Brilliant
transformation.
TRONOX HOLDINGS PLC 2021 ANNUAL REPORT
FAST FACTS
$3.572 billion
revenue
$468 million free
cash flow generated
26.5% EBITDA margin
9 TiO2 pigment
facilities
≈1,200 customers
in 120 countries
$2.6+ million invested
in our communities
6 mines
5 upgrading facilities
≈6,500 employees
worldwide
FINANCIAL HIGHLIGHTS
(Millions of U.S. dollars, except share and per share amounts)(1)
Sales
Net income (loss) from continuing operations
Diluted income (loss) per share from continuing operations
Dividend paid per share
Total assets
Shares outstanding (at December 31)
2021
$3,572
$ 303
$ 1.81
$ 0.36
$5,987
153,934,677
2020
2019
$2,758
$ 995
$ 6.69
$ 0.28
$6,568
143,557,479
$2,642
$ (102)
$ (0.81)
$ 0.18
$5,268
141,900,459
(1) The following information is from our Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on February 22, 2022.
$3.57
BILLION
1.1
MILLION
TONS*
$3.57
BILLION
6,588
EMPLOYEES
REVENUE FROM
PRODUCT SALES
79% TiO2
13% Zircon
8% Feedstock and
Other Products
SALES VOLUME
DISTRIBUTION BY
END USE
76% Paints and
Coatings
17% Plastics
7% Paper and
Specialty
(*) Nameplate capacity
SALES REVENUE
DISTRIBUTION
BY GEOGRAPHY
39% Europe, Middle
East and Africa
33% Asia-Pacific
21% North America
7% South and Central
America
FULL-TIME EMPLOYEES
BY REGION
32% South Africa
18% Australia
14% Europe
11% Asia-Pacific
11% North America
8% KSA
6% South America
Tronox is investing in the future — from our
multi-year digital technology program to our
ambitious safety and sustainability initiatives —
we’re developing our people and harnessing
their diversity for a brilliant transformation.
Dear Fellow Shareholders,
A year of records across many aspects of our business —
sustainability, production, revenue, EBITDA, cash flow, debt
reduction and profitability — is how we can best summarize
2021. In the midst of ongoing challenges, our Tronox team
demonstrated resilience, dedication and unrelenting spirit
as we continued to protect our people and business through
prudent protocols and attention to health and wellbeing.
Our integrated business planning model and vertically
integrated portfolio enabled us to optimize our business
quickly and efficiently, allowing us to successfully navigate
through various raw material, shipping and other supply and
inflationary challenges while achieving record production
levels and addressing the needs of our customers. We are
proud of how Tronox and its employees performed in 2021
and honored to provide you with the key highlights.
Continued Prioritization of Safety
Safety is at the core of everything we do, and in 2021, we
achieved another consecutive year of excellent safety
performance. We are on a journey to inspire world-class
safety for employees and contractors across all of our
operations. We are embedding human and organizational
TOTAL SHAREHOLDER RETURN*
performance programs in our company that will enable us
to continue to improve our safety performance for years to
come. By elevating our approach to how we guide, enable
and execute our work, we are living our core value of
operating safe, reliable and responsible facilities. The
objective of our journey is to create a safety culture where
no employee, contractor or visitor in our workplace is injured.
Safety performance directly impacts Tronox’s ability to deliver
safe, quality, low-cost, sustainable tons to our customers.
Because of this, 15% of the annual incentive plan is tied
directly to safety goals. We have demonstrated our consistent
ability to achieve great safety performance and, as such, we
are setting next-level targets for 2022, because complacency
is not an option at Tronox.
Sustainability Commitment
Tronox has always been focused on environmental, social
and governance (ESG) initiatives, and in order to provide
better oversight of ESG activities, our Board of Directors
reorganized its committee structure. As a result, the Corporate
Governance and Nominating Committee has become the
Governance and Sustainability Committee with a restated
$255.22 $
S&P 500**
S&P Midcap 400
Chemicals
S&P 400 Materials
Tronox
(*) $100 investment in stock or index.
Assumes reinvestment of dividends.
(**) Index is utilized in the Company’s
annual report.
Copyright© 2022 Standard & Poor’s, a
division of S&P Global. All rights reserved.
12/31/16
12/31/17
12/31/18
12/31/19
12/31/20
12/31/21
300
250
200
150
100
300
250
200
150
100
50
“
committee charter that requires management to regularly
report on its progress on key ESG initiatives. This change
comes on top of other significant ESG-related improvements
made by Tronox, including the announcement of a detailed
and substantive roadmap to align with a global warming
scenario below 2°C and achieve net zero GHG emissions
by 2050; inclusion of carbon emission reduction targets in
our executive compensation programs; and a commitment
to be fully compliant with applicable TCFD and SASB
disclosure standards in 2022.
Additionally, Tronox joined the United Nations Global
Compact — a worldwide platform for organizations to
network and engage in the areas of human rights, labor,
environment, and anti-corruption. Incorporating its standards
into our strategies and procedures will help us protect our
privilege to operate and set the stage for long-term success.
We are proud to share that Tronox has been awarded a
Platinum rating from EcoVadis, an independent sustainability
assessment organization. It also puts us in the top 1% of
the 85,000 evaluated companies and in the top 2% in the
Basic Chemicals Manufacturing sector for sustainability
management.
We look forward to making more significant progress in
2022 as we take intentional, well-planned steps to achieve
our sustainability targets, including having 5% of our annual
incentive plan tied to carbon emission reduction.
Debt Reduction, Capital
Allocation and Ownership
At the start of 2021, we communicated our capital allocation
strategy focused on key capital projects, including newTRON
and Atlas Campaspe, and debt paydown. During 2021, we
made significant progress on this commitment, repaying
$745 million in debt. We expect to achieve our previously
announced $2.5 billion gross debt objective well ahead of
our 2023 objective as part of our announced refinancing of
our 6.5% 2025 Senior Secured Notes in April. Given this and
the strength of our vertically integrated business model, we
have increased our annual dividend to $0.50 per share and
announced a $300 million share repurchase program through
February of 2024. We also expect to continue to invest in
the business through cost reduction, as well as growth- and
vertical integration-related capital expenditures to strengthen
our business model.
In another significant event, Exxaro Resources Limited sold
its remaining share ownership in Tronox in an underwritten
secondary public offering in February 2021. As part of this
transaction, Exxaro “flipped-in” its 26% shareholding in our
South African operating subsidiaries, which hold our material
mining licenses, for approximately 7.2 million ordinary shares
of Tronox, which were also sold as part of the upsized
offering. As a result, we now own 100% of our South African
operating subsidiaries and have increased our public float.
GLOBAL OPERATIONS & FULL-TIME EMPLOYEES BY REGION
North America: 725
South America: 395
Tronox Corporate
Chloride Pigment
Sulfate Pigment
Mineral Sands
Operational Offices
Europe: 922
KSA: 527
Asia-Pacific: 725
Australia: 1,186
South Africa: 2,108
“
We have an exciting year ahead,
in which we expect to exceed
our long-term target of $1 billion
in EBITDA, continue to generate
strong cash flow and return capital
to shareholders. We are confident
we have the best team in place to
deliver on our commitments and
propel Tronox on our journey of
transformation.
”
Key Strategic Projects
Reduction of debt, increased dividends and share
repurchases are not coming at the expense of capital
investments. Maintaining sufficient mineral reserves and
resources to be the world’s leading vertically integrated
producer of TiO2 is one of our major investment focuses.
Three key mining projects are underway: Atlas Campaspe,
a project expected to come online in 2022 to replace
feedstock supply from our Snapper and Ginkgo mines in
Eastern Australia as they reach end of life; Fairbreeze mine
expansion; and Namakwa East OFS, which will replace
a portion of our Namakwa Sands operations beginning in
2024. The Fairbreeze and Namakwa East OFS projects
will extend our mine life in South Africa beyond 2035.
Our other focus is newTRON, a multi-year business
transformation program. Project newTRON will enable us
to maintain our position among the lowest cost producers
of TiO2 and enhance our service to customers through
standardization of business processes and deploying new
technologies that will optimize our global supply chain,
reduce maintenance spend and improve throughput. The
capital investment of approximately $150 million over 2021
and 2022 is expected to yield $150 to $200 per ton in run
rate cost reductions by the end of 2023. Through newTRON,
we are equipping our business and empowering our people
to be more competitive.
Investing in Our People
We believe that, by building our organization with talented
people and investing in their success, we unleash the
full potential of our business and our people. We have
benchmarked our current practices against high-performing
learning organizations and used these insights to help our
leaders improve their ability to lead and develop their
teams, to build a sustainable talent base and to create a
powerful learning culture for all employees.
In 2021, we also solidified our Diversity & Inclusion (D&I)
strategy and shared our vision for how to promote and
embed the principles within our culture, including signing a
pledge developed by CEO Action for Diversity & Inclusion.™
Our D&I vision is to be an organization where our leaders
foster and encourage a diverse workforce and where all
people feel valued and respected. We expect our leaders
and employees to listen to others with diverse perspectives;
support new and different approaches; promote fairness
and equality in the workplace; encourage others to be
open-minded and to appreciate alternative cultural
perspectives; and not tolerate discrimination. Our strategy
is focused on building a workforce that is reflective of the
community, fostering an inclusive culture and developing
diverse talent. Our Tronox Diversity and Inclusion Network
(TDIN) chapters throughout the organization are working
to educate our workforce on D&I topics, as well as develop
initiatives to listen, learn and enhance our culture.
As we complete our first full year as your co-CEOs, we
would like to thank our shareholders, Board of Directors,
employees and customers for the confidence you have
placed in us to lead Tronox. We firmly believe in the values
that Tronox stands for and know that we are stronger when
we work together. We have an exciting year ahead in which
we expect to exceed our long-term target of $1 billion in
EBITDA, continue to generate strong cash flow and return
capital to shareholders. We are confident we have the best
team in place to deliver on our commitments and propel
Tronox on our journey of transformation.
Sincerely,
John D. Romano
co-Chief Executive Officer
Jean-François Turgeon
co-Chief Executive Officer
At Tronox, we believe that leadership is about
working together to achieve results and maximizing
the efforts of our talented team around the world.
Meet our leaders...
BOARD OF DIRECTORS
Ilan Kaufthal(3*)
Chairman of the Board,
Tronox Holdings plc,
Eastwind Advisors
Peter B. Johnston(1,2)
Former Interim Chief
Executive Officer, Tronox
Limited; Former Global
Head of Nickel Assets,
Glencore
Ginger M. Jones(1*,2)
Former Senior Vice
President and Chief
Financial Officer, Cooper
Tire & Rubber Company
EXECUTIVE
MANAGEMENT TEAM
John D. Romano
co-Chief Executive Officer
Jean-François Turgeon
co-Chief Executive Officer
Timothy C. Carlson
Senior Vice President,
Chief Financial Officer
Russell Austin
Senior Vice President,
Operations
Our Board of Directors includes six
independent directors who participate on
three committees:
(1) Audit
(2) Human Resources and Compensation
(3) Corporate Governance and Sustainability
(* ) Committee Chair
Sipho Nkosi(2,3)
Former Chief Executive
Officer, Exxaro Resources
Vanessa Guthrie(1,3)
Non-executive Director
of Santos Limited and
Adbri Limited
Stephen Jones(1,2*)
Former President and Chief
Executive Officer, Covanta
Holding Corporation
Mutlaq Al-Morished
Chief Executive Officer,
TASNEE
Moazzam Khan
Managing Director,
Cristal International
Holdings B.V.
Dr. Talal Al-Shair
Director Emeritus
John D. Romano
co-Chief Executive
Officer, Tronox
Jean-François Turgeon
co-Chief Executive
Officer, Tronox
Jeff Engle
Senior Vice President,
Commercial and Strategy
Elizabeth Marengo
Senior Vice President,
Global Human Resources
Jeffrey Neuman
Senior Vice President,
General Counsel and
Corporate Secretary
John Srivisal
Senior Vice President,
Business Development
and Finance
Jonathan Flood
Vice President, Controller
and Principal Accounting
Officer
Melissa H. Zona
Senior Vice President,
External Affairs and Chief
Sustainability Officer
Emad AlJunaidi
Chief Procurement Officer
Jennifer Guenther
Vice President, Investor
Relations
Rose Mei
Vice President, Integrated
Business Planning
Michael Miller
Chief Information Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
□ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Year ended December 31, 2021
OR
For the transition period from
to
1-35573
(Commission file number)
TRONOX HOLDINGS PLC
(Exact name of registrant as specified in its charter)
England and Wales
(State or other jurisdiction of incorporation or organization)
98-1467236
(I.R.S. Employer Identification No.)
263 Tresser Boulevard, Suite 1100
Stamford, Connecticut 06901
Laporte Road, Stallingborough
Grimsby, North East Lincolnshire, DN40 2PR
United Kingdom
Registrant’s telephone number, including area code: (203) 705-3800
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Ordinary Shares, par value $0.01 per share
Name of each exchange on which registered
New York Stock Exchange
Trading Symbol: TROX
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 15(d) of the Act. Yes □ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No □
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). Yes ☒ No □
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller
reporting company’’ and ‘‘emerging growth company’’ in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
Emerging growth company
☒
□
□
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. □
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes □ No ☒
The aggregate market value of the ordinary shares held by non-affiliates of the registrant as of June 30, 2021 was approximately
$2,598,591,296.
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of
the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No □
As of January 31, 2022, the registrant had 153,937,928 ordinary shares outstanding.
Portions of the registrant’s proxy statement for its 2022 annual general meeting of shareholders are incorporated by reference in this
Form 10-K in response to Part III Items 10, 11, 12, 13 and 14.
DOCUMENTS INCORPORATED BY REFERENCE
TRONOX HOLDINGS PLC
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2021
INDEX
Form 10-K Item Number
PART I
Item 1.
Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A. Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Item 3.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases
of Equity Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6.
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure . . .
Item 9.
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . . . . . . . .
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 Shareholder
Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . .
Item 14. Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV
Item 15. Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16. Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page
1
13
28
28
39
39
40
41
41
54
56
107
107
108
108
109
109
109
110
110
111
113
114
i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have made statements under the captions ‘‘Business,’’ ‘‘Risk Factors,’’ ‘‘Management’s Discussion and
Analysis of Financial Condition and Results of Operations’’, and in other sections of this Form 10-K that are
forward-looking statements. Forward-looking statements also can be identified by words such as ‘‘future,’’
‘‘anticipates,’’ ‘‘believes,’’ ‘‘estimates,’’ ‘‘expects,’’ ‘‘intends,’’ ‘‘plans,’’ ‘‘predicts,’’ ‘‘will,’’ ‘‘would,’’ ‘‘could,’’
‘‘can,’’ ‘‘may,’’ and similar terms. These forward-looking statements, which are subject to known and unknown
risks, uncertainties and assumptions about us, may include projections of our future financial performance based
on our growth strategies and anticipated trends in our business. These statements are only predictions based on
our current expectations and projections about future events. There are important factors that could cause our
actual results, level of activity, performance or achievements to differ materially from the results, level of
activity, performance or achievements expressed or implied by the forward-looking statements. In particular,
you should consider the numerous risks and uncertainties outlined in ‘‘Risk Factors.’’
These risks and uncertainties are not exhaustive. Other sections of this Form 10-K may include additional
factors, which could adversely impact our business and financial performance. Moreover, we operate in a very
competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is
not possible for our management to predict all risks and uncertainties, nor can management assess the impact of
all factors on our business or the extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking statements.
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot
guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not
rely upon forward-looking statements as predictions of future events. Unless otherwise required by applicable law, we
are under no duty to update any of these forward-looking statements after the date of this Form 10-K to conform our
prior statements to actual results or revised expectations and we do not intend to do so.
When considering forward-looking statements, you should keep in mind the risks, uncertainties and other
cautionary statements made in this Form 10-K and the documents incorporated by reference, including, in
particular, the factors discussed below. These factors may be revised or supplemented in subsequent reports on
Forms 10-Q and 8-K.
Factors that may affect future results include, but are not limited to:
•
the risk that our customers might reduce demand for our products;
• market conditions and price volatility for titanium dioxide (‘‘TiO2’’), zircon and other feedstock
products, as well as global and regional economic downturns, that adversely affect the demand for our
end-use products;
•
•
•
•
•
•
•
•
•
the potential negative impacts of COVID-19 on our business as well as the global economy and
financial markets;
the possibility that Chinese production of chloride technology and improvements in product quality
may occur more quickly than anticipated;
changes in prices or supply of energy or other raw materials;
liability, production delays and additional expenses from environmental and industrial accidents;
production curtailments, shutdowns or additional expenditures resulting from equipment upgrades,
equipment failures and deterioration of assets;
the possibility that cybersecurity incidents or other security breaches may seriously impact our results
of operations and financial condition;
risks of operating a global business;
political and social instability, and unrest, in the regions in which we operate, including South Africa
and the Middle East region;
economic conditions and regulatory changes following the U.K.’s exit from the E.U. could adversely
impact our operations, operating results and financial condition;
ii
•
•
•
•
•
•
•
•
•
•
•
fluctuations in currency exchange rates;
the risk that the agreements governing our debt may restrict our ability to operate our business in
certain ways, as well as impact our liquidity;
our inability to obtain additional capital on favorable terms;
the risk that we may not realize expected investment returns on our capital expenditure projects;
an unpredictable regulatory environment in South Africa where we have significant mining and
beneficiation operations, including amendments by the South African Department of Mineral Resources
and Energy to the Mining Charter (as defined elsewhere herein);
the risk that our TiO2 products are subject to increased regulatory scrutiny, that may impede or inhibit
widespread usage of TiO2 and/or diminish the Company’s ability to sustain or grow its business or may
add significant costs of doing business;
ESG issues, including those related to climate change and sustainability, may subject us to additional
costs and restrictions;
the risk that our ability to use our tax attributes to offset future income may be limited;
concentrated share ownership in the hands of Cristal may result in conflicts of interest and/or prevent
minority shareholders from influencing the Company;
the risk that we are dependent on, and compete with other mining and chemical businesses for, key
human resources in the countries in which we operate; and
impact of English law and our articles of association on our ability to manage our capital structure
flexibly and the anti-takeover protections incorporated into our articles of association.
We are committed to providing timely and accurate information to the investing public, consistent with our
legal and regulatory obligations. To that end, we use our website to convey information about our businesses,
including the anticipated release of quarterly financial results, quarterly financial and statistical and
business-related information. Investors can access announcements about the Company through our website
available at http://www.tronox.com. Our website is included as an inactive textual reference only and the
information contained therein or connected thereto shall not be deemed to be incorporated into this Form 10-K.
iii
PART I
For the purposes of this discussion, references to ‘‘we,’’ ‘‘us,’’ and, ‘‘our’’ refer to Tronox Holdings plc,
together with its consolidated subsidiaries (collectively referred to as ‘‘Tronox’’ or the ‘‘Company’’). We are a
public limited company formed under the laws of England and Wales. We are considered a domestic company in
the United Kingdom and, as such, are required to comply with filing requirements in the United Kingdom.
Additionally, we are not considered a ‘‘foreign private issuer’’ in the U.S.; therefore, we are required to comply
with the reporting and other requirements imposed by the U.S. securities law on U.S. domestic issuers, which,
among other things, requires reporting under accounting principles generally accepted in the United States of
America (‘‘U.S. GAAP’’).
Item 1.
Business
Overview
Tronox is the world’s leading vertically integrated manufacturer of TiO2 pigment. We operate
titanium-bearing mineral sand mines and beneficiation and smelting operations in Australia, South Africa and
Brazil to produce feedstock materials that can be processed into TiO2 for pigment, high purity titanium
chemicals, including titanium tetrachloride, and ultrafine TiO2 used in certain specialty applications. It is our
long-term strategic goal to be vertically integrated and consume all our feedstock materials in our 9 TiO2
pigment facilities located in the United States, Australia, Brazil, UK, France, the Netherlands, China and the
Kingdom of Saudi Arabia (‘‘KSA’’). We believe that vertical integration is the best way to achieve our ultimate
goal of delivering low cost, high-quality pigment to our approximately 1,200 TiO2 customers throughout the
world. The mining, beneficiation and smelting of titanium bearing mineral sands also creates meaningful
quantities of zircon and pig iron, which we also supply to customers around the world.
The following chart highlights the TiO2 value chain we participate in (percentages set forth in the chart
below refer to the global TiO2 market as of December 31, 2021):
1
The following sets forth the percentage of our revenue derived from sales of our products by geographic
region for the year ended December 31, 2021.
33%
21%
7%
39%
The below sets forth the percentage of our revenue derived from sales of our products for the year ended
December 31, 2021.
8%
13%
79%
For further financial information regarding our products and geographic regions, see the section entitled
‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’, as well as Notes 5
and 25 of notes to our consolidated financial statements, each included elsewhere in this Form 10-K.
2021 Key Strategic Initiatives
The following sets forth the key strategic initiatives undertaken during 2021:
Become the Low Cost TiO2 Producer by Investing in our Business Processes and Strengthening Vertical
Integration
Our ability to compete effectively in the TiO2 industry is determined by many factors, including innovation,
reliability, product quality, customer service and price. The business processes that allows us to maximize the
benefit of our vertical integration and global footprint — the so-called ‘‘hidden factory’’ — needs to be
optimized if we are to successfully meet the pricing and other competitive pressures that characterize our
industry. One of the largest investment projects that we continued to pursue in 2021 to improve our global
business processes is what we call ‘‘Project newTRON,’’ a multi-year IT-enabled transformation program that
includes both operational and business transformation. We believe that Project newTRON will not only enable us
to maintain our position as among the lowest cost producers of TiO2 but also substantially improve the reliability,
customer service, cybersecurity and the IT resiliency of our operations.
In terms of strengthening vertical integration, we have two significant mining projects currently underway.
Most significant is the development of a mine in Eastern Australia called Atlas Campaspe. Atlas Campaspe is
intended to replace feedstock supply from our existing Snapper/Ginkgo mines in Eastern Australia which are
expected to be mined until at least 2023. Our pre-mining feasibility work indicates that this mine is abundant in
natural rutile and high-value zircon, and will be a significant source of high grade ilmenite suitable for direct
use, synthetic rutile production, or slag processing. In addition, we are investing in expanding our Fairbreeze and
2
Namakwa mines in South Africa. Like Atlas Campaspe, we believe these expansions are extremely attractive
mine development projects, rich in ilmenite, rutile and zircon that are expected to replace existing mines which
would otherwise deplete in 2024 and 2025. We have numerous other mine development projects in earlier stages
of development in Western Australia and on the Eastern and Western Capes of South Africa, all of which are
intended to maintain or expand our level of feedstock vertical integration.
Our vertical integration strategy may also benefit from the 2022 start-up of a titanium slag smelter facility
(the ‘‘Slagger’’) located in The Jazan City for Primary and Downstream Industries in KSA. On May 9, 2018, we
entered into an Option Agreement with Advanced Metals Industries Cluster Company Limited (‘‘AMIC’’) which
is owned equally by Tasnee and Cristal. Under the terms of the Option Agreement, AMIC granted us an option
(the ‘‘Option’’) to acquire 90% of a special purpose vehicle (the ‘‘SPV’’) which will hold AMIC’s ownership in
the Slagger. The Option may be exercised if the Slagger achieves certain production criteria related to sustained
quality and tonnage of slag produced (the ‘‘Option Criteria’’). Likewise, AMIC may require us to acquire the
Slagger on the same terms if the Option Criteria are satisfied (the ‘‘Put’’). If the Option Criteria are met and
Cristal exercises the Put or we exercise the Option, AMIC will also contribute $322 million of AMIC
indebtedness (the ‘‘AMIC Debt’’) to the SPV before we acquire a 90% ownership in it. In addition, pursuant to
the Option Agreement, we agreed to lend AMIC up to $125 million for capital expenditures and operational
expenses intended to facilitate the start-up of the Slagger (the ‘‘Tronox Loans’’). As of December 31, 2021, we
have loaned AMIC $125 million to facilitate the startup of the Slagger. If the Option Criteria are met and Cristal
exercises the Put or we exercise the Option, AMIC will also contribute the Tronox Loans to the SPV before we
acquire a 90% ownership in it.
On May 13, 2020, we amended the Option Agreement (the ‘‘First Amendment’’) with AMIC to address
circumstances in which the Option Criteria fail to be satisfied. Pursuant to the First Amendment, if the Option
Criteria are not satisfied, Tronox has the right to acquire 90% of the SPV in exchange for the forgiveness of the
Tronox Loans in which case the AMIC Debt will be retained by AMIC and not contributed to the SPV.
Additionally, on May 13, 2020, we amended a Technical Services Agreement (the ‘‘Amended TSA’’) that
we had entered with AMIC on March 15, 2018 to supplement certain technical services that we had originally
agreed to provide. Under the Amended TSA, we agreed to provide technical advice and project management
services including supervision and management of third-party consultants intended to increase the likelihood that
the Option Criteria are satisfied. AMIC and its consultants remain responsible for engineering and construction of
the Slagger. As compensation for these services, Tronox receives a monthly management fee of approximately
$1 million, subject to certain success incentives if and when the Slagger achieves the Option Criteria. The term
of the Amended TSA was extended in December 2021 until December 31, 2022.
Capital Allocation and Global Debt Refinancing
During 2021, we repaid approximately $745 million in debt and are on course to achieve our previously
announced $2.5 billion gross debt objective well ahead of our 2023 target. Our anticipated strong free cashflow
not only enabled us to accelerate our debt reduction program, but also enabled us to announce in
November 2021, the authorization by our Board of Directors of up to $300 million of repurchases of our
ordinary shares. At the same time, we also announced the Board’s intention to increase the annual dividend to
$0.50 per share.
Further, in March 2021, we consummated a debt refinancing transaction which lowered our annualized cash
interest by approximately $30 million and extended our debt portfolio’s weighted average years to maturity by
approximately 3 years. The refinancing consisted of: (a) $1.3 billion first lien loan agreement due in 2028;
(b) $350 million cash flow revolving credit facility; and (c) $1.075 billion 4.625% senior unsecured notes
due 2029, the proceeds of which were used to redeem approximately $1.065 billion of our then outstanding
senior notes.
Exxaro Exit Transaction
In the first quarter of 2021, Exxaro Resources Limited (‘‘Exxaro’’) sold its entire share ownership in
Tronox, totaling 21,975,315 ordinary shares, in an underwritten secondary offering. As part of its exit transaction
and as contemplated under the 2012 merger agreements between Exxaro and Tronox, Exxaro exchanged its 26%
shareholding in our South African operating subsidiaries for 7,246,035 ordinary shares which were also sold by
Exxaro as part of the underwritten offering. As a result, we now own 100% of our South African operating
subsidiaries.
3
Our Principal Products
TiO2
TiO2 Pigment
TiO2 pigment is used in a wide range of products due to its ability to impart whiteness, brightness, and
opacity. TiO2 pigment is used extensively in the manufacture of paint and other coatings, plastics and paper, and
in a wide range of other applications. Moreover, it is a critical component of everyday consumer applications due
to its superior ability to cover or mask other materials effectively and efficiently relative to alternative white
pigments and extenders. TiO2 pigment is considered to be a quality of life product. At present, it is our belief
that there is no effective substitute for TiO2 pigment because no other white pigment has the physical properties
for achieving comparable opacity and brightness or can be incorporated as cost effectively.
Ultrafine Specialty TiO2
We use the sulfate process at our manufacturing facility in Thann, France to produce ultrafine
TiO2 products. We market ultrafine TiO2 products under the CristalActiv® trademark. Ultrafine TiO2 has highly
catalytic properties due to the relatively high surface area of each TiO2 molecule. The principal use of ultrafine
TiO2 products is in NOx emission control products utilized in stationary, mobile and marine applications.
In 2021, we generated $2.8 billion in revenue from sales of TiO2.
Zircon
Zircon (ZrSiO4) is a co-product of mining mineral sands deposits for titanium feedstock. Zircon is primarily
used as an additive in ceramic glazes, which makes the ceramic glaze more water, chemical and abrasion
resistant. It is also used for the production of zirconium metal and zirconium chemicals, in refractories, as
molding sand in foundries, and for TV screen glass, where it adds its structural stability at high temperatures and
resistance to abrasive and corrosive conditions. Zircon typically represents a relatively low proportion of the
in-situ heavy mineral sands deposits we mine, but has a relatively high value compared to other heavy mineral
products. Refractories containing zircon are expensive and are only used in demanding, high-wear and corrosive
applications in the glass, steel and cement industries. Foundry applications use zircon when casting articles of
high quality and value where accurate sizing is crucial, such as aerospace, automotive, medical, and other
high-end applications.
In 2021, we generated $478 million in revenue from sales of zircon.
Feedstock and Other Products
High Purity Pig Iron
During the process of smelting ilmenite at our smelters to increase the concentration of titanium and
produce titanium slag, high purity pig iron is produced as a co-product. High purity pig iron is used as a raw
material in foundries for the production of high-quality ductile iron castings. Ductile iron is used extensively
throughout the world for the production of safety critical automotive parts, such as engine blocks, brake calipers
and steering knuckles in cars and trucks.
Feedstock
Most TiO2 products are derived from three naturally occurring minerals which are commonly referred to as
heavy minerals or mineral sands: ilmenite, leucoxene and rutile. Ilmenite, rutile, leucoxene, as well as titanium
slag and synthetic rutile which are processed from ilmenite, are the primary feedstock materials that we use for
the production of TiO2 pigment. Titanium slag is produced by smelting ilmenite in an electric arc furnace to
separate titanium-oxide from the iron and other impurities. Synthetic rutile is produced by reducing ilmenite in a
rotary kiln, followed by leaching under various conditions to remove the metallic iron from the reduced ilmenite
grains. The purpose of both processes is to increase the titanium concentration of the ilmenite. There is
substantial overlap amongst each of the aforementioned with the primary differentiating factor being the level of
titanium content. For instance, rutile has the highest titanium dioxide content of approximately 94% to 96%,
while ilmenite has the lowest of approximately 45% to 65%. As a result of expiration of external feedstock
agreements entered into in connection with the regulatory approval of our Cristal transaction and our continued
pursuit of our vertical integration strategy, we do not expect to actively sell feedstock going forward.
4
Titanium Tetrachloride
We sell titanium tetrachloride (‘‘TiCl4’’) from our facilities in Thann, France and Yanbu, KSA. At our Thann
facility in France, we produce TiCl4 dedicated for sale to customers for use mainly in the production of various
types of pigments and catalyst products. At our Yanbu facility, we produce excess TiCl4 which we sell directly to
a joint venture between Advanced Metal Industries Cluster and Toho Titanium Metal Co. Ltd. (‘‘ATTM’’) for use
at a titanium sponge plant facility that is adjacent to our Yanbu facility.
In 2021, we generated $301 million in revenue from the sale of high purity pig iron, feedstock, titanium
tetrachloride and other products. This amount also includes revenue generated from the 8120 paper laminate
grade to Venator Materials plc (‘‘Venator’’). In 2019, as part of the Cristal transaction and in order to obtain
approval by regulators in the European Union, we sold the 8120 paper laminate grade to Venator and entered
into a three-year transitional supply agreement which will terminate in April 2022. Revenue from 8120 paper
laminate grade sales to Venator are included within Feedstock and Other products until the expiration date of the
supply agreement with Venator.
The demand for certain of our products during a given year is subject to seasonal fluctuations. See ‘‘Risk
Factors — Risks Relating to our Business — The markets for many of our products have seasonally affected
sales patterns’’.
Mining and Beneficiation of Mineral Sands Deposits
Our current operational mining and beneficiation of mineral sands deposits are comprised of the following:
•
•
•
•
•
•
KwaZulu-Natal (‘‘KZN’’) Sands operations located on the eastern coast of South Africa consisting of
the Fairbreeze mine, a concentration plant, a mineral separation plant and two smelting furnaces that
produce titanium slag;
Our Namakwa Sands operations located on the western coast of South Africa consisting of the
Namakwa mine, two concentration plants, a mineral separation plant, as well as two smelting furnaces
that produce titanium slag;
Our Northern Operations complex in Western Australia consisting of the Cooljarloo dredge mine and
floating heavy mineral concentration plant and the Chandala metallurgical site which includes a mineral
separation plant and a synthetic rutile plant that produces synthetic rutile;
Our Eastern Australia operations consisting of the Ginkgo and Snapper mines, a floating heavy mineral
concentration plant at the Ginkgo site, and a mineral separation plant;
Our Perth Basin operations in Western Australia consisting of the Wonnerup mine and a mineral
separation plant; and
Our Paraiba, Brazil mining operations ceased during 2020 in line with our life of mine plan; however,
we believe there is enough feedstock to supply the Brazil pigment plant through 2023.
Zircon is often, but not always, found in mineral sands deposits containing ilmenite. It is extracted,
alongside ilmenite and rutile, as part of the initial mineral sands beneficiation process.
The mining of mineral sands deposits is conducted either ‘‘wet,’’ by dredging or hydraulic water jets, or
‘‘dry,’’ by using earth-moving equipment to excavate and transport the sands. The type of mining operation we
deploy is dependent upon the characteristics of the ore body. Dredge mining is generally the favored method of
mining mineral sands, provided that the ground conditions are suitable, water is readily available and the deposit
is low in slime content. Dry mining techniques are generally preferred in situations involving hard ground,
discontinuous ore bodies, small tonnage, high slimes contents and/or very high grades.
Regardless of the type of mining technique, the first step in the beneficiation process after the mineral sands
have been mined is to utilize wet concentrator plants to produce a high grade of heavy mineral concentrate
(typically approximately 90% to 98% heavy mineral content). Screened ore is first de-slimed, a process by which
slimes are separated from larger particles of minerals, and then processed through a series of spiral separators
that use gravity to separate the heavy mineral sands from lighter materials, such as quartz. Residue from the
concentration process is pumped back into either the open pits or slimes dams for rehabilitation and water
recovery.
5
After producing heavy mineral concentrate in our wet concentrator plants, we separate the non-magnetic
(zircon and rutile) and magnetic (ilmenite) fractions utilizing a variety of techniques. Through the separation
process, we produce zircon which is sold directly to customers and rutile and leuxocene which can immediately
be used as feedstock material to make TiO2 pigment or sold to the titanium metal, welding and other industries.
Ilmenite is generally further refined for use in our TiO2 pigment manufacturing processes. Depending on the
characteristics of the ilmenite we use two fundamental processes to refine ilmenite. Both processes involve the
removal of iron and other non-titanium material.
•
•
Titanium slag is made by smelting ilmenite in an electric arc furnace to separate titanium-oxide from
the iron and other impurities. The result is two products: ‘‘slag’’ which contains 86% to 89% titanium
dioxide and is considered a TiO2 feedstock material, and high purity pig iron which is ready for sale to
end-use customers.
Synthetic rutile is made by reducing ilmenite in a rotary kiln, followed by leaching under various
conditions to remove the iron from the reduced ilmenite grains. Activated carbon is a byproduct of this
process. Our synthetic rutile has a titanium dioxide content of approximately 89% to 92% and is also
considered a TiO2 feedstock material.
Our current mining and beneficiation operations have an annual production capacity of approximately
832,000 metric tons (‘‘MT’’) of titanium feedstock, which is comprised of 182,000 MT of rutile and leucoxene,
240,000 MT of synthetic rutile and 410,000 MT of titanium slag. We currently have the capability to produce
approximately 297,000 MT of zircon and 250,000 MT of pig iron.
Competitive Conditions of Mining and Feedstock Production
Globally, there are a large number of mining companies that mine mineral sand deposits containing ilmenite,
as well as zircon. However, there is a smaller number of mining companies that are also involved in upgrading
the underlying ilmenite to produce feedstock typically utilized by TiO2 producers.
Pigment producers procure a range of types of feedstocks from multiple feedstock producers to create
varying blends of feedstock materials that maximize the efficiency and economic returns of their unique
production technique under conditions applicable at the time of production. Pigment producers frequently switch
the relative amount of each feedstock they procure based on a number of factors including: the relative cost of
feedstocks, feedstock logistics costs, the cost of, and availability of, chemicals used to process feedstocks, as well
as waste management costs. Hence, there is a high degree of substitutability between and among titanium
feedstocks.
Production of TiO2 Pigment
TiO2 pigment is produced using a combination of processes involving the manufacture of base pigment
particles through either the chloride or sulfate process followed by surface treatment, drying and milling
(collectively known as finishing). Currently, approximately 87% of our TiO2 pigment production capacity is
produced using the chloride process and approximately 13% of our TiO2 production capacity is produced using
the sulfate process.
In the chloride process, feedstock (slag, synthetic rutile, natural rutile or ilmenite ores) are reacted with
chlorine (the chlorination step) and carbon to form TiCl4 in a continuous fluid bed reactor. Purification of TiCl4
to remove impurities is accomplished using selective condensation and distillation processes. The purified TiCl4
is then oxidized in a vapor phase form to produce raw pigment particles and chlorine gas. The latter is recycled
back to the chlorination step for reuse. Raw pigment is then typically slurried with water and dispersants prior to
entering the finishing step. Due to the nature of the production process, the final pigment product is not sensitive
to the feedstocks used to create it, as substantially all substances other than TiO2 are removed during the process.
The chloride process currently accounts for substantially all of the industry-wide TiO2 production capacity in
North America, and approximately 43% of industry-wide capacity globally.
In the sulfate process, ilmenite and/or slag are dissolved in concentrated sulfuric acid. After removing
impurities, dissolved titanium is hydrolyzed and separated from the remaining sulfuric acid. The titanium
hydrolysate is subsequently calcined in a rotary kiln to produce a raw TiO2. The product is then further finished
in a similar way to TiO2 produced through the chloride process.
6
Commercial production of TiO2 pigment results in one of two different crystal forms: rutile, which is
manufactured using either the chloride process or the sulfate process, or anatase, which is only produced using
the sulfate process. Rutile TiO2 is preferred over anatase TiO2 for many of the largest end-use applications, such
as coatings and plastics, because its higher refractive index imparts better hiding power at lower quantities than
the anatase crystal form and it is more suitable for outdoor use because it is more durable. Rutile TiO2 can be
produced using either the chloride process or the sulfate process.
The primary raw materials used in the production of chloride TiO2 pigment include titanium feedstock,
chlorine and coke. As discussed above, we believe we are unique in the degree to which we produce our own
high-grade titanium feedstock. Other chemicals used in the production of TiO2 are purchased from various
companies under short and long-term supply contracts. In the past, we have been, and we expect that we will
continue to be, successful in obtaining extensions to these and other existing supply contracts prior to their
expiration. We expect the raw materials purchased under these contracts, and contracts that we enter into the near
term, to meet our requirements over the next several years.
Marketing of TiO2
We supply and market TiO2 under the brand name TIONA® and CristalActiv® to approximately
1,200 customers in approximately 120 countries, including market leaders in each of the key end-use markets for
TiO2, and we have supplied each of our top ten customers with TiO2 for more than 10 years. In 2018, we
launched a margin stabilization program which provides relative certainty over availability of product and price
stability to customers who choose to participate. In early 2021, we initiated a long-term partnership strategy that
we believe will strengthen the commitments from our customers across all regions and products. The long-term
partnership strategy and margin stabilization programs are key parts of our TiO2 marketing and sales strategy,
enabling us to focus on predictability and reliability of TiO2 delivery across the supply and demand cycle.
The following sets forth the percentage of our TiO2 sales volume by end-use market for the year ended
December 31, 2021:
17%
7%
76%
In addition to price and product quality, we compete on the basis of technical support and customer service.
We sell our products through both a direct sales force and third-party agents and distributors. Our direct sales,
marketing and technical service organizations execute our sales and marketing strategy on a global basis. Due to
the technical requirements of TiO2 applications, our technical service organization and direct sales offices are
supported by a regional customer service staff located in each of our major geographic markets.
Our sales and marketing strategy focuses on aligning ourselves with customers growing faster than the
market and effective customer management through the development and maintenance of strong relationships. We
develop customer relationships and manage customer contact across multiple contact points within the
organization including our sales, technical service and marketing, research and development, and customer
service teams. These primary points of contact are supplemented by direct contact with plant operations
personnel, supply chain specialists, and senior management. We believe that multiple points of customer contact
facilitate efficient problem solving, supply chain support, formula optimization and co-development of products.
Competitive Conditions of TiO2 Pigment
The global market in which our TiO2 pigment business operates is highly competitive. Competition is based
on a number of factors such as price, product quality and service. We face competition from both chloride
7
process pigment producers and sulfate process pigment producers. Moreover, because transportation costs are
minor relative to the cost of our product, there is also competition between products produced in one region
versus products produced in another region.
We face competition from global competitors with headquarters in Europe, the United States and China,
including Chemours, LB Group, Venator, Kronos Worldwide Inc., and INEOS. In addition, we compete with
numerous regional producers particularly in Eastern Europe and China.
Research and Development
We have research and development facilities that aim to develop new products, service our products, and
focus on applied research and development of both new and existing processes. We utilize a third party for
research and development support with respect to our mineral sands business located in South Africa and
Australia. The majority of scientists supporting our TiO2 pigment product development and testing are located in
Oklahoma City, Oklahoma, USA and Stallingborough, UK, while the majority of scientists supporting our TiO2
ultrafine specialty business are located in Thann, France.
New process developments are focused on increased throughput, efficiency gains and general
processing-related improvements for our customers. Ongoing development of process technology contributes to
cost reduction, enhanced production flexibility, increased capacity, and improved consistency of product quality.
In 2021, our product development and commercialization efforts successfully produced a new coatings product at
our Bahia TiO2 pigment plant as well as expanded the number of product grades produced at our Yanbu site. We
also advanced product development for the plastics industry which is expected to result in increased growth in
that segment commencing in 2022. In addition, our specialty chemicals and materials development efforts have
been focused on producing products that we believe will benefit the environment.
Patents, Trademarks, Trade Secrets and Other Intellectual Property Rights
Protection of our proprietary intellectual property is important to our business. At December 31, 2021, we
held 108 patents and 5 patent applications in the U.S., and approximately 656 in foreign counterparts, including
both issued patents and pending patent applications. Our U.S. patents have expiration dates ranging through
2037. Additionally, we have 9 trademark registrations in the U.S. and 2 trademark applications in the U.S., as
well as 272 trademark counterpart registrations and applications in foreign jurisdictions.
We also rely upon our unpatented proprietary technology, know-how and other trade secrets. The substantial
majority of our patents and trade secrets relate to our chloride products, surface treatments, chlorination
expertise, and oxidation process technology, and this proprietary chloride production technology is an important
part of our overall technology position. However, much of the fundamental intellectual property associated with
both chloride and sulfate pigment production is no longer subject to patent protection. At Namakwa Sands, we
rely on intellectual property for our smelting technology, which was granted to us in perpetuity by Anglo
American South Africa Limited for use on a worldwide basis, pursuant to a non-exclusive license.
While certain of our patents relating to our products and production processes are important to our
long-term success, more important is the operational knowledge we possess. We also use and rely upon
unpatented proprietary knowledge, continuing technological innovation and other trade secrets to develop and
maintain our competitive position. We conduct research activities and protect the confidentiality of our trade
secrets through reasonable measures, including confidentiality agreements and security procedures. We protect the
trademarks that we use in connection with the products we manufacture and sell, and have developed value in
connection with our long-term use of our trademarks. See ‘‘Risk Factors — If our intellectual property were
compromised or copied by competitors, or if competitors were to develop similar intellectual property, our results
of operations could be negatively affected. Further, third parties may claim that we infringe on their intellectual
property rights which could result in costly litigation.’’
Human Capital
Tronox employs approximately 6,500 people across six continents, and we believe it is our rich diversity
and exceptional operational and technical expertise that, combined with our vertical integration model, position
Tronox as the world’s leading vertically integrated manufacturer of titanium dioxide pigment. Recognizing the
importance of our human capital, we have made People, Culture and Capabilities one of our five strategic pillars,
8
and placed a priority around developing leaders who will help us effectively (i) acquire, develop and nurture our
talent, and (ii) foster a culture that embodies the values that are important to us, starting with safety and
operating our business responsibly.
People
Because we operate both titanium ore mines and titanium dioxide pigment plants, and because our
operations span the world, we require specialty skills in mining and TiO2 pigment manufacturing. We also need
people who are willing to learn skills across both mining and chemicals operations and who can help us extract
value from our integrated model. The below map sets forth the approximate number of employees as of
December 31, 2021, in each of the global regions in which we operate.
Accordingly, we place a high priority on knowledge transfer (including by relocating skilled leaders across
countries and between mining and TiO2 pigment operations, by staffing high-potential employees in regions on
global projects, and by enabling collaboration in global centers of excellence), and we place a high priority on
fostering diversity, equity and inclusion. We are committed to creating an organization where leaders encourage a
diverse workforce, where people feel valued and respected, have access to opportunities, and in which a variety
of different voices are encouraged and heard. For instance, during 2021, we implemented a Diversity and
Inclusion steering committee and developed a Diversity and Inclusion strategy consisting of three mission
drivers: Workforce Reflective of our Communities, Foster an Inclusive Culture, and Develop our Diverse Talent.
Moreover, in 2021, we launched a Women in Leadership Program consisting of female leaders across our
company.
We also place an uncompromising focus on operating safe, reliable, and responsible facilities, and we
measure our progress with both safety metrics and leading indicators. We believe every employee and contractor
has a responsibility for safety, and we proactively identify and manage risk, conduct ourselves responsibly,
exercise good judgement, and take accountability for our actions. In 2021, our employees worked more than
12 million hours with 22 recordable injuries and no fatalities from our operations, and our contractors worked
more than 8 million hours with 20 recordable injuries and no fatalities from our operations. For the tenth year in
a row our aggregate employee plus contractor total recordable injury rate was lower than the prior year.
As we continue to navigate the dynamic COVID-19 environment, we continue to take swift actions in
response to the pandemic to protect our employees, Tronox carefully monitored the impacts to our operations.
We were able to operate globally without material disruption. We put prudent and proportionate measures in
place, such as restricted employee travel, remote working, staggered shifts, wellness checkpoints at our entrances,
visitor restrictions and more robust sanitation, and disinfecting procedures.
Culture
We aim to create an organizational culture where employees unleash their full value through living our
values, and fostering a high-performance culture. We apply an ‘‘outward mindset’’ by which we mean that each
employee should be highly aware of the organization’s goals and how his or her individual actions affect the
entire organization.
Nearly all of our employees have been through training and development courses which instill the principles
of working with an outward mindset. The consistent training and reinforcement of the importance of acting with
9
an outward mindset has enabled us to transform our culture. We believe this cultural transformation is reflected
in our results, starting with safety: our people truly care for one another, and not only other employees, but also
our contractors, visitors and communities. Shaped by an outward mindset, our people have embraced our global
diversity and are naturally inclusive.
Today, we are a collaborative group of people who naturally want to be helpful to others, and we adjust our
own efforts to make our colleagues’ work easier, however we can.
Building on the foundation of applying an outward mindset, we have adopted a set of core values that
describes our expectations of one another, starting with safety. Every performance review starts with a
self-assessment and manager’s assessment of our consistency in living our values. Employees are encouraged —
and provided a toolkit — to develop in the values where they are weak, and to help coach others in the values
where they are strong.
Tronox Core Values
• We have an uncompromising focus on operating safe, reliable and responsible facilities.
• We honor our responsibility to create value for stakeholders.
• We treat others with respect, and act with personal and organizational integrity.
• We build our organization with diverse, talented people who make a positive difference and we invest
in their success.
• We are adaptable, decisive and effective.
• We are trustworthy and reliable, and we build mutually rewarding relationships.
• We share accountability, and have high expectations for ourselves and one another.
• We do the right work the right way in every aspect of our business.
• We celebrate the joy of working together to accomplish great things.
Capabilities
Developing the operating and technical skills of our people, and the leadership competencies of our leaders,
is an essential component of our business strategy.
At the beginning of 2020 we assessed the competencies of our senior leaders on ten dimensions, and then
identified a competency on which they would focus their development during the year. Leaders were encouraged
to access targeted executive education courses that aligned with their development from a new online program
we offered. During 2021, in addition to our senior leaders, our managers were also assessed on their leadership
competencies and a competency was identified for development in 2022.
In addition to our focus on leadership development, we continued to leverage and enhance our employees
learning through the following initiatives:
•
•
Offered online education to all employees via a broad based global learning platform, providing
leadership development, business skills and information technology; and
Created development plans for prioritized technical areas based on gaps identified from a
comprehensive skills assessment.
In addition, our employees are further guided by our code of conduct and business ethics and we conduct
annual global training to help them fully understand and comply with our code of conduct.
We also have a rigorous succession planning process with respect to key positions throughout the
organization. We believe such process allows us to proactively develop the talent of the future and allows us to
move with speed and agility when leadership changes are required, as was demonstrated in the recent
appointment of our co-CEOs and the election of our Chairman of the Board of Directors. As part of the
succession planning process, high potential leaders are identified and development plans are completed for each
candidate.
10
Sustainability
Our business requires an unwavering focus on sustainable operating practices, and our commitment to
sustainability supports our overall vision and strategy to be the world’s leading vertically integrated TiO2
producer. As such, we integrate sustainability into every aspect of our busines—from our culture and our strategy
to our operating practices. We believe sustainable operations enable us to better control costs and manage our
environmental footprint. In addition, we enhanced oversight of ESG by reorganizing the Board committee
structure to make the Corporate Governance and Nominating Committee the Corporate Governance and
Sustainability Committee with a restated committee charter that requires management to regularly report on key
ESG initiatives. Sustainability also encompasses providing our employees with a safe, diverse workplace and
offering them opportunities to grow and develop. Ultimately, safe, environmentally sustainable operations
demonstrates our respect for our communities and supports our continued privilege to operate.
During 2021, we received a Platinum Rating by EcoVadis in recognition of our sustainability efforts. This
Platinum Rating places us in the Top 1% of the 85,000 companies evaluated around the world by EcoVadis on
their sustainability performance, and the Top 2% in the Basic Chemicals Manufacturing sector. The EcoVadis
assessment focuses on four themes: the environment, labor and human rights, ethics, and sustainable
procurement. In 2021, we achieved a 10-point increase in all categories, and a 20-point increase in the
environmental category compared to our score in 2020.
EcoVadis is a leading third-party independent assessment organization that evaluates companies’
sustainability performance. Their methodology is based on international sustainability standards including the
Global Reporting Initiative (GRI), United Nations Global Compact (UNGC) and ISO 26000.
Environmental, Health and Safety Authorizations
Mining
Our facilities and operations are subject to extensive general and industry-specific environmental, health and
safety regulations in jurisdictions where we operate, but particularly South Africa and Australia. These regulations
include those relating to mine rehabilitation, liability provision, water management, the handling and disposal of
hazardous and non-hazardous materials, and occupational health and safety. The various legislation and regulations are
subject to a number of internal and external audits. We believe our mineral sands operations are in compliance, in all
material respects, with existing health, safety and environmental legislation and regulations.
Regulation of the Mining Industry in South Africa
The South African mining regulatory regime is comprehensive and requires regular reporting to applicable
government departments. A failure to, among other things, comply with any such reporting requirements or the
conditions of any mining license could result in extended mandatory shutdown periods, license and/or mining
right suspensions or revocations all of which could impact our business.
In South Africa, the primary legislative enactments with which our mines are required to comply are the Mineral
and Petroleum Resources Development Act (‘‘MPRDA’’) which governs the acquisition and retention of prospecting
and mining rights. In addition, the Mine Health and Safety Act governs the manner in which mining must be
conducted from a health and safety perspective, while the National Environmental Management Act (and its subsidiary
legislation) provides the underlying framework with respect to environmental rules and regulation for which our
operations must comply. For additional details regarding other South African legislative enactments that govern our
mining licenses please see the section entitled ‘‘Risk Factors’’ set forth elsewhere in this Form 10-K.
Regulation of the Mining Industry in Australia
Each Australian state and territory has its own legislation regulating the exploration for and mining of
minerals. Our key exploration and mining operations are regulated by the Mining Act 1978 (WA), the Mining
Act 1992 (NSW) and their related regulations.
In Western Australia, State Agreements are contracts between the State and the proponents of major
resources projects within Western Australia, and are intended to foster resource development and related
infrastructure investments. These agreements are approved and ratified by the Parliament of Western Australia.
The State Agreement relevant to the development of certain of our Western Australian operations is the
11
agreement authorized by the Mineral Sands (Cooljarloo) Mining and Processing Agreement Act 1988 (WA). This
agreement concluded in March 2020 and Tronox’s rights and obligations are now covered by the Western
Australian Mining Act.
Regulation of Finished Product Manufacturing
Our business is subject to extensive regulation by federal, state, local and foreign governments.
Governmental authorities regulate the generation and treatment of waste and air emissions at our operations and
facilities. At many of our operations, we also comply with worldwide, voluntary standards developed by the
International Organization for Standardization (‘‘ISO’’), a nongovernmental organization that promotes the
development of standards and serves as a bridging organization for quality and environmental standards, such as
ISO 9002 for quality management and ISO 14001 for environmental management.
Chemical Registration
As a chemical manufacturer with global operations, we are subject to a wide array of regulations regarding
the import, export, labelling, use, storage and disposal of our products. We are obliged to comply with the
regulation of chemical substances and inventories under the Toxic Substances Control Act in the United States
and the Registration, Evaluation and Authorization of Chemicals (‘‘REACH’’) regulation in Europe, as well as a
growing list of analogous regimes in other parts of the world, including China, South Korea and Taiwan.
Manufacturers and importers of chemical substances must register information regarding the properties of their
existing chemical substances with the European Chemicals Agency (‘‘ECHA’’). REACH regulations require
chemical substances which are newly imported or manufactured in the EU to be registered before being placed
on the market, assessed for human health or environmental risk and for registrations to be updated periodically
such as when new information emerges relevant to human health or environmental risks associated with the
production or use of the substance. In 2020, the European Commission adopted a regulation classifying certain
forms of TiO2 with a particular aerodynamic diameter as a Category 2 carcinogen by inhalation. This regulation
came into effect in October 2021. For additional information on this topic, see section entitled ‘‘Risk Factors —
Risks Relating to our Legal and Regulatory Environment — Our TiO2 products are subject to increased
regulatory scrutiny that may impede or inhibit widespread usage of TiO2 and/or diminish the Company’s ability
to sustain or grow its business or may add significant costs of doing business.’’
Greenhouse Gas Regulation
Globally, our operations are subject to regulations that seek to reduce emissions of ‘‘greenhouse gases’’
(‘‘GHGs’’). We currently report and manage GHG emissions as required by law for sites located in jurisdictions
requiring such managing and reporting of GHGs, primarily the European Union and Australia. For additional
information on this topic, see section entitled ‘‘Risk Factors — Risks Relating to our Legal and Regulatory
Environment - ESG issues, including those related to climate change and sustainability, may subject us to
additional costs and restrictions, including increased energy and raw material costs, which could have an adverse
effect on our business, financial condition and results of operations, as well as damage our reputation.’’
Available Information
Our public internet site is http://www.tronox.com. The content of our internet site is available for
information purposes only and is included as an inactive textual reference. It should not be relied upon for
investment purposes, nor is it incorporated by reference into this annual report on Form 10-K unless expressly
noted. We make available, free of charge, on or through the investor relations section of our internet site, our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements
and Forms 3, 4 and 5 filed on behalf of directors and executive officers, as well as any amendments to those
reports filed or furnished pursuant to the U.S. Securities and Exchange Act of 1934, as amended (the ‘‘Exchange
Act’’) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the
U.S. Securities and Exchange Commission (the ‘‘SEC’’).
We file current, annual and quarterly reports, proxy statements and other information required by the
Exchange Act with the SEC. Our SEC filings are also available to the public from the SEC’s internet site at
http://www.sec.gov. The content of the SEC’s internet site is available for informational purposes only and is
included as an inactive textual reference. It should not be relied upon for investment purposes, nor is it
incorporated by reference into this annual report on Form 10-K unless expressly noted.
12
Item 1A. Risk Factors
Item 1A. Risk Factors
You should carefully consider the risk factors set forth below, as well as the other information contained in
this Form 10-K, including our consolidated financial statements and related notes. This Form 10-K contains
forward-looking statements that involve risks and uncertainties. Any of the following risks could materially and
adversely affect our business, financial condition or results of operations. Additional risks and uncertainties not
currently known to us or those we currently view to be immaterial may also materially and adversely affect our
business, financial condition or results of operations. The following risk factors are not necessarily presented in
order of relative importance and should not be considered to represent a complete set of all potential risks that
could affect our business, financial condition or results of operations.
RISKS RELATING TO OUR BUSINESS
Market conditions, as well as global and regional economic downturns that adversely affect the demand for
our end-use products, could adversely affect the results of our operations and the prices at which we can sell
our products, thus, negatively impacting our financial results.
Our revenue and results of operations are significantly dependent on sales of TiO2 products and zircon.
Demand for these products historically have been linked to global, regional and local GDP and discretionary
spending, which can be negatively impacted by regional and world events or economic and market conditions.
Such events can cause a decrease in demand for our products and market prices to fall, which may have an
adverse effect on our results of operations and financial condition. A substantial portion of our products and raw
materials are commodities that reprice as market supply and demand fundamentals change. Accordingly, product
margins and the results of operations tend to vary with changes in the business cycle.
A significant portion of the demand for our TiO2 products comes from manufacturers of paint and plastics.
A significant portion of the demand for zircon comes from the construction and other industrial end markets. Our
customers may experience significant fluctuations in demand for their own end products because of economic
conditions, changes in consumer demand, or increases in raw material and energy costs. In addition, with respect
to the zircon market, we believe that China currently accounts for approximately 50% of the world’s demand for
zircon. As such, any prolonged downturn in China could have a material adverse effect on our business and
financial results.
The price of our products, in particular, TiO2, zircon, and pig iron, have been, and in the future may be,
volatile. Price declines for our products will negatively affect our financial position and results of operations.
Historically, the global market for TiO2, zircon and pig iron have been volatile, and those markets are likely
to remain volatile in the future. Prices for TiO2, zircon and pig iron may fluctuate in response to relatively minor
changes in the supply of, and demand for, these products, market uncertainty and other factors beyond our
control. Factors that affect the price of our products include, among other things:
•
•
•
•
•
•
•
overall economic conditions;
the level of customer demand particularly in the paint, plastics and construction industries;
the level of production and exports of our products globally, including the impact of competitors
increasing their capacity and exports;
the level of production and cost of materials, such as chlorine, sulfuric acid and anthracite, used to
produce our products, including rising prices of raw materials due to inflation;
the cost of energy consumed in the production of TiO2 and zircon, including the price of natural gas,
electricity and pet coke;
domestic and foreign governmental relations, tariffs or other trade disputes, regulations and taxes; and
political conditions or hostilities and unrest in regions where we export our TiO2, zircon and
feedstock/other products.
13
Pricing pressure with respect to our TiO2 products, zircon and pig iron can make it difficult to predict the
cash we may have on hand at any given time, and a prolonged period of price declines may materially and
adversely affect our financial position, liquidity, ability to finance planned capital expenditures and results of
operations.
The ongoing global COVID-19 pandemic has adversely affected, and may continue to adversely affect, our
business, financial condition and results of operations.
The ongoing global COVID-19 pandemic, including new strains of the virus, has adversely affected, and
may continue to adversely affect, our business, financial condition and results of operations. We have significant
sales and manufacturing operations in the U.S., Europe, South Africa, Brazil, the Kingdom of Saudi Arabia and
Australia, and each of these countries has been significantly affected by the outbreak and taken measures to try
to contain it. These restrictive measures have adversely impacted, and may further adversely impact, our
workforce and operations, the operations of our customers, and those of our respective vendors and suppliers.
Demand for our products could decrease as a result of the pandemic. Any such future developments are
dependent upon factors including, but are not limited to, the duration and spread of the outbreak, the severity of
new strains of the virus, the actions to contain the virus or treat its impact, the effectiveness of treatments and
vaccines, the size and effectiveness of the compensating measures taken by governments, including the failure to
implement additional stimuli and how quickly and to what extent normal economic and operating conditions can
resume.
In addition, the COVID-19 pandemic has significantly increased economic and demand uncertainty. It is
possible that the continued spread of COVID-19, including new strains of the virus, will cause an additional
economic slowdown, and it is possible that this could cause a global recession. Such adverse impact on the
global economy is likely to adversely affect our performance, financial condition and results of operations, as
well as our ability to successfully execute our business strategies and initiatives, such as the funding of capital
expenditures, including by negatively impacting the demand for our products and services, negatively affecting
the parties with whom we do business and disrupting our ability to conduct product development and other
important business activities.
To the extent the COVID-19 pandemic continues to adversely affect the global economy, and/or adversely
affects our business, operations or financial performance, it may also have the effect of increasing the likelihood
and/or magnitude of other risks described in this section entitled ‘‘Risk Factors’’. We are closely monitoring the
potential adverse effects and impact on our operations, businesses and financial performance, including liquidity
and capital usage, though the extent is difficult to fully predict at this time due to the rapid evolution of this
uncertain situation.
Our industry and the end-use markets in which we compete are highly competitive. This competition may
adversely affect our results of operations and operating cash flows.
Each of our markets is highly competitive. Competition in the TiO2 industry is based on a number of factors
such as price, product quality, and service. We face significant competition from major international and smaller
regional competitors, including producers in China. Moreover, Chinese producers have significantly expanded
their production capacity in recent years and have also commenced the commercial production of TiO2 via
chloride technology. The risk of substitution of these Chinese producers by our customers could increase as these
Chinese producers expand their use of chloride technology, improve the quality of their chloride technology, and
continue to improve the quality of their sulfate products. Moreover, we compete with a large number of mining
companies with respect to zircon. Zircon producers generally compete on the basis of price, quality, logistics,
delivery, and payment terms and consistency of supply.
Within the end-use markets in which we compete, competition between products is intense. We face
substantial risk that our customers could switch to our competitors’ products in response to any number of
developments including lower price offerings by our competitors for substantially the same products, new
product development by competitors, increased commercial production of TiO2 via chloride technology by
Chinese producers, greater acceptance of TiO2 produced via sulfate technology in end-market applications
previously characterized by TiO2 produced via chloride technology, or with respect to zircon customers,
switching to lower priced substitute products. Our inability to develop, produce or market our products to
compete effectively against our competitors could have a material adverse effect on our business, financial
condition, results of operations and cash flow.
14
An increase in the price of energy or other raw materials, or an interruption in our energy or other raw
material supply, could have a material adverse effect on our business, financial condition or results of
operations.
Our mining, beneficiation, smelting and production processes consume significant amounts of energy and
raw materials, the costs of which can be subject to worldwide, as well as, local supply and demand, as well as
other factors beyond our control. Fuel and energy linked to commodities, such as diesel, natural gas, heavy fuel
oil and pet coke, and other consumables, such as chlorine, sulfuric acid, illuminating paraffin, electrodes, sulfur
and anthracite, consumed in our TiO2 manufacturing and mining operations form an important part of our TiO2
operating costs. We have no control over the costs of these consumables, many of which are linked to some
degree to the price of oil, and the costs of many of these raw materials may fluctuate widely for a variety of
reasons, including changes in availability, major capacity additions or reductions, or significant facility operating
problems. Availability of such consumables could also be impacted by transportation capacity constraints or other
interruptions. These fluctuations could negatively affect our operating margins, our results of operations or
planned capital expenditures. As these costs rise, our operating expenses will increase and could adversely affect
our business, especially if we are unable to pass price increases in raw materials through to our customers.
The markets for many of our products have seasonally affected sales patterns.
Historically, the demand for our products is subject to seasonal fluctuations. TiO2 is widely used in paint
and other coatings where demand increases prior to the painting season in the Northern Hemisphere (spring and
summer). Additionally, although zircon is generally a non-seasonal product, it is negatively impacted by the
winter and Chinese New Year celebrations due to reduced zircon demand from China. We may be adversely
affected by existing or future cyclical changes, and such conditions may be sustained or further aggravated by
anticipated or unanticipated changes in regional weather conditions. For example, poor weather conditions in a
region can lead to an abbreviated painting season, which can depress consumer sales of paint products that use
TiO2.
We are dependent on, and compete with other mining and chemical businesses for, key human resources in
the countries in which we operate, and our business will suffer if we are unable to hire or deploy highly
skilled employees.
We compete with other chemical and mining companies, and other companies generally, in the countries in
which we operate to attract and retain key human resources at all levels with the appropriate technical skills and
operating and managerial experience necessary to continue operating and expanding our businesses. These
operations use modern techniques and equipment and accordingly require various types of skilled workers. The
success of our business will be materially dependent upon the skills, experience and efforts of our key officers
and skilled employees. Competition for skilled employees may cost us in terms of higher labor costs or reduced
productivity. In addition, due to the ongoing COVID-19 pandemic, certain countries in which we operate have
imposed stringent travel and immigration restrictions which may further hinder our ability to deploy necessary
human resources. As a result, we may not be able to attract, retain and deploy skilled and experienced
employees.
Should we lose any of our key personnel or fail to attract, retain and deploy key qualified personnel or other
skilled employees, our business may be harmed and our operational results and financial condition could be
affected.
If we are unable to innovate and successfully introduce new products, or new technologies or processes
reduce the demand for our products or the price at which we can sell products, our results of operations could
be adversely affected.
Our industries and the end-use markets into which we sell our products experience periodic technological
change and product improvement. Our financial condition and results of operations could be adversely affected if
we are unable to gauge the direction of commercial and technological progress in key end-use markets or if we
fail to fund and successfully develop, manufacture and market products in such changing end-use markets.
In addition, new technologies or processes have the potential to replace or provide lower-cost alternatives to
our products, such as new processes that reduce the amount of TiO2 or zircon content in consumer products
which in turn could depress the demand and pricing for TiO2 or zircon, respectively. We cannot predict whether
15
technological innovations will, in the future, result in a lower demand for our products or affect the
competitiveness of our business. We may be required to invest significant resources to adapt to changing
technologies, markets and competitive environments.
Given the nature of our chemical, mining and smelting operations, we face a material risk of liability,
production delays and additional expenditures from environmental and industrial accidents.
Our business is exposed to, among other things, environmental hazards and industrial accidents the
occurrence of which could delay production, suspend operations, increase repair, maintenance or medical costs
and, due to the vertical integration of our operations, could have an adverse effect on the productivity and results
of operations of a particular manufacturing facility or on our business as a whole. Furthermore, during
operational breakdowns resulting from any such environmental hazard or industrial accident, the relevant facility
may not be restored to full operations within the anticipated timeframe, which could result in further business
losses. Over our operating history, we have incurred incidents of this nature. If any of the equipment on which
we depend were severely damaged or were destroyed by fire, 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 our products, which would have a material adverse effect on our business, financial condition or results of
operations.
Equipment failures and deterioration of assets may lead to production curtailments, shutdowns or additional
expenditures.
Our operations depend upon critical equipment that must periodically maintained and upgraded in order to
avoid suffering unanticipated breakdowns or failures. As a result, our mining operations and processing plants
may be interrupted or curtailed by equipment failures, which could have a material adverse effect on our results
of operations. In addition, assets critical to our mining and chemical processing operations may deteriorate due to
wear and tear or otherwise sooner than we currently estimate. Such deterioration may result in additional
maintenance spending and additional capital expenditures. If these assets do not generate the amount of future
cash flows that we expect, and we are not able to refurbish them or procure replacement assets in an
economically feasible manner, our future results of operations may be materially and adversely affected.
Our results of operations and financial condition could be seriously impacted by security breaches, including
cybersecurity incidents.
We rely on information technology systems across our operations to manage our accounting, finance, and
supply chain functions. Our information technology is provided by a combination of internal and external
services and service providers. Further, our business involves the use, processing, storage and transmission of
information about customers, suppliers and employees using such information technology systems. Our ability to
effectively operate our business depends on the security, reliability and capacity of these systems.
Like most major corporations, we may become the target of cyberattacks, including industrial espionage,
phishing or ransomware attacks, from time to time. For instance, the Cristal business we acquired in April 2019
was subject to a significant cybersecurity attack in 2017. Failure to effectively prevent, detect and recover from
security breaches, including attacks on information technology and infrastructure by hackers; viruses; breaches
due to employee error or actions; or other disruptions could seriously harm our operations as well as the
operations of our customers and suppliers. Such serious harm can involve, among other things, misuse of our
assets, business disruptions, loss of data, unauthorized access to trade secrets and confidential business
information, unauthorized access to personal information, legal claims or proceedings, reporting errors,
processing inefficiencies, negative media attention, reputational harm, loss of sales, remediation and increased
insurance costs, and interference with regulatory compliance. We have experienced, and expect to continue to
experience, these types of cybersecurity threats and incidents, which may be material.
We have put in place training and security measures designed to protect against cyberattacks, phishing,
security breaches and misappropriation or corruption of our systems, intentional or unintentional disclosure of
confidential information, or disruption of our operations. As these threats continue to evolve, particularly around
cybersecurity, we may be required to expend significant resources to enhance our control environment, processes,
practices and other protective measures. Despite these efforts, we may not be able to prevent cyberattacks and
other security breaches and such events could materially adversely affect our business, financial condition or
results of operations.
16
Our ore resources and reserve estimates are based on a number of assumptions, including mining and
recovery factors, future cash costs of production and ore demand and pricing. As a result, ore resources and
reserve quantities actually produced may differ from current estimates.
The mineral resource and reserve estimates are estimates of the quantity and ore grades in our mines based
on the interpretation of geological data obtained from drill holes and other sampling techniques, as well as from
feasibility studies. The accuracy of these estimates is dependent on the assumptions and judgments made in
interpreting the geological data in accordance with established guidelines and standards. Our mineral reserves
represent the amount of ore that we believe can be economically mined and processed, and are estimated based
on a number of factors.
There is significant uncertainty in any mineral reserve or mineral resource estimate. Factors that are beyond
our control, such as the ability to secure mineral rights, the sufficiency of mineralization to support mining and
beneficiation practices and the suitability of the market may significantly impact mineral resource and reserve
estimates. The actual deposits encountered and the economic viability of mining a deposit may differ materially
from our estimates. Since these mineral resources and reserves are estimates based on assumptions, we may
revise these estimates in the future as we become aware of new developments. To maintain TiO2 feedstock and
zircon production beyond the expected lives of our existing mines or to increase production materially above
projected levels, we will need to access additional reserves through exploration or discovery.
RISKS RELATING TO THE GLOBAL NATURE OF OUR BUSINESS
We are exposed to the risks of operating a global business.
We have operations in jurisdictions around the globe which subjects us to a number of risks, including:
•
•
•
•
adapting to unfamiliar regional and geopolitical conditions and demands, including political instability,
civil unrest, expropriation, nationalization of properties by a government, imposition of sanctions,
changes to import or export regulations and fees, renegotiation or nullification of existing agreements,
mining leases and permits;
increased difficulties with regard to political and social attitudes, laws, rules, regulations and policies
within countries that favor domestic companies over non-domestic companies, including customer-or
government-supported efforts to promote the development and growth of local competitors;
economic and commercial instability risks, including those caused by sovereign and private debt
default, corruption, and new and unfamiliar laws and regulations at national, regional and local levels,
including taxation regimes, tariffs and trade barriers, exchange controls, repatriation of earnings, and
labor and environmental and health and safety laws and regulations;
implementation of additional technological and cybersecurity measures and cost reduction efforts,
including restructuring activities, which may adversely affect our ability to capitalize on opportunities;
• major public health issues, including the current COVID-19 pandemic, which could cause, and have
caused, disruptions in our operations or workforce;
war or terrorist activities;
difficulties enforcing intellectual property and contractual rights in certain jurisdictions; and
unexpected events, including fires or explosions at facilities, and natural disasters.
•
•
•
Political and social instability, and unrest, and actual, or potential, armed conflicts in the Middle East region
may affect the Company’s results of operations and financial position.
Our operations in KSA have been affected in the past, and may be affected in the future, by the political,
social and economic conditions from time to time prevailing in, or affecting, KSA or the wider Middle East
region, including by rocket attacks from armed rebel groups. For example, since 2011, a number of countries in
the Middle East region have witnessed significant social unrest, including widespread public demonstrations, and,
in certain cases, armed conflict, terrorist attacks, diplomatic disputes, foreign military intervention and a change
of government. In addition, KSA faces a number of challenges arising mainly from the relatively high levels of
unemployment among the Saudi youth population, requests for political and social changes, and the security
17
threat posed by certain groups. Should KSA experience similar political and social unrest as found in other
countries in the Middle East, the Saudi Arabian economy could be adversely affected, our TiO2 plant located in
Yanbu could be temporarily disrupted or materially adversely affected and our business and operating results
could be materially adversely affected.
In addition, the Slagger, that is subject to the Option or Put (as defined elsewhere herein), is located in
Jazan, KSA which has been subject to rocket attacks from armed rebel groups fighting the KSA military in
Yemen. Further attacks could materially adversely affect our business and operating results.
South Africa, where we have large mining assets and derive a significant portion of our revenue and profit,
poses distinct operational risks which could affect our business, financial condition and results of operations.
In South Africa, we currently operate two significant mining assets, as well as accompanying separation
plants and smelting operations, and derive a significant portion of our profit from the sale of zircon. Our mining
and smelting operations depend on electrical power generated by Eskom, the sole, state-owned energy supplier.
Eskom has not been able to reliably provide electrical power and as a result ‘‘load-shedding’’ (planned and
unplanned rolling power outages) is expected for the foreseeable future. In addition, in 2021, Eskom received a
governmental order to reduce by one-third its operating capacity to limit its greenhouse gas emissions. Although
Eskom is currently appealing the government order, there is no assurance that Eskom will be successful in its
appeal. We have also experienced increased electricity prices and future price increases are expected to occur.
Capacity reductions, load shedding, and/or electricity price increases could have a material adverse effect on our
business, financial conditions or results of operations.
In addition, our KZN Sands operations currently use approximately 320,000 gigajoules of Sasol gas, which
is available only from Sasol Limited. As such, an interruption in the supply of Sasol gas could have a material
adverse effect on our business, financial conditions or results of operations.
Moreover, certain regions of South Africa have experienced in the past, and are prone to, drought conditions
resulting in water restrictions being imposed in such areas. We use significant amounts of water in our South
African operations. A prolonged drought in a region of South Africa where our operations are located may lead
to water use restrictions which could have a material adverse effect on our business, financial condition or results
of operations. In addition, under South African law, our South African mining operations are subject to water-use
licenses that govern each operation. These licenses require, among other conditions, that mining operations
achieve and maintain certain water quality limits for all water discharges, where applicable. Changes to water-use
licenses could increase our costs of operations thereby affecting our operational results and financial condition.
Our operations in South Africa are also reliant on services provided by the State-owned, sole provider of rail
transport, Transnet Freight Rail and ocean transport, Transnet National Port Authority (collectively ‘‘Transnet’’).
Furthermore, Transnet provides extensive dockside services at both the ports of Richards Bay and Saldanha Bay.
In 2021, the Transnet owned and operated Port of Richards Bay was impacted by two separate events, including
a significant fire, which damaged part of the Port’s infrastructure, causing increased shipment delays. Delays or
interruptions at either the rail service or the ports in which we receive and/or export material could have a
negative impact on our business, financial condition and results of operations.
The aforementioned operational risks, as well as any other foreseen or unforeseen operational risks primarily
related to doing business in South Africa, could have a material adverse effect on our business, financial
condition or results of operations.
As an emerging market, South Africa poses a challenging array of long-term political, social and economic
risks.
South Africa continues to undergo political, social and economic challenges. For example, in 2021,
unprecedented and politically motivated civil unrest in South Africa resulted in significant damage to the national
supply chains and logistics. The primary area of unrest was near to our KZN operations. Changes to, or
instability in, the economic, social or political environment in South Africa which cause civil unrest, shortages of
production materials, interruptions to transportation networks, or labor unrest could result in production delays
and production shortfalls, and materially impact our production and results of operations.
The South African government has recently embarked on a process of identifying and securing land for
persons who were previously dispossessed of such land as a result of Apartheid policies. In December 2019, the
18
South African government released a draft land expropriation bill for public comment. The land expropriation bill
contemplates that, where it is in the ‘‘public interest’’, land may be expropriated by the South African
government, without compensation being payable to the current owners. While the South African government has
indicated that such measures will be applied initially to state-owned land, it is possible that such measures may
extend to agricultural and mining areas. In the event that the land on which the Namakwa Sands and KZN Sands
operations are situated areas become the subject of a land claim under any such proposed or future land
expropriation bill, it may have a material adverse effect on our business, financial condition or results of
operations.
The African Government’s exchange control regulations require resident companies to obtain the prior
approval of the South African Reserve Bank to raise capital in any currency other than the Rand, and restrict the
export of capital from South Africa. While the South African government has relaxed exchange controls in recent
years, it is difficult to predict whether or how it will further change or abolish exchange control measures in the
future. These exchange control restrictions could hinder our financial and strategic flexibility, particularly our
ability to use South African capital to fund acquisitions, capital expenditures, and new projects outside of South
Africa.
Our South African operations have been affected by inflation in South Africa in recent years. Employment
costs and wages in South Africa have increased in recent years, resulting in significant cost pressures for the
mining industry. Prolonged or heightened inflation and associated cost pressures could have a material adverse
effect on our business, financial condition or results of operations.
Our South African operations have entered into various collective agreements with organized labor
regulating wages and working conditions at our mines and smelter operations. There have been periods when
various stakeholders have been unable to agree on dispute resolution processes, leading to threats of disruptive
industrial action disputes. Due to the high level of employee union membership, our South African operations are
at risk of production stoppages for indefinite periods due to strikes and other labor disputes. Although we believe
that we have good labor relations with our South African employees, we may experience labor disputes in the
future.
Although we believe that our relationships with our various local communities are good, the areas in which
our South African operations are situated are the traditional homelands of various tribal groupings that are
historically politically volatile. This volatility persists today and frequently results in violent, destructive
behaviors. Increased volatility and any consequential civil unrest may result in production stoppages and/or the
destruction of assets which comprise our South African operations, any of which could have a material adverse
effect on our business, financial condition or results of operations.
Economic conditions and regulatory changes following the U.K.’s exit from the E.U. could adversely impact
our operations, operating results and financial condition.
The U.K. has withdrawn from the E.U. (often referred to as Brexit). Since December 31, 2020, the U.K. has
left the E.U. customs union and single market and is no longer required to follow E.U. laws. It is expected that
Brexit will impact economic conditions in the U.K. and the E.U. but given the lack of comparable precedent, it
is unclear what financial, trade and legal implications the withdrawal of the U.K. from the E.U. will have and
how such withdrawal will affect us.
The consequences of Brexit could adversely impact the markets in which we and our customers operate.
Brexit could also create uncertainty with respect to the legal and regulatory requirements to which we are subject
and lead to divergent national laws and regulations as the U.K. government determines which E.U. laws to
replace or replicate. Due to Brexit, adverse consequences such as deterioration in economic conditions, volatility
in currency exchange rates or adverse changes in regulation could have a negative impact on our future
operations, operating results and financial condition.
Our results of operations may be adversely affected by fluctuations in currency exchange rates.
The financial condition and results of operations of our operating entities outside the U.S. are reported in
various foreign currencies, primarily the South African Rand, Australian Dollars, Euros, Pound Sterling and
Brazilian Real and then converted into U.S. dollars at the applicable exchange rate for inclusion in the financial
statements. A significant portion of our costs are denominated in currencies other than the U.S. dollar. As a
19
result, any volatility of the U.S. dollar against these foreign currencies creates uncertainty for, and may have a
negative impact on, reported sales and operating margin. In addition, our operating entities often need to convert
currencies they receive for their products into currencies in which they purchase raw materials or pay for
services, which could result in a gain or loss depending on fluctuations in exchange rates. In order to manage
this risk, we have, from time to time, entered into forward contracts to buy and sell foreign currencies.
RISKS RELATING TO OUR DEBT AND CAPITAL STRUCTURE
We are a holding company that is dependent on cash flows from our operating subsidiaries to fund our debt
obligations, capital expenditures and ongoing operations.
All of our operations are conducted, and all of our assets are owned, by our operating companies, which are
our subsidiaries. We intend to continue to conduct our operations at the operating company level. Consequently,
our cash flow and our ability to meet our obligations or make cash distributions depends upon the cash flow of
our operating companies, and the payment of funds by our operating companies in the form of dividends or
otherwise. The ability of our operating companies to make any payments to us depends on their earnings, the
terms of their indebtedness, including the terms of any credit facilities, or indentures, and legal restrictions
regarding the transfer of funds.
Our ability to service our debt and fund our planned capital expenditures and ongoing operations will
depend on our ability to generate and increase cash flow, and our access to additional liquidity sources. Our
ability to generate and increase cash flow is dependent on many factors, including many of other risks described
in this section entitled ‘‘Risk Factors’’.
The agreements and instruments governing our debt contain restrictions and limitations that could affect our
ability to operate our business, as well as impact our liquidity.
As of December 31, 2021, our total principal amount of debt was approximately $2.6 billion. Our credit
facilities contain covenants that could adversely affect our ability to operate our business, our liquidity, and our
results of operations. These covenants may restrict, among other things, our and our subsidiaries’ ability to:
•
•
incur or guarantee additional indebtedness;
complete asset sales, acquisitions or mergers;
• make investments and capital expenditures;
•
prepay other indebtedness;
•
•
enter into transactions with affiliates; and
fund additional dividends or repurchase shares.
Certain of our indebtedness facilities and senior notes include requirements relating to the ratio of adjusted
EBITDA to indebtedness or certain fixed charges. The breach of any covenants or obligations in our credit
facilities, not otherwise waived or amended, could result in a default under the applicable debt obligations (and
cross-defaults to certain other debt obligations) and could trigger acceleration of those obligations, which in turn
could trigger other cross defaults under other existing or future agreements governing our long-term
indebtedness. In addition, the secured lenders under the credit facilities could foreclose on their collateral, which
includes equity interests in our subsidiaries, and exercise other rights of secured creditors. Any default under
those credit facilities could adversely affect our growth, our financial condition, our results of operations and our
ability to make payments on our credit facilities, and could force us to seek the protection of bankruptcy laws.
We may need additional capital in the future and may not be able to obtain it on favorable terms, and such
capital expenditure projects may not realize expected investment returns.
Our business is capital intensive, and our success depends to a significant degree on our ability to maintain
our manufacturing operations and invest in those operations to expand capacity and remain competitive from a
cost perspective. We may require additional capital in the future to finance capital investments, including any
new mines that replace mines that are end of life, potential expansion or optimization of existing production
facilities or mining operations, fund ongoing research and development activities and meet general working
capital needs. For instance, in 2020 we began the implementation of a multi-year global digital transformation
20
strategy that is expected to include the establishment of increased automation of both operational and financial
systems, including the global ERP, through new and upgraded systems, technology and processes. The risks
relating to such digital transformation include any new information and operational technologies not being
properly designed, integrated, managed, and/or implemented in a timely manner which could significantly
increase the program’s costs, and negatively impact our operations, including, our plant’s system safety,
functionality and effectiveness. Although we have taken, and will continue to take, significant steps to mitigate
the potential negative impact of the implementation of such new digital systems, there can be no assurance that
these procedures will be completely successful. Additionally, we entered into the Option Agreement with AMIC
pursuant to which AMIC granted us an option to acquire 90% of a SPV, to which AMIC’s ownership in the
Slagger will be contributed together with $322 million of indebtedness currently held by AMIC. Upon exercise
of the Option or Put, there can be no assurance that we may assume this indebtedness and may need to obtain
funding to repay it at maturity. In the event we require any additional financing, such financing may not be
available when needed on terms favorable to us, or at all. If we are unable to obtain adequate funds on
acceptable terms, we may be unable to maintain, expand or lower the operating costs of our facilities or take
advantage of future opportunities or respond to competitive pressures, which could harm our results of
operations, financial condition and business prospects. Additionally, 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.
RISKS RELATING TO OUR LEGAL AND REGULATORY ENVIRONMENT
Our South African mining rights are subject to onerous regulatory requirements imposed by legislation and
the Department of Mineral Resources and Energy (the ‘‘DMRE’’), the compliance with which could have a
material adverse effect on our business, financial condition and results of operations.
Black economic empowerment (‘‘BEE’’) legislation was introduced into South Africa as a means to seek to
redress the inequalities of the previous Apartheid system by requiring the inclusion of historically disadvantaged
South Africans in the mainstream economy. Under BEE legislation, certain of our operations are required to be
partially owned by historically disadvantaged South Africans — known as ‘‘empowerment’’ — and comply with
other provisions of applicable BEE legislation that relate to matters such as mandatory procurement and
employment opportunities for the communities in which we operate. On March 1, 2019, a new set of BEE rules
and regulations relevant to our operation came into effect known as ‘‘Mining Charter III’’. Under the
‘‘empowerment’’ rules of Mining Charter III, certain of our operations require a 30% BEE shareholding that must
be structured through a special purpose vehicle comprised of black entrepreneurs, the local community
surrounding the relevant mining area and eligible employees. In addition, Mining Charter III sets forth more
stringent requirements applicable to all of our South African operations, including: the procurement of goods and
services from BEE compliant entities; race, age and gender based employment quotas; and, workers’ housing and
living conditions. Uncertainty over the status of Mining Charter III arose when in September 2021, the South
African High Court ruled that certain provisions of Mining Charter III were unconstitutional and that Mining
Charter III cannot be considered binding legislation. The DMRE is currently considering its options with respect
to the court ruling. As a result, there is no assurance that all the provisions of Mining Charter III will take effect
or that the DMRE as result of such ruling will not attempt to enforce the same or more onerous provisions
through legislative amendments.
Prior to Mining Charter III, BEE in the South African mining sector was governed by Mining Charter II.
Under Mining Charter II, our South African operations were ‘‘empowered’’ by a 26% ownership interest in two
of our South African subsidiaries by Exxaro which prior to 2017 was greater than 50% owned by historically
disadvantaged South Africans. We believe that under Mining Charter III the two South African subsidiaries in
which Exxaro previously held 26% became permanently ‘‘empowered’’ — so-called, ‘‘once empowered always
empowered’’.
‘‘Once empowered always empowered’’ means that a South African company that has had the requisite
shareholding base consisting of historically disadvantaged South Africans as at December 31, 2014 will always
qualify as an ‘‘empowered’’ entity for purposes of the retention of an existing mining right for the duration of
that right. The question of whether the ‘‘once empowered always empowered’’ principle applies in the mining
industry in South Africa has been subject to litigation between the Minerals Council of South Africa (the
‘‘Minerals Council’’) (formerly the Chamber of Mines, an industry body that represents approximately 90% of
21
the South African Mining Industry) and the DMRE. The South African High Court decided in the affirmative for
the Minerals Council and such decision was subsequently confirmed on appeal. Thus, based on the High Court’s
ruling, the ‘‘once empowered always empowered’’ principle applies to our existing mining rights. In addition, the
South African High Court in connection with its September 2021 decision with respect to the unconstitutionality
of Mining Charter III also confirmed that ‘‘once empowered always empowered’’ applies to the renewal and
transfer of mining rights. However, there is no assurance that DMRE may not enact new legislation that would
undermine the court’s ruling regarding the applicability of ‘‘once empowered always empowered’’ to the renewal
and transfer of mining rights. In the event that ‘‘once empowered always empowered’’ does not ultimately apply
to the renewal or transfer of mining rights it could have a material adverse effect on our business, financial
condition or results of operations.
Our failure to comply with the anti-corruption laws of the U.S. and various international jurisdictions could
negatively impact our reputation and results of operations.
Doing business on a global basis requires us to comply with the laws and regulations of the U.S.
government and those of various international jurisdictions, and our failure to successfully comply with these
rules and regulations may expose us to liabilities. In particular, our operations are subject to U.S. and foreign
anti-corruption laws and regulations, such as the U.S. Foreign Corrupt Practices Act (‘‘FCPA’’), the U.K. Bribery
Act 2010 (‘‘U.K. Bribery Act’’), as well as anti-corruption laws of the various jurisdictions in which we operate.
Our global operations may expose us to the risk of violating, or being accused of violating, the foregoing or
other anti-corruption laws. Such violations could be punishable by criminal fines, imprisonment, civil penalties,
disgorgement of profits, injunctions, and exclusion from government contracts, as well as other remedial
measures. Investigations of alleged violations can be very expensive, disruptive, and damaging to our reputation.
Although we have implemented anti-corruption policies and procedures, there can be no guarantee that these
policies, procedures, and training will effectively prevent violations by our employees or representatives in the
future. Additionally, we face a risk that our distributors and other business partners may violate the FCPA, the
U.K. Bribery Act, or similar laws or regulations. Such violations could expose us to FCPA and U.K. Bribery Act
liability and/or our reputation may potentially be harmed by their violations and resulting sanctions and fines.
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 competitors,
customers, equipment vendors, environmental groups and other non-governmental organizations, 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 any litigation and coverage decisions, we
cannot predict the outcome of these matters or whether insurance claims may mitigate any damages to us.
Litigation is very costly, and the costs associated with prosecuting and defending litigation matters could have a
material adverse effect on our results of operations and financial condition. See Note 20 of notes to our
consolidated financial statements, included elsewhere in this Form 10-K for further information regarding our
commitments and contingencies.
Our flexibility in managing our labor force may be adversely affected by labor and employment laws in the
jurisdictions in which we operate, many of which are more onerous than those of the U.S.; and some of our
labor force has substantial workers’ council or trade union participation, which creates a risk of disruption
from labor disputes and new laws affecting employment policies.
The vast majority of our employees are located outside the U.S. In most of those countries, labor and
employment laws are more onerous than in the U.S. and, in many cases, grant significant job protection to
employees, including rights on termination of employment. Moreover, many of our workforce outside the U.S.
belong to unions and/or are represented by a collective bargaining agreement. As such, in such jurisdictions we
are required to consult with, and seek the consent or advice of, various employee groups or works’ councils that
represent our employees for any changes to our activities or employee benefits. This requirement could have a
significant impact on our flexibility in managing costs and responding to market changes.
We are subject to many environmental, health and safety regulations.
Our operations and production facilities are subject to extensive environmental and health and safety laws
and regulations at national, international and local levels in numerous jurisdictions relating to use of natural
resources, pollution, protection of the environment, mine site remediation, transporting and storing raw materials
22
and finished products, and storing and disposing of hazardous wastes among other materials. Moreover, certain
environmental laws impose joint and several and/or strict liability for costs to clean up and restore sites where
pollutants have been disposed or otherwise spilled or released. We cannot be certain that we will not incur
significant costs and liabilities for remediation or damage to property, natural resources or persons as a result of
spills or releases from our operations or those of a third party.
The costs of compliance with the extensive environmental, health and safety laws and regulations or the
inability to obtain, update or renew permits required for operation or expansion of our business could negatively
impact our results of operations or otherwise adversely affect our business. If we fail to comply with the
conditions of our permits governing the production and management of regulated materials, mineral sands mining
licenses or leases or the provisions of the relevant jurisdictional laws in which we operate, these permits, mining
licenses or leases and mining rights could be canceled or suspended, and we could be prevented from obtaining
new mining and prospecting rights, which could materially and adversely affect our business, operating results
and financial condition. Additionally, we could incur substantial costs, including fines, damages, criminal or civil
sanctions and remediation costs, or experience interruptions in our operations, for violations arising under these
laws and regulations, including operating without the required permits, mining licenses or leases and/or mining
rights. In the event of a catastrophic incident involving any of the raw materials we use, or chemicals or mineral
products we produce, we could incur material costs as a result of addressing the consequences of such event.
Changes to existing laws governing operations, especially changes in laws relating to transportation of
mineral resources, the treatment of land and infrastructure, contaminated land, the remediation of mines, tax
royalties, waste handling and management, exchange control restrictions, environmental remediation, mineral
rights, ownership of mining assets, or the rights to prospect and mine may have a material adverse effect on our
future business operations and financial performance. There is risk that onerous conditions may be attached to
authorizations in the form of mining rights, water-use licenses, miscellaneous licenses and environmental
approvals, or that the grant of these approvals may be delayed or not granted.
Our TiO2 products are subject to increased regulatory scrutiny, that may impede or inhibit widespread usage
of TiO2 and / or diminish the Company’s ability to sustain or grow its business or may add significant costs of
doing business.
Current regulatory and societal demands for increased protection against products which may cause cancer,
genetic mutations or other long-term health problems are resulting in increased pressure for more stringent
regulation of our TiO2 products. We expect these trends to continue and the ultimate cost of compliance could be
material. In particular, changes to product safety regulations could limit the use of, and demand for, our TiO2
products, require investment in new product development or the way we manufacture our existing products, and
increase regulatory compliance expenditures for us and our suppliers.
For instance, the European Commission has recently adopted a regulation classifying certain forms of TiO2
with a particular aerodynamic diameter as a Category 2 carcinogen by inhalation, with the applicable labelling
regulation coming into effect in October 2021. The classification of TiO2 as a Category 2 Carcinogen could
impact our business by inhibiting the marketing of products containing TiO2 to consumers, and subject our
manufacturing operations to new regulations that could increase costs. The Category 2 classification and labelling
requirements could have additional effects under other EU laws (e.g., those affecting medical and pharmaceutical
applications, cosmetics, food packaging and food additives) and/or trigger heightened regulatory scrutiny in
countries and local jurisdictions outside the EU based on health and safety grounds. For instance, the Health and
Safety Executive in the U.K. has published the U.K.’s mandatory classification and labelling list, which includes
the classification of TiO2 as a suspected carcinogen (in a powder form containing 1% or more of particles with
aerodynamic diameter ≤ 10 μm). The classification became mandatory in the U.K. in October 2021.
In May 2021, the European Food Safety Authority (EFSA) announced new guidelines which concluded that
a certain digestible form of TiO2 known as E171 is no longer considered safe as a food additive due to
uncertainty for genotoxicity. Though we do not manufacture E171, the EFSA guidelines indicate additional
regulatory review of our TiO2 products is likely which could result in more stringent qualifications and
use-restriction being applied or to the introduction of further classifications. It is also possible that heightened
regulatory scrutiny could lead to claims by consumers or those involved in the production of such products
alleging adverse health impacts. In addition, there is no assurance that other materials which we add to our TiO2
products could also be subject to increased regulation which could impact the cost of labelling or the sales of our
products.
23
ESG issues, including those related to climate change and sustainability, may subject us to additional costs
and restrictions, including increased energy and raw material costs, which could have an adverse effect on
our business, financial condition and results of operations, as well as damage our reputation.
The majority of our greenhouse gas emissions are generated from our TiO2 slag furnaces in South Africa,
synthetic rutile kiln in Australia, and TiO2 pigment plants in the United States, United Kingdom, France, Brazil,
China, Netherlands, Australia, and Saudi Arabia. Concerns about the relationship between greenhouse gases and
global climate change, and an increased focus on carbon neutrality, may result in new or increased legal and
regulatory requirements on both national and supranational levels, to monitor, regulate, control and tax emissions
of carbon dioxide and other greenhouse gases. A number of governmental bodies have already introduced, or are
contemplating, regulatory changes in response to climate change, including regulating greenhouse gas emissions.
Any laws or regulations that are adopted to reduce emissions of greenhouse gases could, among other things,
(i) cause an increase to our raw material costs, (ii) increase our costs to operate and maintain our facilities, and
(iii) increase costs to administer and manage emissions programs.
In addition, companies across all industries are facing increasing scrutiny relating to their ESG policies.
Increased focus and activism related to ESG may hinder the Company’s access to capital, as investors may
reconsider their capital investment as a result of their assessment of the Company’s ESG practices. In particular,
customers, investors and other stakeholders are increasingly focusing on environmental issues, including climate
change, water use, and other sustainability concerns. Moreover, increased regulatory requirements, including in
relation to various aspects of ESG including disclosure requirements, may result in increased compliance or input
costs of energy, raw materials or compliance with emissions standards, which may cause disruptions in the
manufacture of our products or an increase in operating costs. Any failure to achieve our ESG goals or a
perception of our failure to act responsibly with respect to the environment or to effectively respond to new, or
changes in, legal or regulatory requirements concerning environmental or other ESG matters, or increased
operating or manufacturing costs due to increased regulation, could adversely affect our business, financial
condition and results of operations, as well as our reputation.
If our intellectual property were compromised or copied by competitors, or if competitors were to develop
similar intellectual property independently, our results of operations could be negatively affected. Further,
third parties may claim that we infringe on their intellectual property rights which could result in costly
litigation.
Our success depends to a significant degree upon our ability to protect and preserve our patents and
unpatented proprietary technology, operational knowledge and other trade secrets (collectively ‘‘intellectual
property rights’’). The undetected or unremedied unauthorized use of our intellectual property rights or the
legitimate development or acquisition of intellectual property related to our industry by third parties could reduce
or eliminate any competitive advantage we have as a result of our intellectual property rights. If we must take
legal action to protect, defend or enforce our intellectual property rights, any suits or proceedings could result in
significant costs and diversion of our resources and our management’s attention, and we may not prevail in any
such suits or proceedings. A failure to protect, defend or enforce our intellectual property rights could have an
adverse effect on our financial condition and results of operations.
Although there are currently no pending or threatened proceedings or claims known to us that are material
relating to alleged infringement, misappropriation or violation of the intellectual property rights of others, we
may be subject to legal proceedings and claims in the future in which third parties allege that their patents or
other intellectual property rights are infringed, misappropriated or otherwise violated by us or our products or
processes. In the event that any such infringement, misappropriation or violation of the intellectual property
rights of others is found, we may need to obtain licenses from those parties or substantially re-engineer our
products or processes to avoid such infringement, misappropriation or violation. We might not be able to obtain
the necessary licenses on acceptable terms or be able to re-engineer our products or processes successfully.
Moreover, if we are found by a court of law to infringe, misappropriate or otherwise violate the intellectual
property rights of others, we could be required to pay substantial damages or be enjoined from making, using or
selling the infringing products or technology. We also could be enjoined from making, using or selling the
allegedly infringing products or technology pending the final outcome of the suit. Any of the foregoing could
adversely affect our financial condition and results of operations.
24
RISKS RELATING TO ACCOUNTING AND TAXATION
If our intangible assets or other long-lived assets become impaired, we may be required to record a significant
noncash charge to earnings.
We have a significant amount of intangible assets and other long-lived assets on our consolidated balance
sheets. Under U.S. GAAP, we review our intangible assets and other long-lived assets for impairment when
events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be
considered a change in circumstances, indicating that the carrying value of our intangible assets and other
long-lived assets may not be recoverable, include, but are not limited to, a significant decline in share price and
market capitalization, changes in the industries in which we operate, particularly the impact of a downturn in the
global economy, as well as competition or other factors leading to reduction in expected long-term sales or
results of operations. We may be required to record a significant noncash charge in our financial statements
during the period in which any impairment of our intangible assets and other long-lived assets is determined,
negatively impacting our results of operations.
Our ability to use our tax attributes to offset future income may be limited.
Our ability to use net operating losses (‘‘NOLs’’) and Section 163(j) interest expense carryforwards
generated by us could be substantially limited if we were to experience an ‘‘ownership change’’ as defined under
Section 382 of the U.S. Internal Revenue Code of 1986, as amended (‘‘the Code’’). In general, an ownership
change would occur if our ‘‘5-percent shareholders,’’ as defined under Section 382 of the Code and including
certain groups of persons treated as ‘‘5-percent shareholders,’’ collectively increased their ownership in us by
more than 50 percentage points over a rolling three-year period. Although we believe we have sufficient
protection of our approximately $4.3 billion of NOLs and/or approximately $856 million of Section 163(j)
interest expense carryforwards, there can be no assurance that an ownership change for U.S. federal and
applicable state income tax purposes will not occur in the future. A corporation that experiences an ownership
change will generally be subject to an annual limitation on the use of certain pre-ownership change losses and/or
credits. Such a limitation could, for any given year, have the effect of increasing the amount of our U.S. federal
and/or state income tax liability, which would negatively impact our financial condition and the amount of
after-tax cash available for distribution to holders of our ordinary shares if declared by our board of directors.
We could be subject to changes in tax rates, adoption of new tax laws or additional tax liabilities.
We are subject to taxation in the United States, United Kingdom, South Africa, Australia, Brazil and various
other foreign jurisdictions. Our future effective tax rate could be affected by changes in statutory rates and other
legislative changes, or changes in determinations regarding the jurisdictions in which we are subject to tax. From
time to time, the U.S. federal, state and local and foreign governments make substantive changes to tax rules and
their application, which could result in higher corporate taxes than would be incurred under existing tax law and
could have an adverse effect on our results of operations or financial condition. From time to time, we are also
subject to tax audits by various taxing authorities. Although we believe our tax positions are appropriate, the
final determination of any future tax audits could be materially different from our income tax provisions, accruals
and reserves and any such unfavorable outcome from a future tax audit could have a material adverse effect on
our results of operations or financial condition.
Failure to meet some or all of our key financial and non-financial targets could negatively impact the value
of our business and adversely affect our stock price.
From time to time, we may announce certain key financial and non-financial targets that are expected to
serve as benchmarks for our performance for a given time period, such as, projections for our future revenue
growth, Adjusted EBITDA, Adjusted diluted earnings per share and free cash flow. Our failure to meet one or
more of these key financial targets may negatively impact our results of operations, stock price, and stockholder
returns. The factors influencing our ability to meet these key financial targets include, but are not limited to,
changes in the global economic environment relating to our TiO2 products and zircon, changes in our competitive
landscape, including our relationships with new or existing customers, our ability to introduce new products,
applications, or technologies, our undertaking an acquisition, joint venture, or other strategic arrangement, and
other factors described within this Item 1A – Risk Factors, many of which are beyond our control.
25
RISKS RELATING TO INVESTING IN OUR ORDINARY SHARES
Concentrated ownership of our ordinary shares by Cristal may prevent minority shareholders from influencing
significant corporate decisions and may result in conflicts of interest.
As of December 31, 2021, Cristal Inorganic, an affiliate of Cristal owned approximately 24% of our
outstanding ordinary shares. As such, Cristal Inorganic may be able to influence fundamental corporate matters
and transactions. This concentration of ownership, may delay, deter or prevent acts that would be favored by our
other shareholders. The interests of Cristal Inorganic may not always coincide with our interests or the interests
of our other shareholders. Also, Cristal Inorganic may seek to cause us to take courses of action that, in their
judgment, could enhance their investment in us, but which might involve risks to our other shareholders or
adversely affect us or our other shareholders.
In addition, under the shareholders agreement (the ‘‘Cristal Shareholders Agreement’’) we entered into at the
closing of the Cristal Transaction with Cristal, as long as Cristal Inorganic and the three shareholders of Cristal
(collectively, the ‘‘Cristal Shareholders’’) collectively beneficially own at least 24,900,000 or more of our
ordinary shares, they have the right to designate for nomination two directors of our board of directors (the
‘‘Board’’). As long as the Cristal Shareholders collectively beneficially own at least 12,450,000 ordinary shares
but less than 24,900,000 ordinary shares, they have the right to designate for nomination one director of the
Board. The Cristal Shareholders Agreement also provides that as long as the Cristal Shareholders collectively
beneficially own at least 12,450,000 ordinary shares they have certain preemptive rights. Also, pursuant to the
Cristal Shareholders Agreement, we have filed a universal shelf registration statement which is currently effective
and which currently would cover 6,532,738 shares owned by Cristal. Other than with respect to those shares, the
Cristal Shareholders Agreement includes certain restrictions on Cristal Inorganic’s ability to transfer any of its
ordinary shares prior to December 31, 2022 if such transfer would cause an ‘‘ownership change’’ as defined
under Section 382 of the Internal Revenue Code.
As a result of these or other factors, including as a result of any offering of shares by Cristal, or the
perception that such sales may occur, the market price of our ordinary shares could decline. In addition, this
concentration of share ownership may adversely affect the trading price of our ordinary shares because investors
may perceive disadvantages in owning shares in a company with significant shareholders or with significant
outstanding shares with registration rights.
English law and provisions in our articles of association may have anti-takeover effects that could discourage
an acquisition of us by others, even if an acquisition would be beneficial to our shareholders, and may
prevent attempts by our shareholders to replace or remove our current management.
Certain provisions of the U.K. Companies Act 2006 (the ‘‘Companies Act’’) and our articles of association
may have the effect of delaying or preventing a change in control of us or changes in our management. For
example, our articles of association include provisions that:
• maintain an advance notice procedure for proposed nominations of persons for election to our board of
directors;
•
•
provide certain mandatory offer provisions, including, among other provisions, that a shareholder,
together with persons acting in concert, that acquires 30 percent or more of our issued shares without
making an offer to all of our other shareholders that is in cash or accompanied by a cash alternative
would be at risk of certain sanctions from our board of directors unless they acted with the prior
consent of our board of directors or the prior approval of the shareholders; and
provide that vacancies on our board of directors may be filled by a vote of the directors or by an
ordinary resolution of the shareholders.
In addition, public limited companies are prohibited under the Companies Act from taking shareholder
action by written resolution. These provisions, alone or together, could delay or prevent hostile takeovers and
changes in control or changes in our management.
26
Although we do not anticipate being subject to the U.K. City Code on Takeovers and Mergers, such Takeover
Code may still have anti-takeover effects in the event the Takeover Panel determines that such Code is
applicable to us.
The U.K. City Code on Takeovers and Mergers (the ‘‘Takeover Code’’) applies, among other things, to an
offer for a public company whose registered office is in the U.K. (or the Channel Islands or the Isle of Man) and
whose securities are not admitted to trading on a regulated market in the U.K. (or on any stock exchange in the
Channel Islands or the Isle of Man) if the company is considered by the Panel on Takeovers and Mergers (the
‘‘Takeover Panel’’) to have its place of central management and control in the U.K. (or the Channel Islands or
the Isle of Man). This is known as the ‘‘residency test.’’ The test for central management and control under the
Takeover Code is different from that used by the U.K. tax authorities. Under the Takeover Code, the Takeover
Panel will determine whether we have our place of central management and control in the U.K. by looking at
various factors, including the structure of our board of directors, the functions of the directors and where they are
resident.
Given that currently all of the members of our Board of Directors reside outside the United Kingdom, we
do not anticipate that we will be subject to the Takeover Code. However, if at the time of a takeover offer, the
Takeover Panel determines that we have our place of central management and control in the U.K., we would be
subject to a number of rules and restrictions, including but not limited to the following: (1) our ability to enter
into deal protection arrangements with a bidder would be extremely limited; (2) we might not, without the
approval of our shareholders, be able to perform certain actions that could have the effect of frustrating an offer,
such as issuing shares or carrying out acquisitions or disposals; and (3) we would be obliged to provide equality
of information to all bona fide competing bidders.
As a public limited company incorporated in England and Wales, certain capital structure decisions requires
approval of our shareholders, which may limit our flexibility to manage our capital structure.
The Companies Act generally provides that a board of directors of a public limited company may only allot
shares (or grant rights to subscribe for or convertible into shares) with the prior authorization of shareholders,
such authorization stating the maximum amount of shares that may be allotted under such authorization and
specifying the date on which such authorization will expire, being not more than five years, each as specified in
the articles of association or relevant shareholder resolution. We obtained previous shareholder authority to allot
additional shares for a period of five years from February 25, 2019, which authorization will need to be renewed
at least upon expiration (five years from February 25, 2019) but may be sought more frequently for additional
five-year terms (or any shorter period).
The Companies Act generally provides that existing shareholders of a company have statutory pre-emption
rights when new shares in such company are allotted and issued for cash. However, it is possible for such
statutory pre-emption right to be disapplied by either shareholders passing a special resolution at a general
meeting, being a resolution passed by at least 75% of the votes cast, or by inclusion of relevant provisions in the
articles of association of the company. Such a disapplication of statutory pre-emption rights may not be for more
than five years. We obtained previous shareholder authority to disapply statutory pre-emption rights for a period
of five years from February 25, 2019, which disapplication will need to be renewed upon expiration (i.e., at least
every five years) to remain effective, but may be sought more frequently for additional five-year terms (or any
shorter period).
The Companies Act generally prohibits a public limited company from repurchasing its own shares without
the prior approval of its shareholders by ordinary resolution, being a resolution passed by a simple majority of
votes cast, and subject to compliance with other statutory formalities. Such authorization may not be for more
than five years from the date on which such ordinary resolution is passed. We obtained previous shareholder
authority to repurchase shares for a period of five years from February 25, 2019, which authorization will need
to be renewed at least upon expiration (i.e., five years from February 25, 2019) but may be sought more
frequently for additional five-year terms (or any shorter period).
Transfers of our ordinary shares outside The Depository Trust may be subject to stamp duty or stamp duty
reserve tax in the U.K., which would increase the cost of dealing in our shares.
Except for ordinary shares received by a holder deemed to be an affiliate of us for purposes of U.S.
securities laws, our ordinary shares have been issued to a nominee for The Depository Trust Company (‘‘DTC’’)
27
and corresponding book-entry interests credited in the facilities of DTC. On the basis of current law and HM
Revenue and Customs (‘‘HMRC’’) practice, no charges to U.K. stamp duty or stamp duty reserve tax (‘‘SDRT’’)
are expected to arise on the issue of the ordinary shares into DTC’s facilities or on transfers of book-entry
interests in ordinary shares within DTC’s facilities.
Shareholders are strongly encouraged to hold their ordinary shares in book entry form through DTC.
Transfers of shares held in book entry form through DTC currently do not attract a charge to stamp duty or
SDRT in the U.K. A transfer of title in the shares from within the DTC system out of DTC, including to
certificate shares, and any subsequent transfers that occur entirely outside the DTC system will attract a charge to
stamp duty at a rate of 0.5% of any consideration, which is payable by the transferee of the shares. Any such
duty must be paid (and the relevant transfer document, if any, stamped by HMRC) before the transfer can be
registered in our books. However, if those shares are redeposited into DTC, the redeposit will attract stamp duty
or SDRT at the rate of 1.5% to be paid by the transferor.
We have put arrangements in place such that directly held ordinary shares cannot be transferred into the
DTC system until the transferor of the ordinary shares has first delivered the ordinary shares to a depositary
specified by us so that SDRT may be collected in connection with the initial delivery to the depositary. Any such
ordinary shares will be evidenced by a receipt issued by the depositary. Before the transfer can be registered in
our books, the transferor will also be required to put the depositary in funds to settle the resultant liability to
SDRT, which will be charged at a rate of 1.5% of the value of the shares.
Our articles of association provide that the courts of England and Wales have exclusive jurisdiction to
determine any dispute brought by a shareholder in that shareholder’s capacity as such and certain other
matters.
Our articles of association provide that the courts of England and Wales have exclusive jurisdiction to
determine any dispute brought by a shareholder in that shareholder’s capacity as such, or related to or connected
with any derivative claim in respect of a cause of action vested in us or seeking relief on our behalf, against us
and/or the board and/or any of the directors, former directors, officers, employees or shareholders individually,
arising out of or in connection with our articles of association or (to the maximum extent permitted by applicable
law) otherwise. This choice of forum provision may limit a shareholder’s ability to bring a claim in a judicial
forum that the shareholder believes is favorable for disputes with us or our directors, former directors, officers,
employees or shareholders which may discourage lawsuits against us and our directors, former directors, officers,
employees or shareholders.
There may be difficulty in effecting service of legal process and enforcing judgments against us and our
directors and management.
We are incorporated under the laws of England and Wales and a substantial portion of our assets are located
outside of the U.S. The U.S. and the U.K. do not currently have a treaty providing for the recognition and
enforcement of judgments, other than arbitration awards, in civil and commercial matters. The enforceability of
any judgment of a U.S. federal or state court in the U.K. will depend on the laws and any treaties in effect at the
time, including conflicts of laws principles (such as those bearing on the question of whether a U.K. court would
recognize the basis on which a U.S. court had purported to exercise jurisdiction over a defendant). In this
context, there is doubt as to the enforceability in the U.K. of civil liabilities based solely on the federal securities
laws of the U.S. In addition, awards for punitive damages in actions brought in the U.S. or elsewhere may be
unenforceable in the U.K.. An award for monetary damages under U.S. securities laws would likely be
considered punitive if it did not seek to compensate the claimant for loss or damage suffered and was intended to
punish the defendant.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 2.
Properties
Below are our primary offices and facilities at December 31, 2021. We believe our properties are in good
operating condition, and are well maintained. Pursuant to separate financing agreements, substantially all of our
material U.S., European and Australian properties are pledged or encumbered to support or otherwise provide
security for our indebtedness.
28
Our primary office locations consisted of the following:
Location
Owned/Leased
Offices
Stamford, Connecticut
Stallingborough, United Kingdom
Oklahoma City, Oklahoma
Leased
Owned
Owned
263 Tresser Boulevard, Suite 1100
Laporte Road
3301 NW 150 Street
Overview of Our Vertical Integration
Tronox is the world’s leading vertically integrated manufacturer of TiO2 pigment. We produce the majority
of our internal TiO2 pigment feedstock requirements internally at our mine and mineral processing facilities. Our
supply chain consists of mining operations in South Africa and Australia, separation and upgrading facilities
located near our mines where we separate and process raw ore and then ‘‘upgrade’’ the titanium content of the
raw ore to produce specialized chloride TiO2 feedstock materials (titanium slag and synthetic rutile) and nine
TiO2 pigment production facilities located on six continents. The internal TiO2 feedstocks we produce include
titanium slag, synthetic rutile, natural rutile, leucoxene, chloride ilmenite and sulfate ilmenite.
As part of our TiO2 value chain, we explore, acquire, mine and process heavy mineral sands to produce
Heavy Mineral Concentrate (‘‘HMC’’) from which the Valuable Heavy Mineral (VHM) titanium and zircon
products are made. HMC is produced from heavy mineral sands primarily through spiral gravity concentration at
our mines. Mined material is transported to our nearby integrated mineral separation plants (MSP) to separate
and concentrate VHMs by gravity, magnetic and electrostatic techniques. Multiple grades of titanium minerals
and zircon may be produced from each MSP. The three titanium feedstocks which result from the MSP process
(natural rutile, leucoxene and ilmenite) are each handled differently. Natural rutile and leucoxene are ordinarily
shipped from the MSP to one of our TiO2 pigment production facilities. Depending on the TiO2 content of mined
ilmenite, we either use it directly to produce TiO2 pigment or we upgrade it to produce titanium slag at our two
South African smelter operations and synthetic rutile (SR) at our Chandala metallurgical complex in Western
Australia. Our internally sourced titanium mineral products provide a secure, long-term low-cost supply of
high-grade feedstock for our TiO2 pigment manufacturing facilities.
There is a high degree of substitutability among natural rutile, synthetic rutile, titanium slag, leucoxene and
chloride ilmenite as titanium feedstocks for chloride pigment production. The commercial value of titanium
feedstock is a function not only of TiO2 content and supply and demand balances, but also particle size, trace
element geochemistry, logistics and other factors. The global TiO2 industry is a value-added supply chain, with
final product prices for TiO2 pigment, typically significantly higher than that of chloride or sulfate ilmenite, the
backbone of the global titanium mineral supply. The revenue assumptions for titanium feedstocks we applied to
determine our reserve estimates, as described below, are based on market intelligence gathered from internal and
external experts, sales contracts and historic pricing. The economic assessment is done on a minerals only basis
and no value of downstream upgrading is attributed to the minerals units.
In 2021, we produced concentrates of ilmenite, rutile, leucoxene, and zircon from five operations:
— Namakwa Sands, Western Cape, South Africa;
— KwaZulu-Natal (‘‘KZN’’) Sands, KwaZulu-Natal, South Africa;
— Northern Operations, Western Australia;
— Southern Operations, Western Australia; and
— Eastern Operations, Murray Basin, New South Wales, Australia.
Ilmenite from our Namakwa and KZN Sands mines in South Africa is converted to titanium slag at our
smelters at Saldanha Bay, Western Cape and Empangeni, KwaZulu-Natal, respectively. Ilmenite from our
Cooljarloo mine in Western Australia is converted to SR at our Chandala metallurgical complex which is most
commonly used as feedstock to our TiO2 pigment plants at Kwinana and Kemerton, both of which are south of
Perth in Western Australia.
29
Mining Operations
Tronox owns and operates five mining and mineral processing operations, each including one or more heavy
mineral sand (‘‘HMS’’) mines producing HMC which is separated into valuable co-products, primarily zircon,
and TiO2 feedstocks — ilmenite, natural rutile or leucoxene — in a dedicated mineral separation plant.
In South Africa, the Namakwa Sands operations include two open-pit mines at Brand-se-Baai, each with a
dedicated primary gravity concentration plant and a secondary concentration plant (SCP) that processes the HMC
from both primary plants. Products from the SCP are further processed to finished mineral products at a nearby
mineral separation plant (MSP) in Koekenaap. Ilmenite product is further processed into titanium slag and pig
iron at a two-furnace smelter at Saldanha, Western Cape, South Africa which is two hundred kilometers south of
Koekenaap. The KZN operations have an open pit hydraulic mine at Fairbreeze with a primary gravity
concentration plant, a mineral separation plant at nearby Empangeni alongside a two-furnace smelter complex,
and export facilities at the port of Richards Bay.
In Australia, the Northern Operations consist of the Cooljarloo dredge mine and floating primary gravity
concentration plant, and the Chandala metallurgical complex, consisting of a mineral separation plant and SR
plant. The Southern Operations consist of a dry open pit mine and primary concentration at Wonnerup and a
mineral separation plant at Bunbury.
The Eastern Operations in the Murray Basin of Australia include two operating dredge mines at Ginkgo and
Snapper and a mineral separation plant at Broken Hill, NSW. As the Gingko and Snapper mines are expected to
be mined until at least 2023, we are developing and will be commissioning another mine in the Eastern
Operations, Atlas Campaspe, intended to seamlessly replace the Ginkgo and Snapper mines. Our pre-mining
feasibility work indicates that this mine is abundant in natural rutile and high-value zircon, and will be a
significant source of high grade ilmenite suitable for direct use or upgraded feedstock production.
Figure 1 Showing global site and offices including locations with resources and reserves.
30
Pigment Operations
Our pigment production facilities utilize the titanium mineral feedstock from our mining and processing
operations to produce TiO2 pigment products. The following table lists our TiO2 pigment production facilities
and capacity (in metric tonnes per year), by location:
Facility
Hamilton, Mississippi, USA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yanbu, Saudi Arabia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stallingborough, England, United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kwinana, Western Australia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kemerton, Western Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Botlek, the Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Salvador, Bahia, Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fuzhou, Jiangxi Province, China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thann, Alsace, France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Production
TiO2
TiO2
TiO2
TiO2
TiO2
TiO2
TiO2
TiO2
TiO2
TiO2
Capacity
225,000
200,000
165,000
150,000
110,000
90,000
60,000
46,000
32,000
Process
Chloride
Chloride
Chloride
Chloride
Chloride
Chloride
Sulphate
Sulphate
Sulphate
Mineral Properties
Reporting of Reserves and Resources
U.S. registrants are required to report resources and reserves in accordance with the amendments finalized in
February 2019 to Item 102 of Regulation S-K(Subpart 1300). These amendments were intended to modernize the
disclosure requirements for properties owned or operated by mining companies to provide investors with a more
comprehensive understanding of a registrant’s mining properties.
Our mineral resource and reserve estimates are based on extensive geological resource models modified by
various mining and processing factors and assessed in a techno-economic model for commercial viability. This
constitutes a Life-of-Mine-Plan (LOMP) for each operation. Our LOMP and reserve estimates are optimized with
respect to anticipated revenues and costs. Assumptions are developed from our extensive experience and include
mining parameters, processing recoveries, operating costs, foreign exchange, and rehabilitation. Each of our
operations reconcile predicted mining and processing metrics with actual production and recovery data on a
monthly basis. Our models are updated as necessary and used to determine ore boundaries based on economic
assumptions. To satisfy the disclosure rules the nominal cut-off grades used to define resources are, generally:
0.3% zircon at Namakwa Sands; 1.5% ilmenite at KZN Sands; 1.0% Total Heavy Minerals (‘‘THM’’) at our
Northern Operations, Western Australia, 3% THM at our Southern Operations, Western Australia, and 1% THM
at our Eastern Operations, Murray Basin, Australia. Actual cut-off grades applied in estimates can vary according
to numerous factors, such as mining method, overburden: ore ratios, and heavy mineral (‘‘HM’’) assemblage
quality. For reserves where there is substantial asset investment post the minerals production stage, parameters
that best utilize the whole value chain may take precedence over maximizing value from the minerals business
unit, therefore impacting the optimal mining shell and effective cut-off grade.
Not all HMS deposits are alike. Our reserves, as set forth in the table below, have a higher confidence level
because we have undertaken sufficient drilling density and validation. Resources present unconfirmed continuity
and variability in grade, HM assemblage, or other characteristics, as well as the indeterminate impact of
modifying factors, and hence are not classified as reserves.
Within the broad category of resources, inferred resources have a lower level of geological confidence than
do indicated resources with measured resources being the highest confidence level from a geological perspective.
Only indicated resources and measured resources can be converted to reserves with proven reserves having a
higher level of economically exploitable confidence than probable reserves. The summary table of our reserves
below have been determined to be economically-exploitable by individuals competent and qualified to act under
the new disclosure requirements as ‘‘Qualified Persons’’.
Mining and Mineral Tenure
S-K Subpart 1300 requires us to describe our rights to access and mine the minerals we report as reserves
and to disclose any change in mineral tenure of material significance. Our heavy mineral exploration and mining
activities in South Africa and Australia are regulated by the South African Department of Mineral Resources, the
31
Western Australia Department of Mines, Industry Regulation and Safety and the New South Wales Department of
Planning, Industry and Environment. All exploration and mining activities are subject to multiple levels of
environmental regulatory review, including approvals of environmental plans and public comment periods as
pre-conditions to granting of mineral tenure.
Mineral Tenure - South Africa
Our two South African mineral sand mining processing chains are operated by Namakwa Sands and KZN
Sands, both indirect, wholly-owned subsidiaries of Tronox Holdings plc. The South African Department of
Mineral Resources and Energy (‘‘DMRE’’) is the regulatory administrator of mineral rights in South Africa,
subject to the provisions of the Mineral and Petroleum Resources Development Act (‘‘MPRDA’’), No. 28 of
2004, as amended in 2016. The MPRDA vests all mineral rights in South Africa in the national government and
establishes conditions for the acquisition and maintenance of prospecting and mining rights. Prospecting rights
and mining rights may only be granted by the DMRE. Prospecting rights are granted for a maximum period of
five years and can be renewed once for an extension of up to three years. Prospecting rights may be revoked for
non-compliance with the terms of the prospecting right.
Mining right applications require additional approvals by the Department of Environmental Affairs (‘‘DEA’’)
of an Environmental Management Program (‘‘EMP’’) and an Integrated Water and Land Use License.
Mining rights are valid for up to 30 years and may be extended by 30-year renewals, subject to compliance
with conditions established in the EMP and by the MPRDA. Environmental permitting and compliance are
co-administered by the regional offices of DEA and Development Planning. All rights, licenses and permits for
Namakwa Sands and KZN Sands are in good standing.
On the Western Cape of South Africa, Tronox holds mining rights over an area of 19,205 hectares
(47,457 acres) and surface rights totaling 17,111 hectares (43,542 acres) at the active mining site near
Brand-se-Baai, commonly referred to as our Namakwa Sands operation. On the Eastern coast of South Africa,
Tronox controls mining and prospecting rights covering approximately 4,041 hectares (9,986 acres) at KZN,
where surface access rights are either owned directly by KZN Sands or secured by agreements with Mondi Ltd.
A further 4,790 hectares (11,836 acres) of prospecting rights are held by a direct, wholly-owned subsidiary of
KZN Sands at the nearby Port Durnford and Waterloo project areas which we are currently in the process of
converting into a mining right.
Mineral Tenure - Australia
Our Australian mineral properties are divided into the Northern and Southern Operations on the Swan
Coastal Plain of Western Australia and the Eastern Operations in the Murray Basin of New South Wales and
Victoria. Mining tenements in Australia are managed at the State or Territorial level. In Western Australia,
Mining Leases, Exploration Licenses and Retention Licenses are granted and administered by the Western
Australian Department of Mines, Industry Regulation and Safety, and in New South Wales by the NSW
Department of Planning, Industry and Environment, under the authority of the Western Australian Mining Act
1978 and the New South Wales Mining Act 1992, respectively. Principal environmental authorities are the
Western Australian Department of Water and Environmental Regulation and the NSW Environment Protection
Authority.
At the Northern Operations in Western Australia, Tronox controls mining leases, exploration and other
licenses and rights covering a total 50,838 hectares (125,623 acres). Mining and Public Environmental Review
plans are approved for the Cooljarloo mine and approval to extend the environmental plans for Dongara were
recently approved. Environmental Protection Agency approval of Cooljarloo West has also been approved. The
main Cooljarloo deposit covers 9,744 hectares (24,078 acres). We hold 14 mining leases at the Dongara project.
Three older mining leases are held at our Jurien property, the site of a former heavy minerals open pit mine
operated by another party in the 1970’s.
As part of our acquisition of Cristal which closed in 2019, Tronox acquired mining and exploration licenses
totaling 559,682 hectares (1,383,004 acres) in the South Perth Basin and Murray Basin heavy mineral provinces
of Australia.
The Southern Operations in the southwest of Western Australia comprises 30 mining leases, 5 exploration
licenses, 3 retention licenses, 2 general purpose leases and 2 miscellaneous licenses totaling 16,178 hectares.
32
Tronox holds 4 mining leases, 15 exploration licenses and 2 retention licenses in our Eastern Operations in
the Murray Basin of New South Wales, Victoria and South Australia. The tenements cover approximately
524,400 hectares (2,025 sq miles). Three mining leases west of Pooncarie, NSW cover approximately
6,720 hectares (16,605 acres) surrounding our active mines at Snapper, Ginkgo and Crayfish. One mining lease
of 2,330 hectares is at the Atlas Campaspe mining project in NSW.
Mineral Sands - South Africa and Australia
HMS deposits are natural concentrations of granular minerals of high density (conventionally above about
2.85 gm/cm3). Titanium-rich HMS deposit source rocks are typically granitic and/or high-grade metamorphic
crystalline rocks. The heavy mineral assemblage of a particular HMS deposit generally reflects the ilmenite,
leucoxene, natural rutile and zircon contained in local and regional source rocks. Factors that influence the
formation of HMS deposits include erosion of crystalline source rocks, fluvial transport to the coastline,
longshore drift, coastal geomorphology, deposition of heavy minerals, and prolonged natural sorting of heavy
minerals by water and wind, according to the density, size and shape of HM grains. Post-depositional geological
processes that can affect the economic viability of a HMS deposit include in situ weathering, induration of the
host sands, and natural preservation or destruction of the HMS deposit.
Not all heavy minerals have commercial value, and a distinction is made between the Total Heavy Minerals
(‘‘THM’’) and Valuable Heavy Minerals (‘‘VHM’’). Typical VHM assemblages include the titanium-iron oxide
mineral, ilmenite (FeTiO3); rutile, a premium TiO2 feedstock mineral; leucoxene, a natural alteration product of
weathered ilmenite; and zircon, a zirconium silicate (ZrSiO4) valuable for its use in a diverse range of industrial
and construction applications. Other HM of commercial value, such as garnet, staurolite, kyanite and monazite,
may be recovered as by-products.
Of interest recently is the potential use of monazite, both in contained ore bodies and in stockpiled sources
located near the mineral separation processes at Namakwa Sands. Monazite has increasing commercial value due
to a high concentration of rare earth metals which can be separated by well-established methods. Rare earths are
expected to remain in high demand as demand grows for electric vehicles, wind turbines, and consumer goods
that require rare earth-containing permanent magnets. We currently do not know the metallurgical recovery
potential for the monazite as our processes have historically focused on traditional value minerals. Given the
increasing importance of monazite, we are evaluating new processes to better understand the grade and
recoverability of monazite in our mining tenements.
TRONOX MINERAL SAND - 2021 AGGREGATE MINERAL PRODUCTION FOR
THE PAST THREE YEARS
(metric tonnes per year)
Product
Rutile(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ilmenite(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Zircon(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
2020
2019
141,594
1,190,981
219,825
168,258
1,188,051
245,471
159,311
1,222,681
266,321
(1)
(2)
(3)
includes natural rutile + leucoxene
includes multiple grades of TiO2 grades of ilmenite
includes multiple grades of zircon
Namakwa Sands, Western Cape, South Africa
Our heavy mineral sand operations in South Africa include similar material flows from integrated
mine-mineral separation-smelter value chains on the west and east coasts of South Africa. Both Namakwa,
Western Cape and KZN Sands, KwaZulu-Natal produce smelter products of titanium slag and pig iron from
ilmenite, plus commercial grades of zircon and high-grade rutile + leucoxene concentrates.
Ore is excavated from two open-pit dry mines and delivered by trucks and conveyors to two primary wet
concentration plants. Heavy Mineral Concentrate is separated into magnetic and non-magnetic fractions at a
secondary concentration plant at the mine. The two fractions are further processed at a mineral separation plant
33
52 km south at Koekenaap. Ilmenite, rutile and zircon are transported by rail from Koekenaap to Saldanha Bay,
where ilmenite is smelted in a two-furnace complex into titanium slag and pig iron. Chloride-grade slag, slag
fines, pig iron, rutile and zircon are exported from our dedicated facilities at the Saldanha Bay deep-water port,
approximately 150 km north of Cape Town.
The Namakwa Sands HM deposit occupies an ellipsoidal area of 15 kilometers northeasterly by 4 km wide
and is interpreted to be an ancient dune complex shaped by prevailing winds at the time of its formation.
Repetitive cycles of erosion from crystalline source rock, fluvial transport and prolonged reworking by water and
wind formed the deposit. The Namakwa Sands heavy mineral assemblage is heterogeneous, creating challenges
to efficient recovery of valuable heavy minerals.
KZN Sands, KwaZulu-Natal, South Africa
KZN Sands operates the open-cut Fairbreeze mine, just south of the coastal town of Mtunzini, the Central
Processing Complex, 30 km west of Richards Bay, and bulk export facilities at the port of Richards Bay.
The Fairbreeze deposit is hosted by deeply weathered ‘‘Berea-type’’ sands which are mined using a
hydraulic mining technique supported by track dozing. The hydraulic mining technique was pioneered for HMS
mining at our nearby Hillendale mine, where rehabilitation is now complete. High-pressure water jets
disaggregate the fine-grained sand into a slurry that flows by gravity to a central collection caisson and is
pumped to a primary wet plant to produce HMC. This HMC is hauled by truck 45 km to the Empangeni CPC
for separation into commercial zircon and rutile concentrates, and ilmenite feed for the adjacent two-furnace
smelter. Except for local consumption of some pig iron, all saleable products are exported from Richards Bay,
including high-grade titanium feedstocks for our TiO2 pigment plants.
The Fairbreeze deposit is hosted by a complex of strandline/paleo-dune couplets, approximately two
kilometers inland from the modern coastline, forming an elongate ridge extending 12 km south-southwesterly
from the town of Mtunzini with a maximum width of approximately two kilometers. No overburden is present.
Modern erosion has dissected the deposit into five discrete ore bodies As with all heavy mineral sand deposits,
iron-titanium oxides, rutile, zircon and other minerals in the HM assemblage at Fairbreeze are inherited from
their source rock provenance and modified by selective sorting during deposition. Probable source rocks for the
HM are the Natal Metamorphic Province and younger rift-related basalts.
Northern Operations, Western Australia
Our mineral properties of the coastal plain of Western Australia are located within two historically important
heavy mineral provinces. Our combined Cooljarloo dredge mine and planned Cooljarloo West dredge mine,
170 km north of Perth, contain proven and probable reserves shown in the tables below.
Two dredges in a single pond feed an ore slurry to a floating gravity concentrator to produce HMC, which
is hauled by trucks 110 km south to our Chandala metallurgical complex near Muchea, 60 km north of Perth, for
the recovery of ilmenite, rutile, leucoxene and zircon. Ilmenite is upgraded at Chandala to SR, a high-TiO2
feedstock for our Kwinana and other TiO2 pigment plants
The mining of low-grade ore at Cooljarloo is supported by economies of scale, low-cost dredging, a
high-quality VHM suite that constitutes nearly 80% of THM, and good processing characteristics of the ilmenite
in its conversion to SR. Upon exhaustion of Cooljarloo ore, the dredge mine will relocate to nearby Cooljarloo
West, where reserves from three-ore bodies contain an estimated 2.6 million tonnes of in-place heavy minerals.
At Dongara, multiple studies, drilling, and dry-mining optimization over the past 15 years identified reserves
of 68 million tonnes of ore at an average grade of 5.1% THM in five deposits, for which mining and
environmental approvals have been secured. Tronox has chosen not to upgrade the studies to a current feasibility
level and consequently has reported only resources for the Dongara project.
Heavy mineral deposits of our Northern Operations generally occur as stacked, elongate, NNW-trending
bodies parallel to the modern coastline, bounded to the east by the Gingin Scarp. A swarm of HM deposits in the
Cooljarloo district span an area of 40 km NNW by a width of over 5 km. Heavy minerals derived from the
crystalline ‘‘basement’’ of the Yilgarn craton east of the scarp and Mesozoic sediments of the North Perth Basin
west of the scarp are associated with marine still-stands on a wave-cut platform, as HM sands accumulated in
shoreline, dunal and other coastal environments of a westward-regressing seacoast.
34
Southern Operations, Western Australia
Our mineral properties in the South-West of Western Australia were acquired in the Cristal transaction in
2019.
We extract heavy minerals from the Wonnerup North open-cut HMS mine, 10 km east of Busselton, from
which HMC is trucked to our MSP at Bunbury, adjacent to the Bunbury port. The Bunbury MSP also processes
streams of non-magnetic zircon and rutile rich HM concentrates from our Broken Hill MSP in New South Wales.
Ilmenite-dominant heavy mineral deposits of the South Perth Basin occur as multiple, arcuate bands, parallel
to the J-shaped Geographe Bay modern shoreline.
The Wonnerup North deposit is a shallow (~3m deep) windblown dunal deposit on the Capel
paleo-shoreline, one of two strandlines, along with the Yoganup paleo shoreline, located 7 km and 15 km inland,
respectively, from the modern Indian Ocean coast associated with most of the economic HMS deposits of the
region.
Eastern Operations, Murray Basin, New South Wales, Australia
Our Eastern Operations are located in the Murray Basin, a 300,000-square-kilometer intra-cratonic
sedimentary basin covering parts of Victoria, New South Wales, and South Australia. Our operating mines of
Snapper, Ginkgo and Crayfish are approximately 40 km west of Pooncarie, New South Wales. Overburden at our
Snapper and Ginkgo mines is removed by conventional mining methods, followed by dredge mining of ore.
Dry-mining at Crayfish, a small deposit adjunct to Ginkgo, started in September 2019, from which ore is hauled
to the Ginkgo dredge pond.
HMC from Ginkgo-Snapper is hauled by trucks approximately 240 km to our MSP in Broken Hill, NSW.
The Broken Hill MSP utilizes magnetic separation techniques to produce commercial concentrates of ilmenite
and leucoxene, and a non-magnetic HM concentrate. The products are railed approximately 430 km to the port of
Adelaide, South Australia. The non-magnetic concentrates are then shipped to the Bunbury MSP for further
processing into final products. At current production rates, mining is expected to continue at Snapper Ginkgo and
Crayfish until at least 2023.
Construction at our two new open-cut dry mines at Atlas/Campaspe, 150km east of the current operations
and 90 km north of Balranald, NSW and approximately 270 km southeast of Broken Hill is nearly complete.
Starting with Atlas in 2022, the new production will be phased in to sustain VHM output from our Eastern
Operations, as Snapper, Ginkgo and Crayfish reach depletion. HMC produced on-site at Atlas and Campaspe by
wet gravity separation will be delivered to the Broken Hill MSP via a combination of road and rail transport.
Active exploration programs are ongoing in the Murray Basin heavy minerals province, where our exploration
licenses cover nearly 5,100 square kilometers.
Further description of each of our mining projects described above are included in our exhibit filings.
Heavy Mineral Reserves
All of our reserves are reported on the basis of our 100% ownership of in-place, economically extractable
ore, determined from comprehensive geological, mining, processing and economic models. Reserve
classifications of proven or probable are based on the level of confidence in the appropriate resource estimates.
Our residual resources are those areas of mineralized ground which have either had insufficient drilling to
confidently define the shape, grade and recoverability of the valuable minerals as well as not yet having been
subjected to a detailed assessment of the impact of validated ‘‘modifying factors’’ on the revenue generating
potential of a deposit.
For clarity, in the tables below, our reserves have been excised from the resources as they can be proven to
be profitably mined and processed. The remaining deposit that exceeds cut-off grade, but have not yet been
demonstrated to be profitable by virtue of either recoverable grade, operating cost or capital required to develop,
are separately defined as resources.
35
The following tables summarize our reserves and resources as well as their contained in situ THM and HM
assemblages as of December 31, 2021.
TRONOX MINERAL SANDS - 2021 RESERVES
MINE/DEPOSIT
Namakwa Sands Dry Mine −
Western Cape RSA. . . . . . . . .
KZN Sands Hydraulic Mine
KwaZulu-Natal RSA . . . . . . .
Cooljarloo – Dredge Mine
Western Australia . . . . . . . . . .
Atlas-Campaspe Dry Mine in
Development, New South
Wales Australia. . . . . . . . . . . .
Wonnerup Dry Mine
Western Australia . . . . . . . . . .
Ginkgo-Snapper Dredge/Dry
Mines, New South
Wales Australia. . . . . . . . . . . .
Total Reserves . . . . . . . . . . . . . .
Reserve
Category
Material
(million
tonnes)
HM% Ilmenite
Rutile and
Leucoxene
Zircon
Change
(+/-) from
2020 (%)(1)
Mineral Assemblage (% of THM)
Proven
Probable
Total Reserves
Proven
Probable
Total Reserves
Proven
Probable
Total Reserves
Proven
Probable
Total Reserves
Proven
Probable
Total Reserves
Proven
Probable
Total Reserves
148
555
703
206
11
217
231
130
361
51
56
107
12
4
16
36
—
36
7.8% 37.0
5.4% 53.7
5.9% 49.0
5.6% 61.6
3.7% 51.9
5.5% 61.3
1.7% 61.1
2.0% 60.5
1.8% 60.8
7.3% 60.6
5.4% 60.3
6.3% 60.5
5.5% 70.7
5.7% 78.0
5.5% 72.8
2.0% 52.1
—
—
2.0% 52.1
Proven
Probable
684
756
4.7% 52.5
4.8% 54.9
Total Reserves
1,440
4.7% 53.8
8.6
11.1
10.4
7.3
5.0
7.2
7.7
8.3
7.9
13.5
10.0
11.9
18.4
11.1
16.3
16.8
—
16.8
9.0
10.8
9.9
9.0
11.4
10.7
7.7
7.0
7.7
10.5
12.3
11.2
11.8
13.1
12.4
9.7
8.8
9.4
12.7
—
12.7
9.1
11.6
10.4
(3.3)
(3.7)
—
17.1
(11.8)
(42.4)
(8.7)
(1)
Changes are predominantly due to depletion as a result of mining offset by an increase related to our Atlas Campaspe mine and other
reclassifications.
36
TRONOX MINERAL SANDS - 2021 RESOURCES
MINE/DEPOSIT
Namakwa Sands Dry Mine −
Western Cape RSA . . . . . . . . . . . . .
KZN Sands Hydraulic Mine
KwaZulu-Natal RSA . . . . . . . . . . . .
Cooljarloo – Dredge Mine
Western Australia . . . . . . . . . . . . . . .
Dongara Planned Dry Mine
Western Australia . . . . . . . . . . . . . . .
Atlas-Campaspe Dry Mine in
Development, New South
Wales Australia . . . . . . . . . . . . . . . .
Port Durnford-KwaZulu-Natal RSA . .
Resource
Category
Material
(million
tonnes)
HM% Ilmenite
Rutile and
Leucoxene
Zircon
Mineral Assemblage (% of THM)
110
86
196
110
306
50
1
51
56
107
10
282
292
—
292
109
31
140
38
178
31
—
31
83
114
143
340
483
466
949
7.3
6.5
6.9
5.5
6.4
4.1
2.0
4.0
3.4
3.7
1.5
1.5
1.5
—
1.5
4.1
3.5
3.9
2.7
3.7
2.6
—
2.6
3.1
3.0
4.5
4.1
4.2
3.5
3.9
31.6
28.3
30.1
35.1
31.9
64.1
53.5
63.9
54.7
59.1
59.4
61.4
61.3
—
61.3
50.2
53.7
52.0
54.6
51.5
58.7
—
58.7
60.1
59.8
67.6
67.4
67.5
71.8
69.4
5.7
5.6
5.7
8.1
6.5
8.1
7.0
8.1
6.9
7.5
7.8
6.7
6.8
—
6.8
9.0
9.1
9.1
8.7
9.0
10.8
—
10.8
5.8
7.0
6.0
6.1
6.1
6.3
6.2
6.9
6.9
6.9
6.5
6.8
7.7
7.5
7.7
7.1
7.4
9.8
10.5
10.4
—
10.4
10.8
12.4
11.6
9.3
10.8
11.9
—
11.9
13.1
12.8
9.3
9.3
9.3
10.0
9.6
Measured
Indicated
Measured + Indicated
Inferred
Total
Measured
Indicated
Measured + Indicated
Inferred
Total
Measured
Indicated
Measured + Indicated
Inferred
Total
Measured
Indicated
Measured + Indicated
Inferred
Total
Measured
Indicated
Measured + Indicated
Inferred
Total
Measured
Indicated
Measured + Indicated
Inferred
Total
37
MINE/DEPOSIT
Wonnerup Dry Mine
Western Australia . . . . . . . . . . . . . . .
Ginkgo-Snapper Dredge/Dry Mines,
New South Wales Australia . . . . . . .
Kara/Cylinder New South
Wales Australia . . . . . . . . . . . . . . . .
Total Resources . . . . . . . . . . . . . . . . . .
Resource
Category
Material
(million
tonnes)
HM% Ilmenite
Rutile and
Leucoxene
Zircon
Mineral Assemblage (% of THM)
Measured
Indicated
Measured + Indicated
Inferred
Total
Measured
Indicated
Measured + Indicated
Inferred
Total
Measured
Indicated
Measured + Indicated
Inferred
Total
Measured
Indicated
13
7
20
4
24
79
—
79
59
138
—
175
175
26
201
545
922
Measured + Indicated
Inferred
Total
1,467
842
2,309
4.7
4.6
4.7
4.4
4.6
1.4
—
1.4
1.1
1.2
—
4.1
4.1
2.7
3.9
4.3
3.5
3.8
3.5
3.7
77.5
86.9
80.7
84.0
81.2
48.5
—
48.5
47.9
48.3
—
44.9
44.9
54.4
45.7
50.7
54.6
53.0
60.7
55.6
12.0
3.3
9.1
4.0
8.3
17.7
—
17.7
17.9
17.8
—
12.7
12.7
24.4
13.7
7.5
7.6
7.6
7.4
7.5
8.8
7.6
8.4
8.3
8.4
12.5
—
12.5
13.0
12.7
—
11.3
11.3
14.2
11.5
8.9
9.6
9.3
9.5
9.3
Abbreviations, Definitions, and Notations
One metric tonne = 1.10231 short tons
Reserves — mineralized material inclusive of dilution, determined to be economically and legally exploitable as
of December 31, 2021, classified as either Probable Reserves or Proven Reserves, based on level of confidence.
Resources — mineralized ground which has either had insufficient drilling to confidently define the shape, grade
and recoverability of the valuable minerals as well as not yet having been subjected to a detailed assessment of
the impact of validated modifying factors on the revenue generating potential of a deposit.
LOMP — Life-of-Mine-Plans (LOMPs) have been developed for each mine site by teams of Tronox
professionals based on the mineral reserves and resources, realistic assumptions of geological, mining,
metallurgical, economic, marketing, legal, environmental, social, governmental, engineering, operational and all
other modifying factors in sufficient detail to demonstrate at the time of reporting that extraction is reasonably
justified.
THM — total heavy minerals, densities >2.85 g/cm3 regardless of commercial value
VHM — valuable heavy minerals, including Ilmenite, Rutile, Leucoxene & Zircon, reported as percentage of THM.
Minor computational discrepancies may be due to rounding.
Cooljarloo Dredge Mine reserves include Cooljarloo and Cooljarloo West
38
Key Assumptions — economic viability is determined by techno-economic modeling that integrates geological,
analytical and geotechnical databases, mining parameters, metallurgical recoveries, known or forecast operating
costs, cost of capital, and product sales prices at time of production. Historical sales prices by themselves are
unreliable predictors of future prices, and our forecasts are based on our private contracts, internal and external
market research.
Disclosures of mineral reserves traditionally include a cut-off grade, the grade in a mineral deposit below
which material cannot be profitably mined and processed. However, economic exploitability is determined by
many modifying factors other than grade, and most modern mining operations, including ours, use detailed
computer models utilized by employees who possess the experience and technical expertise to identify what parts
of a deposit are economically exploitable. As cut-off grades remain entrenched in the mining industry, the
following nominal cut-off grades apply, with qualifications, to our five operations: 0.3% zircon at Namakwa
Sands; 1.5% ilmenite at KZN Sands; 1.3% THM (approximately 1% VHM) at our Northern Operations, WA,
3% THM at our Southern Operations, WA, and 1% THM at our Eastern Operations, NSW.
Production forecasts of commercial-quality titanium mineral and zircon concentrates from reserves are taken
from our Life-of-Mine Plans. Mining recoveries are typically close to 100%, but metallurgical recoveries in each
concentration step can vary widely, as a function of ore and mineral characteristics. We apply recovery factors
based on actual operating data.
Mineral reserve estimates, life-of mine projections, and revenue assumptions are inherently forward-looking
and subject to market conditions, uncertainties and unanticipated events beyond our control.
Item 3.
Legal Proceedings
Information required by this item is incorporated herein by reference to the section captioned ‘‘Notes to
Consolidated Financial Statements, Note 20 — Commitments and Contingencies’’ of this Form 10-K.
SEC Regulations require us to disclose certain information about administrative or judicial proceedings to
which a governmental authority is party arising under federal, state or local environmental provisions if we
reasonably believe that such proceedings may result in monetary sanctions above a stated threshold. Pursuant to
the SEC regulations, the Company uses a threshold of $1 million or more for purposes of determining whether
disclosure of any such proceedings is required.
Item 4. Mine Safety Disclosures
None.
39
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of
PART II
Equity Securities
Market for our Ordinary Shares
Our ordinary shares trade on the New York Stock Exchange under the symbol ‘‘TROX.’’
Holders of Record
As of January 31, 2021, there were approximately 55 holders of record of ordinary shares. This does not
include the shareholders that held shares of our ordinary shares in a nominee or ‘‘street-name’’ accounts through
banks or broker-dealers. See Item 12, Security Ownership of Certain Beneficial Owners and Management and
Related Shareholder Matters.
Issuer Purchases of Equity Securities
2021
Total
Number of
Shares
Purchased
Weighted
Average Price
Paid per
Share
October 1 - October 31 . . . . . . . . . . . . . . . . .
November 1 - November 30 . . . . . . . . . . . . .
December 1 - December 31 . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
$—
—
—
$—
Total
Number of
Shares
Purchased as
Part of
Publicly
Announced Plan(1)
—
—
—
—
Maximum
Approximate
Dollar
Value that
May Yet be
Purchased
Under the
Plan(1)
$
—
300,000,000
300,000,000
$300,000,000
(1) On November 9, 2021, the Company announced that the Company’s Board of Directors has authorized the repurchase of up to
$300 million of the Company’s ordinary shares, par value $0.01 per share (the ‘‘ordinary shares’’), through February 2024. During the
year ended December 31, 2021, the Company did not repurchase any shares under the Company’s share repurchase plan.
Stock Performance Graph
The following graph presents the five-year cumulative total stockholder returns for our ordinary shares
compared with the Standard & Poor’s (‘‘S&P’’) 500, the S&P MidCap 400 Chemicals and the S&P 400
Materials indices.
40
The graph assumes that the values of our ordinary shares, the S&P 500, the S&P MidCap 400 Chemicals index,
and the S&P 400 Materials index were each $100 on December 31, 2016, and that all dividends were reinvested.
Item 6.
Selected Financial Data
Not applicable.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with Tronox Holdings plc’s consolidated financial
statements and the related notes included elsewhere in this Annual Report on Form 10-K. This discussion and
other sections in this Annual Report on Form 10-K contain forward-looking statements, within the meaning of
the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties, and actual results
could differ materially from those discussed in the forward-looking statements as a result of numerous factors.
Forward-looking statements provide current expectations of future events based on certain assumptions and
include any statement that does not directly relate to any historical or current fact. Forward-looking statements
also can be identified by words such as ‘‘future,’’ ‘‘anticipates,’’ ‘‘believes,’’ ‘‘estimates,’’ ‘‘expects,’’ ‘‘intends,’’
‘‘plans,’’ ‘‘predicts,’’ ‘‘will,’’ ‘‘would,’’ ‘‘could,’’ ‘‘can,’’ ‘‘may,’’ and similar terms. There are important factors that
could cause our actual results, level of activity, performance or achievements to differ materially from the results,
level of activity, performance or achievements expressed or implied by the forward-looking statements. In
particular, you should consider the numerous risks and uncertainties outlined in Item 1A. ‘‘Risk Factors.’’
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains
certain financial measures, in particular the presentation of earnings before interest, taxes, depreciation and
amortization (‘‘EBITDA’’) and Adjusted EBITDA, which are not presented in accordance with accounting
principles generally accepted in the United States (‘‘U.S. GAAP’’). We are presenting these non-U.S. GAAP
financial measures because we believe they provide us and readers of this Form 10-K with additional insight into
our operational performance relative to earlier periods and relative to our competitors. We do not intend for
these non-U.S. GAAP financial measures to be a substitute for any U.S. GAAP financial information. Readers of
these statements should use these non-U.S. GAAP financial measures only in conjunction with the comparable
U.S. GAAP financial measures. A reconciliation of net income (loss) to EBITDA and Adjusted EBITDA is also
provided herein.
Executive Overview
Tronox Holdings plc (referred to herein as ‘‘Tronox’’, ‘‘we’’, ‘‘us’’, or ‘‘our’’) operates titanium-bearing
mineral sand mines and beneficiation operations in Australia, South Africa and Brazil to produce feedstock
materials that can be processed into TiO2 for pigment, high purity titanium chemicals, including titanium
tetrachloride, and Ultrafine© titanium dioxide used in certain specialty applications. It is our long-term strategic
goal to be vertically integrated and consume all of our feedstock materials in our own nine TiO2 pigment
facilities which we operate in the United States, Australia, Brazil, UK, France, the Netherlands, China and the
Kingdom of Saudi Arabia (‘‘KSA’’). We believe that vertical integration is the best way to achieve our ultimate
goal of delivering low cost, high-quality pigment to our coatings and other TiO2 customers throughout the world.
The mining, beneficiation and smelting of titanium bearing mineral sands creates meaningful quantities of zircon
and pig iron, which we also supply to customers around the world.
We are a public limited company listed on the New York Stock Exchange and are registered under the laws of
England and Wales.
Business Environment
The following discussion includes trends and factors that may affect future operating results:
Throughout the current COVID-19 pandemic, our operations have been designated as essential to support
the continued manufacturing of products such as food and medical packaging, medical equipment,
pharmaceuticals, and personal protective gear.
The fourth quarter of 2021 results were driven by robust demand across our end markets, with the supply to
demand balance remaining tight due to below seasonally normal levels of TiO2, production challenges caused by
supplier force majeures and delivery times extended by shipping delays. Fourth quarter revenue increased
41
13% compared to the prior year, driven by higher TiO2, Zircon and pig iron prices. On a year over year basis,
TiO2 average selling prices increased 17% on a local currency basis and 15% on a US dollar basis and Zircon
average selling prices increased 26%. Both TiO2 and Zircon sales volumes remained relatively flat in line with
prior year levels. Revenue from feedstock and other products decreased 11% on a year over year basis due to the
internal consumption of all feedstocks in the quarter compared to the prior year, partially offset by increased pig
iron revenue from higher average selling prices. Sequentially, revenue increased 2% in the fourth quarter of
2021 compared to the third quarter of 2021, as price increases of TiO2, Zircon and pig iron were partially offset
by volume declines of TiO2 and Zircon. TiO2 average selling prices grew 3% sequentially on a US dollar basis
and 4% on a local currency basis. TiO2 volumes were constrained by global logistics challenges and supply chain
and certain raw material availability that resulted in a 4% sequential decline. Revenue from Zircon sales
increased 3% sequentially, as a 9% increase in average selling prices due to improved pricing, was partially
offset by 6% lower sales volumes. Feedstock and other product revenues increased 26% sequentially mainly due
to both higher pig iron volumes and selling prices.
Gross profit decreased sequentially from the third quarter to the fourth quarter of 2021 due to lower sales
volumes of TiO2 and Zircon, higher production costs due to transitory inflation and increased freight rates,
partially offset by favorable impacts of average selling prices. Gross profit increased year over year due to the
increase in average selling prices of TiO2, Zircon and pig iron and the favorable impact of sales volumes and
product mix partially offset by unfavorable impacts of foreign currency as well as higher production costs and
increased freight rates partially offset by favorable overhead absorption and cost savings.
As of December 31, 2021, our total available liquidity was $677 million, including $228 million in cash and
cash equivalents and $449 million available under revolving credit agreements.
During the year ended December 31, 2021, we made several discretionary prepayments on our debt facilities
primarily on the New Term Loan Facility and Standard Bank Term Loan Facility. During the fourth quarter of
2021, we made an additional $202 million of voluntary prepayments on our New Term Loan Facility. As of
December 31, 2021, our total debt was $2.6 billion and net debt to trailing-twelve month Adjusted EBITDA was
2.5x. The Company also has no financial covenants on its term loan or bonds and only one springing financial
covenant on its Cash Flow revolver facility, which we do not expect to be triggered based on our current
scenario planning.
Consolidated Results of Operations from Continuing Operations
Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020
Reported Amounts
Year Ended December 31,
2020
(Millions of U.S. Dollars)
2021
Variance
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,572
2,677
$ 895
25.1%
$2,758
2,137
$ 814
540
$ 621
$ 274
22.5% 2.6 pts
Selling, general and administrative expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations before income taxes . . . . . . . . . . . . . . . .
Income tax (provision) benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
318
—
577
(157)
7
(65)
12
374
(71)
347
3
271
(189)
8
(2)
26
114
881
(29)
(3)
306
32
(1)
(63)
(14)
260
(952)
Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 303
$ 995
$(692)
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19%
(773)% 792 pts
42
Reported Amounts
Year Ended December 31,
2020
(Millions of U.S. Dollars)
2021
Variance
EBITDA(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted EBITDA(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 821
$ 947
$ 599
$ 668
$222
$279
Adjusted EBITDA as % of Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26.5%
24.2% 2.3 pts
(1)
EBITDA and Adjusted EBITDA are Non-U.S. GAAP financials measures. Please refer to the ‘‘Non-U.S. GAAP Financial Measures’’
section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of these
measures and a reconciliation of these measures to Net income (loss) from continuing operations.
Net sales of $3,572 million for the year ended December 31, 2021 increased by 30% compared to
$2,758 million for the same period in 2020. Revenue increased primarily due to both higher TiO2 and Zircon
sales volumes and average selling prices. Net sales by type of product for the years ended December 31, 2021
and 2020 were as follows:
The table below presents reported revenue by product:
Year Ended
December 31,
(Millions of dollars, except percentages)
2021
2020
Variance
Percentage
TiO2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Zircon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Feedstock and other products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,793
478
301
$2,176
283
299
Total net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,572
$2,758
$617
195
2
$814
28%
69%
1%
30%
For the year ended December 31, 2021, TiO2 revenue increased $617 million, or 28%, compared to the
prior year due to a $369 million increase in sales volumes and an increase of $217 million in average selling
prices. Foreign currency positively impacted TiO2 revenue by $31 million due primarily to the strengthening of
the Euro. Zircon revenues increased $195 million primarily due to a 55% increase in sales volumes and a
9% increase in average selling prices. Feedstock and other products revenue increased $2 million primarily due
to an increase in average selling prices and sales volumes of pig iron partially offset by a decrease in sales
volumes of CP slag and other feedstocks.
Gross profit of $895 million for the year ended December 31, 2021 was 25.1% of net sales compared to
22.5% of net sales for the same period in 2020. The increase in gross margin is primarily due to:
•
•
•
•
the favorable impact of approximately 8 points due to an increase in TiO2, Zircon and pig iron selling
prices;
the favorable impact of approximately 1 point for sales volume and product mix;
the net unfavorable impact of approximately 4 points due to changes in foreign exchange rates,
primarily due to the South African Rand and Australian dollar; and
the net unfavorable impact of approximately 2 points due to higher production costs and increased
freight rates offset by favorable overhead absorption and cost savings.
Selling, general and administrative (‘‘SG&A’’) expenses decreased $29 million when comparing the year
ended December 31, 2021 to the prior year. The SG&A expenses decrease was primarily driven by $29 million
of lower professional fees and lower integration costs of $9 million, partially offset by $16 million of increased
employee costs primarily driven by higher incentive compensation. The remaining net decrease was driven by
individually immaterial amounts.
Income from operations for the year ended December 31, 2021 of $577 million, increased by $306 million
or 113% compared to the same period in 2020 which is primarily attributable to the higher gross margin and
lower selling, general and administrative expenses.
43
Adjusted EBITDA as a percentage of net sales was 26.5% for the year ended December 31, 2021, an
increase of 2.3 points from 24.2% in the prior year. On a reported basis, the higher gross profit and lower SG&A
expenses as discussed above were the primary drivers of the year-over-year increase in Adjusted EBITDA
percentage.
Interest expense for the year ended December 31, 2021 decreased $32 million compared to the same period
in 2020. The decrease is primarily due to the following: 1) lower average debt outstanding balances and lower
average interest rates on the New Term Loan Facility as compared to the Prior Term Loan Facility, 2) lower
average debt outstanding balance on the New Standard Bank Term Loan Facility as compared to the Prior
Standard Bank Term Loan Facility, and 3) lower average interest rates on the Senior Notes due 2029 as
compared to the Senior Notes due 2025 and the Senior Notes due 2026. These decreases in interest expense are
partially offset by the four months of additional interest expense in the current year associated with the
6.5% Senior Secured Notes due 2025, which were issued on May 1, 2020.
Interest income for the year ended December 31, 2021 decreased by $1 million compared to the prior year
primarily due to lower cash balances from the use of cash to paydown the New Term Loan Facility, the Standard
Bank Term Loan Facility and the Tikon Loan.
Loss on extinguishment of debt of $65 million for the year ended December 31, 2021 is primarily
comprised of the following: 1) call premiums paid of $21 million and $19 million in relation to the refinancing
of our $615 million Senior Notes due 2026 and our $450 million Senior Notes due 2025, respectively, 2) the
write-off of certain existing debt issuance costs and original issue discount as well as certain new lender and
other third party fees associated with the refinancing of our new revolver and term loan and issuance of our new
senior notes due 2029 and 3) approximately $9 million write-off of existing debt issuance costs and original issue
discount as a result of the $398 million voluntary prepayments made on the New Term Loan Facility.
Other income, net for the year ended December 31, 2021 primarily consisted of $16 million net realized and
unrealized foreign currency gains, $8 million associated with the monthly technical service fee relating to the
Jazan slagger we receive from AMIC, and $5 million of pension income primarily due to the expected return on
plan assets offset by pension related interest costs and amortization of actuarial gain/losses partially offset by
$18 million related to the breakage fee associated with the termination of the TTI acquisition. The foreign
currency gains were primarily related to the South African Rand and the Australian dollar due to the
remeasurement of our U.S. dollar denominated working capital and other long-term obligations partially offset by
the impact of our foreign currency derivatives.
We maintain full valuation allowances related to the total net deferred tax assets in Australia, Switzerland
and the United Kingdom. The provisions for income taxes associated with these jurisdictions include no tax
benefits with respect to losses incurred and tax expense only to the extent of current tax payments. Additionally,
we have valuation allowances against other specific tax assets.
The effective tax rate was 19% and (773)% for the years ended December 31, 2021 and 2020, respectively.
The large negative effective tax rate for the year ended December 31, 2020 is caused by the release of valuation
allowances for deferred tax assets in the U.S. and Brazil, partially offset by the recording of valuation allowances
in Saudi Arabia and the U.K. The net impact was $905 million benefit to the income tax provision. Refer to
Note 8 of notes to consolidated financial statements for further information. Additionally, the effective tax rates
for the years ended December 31, 2021 and 2020 are influenced by a variety of factors, primarily income and
losses in jurisdictions with valuation allowances, disallowable expenditures, prior year accruals, and our
jurisdictional mix of income at tax rates different than the U.K. statutory rate.
Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019
A discussion of our results of operations for the year ended December 31, 2020 versus December 31, 2019
is included in Part II, Item 7, ‘‘Management’s Discussion and Analysis of Financial Condition and Results of
Operations — Results of Operation’’, included in our Annual Report on Form 10-K for the year ended
December 31, 2020.
Other Comprehensive Income (Loss)
There was an other comprehensive loss of $104 million for the year ended December 31, 2021 compared to
other comprehensive loss of $20 million for the year ended December 31, 2020. This increase in comprehensive
loss was primarily driven by unfavorable movements of foreign currency translation adjustments of $113 million
44
for the year ended December 31, 2021 as compared to unfavorable foreign currency translation adjustments of
$4 million in the prior year. In addition, we recognized net losses on derivative instruments of $11 million in the
year ended December 31, 2021 as compared to none in the prior year. These losses were partially offset by
$20 million of pension and postretirement gains for the year ended December 31, 2021 as compared to
$16 million of pension and postretirement losses for the prior year.
A discussion of our comprehensive (loss) income for the year ended December 31, 2020 versus
December 31, 2019 is included in Part II, Item 7, ‘‘Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Other Comprehensive (Loss) Income’’, included in our Annual Report on
Form 10-K for the year ended December 31, 2020.
Liquidity and Capital Resources
During 2021, our liquidity decreased by $364 million to $677 million.
The table below presents our liquidity, including amounts available under our credit facilities, as of the
following dates:
December 31,
2021
December 31,
2020
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available under the Wells Fargo Revolver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available under the new Cash Flow Revolver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available under the Standard Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available under the Emirates Revolver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available under the SABB Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$228
—
329
63
38
19
$677
$ 619
285
—
68
50
19
$1,041
Historically, we have funded our operations and met our commitments through cash generated by
operations, issuance of unsecured notes, bank financings and borrowings under lines of credit. In the next twelve
months, we expect that our operations will provide sufficient cash for our operating expenses, capital
expenditures, interest payments and debt repayments, however, if necessary, we have the ability to borrow under
our debt and revolving credit agreements (see Note 15 of notes to consolidated financial statements). This is
predicated on our achieving our forecast which could be negatively impacted by items outside of our control, in
particular, macroeconomic conditions including the economic impacts caused by continued impact of the
COVID-19 pandemic. Consistent with our actions in 2020 in response to the COVID-19 pandemic, if negative
events occur in the future, we may need to reduce our capital spend, cut back on operating costs, and other items
within our control to maintain appropriate liquidity.
Working capital (calculated as current assets less current liabilities) was $1.2 billion at December 31, 2021,
compared to $1.7 billion at December 31, 2020. The decrease year over year is primarily due to the decrease in
cash as we made several voluntary prepayments on our debt obligations as is discussed below and in Note 15 of
notes to consolidated financial statements and reductions in inventories as the supply / demand balance remains
tight due to continued strong demand.
As of and for the year ended December 31, 2021, the non-guarantor subsidiaries of our 6.5% Senior
Secured Notes and our Senior Notes due 2029 represented approximately 20% of our total consolidated
liabilities, approximately 25% of our total consolidated assets, approximately 44% of our total consolidated net
sales and approximately 49% of our Consolidated EBITDA (as such term is defined in 6.5% Senior Secured
Notes Indenture and the 2029 Indenture). In addition, as of December 31, 2021, our non-guarantor subsidiaries
had $777 million of total consolidated liabilities (including trade payables but excluding intercompany liabilities),
all of which would have been structurally senior to the 6.5% Senior Secured Notes and the 2029 Notes. See
Note 15 of notes to consolidated financial statements for additional information.
At December 31, 2021, we had outstanding letters of credit and bank guarantees of $53 million. See
Note 15 of notes to consolidated financial statements.
Principal factors that could affect our ability to obtain cash from external sources include (i) debt covenants that
limit our total borrowing capacity; (ii) increasing interest rates applicable to our floating rate debt; (iii) increasing
45
demands from third parties for financial assurance or credit enhancement; (iv) credit rating downgrades, which could
limit our access to additional debt; (v) a decrease in the market price of our common stock and debt obligations; and
(vi) volatility in public debt and equity markets.
As of December 31, 2021, our credit rating with Moody’s was B1 stable outlook unchanged from
December 31, 2020. Starting in the first quarter of 2021 and through December 31, 2021, our credit rating with
Standard & Poor’s changed positively to B stable and further changed positively to Ba3 during the first quarter
of 2022. See Note 15 of notes to consolidated financial statements.
Cash and Cash Equivalents
We consider all investments with original maturities of three months or less to be cash equivalents. As of
December 31, 2021, our cash and cash equivalents were invested in money market funds and we also receive
earnings credits for some balances left in our bank operating accounts. We maintain cash and cash equivalents in
bank deposit and money market accounts that may exceed federally insured limits. The financial institutions
where our cash and cash equivalents are held are highly rated and geographically dispersed, and we have a
policy to limit the amount of credit exposure with any one institution. We have not experienced any losses in
such accounts and believe we are not exposed to significant credit risk.
The use of our cash includes payment of our operating expenses, capital expenditures, servicing our interest
and debt repayment obligations, making pension contributions and making quarterly dividend payments. On
November 9, 2021, we updated our capital allocation policy and announced that our Board of Directors had
authorized the repurchase of up to $300 million of the Company’s ordinary shares through February 2024. Under
the updated policy, the Board intends to increase the annual dividend to $0.50 per share beginning with the
first quarterly dividend in 2022. We also expect to continue to invest in our businesses through cost reduction, as
well as growth and vertical integration-related capital expenditures including projects such as newTRON and
various mine development projects as well as continued reductions in our debt.
Repatriation of Cash
At December 31, 2021, we held $228 million in cash and cash equivalents in these respective jurisdictions:
$5 million in the United States, $54 million in South Africa, $59 million in Australia, $30 million in Brazil,
$40 million in Saudi Arabia, $19 million in China, and $21 million in Europe. Our credit facilities limit transfers
of funds from subsidiaries in the United States to certain foreign subsidiaries. In addition, at December 31, 2021,
we held $4 million of restricted cash of which $3 million is in Australia related to performance bonds and
$1 million is in Saudi Arabia related to vendor supply agreement guarantees.
Tronox Holdings plc has foreign subsidiaries with undistributed earnings at December 31, 2021. We have
made no provision for deferred taxes related to these undistributed earnings because they are considered
indefinitely reinvested in the foreign jurisdictions.
Debt Obligations
In March 2021, the Company closed the refinancing of its existing first lien term loan credit agreement with
a new seven-year first lien term loan credit facility (the ‘‘New Term Loan Facility’’) and existing revolving
syndicated facility agreement with a new five-year cash flow revolving facility (the ‘‘New Revolving Facility’’).
Pursuant to the New Term Loan Facility, the Company’s wholly owned subsidiary, Tronox Finance LLC
borrowed $1,300 million of first lien term loans. Pursuant to the New Revolving Facility, the lenders thereunder
have agreed to provide revolving commitments of $350 million. The Company also paid down approximately
$313 million, with cash on hand, of debt in conjunction with the refinancing transaction. Refer to Note 15 of
notes to consolidated financial statements for further details.
On March 15, 2021, Tronox Incorporated, a wholly-owned indirect subsidiary of the Company, issued its
4.625% senior notes due 2029 for an aggregate principal amount of $1,075 million. The net proceeds was used
to fund the redemption in full on March 31, 2021 of the Company’s outstanding $615 million aggregate principal
amount of 6.50% senior notes due 2026 and the redemption in full on April 1, 2021 of Company’s outstanding
$450 million aggregate principal amount of 5.75% senior notes due 2025. Refer to Note 15 of notes to
consolidated financial statements for further details.
On October 1, 2021, Tronox Minerals Sands Proprietary Limited, a wholly-owned indirect subsidiary of the
Company, entered into an amendment and restatement of a new credit facility with Standard Bank. The new
46
credit facility provides the Company with (a) a new five-year term loan facility in an aggregate principal amount
of R1.5 billion (approximately $98 million) (the ‘‘New Standard Bank Term Loan Facility’’) and (b) a new
three-year revolving credit facility (the ‘‘New Standard Bank Revolving Credit Facility’’) providing initial
revolving commitments of R1.0 billion (approximately $63 million at December 31, 2021 exchange rate). As a
result of the amended facility, the Company repaid the remaining outstanding principal balance of R390 million
(approximately $26 million) of the Standard Bank Term Loan Facility on September 30, 2021 and we drewdown
the R1.5 billion (approximately $98 million) on the new term loan facility in November 2021.
During the year ended December 31, 2021, the Company made several voluntary prepayments totaling
$398 million on the New Term Loan Facility. As a result of these voluntary prepayments, the Company recorded
$9 million in ‘‘Loss on extinguishment of debt’’ within the Consolidated Statement of Operations for the year
ended December 31, 2021.
During the year ended December 31, 2021, the Company made several voluntary prepayments totaling
R1,040 million (approximately $69 million) on the Prior Standard Bank Term Loan Facility. Additionally, on
September 30, 2021, in conjunction with the Company’s refinancing of the Prior Standard Bank Term Loan
Facility, the Company repaid the remaining outstanding principal balance of R390 million (approximately
$26 million). During the year ended December 31, 2021, the Company repaid the remaining outstanding
principal balance of CNY 111 million (approximately $17 million) on the Tikon loan. No prepayment penalties
were required as a result of these principal prepayments.
On a consolidated basis, no incremental debt was incurred as a result of the aforementioned debt refinancing
transactions.
At December 31, 2021 and 2020, our long-term debt, net of unamortized discount and debt issuance costs
was $2.6 billion and $3.3 billion, respectively.
At December 31, 2021 and 2020, our net debt (the excess of our debt over cash and cash equivalents) was
$2.3 billion and $2.7 billion, respectively. See Note 15 of notes to consolidated financial statements.
Cash Flows
Years Ended December 31, 2021 and 2020
The following table presents cash flow for the periods indicated:
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash (used in) provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (decrease) increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2021
2020
(Millions of U.S. dollars)
$ 740
(269)
(877)
(10)
$(416)
$ 355
(229)
214
(3)
$ 337
Cash Flows provided by Operating Activities — Cash provided by our operating activities is driven by net
income adjusted for non-cash items and changes in working capital items. The following table summarizes our
net cash provided by operating activities for 2021 and 2020:
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net adjustments to reconcile net income (loss) to net cash provided by operating
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income related cash generation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net change in assets and liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2021
2020
(Millions of U.S. dollars)
$303
$ 995
455
758
(18)
(488)
507
(152)
Net cash provided by our operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$740
$ 355
47
Net cash provided by operating activities was $740 million in 2021 as compared to $355 million in 2020.
The increase of $385 million period over period is primarily due to a $251 million improvement in net income
net of non-cash adjustments and a decrease of $134 million use of cash for net assets and liabilities. The lower
use of cash for working capital was primarily driven by decreases in inventories and prepaid and other current
assets of $74 million and $82 million, respectively, and an increase in account payable and accrued liabilities of
$36 million partially offset by an increase in accounts receivable of $59 million and an increased use of cash in
long-term other assets and liabilities of $10 million.
Cash Flows used in Investing Activities — Net cash used in investing activities for the year ended
December 31, 2021 was $269 million as compared to $229 million for the year ended December 31, 2020. The
$40 million increase in use of cash year over year is primarily driven by higher capital expenditures of
$272 million. The prior year also included $36 million for a loan to AMIC related to a titanium slag smelter
facility (see Note 24 of notes to consolidated financial statements) of which there was no comparable amount in
the current year.
Cash Flows (used in) provided by Financing Activities — Net cash used in financing activities during the
year ended December 31, 2021 was $877 million as compared to cash provided by financing activities of
$214 million for the year ended December 31, 2020. The current year is primarily comprised of repayments of
long-term debt of $3 billion partially offset by proceeds from long-term debt of $2 billion due to the various debt
refinancing transactions that occurred during the current year (refer to Note 15 of notes to consolidated financial
statements) as well as the Company’s continued focus on making discretionary debt repayments in order to
achieve its previously stated gross debt target. As a result of the debt refinancing transactions, there was a
$77 million use of cash for debt issuance costs and call premiums paid in 2021 as compared to $10 million in
2020. Additionally, dividends paid were $65 million during the year ended December 31, 2021 as compared to
$40 million in the same period of 2020.
Years Ended December 31, 2020 and 2019
A discussion of our cash flows for the year ended December 31, 2020 versus 2019 is included in Part II,
Item 7, ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations - Cash
Flows’’, included in our Annual Report on Form 10-K for the year ended December 31, 2020.
Contractual Obligations
The following table sets forth information relating to our contractual obligations as of December 31, 2021:
Contractual Obligation Payments Due by Period(3)
3-5
1-3
years
years
(Millions of U.S. dollars)
Less than
1 year
More than
5 years
Total
Long-term debt and lease financing (including interest)(1) . . .
Purchase obligations(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension and other post-retirement benefit obligations(4) . . . . .
Asset retirement obligations(5) . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,370
655
226
312
446
$5,009
$151
231
34
37
17
$470
$303
209
42
65
26
$645
$ 757
157
29
64
25
$1,032
$2,159
58
121
146
378
$2,862
(1) We calculated the New Term Loan Facility interest at a LIBOR plus a margin of 2.25%. See Note 15 of notes to our consolidated
financial statements.
(2)
(3)
(4)
Includes obligations to purchase requirements of process chemicals, supplies, utilities and services. We have various purchase
commitments for materials, supplies, and services entered into in the ordinary course of business. Included in the purchase
commitments table above are contracts, which require minimum volume purchases that extend beyond one year or are renewable
annually and have been renewed for 2022. Certain contracts allow for changes in minimum required purchase volumes in the event of a
temporary or permanent shutdown of a facility. We believe that all of our purchase obligations will be utilized in our normal
operations.
The table excludes contingent obligations, as well as any possible payments for uncertain tax positions given the inability to estimate
the possible amounts and timing of any such payments.
Pension and other post-retirement benefit (‘‘OPEB’’) obligations of $312 million include estimates of pension plan contributions and
expected future benefit payments for unfunded pension and OPEB plans. Pension plan contributions are forecasted for 2022 only.
48
Expected future unfunded pension and OPEB benefit payments are forecasted only through 2031. Contribution and unfunded benefit
payment estimates are based upon current valuation assumptions. Estimates of pension contributions after 2022 and unfunded benefit
payments after 2031 are not included in the table because the timing of their resolution cannot be estimated. Refer to Note 23 in notes
to consolidated financial statements for further discussion on our pension and OPEB plans.
(5) Asset retirement obligations are shown at the undiscounted and uninflated values.
Non-U.S. GAAP Financial Measures
EBITDA and Adjusted EBITDA, which are used by management to measure performance, are not presented
in accordance with U.S. GAAP. We define EBITDA as net income (loss) excluding the impact of income taxes,
interest expense, interest income and depreciation, depletion and amortization. We define Adjusted EBITDA as
EBITDA excluding the impact of nonrecurring items such as restructuring charges, gain or loss on debt
extinguishments, impairment charges, gains or losses on sale of assets, acquisition-related transaction costs and
pension settlements and curtailment gains or losses. Adjusted EBITDA also excludes non-cash items such as
share-based compensation costs and pension and postretirement costs. Additionally, we exclude from Adjusted
EBITDA, realized and unrealized foreign currency remeasurement gains and losses.
Management believes that EBITDA and Adjusted EBITDA is useful to investors, as it is commonly used in
the industry as a means of evaluating operating performance. We do not intend for these non-U.S. GAAP
financial measures to be a substitute for any U.S. GAAP financial information. Readers of these statements
should use these non-U.S. GAAP financial measures only in conjunction with the comparable U.S. GAAP
financial measures. Since other companies may calculate EBITDA and Adjusted EBITDA differently than we do,
EBITDA and Adjusted EBITDA, as presented herein, may not be comparable to similarly titled measures
reported by other companies. Management believes these non-U.S. GAAP financial measures:
•
•
•
reflect our ongoing business in a manner that allows for meaningful period-to-period comparison and
analysis of trends in our business, as they exclude income and expense that are not reflective of
ongoing operating results;
provide useful information in understanding and evaluating our operating results and comparing
financial results across periods; and
provide a normalized view of our operating performance by excluding items that are either noncash or
infrequently occurring.
Adjusted EBITDA is one of the primary measures management uses for planning and budgeting processes,
and to monitor and evaluate financial and operating results. In addition, Adjusted EBITDA is a factor in
evaluating management’s performance when determining incentive compensation.
The following table reconciles net income (loss) to EBITDA and Adjusted EBITDA for the periods
presented:
Year Ended December 31,
2019
2020
2021
Net income (loss), (U.S. GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from discontinued operations, net of tax (see Note 6), (U.S. GAAP) . . . . . . .
$303
—
$ 995
—
$ (97)
5
Net income (loss) from continuing operations, (U.S. GAAP) . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation, depletion and amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
EBITDA (non-U.S. GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory step-up(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract loss(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction costs(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Integration costs(f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on extinguishment of debt(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
303
157
(7)
71
297
821
—
—
31
18
—
—
65
995
189
(8)
(881)
304
599
—
—
30
14
3
10
2
(102)
201
(18)
14
280
375
98
19
32
32
22
16
3
49
Foreign currency remeasurement(h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension settlement and curtailment gains(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs associated with Exxaro deal(j) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs associated with former CEO retirement(k). . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on asset sale(l) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office closure costs(m) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance proceeds(n) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other items(o) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted EBITDA (non-U.S. GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2019
2020
2021
(16)
—
6
1
(2)
3
—
20
(4)
(2)
—
—
—
—
(11)
27
(6)
(1)
4
—
—
—
—
21
$947
$668
$615
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
2019 amount represents a pre-tax charge related to the recognition of a step-up in value of inventories as a result of purchase
accounting.
2019 amount represents a pre-tax charge for the estimated losses we expect to incur under the supply agreement with Venator. See
Note 3 of notes to consolidated financial statements.
Represents non-cash share-based compensation. See Note 22 of notes to consolidated financial statements.
2021 amount represents the breakage fee and other costs associated with the termination of the TTI transaction which were primarily
recorded in ‘‘Other income (expense)’’ in the Consolidated Statements of Operations. 2020 amount represents transaction costs
associated with the TTI acquisition which were recorded in ‘‘Selling, general and administrative expenses’’ in the Consolidated
Statement of Operations. 2019 amounts represent transaction costs associated with the Cristal Transaction which were recorded in
‘‘Selling, general and administrative expenses’’ in the Consolidated Statements of Operations.
2020 and 2019 amounts represent amounts for employee-related costs, including severance, which was recorded in ‘‘Restructuring’’ in
the Consolidated Statements of Operations. See Note 4 of notes to consolidated financial statements.
2020 and 2019 amounts represent integration costs associated with the Cristal transaction after the acquisition which were recorded in
‘‘Selling, general and administrative expenses’’ in the Consolidated Statements of Operations.
2021 amount represents the loss in connection with the following: 1) termination of its Wells Fargo Revolver, 2) amendment and
restatement of its term loan facility including the new revolving credit facility, 3) termination of its Senior Notes due 2026 and its
Senior Notes due 2025, 4) issuance of its Senior Notes due 2029 and 5) several voluntary prepayments made on the New Term Loan
Facility. See Note 15 of notes to consolidated financial statements. 2020 amount represents the loss in connection with a voluntary
prepayment on the Prior Term Loan Facility. 2019 amount represents the loss in connection with the modification of the Wells Fargo
Revolver and termination of the ABSA Revolver and a voluntary prepayment made on the Prior Term Loan Facility.
Represents realized and unrealized gains and losses associated with foreign currency remeasurement related to third-party and
intercompany receivables and liabilities denominated in a currency other than the functional currency of the entity holding them, which
are included in ‘‘Other income (expense), net’’ in the Consolidated Statements of Operations.
2020 amount represents a curtailment gain due to the freezing of plan benefits partially offset by pension settlements. 2019 amount
represents settlement gain related to the U.S. Pension Plan (acquired as part of the Cristal transaction).
2021 amount represents costs associated with the Exxaro flip-in transaction which are included in ‘‘Selling, general and administrative
expenses’’ in the Consolidated Statements of Operations. 2019 amount represents the payment to Exxaro for capital gains tax on the
disposal of its ordinary shares in Tronox Holdings plc included in ‘‘Other income (expense), net’’ in the Consolidated Statements of
Operations.
2021 amount represents costs, excluding share-based compensation, associated with the retirement agreement of the former CEO which
were recorded in ‘‘Selling, general and administrative expenses’’ in the Consolidated Statements of Operations. The $2 million of share
based compensation expense associated with the former CEO is included in the total share-based compensation amounts of $31 million
in the table above.
(l)
2021 amount represents the gain on European Union carbon credits sold in March 2021 which were recorded in ‘‘Cost of goods sold’’
in the Consolidated Statement of Operations.
(m) Represents impairments of our right-of-use assets associated with the early termination of our leases and other costs related to the
closure of our Baltimore and New York City offices which are included in ‘‘Selling, general and administrative expenses’’ in the
Consolidated Statements of Operations.
(n)
(o)
2020 amount represents reimbursement from claims related to the Ginkgo concentrator failure we inherited as a part of the Cristal
transaction.
Includes noncash pension and postretirement costs, accretion expense, severance expense, and other items included in ‘‘Selling general
and administrative expenses’’ and ‘‘Cost of goods sold’’ in the Consolidated Statements of Operations.
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
50
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. The following is a summary of certain accounting
policies considered critical by management.
Asset Retirement Obligations
To the extent a legal obligation exists, an asset retirement obligation (‘‘ARO’’) is recorded at its estimated
fair value and accretion expense is recognized over time as the discounted liability is accreted to its expected
settlement value. Because AROs represent financial obligations to be settled in the future, uncertainties exist in
estimating the timing and amount of the associated costs to be incurred. Fair value is measured using expected
future cash outflows, adjusted for expected inflation and discounted at our credit-adjusted risk-free interest rate.
No market-risk premium has been included in our calculation of ARO balances since we can make no reliable
estimate. Management believes these estimates and assumptions are reasonable; however, they are inherently
uncertain. Refer to Notes 19 to the consolidated financial statements for a summary of the estimates and
assumptions utilized. At December 31, 2021, AROs were $149 million of which the long-term portion of
$139 million is recorded in ‘‘Asset retirement obligations’’ and the short-term portion of $10 million is recorded
in ‘‘Accrued liabilities’’ in the Consolidated Balance Sheet.
Environmental Matters
Liabilities for environmental matters are recognized when remedial efforts are probable and the costs can be
reasonably estimated. Such liabilities are based on our best estimate of the undiscounted future costs required to
complete the remedial work. The recorded liabilities are adjusted periodically as remediation efforts progress or
as additional technical, regulatory or legal information becomes available. Given the uncertainties regarding the
status of laws, regulations, enforcement policies, the impact of other potentially responsible parties, technology
and information related to individual sites, we do not believe it is possible to develop an estimate of the range or
reasonably possible environmental loss in excess of our recorded liabilities. At December 31, 2021,
environmental liabilities (both short term and long term) were $72 million, primarily related to the Cristal
transaction.
For further discussion, see Environmental Matters included elsewhere in this section entitled,
‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ and Notes 2 and
20 to the consolidated financial statements.
Income Taxes
We have operations in several countries around the world and are subject to income and similar taxes in
these countries. The estimation of the amounts of income tax involves the interpretation of complex tax laws and
regulations and how foreign taxes affect domestic taxes, as well as the analysis of the realizability of deferred tax
assets, tax audit findings and uncertain tax positions. Although we believe our tax accruals are adequate,
differences may occur in the future, depending on the resolution of pending and new tax matters.
Deferred tax assets and liabilities are determined based on temporary differences between the financial
reporting and tax bases of assets and liabilities using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or settled. A valuation allowance is
provided against a deferred tax asset when it is more likely than not that all or some portion of the deferred tax
asset will not be realized. We periodically assess the likelihood that we will be able to recover our deferred tax
assets and reflect any changes in our estimates in the valuation allowance with a corresponding adjustment to
earnings or other comprehensive income (loss) as appropriate. ASC 740, Income Taxes, requires that all available
positive and negative evidence be weighted to determine whether a valuation allowance should be recorded.
The amount of income taxes we pay are subject to ongoing audits by federal, state and foreign tax
authorities, which may result in proposed assessments. Our estimate of the potential outcome for any uncertain
tax issue is highly judgmental. We assess our income tax positions, and record tax benefits for all years subject
to examination based upon our evaluation of the facts, circumstances and information available at the reporting
date. For those tax positions for which it is more likely than not that a tax benefit will be sustained, we record
the amount that has a greater than 50% likelihood of being realized upon settlement with a taxing authority that
51
has full knowledge of all relevant information. Interest and penalties are accrued as part of tax expense, where
applicable. If we do not believe that it is more likely than not that a tax benefit will be sustained, no tax benefit
is recognized.
See Notes 2 and 8 to the consolidated financial statements for additional information.
Contingencies
From time to time, we may be subject to lawsuits, investigations and disputes (some of which involve
substantial amounts claimed) arising out of the conduct of our business, including matters relating to commercial
transactions, prior acquisitions and divestitures including our acquisition of Cristal, employee benefit plans,
intellectual property, and environmental, health and safety matters. We recognize a liability for any contingency
that is probable of occurrence and reasonably estimable. We continually assess the likelihood of adverse
judgments or outcomes in these matters, as well as potential ranges of possible losses (taking into consideration
any insurance recoveries), based on a careful analysis of each matter with the assistance of outside legal counsel
and, if applicable, other experts. Such contingencies are significant and the accounting requires considerable
management judgments in analyzing each matter to assess the likely outcome and the need for establishing
appropriate liabilities and providing adequate disclosures.
Refer to Notes 2 and 20 to the consolidated financial statements for additional information.
Long-Lived Assets
Key estimates related to long-lived assets (property, plant and equipment, mineral leaseholds, and intangible
assets) include useful lives, recoverability of carrying values, and the existence of any asset retirement
obligations. As a result of future decisions, such estimates could be significantly modified. The estimated useful
lives of property, plant and equipment range from three to forty years, and depreciation is recognized on a
straight-line basis. Useful lives are estimated based upon our historical experience, engineering estimates, and
industry information. These estimates include an assumption regarding periodic maintenance. Mineral leaseholds
are depreciated over their useful lives as determined under the units of production method. Intangible assets with
finite useful lives are amortized on the straight-line basis over their estimated useful lives. The amortization
methods and remaining useful lives are reviewed quarterly.
We evaluate the recoverability of the carrying value of long-lived assets that are held and used whenever
events or changes in circumstances indicate that the carrying value may not be recoverable. Under such
circumstances, we assess whether the projected undiscounted cash flows of our long-lived assets are sufficient to
recover the carrying amount of the asset group being assessed. If the undiscounted projected cash flows are not
sufficient, we calculate the impairment amount by discounting the projected cash flows using our
weighted-average cost of capital. For assets that satisfy the criteria to be classified as held for sale, an
impairment loss, if any, is recognized to the extent the carrying amount exceeds fair value, less cost to sell. The
amount of the impairment of long-lived assets is written off against earnings in the period in which the
impairment is determined.
Pension and Postretirement Benefits
We provide pension benefits for qualifying employees in the United States and internationally, with the
largest in the United Kingdom. Because pension benefits represent financial obligations that will ultimately be
settled in the future with employees who meet eligibility requirements, uncertainties exist in estimating the
timing and amount of future payments, and significant estimates are required to calculate pension expense and
liabilities relating to these plans. The company utilizes the services of independent actuaries, whose models are
used to help facilitate these calculations. Several key assumptions are used in actuarial models to calculate
pension expense and liability amounts recorded in the financial statements; the most significant variables in the
models are the expected rate of return on plan assets, the discount rate, and the expected rate of compensation
increase. Management believes the assumptions used in the actuarial calculations are reasonable, reflect the
company’s experience and expectations for the future and are within accepted practices in each of the respective
geographic locations in which it operates. However, actual results in any given year often differ from actuarial
assumptions due to economic events and different rates of retirement, mortality, and turnover. Refer to Notes 2
and 23 to the consolidated financial statements for a summary of the plan assumptions and additional information
on our pension arrangements.
52
Expected Return on Plan Assets — In forming the assumption of the long-term rate of return on plan assets,
we consider the expected earnings on funds already invested, earnings on contributions expected to be made in
the current year, and earnings on reinvested returns. The long-term rate of return estimation methodology for the
plans is based on a capital asset pricing model using historical data and a forecasted earnings model. An
expected return on plan assets analysis is performed which incorporates the current portfolio allocation, historical
asset-class returns, and an assessment of expected future performance using asset-class risk factors. A 100 basis
point change in these expected long-term rates of return, with all other variables held constant, would change our
pension expense by approximately $4 million.
Discount Rate — The discount rates selected for estimation of the actuarial present value of the benefit
obligations are determined based on the prevailing market rate for high-quality, fixed-income debt instruments
with maturities corresponding to the expected timing of benefit payments as of the annual measurement date for
each of the various plans. These rates change from year to year based on market conditions that affect corporate
bond yields. A 100 basis points change in discount rates, with all other variables held constant, would
decrease/increase our pension expense by approximately $1 million. A 100 basis points reduction in discount
rates would increase the PBO by approximately $72 million whereas a 100 basis point increase in discount rates
would have a favorable impact to the PBO of approximately $61 million.
Rates of Compensation Increase — We determine these rates based on review of the underlying long-term
salary increase trend characteristic of the local labor markets and historical experience, as well as comparison to
peer companies. A 100 basis points change in the expected rate of compensation increase, with all other variables
held constant, would change our pension expense by approximately $1 million and would impact the PBO by
approximately $6 million.
Recent Accounting Pronouncements
See Note 2 of notes to Consolidated Financial Statements for recently issued accounting pronouncements.
Environmental Matters
We are subject to a broad array of international, federal, state, and local laws and regulations relating to
safety, pollution, protection of the environment, and the generation, storage, handling, transportation, treatment,
disposal, and remediation of hazardous substances and waste materials. In the ordinary course of business, we are
subject to frequent environmental inspections and monitoring, and occasional investigations by governmental
enforcement authorities. Under these laws, we are or may be required to obtain or maintain permits or licenses in
connection with our operations. In addition, under these laws, we are or may be required to remove or mitigate
the effects on the environment of the disposal or release of chemical, petroleum, low-level radioactive and other
substances at our facilities. We may incur future costs for capital improvements and general compliance under
environmental, health, and safety laws, including costs to acquire, maintain, and repair pollution control
equipment. Environmental laws and regulations are becoming increasingly stringent, and compliance costs are
significant and will continue to be significant in the foreseeable future. There can be no assurance that such laws
and regulations or any environmental law or regulation enacted in the future is not likely to have a material
effect on our business. We believe we are in compliance with applicable environmental rules and regulations in
all material respects.
Refer to Item 3. Legal Proceedings for further information.
53
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to various market, credit, operational, and liquidity risks in the normal course of business,
which are discussed below. We manage these risks through normal operating and financing activities and, when
appropriate, with derivative instruments. We do not invest in derivative instruments for speculative purposes, but
historically have entered into, and may enter into, derivative instruments for hedging purposes in order to reduce
the exposure to fluctuations in interest rates, natural gas prices and exchange rates.
Market Risk
A substantial portion of our products and raw materials are commodities that reprice as market supply and
demand fundamentals change. Accordingly, product margins and the level of our profitability tend to vary with
changes in the business cycle. Our TiO2 prices may do so in the near term as ore prices and pigment prices are
expected to fluctuate over the next few years. We try to protect against such instability through various business
strategies. These include provisions in sales contracts allowing us to pass on higher raw material costs through
timely price increases and formula price contracts to transfer or share commodity price risk, as well as using
varying contract term lengths and selling to a diverse mix of customers by geography and industry to reap the
benefits of a diverse portfolio.
Credit Risk
Credit risk is the risk that a borrower or a counterparty will fail to meet their obligations. A significant
portion of our liquidity is concentrated in trade accounts receivable that arise from sales of our products to
customers. In the case of TiO2, the high level of industry concentration has the potential to impact our overall
exposure to credit risk, either positively or negatively, in that our customers may be similarly affected by changes
in economic, industry or other conditions. We have significant exposure to credit risk in industries that are
affected by cyclical economic fluctuations. We perform ongoing credit evaluations of our customers from time to
time, as deemed appropriate, to mitigate credit risk but generally do not require collateral. Our contracts typically
enable us to tighten credit terms if we perceive additional credit risk; however, historic losses due to write offs of
bad debt have been relatively low. In addition, due to our international operations, we are subject to potential
trade restrictions and sovereign risk in certain countries in which we operate. We maintain allowances for
potential credit losses based on specific customer review and current financial conditions. During 2021, 2020 and
2019 our ten largest third-party customers represented 28%, 32%, and 31%, respectively, of our consolidated net
sales. During 2021, 2020, and 2019, no single customer accounted for 10% of our consolidated net sales.
Interest Rate Risk
Interest rate risk arises from the possibility that changes in interest rates will impact our financial results.
We are exposed to interest rate risk on our floating rate debt, the New Term Loan Facility, Standard Bank Term
Loan Facility, new Cash Flow Revolver, Standard Bank Revolver, Emirates Revolver and SABB Credit Facility
balances. Using a sensitivity analysis as of December 31, 2021, a hypothetical 1% increase in interest rates
would result in a net decrease to pre-tax income of approximately $2 million on an annualized basis. This is due
to the fact that earnings on our interest earning financial assets of $45 million at December 31, 2021 would
increase by the full 1%, offsetting the impact of a 1% increase in interest expense on our floating rate debt of
$277 million.
During 2019, we entered into interest-rate swap agreements for a portion of our Prior Term Loan Facility,
which effectively convert the variable rate to a fixed rate for a portion of the loan. The agreements expire in
September 2024. The Company’s objectives in using the interest-rate swap agreements are to add stability to
interest expense and to manage its exposure to interest rate movements. There was no impact associated with the
New Term Loan Facility as the hedge remained highly effective.
Currency Risk
Currency risk arises from the possibility that fluctuations in foreign exchange rates will impact our balance
sheets due to the translation of our assets and liabilities denominated in foreign currencies, as well as our
earnings due to the translation of certain of our subsidiaries’ statements of operations from local currencies to
U.S. dollars, as well as due to remeasurement of assets and liabilities denominated in currencies other than a
subsidiary’s functional currency. A significant portion of our Adjusted EBITDA is derived from jurisdictions that
54
are subject to currency risk with Australia, Europe and South Africa representing the largest contributors. We
manufacture and market our products in a number of countries throughout the world and, as a result, are exposed
to changes in foreign currency exchange rates, particularly in Australia, Brazil, China, South Africa, the
Netherlands, France and the United Kingdom. The exposure is more prevalent in South Africa and Australia as
the majority of revenues are earned in U.S. dollars while expenses are primarily incurred in local currencies.
Since we are exposed to movements in the South African rand and the Australian Dollar versus the U.S. dollar,
we may enter into forward contracts to buy and sell foreign currencies as ‘‘economic hedges’’ for these foreign
currency transactions.
We periodically enter into foreign currency contracts used to hedge non-functional currency sales for our
South African subsidiaries and forecasted non-functional currency cost of goods sold for our Australian
subsidiaries. These foreign currency contracts are designated as cash flow hedges. Changes to the fair value of
these foreign currency contracts are recorded as a component of other comprehensive income (loss) to the extent
such contracts are effective, and are recognized in net sales or costs of goods sold in the period in which the
forecasted transaction affects earnings or the transactions are no longer probable of occurring.
As of December 31, 2021, we had notional amounts of 443 million Australian dollars (approximately
$322 million at December 31, 2021 exchange rate) that expire between January 25, 2022 and December 23, 2022
to reduce the exposure of our Australian subsidiaries’ cost of sales to fluctuations in currency rates. At
December 31, 2021, we had notional amounts of 4.7 billion South African Rand (approximately $298 million at
December 31, 2021 exchange rate) that expire between January 26, 2022 and December 28, 2022 to reduce the
exposure of our South African subsidiaries’ third party sales to fluctuations in currency rates. At December 31,
2021 and December 31, 2020, there was an unrealized net gain of $15 million and an unrealized net gain of
$58 million, respectively, recorded in ‘‘Accumulated other comprehensive loss’’ on the Consolidated Balance
Sheet.
From time to time, we enter into foreign currency contracts to reduce exposure of our subsidiaries’ balance
sheet accounts not denominated in our subsidiaries’ functional currency to fluctuations in foreign currency
exchange rates. For accounting purposes, these foreign currency contracts are not considered hedges. The change
in fair value associated with these contracts is recorded in ‘‘Other income (expense), net’’ within the
Consolidated Statement of Operations and partially offsets the change in value of third party and
intercompany-related receivables not denominated in the functional currency of the subsidiary. At December 31,
2021, there was (i) 510 million South African Rand (or approximately $32 million at December 31, 2021
exchange rate) and (ii) 172 million Australian dollars (or approximately $125 million at December 31, 2021
exchange rate) of notional amount of outstanding foreign currency contracts. At December 31, 2021, the fair
value of the foreign currency contracts was a gain of $1 million.
55
Item 8.
Financial Statements and Supplementary Data
Tronox Holdings Audited Annual Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID 238) . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations for the Years Ended December 31, 2021, 2020, and 2019 . . . . . . .
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2021,
2020, and 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets at December 31, 2021 and 2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020, and 2019 . . . . . .
Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2021,
2020, and 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
59
60
61
62
63
64
Page No.
56
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Tronox Holdings plc
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Tronox Holdings plc and its subsidiaries
(the ‘‘Company’’) as of December 31, 2021 and 2020, and the related consolidated statements of operations, of
comprehensive income (loss), of shareholders’ equity and of cash flows for each of the three years in the period
ended December 31, 2021, including the related notes (collectively referred to as the ‘‘consolidated financial
statements’’). We also have audited the Company’s internal control over financial reporting as of
December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and
its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting
principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in
all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria
established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining
effective internal control over financial reporting, and for its assessment of the effectiveness of internal control
over financial reporting, included in Management’s Report on Internal Control over Financial Reporting
appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial
statements and on the Company’s internal control over financial reporting based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement, whether due to error or fraud, and whether effective internal control over
financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of
material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial 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 (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded 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 (iii) 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.
57
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.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the
consolidated financial statements that was communicated or required to be communicated to the audit committee
and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and
(ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit
matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we
are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
Valuation Allowance Assessment of Deferred Tax Assets
As described in Notes 2 and 8 to the consolidated financial statements, the Company has recorded
$1.1 billion of deferred tax assets as of December 31, 2021, net of valuation allowances of $1.7 billion. Deferred
tax assets and liabilities are determined based on temporary differences between the financial reporting and tax
bases of assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. A valuation allowance is provided against a
deferred tax asset when it is more likely than not that all or some portion of the deferred tax asset will not be
realized. The Company periodically assesses the likelihood that they will be able to recover the deferred tax
assets and reflect any changes in estimates of the valuation allowance, with a corresponding adjustment to
earnings or other comprehensive income (loss), as appropriate. All available positive and negative evidence is
weighted to determine whether a valuation allowance should be recorded.
The principal considerations for our determination that performing procedures relating to the valuation
allowance assessment of deferred tax assets is a critical audit matter are the significant judgment by management
in determining the realizability of deferred tax assets by jurisdiction, particularly as it relates to the assessment of
cumulative tax losses, estimates of future taxable income and assessment of factors that may limit the
realizability of certain deferred tax assets. This in turn led to a high degree of auditor judgment, subjectivity, and
effort in performing procedures and in evaluating audit evidence relating to management’s assessment of
cumulative tax losses, estimates of future taxable income and assessment of factors that may limit the
realizability of certain deferred tax assets.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with
forming our overall opinion on the consolidated financial statements. These procedures included testing the
effectiveness of controls relating to the valuation allowance assessment of deferred tax assets, including controls
over the determination of cumulative tax losses, estimates of future taxable income and assessment of factors that
may limit the realizability of certain deferred tax assets. These procedures also included, among others, testing
the completeness and accuracy of underlying data used by management, and evaluating management’s assessment
of the realizability of deferred tax assets by jurisdiction. This included evaluating the reasonableness of
management’s assumptions related to the assessment of cumulative tax losses, estimates of future taxable income
and assessment of factors that may limit the realizability of certain deferred tax assets. Evaluating management’s
assumptions related to the assessment of cumulative tax losses, estimates of future taxable income and
assessment of factors that may limit the realizability of certain deferred tax assets involved evaluating whether
the assumptions used by management were reasonable considering the current and past performance of the
respective entity and whether the assumptions were consistent with evidence obtained in other areas of the audit.
/s/ PricewaterhouseCoopers LLP
Stamford, Connecticut
February 22, 2022
We have served as the Company’s auditor since 2014.
58
TRONOX HOLDINGS PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(Millions of U.S. dollars, except share and per share data)
Year Ended December 31,
2020
2019
2021
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
3,572
2,677
—
$
2,758
2,137
—
$
2,642
2,159
19
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from continuing operations before income taxes . . . . . . . . . . .
Income tax (provision) benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) from continuing operations. . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . .
895
318
—
577
(157)
7
(65)
12
374
(71)
303
—
303
17
621
347
3
271
(189)
8
(2)
26
114
881
995
—
995
26
464
347
22
95
(201)
18
(3)
3
(88)
(14)
(102)
5
(97)
12
Net income (loss) attributable to Tronox Holdings plc . . . . . . . . . . . . . . . . . .
$
286
$
969
$
(109)
Net income (loss) per share, basic:
Continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) per share, basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) per share, diluted:
Continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) per share, diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
$
$
1.88
$
— $
6.76
$
— $
(0.81)
0.03
1.88
$
6.76
$
(0.78)
1.81
$
— $
6.69
$
— $
(0.81)
0.03
1.81
$
6.69
$
(0.78)
Weighted average shares outstanding, basic (in thousands) . . . . . . . . . . . . . .
152,056
143,355
139,859
Weighted average shares outstanding, diluted (in thousands) . . . . . . . . . . . .
157,945
144,906
139,859
See notes to consolidated financial statements.
59
TRONOX HOLDINGS PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Millions of U.S. dollars)
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss):
Foreign currency translation adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension and postretirement plans (See Note 23):
Actuarial gains (losses), net of taxes of $6, $5 and $1 in 2021, 2020 and
2019, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of unrecognized actuarial losses, net of taxes of $2 in 2021,
and less than $1 in both 2020 and 2019 . . . . . . . . . . . . . . . . . . . . . . . . . .
Total pension and postretirement gains (losses) . . . . . . . . . . . . . . . . . . . . . . . .
Realized (gains) losses on derivative instruments reclassified from
accumulated other comprehensive loss to the Consolidated Statements of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gains (losses) on derivative financial instruments, (net of taxes of
less than $1, $5 and $5 in 2021, 2020, 2019, respectively; See Note 16). . . .
Year Ended December 31,
2020
2021
2019
$ 303
$995
$ (97)
(113)
(4)
19
(20)
(11)
16
4
20
(32)
21
4
(16)
4
(4)
2
(9)
(7)
8
11
Other comprehensive (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(104)
(20)
Total comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 199
$975
$ (86)
Comprehensive income (loss) attributable to noncontrolling interest:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
(10)
26
(16)
Comprehensive income attributable to noncontrolling interest . . . . . . . . . . . . . . .
7
10
12
16
28
Comprehensive income (loss) attributable to Tronox Holdings plc . . . . . . . .
$ 192
$965
$(114)
See notes to consolidated financial statements.
60
TRONOX HOLDINGS PLC
CONSOLIDATED BALANCE SHEETS
(Millions of U.S. dollars, except share and per share data)
ASSETS
Current Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable (net of allowance of $4 in 2021 and $5 in 2020) . . . . . . . . . . . . . . .
Inventories, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent Assets
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mineral leaseholds, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease right of use assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term lease liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent Liabilities
Long-term debt, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension and postretirement healthcare benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Environmental liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term lease liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and Contingencies - Note 20
Shareholders’ Equity
Tronox Holdings plc ordinary shares, par value $0.01 — 153,934,677 shares issued
and outstanding at December 31, 2021 and 143,557,479 shares issued and
outstanding at December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital in excess of par value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Tronox Holdings plc shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
See notes to consolidated financial statements.
61
December 31,
2021
2020
$ 228
4
631
1,048
132
6
2,049
1,710
747
217
85
985
194
$5,987
$ 438
328
26
18
12
822
2,558
116
139
66
55
157
32
3,945
$ 619
29
540
1,137
200
4
2,529
1,759
803
201
81
1,020
175
$6,568
$ 356
350
39
58
2
805
3,263
146
157
67
41
176
42
4,697
2
2,067
663
(738)
1,994
48
2,042
$5,987
1
1,873
434
(610)
1,698
173
1,871
$6,568
TRONOX HOLDINGS PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of U.S. dollars)
Year Ended December 31,
2020
2019
2021
$ 995
—
995
$
(97)
5
(102)
$
303
—
303
297
15
31
11
65
—
—
36
(108)
53
53
53
9
(78)
740
(272)
—
—
1
—
2
(269)
—
(3,212)
—
2,472
—
—
(37)
(40)
(65)
(3)
8
(877)
—
—
—
(10)
(416)
648
Cash Flows from Operating Activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income (loss) from continuing operations to net cash
provided by operating activities, continuing operations:
Depreciation, depletion and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of deferred debt issuance costs and discount on debt . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on extinguishment of debt
Contract loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired inventory step-up recognized in earnings . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-cash affecting net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (increase) in inventories, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (increase) in prepaid and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . .
Net changes in income tax payables and receivables . . . . . . . . . . . . . . . . . . . . . . . .
Changes in other non-current assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash provided by operating activities – continuing operations. . . . . . . . . . . . . . . . . . . .
Cash Flows from Investing Activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cristal Acquisition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of Ashtabula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from the sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash used in investing activities – continuing operations . . . . . . . . . . . . . . . . . . . . . . .
Cash Flows from Financing Activities:
Repayments of short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchase of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Call premium paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock and performance-based shares settled in cash for taxes . . . . . . . . . . . . .
Proceeds from the exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash (used in) provided by financing activities – continuing operations . . . . . . . . . . . . .
Discontinued Operations:
Cash provided by operating activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flows provided by discontinued operations . . . . . . . . . . . . . . . . . . . . . . . .
Effects of exchange rate changes on cash and cash equivalents and restricted cash . .
Net (decrease) increase in cash and cash equivalents and restricted cash . . . . . . . . .
Cash and cash equivalents and restricted cash at beginning of period . . . . . . . . . . .
Cash and cash equivalents and restricted cash at end of period - continuing
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplemental cash flow information - continuing operations:
Interest paid, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
See notes to consolidated financial statements.
62
$
$
$
232
138
47
$ 648
$ 159
$ 17
304
(899)
30
10
2
—
—
65
(49)
(21)
(29)
17
(2)
(68)
355
(195)
—
—
1
(36)
1
(229)
(13)
(233)
13
500
—
—
(10)
—
(40)
(3)
—
214
—
—
—
(3)
337
311
280
(9)
32
8
3
19
98
25
78
(59)
20
67
(13)
(35)
412
(198)
(1,675)
701
10
(25)
2
(1,185)
—
(387)
—
222
(288)
(148)
(4)
—
(27)
(6)
—
(638)
29
(1)
28
(2)
(1,385)
1,696
$
$
$
311
188
34
TRONOX HOLDINGS PC
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Millions of U.S. dollars)
Tronox
Holdings plc
Ordinary
Shares (in
thousands)
Tronox
Holdings plc
Ordinary
Shares
(amount)
Capital
in
Excess
of par
Value
(Accumulated
Deficit)
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total Tronox
Limited
Shareholders’
Equity
Non-
controlling
Interest
$ 1
—
$1,579
—
$(357)
(109)
$(540)
—
$ 683
(109)
$ 179
12
Balance at January 1, 2019 . . .
Net (loss) income. . . . . . . . . . . .
Other comprehensive (loss)
income. . . . . . . . . . . . . . . . . .
Shares-based compensation. . . . .
Shares issued for acquisition. . . .
Shares repurchased and
cancelled . . . . . . . . . . . . . . . .
Shares cancelled . . . . . . . . . . . .
Acquisition of noncontrolling
interest. . . . . . . . . . . . . . . . . .
Cristal acquisition . . . . . . . . . . .
Ordinary share dividends ($0.18
per share). . . . . . . . . . . . . . . .
122,934
—
—
3,347
37,580
(21,453)
(508)
—
—
—
Balance at December 31, 2019 . .
Net income. . . . . . . . . . . . . . . . .
Other comprehensive loss. . . . . . .
Shares-based compensation . . . . .
Shares cancelled . . . . . . . . . . . . .
Measurement period adjustment
related to Cristal acquisition . . .
Minority interest dividend . . . . . .
Ordinary share dividends ($0.28
per share) . . . . . . . . . . . . . . . .
141,900
—
—
2,032
(375)
—
—
—
Balance at December 31, 2020 . .
Net income. . . . . . . . . . . . . . . . .
Other comprehensive loss. . . . . . .
Shares-based compensation . . . . .
Shares cancelled . . . . . . . . . . . . .
Options exercised . . . . . . . . . . . .
Acquisition of noncontrolling
interest . . . . . . . . . . . . . . . . . .
Ordinary share dividends ($0.36
per share) . . . . . . . . . . . . . . . .
143,557
—
—
2,844
(137)
425
7,246
—
—
—
—
—
—
—
—
—
$ 1
—
—
—
—
—
—
—
$ 1
—
—
—
—
—
1
—
—
32
526
(288)
(6)
3
—
—
$1,846
—
—
30
(3)
—
—
—
$1,873
—
—
31
(3)
8
158
—
—
—
—
—
—
—
—
(27)
$(493)
969
—
—
—
—
—
(42)
$ 434
286
—
—
—
—
—
(57)
(5)
—
—
—
—
(61)
—
—
$(606)
—
(4)
—
—
—
—
—
$(610)
—
(94)
—
—
—
(34)
—
(5)
32
526
(288)
(6)
(58)
—
(27)
$ 748
969
(4)
30
(3)
—
—
(42)
$1,698
286
(94)
31
(3)
8
125
(57)
Total
Equity
$ 862
(97)
11
32
526
(288)
(6)
(148)
51
16
—
—
—
—
(90)
51
—
(27)
$ 168
26
(16)
—
—
$ 916
995
(20)
30
(3)
(3)
(2)
—
(3)
(2)
(42)
$ 173
17
(10)
—
—
—
$1,871
303
(104)
31
(3)
8
(125)
—
(7)
(64)
Balance at December 31, 2021 . .
153,935
$ 2
$2,067
$ 663
$(738)
$1,994
$ 48
$2,042
See notes to consolidated financial statements.
63
TRONOX HOLDINGS PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of U.S. dollars, except share, per share and metric tons data or unless otherwise noted)
1. The Company
Tronox Holdings plc (referred to herein as ‘‘Tronox’’, the ‘‘Company’’, ‘‘we’’, ‘‘us’’, or ‘‘our’’) operates
titanium-bearing mineral sand mines and beneficiation operations in Australia, South Africa and Brazil to produce
feedstock materials that can be processed into TiO2 for pigment, high purity titanium chemicals, including
titanium tetrachloride, and Ultrafine© titanium dioxide used in certain specialty applications. It is our long-term
strategic goal to be vertically integrated and consume all of our feedstock materials in our own
nine TiO2 pigment facilities which we operate in the United States, Australia, Brazil, UK, France, the
Netherlands, China and the Kingdom of Saudi Arabia (‘‘KSA’’). We believe that vertical integration is the best
way to achieve our ultimate goal of delivering low cost, high-quality pigment to our coatings and other
TiO2 customers throughout the world. The mining, beneficiation and smelting of titanium bearing mineral sands
creates meaningful quantities of zircon and pig iron, which we also supply to customers around the world.
We are a public limited company listed on the New York Stock Exchange and are registered under the laws
of England and Wales.
Basis of Presentation
We are considered a domestic company in the United Kingdom and, as such, are required to comply with
filing requirements in the United Kingdom. Additionally, we are not considered a ‘‘foreign private issuer’’ in the
U.S.; therefore, we are required to comply with the reporting and other requirements imposed by the
U.S. securities law on U.S. domestic issuers, which, among other things, requires reporting under accounting
principles generally accepted in the United States of America (‘‘U.S. GAAP’’). The consolidated financial
statements included in this Form 10-K are prepared in conformity with U.S. GAAP.
Our consolidated financial statements include the accounts of all majority-owned subsidiary companies.
All intercompany balances and transactions have been eliminated in consolidation. Certain prior period amounts
have been reclassified to conform to the manner and presentation in the current period.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses
during the reporting periods. It is at least reasonably possible that the effect on the financial statements of a
change in estimate due to one or more future confirming events could have a material effect on the financial
statements.
2.
Significant Accounting Policies
Foreign Currency
The U.S. dollar is our reporting currency for our consolidated financial statements in U.S. GAAP.
We determine the functional currency of each subsidiary based on a number of factors, including the
predominant currency for revenues, expenditures and borrowings. Adjustments from the remeasurement of
non-functional currency monetary assets and liabilities are recorded in ‘‘Other income, net’’ in the Consolidated
Statements of Operations. When a subsidiary’s functional currency is not the U.S. dollar, translation adjustments
resulting from translating the functional currency financial statements into U.S. dollar equivalents are recorded in
‘‘Accumulated other comprehensive loss’’ in the Consolidated Balance Sheets.
Translation adjustments on intercompany foreign currency receivables and payables that are not expected to
be settled in the foreseeable future are reported in the same manner as translation adjustments.
Revenue Recognition
We recognize revenue at a point in time when the customer obtains control of the promised products. For
most transactions this occurs when products are shipped from our manufacturing facilities or at a later point
when control of the products transfers to the customer at a specified destination or time. All amounts billed to a
64
customer in a sales transaction related to shipping and handling represent revenues earned and are reported as
‘‘Net sales’’ in the Consolidated Statements of Operations. Accruals are made for sales returns, rebates and other
allowances, which are recorded in ‘‘Net sales’’ in the Consolidated Statements of Operations and are based on
our historical experience and current business conditions. Additionally, we have elected the practical expedient to
exclude sales taxes and similar taxes that we collect from customers on behalf of government authorities from
the revenue transaction price. See Note 5.
Cost of Goods Sold
Cost of goods sold includes costs for purchasing, receiving, manufacturing, and distributing products,
including raw materials, energy, labor, depreciation, depletion, shipping and handling, freight, warehousing, and
other production costs.
Research and Development
Research and development costs, included in ‘‘Selling, general and administrative expenses’’ in the
Consolidated Statements of Operations comprised of salaries, building costs, utilities, administrative expenses,
third party research, and allocations of corporate costs, were $13 million, $12 million, and $17 million during
2021, 2020, and 2019, respectively, and were expensed as incurred.
Selling, General and Administrative Expenses
Selling, general and administrative expenses include costs related to marketing, research and development,
agent commissions, and legal and administrative functions such as corporate management, human resources,
information technology, investor relations, accounting, treasury, and tax compliance.
Income Taxes
We use the asset and liability method of accounting for income taxes. The estimation of the amounts of
income taxes involves the interpretation of complex tax laws and regulations and how foreign taxes affect
domestic taxes, as well as the analysis of the realizability of deferred tax assets, tax audit findings, and uncertain
tax positions.
Deferred tax assets and liabilities are determined based on temporary differences between the financial
reporting and tax bases of assets and liabilities using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or settled. A valuation allowance is
provided against a deferred tax asset when it is more likely than not that all or some portion of the deferred tax
asset will not be realized. We periodically assess the likelihood that we will be able to recover our deferred tax
assets and reflect any changes in our estimates in the valuation allowance, with a corresponding adjustment to
earnings or other comprehensive income (loss), as appropriate. All available positive and negative evidence is
weighted to determine whether a valuation allowance should be recorded.
The amount of income taxes we pay is subject to ongoing audits by federal, state, and foreign tax
authorities, which may result in proposed assessments. Our estimate of the potential outcome for any uncertain
tax issue is highly judgmental. We assess our income tax positions, and record tax benefits for all years subject
to examination based upon our evaluation of the facts, circumstances, and information available at the reporting
date. For those tax positions for which it is more likely than not that a tax benefit will be sustained, we record
the amount that has a greater than 50% likelihood of being realized upon settlement with a taxing authority that
has full knowledge of all relevant information. Interest and penalties are accrued as part of tax expense, where
applicable. If we do not believe that it is more likely than not that a tax benefit will be sustained, no tax benefit
is recognized. See Note 8.
Earnings per Share
Basic and diluted earnings per share are calculated using the two-class method. Under the two-class method,
earnings used to determine basic earnings per share are reduced by an amount allocated to participating
securities. Participating securities include restricted shares issued under the Tronox Management Equity Incentive
Plan (the ‘‘MEIP’’) (see Note 22), which contains non-forfeitable dividend rights. Our unexercised options and
unvested restricted share units do not contain non-forfeitable rights to dividends and, as such, are not considered
65
in the calculation of basic earnings per share. Our unvested restricted shares do not have a contractual obligation
to share in losses; therefore, when we record a net loss, none of the loss is allocated to participating securities.
Consequently, in periods of net loss, the two-class method does not have an effect on basic loss per share.
Diluted earnings per share is calculated by dividing net earnings allocable to ordinary shares by the
weighted-average number of ordinary shares outstanding for the period, as adjusted for the potential dilutive
effect of non-participating restricted share units and options. The options are included in the calculation of
diluted earnings per ordinary share utilizing the treasury stock method. See Note 9.
Fair Value Measurement
We measure fair value on a recurring basis utilizing valuation techniques that maximize the use of
observable inputs and minimize the use of unobservable inputs, to the extent possible, and consider counterparty
credit risk in our assessment of fair value. The fair value hierarchy is as follows:
•
•
•
Level 1 – Quoted prices in active markets for identical assets and liabilities;
Level 2 – Quoted prices for similar assets and liabilities in active markets, quoted prices for identical
or similar assets and liabilities in markets that are not active or other inputs that are observable or can
be corroborated by observable market data; and,
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant
to the fair value of the assets and liabilities See Note 17.
Cash and Cash Equivalents
We consider all investments with original maturities of three months or less to be cash equivalents.
We maintain cash and cash equivalents in bank deposit and money market accounts that may exceed federally
insured limits. The financial institutions where our cash and cash equivalents are held are generally highly rated
and geographically dispersed, and we have a policy to limit the amount of credit exposure with any one
institution. We have not experienced any losses in such accounts and believe we are not exposed to significant
credit risk.
At December 31, 2021, we had restricted cash of $4 million comprised of $3 million in Australia related to
outstanding performance bonds and $1 million in Saudi Arabia related to vendor supply agreement guarantees.
At December 31, 2020, we had restricted cash of $29 million comprised of $18 million in Europe related to the
termination fee associated with the TTI acquisition, $10 million in Australia related to outstanding performance
bonds and $1 million in Saudi Arabia related to vendor supply agreement guarantees.
Accounts Receivable, net of allowance for credit losses
We perform credit evaluations of our customers, and take actions deemed appropriate to mitigate credit risk.
Only in certain specific occasions do we require collateral in the form of bank or parent company guarantees or
guarantee payments. We maintain allowances for potential credit losses based on specific customer review and
current financial conditions.
Inventories, net
Pigment inventories are stated at the lower of actual cost and net realizable value, net of allowances for
obsolete and slow-moving inventory. The cost of inventories is determined using the first-in, first-out method.
Carrying values include material costs, labor, and associated indirect manufacturing expenses. Costs for materials
and supplies, excluding titanium ore, are determined by average cost to acquire. Feedstock and co-products
inventories including titanium ore are stated at the lower of the weighted-average cost of production or market.
Inventory costs include those costs directly attributable to products, including all manufacturing overhead but
excluding distribution costs. Raw materials are carried at actual cost.
We review the cost of our inventory in comparison to its net realizable value. We also periodically review
our inventory for obsolescence. In either case, we record any write-down equal to the difference between the cost
of inventory and its estimated net realizable value based on assumptions about alternative uses, market conditions
and other factors. Inventories expected to be sold or consumed within twelve months after the balance sheet date
are classified as current assets and all other inventories are classified as non-current assets. See Note 10.
66
Long Lived Assets
Property, plant and equipment, net is stated at cost less accumulated depreciation, and is depreciated over its
estimated useful life using the straight-line method as follows:
Land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10 — 20 years
10 — 40 years
3 — 25 years
10 years
Maintenance and repairs are expensed as incurred, except for costs of replacements or renewals that improve
or extend the lives of existing properties, which are capitalized. Upon retirement or sale, the cost and related
accumulated depreciation are removed from the respective account, and any resulting gain or loss is included in
‘‘Cost of goods sold’’ or ‘‘Selling, general, and administrative expenses’’ in the Consolidated Statements of
Operations. See Note 11.
We capitalize costs associated with our asset retirement obligations which are generally included in
machinery and equipment. See Note 19.
We capitalize interest costs on major projects that require an extended period of time to complete. See Note 15.
Mineral property acquisition costs are capitalized as tangible assets when management determines that
probable future benefits consisting of a contribution to future cash inflows have been identified and adequate
financial resources are available or are expected to be available as required to meet the terms of property
acquisition and anticipated exploration and development expenditures. Mineral leaseholds are depleted over their
useful lives as determined under the units of production method. Mineral property exploration costs are expensed
as incurred. When it has been determined that a mineral property can be economically developed as a result of
establishing proven and probable reserves, the costs incurred to develop such property through the
commencement of production are capitalized. See Note 12.
Intangible assets are stated at cost less accumulated amortization and are amortized on a straight-line basis
over their estimated useful lives, which generally range from 3 to 20 years. See Note 13.
We evaluate the recoverability of the carrying value of long-lived assets that are held and used whenever
events or changes in circumstances indicate that the carrying value may not be recoverable. Under such
circumstances, we assess whether the projected undiscounted cash flows of our long-lived assets are sufficient to
recover the carrying amount of the asset group being assessed. If the undiscounted projected cash flows are not
sufficient, we calculate the impairment amount by discounting the projected cash flows using our
weighted-average cost of capital. For assets that satisfy the criteria to be classified as held for sale, an
impairment loss, if any, is recognized to the extent the carrying amount exceeds fair value, less cost to sell.
The amount of the impairment of long-lived assets is written off against earnings in the period in which the
impairment is determined.
Business Acquisitions
Business acquisitions are accounted for using the acquisition method under Accounting Standards
Codification (‘‘ASC’’) 805, Business Combinations (‘‘ASC 805’’), which requires recording assets acquired and
liabilities assumed at fair value as of the acquisition date. Under the acquisition method of accounting, each
tangible and separately identifiable intangible asset acquired and liabilities assumed is recorded based on their
preliminary estimated fair values on the acquisition date. The initial valuations are derived from estimated fair
value assessments and assumptions used by management. Acquisition related costs are expensed as incurred and
are included in ‘‘Selling, general and administrative expenses’’ in the Consolidated Statements of Operations.
Leases
We determine if a contract is or contains a lease at inception of the contract. Our leases are primarily
operating leases. Leased assets primarily include office buildings, rail cars and motor vehicles, forklifts, and other
machinery and equipment. Our leases primarily have fixed lease payments, with real estate leases typically
requiring additional payments for real estate taxes and occupancy-related costs. Certain of our leases also have
variable lease payments. Variable lease payments that depend on an index or a rate (such as the Consumer Price
67
Index) are included in our initial measurement of the lease right of use assets and lease liabilities. Variable lease
payments that are not index or rate based (such as variable payments based on our performance or use of the
leased assets) are recorded as expenses when incurred and excluded from the measurement of right of use assets
and lease liabilities. Our leases typically have initial lease terms ranging from 1 to 25 years. Some of our lease
agreements include options to renew, extend or early terminate the leases. Lease term is the non-cancellable
period of a lease, adjusted by the period covered by an option to extend or terminate the lease if we are
reasonably certain to exercise (or not exercise) that option. Our operating leases typically do not contain purchase
options we expect to exercise, residual value guarantees or other material covenants.
Operating leases are recorded under ‘‘Lease right of use assets’’, ‘‘Short-term lease liabilities’’, and
‘‘Long-term lease liabilities’’ on the Consolidated Balance Sheets. Finance leases are recorded under ‘‘Property,
plant and equipment net’’, ‘‘Long-term debt due within one year’’, and ‘‘Long-term debt’’ on the Consolidated
Balance Sheets. Operating lease right of use (‘‘ROU’’) assets and lease liabilities are initially recorded at the
present value of the future minimum lease payments over the lease term at the commencement date. As most of
our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information
available at the lease commencement date in determining the present value of future payments. Lease payments
for the initial measurement of lease ROU assets and lease liabilities include fixed payments and variable
payments that depend on an index or a rate. Variable lease payments that are not index or rate based are recorded
as expenses when incurred. Operating lease ROU assets are amortized on a straight-line basis over the period of
the lease. Finance lease ROU assets are amortized on a straight-line basis over the shorter of their estimated
useful lives of leased asset and the lease terms. See Note 18.
Long-term Debt
Long-term debt is stated net of unamortized original issue premium or discount. Premiums or discounts are
amortized using the effective interest method with amortization expense recorded in ‘‘Interest and debt expense,
net’’ in the Consolidated Statements of Operations. Deferred debt issuance costs related to a recognized debt
liability are presented in the Consolidated Balance Sheets as a direct deduction from the carrying amount of that
debt liability, consistent with debt discounts and are amortized using the effective interest method with
amortization expense recorded in ‘‘Interest and debt expense, net’’ in the Consolidated Statements of Operations.
See Note 15.
Asset Retirement Obligations
Asset retirement obligations are recorded at their estimated fair value, and accretion expense is recognized
over time as the discounted liability is accreted to its expected settlement value. Fair value is measured using
expected future cash outflows discounted at our credit-adjusted risk-free interest rate, which are considered
Level 3 inputs. We classify accretion expense related to asset retirement obligations as a production cost, which
is included in ‘‘Cost of goods sold’’ in the Consolidated Statements of Operations. See Note 19.
Environmental Remediation and Other Contingencies
We record an undiscounted liability when any of the following occur: 1) a claim or assessment has been
asserted, 2) a litigation has commenced, or 3) based on available information, it is probable that a claim or an
assessment will be asserted or a litigation will commence; and in addition, the outcome is expected to be
unfavorable to us and the associated costs can be reasonably estimated. See Note 20.
Self-Insurance
We are self-insured for certain levels of general and vehicle liability, property, workers’ compensation and
health care coverage. The cost of these self-insurance programs is accrued based upon estimated fully developed
settlements for known and anticipated claims. Any resulting adjustments to previously recorded reserves are
reflected in current operating results. We do not accrue for general or unspecific business risks.
Share-based Compensation
Equity Restricted Share and Restricted Share Unit Awards — The fair value of equity instruments is
measured based on the share price on the grant date and is recognized over the vesting period. These awards
contain service, market, and/or performance conditions. For awards containing only a service or a market
68
condition, we have elected to recognize compensation costs using the straight-line method over the requisite
service period for the entire award. For awards containing a market condition, the fair value of the award is
measured using the Monte Carlo simulation under a lattice model approach. For awards containing a performance
condition, the fair value is the grant date close price and compensation expense is not recognized until we
conclude that it is probable that the performance condition will be met. We reassess the probability at least
quarterly. See Note 22.
Defined Benefit Pension and Postretirement Benefit Plans
We recognize the funded status of our defined benefit pension plans and postretirement benefit plans in the
Consolidated Balance Sheets. The funded status is measured as the difference between the fair value of plan
assets and the benefit obligation at the measurement date. The benefit obligation for the defined benefit plans is
the projected benefit obligation (PBO), which represents the actuarial present value of benefits expected to be
paid upon retirement based on employee services already rendered and estimated future compensation levels.
The benefit obligation for our postretirement benefit plans is the accumulated postretirement benefit obligation
(APBO), which represents the actuarial present value of postretirement benefits attributed to employee services
already rendered. The fair value of plan assets related to our defined benefit plan represents the current market
value of assets held in a trust fund, which is established for the sole benefit of plan participants.
If the fair value of plan assets exceeds the benefit obligation, the plan is overfunded, and the excess is
recorded as a prepaid pension asset. On the other hand, if the benefit obligation exceeds the fair value of plan
assets, the plan is underfunded, and the deficit is recorded as pension and postretirement healthcare benefits
obligation in the Consolidated Balance Sheet. The portion of the pension and postretirement healthcare
obligations payable within the next 12 months is recorded in accrued liabilities in the Consolidated Balance
Sheet.
Net periodic pension and postretirement benefit cost represents the aggregation of service cost, interest cost,
expected return on plan assets, amortization of prior service costs or credits and actuarial gains or losses
previously recognized as a component of OCI and it is recorded in the Consolidated Statement of Operations.
Net periodic cost is recorded in cost of goods sold and selling, general and administrative expenses in the
Consolidated Statement of Operations based on the employees’ respective functions.
Actuarial gains or losses represents the effect of remeasurement on the benefit obligation principally driven
by changes in the plan actuarial assumptions. Prior service costs or credits arise from plan amendments.
The actuarial gains or losses and prior service costs or credits are initially recognized as a component of Other
Comprehensive income in the Consolidated Statement of Comprehensive Income (Loss). Those gains or losses
and prior service costs or credits are subsequently recognized as a component of net periodic cost.
The measurement of benefit obligations and net periodic cost is based on estimates and assumptions
approved by management. These valuations reflect the terms of the plans and use participant-specific information
such as compensation, age and years of service, as well as certain assumptions, including estimates of discount
rates, expected return on plan assets, rate of compensation increases and mortality rates.
Defined Contribution Plans — We recognize our contribution as expense when they are due. The expense is
recorded in cost of goods sold or selling, general and administrative expenses the Consolidated Statement of
Operations based on the employees’ respective functions.
Multiemployer Plan — We treat our multiemployer plan like a defined contribution plan. A pension plan to
which two or more unrelated employers contribute is generally considered to be a multiemployer plan. As a
defined contribution plan, we recognize the contribution for the period as a net benefit cost and any contributions
due and unpaid as a liability.
Recently Adopted Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (‘‘Topic 740’’): Simplifying the
Accounting for Income Taxes. The standard simplifies the accounting for income taxes by removing the
exceptions to the incremental approach for intraperiod tax allocation, the requirement to recognize deferred tax
liability for equity method investments, the ability not to recognize a deferred tax liability for a foreign
subsidiary when a foreign equity method investment becomes a subsidiary, and the general methodology for
calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year.
69
This standard is effective for fiscal years and interim periods within those fiscal years beginning after
December 15, 2020 with early adoption permitted. The adoption of this standard did not have a material impact
on our consolidated financial statements.
Recently Issued Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04, ‘‘Reference Rate Reform (Topic 848): Facilitation of the
Effects of Reference Rate Reform Financial Reporting’’. This amendment is elective in nature. Amongst other
aspects, this standard provides for practical expedients and exceptions to current accounting standards that
reference a rate which is expected to be dissolved (e.g., London Interbank Offered Rate ‘‘LIBOR’’) as it relates
to hedge accounting, contract modifications and other transactions that reference this rate, subject to meeting
certain criteria. The standard is effective for all entities as of March 12, 2020 through December 31, 2022.
The Company is currently evaluating the impact of the standard.
3. Acquisitions and Related Divestitures
TTI Acquisition
In May 2020, the Company announced that it had signed a definitive agreement to acquire the Tizir
Titanium and Iron (‘‘TTI’’) business from Eramet S.A. for approximately $300 million in cash, plus 3% per
annum which accrues for the period from January 1, 2020 until the transaction closes. TTI is a titanium smelter
located in Tyssedal, Norway which upgrades ilmenite to produce high-grade titanium slag and high-purity pig
iron with an annual capacity of approximately 230,000 tons and 90,000 tons, respectively.
Pursuant to the definitive agreement, we were required to pay to Eramet S.A. a termination fee of
$18 million if the agreement is terminated as a result of a failure to satisfy certain regulatory approvals prior to
May 13, 2021. During the second quarter of 2020, upon signing of the definitive agreement to acquire TTI, we
placed $18 million into an escrow account with a third-party financial institution.
One of the conditions to the transaction was the obtaining of certain regulatory approvals that would include
UK Competition and Markets Authority (‘‘CMA’’) approval by no later than a date specified in the definitive
agreement (the ‘‘Condition Satisfaction Date’’). On January 4, 2021, the Company received a decision from the
CMA indicating that it intended to open a Phase 2 investigation into the Company’s proposed acquisition of TTI.
In response to the concerns presented by the CMA, the Company submitted a remedy proposal, which the CMA
rejected on January 18, 2021. As a result of this rejection, the Company concluded that it is not possible to
complete the transaction by the Condition Satisfaction Date and elected to terminate the transaction. On
January 19, 2021, pursuant to the definitive agreement the $18 million previously placed into escrow was
released to Eramet in satisfaction of the termination fee, which was recorded in ‘‘Other income, net’’ in our
Consolidated Statement of Operations. At December 31, 2020, the $18 million is reflected within
‘‘Restricted cash’’ on the Consolidated Balance Sheet.
Cristal Acquisitions and Related Divestitures
On April 10, 2019, we completed the acquisition of the TiO2 business of Cristal for $1.675 billion of cash,
plus 37,580,000 ordinary shares. The total acquisition price, including the value of the ordinary shares at
$14 per share on the closing date of the Cristal Transaction, was approximately $2.2 billion. With the acquisition
of our shares, an affiliate of Cristal became our largest shareholder. At December 31, 2021, Cristal International
Holdings B.V. (formerly known as Cristal Inorganic Chemical Netherlands Cooperatief W.A.), a wholly-owned
subsidiary of The National Titanium Dioxide Company Limited., continues to own 37,580,000 shares of Tronox,
or a 24% ownership interest. The National Titanium Dioxide Company Limited is 79% owned by Tasnee.
In order to obtain regulatory approval for the Cristal Transaction, the FTC required us to divest Cristal’s
North American TiO2 business, which we sold to INEOS on May 1, 2019, for cash proceeds, net of transaction
costs, of $701 million, inclusive of an amount for a working capital adjustment. The operating results of Cristal’s
North American TiO2 business from the acquisition date to the date of divestiture are included in a single caption
entitled ‘‘Net Income (Loss) from discontinued operations, net of tax’’ in our Consolidated Statements of
Operations. See Note 6 for further information on discontinued operations.
In conjunction with the Cristal Transaction, we entered into a transition services agreement with Tasnee and
certain of its affiliates under which we and the Tasnee entities will provide certain transition services to one
70
another. See Note 24 for further details of the transition services agreement. In conjunction with the divestiture
of Cristal’s North American TiO2 business to INEOS, we entered into a two-year transition services agreement
with INEOS. Under the terms of the transition services agreement, INEOS agreed to provide services to Tronox
for manufacturing, technology and innovation, information technology, finance, warehousing and human
resources. Similarly, Tronox will provide services to INEOS for information technology, finance, product
stewardship, warehousing and human resources.
In addition, in order to obtain regulatory approval by the European Commission, we divested the 8120 paper
laminate grade, supplied from our Botlek facility in the Netherlands, to Venator Materials PLC (‘‘Venator’’).
The divestiture was completed on April 26, 2019. Under the terms of the divestiture, we will supply the
8120 grade product to Venator under a supply agreement for an initial term of 2 years, and extendable up to
3 years, to allow for the transfer of the manufacturing of the 8120 grade to Venator. Total cash consideration is
8 million Euros, of which 1 million Euros was paid at the closing, 3.5 million Euros (or approximately
$3.9 million) was received during the second quarter of 2020 and 3.5 million Euros (approximately $4.2 million)
was received in the second quarter of 2021. We recorded a charge of $19 million during the second quarter of
2019, in ‘‘Contract loss’’ in the Consolidated Statements of Operations, reflecting both the proceeds on sale and
the estimated losses we expect to incur under the supply agreement with Venator.
We funded the cash portion of the Cristal Transaction through existing cash, borrowings from our Wells
Fargo Revolver, and restricted cash which had been borrowed under the Blocked Term Loan (as defined
elsewhere herein) and which became available to us for the purpose of consummating the Cristal Transaction.
See Note 15 for further details of the Cristal Transaction financing.
Supplemental Pro Forma Financial Information
The following unaudited pro forma information was prepared pursuant to the requirements of ASC 805 and
give effect to the Cristal Transaction as if it had occurred on January 1, 2018. The unaudited pro forma financial
information reflects certain adjustments related to the acquisition, such as:
a.
b.
c.
d.
e.
f.
g.
h.
conforming the accounting policies of Cristal to those applied by Tronox;
conversion to U.S. GAAP from IFRS for Cristal;
the elimination of transactions between Tronox and Cristal;
recording certain incremental expenses resulting from purchase accounting adjustments, such as
inventory step-up amortization, depreciation, depletion and amortization expense in connection with fair
value adjustments to property, plant and equipment, mineral leaseholds and intangible assets;
recording the contract loss on the sale of the 8120 product line as a charge in the first quarter of 2018;
recording all transaction costs incurred in the first quarter of 2018;
recording the effect on interest expense related to borrowings in connection with the Cristal
Transaction; and
recording the related tax effects and the impacts to EPS for the shares issued in conjunction with the
transaction.
The unaudited pro forma financial information should not be relied upon as being indicative of the historical
results that would have been obtained if the Cristal Transaction had actually occurred on that date, nor the results
of operations in the future.
In accordance with ASC 805, the supplemental pro forma results of operations for the year ended
December 31, 2019, as if the Cristal Transaction had occurred on January 1, 2018, are as follows:
Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from continuing operations attributable to Tronox Holdings plc . . . . . . . . . . . . . . . . .
$3,008
18
$
For the year ended December 31, 2019, we incurred pre-tax charges of $98 million related to the
recognition of the step up to fair value of inventories acquired. We also incurred a pre-tax charge of $19 million
Year Ended
December 31, 2019
71
in contract losses incurred on the 8120 supply agreement with Venator for the year ended December 31, 2019.
See Note 20. The 2019 pro forma results were adjusted to exclude these charges as these costs were reflected
within the results of operations in the pro forma results as if they were incurred on January 1, 2018.
4. Restructuring Initiatives
In April 2019, we announced the completion of the Cristal Transaction. During the second quarter of 2019, as a
result of the acquisition, we outlined a broad-based synergy savings program that is expected to reduce costs,
simplify processes and focus the organization’s structure and resources on key growth initiatives. During the
years ended December 31, 2020 and 2019, we recorded costs of $3 million and $22 million, respectively, in our
Consolidated Statement of Operations relating to these initiatives. No material balances were recorded during the
year ended December 31, 2021. The costs consisted of charges for employee-related costs, including severance.
The liability balance for restructuring as of December 31, 2021, 2020 and 2019, which is recorded within
‘‘Accrued liabilities’’ in the Consolidated Balance Sheet, is as follows:
Employee-Related
Costs
Balance, January 1, 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ —
22
(12)
$ 10
3
(11)
$ 2
(1)
$ 1
5. Revenue
Nature of Contracts and Performance Obligations
We primarily generate revenue from selling TiO2 pigment products and related co-products, primarily zircon
and pig iron, to our customers. These products are used for the manufacture of paints, coatings, plastics, paper,
and a wide range of other applications. We account for a contract with our customer when it has approval and
commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract
has commercial substance, and collectability of consideration is probable.
Our promise in a contract typically relates to the transferring of a product or multiple distinct products that
are substantially the same and that have the same pattern of transfer, representing a single performance obligation
within a contract. We have elected to account for shipping and handling activities that occur after control of the
products has transferred to the customer as contract fulfillment activities, rather than a separate performance
obligation. Amounts billed to a customer in a sales transaction related to shipping and handling activities
continue to be reported as ‘‘Net sales’’ and related costs as ‘‘Cost of goods sold’’ in the Consolidated Statements
of Operations.
The duration of our contract period is one year or less. As such, we have elected to recognize incremental
costs incurred to obtain contracts, which primarily consist of commissions paid to third-party sales agents, as
‘‘Selling, general and administrative expenses’’ in the Consolidated Statements of Operations. Furthermore, we
have elected not to disclose the value of unsatisfied performance obligations at each period end, given the
original expected duration of our contracts are one year or less.
Transaction Price
Revenue is measured as the amount of consideration that we expect to be entitled in exchange for
transferring products to the customer. The transaction price typically consists of fixed cash consideration. We also
offer various incentive programs to our customers, such as rebates, discounts, and other price adjustments that
represent variable consideration. We estimate variable consideration and include such consideration amounts in
72
the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will
not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable
consideration and determination of whether to include estimated amounts in the transaction price are based
largely on an assessment of our anticipated performance and all information (historical, current and forecasted)
that is reasonably available to us. We adjust our estimate of revenue at the earlier of when the amount of
consideration we expect to receive changes or when the consideration becomes fixed. Sales returns rarely happen
in our business; therefore, it is unlikely that a significant reversal of revenue will occur.
Sales and similar taxes we collect on behalf of governmental authorities are excluded from the transaction
price for the determination of revenue. The expected costs associated with product warranties continue to be
recognized as expense when the products are sold. Customer payment terms and conditions vary by contract and
customer, although the timing of revenue recognition typically does not differ from the timing of invoicing.
Additionally, as we generally do not grant extended payment terms, we have determined that our contracts
generally do not include a significant financing component.
Revenue Recognition
We recognize revenue at a point in time when the customer obtains control of the promised products.
For most transactions this occurs when products are shipped from our manufacturing facilities or at a later point
when control of the products transfers to the customer at a specified destination or time.
Contract Balances
Contract assets represent our rights to consideration in exchange for products that have transferred to a
customer when the right is conditional on situations other than the passage of time. For products that we have
transferred to our customers, our rights to the consideration are typically unconditional and only the passage of
time is required before payments become due. These unconditional rights are recorded as accounts receivable.
As of December 31, 2021, and December 31, 2020, we did not have material contract asset balances.
Contract liabilities represent our obligations to transfer products to a customer for which we have received
consideration from the customer. When a customer has poor credit worthiness, we may receive advance payment
that is accounted for as deferred revenue. Deferred revenue is earned when control of the product transfers to the
customer, which is typically within a short period of time from when we received the advanced payment.
Contract liability balances as of December 31, 2021 and December 31, 2020 were $2 million and $4 million,
respectively. Contract liability balances were reported as ‘‘Accrued liabilities’’ in the Consolidated Balance
Sheets. All contract liabilities as of December 31, 2020 and 2019 were recognized as revenue in ‘‘Net sales’’ in
the Consolidated Statements of Operations during the first quarter of 2021 and first quarter of 2020, respectively.
Disaggregation of Revenue
We operate under one operating and reportable segment, Tronox. See Note 25 for details. We disaggregate
our revenue from contracts with customers by product type and geographic area. We believe this level of
disaggregation appropriately depicts how the nature, amount, timing and uncertainty of our revenue and cash
flows are affected by economic factors and reflects how our business is managed.
Net sales to external customers by geographic areas where our customers are located were as follows:
Year Ended December 31,
2020
2019
2021
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South and Central America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe, Middle-East and Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 743
252
1,398
1,179
$3,572
$ 716
181
1,013
848
$2,758
$ 696
164
954
828
$2,642
The 2020 amounts by geographic area in table above have been corrected for an increase and decrease of
$78 million to Asia Pacific and North America, respectively, as well as an increase and decrease of $134 million
to Europe, Middle-East and Africa and South and Central America, respectively.
73
Net sales from external customers for each similar type of product were as follows:
TiO2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Zircon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Feedstock and other products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2020
$2,176
283
299
$2,758
2019
$2,049
290
303
$2,642
2021
$2,793
478
301
$3,572
Feedstock and other products mainly include pig iron, ilmenite, chloride (‘‘CP’’) slag, TiCl4 and other
mining products. The nature, amount, timing and uncertainty of revenue and cash flows typically do not differ
significantly among different products.
6. Discontinued Operations and Other Disposition
Discontinued Operations - 2019
As discussed in Note 3, the Company divested Cristal’s North American TiO2 business to INEOS on May 1,
2019, for cash proceeds, net of transaction costs, of $701 million, inclusive of an amount for a working capital
adjustment. The operating results of Cristal’s North American TiO2 business from the acquisition date to the date
of divestiture are included in a single caption entitled ‘‘Net income (loss) from discontinued operations, net of
tax’’ in our Consolidated Statements of Operations and is included in the table below.
The following table presents a summary of the operations of Cristal’s North American TiO2 business and Cristal
Metals line items constituting the ‘‘Income from discontinued operations, net of tax’’ in our Consolidated Statements of
Operations for the year ended December 31, 2019. There were no discontinued operations in 2021 and 2020.
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expense and other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended
December 31, 2019
$41
29
12
5
7
2
$ 5
7. Other Income, Net
Other income, net is comprised of the following:
Net realized and unrealized foreign currency gains (losses) . . . . . . . . . . . . . . . . . . .
Pension and postretirement benefit interest cost, expected return on assets and
amortization of actuarial losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension and postretirement benefit settlement and curtailment gains(1) . . . . . . . . . .
Insurance proceeds(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Breakage fee (Note 3)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AMIC technical service support fee (Note 24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2020
$ 4
2021
$ 16
2019
$ 5
5
—
—
(18)
8
1
$ 12
1
2
11
—
5
3
$26
(1)
1
—
—
—
(2)
$ 3
(1)
(2)
2020 and 2019 amounts are curtailment gains related to our former U.S. Pension Plan (acquired as part of the Cristal transaction). See
Note 23.
2020 amount represents reimbursement from claims related to the Ginkgo concentrator failure we inherited as a part of the Cristal
Transaction.
(3)
2021 amount represents the breakage fee associated with the termination of the TTI acquisition. See Note 3.
74
8.
Income Taxes
Our operations are conducted through various subsidiaries in a number of countries throughout the world.
We have provided for income taxes based upon the tax laws and rates in the countries in which operations are
conducted and income is earned.
Income (loss) from continuing operations before income taxes is comprised of the following:
Year Ended December 31,
2019
2020
2021
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (16)
390
$ (12)
126
Income (loss) from continuing operations before income taxes . . . . . . . . . . . . . . . . . . .
$374
$114
$ 56
(144)
$ (88)
The income tax (provision) benefit is summarized below:
Year Ended December 31,
2019
2020
2021
United Kingdom:
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (1)
—
$ (1)
(10)
$ —
11
International:
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(55)
(15)
(17)
909
(23)
(2)
Income tax (provision) benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(71)
$881
$(14)
The following table reconciles the applicable statutory income tax rates to our effective income tax rates for
‘‘Income tax (provision) benefit’’ as reflected in the Consolidated Statements of Operations.
Statutory tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increases (decreases) resulting from:
Year Ended December 31,
2019
2020
2021
19%
19% 19%
7
Tax rate differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Disallowable expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(27)
Valuation allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
Corporate reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Tax rate changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
State and local taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior year accruals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2)
Branch taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
2
Withholding taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2)
Deferred gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
10
17
(849)
(96)
(8)
5
131
—
—
(2)
—
—
5
(29)
(44)
—
17
(7)
24
(1)
(2)
3
(4)
3
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19% (773)% (16)%
Tronox Holdings plc, a U.K. public limited company, became the public parent during the three months
ended March 31, 2019. Prior to that time, Tronox Limited, was the public parent, registered under the laws of the
State of Western Australia, but managed and controlled in the U.K. The statutory tax rate in the U.K. at
December 31, 2021, 2020 and 2019 was 19%.
The effective tax rates in 2021, 2020 and 2019 are all influenced by a variety of factors, primarily income
and losses in jurisdictions with valuation allowances, changes in tax rates, disallowable expenditures, prior year
accruals, and rates different than the United Kingdom statutory rate of 19%. The 2021 rate is additionally
75
impacted by the liquidation of an inactive Dutch subsidiary and the write-off of its historical NOL balances as
part of our corporate reorganization. Both the 2021 and 2020 rates are additionally impacted by a corporate
reorganization related to our Australian entities and the amendment of prior year returns in resolution of a tax
audit which impacted prior year accruals (see below for further discussion regarding the audit agreement).
These Australian impacts are fully offset by valuation allowances. The large negative effective tax rate for 2020
is caused by the release of valuation allowances for deferred tax assets in the U.S. and Brazil, partially offset by
the recording of valuation allowances in Saudi Arabia and the U.K. The 2019 rate was additionally impacted by
a benefit of $48 million due to the release of a valuation allowance for deferred tax assets associated with our
operating subsidiary in the Netherlands.
The Company reached an agreement with the Australian Tax Office (‘‘ATO’’) during the year ended
December 31, 2020 for the tax years 2016 through 2019 related to the companies operating in Australia acquired
in the Cristal transaction, which were under examination by the ATO. Cash tax payments to be made pursuant to
this agreement are not reflected in the above table due to the indemnification clause of the Cristal Transaction
purchase contract. Refer to Note 24 for further information. As part of the agreement, $79 million in deferred tax
assets related to Australian NOLs were lost. The change to deferred taxes is fully offset by a valuation allowance
and results in no impact to the consolidated provision. The NOL adjustment from the ATO agreement is reflected
in the ‘‘Prior year accruals’’ line of the effective tax rate table.
Changes in our state apportionment factors and state statutory rate changes caused our overall effective state
tax rates to change. Due to the large deferred tax asset created by the Anadarko litigation settlement in 2014,
these state rate changes have a material impact on deferred taxes for 2020 and 2019. These are reflected within
the ‘‘Tax rate changes’’ line of the effective tax rate table and is offset by a valuation allowance for 2019. During
2020 and 2019, tax law changes fully repealed the future Netherlands rate reduction, and this benefit is also
reflected in the ‘‘Tax rate changes’’ line.
Net deferred tax assets (liabilities) at December 31, 2021 and 2020 were comprised of the following:
Deferred tax assets:
Net operating loss and other carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserves for environmental remediation and restoration. . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligations for pension and other employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Grantor trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance associated with deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:
Inventories, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2021
2020
$ 1,720
107
43
58
4
636
8
214
23
3
9
7
2,832
(1,728)
1,104
(5)
(216)
(22)
(24)
(1)
(8)
(276)
828
$
$ 1,788
153
46
57
3
637
8
232
21
6
1
8
2,960
(1,826)
1,134
(2)
(226)
(30)
(22)
—
(10)
(290)
844
$
76
Balance sheet classifications:
Deferred tax assets — long-term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities — long-term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2021
2020
$ 985
$(157)
$ 828
$1,020
$ (176)
$ 844
The net deferred tax assets reflected in the above table include deferred tax assets related to grantor trusts,
which were established as Tronox Incorporated emerged from bankruptcy during 2011. The balances relate to the
assets contributed to such grantor trusts by Tronox Incorporated and the proceeds from the resolution of previous
litigation of $5.2 billion during 2014, which resulted in additional deferred tax assets of $2.0 billion. As the
grantor trusts continue to spend funds received from the litigation and earn income from the investment of those
funds, the U.S. net operating loss will increase or decrease.
There was a decrease to our valuation allowance of $98 million during 2021, a decrease of $965 million in
2020, and an increase of $172 million in 2019. The table below sets forth the changes, by jurisdiction:
United Kingdom. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Saudi Arabia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Switzerland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total (decrease) increase in valuation allowances . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2020
$
(1)
(944)
(17)
2
11
(14)
—
(2)
$(965)
2021
$ (1)
(19)
(43)
(24)
(11)
—
—
—
$(98)
2019
$ (2)
54
89
—
—
14
15
2
$172
As part of the functions under business combination accounting pursuant to ASC 805 and deferred income
taxes in accordance with ASC 740, the Company evaluated deferred tax attributes in each jurisdiction for
application of a valuation allowance. Some operations acquired in the Cristal Transaction included a full or
partial valuation allowance at the time of acquisition. Evidence provided to the Company that was maintained
previously to support valuation allowances at acquisition was used along with considerations of any changes in
operations and possible combinations with deferred tax attributes of the Company’s existing operations in each
jurisdiction. It was determined that France would remove its valuation allowance so that jurisdiction is not shown
in the table above, Australia and Brazil would increase from partial to full valuation allowances, and Switzerland
and the United States would sustain full valuation allowances at acquisition.
During the year ended December 31, 2021, operations in Saudi Arabia had a substantially positive
improvement in its earnings. The Company’s operations there not only turned from net losses to net income, but
the amount of net income realized during 2021 and forecasted in the immediate future has been enough to
overcome the losses sustained in prior years. A reversal of the valuation allowance in Saudi Arabia resulted in a
non-cash deferred tax benefit of $8 million. This valuation allowance was established during the year ended
December 31, 2020 against the net deferred tax assets in Saudi Arabia, and the addition of the valuation
allowance in that period resulted in a non-cash deferred tax provision of $2 million.
During the year ended December 31, 2020, we determined sufficient positive evidence existed to reverse a
portion of the valuation allowance attributable to the deferred tax assets associated with our operations in the
U.S. This reversal resulted in a non-cash deferred tax benefit of $909 million. Our analysis considered all
positive and negative evidence, including (i) three years of cumulative income for our U.S. subsidiaries, (ii) our
continuing and improved profitability over the last twelve months in this jurisdiction, (iii) estimates of continued
profitability based on updates to our latest forecasts, (iv) changes in the factors that drove losses in the past,
primarily interest expenses incurred in the U.S., and (v) risk that certain deferred tax assets may be subject to
limitation under Section 382 of the Code. Based on this analysis, we concluded that it was more likely than not
that our U.S. subsidiaries will be able to utilize all of their deferred tax assets with an indefinite life. A portion of
77
the U.S. deferred tax assets are attributable to NOLs incurred in prior years which are subject to expiration in
future years. Our analysis did not support that these limited-life NOLs would be utilized before their expiration,
and it is against these deferred tax assets in the U.S. that the Company continues to carry a valuation allowance
with a current estimated value of $1,026 million.
During the year ended December 31, 2020, we also determined sufficient positive evidence existed to
reverse the valuation allowance attributable to the deferred tax assets associated with our operations in Brazil.
This reversal resulted in a non-cash deferred tax benefit of $8 million. Our analysis considered all positive and
negative evidence, the most significant of which was the continuing and improved profitability of the Brazilian
company subsequent to its acquisition in 2019 and estimates of continued profitability based on updates to our
latest forecasts. Based on this analysis, we concluded that it is more likely than not that our Brazilian subsidiary
will be able to utilize all of its deferred tax assets.
During the year ended December 31, 2020, we established a valuation allowance against the net deferred tax
assets in the United Kingdom. The addition of this valuation allowance resulted in a non-cash deferred tax
provision of $10 million. There has been increased profitability in this jurisdiction after the Cristal Transaction;
however, it has not yet been sufficient to overcome our cumulative historical losses. Forecasted changes to
intercompany interest is recent negative evidence now impacting our analysis. The company expects continued
profitability in this jurisdiction but no longer has objective support which can be heavily weighted in this
determination.
At December 31, 2021, we have full valuation allowances related to the total net deferred tax assets in
Australia, Switzerland, and the United Kingdom, as we cannot objectively assert that these deferred tax assets are
more likely than not to be realized. It is reasonably possible that a portion of these valuation allowances could be
reversed within the next year due to increased book profitability levels. Future provisions for income taxes will
include no tax benefits with respect to losses incurred and tax expense only to the extent of current tax payments
until the valuation allowances are eliminated. Additionally, we have valuation allowances against specific tax
assets in South Africa and the U.S.
These conclusions were reached by the application of ASC 740, Income Taxes, and require that all available
positive and negative evidence be weighted to determine whether a valuation allowance should be recorded.
The more significant evidential matter in Australia, Switzerland, and the United Kingdom relates to cumulative
book losses. The most significant evidential matter for South Africa relates to capital losses and assets that
cannot be depleted or depreciated for tax purposes.
An ownership change occurred during 2019 for the Cristal U.S. businesses as a result of the acquisition by
the Company. These ownership changes resulted in a limitation under Sections 382 and 383 of the Internal
Revenue Code related to the net operating losses of the Cristal U.S. businesses. The net limitations related to the
ownership change resulted in a reduction of $69 million of the acquired U.S. loss carryforward, offset by
corresponding reduction to a valuation allowance. The Company did not have any transactions during 2019 that
triggered an ownership change under Sections 382 and 383 of the Code for the Tronox U.S. businesses.
78
The deferred tax assets generated by tax loss carryforwards in Australia, Switzerland, and the
United Kingdom have been fully offset by valuation allowances. In the United States, the deferred tax assets
generated by tax loss carryforwards are partially offset by a valuation allowance to the extent they are subject to
expiration. The expiration of these carryforwards at December 31, 2021 is shown below. The Australian, Saudi
Arabian, French, Brazilian and United Kingdom tax loss carryforwards do not expire.
2022
2023
2024
2025
2026
2027 - 2040 Unlimited
Total Tax Loss
Carryforwards
United Kingdom . . . . . . . . . . . . . . . . . . . . $ — $ — $ — $ — $ — $ — $
Australia . . . . . . . . . . . . . . . . . . . . . . . . . .
The Netherlands . . . . . . . . . . . . . . . . . . . .
France . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Saudi Arabia . . . . . . . . . . . . . . . . . . . . . . .
Switzerland . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Federal . . . . . . . . . . . . . . . . . . . . . . .
U.S. State . . . . . . . . . . . . . . . . . . . . . . . . .
— — — —
—
— — — —
—
— — — —
—
— — — —
—
(1)
(80) — — —
— — — — (3,988)
(4,027)
(28)
—
—
—
—
(100)
—
(3)
(76)
(12)
(41)
(51)
(355)
(100)
(214)
(23)
—
(334)
(18)
$
(51)
(355)
(100)
(214)
(23)
(181)
(4,322)
(4,205)
Total tax loss carryforwards . . . . . . . . . . . $(103) $(108) $(12) $(41) $(76)
$(8,016)
$(1,095)
$(9,451)
At December 31, 2021, Tronox Holdings plc had foreign subsidiaries with undistributed earnings. Although
we would not be subject to income tax on these earnings, amounts totaling $353 million could be subject to
withholding tax if distributed. We have made no provision for deferred taxes for Tronox Holdings plc related to
these undistributed earnings because they are in the specific jurisdictions which we assert are indefinitely
reinvested outside of the parents’ taxing jurisdictions.
The noncurrent liabilities section of our Consolidated Balance Sheet does not reflect any reserves for
uncertain tax positions for either 2021 or 2020.
Our Chinese returns are closed through 2014. Our U.K. and Brazilian returns are closed through 2016.
Our Australian, South African, and U.S. returns are closed through 2017. Our Netherlands and French returns are
closed through 2018.
We believe that we have made adequate provision for income taxes that may be payable with respect to
years open for examination; however, the ultimate outcome is not presently known and, accordingly, additional
provisions may be necessary and/or reclassifications of noncurrent tax liabilities to current may occur in the
future.
9.
Income (Loss) Per Share
The computation of basic and diluted income per share for the periods indicated is as follows:
Numerator – Basic and Diluted:
Net income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net income from continuing operations attributable to
noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Undistributed net income (loss) from continuing operations attributable to
Tronox Holdings plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from discontinued operations available to ordinary shares . . .
Net income (loss) available to ordinary shares. . . . . . . . . . . . . . . . . . . . . . . . .
$
Year Ended December 31,
2020
2019
2021
$
303
$
995
$
(102)
17
286
—
286
$
26
969
—
969
12
(114)
5
(109)
$
Denominator – Basic and Diluted:
Weighted-average ordinary shares, basic (in thousands) . . . . . . . . . . . . . . . . .
152,056
143,355
139,859
Weighted-average ordinary shares, diluted (in thousands) . . . . . . . . . . . . . . . .
157,945
144,906
139,859
79
Year Ended December 31,
2020
2019
2021
Net income (loss) per Ordinary Share:
Basic net income (loss) from continuing operations per ordinary share . . . . .
Basic net income (loss) from discontinued operations per ordinary share . . .
Basic net income (loss) per ordinary share. . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted net income (loss) from continuing operations per ordinary share . . .
Diluted net income (loss) from discontinued operations per ordinary share. .
Diluted net income (loss) per ordinary share . . . . . . . . . . . . . . . . . . . . . . . .
$1.88
—
$1.88
$1.81
—
$1.81
$6.76
—
$6.76
$6.69
—
$6.69
$(0.81)
0.03
$(0.78)
$(0.81)
0.03
$(0.78)
Net income per ordinary share amounts were calculated from exact, unrounded net loss and share
information. Prior to January 2019, we had issued shares of restricted stock which were participating securities
that did not have a contractual obligation to share in losses; therefore, when we have a net loss, none of the loss
is allocated to these participating securities. The restricted stock vested on January 29, 2019. Consequently, for
the years ended December 31, 2021, 2020 and 2019, the two-class method did not have an effect on our net loss
per ordinary share calculation, and as such, dividends paid during these periods did not impact this calculation.
In computing diluted net income per share under the two-class method, we considered potentially dilutive
shares. Anti-dilutive shares not recognized in the diluted net income per share calculation for the years ended
December 31, 2021, 2020 and 2019 were as follows:
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted share units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
414,296
1,201,891
— 1,054,994
1,260,902
5,557,659
2021
Shares
2020
2019
10. Inventories, net
Inventories, net consisted of the following:
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Work-in-process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finished goods, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Materials and supplies, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2021
2020
$ 265
117
461
205
$1,048
$ 170
103
668
196
$1,137
Materials and supplies, net consists of processing chemicals, maintenance supplies, and spare parts, which
will be consumed directly and indirectly in the production of our products. During 2020, Tronox mining facilities
sold feedstock to third party customers and as such, $110 million of feedstock was classified as ‘‘Finished goods,
net’’ at December 31, 2020. During 2021, in line with our overall vertical integration strategy, there were no
material feedstock sales to third party customers and as such, at December 31, 2021, $99 million of feedstock
has been classified as ‘‘Raw materials’’.
At December 31, 2021 and 2020, inventory obsolescence reserves were $43 million and $41 million,
respectively. At December 31, 2021 and December 31, 2020, reserves for lower of cost and net realizable value
were $11 million and $29 million, respectively.
80
11. Property, Plant and Equipment
Property, plant and equipment, net of accumulated depreciation, consisted of the following:
Land and land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction-in-progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
$
2021
188
365
2,234
263
73
3,123
(1,413)
$
2020
189
368
2,197
192
86
3,032
(1,273)
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,710
$ 1,759
Substantially all the Property, plant and equipment, net is pledged as collateral for our debt. See Note 15.
The table below summarizes depreciation expense related to property, plant and equipment for the periods
presented, recorded in the specific line items in our Consolidated Statements of Operations:
Year Ended December 31,
2020
2019
2021
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$222
5
$227
$233
5
$238
$189
5
$194
12. Mineral Leaseholds, net
Mineral leaseholds, net of accumulated depletion, consisted of the following:
Mineral leaseholds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less accumulated depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mineral leaseholds, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2021
$1,306
(559)
$ 747
2020
$1,333
(530)
$ 803
Depletion expense related to mineral leaseholds during 2021, 2020, and 2019 was $37 million, $33 million,
and $56 million, respectively, and was recorded in ‘‘Cost of goods sold’’ in the Consolidated Statements of
Operations.
13. Intangible Assets, net
Intangible Assets, net of accumulated amortization, consisted of the following:
December 31, 2021
December 31, 2020
Gross Cost
Accumulated
Amortization
Net Carrying
Amount
Gross Cost
Accumulated
Amortization
Net Carrying
Amount
Customer relationships . . . . . . . . . . . . . . .
TiO2 technology . . . . . . . . . . . . . . . . . . . .
Internal-use software and other . . . . . . . .
Intangible assets, net. . . . . . . . . . . . . . .
$291
93
120
$504
$(211)
(31)
(45)
$(287)
$ 80
62
75
$217
$291
93
73
$457
$(193)
(24)
(39)
$(256)
$ 98
69
34
$201
As of December 31, 2021 and 2020, internal-use software included approximately $68 million and
$19 million, respectively, of capitalized software costs which are not being amortized as the software is not ready
for its intended use.
81
The table below summarizes amortization expense related to intangible assets for the periods presented,
recorded in the specific line items in our Consolidated Statements of Operations:
Year Ended December 31,
2020
2019
2021
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 2
31
$33
$ 2
31
$33
$ 2
28
$30
Estimated future amortization expense related to intangible assets is $34 million for 2022, $34 million for
2023, $33 million for 2024, $33 million for 2025, $15 million for 2026 and $68 million thereafter.
14. Balance Sheet and Cash Flows Supplemental Information
Accrued liabilities consisted of the following:
Employee-related costs and benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Related party payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales rebates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes other than income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2021
$155
1
20
36
1
18
10
25
62
$328
2020
$133
7
21
43
2
16
9
57
62
$350
Additional supplemental cash flow information for the year ended and as of December 31, 2021, 2020 and
2019 is as follows:
Supplemental non cash information:
Operating activities - MGT sales made to AMIC . . . . . . . .
Operating activities - Interest expense on MGT loan . . . . .
Investing activities - Acquisition of MGT assets . . . . . . . . .
2021
$ 4
$
1
$ —
Financing activities - debt assumed in the acquisition of
MGT assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ —
Financing activities - Acquisition of noncontrolling
interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing activities - Repayment of MGT loan . . . . . . . . .
$125
$
3
Year Ended December 31,
2020
$—
$—
$36
$36
$—
$—
2019
$—
$—
$—
$—
$—
$—
Capital expenditures acquired but not yet paid . . . . . . . . . .
$75
$37
$23
December 31, 2021 December 31, 2020 December 31, 2019
82
15. Debt
Long-term Debt
Long-term debt, net of an unamortized discount and debt issuance costs, consisted of the following:
Prior Term Loan Facility, net of unamortized
discount(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Term Loan Facility, net of unamortized
discount(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior Notes due 2025. . . . . . . . . . . . . . . . . . . .
Senior Notes due 2026. . . . . . . . . . . . . . . . . . . .
Senior Notes due 2029. . . . . . . . . . . . . . . . . . . .
6.5% Senior Secured Notes due 2025. . . . . . . .
Prior Standard Bank Term Loan Facility(1). . . .
New Standard Bank Term Loan Facility(1) . . . .
Tikon Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Australian Government Loan, net of
unamortized discount . . . . . . . . . . . . . . . . . . .
MGT Loan(2) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases. . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Long-term debt due within one year . . . .
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . .
Long-term debt, net . . . . . . . . . . . . . . . . . . . . . .
Original
Principal
Annual
Interest Rate
Maturity
Date
December 31,
2021
December 31,
2020
$2,150
Variable
9/22/2024
$ —
$1,607
1,300
450
615
1,075
500
222
98
N/A
Variable
3/11/2028
5.75% 10/1/2025
6.50% 4/15/2026
4.63% 3/15/2029
5/1/2025
6.50%
3/25/2024
11/11/2026
5/23/2021
Variable
Variable
Variable
N/A
36
N/A 12/31/2036
Refer below
Variable
897
—
—
1,075
500
—
92
—
1
33
14
2,612
(18)
(36)
—
450
615
—
500
115
—
17
1
36
15
3,356
(58)
(35)
$2,558
$3,263
(1)
The average effective interest rate, including impacts of our interest rate swap, for the New Term Loan Facility was 5.1% for the year
ended December 31, 2021. The average effective interest rate, including impacts of our interest rate swap, for the Prior Term Loan
Facility was 4.6% for the year ended December 31, 2020. The average effective interest rate on the New Standard Bank Term Loan
Facility was 7.3% for the year ended December 31, 2021. The average effective interest rate on the Prior Standard Bank Term Loan
Facility was 7.8% for the year ended December 31, 2020.
(2)
The MGT loan is a related party debt facility. Average effective interest rate on the MGT loan was 3.1% during the year ended
December 31, 2021. Refer below for further details.
At December 31, 2021, the scheduled maturities of our long-term debt were as follows:
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remaining accretion associated with the New Term Loan Facility and Australian Government
Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
Borrowings
18
18
18
518
58
1,987
2,617
(5)
2,612
Prior Term Loan Facility and New Term Loan Facility
On September 22, 2017, we entered into a new senior secured first lien term loan facility (the ‘‘Prior Term
Loan Facility’’) with the lenders party thereto and Bank of America, N.A., as administrative agent, with a
maturity date of September 22, 2024. The Prior Term Loan Facility consisted of (i) a U.S. dollar term facility in
83
an aggregate principal amount of $1.5 billion (the ‘‘Term Loans’’) with our subsidiary, Tronox Finance LLC
(‘‘Tronox Finance’’) as the borrower and (ii) a U.S. dollar term facility in an aggregate principal amount of
$650 million (the ‘‘Blocked Term Loan’’) with our unrestricted subsidiary, Tronox Blocked Borrower LLC (the
‘‘Blocked Borrower’’) as the borrower, which Blocked Term Loan was funded into a blocked account. Upon
consummation of the Cristal Transaction on April 10, 2019, the Blocked Borrower merged with and into Tronox
Finance, and the Blocked Term Loan became available to Tronox Finance. The Prior Term Loan Facility bore
interest at the ‘‘Applicable Rate’’ defined by reference to a grid-pricing matrix that relates to our First Lien Net
Leverage Ratio and was issued net of an original issue discount of $11 million.
On February 25, 2019, we entered into an amendment to both our Prior Term Loan Facility and Wells Fargo
Revolver (as defined below). The purpose of each amendment was to make certain of our U.K. subsidiaries
restricted subsidiaries, update the relevant indebtedness disclosure schedules to include certain inter-company
indebtedness that had been in existence prior to the execution of each such facility, and waive an administrative
omission under such facility. As a result of this amendment, the Company made two mandatory principal
prepayments on the Prior Term Loan Facility as follows: 1) $95 million subsequent to the issuance of the Prior
Standard Bank Term Loan Facility in March 2019 and 2) $100 million subsequent to the divestiture of the Cristal
North American TiO2 business. The Company accounted for both of these mandatory principal prepayments as
debt modifications in accordance with ASC 470. Additionally, in December 2019, the Company made a voluntary
prepayment of $100 million on the Prior Term Loan Facility. As a result of the voluntary prepayment, we
recorded $1 million in ‘‘Loss on extinguishment of debt’’ within the Consolidated Statement of Operations for
the year ended December 31, 2019. No prepayment penalties were required as a result of these principal
prepayments. In December 2020, the Company made a voluntary prepayment of $200 million on the Prior Term
Loan Facility. As a result of the voluntary prepayment, we recorded $2 million in ‘‘Loss on extinguishment of
debt’’ within the Consolidated Statement of Operations for the year ended December 31, 2020. No prepayment
penalties were required as a result of this principal prepayment.
On March 11, 2021, Tronox Finance LLC entered into an amendment and restatement of its Prior Term
Loan Facility pursuant to which, among other thing, we amended and restated the Prior Term Loan Facility with
a new amended and restated first lien credit agreement dated as of September 22, 2017 (as amended through and
including March 11, 2021, the ‘‘New Term Loan Facility’’) with a syndicate of lenders and HSBC Bank USA,
National Association, as administrative agent and collateral agent. The New Term Loan Facility provides the
Company with (a) a new seven-year New Term Loan Facility) in an aggregate principal amount of $1.3 billion
and (b) new five-year cash flow revolving facility (the ‘‘New Revolving Facility’’) providing initial revolving
commitments of $350 million and a sublimit of $125 million for letters of credit. The maturity date on the New
Term Loan Facility and the New Revolving Facility is March 11, 2028 and March 11, 2026, respectively.
The New Term Loan Facility shall bear interest at either the base rate or an adjusted LIBOR rate, in each
case plus an applicable margin. The applicable margin in respect of the New Term Loan Facility is either
1.50% or 1.25%, for base rate loans, or 2.50% or 2.25%, for adjusted LIBOR rate loans, in each case determined
based on, initially the passage of time, and thereafter upon the Company’s first lien net leverage ratio at the
applicable time. Interest is payable on the New Term Loan Facility on the last business of each March, June,
September and December. Based on our first lien net leverage ratio, the applicable margin under the New Term
Loan Facility as of December 31, 2021 was LIBOR plus a margin of 2.25%. The New Revolving Facility shall
bear interest at either the base rate or adjusted LIBOR rate, in each case plus an applicable margin. The
applicable margin in respect of the New Revolving Facility is either 1.25%, 1.00% or 0.75% for base rate loans,
or 2.25%, 2.00% or 1.75%, for adjusted LIBOR Rate Loans, in each case determined based on, initially the
passage of time, and thereafter upon the Company’s first lien net leverage ratio at the applicable time. The New
Credit Facility requires the Borrower to pay customary agency fees.
In connection with entering into the New Term Loan Facility, the Company terminated all remaining
commitments and repaid all obligations under its Prior Term Loan Facility and Wells Fargo Revolver (defined
below). Additionally, we repaid $313 million of the principal under the Prior Term Loan Facility with cash on
hand.
Commencing June 30, 2021, the New Revolving Facility contains a springing financial covenant when a
loan amount is drawn exceeding 35% of the New Revolving Facility. In this instance, the first lien net leverage
ratio shall not exceed 4.75x at quarter end testing period.
84
As a result of this transaction in accordance with ASC 470, we recognized approximately $4 million in
‘‘Loss on Extinguishment of Debt’’ recorded in the Consolidated Statement of Operations for the year ended
December 31, 2021.
As of December 31, 2021, there is no outstanding revolving credit loans under the New Revolving Facility,
excluding $21 million of issued and undrawn letters of credit under the New Revolving Facility. Debt issuance
costs associated with the New Revolving Facility of $2 million were included in ‘‘Other long-term assets’’ in the
Consolidated Balance Sheets at December 31, 2021 and are being amortized over the life of the New Revolving
Facility.
Additionally, during the year ended December 31, 2021, the Company made several voluntary prepayments
totaling $398 million on the New Term Loan Facility. As a result, we recognized approximately $9 million in
‘‘Loss on Extinguishment of Debt’’ recorded in the Consolidated Statement of Operations for the year ended
December 31, 2021.
Senior Notes due 2025
On September 22, 2017, Tronox Finance plc, issued 5.75% senior notes due 2025 for an aggregate principal
amount of $450 million (the ‘‘Senior Notes due 2025’’), which notes were issued under an indenture dated
September 22, 2017 (the ‘‘2025 Indenture’’). The 2025 Indenture and the Senior Notes due 2025 provided among
other things, that the Senior Notes due 2025 were senior unsecured obligations of Tronox Finance plc and were
guaranteed on a senior and unsecured basis by us and certain of our other subsidiaries. The Senior Notes due
2025 were not registered under the Securities Act, and were not offered or sold in the U.S. absent registration or
an applicable exemption from registration requirements. Interest was payable on April 1 and October 1 of each
year beginning on April 1, 2018 until their maturity date of October 1, 2025. The terms of the 2025 Indenture,
among other things, limited, in certain circumstances, the ability of us and certain of our subsidiaries to: incur
secured indebtedness, engage in certain sale-leaseback transactions and merge, consolidate or sell substantially all
of our assets. The terms of the 2025 Indenture also included certain limitations on our non-guarantor subsidiaries
incurring indebtedness. During the year ended December 31, 2021, we paid the outstanding balance of
$450 million on the Senior Notes due 2025 as a result of the issuance of the Senior Notes due 2029 as defined
and discussed below.
Senior Notes due 2026
On April 6, 2018, Tronox Incorporated issued 6.5% Senior Notes due 2026 for an aggregate principal
amount of $615 million (‘‘Senior Notes due 2026’’). The 2026 Indenture and the Senior Notes due 2026
provided, among other things, that the Senior Notes due 2026 were senior unsecured obligations of Tronox
Incorporated and were guaranteed on a senior and unsecured basis by us and certain of our other subsidiaries.
The Senior Notes due 2026 were not registered under the Securities Act and were not offered or sold in the
U.S. absent registration or an applicable exemption from registration requirements. Interest was payable on
April 15 and October 15 of each year beginning on October 15, 2018 until their maturity date of April 15, 2026.
The terms of the 2026 Indenture, among other things, limited, in certain circumstances, our and certain of our
subsidiaries ability to: incur secured indebtedness; engage in certain sale-leaseback transactions; and merge,
consolidate or sell substantially all of our assets. The terms of the 2026 Indenture also included certain
limitations on our non-guarantor subsidiaries incurring indebtedness. The proceeds of the offering were used to
fund the redemption of our Senior Notes due 2022. During the year ended December 31, 2021, we paid the
outstanding balance of $615 million on the Senior Notes due 2026 as a result of the issuance of the Senior Notes
due 2029 as defined and discussed below.
Senior Notes due 2029
On March 15, 2021, Tronox Incorporated closed an offering of $1,075 million aggregate principal amount of
its 4.625% senior notes due 2029 (the ‘‘Senior Notes due 2029’’). The notes were offered at par and issued under
an indenture dated as of March 15, 2021 among the Company and certain of the Company’s restricted
subsidiaries as guarantors and Wilmington Trust, National Association. The Senior Notes due 2029 provide,
among other thing, that the Senior Notes due 2029 are guaranteed by the Company and certain of the Company’s
restricted subsidiaries, subject to certain exceptions. The Senior Notes due 2029 and related guarantees are the
senior obligations of the Company and the guarantors. The Senior Notes due 2029 have not been registered
85
under the Securities Act, or any state securities laws, and may not be offered or sold in the United States absent
registration requirements. The terms of the indenture, among other things, limit, in certain circumstances, the
ability of the Company and its restricted subsidiaries to: incur secured indebtedness, incur indebtedness at a
non-guarantor subsidiary, engage in certain sale-leaseback transactions and merge, consolidate or sell
substantially all of their assets. Interest is payable on the Senior Notes due 2029 on March 15 and September 15
of each year beginning on September 15, 2021 until their maturity date of March 15, 2029.
During the year ended December 31, 2021, the Company repaid the outstanding principal balance of
$615 million and $450 million on its Senior Notes due 2026 and its Senior Notes due 2025, respectively. As a
result of this transaction, we recorded $52 million of debt extinguishment costs, including call premiums of
$21 million and $19 million on the Senior Notes due 2026 and Senior Notes due 2025, respectively, in ‘‘Loss on
Extinguishment of Debt’’ on the Consolidated Statement of Operations for the year ended December 31, 2021.
6.5% Senior Secured Notes due 2025
On May 1, 2020, Tronox Incorporated, a wholly-owned indirect subsidiary of the Company, issued 6.5% senior
secured notes due 2025 for an aggregate principal amount of $500 million (the ‘‘6.5% Senior Secured Notes due
2025’’), which were issued under an indenture dated May 1, 2020. A portion of the proceeds of this debt offering
was utilized to repay the $200 million of the Company’s outstanding borrowings under its Wells Fargo, Standard
Bank, and Emirates revolvers which was originally borrowed during the first quarter of 2020 (as discussed
below).
Prior Standard Bank Term Loan Facility
On March 25, 2019, our South African subsidiaries, Tronox KZN Sands Proprietary Limited and Tronox
Mineral Sands Proprietary Limited, entered into the Prior Standard Bank Term Loan Facility with a maturity date
of March 25, 2024. The Term Loan Facility consisted of (i) an aggregate principal amount of R2.6 billion
(‘‘Amortizing Loan’’, approximately $163 million at December 31, 2021 exchange rate) the principal of which
was to be paid back at 5 percent per quarter over the five year term of the loan, and (ii) an aggregate principal
amount of R600 million (‘‘Bullet Loan’’) the principal of which was to be paid back at the maturity date of the
Prior Standard Bank Term Loan Facility. During the third quarter of 2019, we repaid the outstanding balance on
the Bullet Loan.
The Amortizing Loan bore interest at JIBAR plus 260 basis points when net leverage of the South African
subsidiaries was less than 1.5 and JIBAR plus 285 points when net leverage was greater than 1.5.
During the year ended December 31, 2021, we made several voluntary prepayments totaling R1,040 million
(approximately $69 million) on the Prior Standard Bank Term Loan Facility. No prepayment penalties were
required as a result of this principal prepayment. Additionally, during the year ended December 31, 2021, we
repaid the remaining outstanding balance of R390 million (approximately $26 million) of the Prior Standard
Bank Term Loan Facility and entered into an amendment and restatement with Standard Bank as is discussed
below.
New Standard Bank Term Loan Facility and Revolving Credit Facility
On October 1, 2021, Tronox Minerals Sands Proprietary Limited, a wholly-owned subsidiary of the
Company, entered into an amendment and restatement of a new credit facility with Standard Bank. The new
credit facility provides the Company with (a) a new five-year term loan facility in an aggregate principal amount
of R1.5 billion (approximately $98 million) (the ‘‘New Standard Bank Term Loan Facility’’) and (b) a new
three-year revolving credit facility (the ‘‘New Standard Bank Revolving Credit Facility’’) providing initial
revolving commitments of R1.0 billion (approximately $63 million at December 31, 2021 exchange rate).
The maturity date on the New Standard Bank Term Loan Facility and the New Standard Bank Revolving Credit
Facility is November 11, 2026 and October 1, 2024, respectively. The New Standard Bank Term Loan Facility
has a delayed draw feature up to thirty business days from the effective date of the executed credit agreement.
Mandatory capital repayments of R37.5 million (approximately $2 million at December 31, 2021 exchange rate)
are scheduled quarterly with the first mandatory repayment starting in December 2021.
Both the New Standard Bank Term Loan Facility and the New Standard Bank Revolving Credit Facility
shall bear interest at an adjusted JIBAR rate plus an applicable margin. The applicable margin on the New
86
Standard Bank Term Loan Facility is 2.35%. The applicable margin on the New Standard Bank Revolving Credit
Facility is based upon average credit utilization during any interest period. If the revolving credit facility
utilization is less than 33%, less than 66% but greater than 33%, or greater than 66%, the applicable margin is
2.10%, 2.25%, and 2.40%, respectively. The New Standard Bank Revolving Credit Facility requires the borrower
to pay customary agency fees. Interest is payable on the New Standard Bank Term Loan Facility on each of
March 31, June 30, September 30 and December 31, and the final maturity date pursuant to the agreement.
Interest is payable on the New Standard Bank Revolving Credit Facility on the last day of the applicable interest
period pursuant to the agreement.
Pursuant to the credit agreement, on November 11, 2021, the Company drew down the total outstanding
principal balance of R1.5 billion (approximately $98 million) on the New Standard Bank Term Loan Facility.
Tikon Loan
As part of the Cristal Transaction, we acquired a working capital debt agreement in China (‘‘Tikon Loan’’)
that matured in April and May of 2021. The Tikon Loan bore interest based on an official lending basis rate per
annum as announced and published by the People’s Bank of China plus a 7% premium. During the year ended
December 31, 2021, we repaid the remaining outstanding principal balance of CNY 111 million (approximately
$17 million). No prepayment penalties were required as a result of these principal prepayments.
Australian Government Loan
As part of the Cristal Transaction, we acquired an interest-free loan with the Australian government
(‘‘Australian Government Loan’’) that matures in December 2022 subject to renewal every 5 years with final
termination in December 2036. The loan balance due upon maturity is AUD 6 million (approximately $5 million
at December 31, 2021). At December 31, 2021, the discounted value on the Australian Government Loan was
approximately AUD 2 million (approximately $1 million at December 31, 2021 exchange rate).
MGT Loan
On December 17, 2020, we completed our agreement with Cristal to acquire certain assets co-located at our
Yanbu facility which produce metal grade TiCl4 (‘‘MGT’’) in exchange for a $36 million note payable.
Repayment of the note payable is based on a fixed U.S. dollar per metric ton quantity of MGT delivered by us to
Advanced Metal Industries Cluster and Toho Titanium Metal Co. Ltd (ATTM) over time and therefore the
ultimate maturity date is variable in nature. If ATTM fails to purchase MGT from us under certain contractually
agreed upon conditions, then at our election we may terminate the MGT supply agreement with ATTM and will
no longer owe any amount under the loan agreement with Cristal. We currently estimate the ultimate maturity to
be between approximately five to seven years, subject to actual future MGT production levels. The interest rate
is based on the Saudi Arabian Interbank Offered Rate (‘‘SAIBOR’’) plus a premium. As of December 31, 2021,
the outstanding balance of the note payable was $33 million, of which $7 million is expected to be paid within
the next twelve months (recorded within ‘‘Long-term debt due within one year’’ on our Consolidated Balance
Sheet). Refer to Note 24 for further information on the MGT transaction.
Short-term Debt
Wells Fargo Revolver
On September 22, 2017, we entered into a new global senior secured asset-based syndicated revolving credit
facility with Wells Fargo Bank, N.A. (the ‘‘Wells Fargo Revolver’’). The Wells Fargo Revolver which initially
provided us with up to $550 million of revolving credit lines, with an $85 million sublimit for letters of credit,
and had a maturity date of September 22, 2022. Our availability of revolving credit loans and letters of credit
was subject to a borrowing base. Borrowings bore interest at our option, at either an adjusted London Interbank
Offered Rate (‘‘LIBOR’’) plus an applicable margin that ranges from 1.25% to 1.75%, or a base rate, which was
defined to mean the greatest of (a) the administrative agent’s prime rate, (b) the Federal funds effective rate plus
0.50% and (c) the adjusted LIBOR for a one month period plus 1.00% plus a margin that ranges from 0.25% to
0.75%, in each case, based on the average daily borrowing availability.
On March 22, 2019, we entered into a consent and amendment to the Wells Fargo Revolver and an
amendment to our Term Loan Facility. The purpose of each amendment was to, among other things, (i) permit
87
the refinancing of certain existing indebtedness incurred by our South African subsidiaries, Tronox KZN Sands
Proprietary Limited and Tronox Mineral Sands Proprietary Limited, and the proposed uses of proceeds thereof,
and (ii) implement required provisions in both the Wells Fargo Revolver and Term Loan Facility necessary in
connection with the establishment of Tronox Holdings plc.
The Wells Fargo Revolver amendment also modified certain components of the borrowing base in order to
increase the potential availability of credit. We also voluntarily reduced the revolving credit lines under the Wells
Fargo Revolver from $550 million to $350 million. As a result of this modification, during the year ended
December 31, 2019, we recorded a charge of $2 million in ‘‘Loss on extinguishment of debt’’ within the
Consolidated Statement of Operations.
As discussed above, the Wells Fargo Revolver was terminated during the year ended December 31, 2021 as
a result of the New Revolving Facility.
ABSA Revolving Credit Facility
In connection with the Standard Bank Revolver (defined below) entered into on March 25, 2019, discussed
below, the ABSA Revolver was terminated on March 26, 2019. As a result of the termination, during the year
ended December 31, 2019, we recorded less than $1 million in ‘‘Loss on extinguishment of debt’’ within the
Consolidated Statement of Operations.
Standard Bank Credit Facility
On March 25, 2019, our South African subsidiaries, Tronox KZN Sands Proprietary Limited and Tronox
Mineral Sands Proprietary Limited, entered into the Standard Bank Credit Facility (‘‘Standard Bank Revolver’’)
for an amount up to R1 billion (approximately $63 million at December 31, 2021 exchange rate) maturing on
March 25, 2022. The Standard Bank Credit Facility bore interest at the Johannesburg Interbank Average Rate
(‘‘JIBAR’’) plus 260 basis points when net leverage for our South African subsidiaries (total combined debt
outstanding under the Standard Bank Revolver and Standard Bank Term less cash and cash equivalents divided
by the consolidated EBITDA) was less than 1.5 and JIBAR plus 285 basis points when net leverage was greater
than 1.5. As discussed above, during the year ended December 31, 2021, the Standard Bank Credit Facility was
amended and restated with the New Standard Bank Revolving Credit Facility.
Emirates Revolver
As part of the Cristal transaction, we acquired a revolving credit facility with Emirates NBD PJSC. In March
2021, the Company entered into an amendment to extend the maturity date of the Emirates Revolver from March 31,
2021 to March 31, 2022. Under the Emirates Revolver, we have the ability to borrow up to approximately
$60 million. The revolver is secured by inventory and trade receivables of Tronox Pigment UK Ltd. Under the terms
of the revolver, for U.S. dollar borrowings the interest rate is LIBOR plus 2.25% while the interest rate for Euro
borrowings is Euribor plus 2.25%. There were no borrowings outstanding under this revolver at December 31, 2021.
SABB Credit Facility
On October 16, 2019, our KSA subsidiary entered into a short-term working capital facility with the Saudi British
Bank (‘‘SABB Facility’’) for an amount up to SAR 70 million (approximately $19 million). The SABB Facility bears
interest at the Saudi Inter Bank Offered Rate plus 180 basis points on outstanding balances. During October 2019, the
Company borrowed SAR 50 million (or approximately $13 million) under the SABB Facility and subsequently repaid
the outstanding balance in December 2019. Additionally, in March 2020, the Company borrowed SAR 50 million (or
approximately $13 million) under the SABB Facility and subsequently repaid the outstanding balances. There is no
borrowing outstanding under this facility at December 31, 2021. In December 2021, the Company extended the
maturity date of the SABB Credit Facility from November 30, 2021 to November 30, 2022.
Debt Covenants
At December 31, 2021, we are in compliance with all financial covenants in our debt facilities.
88
Interest and Debt Expense, Net
Interest and debt expense, net in the Consolidated Statements of Operations consisted of the following:
Year Ended December 31,
2020
2019
2021
Interest on debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of deferred debt issuance costs and discounts on debt . . . . . . . . . . . .
Capitalized interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on capital leases and letters of credit and commitments . . . . . . . . . . . . . . .
Total interest and debt expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$148
11
(7)
5
$157
$174
10
(2)
7
$189
$186
8
(1)
8
$201
In connection with obtaining debt, we incurred debt issuance costs, which are being amortized through the
respective maturity dates using the effective interest method for our long-term debt and on a straight-line basis
for our New Revolving Facility. At December 31, 2021 and December 31, 2020, we had deferred debt issuance
costs of $2 million and $2 million, respectively, related to the New Revolving Facility and Wells Fargo Revolver,
respectively, which is recorded in ‘‘Other long-term assets’’ in the Consolidated Balance Sheets. At December 31,
2021 and December 31, 2020, we had debt discount of $5 million and $9 million, respectively, and debt issuance
costs of $36 million and $35 million, respectively, primarily related to our term loan and senior notes, which
were recorded as a direct reduction of the carrying value of the long-term debt in the Consolidated Balance
Sheets.
16. Derivative Financial Instruments
Derivatives recorded on the Consolidated Balance Sheet:
The following table is a summary of the fair value of derivatives outstanding at December 31, 2021 and
2020:
Fair Value
December 31, 2021
December 31, 2020
Assets(a)
Accrued
Liabilities
Assets(a)
Accrued
Liabilities
Derivatives Designated as Cash Flow Hedges
Currency Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest Rate Swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Natural Gas Hedges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivatives Not Designated as Cash Flow Hedges
Currency Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 3
$—
$ 1
$ 4
$—
$ 4
$ 1
$25
$—
$26
$—
$26
$58
$—
$—
$58
$ 7
$65
$—
$57
$—
$57
$—
$57
(a) At December 31, 2021 and 2020, current assets of $4 million and $65 million, respectively, are recorded in prepaid and other current
assets on the Consolidated Balance Sheet.
89
Derivatives’ Impact on the Consolidated Statement of Operations
The following table summarizes the impact of the Company’s derivatives on the Consolidated Statement of
Operations:
Amount of Pre-Tax Gain (Loss) Recognized in Earnings
Cost of
Goods
Revenue
Sold
Year Ended December 31, 2021 Year Ended December 31, 2020 Year Ended December 31, 2019
Other
Income,
net
Other
Income,
net
Other
Income,
net
Cost of
Goods
Sold
Cost of
Goods
Sold
Revenue
Revenue
Derivatives Not Designated as Hedging Instruments
Currency Contracts . . . . . . . .
$ 1
Derivatives Designated as Hedging Instruments
Currency Contracts . . . . . . . .
Natural Gas . . . . . . . . . . . . . .
$ (3)
$—
$35
$ 3
$—
$—
$—
$—
Total Derivatives . . . . . . . . . .
$ (3)
$38
$ 1
Interest Rate Risk
$—
$—
$ 4
$ (7)
$—
$ (7)
$ 3
$ (1)
$ 2
$—
$—
$ 4
$—
$ 5
$—
$ 5
$—
$ 7
$ 3
$—
$ 3
$—
$—
$ 7
During the second quarter of 2019, we entered into interest-rate swap agreements with an aggregate notional
value of $750 million representing a portion of our Term Loan Facility, which effectively converts the variable
rate to a fixed rate for that portion of the loan. The agreements expire in September 2024. The Company’s
objectives in using the interest-rate swap agreements are to add stability to interest expense and to manage its
exposure to interest rate movements. These interest rate swaps have been designated as cash flow hedges and
involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate
payments over the life of the agreements without exchange of the underlying notional amount. There was no
impact associated with the New Term Loan Facility as the hedge remained highly effective.
Fair value gains or losses on these cash flow hedges are recorded in other comprehensive (loss) income and
are subsequently reclassified into interest expense in the same periods during which the hedged transactions
affect earnings. For the year ended December 31, 2021, 2020 and 2019, the amounts recorded in interest expense
related to the interest-rate swap agreements were $16 million, $10 million and less than $1 million, respectively.
At December 31, 2021 and December 31, 2020, the net unrealized loss was $25 million and $57 million,
respectively, and was recorded in ‘‘Accumulated other comprehensive loss’’ on the Consolidated Balance Sheet.
Foreign Currency Risk
From time to time, we enter into foreign currency contracts used to hedge forecasted third party
non-functional currency sales for our South African subsidiaries and forecasted non-functional currency cost of
goods sold for our Australian subsidiaries. These foreign currency contracts are designated as cash flow hedges.
Changes to the fair value of these foreign currency contracts are recorded as a component of other
comprehensive (loss) income, if these contracts remain highly effective, and are recognized in net sales or costs
of goods sold in the period in which the forecasted transaction affects earnings or are recognized in other
income, net when the transactions are no longer probable of occurring.
As of December 31, 2021, we had notional amounts of 443 million Australian dollars (approximately
$322 million at December 31, 2021 exchange rate) that expire between January 25, 2022 and December 23, 2022
to reduce the exposure of our Australian subsidiaries’ cost of sales to fluctuations in currency rates. At
December 31, 2021, we had notional amounts of 4.7 billion South African Rand (approximately $298 million at
December 31, 2021 exchange rate) that expire between January 26, 2022 and December 28, 2022 to reduce the
exposure of our South African subsidiaries’ third party sales to fluctuations in currency rates. At December 31,
2021 and December 31, 2020, there was an unrealized net gain of $15 million and an unrealized net gain of
$58 million, respectively, recorded in ‘‘Accumulated other comprehensive loss’’ on the Consolidated Balance
Sheet, which is expected to be recognized in earnings over the next twelve months.
From time to time, we enter into foreign currency contracts to reduce exposure of our subsidiaries’ balance
sheet accounts not denominated in our subsidiaries’ functional currency to fluctuations in foreign currency
exchange rates. For accounting purposes, these foreign currency contracts are not considered hedges. The change
90
in fair value associated with these contracts is recorded in ‘‘Other income, net’’ within the Consolidated
Statement of Operations and partially offsets the change in value of third party and intercompany-related
receivables not denominated in the functional currency of the subsidiary. At December 31, 2021, there was
(i) 510 million South African Rand (or approximately $32 million at December 31, 2021 exchange rate) and
(ii) 172 million Australian dollars (or approximately $125 million at December 31, 2021 exchange rate) of
notional amount of outstanding foreign currency contracts.
17. Fair Value Measurement
For financial instruments that are subsequently measured at fair value, the fair value measurement is
grouped into levels. See Note 2.
Our debt is recorded at historical amounts. The following table presents the fair value of our debt and
derivative contracts at both December 31, 2021 and December 31, 2020:
Prior Term Loan Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Term Loan Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior Standard Bank Term Loan Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Standard Bank Term Loan Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior Notes due 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior Notes due 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior Notes due 2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.5% Senior Secured Notes due 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tikon Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Australian Government Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MGT Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency contracts, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2021
$ —
895
—
92
—
—
1,071
526
—
1
33
25
2
December 31,
2020
$1,610
—
115
—
468
641
—
536
17
1
36
57
65
We determined the fair value of the Prior Term Loan Facility, the New Term Loan Facility, the Senior Notes
due 2025, the Senior Notes due 2026, the Senior Notes due 2029 and the 6.5% Senior Secured Notes due 2025
using quoted market prices, which under the fair value hierarchy is a Level 1 input. We determined the fair value
of the Prior Standard Bank Term Loan
Facility, the New Standard Bank Term Loan Facility and Tikon Loan utilizing transactions in the listed markets
for similar liabilities, which under the fair value hierarchy is a Level 2 input. The fair value of the Australian
Government Loan and MGT Loan is based on the contracted amount which is a Level 2 input.
We determined the fair value of the foreign currency contracts and interest rate swaps using inputs other
than quoted prices in active markets that are observable either directly or indirectly. The fair value hierarchy for
the foreign currency contracts and interest rate swaps is a Level 2 input.
The carrying value of cash and cash equivalents, restricted cash, accounts receivable and accounts payable
approximate fair value due to the short-term nature of these items.
18. Leases
Lease expense for the year ended December 31, 2021, 2020 and 2019 was comprised of the following:
Operating lease expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2020
$48
2019
$41
2021
$47
Finance lease expense:
Amortization of right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
2
1
2
$ 1
$ 2
91
Short term lease expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable lease expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2020
26
22
$99
2021
30
23
$103
2019
$22
$20
$86
The table below summarizes lease expense for the year ended December 31, 2021, 2020 and 2019 recorded
in the specific line items in our Consolidated Statements of Operations:
Year Ended December 31,
2020
2021
2019
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 98
5
$103
$91
8
$99
$80
6
$86
The weighted-average remaining lease term in years and weighted-average discount rates at December 31,
2021 and 2020 were as follows:
December 31, 2021
December 31, 2020
Weighted-average remaining lease term:
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average discount rate:
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.7
8.8
7.4%
14.1%
3.3
9.6
7.7%
14.2%
The maturity analysis for operating leases and finance leases at December 31, 2021 were as follows:
Operating Leases Finance Leases
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: imputed interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Present value of lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30
15
12
8
6
44
115
(34)
$ 81
3
3
3
3
3
11
26
(12)
$ 14
Additional information relating to cash flows and ROU assets for the year ended December 31, 2021, 2020
and 2019 is as follows:
Cash paid for amounts included in the measurement of
lease liabilities:
Operating cash flows used for operating leases. . . . . . . . . .
Operating cash flows used for finance leases . . . . . . . . . . .
Financing cash flows used for finance leases . . . . . . . . . . .
$51
$ 2
$ 1
$55
$ 2
$ 1
$41
$ 2
$ 1
December 31, 2021 December 31, 2020 December 31, 2019
92
Additional information relating to ROU assets for the year ended December 31, 2021 and 2020 is as
follows:
Year Ended December 31,
2021
2020
ROU assets obtained in exchange for lease obligations:
Operating leases obtained in the normal course of business. . . . . . . . . . . . . . . . . . . . . . . .
Finance leases obtained in the normal course of business . . . . . . . . . . . . . . . . . . . . . . . . .
$49
$ 2
$29
$—
As of December 31, 2021, we have additional operating and finance leases, primarily for equipment and
machinery, that have not yet commenced. The related ROU assets of the operating and finance leases are
approximately $63 million and $40 million, respectively. These leases will commence later in 2022 with lease
terms of between approximately 10 and 15 years.
19. Asset Retirement Obligations
Asset retirement obligations consist primarily of rehabilitation and restoration costs, landfill capping costs,
decommissioning costs, and closure and post-closure costs. Activity related to asset retirement obligations was as
follows:
Balance, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remeasurement/translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in estimates, including cost and timing of cash flows . . . . . . . . . . . . . . . .
Settlements/payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other acquisition and divestiture related . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2021
$166
5
12
(9)
(15)
(10)
—
$149
2020
$158
1
12
7
(1)
(15)
4
$166
Asset retirement obligations were classified as follows:
Current portion included in ‘‘Accrued liabilities’’. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent portion included in ‘‘Asset retirement obligations’’. . . . . . . . . . . . . . . . . . . . . . . . . .
Asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2021
2020
$ 10
139
$149
$
9
157
$166
We used the following assumptions in determining asset retirement obligations at December 31, 2021:
inflation rates between 1.5% - 4.4% per year; credit adjusted risk-free interest rates between 3.9% -16.9%; the
life of mines between 3-25 years and the useful life of assets between 1-32 years.
Environmental Rehabilitation Trust
In accordance with applicable regulations, we have established an environmental rehabilitation trust for the
prospecting and mining operations in South Africa, which receives, holds, and invests funds for the rehabilitation
or management of asset retirement obligations. The trustees of the fund are appointed by us and consist of
sufficiently qualified employees capable of fulfilling their fiduciary duties. At December 31, 2021 and 2020, the
environmental rehabilitation trust assets were $12 million and $12 million, respectively, which were recorded in
‘‘Other long-term assets’’ in the Consolidated Balance Sheets.
20. Commitments and Contingencies
Purchase and Capital Commitments—At December 31, 2021, purchase commitments were $231 million for
2022, $87 million for 2023, $122 million for 2024, $52 million for 2025, $105 million for 2026, and $58 million
thereafter.
93
Letters of Credit—At December 31, 2021, we had outstanding letters of credit and bank guarantees of
$53 million, of which $21 million were letters of credit and $32 million were bank guarantees. Amounts for
performance bonds were not material.
Environmental Matters—It is our policy to record appropriate liabilities for environmental matters when
remedial efforts are probable and the costs can be reasonably estimated. Such liabilities are based on our best
estimate of the undiscounted future costs required to complete the remedial work. The recorded liabilities are
adjusted periodically as remediation efforts progress or as additional technical, regulatory or legal information
becomes available. Given the uncertainties regarding the status of laws, regulations, enforcement policies, the
impact of other potentially responsible parties, technology and information related to individual sites, we do not
believe it is possible to develop an estimate of the range of reasonably possible environmental loss in excess of
our recorded liabilities. We expect to fund expenditures for these matters from operating cash flows. The timing
of cash expenditures depends principally on the timing of remedial investigations and feasibility studies,
regulatory approval of cleanup projects, remedial techniques to be utilized and agreements with other parties.
Included in these environmental matters are the following:
Hawkins Point Plant. Residual waste mud, known as Batch Attack Mud, and a spent sulfuric waste stream
were deposited in an onsite repository (the ‘‘Batch Attack Lagoon’’) at a former TiO2 manufacturing site,
Hawkins Point Plant in Baltimore, Maryland, operated by Cristal USA, Inc. from 1954 until 2011. We assumed
responsibility for remediation of the Hawkins Point Plant when we acquired the TiO2 business of Cristal in April
2019. In 1984, a predecessor of Cristal and the Maryland Department of the Environment (‘‘MDE’’) entered into
a consent decree (the ‘‘Consent Decree’’) to address the Batch Attack Lagoon. The Consent Decree required that
Cristal close the Batch Attack Lagoon when the Hawkins Point Plant ceased operations. In addition, we are
investigating whether hazardous substances are migrating from the Batch Attack Lagoon. As of December 31,
2021, a provision of $59 million is included in ‘‘Environmental liabilities’’ in our Consolidated Balance Sheet for
the Hawkins Point Plant consistent with the accounting policy described above. We are in discussions with the
MDE regarding a new consent decree to address both the Batch Attack Lagoon as well as other environmental
contamination issues associated with the Hawkins Point Plant.
Other Matters—We are subject to a number of other lawsuits, investigations and disputes (some of which
involve substantial amounts claimed) arising out of the conduct of our business, including matters relating to
commercial transactions, prior acquisitions and divestitures, including our acquisition of Cristal, employee benefit
plans, intellectual property, and environmental, health and safety matters. We recognize a liability for any
contingency that is probable of occurrence and reasonably estimable. We continually assess the likelihood of
adverse judgments of outcomes in these matters, as well as potential ranges of possible losses (taking into
consideration any insurance recoveries), based on a careful analysis of each matter with the assistance of outside
legal counsel and, if applicable, other experts. Included in these other matters is the following:
Venator Materials plc v. Tronox Limited. In May 2019, Venator Materials plc (‘‘Venator’’) filed an action in
the Superior Court of the State of Delaware alleging among other things that we owed Venator a $75 million
‘‘Break Fee’’ pursuant to the terms of a preliminary agreement dated July 14, 2018 (the ‘‘Exclusivity
Agreement’’). The Exclusivity Agreement required, among other things, Tronox and Venator to use their
respective best efforts to negotiate a definitive agreement to sell the entirety of the National Titanium Dioxide
Company Limited’s (‘‘Cristal’s’’) North American operations to Venator if a divestiture of all or a substantial part
of these operations were required to secure the approval of the Federal Trade Commission for us to complete our
acquisition of Cristal’s TiO2 business. In June 2019, we denied Venator’s claims and counterclaimed against
Venator seeking to recover $400 million in damages from Venator that we suffered as a result of Venator’s
breaches of the Exclusivity Agreement. Specifically, we alleged, among other things, that Venator’s failure to use
best efforts constituted a material breach of the Exclusivity Agreement and directly resulted in and caused us to
sell Cristal’s North American operations to an alternative buyer for $701 million, $400 million less than the price
Venator had agreed to in the Exclusivity Agreement. Though we believe that our interpretation of the Exclusivity
Agreement is correct, there can be no assurance that we will prevail in litigation.
Western Australia Stamp Duty Matter. In May 2018, we lodged a pre-transaction determination request for a
stamp duty exemption with the Western Australia Office of State Revenue (the ‘‘WA OSR’’) in connection with
our re-domicile transaction (the ‘‘Re-Domicile Transaction’’) which was subsequently granted by the WA OSR in
June 2018 on a preliminary basis. Immediately following the consummation of the Re-Domicile Transaction, we
filed a confirmation request for the stamp duty exemption with the WA OSR. Following this confirmation
94
request, we exchanged numerous communications with the WA OSR addressing questions raised and stating our
position. In July 2021, the WA OSR informed us that they have reviewed their technical position on the
applicability of the stamp duty exemption and have determined that such an exemption is disallowed based upon
minor technicalities regarding the application of the governing set of rules. While the Company believe the rules
were appropriately applied and will be successful in utilizing the exemption allowed, if an unfavorable ruling
ultimately prevails it could result in a material charge to the financial statements. The Company is currently
assessing its options with respect to this matter.
21. Accumulated Other Comprehensive Income (Loss) Attributable to Tronox Holdings plc and Other
Equity Items
The tables below present changes in accumulated other comprehensive income (loss) by component for
2021, 2020 and 2019.
Cumulative
Translation
Adjustment
Pension
Liability
Adjustment
Unrealized
Gains (losses)
on Derivatives
Balance, January 1, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of noncontrolling interest . . . . . . . . . . . . . . . . . . . . . .
Amounts reclassified from accumulated other comprehensive
income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . .
Amounts reclassified from accumulated other comprehensive
income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of noncontrolling interest . . . . . . . . . . . . . . . . . . . . . .
Amounts reclassified from accumulated other comprehensive
$(445)
3
(61)
—
(503)
12
—
$(491)
(103)
(34)
$ (95)
(11)
—
2
(104)
(20)
4
$(120)
16
—
income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
4
Balance, December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(628)
$(100)
$ —
8
—
(7)
1
(4)
4
$ 1
21
—
(32)
$(10)
Total
$(540)
—
(61)
(5)
(606)
(12)
8
$(610)
(66)
(34)
(28)
$(738)
Repurchase of Common Stock
In addition to the repurchase of 14 million shares from Exxaro in 2019, on June 3, 2019, the Company’s
Board of Directors authorized the repurchase of up to $100 million of the Company’s stock. During the year
ended December 31, 2019, we purchased 7,453,391 shares under the authorization at an average price of
$11.59 per share and at a cost of approximately $87 million, including sales commissions and fees. We did not
complete the full program given certain Section 382 restrictions related to our NOLs. Upon repurchase of the
shares by the Company, the shares were cancelled.
On November 9, 2021, the Company’s Board of Directors authorized the repurchase of up to $300 million
of the Company’s stock through February 2024. As of December 31, 2021, there were no repurchases as part of
this program.
22. Share-based Compensation
Share-based compensation expense consisted of the following:
Year Ended December 31,
2020
2019
2021
Total share-based compensation expense (continuing operations) from restricted
shares and restricted share units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$31
$30
$32
The stock compensation expense for the year ended December 31, 2021 is inclusive of a a $3 million true
up of expense due to the 2020 and 2021 performance grants as well as the acceleration of $2 million of stock
95
compensation expense associated with the retirement agreement entered into with the former CEO on March 18,
2021. The stock compensation expense for the year ended December 31, 2020 is inclusive of a $4 million credit
for the reversal of expense due to the 2018 performance grants.
Tronox Holdings plc Amended and Restated Management Equity Incentive Plan
On March 27, 2019, in connection with the Re-domicile Transaction, Tronox Holdings plc assumed the
management equity incentive plan previously adopted by Tronox Limited, which plan was renamed the Tronox
Holdings plc Amended and Restated Management Equity Incentive Plan. The amendments to the plan were made
to provide, among other things, for the appropriate substitution of Tronox Holdings in place of Tronox Limited
and to ensure the compliance with the laws of England and Wales law in place of Australian law. The MEIP
permits the grant of awards that are comprised of incentive options, nonqualified options, share appreciation
rights, restricted shares, restricted share units, performance awards, and other share-based awards, cash payments,
and other forms as the compensation committee of the Board of Directors (the ‘‘Board’’) in its discretion deems
appropriate, including any combination of the above. The maximum number of shares which were initially
subjected to awards (inclusive of incentive options) was 20,781,225 ordinary shares and was increased by
8,000,000 on the affirmative vote of our shareholders on June 24, 2020.
Restricted Share Units (‘‘RSUs’’)
On an annual basis, the Company grants RSUs which have time and/or performance conditions. Both the
time-based awards and the performance-based awards are classified as equity awards.
2021 Grants - The Company granted both time-based and performance-based awards to certain members of
management and to members of the Board. A total of 659,609 of time-based awards were granted to management
which will vest ratably over a three-year period ending March 5, 2024. A total of 56,304 of time-based awards were
granted to members of the Board of which will vest in May 2022. A total of 623,112 of performance-based awards
were granted, of which 311,556 of the awards vest based on a relative Total Shareholder Return (‘‘TSR’’) calculation
and 311,556 of the awards vest based on certain performance metrics of the Company. The non-TSR
performance-based awards vest on March 5, 2024 based on the achievement against the target average company
performance of three separate performance periods, commencing on January 1 of each 2021, 2022, and 2023 and
ending on December 31 of each 2021, 2022 and 2023, for which, for each performance period, the performance metric
is an average annual return on invested capital (ROIC) improvement versus 2020 ROIC. Similar to the Company’s
historical TSR awards granted in prior years, the TSR awards vest based on the Company’s three-year TSR versus the
peer group performance levels. Given these terms, the TSR metric is considered a market condition for which we used
a Monte Carlo simulation to determine the weighted average grant date fair value of $29.07.
Similar TSR awards were granted during 2020 and 2019 with grant date fair values of $10.00 and $12.65,
respectively, which were calculated utilizing a Monte Carlo simulation. The following weighted-average
assumptions were utilized to value the grants in 2021, 2020 and 2019:
Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected historical volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk free interest rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected life (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The following table presents a summary of activity for RSUs for 2021:
2019
N/A
2020
2021
1.56%
2.13%
71.10% 58.30% 67.20%
2.50%
1.42%
0.17%
3
3
3
Outstanding, January 1, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding, December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number
of Shares
7,303,905
1,339,025
(2,845,305)
(682,680)
5,114,945
Weighted
Average
Grant Date
Fair Value
$12.39
20.91
14.49
15.16
$13.12
Expected to vest, December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,049,472
$13.58
96
At December 31, 2021, there was $30 million of unrecognized compensation expense related to nonvested
RSUs, adjusted for estimated forfeitures, which is expected to be recognized over a weighted-average period of
1.8 years. The weighted-average grant-date fair value of RSUs granted during 2021, 2020 and 2019 was $20.91
per unit, $8.89 per unit, and $10.81 per unit, respectively. The total fair value of RSUs that vested during 2021,
2020 and 2019 was $41 million, $30 million and $20 million, respectively.
Options
We did not issue any options during 2021 and 2020 and all our options outstanding are fully vested at
December 31, 2021. The following table presents a summary of option activity for 2021:
Outstanding, January 1, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of
Options
1,201,891
(424,832)
—
(20,732)
Outstanding and Exercisable, December 31, 2021 . . . . . . . . . . . .
756,327
Weighted
Average
Exercise Price
Weighted
Average
Contractual
Life (years)
Intrinsic
Value
$21.60
20.25
—
28.26
$22.13
2.19
$—
1.30
$ 2
The aggregate intrinsic values in the table represent the total pre-tax intrinsic value (the difference between
our share price at the indicated dates and the options’ exercise price, multiplied by the number of in-the-money
options) that would have been received by the option holders had all option holders exercised their in-the-money
options at the end of the year. The amount will change based on the fair market value of our stock. There were
424,832 options exercised during 2021 with a total intrinsic value of $2 million. We issue new shares upon the
exercise of options. During 2021, we received $8 million, in cash for the exercise of stock options. There were
no options exercised during both 2020 and 2019 and consequently there was no related intrinsic value. At
December 31, 2021, 2020 and 2019, there was no unrecognized compensation expense related to options.
23. Pension and Other Postretirement Healthcare Benefits
The following provides information regarding our U.S. and foreign plans:
U.S. Plans
Pension and Postretirement Healthcare Plans — Tronox has one main U.S. defined benefit plan: the
U.S. Qualified Plan. Prior to December 2020, the Company also had the U.S. Pension Plan (which was acquired
as part of the Cristal acquisition). In December 2020, the U.S. Pension Plan was frozen and merged into the
U.S. Qualified Plan. The U.S. Qualified Plan is a funded noncontributory qualified benefit plan which is in
accordance with the Employee Retirement Income Security Act of 1974
(‘‘ERISA’’) and the Internal Revenue Code. We made contributions into funds managed by a third party, and
those funds are held exclusively for the benefit of the plan participants. Benefits under the U.S. Qualified Plan
were generally calculated based on years of service and final average pay. The U.S. Qualified Plan was frozen
and closed to new participants on June 1, 2009. We also maintain one postretirement healthcare plan - the
U.S. retiree welfare plan.
International Plans
Pension Plans — Tronox has international defined benefit commitments primarily in the United Kingdom
(‘‘U.K. DB Scheme’’) and Saudi Arabia. The U.K. DB Scheme is a funded qualified defined benefit plan in the
United Kingdom, which is frozen with no additional benefits accruing to the participants. Benefits under the
U.K. DB Scheme are generally calculated based on years of credit service and final compensation when benefits
ceased to accrue as defined under the plan provisions. We also maintain a Saudi Arabia Cristal End of Service
Benefit plan which provides end of service benefits to qualifying participants. End of service benefits are based
on years of service and the reasons for which a participant’s services to the Company are terminated.
Multiemployer Pension Plan — In prior periods, we maintained a defined benefit plan in the Netherlands
(the ‘‘Netherlands Plan’’) to provide defined pension benefits to qualifying employees of Tronox Pigments
97
(Holland) B.V. and its related companies. During 2014, the Netherlands Plan was replaced with a multiemployer
plan, the Netherlands Contribution Plan (the ‘‘CDC Plan’’) effective January 1, 2015. Under the CDC Plan,
employees earn benefits based on their pensionable salaries each year determined using a career average benefit
formula. The collective bargaining agreement between us and the participants require us to contribute 20.4% of
the participants’ pensionable salaries into a pooled fund administered by the industry-wide PGB. The pensionable
salary is the annual income of employees subject to a cap, which is adjusted each year to reflect the current
requirements of the Netherlands’ Wages and Salaries Tax Act of 1964. Our obligation under this plan is limited
to the fixed percentage contribution we make each year. The employees are entitled to any returns generated
from the investment activities of the fund.
The following table outlines the details of our participation in the CDC Plan for the year ended
December 31, 2021. The CDC disclosures provided herein are based on the fund’s 2020 annual report, which is
the most recently available public information. Based on the total plan assets and accumulated benefit obligation
information in the plan’s annual report, the zone status was green as of December 31, 2020. A green zone status
indicates that the plan was at least 80 percent funded. The ‘‘FIP/RP Status Pending/Implemented’’ column
indicates whether a financial improvement plan (FIP) or a rehabilitation plan (RP) is either pending or has been
implemented. As of December 31, 2021, we are not aware of any financial improvement or rehabilitation plan
being implemented or pending. The last column lists the expiration date of the collective-bargaining agreement to
which the plan is subject.
Pension Protection Act Zone Status
Tronox Contributions
Pension
Fund
EIN/Pension
Plan
Number
PGB . . . . . . . .
NA
2021
N/A
2020
Green
FIP/RP
Pending/
Implemented
No
2021
$5
2020
$5
Expiration
date of
Collective-
Bargaining
Agreement
Surcharge
Imposed
No
12/31/2024
On the basis of the information available in the CDC Plan 2020 annual report, our contribution does not
constitute more than 5 percent of the total contribution to the plan by all participants. During 2021, the fund did
not impose any surcharge on us.
Postretirement Healthcare Plans — We also maintain postretirement healthcare plans in South Africa
(the ‘‘South African Plan’’) and Brazil (the ‘‘Brazil Medical Plan’’). The South African Plan provides medical
and dental benefits to certain South African employees, retired employees and their registered dependents. The
South African Plan provides benefits as follows: (i) members employed before March 1, 1994 receive
100% post-retirement and death-in-service benefits; (ii) members employed on or after March 1, 1994 but before
January 1, 2002 receive 2% per year of completed service subject to a maximum of 50% post-retirement and
death-in-service benefits; and, (iii) members employed on or after January 1, 2002 receive no post-retirement and
death-in-service benefits. The Brazil Medical Plan provides post-employment medical benefits to employees who
contributed to the medical plan while employed. Retirees receiving a benefit under the plan are required to pay a
contribution that varies based on the coverage level elected.
98
Pension and Postretirement Benefit Costs / Obligations
Benefit Obligations and Funded Status — The following provides a reconciliation of beginning and ending
benefit obligations, beginning and ending plan assets, funded status, and balance sheet classification of our
U.S. and international pension plans and other post-retirement benefit plans (‘‘OPEB’’) as of and for the years
ended December 31, 2021 and 2020. The benefit obligations and plan assets associated with our principal benefit
plans are measured on December 31.
Pensions
December 31
Other Post Retirement Benefit Plans
December 31
2021
International US
US
2020
International US International US International
2020
2021
Change in benefit obligations:
Benefit obligation, beginning of year . . . $399
Service cost . . . . . . . . . . . . . . . . . . . . . . —
10
Interest cost . . . . . . . . . . . . . . . . . . . . . .
Net actuarial (gains) losses. . . . . . . . . .
(10)
Curtailments . . . . . . . . . . . . . . . . . . . . . —
Settlements . . . . . . . . . . . . . . . . . . . . . . —
Plan amendments(1). . . . . . . . . . . . . . . . —
Foreign currency rate changes . . . . . . . —
(30)
Benefits paid . . . . . . . . . . . . . . . . . . . . .
Benefit obligation, end of year(2). . . . . . .
369
Change in plan assets:
Fair value of plan assets, beginning of
344
year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets . . . . . . . . .
23
Employer contributions . . . . . . . . . . . . —
(30)
Benefits paid . . . . . . . . . . . . . . . . . . . . .
Foreign currency rate changes . . . . . . . —
Settlements . . . . . . . . . . . . . . . . . . . . . . —
337
Fair value of plan assets, end of year . . .
$252
4
4
(10)
—
—
—
(2)
(14)
234
195
(3)
6
(14)
(1)
—
183
$398
1
12
28
(2)
(7)
—
—
(31)
399
319
41
22
(31)
—
(7)
344
$232
4
5
20
—
(6)
—
6
(9)
252
186
15
3
(9)
6
(6)
195
$ 2
—
—
—
—
—
—
—
—
2
—
—
—
—
—
—
—
$ 23
1
2
(3)
—
—
(4)
(2)
(1)
16
—
—
1
(1)
—
—
—
$ 2
—
—
—
—
—
—
—
—
2
—
—
—
—
—
—
—
$ 13
—
1
3
(1)
—
9
(2)
—
23
—
—
—
—
—
—
—
Net underfunded status of plans. . . . . . . . $ (32)
$ (51)
$ (55)
$ (57)
$ (2)
$(16)
$ (2)
$(23)
Classification of amounts recognized in
the Consolidated Balance Sheets:
Other long-term assets . . . . . . . . . . . . . . . $ — $ 20
(4)
Accrued liabilities . . . . . . . . . . . . . . . . . . . —
Pension and postretirement healthcare
$ — $ 14
(5)
—
$— $ — $— $ —
—
(1)
—
—
benefits . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . .
(32)
(32)
(67)
(71)
(55)
(55)
(66)
(71)
(1)
(2)
(16)
(16)
(2)
(2)
(23)
(23)
Accumulated other comprehensive
(income) loss. . . . . . . . . . . . . . . . . . . . .
81
10
98
12
—
3
—
12
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 49
$ (41)
$ 43
$ (45)
$ (2)
$(13)
$ (2)
$(11)
(1)
(2)
Relates to a plan amendment entered into during both 2021 and 2020 related to the Brazil Medical Plan.
Since the benefits under the U.S Qualified Plan and the U.K. DB Scheme are frozen, the projected benefit obligation and accumulated
benefit obligation are the same.
Contributions
At a minimum, Tronox contributes to its pension plans to comply with local regulatory requirements
(e.g., ERISA in the United States). Discretionary contributions in excess of the local minimum requirements are
made based on many factors, including long-term projections of the plans’ funded status, the economic
environment, potential risk of overfunding, pension insurance costs and alternative uses of the cash. Changes to
99
these factors can impact the timing of discretionary contributions from year to year. Pension contributions were
less than $1 million in 2021 and are currently expected to be less than $1 million in 2022.
The following table provides information for pension plans where the accumulated benefit obligation
exceeds the fair value of the plan assets:
Projected benefit obligation (PBO). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated benefit obligation (ABO) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pensions
2021
International
$71
$47
$—
US
$369
$369
$337
Expected Benefit Payments — The following table shows the expected cash benefit payments for the next
five years and in the aggregate for the years 2027 through 2031:
2022
2023
2024
2025
2026
2027-2031
Pensions - US . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pensions - International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Post Retirement Benefit Plans - US . . . . . . . . . . . . . . . . . . . . . . .
Other Post Retirement Benefit Plans - International. . . . . . . . . . . . . . . .
$28
$10
$29
$ 9
$32
$115
$ 57
$11
$— $— $— $— $— $ 1
$ 6
$— $— $ 1
$27
$11
$26
$11
$ 1
$ 1
Retirement and Postretirement Healthcare Expense — The table below presents the components of net
periodic cost associated with the U.S. and foreign plans recognized in the Consolidated Statements of Operations
for 2021, 2020, and 2019:
Pensions
Year Ended December 31,
2020
2021
2019
Other Postretirement Benefit Plans
Year Ended December 31,
2020
2019
2021
Net periodic cost:
$ 4
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
Expected return on plan assets(1) . . . . . . . . . . . . . . . . . . .
(26)
Net amortization of actuarial loss(1) . . . . . . . . . . . . . . . . .
5
Settlement losses (gains)(1) . . . . . . . . . . . . . . . . . . . . . . . . —
Curtailment (gains)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
$ (3)
Total net periodic cost - continuing operations . . . . . . . . . .
$ 4
$ 5
21
17
(22)
(22)
2
4
(1)
—
(2) —
$ 2
$ 4
$ 1
2
—
1
—
—
$ 4
$—
1
—
—
—
—
$ 1
$—
1
—
—
—
—
$ 1
(1)
Recorded in Other income, net in the Consolidated Statement of Operations.
Assumptions —
The following weighted average assumptions were used to determine net periodic cost:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . .
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . .
2021
International
1.47%
2.50%
US
2.60%
6.70%
2021
International
10.19%
N/A
US
2.59%
N/A
Pension
2020
International
1.98%
2.50%
US
3.39%
6.03%
OPEB
2020
International
8.72%
N/A
US
3.36%
N/A
2019
International
2.50%
3.00%
US
4.34%
5.69%
2019
International
10.25%
N/A
US
4.00%
N/A
100
The following weighted average assumptions were used in estimating the actuarial present value of benefit
obligations:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . .
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . .
2021
International
US
Pensions
2020
International
1.87%
4.68%
2.60%
3.00%
1.45%
4.65%
US
2.97%
N/A
2019
International
1.98%
4.67%
US
3.39%
3.00%
2021
International
10.33%
N/A
US
2.83%
N/A
OPEB
2020
International
9.51%
N/A
US
2.59%
N/A
2019
International
9.91%
N/A
US
3.36%
N/A
For the U.S. Qualified Plan, the mortality assumption was updated on December 31, 2021 to use the Society
of Actuaries’ most recently published generational projection scale (i.e. MP-2021) and base table (i.e. Pri-2012).
The mortality improvement scale that had been used as of December 31, 2020 was the MP-2020 projection scale
and the base table was Pri-2012.
Expected Return on Plan Assets — In forming the assumption of the U.S. and international long-term rate
of return on plan assets, we considered the expected earnings on funds already invested, earnings on
contributions expected to be received in the current year, and earnings on reinvested returns. The long-term rate
of return estimation methodology for the Company’s pension plans is based on a capital asset pricing model
using historical data and a forecasted earnings model. An expected return on plan assets analysis is performed
which incorporates the current portfolio allocation, historical asset-class returns, and an assessment of expected
future performance using asset-class risk factors.
Discount Rate — The 2021 and 2020 rates were selected based on the results of a cash flow matching
analysis, which projected the expected cash flows of the plans using a yield curves model developed from a
universe of Aa-graded U.S. currency corporate bonds (obtained from Bloomberg) with BVAL scores of 6 or
greater.
Plan Assets — The investments of the U.S. and International pension plans are managed to meet the future
expected benefit liabilities of the plan over the long term by investing in diversified portfolios consistent with
prudent diversification and historical and expected capital market returns. Tronox’s U.S. and international
pension plans’ weighted-average asset allocations at December 31, 2021 and 2020, and the target asset allocation
ranges, by major asset category, are as follows:
December 31,
2021
2020
US
International
US
International
Actual
Target
Actual
Target
Actual
Target
Actual
Target
Equity securities . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
49%
46
1
4
49% —% —%
43
48
—
—
57
3
43
—
57
43%
39
1
17
42% —% —%
39
40
—
—
61
18
30
—
70
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100% 100% 100% 100% 100% 100% 100% 100%
101
The fair values of pension investments as of December 31, 2021 are summarized below:
Fair Value Measurement at December 31, 2021 Using:
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Asset category:
Equities securities:
Global equity securities. . . . . . . . . . . . . . . . . . . . . . . . . . .
Global comingled equity funds. . . . . . . . . . . . . . . . . . . . .
Debt securities:
US government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign government bonds . . . . . . . . . . . . . . . . . . . . . . . .
US corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . .
Real Estate:
$ 93(1)
73(2)
81(3)
39(3)
—
—
Property/ real estate fund . . . . . . . . . . . . . . . . . . . . . . . . .
—
Other:
Insurance contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash & cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . .
—
19(6)
Total at fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$305
$ —
—
—
—
73(4)
42(4)
1(5)
—
—
$116
Total
$ 93
73
81
39
73
42
1
98
19
$—
—
—
—
—
—
—
98(7)
—
$98
$519
(1)
For global equity securities, this category is comprised of shares of common stock in both U.S. and international companies from a
diverse set of industries and size. Common stock is valuated at the closing market price reported on a U.S. or international exchange
where the security is actively traded. Equity securities are classified within level 1 of the fair value hierarchy.
(2) Global commingled equity funds are comprised of managed funds that invest in common stock of both U.S. and international
companies shares from a diverse set of industries and size. Common stock are valued at the closing market price reported on a U.S. or
international exchange where the security is actively traded. These funds are classified within level 1 of the fair value hierarchy.
(3)
(4)
(5)
(6)
(7)
For US and foreign government bonds, this category includes U.S. treasuries, U.S. federal agency obligations and international
government debt. The fair value of these investments are based on observable quoted prices on active exchanges, which are level 1
inputs.
For US corporate bonds and foreign corporate bonds, this category is comprised of corporate bonds of U.S. and foreign companies
from a diverse set of industries and size. The fair values for the U.S. and foreign corporate bonds are determined using quoted prices of
similar securities in active markets and observable data or broker or dealer quotations. The fair values for these investments are
classified as level 2 within the valuation hierarchy.
For property / real estate funds, this category includes real estate properties, partnership equities and investments in operating
companies. The fair value of the assets is determined using discounted cash flows by estimating an income stream for the property plus
a reversion into a present value at a risk adjusted rate. Yield rates and growth assumptions utilized are derived from market transactions
as well as other financial and industry data. The fair value of these investments are classified as level 2 in the valuation hierarchy.
Cash and cash equivalents include cash and short-interest bearing investments with maturities of three months or less. Investments are
valued at cost plus accrued interest. Cash and cash equivalents are classified within level 1 of the valuation hierarchy.
For insurance contracts, the fair value is estimated as the cost of purchasing equivalent annuities on terms consistent with those
currently available in the market. The contracts are with highly rated insurance companies and are classified within level 3 of the
valuation hierarchy. The following table summarizes changes in fair value of the pension plan assets classified as level 3 for the year
ended December 31, 2021:
Balance, December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases, sales, settlements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfers in/out of Level 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$111
(6)
(6)
—
(1)
$ 98
Insurance Contracts
102
The fair values of pension investments as of December 31, 2020 are summarized below:
Fair Value Measurement at December 31, 2020, Using:
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Asset category:
Equities securities:
Global equity securities. . . . . . . . . . . . . . . . . . . . . . . . . . .
Global comingled equity funds. . . . . . . . . . . . . . . . . . . . .
$ 83(1)
66(2)
$ —
—
$ —
—
$ 83
66
Debt securities:
US government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign government bonds . . . . . . . . . . . . . . . . . . . . . . . .
US corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . .
Real Estate:
Property/ real estate fund . . . . . . . . . . . . . . . . . . . . . . . . .
Other:
Insurance contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash & cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . .
70(3)
37(3)
—
—
—
—
66(6)
Total at fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 322
—
—
62(4)
43(4)
1(5)
—
—
$106
—
—
—
—
—
70
37
62
43
1
111(7)
—
$111
111
66
$539
(1)
For global equity securities, this category is comprised of shares of common stock in both U.S. and international companies from a
diverse set of industries and size. Common stock is valuated at the closing market price reported on a U.S. or international exchange
where the security is actively traded. Equity securities are classified within level 1 of the fair value hierarchy.
(2) Global commingled equity funds are comprised of managed funds that invest in common stock of both U.S. and international
companies shares from a diverse set of industries and size. Common stock are valued at the closing market price reported on a U.S. or
international exchange where the security is actively traded. These funds are classified within level 1 of the fair value hierarchy.
(3)
(4)
(5)
(6)
(7)
For US and foreign government bonds, this category includes U.S. treasuries, U.S. federal agency obligations and international
government debt. The fair value of these investments are based on observable quoted prices on active exchanges, which are level 1
inputs.
For US corporate bonds and foreign corporate bonds, this category is comprised of corporate bonds of U.S. and foreign companies
from a diverse set of industries and size. The fair values for the U.S. and foreign corporate bonds are determined using quoted prices of
similar securities in active markets and observable data or broker or dealer quotations. The fair values for these investments are
classified as level 2 within the valuation hierarchy.
For property / real estate funds, this category includes real estate properties, partnership equities and investments in operating
companies. The fair value of the assets is determined using discounted cash flows by estimating an income stream for the property plus
a reversion into a present value at a risk adjusted rate. Yield rates and growth assumptions utilized are derived from market transactions
as well as other financial and industry data. The fair value of these investments are classified as level 2 in the valuation hierarchy.
Cash and cash equivalents include cash and short-interest bearing investments with maturities of three months or less. Investments are
valued at cost plus accrued interest. Cash and cash equivalents are classified within level 1 of the valuation hierarchy.
For insurance contracts, the fair value is estimated as the cost of purchasing equivalent annuities on terms consistent with those
currently available in the market. The contracts are with highly rated insurance companies and are classified within level 3 of the
valuation hierarchy. The following table summarizes changes in fair value of the pension plan assets classified as level 3 for the year
ended December 31, 2020:
Balance, December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases, sales, settlements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfers in/out of Level 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$104
9
(5)
—
3
$111
Insurance Contracts
103
Defined Contribution Plans
U.S. Savings Investment Plan
In 2006, we established the U.S. Savings Investment Plan (the ‘‘SIP’’), a qualified defined contribution plan
under Section 401(k) of the Internal Revenue Code. Under the SIP, our regular full-time and part-time employees
contribute a portion of their earnings, and we match these contributions up to a predefined threshold. Our
matching contribution is 100% of the first 6% of employee contributions. Effective January 1, 2013, we
established a profit sharing contribution at 6% of employees’ pay (‘‘discretionary contribution’’). A discretionary
contribution of 6% was made for 2021, 2020 and 2019. Our matching contribution to the SIP vests immediately;
however, our discretionary contribution is subject to vesting conditions that must be satisfied over a three-year
vesting period. Contributions under the SIP, including our match, are invested in accordance with the investment
options elected by plan participants. Compensation expenses associated with our matching contribution to the SIP
was $5 million, $4 million and $4 million during 2021, 2020 and 2019, respectively, which was included in
‘‘Selling, general and administrative expenses’’ in the Consolidated Statements of Operations. Compensation
expense associated with our discretionary contribution was $5 million in 2021, $4 million in 2020 and $4 million
in 2019, which was included in ‘‘Selling, general and administrative expenses’’ in the Consolidated Statements of
Operations.
U.S. Benefit Restoration Plan
In 2006, we established the U.S. Benefit Restoration Plan (the ‘‘BRP’’), a nonqualified defined contribution
plan, for employees whose eligible compensation is expected to exceed the IRS compensation limits for qualified
plans. Under the BRP, participants can contribute up to 20% of their annual compensation and incentive. Our
matching contribution under the BRP is the same as the SIP. Our matching contribution under this plan vests
immediately to plan participants. Contributions under the BRP, including our match, are invested in accordance
with the investment options elected by plan participants. Compensation expense associated with our matching
contribution to the BRP was $1 million, $1 million and $2 million during 2021, 2020 and 2019, respectively,
which was included in ‘‘Selling, general and administrative expenses’’ in the Consolidated Statements of
Operations.
South Africa Defined Contribution Plans
Tronox Mineral Sands Proprietary Limited, a wholly owned subsidiary of the Company, participates in
several defined contribution plans which are registered in the Republic of South Africa and are governed by the
South African Pension Funds Act of 1956. These plans provide retirement and other benefits to all permanent
employees, and where applicable, retired employees and their dependents. The Company contributes a range of
10% to 15% (depending on the plan) of the employees’ predefined pre-tax pensionable earnings. Compensation
expense associated with these plans was $5 million, $4 million, and $4 million during 2021, 2020 and 2019,
respectively, which was included in both ‘‘Costs of goods sold’’ and ‘‘Selling, general and administrative
expenses’’ in the Consolidated Statements of Operations.
24. Related Party Transactions
Exxaro
In connection with the Company’s acquisition in 2012 of Exxaro Resources Limited’s (‘‘Exxaro’’) mineral
sands business, Exxaro was granted a ‘‘flip in’’ right such that following the occurrence of certain events, Exxaro
could exercise a put option, or the Company could exercise a call option, whereby Exxaro exchanges its
26% shareholding in the Company’s South African operating subsidiaries which hold the Company’s material
mining licenses (the ‘‘South African Subsidiaries Interest’’) for an additional 7,246,035 of our ordinary shares.
On November 26, 2018, the Company, certain of the Company’s subsidiaries and Exxaro entered into the Exxaro
Mineral Sands Transaction Completion Agreement which amended the ‘‘flip in’’ rights granted to Exxaro to
accelerate the occurrence of the ‘‘flip in’’ upon satisfaction of certain conditions, which have now been satisfied.
On February 23, 2021, we exercised our call option to complete the ‘‘flip in’’ transaction, pursuant to which we
issued to Exxaro 7,246,035 new ordinary shares of the Company in exchange for Exxaro’s South African
Subsidiaries Interest. In addition, on March 1, 2021, Exxaro sold its entire share ownership in us, including the
‘‘flip-in’’ shares, totaling 21,975,315 ordinary shares in an underwritten public offering.
104
Tasnee/Cristal
On April 10, 2019, we announced the completion of the acquisition of the TiO2 business of Cristal for
$1.675 billion of cash, subject to a working capital and noncurrent liability adjustment, plus 37,580,000 ordinary
shares. At December 31, 2021, Cristal International Holdings B.V. (formerly known as Cristal Inorganic
Chemical Netherlands Cooperatief W.A.), a wholly-owned subsidiary of Tasnee, continues to own
37,580,000 shares of Tronox, or a 24% ownership interest. In February 2020, Tronox and Cristal resolved the
working capital and noncurrent liability adjustment by agreeing that no payment was required by either party.
On May 9, 2018, we entered into an Option Agreement with AMIC which is owned equally by Tasnee and
Cristal. Under the terms of the Option Agreement, AMIC granted us an option (the ‘‘Option’’) to acquire 90% of
a special purpose vehicle (the ‘‘SPV’’), to which AMIC’s ownership in a titanium slag smelter facility
(the ‘‘Slagger’’) in The Jazan City for Primary and Downstream Industries in KSA will be contributed together
with $322 million of AMIC indebtedness (the ‘‘AMIC Debt’’). The AMIC Debt would remain outstanding debt
of the SPV upon exercise of the Option. The Option may be exercised if the Slagger achieves certain production
criteria related to sustained quality and tonnage of slag produced (the ‘‘Option Criteria’’). Likewise, AMIC may
require us to acquire the Slagger on the same terms if the Option Criteria are satisfied. Furthermore, pursuant to
the Option Agreement and during its term, we agreed to lend AMIC and, upon the creation of the SPV, the SPV,
up to $125 million for capital expenditures and operational expenses intended to facilitate the start-up of the
Slagger (the ‘‘Tronox Loans’’). We have lent AMIC the Tronox Loans maximum amount of $125 million which
is recorded within ‘‘Other long-term assets’’ on the Consolidated Balance Sheet as of both December 31, 2021
and 2020 as well as the related interest of $9 million and $6 million, respectively. The Option did not have a
significant impact on the financial statements as of or for the periods ended December 31, 2021 and 2020.
On May 13, 2020, we amended the Option Agreement (the ‘‘First Amendment’’) with AMIC to address
circumstances in which the Option Criteria cannot be satisfied. Pursuant to the First Amendment, Tronox has the
right to acquire the SPV in exchange for (i) our forgiveness of the Tronox Loans principal and accrued interest
thereon, and (ii) the SPV’s assumption of $36 million of indebtedness plus accrued interest thereon lent by
AMIC to the SPV. Under the First Amendment, the SPV would not assume any of the AMIC Debt.
Additionally, on May 13, 2020, we amended a Technical Services Agreement that we had entered with
AMIC on March 15, 2018, to add project management support services. Under this arrangement, AMIC and its
consultants are still responsible for engineering and construction of the Slagger while we provide technical
advice and project management services including supervision and management of third party consultants
intended to satisfy the Option Criteria. As compensation for these services, Tronox receives a monthly
management fee of approximately $1 million, which is recorded in ‘‘Other income, net’’ within the Consolidated
Statement of Operations and in ‘‘Prepaid and other assets’’ on the Consolidated Balance Sheet. The monthly
management fee is subject to certain success incentives if and when the Slagger achieves the Option Criteria.
The term of the Amended TSA was extended in December 2021 until December 31, 2022. Tronox recorded
approximately $8 million and $5 million in ‘‘Other Income’’ for this the management fee for the years ended
December 31, 2021 and 2020, respectively, in the Consolidated Statement of Operations. At both December 31,
2021 and 2020, Tronox had a receivable due from AMIC related to management fee of $1 million that is
recorded within ‘‘Prepaid and other assets’’ on the Consolidated Balance Sheet.
At December 31, 2021, Tronox had a receivable due from Tasnee of $8 million related primarily to
$4 million of stamp duty taxes reimbursable from Tasnee and $3 million for pre-acquisition period tax
settlements in process with certain tax authorities also reimbursable from Tasnee. At December 31, 2020, Tronox
had a receivable due from Tasnee of $9 million related primarily to amounts arising from transition service
agreements, stamp duty taxes paid on behalf of Tasnee, pre-acquisition activities and reimbursement of a tax
settlement due to the Australian Taxation Office for pre-acquisition tax periods. These receivables are recorded
within ‘‘Prepaid and other assets’’ on the Consolidated Balance Sheet.
On December 29, 2019, we entered into an agreement with Cristal to acquire certain assets co-located at our
Yanbu facility which produce metal grade TiCl4 (‘‘MGT’’). Consideration for the acquisition is the assumption
by Tronox of a $36 million note payable to Cristal (the ‘‘MGT Loan’’). MGT is used at a titanium ‘‘sponge’’
plant facility, 65% of the ownership interests of which are held by Advanced Metal Industries Cluster and Toho
Titanium Metal Co. Ltd (‘‘ATTM’’), a joint venture between AMIC and Toho Titanium Company Ltd. ATTM
uses the TiCl4, which we supply by pipeline, for the production of titanium sponge, a precursor material used in
the production of titanium metal.
105
On December 17, 2020 we completed the MGT transaction. Repayment of the $36 million note payable is
based on a fixed U.S. dollar per metric ton quantity of MGT delivered by us to ATTM over time and therefore
the ultimate maturity date is variable in nature. If ATTM fails to purchase MGT from us under certain
contractually agreed upon conditions, then at our election we may terminate the MGT supply agreement with
ATTM and will no longer owe any amount under the loan agreement with Cristal. We currently estimate the
ultimate maturity to be between approximately five and six years, subject to actual future MGT production
levels. The interest rate on the note payable is based on the SAIBOR plus a premium. As of December 31, 2021,
the outstanding balance of the note payable was $33 million, of which $7 million is expected to be paid within
the next twelve months. During the year ended December 31, 2021 and 2020, Tronox recorded interest expense
of $1 million and nil, respectively, related to the MGT Loan, which is recorded in ‘‘Interest expense’’ on the
Consolidated Statement of Operations. During the year ended December 31, 2021 and 2020, Tronox recorded
$4 million and nil, respectively, for MGT Loan repayments to Cristal that is recorded within ‘‘Net sales’’ on the
Consolidated Statement of Operations.
As a result of these transactions we have entered into related to the MGT assets, Tronox recorded $8 million
and $5 million for purchase of chlorine gas for the years ended December 31, 2021 and 2020, respectively, from
ATTM and such amounts are recorded in ‘‘Cost of goods sold’’ on the Consolidated Statement of Operations.
The amount due to ATTM as of December 31, 2021 and 2020, for the purchase of chlorine gas was $1 million
and $3 million, respectively, and is recorded within ‘‘Accrued liabilities’’ on the Consolidated Balance Sheet.
During the year ended December 31, 2021 and 2020, Tronox recorded $31 million and $25 million,
respectively, for MGT sales made to AMIC. The MGT sales are recorded in ‘‘Net sales’’ on the Consolidated
Statement of Operations. At December 31, 2021 and December 31, 2020, Tronox had a receivable from AMIC of
$6 million and $7 million, respectively, from MGT sales that is recorded within ‘‘Prepaid and other assets’’ on
the Consolidated Balance Sheet.
25. Segment Information
We operate our business under one operating segment, Tronox, which is also our reportable segment. The
Company’s chief operating decision maker, who are its Co-CEOs, reviews financial information presented at the
consolidated level for purposes of allocating resources and evaluating financial performance. Since we operate
our business under one segment, there is no difference between our consolidated results and segment results.
We disaggregate revenue from contracts with customers by product type and geographic area as well as
sales based on country of production. We believe this level of disaggregation appropriately depicts how the
nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors and
reflects how our business is managed.
During 2021, 2020 and 2019 our ten largest third-party customers represented 28%, 32%, and 31%,
respectively, of our consolidated net sales. During 2021, 2020, and 2019, no single customer accounted for
10% of our consolidated net sales.
Net sales to external customers based on country of production, were as follows:
Year Ended December 31,
2020
2019
2021
U.S. operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International operations:
United Kingdom. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Saudi Arabia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other - international. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 716
$ 653
$ 676
396
873
441
420
726
301
637
330
269
568
218
674
370
218
486
Total net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,572
$2,758
$2,642
See Note 5 for further information on revenues.
106
There is no difference between the total consolidated assets of continuing operations and our segment assets.
Property, plant and equipment, net, mineral leaseholds, net, and lease right of use assets, net by geographic
region, were as follows:
U.S. operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International operations:
December 31,
2021
2020
$ 251
$ 261
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Saudi Arabia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other - international . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
97
241
705
1,000
248
101
262
768
995
256
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,542
$2,643
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision of and with the participation of Tronox’s management, including our Co-CEOs and
CFO, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as
such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended)
(the ‘‘Exchange Act’’), as of December 31, 2021, the end of the period covered by this report. Based on that
evaluation, our co-CEOs and CFO have concluded that the Company’s disclosure controls and procedures were
effective as of that date. Tronox’s disclosure controls and procedures are designed to ensure that information
required to be disclosed by Tronox in the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and
that such information is accumulated and communicated to Tronox’s management, including Tronox’s co-CEOs
and CFO, or other person performing similar functions, as appropriate to allow timely decisions regarding
required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Management of Tronox Holdings plc and its subsidiaries is responsible for establishing and maintaining
adequate internal control over financial reporting. Internal controls over financial reporting is a process designed
under the supervision of our interim principal co-executive officers and principal financial officer to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s
financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
Our internal controls over financial reporting include those policies and procedures that:
•
•
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with U.S. generally accepted accounting principles, and that our
receipts and expenditures are being made only in accordance with authorizations of the Company’s
management and directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use
or disposition of our assets that could have a material effect on the financial statements.
Management assessed the effectiveness of our internal controls over financial reporting as of December 31,
2021. In making this assessment, management used the criteria in Internal Control-Integrated Framework (2013)
set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our
assessment using those criteria, management concluded that our internal control over financial reporting as of
December 31, 2021 was effective.
107
Because of its inherent limitations, internal controls over financial reporting may not prevent or detect
misstatements. 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.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2021 has
been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their
report, which appears in Item 8 of this Form 10-K.
Changes in Internal Control Over Financial Reporting
There have been no changes to our internal control over financial reporting during the quarter ended
December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
108
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Information about our executive officers as of February 22, 2022:
NAME
POSITION
John D. Romano
Jean-Francois Turgeon
Timothy Carlson
Jeff Engle
Russell Austin
Jeffrey Neuman
D. John Srivisal
Melissa Zona
Jennifer Guenther
Jonathan P. Flood
Co-Chief Executive Officer
Co-Chief Executive Officer
Senior Vice President, Chief Financial Officer
Senior Vice President, Commercial and Strategy
Senior Vice President, Operations
Senior Vice President, General Counsel and Secretary
Senior Vice President, Business Development and Finance
Senior Vice President, External Affairs and Chief Sustainability Officer
Vice President, Head of Investor Relations
Vice President, Controller and Principal Accounting Officer
Information about members of our Board of Directors as of February 22, 2022:
NAME
CURRENT OCCUPATION
Ilan Kaufthal
Mutlaq Al-Morished
Vanessa Guthrie
Peter B. Johnston
Ginger M. Jones
Stephen Jones
Moazzam Khan
Sipho Nkosi
John Romano
Jean-Francois Turgeon
Chairman of the Board, Tronox Holdings plc; Eastwind Advisors
CEO, TASNEE
Former Managing Director and Chief Executive Officer, Toro Energy Limited
Former Interim CEO, Tronox Limited; Former Global Head of Nickel Assets, Glencore
Former Senior Vice President and CFO, Cooper Tire & Rubber Company
Former President and CEO, Covanta Holding Corporation
Managing Director, Cristal International Holdings BV
Former CEO, Exxaro Resources Limited
Co-Chief Executive Officer, Tronox
Co-Chief Executive Officer, Tronox
Other information regarding our executive officers, members of the Board of Directors, including its audit
committee and audit committee financial experts, as well as information regarding our Code of Ethics and
Business Conduct that applies to our co-Chief Executive Officers and senior financial officers, will be presented
in Tronox Holding plc’s definitive proxy statement for its 2022 annual general meeting of shareholders, which
will be filed not later than 120 days after the end of the fiscal year covered by this Annual Report on
Form 10-K, under the headings ‘‘Proposal 1 - Election of Directors’’ and ‘‘Code of Ethics and Business
Conduct’’ and is incorporated herein by reference.
Item 11.
Executive Compensation
Information regarding executive officer and director compensation will be presented in Tronox Holdings
plc’s definitive proxy statement for its 2022 annual general meeting of shareholders, filed not later than 120 days
after the end of the fiscal year covered by this Annual Report on Form 10-K, under the headings ‘‘Human
Resources and Compensation Committee Interlocks and Insider Participation’’, ‘‘2021 Non-Employee Director
Compensation’’ and ‘‘Compensation Discussion and Analysis’’ and is incorporated herein by reference.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters
Information regarding security ownership of certain beneficial owners and management and related
shareholder matters will be presented in Tronox Holdings plc’s definitive proxy statement for its 2022 annual
general meeting of shareholders, filed not later than 120 days after the end of the fiscal year covered by this
Annual Report on Form 10-K, under the heading ‘‘Security Ownership of Certain Beneficial Owners’’ and is
incorporated herein by reference.
109
Equity Compensation Plan Information
The following table provides information as of December 31, 2021 regarding securities issued under the
Tronox Holdings plc Amended and Restated Management Equity Incentive Plan (the ‘‘Tronox Holdings plc
MEIP’’).
Number of securities
to be issued upon
exercise of
outstanding
restricted share
units and options
Weighted-average
exercise price of
outstanding
options(1)
Number of securities
remaining available
for
future issuance
under
equity compensation
plans (excluding
securities reflected in
the second column)(2)
Equity compensation plans approved by security
holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,871,272
Equity compensation plans not approved by
security holders . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,871,272
$22.13
—
$22.13
8,129,023
—
8,129,023
(1)
(2)
Because there is no exercise price for restricted share units, such awards are not included in the weighted-average exercise price.
Each restricted share unit awarded under the Tronox Holdings plc MEIP was granted at no cost to the persons receiving them and
represents the contingent right to receive the equivalent number of ordinary shares.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Information regarding certain relationships and related transactions and director independence will be
presented in Tronox Holdings plc’s definitive proxy statement for its 2022 annual general meeting of
shareholders, filed not later than 120 days after the end of the fiscal year covered by this Annual Report on
Form 10-K, under the heading ‘‘Certain Relationships and Related Transactions’’ and is incorporated herein by
reference.
Item 14.
Principal Accounting Fees and Services.
Information regarding principal accounting fees and services will be presented in Tronox Holdings plc’s
definitive proxy statement for its 2022 annual general meeting of shareholders, filed not later than 120 days after
the end of the fiscal year covered by this Annual Report on Form 10-K, under the heading ‘‘Fees Paid to
Independent Registered Public Accounting Firm’’ and is incorporated herein by reference.
110
PART IV
Item 15.
Exhibits, Financial Statement Schedules.
(a) The following documents are filed as part of this Annual Report on Form 10-K:
1. Consolidated Financial Statements
Reference is made to the Index to Consolidated Financial Statements and Consolidated Financial Statement
Schedules appearing at ‘‘Item 8. Financial Statements and Supplementary Data’’ in this report.
2. Consolidated Financial Statement Schedules
All financial statement schedules are omitted as they are inapplicable, or the required information has been
included in the consolidated financial statements or notes thereto.
3.
Exhibits
(b) The exhibits listed in the following table have been filed with, or incorporated by reference into, this Annual
Report on Form 10-K.
2.1
2.2
2.3
2.4
2.5
3.1
4.1
4.2
4.3
4.4
4.5*
10.1*
10.2*
Transaction Agreement, dated as of February 21, 2017, by and between Cristal, Tronox Limited and
Cristal Inorganic Chemicals Netherlands Coöperatief W.A. (incorporated by reference to Exhibit 2.1 of
the Current Report on Form 8-K filed on February 21, 2017).
Amendment No. 1 to Transaction Agreement, dated as of March 1, 2018, by and among The National
Titanium Dioxide Company Limited, Tronox Limited and Cristal Inorganic Chemicals Netherlands
Coöperatief W.A. (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed on
March 1, 2018).
Amendment No. 2 to Transaction Agreement dated March 28, 2019, by and among The National
Titanium Dioxide Company Limited, Tronox Limited, and, solely for certain purposes, Cristal
Inorganic Chemicals Netherlands Coöperatief W.A. (incorporated by reference to Exhibit 2.1 of the
Current Report on Form 8-K filed on April 2, 2019).
Stock Purchase Agreement, dated as of March 14, 2019, by and among Tronox Limited, INEOS AG
and INEOS Joliet US Holdco, LLC (incorporated by reference to Exhibit 2.1 of the Current Report on
Form 8-K filed on March 19, 2019).
Agreement for the sale and purchase of Tizir Titanium & Iron AS, dated as of May 14, 2020, by and
between Tronox Holdings plc, Tronox Titanium Holdings AS, Tizir Limited and Eramet S.A.
(incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K/A filed on May 14, 2020)
Articles of Association of Tronox Holdings plc (incorporated by reference to Exhibit 3.1 of the Current
Report on Form 8-K filed on March 27, 2019).
Specimen ordinary share certificate of Tronox Holdings plc (incorporated by reference to Exhibit 4.1
of the Current Report on Form 8-K filed on March 27, 2019).
Shareholders Agreement, dated April 10, 2019, by and between Tronox Holdings plc, Cristal Inorganic
Chemicals Netherlands Coöperatief W.A., The National Titanium Dioxide Company Limited, Gulf
Investment Corporation and Dr. Talal Al-Shair (incorporated by reference to Exhibit 4.1 of the Current
Report on Form 8-K filed on April 11, 2019).
Description of Securities of the Registrant (filed herewith).
Indenture, dated as of May 1, 2020 among Tronox Incorporated, the Company and the other guarantors
named therein and Wilmington Trust, National Association, as trustee (incorporated by reference to
Exhibit 4.1 of the Current Report on Form 8-K filed on May 1, 2020).
Indenture, dated as of March 15, 2021, among Tronox Incorporated, Tronox Holdings plc and the
guarantors named therein and Wilmington Trust, National Association, as trustee (incorporated by
reference to Exhibit 4.1 of the Current Report on Form 8-K filed on March 15, 2021).
Tronox Holdings plc Amended and Restated Management Equity Incentive Plan (incorporated by
reference to Exhibit 10.2 of the Current Report on Form 8-K filed on March 27, 2019).
Tronox Holdings plc Amended and Restated Annual Bonus Incentive Plan (incorporated by reference
to Exhibit 10.3 of the Current Report on Form 8-K filed on March 27, 2019).
111
10.3*
10.4*
10.5*
10.6*
10.7*
10.8
10.9
10.10
10.11
10.12*
10.13*
10.14*
14.1
21.1
23.1
Offer letter, dated November 7, 2019 by and between Tronox Holdings plc and Timothy Carlson
(incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on
November 12, 2019).
General form of executive officer Time-Based Restricted Share Unit Agreement (filed herewith).
General form of executive officer TSR Performance-Based Restricted Share Unit Agreement (filed
herewith).
General form of executive officer ROIC Performance-Based Restricted Share Unit Agreement (filed
herewith).
General form of Director Grant Restricted Share Unit Agreement (incorporated by reference to
Exhibit 10.3 to the Quarterly Report on Form 10-Q filed on May 4, 2017).
Form of Director Deed of Indemnification (incorporated by reference to Exhibit 10.4 of the Current
Report on Form 8-K filed on March 27, 2019).
Agreement for the Provision of Depositary Services and Custody Services, dated as of April 10, 2019,
in respect of Tronox Holdings plc Depositary Receipts among Computershare Trust Company, N.A.,
Tronox Holdings plc, Cristal Inorganic Chemicals Netherlands Coöperatief W.A. and all other holders
from time to time of depositary receipts issued in accordance herewith (incorporated by reference to
Exhibit 10.1 of the Current Report on Form 8-K filed on April 15, 2019).
Underwriting Agreement, dated February 24, 2021, by and among the Company, Exxaro Resources
Limited and J.P. Morgan Securities LLC, as representative of the several underwriters named therein
(incorporated by reference to Exhibit 1.1 of the Current Report on Form 8-K filed on March 1, 2021).
Amended and Restated First Lien Credit Agreement dated as of September 22, 2017 (as amended
through and including Mach 11, 2021) with a syndicate of lenders and HSBC Bank USA, National
Association, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 of
the Current Report on Form 8-K filed on March 11, 2021).
Retirement Agreement dated as of March 18, 2021 by and between the Company and
Mr. Jeffry N. Quinn (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K
filed on March 18, 2021).
Employment Agreement dated as of March 18, 2021 by and between the Company and
Mr. John D. Romano (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K
filed on March 18, 2021).
Employment Agreement dated as of March 18, 2021 by and between the Company and
Mr. Jean-Francois Turgeon (incorporated by reference to Exhibit 10.3 of the Current Report on
Form 8-K filed on March 18, 2021).
Tronox Code of Ethics and Business Conduct, effective March 27, 2019 (incorporated by reference to
Exhibit 14.1 of the Annual Report on Form 10-K filed on March 16, 2020).
Subsidiaries of Tronox Holdings plc. (filed herewith)
Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm for Tronox
Holdings plc. (furnished herewith)
Power of Attorney (filed herewith)
Rule 13a-14(a) Certification of John Romano. (furnished herewith)
Rule 13a-14(a) Certification of Jean-Francois Turgeon. (furnished herewith)
Rule 13a-14(a) Certification of Timothy Carlson. (furnished herewith)
Section 1350 Certification for John Romano. (furnished herewith)
Section 1350 Certification for Jean-Francois Turgeon. (furnished herewith)
Section 1350 Certification for Timothy Carlson. (furnished herewith)
Technical Report Summary on the Cooljarloo Australia operations (filed herewith).
Technical Report Summary on the Atlas and Campaspe Australia operations (filed herewith).
Technical Report Summary on the Namakwa Sands South Africa operations (filed herewith).
Technical Report Summary on the KZN Mineral Sands South Africa operations (filed herewith).
24.0
31.1
31.2
31.3
32.1
32.2
32.3
96.1
96.2
96.3
96.4
101.INS Inline XBRL Instance Document (filed herewith)
101.SCH Inline XBRL Taxonomy Extension Schema Document (filed herewith)
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith)
112
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)
104
The cover page from the Company’s Annual Report on Form 10-K for the year ended
December 31, 2021, which has been formatted in Inline XBRL, and included with Exhibit 101.
*
Indicates management contract or compensatory plan or arrangement.
Item 16.
Form 10-K Summary.
None.
113
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, on this
22nd day of February 2022.
SIGNATURES
TRONOX HOLDINGS PLC
(Registrant)
By:
Name:
Title:
/s/ Jonathan P. Flood
Jonathan P. Flood
Vice President, Controller and Principal Accounting
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
/s/ John Romano
John Romano
Title
Co-Chief Executive Officer, Director
(Principal Executive Officer)
/s/ Jean-Francois Turgeon
Jean-Francois Turgeon
Co-Chief Executive Officer, Director
(Principal Executive Officer)
Date
February 22, 2022
February 22, 2022
/s/ Timothy Carlson
Timothy Carlson
/s/ Jonathan P. Flood
Jonathan P. Flood
*
Ilan Kaufthal
*
Mutlaq Al-Morished
*
Vanessa Guthrie
*
Stephen Jones
*
Moazzam Khan
*
Peter B. Johnston
*
Sipho Nkosi
*
Ginger M. Jones
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
February 22, 2022
Vice President and Controller
(Principal Accounting Officer)
February 22, 2022
Chairman of the Board of Directors
February 22, 2022
Director
Director
Director
Director
Director
Director
Director
February 22, 2022
February 22, 2022
February 22, 2022
February 22, 2022
February 22, 2022
February 22, 2022
February 22, 2022
*By: /s/ Jeffrey Neuman
Jeffrey Neuman, Attorney-in-fact
Senior Vice President, General Counsel and
Secretary
February 22, 2022
114
[THIS PAGE INTENTIONALLY LEFT BLANK]
SHAREHOLDER INFORMATION
Tronox Holdings plc is a public
limited company incorporated
under the laws of England and
Wales. We have global operations
in North America, South America,
Europe, the Middle East, Africa,
Asia and Australia.
CORPORATE OFFICES
United Kingdom:
Laporte Road, Stallingborough
Grimsby, North East Lincolnshire
DN40 2PR
United Kingdom
United States:
263 Tresser Boulevard,
Suite 1100
Stamford, CT 06901
USA
+1 203.705.3800
This report is made available to
shareholders in advance of the
annual meeting of shareholders
to be held at 10 a.m. EDT, May 12,
2022. The proxy will be made
available to shareholders on or
about March 30, 2022, at which
time proxies for the meeting will
be requested.
Information about Tronox,
including financial information,
can be found on our website:
www.tronox.com.
STOCK LISTING
New York Stock Exchange
TICKER SYMBOL
TROX
TRANSFER AGENT
AND REGISTRAR
Computershare Trust Company, N.A.
SHAREHOLDER
SERVICES TELEPHONE
Toll-free: +1 800.736.3001
International: +1 781. 575.3100
SHAREHOLDER
CORRESPONDENCE
REGULAR MAIL
Computershare
Investor Services
P.O. Box 505000
Louisville, KY, 40233-5000
OVERNIGHT MAIL
Computershare Investor Services
462 South 4th Street, Suite 1600
Louisville, KY, 40202
SHAREHOLDER
EMAIL INQUIRIES
web.queries@computershare.com
ELECTRONIC ACCESS
www.proxyvote.com
Copies of the Tronox 2021
Annual Report and proxy
statement are available at
www.proxyvote.com
A copy of the company’s Form
10-K and other filings with the
U.S. Securities and Exchange
Commission are available at
investor.tronox.com.
CERTIFICATIONS
Tronox has included as Exhibits 31.1,
31.2, 31.3, 32.1, 32.2, and 32.3 to its
Annual Report on Form 10-K for fiscal
year 2021 filed with the Securities and
Exchange Commission certificates of its
co-Chief Executive Officers and Chief
Financial Officer certifying, among
other things, the information contained
in the Form 10-K.
Annually, Tronox submits to the
New York Stock Exchange (NYSE)
a certificate of Tronox’s co-Chief
Executive Officers certifying that they
were not aware of any violation by
Tronox of NYSE corporate governance
listing standards as of the date of the
certification.
SHAREHOLDER INFORMATION
Our website www.tronox.com
provides shareholders easy access
to Tronox’s financial results.
Shareholders may also contact
Jennifer Guenther, Vice President,
Investor Relations, at +1 646.960.6598.
Tronox and its operating unit
names, logos, and product service
designators are either the registered
or unregistered trademarks or trade
names of Tronox Holdings plc and
its subsidiaries.
This paper has been certified
to meet the environmental and
social standards of the Forest
Stewardship Council® (FSC®)
and from well-managed forests
and other responsible sources.
TRONOX HOLDINGS PLC AT A GLANCE
Our global operations are
positioned to meet our customers’
needs around the world.
Tronox Holdings plc is a public limited company
incorporated under the laws of England and Wales.
We are the world’s leading integrated manufacturer
of titanium dioxide pigment, sold under the TiONA®
brand. We operate titanium-bearing mineral sand mines
and beneficiation and smelting operations in Australia,
South Africa and Brazil to produce feedstock materials
that can be processed into titanium dioxide for pigment,
as well as high-purity titanium chemicals, including
titanium tetrachloride and CristalACTiV™ ultrafine
titanium dioxide. We consume a substantial part of
our feedstock materials in our own pigment facilities
in the United States, Australia, Brazil, United Kingdom,
France, the Netherlands, China and Saudi Arabia. The
mining, beneficiation and smelting of titanium-bearing
mineral sands creates meaningful quantities of zircon
that we also supply to customers around the world.
United Kingdom:
Laporte Road, Stallingborough
Grimsby, North East Lincolnshire
DN40 2PR
United States:
263 Tresser Boulevard, Suite 1100
Stamford, CT 06901