Page 30 - 2023 Sustainability Report

COMPANY OVERVIEW

In November 2021, President Biden signed into law the Infrastructure Investment and Jobs Act (IIJ Act), which provides
billions of dollars in new funding for public transit and clean energy projects intended, in part, to address climate change,
including road, bridge and other major infrastructure projects. These projects, as well as new public transit and clean
energy projects, require aggregates and cement for construction and may result in increased demand for the Company’s
products. See Climate-Related Opportunities section for additional information.

Although it is impossible to determine the actions the federal government will ultimately take to implement climate change-
related orders, commitments and laws, or the full scope, timing or ramifications of such measures, the United States, like
other signatories to the Paris Agreement, is currently pursuing a goal of a Net Zero GHG by 2050. It is also possible that the
USEPA and other agencies will use their rule-making authority and procurement decisions to further address climate change.
Various states where the Company has operations have enacted or are considering climate change initiatives as well, and the
Company has been and may continue to be subject to state regulations in addition to any federal laws and rules that are
passed. In October 2023, California adopted its California Climate Accountability Package which requires annual reporting of
Scope 1, Scope 2 and Scope 3 emissions on a phased-in implementation schedule for certain companies, climate-related risk
reporting for certain companies and heightened disclosure standards around net zero emissions claims, carbon-neutral claims
or significant GHG emissions reduction claims and the purchase or use of voluntary carbon offsets used to achieve those
claims. These rules have been challenged and may be challenged in the future by various groups and the Company cannot
reasonably predict the ultimate resolution of such challenges at this time. In addition, certain other states are enacting laws
and regulations that seek to eliminate the consideration of climate-related matters in state pension fund investment decisions
and other company programs. These and other state climate-related or ant-climate, social and governance regulations may
result in significantly higher compliance costs and risks.
If and when the USEPA issues new regulations and/or Congress passes additional legislation restricting GHGs emissions,
the Woodville, Ohio and Manistee, Michigan Magnesia Specialties operations, as well as the Company’s one remaining
cement plant in Texas, which release CO in certain of their processes and use carbon-based fuels for power equipment,
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kilns and the Company’s mobile feet, will likely be subject to these new regulations. The Company’s cement operations,
like those of other cement producers, require combustion of significant amounts of fuel to generate high kiln
temperatures and create carbon dioxide as a product of the calcination process, which is presently an unavoidable step in
making clinker, the essential component for the production of cement. Accordingly, the Company continues to closely
monitor GHG regulations and legislation and its potential impact on the Company’s cement business, financial condition
and product demand. The Company anticipates that any increased operating costs or taxes relating to GHG emission
limitations at the Woodville or cement facilities would be passed on to customers. The magnesium oxide products
produced at the Manistee operation, however, compete against other products that, due to the form and/or structure of
the source material, require less energy in the calcination process, resulting in the generation of fewer GHGs per ton of
production. Due to GHG emissions requirements, the Manistee facility may be required to absorb additional costs,
including for taxes or capital investments, in order to maintain competitive pricing in that market. In addition, the cement
produced by the Company’s cement operations, like other U.S. producers, is subject to strict limits set by the U.S.
Department of Transportation (USDOT) and other agencies, including those relating to “clinker substitution”, or the
replacement of ground clinker in cement with alternate materials such as pozzolan, slag and fly ash, which has
implications for the Company’s fuel use and efforts to reduce GHG emissions from its cement operations. For example,
various industry associations are engaged in an effort requesting the USDOT and other agencies to further revise their
standards allowing for greater rates of clinker substitution, similar to the rates currently permitted for European cement
producers. If higher rates of substitution and blending are, in fact, permitted in the future, the result is likely to be both
reduced clinker and power consumption in cement production, which would, in turn, reduce GHGs emitted in connection
with each ton of cement produced in the United States. With the acceptance of Portland Limestone Cement (PLC) by the
Texas Department of Transportation, in 2022, the Company embarked on a rollout of PLC cement, and by the end of
2022, the Company had converted 90% of its Type I/II customers in Texas to the PLC product. PLC cement may reduce
the GHG footprint of the Company’s cement product line up to 10%.

28 2023 SUSTAINABILITY REPORT