Page 31 - 2023 Sustainability Report

COMPANY OVERVIEW

In light of the various regulatory uncertainties the Company cannot presently reasonably predict the costs of any future
compliance requirements. Nonetheless, the Company does not believe it will have a material adverse effect on the
financial condition or results of the operations of either the Magnesia Specialties business or Building Materials business.

Technology Risks

Consideration of the impact of technology is integrated into the Company’s risk management process. In an effort to
mitigate the risks to the Company associated with climate change while ensuring and improving financial sustainability,
the Company has adopted a corporate-wide management strategy, which has resulted in multiple initiatives to identify
and implement or evaluate GHG reduction processes and technologies that also improve operational efficiencies,
including: using alternative fuels such as biodiesel; reducing overall fuel use by converting from quarry trucks to conveyor
systems; right-sizing quarry trucks to match the appropriately sized truck with the size of production to reduce the
number of required trips; replacing older railcars with more efficient, high-capacity models that reduce the number of
required trips; adding rail capacity in lieu of truck movements; and installing state-of-the-art emissions control equipment
at one of the Company’s magnesia plants and tire processing systems for fuel, as well as a larger natural gas line, at one
of the Company’s cement plants. The Company’s Midlothian cement plant has been recognized by the USEPA as a high-
performing, energy-efficient facility following investments in innovative air pollution control technologies and usage of
alternative fuels. The road to Net Zero for the Company and others in its industry requires operational changes,
investments in sustainable energy, and in some cases, technology that is not yet available. The Company continues to
monitor various pilot projects being conducted relating to the development of carbon capture technology; however, no
technologies or methods of operation for reducing or capturing GHGs from cement manufacture have yet been proven
successful in a full production environment, other than improvements in fuel efficiency. While awaiting further
development of carbon capture technology, the Company has invested heavily and continues to look for opportunities to
invest in its sustainability practices.

Market Risks

The nature of the Company’s competition varies among its products due to the differing amounts of capital necessary to
build and maintain production facilities and can be influenced by climate-related risks and opportunities particularly with
respect to the Company’s small-but-strategic heritage cement business. Most domestic cement producers are owned by
large non-U.S. companies operating in multiple international markets that report their results (including sustainability and
climate-related metrics) on a world-wide consolidated basis. The Company is subject to U.S. environmental regulations
and there are critical regulatory differences between the U.S. and the European Union and different calculation
methodologies for carbon intensity calculations, blending and fuel choice that result in meaningful differences in the
makeup of corresponding end-products and reported emissions metrics. Those differences, in turn, make like-for-like
comparisons of the emissions performance with the performance of the Company’s heritage cement business
challenging. To the extent that investors or consumers decide to use world-wide comparisons of these metrics in making
investment and purchase decisions, the Company could be at a competitive disadvantage. Geography is critically
important when assessing market attractiveness and growth opportunities for the Company. Attractive geographies
generally exhibit (a) population growth and/or high population density, both of which are drivers of heavy-side building
materials consumption; (b) business and employment diversity, drivers of greater economic stability, and (c) a superior
state financial position, a driver of public infrastructure investment. All of these factors can be and are influenced by
climate change and physical risk and opportunities.

Reputation

Disruptions to the Company’s operations and to its customers’ transportation activities from climate-related risks could
impact the Company’s reputation and result in additional costs to the Company. Any failure or perceived failure to
achieve or accurately report on the Company’s current or future climate-related commitments, including its GHG

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