DeBerry of 8,570 restricted
unit awards and 8,570 performance-based unit awards; 3,003 restricted unit awards and 3,003 performance-based unit awards;
4,840 restricted unit awards and 4,840 performance-based unit awards; and 1,268 restricted unit awards and 1,268 performance-
based unit awards, respectively. All such restricted unit awards vest in substantially equal one-third increments on each of March
15, 2019, March 15, 2020 and March 15, 2021, subject to accelerated vesting in certain circumstances. All such performance-based
unit awards vest, if at all, based on total unit return to our common unit holders relative to a peer group over a three-year period
and continued employment of the NEO through the certification period. Vesting of such performance-based unit awards fully
accelerates upon a change in control of the Partnership or our general partner, or the death or disability of the NEO. The peer group
for such performance-based unit awards consists of 43 other publicly traded partnerships. Vested performance-based unit awards
are settled in our common units, with the number of units payable determined by multiplying the target number provided in the
award agreement by a performance percentage, which may range from 0% to 200% depending on the relative performance of our
common units to the performance of the peer group. Upon vesting of such performance-based unit awards, the NEO will also receive
a cash payment equal to distribution equivalents that were accumulated from the date of grant, multiplied by the above percentage.
Effective December 31, 2018, Mr. Humphrey resigned as Chief Financial Officer of the Partnership and all of his restricted
unit awards and performance-based unit awards and related cash distributions paid thereon that had not vested prior to December
31, 2018 were forfeited.
In 2018, (i) Mr. Milling and Ms. Daniel had 1,252 restricted units and 337 restricted units, respectively, vest on January 1,
2018, which in each case were originally granted on April 29, 2016, (ii) Mr. Milling, Mr. Humphrey, Ms. Daniel and Mr. DeBerry
had 10,529 restricted units, 2,895 restricted units, 5,825 restricted units and 2,590 restricted units, respectively, vest on March 15,
2018, which in each case were originally granted on February 19, 2016, (iii) Mr. Milling, and Ms. Daniel had 2,607 restricted units
and 4,914 restricted units, respectively, vest on March 15, 2018, which in each case were originally granted on April 28, 2017, and
(iv) Mr. Humphrey had 168 restricted units vest on March 15, 2018, which were originally granted on August 4, 2017.
Severance and Change in Control Arrangements
The NEOs are not parties to any agreements or arrangements with us or our general partner pursuant to which they would
receive any payments or benefits in connection with a termination of their employment or a change in control of us our general
partner, except that our current restricted unit awards and performance-based unit awards under the Plan contain provisions that
could accelerate vesting of the award in certain situations. In the event that one of the NEOs is terminated by us or one of our
affiliates prior to the vesting date of the restricted unit awards or performance-based unit awards, all such restricted units and
performance-based unit awards will immediately be forfeited without consideration unless such termination is due to the NEO’s
death or disability.
For the restricted unit awards and related cash distributions accumulated thereunder, in the event of the NEO’s death or
disability, or if a “Change in Control” occurs, all restricted unit awards will become 100% vested. For the performance-based unit
awards and related cash distributions accumulated thereunder, the awards granted to the NEOs are earned and vested and/or forfeited,
as the case may be, in the amounts described in further detail in the section titled “Potential Payments upon Termination or Change-
in-Control” as described below.
The Plan generally defines a “Change in Control” as occurring on one or more of the following events:
(a) the acquisition in one or more transactions by any “person” (as such term is used for purposes of Section 13(d) or
Section 14(d) of the Exchange Act) but excluding, for this purpose, (i) the Partnership or any of our parents or their
subsidiaries or (ii) any employee benefit plan of any entity described in clause (i) above (the entities described in clauses
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(i) and (ii) hereof, “Excluded Persons”), of more than fifty percent (50%) of the combined voting power of the Partnership’s
or our general partner’s then outstanding voting securities (the “Voting Securities”);
(b) the consummation of a merger or consolidation involving the Partnership or our general partner if the owners of the
Partnership or our general partner (as applicable), immediately before such merger or consolidation, do not own, directly
or indirectly, immediately following such merger or consolidation, at least fifty percent (50%) of the combined voting
power of the outstanding voting securities of the entity resulting from such merger or consolidation; or
(c) the acquisition by any “person” (as such term is used for purposes of Section 13(d) or Section 14(d) of the Exchange
Act), other than an Excluded Person, in a single transaction or in a series of related transactions occurring during any
period of 12 consecutive months, of assets from the Partnership or our general partner that have a total gross fair market
value equal to or more than 51% of the total gross fair market value of all of the assets of the Partnership or our general
partner (as applicable) and its subsidiaries (determined on a consolidated basis) immediately prior to such acquisition or
acquisitions.
The Short-Term Bonus provided by Ciner Corp also contains provisions that could accelerate vesting of the payment in certain
situations. For the Short-Term Bonus, if a “change in control” occurs, those individuals associated with the business that is sold
will be paid their pro-rata portion of the applicable incentive award. To be eligible, a participant must be an active employee as of
the date of the sale. The pro-rata calculation will use the participant’s annual base salary in effect as of the date of the sale and
actual business results through the date of the sale. The financial goals and the individual participation percentage will be pro-rated
through the date of the sale and no individual performance multiplier will apply.
The Short-Term Bonus generally describes a “change in control” as occurring in the event that Ciner Corp completes a direct
or indirect sale to an unrelated third party of all or substantially all of the equity interests or assets in one of the businesses covered
by the Short-Term Bonus.
The Cash LTIP also contains provisions that could accelerate vesting of the payment in certain situations. In the event of a
participant’s death or disability, all unvested time-based awards accumulated thereunder shall become 100% vested and will be
paid as soon as practical after such termination, and in the event of a participant’s death or disability during the three-year measurement
period, then the performance-based awards accumulated thereunder shall continue as if employment continued and will be paid to
his or her estate when payments are made to all participants after the vesting date at the end of the measurement period.
For the Cash LTIP, if a “change in control” occurs, all unvested time-based awards accumulated thereunder will become fully
vested, and all performance-based awards accumulated thereunder will become fully vested and adjusted for actual performance
as of the date of the sale. To be eligible, a participant must be an active employee as of the date of the sale. For the performance-
based awards thereunder, the calculation for a “change in control” event will use the participant’s target award amount and actual
business results through the date of the sale, and the Partnership’s TUR performance will be determined compared to the peer group
performance on the date of the sale.
The Cash LTIP generally describes a “change in control” as occurring in the event that Ciner Corp completes a direct or
indirect sale to an unrelated third party of all or substantially all of the Ciner Corp’s equity interests or assets.
Other Elements of Compensation and Perquisites
Neither we nor our general partner sponsor any employee benefit plans or arrangements, any defined benefit pension plan or
nonqualified deferred compensation plans or any retirement plans for the NEOs, and neither we nor our general partner provide
the NEOs with any perquisites. Instead, these types of benefits are provided in certain situations to the NEOs in connection with
their employment by Ciner Corp and are governed in all cases by the terms of the applicable plan documents. The NEOs have been
eligible to participate under the same plans that Ciner Corp offers to its other employees with respect to medical, dental, vision,
disability and life insurance plans, and the NEOs have participated in the Short-Term Bonus, the Ciner Pension Plan, the Ciner
Benefit Equalization Plan, the 401(k) Plan and the Post-Retirement Plan. The NEOs participate in these plans on the same basic
terms as all other similarly situated employees. The NEOs also participate in Deferred Compensation Plans and receive certain
perquisites provided by Ciner Corp. All determinations with respect to such benefits are made by Ciner Corp, or the plans, as the
case may be, without input from us or our general partner or our Board, and we only bear the cost of such program or benefits that
are charged back to us under the provisions of the Services Agreement.
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Compensation Committee Interlocks and Insider Participation
As a limited partnership, we are not required by the New York Stock Exchange (“NYSE”) to establish a compensation
committee. As discussed above, we do not employ any of the NEOs and, outside of the Plan, all compensation granted to the NEOs
is under Ciner Corp’s ultimate direction and control. Mr. Milling, our general partner’s Chief Executive Officer, participates in his
capacity as a director of our general partner in the deliberations of our Board concerning the annual management fee and the grants
under the Plan. While Mr. Milling makes recommendations to our Board regarding NEO compensation provided thereunder, Mr.
Milling is not present for any discussions regarding his performance or compensation. Although our Board does not currently intend
to establish a compensation committee, it may do so in the future.
Compensation Consultants
Our Board did not retain a compensation consultant in 2018.
Unit Ownership Requirements
Neither we nor our general partner has established unit ownership requirements for the NEOs, provided that, in order to more
closely align the interests of non-management directors of our general partner and unitholders in us, we and our general partner
have equity ownership guidelines that require non-management directors of our general partner to hold common units in the
Partnership within five years from their initial election date to our board that have an aggregate value equivalent to three times the
annual cash retainer provided by our board to such director.
Guidelines for Trading by Insiders
We and our general partner maintain policies that govern trading in our common units by the officers and directors of our
general partner who are required to report under Section 16 of the Exchange Act, as well as certain other employees who may have
regular access to material non-public information about us. These policies include pre-approval requirements for all trades in our
common units and periodic trading “black-out” periods designed with reference to our quarterly financial reporting schedule. These
policies also prohibit such persons from short selling, purchasing our common units on margin or pledging our common units.
Compensation Risk Assessment
Based on an internal review by our Board of the Plan, the Services Agreement and its understanding of the material compensation
programs of Ciner Corp, our general partner has concluded that there are no plans that provide meaningful incentives for employees,
including the NEOs, to take risks that would be reasonably likely to have a material adverse effect on the Partnership.
CEO Pay Ratio
Neither we nor our general partner have any employees. As a result, we have no basis for disclosing the annual compensation
and corresponding ratio as required under Item 402(u) of Regulation S-K.
Compensation Committee Report
Our Board has reviewed and discussed with management the compensation discussion and analysis contained in this
Report as required by Item 402(b) of Regulation S-K. Based on such review and discussion, our Board has recommended that
this Compensation Discussion and Analysis be included in the annual report on Form 10-K for the year ended December 31,
2018.
Members of the board of directors of Ciner Resource Partners LLC
Atilla Ciner
Alec G. Dreyer
Michael E. Ducey
Kirk H. Milling
Doðan Pençe
Oðuz Erkan
Thomas W. Jasper
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EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes the compensation paid to the NEOs and allocated to the Partnership for the fiscal years ended
December 31, 2018, 2017 and 2016, as applicable. Other than for awards granted under the Plan, it is Ciner Corp that has ultimate-
decision making authority to determinate and approve the compensation program and individual compensation of the employees
that perform services on our behalf, including the NEOs, and we reimburse Ciner Corp for such services and compensation under
the Services Agreement. Other than for awards granted under the Plan, the amounts reflected in the columns of the summary
compensation table reflect the amounts we incurred for such services from the NEOs, in accordance with our Services Agreement
with Ciner Corp. We believe these expenses accurately reflect amounts paid to the NEOs as compensation for the services provided
to us.
Name and Principal
Position
Year
Salary
($)
Bonus
($)(1)
Unit
Awards
($)(2)
Non-Equity
Incentive Plan
Compensation
($)(3)
Change in
Pension
Value(4)
All Other
Compensation
($)(5)
Total
($)
Kirk H. Milling,
Chairman of the Board,
President and Chief
Executive Officer
Scott R. Humphrey,
Chief Financial Officer(7)
Nicole C. Daniel,
Vice President,
General Counsel
and Secretary
Christopher L. DeBerry,
Chief Accounting Officer(8)
2018
$360,843
$29,764
$579,161
$276,839
____(6)
$17,932
$1,264,539
2017
422,065
35,172
560,127
175,030
543,852
36,062
1,772,308
2016
417,620
35,327
612,096
179,128
280,705
24,251
1,268,422
2018
255,122
—
202,943
68,884
2017
220,962
37,442
321,679
53,762
2018
211,762
13,546
327,087
131,114
2017
266,924
18,907
593,123
86,481
2016
292,644
19,655
260,101
101,640
—
—
—
—
—
20,670
547,619
24,545
658,390
20,090
703,599
26,175
991,610
16,368
690,408
2018
$175,839
$3,849
$85,691
$51,163
$—
$15,065
$331,607
(1) The amounts shown in the “Bonus Column” reflect the awards under Ciner Corp’s Cash LTIP that are time-based. Amounts
for 2017 and 2016 were previously included in the “Non-Equity Incentive Plan Compensation” column and reported when paid.
Since there are no performance metrics tied to this portion of the award under the Cash LTIP, they have now been reported in the
“Bonus” column as earned.
(2) The amounts shown in the “Unit Awards” column reflect the full aggregate grant date fair value of the performance-based
unit awards and the restricted unit awards granted to the NEOs during the applicable period, as determined in accordance with
ASC Topic 718, and as determined without regard to potential forfeitures (the amounts shown do not reflect the actual value that
may be recognized by each NEO). For the restricted unit awards, the fair value per unit is equal to the closing sale price of our
common units on the NYSE on the dates of the applicable grants ($29.60 on April 29, 2016, $28.46 on April 28, 2017, $26.04 on
August 4, 2017 and $26.05 on April 26, 2018). The performance-based unit awards contain a relative total shareholder return
vesting condition, which are considered market-based awards under applicable accounting guidance. The grant date fair value
for the performance-based unit awards was based on a per unit price of $43.93 on August 31, 2016, $43.14 on April 28, 2017,
$38.73 on August 4, 2017 and $41.53 on April 26, 2018, which was determined based on the probability of achieving the
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performance target utilizing a Monte Carlo simulation model, and the amounts in the table above reflect the value of the
performance-based unit awards at the target (or 100%) level. For a discussion of the valuation assumptions applicable to the
Unit Awards, please see Note 12 to our financial statements included in this Annual Report on Form 10-K for the year ended
December 31, 2018.
(3) For the year ended December 31, 2018, the amounts shown in this column reflect awards Ciner Corp’s Short-Term Bonus
that are expected to be allocated to, and reimbursed by, us under the Services Agreement. Given the timing of when payments
are to be made in 2019 for the year ended December 31, 2018, the 2018 amounts represent payments which were earned in 2018
and are expected to be paid in early 2019, using an estimated payout of approximately 77%, which may not be indicative of the
payout the NEO will actually receive. For the years ended December 31, 2017 and 2016, the amounts shown in this column
have been updated to reflect awards under Ciner Corp’s Short-Term Bonus compensation programs that were allocated to us, and
reimbursed by, us under the Services Agreement. The 2017 amounts now represent payments that were earned in 2017 and paid
by us in early 2018 and the 2016 amounts now represent payments that were earned in 2016 and paid by us in early 2017. Short-
Term Bonus amounts were previously reported in the year payment was made, not earned. Amounts in this column also include
payments made under the Cash LTIP for the performance-based portion of that plan (2018 only) and the Ciner Corp profit
sharing plan (2016 only) which are each sponsored by Ciner Corp and were allocated to and reimbursed by us under the Services
Agreement.
(4) The amounts shown in this column reflect the annual change in actuarial present value of accumulated benefits under the
Ciner Penson Plan and Ciner Benefit Equalization Plan sponsored by Ciner Corp. There are no deferred compensation earnings
reported in this column as the non-qualified deferred compensation plans do not provide above-market or preferential earnings.
(5) Amounts shown in this column for 2018 include the following: taxable gifts, taxable compensation for wellness programs,
employer contributions to non-qualified deferred compensation plans, taxable value of company-provided vehicles, taxable
value of fitness center reimbursements, company contributions to Health Savings Accounts, value of country club membership,
company contributions to the 401(k) plan.
(6) The change in actuarial present value of accumulated benefits under the Ciner Pension Plan and Ciner Benefit Equalization
Plan decreased $841 from December 31, 2017 to December 31, 2018 as the discount rate increased from 3.40% to 4.05% for the
Ciner Pension Plan and 3.50% to 4.15% for the Ciner Benefit Equalization Plan which resulted in decreases in the respective
liability during the period.
(7) Mr. Humphrey resigned as the Chief Financial Officer of our general partner as effective December 31, 2018 and as a result,
outstanding unvested restricted unit awards and performance-based unit awards granted to him were forfeited.
(8) Mr. DeBerry became one of the NEOs upon his promotion to Chief Accounting Officer of our general partner in 2018.
Consequently, compensation information was not reported for the prior years. Effective January 1, 2019, Mr. DeBerry was
appointed the principal financial officer for the Partnership.
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Grants of Plan-Based Awards
The following table provides information regarding the amounts that could have been earned under Ciner Corp’s Short-Term
Bonus and the Plan and allocated to us under the Services Agreement with respect to 2018.
Estimated Possible Payouts under Non-
Equity Incentive Plan Awards (1)
Estimated Possible Payouts under
Equity Incentive Plan Awards (2)
Name
Grant date
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
Kirk H. Milling
All Other
Unit
Awards:
Number of
Units (#)(3)
Grant Date
Fair Value of
Unit Awards
($)(4)
Short-Term Bonus
— $
61,223
$
244,891
$
489,781
Restricted Units
4/28/2018
Performance Units
4/28/2018
—
—
—
—
—
—
—
—
—
—
—
—
—
—
8,570
$
223,249
4,285
8,570
17,140
8,570
355,912
Scott R. Humphrey (5)
Short-Term Bonus
—
22,754
91,104
182,028
Restricted Units
4/28/2018
Performance Units
4/28/2018
—
—
—
—
—
—
Nicole C. Daniel
Short-Term Bonus
—
35,362
141,446
282,892
Restricted Units
4/28/2018
Performance Units
4/28/2018
—
—
—
—
—
—
Christopher L. DeBerry
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,420
4,840
9,680
4,840
201,005
Short-Term Bonus
— $
13,716
$
54,863
$
109,725
Restricted Units
4/28/2018
Performance Units
4/28/2018
—
—
—
—
—
—
—
—
634
—
—
—
—
—
1,268
1,268
2,536
1,268
$
—
33,031
52,660
(1) Reflects the estimated 2018 cash payouts allocable to the Partnership under the Short-Term Bonus in respect of 2018 performance
at the threshold, target and maximum levels with respect to each performance measure. All such amounts are primarily set without
input from us, our general partner or our Board, and reflect amounts that can be allocated to the Partnership under the Services
Agreement. If threshold levels of performance are not met, then the payout can be zero. The maximum value reflects the maximum
amount allocable to the Partnership under the Services Agreement. The expected amounts to be allocated to the Partnership for the
actual bonus payouts for each NEO under the Short-Term Bonus for 2018 are reflected in the Non-Equity Incentive Plan
Compensation column of the Summary Compensation Table set forth above.
(2) Reflects the estimated future payouts allocable under the Partnership’s performance-based unit awarded in 2018. Under the
performance-based unit awards, participants may earn from 0% to 200% of the targeted award based on the Partnership’s relative
total unitholder return performance over a three-year performance period. If earned, the awards are to be paid in common units,
though the NEO will also receive a cash payment equal to distribution equivalents that were accumulated from the date of grant,
multiplied by the above percentage. The threshold value represents the minimum payment (other than zero) that may be earned by
the NEO.
(3) Reflects the allocable number of restricted unit awards in 2018 under the Plan. Restricted awards vest ratable over three years,
beginning on March 15, 2019. For restricted unit awards, any related cash distributions are paid at the same time upon the applicable
vesting of the underlying award.
(4) The amounts included in the Grant Date Fair Value of Unit Award column represents the expected allocation to the Partnership
of the grant date fair value of the awards made to the NEOs in 2018 computed in accordance with FASB ASC Topic 718.
(5) Mr. Humphrey resigned as the Chief Financial Officer of our general partner effective December 31, 2018 and, as a result,
outstanding unvested restricted unit awards and performance-based unit awards granted to him were forfeited.
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Outstanding Equity Awards at Fiscal Year-End 2018
The following table summarizes the outstanding equity awards held by the NEOs for the fiscal year ended December 31,
2018. Other than awards granted under the Plan, the NEOs do not receive any grants of equity or equity-based awards in us or
Ciner Corp.
Name
Kirk H. Milling
Scott R. Humphrey(9)
Nicole C. Daniel
Christopher L. DeBerry
Grant
Date
4/29/2016
8/31/2016
4/28/2017
4/26/2018
4/28/2017
8/4/2017
4/26/2018
4/29/2016
8/31/2016
4/28/2017
4/26/2018
4/26/2018
Number of
Units That
Have Not
Vested (#)
1,252(3)
—
5,216(4)
8,570(4)
—
—
—
337(3)
Market Value of
Units That Have
Not Vested ($)(1)
$ 34,660
—
132,586
198,404
—
—
—
9,330
—
—
9,830(4)
4,840(5)
1,268(5)
249,869
112,051
$ 29,355
Equity Incentive
Plan Awards:
Number of
Unearned Units
That Have Not
Vested (#)
Equity Incentive
Plan Awards:
Market Value of
Unearned Units
that Have Not
Vested ($)(2)
—
3,756(6)
7,823(7)
8,570(8)
—
—
—
—
1,010(6)
4,022(7)
4,840(8)
1,268(8)
—
106,075
203,288
203,263
—
—
—
—
28,524
104,516
114,795
$ 30,074
(1) The market value is based on the closing price of our common units on the NYSE on
December 31, 2018, which was $21.45, plus (i) for purposes of footnote (3) below included $6.234 in accrued
distributions per common unit, (ii) for purposes of footnote (4) below included $3.969 in accrued distributions per
common unit, and (iii) for purposes of footnote (5) below included $1.701 in accrued distributions per common unit.
(2) Calculated by multiplying the number of performance-based unit awards reported in the preceding column by the
closing price of our common units on the NYSE on December 31, 2018, which was $21.45, plus (i) for purposes of
footnote (6) below included $6.79150 in accrued distributions per common unit, (ii) for purposes of footnote (7) below
included $4.5360 in accrued distributions per common unit, and (iii) for purposes of footnote (8) below included $2.2680
in accrued distributions per common unit.
(3) Represents restricted common unit awards that were awarded pursuant to the Plan on April 29, 2016 that have not yet
vested. Two-thirds of such restricted common unit awards vested in substantially equal increments on each of January 1,
2017 and January 1, 2018, and the remaining one-third of the restricted common unit awards vested on January 1, 2019.
(4) Represents restricted common unit awards that were awarded pursuant to the Plan on April 28, 2017 that have not yet
vested. One-third of such restricted common unit awards vested on March 15, 2018, and the remaining two-thirds of the
restricted common unit awards vest in substantially equal increments on March 15, 2019 and March 15, 2020, subject to
accelerated vesting in certain circumstances.
(5) Represents restricted common unit awards that were awarded pursuant to the Plan on April 26, 2018 that have not yet
vested. The restricted common unit awards vest in substantially equal increments on March 15, 2019, March 15, 2020 and
March 15, 2021, subject to accelerated vesting in certain circumstances.
(6) These performance-based unit awards were awarded under the Plan on August 31, 2016, and vest, if at all, based on
total unit return to our common unit holders relative to a peer group over a three-year period ending December 31, 2018
and continued employment of the NEO through certification of the results. Vesting fully accelerates upon a change in
control of the Partnership or our general partner, or the death or disability of the NEO. The peer group consists of 26 other
publicly traded partnerships. Vested units are settled in our common units, with the number of units payable determined
by multiplying the target number provided in the award agreement by a performance percentage, which may range from
0% to 200% depending on the relative performance of our common units to the performance of the peer group. Upon any
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vesting, the NEO will also receive a cash payment equal to distribution equivalents that were accumulated from the date
of grant, multiplied by the above percentage. The results were certified on January 28, 2019 and these performance-based
unit awards were vested on that date. Our unit holder return over the measurement period was 31.42% which was
positioned at the 72.22 percentile of the peer group resulting in a 188.89% multiplier.
(7) These performance-based unit awards were awarded under the Plan on April 28, 2017, and vest, if at all, based on
total unit return to our common unit holders relative to a peer group over a three-year period ending December 31, 2019
and continued employment of the NEO through certification of the results. Vesting fully accelerates upon a change in
control of the Partnership or our general partner, or the death or disability of the NEO. The peer group consists of 44 other
publicly traded partnerships. Vested units are settled in our common units, with the number of units payable determined
by multiplying the target number provided in the award agreement by a performance percentage, which may range from
0% to 200% depending on the relative performance of our common units to the performance of the peer group. Upon any
vesting, the NEO will also receive a cash payment equal to distribution equivalents that were accumulated from the date
of grant, multiplied by the above percentage.
(8) These performance-based units were awarded under the Plan to the NEOs on April 26, 2018, and vest, if at all, based
on total unit return to our common unit holders relative to a peer group over a three-year period ending December 31,
2020 and continued employment of the NEO through certification of the results. Vesting fully accelerates upon a change
in control of the Partnership or our general partner, or the death or disability of the NEO. The peer group consists of 44
other publicly traded partnerships. Vested units are settled in our common units, with the number of units payable
determined by multiplying the target number provided in the award agreement by a performance percentage, which may
range from 0% to 200% depending on the relative performance of our common units to the performance of the peer
group. Upon any vesting, the NEO will also receive a cash payment equal to distribution equivalents that were
accumulated from the date of grant, multiplied by the above percentage.
(9) Mr. Humphrey resigned as the Chief Financial Officer of our general partner effective December 31, 2018 and, as a
result, outstanding unvested restricted unit awards and performance-based unit awards granted to him were forfeited.
Units Vested Table
The following table provides information related to the vesting of restricted units and performance-based units during fiscal
year ended 2018.
Name
Mr. Milling
Mr. Humphrey
Ms. Daniel
Mr. DeBerry
Ciner Resources LP
Unit Awards
Number of
Units
Acquired
on Vesting
14,388
3,063
11,076
2,590
Value
Realized on
Vesting(1)
$459,822
$93,075
$349,651
$78,783
(1) This column reflects restricted unit awards and performance unit awards that vested in 2018 and the fair
market value of the common units on the date of vesting, which includes accrued distributions for such
common units since the grant date.
Pension Benefits
Although neither we nor our general partner sponsors a pension or defined benefit program, Ciner Corp maintains a defined
benefit pension for the NEOs, which we reimburse Ciner Corp for a portion thereof allocated to us under the Services Agreement.
The following table lists the pension program participation and actuarial present value of the NEO’s defined benefit pension as of
December 31, 2018, for NEOs for whom we reimburse Ciner Corp for a portion thereof allocated to us under the Services Agreement.
The allocated expense for each NEO is included in the “All Other Compensation” column of the Summary Compensation Table
above. The following table provides information on pension benefit plans of the NEOs as of December 31, 2018, for whom we
reimburse Ciner Corp under the Services Agreement.
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Name
Mr. Milling
Plan Name
Ciner Pension Plan
Mr. Humphrey
Ms. Daniel
Mr. DeBerry
Ciner Benefit Equalization
Plan
None
None
None
Number of Years
Credited
Service (#)(1)
Present Value of
Accumulated
Benefit($)
498,592
1,941,111
n/a
n/a
n/a
Payments
During Last
Fiscal Year($)
—
—
n/a
n/a
n/a
19.75 $
19.75 $
n/a
n/a
n/a
(1) Years of credited service include service recognized under the predecessor OCI Enterprises Inc. plans from which these plans
were assumed by Ciner Corp effective October 24, 2015.
Nonqualified Deferred Compensation and Other Nonqualified Deferred Compensation Plans
Although neither we nor our general partner sponsors a nonqualified deferred compensation or other nonqualified deferred
compensation plan, Ciner Corp maintains a nonqualified deferred compensation plan for certain of its employees, including the
NEOs, which we reimburse Ciner Corp for a portion thereof allocated to us under the Services Agreement. The nonqualified deferred
compensation plan allows individuals to defer up to 80% of their base pay and up to up to 100% of their Short-Term Bonus. In
addition, Ciner Corp. contributes a matching contribution on compensation in excess of the dollar amount under Section 401(a)
(17) of the IRS code ($275,000 for 2018). That matching contribution is equal to 100% of the first 4% that the NEO contributes
to the plan and 50% of the next 2% that an individual contributes to the plan. Ciner Corp. also makes an additional discretionary
contribution to the plan for individuals hired on or after May 1, 2001. That additional discretionary contribution is equal to 3% of
the annual base pay in excess of the dollar amount under Section 401(a)(17) of the IRS code ($275,000 for 2018), provided the
individual is employed on December 31 for such year. The allocated expense for each NEO is included in the “All Other
Compensation” column of the Summary Compensation Table above. The following table provides information on nonqualified
deferred compensation of the NEOs as of December 31, 2018, for whom we reimburse Ciner Corp under the Services Agreement.
For the Year Ended December 31, 2018
Name
Kirk H. Milling
Scott R. Humphrey
Nicole C. Daniel
Christopher L. DeBerry
Beginning
Balance
$15,513
—
$4,525
—
Executive
Contribution
—
—
$35,632
—
Registrant
Contribution
—
—
$9,575
—
Aggregate
Earnings
$225
—
$(1,818)
—
Aggregate
Withdrawals/
Distributions
($)
—
—
—
—
Aggregate
Balance as of
December 31,
2017 ($)(3)
$15,737
—
$47,914
—
(1) These amounts represent matching and discretionary contributions under the Ciner Deferred Compensation Plan. These
amounts are also included in the “All Other Compensation” column of the “Summary Compensation Table”.
(2) These amounts represent earnings on plan balances from January 1 to December 31, 2018. These amounts are not
included in the “Summary Compensation Table”.
(3) The total reflects contributions by Messrs. Milling’s and DeBerry’s and Ms. Daniel’s contributions by us, and earnings
on balances prior to 2018, plus contributions by Messrs. Milling and DeBerry and Ms. Daniel and earnings from January 1,
2018, through December 31, 2018 (shown in the appropriate columns of this table, with amounts that are included in the
“Summary Compensation Table” described in footnote 2 immediately above).
Potential Payments upon Termination or Change-in-Control
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None of the Partnership, our general partner or Ciner Corp are parties to any agreements or arrangements with the NEOs
pursuant to which the NEOs would receive any benefits in connection with a termination of their employment.
While neither we nor our general partner maintain employment agreements or severance agreements with our named executive
officers, our current restricted unit awards and performance-based unit awards under the Plan and awards granted by Ciner Corp
under the Cash LTIP and Short-Term Bonus and allocated to us contain provisions that could accelerate vesting of the award in
certain situations, in the event of a (i) termination of an employee due to death or disability or (ii) a change in control (as described
below). In the event of termination of employment for any other reason than described below, all restricted unit awards and
performance-based unit awards that are still unvested shall be forfeited.
Termination
Pursuant to the terms of the award agreements issued under the Plan, for the restricted unit awards, in the event of a termination
of an employee due to death or disability, all restricted unit awards and related cash distribution accumulated thereunder shall
become 100% vested. Pursuant to the terms of the award agreements issued under the Plan, for the performance-based unit awards,
in the event of the NEO’s death or disability during the three-year measurement period, then performance-based unit awards are
resolved as follows:
(i) if such event occurs during the first year of the measurement period for the performance-based unit awards, all such
performance-based unit awards and related accumulated distributions are forfeited for no consideration;
(ii) if such event occurs during second year of the measurement period for the performance-based unit awards, then such
performance-based unit awards and related accumulated distributions are earned and vested at 33% of the target units for
such awards; and
(iii) if such event occurs, during the last year of the measurement period for the performance-based unit awards, then such
performance-based unit awards and related accumulated distributions are earned and vested at 67% of the target units for
such awards.
Pursuant to the terms of the award agreements issued under the Plan, for the performance-based unit awards, in the event
of the NEO’s death or disability after the measurement period, but prior to the determination date for such performance-based unit
awards, the participant’s outstanding performance-based unit awards and distribution equivalents shall be earned and vest if at all,
based on the attainment of such performance criteria, as determined by the administrator, with all remaining performance-based
unit awards (and accumulated distributions associated with such performance-based unit awards) being immediately forfeited for
no consideration.
Pursuant to the terms of the Cash LTIP, for the time-based awards accumulated thereunder, in the event of a termination
of an employee due to death or disability, all time-based awards accumulated thereunder shall become 100% vested and will be
paid as soon as practical after such termination. Pursuant to the terms of the Cash LTIP, for the performance-based awards accumulated
therender, in the event of the NEO’s death or disability during the three-year measurement period, then the performance-based
awards thereunder shall continue as if employment continued and paid to his or her estate when payments are made to all participants
after the vesting date at the end of the measurement period.
Change in Control Benefits
Pursuant to the terms of the award agreements issued under the Plan, for the restricted unit awards and related cash distributions
accumulated thereunder, in the event of a “Change in Control”, all restricted unit awards and related cash distributions accumulated
thereunder shall become 100% vested. Pursuant to the terms of the award agreements issued under the Plan, for the performance-
based unit awards, in the event of a “Change in Control” then the performance-based unit awards and the related cash distributions
accumulated thereunder shall vest and forfeit as follows:
(i) in the event a Change of Control occurs before three-year measurement period has been completed, then the measurement
period shall be deemed to end on the date of such Change in Control, and the participant’s outstanding performance-based
unit awards and distribution equivalents shall be earned and vest, if at all, based on the attainment of such performance
criteria, as determined by the administrator, as if the measurement period ended on the date of the Change in Control and
as if the ending unit prices were determined as of the date of the Change in Control, with all remaining performance-based
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unit awards (and accumulated distributions associated with such performance-based unit awards) being immediately
forfeited for no consideration; and
(ii) in the event a Change in Control occurs after the three-year measurement period has been completed but prior to the
determination date for such performance-based unit awards, on the date of the Change in Control, the participant’s
outstanding performance-based unit awards and accumulated distributions associated with such performance-based unit
awards shall be earned and vest, if at all, based on the attainment of such performance criteria as described in performance
unit awards, as determined by the administrator of the Plan, with all remaining performance-based unit awards (and
accumulated distributions associated with such performance-based unit awards) being immediately forfeited for no
consideration; and
The Plan generally defines a “Change in Control” as occurring on one or more of the following events:
(a) the acquisition in one or more transactions by any “person” (as such term is used for purposes of Section 13(d) or
Section 14(d) of the Exchange Act) but excluding, for this purpose, (i) the Partnership or any of our parents or their
subsidiaries or (ii) any employee benefit plan of any entity described in clause (i) above (the entities described in clauses
(i) and (ii) hereof, “Excluded Persons”), of more than fifty percent (50%) of the combined voting power of the Partnership’s
or our general partner’s then outstanding voting securities (the “Voting Securities”);
(b) the consummation of a merger or consolidation involving the Partnership or our general partner if the owners of the
Partnership or our general partner (as applicable), immediately before such merger or consolidation, do not own, directly
or indirectly, immediately following such merger or consolidation, at least fifty percent (50%) of the combined voting
power of the outstanding voting securities of the entity resulting from such merger or consolidation; or
(c) the acquisition by any “person” (as such term is used for purposes of Section 13(d) or Section 14(d) of the Exchange
Act), other than an Excluded Person, in a single transaction or in a series of related transactions occurring during any
period of 12 consecutive months, of assets from the Partnership or our general partner that have a total gross fair market
value equal to or more than 51% of the total gross fair market value of all of the assets of the Partnership or our general
partner (as applicable) and its subsidiaries (determined on a consolidated basis) immediately prior to such acquisition or
acquisitions.
Pursuant to the terms of the Cash LTIP, for the time-based awards accumulated thereunder, in the event of a “change in control,”
all unvested time-based awards accumulated thereunder shall become 100% vested. Pursuant to the terms of the Cash LTIP, for the
performance-based awards, in the event of a “change in control,” then the performance-based awards thereunder shall become
100% vested and adjusted for actual performance as of the date of the sale. To be eligible, a participant must be an active employee
as of the date of the sale. For the performance-based awards thereunder, the calculation for a “change in control” event will use the
participant’s target award amount and actual business results through the date of the sale, and the Partnership’s TUR performance
will be determined compared to the peer group performance on the date of the sale. The Cash LTIP generally describes a “change
in control” as occurring in the event that Ciner Corp completes a direct or indirect sale to an unrelated third party of all or substantially
all of the Ciner Corp’s equity interests or assets.
Pursuant to the Short-Term Bonus, in the event of a “change in control” prior to the determination date thereunder, the
participant’s outstanding awards under the Short-Term Bonus shall be paid their pro-rata portion of the applicable incentive award.
To be eligible, a participant must be an active employee as of the date of the sale. The pro-rata calculation will use the participant’s
annual base salary in effect as of the date of the sale and actual business results through the date of the sale. The financial goals
and the individual participation percentage will be pro-rated through the date of the sale and no individual performance multiplier
will apply. The Short-Term Bonus generally describes a “change in control” as occurring in the event that Ciner Corp completes
a direct or indirect sale to an unrelated third party of all or substantially all of the equity interests or assets in one of the businesses
covered by the Short-Term Bonus.
The following table shows the amount of incremental value that would have been received by each of the NEOs upon certain
events of termination or a “Change in Control” resulting in the accelerated vesting of our restricted units and performance based
units held by the NEOs on December 31, 2018 and the amount of expense that could be allocated to us by Ciner Corp under the
Services Agreement in connection with certain events of termination or a “change in control” under the Short-Term Bonus and
Cash LTIP, as if such event occurred on December 31, 2018. Actual amounts will be determinable only upon termination or a
change in control event.
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Name
Benefit
Termination Due to
Death or Disability
($)(1)
Kirk H. Milling
Scott R. Humphrey(2)
Nicole C. Daniel
Christopher L. DeBerry
Plan Common Unit
Vesting
Cash LTIP
Short-Term Bonus
Plan Common Unit
Vesting
Cash LTIP
Short-Term Bonus
Plan Common Unit
Vesting
Cash LTIP
Short-Term Bonus
Plan Common Unit
Vesting
Cash LTIP
Short-Term Bonus
$587,381
174,712
—
241,624
—
—
452,352
88,411
—
170,719
$21,781
—
Termination
for Any
Other Reason
($)
—
Change of Control with or
without Continued
Employment ($)(1)
$1,065,472
—
—
—
—
—
—
—
—
—
—
—
174,712
151,007
357,199
—
68,883
693,792
88,411
73,845
225,009
21,781
$34,889
(1) The amounts reflected above represent the product of the number of restricted units and performance-based units that were
subject to vesting/restrictions on December 31, 2018 multiplied by the closing price of our common units of $21.45 on that date.
(2) Mr. Humphrey resigned as the Chief Financial Officer of our general partner effective December 31, 2018.
Director Compensation
Officers or employees of Ciner Corp or its affiliates who also serve as directors of our general partner do not receive additional
compensation for their service as a director of our general partner. Directors of our general partner who are not officers or employees
of Ciner Corp or its affiliates receive compensation as “non-employee directors.” Our annual retainer for our non-employee directors
consists of approximately $150,000, of which $75,000 is paid in the form of an annual cash retainer and the remaining $75,000 is
paid in a grant of common units under the Plan. The lead director, audit committee chair and the conflicts committee chair are paid
additional annual retainers of $10,000, $15,000 and $10,000, respectively. Each non-employee director that does not serve as a
non-employee director for the entire year, receives a prorated retainer reflecting their partial year of non-employee director service
with us.
The following table summarizes the compensation paid to our non-employee directors for the fiscal year ended December 31,
2018.
Name
Fees Earned or Paid in
Cash
($)(1)
Michael E. Ducey
Thomas W. Jasper
Angela A. Minas(3)
Alec G. Dreyer(4)
$85,000
97,083
17,500
$37,500
Unit Awards
($)(2)
$73,356
73,356
—
$37,387
All Other
Compensation
($)
—
—
—
—
Total
($)
$158,356
170,439
17,500
$74,887
(1) The amounts shown in this column reflect the director cash retainers and committee chair fees paid for non-employee
director board service based on when the service was effective.
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(2) The amounts shown in this column reflect the aggregate grant date fair value, as determined in accordance with the Financial
Accounting Standards Board ASC Topic 718, for awards of common units as follows: Michael E. Ducey (with 2,690 common
units), Thomas W. Jasper (with 2,690 common units) and Alec G. Dreyer (with 1,427 common units).
(3) Resigned effective as of March 11, 2018.
(4) Appointed to our Board and the Audit Committee of our Board effective as of July 1, 2018.
We have established ownership guidelines for our non-management directors with the goal of promoting ownership of units
and aligning the interests of our directors with those of our unitholders. The guidelines require non-management directors to hold
three times their annual cash retainer in our units within five years of the date the person first becomes a director.
Each non-employee director will be reimbursed for out-of-pocket expenses in connection with attending such meetings. Each
director will be fully indemnified by us for actions associated with being a director to the fullest extent permitted under Delaware
law.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of our common units as of March 1, 2019
owned by:
•
•
•
•
each person known by us to be a beneficial owner of more than 5% of our units;
each of the directors of our general partner;
each of the named executive officers of our general partner; and
all directors and executive officers of our general partner as a group.
The amounts and percentage of units beneficially owned are reported on the basis of regulations of the SEC governing the
determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a
security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or
“investment power,” which includes the power to dispose of or to direct the disposition of such security. Except as indicated by
footnote, the persons named in the table below have sole voting and investment power with respect to all units shown as beneficially
owned by them, subject to community property laws where applicable.
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Percentage of total units beneficially owned is based on 19,744,301 common units and 399,000 general partner units
outstanding. The list of beneficial owners is presented in the following table below:
(1)
Name of Beneficial Owner
Ciner Wyoming Holding Co.(2)
Ciner Resource Partners LLC (2)
Kirk H. Milling
Nicole C. Daniel
Chris L. DeBerry
Eduard Freydel
Michael E. Ducey
Thomas W. Jasper
Alec G. Dreyer
Dogan Pençe
Atilla Ciner
Common
Units
Beneficially
Owned(2)
14,551,000
—
54,617
30,959
8,414
7,128
11,307
8,236
1,427
—
—
—
All directors and executive officers as a group
(10 people)
122,088
Percentage of
Common
Units
Beneficially
Owned
General
Partner’
Units
Beneficially
Owned
Percentage of
General Partner
Units
Beneficially
Owned
74%
—
—
399,000
—
100.0%
*
*
*
*
*
*
*
*
*
*
*
—
—
—
—
—
—
—
—
—
—
—
—
* Beneficial ownership represents less than 1% of the Partnership’s outstanding common units.
(1) Unless otherwise indicated, the address for all beneficial owners is Five Concourse Parkway, Suite 2500, Atlanta, Georgia
30328.
(2) Ciner Holdings, the sole member of our general partner, owns 14,551,000 common units representing limited partner interests
and 100% of the membership interests of our general partner, and our general partner (Ciner Resource Partners LLC) owns
399,000 general partner units representing general partner interests in us. Turgay Ciner owns all of the ownership interests of
Akkan Enerji ve Madencilik Anonim Sirketi, which owns all of the ownership interests of KEW Soda, which owns all of the
ownership interests of WE Soda, which owns all of the ownership interests of Ciner Enterprises, which owns all of the
ownership interests of Ciner Corp, which owns all of the ownership interests of Ciner Holdings, the sole member of our
general partner. Each of Turgay Ciner, Akkan Enerji ve Madencilik Anonim Sirketi, KEW Soda, WE Soda Ciner Enterprises
and Ciner Corp may, therefore, be deemed to beneficially own the units held by Ciner Holdings and the general partner. The
business address of each of WE Soda and KEW Soda is 23 College Hill, London, United Kingdom, EC4R 2RP. The business
address of the general partner, Ciner Holdings, Ciner Corp and Ciner Enterprises is Five Concourse Parkway, Suite 2500,
Atlanta, Georgia 30328. The business address of Akkan is ehitmuhtar Cad., 38/1 Taksim, Beyoglu Istanbul, Turkey. The
business address of Mr. Ciner is Pa aliman Caddesi, No:73, 34670 Pa aliman , Üsküdar, Istanbul, Turkey. The amounts
disclosed in this column also include restricted units awarded to our executive officers that are unvested.
Equity Compensation Plan Information
The following table summarizes information about our equity compensation plans as of December 31, 2018:
Plan Category
Equity compensation plans approved by security
holders
Equity compensation plans not approved by security
holders
Number of Securities
Weighted Average
Number of Securities
to be Issued Upon Exercise
Exercise Price of
Remaining Available
of Outstanding Options,
Outstanding Options,
For Future Issuance Under
Warrants and Rights
Warrants and Rights
Equity Compensation Plan
—
—
—
—
—
722,894
For a description of our equity compensation plan, please see the discussion under “Item 11. Executive Compensation” above.
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ITEM 13. Certain Relationships and Related Transactions, and Director Independence
As of March 1, 2019, Ciner Holdings owns 14,551,000 common units representing a 74% ownership interest in us, and owns and
controls our general partner. In addition, our general partner owns general partner units representing an approximate 2.0% general
partner interest in us and all of our incentive distribution rights.
The terms of the transactions and agreements disclosed in this section were determined by and among affiliated entities and,
consequently, are not the result of arm’s length negotiations. These terms and agreements are not necessarily at least as favorable to us
as the terms that could have been obtained from unaffiliated third parties.
Distributions and Payments to Our General Partner and Its Affiliates
The following table summarizes the distributions and payments to be made by us to our general partner and its affiliates in
connection with the formation, ongoing operation and any liquidation of Ciner Resources LP.
Operational Stage
Distributions to our general partner and its affiliates
Payments to our general partner and its affiliates
Withdrawal or removal of our general partner
Liquidation Stage
We will generally make cash distributions 98.0% to our unitholders, pro
rata, including our general partner and its affiliates as the holders of an
aggregate of 14,551,000 common units, and approximately 2.0% to our
general partner. In addition, if distributions exceed the minimum quarterly
distribution and other higher target distribution levels, our general partner
will be entitled to increasing percentages of the distributions, up to 48.0%
of the distributions we make above the highest target distribution level.
Ciner Corp will receive a management fee in connection with our general
partner’s management of us (as described in the section “Reimbursement
of General and Administrative Expenses” below), and, prior to making any
distribution on our common units, we will reimburse Ciner Enterprises
and certain of its affiliates, including Ciner Holdings and Ciner Corp, for
all expenses they incur and payments they make on our behalf pursuant to
the Services Agreement. Our partnership agreement does not set a limit on
the amount of expenses for which our general partner and such affiliates
may be reimbursed. These expenses may include salary, bonus, incentive
compensation and other amounts paid to persons who perform services for
us or on our behalf and expenses allocated to our general partner by such
affiliates. Our partnership agreement provides that our general partner will
determine in good faith the expenses that are allocable to us.
If our general partner withdraws or is removed, its general partner interest
and its incentive distribution rights will either be sold to the new general
partner for cash or converted into common units, in each case for an
amount equal to the fair market value of those interests.
Liquidation
Upon our liquidation, the partners, including our general partner, will be
entitled to receive liquidating distributions according to their particular
capital account balances.
Indemnification Agreement
On October 23, 2015, in connection with the consummation of the Transaction, the Partnership amended and restated in its
entirety, and renamed, that Omnibus Agreement (as amended and restated, the “Indemnification Agreement”), dated September 18,
2013, among the Partnership, our general partner and OCI Enterprises. Pursuant to the Indemnification Agreement, OCI Enterprises
agreed to continue to indemnify the Partnership for issues arising out of, including but not limited to, certain tax liabilities relating to
the period before the Partnership’s initial public offering and assets retained by OCI Enterprises and its affiliates.
Services Agreement
Further, in connection with the closing of the Transaction on October 23, 2015, the Partnership entered into the Services
Agreement among the Partnership, our general partner and Ciner Corp. Pursuant to the Services Agreement, Ciner Corp agreed to
provide the Partnership with certain corporate, selling, marketing, and general and administrative services, in return for which the
Partnership has agreed to pay Ciner Corp an annual management fee, subject to quarterly adjustments, and reimburse Ciner Corp for
certain third-party costs incurred in connection with providing such services.
Trademark License Agreement
In connection with the closing of the Transaction on October 23, 2015, the Partnership also entered into the Trademark License
Agreement, among Park Holding, Akkan, Ciner Enterprises, Ciner Corp, Ciner Holding, the Partnership, our general partner and Ciner
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Wyoming. The Trademark License Agreement governs the use of “Ciner” as part of the names used by the Partnership and the other
related parties thereto following the Transaction, and as a trademark and service mark, for the Partnership’s products and services.
Reimbursement of General and Administrative Expense
Under the Services Agreement, we pay Ciner Corp for services provided to us, and we also reimburse Ciner Corp for certain
third-party costs incurred in connection with providing such services. We also reimburse Ciner Corp for our allocable portion of the
premiums on any insurance policies covering our assets and for any additional state income, franchise or similar tax paid by Ciner
Enterprises resulting from the inclusion of us (and our subsidiaries) in a combined state income, franchise or similar tax report with
Ciner Corp as required by applicable law.
Transactions with Affiliates
Ciner Corp and Ciner Wyoming are party to a sales agency agreement dated June 17, 2015. Under the sales agency agreement,
Ciner Corp contracts with customers, including ANSAC and Ciner Group, for the sale of the soda ash that Ciner Wyoming produces,
and Ciner Wyoming delivers soda ash directly to the customers. Though Ciner Corp is the contractual party with customers, any risk
of loss related to soda ash is passed directly to Ciner Wyoming, except in circumstances where the buyer takes ownership of soda ash
at the shipping point. Ciner Wyoming invoices the customers, and risk of loss from collecting accounts receivable remains with
Ciner Wyoming. Ciner Wyoming also bears any risk of loss from liability claims related to soda ash. Ciner Corp receives sales
proceeds directly from customers on behalf of Ciner Wyoming, and Ciner Corp then transfers the total proceeds of the sales directly to
Ciner Wyoming, less Ciner Corp’s actual costs of sales and marketing. Ciner Corp’s costs are allocated to Ciner Wyoming by OCI
Enterprises (prior to the Transaction) and Ciner Corp (subsequent to the Transaction) based on the amount of time spent by Ciner Corp
providing such services. For the years ended December 31, 2018, 2017 and 2016, these charges amounted to approximately $14.6
million, $14.5 million and $14.9 million, respectively. Ciner Corp also contracts with various land and sea carriers for freight
transportation on behalf of Ciner Wyoming. All such actual freight costs are charged directly to Ciner Wyoming.
Substantially all of Ciner Wyoming’s selling and marketing expenses and general and administrative expenses are expenses
charged to Ciner Wyoming by Ciner Corp for actual expenses incurred by it on behalf of Ciner Wyoming and include expenses
relating to salaries, benefits, office supplies, professional fees, travel, computers and rent.
Ciner Corp, on behalf of Ciner Wyoming, also makes sales of soda ash to Ciner Ic ve Dis Ticaret Anonim Sirketi, or CIDT, an
affiliate of Ciner Group that sells soda ash to markets not served by ANSAC. These sales of soda ash to CIDT were approved, in 2016,
by the Board of Ciner Wyoming (formerly OCI Wyoming LLC) and by the Audit Committee pursuant to the Related Persons
Transaction Policy of the general partner. For the year ended December 31, 2018 and December 31, 2017, sales to CIDT were
approximately $0.0 million and $82.3 million, respectively. See Item 8, Financial Statements and Supplementary Data, Note 15 ,
“Agreements and Transactions with Affiliates,” for more information.
Ciner Corp is a member company of ANSAC and had an approximate 33.0%, 33.2% and 41.1% participation interest at
December 31, 2018, 2017 and 2016, respectively. Kirk Milling, the Chief Executive Officer of Ciner Corp and Chairman of the Board
and Chief Executive Officer of our General Partner, has served as a director of ANSAC since 2001, and Nicole Daniel, the Vice
President, General Counsel and Secretary of Ciner Corp and our General Partner, has served as a director of ANSAC since October
2016. We made approximately 52.0%, 44.7% and 55.2% of our total net sales for the years ended December 31, 2018, 2017 and 2016,
respectively, through Ciner Corp’s membership in ANSAC. In addition, ANSAC provides logistics and support services for all of our
export sales.
The personnel who operate our assets are employees of Ciner Corp and its affiliates. Ciner Corp directly charges us for the
payroll and benefit costs associated with employees and carried the obligations for other employee-related benefits in its financial
statements. We are allocated a portion of Ciner Corp’s defined benefit pension plan liability and postretirement benefit liability for the
employees providing services to us based on an actuarial assessment of that liability. See Item 8, Financial Statements and
Supplementary Data, Note 11, “Employee Compensation,” for more information. In addition, under the joint venture agreement
governing Ciner Wyoming, Ciner Wyoming reimburses us for employees who operate our assets and for support provided to Ciner
Wyoming.
Procedures for Review, Approval and Ratification of Transactions with Related Persons
As disclosed under “Item 10. Directors, Executive Officers and Corporate Governance,” our audit committee has been given the
sole authority, under the audit committee charter, to review and evaluate any related party transactions or dealings with parties related
to us and disclosures of such transactions or dealings in our annual report on Form 10-K, and our conflicts committee is responsible,
under the conflicts committee charter, with reviewing specific matters that may involve conflicts of interest between our general
partner or any of its affiliates, on the one hand, and us, our partners and any of our subsidiaries, on the other hand, in accordance with
the terms of our partnership agreement. Any matters approved by our conflicts committee in good faith will be deemed to be approved
by all of our partners and not a breach by our general partner of any duties it may owe us or our unitholders.
Director Independence
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See “Item 10. Directors, Executive Officers and Corporate Governance” for information regarding the directors of our general
partner and independence requirements applicable for the Board of Directors of our general partner and its committees.
ITEM 14. Principal Accounting Fees and Services
The Audit Committee has ratified Deloitte & Touche LLP, Independent Registered Public Accounting Firm, to audit the books,
records and accounting of Ciner Resources LP for the year ended December 31, 2018. The Audit Committee in its discretion may
select a different registered public accounting firm at any time during the year if it determines that such a change will be in the best
interests of us and our unitholders.
Audit Fees
The following table presents approximate fees billed by Deloitte & Touche LLP for the audit of our annual consolidated
financial statements and other services rendered for the years ended December 31, 2018 and December 31, 2017.
Audit fees (1)
Audit-related fees (2)
Tax fees (3)
All other fees (4)
Total
Year ended December 31,
Year ended December 31,
2018
2017
$
$
1,263,088
$
—
422,249
—
1,685,337
$
683,396
—
367,065
—
1,050,461
(1) Audit fees represent fees for professional services rendered in connection with (i) the audit of our annual financial
statements, (ii) the review of our quarterly financial statements and (iii) those services normally provided in
connection with statutory and regulatory filings or engagements including consents and other services related to
SEC matters. The increase in fees over the prior year is due to 2018 being the first year that the partnership was
required to obtain an audit of its internal control over financial reporting.
(2) Audit-related fees represent fees for assurance and related services. This category primarily includes services relating
to fees for audit of employee benefits plans.
(3) Tax fees represent fees for professional services rendered in connection with tax compliance. For the year ended
December 31, 2018 and 2017, $160,193 and $284,507 of the above tax fees were related to K-1 services.
(4) All other fees represent fees for services not classifiable under the other categories listed in the table above.
Pre-Approval Policy
As outlined in its charter, the audit committee of the board of directors of our general partner is responsible for reviewing and
approving, in advance, all audit services, internal control related services and permissible non-audit services to be provided to us by our
independent registered public accounting firm. During the year ended December 31, 2018, all of the services performed for us by Deloitte
& Touche LLP were pre-approved by the audit committee of the board of directors of our general partner.
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Item 15. Exhibits, Financial Statement Schedules
PART IV
(a) the following documents are included with the filing of this report:
1. The financial statements filed as part of this Report are listed in Part II, Item 8, “Financial Statements and
Supplementary Data.”
2. No financial statement schedules are required to be filed as part of this Report because all such schedules have been
omitted. Such omission has been made on the basis that information is provided in the financial statements or related
footnotes in Part II, Item 8, “Financial Statements and Supplementary Data,” or is not required to be filed as the
information is not applicable.
3. The exhibits listed on the Exhibit Index are included with this Report and incorporated by reference into this Item.
Item 16. Form 10-K Summary
None.
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Exhibit Number
Exhibit Index
Description
3.1 Certificate of Limited Partnership of Ciner Resources LP (formerly known as OCI Resources LP) dated
April 22, 2013 (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1
(File No. 333-189838) filed with the SEC on July 8, 2013)
3.2 Certificate of Amendment of the Certificate of Limited Partnership of Ciner Resources LP (formerly known as
OCI Resources LP) effective November 5, 2015 (incorporated by reference to Exhibit 3.1 to the Registrant’s
Current Report on Form 8-K, filed with the SEC on November 5, 2015
3.3 First Amended and Restated Agreement of Limited Partnership of Ciner Resources LP (formerly known as
OCI Resources LP) dated as of September 18, 2013 (incorporated by reference to Exhibit 3.1 to the Registrant’s
Current Report on Form 8-K, filed with the SEC on September 18, 2013)
3.4 Amendment No. 1 to the First Amended and Restated Agreement of Limited Partnership of Ciner Resources LP
(formerly known as OCI Resources LP) dated as of May 2, 2014 (incorporated by reference to Exhibit 3.1 to the
Registrant’s Current Report on Form 8-K, filed with the SEC on May 7, 2014)
3.5 Amendment No. 2 to the First Amended and Restated Agreement of Limited Partnership of Ciner Resources LP
(formerly known as OCI Resources LP) dated as of November 5, 2015 (incorporated by reference to Exhibit 3.2
to the Registrant’s Current Report on Form 8-K, filed with the SEC on November 5, 2015)
3.6 Amendment No. 3 to the First Amended and Restated Agreement of Limited Partnership of Ciner Resources LP,
dated April 28, 2017 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K,
3.7 Certificate of Formation of OCI Resource Partners LLC dated April 22, 2013 (incorporated by reference to
Exhibit 3.3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-189838) filed with the SEC on
July 8, 2013).
3.8 Certificate of Amendment to the Certificate of Formation of Ciner Resource Partners LLC (formerly known as
OCI Resource Partners LLC) effective November 5, 2015 (incorporated by reference to Exhibit 3.3 to the
Registrant’s Current Report on Form 8-K, filed with the SEC on November 5, 2015)
3.9 Amended and Restated Limited Liability Company Agreement of Ciner Resource Partners LLC (formerly
known as OCI Resource Partners LLC) dated as of September 18, 2013 (incorporated by reference to Exhibit 3.2
to the Registrant’s Current Report on Form 8-K, filed with the SEC on September 18, 2013)
3.10 Amendment No. 1 to the Amended and Restated Limited Liability Company Agreement of Ciner Resource
Partners LLC (formerly known as OCI Resource Partners LLC) dated November 5, 2015 (incorporated by
reference to Exhibit 3.4 to the Registrant’s Current Report on Form 8-K, filed with the SEC on November 5,
2015)
In accordance with Item 601(b)(4)(iii)(A) of Regulation S-K, certain instruments respecting long-term debt of the Registrant have
been omitted but will be furnished to the SEC upon request.
10.1 Ciner Resources Credit Agreement, dated as of August 1, 2017, among Ciner Resources LP, as borrower, PNC
Bank, National Association, as administrative agent, swing line lender and an l/c issuer, and the other lenders
party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed
10.2 Ciner Wyoming Credit Agreement, dated as of August 1, 2017, among Ciner Wyoming LLC, as borrower, PNC
Bank, National Association, as administrative agent, swing line lender and an l/c issuer, and the other lenders
party thereto (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed
10.3* Sodium Lease (WYW101824), dated June 1, 2018, between the United States Department of the Interior Bureau
of Land Management and Ciner Wyoming LLC
10.4 Sodium/Trona and Associated Mineral Salts Mining Lease No. 0-42571, dated August 2, 2009, between the
State of Wyoming and Ciner Wyoming LLC (formerly known as OCI Wyoming LLC) (incorporated by
reference to Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1 (File No. 333-189838) filed
with the SEC on July 8, 2013)
10.5 Sodium/Trona and Associated Mineral Salts Mining Lease No. 0-42570, dated August 2, 2009, between the
State of Wyoming and Ciner Wyoming LLC (formerly known as OCI Wyoming LLC) (incorporated by
reference to Exhibit 10.11 to the Registrant’s Registration Statement on Form S-1 (File No. 333-189838) filed
with the SEC on July 8, 2013)
10.6 Sodium/Trona and Associated Mineral Salts Mining Lease No. 0-26012, dated November 2, 2009, between the
State of Wyoming and Ciner Wyoming LLC (formerly known as OCI Wyoming LLC) (incorporated by
reference to Exhibit 10.12 to the Registrant’s Registration Statement on Form S-1 (File No. 333-189838) filed
with the SEC on July 8, 2013)
10.7 Sodium/Trona and Associated Mineral Salts Mining Lease No. 0-25779, dated September 2, 2009, between the
State of Wyoming and Ciner Wyoming LLC (formerly known as OCI Wyoming LLC) (incorporated by
reference to Exhibit 10.13 to the Registrant’s Registration Statement on Form S-1 (File No. 333-189838) filed
with the SEC on July 8, 2013)
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10.8 Sodium/Trona and Associated Mineral Salts Mining Lease No. 0-25971, dated November 2, 2009, between the
State of Wyoming and Ciner Wyoming LLC (formerly known as OCI Wyoming LLC) (incorporated by
reference to Exhibit 10.14 to the Registrant’s Registration Statement on Form S-1 (File No. 333-189838) filed
with the SEC on July 8, 2013)
10.9 Sodium Lease (WYW079420), dated December 1, 2017, between the United States Department of the Interior
Bureau of Land Management and Ciner Wyoming, LLC (incorporated by reference to Exhibit 10.16 to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on March
9, 2018)
10.10 Sodium Lease (WYW0111730), dated December 1, 2017, between the United States Department of the Interior
Bureau of Land Management and Ciner Wyoming, LLC (incorporated by reference to Exhibit 10.17 to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on March
9, 2018)
10.11 Sodium Lease (WYW0111731), dated December 1, 2017, between the United States Department of the Interior
Bureau of Land Management and Ciner Wyoming, LLC (incorporated by reference to Exhibit 10.18 to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on March
9, 2018)
10.12 License Agreement, dated July 18, 1961, between Union Pacific Railroad Company and Stauffer Chemical
Company of Wyoming (as amended by Amendment of License Agreement, dated September 20, 2010, between
Ciner Wyoming LLC (formerly known as OCI Wyoming LLC), as successor by assignment from Stauffer
Chemical Company of Wyoming, and Rock Springs Royalty Company LLC, as successor in interest to Union
Pacific Railroad Company) (incorporated by reference to Exhibit 10.15 to the Registrant’s Registration
Statement on Form S-1 (File No. 333-189838) filed with the SEC on July 8, 2013)
10.13 Amendment - 1961 License Agreement, dated as of June 28, 2018, between Rock Springs Royalty Company
LLC and Ciner Wyoming LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on
Form 8-K, filed with the SEC on July 3, 2018)
10.14 Sodium Lease (WYW079420), dated January 1, 2015, between the United States Department of the Interior
Bureau of Land Management and Ciner Wyoming, LLC (incorporated by reference to Exhibit 10.1 to the
10.15 Contribution, Assignment and Assumption Agreement dated as of September 18, 2013 by and among
OCI Wyoming Co., Ciner Resource Partners LLC (formerly known as OCI Resource Partners LLC), Ciner
Resources LP (formerly known as OCI Resources LP), Ciner Wyoming Holding Co. (formerly known as
OCI Wyoming Holding Co.) and Ciner Resources Corporation (formerly known as OCI Chemical Corporation)
(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC
on September 18, 2013)
10.16* Amendment No. 1 to Ciner Resource Partners LLC 2013 Long-Term Incentive Plan
10.17++ Ciner Resource Partners LLC (formerly known as OCI Resource Partners LLC) 2013 Long-Term Incentive Plan
(incorporated by reference to Exhibit 10.18 to the Registrant’s Registration Statement on Form S-1/A (File No.
333-189838) filed with the SEC on September 3, 2013)
10.18++ Form of Ciner Resource Partners LLC (formerly known as OCI Resource Partners LLC) 2013 Long-Term
Incentive Plan Restricted Unit Award Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s
Current Report on Form 8-K filed with the SEC on July 2, 2014)
10.19++ Form of Ciner Resource Partners LLC (formerly known as OCI Resource Partners LLC) 2013 Long-Term
Incentive Plan Director Unit Agreement (incorporated by reference to Exhibit 10.3 to the Registrant’s Current
Report on Form 8-K filed with the SEC on November 4, 2014)
10.20++ Form of Ciner Resource Partners LLC (formerly known as OCI Resource Partners LLC) 2013 Long-Term
Incentive Plan TR Performance Unit Award (incorporated by reference to Exhibit 10.1 to the Registrant’s
Current Report on Form 8-K filed with the SEC on August 6, 2014)
10.21 Limited Liability Company Agreement of Ciner Wyoming LLC (formerly known as OCI Wyoming LLC) dated
as of June 30, 2014 (incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K,
filed with the SEC on July 2, 2014)
10.22 Amendment No. 1 to Limited Liability Company Agreement of Ciner Wyoming LLC (formerly known as OCI
Wyoming LLC) dated as of November 5, 2015 (incorporated by reference to Exhibit 10.22 to the Registrant’s
Annual Report on Form 10-K, filed with the SEC on March 11, 2016)
10.23 Services Agreement, dated as of October 23, 2015, among Ciner Resources LP (formerly known as OCI
Resources LP), Ciner Resource Partners LLC (formerly known as OCI Resource Partners LLC), and Ciner
Resources Corporation (formerly known as OCI Chemical Corporation) (incorporated by reference to Exhibit
10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on October 26, 2015)
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10.24 OCI Indemnification Agreement, dated as of October 23, 2015, among Ciner Resources LP (formerly known as
OCI Resources LP), Ciner Resource Partners LLC (formerly known as OCI Resource Partners LLC), and OCI
Enterprises Inc. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed
with the SEC on October 26, 2015)
10.25 Trademark License Agreement, dated as of October 23, 2015, among Park Holding A.S., Ciner Enterprises Inc.,
Ciner Resources Corporation (formerly known as OCI Chemical Corporation), Ciner Wyoming Holding Co.
(formerly known as OCI Wyoming Holding Co.), Ciner Resource Partners LLC (formerly known as OCI
Resource Partners LLC), Ciner Resources LP (formerly known as OCI Resources LP), and Ciner Wyoming LLC
(formerly known as OCI Wyoming LLC) (incorporated by reference to Exhibit 10.3 to the Registrant’s Current
Report on Form 8-K, filed with the SEC on October 26, 2015)
21.1* List of Subsidiaries of Registrant
23.1* Consent of Deloitte & Touche LLP, dated March 8, 2019
31.1* Chief Executive Officer Certification Pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(a), as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2* Principal Financial Officer Certification Pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(a), as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1** Chief Executive Officer Certification Pursuant to Exchange Act Rule 13a-14(b) or Rule 15d-14(b) and Section
1350 of Chapter 63 of Title 18 of the United States Code, as Adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
32.2** Principal Financial Officer Certification Pursuant to Exchange Act Rule 13a-14(b) or Rule 15d-14(b) and
Section 1350 of Chapter 63 of Title 18 of the United States Code, as Adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
95.1* Mine Safety Disclosures
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase
* Filed herewith.
** Furnished herewith. Not considered to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or otherwise subject to the liabilities of that section, and are not deemed incorporated by reference into any filing under the
Securities Act of 1933, as amended.
++Management contract or compensatory plan or arrangement required to be filed as an exhibit to this 10-K pursuant to Item 15.
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SIGNATURES
Pursuant 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 its behalf by the undersigned, thereunto duly authorized.
CINER RESOURCES LP (Registrant)
By: Ciner Resource Partners LLC, its General Partner
By:
/s/ Kirk H. Milling
Kirk H. Milling
President, Chief Executive Officer and Chairman of the
Board of Directors of Ciner Resource Partners LLC, our
General Partner
(Principal Executive Officer)
Date: March 8, 2019
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacity and on the dates indicated.
Signature
Title
Date
/s/ Kirk H. Milling
Kirk H. Milling
/s/ Chris L. DeBerry
Chris L. DeBerry
/s/ Atilla Ciner
Atilla Ciner
/s/ Dogan Pençe
Dogan Pençe
/s/ Michael E. Ducey
Michael E. Ducey
/s/ Thomas W. Jasper
Thomas W. Jasper
/s/ Alec G. Dreyer
Alec G. Dreyer
President, Chief Executive Officer and Chairman of the Board of Directors
of Ciner Resource Partners LLC, our General Partner
(Principal Executive Officer)
March 8, 2019
Principal Financial Officer and Chief Accounting Officer of Ciner Resource
Partners LLC, our General Partner
(Principal Financial and Accounting Officer)
March 8, 2019
(Director of Ciner Resource Partners LLC, our General Partner)
March 8, 2019
(Director of Ciner Resource Partners LLC, our General Partner)
March 8, 2019
(Director of Ciner Resource Partners LLC, our General Partner)
March 8, 2019
(Director of Ciner Resource Partners LLC, our General Partner)
March 8, 2019
(Director of Ciner Resource Partners LLC, our General Partner)
March 8, 2019
(Director of Ciner Resource Partners LLC, our General Partner)
March 8, 2019
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GLOSSARY OF INDUSTRY TERMS
ANSAC: American Natural Soda Ash Corporation, a U.S. export cooperative organized under the provisions of the Webb-Pomerene
Act of 1918.
Calciner: A large furnace used to heat and bring about thermal decomposition of trona.
CIDT: Ciner Ic ve Dis Ticaret Anonim Sirketi, an export affiliate and part of the global Ciner Group.
Continuous Miner: A machine with a large rotating steel drum equipped with tungsten carbide teeth that scrapes trona from a mining
bed seam.
Deca: Sodium carbonate decahydrate, a natural by-product of trona ore processing.
Effective Capacity: The volume of soda ash that can be generated using current operational resources, taking into account scheduled
and unscheduled downtime and idled capacity.
Liquor: A solution consisting of sodium carbonate dissolved in water.
Longwall Mining: A mining method employing heavy machinery to cut and remove trona from the wide face of a mine and hoist it to
the surface. Longwall mining provides high production rates with low operating costs but requires large areas of medium to thick
seams.
Mining Bed: A layer or stratum of trona.
Mining Face: The exposed area of an underground mine from which trona is extracted.
MMBtu: Million British thermal units.
MSHA: Mine Safety and Health Administration.
Nameplate Capacity: Maximum potential output of a mining facility.
Non-subsidence mining: Any one of several mining techniques designed to prevent or avoid the collapse of the surface above the
mine. Room and pillar mining, which leaves “pillars” to support the roof of a mine, is a form of non-subsidence mining.
Operating Rate: The amount of soda ash produced in a given year as a percentage of effective capacity for that year.
Ore to Ash Ratio: The number of short tons of trona ore it takes to produce one short ton of soda ash.
Ore Grade: Ore grade is the percentage of raw trona ore that is recoverable as soda ash free of impurities. A higher ore grade will
produce more soda ash than a lower ore grade.
Purged Liquor: Liquor expelled into collection ponds during trona ore processing.
Recovery Rate: An amount, expressed as a percentage, calculated by dividing the volume of dry soda ash produced by the sum of the
volume of dry soda ash produced and the losses experienced in the refinery process.
Reserves: That part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve
determination.
Room and Pillar Mining: A mining method wherein underground mineral seams are mined in a network of “rooms.” As these rooms
are cut and formed, continuous miners simultaneously load trona onto shuttle cars for hoisting to the surface. “Pillars” composed of
trona are left behind in these rooms to support the roofs of the mines. Room and pillar mining is often used to mine smaller blocks or
center seams.
Run-of-Mine: The amount of trona removed directly from the mine prior to processing.
Seam: Trona deposits occur in layers typically separated by layers of rock. Each layer of trona is called a “seam.”
Soda Ash: Sodium carbonate (Na2CO3) in a powder form.
Solution Mining: A mining method in which ore is extracted by dissolving it in a leaching solution and pumping the dissolved ore to
the surface for processing. Solution mining is used in situations where minimal seam width or deep mining beds prohibit the use of
conventional underground mining techniques.
Tailings Disposal: Disposal of materials left over after the process of separating the soluble portion of trona ore from the non-soluble
portion of trona ore.
Trona: Sodium sesquicarbonate (Na2CO3-NaHCO3-2H2O), a naturally occurring soft mineral, consisting primarily of sodium
carbonate, or soda ash, sodium bicarbonate and water.
Trona Ore: Trona that has been removed from the ground.
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