Tronox Holdings plc

In fiscal 2023, we continued to experience an extremely difficult operating environment. End-market demand for TiO 2 and zircon did not recover to the levels initially anticipated at the beginning of the year and our full-year results reflected industry and macroeconomic challenges. Despite these challenges, we continued to maintain industry best-in-class EBITDA margins as compared to our direct TiO 2 pigment western peers, proactively took steps to manage working capital and reduce inventory levels by adjusting production levels, and continued to invest in our long-term strategic vision of remaining the world’s leading vertically integrated producer of TiO 2.

2023 Highlights

Executive Succession Planning

In 2023, the Board successfully executed on its succession plan with the retirements of Jean-Francois Turgeon as Co-CEO and Tim Carlson, as CFO. When Jean-Francois decided to retire effective April 1, 2024, the Board believed that the time was right to move to a unified leadership structure with John Romano as sole CEO. Mr. Romano has been part of the Tronox organization for over 35 years and the Board is confident that with his strategic, global mindset, deep understanding of our industry and customers, and a clear vision for Tronox, he is the right CEO to lead the Company into the future.

In addition, with Mr. Carlson’s retirement as CFO, effective April 1, 2023, John Srivisal, the Company’s then SVP, Business Development and Finance, was appointed the Company’s new CFO. Mr. Srivisal’s proven track record as a leader overseeing our financial planning and analysis team and experience navigating complex capital markets makes him a worthy successor to Mr. Carlson.

Key Strategic Projects

In terms of strengthening vertical integration, 2023 saw the commencement of a significant new mine in Eastern Australia called Atlas Campaspe. The Atlas mine has replaced feedstock supply from our Snapper / Ginkgo mines in Eastern Australia which are expected to cease mining operations in the first half 2024. We believe Atlas is abundant in natural rutile and zircon, and will be a significant source of high grade ilmenite suitable for direct use, synthetic rutile production, or slag processing. The investment in Atlas is expected to generate returns above the Company's cost of capital and sustain Tronox's position as a leading low-cost producer. In addition, we are continuing to evaluate opportunities to leverage our expertise in mining and the exposure we have to rare earth materials, including monazite, through our operations.

Strengthening our Balance Sheet

In addition to returning approximately $89 million in cash to shareholders in the form of dividends and investing approximately $261 million of capital during 2023, Tronox continued to prudently manage liquidity and its balance sheet by undertaking a $350 million incremental term loan. We believe the added liquidity will enable key capital investments, primarily expansion projects for mines reaching end of life in South Africa. The absence of any significant principal repayments on our outstanding indebtedness until 2028 should give shareholders further confidence in the strength of our balance sheet. Finally, we have access to ample liquidity. At the end of 2023, we had cash on hand of $273 million and untapped short-term borrowing capacity of $488 million.

Progress in Reducing our Carbon Footprint

A 200 MW solar energy project in South Africa we first announced in Q1 2022 commenced operations in early 2024 and, in March 2024, we started to receive power from such project. We expect such project to be fully on-line in the first half of 2024. Not only is the project one of South Africa’s largest renewable power projects which will help address the country’s chronic electricity shortage, but it also will reduce Tronox’s global Scope 1 and 2 emissions by approximately 13%. The solar project also provides a substantial economic boost to a region of South Africa plagued by chronic poverty and social unrest. Management regards this as a substantial achievement. On top of our large-scale solar project, we anticipate announcing during 2024 a wind power project also in South Africa. When we established our 2025 carbon reduction target of 35% we anticipated that this wind project would be on-line during 2025; however, the timeline for such project has been delayed by factors beyond the Company’s control. We now anticipate the timeline to achieve the 35% emissions intensity reduction by the end of 2025 will be updated to reflect our latest views on various project timelines, namely the second renewable power project in South Africa. Based upon our current emissions reduction roadmap, we are still confident that we can achieve 50% reduction in Scope 1 and 2 emissions intensity versus our 2019 baseline by 2030. We believe the Company’s determination to bring on-stream these significant renewable energy projects are just two examples of how Tronox is committed to being a leader when it comes to corporate sustainability and protection of the environment.

What We Do and How We Do It

We are the world’s leading vertically integrated manufacturer of TiO 2 pigment. We operate titanium-bearing mineral sand mines and beneficiation and smelting operations in Australia and South Africa to produce feedstock materials that can be processed into TiO 2 for pigment, high purity titanium chemicals, including titanium tetrachloride, and ultrafine TiO 2 used in certain specialty applications. Our strategy is to be vertically integrated and produce enough feedstock materials so as to be as self-sufficient as possible in the production of TiO 2 at our 9 pigment facilities located in the United States, Australia, Brazil, UK, France, the Netherlands, China and the Kingdom of Saudi Arabia. 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 TiO 2 customers throughout the world. The mining, beneficiation and smelting of titanium bearing mineral sands also creates meaningful quantities of co-products including zircon, pig iron and the rare-earth bearing mineral, monazite, which we also supply to customers around the world.

The following chart highlights our fully integrated business across the TiO 2 value chain.

Shareholder Engagement

At our most recent annual meeting of shareholders held on May 3, 2023, our Say-on-Pay advisory vote passed with the affirmative vote of approximately 99% of the votes cast and our Say-on-Pay advisory vote has passed with the affirmative vote of at least 96% for each of the last 5 years. We believe the positive 2023 Say-on-Pay advisory vote continued to reflect the focus and commitment by the Board and the Company’s Human Resources and Compensation Committee (the “HRCC”) to align our compensation program with the interests of our stakeholders.

During the past year and into 2024, we continued our practice of active engagement with shareholders on many levels. These interactions were aimed at providing insight and transparency into our financial results, operations and long-term strategy.

In terms of shareholder engagement specifically related to compensation, sustainability and governance, we invited our top shareholders to meet telephonically with our Board Chair and members of management in late 2023 and early 2024. Nine shareholders representing approximately 35% of our outstanding ordinary shares responded to our invitation and met with the Company.

At those meetings, we discussed a wide range of compensation and Environmental, Social and Governance (“ESG”) issues. In addition to expressing strong support for our governance and executive compensation practices, shareholders were also supportive and complementary of our CEO succession plan. We also previewed with them Mr. Romano’s new compensation package as sole CEO. Our shareholders were particularly complimentary of our decarbonization plans, especially the detail and specificity of our carbon emission reduction roadmap. Shareholders were understanding of the reasons that might cause us to delay achievement of our 2025 carbon emission reduction target. Board diversity was also a focus of shareholders. Shareholders reacted favorably to the Board’s intention to achieve 30% gender diversity by 2025.

Corporate Governance Highlights

The Board is committed to continually improving its corporate governance processes, practices and procedures. Our governance policies and structures are designed to promote the Board’s thoughtful oversight of Tronox’s business decisions and ensure intelligent risk-taking, with the goal of furthering our long-term strategic goal of being the world’s most vertically integrated and lowest cost producer of TiO 2 as well as becoming a sustainable mining and materials company.

Highlights include:

members, Dr. Vanessa Guthrie, to step down from the Tronox Board in February 2024 before the 2024 AGM due to a potential conflict of interest between a company on whose board she serves and Tronox;

Mutlaq Al-Morished, the two members appointed by Cristal Netherlands, our largest shareholder;

Executive Compensation Program Highlights

Our executive compensation program is designed to incentivize and motivate our executive officers to manage our business well over the long-term, to drive performance improvements, and to increase shareholder value. The incentive compensation elements of our program are designed to closely align the financial interests of our executive with those of our shareholders. Highlights include: