Elkem : annual report 2022

Annual report 2022

Dual-play growth & green leadership

Delivering your potential

We are Elkem

Advanced silicon-based materials shaping a better and more sustainable future

Elkem history Highlights Letter from the CEO The Elkem way The Elkem share Board of directors' report Board and management	Corporate governance Overview of main risk areas ESG report Taxonomy report Financial statements Contact

Elkem in brief

Who we are and what we do

Our divisions

Table of contents

45.9

NOK billion total operating income

28%

EBITDA margin

Elkem is one of the world's leading suppliers of advanced silicon-based materials shaping a better and more sustainable future. The company develops silicones, silicon products and carbon solutions by combining natural raw materials, renewable energy and human ingenuity. Elkem helps its customers create and improve essential innovations like electric mobility, digital communications, health and personal care as well as smarter and more sustainable cities.

Silicones

Elkem's history	8
Highlights	10
Elkem's value chain	14
Letter from the CEO	16
The Elkem way	20
Silicones	22
Silicon Products	24
Carbon Solutions	26
The Elkem share	30
Board of directors' report	34
Board and management	50
Corporate governance	52

>80%

renewable electricity

0

net zero emissions by 2050

With a strong track record since 1904, Elkem's global team of more than 7,300 people has a joint commitment to stakeholders: Delivering your potential. Elkem is listed on the Oslo Stock Exchange (ticker: ELK) where it is part of the OBX® ESG Index, a selection of 40 blue-chip companies demonstrating best Environmental, Social and Governance (ESG) practices.

Silicon Products

Carbon Solutions

Overview of main risk areas	68
Risk descriptions	70
ESG report	74
Introduction	76
The Elkem climate roadmap	80
ESG management	84
Environmental	96
Social	120
Governance	136
Third party verification	154
Taxonomy report	156
Financial statements	160
Consolidated financial statements	164
Notes to the consolidated financial statements	170
Financial statements - Elkem ASA	254
Notes to the financial statements - Elkem ASA	259
Declaration by the board of directors	291
Independent auditor's report	292
Alternative Performance Measures (APMs)	298

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Elkem history Highlights Letter from the CEO The Elkem way The Elkem share Board of directors' report Board and management	Corporate governance Overview of main risk areas ESG report Taxonomy report Financial statements Contact

Elkem's history

Foundation		Expansion		Internationalisation
→	Sam Eyde establishes Elkem		→	Producer of aluminium		→	International expantion;
→	Development of electrometal-		→	Partner with Alcoa			steel and ferroalloys
	lurgical processes		→	Rhöne-Poulenc is		→	Acquisition of Union Carbide
				established in 1948

1904		1950

Growth & specialisation

• Rhodia Silicones acquired by Bluestar in 2007, renamed Bluestar Silicones International (BSI)
• Elkem acquired by Bluestar in 2011
• Merger with BSI in 2015
• Spin-offof Elkem Solar

2000	2020

Dual-play growth and green leadership

• Record financial results in 2021 and 2022
• Solid balance sheet enables attractive dividend and growth investments

Innovation

• The Fiskaa Verk, Norway site is purchased in 1917 for experimental and research purposes
• Elkem patents the Söderberg electrode in 1918
• Elkem listed on Oslo Stock Exchange

Industrial giant		Portfolio optimisation
→	Elkem merges with		→	Sold metal business
	Christiania Spigerverk to		→	Acquisition of Icelandic Alloys
	become one of Norway's		→ Start-up of Elkem Solar
	largest companies		→ Elkem acquired by Orkla
→	Xinghuo plant is			and delisted from the Oslo
	established in 1968			Stock Exchange

Integration

• Becoming a global, integrated leader in silicon-based advanced material solutions
• Initial public offering: Re-listing on the Oslo Stock Exchange in 2018
• Integrated with and acquisition of Xinghuo and Yongdeng, with successful branch expansion at Xinghuo

• Well-positionedfor global megatrends like green transition and digitalisation
• Good portfolio balance between East and West - and upstream and downstream
• Awarded double A- scores from CDP on climate and forests
• Aiming to be one of the winners in the green transition
• Vianode, with Elkem as largest shareholder, investing NOK
  2 billion in battery materials plant

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	Elkem history Highlights Letter from the CEO The Elkem way The Elkem share Board of directors' report Board and management	Corporate governance Overview of main risk areas ESG report Taxonomy report Financial statements Contact

10 highlights from 2022

In 2022, Elkem delivered its best financial result in the company's 118-year history. Elkem benefitted from its robust business model and high market prices.

1Q-2022

• Elkem was awarded a platinum rating on sustainability transparency from EcoVadis, one of the world's largest and most trusted providers of sustainability ratings
• Elkem announced a partnership with Hydro and Altor to accelerate the growth of Vianode. Hydro and Altor to have 30% ownership each, while Elkem retained 40% ownership
• Elkem made a decision to invest NOK 150 million in a flagship R&I centre in Shanghai, China to meet the growing demand for advanced silicone products and technologies

3Q-2022

• In September, Elkem celebrated the opening of its new specialised silicones facility in York, S.C., USA for production of high purity silicone materials to medical implantable and pharmaceutical applications
• Elkem Silicones was declared 2022 R&D 100 Awards winner in Mechanical Materials category for safety and reliability for silicone solutions for electric vehicle thermal management
• Supported by Elkem, Hydro and Altor, Vianode made the decision to build the first phase production plant for advanced battery materials at Herøya, Norway

2Q-2022

• Elkem signed a new credit facilities agreement of EUR 1,000 million. The facilities agreement includes sustainability performance targets linked to health and safety and reduction of the group's product carbon footprint
• Elkem entered into new 7-year power contract in Norway starting from 2027 with an aggregate volume of 2.5 TWh

4Q-2022

• Elkem successfully placed a series of floating rate loans in the Schuldschein market, amounting to EUR 200 million
• Inauguration of the world's first carbon capture pilot for smelters in Rana, Norway, with main goal to verify the technology on industrial gases from smelters and other process industries
• Elkem awarded double A- scores from CDP for efforts on climate and forests, and B score on water security

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