Recent Developments

Exchange Offer and Consent Solicitation Related to the 7.5% senior notes due 2014 and Consent Solicitation for the 1.75% senior convertible notes due 2024

On October 28, 2009, we commenced (i) an exchange offer and consent solicitation relating to our 7.5% senior notes due 2014 (the "7.5% Notes") and (ii) a consent solicitation relating to our 1.75% convertible senior notes due 2024 (the "1.75% Notes"). See Note 25 Subsequent Events in the consolidated financial statements included herein for additional information.

Convertible Debt for equity exchange transactions

In a series of transactions in September, October and November 2009, we issued a total of 11,365,693 shares of our common stock in exchange for $127.9 million principal amount of our 1.75% Notes. Upon completion of the convertible debt-for-equity exchanges, we had approximately $47.1 million principal amount of our 1.75% Notes outstanding. Holders of the outstanding 1.75% Notes may require us to purchase for cash all or part of the 1.75% Notes then outstanding at par on August 1, 2011.

Century expects to receive $15 million tax refund under recently enacted legislation

An unemployment insurance extension bill that would, among other things, allow businesses with net operating losses for 2008 or 2009 to carry back those losses for up to five years has recently been enacted. Under the new law, we expect to obtain a tax refund of approximately $15 million by carrying back losses to our 2005 tax year.

Ravenswood Retiree Medical Benefits changes

Century Aluminum of West Virginia, Inc. ("CAWV") will amend its post retirement medical benefit plan effective January 1, 2010 for all current and former salaried employees, their dependents and all bargaining unit employees who retired before June 1, 2006, and their dependents.

The principal changes to the plan are upon attainment of age 65, all CAWV provided retiree medical benefits will cease for retirees and dependents. In addition, pre-65 bargaining unit retirees and pre-65 dependents will now be covered by the salary retiree medical plan which requires out-of pocket payments for premiums, co-pays and deductibles by participants.

These changes to the retiree medical benefits are expected to lower our CAWV accrued postretirement benefit cost liability by approximately $40 million to $50 million. The resulting credit is expected to be recorded in other comprehensive income in the fourth quarter of 2009.

There were no changes to the retiree medical benefits for salaried retirees or retirees who retired as a bargaining unit employee from our Hawesville facility.

Transfer of ownership of Gramercy and St. Ann Bauxite joint ventures

On September 1, 2009, we completed the sale of our 50% ownership positions in Gramercy Alumina LLC ("Gramercy") and St. Ann Bauxite Limited ("St. Ann") to Noranda Aluminum Holding Corporation (together with its consolidated subsidiaries, "Noranda"). At closing, we divested our entire interest in these businesses and Noranda assumed 100% ownership of Gramercy and St. Ann. In connection with this transaction, we made a $5 million cash payment during the third quarter of 2009 and expect to make an additional $5 million payment in the fourth quarter of 2009.

Hawesville currently receives all of its alumina supply from Gramercy. As part of the transaction, the former alumina supply agreement with Gramercy was terminated and we entered into a new alumina supply agreement. The new alumina supply agreement term is through December 2010. Pricing under the new contract will be fixed for the first 125,000 metric tons ("MT") and LME-based for the remaining 65,500 MT (subject to certain conditions for floor pricing).

Equity investments impairment

In August 2009, upon signing an agreement to transfer our equity investment in Gramercy and St. Ann to Noranda, we undertook an evaluation to determine the impact of the transaction, if any, on the carrying amount of the equity investments in the joint venture assets. We concluded that the terms of the asset transfer agreement provided an indication of an impairment of the equity investments in the joint ventures. As a result, we performed an impairment analysis to determine the appropriate carrying amount of these assets as of June 30, 2009. Based on the impairment analysis, we recorded an approximate $73 million impairment loss in the second quarter of 2009. The approximate $73 million loss consisted of the following amounts:

Gramercy and St. Ann and intercompany profit elimination                 $         (74,783 )
Pension and OPEB obligations for Gramercy and St. Ann                                1,549
                                                                         $         (73,234 )

The impairment loss was recorded on the consolidated statements of operations in equity in earnings (losses) of joint ventures in the second quarter of 2009. On the consolidated balance sheets, the impairment of the equity investments was recorded in other assets. The pension and OPEB obligations of the equity investments were recorded in other comprehensive income.Amounts due to Gramercy under our previous alumina contract were recorded under due to affiliates through September 1, 2009; amounts due under the new alumina contract are now recorded in accounts payable.

Long-term power contract for Hawesville signed

To secure a new, long-term power contract for the Hawesville facility, on July 16, 2009, Century Aluminum of Kentucky, our wholly owned subsidiary, ("CAKY"), along with E.ON U.S. LLC ("E.ON") and Big Rivers, agreed to an "unwind" of the former contractual arrangement between Big Rivers and E.ON and entered into a new arrangement ("Big Rivers Agreement") to provide long-term cost-based power to CAKY.The term of the Big Rivers Agreement is through 2023 and provides adequate power for Hawesville's full production capacity requirements (approximately 482 MW) with pricing based on the provider's cost of production. The Big Rivers Agreement is take-or-pay for Hawesville's energy requirements at full production. Under the terms of the agreement, any power not required by Hawesville would be available for sale and we would receive credits for actual power sales up to our cost for that power. The current market price of electrical power in this region is less than Big Rivers' forecasted cost.

E.ON has agreed to mitigate a significant portion of this near-term risk, at a minimum, through December 2010. During this time, to the extent Hawesville does not use all the power under the take-or-pay contract, E.ON will, with some limitations, assume Hawesville's obligations. As part of this arrangement, E.ON will pay up to approximately $80 million to CAKY in the form of direct payments to Big Rivers under the Big Rivers Agreement to compensate CAKY for the fair value of the previous contract and to compensate CAKY for power in excess of CAKY's current demand. At Hawesville's current production rate, Hawesville would receive the entirety of these economic benefits over the term of the agreement. To the extent the aggregate payments made by E.ON exceed the approximately $80 million commitment, Hawesville would repay this excess to E.ON over time, but only if the London Metal Exchange ("LME") aluminum price were to exceed certain thresholds.

As the previous power contract was designated as a normal contract under ASC 815 (formerly SFAS No. 133, "Accounting for Derivatives), in the third quarter of 2009 when it became no longer probable that we would continue to take physical delivery of the power under the previous contract, we recorded an $80.7 million contractual receivable from E.ON representing the net present value of the consideration provided to CAKY from E.ON to net settle the previous contract, wrote off a $23.8 million intangible asset associated with the former power contract and recorded a $56.7 million net gain on this transaction on our consolidated statements of operations in other operating income - net. See Note 4 Long-term power contract for Hawesville for additional information about these agreements.

Helguvik Investment Agreement

An Enabling Act for an Investment Agreement with the Government of Iceland for Helguvik, which governs certain meaningful aspects of the construction of a primary aluminum facility in Helguvik, Iceland (the "Helguvik project") such as the fiscal regime, was approved in April 2009 by the Icelandic Parliament. In July 2009, the Investment Agreement was approved by the European Surveillance Authority and in August 2009 the agreement was signed by Nordural Helguvik ehf. and the Icelandic Minister of Industry.

Alcan Metal Agreement terminated

In April 2009, Alcan and CAWV agreed to terminate all remaining obligations under the Alcan Metal Agreement. CAWV paid Alcan $0.6 million to settle the remaining delivery obligations.

IRS Tax Refunds received

In the first quarter of 2009, we received a federal income tax refund for $79.7 million related to a carryback of a portion of the December 31, 2008 taxable loss to tax years ended December 31, 2006 and December 31, 2007. Additionally, we received a $10.1 million federal income tax refund related to overpayments of December 31, 2008 estimated tax payments.

Curtailment of Operations at Ravenswood and Hawesville

On February 4, 2009, Century Aluminum of West Virginia announced the curtailment of the remaining plant operations at Ravenswood. Layoffs for the majority of Ravenswood's employees were completed by February 20, 2009. The decision to curtail operations was due to the relatively high operating cost at Ravenswood and the depressed global price for primary aluminum.

On March 3, 2009, our subsidiary, Century Aluminum of Kentucky announced the orderly curtailment of one potline at Hawesville. Hawesville has production capacity of approximately 244,000 metric tons per year ("mtpy") of primary aluminum from five potlines. The potline curtailment was completed in March 2009. The action reduced primary aluminum production by approximately 4,370 metric tons per month and impacted approximately 120 employees. The action was needed to reduce the continuing cash losses as a result of the depressed global price for primary aluminum.

Credit Rating Downgrade

In April 2009, Moody's further downgraded our credit rating to "Caa3" from "B2." The downgrade reflects Moody's concerns regarding the level of cash consumption, and the potential for liquidity challenges absent a significant recovery in the aluminum markets. Moody's has stated the Caa3 corporate family rating anticipates that operating cash flow generated from Grundartangi is unlikely to be sufficient to support ongoing operations across Century on a sustained basis. According to Moody's, obligations rated "Caa3" are judged to be of poor standing and are subject to very high credit risk, and have "extremely poor credit quality."

Equity Offering

In February 2009, we completed a public offering of 24,500,000 shares of common stock at a price of $4.50 per share, raising approximately $110.2 million before offering costs. The offering costs were approximately $6.2 million, representing underwriting discounts and commissions and offering expenses.

Glencore purchased 13,242,250 shares of common stock in this offering. We agreed with Glencore to amend the terms of our Standstill and Governance Agreement to increase the percentage of our voting securities that Glencore may acquire prior to April 7, 2009 and to allow Glencore to exercise voting rights with respect to the shares of common stock it purchased in this offering. As of September 30, 2009, we believe that Glencore beneficially owned, through the ownership of common stock approximately 38.1% of our issued and outstanding common stock and, through ownership of common and preferred stock, an overall 48.1% economic ownership of Century.

We intend to use the net proceeds from the sale of our common stock for general corporate purposes, including repayment of debt.

Alumina and bauxite contract amendments

On April 21, 2009, we agreed with Glencore to amend two alumina purchase agreements dated April 14, 2008 and April 26, 2006, respectively (collectively, the "Amendments").

The Amendments reduce the amount of alumina Glencore will supply to Century from 330,000 metric tons to 110,368 metric tons in 2009 and from 290,000 metric tons to 229,632 metric tons in 2010, for an overall alumina supply reduction of 280,000 metric tons. With the Amendments, given the alumina received to date, we reduced our total remaining alumina obligation under the respective agreements for 2009 to 13,500 metric tons.

In conjunction with these alumina supply reductions, St. Ann agreed to reduce the amount of bauxite it will supply to Glencore in 2009 by 775,000 dry metric tons, with 650,000 dry metric tons being cancelled and 125,000 dry metric tons being deferred to 2010. As part of this transaction, we have agreed to pay St. Ann $6.0 million in compensation for the reduced bauxite sales.

Impact of the adoption of ASC 470-20 (formerly FSP APB 14-1)

We adopted Accounting Standards Codification ("ASC") 470-20 (formerly FSP APB 14-1"Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)") effective January 1, 2009 and retrospectively applied the changes under this new accounting principle to our financial statements. Retrospective application to all periods presented is required. Accordingly, we have adjusted our previously issued financial statements to reflect the changes that resulted from the adoption of the guidance to give effect to ASC 470-20, as applicable.

Extension of labor contract at Ravenswood

We reached an agreement with the USWA to extend the labor contract at Ravenswood from May 31, 2009 to August 31, 2010.

APCo Rate filing

Appalachian Power Company ("APCo") supplies all of Ravenswood's power requirements under an agreement at prices set forth in published tariffs, which are subject to change. Under the special rate contract, Ravenswood may be excused from or may defer the payment of the increase in the tariff rate if aluminum prices as quoted on the LME fall below pre-determined levels. In March 2009, APCO filed a request for a rate increase to recover unrecovered fuel costs and to cover the increased cost of fuel and purchased power as well as capital improvements. In September 2009, the West Virginia Public Service Commission (the "PSC") agreed to extend the special rate contract terms of the existing agreement for one year and attributed approximately $16 million of the unrecovered fuel costs to Ravenswood. This amount will be factored into the special rate provision which excuses or defers payments above set tariff rates depending on aluminum prices. We are reviewing options to further extend the term of the existing agreement that establishes the LME-based cap on the tariff rates.

Results of Operations

The following discussion reflects our historical results of operations.

Century's financial highlights include:
                                                  Three months ended
                                                     September 30,                Nine months ended September 30,
                                                 2009             2008              2009                   2008
                                                               (In thousands, except per share data)
Net sales:
Third-party customers                         $  169,927       $  426,771     $        480,438       $      1,203,696
Related party customers                           58,772          125,468              162,001                364,882
Total                                         $  228,699       $  552,239     $        642,439       $      1,568,578

Gross profit (loss)                           $   (2,352 )     $  121,983     $        (79,940 )     $        374,202

Net income (loss)                             $   40,142       $   35,789     $       (181,628 )     $       (201,641 )

Income (loss) per common share:
Basic                                         $     0.45       $     0.58     $          (2.56 )     $          (4.66 )
Diluted                                       $     0.45       $     0.55     $          (2.56 )     $          (4.66 )

Shipments - primary aluminum (000 pounds):
Direct                                           169,807          298,065              553,872                881,502
Toll                                             152,609          150,835              454,581                444,602
Total                                            322,416          448,900            1,008,453              1,326,104

Shipments - primary aluminum (metric tons):
Direct                                            77,023          135,200              251,232                399,843
Toll                                              69,222           68,418              206,195                201,668
Total                                            146,245          203,618              457,427                601,511




Net sales (in millions)                      2009          2008         $ Difference      % Difference
Three months ended September 30,           $   228.7     $   552.2     $       (323.5 )           (58.6 )%
Nine months ended September 30,            $   642.4     $ 1,568.6     $       (926.2 )           (59.0 )%

Lower price realizations for our primary aluminum shipments in the three months ended September 30, 2009, due to lower LME prices for primary aluminum, resulted in a $152.5 million sales decrease. Reduced sales volume contributed $171.0 million to the decrease in net sales. Direct shipments declined 128.3 million pounds in the three months ended September 30, 2009 primarily due to capacity curtailments at our U.S. smelters. Toll shipments increased 1.8 million pounds from the same period in 2008 due to increased production at the Grundartangi smelter.

Lower price realizations for our primary aluminum shipments in the nine months ended September 30, 2009, due to lower LME prices for primary aluminum, resulted in a $512.2 million sales decrease. Reduced sales volume contributed $414.0.million to the decrease in net sales. Direct shipments declined 327.6 million pounds in the nine months ended September 30, 2009 primarily due to capacity curtailments at our U.S. smelters. Toll shipments increased 10.0 million pounds from the same period in 2008 due to increased production at the Grundartangi smelter.

Gross profit (loss) (in millions)            2009          2008         $ Difference       % Difference
Three months ended September 30,           $    (2.4 )   $   122.0     $       (124.4 )           (102.0 )%
Nine months ended September 30,            $   (79.9 )   $   374.2     $       (454.1 )           (121.4 )%

During the three months ended September 30, 2009, lower price realizations, net of LME-based alumina cost and LME-based power cost decreases, reduced gross profit by $125.5 million. Lower shipment volume, due to capacity curtailments, resulted in a $32.3 million decrease to gross profit. In addition, we experienced $30.0 million in net cost decreases, relative to the same period in 2008, comprised of: increased power and natural gas costs at our U.S. smelters, $2.8 million; reduced costs associated with Gramercy supplied alumina, $15.4 million; reduced costs for materials, supplies and maintenance, $7.9 million; other cost reductions, $5.0 million; and reduced depreciation and amortization expense of $4.5 million.

During the nine months ended September 30, 2009, lower price realizations, net of LME-based alumina cost and LME-based power cost decreases, reduced gross profit by $434.9 million. Lower shipment volume, due to capacity curtailments, resulted in a $72.3 million decrease to gross profit. In addition, we experienced $25.1 million in net cost decreases, compared to the same period in 2008, comprised of: increased power and natural gas costs at our U.S. smelters, $3.5 million; reduced costs for materials, supplies and maintenance, $15.5 million; reduced costs associated with Gramercy supplied alumina, $3.2 million; other cost reductions, $3.8 million; and reduced depreciation and amortization expense of $6.1 million.

Due to the turnover of inventory during the nine months ended September 30, 2009 and increased market prices at the end of the third quarter of 2009, the previously recognized lower of cost or market inventory reserve was adjusted to reflect the current value for our September 30, 2009 ending inventory. This adjustment favorably impacted cost of goods sold by $3.4 million and $28.0 million for the three and nine months ending September, 2009, respectively.

Other operating income - net (in millions)     2009           2008         $ Difference      % Difference
Three months ended September 30,             $    55.6     $        -     $         55.6               100 %
Nine months ended September 30,              $    22.1     $        -     $         22.1               100 %

During the three months ended September 30, 2009, the expenses associated with the idled potlines at our Ravenswood and Hawesville facilities were $1.8 million. This amount includes expenses incurred while the Ravenswood facility is in an idled state and a favorable adjustment to future benefits payable to laid-off employees due to a change in state unemployment benefits.

During the nine months ended September 30, 2009, the expenses associated with the idled potlines at our Ravenswood and Hawesville facilities were $35.3 million. This amount includes expenses incurred to curtail operations and to maintain the Ravenswood facility in an idled state. See Note 8 Curtailment of Operations - Ravenswood and Hawesville.

During the three and nine months ended September, we recorded a gain of $81.2 million related to our agreement with E.ON that was consummated concurrently with the new long term power contract for Hawesville. In addition, we wrote off the remaining carrying value of the intangible asset associated with the previous power contract that was terminated July 16, 2009. The amount of the write-off was $23.8 million. See Note 4 Long-term power contract for Hawesville for additional information about this contract.

Selling, general and administrative
expenses (in millions)                       2009          2008        $ Difference      % Difference
Three months ended September 30,           $    11.4     $    11.3     $         0.1               0.9 %
Nine months ended September 30,            $    32.8     $    44.0     $       (11.2 )           (25.5 )%

The increase in selling, general and administrative expenses for the three months ended September 30, 2009 was primarily due to increased spending to support strategic actions taken during the three month period. The decrease in selling, general and administrative expenses for the nine months ended September 30, 2009 was primarily due to reduced accruals under our share-based performance and stock compensation programs and reduced discretionary spending.

   Interest income (in millions)      2009      2008       $ Difference      % Difference
   Three months ended September 30,   $ 0.2     $ 1.6     $         (1.4 )           (87.5 )%
   Nine months ended September 30,    $ 1.2     $ 6.4     $         (5.2 )           (81.3 )%

The decrease in interest income for the three and nine months ended September 30, 2009 from the same periods in 2008 is the result of lower average cash and short-term investment balances and lower interest rates during the 2009 periods.

Net loss on forward contracts (in millions)     2009          2008        $ Difference      % Difference
Three months ended September 30,              $    (0.9 )   $   (79.1 )   $        78.2             (98.9 )%
Nine months ended September 30,               $    (7.8 )   $  (731.2 )   $       723.4             (98.9 )%

The net loss in the three months ended September 30, 2009 relates to the discontinuation of cash flow hedge accounting treatment for our natural gas financial forward contracts with the transfer of our ownership interest in Gramercy. The net loss in the nine months ended September 30, 2009 relates to the discontinuation of cash flow hedge accounting treatment for our natural gas financial forward contracts, recognition of previously settled Icelandic krona ("ISK") hedges associated with the Helguvik project and losses on derivatives associated with the Hawesville and Ravenswood power contracts.

The loss on forward contracts for the three and nine months ended September 30, 2008, was a result of mark-to-market adjustments associated with our long term primary aluminum forward financial sales contracts that did not qualify for cash flow hedge accounting. Cash settlements of these contracts during the three and nine months ended September 30, 2008 were $20.6 million and $115.0 million, respectively. In July 2008, we terminated these contracts.

  Income tax benefit (in millions)   2009       2008        $ Difference      % Difference
  Three months ended September 30,   $ 6.6     $  10.3     $         (3.7 )           (35.9 )%
  Nine months ended September 30,    $ 8.1     $ 206.9     $       (198.8 )           (96.1 )%

The changes in the income tax provision for the three and nine months ended September 30, 2009 from the same periods in 2008 were primarily due to our inability to provide tax benefits on pre-tax U.S losses resulting from a valuation allowance against our federal and state deferred tax assets at December 2008 and September 2009 and the release of income tax reserves that were no longer required.

Equity in earnings (losses) of joint
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