Page 27 - Martin Marietta - 2024 Sustainability Report

COMPANY OVERVIEW

claims or significant GHG emissions reduction claims and the purchase or use of voluntary carbon offsets used to achieve
those claims. These and other state or federal climate-related, social and governance regulations may result in significantly
higher compliance costs and risks.

The Company’s cement operation, like those of other cement producers, requires combustion of significant amounts of
fuel to generate high kiln temperatures and creates carbon dioxide as a product of the calcination process, which is
presently an unavoidable step in making clinker, the essential component for cement production. 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 lime plant or Midlothian Cement Plant 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. 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 operation, 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. The Company has continued its rollout of Portland Limestone
Cement (PLC cement) with more than 90% of its Type I/II customers converted to the PLC product. PLC cement has
reduced the GHG footprint of the Company’s cement product line by greater than 10%.

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. The Company has
adopted a corporate-wide sustainability risk 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 the
Company’s magnesia plant and tire processing systems for fuel at the Company’s cement plant. 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.

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