Century Aluminum Q1 2025 Earnings Report

Century Aluminum EPS Results

• Actual EPS: $0.28
• Consensus EPS: $0.53
• Beat/Miss: Missed by -$0.25
• One Year Ago EPS: N/A

Century Aluminum Revenue Results

• Actual Revenue: $633.90 million
• Expected Revenue: $643.80 million
• Beat/Miss: Missed by -$9.90 million
• YoY Revenue Growth: N/A

Century Aluminum Announcement Details

• Quarter: Q1 2025
• Date: 5/7/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, May 7, 2025
• Conference Call Time: 5:00PM ET

Century Aluminum (NASDAQ:CENX) Company, together with its subsidiaries, engages in the production of standard-grade and value-added primary aluminum products in the United States and Iceland. It also owns and operates an alumina production facility in Iceland, and a carbon anode production facility in the Netherlands. The company was founded in 1995 and is headquartered in Chicago, Illinois.

Century Aluminum Q1 2025 Earnings Call Transcript

Key Takeaways

• Century generated $78 M of adjusted EBITDA in Q1, reduced net debt by $55 M and increased liquidity by $94 M, driven by strong working capital management and favorable market conditions.
• Strong market fundamentals featured realized LME prices of $2,553/t and regional premiums of $602/t (Midwest) and $336/t (Europe), with US billet shipments up 6.7% y/y as downstream customers shift supply chains back to the US.
• Operational highlights include full production resumption at Grundartangi after power curtailments, on-track capital projects at Jamalco (new steam turbine) and Sebree (carbon plant outage), and normalized performance at Mt. Holly.
• Second quarter outlook anticipates $80–90 M in adjusted EBITDA driven by higher regional premiums and lower energy costs, partly offset by $5–10 M raw materials headwinds and a one-time $10–15 M maintenance spend.
• Section 232 and reciprocal tariffs have bolstered the Midwest premium (expected to rise to $450–500/t) and accelerated supply‐chain reshoring, paving the way for Century’s planned new US smelter—the first in 50 years—to double domestic capacity.

Presentation

[Operator]

Good afternoon. Thank you for attending today's Century Aluminum Company First Quarter twenty twenty five Earnings Conference Call. My name is Micaiah, and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for your questions and answers at the end. At this time, I would like to pass the call over to our host, Ryan Crawford, Investor Relations.

[Operator]

Ryan, you may proceed.

[Ryan Crawford, Financial Planning & Analysis and IR Manager at Century Aluminum Company]

Thank you, operator. Good afternoon, everyone, and welcome to the conference call. I'm joined here today by Jesse Geary, Century's President and Chief Executive Officer and Peter Trzipkowski, Executive Vice President, Chief Financial Officer and Treasurer. After our prepared comments, we will take your questions. As a reminder, today's presentation is available on our website at www.centuryaluminum.com.

[Ryan Crawford, Financial Planning & Analysis and IR Manager at Century Aluminum Company]

We use our website as a means of disclosing material information about the company and for complying with Regulation FD. Turning to Slide one. Please take a moment to review the cautionary statements shown here with respect to forward looking statements and non GAAP financial measures contained in today's discussion. And with that, I'll hand the call to Jesse.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Thanks, Ryan, and thanks to everyone for joining. Just before we dive into the results today, I'd like to congratulate Pete Trebkowski on his recent promotion to CFO. Many of you have gotten to know Pete over his last twelve years at Century. He has extensive knowledge of the company's operations and a proven track record of success in every area that he's led. I have every confidence that his expertise and leadership will continue to drive Century's long term success as we move forward.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Congrats Pete. Okay. I'll start today by reviewing our first quarter results and the strong market conditions we've had so far in 2025. I'll then walk through our operational performance for the quarter and some initiatives we have planned for Q2. Pete will then take you through the details of the Q1 results and our second quarter outlook before we turn the call over for questions.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Sensory's safety performance got off to a good start in Q1 with improved outcomes at each location versus the last year. This is rewarding to see as we continue to invest substantial time and effort towards improving the safety culture at each of our locations. Safety is our number one priority and is fundamental to our high performance culture. Turning to financial results. Century generated $78,000,000 of adjusted EBITDA in the first quarter, driving a reduction in net debt of $55,000,000 and increasing liquidity by $94,000,000 Pete will walk you through the details here, but we are really pleased with the way the business performed and the excellent job the team did to bring working capital levels down in the quarter.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Overall, strong LME and rising Midwest premium offset higher energy prices in the first quarter. Realized LME prices averaged 2,553 in Q1, while realized Midwest and European premiums averaged $6.00 $2 and $336 in the quarter, respectively. Regional premiums have seen the most movement so far in Q2, with spot Midwest premium today sitting at close to $850 a tonne following the implementation of the Section two thirty two tariffs and spot ENEPP falling to roughly $200 a tonne. I'll provide some more color on the Section two thirty two and other tariffs to conclude the call. Turning to Slide four.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Cold winter temperatures led to higher realized market energy prices at Sebree in the first quarter. Prices have now returned to normalized levels in Q2. The polar vortex also led to unusually cold temperatures in South Carolina in Q1, which combined with generation outages led Santee Cooper to declare an emergency economic curtailment across its system, which affected Mount Holly. While this did not result in an interruption in power supply, it did contractually allow Santee to pass along higher emergency power rates to Mount Holly over several days. This is an extreme event, which we do not expect will occur in the future.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Turning to page five, as you can see in the top left graph, we expect constraints on new global supply to drive a global market deficit in 2025 of approximately 400,000 tonnes as China reaches its 45,000,000 tonne production cap. Global inventories have reached new lows of only forty six days so far in Q2. These low inventory levels, combined with continued demand growth, should be supportive of higher aluminum prices as we move forward in the year. We have seen increasing demand in The U. S.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Following the effectiveness of the revised Section two thirty two tariffs on aluminum in March, especially for domestically produced billets. Ensusers shipments were up 6.7% year over year in March as downstream customers look to shift supply chains back to The U. S. U. S.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Billet orders have remained strong so far into Q2. Turning to alumina. Global supplies recovered from the extreme tightness we saw at year end, with market prices returning to normalized levels over the quarter. Spot ATI prices are approximately $350 today. Turning to Page six, you can see that coke, pitch and caustic soda prices rose in the first quarter, but remain constructive at current price levels.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

HFO prices into Jamalco have fallen substantially recently in line with global oil prices, which should begin to roll through our results on a one month lag basis and help to offset some of the increased caustic soda prices at the refinery. Turning to operations. Our assets continue to deliver strong operating results in Q1. In Iceland, Grundartangi returned to full production levels in March following the end of the previously announced power curtailments in Iceland. The team did an excellent job bringing the additional pots back online safely.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

We are also very happy to announce that we reached an extension agreement with one of the largest power providers to the Gruner Tangi smelter called Owen Power to continue to supply the plant into 02/1932. It was a pleasure to work with Outne Haraldsen and his team to reach this good outcome, and we look forward to continuing working with ON for years to come.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Billet orders out of Grunutangi were a

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

bit lower than anticipated in Q1 as demand weakness in the European market continued. We are seeing a small uptick in European billet orders as we enter Q2, but we will need to see this continue before we consider the trend. Please just remember that the European billet market works a bit differently than The U. S, with the European market generally operating on a lagged spot price basis versus the annual contracts we are used to in The U. S.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

So Grundartangi will be well positioned to benefit from higher spot prices when European demand recovers. As discussed on the Q4 call, Mt. Holly did suffer some minor operational instability in Q4 as an excursion on the carbon side of the business increased operating costs and drove slightly lower production across the plant. Plant management has done a good job bringing production back to normalized levels, but it's taken a bit longer to bring the operational efficiencies back to where they should be. So this will remain a focus item as we progress through Q2.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

At Jamalco, we are focused on executing the major capital improvement program we have previously discussed to return the refinery to its nameplate capacity levels of close to 1,400,000 tonnes. The major focus item for this year is the installation of a new steam power generation turbine at the plant, which will enable Xamalco to be fully self sufficient in its power generation and lower its cost structure by reducing expensive third party power purchases. We remain on track to complete this project by year end and to begin realizing the cost savings from the project in Q1 twenty twenty six. Our evaluation process at Hawesville remains ongoing, with due diligence continuing among a group of interested parties. We will keep you updated on progress here as we move through the year and we expect to have a more fulsome update on our Q2 call.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Sebree had another excellent quarter in Q1 with quarter over quarter improvements across most operating KPIs, higher volume and lower operating costs. The continued strong performance at Sebri has given us the opportunity to bring forward some major maintenance in the carbon plant that we had originally planned for next year. During the quarter, we will take the green section of the carbon plant out of service and refurbish the anode press and ancillary equipment. By taking the outage now, it will reduce risk and improve reliability and operational performance of the carbon plant before we head into the hot summer months. The outage will drive a onetime increase in maintenance spend in the second quarter of about $10,000,000 This will obviously not repeat in Q3 or beyond, and we will reap the benefits of the increased reliability and operational security of this key area of the plant over the back half of twenty twenty five and beyond.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

With that, I'll turn it over to Pete to walk through the financials.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

Thank you, Jesse. It's great to be with all of you again, and I'm really excited to be taking on this expanded role. I'll start by walking you through our financial performance for the first quarter and end with providing our outlook for the second quarter. Century delivered solid results in Q1 with $78,000,000 in adjusted EBITDA. This is down modestly from Q4, primarily due to polar vortex linked weather conditions, impact on energy prices and onetime alumina costs, and partially offset by higher all in metal prices.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

The core fundamentals of our business remain strong as we move into the second quarter. Let's turn to Slide seven and review our Q1 performance. On a consolidated basis, first quarter shipments rose slightly, nearing 169,000 tonnes, an increase of 1% sequentially as all smelters were operating at their targeted utilization levels by quarter end. As Jesse mentioned, Iceland power curtailments were fully lifted in March, allowing us to ramp up our Grundartangi smelter back to full production. At Jamalco, we had a strong start to the year producing our highest quarterly volume in Q1 since we acquired the refinery in 2023.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

Going forward, we remain focused on achieving lower cost of production as we continue to invest in our capital improvement program there, which I'll talk about in a few minutes. Net sales for the quarter were $634,000,000 a $3,000,000 increase due to higher metal volume and all in metal pricing, partially offset by lower third party alumina sales. For the quarter, we reported net income of $30,000,000 or $0.29 per share. Our adjusted net income was $37,000,000 or $0.36 per share, including an adjustment of approximately $4,000,000 or $04 per share related to the emergency energy charges at Mt. Holly that Jesse previously discussed.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

Adjusted EBITDA was $78,000,000 for the quarter. As we've discussed, the Section two thirty two aluminum tariffs were increased to 25% with no country or product exemptions on March 12. The Midwest premium doubled soon after from approximately $0.20 preannouncement to nearly $0.40 postannouncement. Due to timing of the announcement, this partially benefited our first quarter result by 16,000,000 The full extent of the Midwest premium uplift and any additional upside will be realized in Q2 as pricing reflects a one month contractual lag. Moving on, we made meaningful progress to improve our balance sheet during the quarter.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

Liquidity increased to $339,000,000 up nearly $100,000,000 quarter over quarter, and our cash balance stood at 45,000,000 Net debt declined at $442,000,000 a reduction of $55,000,000 from fourth quarter positioning us well for continued capital discipline. The reduction in net debt and increased cash balances were funded by strong operating performance along with working capital improvements. Overall, our Q1 results continue to reflect operational discipline and steady commercial performance. Now let's turn to Page eight and I'll provide a breakdown of adjusted EBITDA results from Q4 to Q1. Adjusted EBITDA for the first quarter decreased $3,000,000 to $78,000,000 Realized LME of $2,553 per ton was up $91 per ton versus the prior quarter, while realized U.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

Midwest premium of $6.00 $2 per ton was up $165 per ton, and then realized European delivery premium remained flat at $336 per ton. Together, higher metal prices and regional premiums contributed an incremental $36,000,000 compared with the prior quarter. Energy costs were higher, driven by polar vortex linked cold temperatures that increased market prices for energy at our U. S. Operations and impacted adjusted EBITDA by $18,000,000 Alumina and our other raw materials was a $27,000,000 headwind quarter over quarter, in line with our previously provided outlook.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

As discussed on our last call, a force majeure event at our alumina supplier led to a onetime financial benefit in Q4 that did not repeat in Q1. As a result of the FM event, we procured additional alumina spot purchases at higher prices to mitigate shortfalls from the supplier. The impact of the higher price purchases flow through our results in Q1 due to our lag FIFO accounting method. We also recognized $4,000,000 in lower operating costs and a $2,000,000 benefit from volume and mix. Now let's turn to Slide nine for a look at cash flow.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

We began the quarter with $33,000,000 in cash and $78,000,000 of adjusted EBITDA provided a strong base. We also made substantial progress optimizing working capital, which contributed an additional $23,000,000 in cash. We strategically deployed these cash inflows across several priorities. We repaid $45,000,000 in short term debt as we remain focused on deleveraging the balance sheet. We also funded $16,000,000 of CapEx.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

This was anticipated and primarily focused on the Jamalco facility where we aim to bring a new steam turbine generator online by year end to increase power generation and lower production costs. We also paid $7,000,000 in normal interest and taxes in the quarter. We continue to accrue 45X production tax credits. As of March 31, we have a receivable of $173,000,000 related to full year 2023, '20 '20 '4 and the first quarter of twenty twenty five. We now expect to receive the first cash payment of fiscal year twenty twenty three credit during Q2.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

We ended Q1 with $45,000,000 in cash and strong liquidity in place to support our strategy going forward. Turning to Slide 10, let's look ahead to the next ninety days. At current realized prices, we expect Q2 adjusted EBITDA in the range of 80,000,000 to 90,000,000 For Q2, the lagged LME of $2,513 per ton is expected to be down about $40 versus Q1 realized prices. The Q2 lagged U. S.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

Midwest premium reflects a full quarter of the new tariff level and is expected to be $866 per ton, up $265 The European delivery premium is expected to be $220 per ton or down about $115 Taken together, the lagged LME and delivery premium changes are expected to have a $10,000,000 increase to Q2 adjusted EBITDA compared with Q1 levels. U. S. Energy prices have eased since the polar vortex light conditions in Q1 with U. S.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

Midwest Indiana hub prices already down approximately 15% compared with last quarter and we expect this to continue. Lower oil prices will also benefit the price of heavy fuel oil, a key input at our Jamalco refinery. At these prices, total energy tailwinds should contribute 10,000,000 Cope, pitch and caustic prices have all increased in recent months and are expected to result in a 5,000,000 to $10,000,000 headwind. We expect a one time increase to operating expenses of 10,000,000 to 15,000,000 split between normal planned summer labor increases and bringing forward the Green Mill outage at our Sebree, Kentucky facility that Jesse mentioned. Taking this maintenance outage now allows us to increase reliability at one of our best performing assets over the past few years.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

Volume and mix should contribute a 5,000,000 benefit. Finally, we also include the estimated hedge and tax impacts that are recorded below the line to help model our business. We expect a $5,000,000 headwind from realized hedge settlements and a similar amount from tax expense, both flowing through the Q2 P and L and impacting adjusted net income and adjusted earnings per share. As a reminder, our appendix details the full hedge book and continues to show the vast majority of LME and regional premium volumes are exposed to market prices as our investors have requested. We remain well positioned to navigate near term market dynamics and deliver long term value for our shareholders while executing on critical business priorities within our control.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

With that, I'll hand the call back to Jesse to talk in more detail about tariffs.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Thanks Pete. Just before we move to questions, I'd like to thank President Trump again for the significant actions that he and his administration have taken to restore American manufacturing and stand up for American workers. The Section two thirty two tariffs have truly enabled a new future for The US aluminum industry. Following the implementation of the Section two thirty two tariffs, we have seen the Midwest premium rise and stabilize around $0.39 There is some significant front running of foreign imports ahead of the March 12 effective date that temporarily raised US inventory levels and has pressured the Midwest premium below $0.40 while those inventories are consumed. We continue to believe that the Midwest premium will rise to the $0.45 to 0.5 range as those inventories are reduced over the next couple months.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

On April 2, President Trump took further actions to restore The US manufacturing base through implementation of the reciprocal tariffs. We have long prided ourselves on sourcing locally for each of our operations, and at Sebree and Mt. Holly, we continue to source most of our key cost inputs from American suppliers. In response to the president's groundbreaking actions, we have now taken further steps to shorten and secure the remainder of our major supply chains consistent with the intent of the reciprocal tariff program. I'm proud to say that the team has done a fantastic job, and we do not expect any material cost increases a result of the program.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

As the largest producer of primary aluminum in The United States, Century is doing its part to build and secure the aluminum production that is so essential to US national security needs. When complete, our new smelter project will represent the first new smelter built in The US in fifty years and will double the size of the existing US industry, creating over 1,000 full time direct jobs and over 5,500 construction jobs. We look forward to working with the Trump administration to make this industry changing project a reality. We are ready for your questions, and we'll now turn the call over to the operator.

[Operator]

Thank you. We will now begin today's Q and A session. The first question is from the line of Katja Jantzik with BMO Capital Markets. You may proceed.

[Katja Jancic, Analyst at BMO Capital Markets]

Hi, thank you for taking my questions. Maybe starting on the second quarter guide, The just to confirm, the incremental OpEx cost of 10,000,000 to $15,000,000 that is one time. So in other words, in 3Q, that should reverse.

[Katja Jancic, Analyst at BMO Capital Markets]

Correct?

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Hey, Katya. That's correct. That should be a onetime in q two.

[Katja Jancic, Analyst at BMO Capital Markets]

Maybe just to clarify, I I I thought last quarter some of the higher alumina costs were also onetime, which were expected to reverse. Is that not right? Because we there's no benefits for alumina. I don't see it.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Yeah. That's correct. There's It's correct that it's onetime. And the explanation is that given the significant volatility in the alumina pricing, It mostly relates to timing of vessels sold to third parties. So we did sell a very high priced vessel in Q1.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

And by the time we reached our vessel that we were going to sell into Q2, the price had fallen. So that most of that difference that you're seeing there, relates to timing of vessels. We saw a little bit of cost pressure to Malko, coming through in q two as well, and those are really account for most of that $10,000,000 there.

[Katja Jancic, Analyst at BMO Capital Markets]

Oh, and then maybe on the manufacturing credit receivable, I think you mentioned that some of it is gonna be received in February. Can you provide how much you're expecting to receive? And then how we should think of the remaining receivables when though that cash should come through?

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

Yeah. Hey, Katya. It's Pete. If you remember back on the past few calls, we provided an overall annual estimate of 70,000,000 to $80,000,000 as it relates to the 45x production tax credits, which are owed to us by the US government. So now, as I said on the call, we expect to receive about 60,000,000 of our FY 'twenty three amount in Q2.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

As you also may recall, at the end of last year, carbon costs weren't made eligible for the production tax credit until late last year. So the remaining incremental $20,000,000 for a total of $80,000,000 is expected later this year or early next year.

[Katja Jancic, Analyst at BMO Capital Markets]

And then similar for the rest, what you're going to be receiving through this year, it's always gonna come in the second quarter?

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

No. It we typically file around, you know, the the end of the the first quarter into the beginning of the second quarter, And you could expect in normal reoccurring timeline that we'll get our proceeds from that three to six months thereafter.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

What Pete is saying, Katya, you could potentially see that the $20.24 amounts coming through in late twenty twenty five or early 'twenty six.

[Operator]

Thank you. The next question is from the line of Nick Giles with B. Riley Securities. You may proceed.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

Thank you, operator. Good afternoon, everyone. First, Pete, I wanted to say, congratulations on stepping in on the new role. That's well deserved. My first question, great to see your net debt move down and your liquidity has moved above your target range.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

So I wanted to confirm whether reducing debt remains the the top use of excess cash. And, you've touched on some of this already, but are there any other cash flow considerations we should keep in mind as we as we try to model out the balance of the year?

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Hey, Nick. No. You pretty much got it. In the near term, we'll continue to prioritize paying down those debt levels, while also continuing on the existing CapEx programs that we've already talked to you about. So priority as those additional cash amounts come in, we will remain bringing down debt levels.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

Thanks for that. And my next one was, you mentioned some cost pressure pressures at your Malco in 1Q and wanted to use that as an opportunity to get an update on the operations there. I mean, do you feel that there are, further cost improvements to be made that might not be reflected in in your guidance today? And then can you just remind us of any additional capacity and, ultimately, requirements?

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Yeah. Absolutely, Nick. Great question. Yeah. It was relatively minor in in q one on the

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

cost

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

pressure side Asset continues to operate well. And as we mentioned, it actually hit its highest quarterly volume levels in Q1 since we've owned the asset. So the team is doing a good job driving improvements, just a little noise on the cost side in Q1 That should hopefully continue to reduce throughout the year. Over the long term, we continue to believe we'll be able to take that asset into the second quartile of the cost curve. And to do that, we need to execute on our CapEx program there, which we both Pete and I talked about.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

The next step being the introduction of the steam generation turbine, which hopefully will be done by the end of the year. And you'll start to see the benefits of that immediately because we'll reduce our third party power purchases, hopefully, starting in Q1 of twenty twenty six. So lots of good news to come in the future at Jamalco. We continue to think that's going to be a really good asset for us. And it's just a matter of time and executing on our CapEx programs to get where we want to be.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Then to your last question, which is on the volume side, it's operating near that 1,200,000 tonne level that we've been targeting today. And with this CapEx program over the next couple of years, we continue to believe we'll creep it up towards its nameplate capacity of 1,400,000 tons.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

Jesse, I really appreciate you addressing all those questions. I know there were a few in there. Just to clarify, have you quantified the benefit on the cost side of the turbines later this year?

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

We haven't. And as we get that done and as we move into 2026 and begin to talk about the 2026 outlook, we'll begin to give you a little bit more color around that.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

Great. Alright. Well, guys, keep up the good work, and I'll I'll jump back in the queue for now. Thanks.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

Thanks, Nick.

[Operator]

Thank you. The next question is from the line of John Tumazos with Berry Independent Research. You may proceed.

[John Tumazos, Owner and CEO at John Tumazos Very Independent Research]

Thank you very much. 46 of the last forty nine weeks total exchange inventories have fallen. Clearly, the LME price dipping to $1.00 7 per pound anticipates a demand fall with the tariffs and trade war. When do you expect an inflection point where lower demand would cause exchange inventories to rise suggesting the metal surplus that the LME price is anticipating?

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Thanks, John. Great question. Obviously, there's a lot of speculation out there. As I said in my prepared remarks, we actually haven't seen any of that yet to date. We've actually seen relatively strong demand, especially in The U.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

S. As a lot of our customers have been nearshoring their supply chains. And so that's been especially strong on the billet demand side. Europe hasn't weak, but that was, you know, weak for a while. Over the past couple of years, we're actually starting to see a small uptick there.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

None that's called a trend, but enough to be a bit hopeful. So we continue to think, at least on the premium side, things look pretty good, but we're cognizant of of the volatility that's out there and and are watching it closely. But net net, as I said in my prepared remarks, we still see a small deficit this year, we expect that deficit to grow going forward rather than than increase as you positive.

[John Tumazos, Owner and CEO at John Tumazos Very Independent Research]

Over the last three years of the Ukraine war, there were three I don't know if the right word is incidents or episodes when very large deliveries of Roussall metal were made in the LMA warehouses in Asia that replenish supply. Since April, the Roussall metal is not eligible or produced since April. How would you think mechanically the exchange inventories get replenished? Chinese deliveries, Russel restarting production. Mechanically, where do you think the new supply is going to arise?

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

It's a complicated question, John, and one that depends on a lot of geopolitics, obviously. Just remember that the Russians are sanctioned by The US today, and Europe has increased sanctions on the Russians recently that will continue to to further bite as we move into 2026, way they're structured. So that's a difficult question on the Russian side, and we'll wait to see and watch how the sanction policy manifests itself. In terms of, if I take your question at a broader level, where the marginal units are coming from, As I mentioned, we're actually projecting that we stay in deficit. So we don't actually necessarily see those inventories replenishing.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Quite the opposite. We potentially see inventories continuing to to decrease, global inventories decreasing over over time. So the way we see it, we continue to believe aluminum prices will continue to rise in the near to medium future and certainly over the long run.

[John Tumazos, Owner and CEO at John Tumazos Very Independent Research]

If you could bear with me one more, Jesse. Alumina shortage reversed in November to surplus. And if the IAI statistics are accurate, in the first quarter, the surplus margin was 2.2% more metallurgical alumina than 1.92 times world smelter output, which is a considerable margin. Do you expect alumina refineries to close to balance the market? Or do you expect alumina will find its way from China, Vietnam, India to feed results capacity and the Chinese will choose to open to produce more metal rather than close refineries?

[John Tumazos, Owner and CEO at John Tumazos Very Independent Research]

And further, there's more refineries on the drawing board in India and Indonesia and even in China that could increase the alumina surplus. How do you think this plays out?

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Yeah. O over time, when you look back, the aluminum market has actually been fairly disciplined in curtailing capacity when the price is syndicated. And so our expectation would be that you would start to see closures at price levels if if price levels go low enough to to demand that. You did see a little bit of that as the aluminum price went lower and then bounced higher more recently. And so we're back around that $3.50 level on per ton on the API.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

But our expectation would be you will see closures if if alumina price continues to fall or to match increasing supply over time. The

[Operator]

next question is from the line of Nick Giles with B. Riley Securities.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

In your 2Q guide, you outlined a 5,000,000 to $10,000,000 hit on raw materials. But when I try to do the back of the napkin compared to your 1Q guide, using your sensitivities, I get closer to an annual hit of this magnitude, not a quarterly impact. So I just wanted to see if I'm missing something or if there's anything in the one q print that would have been different from your initial guide.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

Hey, Nick. It's Pete. I can kinda give you a quick update on that. So what we've shown on the page is is the Coke pitch and caustic price realizations that we expect across our smelters and our refinery. Coke is is starting to see price increases as well as pitch and caustic.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

So if you take the sensitivities that we have in our appendix, and and we can we can help with the modeling of this. For the quarter, it's it's at least 5 to 7,000,000. For the for the guide, we said 5 to 10,000,000 for raw materials. So there's some other pluses and minuses within this bucket, but we try to just show you here what we have in our sensitivities. So for the three in total, Coke, pitch, and caustic, all seeing some temporary price headwinds.

[Peter Trpkovski, EVP, CFO & Treasurer at Century Aluminum Company]

And the sensitivities for the quarter, we can help you with the math and the modeling, but it equates to about 5 to 7,000,000.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

No. That makes sense, Pete. I appreciate that. And I'll take I'll certainly take you up on that. My my last one, if I could.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

You know, when we think about the new aluminum smelter, can you just remind us of what some of the key milestones are? What would be the earliest that you could deploy meaningful capital towards the project?

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Yes. Thanks, Nick. Great question. And we remain really excited about the project. We're working really hard.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

The next two key milestones, which are linked, are to finalize negotiations of the power arrangements. And then following from that and driven from that, we'll be making a site selection. And then the next phase after that is actually further engineering work, which will take you into 2026 before you start to see any significant, CapEx spend for the project.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

Got it. And just as far as the project's competitiveness, I mean, we really, I can't imagine a more favorable environment for a a domestic producer like Century. So is there anything that could change or unwind such as the such as a Canadian exemption for section two thirty two that would, in your mind, change the the competitiveness of the project, or do you feel like the the project will, stand on its own two feet, even if we were to see such an exemption?

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Yeah. As you might imagine, we're taking very long term, like, disciplined view on the returns for a project of this side size. And so we're not modeling for a year or two out. We're modeling for a very long life lifespan for what will be a fifty year asset once built. And so when we look at that, we're looking at very long term trends.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

But obviously, the current market environment is a great as you said, is a very constructive environment to find ourselves in when considering a project. And in that, I include the political environment and the dedication of this administration towards reshoring manufacturing. So we think this is the the exact type of project that this administration wants to see, and we continue to think that the policy coming out of this administration will continue to, be supportive of the project.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

Good to hear, guys. Again, keep up the good work.

[John Tumazos, Owner and CEO at John Tumazos Very Independent Research]

Thanks, Nick.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

Thanks, Nick.

[Operator]

There are currently no questions registered. So as a reminder, it is star one to ask a question. There are no registered questions at this time. I'd like to pass the call back over to Ryan for any further remarks.

[Jesse Gary, President, Chief Executive Officer & Director at Century Aluminum Company]

This is Jesse. I'll just say thanks everyone for joining the call, and we look forward to talking to you next in August. Have a good summer, everybody.

[Operator]

Thank you all. That will now conclude today's call. We appreciate your participation. Hope you have a wonderful day, and you may now disconnect your line.

Participants

Executives

• Ryan Crawford, Financial Planning & Analysis and IR Manager
• Jesse Gary, President, Chief Executive Officer & Director
• Peter Trpkovski, EVP, CFO & Treasurer

Analysts

• Katja Jancic, Analyst at BMO Capital Markets
• Nick Giles, Senior Research Analyst at B.Riley Securities
• John Tumazos, Owner and CEO at John Tumazos Very Independent Research