Elkem Company Overview and Financials
Risk factors (VII/VIII)
2.1.30
Elkem's joint arrangements partners may have interests that differ from Elkem's and may take actions that adversely affect Elkem
Elkem currently participates in several joint arrangements, and may enter into other joint arrangements or co-investment projects with third parties in the future. Such current and prospective joint ventures and co-investments involve potential risks, including: Joint ventures may require an investment of considerable
management, financial and operational resources to establish sufficient infrastructure such as risk management, compliance or other processes; Joint ventures may be structurally complicated by the necessity of the parties anticipating and addressing issues of governance, control, dispute resolution and ownership of
intellectual property and other assets, among many other matters; Elkem may not have the level of strategic control over the joint venture that it requires in order to fulfil its long-term goals, or may find it is restricted by the other partner in the products it can produce or the customers to whom it can sell products or
services such as manufacturing capacity; Elkem may find it lacks sufficient control over the operations of the joint venture, resulting in problems with quality control, inefficiency or other operational problems; Joint ventures may have complex governance issues arising from shared control and split ownership models; Joint
ventures may experience delays or other timing problems prior to launch, exacerbated by disagreements between the parties; A joint venture partner may sell its stake in the joint venture to a buyer who is unattractive to Elkem; Joint ventures may expire, potentially leading to disagreements between the parties over the
ownership or future of the joint venture's business or assets; Joint ventures may have flaws in their design that cause them to experience losses and lead to their termination; The objectives of the joint venture may not be achieved in a timely manner or at all; Partners at any time may have or develop economic or
business interests or goals that are inconsistent with Elkem's; Partners may (i) take actions contrary to Elkem's instructions or requests, or contrary to Elkem's policies or objectives with respect to the investment or (ii) exercise veto rights so as to block actions that Elkem believes to be in Elkem's or the joint venture's or
strategic alliance's best interests; Partners may become unwilling or unable to fulfil the objectives of the joint venture due to general market conditions, financial difficulties or other circumstances beyond Elkem's control; and In the event that a joint venture fails for any of the above reasons or otherwise, Elkem may have
to buy out its partner or otherwise purchase the partner's interest in the underlying asset, potentially at an unacceptably high price, which in turn could impose a material cost burden on Elkem, or alternatively Elkem may have to sell its interest in the asset to the partner or another third party at an unacceptably low price.
If any of these risks were to materialise, it could have a material adverse effect on Elkem's business, results of operations, financial condition and prospects.
2.1.31
Insurance costs may increase and Elkem may experience additional exclusions and limitations on coverage in the future
Elkem currently maintains insurance coverage of a nature and in an amount that it believes to be customary in the industry, including property damage and business interruption, marine cargo/transportation, environmental liability, third-party public and product liability, workers' compensation, loss resulting from criminal
acts by employees, employment practices liability, contaminated products insurance-recall, commercial general liability, umbrella liability and excess liability insurance, all of which are subject to certain limitations, deductibles and caps.
Elkem's insurance may be inadequate or unavailable to protect it in the event of a claim or other loss, or its insurance coverage may be cancelled or otherwise terminated, and Elkem may not be able to continue to obtain insurance or renew existing insurance on commercially reasonable terms or at all.
Even a partially uninsured claim, if successful and of significant size, could have a material adverse effect on Elkem's business, results of operations, financial condition and prospects.
2.1.32
As a large portion of Elkem's employees are parties to collective bargaining agreements and members of trade unions, Elkem faces a risk of work stoppages and strikes
A large portion of Elkem's employees are party to collective bargaining agreements and members of trade unions. Elkem's relationship with its works councils and trade unions are therefore important to the operation of its business. The presence of works councils and trade unions may limit Elkem's flexibility in dealing
with its workforce and ultimately lead to increased operating costs. The Group has experienced strikes by its unionised employees in the past, in particular in France, and may experience similar strikes in the future. A lengthy strike or other work stoppage by Elkem's employees, or by employees of a third-party which
provides critical services to Elkem, could also have material adverse effect on Elkem's ability to conduct its operations, which in turn could have a material adverse effect on Elkem's business, results of operations, financial condition and prospects.
2.1.33
Increases in labour costs could materially impact Elkem's business and results of operations
Elkem is subject to the risk of increases in labour costs. Any sustained increases in labour costs in Europe, China or in other geographies in which Elkem has labour intensive operations may have a material adverse effect on Elkem's business, results of operations, financial condition and prospects.
Elkem
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