UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 20172021

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to ___________

1-35573
(Commission file number)

TRONOX LIMITEDHOLDINGS PLC
(ACN 153 348 111)
(Exact Name of Registrant as Specified in its Charter) extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Western Australia, Australia98-1026700
England and Wales98-1467236
(State or Other Jurisdictionother jurisdiction of Incorporationincorporation or Organization)organization)(I.R.S. Employer Identification Number)No.)
263 Tresser Boulevard, Suite 1100
Stamford, Connecticut06901
Lot 22, Mason
Laporte Road,
Stamford, Connecticut 06901Kwinana Beach, WA, 6167
Australia Stallingborough
Grimsby, North East Lincolnshire, DN40 2PR
United Kingdom

Registrant’s telephone number, including area code: (203) 705-3800

Securities registered pursuant to Section 12(b) of the Act:
Title of each className of each exchange on which registered
Ordinary Shares, par value $0.01 per shareNew York Stock Exchange
Trading Symbol: TROX
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐  (Do not check if a smaller reporting company)Smaller reporting company☐
Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of October 27, 2017,20, 2021, the Registrant had 91,052,581 Class A ordinary shares and 28,729,280 Class B153,867,141 ordinary shares outstanding.


Table of Contents

Table of Contents
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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46
Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 6. Exhibits48
41
SIGNATURES
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Item 1.    Financial Statements (Unaudited)
Item 1.Financial Statements (Unaudited)

Page
No.
Page
No.
Unaudited Condensed Consolidated Statements of OperationsIncome for the Three Months and Nine Months Ended September 30, 20172021 and 20162020
4
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months and Nine Months Ended September 30, 20172021 and 20162020
5
Unaudited Condensed Consolidated Balance Sheets at September 30, 20172021 and December 31, 20162020
6
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 20172021 and 20162020
7
Unaudited Condensed Consolidated Statement of Shareholders’ Equity for the Three Months and Nine Months Ended September 30, 20172021 and 2020
8
Notes to Unaudited Condensed Consolidated Financial Statements
9
10

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TRONOX LIMITEDHOLDINGS PLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSINCOME
(Unaudited)
(Millions of U.S. dollars, except share and per share data)

  
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
  2017  2016  2017  2016 
Net sales $435  $339  $1,234  $957 
Cost of goods sold  329   291   971   877 
                 
Gross profit  106   48   263   80 
Selling, general and administrative expenses  (55)  (47)  (186)  (135)
Restructuring income (expense)  —   (1)  1   (2)
                 
Income (loss) from operations  51   —   78   (57)
Interest and debt expense, net  (47)  (46)  (140)  (138)
Gain (loss) on extinguishment of debt  (28)  —   (28)  4 
Other income (expense), net  12   (10)  5   (22)
                 
Income (loss) from continuing operations before income taxes  (12)  (56)  (85)  (213)
Income tax provision  (13)  (6)  (10)  (25)
                 
Net income (loss) from continuing operations  (25)  (62)  (95)  (238)
Income (loss) from discontinued operations, net of tax (See Note 2)  (216)  23   (179)  55 
Net income (loss)  (241)  (39)  (274)  (183)
Net income (loss) attributable to noncontrolling interest  6   (2)  11   (1)
               �� 
Net income (loss) attributable to Tronox Limited $(247) $(37) $(285) $(182)
                 
Net income (loss) per share, basic and diluted:                
Continuing operations $(0.26) $(0.53) $(0.89) $(2.04)
Discontinued operations  (1.81)  0.20   (1.51)  0.47 
Net income (loss) per share, basic and diluted $(2.07) $(0.33) $(2.40) $(1.57)
                 
Weighted average shares outstanding, basic and diluted (in thousands)  119,405   116,219   118,908   116,108 

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net sales$870 $675 $2,688 $1,975 
Cost of goods sold626 536 2,011 1,532 
Gross profit244 139 677 443 
Selling, general and administrative expenses76 89 234 263 
Restructuring— 1 — 3 
Income from operations168 49 443 177 
Interest expense(37)(48)(123)(140)
Interest income1 1 4 6 
Loss on extinguishment of debt(3)— (60)— 
Other income, net12 7 6 19 
Income before income taxes141 9 270 62 
Income tax (provision) benefit(28)893 (54)876 
Net income113 902 216 938 
Net income attributable to noncontrolling interest2 6 13 14 
Net income attributable to Tronox Holdings plc$111 $896 $203 $924 
Earnings per share:
Basic$0.72 $6.24 $1.34 $6.45 
Diluted$0.70 $6.18 $1.29 $6.42 
Weighted average shares outstanding, basic (in thousands)153,762 143,579 151,472 143,245 
Weighted average shares outstanding, diluted (in thousands)159,020 145,067 157,148 143,969 
See accompanying notes to unaudited condensed consolidated financial statements.
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TRONOX LIMITEDHOLDINGS PLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(Millions of U.S. dollars)

  
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
  2017  2016  2017  2016 
Net income (loss) $(241) $(39) $(274) $(183)
Other comprehensive income:                
Foreign currency translation adjustments  (36)  69   22   122 
Pension and postretirement plans:                
Actuarial losses, (no tax impact; See Note 3)  —   (21)  —   (21)
Amortization of unrecognized actuarial losses, net of taxes of less than $1 million in each of the three and nine months ended September 30, 2017 and 2016  1   
(1
)  2   — 
Impact of transfer of Alkali pension obligation upon sale (no tax impact)  5   —   5   — 
Unrealized gains (losses) on derivative financial instruments (no tax impact; see Note 3)  —   (1)  (3)  1 
                 
Other comprehensive income (loss)  (30)  46   26   102 
                 
Total comprehensive income (loss)  (271)  7   (248)  (81)
                 
Comprehensive income (loss) attributable to noncontrolling interest:                
Net income (loss)  6   (2)  11   (1)
Foreign currency translation adjustments  (10)  18   3   31 
                 
Comprehensive income (loss) attributable to noncontrolling interest  (4)  16   14   30 
                 
Comprehensive income (loss) attributable to Tronox Limited $(267) $(9) $(262) $(111)

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net income$113 $902 $216 $938 
Other comprehensive income (loss):
Foreign currency translation adjustments(70)43 (62)(129)
Pension and postretirement plans:
Actuarial losses, (net of tax benefit of less than $1 million in both the three and nine months ended September 30, 2021 and 2020, respectively)1 — (1)(2)
Amortization of unrecognized actuarial losses, (net of tax benefit of less than $1 million in both the three and nine months ended September 30, 2021 and 2020)1 1 3 3 
Total pension and postretirement losses2 1 2 1 
Realized (gains) losses on derivatives reclassified from accumulated other comprehensive loss to the Condensed Consolidated Statement of Income (net of tax expense of nil and less than $1 million in the three months ended September 30, 2021 and 2020, respectively and nil and $2 million in the nine months ended September 30, 2021 and 2020, respectively)(13)(1)(22)10 
Unrealized (losses) gains on derivative financial instruments, (net of tax expense of nil and $2 million for the three months ended September 30, 2021 and 2020, respectively and net of tax benefit of nil and $5 million for the nine months ended September 30, 2021 and 2020, respectively) - See Note 11— 18 12 (30)
Other comprehensive income (loss)(81)61 (70)(148)
Total comprehensive income32 963 146 790 
Comprehensive income (loss) attributable to noncontrolling interest:
Net income2 6 13 14 
Foreign currency translation adjustments(4)5 (9)(42)
Comprehensive income (loss) attributable to noncontrolling interest(2)11 4 (28)
Comprehensive income attributable to Tronox Holdings plc$34 $952 $142 $818 
See accompanying notes to unaudited condensed consolidated financial statements.
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TRONOX LIMITEDHOLDINGS PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Millions of U.S. dollars, except share and per share data)

  
September 30,
2017
  
December 31,
2016
 
ASSETS      
Current Assets      
Cash and cash equivalents $1,058  $248 
Restricted cash  653   3 
Accounts receivable, net of allowance for doubtful accounts  309   278 
Inventories, net  459   499 
Prepaid and other assets  44   28 
Income taxes receivable  1   11 
Total assets of discontinued operations  —   1,671 
Total current assets  2,524   2,738 
Noncurrent Assets        
Property, plant and equipment, net  1,069   1,092 
Mineral leaseholds, net  859   877 
Intangible assets, net  203   223 
Inventories, net  14   14 
Other long-term assets  22   20 
Total assets $4,691  $4,964 
         
LIABILITIES AND EQUITY        
Current Liabilities        
Accounts payable $155  $136 
Accrued liabilities  131   150 
Short-term debt  —   150 
Long-term debt due within one year  11   16 
Income taxes payable  2   1 
Total liabilities of discontinued operations  —   111 
Total current liabilities  299   564 
         
Noncurrent Liabilities        
Long-term debt, net  3,129   2,888 
Pension and postretirement healthcare benefits  100   114 
Asset retirement obligations  78   73 
Long-term deferred tax liabilities  161   151 
Other long-term liabilities  18   21 
Total liabilities  3,785   3,811 
         
Commitments and Contingencies        
Shareholders’ Equity        
Tronox Limited Class A ordinary shares, par value $0.01 — 68,767,566 shares issued and 68,591,094 shares outstanding at September 30, 2017 and 65,998,306 shares issued and 65,165,672 shares outstanding at December 31, 2016  1   1 
Tronox Limited Class B ordinary shares, par value $0.01 — 51,154,280 shares issued and outstanding at September 30, 2017 and December 31, 2016  —   — 
Capital in excess of par value  1,542   1,524 
Accumulated deficit  (321)  (19)
Accumulated other comprehensive loss  (474)  (497)
Total Tronox Limited shareholders’ equity  748   1,009 
Noncontrolling interest  158   144 
         
Total equity  906   1,153 
Total liabilities and equity $4,691  $4,964 

September 30, 2021December 31, 2020
ASSETS
Current Assets
Cash and cash equivalents$309 $619 
Restricted cash4 29 
Accounts receivable (net of allowance for credit losses of $4 million and $5 million as of September 30, 2021 and December 31, 2020, respectively)625 540 
Inventories, net1,011 1,137 
Prepaid and other assets147 200 
Income taxes receivable6 4 
Total current assets2,102 2,529 
Noncurrent Assets
Property, plant and equipment, net1,715 1,759 
Mineral leaseholds, net770 803 
Intangible assets, net214 201 
Lease right of use assets, net65 81 
Deferred tax assets995 1,020 
Other long-term assets182 175 
Total assets$6,043 $6,568 
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable$394 $356 
Accrued liabilities326 350 
Short-term lease liabilities34 39 
Long-term debt due within one year7 58 
Income taxes payable18 2 
Total current liabilities779 805 
Noncurrent Liabilities
Long-term debt, net2,675 3,263 
Pension and postretirement healthcare benefits139 146 
Asset retirement obligations160 157 
Environmental liabilities66 67 
Long-term lease liabilities27 41 
Deferred tax liabilities165 176 
Other long-term liabilities33 42 
Total liabilities4,044 4,697 
Commitments and Contingencies - Note 1400
Shareholders’ Equity
Tronox Holdings plc ordinary shares, par value $0.01 — 153,825,485 shares issued and outstanding at September 30, 2021 and 143,557,479 shares issued and outstanding at December 31, 20202 1 
Capital in excess of par value2,057 1,873 
Retained earnings596 434 
Accumulated other comprehensive loss(705)(610)
Total Tronox Holdings plc shareholders’ equity1,950 1,698 
Noncontrolling interest49 173 
Total equity1,999 1,871 
Total liabilities and equity$6,043 $6,568 
See accompanying notes to unaudited condensed consolidated financial statements.
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TRONOX LIMITEDHOLDINGS PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Millions of U.S. dollars)

  
Nine Months Ended
September 30,
 
  2017  2016 
Cash Flows from Operating Activities:      
Net loss $(274) $(183)
Income (loss) from discontinued operations, net of tax  (179)  55 
Net income (loss) from continuing operations $(95) $(238)
Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities, continuing operations:        
Depreciation, depletion and amortization  136   131 
Deferred income taxes  8   (5)
Share-based compensation expense  26   18 
Amortization of deferred debt issuance costs and discount on debt  9   8 
Pension and postretirement healthcare benefit expense  2   — 
(Gain) loss on extinguishment of debt  28   (4)
Other, net  22   35 
Contributions to employee pension and postretirement plans  (18)  (15)
Changes in assets and liabilities:        
(Increase) decrease in accounts receivable, net  (29)  (3)
(Increase) decrease in inventories, net  48   94 
(Increase) decrease in prepaid and other assets  (16)  (3)
Increase (decrease) in accounts payable and accrued liabilities  (27)  (33)
Increase (decrease) in taxes payable  —   28 
Cash provided by operating activities, continuing operations  94   13 
         
Cash Flows from Investing Activities:        
Capital expenditures  (63)  (59)
Debt proceeds restricted for Cristal acquisition  (650)  — 
Proceeds from the sale of business  1,325   — 
Proceeds from the sale of assets  —   1 
Cash provided by (used in) investing activities, continuing operations  612   (58)
         
Cash Flows from Financing Activities:        
Repayments of long-term debt  (2,342)  (27)
Repayments of short-term debt  (150)  — 
Proceeds from long-term debt  2,589   — 
Debt issuance costs  (36)  — 
Call premium paid  (14)  — 
Proceeds from options and warrants  1   — 
Dividends paid  (17)  (40)
Restricted stock and performance-based shares settled in cash for taxes  (11)  (1)
Cash provided by (used in) financing activities, continuing operations  20   (68)
         
Discontinued Operations:        
Cash provided by operating activities  107   112 
Cash used in investing activities  (25)  (29)
Cash used in financing activities  —   — 
Net cash flows provided by discontinued operations  82   83 
         
Effects of exchange rate changes on cash and cash equivalents  2   3 
         
Net increase (decrease) in cash and cash equivalents  810   (27)
Cash and cash equivalents at beginning of period  248   229 
         
Cash and cash equivalents at end of period, continuing operations $1,058  $202 

Nine Months Ended September 30,
20212020
Cash Flows from Operating Activities:
Net income$216 $938 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization227 219 
Deferred income taxes13 (886)
Share-based compensation expense23 19 
Amortization of deferred debt issuance costs and discount on debt8 7 
Loss on extinguishment of debt60 — 
Other non-cash items affecting net income23 44 
Changes in assets and liabilities:
Increase in accounts receivable, net of allowance for credit losses(95)(13)
Decrease (increase) in inventories, net104 (100)
Decrease (increase) in prepaid and other assets36 (38)
Increase in accounts payable and accrued liabilities26 18 
Net changes in income tax payables and receivables14 — 
Changes in other non-current assets and liabilities(54)(52)
Cash provided by operating activities601 156 
Cash Flows from Investing Activities:
Capital expenditures(183)(129)
Insurance proceeds1 1 
Loans— (24)
Proceeds from sale of assets1 1 
Cash used in investing activities(181)(151)
Cash Flows from Financing Activities:
Repayments of short-term debt— (7)
Repayments of long-term debt(3,008)(23)
Proceeds from long-term debt2,375 500 
Proceeds from short-term debt— 13 
Call premiums paid(40)— 
Debt issuance costs(36)(10)
Proceeds from the exercise of options6 — 
Dividends paid(46)(30)
Restricted stock and performance-based shares settled in cash for withholding taxes(3)(3)
Cash (used in) provided by financing activities(752)440 
Effects of exchange rate changes on cash and cash equivalents and restricted cash(3)(7)
Net (decrease) increase in cash, cash equivalents and restricted cash(335)438 
Cash, cash equivalents and restricted cash at beginning of period648 311 
Cash, cash equivalents and restricted cash at end of period$313 $749 
Supplemental cash flow information:
Interest paid, net$113 $94 
Income taxes paid$25 $9 
See accompanying notes to unaudited condensed consolidated financial statements.
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TRONOX LIMITEDHOLDINGS PLC
CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(Millions of U.S. dollars)dollars, except for shares)

  
Tronox
Limited
Class A
Ordinary
Shares
  
Tronox
Limited
Class B
Ordinary
Shares
  
Capital in
Excess of
par Value
  
Accumulated
Deficit
  
Accumulated
Other
Comprehensive
Loss
  
Total
Tronox
Limited
Shareholders’
Equity
  
Non-
controlling
Interest
  
Total
Equity
 
Balance at January 1, 2017 $1  $—  $1,524  $(19) $(497) $1,009  $144  $1,153 
Net income (loss)  —   —   —   (285)  —   (285)  11   (274)
Other comprehensive income  —   —   —   —   23   23   3   26 
Share-based compensation  —   —   28   —   —   28   —   28 
Shares cancelled  —   —   (11)  —   —   (11)  —   (11)
Shares and warrants exercised  —   —   1   —       1       1 
Class A and Class B share dividends  —   —   —   (17)  —   (17)  —   (17)
                                 
Balance at September 30, 2017 $1   —   1,542   (321)  (474)  748   158   906 

For the nine months ended September 30, 2021
Tronox
Holdings
plc
Ordinary
Shares (in
thousands)		Tronox
Holdings
plc
Ordinary
Shares
(Amount)		Capital
in
Excess
of par
Value		Retained EarningsAccumulated
Other
Comprehensive
Loss		Total
Tronox
Holdings plc
Shareholders’
Equity		Non-
controlling
Interest		Total
Equity
Balance at December 31, 2020143,557 $1 $1,873 $434 $(610)$1,698 $173 $1,871 
Net income— — — 19 — 19 7 26 
Other comprehensive (loss) income— — — — (24)(24)(10)(34)
Share-based compensation2,545 — 9 — — 9 — 9 
Shares cancelled(101)— (2)— — (2)— (2)
Options exercised11 — — — — — — — 
Acquisition of noncontrolling interest7,246 1 158 — (34)125 (125)— 
Ordinary share dividends ($0.08 per share)— — — (13)— (13)— (13)
Balance at March 31, 2021153,258 $2 $2,038 $440 $(668)$1,812 $45 $1,857 
Net income— — — 73 — 73 4 77 
Other comprehensive (loss) income— — — — 40 40 5 45 
Share-based compensation225 — 7 — — 7 — 7 
Shares cancelled(31)— (1)— — (1)— (1)
Options exercised137 — 3 — — 3 — 3 
Ordinary share dividends ($0.08 per share)— — — (12)— (12)— (12)
Balance at June 30, 2021153,589 $2 $2,047 $501 $(628)$1,922 $54 $1,976 
Net income— — — 111 — 111 2 113 
Other comprehensive (loss) income— — — — (77)(77)(4)(81)
Share-based compensation69 — 7 — — 7 — 7 
Shares cancelled(4)— — — — — — — 
Options exercised171 — 3 — — 3 — 3 
Ordinary share dividends ($0.10 per share)— — — (16)— (16)(3)(19)
Balance at September 30, 2021153,825 $2 $2,057 $596 $(705)$1,950 $49 $1,999 
See accompanying notes to unaudited condensed consolidated financial statements.
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TRONOX LIMITEDHOLDINGS PLC
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)
(Unaudited)
(Millions of U.S. dollars, except for shares)
For the nine months ended September 30, 2020
Tronox
Holdings
plc
Ordinary
Shares (in
thousands)		Tronox
Holdings
plc
Ordinary
Shares		Capital
in
Excess
of par
Value		(Accumulated
Deficit)		Accumulated
Other
Comprehensive
Loss		Total
Tronox
Holdings plc Shareholders’
Equity		Non-
controlling
Interest		Total
Equity
Balance at December 31, 2019141,900 $1 $1,846 $(493)$(606)$748 $168 $916 
Net income— — — 32 — 32 8 40 
Other comprehensive income (loss)— — — — (223)(223)(47)(270)
Share-based compensation1,779 — 9 — — 9 — 9 
Shares cancelled(313)— (3)— — (3)— (3)
Measurement period adjustment related to Cristal acquisition— — — — — — (3)(3)
Ordinary share dividends ($0.07 per share)— — — (10)— (10)— (10)
Balance at March 31, 2020143,366 $1 $1,852 $(471)$(829)$553 $126 $679 
Net loss— — — (4)— (4)— (4)
Other comprehensive income (loss)— — — — 61 61 — 61 
Share-based compensation199 — 2 — — 2 — 2 
Shares cancelled(42)— — — — — — — 
Ordinary share dividends ($0.07 per share)— — — (10)— (10)— (10)
Balance at June 30, 2020143,523 $1 $1,854 $(485)$(768)$602 $126 $728 
Net income— — — 896 — 896 6 902 
Other comprehensive income (loss)— — — — 56 56 5 61 
Share-based compensation16 — 8 — — 8 — 8 
Shares cancelled(8)— — — — — — — 
Ordinary share dividends ($0.07 per share)— — — (11)— (11)— (11)
Balance at September 30, 2020143,531 $1 $1,862 $400 $(712)$1,551 $137 $1,688 
See accompanying notes to unaudited condensed consolidated financial statements.
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TRONOX HOLDINGS PLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Millions of U.S. dollars, except share, per share and metric tons data or unless otherwise noted)


1.The Company

1.    The Company
Tronox LimitedHoldings plc (referred to herein as "Tronox", the "Company", "we", "us", or "our") operates titanium-bearing mineral sand mines and its subsidiaries (collectively referredbeneficiation operations in Australia, South Africa and Brazil to as “Tronox Limited,” “we,” “us,” or “our”produce feedstock materials that can be processed into TiO2 for pigment, high purity titanium chemicals, including titanium tetrachloride, and Ultrafine© titanium dioxide used in certain specialty applications. It is our long-term strategic goal to be vertically integrated and consume all of our feedstock materials in our own 9 TiO2 pigment facilities which we operate in the United States, Australia, Brazil, UK, France, the Netherlands, China and the Kingdom of Saudi Arabia (“KSA”). We believe that vertical integration is the best way to achieve our ultimate goal of delivering low cost, high-quality pigment to our coatings and other TiO2 customers throughout the world. The mining, beneficiation and smelting of titanium bearing mineral sands creates meaningful quantities of Zircon and pig iron, which we also supply to customers around the world.
We are a public limited company listed on the New York Stock Exchange and are registered under the laws of the State of Western Australia. We are a global leader with operations in North America, Europe, South AfricaEngland and the Asia-Pacific region in the production and marketing of titanium bearing mineral sands and titanium dioxide (“TiO2”) pigment. We classify our operations into one reporting segment: TiO2: consisting of products that are critical components of everyday applications such as paint and other coatings, plastics, paper and other uses and our related mineral sands product streams include titanium feedstock, zircon and pig iron.Wales.

On February 21, 2017, Tronox Limited, The National Titanium Dioxide Company Ltd., a limited company organized under the laws of the Kingdom of Saudi Arabia (“Cristal”), and Cristal Inorganic Chemicals Netherlands Coöperatief W.A., a cooperative organized under the laws of the Netherlands and a wholly owned subsidiary of Cristal (“Seller”), entered into a Transaction Agreement (the “Transaction Agreement”), pursuant to which we agreed to acquire Cristal’s titanium dioxide business for $1.673 billion in cash, subject to a working capital adjustment at closing (the “Cash Consideration”), plus 37,580,000 Class A ordinary shares (“Class A Shares”), par value $0.01 per share, of Tronox Limited (the “Cristal Transaction”). Following the closing of the Cristal Transaction, the Seller will own approximately 24% of the outstanding ordinary shares (including both Class A and Class B) of Tronox Limited. The Cristal Transaction is conditioned on us obtaining financing sufficient to fund the Cash Consideration, and the Transaction Agreement provides that we must pay to Cristal a termination fee of $100 million if all conditions to closing, other than the financing condition, have been satisfied and the Transaction Agreement is terminated because closing of the Cristal Transaction has not occurred by May 21, 2018. As a result of the refinancing (See Note 11 - Debt), we expect to finance the Cristal Transaction with our cash on hand inclusive of restricted cash and liquidity from our asset-based syndicated revolving credit facility. The Cristal Transaction is also conditioned upon the receipt of various regulatory approvals, including antitrust clearance in numerous jurisdictions. On April 13, 2017, the United States Federal Trade Commission (“FTC”) issued a request for additional information (“Second Request”) to us and Cristal in connection with its filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and Tronox has substantially complied with the Second Request. The Cristal Transaction, which has been unanimously approved by our board of directors (the “Board”), is expected to close by the first quarter of 2018, subject to regulatory approvals and satisfaction of customary closing conditions. On October 2, 2017, at a special meeting of shareholders of the Company held pursuant to the Transaction Agreement, the Company’s shareholders approved a resolution to issue 37,580,000 Class A Shares to the Seller in connection with the acquisition of Cristal’s TiO2 business, and the resulting acquisition of interests in such Class A Shares by the Seller and certain other persons and entities, at the closing of such acquisition.

On September 1, 2017, we completed the previously announced sale of our wholly owned subsidiary Tronox Alkali Corporation (“Alkali”) to Genesis Energy, L.P. for proceeds of $1.325 billion in cash, subject to a customary post-closing working capital adjustment (the “Sale”). We have agreed unconditionally to guarantee the indemnification and performance of the obligations of Tronox U.S. Holdings Inc. (“Tronox Holdings”), a subsidiary of Tronox Limited, under the stock purchase agreement (“Purchase Agreement”). Both Tronox Holdings and Genesis Energy, L.P. have agreed, following the closing, to indemnify the other party for losses arising from certain breaches of the Purchase Agreement and for certain other liabilities, subject to certain limitations.

During the three months ended September 30, 2017, we recognized a pre-tax loss of $233 million on the Alkali disposal.  For all periods presented, sales, costs and expenses and income taxes attributable to Alkali together with the loss on disposal have been aggregated in a single caption entitled “Income (loss) from discontinued operations, net of tax” in our Condensed Consolidated Statement of Operations. Included in the calculation of the loss noted above, were approximately $21 million of transaction fees related to the sale of Alkali. For cash flow presentation purposes, these transaction costs are included in “Cash provided by operating activities, continuing operations” on the Condensed Consolidated Statements of Cash Flows. See Note 2 – Discontinued Operations for additional information.

In 2012, our Class B ordinary shares (“Class B Shares”) were issued to Exxaro Resources Limited (“Exxaro”) and one of its subsidiaries in consideration for 74% of Exxaro’s South African mineral sands business. Exxaro has agreed not to acquire any voting shares of Tronox Limited if, following such acquisition, Exxaro will have a voting interest in Tronox Limited of 50% or more unless Exxaro brings any proposal to make such an acquisition to the Board on a confidential basis. In the event an agreement regarding the proposal is not reached, Exxaro is permitted to make a takeover offer for all the shares of Tronox Limited not held by affiliates of Exxaro, subject to certain non-waivable conditions. At September 30, 2017 and December 31, 2016, Exxaro held approximately 43% and 44%, respectively, of the voting securities of Tronox Limited. See Note 18 for additional information regarding Exxaro transactions. On March 8, 2017, Exxaro announced its intention to begin pursuing a path to monetize its ownership stake in Tronox over time. On October 10, 2017, Exxaro sold 22,425,000 Class A ordinary shares in an underwritten registered offering (the “Exxaro Share Transaction”). Subsequent to the Exxaro Shares Transaction, Exxaro held approximately 24% of the Company’s voting securities. Presently, Exxaro intends to sell the remainder of its Tronox shares in a staged process over time pursuant to the existing registration statement, subject to market conditions. Exxaro’s sale of Class A ordinary shares does not impact their 26% ownership interest in each of our Tronox KZN Sands (Pty) Ltd. and Tronox Mineral Sands (Pty) Ltd subsidiaries.
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Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and have been prepared pursuant to the rules and regulations of the U. S.U.S. Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016. The Condensed Consolidated Balance Sheet as of December 31, 2016 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP.

2020.
In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, considered necessary for a fair statement.statement of its financial position as of September 30, 2021, and its results of operations for the three and nine months ended September 30, 2021 and 2020. Our unaudited condensed consolidated financial statements include the accounts of all majority-owned subsidiary companies. All intercompany balances and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the manner and presentation in the current period. As a result of the Alkali disposition, the results of Alkali have been reclassified as discontinued operations for all periods presented. See Note 2 – Discontinued Operations for additional information.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. It is at least reasonably possible that the effect on the financial statements of a change in estimate due to one or more future confirming events could have a material effect on the financial statements.

Revision of Previously Issued Consolidated Financial Statements

Duringstatements, including any potential impacts on the three months ended March 31, 2017, we identifiedeconomy as a misstatement in our selling, general, and administrative expense for certain prior periods related to a liability resulting from a non-timely filing with a statutory authority. The aggregate misstatement is $11 million, which impacts our previously issued consolidated statements of operations, comprehensive loss, balance sheets and cash flows as of and for the years ended December 31, 2015 and 2016, and the unaudited condensed consolidated financial statements for the third and fourth quarters and corresponding year-to-date periods of 2015, and each quarter and corresponding year-to-date periods of 2016.

In accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, management evaluated the materialityresult of the misstatement from qualitativeCovid-19 pandemic which could impact revenue growth and quantitative perspectives, and concluded that the misstatement was not material to our previously issued annual and interim financial statements. The cumulative amountcollectibility of the prior period adjustments would have been material to our current statement of operations and comprehensive loss had we made the correction in the three months ended March 31, 2017 and accordingly we will revise our previously issued financial statements to correct this misstatement. We also corrected the timing of other previously recorded immaterial out-of-period adjustments and reflected them in the revised prior period financial statements. The previously recorded immaterial out-of-period adjustments include a $6 million decrease to cost of goods sold due to an overstated depreciation expense and a $7 million increase to cost of goods sold related to royalty tax both originating in 2013 and previously recorded as out-of-period corrections in 2014; a $5 million decrease to cost of goods sold that originated in 2012 and was previously recorded as an out-of-period correction in 2014 due to overstated depletion expense; and other miscellaneous immaterial corrections. Periods not presented herein will be revised, as applicable, in future filings.trade receivables.

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The effects on our unaudited condensed consolidated financial statements are as follows:

Unaudited Condensed Consolidated Statement of Operations

  Three Months Ended September 30, 2016  Nine Months Ended September 30, 2016 
  
As
Reported (1)
  Adjustment  Revised  
As
Reported (1)
  Adjustment  Revised 
                   
Net sales $339  $—  $339  $957  $—  $957 
Cost of goods sold  290   1   291   877   —   877 
Gross profit  49   (1)  48   80   —   80 
Selling, general and administrative expenses  (47)  —   (47)  (131)  (4)  (135)
Income (loss) from operations  1   (1)  —   (53)  (4)  (57)
Other income (expense), net  (13)  3   (10)  (22)  —   (22)
Income (loss) from continuing operations before income taxes  (58)  2   (56)  (209)  (4)  (213)
Net income (loss) from continuing operations  (64)  2   (62)  (235)  (3)  (238)
Income (loss) from discontinued operations, net of tax  22   1   23   53   2   55 
Net loss attributable to Tronox Limited  (40)  3   (37)  (181)  (1)  (182)
Net income (loss) per share from continuing operations, basic and diluted  (0.54)  0.01   (0.53)  (2.02)  (0.02)  (2.04)
Net income (loss) per share from discontinued operations, basic and diluted  0.19   0.01   0.20   0.46   0.01   0.47 
                         
Weighted average shares outstanding, basic and diluted (in thousands)  116,219   116,219   116,219   116,108   116,108   116,108 

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

  Three Months Ended September 30, 2016  Nine Months Ended September 30, 2016 
  
As
Reported
  Adjustment  Revised  
As
Reported
  Adjustment  Revised 
                   
Net loss $(42) $3  $(39) $(182) $(1) $(183)
Total comprehensive income ( loss)  4   3   7   (80)  (1)  (81)
Comprehensive loss attributable to Tronox Limited  (12)  3   (9)  (110)  (1)  (111)

Unaudited Condensed Consolidated Balance Sheet

  December 31, 2016 
  
As Reported (1)
  Adjustment  Revised 
Current assets of continuing operations $1,067  $—  $1,067 
Total assets of discontinued operations  1,668   3   1,671 
Total current assets  2,735   3   2,738 
Total assets  4,961   3   4,964 
Accrued liabilities  138   11   149 
Current liabilities of continuing operations  443   10   453 
Total liabilities of discontinued operations  110   1   111 
Total current liabilities  553   11   564 
Total liabilities  3,800   11   3,811 
Accumulated deficit  (13)  (6)  (19)
Accumulated other comprehensive loss  (495)  (2)  (497)
Total Tronox Limited shareholders’ equity  1,017   (8)  1,009 
Total equity  1,161   (8)  1,153 
Total liabilities and equity  4,961   3   4,964 

(1)Amounts reflect the results of Alkali as discontinued operations.

Unaudited Condensed Consolidated Statement of Cash Flows

There was no net impact to operating, investing and financing cash flows from the revisions for continuing operations for the nine months ended September 30, 2016.
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Recently Adopted Accounting Pronouncements

In March 2016,December 2019, the FinancialFASB issued ASU 2019-12, Income Taxes (“Topic 740”): Simplifying the Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which amends ASC Topic 718, Compensation – Stock Compensation. ASU 2016-09for Income Taxes. The standard simplifies various aspects related to how share-based payments are accountedthe accounting for and presented in the financial statements including income taxes by removing the exceptions to the incremental approach for intraperiod tax allocation, the requirement to recognize deferred tax liability for equity method investments, the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary, and forfeituresthe general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020 with early adoption permitted. The adoption of awards. We adopted ASU 2016-09 during the first quarter of 2017. Its adoptionthis standard did not have a material impact on our unaudited condensed consolidated financial statements.

In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging: Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships (“ASU 2016-05”), which clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument in an existing hedging relationship would not, in and of itself, be considered a termination of the derivative instrument or a change in a critical term of the hedging relationship. As long as all other hedge accounting criteria in ASC 815, Derivatives and Hedging (“ASC 815”) are met, a hedging relationship in which the hedging derivative instrument is novated would not be discontinued or require redesignation. This clarification applies to both cash flow and fair value hedging relationships. We adopted ASU 2016-05 during the first quarter of 2017. Its adoption did not have an impact on our unaudited condensed consolidated financial statements.

In July 2015, as part of its simplification initiative, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 simplifies the subsequent measurement of inventory by requiring entities to remeasure inventory at the lower of cost and net realizable value, which is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We adopted ASU 2015-11 during the first quarter of 2017. The adoption of ASU 2015-11 did not have an impact on our unaudited condensed consolidated financial statements.

Recently Issued Accounting Pronouncements


We considerDuring the applicability and impact of all recently issued ASUs. Those not listed below were assessed and determined to be either not applicable or expected to have a minimal impact on our consolidated financial statements.

In August 2017,quarter ended March 31, 2020, the FASB issued ASU 2017-12, Derivatives2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform Financial Reporting.” This amendment is elective in nature. Amongst other aspects, this standard provides for practical expedients and Hedging (Topic 815): Targeted Improvementsexceptions to Accounting for Hedging Activities (“ASU 2017-12”),current accounting standards that reference a rate which will make more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. It is intendedexpected to more closely alignbe dissolved (e.g. London Interbank Offered Rate “LIBOR”) as it relates to hedge accounting, with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. ASU 2017-12 is effective for annual periods beginning on or after December 15, 2018, including interim periods within those periods. Early adoption is permitted which we are considering. We do not expect the adoption of ASU 2017-12 to have a material impact on our consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”), which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under ASU 2017-09, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. ASU 2017-09 is effective prospectively for annual periods beginning on or after December 15, 2017, including interim periods within those periods. Early adoption is permitted. The impact, if any, that ASU 2017-09 will have on our consolidated financial statements will depend on any future award modification.

In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”) which amends the requirements in ASC 715, Compensation — Retirement Benefits, which requires employers that sponsor defined benefit pension and/or other postretirement plans to aggregate the various components of net periodic benefit cost for presentation purposes but does not prescribe where they should be presented in the income statement. ASU 2017-07 requires employers to present the service cost component of the net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from service rendered during the period. In addition, only the service cost component will be eligible for capitalization in assets. Employers will present the other components separately from the line item(s) that includes the service cost and outside of any subtotal of operating income, if one is presented. Employers will have to disclose the line item(s) used to present the other components of net periodic benefit cost, if the components are not presented separately in the income statement. ASU 2017-07 is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted as of the beginning of an annual period for which an entity’s financial statements (interim or annual) have not been issued. ASU 2017-07 requires the presentation of the components of net periodic benefit cost in the income statement retrospectively while the guidance limiting the capitalization of net periodic benefit cost in assets to the service component will be applied prospectively. We do not expect the adoption of ASU 2017-07 to have a material impact on our consolidated financial statements.
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In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”), which clarifies the definition of a business with the objective of adding guidance to assist companiescontract modifications and other reporting organizations with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01that reference this rate, subject to meeting certain criteria. The standard is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. Early application of the amendments in ASU 2017-01 is allowed under certain circumstances. The amendments in ASU 2017-01 should be applied prospectively on or after the effective date. The impact, if any, that ASU 2017-01 will have on our consolidated financial statements will depend on the nature of future acquisitions of assets or businesses.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which requires that the reconciliation of the beginning-of-period and end-of period amounts shown in the statement of cash flows include restricted cash and restricted cash equivalents. ASU 2016-18 does not define restricted cash or restricted cash equivalents, but an entity will need to disclose the nature of the restrictions. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The guidance should be applied retrospectively to all periods presented. The adoption of ASU 2016-18 will require us to include and reconcile the amount of “Restricted cash”, together with “Cash and cash equivalents”, for cash flow purposes for all periods presented commencing with the three months ending March 31, 2018.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”), which reduces the complexity in the accounting standards by allowing the recognition of current and deferred income taxes for an intra-entity asset transfer, other than inventory, when the transfer occurs. Historically, recognition of the income tax consequence was not recognized until the asset was sold to an outside party. This amendment should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. ASU 2016-16 is effective for annual periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. The impact, if any, that ASU 2016-16 will have on our consolidated financial statements will depend upon future intra-entity transfers of assets other than inventory.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”) which provides guidance intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years with early adoption permitted, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. We have not yet determined the impact, if any, that ASU 2016-15 will have on our consolidated financial statements as it will depend on the nature of future cash flow transactions impacted by the new guidance.

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”) which includes a lessee accounting model that recognizes two types of leases - finance leases and operating leases. The standard requires that a lessee recognize on the balance sheet assets and liabilities for leases with lease terms of more thanMarch 12, months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend on its classification as a finance or an operating lease. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. We have developed an implementation plan for adopting ASU 2016-02, which includes utilizing a software program to manage our lease obligations. We are evaluating the impact that ASU 2016-02 will have on our consolidated financial statements and have concluded that we will not early adopt ASU 2016-02. Refer to Note 14 and 17 included in our Annual Report on Form 10-K for the year ended2020 through December 31, 2016 regarding current obligations under lease agreements.
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In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) which states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires several new disclosures. This guidance2022. The company is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted, and may be applied either retrospectively or on a modified retrospective basis. Subsequent to the issuance of the May 2014 guidance, several clarifications and updates have been issued on this topic, the most recent of which was issued in May 2017. We are executing our implementation plan for adopting ASU 2014-09 and are currently operating in line with that plan. We have completed phase 1 of our contract evaluation process and are continuing to review additional contracts while currently validating the results of applying the new revenue guidance. We have also started documenting our accounting policies and evaluating the new disclosure requirements and we expect to complete the evaluation of the impact of the accountingstandard.

2.    Revenue
We recognize revenue at a point in time when the customer obtains control of the promised products. For most transactions this occurs when products are shipped from our manufacturing facilities or at a later point when control of the products transfers to the customer at a specified destination or time.
Contract assets represent our rights to consideration in exchange for products that have transferred to a customer when the right is conditional on situations other than the passage of time. For products that we have transferred to our customers, our rights to the consideration are typically unconditional and disclosure requirements ononly the passage of time is required before payments become due. These unconditional rights are recorded as accounts receivable. As of September 30, 2021, and December 31, 2020, we did not have material contract asset balances.
Contract liabilities represent our business processes, controlsobligations to transfer products to a customer for which we have received consideration from the customer. From time to time, we may receive advance payment from our customers that is accounted for as deferred revenue. Deferred revenue is earned when control of the product transfers to the customer, which is typically within a short period of time from when we received the advanced payment. Contract liability balances as of September 30, 2021 and systemsDecember 31, 2020 were approximately $3 million and $4 million, respectively. Contract liability balances were reported as “Accounts payable” in the fourth quarter of 2017. We are evaluating the impact that ASU 2014-09 will have on our consolidated financial statements and will adopt the new standard using the modified retrospective approach effective January 1, 2018.

2.Discontinued Operations

Concurrent with the announcement of the Cristal Transaction, we expressed intent to begin a process to market our Alkali soda ash business which met the criteria as held for sale in the third quarter and was sold on September 1, 2017. The sale of Alkali is an important step in positioning us as a global leader in the titanium dioxide (TiO2) industry. The proceeds will be used to fund a portion of the cash consideration for the Cristal acquisition and a portion was also used in the refinancing of our debt. See Notes 1 and 11. The criteria for presentation of Alkali as a discontinued operation in accordance with Accounting Standards Update (“ASU”) 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity was met in the third quarter of 2017.  This disposal is considered a strategic shift that has and will have a major effect on the Company’s operations and financial results; therefore, the results of Alkali have been classified as discontinued operations for all periods presented.  Alkali assetsunaudited Condensed Consolidated Balance Sheets.  All contract liabilities as of December 31, 2016 have been segregated from continuing operations and presented2020 were recognized as current assets or current liabilities from discontinued operations.revenue in “Net sales” in the unaudited Condensed Consolidated statements of income during the first quarter of 2021.

Disaggregation of Revenue
Alkali, which was previously one of our twoWe operate under 1 operating and reportable segments, included certain allocated corporate costs which have been reallocatedsegment, Tronox. We disaggregate our revenue from contracts with customers by product type and geographic area. We believe this level of disaggregation appropriately depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors and reflects how our business is managed.
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Net sales to Corporate. The amount of allocated corporate costs was $1 million and $3 million, respectively,external customers by geographic areas where our customers are located were as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
North America$183 $189 $546 $521 
South and Central America63 51 194 113 
Europe, Middle-East and Africa345 244 1,059 736 
Asia Pacific279 191 889 605 
Total net sales$870 $675 $2,688 $1,975 

Net sales from external customers for each similar type of product were as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
TiO2
$682 $543 $2,118 $1,589 
Zircon116 56 360 189 
Feedstock and other products72 76 210 197 
Total net sales$870 $675 $2,688 $1,975 
Feedstock and other products mainly include ilmenite, chloride (“CP”) slag, pig iron, TiCl4 and other mining products.
During the three and nine months ended September 30, 20172021 and 2016.  After2020, our ten largest third-party customers represented 28% and 33%, respectively, of our consolidated net sales. During the sale, we now operate in anine months ended September 30, 2021 and 2020, no single operating and reportable segment, TiO2.

The following table presents the major classescustomer accounted for 10% of Alkali’s line items constituting the “Income (loss) from discontinued operations,our consolidated net of tax” in our Condensed Consolidated Statements of Operations:

  
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
  2017  2016  2017  2016 
Net sales $129  $194  $521  $590 
Cost of goods sold  113   163   448   511 
Selling, general and administrative expenses  (6)  (7)  (18)  (20)
Income before income taxes  10   24   55   59 
Income tax benefit (provision)  7   (1)  (1)  (4)
Loss on sale of discontinued operations, no tax impact  (233)  —   (233)  — 
Income (loss) from discontinued operations $(216) $23  $(179) $55 
sales.
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The following table is a summary of the carrying amounts of Alkali’s assets and liabilities included as “Total assets of discontinued operations” and “Total liabilities of discontinued operations” of December 31, 2016:

  December 31, 2016 
Assets   
Current Assets   
Accounts receivable, net of allowance for doubtful accounts $146 
Inventories, net  33 
All other current assets  21 
Total current assets of discontinued operations  200 
Noncurrent Assets    
Property, plant and equipment  739 
Mineral leaseholds, net  730 
Other long-term assets  2 
Total assets of discontinued operations $1,671 

Liabilities   
Current Liabilities   
Accounts payable $44 
Accrued liabilities  36 
All other current liabilities  11 
Total current liabilities of discontinued operations  91 
All other long-term liabilities  20 
Total liabilities of discontinued operations $111 

3.3.    Income Taxes

Our operations are conducted through our various subsidiaries in a number of countries throughout the world. We have provided for income taxes based upon the tax laws and rates in the countries in which operations are conducted and income is earned.

  
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
  2017  2016  2017  2016 
Income tax provision $(13) $(6) $(10) $(25)
Income (loss) from continuing operations before income taxes $(12) $(56) $(85) $(213)
Effective tax rate  (108)%  (11)%  (12)%  (12)%

During the fourth quarter of 2016, we implemented various steps of an internal corporate restructuring plan to simplify our corporate, finance and legal structure and thereby improve operational, administrative, and commercial synergies (the “Corporate Reorganization”). As a result of this Corporate Reorganization, we reduced our cross jurisdictional financing arrangements during 2016; therefore, the three and nine months period ended September 30, 2017 is not impacted by withholding tax accruals on interest income. In connection with the Corporate Reorganization during the three months period ended March 31, 2017, Tronox Limited became managed and controlled in the United Kingdom (“U.K”), with no additional impacts to the consolidated provision forIncome before income taxes due to the valuation allowances in various jurisdictions.

During the nine months ended September 30, 2017, Tronox Limited, the public parent which is registered under the lawscomprised of the State of Western Australia, became managedfollowing:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Income tax (provision) benefit$(28)$893 $(54)$876 
Income before income taxes$141 $9 $270 $62 
Effective tax rate20 %(9,922)%20 %(1,413)%
Tronox Holdings plc, a U.K. public limited company is the publicly-traded parent company for the business group, and controlled in the U.K. The statutory tax rate in the U.K. at both September 30, 20172021 and 2020 was 19%. During 2016, Tronox Limited was managed and controlled in Australia which has a statutory tax rate of 30%.

During the three months ended September 30, 2017 we sold the Alkali segment of our operations.  The Alkali results are now shown as discontinued operations and are not included in the tabular results above.  The effective tax raterates for the three months ended September 30, 2017 differs from both the three months ended September 30, 2016, and the nine months ended September 30, 2017 primarily due to the discrete results of reporting the effects of this sale.
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Additionally, the effective tax rate for the three and nine months ended September 30, 2017 differs from2021 and 2020 are influenced by a variety of factors, primarily income and losses in jurisdictions with valuation allowances, disallowable expenditures, prior year accruals, and our jurisdictional mix of income at tax rates different than the U.K. statutory rate of 19% primarily due to valuation allowances, income in foreign jurisdictions taxed at rates different than 19%. The effective tax rate forrate. Additionally, both the three and nine months ended September 30, 2016 differs from2020 are influenced by the Australian statutory raterelease of 30% primarily due toa portion of the US valuation allowancesallowance and income in foreign jurisdictions taxed at rates lower than 30%, and withholding tax accruals on interest income. The income tax provision for the three and nine months ended September 30, 2017 differs from the income tax provision for the three and2020 is influenced by restructuring impacts. The nine months ended September 30, 2016 due2021 is influenced by the creation of a South African employee stock ownership plan.
At each reporting date, we perform an analysis to withholdingdetermine the likelihood of realizing our deferred tax accruals on interestassets and whether any valuation allowances are required. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income (including the reversals of deferred tax liabilities) during the periods in which we made during 2016.

The statutorythose deferred tax rates in various countries where subsidiariesassets will become deductible. Our analysis takes into consideration all available positive and negative evidence, including prior operating results, the nature and reason for any losses, our forecast of Tronox Limited have operations are different than both the U.K.future taxable income, utilization of tax planning strategies, and the Australiandates on which any deferred tax rates. Tax rates in the United States (“U.S.”) (35% for corporations), South Africa (28% for limited liability companies), the Netherlands (25% for corporations), Switzerland (8.5% for corporations)assets are expected to expire. These assumptions and Jersey, U.K. (0% for corporations) all impact our effective tax rate.

estimates require a significant amount of judgment and are made based on current and projected circumstances and conditions.
We continue to maintain full valuation allowances related to the total net deferred tax assets in Australia, the Netherlands,Saudi Arabia, Switzerland, and the U.S.,United Kingdom, as we cannot objectively assert that these deferred tax assets are more likely than not to be realized. FutureIt is reasonably possible that a portion of these valuation allowances could be reversed within the next year due to increased profitability levels. Until these valuation allowances are eliminated, future provisions for income taxes for these jurisdictions will include no tax benefits with respect to losses incurred and tax expense only to the extent of current state tax payments until the valuation allowances are eliminated.payments. Additionally, we have valuation allowances against specific tax assets in the Netherlands, South Africa, and during the nine month period ended September 30, 2017 we established a valuation allowance of $7 million against deferred tax assets in the U.K. which we do not currently expect to utilize.

These conclusions were reached by the application of ASC 740, Income Taxes, which require all available positive and negative evidence be weighted to determine whether a valuation allowance should be recorded. The more significant evidential matter in Australia, the U.S., The Netherlands, and the U.K. relates to recent book losses and the lack of sufficient projected taxable income. The more significant evidential matter for South Africa relates to assets that cannot be depleted or depreciated for tax purposes and capital gains tax losses which we do not expect to utilize.

The Company is currently under audit in Australia and the United States.
We currently have no uncertain tax positions recorded; however, it is reasonably possible that this could change in the next 12 months.
We believe that we have made adequate provision for income taxes that may be payable with respect to years open for examination; however, the ultimate outcome is not presently known and, accordingly, additionaladjustments to our provisions may be necessary and/or reclassifications of noncurrent tax liabilities to current may occur in the future.

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4.Income (Loss) Per Share
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4.    Income Per Share
The computation of basic and diluted income (loss) per share for the periods indicated is as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Numerator - Basic and Diluted:
Net income$113 $902 $216 $938 
Less: Net income attributable to noncontrolling interest2 6 13 14 
Net income available to ordinary shares$111 $896 $203 $924 
Denominator - Basic and Diluted:
Weighted-average ordinary shares, basic (in thousands)153,762 143,579 151,472 143,245 
Weighted-average ordinary shares, diluted (in thousands)159,020 145,067 157,148 143,969 
Basic net income per ordinary share$0.72 $6.24 $1.34 $6.45 
Diluted net income per ordinary share$0.70 $6.18 $1.29 $6.42 

  
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
  2017  2016  2017  2016 
Numerator – Basic and Diluted:            
Net income (loss) from continuing operations $(25) $(62) $(95) $(238)
Less: Net income (loss) from continuing operations attributable to noncontrolling interest  6   (2)  11   (1)
Undistributed net income (loss) from continuing operations attributable to Tronox Limited  (31)  (60)  (106)  (237)
Percentage allocated to ordinary shares (1)
  100%  100%  100%  100%
Net income (loss) from continuing operations available to ordinary shares  (31)  (60)  (106)  (237)
Net income (loss) from discontinued operations available to ordinary shares  (216)  23   (179)  55 
Net income (loss) available to ordinary shares $(247) $(37) $(285) $(182)
Denominator – Basic and Diluted:                
                 
Weighted-average ordinary shares, basic and diluted (in thousands)  119,405   116,219   118,908   116,108 
                 
Net income (loss) per Ordinary Share (2):
                
Basic and diluted net income (loss) from continuing operations per ordinary share $(0.26) $(0.53) $(0.89) $(2.04)
Basic and diluted net income (loss) from discontinued operations per ordinary share  (1.81)  0.20   (1.51)  0.47 
Basic and diluted net income (loss) per ordinary share $(2.07) $(0.33) $(2.40) $(1.57)

(1)Our participating securities do not have a contractual obligation to share in losses; therefore, when we have a net loss, none of the loss is allocated to participating securities.  Consequently, for the three and nine months ended September 30, 2017 and 2016, the two-class method did not have an effect on our net loss per ordinary share calculation, and as such, dividends paid during the year did not impact this calculation.

(2)Loss per ordinary share amounts were calculated from exact, not rounded, lossNet income per ordinary share amounts were calculated from exact, not rounded net income and share information.
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In computing diluted net income (loss) per share under the two-class method, we considered potentially dilutive shares.  Anti-dilutive shares not recognized in the diluted net lossincome per share calculation for the three and nine months ended September 30, 20172021 and 20162020 were as follows:
Shares
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Options495,314 1,205,020 495,314 1,205,020 
Restricted share units16,488 5,653,136 29,787 6,419,593 

  September 30, 2017  September 30, 2016 
  Shares  
Average
Exercise Price
  Shares  
Average
Exercise Price
 
Options  1,827,354  $21.21   1,997,437  $21.20 
Series A Warrants (1)
  960,371  $8.51   1,440,652  $8.51 
Series B Warrants (1)
  1,009,283  $9.37   1,953,250  $9.37 
Restricted share units  5,548,071  $11.22   5,566,589  $7.18 


(1)
Series A Warrants were converted into Class A ordinary shares at September 30, 2017 and 2016 using a rate of 6.02.  Series B Warrants were converted into Class A ordinary shares at September 30, 2017 and 2016 using a rate of 6.03.

5.    Inventories, Net
5.Accounts Receivable, Net of Allowance for Doubtful Accounts

Accounts receivable, net of allowance for doubtful accounts, consisted of the following:

  
September 30,
2017
  
December 31,
2016
 
Trade receivables $298  $271 
Other  12   8 
Subtotal  310   279 
Allowance for doubtful accounts  (1)  (1)
Accounts receivable, net of allowance for doubtful accounts $309  $278 

6.Inventories, Net

Inventories, net consisted of the following:
September 30,
2021		December 31,
2020
Raw materials$162 $170 
Work-in-process107 103 
Finished goods, net556 668 
Materials and supplies, net186 196 
Inventories, net – current$1,011 $1,137 

  
September 30,
2017
  
December 31,
2016
 
Raw materials $161  $191 
Work-in-process  30   35 
Finished goods, net  184   190 
Materials and supplies, net (1)
  98   97 
Total  473   513 
Less: Inventories, net – non-current  (14)  (14)
Inventories, net - current $459  $499 
Materials and supplies, net consists of processing chemicals, maintenance supplies and spare parts, which will be consumed directly and indirectly in the production of our products.
(1)Consists of processing chemicals, maintenance supplies, and spare parts, which will be consumed directly and indirectly in the production of our products.

Finished goods include inventory on consignment of $29 million and $24 million atAt September 30, 20172021 and December 31, 2016, respectively. At September 30, 2017 and December 31, 2016,2020, inventory obsolescence reserves primarily for materials and supplies were $15$43 million and $17$41 million, respectively. At September 30, 2017 and December 31, 2016, reservesReserves for lower of cost or market and net realizable value were $17$7 million and $26$29 million at September 30, 2021 and December 31, 2020, respectively.
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7.6.    Property, Plant and Equipment, Net

Property, plant and equipment, net of accumulated depreciation, consisted of the following:
September 30,
2021		December 31,
2020
Land and land improvements$188 $189 
Buildings371 368 
Machinery and equipment2,244 2,197 
Construction-in-progress242 192 
Other82 86 
Subtotal3,127 3,032 
Less: accumulated depreciation(1,412)(1,273)
Property, plant and equipment, net$1,715 $1,759 

  
September 30,
2017
  
December 31,
2016
 
Land and land improvements $94  $94 
Buildings  244   237 
Machinery and equipment  1,316   1,275 
Construction-in-progress  103   82 
Other  40   38 
Subtotal  1,797   1,726 
Less accumulated depreciation and amortization  (728)  (634)
Property, plant and equipment, net (1)
 $1,069  $1,092 
Substantially all of the property, plant and equipment, net is pledged as collateral for our debt. See Note 10.
(1)Substantially all of these assets are pledged as collateral for our debt. See Note 11.

DepreciationThe table below summarizes depreciation expense related to property, plant and equipment duringfor the three months ended September 30, 2017 and 2016 was $31 million and $30 million, respectively, of which $30 million and $29 million, respectively, wasperiods presented, recorded in “Cost of goods sold”the specific line items in theour unaudited Condensed Consolidated Statements of Operations and $1 million each was recorded in “Selling, general and administrative expenses” in the unaudited Condensed Consolidated Statements of Operations. Depreciation expense related to property, plant and equipment during the nine months ended September 30, 2017 and 2016 was $93 million and $86 million, respectively, of which $91 million and $84 million, respectively, was recorded in “Cost of goods sold” in the unaudited Condensed Consolidated Statements of Operations and $2 million each was recorded in “Selling, general and administrative expenses” in the unaudited Condensed Consolidated Statements of Operations.Income:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Cost of goods sold$54 $56 $171 $167 
Selling, general and administrative expenses1 1 4 3 
Total$55 $57 $175 $170 


8.
7.    Mineral Leaseholds, Net

Mineral leaseholds, net of accumulated depletion, consisted of the following:

September 30, 2021December 31, 2020
Mineral leaseholds$1,325 $1,333 
Less: accumulated depletion(555)(530)
Mineral leaseholds, net$770 $803 
  
September 30,
2017
  
December 31,
2016
 
Mineral leaseholds $1,263  $1,257 
Less: accumulated depletion  (404)  (380)
Mineral leaseholds, net $859  $877 


Depletion expense relating to mineral leaseholds recorded in “Cost of goods sold” in the unaudited Condensed Consolidated Statements of OperationsIncome was $8$9 million and $11 million during each of the three months ended September 30, 20172021 and 2016 and $242020, respectively. Depletion expense relating to mineral leaseholds recorded in "Cost of goods sold" in the unaudited Condensed Consolidated Statements of Income was $28 million and $26$25 million respectively, during the nine months ended September 30, 20172021 and 2016.2020, respectively.

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9.Intangible Assets, Net
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8.    Intangible Assets, Net
Intangible assets, net of accumulated amortization, consisted of the following:
September 30, 2021December 31, 2020
Gross CostAccumulated
Amortization		Net Carrying
Amount		Gross CostAccumulated
Amortization		Net Carrying
Amount
Customer relationships$291 $(207)$84 $291 $(193)$98 
TiO2 technology
93 (29)64 93 (24)69 
Internal-use software and other110 (44)66 73 (39)34 
Intangible assets, net$494 $(280)$214 $457 $(256)$201 

  September 30, 2017  December 31, 2016 
  
Gross
Cost
  
Accumulated
Amortization
  
Net Carrying
Amount
  
Gross
Cost
  
Accumulated
Amortization
  
Net Carrying
Amount
 
Customer relationships $291  $(129) $162  $291  $(115) $176 
TiO2 technology
  32   (11)  21   32   (9)  23 
Internal-use software  44   (24)  20   45   (21)  24 
Intangible assets, net $367  $(164) $203  $368  $(145) $223 

As of September 30, 2021 and December 31, 2020, internal-use software included approximately $58 million and $19 million, respectively, of capitalized software costs which are not being amortized as the software is not ready for its intended use.
AmortizationThe table below summarizes amortization expense related to intangible assets during each offor the three months ended September 30, 2017 and 2016 was $6 million of which less than $1 million each wasperiods presented, recorded in “Cost of goods sold”the specific line items in theour unaudited Condensed Consolidated Statements of Operations and $6 million each was recorded in “Selling, general and administrative expenses” in the unaudited Condensed Consolidated Statements of Operations. Amortization expense related to intangible assets during each of the nine months ended September 30, 2017 and 2016 was $19 million of which $1 million each was recorded in “Cost of goods sold” in the unaudited Condensed Consolidated Statements of Operations and $18 million each was recorded in “Selling, general and administrative expenses” in the unaudited Condensed Consolidated Statements of Operations. Income:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Cost of goods sold$— $— $1 $1 
Selling, general and administrative expenses8 8 23 23 
Total$8 $8 $24 $24 
Estimated future amortization expense related to intangible assets is $6$8 million for the remainder of 2017, $252021, $37 million each for 2018 through 2021,2022, $35 million for 2023, $34 million for 2024, $34 million for 2025 and $97$66 million thereafter.
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10.Accrued Liabilities
9.    Balance Sheet and Cash Flow Supplemental Information

Accrued liabilities consisted of the following:
September 30, 2021December 31, 2020
Employee-related costs and benefits$141 $133 
Related party payables1 7 
Interest16 21 
Sales rebates38 43 
Restructuring1 2 
Taxes other than income taxes22 16 
Asset retirement obligations6 9 
Interest rate swaps36 57 
Currency contracts2 — 
Other accrued liabilities63 62 
Accrued liabilities$326 $350 

  
September 30,
2017
  
December 31,
2016
 
Employee-related costs and benefits $63  $61 
Interest  5   35 
Sales rebates  19   20 
Taxes other than income taxes  11   9 
Professional fees and other  33   25 
Accrued liabilities $131  $150 

11.Debt

Debt Refinancing

On September 22, 2017, we completed our offering of our Senior Notes due 2025 for an aggregate principal amount of $450 million, the net proceeds of which, together with borrowings under our $2.150 billion New Term Loan Facility and proceeds from the Alkali sale, funded the redemption of the remaining outstanding balance of our Senior Notes due 2020 and repayment in full of the remaining outstanding balance of our $1.5 billion Prior Term Loan. In addition, we paid off our UBS Revolver and entered into a new asset-based revolving syndicated facility with Wells Fargo (all defined below).

The refinancing of our Senior Notes due 2020 was considered a debt extinguishment in accordance with ASC 470, Debt (“ASC 470”).  However, for refinancing of both the UBS Revolver and the New Term Loan Facility, a portion of each of these refinancing arrangements were considered modifications and a portion considered extinguishments in accordance with the requirements of ASC 470 as some of the original lenders in the original syndications were part of the new lender base.

Short-term Debt

During the third quarter of 2017, we repaid the $150 million outstanding balance under the global senior secured asset-based syndicated revolving credit facility with UBS AG (the “UBS Revolver”). Concurrent with entering into the Wells Fargo Revolver, described below, the UBS Revolver was terminated. Unamortized original debt issuance costs of $1 million relating to the UBS Revolver were included in “Gain (loss) on extinguishment of debt” in the Condensed Consolidated Statements of OperationsAdditional supplemental cash flow information for the three and nine months ended September 30, 2017. The remaining unamortized balance of original debt issuance costs of $2 million relating to the UBS Revolver will be amortized over the life of the Wells Fargo Revolver.

Wells Fargo Revolver

On September 22, 2017, we entered into a new global senior secured asset-based syndicated revolving credit facility with the lenders party thereto2021 and Wells Fargo Bank, N.A.2020 and as administrative agent (the “Wells Fargo Revolver”). The Wells Fargo Revolver provides us with up to $550 million of revolving credit loans, with an $85 million sublimit for letters of credit, and has a maturity date of September 22, 2022.  Our availability of revolving credit loans30, 2021 and letters of creditDecember 31, 2020 is subject to a borrowing base. Borrowings bear interest at our option, at either an adjusted London Interbank Offered Rate (“LIBOR”) plus an applicable margin that ranges from 1.25% to 1.75%, or a base rate, which is defined to mean the greatest of (a) the administrative agent’s prime rate, (b) the Federal funds effective rate plus 0.50% and (c) the adjusted LIBOR for a one-month period plus 1.00%, plus an applicable margin that ranges from 0.25% to 0.75%, in each case, based on the average daily borrowing availability. At September 30, 2017, there was no outstanding revolving credit loans under the Wells Fargo Revolver, except for $19 million of issued and undrawn letters of credit under the Wells Fargo Revolver. Debt issuance costs associated with the Wells Fargo Revolver of $6 million ($2 million remaining from the UBS Revolver and $4 million incurred for the Wells Fargo Revolver) were included in “Other long-term assets” in the Condensed Consolidated Balance Sheets at September 30, 2017 and will be amortized over the life of the Wells Fargo Revolver.as follows:
Nine Months Ended September 30,
Supplemental non cash information:20212020
Financing activities - Acquisition of noncontrolling interest$125 $— 
September 30, 2021December 31, 2020
Capital expenditures acquired but not yet paid$54 $37 

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10.    Debt
Long-Term Debt
Long-term debt, net of an unamortized discount and debt issuance costs, consisted of the following:
Original
Principal		Annual
Interest Rate		Maturity
Date		September 30, 2021December 31, 2020
Prior Term Loan Facility, net of unamortized discount (1)
$2,150 Variable9/22/2024$— $1,607 
New Term Loan Facility, net of unamortized discount (1) (4)
1,300 Variable3/11/20281,098 — 
Senior Notes due 2025450 5.75 %10/1/2025— 450 
Senior Notes due 2026615 6.50 %4/15/2026— 615 
Senior Notes due 20291,075 4.63 %3/15/20291,075 — 
6.5% Senior Secured Notes due 2025500 6.50 %5/1/2025500 500 
Standard Bank Term Loan Facility (1) (3)
222 Variable3/25/2022— 115 
Tikon Loan (3)
N/AVariable5/23/2021— 17 
Australian Government Loan, net of unamortized discountN/AN/A12/31/20361 1 
MGT Loan(2)
36VariableVariable34 36 
Finance leases15 15 
Long-term debt2,723 3,356 
Less: Long-term debt due within one year(7)(58)
Debt issuance costs(41)(35)
Long-term debt, net$2,675 $3,263 

  
Original
Principal
  
Annual
Interest Rate
  
Maturity
Date
 
September 30,
2017
  
December 31,
2016
 
Prior Term Loan, net of unamortized discount (1)
 $1,500  Variable  3/20/2020 $—  $1,441 
New Term Loan Facility, net of unamortized discount (2)
 $2,150  Variable  9/22/2024 $2,136  $— 
Senior Notes due 2020  900   6.375% 8/15/2020  —   896 
Senior Notes due 2022  600   7.50% 3/15/2022  584   584 
Senior Notes due 2025  450   5.75% 9/22/2025  450   — 
Lease financing            17   19 
Long-term debt            3,187   2,940 
Less: Long-term debt due within one year            (11)  (16)
Debt issuance costs            (47)  (36)
Long-term debt, net              $3,129  $2,888 
_______________
(1)(1)Average effective interest rate of 5.2% and 5.1% during the three and nine months ended September 30, 2017, respectively, and 4.9% each during the three and nine months ended September 30, 2016.
(2)Average effective interest rate of 4.5% during each of the three and nine months ended September 30, 2017.

At September 30, 2017, the scheduled maturities of our long-term debt were as follows:

  
Total
Borrowings
 
2017 $— 
2018  17 
2019  22 
2020  22 
2021  22 
Thereafter  3,118 
Total  3,201 
Remaining accretion associated with the New Term Loans  (14)
Total borrowings $3,187 

Prior Term Loan

On April 23, 2014, we, along with our wholly owned subsidiary, Tronox Pigments (Netherlands) B.V., and certain named guarantor subsidiaries, entered into a Third Amended and Restated Credit and Guaranty Agreement (the “Third Agreement”) with the lenders party thereto and Goldman Sachs Bank USA, as administrative agent. Pursuant to the Third Agreement, we obtained a $1.5 billion senior secured term loan (the “Prior Term Loan”) with a maturity date of March 19, 2020. As mentioned above, on September 22, 2017, we repaid the remaining $1.4 billion outstanding balance of the $1.5 billion Prior Term Loan and entered into the New Term Loan Facility described below. Unamortized original debt discount and issuance costs of $1 million relating to4.9% during the nine months ended September 30, 2021. Average effective interest rate on the Prior Term Loan Facility of 4.5% during the nine months ended September 30, 2020. Average effective interest rate on the Standard Bank Term Loan Facility of 6.4% and 8.2% during the nine months ended September 30, 2021 and 2020, respectively.
(2)The MGT loan is a related party debt facility. Average effective interest rate on the MGT loan of 3.07% during the nine months ended September 30, 2021.
(3)During the nine months ended September 30, 2021, the Company made 3 voluntary prepayments totaling R1,040 million (approximately $69 million at September 30, 2021 exchange rate) on the Standard Bank Term Loan Facility. During the nine months ended September 30, 2021, the Company made a voluntary prepayment of CNY 41 million (approximately $6 million at September 30, 2021 exchange rate) on the Tikon Loan, as well as repaying the remaining outstanding principal balance of CNY 70 million (approximately $11 million at September 30, 2021 exchange rate) on the Tikon loan. Additionally, on September 30, 2021, in conjunction with the Company's refinancing of the Standard Bank Term Loan Facility, the Company repaid the remaining outstanding principal balance of R390 million (approximately $26 million at September 30, 2021 exchange rate). Refer below for further details on the refinancing transaction. No prepayment penalties were includedrequired as a result of these principal prepayments.
(4)During the three and nine months ended September 30, 2021, the Company made 4 and 6 voluntary prepayments, respectively, totaling $135 million and $196 million, respectively, on the New Term Loan Facility. As a result of these voluntary prepayments, the Company recorded $3 million and $4 million in “Gain (loss)"Loss on extinguishment of debt” indebt" within the Condensed Consolidated StatementsStatement of OperationsIncome for the three and nine months ended September 30, 2017. The remaining balance2021, respectively.
Prior Term Loan Facility and New Term Loan Facility
18
Table of unamortized original debt discountContents
On March 11, 2021, Tronox Finance LLC entered into an amendment and issuance costsrestatement of $16 million relatingits existing first lien term loan credit facility (the "Prior Term Loan Facility") pursuant to which, among other thing, we amended and restated the Prior Term Loan will continue to be amortized over the lifeFacility with a new amended and restated first lien credit agreement dated as of the New Term Loan Facility.

New Term Loan Facility

On September 22, 2017 we entered into a new senior secured first lien term loan facility (the “New(as amended through and including March 11, 2021, the "New Term Loan Facility”Facility") with thea syndicate of lenders party thereto and HSBC Bank of America, N.A.,USA, National Association, as administrative agent with a maturity date of September 22, 2024.and collateral agent. The New Term Loan Facility consists of (i)provides the Company with (a) a U.S. dollar term facilitynew seven-year New Term Loan Facility) in an aggregate principal amount of $1.5$1.3 billion and (b) new five-year cash flow revolving facility (the “New Term Loans”"New Revolving Facility") with our subsidiary, Tronox Finance LLC (“Tronox Finance”) as the borrowerproviding initial revolving commitments of $350 million and (ii) a U.S. dollar term facility in an aggregate principal amountsublimit of $650$125 million (the “Blocked Term Loan”)  with our unrestricted subsidiary, Tronox Blocked Borrower LLC (the “Blocked Borrower”) as the borrower, which Blocked Term Loan was funded into a blocked account.  Upon consummationfor letters of the Cristal acquisition, the Blocked Borrower will merge with and into Tronox Finance, and the Blocked Term Loan will become available to Tronox Finance. If the Cristal Acquisition is terminated, the Blocked Term Loan will be repaid to the lenders of such Blocked Term Loan.credit. The proceeds from the Blocked Term Loan were included in “Restricted cash” in the Condensed Consolidated Balance Sheets at September 30, 2017. The term loans undermaturity date on the New Term Loan Facility and the New Revolving Facility is March 11, 2028 and March 11, 2026, respectively.
The New Term Loan Facility shall bear interest at either the “Applicable Rate” defined by reference to a grid pricing matrix that relates to ourbase rate or an adjusted LIBOR rate, in each case plus an applicable margin. The applicable margin in respect of the New Term Loan Facility is either 1.50% or 1.25%, for base rate loans, or 2.50% or 2.25%, for adjusted LIBOR rate loans, in each case determined based on, initially the passage of time, and thereafter upon the Company’s first lien net leverage ratio.ratio at the applicable time. Interest is payable on the New Term Loan Facility on the last business of each March, June, September and December. Based uponon our first lien net leverage ratio, the Applicable Rateapplicable margin under the New Term Loan Facility as of September 30, 20172021 was 300 basis pointsLIBOR plus LIBOR.a margin of 2.25%. The New Term LoanRevolving Facility was issued netshall bear interest at either the base rate or adjusted LIBOR rate, in each case plus an applicable margin. The applicable margin in respect of an original issue discount of $11 million. Debt issuance costs of $4 million relating to the New TermRevolving Facility is either 1.25%, 1.00% or 0.75% for base rate loans, or 2.25%, 2.00% or 1.75%, for adjusted LIBOR Rate Loans, were included in “Gain (loss)each case determined based on, extinguishmentinitially the passage of debt” intime, and thereafter upon the Condensed Consolidated Statements of Operations forCompany’s first lien net leverage ratio at the three and nine months ended September 30, 2017. Debt issuance costs of $30 million associatedapplicable time. The New Credit Facility requires the Borrower to pay customary agency fees.
In connection with entering into the New Term Loan Facility, ($13the Company terminated all remaining commitments and repaid all obligations under its Prior Term Loan Facility and Wells Fargo Revolver. Additionally, we repaid $313 million remaining fromof the principal under the Prior Term Loan and $17 million incurred forFacility with cash on hand.
Commencing June 30, 2021, the New Term Loan Facility) were recorded asRevolving Facility contains a direct reduction of the carrying value of the long-term debt as described below and will be amortized over the lifespringing financial covenant when a loan amount is drawn exceeding 35% of the New Term LoanRevolving Facility. In this instance, the first lien net leverage ratio shall not exceed 4.75x at quarter end testing period.
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this transaction and in accordance with ASC 470, we recognized approximately $4 million in "Loss on Extinguishment of Debt" recorded in the unaudited condensed Consolidated Statement of Income for the nine months ended September 30, 2021.
Senior Notes due 2020

2025, Senior Notes due 2026 and Senior Notes due 2029
On September 25, 2017, we redeemed (the “Redemption”) the $896 million outstanding balanceMarch 15, 2021, Tronox Incorporated closed an offering of our $900$1,075 million aggregate principal 6.375%amount of its 4.625% senior notes due 2020 issued by Tronox Finance2029 (the “Senior"Senior Notes due 2020”2029"). The total cash payment made in connection withnotes were offered at par and issued under an indenture dated as of March 15, 2021 among the Redemption was approximately $917 million,Company and included accrued interestcertain of $7 millionthe Company's restricted subsidiaries as guarantors and a call premium of $14 million (the “Call Premium”) included in “Gain (loss) on extinguishment of debt” in the unaudited Condensed Consolidated Statements of Operations. During the nine months ended September 30, 2016, we repurchased $4 million of face value ofWilmington Trust, National Association. The Senior Notes due 2029 provide, among other thing, that the Senior Notes due 2020 at a price2029 are guaranteed by the Company and certain of 77% of par, resulting in a net gain of approximately $1 million which was included in “Gain (loss) on extinguishment of debt” in the unaudited Condensed Consolidated Statements of Operations.Company's restricted subsidiaries, subject to certain exceptions. The Senior Notes due 2020 were fully2029 and unconditionally guaranteed on arelated guarantees are the senior and unsecured basis by us and certain of our subsidiaries. As a resultobligations of the Redemption, we are no longer required to present guarantor condensed consolidating financial statements starting with this Form 10-Q forCompany and the period ended September 30, 2017. In connection with the Redemption, we recorded a loss on extinguishment of debt of $22 million included in “Gain (loss) on extinguishment of debt”, of which $8 million related to unamortized debt issuance costs and $14 million related to the Call Premium.

Senior Notes due 2022

We have $600 million aggregate principal amount, 7.50% Senior Notes due 2022 (the “Senior Notes due 2022”) which notes were issued pursuant to an indenture dated March 19, 2015 (the “2022 Indenture”).guarantors. The Senior Notes due 20222029 have not been registered under the Securities Act, or any state securities laws, and may not be offered or sold in the U.S.United States absent registration or an applicable exemption from registration requirements. There were no repayments during the three and nine months ended September 30, 2017. During the nine months ended September 30, 2016, we repurchased $16 million of face value of notes at a weighted average price of 76% of par, resulting in a net gain of approximately $3 million which was included in “Gain (loss) on extinguishment of debt” in the unaudited Condensed Consolidated Statements of Operations.

The Indenture and the Senior Notes due 2022 provide, among other things, that the Senior Notes due 2022 are senior unsecured obligations of Tronox Finance and are guaranteed on a senior and unsecured basis by us and certain of our other subsidiaries. Interest is payable on March 15 and September 15 of each year until their maturity date of March 15, 2022. The terms of the 2022 Indenture,indenture, among other things, limit, in certain circumstances, the ability of us to: incur certain additional indebtednessthe Company and issue preferred stock; make certain dividends, distributions, investments and otherits restricted payments; sell certain assets; incur liens; agree to any restrictions on the ability of certain subsidiaries to make payments to us; consolidate or merge with or into, or sell substantially all of our assets to, another person; enter into transactions with affiliates; and enter into new lines of business. At September 30, 2017 and December 31, 2016, debt issuance costs related to the Senior Notes due 2022 of $8 million and $10 million, respectively, were recorded as a direct reduction of the carrying value of the long-term debt as described below.

Senior Notes due 2025

On September 22, 2017, our wholly-owned subsidiary Tronox Finance plc, issued 5.75% senior notes due 2025 for an aggregate principal amount of $450 million (the “Senior Notes due 2025”), which notes were issued under an indenture dated September 22, 2017 (the “2025 Indenture”). The 2025 Indenture and the Senior Notes due 2025 provide, among other things, that the Senior Notes due 2025 are senior unsecured obligations of Tronox Finance plc and are guaranteed on a senior and unsecured basis by us and certain of our other subsidiaries. The Senior Notes due 2025 have not been registered under the Securities Act, and may not be offered or sold in the U.S. absent registration or an applicable exemption from registration requirements. Interest is payable on April 1 and October 1 of each year beginning on April 1, 2018 until their maturity date of October 1, 2025. The terms of the 2025 Indenture, among other things, limit, in certain circumstances, the ability of us and certain of our subsidiaries to: incur secured indebtedness, incur indebtedness at a non-guarantor subsidiary, engage in certain sale-leaseback transactions and merge, consolidate or sell substantially all of ourtheir assets. The terms of the 2025 Indenture also include certain limitationsInterest is payable on our non-guarantor subsidiaries incurring indebtedness. Debt issuance costs of $9 million relating to the Senior Notes due 2025 were recorded as a direct reduction2029 on March 15 and September 15 of each year beginning on September 15, 2021 until their maturity date of March 15, 2029.
On March 31, 2021, the carrying valueCompany repaid the outstanding principal balance of the long-term debt as described below and will be amortized over the life of the$615 million on its Senior Notes due 2025.2026. As a result of this transaction, we recorded $30 million of debt extinguishment costs, including a call premium of $21 million, in "Loss on Extinguishment of Debt" on the Condensed Consolidated Statement of Income for the nine months ended September 30, 2021.
On April 1, 2021, the Company repaid the outstanding principal balance of $450 million on its Senior Notes due 2025. As a result of this transaction, we recorded $22 million of debt extinguishment costs, including a call premium of $19 million, in
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Liquidity and Capital Resources

As"Loss on Extinguishment of Debt" on the Condensed Consolidated Statement of Income for the nine months ended September 30, 2017, we had $238 million available under the $550 million Wells Fargo Revolver and $1.1 billion in cash and cash equivalents. In addition, restricted cash as of September 30, 2017 included the $650 million proceeds from the Blocked2021.
New Standard Bank Term Loan discussed above.Facility and Revolving Credit Facility

Lease Financing

We have capital lease obligationsOn October 1, 2021, Tronox Minerals Sands Proprietary Limited, a wholly-owned subsidiary of the Company, entered into an amendment and restatement of a new credit facility with Standard Bank. The new credit facility provides the Company with (a) a new five-year term loan facility in South Africa, which are payable through 2031 at a weighted average interest ratean aggregate principal amount of approximately 14%. At September 30, 2017 and December 31, 2016, assets recorded under capital lease obligations were $21 million and $7 million, respectively. Related accumulated amortization was $7 million and $6R1.5 billion (approximately $99 million at September 30, 20172021 exchange rate) (the "New Standard Bank Term Loan Facility") and (b) a new three-year revolving credit facility (the "New Standard Bank Revolving Credit Facility") providing initial revolving commitments of R1.0 billion (approximately $66 million at September 30, 2021 exchange rate). The maturity date on the New Standard Bank Term Loan Facility and the New Standard Bank Revolving Credit Facility is November 11, 2026 and October 1, 2024, respectively. The New Standard Bank Term Loan Facility has a delayed draw feature up to thirty business days from the effective date of the executed credit agreement. Mandatory capital repayments of R37.5 million (approximately $2 million at September 30, 2021 exchange rate) are scheduled quarterly with the first mandatory repayment starting in December 2021.
Both the New Standard Bank Term Loan Facility and the New Standard Bank Revolving Credit Facility shall bear interest at an adjusted JIBAR rate plus an applicable margin. The applicable margin on the New Standard Bank Term Loan Facility is 2.35%. The applicable margin on the New Standard Bank Revolving Credit Facility is based upon average credit utilization during any interest period. If the revolving credit facility utilization is less than 33%, less than 66% but greater than 33%, or greater than 66%, the applicable margin is 2.10%, 2.25%, and 2.40%, respectively. The New Standard Bank Revolving Credit Facility requires the borrower to pay customary agency fees. Interest is payable on the New Standard Bank Term Loan Facility on each of March 31, June 30, September 30 and December 31, 2016, respectively. During eachand the final maturity date pursuant to the agreement. Interest is payable on the New Standard Bank Revolving Credit Facility on the last day of the three and nine months ended September 30, 2017 and 2016, we made principal payments of less than $1 million.

Fair Value

Our debt is recorded at historical amounts. At September 30, 2017 and December 31, 2016,applicable interest period pursuant to the fair value of the New Term Loan Facility was $2.2 billion. At September 30, 2017 and December 31, 2016, the fair value of the Senior Notes due 2022 was $616 million and $544 million, respectively. At September 30, 2017 the fair value of our Senior Notes due 2025 was $461 million. We determined the fair value of the New Term Loan Facility, the Senior Notes due 2022 and the Senior Notes due 2025 using quoted market prices. The fair value hierarchy for the New Term Loan Facility, the Senior Notes due 2022 and the Senior Notes due 2025 is a Level 1 input. Balances outstanding under our Wells Fargo Revolver are carried at contracted amounts, which approximate fair value based on the short term nature of the borrowing and the variable interest rate. The fair value hierarchy for our Wells Fargo Revolver is a Level 2 input.agreement.

Debt Covenants

As of September 30, 2021, we are in compliance with all financial covenants in our debt facilities.
11.    Derivative Financial Instruments
Derivatives recorded on the Condensed Consolidated Balance Sheet:
The following table is a summary of the fair value of derivatives outstanding at September 30, 2021 and December 31, 2020:
Fair Value
September 30, 2021December 31, 2020
Assets(a)Accrued LiabilitiesAssets(a)Accrued Liabilities
Derivatives Designated as Cash Flow Hedges
Currency Contracts$10 $1 $58 $— 
Interest Rate Swaps$— $36 $— $57 
Natural Gas Hedges$2 $— $— $— 
Total Hedges$12 $37 $58 $57 
Derivatives Not Designated as Cash Flow Hedges
Currency Contracts$— $1 $7 $— 
Total Derivatives$12 $38 $65 $57 
(a) At September 30, 2017,2021 and December 31, 2020, current assets of $12 million and $65 million, respectively, are recorded in prepaid and other current assets on the Condensed Consolidated Balance Sheets.
Derivatives' Impact on the Condensed Consolidated Statement of Income:
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The following table summarizes the impact of the Company's derivatives on the unaudited Condensed Consolidated Statement of Income:
Amount of Pre-Tax Gain (Loss) Recognized in EarningsAmount of Pre-Tax Gain (Loss) Recognized in Earnings
RevenueCost of Goods SoldOther Income (Expense), netRevenueCost of Goods SoldOther Income (Expense), net
Three Months Ended September 30, 2021Three Months Ended September 30, 2020
Derivatives Not Designated as Hedging Instruments
Currency Contracts$— $— $— $— $— $4 
Derivatives Designated as Hedging Instruments
Currency Contracts$— $13 $— $(3)$4 $— 
Total Derivatives$— $13 $— $(3)$4 $4 
Amount of Pre-Tax Gain (Loss) Recognized in EarningsAmount of Pre-Tax Gain (Loss) Recognized in Earnings
RevenueCost of Goods SoldOther Income (Expense), netRevenueCost of Goods SoldOther Income (Expense), net
Nine Months Ended September 30, 2021Nine Months Ended September 30, 2020
Derivatives Not Designated as Hedging Instruments
Currency Contracts$— $— $3 $— $— $(4)
Derivatives Designated as Hedging Instruments
Currency Contracts$— $22 $— $(9)$(1)$— 
Total Derivatives$— $22 $3 $(9)$(1)$(4)
Interest Rate Risk
During the second quarter of 2019, we hadentered into interest-rate swap agreements with an aggregate notional value of $750 million, representing a portion of our Prior Term Loan Facility, which effectively converts the variable rate to a fixed rate for that portion of the loan. The agreements expire in September 2024. The Company’s objectives in using the interest-rate swap agreements are to add stability to interest expense and to manage its exposure to interest rate movements. These interest rate swaps have been designated as cash flow hedges and involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. There was no financial covenants in the Wells Fargo Revolver andimpact associated with the New Term Loan Facility. We wereFacility as the hedge remained highly effective.
Fair value gains or losses on these cash flow hedges are recorded in compliance with all our reporting covenants asother comprehensive (loss) income and are subsequently reclassified into interest expense in the same periods during which the hedged transactions affect earnings. At September 30, 2021 and December 31, 2020, the net unrealized loss of $36 million and for$57 million, respectively, was recorded in "Accumulated other comprehensive loss" on the unaudited Condensed Consolidated Balance Sheet. For the three and nine months ended September 30, 2017.2021, the amounts recorded in interest expense related to the interest-rate swap agreements were $4 million and $12 million, respectively. For the three and nine months ended September 30, 2020, the net amounts recorded in interest expense related to the interest-rate swap agreements were $4 million and $6 million, respectively.

Foreign Currency Risk
Interest
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During the third quarter of 2019, the first quarter of 2020 and Debt Expense, Net

Interestsecond quarter of 2021, we entered into foreign currency contracts used to hedge forecasted third party non-functional currency sales for our South African subsidiaries and debt expense,forecasted non-functional currency cost of goods sold for our Australian subsidiaries. These foreign currency contracts are designated as cash flow hedges. Changes to the fair value of these foreign currency contracts are recorded as a component of other comprehensive (loss) income, if these contracts remain highly effective, and are recognized in net sales or costs of goods sold in the unaudited Condensed Consolidated Statementsperiod in which the forecasted transaction affects earnings or are recognized in other income (expense) when the transactions are no longer probable of Operations consistedoccurring.
As of September 30, 2021, we had notional amounts of 120 million Australian dollars (or approximately $87 million at September 30, 2021 exchange rate) that expire between October 28, 2021 and December 30, 2021 to reduce the following:

  
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
  2017  2016  2017  2016 
Interest on Prior Term Loan $16  $17  $49  $50 
Interest on New Term Loan Facility  2   —   2   — 
Interest on Senior Notes due 2020  13   14   41   43 
Interest on Senior Notes due 2022  11   11   33   33 
Interest on Senior Notes due 2025  1   —   1   — 
Amortization of deferred debt issuance costs and discounts on debt  3   3   9   8 
Other  2   1   7   6 
Capitalized interest  (1)  —   (2)  (2)
Total interest and debt expense, net $47  $46  $140  $138 

In connection with obtaining debt, we incurred debt issuance costs, which are being amortized through the respective maturity dates using the effective interest method.exposure of our Australian subsidiaries’ cost of sales to fluctuations in currency rates. At September 30, 2017, we had deferred debt issuance costs2021 and December 31, 2020, there was an unrealized net gain of $6$26 million related to the Wells Fargo Revolver which isand $58 million, respectively, recorded in “Other long-term assets” in"Accumulated other comprehensive loss" on the unaudited Condensed Consolidated Balance Sheets.Sheet, of which $26 million is expected to be recognized in earnings over the next twelve months in line with the underlying sales of inventory. Of the $26 million, $13 million is expected to be recognized in earnings during the remainder of 2021.
We enter into foreign currency contracts for the South African Rand and Australian Dollar to reduce exposure of our subsidiaries’ balance sheet accounts not denominated in our subsidiaries’ functional currency to fluctuations in foreign currency exchange rates. Historically, we have used a combination of zero-cost collars or forward contracts to reduce the exposure.  For accounting purposes, these foreign currency contracts are not considered hedges. The change in fair value associated with these contracts is recorded in “Other expense, net” within the unaudited Condensed Consolidated Statement of Income and partially offsets the change in value of third party and intercompany-related receivables not denominated in the functional currency of the subsidiary. At September 30, 2017, we had $302021, there was (i) 385 million South African Rand (or approximately $25 million at September 30, 2021 exchange rate). At September 30, 2021, the fair value of the foreign currency contracts was a fair value of a net loss of less than $1 million. At December 31, 2020, there was (i) 354 million South African Rand (or approximately $23 million at September 30, 2021 exchange rate) and $9(ii) 54 million Australian dollars (or approximately $39 million at September 30, 2021 exchange rate) of notional amounts outstanding foreign currency contracts. 
12.    Fair Value
Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The accounting standards also have established a fair value hierarchy, which prioritizes the inputs to valuation techniques used in measuring fair value into three broad levels as follows:
Level 1 -Quoted prices in active markets for identical assets or liabilities
Level 2 -Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly
Level 3 -Unobservable inputs based on the Company’s own assumptions
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Our debt discountis recorded at historical amounts. The following table presents the fair value of our debt and issuance costs related toderivative contracts at both September 30, 2021 and December 31, 2020:
September 30,
2021		December 31,
2020
Prior Term Loan Facility$— $1,610 
New Term Loan Facility1,101 — 
Standard Bank Term Loan Facility— 115 
Senior Notes due 2025— 468 
Senior Notes due 2026— 641 
Senior Notes due 20291,073 — 
6.5% Senior Secured Notes due 2025525 536 
Tikon Loan— 17 
Australian Government Loan1 1 
MGT Loan34 36 
Interest rate swaps36 57 
Foreign currency contracts, net9 65 
We determined the fair value of the Prior Term Loan Facility, New Term Loan Facility, and the Senior Notes due 2025, respectively,the Senior Notes due 2026, the Senior Notes due 2029 and 6.5% Senior Secured Notes due 2025 using quoted market prices, which was recorded asunder the fair value hierarchy is a direct reductionLevel 1 input. We determined the fair value of the Standard Bank Term Loan Facility and Tikon Loan utilizing transactions in the listed markets for identical or similar liabilities, which under the fair value hierarchy is a Level 2 input. The fair value of the Australian Government Loan and MGT Loan is based on the contracted amount which is a Level 2 input.
We determined the fair value of the foreign currency contracts and the interest rate swaps using inputs other than quoted prices in active markets that are observable either directly or indirectly. The fair value hierarchy for the foreign currency contracts and interest rate swaps is a Level 2 input.
The carrying value of the long termcash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and short-term debt in the unaudited Condensed Consolidated Balance Sheets. At September 30, 2017 and December 31, 2016, we had $8 million and $10 million, respectively, of debt issuance costs relatedapproximate fair value due to the Senior Notes 2022, which were recorded as a direct reductionshort-term nature of the carrying value of the long term debt in the unaudited Condensed Consolidated Balance Sheets.
these items.
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12.13.    Asset Retirement Obligations

Asset retirement obligations consist primarily of rehabilitation and restoration costs, landfill capping costs, decommissioning costs, and closure and post-closure costs. ActivityActivities related to asset retirement obligations waswere as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Beginning balance$169 $155 $166 $158 
Additions— 1 4 1 
Accretion expense3 4 9 9 
Remeasurement/translation(6)4 (9)(5)
Other, including change in estimates3 — 3 — 
Settlements/payments(3)(5)(7)(8)
Other acquisition and divestiture related— — — 4 
Balance, September 30,$166 $159 $166 $159 

  
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
  2017  2016  2017  2016 
Beginning balance $80  $78  $76  $81 
Additions  1   —   1   1 
Accretion expense  2   1   4   4 
Remeasurement/translation  —   3   4   5 
Changes in estimates, including cost and timing of cash flows  —   —   —   (9)
Settlements/payments  (1)  —   (3)  — 
Balance, September 30, $82  $82  $82  $82 

September 30, 2021December 31, 2020
Current portion included in “Accrued liabilities”$6 $9 
Noncurrent portion included in “Asset retirement obligations”160 157 
Asset retirement obligations$166 $166 
Asset retirement obligations in our unaudited Condensed Consolidated Balance Sheets at September 30, 2017
14.    Commitments and December 31, 2016 consist of a current portion of $4 million and $3 million, respectively, included in “Accrued liabilities” and a noncurrent portion of $78 million and $73 million, respectively, included in “Asset retirement obligations”.Contingencies

During the nine months ended September 30, 2016, we amended our lease agreement for our TiO2 pigment facility in Botlek, The Netherlands, which included an option to extend the lease term for an additional 25 years. This amendment increased the estimated useful life used in determining the asset retirement obligation and consequently, we recognized a $10 million reduction to this liability.

13.Commitments and Contingencies

Purchase and Capital Commitments— Includes obligations for purchase requirements of process chemicals, supplies, utilities and services entered into in the ordinary course of business. At September 30, 2017,2021, purchase commitments were $72 million for the remainder of 2017, $82 million for 2018, $57 million for 2019, $41 million for 2020, $29$90 million for 2021, $98 million for 2022, $70 million for 2023, $59 million for 2024, $47 million for 2025, and $118$143 million thereafter.

Letters of Credit—At September 30, 2017,2021, we had outstanding letters of credit and bank guarantees and performance bonds of $43$53 million, of which $19$23 million were letters of credit issued under the Wells Fargo Revolver, $18and $30 million were bank guarantees issued by ABSA Bank Limited (“ABSA”), $5 million were bank guarantees issued by Standard Bank, $1 million wereguarantees. Amounts for performance bonds issuedwere not material.
Environmental Matters— It is our policy to record appropriate liabilities for environmental matters when remedial efforts are probable and the costs can be reasonably estimated. Such liabilities are based on our best estimate of the undiscounted future costs required to complete the remedial work. The recorded liabilities are adjusted periodically as remediation efforts progress or as additional technical, regulatory or legal information becomes available. Given the uncertainties regarding the status of laws, regulations, enforcement policies, the impact of other potentially responsible parties, technology and information related to individual sites, we do not believe it is possible to develop an estimate of the range of reasonably possible environmental loss in excess of our recorded liabilities. We expect to fund expenditures for these matters from operating cash flows. The timing of cash expenditures depends principally on the timing of remedial investigations and feasibility studies, regulatory approval of cleanup projects, remedial techniques to be utilized and agreements with other parties.  Included in these environmental matters is the following:
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Hawkins Point Plant. Residual waste mud, known as Batch Attack Mud, and a spent sulfuric waste stream were deposited in an onsite repository (the “Batch Attack Lagoon”) at a former TiO2 manufacturing site, Hawkins Point Plant in Baltimore, Maryland, operated by Westpac Banking CorporationCristal USA, Inc. from 1954 until 2011.  We assumed responsibility for remediation of the Hawkins Point Plant when we acquired the TiO2 business of Cristal in April 2019.  In 1984, a predecessor of Cristal and less than $1the Maryland Department of the Environment (“MDE”) entered into a consent decree (the “Consent Decree”) to address the Batch Attack Lagoon.  The Consent Decree required that Cristal close the Batch Attack Lagoon when the Hawkins Point Plant ceased operations.  In addition, we are investigating whether hazardous substances are migrating from the Batch Attack Lagoon.   A provision of $60 million of letters of credit issued by UBS.has been made in our financial statements for the Hawkins Point Plant consistent with the accounting policy described above. We are in discussions with the MDE regarding a new consent decree to address both the Batch Attack Lagoon as well as other environmental contamination issues associated with the Hawkins Point Plant.

Other Matters—From time to time, we may be party We are subject to a number of other lawsuits, investigations and disputes (some of which involve substantial amounts claimed) arising out of the conduct of our business, including matters relating to commercial transactions, prior acquisitions and divestitures, including our acquisition of Cristal, employee benefit plans, intellectual property, and environmental, health and safety matters. We recognize a liability for any contingency that is probable of occurrence and reasonably estimable. We continually assess the likelihood of adverse judgments of outcomes in these matters, as well as potential ranges of possible losses (taking into consideration any insurance recoveries), based on a careful analysis of each matter with the assistance of outside legal counsel and, administrative proceedings involving legal, environmental, and/orif applicable, other experts. Included in these other matters in various courts or agencies. These proceedings, individually andare the following:
Venator Materials plc v. Tronox Limited. In May 2019, Venator Materials plc (“Venator”) filed an action in the aggregate, may haveSuperior Court of the State of Delaware alleging among other things that we owed Venator a $75 million “Break Fee” pursuant to the terms of a preliminary agreement dated July 14, 2018 (the “Exclusivity Agreement”). The Exclusivity Agreement required, among other things, Tronox and Venator to use their respective best efforts to negotiate a definitive agreement to sell the entirety of the National Titanium Dioxide Company Limited’s (“Cristal’s”) North American operations to Venator if a divestiture of all or a substantial part of these operations were required to secure the approval of the Federal Trade Commission for us to complete our acquisition of Cristal’s TiO2 business. In June 2019, we denied Venator's claims and counterclaimed against Venator seeking to recover $400 million in damages from Venator that we suffered as a result of Venator’s breaches of the Exclusivity Agreement. Specifically, we alleged, among other things, that Venator’s failure to use best efforts constituted a material adverse effectbreach of the Exclusivity Agreement and directly resulted in and caused us to sell Cristal’s North American operations to an alternative buyer for $701 million, $400 million less than the price Venator had agreed to in the Exclusivity Agreement. Though we believe that our interpretation of the Exclusivity Agreement is correct, there can be no assurance that we will prevail in litigation.
Western Australia Stamp Duty Matter. In May 2018, we lodged a pre-transaction determination request for a stamp duty exemption with the Western Australia Office of State Revenue (the “WA OSR”) in connection with our re-domicile transaction (the “Re-Domicile Transaction”) which was subsequently granted by the WA OSR in June 2018 on us. These proceedings maya preliminary basis. Immediately following the consummation of the Re-Domicile Transaction, we filed a confirmation request for the stamp duty exemption with the WA OSR. Following this confirmation request, we exchanged numerous communications with the WA OSR addressing questions raised and stating our position. In July 2021, the WA OSR informed us that they have reviewed their technical position on the applicability of the stamp duty exemption and have determined that such an exemption is disallowed based upon minor technicalities regarding the application of the governing set of rules. While the Company believe the rules were appropriately applied and will be associated with facilities currently or previously owned, operated or used by us and/or our predecessors, some of which may include claims for personal injuries, property damages, cleanup costs, and other environmental matters. Current and former operations may also involve management of regulated materials that are subject to various environmental laws and regulations includingsuccessful in utilizing the Comprehensive Environmental Response Compensation and Liability Act, the Resource Conservation and Recovery Act or state equivalents. Similar environmental laws and regulations and other requirements existexemption allowed, if an unfavorable ruling ultimately prevails it could result in foreign countries in which we operate. Currently, we are not party to any pending legal or administrative proceedings that may have a material adverse effect, either individually or incharge to the aggregate, on our business, financial condition or results of operations.
statements. The Company is currently assessing its options with respect to this matter.
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14.Shareholders’ Equity

The changes in outstanding Class A Shares and Class B Shares for the nine months ended September 30, 2017 were as follows:

Class A Shares:
Balance at January 1, 201765,165,672
Shares issued for share-based compensation3,034,771
Shares issued upon warrants exercised964,897
Shares issued upon options exercised45,753
Shares issued cancelled for share-based compensation(619,999)
Balance at September 30, 201768,591,094
Class B Shares:
Balance, at both September 30, 2017 and December 31, 201651,154,280

Warrants

We have outstanding Series A Warrants (the “Series A Warrants”) and Series B Warrants (the “Series B Warrants”), together (the “Warrants”). At September 30, 2017, holders of the Series A Warrants and the Series B Warrants were entitled to purchase 6.02 and 6.03 of Class A Shares, respectively, and receive $12.50 in cash at an exercise price of $51.21 for each Series A Warrant and $56.51 for each Series B Warrant. The Warrants have a seven-year term from the date initially issued and will expire on February 14, 2018. A holder may exercise the Warrants by paying the applicable exercise price in cash or exercising on a cashless basis. The Warrants are freely transferable by the holder. At September 30, 2017 and December 31, 2016, there were 159,530 and 239,306 Series A Warrants outstanding, respectively, and 167,377 and 323,915 Series B Warrants outstanding, respectively.

Dividends

During 2017, we declared and paid quarterly dividends to holders of our Class A Shares and Class B Shares as follows:
  
Three Months
Ended March 31,
2017
  
Three Months
Ended June 30,
2017
  
Three Months
Ended September 30,
2017
 
Dividend per share $0.045  $0.045  $0.045 
Total dividend $6  $6  $5 
Record date (close of business) March 6  May 15  August 21 

During 2016, we declared and paid quarterly dividends to holders of our Class A Shares and Class B Shares as follows:
  
Three Months
Ended March 31,
2016
  
Three Months
Ended June 30,
2016
  
Three Months
Ended September 30,
2016
 
Dividend per share $0.25  $0.045  $0.045 
Total dividend $30  $5  $5 
Record date (close of business) March 4  May 16  August 17 

15.    Accumulated Other Comprehensive Loss Attributable to Tronox LimitedHoldings plc

The tables below present changes in accumulated other comprehensive income (loss)loss by component for the three months ended September 30, 20172021 and 2016.2020.
Cumulative
Translation
Adjustment		Pension
Liability
Adjustment		Unrealized
Gains
(Losses) on
Hedges		Total
Balance, July 1, 2021$(512)$(120)$4 $(628)
Other comprehensive income (loss)(66)1 — (65)
Amounts reclassified from accumulated other comprehensive income— 1 (13)(12)
Balance, September 30, 2021$(578)$(118)$(9)$(705)

  
Cumulative
Translation
Adjustment
  
Pension
Liability
Adjustment
  
Unrealized
Gains (Losses)
on
Derivatives
  Total 
Beginning balance $(363) $(91) $—  $(454)
Other comprehensive income (loss)  (26)  —   —   (26)
Amounts reclassified from accumulated other comprehensive income (loss)  —   6   —   6 
Balance, September 30, 2017 $(389)  (85)  —   (474)

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Cumulative
Translation
Adjustment
  
Pension
Liability
Adjustment
  
Unrealized
Gains (Losses)
on
Derivatives
  Total 
Beginning balance $(456) $(101) $2  $(555)
Other comprehensive income (loss)  51   (21)  (1)  29 
Amounts reclassified from accumulated other comprehensive income (loss)  —   (1)  —   (1)
Balance, September 30, 2016 $(405) $(123) $1  $(527)

Cumulative
Translation
Adjustment		Pension
Liability
Adjustment		Unrealized
Gains
(Losses) on
Hedges		Total
Balance, July 1, 2020$(628)$(104)$(36)$(768)
Other comprehensive income38 — 18 56 
Amounts reclassified from accumulated other comprehensive income— 1 (1)— 
Balance, September 30, 2020$(590)$(103)$(19)$(712)
The tables below present changes in accumulated other comprehensive income (loss) by component for the nine months ended September 30, 20172021 and 2016.2020.

  
Cumulative
Translation
Adjustment
  
Pension
Liability
Adjustment
  
Unrealized
Gains (Losses)
on
Derivatives
  Total 
Beginning balance $(408) $(92) $3  $(497)
Other comprehensive income (loss)  19   —   (3)  16 
Amounts reclassified from accumulated other comprehensive income (loss)  —   7   —   7 
Balance, September 30, 2017 $(389)  (85)  —   (474)

  
Cumulative
Translation
Adjustment
  
Pension
Liability
Adjustment
  
Unrealized
Gains (Losses)
on
Derivatives
  Total 
Beginning balance $(496) $(102) $—  $(598)
Other comprehensive income (loss)  91   (21)  1   71 
Balance, September 30, 2016 $(405) $(123) $1  $(527)

Cumulative
Translation
Adjustment		Pension
Liability
Adjustment		Unrealized
Gains
(Losses) on
Hedges		Total
Balance, January 1, 2021$(491)$(120)$1 $(610)
Other comprehensive income (loss)(53)(1)12 (42)
Amounts reclassified from accumulated other comprehensive income— 3 (22)(19)
Acquisition of noncontrolling interest(34)— — (34)
Balance, September 30, 2021$(578)$(118)$(9)$(705)
15.Noncontrolling Interest


Cumulative
Translation
Adjustment		Pension
Liability
Adjustment		Unrealized
Gains
(Losses) on
Hedges		Total
Balance, January 1, 2020$(503)$(104)$1 $(606)
Other comprehensive loss(87)(2)(30)(119)
Amounts reclassified from accumulated other comprehensive income— 3 10 13 
Balance, September 30, 2020$(590)$(103)$(19)$(712)
At September 30, 2017, Exxaro has a 26% ownership interest in each of our Tronox KZN Sands (Pty) Ltd. and Tronox Mineral Sands (Pty) Ltd. subsidiaries in order to comply with the ownership requirements of the Black Economic Empowerment legislation in South Africa. Exxaro is entitled to exchange this interest for approximately 3.2% in additional Class B Shares under certain circumstances. Exxaro also has a 26% ownership interest in certain of our other non-operating subsidiaries. We account for such ownership interest as “Noncontrolling interest” in the unaudited condensed consolidated financial statements.

Noncontrolling interest activity for the three and nine months ended September 30, 2017 and 2016 was as follows:

  
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
  2017  2016  2017  2016 
Beginning balance $162  $126  $144  $112 
Net income (loss) attributable to noncontrolling interest  6   (2)  11   (1)
Effect of exchange rate changes  (10)  18   3   31 
Balance, September 30, $158  $142  $158  $142 

16.Share-Based Compensation

Share-based compensation expense consisted of the following:

  
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
  2017  2016  2017  2016 
Restricted shares and restricted share units $5  $7  $25  $15 
Options  —   1   —   2 
T-Bucks Employee Participation Plan  —   —   1   1 
Total share-based compensation expense $5  $8  $26  $18 

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Tronox Limited Management Equity Incentive Plan

Restricted Shares

We did not grant any restricted shares during the nine months ended September 30, 2017.

The following table presents a summary of activity for the nine months ended September 30, 2017:

  
Number of
Shares
  
Weighted Average
Grant Date
Fair Value
 
Outstanding, January 1, 2017  284,400  $6.09 
Vested  (107,928)  8.00 
Outstanding, September 30, 2017  176,472  $4.92 
Expected to vest, September 30, 2017  176,472  $4.92 

At September 30, 2017, there was less than $l million of unrecognized compensation expense related to unvested restricted shares which is expected to be recognized over a weighted-average period of 1.1 years. Since the restricted shares were granted only to certain members of our Board, the unrecognized compensation expense was not adjusted for estimated forfeitures. The total fair value of restricted shares that vested during the nine months ended September 30, 2017 was $1 million.

16.    Share-Based Compensation
Restricted Share Units (“RSUs”)

2021 Grant - During the nine months ended September 30, 2017, wefirst three quarters of 2021, the Company granted RSUs which have time and/or performance conditions. Bothboth time-based and performance-based awards to certain members of management and to members of the Board. A total of 656,363 of time-based awards and the performance-based awards are classified as equity awards. For the time-based awards, 1,075 RSUs vested immediately, 14,053 RSUs vest ratably over a nine-month period 100,160 RSUs vest ratably over a one-year period and 12,869 RSUswere granted to management which will vest ratably over a three-year period and are valued atending March 5, 2024. A total of 56,304 of time-based awards were granted to members of the weighted average grant date fair value. ForBoard which will vest in May 2022. During the first three quarters of 2021, a total of 623,112 of performance-based awards 1,145,933 cliff vest at the endwere granted, of which 311,556 of the three years and 12,865 cliffawards vest at the end of forty months. Included in the performance-based awards are 786,639 RSUs for which vesting is determined based on a relative Total StockholderShareholder Return (“TSR”("TSR") calculation overand 311,556 of the applicable measurement period.awards vest based on certain performance metrics of the Company. The non-TSR performance-based awards vest on March 5, 2024 based on the achievement against the target average company performance of 3 separate performance periods, commencing on January 1 of each 2021, 2022, and 2023 and ending on December 31 of each 2021, 2022 and 2023, for which, for each performance period, the performance metric is an average annual return on invested capital (ROIC) improvement versus 2020 ROIC. Similar to the Company's historical TSR awards granted in prior years, the TSR awards vest based on the Company's three-year TSR versus the peer group performance levels. Given these terms, the TSR metric is considered a market condition for which we useused a Monte Carlo simulation to determine the weighted average grant date fair value. A totalvalue of 1,225,697 RSUs$29.07. The following weighted average assumptions were granted, pursuantutilized to an Integration Incentive Award program (the “Integration Incentive Award”) established in connection withvalue the Cristal Transaction, to certain executive officers and managers with significant integration accountability. If the Cristal Transaction does not close by July 1, 2018, then the Integration Incentive Award granted will be cancelled.TSR grants:

2021
Dividend yield1.56 %
Expected historical volatility71.1 %
Risk free interest rate0.17 %
Expected life (in years)3
The following table presents a summary of activity for the nine months endedunrecognized compensation cost associated with all unvested awards at September 30, 2017

  
Number of
Shares
  
Weighted Average
Grant Date
Fair Value
 
Outstanding, January 1, 2017  5,587,331  $7.19 
Granted  2,944,267   17.19 
Vested  (2,378,609)  9.52 
Forfeited  (604,918)  9.81 
Outstanding, September 30, 2017  5,548,071  $11.22 
Expected to vest, September 30, 2017  5,797,277  $9.83 

At September 30, 2017, there2021 was $35$34 million, of unrecognized compensation expense related to unvested RSUs, adjusted for estimated forfeitures, which is expected to be recognized over a weighted-average period of 2.0approximately 1.9 years. The weighted-average grant-date fair value
During the three months ended September 30, 2021 and 2020, we recorded $7 million and $8 million of RSUs granted duringstock compensation expense, respectively. During the nine months ended September 30, 20172021 and 2016 was $17.19 per share2020, we recorded $23 million and $4.04 per share,$19 million of stock compensation expense, respectively. The total fair value of RSUs that vested during the nine months ended September 30, 20172021 includes the acceleration of approximately $2 million of stock compensation expense associated with the retirement agreement entered into with the former CEO on March 18, 2021.
There were 318,852 options exercised during the nine month periods ended September 30, 2021 with an intrinsic value of $1.0 million. Cash proceeds from the exercise of stock options was $23 million.
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Options

The following table presents a summary of activity$6 million for the nine months ended September 30, 2017:2021.

  
Number of
Options
  
Weighted
Average
Exercise
Price
  
Weighted
Average
Contractual
Life (years)
  
Intrinsic
Value
 
Outstanding, January 1, 2017  1,970,481  $21.19   6.38  $— 
Exercised  (45,753)  19.32         
Forfeited  (4,273)  21.98         
Expired  (93,101)  21.58         
Outstanding, September 30, 2017  1,827,354  $21.21   4.62  $2 
Expected to vest, September 30, 2017  789  $22.69   7.27  $— 
Exercisable, September 30, 2017  1,826,560  $21.21   4.61  $2 

The aggregate intrinsic values in the table represent the total pre-tax intrinsic value (the difference between our share price at the indicated dates and the options’ exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their in-the-money options at the end of the period. The amount will change based on the fair market value of our stock. The total intrinsic value of options exercised during the three and nine months ended September 30, 2017 was less than $1 million. No options were exercised during the three and nine months ending September 30, 2016 and consequently, there was no related intrinsic value. We issue new shares upon the exercise of options. During the three and nine months ended September 30, 2017, we received approximately $1 million in cash for the stock options exercised. As there were no stock options exercised during the three and nine months ended September 30, 2016, no cash was received.

At September 30, 2017, we had no unrecognized compensation expense related to options, adjusted for estimated forfeitures. We did not issue any options during the nine months ended September 30, 2017.

T-Bucks Employee Participation Plan (“T-Bucks EPP”)

During 2012, we established the T-Bucks EPP for the benefit of certain qualifying employees of our South African subsidiaries. We funded a T-Bucks Trust (the “Trust”) with R124 million (approximately $15 million), which was used to acquire Class A Shares. On  May 31, 2017, the shares held by the Trust became fully vested. The Trust sold 546,403 shares in June 2017 on behalf of the participants who elected to receive cash. The remaining participants elected to receive shares.

Long-Term Incentive Plan (“LTIP”)

We have a LTIP for the benefit of certain qualifying employees of Tronox subsidiaries in South Africa and Australia. The LTIP is classified as a cash-settled compensation plan and is re-measured to fair value at each reporting date. We did not have an outstanding liability for LTIP at both September 30, 2017 and December 31, 2016.

17.Pension and Other Postretirement Healthcare Benefits

We sponsor a noncontributory defined benefit retirement plan in the U. S., the qualified retirement plan (the “U.S. Qualified Retirement Plan”). We also have a collective defined contribution plan (a multiemployer plan) in the Netherlands, and a postretirement healthcare plan in South Africa. We had a defined benefit retirement plan in the Netherlands which was settled in the fourth quarter of 2016.

We sponsored a noncontributory defined benefit plan that covered eligible employees of Alkali which became effective from the acquisition date of Alkali, on April 1, 2015 (the “Alkali Qualified Plan”). Our obligations under the Alkali Qualified Plan transferred with the Sale and $5 million in actuarial losses and prior service costs previously included in “Accumulated other comprehensive loss” were recognized as a loss within “Income (loss) from discontinued operations, net of tax” on the Statement of Operations in the third quarter of 2017.

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17.    Pension and Other Postretirement Healthcare Benefits
The components of net periodic cost associated with our U.S. Qualified Retirement Plan and The Netherlands defined benefit planforeign pension plans recognized in the unaudited Condensed Consolidated Statements of OperationsIncome were as follows:

  
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
  2017  2016  2017  2016 
Net periodic cost:            
Service cost $—  $—  $—  $— 
Interest cost  3   5   11   15 
Expected return on plan assets  (4)  (5)  (11)  (15)
Net amortization of actuarial loss and prior service credit  1   —   2   1 
Curtailment gain (loss)  —   (1)  —   (1)
Total net periodic cost $—  $(1) $2  $— 

follows:
PensionsPensions
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net periodic cost:
Service cost$1 $1 $3 $4 
Interest cost3 4 10 13 
Expected return on plan assets(6)(5)(19)(17)
Net amortization of actuarial loss and prior service credit1 1 3 3 
Total net periodic cost$(1)$1 $(3)$3 
The components of net periodic cost associated with theour postretirement healthcare plans was less than $1 million each forrecognized in the three and nine months ended September 30, 2017 and 2016.unaudited Condensed Consolidated Statements of Income were as follows:
Other Postretirement Benefit Plans(1)
Other Postretirement Benefit Plans
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net periodic cost:
Service cost$— $— $— $— 
Interest cost1 — 2 1 
Expected return on plan assets— — — — 
Net amortization of actuarial loss and prior service credit— — 1 — 
Total net periodic cost$1 $— $3 $1 
(1) The components of net periodic cost associated with theour other postretirement healthcare plan wasplans were less than $1 million for each ofthe three months ended September 30, 2020.
During the nine months ended September 30, 2017 and 2016.

2021, the Company made contributions to its pension plans of less than $1 million. The Company expects to make less than $5 million of pension contributions for the remainder of 2021.
For each of the three and nine month periodsmonths ended September 30, 20172021 and 2016,2020, we contributed $1 million and $3$1 million, respectively, to Thethe Netherlands multiemployer plan,Multiemployer Plan, which was primarily recognized in “Cost of goods sold” in the unaudited Condensed Consolidated Statement of Operations.

18.Related Parties

Exxaro

We have service level agreements with Exxaro for research and development that expired duringIncome. For the third quarter of 2017. Such service level agreements amounted to less than $1 million of expense during each of the three months and nine months ended September 30, 20172021 and 2016,2020, we contributed $4 million and $3 million, respectively, to the Netherlands Multiemployer Plan, which was includedprimarily recognized in “Selling, general and administrative expense”“Cost of goods sold” in the unaudited Condensed Consolidated StatementsStatement of Operations. Income.
18.    Related Parties
Exxaro
In connection with the Company’s acquisition in 2012 of Exxaro Resources Limited’s (“Exxaro”) mineral sands business, Exxaro was granted a “flip in” right such that following the occurrence of certain events, Exxaro could exercise a put option, or the Company could exercise a call option, whereby Exxaro exchanges its 26% shareholding in the Company’s South African operating subsidiaries which hold the Company’s material mining licenses (the “South African Subsidiaries Interest”) for an additional 7,246,035 of our ordinary shares. On November 26, 2018, the Company, certain of the Company’s subsidiaries and Exxaro entered into the Exxaro Mineral Sands Transaction Completion Agreement which amended the “flip in” rights granted to Exxaro to accelerate the occurrence of the “flip in” upon satisfaction of certain conditions, which have
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now been satisfied. On February 23, 2021, we exercised our call option to complete the “flip in” transaction, pursuant to which we issued to Exxaro 7,246,035 new ordinary shares of the Company in exchange for Exxaro’s South African Subsidiaries Interest. In addition, on March 1, 2021, Exxaro sold its entire share ownership in us, including the “flip-in” shares, totaling 21,975,315 ordinary shares in an underwritten public offering.
Tasnee/Cristal
On April 10, 2019, we announced the completion of the acquisition of the TiO2 business of Cristal for $1.675 billion of cash, subject to a working capital and noncurrent liability adjustment, plus 37,580,000 ordinary shares. At September 30, 2021, Cristal International Holdings B.V. (formerly known as Cristal Inorganic Chemical Netherlands Cooperatief W.A.), a wholly-owned subsidiary of Tasnee, continues to own 37,580,000 shares of Tronox, or a 24% ownership interest. In February 2020, Tronox and Cristal resolved the working capital and noncurrent liability adjustment by agreeing that no payment was required by either party.
On May 9, 2018, we entered into an Option Agreement with AMIC which is owned equally by Tasnee and Cristal. Under the terms of the Option Agreement, AMIC granted us an option (the “Option”) to acquire 90% of a special purpose vehicle (the “SPV”), to which AMIC’s ownership in a titanium slag smelter facility (the “Slagger”) in The Jazan City for Primary and Downstream Industries in KSA will be contributed together with $322 million of AMIC indebtedness (the “AMIC Debt”). The AMIC Debt would remain outstanding debt of the SPV upon exercise of the Option. The Option may be exercised if the Slagger achieves certain production criteria related to sustained quality and tonnage of slag produced (the “Option Criteria”). Likewise, AMIC may require us to acquire the Slagger on the same terms if the Option Criteria are satisfied. Furthermore, pursuant to the Option Agreement and during its term, we agreed to lend AMIC and, upon the creation of the SPV, the SPV $125 million for capital expenditures and operational expenses intended to facilitate the start-up of the Slagger (the “Tronox Loans”). At September 30, 2021, we have lent AMIC the Tronox Loans maximum amount of $125 million. We have recorded the $125 million of total principal loan payments and related interest of $8 million within “Other long-term assets” on the unaudited Condensed Consolidated Balance Sheet at September 30, 2021. The Option did not have a significant impact on the financial statements as of or for the periods ended September 30, 2021.
On May 13, 2020 we amended the Option Agreement (the "First Amendment") with AMIC to address circumstances in which the Option Criteria cannot be satisfied. Pursuant to the First Amendment, Tronox has the right to acquire the SPV in exchange for (i) our forgiveness of the Tronox Loans principal and accrued interest thereon, and (ii) the SPV's assumption of $36 million of indebtedness plus accrued interest thereon lent by AMIC to the SPV. Under the First Amendment, the SPV would not assume any of the AMIC Debt.

Additionally, on May 13, 2020, we amended a Technical Services Agreement that we had entered with AMIC on March 15, 2018, to add project management support services. Under this arrangement, AMIC and its consultants are still responsible for engineering and construction of the Slagger while we provide technical advice and project management services including supervision and management of third party consultants intended to satisfy the Option Criteria. As compensation for these services, Tronox receives a professional servicemonthly management fee of approximately $1 million, which is recorded in “Other income (expense), net” within the unaudited Condensed Consolidated Statement of Income and in “Prepaid and other assets” on the unaudited Condensed Consolidated Balance Sheet. The monthly management fee is subject to certain success incentives if and when the Slagger achieves the Option Criteria. Tronox recorded approximately $2 million and $3 million in "Other Income" for the three months ended September 30, 2021 and September 30, 2020, respectively, in the unaudited Condensed Consolidated Statement of Income. Tronox recorded approximately $6 million and $3 million in "Other Income" for the nine months ended September 30, 2021 and September 30, 2020, respectively in the unaudited Condensed Consolidated Statement of Income. At September 30, 2021, Tronox had a receivable due from AMIC related to management fee of $1 million and that is recorded within “Prepaid and other assets” on the unaudited Condensed Consolidated Balance Sheet.
At September 30, 2021 Tronox had a receivable due from Tasnee of $4 million recorded within “Prepaid and other assets” on the unaudited Condensed Consolidated Balance Sheet, which relates primarily to stamp duty taxes paid on behalf of Tasnee and activities pursuant to a transition services agreement.
On December 29, 2019, we entered into an agreement with ExxaroCristal to acquire certain assets co-located at our Yanbu facility which produces metal grade TiCl4 ("MGT"). Consideration for the acquisition is the assumption by Tronox of a $36 million note payable to Cristal (the "MGT Loan"). The MGT is used at a titanium "sponge" plant facility, 65% of the ownership interests of which are held by Advanced Metal Industries Cluster and Toho Titanium Metal Co. Ltd ("ATTM"), a joint
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venture between AMIC and Toho Titanium Company Ltd. ATTM uses the TiCl4, which we supply by pipeline, for the production of titanium sponge, a precursor material used in the production of titanium metal.

On December 17, 2020 we completed the MGT transaction. Repayment of the $36 million note payable is based on a fixed U.S. dollar per metric ton quantity of MGT delivered by us to ATTM over time and therefore the ultimate maturity date is variable in nature. If ATTM fails to purchase MGT from us under certain contractually agreed upon conditions, then at our election we may terminate the MGT supply agreement with ATTM and will no longer owe any amount under the loan agreement with Cristal. We currently estimate the ultimate maturity to be between approximately five and six years, subject to actual future MGT production levels. The interest rate on the note payable is based on the SAIBOR plus a premium. As of September 30, 2021, the outstanding balance of the note payable was $34 million, of which $6 million is expected to be paid within the next twelve months.

As a result of the transactions we have entered into related to the Fairbreeze construction project which ended in January 2017. Payments were nilMGT assets, Tronox recorded $2 million and $1 million for purchase of chlorine gas for the three months ended September 30, 2021 and September 30, 2020, respectively from ATTM, and such amounts are recorded in "Cost of goods sold" on the unaudited Condensed Consolidated Statement of Income. During the nine months ended September 30, 2021 and September 30, 2020, Tronox recorded $6 million and $4 million, respectively, for purchase of chlorine gas and such amounts are recorded in "Cost of goods sold" on the unaudited Condensed Consolidated Statement of Income. The amount due to Exxaro relating to FairbreezeATTM as of September 30, 2021 for the purchase of chlorine gas was $1 million and is recorded within “Accrued liabilities” on the unaudited Condensed Consolidated Balance Sheet. In addition, during the three months ended September 30, 20172021 and 2016 and less than $1September 30, 2020, Tronox recorded $8 million and $2$7 million, respectively, duringfor MGT sales made to ATTM and MGT Loan repayments to Cristal. For the nine months ended September 30, 20172021 and 2016. These payments were capitalizedSeptember 30, 2020, Tronox recorded $27 million and included$19 million , respectively for MGT sales made to ATTM and MGT Loan repayments to Cristal. The MGT sales and MGT Loan repayments to Cristal are recorded in “Property, plant“Net sales” on the unaudited Condensed Consolidated Statement of Income. At September 30, 2021, Tronox had a receivable from ATTM of $5 million from MGT sales that is recorded within “Prepaid and equipment, net” in ourother assets” on the unaudited Condensed Consolidated Balance Sheets. At both September 30, 2017 and December 31, 2016, we had less than $1 million of related party payables, which were recorded in “Accounts payable” in our unaudited Condensed Consolidated Balance Sheets.Sheet.


19.Segment Information

Segment performance is evaluated based on segment operating income (loss), which represents the results of segment operations before unallocated costs, such as general corporate expenses not identified to a specific segment, interest expense, other income (expense), net and income tax expense or benefit.

Net sales and income (loss) from operations by segment were as follows:

  Three Months Ended September 30,  Nine Months Ended September 30, 
  2017  2016  2017  2016 
Net sales (TiO2)
 $435  $339  $1,234  $957 
TiO2 segment
 $75  $17  $168  $(12)
Corporate  (24)  (17)  (90)  (45)
Income (loss) from operations  51   —   78   (57)
Interest and debt expense, net  (47)  (46)  (140)  (138)
Gain on extinguishment of debt  (28)  —   (28)  4 
Other income (expense), net  12   (10)  5   (22)
Income (loss) from continuing operations before income taxes $(12) $(56) $(85) $(213)

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Item 2.Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with Tronox Limited’sHoldings plc’s unaudited condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2016.2020. This discussion and other sections in this Quarterly Report on Form 10-Q contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties, and actual results could differ materially from those discussed in the forward-looking statements as a result of numerous factors. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements also can be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains certain financial measures, in particular the presentation of earnings before interest, tax,taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA, which are not presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). We are presenting these non-U.S. GAAP financial measures because we believe they provide us and readers of this Form 10-Q with additional insight into our operational performance relative to earlier periods and relative to our competitors. We do not intend for these non-U.Snon-U.S. GAAP financial measures to be a substitute for any U.S. GAAP financial information. Readers of these statements should use these non-U.S. GAAP financial measures only in conjunction with the comparable U.S. GAAP financial measures. A reconciliation of net income (loss) to EBITDA and Adjusted EBITDA is also provided herein.

Overview

We are a global leaderTronox Holdings plc (referred to herein as "Tronox", "we", "us", or "our") operates titanium-bearing mineral sand mines and beneficiation operations in Australia, South Africa and Brazil to produce feedstock materials that can be processed into TiO2 for pigment, high purity titanium chemicals, including titanium tetrachloride, and Ultrafine© titanium dioxide used in certain specialty applications. It is our long-term strategic goal to be vertically integrated and consume all of our feedstock materials in our own nine TiO2 pigment facilities which we operate in the productionUnited States, Australia, Brazil, UK, France, the Netherlands, China and marketingthe Kingdom of Saudi Arabia (“KSA”). We believe that vertical integration is the best way to achieve our ultimate goal of delivering low cost, high-quality pigment to our coatings and other TiO2 customers throughout the world. The mining, beneficiation and smelting of titanium bearing mineral sands creates meaningful quantities of Zircon and titanium dioxide (“TiO2”) pigment.

TiO2 Segment

pig iron, which we also supply to customers around the world.
We operate three TiO2 pigment facilities at the following locations: Hamilton, Mississippi; Botlek, the Netherlands; and Kwinana, Western Australia, representing an aggregate annual TiO2 production capacity of approximately 465,000 metric tons. TiO2 is used extensively in the manufacture of paint and other coatings, plastics and paper, and inare a wide range of other applications, including inks, fibers, rubber, food, cosmetics, and pharmaceuticals. Moreover, it is a critical component of everyday consumer applications due to its superior ability to cover or mask other materials effectively and efficiently relative to alternative white pigments and extenders. TiO2 is considered to be a quality of life product, and some research indicates that consumption generally increases as disposable income increases. At present, it is our belief that there is no effective mineral substitute for TiO2 because no other white pigment has the physical properties for achieving comparable opacity and brightness, or can be incorporated as cost effectively. We also operate three separate mining operations: KwaZulu-Natal Sands located in South Africa, Namakwa Sands located in South Africa and Cooljarloo located in Western Australia.

Our TiO2 business includes the following:

Exploration, mining, and beneficiation of mineral sands deposits;

Production of titanium feedstock and its co-products (including chloride slag, slag fines, rutile, synthetic rutile and leucoxene), pig iron, and zircon;

•
Production and marketing of TiO2; and

Electrolytic manganese dioxide manufacturing and marketing, which is primarily focused on advanced battery materials and specialty boron products.
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Recent Developments

On February 21, 2017, Tronox Limited, The National Titanium Dioxide Company Ltd., apublic limited company organizedlisted on the New York Stock Exchange and are registered under the laws of the Kingdom of Saudi Arabia (“Cristal”),England and Cristal Inorganic Chemicals Netherlands Coöperatief   W.A., a cooperative organized under the laws of the Netherlands and a wholly owned subsidiary of Cristal (“Seller”), entered into a Transaction Agreement (the “Transaction Agreement”), pursuant to which we agreed to acquire Cristal’s titanium dioxide business for $1.673 billion in cash, subject to a working capital adjustment at closing (the “Cash Consideration”), plus 37,580,000 Class A ordinary shares (“Class A Shares”), par value $0.01 per share, of Tronox Limited (the “Cristal Transaction”). Following the closing of the Cristal Transaction, the Seller will own approximately 24% of the outstanding ordinary shares (including both Class A and Class B) of Tronox Limited.Wales.

The Transaction Agreement provides that we must pay to Cristal a termination fee of $100 million if all conditions to closing, other than the financing condition, have been satisfied and the Transaction Agreement is terminated because closing of the Cristal Transaction has not occurred by May 21, 2018. As a result of the refinancing (See Note 11 of notes to unaudited condensed consolidated financial statements), we expect to finance the Cristal Transaction with our cash on hand inclusive of restricted cash and liquidity from our asset-based syndicated revolving credit facility. The Cristal Transaction is also conditioned upon the receipt of various regulatory approvals, including antitrust clearance in numerous jurisdictions. On April 13, 2017, the U.S. Federal Trade Commission (“FTC”) issued a Second Request to the Company and Cristal in connection with its filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and Tronox has substantially complied with the Second Request. The Cristal Transaction, which has been unanimously approved by our board of directors (the “Board”), is expected to close by the first quarter 2018, subject to regulatory approvals and satisfaction of customary closing conditions.

On September 1, 2017, we completed the previously announced sale of our wholly owned subsidiary Tronox Alkali Corporation (“Alkali”) to Genesis Energy, L.P. for proceeds of approximately $1.325 billion in cash, subject to a customary post-closing  working capital adjustment (the “Sale”). In connection with the Sale, we recognized a loss of $233 million, net of tax, during the three and nine months ended September 30, 2017. See Note 2. As a result of the Sale, Alkali’s results of operations have been reported as discontinued operations (see Note 2). We have agreed unconditionally to guarantee the indemnification and performance of the obligations of Tronox U.S. Holdings Inc. (“Tronox Holdings”), a subsidiary of Tronox Limited, under the stock purchase agreement (“Purchase Agreement”). Both Tronox Holdings and Genesis Energy, L.P. have agreed, following the closing, to indemnify the other party for losses arising from certain breaches of the Purchase Agreement and for certain other liabilities, subject to certain limitations. On October 2, 2017, at a special meeting of shareholders of the Company held pursuant to the Transaction Agreement, the Company’s shareholders approved a resolution to issue 37,580,000 Class A Shares to the Seller in connection with the acquisition of Cristal’s TiO2 business, and the resulting acquisition of interests in such Class A Shares by the Seller and certain other persons and entities, at the closing of such acquisition.

In 2012, our Class B ordinary shares (“Class B Shares”) were issued to Exxaro Resources Limited (“Exxaro”) and one of its subsidiaries in consideration for 74% of Exxaro’s South African mineral sands business. Exxaro has agreed not to acquire any voting shares of Tronox Limited if, following such acquisition, Exxaro will have a voting interest in Tronox Limited of 50% or more unless Exxaro brings any proposal to make such an acquisition to the Board on a confidential basis. In the event an agreement regarding the proposal is not reached, Exxaro is permitted to make a takeover offer for all the shares of Tronox Limited not held by affiliates of Exxaro, subject to certain non-waivable conditions. At September 30, 2017 and December 31, 2016, Exxaro held approximately 43% and 44%, respectively, of the voting securities of Tronox Limited. See Note 18 for additional information regarding Exxaro transactions. On March 8, 2017, Exxaro announced its intention to begin pursuing a path to monetize its ownership stake in Tronox over time. On October 10, 2017, Exxaro sold 22,425,000 Class A ordinary shares in an underwritten registered offering (the “Exxaro Share Transaction”). Subsequent to the Exxaro Shares Transaction, Exxaro held approximately 24% of the Company’s voting securities. Presently, Exxaro intends to sell the remainder of its Tronox shares in a staged process over time pursuant to the existing registration statement, subject to market conditions. Exxaro’s sale of Class A ordinary shares does not impact their 26% ownership interest in each of our Tronox KZN Sands (Pty) Ltd. and Tronox Mineral Sands (Pty) Ltd subsidiaries.

During the fourth quarter of 2016, we implemented various steps of an internal corporate reorganization plan to simplify our corporate structure and thereby improve operational, administrative, and commercial synergies within each of our operating segments (the “Corporate Reorganization”). As a result of the Corporate Reorganization, we reduced our cross jurisdictional financing arrangements, eliminated administrative activities and reversed the deferred tax assets related to intercompany interest deductions. The related withholding tax accrual amounts were also reversed as a result of the Corporate Reorganization. Additionally, we reduced our deferred tax assets related to loss carryforwards which will no longer be available to utilize. In connection with the Corporate Reorganization during the first quarter of 2017, Tronox Limited became managed and controlled in the U.K., with no additional impacts to the consolidated provision for income taxes due to the valuation allowances in various jurisdictions. See Note 3 of notes to our unaudited condensed consolidated financial statements for additional information.
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Business Environment

The following discussion includes trends and factors that may affect future operating results:

Throughout the current Covid-19 pandemic, our operations have been designated as essential to support the continued manufacturing of products such as food and medical packaging, medical equipment, pharmaceuticals, and personal protective gear.
Our pigment business benefitedThe third quarter of 2021 saw a continuation of the strong market demand trends that have been ongoing since the third quarter of 2020. Third quarter revenue increased 29% compared to the prior year, driven by higher TiO2 and Zircon volumes and higher average selling prices across all products. On a year over year basis, TiO2 average selling prices increased 12%, TiO2 volumes increased 13%, Zircon average selling prices increased 13% and Zircon volumes increased 81%. Revenue from feedstock and other products decreased 5% on a global industry recovery that beganyear over year basis due to a lack of external feedstock sales in the firstquarter compared to the prior year, partially offset by increased pig iron revenue from higher average selling prices. On a sequential basis, third quarter revenue decreased 6%, as price increases were offset by volume declines. TiO2 volumes were constrained by global logistics challenges and supply chain and certain raw material availability that resulted in a 10% sequential decline. TiO2 average selling prices grew 4% on a local currency basis or 3% on a US dollar basis sequentially with the implementation of regional pricing initiatives across the globe. Revenue from Zircon sales decreased 5%
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sequentially, as a 10% increase in average selling prices due to improved pricing, was partially offset by 14% lower volumes. Feedstock and other product revenues increased 9% sequentially mainly due to higher pig iron pricing.
Gross profit increased sequentially from the second quarter 2021 to the third quarter 2021 due to the favorable impacts of average selling prices and favorable exchange rates, partially offset by headwinds from lower sales volumes, higher production costs, and increased freight rates.
As of September 30, 2021, our total available liquidity was $764 million, including $309 million in cash and cash equivalents and $455 million available under revolving credit agreements, including $328 million available under our new Cash Flow Revolver.
In the third quarter of 2016. To meet healthy demand,2021, we operatedcontinued to make discretionary prepayments on our pigment plants at high utilization rates while matching pigment production volumes to sales volumesdebt facilities primarily on the New Term Loan Facility and keeping inventory at or below normal levels. Global pigment pricing has rebounded with successive gains in each quarter sinceStandard Bank Term Loan Facility. In the firstthird quarter of 2016. We believe pigment inventories, in2021, we made an additional $135 million of voluntary prepayment on our New Term Loan Facility and we repaid the aggregate, are at or below normal levels at both customer and producer locations globally resulting in a continued tight supply-demand balance. We continueoutstanding balance of R390 million (approximately $26 million) on our Standard Bank Term Loan Facility. See note 10 to use a significant majority of our high grade titanium feedstock for our pigment production and continued to reduce our titanium slag inventories. In addition, we expect zircon sales volumes in 2017 to exceed those of 2016 as we continue to ramp up production at our Fairbreeze mine to match market demand.

We continue to be uniquely tax-advantaged by favorable tax loss carry forwards and other favorable tax positions. We believe these tax-advantaged factors create opportunities for our operations to benefit for years to come. See Note 3 of notes to our unauditedthe condensed consolidated financial statements for additional information.statements.  As of September 30, 2021, our total debt was $2.7 billion and net debt to trailing-twelve month Adjusted EBITDA was 2.6x. The Company also has no financial covenants on its term loan or bonds and only one springing financial covenant on its Cash Flow revolver facility, which we do not expect to be triggered based on our current scenario planning.


Condensed Consolidated Results of Operations from Continuing Operations

Three and Nine Months Ended September 30, 20172021 compared to the Three and Nine Months Ended September 30, 20162020
Three Months Ended September 30,
20212020Variance
Net sales$870 $675 $195 
Cost of goods sold626 536 90 
Gross profit244 139 105 
Gross Margin28 %21 %7 pts
Selling, general and administrative expenses76 89 (13)
Restructuring— 1 (1)
Income from operations168 49 119 
Interest expense(37)(48)(11)
Interest income1 1 — 
Loss on extinguishment of debt(3)— (3)
Other income, net12 7 5 
Income before income taxes141 9 132 
Income tax provision(28)893 921 
Net income$113 $902 $(789)
Effective tax rate20 %(9922)%
EBITDA (1)
$249 $132 $117 
Adjusted EBITDA (1)
$252 $148 $104 
Adjusted EBITDA as % of Net Sales29 %22 %7 pt

  Three Months Ended September 30,  Nine Months Ended September 30, 
  2017  2016  Variance  2017  2016  Variance 
  (Millions of U.S. dollars) 
Net sales $435  $339  $96  $1,234  $957  $277 
Cost of goods sold  329   291   38   971   877   94 
Gross profit  106   48   58   263   80   183 
Selling, general and administrative expenses  (55)  (47)  (8)  (186)  (135)  (51)
Restructuring income (expense)  —   (1)  1   1   (2)  3 
Income (loss) from continuing operations  51   —   51   78   (57)  135 
Interest and debt expense, net  (47)  (46)  (1)  (140)  (138)  (2)
Gain (loss) on extinguishment of debt  (28)  —   (28)  (28)  4   (32)
Other income (expense), net  12   (10)  22   5   (22)  27 
Income (loss) from continuing operations before income taxes  (12)  (56)  44   (85)  (213)  128 
Income tax provision  (13)  (6)  (7)  (10)  (25)  15 
Net income (loss) from continuing operations $(25) $(62) $37  $(95) $(238) $143 

_______________
(1)EBITDA and Adjusted EBITDA are Non-U.S. GAAP financial measures. Please refer to the “Non-U.S. GAAP Financial Measures” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of these measures and a reconciliation of these measures to Net income from operations.
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Net sales of $870 million for the three months ended September 30, 20172021 increased by 28%29%, compared to $675 million, for the same period in 20162020. The increase is primarily due to higher TiO2 and Zircon sales volumes as well as higher TiO2, Zirconand pig ironaverage selling prices for Pigment of $53 million, Zircon of $8 million and Pig Iron of $4 million. Higher volume and product mix for CP Slag of $12 million, Zircon of $4 million, Pig Iron of $8 million and Ilmenite of $2 million also contributed to the increase in net sales. There was also a favorable change in foreign currency translation of $5 million resulting from Pigment Sales. Volumes and product mix for Pigment were relatively flat.prices.

Net sales for the nine months ended September 30, 2017 increased by 29% compared to the same period in 2016 primarily due to the impacttype of higher selling prices for Pigment of $142 million, Zircon of $7 million, Pig Iron of $11 million, Natural Rutile of $1 million and Ilmenite of $3 million. Higher volume and product mix for Pigment of $35 million, CP Slag of $34 million, Zircon of $24 million, Pig Iron of $6 million, Natural Rutile of $2 million and Ilmenite of $9 million also contributed to the increase in net sales for the nine months ended September 30, 2017. The impact from foreign currency translation versus the same period in 2016 was insignificant.

Our gross profit margin for the three months ended September 30, 20172021 and 2020 were as follows:
Three Months Ended
September 30,
20212020VariancePercentage
TiO2
$682 $543 $139 26 %
Zircon116 56 60 107 %
Feedstock and other products72 76 (4)(5)%
Total net sales$870 $675 $195 29 %
For the three months ended September 30, 2021, TiO2 revenue was 24%higher by 26% or $139 million compared to the prior year quarter primarily due to $73 million increase in average selling prices and an increase of $66 million in sales volumes. Foreign currency positively impacted TiO2 revenue by $2 million due to the strengthening of the Euro. Zircon revenue increased $60 million primarily due to a 81% increase in sales volumes and a 13% increase in average selling prices. Feedstock and other products revenues decreased $4 million from the year-ago quarter primarily due to a decrease in sales volumes of CP slag and other feedstocks partially offset by an increase selling prices of pig iron.
Gross profit of $244 million was 28% of net sales compared to 14% for21% of net sales in the same period in 2016.year-ago quarter. The increase in gross margin is primarily due to:
•the favorable impact of $58 million was10 points primarily due to higheran increase in both TiO2 and pig iron selling prices, of $68 million, higher volumes and product mix of $3 million,partially offset by
•the net unfavorable impact of higher production costs of $6 million and unfavorable3 points due to changes in foreign currency translationexchange rates, primarily as a result of $7 million primarily from the South African Rand and Australian Dollar.dollar.
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Our gross profit margin for the nine months ended September 30, 2017 was 21% of net sales compared to 8% of net sales during 2016. The increase of $183 million was primarily due to•Additionally, higher selling prices of $169 million, higher volumes and product mix of $30 million, the impact of lower production costs of $24 million due primarily to the benefits of vertical integration,and increased freight rates were offset by unfavorable changes in foreign currency translation of $40 million primarily from the Randfavorable overhead absorption and Australian dollar.cost savings.


Selling, general and administrative expenses increaseddecreased by 17%$13 million or 15% during the three months ended September 30, 20172021 compared to the same period of the previousprior year. Included in SG&A are $24 million and $17 million of corporate expenses for the three months ended September 30, 2017 and 2016, respectively.  The $7 million increase in corporate expenses compared to the same period in 2016 wasdecrease is mainly due to higherlower professional feescosts of $13$6 million, related to the Cristal Transactiona $4 million decrease in employee costs, $1 million decrease in integration costs and $1 million decrease in rent expense partially offset by $5 million of Alkali transactionalhigher travel and entertainment expenses that were reclassified to discontinued operations. Also contributing to the charge were higher other general and administrative costs of $2 million, and a reduction of employee stock-based and other compensation costs of $3 million.  SG&A costs associated with our TiO2 activities increased $1 million from the prior year period due primarily to unfavorable changes in foreign currency translation of $1 million.

Selling, general and administrative expenses increased by 38% during the nine months ended September 30, 2017 compared to the same period of the previous year.  Included in SG&A are $91 million and $45 million of corporate expenses for the nine months ended September 30, 2017 and 2016, respectively.  The $45 million increase in corporate expenses was due to higher professional fees of $33 million related to the Cristal Transaction, higher employee stock-based and other compensation costs of $10 million and higher other general and administrative costs of $3 million. Restructuring costs decreased by $1 million during the period.   SG&A costs associated with our TiO2 activities increased $5 million from the prior year period due primarily to higher employee stock-based and other compensation costs and unfavorable changes in foreign currency translation.

Income from operations for the three months ended September 30, 20172021 was $51 million, $75 million from our TiO2 activities offset by $24 million of corporate expenses.  Income from operations for the three month period ended September 30, 2016 was $0, $17 million from our TiO2 activities offset by $17 million of corporate expenses.  Income from our TiO2 activities increased by $58$168 million compared to $49 million in the same period in 2016prior year period. The increase of $119 million was primarily due to an increasehigher TiO2, Zircon and pig iron selling prices, higher TiO2 and Zircon volumes and reduction in gross profitSG&A expenses as discussed above.
Adjusted EBITDA as a percentage of $58 million offset by a $1 million increase in selling, general and administrative expenses and a $1 million decrease in restructuring costs. Corporate general and administrative expensesnet sales was 29% for the three months ended September 30, 20172021 as compared to 22% from the prior year primarily due to the increased gross margin and decrease in SG&A expenses as discussed above.
Interest expense for the reasons noted above in the discussion of the SG&A expenses.

Income from operations for the ninethree months ended September 30, 2017 was $78 million, $168 million from our TiO2 activities offset2021 decreased by $90 million of corporate expenses, $91 million of SG&A and a $1 million reversal of restructuring expense.  Loss from operations for the nine month period ended September 30, 2016 was $57 million, a $12 million loss from our TiO2 activities and $45 million of corporate expenses.  Income from our TiO2 activities increased by $180$11 million compared to the same period in 2016of 2020 primarily due to an increase in gross profitlower average debt outstanding balances primarily on the New Term Loan Facility as compared to the Prior Term Loan Facility and the Standard Bank Term Loan Facility as well as lower average interest rates mainly on the Senior Notes due 2029 as compared to the Senior Notes due 2026 and the Senior Notes due 2025.
Loss on extinguishment of $183debt was $3 million offset by a $5 million increase in selling, general and administrative expenses and a $2 million decrease in restructuring costs.  Corporate general and administrative expenses for the ninethree months ended September 30, 2017 increased for the reasons noted above in the discussion2021 which is primarily as a result of the SG&A expenses.

Interest and debt expense, net for$135 million of voluntary prepayments made on the New Term Loan Facility during the three and nine months ended September 30, 2017 was consistent with the same period of 2016. See Note 11 of notes to unaudited condensed consolidated financial statements.

Gain (loss) on debt extinguishment - See Note 11 of notes to unaudited condensed consolidated financial statements.

2021.
Other income (expense), net for the three months ended September 30, 20172021 primarily consisted of aapproximately $9 million of net realized and unrealized foreign currency gaingains, $2 million associated with the monthly technical service fee relating to the Jazan slagger we receive from AMIC and $1 million of $9 millionpension income primarily due to expected return on plan assets offset by pension related interest costs and interestamortization of actuarial gains/losses.
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We continue to maintain full valuation allowances related to the total net deferred tax assets in Australia, Saudi Arabia, Switzerland, and the United Kingdom.  The provisions for income taxes associated with these jurisdictions include no tax benefits with respect to losses incurred and tax expense only to the extent of $3 million. Other income (expense), netcurrent tax payments. Additionally, we have valuation allowances against other specific tax assets.
On a reported basis, the effective tax rate was 20% and (9922)% for the three months ended September 30, 20162021 and 2020, respectively. The effective tax rates for the three months ended September 30, 2021 and 2020 are influenced by a variety of factors, primarily consistedincome and losses in jurisdictions with valuation allowances, disallowable expenditures, prior year accruals, and our jurisdictional mix of income at tax rates different than the U.K. statutory rate. Additionally, the three months ended September 30, 2020 included a deferred tax benefit generated by the release of a net realizedportion of the US valuation allowance.

Nine Months Ended September 30, 2021 compared to the Nine Months Ended September 30, 2020
Nine Months Ended September 30,
20212020Variance
Net sales$2,688 $1,975 $713 
Cost of goods sold2,011 1,532 479 
Gross profit677 443 234 
Gross Margin25 %22 %3 pt
Selling, general and administrative expenses234 263 (29)
Restructuring— 3 (3)
Income from operations443 177 266 
Interest expense(123)(140)(17)
Interest income4 6 (2)
Loss on extinguishment of debt(60)— 60 
Other income, net6 19 (13)
Income before income taxes270 62 208 
Income tax provision(54)876 930 
Net income$216 $938 $(722)
Effective tax rate20 %(1413)%
EBITDA (1)$616 $415 $201 
Adjusted EBITDA (1)$714 $464 $250 
Adjusted EBITDA as % of Net Sales27 %23 %4 pt
_______________
(1)EBITDA and unrealized foreignAdjusted EBITDA are Non-U.S. GAAP financial measures. Please refer to the “Non-U.S. GAAP Financial Measures” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of these measures and a reconciliation of these measures to Net income from operations.
Net sales of $2,688 million for the nine months ended September 30, 2021 increased by 36% compared to $1,975 million for the same period in 2020. The increase is primarily due to increases in TiO2 and Zircon sales volumes as well as higher TiO2, Zircon and pig iron average selling prices.
Net sales by type of product for the nine months ended September 30, 2021 and 2020 were as follows:
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Nine Months Ended September 30,
20212020VariancePercentage
TiO2$2,118 $1,589 $529 33 %
Zircon360 189 171 90 %
Feedstock and other products210 197 13 7 %
Total net sales$2,688 $1,975 $713 36 %
For the nine months ended September 30, 2021, TiO2 revenue was higher by 33% or $529 million compared to the prior year period. TiO2 revenue increased primarily due to a $365 million increase in sales volumes and an increase of $118 million in average selling prices of TiO2. Foreign currency losspositively impacted TiO2 revenue by $42 million due to the strengthening of $15the Euro. Zircon revenues increased $171 million primarily due to 83% increase in sales volumes and a 3% increase in average selling prices. Feedstock and other products revenues increased $13 million primarily due to higher sales volumes and average selling prices of pig iron partially offset by a gain on saledecrease in sales volumes of inventory producedCP slag and other feedstocks.
Gross margin of $677 million was 25% of net sales compared to 22% of net sales in the year-ago period. The increase in gross margin is primarily due to:
•the favorable impact of 5 points primarily due to an increase in both TiO2, Zircon and pig iron selling prices,
•the favorable impact of 1 points due sales volume and product mix,
•the favorable impact of 1 point due to the mandatory shut-down of our mining operations and slow-down of our smelters in South Africa due to the Covid-19 pandemic in the prior year which did not recur in the current year, partially offset by,
•the net unfavorable impact of 5 points due to changes in foreign exchange rates, primarily due to the South African Rand and Australian dollar.
•Additionally, higher production costs and increased freight rates were offset by favorable overhead absorption and cost savings.

Selling, general and administrative expenses decreased by $29 million or 11% during the commissioning phasenine months ended September 30, 2021 compared to the same period of the prior year primarily driven by a $23 million decrease in professional services, a decrease of $9 million in integration costs and a $2 million decrease in travel and entertainment expenses as a result of the Covid-19 pandemic partially offset by higher employee costs of $8 million.
Income from operations for the nine months ended September 30, 2021 was $443 million compared to income from operations of $177 million in the prior year period. The increase of $266 million was primarily due to higher TiO2, Zircon and pig iron selling prices, higher TiO2 and Zircon volumes and lower SG&A expenses as discussed above.
Adjusted EBITDA as a percentage of net sales was 27% for the nine months ended September 30, 2021, an increase of 4 points from 23% in the prior year. The higher gross margin and lower SG&A expenses as discussed above were the primary drivers of the year-over-year increase in Adjusted EBITDA percentage.
Interest expense for the nine months ended September 30, 2021 decreased by $17 million compared to the same period of 2020 primarily due to lower average debt outstanding balances on the New Term Loan Facility as compared to the Prior Term Loan Facility and the Standard Bank Term Loan Facility as well as lower average interest rates on the Senior Notes due 2029 as compared to the Senior Notes due 2025 and the Senior Notes due 2026. These decreases in interest expense are partially offset by the four months of additional interest expense in the current period associated with the 6.5% Senior Secured Notes due 2025, which were issued on May 1, 2020.
Interest income for the nine months ended September 30, 2021 decreased by $2 million compared to the same period in 2020 due to lower cash balances from the use of cash to paydown the New Term Loan Facility, the Standard Bank Term Loan Facility and the Tikon Loan.
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Loss on extinguishment of debt was $60 million for the nine months ended September 30, 2021 which is primarily comprised of call premiums paid of $21 million and $19 million in relation to the refinancing of our Fairbreeze mine$615 million Senior Notes due 2026 and our $450 million Senior Notes due 2025, respectively, as well as the write-off of $3certain existing debt issuance costs and original issue discount as well as certain new lender and other third party fees associated with the refinancing of our new revolver and term loan and issuance of our new senior notes due 2029. Additionally, there was approximately $4 million and interest income of $1 million.

loss on extinguishment of debt for the nine months ended September 30, 2021 related to the $196 million of voluntary prepayments made on the New Term Loan Facility.
Other (expense) income, (expense), net for the nine months ended September 30, 20172021 primarily consisted of approximately $14 million of net realized and unrealized foreign currency gains, $6 million associated with the monthly technical service fee relating to the Jazan slagger we receive from AMIC, and $4 million of pension income primarily due to expected return on plan assets offset by pension related interest costs and amortization of actuarial gains/losses partially offset by $18 million related to the breakage fee associated with the termination of the TTI acquisition. The foreign currency gains were primarily driven by the South African Rand and the Australian dollars used in the remeasurement of our U.S. dollar denominated working capital and other long term obligations partially offset by the impact of our foreign currency derivatives.
We continue to maintain full valuation allowances related to the total net deferred tax assets in Australia, Saudi Arabia, Switzerland, and the United Kingdom.  The provisions for income taxes associated with these jurisdictions include no tax benefits with respect to losses incurred and tax expense only to the extent of $5 million. Other income (expense), net duringcurrent tax payments. Additionally, we have valuation allowances against other specific tax assets.

On a reported basis, the effective tax rate was 20% and (1413)% for the nine months ended September 30, 2016 primarily consisted of a net realized2021 and unrealized foreign currency loss of $28 million, partially offset by a gain on sale of inventory produced during2020, respectively. The effective tax rates for the commissioning phase of our Fairbreeze mine of $3 million and interest income of $2 million.
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During the threenine months ended September 30, 2017 we sold2021 and 2020 are influenced by a variety of factors, primarily income and losses in jurisdictions with valuation allowances, disallowable expenditures, prior year accruals, and our jurisdictional mix of income at tax rates different than the Alkali segmentU.K. statutory rate. Additionally, the nine months ended September 30, 2020 is influenced by restructuring impacts and a deferred tax benefit generated by the release of our operations.  The Alkali results are now shown as discontinued operationsa portion of the US valuation allowance, and are notthe nine months ended September 30, 2021 included in the tabular results above.  The effectivea deferred tax ratebenefit generated by funding a newly created South African employee stock ownership plan.
Other Comprehensive Income
Other comprehensive loss was $81 million for the three months ended September 30, 2017 differs from both2021 as compared to other comprehensive income of $61 million for the prior year period. The decrease in other comprehensive income in 2021 compared to the prior year was primarily driven by unfavorable foreign currency translation adjustments of $70 million for the three months ended September 30, 2016, and2021 as compared to favorable foreign currency translation adjustments of $43 million in the prior year quarter as well as favorable unrealized gains of $18 million for the three months ended September 30, 2020 as compared to none for the current year period.
Other comprehensive loss was $70 million in the nine months ended September 30, 2017 primarily due2021 as compared to the discrete resultsother comprehensive loss of reporting$148 million in the effects of this sale.

The effective tax rate for the three and nine months ended September 30, 2017 differs from the U.K. statutory rate of 19%2020. The increase in other comprehensive income is primarily due to valuation allowances and incomethe unfavorable foreign currency translation adjustments of $62 million in foreign jurisdictions taxed at rates different than 19%. The effective tax rate for the three and nine months ended September 30, 2016 differs from2021 as compared to unfavorable foreign currency translation adjustments of $129 million in the Australian statutory rateprior year period. In addition, we recognized net gain on derivative instruments of 30% primarily due to valuation allowances, income$10 million in foreign jurisdictions taxed at rates lower than 30%, and withholding tax accruals on interest income. The income tax provision for the three and nine months ended September 30, 2017 differs from2021 as compared to a net loss on derivative instruments of $20 million in the income tax provision for the three and nine months ended September 30, 2016 due to withholding tax accruals on interest income which we made during 2016.prior year period.

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Liquidity and Capital Resources

The following table presents our liquidity as of September 30, 20172021 and December 31, 2016:2020:

September 30, 2021December 31, 2020
 
September 30,
2017
  
December 31,
2016
 (Millions of U.S. dollars)
Cash and cash equivalents $1,058  $248 Cash and cash equivalents$309 $619 
Available under the Wells Fargo Revolver  238   — Available under the Wells Fargo Revolver— 285 
Available under the UBS Revolver  —   190 
Available under the ABSA Revolver  —   95 
Available under the new Cash Flow RevolverAvailable under the new Cash Flow Revolver328 — 
Available under the Standard Credit FacilityAvailable under the Standard Credit Facility66 68 
Available under the Emirates RevolverAvailable under the Emirates Revolver42 50 
Available under the SABB FacilityAvailable under the SABB Facility19 19 
Total $1,296  $533 Total$764 $1,041 
Historically, we have funded our operations and met our commitments through cash generated by operations. During 2012, 2015operations, issuance of unsecured notes, bank financings and 2017,borrowings under lines of credit. In the next twelve months, we issued a $900 million aggregate principal, 6.375% senior notes due 2020 at par value (the “Senior Notes due 2020”) which was redeemed duringexpect that our operations will provide sufficient cash for our operating expenses, capital expenditures, interest payments and debt repayments, however, if necessary, we have the third quarter of 2017, a $600 million aggregate principal amount, 7.50% senior notes due 2022 (the “Senior Notes due 2022”)ability to borrow under our debt and a 5.75% senior notes due 2025 for an aggregate principal amount of $450 million (the “Senior Notes due 2025”), respectively. Additionally, during 2013 and 2017 we obtained a $1.5 billion senior secured term loan (the “ Prior Term Loan”) which was repaid during the third  quarter of 2017 and a $2.2 billion new senior secured first lien term loan facility (the “New Term Loan Facility”), respectively. Seerevolving credit agreements (see Note 1110 of notes to unaudited condensed consolidated financial statements. In connectionstatements). This is predicated on our achieving our forecast which could be negatively impacted by items outside of our control, in particular, macroeconomic conditions, including the economic impacts caused by the continued impact of the COVID-19 pandemic. Consistent with our actions in 2020 in response to the Cristal Transaction,COVID-19 pandemic, if negative events occur in the future, we refinancedmay need to reduce our capital spend, cut back on operating costs and increasedother items within our credit facilities lowering our cost of debt and extended the portfolio’s weighted average yearscontrol to maturity. Additionally, we improved our mix of secured and unsecured debt and achieved more favorable covenants. See Note 11 of notesmaintain adequate liquidity.
Working capital (calculated as current assets less current liabilities) was $1.3 billion at September 30, 2021 compared to unaudited condensed consolidated financial statements.

$1.7 billion at December 31, 2020.
As of September 30, 2021, the non-guarantor subsidiaries of our 6.5% Senior Secured Notes and forour Senior Notes due 2029 represented approximately 17% of our total consolidated liabilities and approximately 26% of our total consolidated assets. For the three and nine months ended September 30, 2017,2021, the non-guarantor subsidiaries of our 6.5% Senior Secured Notes and Senior Notes due 2029 represented approximately 23% of our total consolidated liabilities, approximately 40% of our total consolidated assets, approximately 19%44% and 44%, respectively, of our total consolidated net sales and approximately 38%46% and 49%, respectively, of our Consolidatedconsolidated EBITDA (as such term is defined in the 20256.5% Senior Secured Notes Indenture and 2029 Indenture). In addition, as of September 30, 2017,2021, our non-guarantor subsidiaries had $881$691 million of total consolidated liabilities (including trade payables but excluding intercompany liabilities), all of which would have been structurally senior to the 20256.5% Senior Secured Notes and 2029 Notes. See Note 1110 of notes to unaudited condensed consolidated financial statements.

At September 30, 2017,2021, we had outstanding letters of credit and bank guarantees and performance bonds, seeof $53 million. See Note 1314 of notes to unaudited condensed consolidated financial statements.

In the next twelve months, we expect that our operations and available borrowings under our revolving credit agreements will provide sufficient cash to fund our operating expenses, capital expenditures, interest payments, debt repayments, and dividends. Working capital (calculated as current assets of continuing operations less current liabilities of continuing operations) was $2.2 billion at September 30, 2017 compared to $614 million at December 31, 2016, an increase of $1.6 billion, which is primarily due to the sale of the Alkali business, the debt refinancing and cash provided by continuing operations of $94 million, partially offset by dividends paid of $17 million and capital expenditures of $63 million.

Principal factors that could affect the availability of our internally-generated funds include (i) the deterioration of our revenues; (ii) an increase in our expenses; or (iii) changes in our working capital requirements. See Note 1 to notes to condensed consolidated financial statements.
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Principal factors that could affect our ability to obtain cash from external sources include (i) debt covenants that limit our total borrowing capacity; (ii) increasing interest rates applicable to our floating rate debt; (iii) increasing demands from third parties for financial assurance or credit enhancement; (iv)) credit rating downgrades, which could limit our access to additional debt; (v) a decrease in the market price of our common stock and debt obligations; orand (vi) volatility in public debt and equity markets.

As of September 30, 2017,2021, our credit rating with Moody’s and Standard & Poor’s was B1 stable outlook and B stable outlook, respectively. On August 24, 2017,unchanged from December 31, 2020. During the first quarter of 2021, our credit rating with Standard & Poor’s upgraded our outlookPoor's changed positively to B stable outlook from B negative outlook. On September 7, 2017, Moody’s upgraded our corporate credit ratingoutlook at December 31, 2020, and remains unchanged as of June 30, 2021. See Note 10 of notes to B1 stable outlook from B2 negative outlook. At September 30, 2017, we have sufficient borrowings available and have no significant principal payments on debt due until 2022.unaudited condensed consolidated financial statements.

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Cash and Cash Equivalents

We consider all investments with original maturities of three months or less to be cash equivalents. As of September 30, 2017,2021, our cash and cash equivalents were primarily invested in money market funds.funds and we also receive earnings credits for some balances left in our bank operating accounts. We maintain cash and cash equivalents in bank deposit and money market accounts that may exceed federally insured limits. The financial institutions where our cash and cash equivalents are held are generally highly rated and geographically dispersed, and we have a policy to limit the amount of credit exposure with any one institution. We have not experienced any losses in such accounts and believe we are not exposed to significant credit risk.

The use of our cash includes payment of our operating expenses, capital expenditures, servicing our interest and debt repayment obligations, making pension contributions and making quarterly dividend payments.

Going forward, we expect to prioritize capital expenditures, continued annual dividend increases and share repurchases.
Repatriation of Cash

At September 30, 2017,2021, we held $1.7 billion$309 million in cash and cash equivalents and restricted cash in these respective jurisdictions: $31$8 million in the United States, $30 million in Europe, $75$65 million in Australia, $145$80 million in South Africa, $39 million in Brazil, $66 million in Saudi Arabia, and $1.5 billion$21 million in the U.S.China. Our credit facilities limit transfers of funds from subsidiaries in the U.S.United States to certain foreign subsidiaries.

In addition, at September 30, 2021, we held $4 million of restricted cash in Australia related to performance bonds.
Tronox LimitedHoldings plc has foreign subsidiaries with positive undistributed earnings at September 30, 2017.2021. We have made no provision for deferred taxes related to these undistributed earnings because they are considered to be indefinitely reinvested in the foreign jurisdictions.

Debt Obligations
Cash DividendsDuring the three and nine months ended September 30, 2021, the Company made four and six voluntary prepayments, respectively, totaling $135 million and $196 million, respectively, on Class Athe New Term Loan Facility. As a result of these voluntary prepayments, the Company recorded $3 million and Class B Shares$4 million in "Loss on extinguishment of debt" within the Condensed Consolidated Statement of Income for the three and nine months ended September 30, 2021, respectively.

During the nine months ended September 30, 2021, the Company made three voluntary prepayments totaling R1,040 million (approximately $69 million at September 30, 2021 exchange rate) on the Standard Bank Term Loan Facility. Additionally, on September 30, 2021, in conjunction with the Company's refinancing of the Standard Bank Term Loan Facility, the Company repaid the remaining outstanding principal balance of R390 million (approximately $26 million at September 30, 2021 exchange rate). During the nine months ended September 30, 2021, the Company made a voluntary prepayment of CNY 41 million (approximately $6 million at September 30, 2021 exchange rate) on the Tikon Loan. Additionally, in April 2021, the Company repaid the remaining outstanding principal balance of CNY 70 million (approximately $11 million at September 30, 2021 exchange rate) on the Tikon loan. No prepayment penalties were required as a result of these principal prepayments.
On November 8, 2017,In March 2021, the Board declaredCompany closed the refinancing of its existing first lien term loan credit agreement with a quarterly dividendnew seven-year first lien term loan credit facility (the "Prior Term Loan Facility") and existing revolving syndicated facility agreement with a new five-year cash flow revolving facility (the "New Revolving Facility"). Pursuant to the New Term Loan Facility, the Company's wholly owned subsidiary, Tronox Finance LLC borrowed $1,300 million of $0.045 per sharefirst lien term loans. Pursuant to holdersthe New Revolving Facility, the lenders thereunder have agreed to provide revolving commitments of our Class A Shares and Class B Shares at$350 million. The Company also paid down approximately $313 million, with cash on hand, of debt in conjunction with the close of business on November  20, 2017, totaling $5 million, which will be paid on   December 1, 2017. Seerefinancing transaction. Refer to Note 1410 of notes to unaudited condensed consolidated financial statements for declaredfurther details.
On March 15, 2021, Tronox Incorporated, a wholly-owned indirect subsidiary of the Company, issued its 4.625% senior note due 2029 for an aggregate principal amount of $1,075 million. The net proceeds was used to fund the redemption in full on March 31, 2021 of the Company's outstanding $615 million aggregate principal amount of 6.50% senior notes due 2026 and paid quarterly dividends by quarter.

Debt Obligations

At September 30, 2017 and December 31, 2016, our excessthe redemption in full on April 1, 2021 of our debt over cash and cash equivalents was $2.1 billion and $2.8 billion, respectively.

We did not have anCompany’s outstanding balance on our short-term debt at September 30, 2017 and had $150$450 million aggregate principal amount of such debt at December 31, 2016. At September 30, 2017 and December 31, 2016, our long-term debt, net of an unamortized discount was $3.2 billion and $2.9 billion, respectively. See5.75% senior notes due 2025. Refer to Note 1110 of notes to unaudited condensed consolidated financial statements for specific debt information.further details.

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On October 1, 2021, Tronox Minerals Sands Proprietary Limited, a wholly-owned indirect subsidiary of the Company, entered into an amendment and restatement of a new credit facility with Standard Bank. The new credit facility provides the Company with (a) a new five-year term loan facility in an aggregate principal amount of R1.5 billion (approximately $99 million at September 30, 2021 exchange rate) (the "New Standard Bank Term Loan Facility") and (b) a new three-year revolving credit facility (the "New Standard Bank Revolving Credit Facility") providing initial revolving commitments of R1.0 billion (approximately $66 million at September 30, 2021 exchange rate). As a result of the amended facility, the Company repaid the remaining outstanding principal balance of R390 million (approximately $26 million at September 30, 2021 exchange rate) of the Standard Bank Term Loan Facility on September 30, 2021 and we plan to drawdown on the new facility in November 2021.

On a consolidated basis, no incremental debt was incurred as a result of the aforementioned debt refinancing transactions.

At September 30, 2021 and December 31, 2020, our long-term debt, net of unamortized discount and debt issuance costs was $2.7 billion and $3.3 billion, respectively.
At September 30, 2021 and December 31, 2020, our net debt (the excess of our debt over cash and cash equivalents) was $2.4 billion and $2.7 billion, respectively. See Note 10 of notes to unaudited condensed consolidated financial statements.
Cash Flows

The following table presents cash flow for the periods indicated:
Nine Months Ended September 30,
20212020
(Millions of U.S. dollars)
Cash provided by operating activities$601 $156 
Cash used in investing activities(181)(151)
Cash (used in) provided by financing activities(752)440 
Effects of exchange rate changes on cash and cash equivalents and restricted cash(3)(7)
Net (decrease) increase in cash, cash equivalents and restricted cash$(335)$438 

  Nine Months Ended September 30, 
  2017  2016 
  (Millions of U.S. dollars) 
Net cash provided by operating activities $94  $13 
Net cash provided by (used in) investing activities  612   (58)
Net cash provided by (used in) financing activities  20   (68)
Net cash provided by discontinued operations  82   83 
Effect of exchange rate changes on cash  2   3 
Net increase (decrease) in cash and cash equivalents $810  $(27)

Cash Flows provided by Operating Activities —Net Cash provided by operating activities of $601 million is primarily driven by $570 million of net income adjusted for non-cash items and a net cash inflow of $31 million related to changes in assets and liabilities. The following table provides our net cash provided by operating activities for the nine months ended September 30, 20172021 and 2020:
Nine Months Ended September 30,
20212020
(Millions of U.S. dollars)
Net income$216 $938 
Adjustments for non-cash items354 (597)
Income related cash generation570 341 
Net change in assets and liabilities31 (185)
Cash provided by operating activities$601 $156 
Net cash provided by operating activities increased by $81$445 million comparedyear-over-year from net cash provided by operations of $156 million in the prior year to net cash provided by operating activities of $601 million during the same period in 2016current year. This improvement was generated primarily due to improved working capital management of $218 million coupled with higher cash earnings.net income adjusted for non-cash items of $229 million.

Cash Flows provided by (used in)used in Investing Activities —Net cash provided byused in investing activities for the nine months ended September 30, 20172021 was $612$181 million as compared to cash used in investing activities of $58$151 million for the same period in 2016. The increase was2020 primarily due to increased capital expenditures of $183 million during the proceeds of $1.325 billion received from the Sale, partially offset by the $650current year as compared to $129 million Blocked Term Loan under the New Term Loan Facility which is included in “Restricted cash” in the Condensed Consolidated Balance Sheets at September 30, 2017. Capital expenditures were $4prior year. The prior year was also
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comprised of a loan of $24 million higher comparedto AMIC related to the same period in 2016.Jazan Slagger, a titanium slag smelter facility (see Note 18 of notes to unaudited condensed consolidated financial statements for a discussion of the Jazan Slagger).

Cash Flows (used in) provided by (used in) Financing Activities —Net cash provided byused in financing activities of $20 million during the nine months ended September 30, 20172021 was primarily attributable$752 million as compared to cash provided by financing activities of $440 million for the proceeds from long-term debt of $2.6 billion, partially offset by repayments of short term and long term debt of $2.5 billion, debt issuance costs of $36 million and a call premium payment of $14 million.nine months ended September 30, 2020. The nine months ended September 30, 2017 also included dividends paid2021 was primarily comprised of $17$2,375 million from the proceeds from the issuance of $1,075 million 4.625% Senior notes due 2029 and $11borrowings of $1,300 million under a new term loan facility. These borrowings were partially offset by repayments of long-term debt of $3,008 million, comprised primarily of $1,607 million related to the term loan facility, $1,065 million related to the early redemption of senior notes originally due in 2025 and 2026, and voluntary prepayments made on both the new term loan facility and the South African term loan facility. Additionally, the current period includes the payment of a $21 million call premium and a $19 million call premium (both associated with the notes redemption), $36 million of restricted stockdebt issuance costs and performance-based shares settled in cash$46 million of dividends paid. See Note 10 of notes to unaudited condensed consolidated financial statements for taxes. Net cash used in financing activitiesfurther information on the current year debt refinancing transactions. The nine months ended September 30, 2020 was primarily comprised of $68$500 million from the proceeds from the issuance of the 6.5% Senior Secured Notes due 2025. Additionally, during the nine months ended September 30, 20162020, our KSA subsidiary drew down $13 million on its SABB Credit Facility for local working capital purposes. Partially offsetting these proceeds was primarily attributable toa use of cash of $30 million for the payment of dividends paidduring the first three quarters of $40 million2020 and principaltotal repayments onof short-term and long-term debt of $27 million.$30 million for our SABB Credit Facility and our debt in South Africa.

Contractual Obligations

The following table sets forth information relating to our contractual obligations as of September 30, 2017:2021:
Contractual Obligation
Payments Due by Year (3)(4)
TotalLess than
1 year		1-3
years		3-5
years		More than
5 years
(Millions of U.S. dollars)
Long-term debt, net and lease financing (including interest) (1)
$3,523 137 288 707 2,391 
Purchase obligations (2)
507 90 168 106 143 
Operating leases182 36 36 21 89 
Asset retirement obligations and environmental liabilities(5)
425 10 36 25 354 
Total$4,637 273 528 859 2,977 

 
Contractual Obligation
Payments Due by Year (3)(4)
 
 Total  
Less than
1 year
  
1-3
years
  
3-5
years
  
More than
5 years
 
 (Millions of U.S. dollars) 
Long-term debt, net and lease financing (including interest) (1)
 $4,262  $178  $373  $931  $2,780 
Purchase obligations (2)
  399   134   109   55   101 
Operating leases  44   19   12   6   7 
Asset retirement obligations  82   4   5   5   68 
Total $4,787  $335  $499  $997  $2,956 
__________________
(1)We calculated the New Term Loan Facility interest at a base rate of 1.3% plus a margin of 3.0%. See Note 11 of notes to unaudited condensed consolidated financial statements.
(1)We calculated the New Term Loan Facility interest at a LIBOR plus a margin of 2.25%. See Note 10 of notes to our unaudited condensed consolidated financial statements.

(2)Includes obligations for purchase requirements of process chemicals, supplies, utilities and services. We have various purchase commitments for materials, supplies, and services entered into in the ordinary course of business. Included in the purchase commitments table above are contracts, which require minimum volume purchases that extend beyond one year or are renewable annually and have been renewed for 2021. Certain contracts allow for changes in minimum required purchase volumes in the event of a temporary or permanent shutdown of a facility. We believe that all of our purchase obligations will be utilized in our normal operations.
(2)Includes obligations to purchase requirements of process chemicals, supplies, utilities and services. We have various purchase commitments for materials, supplies, and services entered into in the ordinary course of business. Included in the purchase commitments table above are contracts which require minimum volume purchases that extend beyond one year or are renewable annually and have been renewed for 2017. Certain contracts allow for changes in minimum required purchase volumes in the event of a temporary or permanent shutdown of a facility. We believe that all of our purchase obligations will be utilized in our normal operations.
(3)The table excludes contingent obligations, as well as any possible payments for uncertain tax positions given the inability to estimate the possible amounts and timing of any such payments.

(4)The table excludes commitments pertaining to our pension and other postretirement obligations.
(3)The table above excludes contingent obligations, as well as any possible payments for uncertain tax positions given the inability to estimate the possible amounts and timing of any such payments.
(5)Asset retirement obligations and environmental liabilities are shown at the undiscounted and uninflated values.

(4)The table above excludes commitments pertaining to our pension and other postretirement obligations.
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Non-U.S. GAAP Financial Measures

EBITDA and Adjusted EBITDA, which are used by management to measure performance, are not presented in accordance with U.S. GAAP. We define EBITDA as net income excluding the impact of income taxes, interest expense, interest income and depreciation, depletion and amortization. We define Adjusted EBITDA as EBITDA excluding the impact of nonrecurring
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items such as restructuring charges, gain or loss on debt extinguishments, impairment charges, gains or losses on sale of assets, acquisition-related transaction costs, integration costs, purchase accounting adjustments and pension settlements and curtailment gains or losses. Adjusted EBITDA also excludes non-cash items such as share-based compensation costs and pension and postretirement costs. Additionally, we exclude from Adjusted EBITDA, realized and unrealized foreign currency remeasurement gains and losses.
Management believes that EBITDA is useful to investors, as it is commonly used in the industry as a means of evaluating operating performance. We do not intend for these non-U.Snon-U.S. GAAP financial measures to be a substitute for any U.S. GAAP financial information. Readers of these statements should use these non-U.S. GAAP financial measures only in conjunction with the comparable U.S. GAAP financial measures. Since other companies may calculate EBITDA and Adjusted EBITDA differently than we do, EBITDA and Adjusted EBITDA, as presented herein, may not be comparable to similarly titled measures reported by other companies.

Management believes these non-U.S. GAAP financial measures:

Reflect•reflect our ongoing business in a manner that allows for meaningful period-to-period comparison and analysis of trends in our business, as they exclude income and expense that are not reflective of ongoing operating results;

Provide•provide useful information in understanding and evaluating our operating results and comparing financial results across periods;
and

Provide•provide a normalized view of our operating performance by excluding items that are either noncash or infrequently occurring, or non-recurring in nature;

Assist investors in assessing our compliance under our debt instruments; and

occurring.
Adjusted EBITDA is one of the primary measures management uses for planning and budgeting processes, and to monitor and evaluate financial and operating results. In addition, Adjusted EBITDA is a factor in evaluating management’s performance when determining incentive compensation.

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The following table reconciles net lossincome to EBITDA and Adjusted EBITDA for the periods presented:
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
(Millions of U.S. dollars)
Net income (U.S. GAAP)$113 $902 $216 $938 
Interest expense37 48 123 140 
Interest income(1)(1)(4)(6)
Income tax provision28 (893)54 (876)
Depreciation, depletion and amortization expense72 76 227 219 
EBITDA (non-U.S. GAAP)249 132 616 415 
Share-based compensation (a)7 8 23 19 
Transaction costs (b)— 6 18 10 
Restructuring (c)— 1 — 3 
Integration costs (d)— 1 — 10 
Loss on extinguishment of debt (e)3 — 60 — 
Costs associated with former CEO retirement (f)— — 1 — 
Gain on asset sale (g)— — (2)— 
Foreign currency remeasurement (h)(10)(2)(14)(10)
Costs associated with Exxaro deal (i)— — 1 — 
Other items (j)3 2 11 17 
Adjusted EBITDA (non-U.S. GAAP)$252 $148 $714 $464 
(a) Represents non-cash share-based compensation. See Note 16 of notes to unaudited condensed consolidated financial statements.
(b) Represents breakage fee and other costs associated with termination of TTI Transaction which were primarily recorded in “Other income (expense)” in the unaudited Condensed Consolidated Statements of Income.
(c) Represents amounts for employee-related costs, including severance.
(d) Represents integration costs associated with the Cristal acquisition after the acquisition which were recorded in “Selling, general and administrative expenses” in the unaudited Condensed Consolidated Statements of Income.
(e) Represents the loss in connection with the following: 1) termination of its Wells Fargo Revolver, 2) amendment and restatement of its term loan facility including the new revolving credit facility, 3) termination of its Senior Notes due 2026 and its Senior Notes due 2025, 4) issuance of its Senior Notes due 2029 and 5) voluntary prepayments made on the New Term Loan Facility.
(f) Represents costs, excluding share-based compensation, associated with the retirement agreement of the former CEO which were recorded in "Selling, general and administrative expenses" in the unaudited Condensed Consolidated Statements of Income. The $2 million of share based compensation expense associated with the former CEO is included in the total share-based compensation amount of $23 million in the table above.
(g) Represents the gain on European Union carbon credits sold in March 2021 which were recorded in "Cost of goods sold" in the unaudited Condensed Consolidated Statement of Income.
(h) Represents realized and unrealized gains and losses associated with foreign currency remeasurement related to third-party and intercompany receivables and liabilities denominated in a currency other than the functional currency of the entity holding them, which are included in “Other income (expense), net” in the unaudited Condensed Consolidated Statements of Income.
(i) Represents costs associated with the Exxaro flip-in transaction which are included in "Selling, general and administrative expenses" in the unaudited Condensed Consolidated Statements of Income.
(j) Includes noncash pension and postretirement costs, asset write-offs, accretion expense and other items included in “Selling general and administrative expenses”, “Cost of goods sold” and “Other income (expense), net” in the unaudited Condensed Consolidated Statements of Income.

  
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
  2017  2016  2017  2016 
  
(Millions of U.S. dollars)
 
Net income (loss), (U.S GAAP), $(241) $(39) $(274) $(183)
Income (loss) from discontinued operations, net of tax (see Note 2), (U.S GAAP),  (216)  23   (179)  55 
Net income (loss) from continuing operations, (U.S GAAP),  (25)  (62)  (95)  (238)
Interest and debt expense, net  47   46   140   138 
Interest income  (3)  —   (5)  (2)
Income tax provision  13   6   10   25 
Depreciation, depletion and amortization expense  45   45   136   131 
EBITDA (non-U.S. GAAP)  77   35   186   54 
Share based compensation (a)
  5   8   26   18 
Transaction costs (b)
  13   —   33   — 
Restructuring (income) expense (c)
  —   1   (1)  2 
(Gain) loss on extinguishment of debt (d)
  28   —   28   (4)
Foreign currency remeasurement (e)
  (5)  14   1   32 
Other items (f)
  5   —   12   4 
Adjusted EBITDA (non-U.S. GAAP) (g)
 $123  $58  $285  $106 
(a)Represents non-cash share-based compensation. See Note 16 of notes to unaudited condensed consolidated financial statements.

(b)Represents transaction costs associated with the Cristal Transaction which were recorded in “Selling, general and administrative expenses” in the unaudited Condensed Consolidated Statements of Operations.

(c)Represents severance and other costs associated with the shutdown of our sodium chlorate plant, and other global restructuring efforts which was recorded in “Restructuring income (expense)” in the unaudited Condensed Consolidated Statements of Operations.

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(d)Represents a $28 million loss which includes a $22 million loss associated with the redemption of the outstanding balance of the Senior Notes due 2020, $1 million of unamortized original debt issuance costs from the repayment of the UBS Revolver, and $5 million of debt issuance costs from the refinancing activities associated with the term loans. During 2016, the $4 million gain was associated with the repurchase of $20 million face value of our Senior Notes due 2020 and Senior Notes due 2022.  These amounts were recorded in “Gain (loss) on extinguishment of debt” in the unaudited Condensed Consolidated Statements of Operations.

(e)Represents foreign currency remeasurement which is included in “Other income (expense), net” in the unaudited Condensed Consolidated Statements of Operations.

(f)Includes noncash pension and postretirement costs, severance expense, accretion expense, insurance settlement gain and other items included in “Selling general and administrative expenses” and “Cost of goods sold” in the unaudited Condensed Consolidated Statements of Operations.

(g)No income tax impact given full valuation allowance except for South Africa related restructuring costs. See Note 3 to unaudited condensed consolidated financial statements.

The following table reconciles income (loss) from continuing operations, our comparable measure for segment reporting under U.S. GAAP, to Adjusted EBITDA by segment for the periods presented:

  
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
  2017  2016  2017  2016 
TiO2 segment
 $75  $17  $168  $(12)
Corporate  (24)  (17)  (90)  (45)
Income (loss) from continuing operations (U.S. GAAP)  51   —   78   (57)
TiO2 segment
  44   44   132   127 
Corporate  1   1   4   4 
Depreciation, depletion and amortization expense  45   45   136   131 
TiO2 segment
  17   15   44   41 
Corporate  10   (2)  27   (9)
Other  27   13   71   32 
TiO2 segment
  136   76   344   156 
Corporate  (13)  (18)  (59)  (50)
Adjusted EBITDA (non-U.S. GAAP) $123  $58  $285  $106 

Recent Accounting Pronouncements

See Note 1 of notes to unaudited condensed consolidated financial statements for recently issued accounting pronouncements.

Environmental Matters

We are subject to a broad array of international, federal, state, and local laws and regulations relating to safety, pollution, protection of the environment, and the generation, storage, handling, transportation, treatment, disposal, and remediation of hazardous substances and waste materials. In the ordinary course of business, we are subject to frequent environmental inspections and monitoring, and occasional investigations by governmental enforcement authorities. Under these laws, we are or may be required to obtain or maintain permits or licenses in connection with our operations. In addition, under these laws, we are or may be required to remove or mitigate the effects on the environment of the disposal or release of chemical, petroleum, low-level radioactive and other substances at our facilities. We may incur future costs for capital improvements and general compliance under environmental, health, and safety laws, including costs to acquire, maintain, and repair pollution control equipment. Environmental laws and regulations are becoming increasingly stringent, and compliance costs are significant and will continue to be significant in the foreseeable future. There can be no assurance that such laws and regulations or any environmental law or regulation enacted in the future is not likely to have a material effect on our business. We believe we are in compliance with applicable environmental rules and regulations in all material respects.
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Item 3.
Item 3.    Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various market, credit, operational, and liquidity risks in the normal course of business, which are discussed below. We manage these risks through normal operating and financing activities and, when appropriate, through the use ofwith derivative instruments. We do not invest in derivative instruments for speculative purposes, but historically have entered into, and may enter into, derivative transactionsinstruments for hedging purposes in order to reduce the exposure to fluctuations in interest rates, natural gas prices orand exchange rates.

Market Risk

A substantial portion of our products and raw materials are commodities that reprice as market supply and demand fundamentals change. Accordingly, product margins and the level of our profitability tend to vary with changes in the business cycle. Our TiO2 prices may do so in the near term as ore prices and pigment prices are expected to fluctuate over the next few years. We try to protect against such instability through various business strategies. These include provisions in sales contracts allowing us to pass on higher raw material costs through timely price increases and formula price contracts to transfer or share commodity price risk, as well as using varying contract term lengths and selling to a diverse mix of customers by geography and industry to reap the benefits of a diverse portfolio.

Credit Risk

Credit risk is the risk that a borrower or a counterparty will fail to meet their obligations. A significant portion of our liquidity is concentrated in trade accounts receivable that arise from sales of our products to customers. In the case of TiO2, the high level of industry concentration has the potential to impact our overall exposure to credit risk, either positively or negatively, in that our customers may be similarly affected by changes in economic, industry or other conditions (e.g., the Covid-19 pandemic may increase our credit risk as a result of the difficult economic environment). We have significant exposure to credit risk in industries that are affected by cyclical economic fluctuations. We perform ongoing credit evaluations of our customers and use credit risk insurance policies from time to time, as deemed appropriate, to mitigate credit risk but generally do not require collateral. Our contracts typically enable us to tighten credit terms if we perceive additional credit risk andrisk; however, historic losses due to write offs of bad debt have been relatively low.insignificant. In addition, due to our international operations, in our TiO2 segment, we are subject to potential trade restrictions and sovereign risk in certain countries in which we operate in.operate. We maintain allowances for potential credit losses based on specific customer review and current financial conditions.

During the threenine months ended September 30, 20172021 and 2016,2020, our ten largest third-party customers represented approximately 35%28% and 25%33%, respectively, of our consolidated net sales. During the nine months ended September 30, 20172021 and 2016, our ten largest third-party customers represented approximately 36% and 23%, respectively,2020, no single customer accounted for 10% of our consolidated net sales.

Interest Rate Risk

Interest rate risk arises from the possibility that changes in interest rates will impact our financial results. We are exposed to interest rate risk on our floating rate debt, the New Term Loan Facility, Standard Bank Term Loan Facility, and Wells Fargonew Cash Flow Revolver, balance.Standard Bank Revolver, Emirates Revolver and SABB Credit Facility balances. Using a sensitivity analysis as of September 30, 2017,2021, a hypothetical 1% increase in interest rates would result in a net increasedecrease to pre-tax lossincome of approximately $4 million on an annualized basis. This is due to the fact that earnings on our floating rate financial assets of $1.7 billion$26 million at September 30, 2017 and2021 would increase by the full 1%, offsetting the impact of a 1% increase in interest expense on our floating rate debt of $388 million.
During 2019, we entered into interest-rate swap agreements for a portion of our Prior Term Loan Facility, which effectively converts the variable rate to a fixed rate for a portion of the loan. The agreements expire in September 2024. The Company’s objectives in using the interest-rate swap agreements are to add stability to interest expense and to manage its exposure to interest rate movements. There was no impact associated with the New Term Loan Facility and Wells Fargo Revolver balance, would each increase byas the full 1%.hedge remained highly effective.

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Currency Risk

Currency risk arises from the possibility that fluctuations in foreign exchange rates will impact our balance sheets due to the valuetranslation of our assets and liabilities denominated in foreign currencies, as well as our earnings due to the translation of our balance sheets and remeasurementcertain of our subsidiaries’ statements of operationsincome from local currencies to U.S. dollars.dollars, as well as due to remeasurement of assets and liabilities denominated in currencies other than a subsidiary’s functional currency. We manufacture and market our products in a number of countries throughout the world and, as a result, are exposed to changes in foreign currency exchange rates, particularly in Australia, Brazil, China, South Africa, the Netherlands and the Netherlands.United Kingdom. The exposure is moremost prevalent in South Africa and Australia as the majority of revenues are earned in U.S. dollars while expenses are primarily incurred in local currencies. Since we are exposed to movements in the South African Rand and the Australian Dollar versus the U.S. dollar, we may enter into forward contracts to buy and sell foreign currencies as “economic hedges” for these foreign currency transactions.
During the third quarter of 2019, the first quarter of 2020 and the second quarter of 2021, we entered into foreign currency contracts used to hedge non-functional currency sales for our South African subsidiaries and forecasted non-functional currency cost of goods sold for our Australian subsidiaries. These foreign currency contracts are designated as cash flow hedges. Changes to the fair value of these foreign currency contracts are recorded as a component of other comprehensive (loss) income to the extent such contracts are effective, and are recognized in net sales or costs of goods sold in the period in which the forecasted transaction affects earnings or the transactions are no longer probable of occurring.
38As of September 30, 2021, we had notional amounts of 120 million Australian dollars (or approximately $87 million at September 30, 2021 exchange rate) that expire between October 28, 2021 and December 30, 2021 to reduce the exposure of our Australian subsidiaries’ cost of sales to fluctuations in currency rates. At September 30, 2021, there was an unrealized net gain of $26 million recorded in "Accumulated other comprehensive loss" on the unaudited Condensed Consolidated Balance Sheet
From time to time, we enter into foreign currency contracts for the South African Rand and Australian dollar to reduce exposure of our subsidiaries’ balance sheet accounts not denominated in our subsidiaries' functional currency to fluctuations in foreign currency rates. At September 30, 2021, the fair value of the foreign currency contracts was a fair value of a net loss of less than $1 million.
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Item 4.
Item 4.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of September 30, 2017, our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has conducted an evaluation of our disclosure controls and procedures. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of September 30, 2017.

Under the supervision of and with the participation of Tronox’s management, including our CEOco-CEOs and CFO, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) (the “Exchange Act”), as of September 30, 2017,2021, the end of the period covered by this report. Based on that evaluation, we have concluded that the Company’s disclosure controls and procedures were effective as of that date. Tronox’s disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by Tronox in the reports that it files or submits under the Exchange Act is accumulated and communicated to Tronox’s management, including Tronox’s principal executive and principal financial officers, or other persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.Based on that evaluation, we have concluded that the Company’s disclosure controls and procedures were effective as of that date. 

An evaluation of our internal controlscontrol over financial reporting was also performed to determine whether any changes have occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Changes in Internal Control over Financial Reporting

There have beenDuring the quarter ended September 30, 2021, there were no changes toin our internal control over financial reporting during the quarter ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1.
Item 1.    Legal Proceedings

Information required by this item is incorporated herein by reference to the section captioned “Notes to Consolidated Financial Statements, Note 14- Commitments and Contingencies” of this Form 10-Q.
From timeSEC Regulations require us to time,disclose certain information about administrative or judicial proceedings to which a governmental authority is party arising under federal, state or local environmental provisions if we may be party to a number of legal and administrative proceedings involving environmental and/or other matters in various courts or agencies. These proceedings, individually and in the aggregate, may have a material adverse effect on us. Thesereasonably believe that such proceedings may be associated with facilities currentlyresult in monetary sanctions above a stated threshold. Pursuant to the SEC regulations, the Company uses a threshold of $1 million or previously owned, operated or used by us and/or our predecessors, somemore for purposes of which may include claims for personal injuries, property damages, cleanup costs and other environmental matters. Our current and former operations may also involve managementdetermining whether disclosure of regulated materials, which are subject to various environmental laws and regulations including the Comprehensive Environmental Response Compensation and Liability Act, the Resource Conservation and Recovery Act or state equivalents. Similar environmental laws and regulations and other requirements exist in foreign countries in which we operate.any such proceedings is required.

Item 1A.
Item 1A.    Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed under “Risk Factors” included in our Annual Report on Form 10-K and in our Form 10-Q forany subsequent filings thereto with the three months ended June 30, 2017.SEC. The risks described herein or in the Form 10-K or inand any subsequent filings thereto with the Form 10-Q for the three months ended June 30, 2017SEC are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. There have been no material changes from the risk factors disclosed under the heading “Risk Factors” in our Form 10-K and our Form 10-Q for the three months ended June 30, 2017, except as noted below.10-K.


The classification of TiO2 as a Category 2 Carcinogen in the European Union could result in more stringent regulatory control with respect to TiO2.

In May 2016, France’s competent authority under the EU’s Registration, Evaluation, Authorization and Restrictions of Chemicals (“REACH”) submitted a proposal to the European Chemicals Agency ("ECHA") that would classify TiO2 as carcinogenic in humans by inhalation. The Company together with other companies and trade associations representing the TiO2 industry and industries consuming our products, submitted comments opposing the classification, based on evidence from epidemiological and other scientific studies. On October 12, 2017, ECHA’s Committee for Risk Assessment (“RAC”) released a written opinion dated September 14, 2017 stating that based on the scientific evidence it reviewed, there is sufficient grounds to classify TiO-2 under the EU’s Classification, Labelling and Packaging Regulation (“CLP”) as a Category 2 Carcinogen , but only with a hazard statement describing the risk by inhalation. The European Commission will review the RAC’s formal recommendation to determine what regulatory measures, if any, should be taken. If the European Commission decides to adopt this classification, it could require that products manufactured with TiO2 be classified as containing carcinogenic materials, which could impact our business by inhibiting the marketing of products containing TiO2 to consumers, and subject our manufacturing operations to new regulations that could increase costs. Any classification, use restriction or authorized requirement for use imposed by the ECHA could have additional effects under other EU laws (e.g., those affecting medical and pharmaceutical applications, cosmetics, food packaging and food additives) and/or trigger heightened regulatory scrutiny in countries and local jurisdictions outside the EU based on health and safety grounds. It is also possible that heightened regulatory scrutiny would lead to claims by consumers or those involved in the production of such products alleging adverse health impacts.

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Our ability to use NOLs to offset future income may be limited.

The Company’s ability to use any net operating losses (“NOLs”) generated by it could be substantially limited if the Company were to experience an “ownership change” as defined under Section 382 of the Code. In general, an “ownership change” would occur if the Company’s “5-percent shareholders,” as defined under Section 382 of the Code, including certain groups of persons treated as “5-percent shareholders,” collectively increased their ownership in the Company by more than 50 percentage points over a rolling three-year period. On October 10, 2017, Exxaro sold 22,425,000 Class A ordinary shares in an underwritten registered offering (the “Exxaro Share Transaction”). The Exxaro Share Transaction and the issuance of the Class A ordinary shares to Cristal Netherlands in connection with the Cristal Transaction may result in an “ownership change” for U.S. federal and applicable state income tax purposes. Should Exxaro decide to sell a significant portion of their remaining ownership in the future, an “ownership change” will most likely occur. A corporation that experiences an ownership change will generally be subject to an annual limitation on the use of its pre-ownership change NOLs (and certain other losses and/or credits) equal to the equity value of the corporation immediately before the ownership change, multiplied by the long-term tax-exempt rate for the month in which the ownership change occurs. Although our NOLs continue to have full valuation allowances, such a limitation could, for any given year, have the effect of increasing the amount of our U.S. federal income tax liability, which would negatively impact the amount of after-tax cash available for distribution to holders of our ordinary shares and our financial condition.

Item 2.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.
Item 3.    Defaults Upon Senior Securities

None.
Item 4.
Item 4.    Mine Safety Disclosures

Not applicable.
Information regarding mine safety and other regulatory actions at our mine in Green River, Wyoming, operated in conjunction with the Alkali business (which was sold on September 1, 2017), is included in Exhibit 95 to this Form 10-Q.

Item 5.
Item 5.    Other Information

None.

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Item 6.    Exhibits
Item 6.
Exhibits

Exhibit No.
Exhibit No.
4.1
Ninth Supplemental Indenture, dated as of September 1, 2017, to the Indenture, dated August 20, 2012 among Tronox Finance LLC, as Issuer, Tronox Limited as Parent, the guarantors named therein and Wilmington Trust, National Association, as trustee. (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed by Tronox Limited on September 6, 2017).
31.1
4.2
Fifth Supplemental Indenture, dated as of September 1, 2017, to the Indenture, dated March 19, 2015 among Tronox Finance LLC, as Issuer, Tronox Limited as Parent, the guarantors named therein and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K filed by Tronox Limited on September 6, 2017).
4.3
Indenture, dated as of September 22, 2017 among Tronox Finance plc, the Company and the other guarantors named therein and Wilmington Trust, National Association, as trustee. (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed by Tronox Limited on September 25, 2017).
10.1
Revolving Syndicated Facility Agreement, dated as of September 22, 2017 among the Company, Tronox US Holdings Inc. and certain of the Company’s other subsidiaries along with a syndicate of lenders and Wells Fargo Bank, National Association, as issuing bank, swingline lender, administrative agent, and collateral agent. (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by Tronox Limited on September 25, 2017).
10.2
First Lien Term Loan Credit Agreement, dated as of September 22, 2017 among Tronox Finance LLC and its unrestricted subsidiary Tronox Blocked Borrower LLC, and certain of the Company’s other subsidiaries, along with a syndicate of lenders and Bank of America, N.A. as administrative agent and collateral agent. (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed by Tronox Limited on September 25, 2017).
31.1
Rule 13a-14(a) Certification of Peter Johnston.John Romano. (furnished herewith)
31.2
31.2Rule 13a-14(a) Certification of Jean-Francois Turgeon. (furnished herewith)
31.3
Rule 13a-14(a) Certification of Timothy Carlson. (furnished herewith)
32.1
Section 1350 Certification for Peter Johnston.John Romano. (furnished herewith)
32.2
32.2Section 1350 Certification for Jean-Francois Turgeon. (furnished herewith)
32.3
Section 1350 Certification for Timothy Carlson. (furnished herewith)
95
101		Mine Safety Disclosures.The following financial statements from Tronox Holdings plc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Income, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Changes in Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to Condensed Consolidated Financial Statements.
101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. (furnished herewith)
101.SCHInline XBRL Taxonomy Extension Schema DocumentDocument. (furnished herewith)
101.CALInline XBRL Taxonomy Extension Calculation Linkbase DocumentDocument. (furnished herewith)
101.LAB101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document. (furnished herewith)
101.LABInline XBRL Taxonomy Extension Label Linkbase DocumentDocument. (furnished herewith)
101.DEF101.PREXBRL Taxonomy Extension Definition Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase DocumentDocument. (furnished herewith)
104The cover page from the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2021, which has been formatted in Inline XBRL and contained in Exhibit 101.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:
October 28, 2021
Date: November 9, 2017
TRONOX HOLDINGS PLC (Registrant)
TRONOX LIMITED
(Registrant)
By:
By:/s/ Timothy Carlson
Name:Name:Timothy Carlson
Title:Title:Senior Vice President, and Chief Financial Officer and Principal Accounting Officer


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