# EDGAR Filing Document

**Accession Number:** 0000886977
**File Stem:** 0001628280-23-007564
**Filing Date:** 2023-3
**Character Count:** 532577
**Document Hash:** f71f65444e56dde404b7a36394a03cc9
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001628280-23-007564.hdr.sgml**: 20230310

**ACCESSION NUMBER**: 0001628280-23-007564

**CONFORMED SUBMISSION TYPE**: 40-F

**PUBLIC DOCUMENT COUNT**: 164

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230310

**DATE AS OF CHANGE**: 20230310

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** METHANEX CORP
- **CENTRAL INDEX KEY:** 0000886977
- **STANDARD INDUSTRIAL CLASSIFICATION:** INDUSTRIAL ORGANIC CHEMICALS [2860]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** A1
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 40-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-20115
- **FILM NUMBER:** 23724396

**BUSINESS ADDRESS:**
- **STREET 1:** 1800 WATERFRONT CENTER
- **STREET 2:** 200 BURRARD STREET
- **CITY:** VANCOUVER BC CANADA
- **STATE:** A1
- **ZIP:** 00000
- **BUSINESS PHONE:** 6046847500

**MAIL ADDRESS:**
- **STREET 1:** 1800 WATERFRONT CENTER
- **STREET 2:** 200 BURRARD STREET
- **CITY:** VANCOUVER BC CANADA

?xml version="1.0" ? mx-20221231

**UNITED STATES SECURITIES AND EXCHANGE COMMISSION** 

**WASHINGTON, D.C. 20549** 

**FORM 40-F**

**☐&nbsp;&nbsp;&nbsp;&nbsp;REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934**

**OR**

**☒&nbsp;&nbsp;&nbsp;&nbsp;ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

For the fiscal year ended **December 31, 2022**&nbsp;&nbsp;&nbsp;&nbsp;Commission File Number **000-20115**

**METHANEX CORPORATION**

(Exact name of Registrant as specified in its charter)

**not applicable**

(Translation of Registrant's name into English (if applicable))

**Canada**

(Province or other jurisdiction of incorporation or organization)

**2860**

(Primary Standard Industrial Classification Code Number (if applicable))

**not applicable**

(I.R.S. Employer Identification Number (if applicable))

**1800 Waterfront Centre, 200 Burrard Street, Vancouver, British Columbia, Canada V6C 3M1**

**Telephone: (604) 661-2600**

(Address and telephone number of Registrant's principal executive offices)

**CT Corporation System, 28 Liberty Street, New York, New York 10005**

**Telephone: 212-894-8940**

(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

---

| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol | Name of each exchange on which registered |
| **Common Shares** | **MEOH** | **NASDAQ Global Select Market** |

---

Securities registered or to be registered pursuant to Section 12(g) of the Act.

---

| |
|:---|
| **None** |
| (Title of Class) |

---

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

---

| |
|:---|
| **4.25% Senior Notes due December 1, 2024**<br>**5.125% Senior Notes due October 15, 2027**<br>**5.25% Senior Notes due December 15, 2029**<br>**5.65% Senior Notes due December 1, 2044** |
| (Title of Class) |

---

------

For annual reports, indicate by check mark the information filed with this Form:

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| | |
|:---|:---|
| ☑ **Annual Information Form** | ☑ **Audited Annual Financial Statements** |

---

Indicate number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

**&nbsp;&nbsp;&nbsp;&nbsp;69,239,136 Common Shares were outstanding as of December 31, 2022**

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 every Interactive Data File required to be submitted 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 such files).

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| | |
|:---|:---|
| **Yes** ☑ | **No ☐** |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;

Emerging growth company **☐**<br>

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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.

 **☐**<br>

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

**☑**<br>

---

| | | |
|:---|:---|:---|
| **PCAOB Auditor Firm ID Number:** | **Auditor Name:** | **Auditor Location:** |
| 85 | KPMG LLP | Vancouver, British Columbia, Canada |

---

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

 **☐**<br>

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

 **☐**<br>

------

**ANNUAL INFORMATION FORM, AUDITED FINANCIAL STATEMENTS, AND MANAGEMENT'S DISCUSSION AND ANALYSIS**

Methanex Corporation (the "Registrant" or the "Company") is a Canadian public company whose common shares are listed on the Toronto Stock Exchange (the "TSX") in Canada (trading symbol: MX) and on the NASDAQ Global Select Market in the United States (trading symbol: MEOH). The Registrant is a "foreign private issuer" as defined in Rule 3b-4 under Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is eligible to file this annual report on Form 40-F pursuant to the multi-jurisdictional disclosure system.

The following documents of the Company are filed as exhibits to, and incorporated by reference into, this Annual Report:

---

| | |
|:---|:---|
| **Document** | **Exhibit No.** |
| Annual Information Form of the Company for the year ended December 31, 2022 | 99.1 |
| Management's Discussion and Analysis of the Company for the year ended December 31, 2022 (the "2022 MD&A") | 99.2 |
| Audited financial statements of the Company for the years ended December 31, 2022 and 2021, including the reports of Independent Registered Public Accounting firm with respect thereto | 99.3 |

---

Pursuant to Rule 3a12-3 under the Exchange Act, the Company's equity securities are exempt from sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act.

**FORWARD-LOOKING STATEMENTS**

This annual report includes or incorporates by reference certain statements that constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this annual report and documents incorporated by reference herein and include statements regarding the Registrant's intent, belief or current expectations and those of the Registrant's management. These forward-looking statements involve known and unknown risks and uncertainties that may cause the Registrant's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this annual report or in documents incorporated by reference in this annual report, words such as "believes," "expects," "may," "will," "should," "potential," "estimates," "anticipates," "aims," "goal," or the negative version of those words or other comparable terminology and similar statements of a future or forward-looking nature are intended to identify these forward-looking statements. These forward-looking statements are based on various factors and were derived utilizing numerous assumptions that could cause the Registrant's actual results to differ materially from those in the forward-looking statements. Accordingly, readers are cautioned not to put undue reliance on these forward-looking statements. For additional information, please refer to the disclosure contained under the heading, "Caution Regarding Forward-Looking Statements" in the Registrant's Annual Information Form filed as Exhibit 99.1 to this report.

**NOTE TO UNITED STATES READERS REGARDING DIFFERENCES BETWEEN UNITED STATES AND CANADIAN REPORTING PRACTICES**

The Registrant is permitted to prepare this annual report in accordance with Canadian disclosure requirements, which are different from those of the United States. The Registrant prepares its consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board, which principles differ in certain respects from generally accepted accounting principles applicable in the United States ("U.S. GAAP") and from practices prescribed by the SEC. Therefore, the Company's financial statements incorporated by reference in this annual report may not be comparable to financial statements prepared in accordance with U.S. GAAP.

------

**CURRENCY**

Unless otherwise indicated, all dollar amounts in this Annual Report are in United States dollars. The exchange rate of United States dollars into Canadian dollars on December 31, 2022, the last trading day of the year, based upon the daily exchange rate published by the Bank of Canada, was U.S.$1.00=CDN $1.2678. The exchange rate of United States dollars into Canadian dollars, on March 8, 2023, based upon the daily exchange rate as published by the Bank of Canada, was U.S.$1.00=CDN$1.3785.

**CONTROLS AND PROCEDURES**

Disclosure controls and procedures are defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act to mean controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the "Commission"). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

At the end of the period covered by this annual report on Form 40-F, being the fiscal year ended December 31, 2022, an evaluation was carried out under the supervision and with the participation of the Registrant's management, including the principal executive and principal financial officers (its Chief Executive Officer and Chief Financial Officer). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Registrant's disclosure controls and procedures are effective as of December 31, 2022.

**MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING**

***Internal Control over Financial Reporting***

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act as a process designed by, or under the supervision of, the Registrant's Chief Executive Officer and Chief Financial Officer, and effected by the Registrant's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and preparation of the Registrant's consolidated financial statements for external purposes in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board. Internal control over financial reporting includes policies and procedures that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Registrant;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the Registrant; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Registrant's assets that could have a material effect on the financial statements.

Internal control over financial reporting has inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements will not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

------

***Management's Assessment and Auditor's Attestation Report***

In connection with the Company's reporting obligations in Canada and its obligations under Rule 13a-15(c) under the Exchange Act, management, under the supervision and with the participation of its Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the Company's internal control over financial reporting as of December 31, 2022, based on the framework set forth in *Internal Control – Integrated Framework*, issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission (the "COSO Framework"). Based on its evaluation under this framework, management concluded that our internal control over financial reporting was effective as at that date.

KPMG LLP, an independent registered public accounting firm that audited and reported on our consolidated financial

statements, has issued an attestation report on the effectiveness of our internal control over financial reporting as of

December 31, 2022. The attestation report is included on the fourth page of our consolidated financial statements filed as Exhibit 99.3 to this report.

***Changes in Internal Control over Financial Reporting***

There have been no changes in the Company's internal control over financial reporting that occurred during the year ended December 31, 2022 that has materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

**AUDIT COMMITTEE**

The Registrant's Board of Directors has established a separately-designated Audit, Finance and Risk Committee (the "Audit Committee") in accordance with Section 3(a)(58)(A) of the Exchange Act and NASDAQ Marketplace Rule 5605(c). As at the date of this annual report, the Registrant's Audit Committee is comprised of the following directors, each of whom is independent as determined under each of Rule 10A-3 under the Exchange Act and NASDAQ Marketplace Rule 5605(a):

Benita Warmbold, Chair

James Bertram

Paul Dobson

Maureen Howe

Leslie O'Donoghue

All members of the Audit Committee are financially literate, meaning they are able to read and understand the Company's financial statements and to understand the breadth and level of complexity of the issues that can reasonably be expected to be raised by the Company's financial statements. The Audit Committee meets the composition requirements set forth by NASDAQ Marketplace Rule 5605(c)(2).

A description of the mandate of the Audit Committee (the "Audit Committee Charter"), together with the relevant education and experience of its members and other Committee information, may be found in the "Audit Committee Information" section of the Registrant's Annual Information Form for the year ended December 31, 2022, filed as Exhibit 99.1 to this annual report. The full text of the Audit Committee Charter is attached as Appendix "A" to the Annual Information Form.

**AUDIT COMMITTEE FINANCIAL EXPERT**

The Registrant's Board of Directors has determined that Ms. Benita Warmbold is an audit committee financial expert (as that term is defined in paragraph (8)(b) of General Instruction B to Form 40-F under the Exchange Act). The Commission has indicated that the designation of Ms. Warmbold as an audit committee financial expert does not make Ms. Warmbold an "expert" for any other purpose (including without limitation for purposes of section 11 of the Securities Act of 1933, as amended), impose any duties, obligations or liability on Ms. Warmbold that are greater than those imposed on members of the Audit Committee and the board of directors who do not carry this designation, or affect the duties, obligations or liability of any other member of the Audit Committee or the board of directors.

------

**CODE OF ETHICS**

The Registrant has adopted a Code of Business Conduct (the "Code of Ethics") that applies to directors, officers and employees, including the Registrant's principal executive officer, principal financial officer and principal accounting officer. The Code of Ethics materially complies with NASDAQ Marketplace Rule 5610, and meets the requirements for a "code of ethics" within the meaning of that term in Form 40-F. A copy of the Code of Ethics can be found on the Registrant's website at www.methanex.com.

No waivers from or substantive amendments to the provisions of the Code of Ethics were made in 2022.

**PRINCIPAL ACCOUNTANT FEES AND SERVICES** 

KPMG LLP, Chartered Professional Accountants, Vancouver, are the independent auditors of the Registrant. The holders of the Registrant's common shares have resolved to have the directors of the Registrant determine the auditors' remuneration.

The Registrant's Audit Committee annually reviews and approves the terms and scope of the external auditors' engagement. The Audit Committee oversees the Audit and Non-Audit Pre-Approval Policy, which sets forth the procedures and the conditions under which permissible services proposed to be performed by KPMG LLP, the Registrant's external auditors, are pre-approved. The Audit Committee has delegated to the Chair of the Audit Committee pre-approval authority for any services not previously approved by the Audit Committee. All such services approved by the Chair of the Audit Committee are subsequently reviewed by the Audit Committee.

All non-audit service engagements, regardless of the cost estimate, are required to be coordinated and approved by the Chief Financial Officer to further ensure that adherence to this policy is monitored.

***Audit and Non-Audit Fees Billed by the Independent Auditors***

KPMG LLP's global fees relating to the years ended December 31, 2022 and December 31, 2021 are as follows:

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| | | |
|:---|:---|:---|
| **US$000s** | **2022** | **2021** |
| Audit Fees | 2264 | 2055 |
| Audit-Related Fees | 168 | 67 |
| Tax Fees | 66 | 14 |
| All Other Fees |  |  |
| **Total** | **2498** | **2136** |

---

Each fee category is described below.

***Audit Fees***

Audit fees for professional services rendered by the external auditors for the audit of the Company's consolidated financial statements; statutory audits of the financial statements of the Company's subsidiaries; quarterly reviews of the Company's financial statements; consultations as to the accounting or disclosure treatment of transactions reflected in the financial statements; and services associated with registration statements, prospectuses, periodic reports and other documents filed with securities regulators.

Audit fees for professional services rendered by the external auditors for the audit of the Company's consolidated financial statements were in respect of an "integrated audit" performed by KPMG LLP globally. The integrated audit encompasses an opinion on the fairness of presentation of the Company's financial statements as well as an opinion on the effectiveness of the Company's internal controls over financial reporting.

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***Audit-Related Fees***

Audit-related fees for professional services rendered by the auditors for financial audits of employee benefit plans; procedures and audit or attest services not required by statute or regulation; and financial statement preparation services relating to the statutory audits of certain of the Company's subsidiaries, the fees for which represented less than 5% of total audit-related fees for fiscal 2022.

***Tax Fees***

Tax fees for professional services rendered for tax compliance, including the review of tax returns; assistance in completing routine tax schedules and calculations; review of transfer pricing and indirect tax items.

***Other Fees***

There were no other fees in 2022 and 2021.

**OFF-BALANCE SHEET ARRANGEMENTS**

At December 31, 2022, we did not have any off-balance sheet arrangements, that have, or are reasonably likely to have, a current or future material effect on our results of operations or financial condition.

**CONTRACTUAL AND OTHER OBLIGATIONS**

The information provided under the heading "Liquidity and Capital Resources" (pages 22-29) contained in the 2022 MD&A, filed as Exhibit 99.2 to this annual report on Form 40-F, is incorporated by reference herein.

**NASDAQ CORPORATE GOVERNANCE**

The Company is subject to corporate governance requirements prescribed under applicable Canadian securities laws, rules and policies. The Company is also subject to corporate governance requirements prescribed by the listing standards of the NASDAQ Stock Market, and the rules and regulations promulgated by the SEC under the Exchange Act (including those applicable rules and regulations mandated by the Sarbanes-Oxley Act of 2002).

NASDAQ Marketplace Rule 5615(a)(3) permits a foreign private issuer to follow its home country practice in lieu of certain corporate governance requirements of the NASDAQ Marketplace Rules. A foreign private issuer that follows a home country practice in lieu of one or more provisions of the NASDAQ Marketplace Rules is required to disclose in its annual report filed with the Commission, or on its website, each corporate governance requirement of the NASDAQ Marketplace Rules that it does not follow and describe the home country practice followed by the issuer in lieu of such NASDAQ corporate governance requirements.

A description of the significant ways in which the Company's governance practices differ from those followed by domestic companies pursuant to NASDAQ standards is as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Shareholder Meeting Quorum Requirement*: NASDAQ Marketplace Rule 5620(c) provides that the minimum quorum requirement for a shareholder meeting is 33<sup>1</sup>/3% of the outstanding shares of common stock. In addition, a company listed on NASDAQ is required to provide for a quorum requirement in its bylaws. The Company's by-laws provide that at any meeting of shareholders a quorum shall be two persons present in person, or represented by proxy, holding common shares representing not less than 25% of the votes entitled to be cast at the meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Distribution of Annual Reports*: NASDAQ Marketplace Rule 5250(d) requires a NASDAQ-listed company to make available to shareholders an annual report containing audited financial statements of the company and its subsidiaries (which, for example, may be on 40-F under the Exchange Act) within a reasonable period of time

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following the filing of the annual report with the Commission. The Company may comply with this requirement either:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ by mailing the report to shareholders (as opposed to electronic or notice-and-access delivery);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ by satisfying the requirements for furnishing an annual report contained in Rule 14a-16 under the Exchange Act (which rule is not applicable to the Company, as explained in more detail below); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ by posting the annual report to shareholders on or through the company's website, along with a prominent undertaking in the English language to provide shareholders, upon request, a hard copy of the annual report free of charge. A company that chooses to satisfy this requirement in this manner must, simultaneously with this posting, issue a press release stating that its annual report has been filed with the Commission. The press release must also state that: (a) the annual report is available on the company's website and include the website address, and (b) shareholders may receive a hard copy free of charge upon request.

The Company is a "foreign private issuer" as defined in Rule 3b-4 under the Exchange Act, and the equity securities of the Company are accordingly exempt from the proxy rules set forth in Sections 14(a), 14(b), 14(c) and 14(f) of the Exchange Act (including Exchange Act Rule 14a-16). The Company solicits proxies in accordance with applicable rules and regulations in Canada.

Pursuant to the provisions of the *Canada Business Corporations* Act (the "CBCA"), the Company, as a "distributing corporation" under the CBCA, is required to send a copy of the annual audited comparative financial statements to each registered shareholder determined as of a set record date, except to a shareholder who has informed the Company in writing that he or she does not want a copy of these documents.

Section 437 of the TSX Company Manual requires that: (a) every TSX-listed company must forward annually to each shareholder who has requested them its annual financial statements and its MD&A in accordance with NI 51-102; and (b) if a listed company produces an annual report, it must be filed publicly through the System for Electronic Document Analysis and Retrieval (commonly referred to as "SEDAR"), an electronic database maintained on behalf of the Canadian provincial securities regulators (the "Canadian Securities Administrators") and available at <u>www.sedar.com</u>.

Pursuant to Canadian National Instrument 51-102 - *Continuous Disclosure Obligations* ("NI 51-102"), the Company is required to send annually a request form to the registered holders and beneficial owners of its securities, other than debt instruments, that registered holders and beneficial owners may use to request a copy of the Company's annual financial statements and related Management's Discussion and Analysis ("MD&A"), the interim financial statements and related MD&A, or both. If a registered holder or beneficial owner of securities, other than debt instruments, of the Company requests the Company's annual or interim financial statements, the Company must send a copy of the requested financial statements to the person or company that made the request, without charge, by the later of: (a) 10 days after the filing deadline for the financial statements, or (b) 10 calendar days after the Company receives the request. If the Company sends financial statements it must also send, at the same time, the annual or interim MD&A relating to the financial statements.

The Company has elected to use the notice-and-access ("Notice-and-Access") provisions adopted by the Canadian Securities Administrators for delivery of proxy materials to its shareholders, as contained in NI 51-102 and National Instrument 54-101 – *Communication with Beneficial Owners of Securities of a Reporting Issuer*. Pursuant to Notice-and-Access, the Company's shareholders will receive a notice containing only certain prescribed information in plain language (including the website addresses for SEDAR and the non-SEDAR websites where the proxy-related materials are posted, as well as a toll-free telephone number for use by shareholders to obtain information about Notice-and-Access and to request paper copies of the proxy materials). Such notice may be sent by the Company by prepaid mail, courier (or the equivalent) or electronically if prior consent has been obtained, along with the applicable voting instruction form.

If a shareholder requests paper copies of an information circular, the Company will be required to send, free of charge, the items requested within three business days for requests received prior to the date of the meeting, and

------

within 10 calendar days for requests received on or after the date of the meeting but within one year of the information circular being filed on SEDAR. When responding to such requests, the Company will be prohibited from asking for any other information about the requestor, other than the name and address to which the requested materials are to be sent.

Since the foregoing corporate governance practices of the Company are consistent with the laws, customs and practices in Canada, the Company has sought and received relief from the differing NASDAQ standards pursuant to NASDAQ Marketplace Rule 5615(a)(3).

The Company believes that there are otherwise no significant differences between its corporate governance policies and those required to be followed by United States domestic issuers listed on the NASDAQ Stock Market. In particular, in addition to having a separate Audit Committee, the Registrant's Board of Directors has established a separately-designated Human Resources Committee that materially meets the requirements for a compensation committee under NASDAQ Marketplace Rule 5605(d), as currently in force.

The Company is required by National Instrument 58-101 of the Canadian Securities Administrators, *Disclosure of Corporate Governance Practices*, to describe its practices and policies with regard to corporate governance in management information circulars that are furnished to the Company's shareholders in connection with annual meetings of shareholders.

**UNDERTAKING**

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities in relation to which the obligation to file an annual report on Form 40-F arises, or transactions in said securities.

**CONSENT TO SERVICE OF PROCESS**

A Form F-X signed by the Registrant and the Registrant's agents for service of process: (a) with respect to the Common Shares, was filed with the Commission together with the Form 40-F of the Registrant on June 16, 1995; (b) with respect to the 4.25% Senior Notes due December 1, 2024 was filed with the Commission together with the Form F-10 of the Registrant on October 31, 2014; (c) with respect to the 5.65% Senior Notes due December 1, 2044 was filed with the Commission together with the Form F-10 of the Registrant on October 31, 2014; (d) with respect to the 5.25% Senior Notes due December 15, 2029, was filed with the Commission together with the Form F-10 of the Registrant on August 22, 2019; and (e) with respect to the 5.125% Senior Notes due October 15, 2027, was filed with the Commission together with the Form F-10 of the Registrant on September 9, 2020.

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**<u>EXHIBITS</u>**

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| | |
|:---|:---|
| <u>Exhibit No</u> | <u>Description</u> |
| 23.1 | <u>[Consent of KPMG LLP](ex-231xform40fconsent2022.htm)</u> |
| 31.1 | <u>[Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ex-311xceocertification2022.htm)</u> |
| 31.2 | <u>[Certification of Senior Vice President, Finance and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ex-312xcfocertification2022.htm)</u> |
| 32.1 | <u>[Certification of President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ex-321x906ceocertification.htm)</u> |
| 32.2 | <u>[Certification of Senior Vice President, Finance and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ex-322x906cfocertification.htm)</u> |
| 99.1 | <u>[Annual Information Form of the Registrant dated March 10, 2023](a2022aif.htm)</u> |
| 99.2 | <u>[Management's Discussion and Analysis for the Year Ended December 31, 2022](mda-2022annualreport.htm)</u> |
| 99.3 | <u>[Audited Consolidated Financial Statements of the Registrant for the years ended December 31, 202](mx-20221231_d2.htm)[2](mx-20221231_d2.htm)[and December 31, 202](mx-20221231_d2.htm)[1](mx-20221231_d2.htm)[and the Independent Auditor's Reports thereon](mx-20221231_d2.htm)</u> |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline XBRL Taxonomy Extension Definitions Linkbase Document |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

---

------

**SIGNATURES**

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.

&nbsp;&nbsp;&nbsp;&nbsp;METHANEX CORPORATION

Date: March 10, 2023

&nbsp;&nbsp;&nbsp;&nbsp;By:&nbsp;&nbsp;&nbsp;&nbsp;<u>/s/ KEVIN PRICE</u>

&nbsp;&nbsp;&nbsp;&nbsp;Name:&nbsp;&nbsp;&nbsp;&nbsp;Kevin Price

&nbsp;&nbsp;&nbsp;&nbsp;Title:&nbsp;&nbsp;&nbsp;&nbsp;SVP, General Counsel & Corporate Secretary

## Exhibit 23.1

**Exhibit 23.1**

![image_0.jpg](image_0.jpg)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

KPMG LLP

PO Box 10426 777 Dunsmuir Street

Vancouver BC V7Y 1K3

Canada

Telephone (604) 691-3000

Fax (604) 691-3031

**Consent of Independent Registered Public Accounting Firm**

The Board of Directors of Methanex Corporation

We consent to the use of:

• our report dated March 10, 2023 on the consolidated financial statements of Methanex Corporation (the "Entity") which comprise the consolidated statements of financial position as of December 31, 2022 and December 31, 2021, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the years in the two-year period ended December 31, 2022, and the related notes, and

• our report dated March 10, 2023 on the effectiveness of the Entity's internal control over financial reporting as of December 31, 2022

each of which is included in the Annual Report on Form 40-F of the Entity for the fiscal year ended December 31, 2022.

We also consent to the incorporation by reference of such reports in the Registration Statements (No. 333-112624, No. 333-141833, No. 333-194850, and No. 33-217591) on Form S-8 of the Entity.

/s/ KPMG LLP

Chartered Professional Accountants

March 10, 2023

Vancouver, Canada

KPMG LLP, an Ontario limited liability partnership and member firm of the KPMG global

organization of independent member firms affiliated with KPMG International Limited, a private

English company limited by guarantee. KPMG Canada provides services to KPMG LLP.

Document classification. Confidential.

## Exhibit 31.1

Exhibit 31.1

**<u>CERTIFICATION</u>**

I, Rich Sumner, certify that:

1. I have reviewed this annual report on Form 40-F of Methanex Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)&nbsp;&nbsp;&nbsp;&nbsp;evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)&nbsp;&nbsp;&nbsp;&nbsp;disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and

5. The issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)&nbsp;&nbsp;&nbsp;&nbsp;all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)&nbsp;&nbsp;&nbsp;&nbsp;any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

Date:&nbsp;&nbsp;&nbsp;&nbsp;March 10, 2023

&nbsp;&nbsp;&nbsp;&nbsp;<u>/s/ RICH SUMNER</u> 

&nbsp;&nbsp;&nbsp;&nbsp;Rich Sumner

President and Chief Executive Officer

## Exhibit 31.2

Exhibit 31.2

**<u>CERTIFICATION</u>**

I, Dean Richardson, certify that:

1. I have reviewed this annual report on Form 40-F of Methanex Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)&nbsp;&nbsp;&nbsp;&nbsp;designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)&nbsp;&nbsp;&nbsp;&nbsp;evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)&nbsp;&nbsp;&nbsp;&nbsp;disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and

5. The issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)&nbsp;&nbsp;&nbsp;&nbsp;all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)&nbsp;&nbsp;&nbsp;&nbsp;any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

Date:&nbsp;&nbsp;&nbsp;&nbsp;March 10, 2023

&nbsp;&nbsp;&nbsp;&nbsp;<u>/s/ DEAN RICHARDSON</u>

&nbsp;&nbsp;&nbsp;&nbsp;Dean Richardson

Senior Vice President, Finance

and Chief Financial Officer

## Exhibit 32.1

Exhibit 32.1

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report of Methanex Corporation (the "Company") on Form 40-F for the year ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Rich Sumner, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.&nbsp;&nbsp;&nbsp;&nbsp;the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.&nbsp;&nbsp;&nbsp;&nbsp;the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

<u>/s/ RICH SUMNER</u>

Rich Sumner

President and Chief Executive Officer

March 10, 2023

## Exhibit 32.2

Exhibit 32.2

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report of Methanex Corporation (the "Company") on Form 40-F for the year ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Dean Richardson, Senior Vice President, Finance and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.&nbsp;&nbsp;&nbsp;&nbsp;the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.&nbsp;&nbsp;&nbsp;&nbsp;the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

<u>/s/ DEAN RICHARDSON</u>

Dean Richardson

Senior Vice President, Finance<br>and Chief Financial Officer

March 10, 2023

## Exhibit 99.1

**Exhibit 99.1**

**METHANEX CORPORATION**

**ANNUAL INFORMATION FORM**

**www.methanex.com**

**March 10, 2023**

![methanex_logoxrgbxblacka03.jpg](methanex_logoxrgbxblacka03.jpg)

------

---

| | |
|:---|:---|
| **TABLE OF CONTENTS** | **Page** |
| **[REFERENCE INFORMATION](#i0055ba19033c401797f06446bcb87cbb_7)** | **[3](#i0055ba19033c401797f06446bcb87cbb_7)** |
| **[CAUTION REGARDING FORWARD-LOOKING STATEMENTS](#i0055ba19033c401797f06446bcb87cbb_10)** | **[4](#i0055ba19033c401797f06446bcb87cbb_10)** |
| **[THE COMPANY](#i0055ba19033c401797f06446bcb87cbb_13)** | **[6](#i0055ba19033c401797f06446bcb87cbb_13)** |
| **[BUSINESS OF THE COMPANY](#i0055ba19033c401797f06446bcb87cbb_16)** | **[7](#i0055ba19033c401797f06446bcb87cbb_16)** |
| **[DEVELOPMENT OF THE BUSINESS AND CORPORATE STRATEGY](#i0055ba19033c401797f06446bcb87cbb_19)** | **[7](#i0055ba19033c401797f06446bcb87cbb_19)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Three Year History](#i0055ba19033c401797f06446bcb87cbb_22) | [7](#i0055ba19033c401797f06446bcb87cbb_22) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Our Strategy](#i0055ba19033c401797f06446bcb87cbb_25) | [9](#i0055ba19033c401797f06446bcb87cbb_25) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Leadership](#i0055ba19033c401797f06446bcb87cbb_28) | [9](#i0055ba19033c401797f06446bcb87cbb_28) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Low Cost](#i0055ba19033c401797f06446bcb87cbb_31) | [9](#i0055ba19033c401797f06446bcb87cbb_31) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Operational Excellence](#i0055ba19033c401797f06446bcb87cbb_34) | [10](#i0055ba19033c401797f06446bcb87cbb_34) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Environment, Social & Governance ("ESG")](#i0055ba19033c401797f06446bcb87cbb_1461) | [10](#i0055ba19033c401797f06446bcb87cbb_1461) |
| **[METHANOL INDUSTRY INFORMATION](#i0055ba19033c401797f06446bcb87cbb_40)** | **[11](#i0055ba19033c401797f06446bcb87cbb_40)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Demand Factors](#i0055ba19033c401797f06446bcb87cbb_43) | [11](#i0055ba19033c401797f06446bcb87cbb_43) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Supply Factors](#i0055ba19033c401797f06446bcb87cbb_46) | [13](#i0055ba19033c401797f06446bcb87cbb_46) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Methanol Prices](#i0055ba19033c401797f06446bcb87cbb_49) | [14](#i0055ba19033c401797f06446bcb87cbb_49) |
| **[PRODUCTION](#i0055ba19033c401797f06446bcb87cbb_52)** | **[15](#i0055ba19033c401797f06446bcb87cbb_52)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Production Process](#i0055ba19033c401797f06446bcb87cbb_55) | [15](#i0055ba19033c401797f06446bcb87cbb_55) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Operating Data and Other Information](#i0055ba19033c401797f06446bcb87cbb_58) | [15](#i0055ba19033c401797f06446bcb87cbb_58) |
| **[MARKETING](#i0055ba19033c401797f06446bcb87cbb_61)** | **[15](#i0055ba19033c401797f06446bcb87cbb_61)** |
| **[DISTRIBUTION AND LOGISTICS](#i0055ba19033c401797f06446bcb87cbb_64)** | **[16](#i0055ba19033c401797f06446bcb87cbb_64)** |
| **[NATURAL GAS SUPPLY](#i0055ba19033c401797f06446bcb87cbb_67)** | **[16](#i0055ba19033c401797f06446bcb87cbb_67)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[General](#i0055ba19033c401797f06446bcb87cbb_70) | [16](#i0055ba19033c401797f06446bcb87cbb_70) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[United States](#i0055ba19033c401797f06446bcb87cbb_76) | [16](#i0055ba19033c401797f06446bcb87cbb_73) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[New Zealand](#i0055ba19033c401797f06446bcb87cbb_73) | [16](#i0055ba19033c401797f06446bcb87cbb_76) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Trinidad](#i0055ba19033c401797f06446bcb87cbb_79) | [17](#i0055ba19033c401797f06446bcb87cbb_79) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Chile](#i0055ba19033c401797f06446bcb87cbb_82) | [17](#i0055ba19033c401797f06446bcb87cbb_79) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Egypt](#i0055ba19033c401797f06446bcb87cbb_85) | [17](#i0055ba19033c401797f06446bcb87cbb_85) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Canada](#i0055ba19033c401797f06446bcb87cbb_88) | [17](#i0055ba19033c401797f06446bcb87cbb_88) |
| **[FOREIGN OPERATIONS](#i0055ba19033c401797f06446bcb87cbb_91)** | **[17](#i0055ba19033c401797f06446bcb87cbb_91)** |
| **[RESPONSIBLE CARE & SUSTAINABILITY](#i0055ba19033c401797f06446bcb87cbb_94)** | **[18](#i0055ba19033c401797f06446bcb87cbb_94)** |
| **[ENVIRONMENTAL MATTERS](#i0055ba19033c401797f06446bcb87cbb_97)** | **[19](#i0055ba19033c401797f06446bcb87cbb_97)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Carbon and GHG Legislation](#i0055ba19033c401797f06446bcb87cbb_100) | [19](#i0055ba19033c401797f06446bcb87cbb_100) |
| **[INSURANCE](#i0055ba19033c401797f06446bcb87cbb_103)** | **[20](#i0055ba19033c401797f06446bcb87cbb_103)** |
| **[COMPETITION](#i0055ba19033c401797f06446bcb87cbb_106)** | **[20](#i0055ba19033c401797f06446bcb87cbb_106)** |
| **[EMPLOYEES](#i0055ba19033c401797f06446bcb87cbb_109)** | **[20](#i0055ba19033c401797f06446bcb87cbb_109)** |
| **[RISK FACTORS](#i0055ba19033c401797f06446bcb87cbb_112)** | **[20](#i0055ba19033c401797f06446bcb87cbb_112)** |
| **[DIVIDENDS](#i0055ba19033c401797f06446bcb87cbb_115)** | **[21](#i0055ba19033c401797f06446bcb87cbb_115)** |
| **[CAPITAL STRUCTURE](#i0055ba19033c401797f06446bcb87cbb_118)** | **[21](#i0055ba19033c401797f06446bcb87cbb_118)** |
| **[RATINGS](#i0055ba19033c401797f06446bcb87cbb_121)** | **[22](#i0055ba19033c401797f06446bcb87cbb_121)** |
| **[MARKET FOR SECURITIES](#i0055ba19033c401797f06446bcb87cbb_124)** | **[23](#i0055ba19033c401797f06446bcb87cbb_124)** |
| **[NORMAL COURSE ISSUER BID](#i0055ba19033c401797f06446bcb87cbb_127)** | **[23](#i0055ba19033c401797f06446bcb87cbb_127)** |
| **[DIRECTORS AND EXECUTIVE OFFICERS](#i0055ba19033c401797f06446bcb87cbb_130)** | **[23](#i0055ba19033c401797f06446bcb87cbb_130)** |
| **[INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS](#i0055ba19033c401797f06446bcb87cbb_133)** | **[25](#i0055ba19033c401797f06446bcb87cbb_133)** |
| **[EXPERTS](#i0055ba19033c401797f06446bcb87cbb_136)** | **[25](#i0055ba19033c401797f06446bcb87cbb_136)** |
| **[LEGAL PROCEEDINGS](#i0055ba19033c401797f06446bcb87cbb_139)** | **[25](#i0055ba19033c401797f06446bcb87cbb_139)** |
| **[AUDIT COMMITTEE INFORMATION](#i0055ba19033c401797f06446bcb87cbb_142)** | **[26](#i0055ba19033c401797f06446bcb87cbb_142)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[The Audit Committee Charter](#i0055ba19033c401797f06446bcb87cbb_145) | [26](#i0055ba19033c401797f06446bcb87cbb_145) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Composition of the Audit Committee](#i0055ba19033c401797f06446bcb87cbb_148) | [26](#i0055ba19033c401797f06446bcb87cbb_148) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Relevant Education and Experience](#i0055ba19033c401797f06446bcb87cbb_151) | [26](#i0055ba19033c401797f06446bcb87cbb_151) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Pre-Approval Policies and Procedures](#i0055ba19033c401797f06446bcb87cbb_154) | [28](#i0055ba19033c401797f06446bcb87cbb_154) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Audit and Non-Audit Fees Billed by the Independent Auditors](#i0055ba19033c401797f06446bcb87cbb_157) | [28](#i0055ba19033c401797f06446bcb87cbb_157) |
| **[TRANSFER AGENT AND REGISTRAR](#i0055ba19033c401797f06446bcb87cbb_160)** | **[29](#i0055ba19033c401797f06446bcb87cbb_160)** |
| **[MATERIAL CONTRACTS](#i0055ba19033c401797f06446bcb87cbb_163)** | **[29](#i0055ba19033c401797f06446bcb87cbb_163)** |
| **[CONTROLS AND PROCEDURES](#i0055ba19033c401797f06446bcb87cbb_166)** | **[29](#i0055ba19033c401797f06446bcb87cbb_166)** |
| **[CODE OF ETHICS](#i0055ba19033c401797f06446bcb87cbb_169)** | **[29](#i0055ba19033c401797f06446bcb87cbb_169)** |
| **[ADDITIONAL INFORMATION](#i0055ba19033c401797f06446bcb87cbb_172)** | **[29](#i0055ba19033c401797f06446bcb87cbb_172)** |
| **APPENDIX "A"** | **[30](#i0055ba19033c401797f06446bcb87cbb_175)** |

---

------

**REFERENCE INFORMATION**

In this Annual Information Form ("AIF"), a reference to the "Company" refers to Methanex Corporation and a reference to "Methanex," "we," "us," "our" and similar words refers to the Company and its subsidiaries or any one of them as the context requires, as well as their respective interests in joint ventures and partnerships.

We use the United States dollar as our reporting currency. Accordingly, unless otherwise indicated, all dollar amounts in this AIF are stated in United States dollars.

In this AIF, unless the context otherwise indicates, all references to "methanol" are to chemical-grade methanol. Methanol's chemical formula is CH<sup>3</sup>OH and it is also known as methyl alcohol.

**In this AIF, we incorporate by reference our 2022 Management's Discussion and Analysis ("2022 MD&A"), which contains information required to be included in this AIF. The 2022 MD&A is publicly accessible and is filed on the Canadian Securities Administrators' SEDAR website at <u>www.sedar.com</u> and on the U.S. Securities and Exchange Commission's EDGAR website at <u>www.sec.gov</u>.**

The approximate conversion of measurement used in this AIF is as follows:

1 tonne of methanol = 332.6 US gallons of methanol

Some of the historical price data and supply and demand statistics for methanol and certain other industry data contained in this AIF are derived by the Company from industry consultants or from recognized industry reports regularly published by independent consulting and data compilation organizations in the methanol industry, including Chemical Market Analytics by OPIS, a Dow Jones company, Tecnon OrbiChem Ltd., Argus, ICIS, S&P Global Platts and Methanol Market Services Asia. Industry consultants and industry publications generally state that the information provided has been obtained from sources believed to be reliable. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon in these reports.

Responsible Care® is a registered trademark of the Chemistry Industry Association of Canada and is used under license by us.

------

**CAUTION REGARDING FORWARD-LOOKING STATEMENTS**

This document contains forward-looking statements with respect to us and our industry. These statements relate to future events or our future performance. All statements other than statements of historical fact are forward-looking statements. Statements that include the words "believes," "expects," "may," "will," "should," "potential," "estimates," "anticipates," "aim," "goal," "targets," "plan," "predict" or other comparable terminology and similar statements of a future or forward-looking nature identify forward-looking statements.

More particularly and without limitation, any statements regarding the following are forward-looking statements:

• expected demand for methanol and its derivatives,

• expected new methanol supply or restart of idled capacity and timing for startup of the same,

• expected shutdowns (either temporary or permanent) or restarts of existing methanol supply (including our own facilities), including, without limitation, the timing and length of planned maintenance outages,

• expected methanol and energy prices,

• expected levels of methanol purchases from traders or other third parties,

• expected levels, timing and availability of economically priced natural gas supply to each of our plants,

• capital committed by third parties towards future natural gas exploration and development in the vicinity of our plants,

• our expected capital expenditures and anticipated timing and rate of return on such capital expenditures,

• anticipated operating rates of our plants,

• expected operating costs, including natural gas feedstock costs and logistics costs,

• expected tax rates or resolutions to tax disputes,

• expected cash flows, cash balances, earnings capability, debt levels and share price,

• availability of committed credit facilities and other financing,

• our ability to meet covenants associated with our long-term debt obligations, including, without limitation, the Egypt limited recourse debt facilities that have conditions associated with the payment of cash or other distributions,

• our shareholder distribution strategy and anticipated distributions to shareholders,

• commercial viability and timing of, or our ability to execute future projects, plant restarts, capacity expansions, plant relocations, or other business initiatives or opportunities, including our Geismar 3 project,

• our financial strength and ability to meet future financial commitments,

• expected global or regional economic activity (including industrial production levels) and GDP growth,

• expected outcomes of litigation or other disputes, claims and assessments,

• expected actions of governments, governmental agencies, gas suppliers, courts, tribunals or other third parties, and

• the potential future impact of the COVID-19 pandemic.

We believe that we have a reasonable basis for making such forward-looking statements. The forward-looking statements in this document are based on our experience, our perception of trends, current conditions and expected future developments as well as other factors. Certain material factors or assumptions were applied in drawing the conclusions or making the forecasts or projections that are included in these forward-looking statements, including, without limitation, future expectations and assumptions concerning the following:

• the supply of, demand for and price of methanol, methanol derivatives, natural gas, coal, oil and oil derivatives,

• our ability to procure natural gas feedstock on commercially acceptable terms,

• operating rates of our facilities,

------

• receipt or issuance of third-party consents or approvals or governmental approvals related to rights to purchase natural gas,

• the establishment of new fuel standards,

• operating costs, including natural gas feedstock and logistics costs, capital costs, tax rates, cash flows, foreign exchange rates and interest rates,

• the availability of committed credit facilities and other financing,

• the expected timing and capital cost of our Geismar 3 project,

• global and regional economic activity (including industrial production levels) and GDP growth,

• absence of a material negative impact from major natural disasters,

• absence of a material negative impact from changes in laws or regulations,

• absence of a material negative impact from political instability in the countries in which we operate, and

• enforcement of contractual arrangements and ability to perform contractual obligations by customers, natural gas and other suppliers and other third parties.

However, forward-looking statements, by their nature, involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The risks and uncertainties primarily include those attendant with producing and marketing methanol and successfully carrying out major capital expenditure projects in various jurisdictions, including, without limitation:

• conditions in the methanol and other industries, including fluctuations in the supply, demand and price for methanol and its derivatives, including demand for methanol for energy uses,

• the price of natural gas, coal, oil and oil derivatives,

• our ability to obtain natural gas feedstock on commercially acceptable terms to underpin current operations and future production growth opportunities,

• the ability to carry out corporate initiatives and strategies,

• actions of competitors, suppliers and financial institutions,

• conditions within the natural gas delivery systems that may prevent delivery of our natural gas supply requirements,

• our ability to meet timeline and budget targets for the Geismar 3 project, including the impact of any cost

pressures arising from tightening construction labour market conditions,

• competing demand for natural gas, especially with respect to any domestic needs for gas and electricity,

• actions of governments and governmental authorities, including, without limitation, the implementation of policies or other measures that could impact the supply of or demand for methanol or its derivatives,

• changes in laws or regulations,

• import or export restrictions, anti-dumping measures, increases in duties, taxes and government royalties and other actions by governments that may adversely affect our operations or existing contractual arrangements,

• worldwide economic conditions,

• the impacts of the COVID-19 pandemic, and

• other risks described in our 2022 MD&A.

Having in mind these and other factors, investors and other readers are cautioned not to place undue reliance on forward-looking statements. They are not a substitute for the exercise of one's own due diligence and judgment. The outcomes implied by forward-looking statements may not occur and we do not undertake to update forward-looking statements except as required by applicable securities laws.

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**THE COMPANY**

Methanex Corporation was incorporated under the laws of Alberta on March 11, 1968, and was continued under the *Canada Business Corporations Act* on March 5, 1992. Its registered and head office is located at 1800 Waterfront Centre, 200 Burrard Street, Vancouver, British Columbia, V6C 3M1 (telephone: 604-661-2600).

The following chart includes the Company's principal operating subsidiaries as of December 31, 2022, and, for each subsidiary, its place of organization and the Company's percentage of voting interests beneficially owned or over which the Company exercises control or direction. The chart also shows our principal production facilities and their locations.![orgchartscreenshotfeb27.jpg](orgchartscreenshotfeb27.jpg)

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**BUSINESS OF THE COMPANY**

Methanol is a clear liquid commodity chemical that is predominantly produced from natural gas and is also produced from coal, particularly in China. Traditional chemical demand, which represents just over 50% of global methanol demand, is used to produce traditional chemical derivatives, including formaldehyde, acetic acid and a variety of other chemicals that form the basis of a wide variety of industrial and consumer products. Demand for energy-related applications, which represents over 30% of global methanol demand, includes several applications including methyl tertiary-butyl ether ("MTBE"), fuel applications (including vehicle fuel, marine fuel and other thermal applications), di-methyl ether ("DME") and biodiesel. Demand into methanol-to-olefins ("MTO") represents over 15% of global methanol demand. MTO plants produce light olefins which have wide applications in packaging, textiles, plastic parts and automotive components.

We are the world's largest producer and supplier of methanol to the major international markets in Asia Pacific, North America, Europe and South America. Our total annual operating capacity, including Methanex's interests in jointly owned plants, is currently 9.3 million tonnes and is located in the United States, New Zealand, Trinidad, Chile, Egypt, and Canada. In addition to the methanol produced at our sites, we purchase methanol produced by others under methanol offtake contracts and on the spot market. This gives us flexibility in managing our supply chain while continuing to meet customer needs and support our marketing efforts. We have marketing rights for 100% of the production from the jointly-owned plants in Trinidad and Egypt, which provides us with an additional 1.3 million tonnes per year of methanol offtake supply when the plants are operating at full capacity.

Refer to the *Production* section on page 14 for more information regarding production at our plants.

**DEVELOPMENT OF THE BUSINESS AND CORPORATE STRATEGY**

**Three-Year History** 

**2020**

On March 16, 2020, in order to strengthen the Company's balance sheet while maintaining financial flexibility, given the uncertainty in the global economy and challenging commodity price environment, the Company announced that it was idling its Titan plant in Trinidad effective immediately and would be idling its Chile IV plant effective April 1, 2020, both for indefinite periods.

On April 1, 2020, as a result of the COVID-19 pandemic and its economic impact, the Company placed its Geismar 3 project on temporary "care and maintenance" for up to 18 months, thereby deferring approximately $500 million of previously announced capital spending. The Company also announced that it was reducing near-term capital spending by approximately $25 million by deferring planned maintenance activities.

On April 29, 2020, the Company announced that it was taking additional measures to enable greater financial flexibility and preserve liquidity in response to the uncertain market conditions caused by the COVID-19 pandemic and low oil price environment. These steps included negotiating covenant flexibility for its existing credit facilities with its banking partners and reducing its quarterly cash dividend to $0.0375 per share.

On June 3, 2020, the Company announced that it had amended its $300 million committed revolving credit facility and $800 million non-revolving construction facility to provide it with financial covenant relief and greater flexibility on the timeline to complete the Company's Geismar 3 project. The relief would be effective upon the Company's election and would provide flexibility in the calculation of the minimum EBITDA to interest coverage ratio through June 30, 2021, and an increase of the maximum debt to capitalization ratio through June 30, 2023.

On September 17, 2020, the Company announced that it was issuing $700 million of senior unsecured notes bearing a coupon of 5.125%, due October 15, 2027, the proceeds of which would be used to repay or redeem $250 million of unsecured notes bearing a coupon of 5.25% due March 1, 2022, and for maintenance capital expenditures, working capital or other general corporate purposes.

**2021**

On January 7, 2021, as a result of not being successful in reaching an agreement for an economic longer-term natural gas agreement, the Company announced that it expected its Titan methanol facility in Trinidad to remain idled indefinitely. In order to reduce costs while continuing efforts to secure longer-term gas supply, the Company restructured its Trinidad operations to support a one-plant operation and reduced its Trinidad workforce by approximately 60 positions.

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On July 15, 2021, the Company and Mitsui O.S.K. Lines ("MOL") announced that they had reached agreement on Key Commercial Terms for a strategic partnership involving the Company's Waterfront Shipping subsidiary, with MOL acquiring a 40 percent minority interest for $145 million.

On July 16, 2021, the Company announced that it was restarting construction on its advantaged Geismar 3 project in October 2021, with commercial operations targeted for the end of 2023 or early 2024. The decision was made as a result of positive methanol industry fundamentals and the completion of certain deleveraging initiatives. Credit facility amendments were also made to further strengthen the Company's balance sheet and enhance its financial flexibility, including repaying the $173 million drawn on the Company's Geismar 3 construction facility, reducing the facility to $600 million and extending its maturity to 2025. The maturity of the Company's undrawn $300 million revolving credit facility was also extended to 2026 pursuant to an amended and restated credit agreement. On this date the Company also announced a reset of the quarterly dividend to $0.125 per share from $0.0375 per share.

On September 16, 2021, the Company announced that its Board of Directors approved a normal course issuer bid to commence on September 24, 2021, pursuant to which the Company could purchase up to 3,810,464 common shares, representing 5% of the public float at the time of the announcement.

On October 27, 2021, the Company announced that it had concluded definitive agreements for the Company and MOL to establish a strategic partnership involving the Company's Waterfront Shipping subsidiary, with MOL acquiring a 40 percent minority interest for $145 million, subject to regulatory approval.

**2022**

On January 26, 2022, in reporting its fourth quarter 2021 results, the Company announced the restart of its Chile IV plant in early October 2021.

On February 1, 2022, the Company and MOL announced the completion of the previously announced strategic partnership involving the Company's Waterfront Shipping subsidiary, with MOL acquiring a 40 percent minority interest for $145 million.

On April 27, 2022, the Company announced that its Board of Directors approved an amendment to its existing normal course issuer bid originally announced on September 16, 2021, which increased the number of common shares that could be purchased under the bid from 3,810,464 to 6,094,171, representing 10% of the public float at the time of the original announcement.

On September 15, 2022, the Company announced that its Board of Directors approved a normal course issuer bid to commence on September 26, 2022, pursuant to which the Company may purchase up to 3,506,405 common shares, representing 5% of the public float at the time of the announcement, subject to approval by the Toronto Stock Exchange.

On September 15, 2022, the Board of Directors of the Company announced that John Floren will retire as President and CEO and from the Board as of December 31, 2022, and that, following a comprehensive multi-year succession process, the Board appointed Rich Sumner as President and Chief Executive Officer and member of the Board of Directors, effective January 1, 2023.

On September 21, 2022, the Company announced that the Toronto Stock Exchange approved the Company's previously announced normal course issuer bid, pursuant to which the Company may purchase for cancellation up to 3,506,405 common shares, representing 5% of the 70,128,109 common shares issued and outstanding as of September 15, 2022.

On December 13, 2022, the Company announced the following appointments to its executive leadership team:<br>

–Dean Richardson, Vice President, Corporate Finance at the time of the announcement, was appointed as Senior Vice President, Finance and Chief Financial Officer as of February 1, 2023. Ian Cameron retired from his role as Senior Vice President, Finance and Chief Financial Officer.

–Kevin Maloney, Vice President, Corporate Development at the time of the announcement, was appointed Senior Vice President, Corporate Development as of January 1, 2023. Vanessa James stepped down from her role as Senior Vice President, Corporate Development and Sustainability.

–Gustavo Parra, Vice President, Manufacturing Strategy and Planning at the time of the announcement, was appointed Senior Vice President, Manufacturing as of January 1, 2023. Kevin Henderson retired as Senior Vice President, Manufacturing.

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–Karine Delbarre, Vice President, North America Marketing & Logistics at the time of the announcement, was appointed Senior Vice President, Global Marketing & Logistics as of January 1, 2023, filling the vacancy left by Rich Sumner following his appointment as President and CEO.

–Mark Allard, Vice President of North America Manufacturing at the time of the announcement, was appointed Senior Vice President, Low Carbon Solutions as of January 1, 2023. The newly formed role will be focused on capitalizing on the demand and supply opportunities for low-carbon methanol.

–Kevin Price, General Counsel & Corporate Secretary at the time of the announcement, was appointed as Senior Vice President, General Counsel & Corporate Secretary as of January 1, 2023.

**Our Strategy**

Our primary objective is to create value through our leadership in the global production, marketing and delivery of methanol to customers. To achieve this objective we have a simple, clearly defined strategy: leadership, low cost and operational excellence. We pride ourselves in being a leader in Responsible Care (an operating ethic and set of principles for sustainability developed by the Chemistry Industry Association of Canada and recognized by the United Nations) to have a strategic focus on managing risks and proactive plans relating to personnel health and safety, environmental protection, community involvement, social responsibility, sustainability, security and emergency preparedness. Our brand differentiator "*The Power of Agility*<sup>®</sup>" defines our culture of flexibility, responsiveness and creativity that allows us to capitalize on opportunities quickly as they arise, and swiftly respond to customer needs.

**Leadership**

Leadership is a key element of our strategy. We are focused on creating value through our position as the leading producer and supplier in the global methanol industry, improving our ability to cost-effectively deliver methanol to customers and supporting both traditional and energy-related global methanol demand growth.

We are the leading producer and supplier of methanol to the major international markets in Asia Pacific, North America, Europe and South America. Our 2022 sales volume of 10.8 million tonnes of methanol represented approximately 12% of global methanol demand. This scale allows us the flexibility to meet customer needs across international markets. Our leadership position has also enabled us to play an important role in the methanol industry, which includes publishing Methanex reference prices that are used in each major market as the basis of pricing for our customer contracts.

The geographically diverse locations of our production sites allow us to deliver methanol cost-effectively to customers in all major global markets. We continue to invest in global distribution and supply infrastructure, which includes the world's largest methanol ocean tanker fleet and terminal capacity in all major international markets, enabling us to enhance value to customers by providing reliable and secure supply.

Another key component of our global leadership strategy is our ability to supplement methanol production with methanol purchased from third parties to give us flexibility in our supply chain to meet customer commitments. We purchase methanol through a combination of methanol offtake contracts and spot purchases. We manage the cost of purchased methanol by taking advantage of our global supply chain infrastructure, which allows us to purchase methanol in the most cost-effective region while still maintaining overall security of supply.

The Asia Pacific region continues to lead global methanol demand growth. We have storage capacity in China, South Korea, Japan and Singapore that allows us to cost-effectively manage supply to customers and we have offices in Shanghai, Beijing, Hong Kong, Tokyo, and Seoul to ensure customer service and industry positioning in the region. This enables us to participate in and improve our knowledge of the rapidly evolving and growing methanol markets in China and other Asian countries including the use of methanol as a clean-burning fuel.

**Low Cost**

A low cost structure is an important competitive advantage in a commodity industry and is a key element of our strategy. Our approach to major business decisions is guided by a drive to improve our cost structure and create value for shareholders. The most significant components of total costs are natural gas for feedstock and distribution costs associated with delivering methanol to customers.

We manage our natural gas costs in two ways: through gas contracts linked to methanol price and through fixed price contracts. Our production facilities outside North America are largely underpinned by natural gas purchase agreements where the natural gas price is linked to methanol prices. This pricing relationship enables these facilities to be competitive throughout the methanol price cycle. In North America, we have fixed price contracts and hedges in place targeting minimum operating rate

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requirements of approximately 70% in the near-term, declining over time. For 2023, approximately 85% of our North American gas requirements are contracted at fixed prices. We purchase our remaining North American gas requirements through the spot market.

Our production facilities are well located to supply global methanol markets and we take a long-term approach to contracting shipping capacity to meet customer needs. Nonetheless, the cost to distribute methanol from production locations to customers is a significant component of total operating costs. These include costs for ocean shipping, in-market storage facilities and in-market distribution. We focus on identifying initiatives to reduce these costs, including optimizing the use of our shipping fleet, third-party backhaul arrangements and taking advantage of prevailing conditions in the shipping market by varying the type and term of ocean vessel contracts. Tanker shipping rates rose significantly in 2022 and our approach to managing distribution resulted in a lower cost structure compared to being fully exposed to spot shipping rates. We also look for opportunities to leverage our global asset position by entering into geographic product exchanges with other methanol producers to reduce distribution and transportation costs.

**Operational Excellence**

We maintain a focus on operational excellence in all aspects of our business. This includes excellence in manufacturing and supply chain processes, marketing and sales, Responsible Care and financial management.

To differentiate ourselves from competitors, we strive to be the best operator and the preferred supplier to customers. We believe that reliability of supply is critical to the success of our customers' businesses and our goal is to deliver methanol reliably and cost-effectively. Our commitment to Responsible Care drives our adherence to the highest principles of health, safety, environmental stewardship, and social responsibility. We believe this commitment helps us achieve an excellent overall environmental and safety record and aligns our community involvement and social investments with our core values.

Product stewardship is a vital component of a Responsible Care culture and guides our actions through the complete life cycle of our product. We aim for the highest safety standards to minimize risk to employees, customers and suppliers as well as to the environment and the communities in which we do business. We promote the proper use and safe handling of methanol at all times through a variety of internal and external health, safety and environmental initiatives, and we work with industry colleagues to improve safety standards. We readily share technical and safety expertise with key stakeholders (including customers, end-users, suppliers, and logistics providers) through direct communication and active participation in local and international industry associations, seminars and conferences and online education initiatives.

In 2022, our strategy of operational excellence in financial management supported the construction of the Geismar 3 project to be funded from our cash balance, while continuing to return cash to shareholders through initiating a new share repurchase program and a regular dividend. As at December 31, 2022, we had strong liquidity with $858 million in cash and $600 million of undrawn back-up liquidity through our revolving and construction credit facilities, and no significant debt maturities until late 2024. We actively manage our liquidity and capital structure in light of changes to economic conditions, the underlying risks inherent in our operations and the capital requirements of our business.

**Environment, Social & Governance ("ESG")**

We have embedded sustainability into our long-term strategy alongside our commitment to Responsible Care. We conducted an internal materiality assessment to prioritize the sustainability topics that are most relevant to our business and stakeholders. In a sustainability context, material topics are ESG topics that can significantly impact our business success and are of interest to our key stakeholders. These material topics are greenhouse gas ("GHG") emissions, transition to a low-carbon economy, employee and contractor safety, process safety, diversity and inclusion, and the societal benefits of methanol.

In 2021, we formalized accountability for sustainability by adding direct ESG-related responsibility within our executive team and established internal leadership teams with the responsibility to (i) evaluate emissions reduction opportunities, technologies and strategies in our manufacturing operations to reduce our GHG emissions and (ii) assess potential market-related impacts of a transition to a low-carbon economy and opportunities for lower-carbon methanol, including green methanol.

We believe that having a diverse team and an inclusive workplace creates a better culture, better decision making and a better company. In 2021, we established a Global Diversity & Inclusion Council made up of senior leaders from around the globe to lead the development of our Diversity & Inclusion Vision and Guiding Principles, and Strategic Priorities. Our Vision is to have an inclusive culture where diversity is valued, differences are embraced and everyone has the opportunity to contribute, develop and advance. In 2022, we established a 3-year Diversity & Inclusion Roadmap based on the Vision and Guiding Principles and the feedback collected from team members through our D&I assessment.

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In March 2023, we issued our 2022 Sustainability Report, aligned with the Sustainability Accounting Standards Board (SASB) and the Task-Force on Climate-related Financial Disclosures (TCFD). Our 2022 Sustainability Report is available at https://www.methanex.com/sustainability.

**METHANOL INDUSTRY INFORMATION**

**Demand Factors**

Based on the diversity of end products in which methanol is used, demand for methanol is driven by a number of factors, including: the strength of global and regional economies, industrial production levels, energy prices, pricing of end products, downstream capacity additions and government regulations and policies.

We estimate that global methanol demand increased slightly to approximately 88 million tonnes in 2022.

Traditional chemical demand decreased by approximately 1% year-over-year due to the slowdown in global economic growth and high energy costs. Demand into energy-related applications increased by approximately 2% year-over-year, driven by an increase in methyl tertiary-butyl (MTBE) and other fuel applications. Demand into methanol-to-olefins (MTO) increased by approximately 7% year-over-year driven by strong operating rates in the first half of the year, a new plant starting up in the third quarter, and the restart of an idle plant in November.

***Traditional Chemical Derivative Demand***

Traditional chemical demand, which represents over 50% of global methanol demand, is used to produce traditional chemical derivatives, including formaldehyde, acetic acid and a variety of other chemicals that form the basis of a wide variety of industrial and consumer products. We believe that traditional chemical demand is influenced by the strength of global and regional economies and industrial production levels. The use of methanol derivatives such as formaldehyde and acetic acid in the building industry means that building and construction cycles and the level of wood products production, housing starts and consumer spending are important factors in determining demand for such derivatives. Demand is also affected by automobile production, durable goods production, industrial investment and environmental and health trends, as well as new product development. Historically, chemical derivative demand for methanol has been relatively insensitive to changes in methanol prices. We believe this demand inelasticity is because there are limited, if any, cost-effective substitutes for methanol-based chemical derivative products and because methanol costs in most cases account for only a small portion of the value of many of the end products.

*Formaldehyde Demand*

In 2022, methanol demand to produce formaldehyde represented approximately 26% of global methanol demand. The largest use for formaldehyde is as a component of urea-formaldehyde and phenol-formaldehyde resins, which are used as wood adhesives for plywood, particleboard, oriented strand board, medium-density fibreboard and other reconstituted or engineered wood products. There is also demand for formaldehyde as a raw material for engineering plastics and in the manufacture of a variety of other products, including elastomers, paints, building products, foams, polyurethane, and automotive products.

*Acetic Acid Demand*

In 2022, methanol used to produce acetic acid represented approximately 10% of global methanol demand. Acetic acid is a chemical intermediate used principally in the production of vinyl acetate monomer, acetic anhydride, purified terephthalic acid and acetate solvents, which are used in a wide variety of products, including adhesives, paper, paints, plastics, resins, solvents, pharmaceuticals, and textiles.

*Other Chemical Derivative Demand*

In 2022, the remaining chemical derivative demand for methanol represented approximately 16% of global methanol and is used in the manufacture of methylamines, methyl methacrylate and a diverse range of other chemical products that are ultimately used to make products such as adhesives, coatings, plastics, film, textiles, paints, solvents, paint removers, polyester resins and fibres, explosives, herbicides, pesticides, poultry feed additives and a variety of health and pharmaceutical products. Other end uses include silicone products, aerosol products, de-icing fluid, windshield washer fluid for automobiles and antifreeze for pipeline dehydration.

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***Energy Demand***

Demand for energy-related applications, which represents just under 50% of global methanol demand, includes a number of applications including methanol-to-olefins ("MTO"), methyl tertiary-butyl ether ("MTBE"), fuel applications (including vehicle fuel, marine fuel and a fuel for industrial boilers and kilns), di-methyl ether and biodiesel. We believe that demand for energy-related applications will be influenced by energy prices, pricing of end products and government regulations and policies. Ongoing regulatory changes as part of the global energy transition have led to a growing interest in methanol as a fuel due to its cleaner-burning attributes and potential to reduce greenhouse gas emissions.The future operating rates and methanol consumption of MTO producers will depend on a number of factors, including pricing for their various final products, the degree of downstream integration of these units with other products, the impact of olefin industry feedstock costs, including naphtha, on relative competitiveness and plant maintenance schedules.

*Methanol-to-Olefins (MTO) Demand*

Light olefins (ethylene and propylene) are the basic building blocks used to make many everyday products that have wide application in packaging, textiles, plastic parts and containers, and automotive components. Olefins can be produced from various feedstocks, including naphtha, liquefied petroleum gas, ethane and methanol. In China, olefins have historically been produced using naphtha, a product derived from oil. The first merchant MTO plant in China started up in 2012, and in 2022, over 15 million tonnes of methanol, or 17% of global demand, in the merchant market was consumed by MTO plants in China (excluding demand from upstream-integrated coal-to-olefins plants). We estimate the current MTO capacity for merchant methanol to be about 21 million tonnes per annum excluding the integrated coal-to-methanol (CTO) facilities.

*Methyl tertiary-butyl (MTBE) Demand*

MTBE is used primarily as an oxygenate blended in gasoline to contribute octane and reduce the amount of harmful exhaust emissions from motor vehicles. MTBE is an efficient and cost-competitive gasoline component and, as such, is increasingly used in developing countries targeting gasoline pool extension and clean air benefits at a cost lower than that of alternatives. Asia represents the majority of global MTBE demand, with China being a significant market. China is now the world's largest automotive market with growing gasoline demand and has publicly stated its desire to reduce exhaust emissions. In the US, MTBE production continues to increase for export markets (Latin America and Europe mainly) as idled assets have restarted and a new project is under construction. By the end of 2022, approximately 10 million tonnes of methanol, or 11% of global demand, was consumed for the production of MTBE. We believe that global demand for MTBE will experience growth over the coming years.

*Methanol Demand for Fuel Applications*

Methanol can be used as a marine fuel, vehicle fuel and as a fuel for industrial boilers, kilns and for cooking stoves.

There is growing interest in methanol as a marine fuel given its environmental benefits, wide availability, cost competitiveness and ease of use. When made from renewable sources, methanol can be carbon neutral on a life-cycle basis, providing a future-proof pathway to meet the decarbonization goals of the shipping industry. Approximately 60% of our long-term shipping fleet, or 18 vessels in total, have the capability to run on methanol. In 2022, many announcements were made by shipping companies for orders of dual-fueled vessels that can run on methanol. Based on existing dual fuel ships and orders to date, we expect that demand potential will grow from approximately 300,000 tonnes today to three million tonnes by 2027.

Methanol is also being used as a vehicle fuel in China. Methanol can be blended with gasoline in low quantities and used in existing vehicles and can be used in high-proportion blends such as M85 in flex-fuel vehicles or M100 in dedicated methanol-fueled vehicles. There is significant interest in high-level methanol fuel blends for M100 taxis and trucks (able to run on 100% methanol fuel) in China. There are approximately 27,000 taxis and 3,000 heavy-duty trucks in China, running on M100 fuel, representing approximately 800,000 tonnes of annual methanol demand. Other countries are in the assessment or near-commercial stage for using methanol as a vehicle fuel.

In China, stricter air quality emissions regulations in several provinces are leading to a phase-out of coal-fueled commercial boilers, kilns, and cooking stoves in favour of cleaner fuels, creating a growing market for methanol as an alternative fuel. We estimate that this growing demand segment already represents approximately five million tonnes of methanol demand. We continue to support various pilot projects and the development of operational and safety standards to support the commercialization of methanol as a thermal fuel for industrial boilers, kilns and cooking stoves.

In 2022, global methanol demand for use in fuel applications was estimated at approximately 10 million tonnes, or 11%.

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*Di-methyl ether (DME) Demand*

DME is a clean-burning fuel that can be stored and transported like LPG. DME, which is typically produced from methanol, can be blended up to approximately 20% with LPG and used for household cooking and heating. DME can also be used as a clean-burning substitute for diesel fuel in transportation, although, this application has not yet entered widespread commercialization. In 2022, global methanol demand for use in DME was estimated at over four million tonnes, or 5% of global demand. In addition to DME production in China, DME is being produced and projects promoting the use of DME are under development in other countries.

**Supply Factors**

Methanol industry supply is impacted by the cost of production, methanol industry operating rates and new methanol industry capacity additions.

Methanol is predominantly produced from natural gas and is also produced from coal, particularly in China. The cost of production is influenced by the availability and cost of raw materials, including coal and natural gas, freight costs, other operating and maintenance costs and government policies. An increase in economically competitive methanol supply, all else equal, can displace supply from higher cost producers and have a negative impact on methanol price.

The industry has historically operated below stated capacity on a consistent basis, even in periods of high methanol prices, primarily due to shutdowns for planned or unplanned maintenance and feedstock shortages and/or uneconomical feedstock costs. Methanol industry supply can increase through improving operating rates of existing methanol plants.

Methanol industry capacity can increase through the construction of new methanol plants, by restarting idle methanol plants, or by expanding or debottlenecking existing plants to increase their operating capacity. There is typically a span of four to six years to plan and construct a new world-scale methanol plant.

Typical of most commodity chemicals, periods of high methanol prices encourage high-cost producers to operate at maximum rates and encourage the construction of new plants and expansion projects, leading to the possibility of oversupply in the market. However, historically, many of the announced capacity additions have not been constructed for a variety of reasons. There are significant barriers to entry in this industry. The construction of world-scale methanol facilities requires significant capital over a long lead time, a location with access to significant natural gas or coal feedstock with appropriate pricing, and an ability to market and deliver methanol cost-effectively and reliably to customers.

Approximately two million tonnes of new annualized capacity, outside of China was introduced in 2022, including Sabalan in Iran (1.8 million tonnes) and Liberty One Methanol in the US (0.2 million tonnes). In China, we estimate that approximately three million tonnes of new production capacity was added in 2022, including coal-based Jiutai Line No. Two (1.8 million tonnes) and several small coke-oven-gas-based plants. The methanol industry ran at slightly lower operating rates in 2022 due to various planned and unplanned outages, limited feedstock availability in some regions and high energy prices making production uneconomic in certain regions..

In North America, we are building a 1.8 million tonne plant, the Geismar 3 project, which will be our third plant in Louisiana, with first methanol production expected in the fourth quarter of 2023. In Iran, the 1.8 million tonne Dena plant is under construction which is scheduled to be completed in the next few years although actual timing is uncertain. The completion of major projects as well as ongoing plant operating rates in Iran continue to be challenged due to the impact of ongoing sanctions, plant technical issues as well as ongoing natural gas constraints (particularly in the winter months). In Malaysia, a 1.8 million tonne plant is under construction with a scheduled start up in 2024. In China, there are planned capacity additions over the near-to-medium term which we expect will be somewhat offset by the closure of some small-scale, inefficient and older plants. Methanol production from new capacity built in China will likely be consumed in that country.

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**Methanol Prices**

The methanol business is a highly competitive commodity industry and future methanol prices will ultimately depend on the strength of global demand and methanol industry supply but can also be impacted by other factors such as global trade disputes and government sanctions. Methanol demand and industry supply are driven by several factors as described above. Methanol prices have historically been, and are expected to continue to be, characterized by cyclicality. We are not able to predict future methanol prices, which are driven by several factors that are beyond our control.

We publish regional non-discounted reference prices for each major methanol market and these posted prices are reviewed and revised monthly or quarterly based on industry fundamentals and market conditions. Most of our customer contracts use published Methanex reference prices as a basis for pricing, and we offer discounts to customers based on various factors.

![a2022chartfinal.jpg](a2022chartfinal.jpg)

1 In January 2022 Methanex introduced a separate price posting for China (China Posted Contract Price), prior to this the Asian Posted Contract Price (APCP) was used for all Asia Pacific and China customers.

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**PRODUCTION**

**Production Process**

The methanol manufacturing process used in our facilities typically involves heating natural gas, mixing it with steam and passing it over a nickel catalyst where the mixture is converted into carbon monoxide, carbon dioxide and hydrogen. This reformed gas (also known as synthesis gas or syngas) is then cooled, compressed and passed over a copper-zinc catalyst to produce crude methanol. Crude methanol consists of approximately 80% methanol and 20% water by weight. To produce chemical-grade methanol, crude methanol is distilled to remove water, higher alcohols and other impurities.

**Operating Data and Other Information**

We endeavour to operate our production facilities around the world in an optimal manner to lower our overall delivered cost of methanol.

Scheduled shutdowns of plants are necessary to change catalysts or perform maintenance activities that cannot otherwise be completed with the plant operating (a process commonly known as a turnaround). These shutdowns typically take between 30 and 45 days. Catalysts generally need to be changed every three to six years depending on technology. Careful planning and scheduling is required to ensure that maintenance and repairs can be carried out during turnarounds. In addition, both scheduled and unscheduled shutdowns may occur between turnarounds. We prepare a long-term turnaround schedule that is updated annually for all of our production facilities.

The following table details the annual operating capacity and actual production at our facilities in 2022 and 2021:

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| | | | |
|:---|:---|:---|:---|
| | **Annual**<br>**Operating Capacity**<sup>(1)</sup> | **2022 Production** | **2021 Production** |
| | (000 tonnes/year) | (000 tonnes) | (000 tonnes) |
| **USA (Geismar)** | 2200 | 2041 | 1989 |
| **New Zealand** <sup>(2)</sup> | 2200 | 1230 | 1348 |
| **Trinidad (Methanex interest)** <sup>(3)</sup> | 1960 | 981 | 1161 |
| **Chile** | 1700 | 888 | 807 |
| **Egypt (50% interest)** | 630 | 385 | 581 |
| **Canada (Medicine Hat)** | 640 | 593 | 628 |
|  | **9330** | **6118** | **6514** |

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&nbsp;&nbsp;&nbsp;&nbsp;(1)The annual operating capacity of our production facilities may be higher or lower than original nameplate capacity as, over time, these figures have been adjusted to reflect ongoing operating efficiencies. Actual production for a facility in any given year may be higher or lower than operating capacity due to a number of factors, including natural gas availability, feedstock composition, the age of the facility's catalyst, turnarounds and access to CO2 from external suppliers for certain facilities. We review and update the operating capacity of our production facilities on a regular basis based on historical performance.

&nbsp;&nbsp;&nbsp;&nbsp;(2)The operating capacity of New Zealand is made up of the two Motunui facilities and the Waitara Valley facility. The Waitara Valley facility is idled indefinitely due to natural gas constraints. (refer to the *Natural Gas Supply* – *New Zealand* section below).

&nbsp;&nbsp;&nbsp;&nbsp;(3)The operating capacity of Trinidad is made up of the Titan (100% interest) and Atlas (63.1% interest) facilities. The Titan plant is idled indefinitely due to natural gas constraints. (refer to the *Natural Gas Supply* – *Trinidad* section below).

Refer to the *Production Summary* section of our 2022 MD&A for more information.

**MARKETING**

We sell methanol on a worldwide basis to every major market through an extensive marketing and distribution system with marketing offices in North America (Dallas and Vancouver), Europe (Brussels), Asia Pacific (Hong Kong, Shanghai, Tokyo, Seoul and Beijing), South America (Santiago) and the Middle East (Dubai). Most of our customers are large global or regional petrochemical manufacturers or distributors.

We believe our ability to sell methanol from geographically dispersed production sites enhances our ability to serve major chemical and petrochemical producers as customers for whom reliability of supply and quality of service are important.

In addition to selling methanol that we produce at our own facilities, we also sell methanol that we purchase from other suppliers through methanol purchase agreements and on the spot market. This provides us with flexibility in our supply chain and allows us to reliably meet customer commitments.

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**DISTRIBUTION AND LOGISTICS**

All of our methanol production facilities except Medicine Hat are located adjacent to deepwater ports. Methanol is pumped from our coastal plants by pipeline to these ports for shipping. We currently own or manage a fleet of approximately 30 ocean-going vessels to ship this methanol. We lease or own in-region storage and terminal facilities in North America, Europe, South America and Asia Pacific. We also use barge, rail, pipelines and, to a lesser extent, truck transport in our delivery system.

To retain optimal flexibility in managing our shipping fleet, we have entered into short-term and long-term time charter agreements covering vessels with a range of capacities. We also ship methanol under contracts of affreightment and through spot arrangements. We use larger vessels as key elements in our supply chain to move product from our production facilities to storage facilities located in major ports and for direct delivery to some customers. We also use smaller vessels capable of entering into restricted ports to deliver directly to other customers.

The cost to distribute methanol to customers represents a significant component of our operating costs. These include costs for ocean shipping, storage and distribution. We are focused on identifying initiatives to reduce these costs and we seek to maximize the use of our shipping fleet to reduce costs. We take advantage of prevailing conditions in the shipping market by varying the type and length of term of ocean vessel charter contracts. We are continuously investigating opportunities to further improve the efficiency and cost-effectiveness of distributing methanol from our production facilities to customers. We also look for opportunities to leverage our global asset position by entering into product exchanges with other methanol producers to reduce distribution costs.

Our Trinidad plants are ideally located to supply customers in all global markets. Our plants in New Zealand primarily supply customers in the Asia Pacific region, but can also supply European, North American and South American markets when required. Our production site in Chile can supply all global regions due to its geographic location. Our Egypt plant primarily services the domestic Egypt market and our European markets but can also supply the Asia Pacific region. Our Medicine Hat plant serves our customer base in North America and the Geismar plants can serve customers across North America, Europe and the Asia Pacific region.

**NATURAL GAS SUPPLY**

**General**

Natural gas is the principal feedstock for producing methanol and it accounts for a significant portion of our operating costs. Accordingly, our results from operations depend in large part on the availability and security of supply and the price of natural gas. If, for any reason, we are unable to obtain sufficient natural gas for any of our plants on commercially acceptable terms or we experience interruptions in the supply of contracted natural gas, we could be forced to curtail production or close such plants, which could have an adverse effect on our results of operations and financial condition.

**United States** 

We have two plants in Geismar, Louisiana with an annual operating capacity of 2.2 million tonnes. The Geismar 3 project, with an expected annual production capacity of 1.8 million tonnes, is currently under construction, with commercial operations expected in the fourth quarter of 2023.

We have several fixed price hedges and fixed price physical supply agreements to manage natural gas price risk for our Geismar facilities. In North America, we have fixed price contracts and hedges in place targeting minimum operating rate requirements of approximately 70% in the near-term, declining over time. The balance of our gas requirements are purchased at spot prices.

**New Zealand**

We have three plants in New Zealand with a total operating capacity of 2.2 million tonnes of methanol per year. Two plants are located at Motunui and can produce 1.7 million tonnes per year and the third is located at nearby Waitara Valley and can produce 0.5 million tonnes. The Waitara Valley Plant was idled indefinitely in the first quarter of 2021 due to a lack of available gas supply.

We have entered into several agreements with various natural gas suppliers with terms that range in length up to 2029. All gas supply agreements in New Zealand are take-or-pay agreements and include U.S. dollar base and variable price components where the variable price component is adjusted by a formula linked to methanol prices above a certain level. We believe this pricing relationship enables these facilities to be competitive at all points in the methanol price cycle. Certain contracts require

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the supplier to deliver a minimum amount of natural gas with additional volume dependent on the success of exploring and developing the related natural gas field.

We continue to pursue opportunities to contract additional natural gas to supply our plants in New Zealand, including gas to underpin the restart of the currently idled Waitara Valley plant.

**Trinidad**

Natural gas for our Atlas methanol production facility in Trinidad, with our share of total production capacity being 1.1 million tonnes per year, is supplied under a take-or-pay contract with the National Gas Company of Trinidad and Tobago Limited ("NGC"), which purchases the natural gas from upstream gas producers. The contract for Atlas has a U.S. dollar base and variable price components, where the variable portion is adjusted by a formula linked to methanol prices above a certain level and expires in September 2024.

The Titan plant was idled indefinitely since the first quarter of 2020 and we continue to engage with the NGC to secure an economic natural gas supply.

**Chile**

Natural gas for our two plants in Chile is supplied by various producers in Chile and Argentina. A portion of the contracted gas is subject to deliver-or-pay and take-or-pay provisions. Our current gas agreements and gas export permits from Argentina provide for sufficient gas to allow for a two-plant operation in Chile during the Southern hemisphere summer months.

In 2022, one plant operated throughout the year and a second plant operated for seven months.

Our primary Chilean natural gas supplier is Empresa Nacional del Petróleo ("ENAP"). ENAP has made significant investments over the past several years in the development of natural gas from unconventional reservoirs, which has resulted in increased gas deliveries from ENAP to our facilities. The agreements for natural gas supply with ENAP underpin approximately 25% of the 1.7 million tonnes of annual operating capacity for 2023 through 2025.

In 2022, we received natural gas from Argentina from three different natural gas suppliers pursuant to firm supply agreements. These agreements commenced in October 2021 and expired at the end of April 2022. We also received Argentine natural gas in 2022 from a fourth supplier, YPF S.A. from January until April 2022 and from October through December 2022. We have a gas supply agreement with YPF S.A. that expires at the end of 2025.

The price paid for natural gas for our Chilean facilities from our Chilean and Argentine suppliers is a U.S. dollar base price plus a variable price component that is adjusted by a formula linked to methanol prices above a certain level.

**Egypt**

We have a 25-year, take-or-pay natural gas supply agreement expiring in 2035 for the 1.3 million tonne per year methanol plant in Egypt in which we have a 50% equity interest. The price paid for gas is based on a U.S. dollar base price plus a variable price component that is adjusted by a formula linked to methanol prices above a certain level. Under the contract, the gas supplier is obligated to supply, and we are obliged to take or pay for, a specified annual quantity of natural gas. In addition, the natural gas supply agreement has a mechanism whereby we are partially compensated when gas delivery shortfalls in excess of a certain threshold occur. Natural gas is supplied to this facility from the same gas delivery grid infrastructure that supplies other industrial users in Egypt, as well as the general Egyptian population.

**Canada**

We have entered into fixed price contracts to supply 80-90% of our natural gas requirements for our Medicine Hat facility through 2031. The balance of our gas requirements is purchased under contracts at spot prices.

**FOREIGN OPERATIONS**

We have substantial operations and investments outside of North America, and as such we are affected by foreign political developments and federal, provincial, state and other local laws and regulations. We are subject to risks inherent in foreign operations, including loss of revenue, property and equipment as a result of expropriation; import or export restrictions; anti-dumping measures; nationalization, war, civil unrest, insurrection, acts of terrorism and other political risks; increases in duties, taxes and governmental royalties; renegotiation of contracts with governmental entities; as well as changes in laws or policies or other actions by governments that may adversely affect our operations. We are also subject to potential trade risks associated

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with geopolitical disputes between countries in which we operate.

We derive a substantial portion of our revenue from production and sales by subsidiaries outside of Canada, and the payment of dividends or the making of other cash payments or advances by these subsidiaries to us may be subject to restrictions or exchange controls on the transfer of funds in or out of the respective countries or result in the imposition of taxes on such payments or advances. We have organized our foreign operations in part based on certain assumptions about various tax laws (including capital gains and withholding taxes), foreign currency exchange and capital repatriation laws and other relevant laws of a variety of foreign jurisdictions. While we believe that such assumptions are reasonable, we cannot provide assurance that foreign taxation or other authorities will reach the same conclusion. Further, if such foreign jurisdictions were to change or modify such laws, we could suffer adverse tax and financial consequences.

Our wholly owned subsidiary, Methanex Chile SpA ("Methanex Chile"), owns two methanol plants on our Chilean production site. Chilean foreign investment regulations provide certain benefits and guarantees to companies that enter into a foreign investment contract ("DL 600 Contract") with Chile. Methanex Chile has entered into DL 600 Contracts, substantially identical in all matters material for Methanex Chile, for both plants. Under the DL 600 Contracts, Methanex Chile is authorized to remit from Chile, in United States dollars or any other freely convertible currency, all or part of its profits and its equity. The DL 600 Contracts provide that they cannot be amended or terminated except by written agreement.

**RESPONSIBLE CARE & SUSTAINABILITY**

As a member of the Chemistry Industry Association of Canada ("CIAC"), the American Chemistry Council ("ACC"), Asociación Gremial de Industriales Quimicos de Chile, Responsible Care New Zealand, European Chemical Industry Council, China Association of International Chemical Manufacturers, Japan Chemical Industry Association and Gulf Petrochemicals and Chemicals Association, we are committed to the Responsible Care® Ethic and Principles for Sustainability.

Responsible Care, a sustainability initiative recognized by the United Nations, is the umbrella under which we manage our business in relation to health, safety, the environment, community involvement, social responsibility, sustainability, security and emergency preparedness at each of our facilities and locations.

Accordingly, we have established policies, systems and procedures to promote and encourage the responsible development, manufacture, transportation, storage, handling, distribution and use of methanol and ultimate disposal of hazardous waste and residual chemical products so as to do no harm to human health and well-being, the environment and the communities in which we operate while striving to improve the environment and people's lives.

Methanex's Responsible Care and Social Responsibility (RC and SR) related policies and programs are based on CIAC's RC Ethic and Principles for Sustainability and the CIAC RC Codes of Practice. Some of the countries where we operate have different standards than those applied in North America. Our policy is to adopt the more stringent of either Responsible Care practices or local regulatory or association requirements at each of our facilities.

Sound corporate governance is the foundation of our long-term success and the sustainability of our operations. Our corporate governance policies ensure that we have strong management and clear direction for all of Methanex's business affairs. The application of Responsible Care begins with our Board of Directors, which has appointed a Responsible Care Committee, and extends throughout our organization.

The Board's Responsible Care Committee provides oversight of the RC and SR program performance and related matters at the policy level. The Responsible Care Committee considers RC ethics, sustainability, safety (personal and process), environment, crisis management and communications, physical security, product stewardship and social responsibility. The senior management team has overall responsibility for establishing Methanex's RC and SR policies and programs, and ensuring that they align with the Board's requirements and the Company's business strategy. These global programs are directed and managed by the Vice President, Responsible Care and the Vice President, Corporate Sustainability, who lead Methanex's global Responsible Care and global Corporate Sustainability functions, respectively.

Methanex evaluates the performance of its RC and SR management system through internal and third-party external audit and assessment programs. The internal program includes ongoing in-region self-audits as well as global audits conducted by Methanex subject matter experts. Third-party verification of the performance of Methanex's RC/SR program occurs through the CIAC RC verification process or the ACC RC 14001 certification process. The most recent CIAC RC re-verification was successfully completed in 2022.

Our overarching RC Ethic & Principles for Sustainability Purpose and Values statement sets out the Company's commitment to RC and sustainability. We also have an established Health, Safety, Security, Environment, Quality Policy that includes the

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requirement that we operate our facilities in a manner that protects the safety and health of all employees, contractors, customers and the general public. It requires that we have systems in place to monitor and comply with all local safety, health and environmental regulations as well as internal standards, periodically audit performance and compliance, measure performance against key performance indicators, report incidents with the potential to cause harm to people or the environment and demonstrate continual improvement.

We have also adopted a number of risk assessment tools that are formally applied as part of our normal business processes to identify and mitigate current and future health and occupational safety, environmental and process safety-related risks. When incidents do occur, we have a formal incident investigation process to allow for effective mitigation as well as application of lessons learned throughout our organization.

As a natural extension of our RC ethic, we align our employee engagement and communications, community involvement and social investment strategies with our core values and corporate strategy. In alignment with our Stakeholder Relations Policy, the Company is committed to being accountable and responsive to our stakeholders. We proactively respond to any community concerns about the manufacture, storage, handling, transportation and disposal of our products and promptly provide information concerning any potential health or environmental hazard to the appropriate authorities, employees and all stakeholders. Furthermore, the Company is committed to positively contributing to and having an open, honest and proactive relationship with the communities where we have a significant presence; to having effective processes to identify and respond to community concerns; and to informing the community of risks associated with our operations.

One of the ways the Company maintains the highest standards of product care is by sharing methanol safe handling knowledge and best practices with key stakeholders involved in the methanol value chain including customers, logistics providers, emergency responders, industry associations and regulators.

We believe that Responsible Care helps us achieve safe and reliable operations, which in turn results in strong financial performance, effective and innovative minimization of environmental impacts and improved quality of life.

**ENVIRONMENTAL MATTERS**

The countries in which we operate and international and jurisdictional waters in which our vessels operate have laws, regulations, treaties and conventions in force to which we are subject, governing the environment and the management of natural resources as well as the handling, storage, transportation and disposal of hazardous or waste materials. We are also subject to laws and regulations governing emissions and the import, export, use, discharge, storage, disposal and transportation of toxic substances. The products we use and produce are subject to regulation under various health, safety and environmental laws. Non-compliance with these laws and regulations may give rise to compliance orders, fines, injunctions, civil liability and criminal sanctions.

Laws and regulations with respect to protecting the environment have become more stringent over time and may, in certain circumstances, impose absolute liability rendering a person liable for environmental damage without regard to negligence or fault on the part of such person. Such laws and regulations may also expose us to liability for the conduct of, or conditions caused by others or for our own acts even if we complied with applicable laws at the time such acts were performed. To date, environmental laws and regulations have not had a significant adverse effect on our capital expenditures, earnings or competitive position. However, operating petrochemical manufacturing plants and distributing methanol exposes us to risks in connection with compliance with such laws and we cannot provide assurance that we will not incur significant costs or liabilities in the future.

**Carbon and GHG Legislation** 

Carbon dioxide ("CO2") is a byproduct of the development and extraction of hydrocarbons, including natural gas used as a feedstock in methanol production. Carbon dioxide is also a by-product of the methanol production process. The amount of CO2 generated by the methanol production process depends on the production technology, feedstock, operating rate of the plant and any export of the by-product hydrogen. Carbon dioxide emissions are also generated when fuel is consumed during the global transport of methanol. The GHG Protocol Corporate Standard classifies a company's GHG emissions into three 'scopes'. Scope 1 emissions are direct emissions from owned or controlled sources. Scope 2 emissions are indirect emissions from the generation of purchased energy. Scope 3 emissions are all indirect emissions (not included in Scope 2) that occur in the value chain, including both upstream and downstream emissions.

We monitor and manage our GHG emissions intensity for Scope 1 and Scope 2 emissions, defined as the equivalent quantity of CO2 released per unit of production or transported tonne, relating to both methanol production and our Methanex owned marine operations. Plant efficiency, and thus CO2 emissions, is highly dependent on the design of the methanol plant, plant reliability

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and availability of natural gas among other factors, and accordingly CO2 emissions may vary from year to year depending on the mix of production assets and vessels in operation.

Under the Paris Agreement within the United Nations Framework Convention on Climate Change, many of the countries we operate in have agreed to put forth substantial efforts and commitments to reduce GHG emissions, and/or impose carbon taxes. We are currently subject to GHG regulations in New Zealand, Canada and Chile, while our production in the United States, Trinidad and Egypt is currently not subject to such regulations. These regulations result in additional costs to produce methanol. Many of our competitors produce methanol in countries with no imposed GHG regulations or carbon taxes and as such, further increases in regulations or carbon taxes in the countries in which we operate may negatively impact our competitive position within the methanol industry.

There are ongoing reviews and potential changes to government GHG regulations in countries where we have operations or conduct business, including potential carbon adjustment mechanisms that could impact the efficient management of our global supply chain.

We cannot provide assurance that GHG legislation changes, new legislation, or changes in carbon prices and initiatives related to climate change in these jurisdictions, or others, will not have an adverse impact on our results of operations and financial condition.

**INSURANCE**

The majority of our revenues are derived from the sale of methanol produced at our plants. Our business is subject to the normal hazards of methanol production operations that could result in damage to our plants. Under certain conditions, prolonged shutdowns of plants due to unforeseen equipment breakdowns, interruptions in the supply of natural gas, oxygen, or utilities, power failures, loss of port facilities or any other event, including any event of force majeure, could adversely affect our revenues and operating income. We maintain operational insurance, including business interruption and construction insurance, subject to certain deductibles, that we consider to be adequate under the circumstances. However, there can be no assurance that we will not incur losses beyond the limits or outside the coverage of such insurance. From time to time, various types of insurance for companies in the chemical and petrochemical industries have not been available on commercially acceptable terms or, in some cases, have been unavailable. There can be no assurance that in the future we will be able to maintain existing coverage, or that premiums will not increase substantially.

**COMPETITION**

Methanex is the largest producer and supplier of methanol, with approximately 12% of the global market demand in 2022, and is the only global supplier with a significant presence in all major markets in Asia, Europe, North America and South America. Methanex has established itself as a clear methanol industry leader. Similar to other global commodities, the methanol industry is highly competitive. A supplier's ability to withstand price competition and volatile market conditions will depend on several factors, with the most important being its position on the industry cost curve. This in turn depends on the relative cost and availability of natural gas or coal feedstock, and the efficiency of production facilities and distribution systems. Our methanol assets are competitively positioned on the industry cost curve. Furthermore, more than half of our natural gas supply is underpinned by medium to long-term contracts that feature a fixed base price of gas and a variable component that is linked to the price of methanol. This contractual structure allows Methanex to reduce its cost structure in periods of low methanol pricing, mitigating its exposure to fluctuations in methanol price. Some of our competitors are not dependent on a single product for revenues, and some have greater financial resources. However, given our ability to service our customers globally, the reliability and cost-effectiveness of our distribution system and the enhanced service we provide customers, we believe we are well positioned to compete in each of the major international methanol markets.

**EMPLOYEES**

As at December 31, 2022, we had 1,410 employees.

**RISK FACTORS**

The risks relating to our business are described under the heading *Risk Factors and Risk Management* in our 2022 MD&A, and are incorporated in this document by reference. Any of those risks, as well as risks and uncertainties currently not known to us, could adversely affect our business, financial condition, results of operations or the market price of our securities.

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**DIVIDENDS**

Dividends are payable to the holders of common shares of the Company ("Common Shares") if, as and when declared by our Board of Directors and in such amounts as the Board of Directors may, from time to time, determine. The Company's current dividend policy is designed to return cash to shareholders while allowing the Company to retain financial flexibility appropriate for the historically cyclical nature of the methanol industry. The following table sets forth the amount of quarterly cash dividends paid by the Company on its Common Shares in 2020, 2021 and 2022:

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| | | |
|:---|:---|:---|
| **Record Date** | **Payment Date** | **Dividend per Share** |
| December 17, 2022 | December 31, 2022 | $0.175 |
| September 16, 2022 | September 30, 2022 | $0.175 |
| June 16, 2022 | June 30, 2022 | $0.145 |
| March 17, 2022 | March 31, 2022 | $0.125 |
| December 17, 2021 | December 31, 2021 | $0.125 |
| September 16, 2021 | September 30, 2021 | $0.125 |
| June 16, 2021 | June 30, 2021 | $0.0375 |
| March 17, 2021 | March 31, 2021 | $0.0375 |
| December 17, 2020 | December 31, 2020 | $0.0375 |
| September 16, 2020 | September 30, 2020 | $0.0375 |
| June 16, 2020 | June 30, 2020 | $0.0375 |
| March 17, 2020 | March 31, 2020 | $0.36 |

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**CAPITAL STRUCTURE**

We are authorized to issue an unlimited number of Common Shares without nominal or par value and 25,000,000 preferred shares without nominal or par value ("Preferred Shares").

Holders of Common Shares are entitled to receive notice of and attend all annual and special meetings of shareholders and to one vote in respect of each Common Share held; receive dividends if, as and when declared by our Board of Directors; and participate in any distribution of the assets of the Company in the event of liquidation, dissolution or winding up.

Preferred Shares may be issued in one or more series and the Board of Directors may fix the designation, rights, restrictions, conditions and limitations attached to the Preferred Shares of each such series. Currently, there are no Preferred Shares outstanding.

Our bylaws provide that at any meeting of our shareholders a quorum shall be two persons present in person, or represented by proxy, holding Common Shares representing not less than 25% of the votes entitled to be cast at the meeting. NASDAQ Global Select Market listing standards require a quorum for shareholder meetings to be not less than 33-1/3% of a company's outstanding voting shares. As a foreign private issuer and because our quorum requirements are consistent with practices in Canada, we are exempt from the quorum requirement under the NASDAQ Global Select Market rules.

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**RATINGS**

The following information relating to the Company's credit ratings is provided as it relates to the Company's financing costs, liquidity and operations. Credit ratings affect the Company's cost and ability to obtain short-term and long-term financing and to engage in certain business activities on a cost-effective basis. A negative change in the Company's current rating score and/or rating outlook could adversely affect the Company's future cost of financing and its access to sources of liquidity and capital. In addition, changes in credit ratings may affect the Company's ability to, and the associated costs of (i) entering into ordinary course derivative or hedging transactions, and (ii) entering into and maintaining ordinary course contracts with customers and suppliers on acceptable terms.

The following table sets forth the ratings assigned to the Company by S&P Global Ratings ("S&P"), Moody's Investors Service, Inc. ("Moody's") and Fitch Ratings, Inc. ("Fitch").

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| | | | |
|:---|:---|:---|:---|
| | **S&P**<sup>(1)</sup> | **Moody's**<sup>(2)</sup> | **Fitch**<sup>(3)</sup> |
| **Issuer Credit Rating** | **BB** | **n/a**<sup>(2)</sup> | **BB+** |
| **Unsecured Notes** | **BB** | **Ba1** | **BB+** |
| **Ratings Outlook** | **Positive** | **Stable** | **Stable** |

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(1)&nbsp;&nbsp;&nbsp;&nbsp;S&P long-term debt ratings are on a rating scale that ranges from AAA to D, which represents the range from highest to lowest quality. According to the S&P rating system, issuers and debt securities rated BB are less vulnerable in the near term relative to other lower-rated obligations, however, they face major ongoing uncertainties in periods of adverse business, financial or economic conditions. The ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.

(2)&nbsp;&nbsp;&nbsp;&nbsp;Moody's long-term debt ratings are on a rating scale that ranges from Aaa to C, which represents the range from highest to lowest quality. According to the Moody's rating system, debt securities rated Ba are judged to be speculative and are subject to substantial credit risk. Moody's applies numerical modifiers 1, 2 and 3 in each major rating category from Aa through Caa in its corporate bond rating system. The modifier 1 indicates that the issue ranks in the higher end of its major rating category, the modifier 2 indicates a mid-range ranking and the modifier 3 indicates that the issue ranks in the lower end of its major rating category. Moody's rates the Company's debt securities and does not provide an Issuer Credit Rating.

(3) &nbsp;&nbsp;&nbsp;&nbsp;Fitch long-term debt ratings are on a rating scale that ranges from AAA to D, which represents the range from highest to lowest quality. According to the Fitch rating system, issuers and debt securities rated BB indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists that supports the servicing of financial commitments. The ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.

The rating agencies regularly evaluate the Company, and their ratings of the Company are based on a number of factors, including the Company's financial strength and factors not entirely within the Company's control, including conditions affecting the methanol industry generally and the wider state of the economy.

The foregoing ratings should not be construed as a recommendation to buy, sell or hold any securities, as such ratings do not comment as to market price or suitability for a particular investor. There is no assurance that any rating will remain in effect for any given period of time or that any rating will not be revised or withdrawn entirely by a rating agency in the future if, in its judgment, circumstances so warrant. If any such rating is so revised or withdrawn, we are under no obligation to update this AIF.

During the last two years, the Company has paid each of the rating agencies its customary fees in connection with the provision of the above ratings.

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**MARKET FOR SECURITIES**

Our Common Shares are listed on the Toronto Stock Exchange in Canada (trading symbol: MX) and on the NASDAQ Global Select Market in the U.S. (trading symbol: MEOH). The following table sets out the market price ranges and trading volumes of our Common Shares on the Toronto Stock Exchange as well as on other Canadian and US equity marketplaces, including exchanges and alternative trading systems, for each month of our most recently completed financial year (January 1, 2022, through December 31, 2022).

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **2022 Trading Volumes**<sup>(1)</sup> | **2022 Trading Volumes**<sup>(1)</sup> | **2022 Trading Volumes**<sup>(1)</sup> | **2022 Trading Volumes**<sup>(1)</sup> | **2022 Trading Volumes**<sup>(1)</sup> | **2022 Trading Volumes**<sup>(1)</sup> | **2022 Trading Volumes**<sup>(1)</sup> |
| **Trading Symbol: MX** | **Trading Symbol: MX** | **Trading Symbol: MX** | **Trading Symbol: MX** | **Trading Symbol: MX** | **Trading Symbol: MEOH** | **Total Volume** |
| **The Toronto Stock Exchange** | **The Toronto Stock Exchange** | **The Toronto Stock Exchange** | **The Toronto Stock Exchange** | **Other Canadian Trading** | **NASDAQ Global Select Market and Other <br>US Trading** | **Total Volume** |
| Month | High<br>(CDN$) | Low<br>(CDN$) | Volume | Volume | Volume | **Total Volume** |
| January | 59.89 | 50.79 | 3521946 | 2141146 | 9476078 | 15139170 |
| February | 66.40 | 57.43 | 2917249 | 1784650 | 8857024 | 13558923 |
| March | 71.17 | 61.28 | 4334878 | 2375224 | 10583617 | 17293719 |
| April | 71.63 | 60.82 | 3707676 | 2410836 | 8957841 | 15076353 |
| May | 70.15 | 59.10 | 6291030 | 3130320 | 9922505 | 19343855 |
| June | 68.25 | 47.94 | 7000447 | 3354855 | 12018315 | 22373617 |
| July | 51.31 | 43.58 | 5388034 | 2449038 | 11403960 | 19241032 |
| August | 53.83 | 45.22 | 3671827 | 2045268 | 7935391 | 13652486 |
| September | 48.97 | 39.00 | 4819295 | 2315529 | 9890820 | 17025644 |
| October | 49.33 | 44.11 | 4457526 | 2369577 | 10248697 | 17075800 |
| November | 55.11 | 47.17 | 4250136 | 1994500 | 7607913 | 13825549 |
| December | 53.18 | 48.45 | 3379410 | 1677371 | 5234882 | 10291663 |

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(1) Source: Bloomberg

**NORMAL COURSE ISSUER BID**

On April 27, 2022, the Company announced an amendment to its existing normal course issuer bid originally announced on September 16, 2021 (the "2021 Bid") which increased the number of Common Shares that may be purchased from 3,810,464 to 6,094,171, representing 10% of the public float as of September 16, 2021. Under the 2021 Bid, which commenced on September 24, 2021 and completed on July 26, 2022, the Company repurchased for cancellation 3,810,464 Common Shares through the facilities of the NASDAQ Global Select Market and alternative trading systems in the United States at a volume weighted average price of US$47.83 and 2,283,707 Common Shares through the facilities of the TSX at a volume weighted average price of CAD$56.14.

On September 15, 2022, the Company announced a normal course issuer bid (the "2022 Bid") authorizing the Company to purchase up to 3,506,405 Common Shares, representing 5% of the Common Shares issued and outstanding as of September 15, 2022. The 2022 Bid commenced on September 26, 2022, with purchases being made on the open market through the facilities of the TSX. To December 31, 2022, the Company repurchased 892,773 Common Shares under the 2022 Bid for CAD$44.3 million. The 2022 Bid expires on September 25, 2023.

**DIRECTORS AND EXECUTIVE OFFICERS**

As at December 31, 2022, the directors and executive officers of the Company owned, controlled or directed, directly or indirectly, 447,071 Common Shares, representing approximately 0.6% of the outstanding Common Shares as at December 31, 2022.

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The following tables set forth the names and places of residence of the current directors and executive officers of the Company, the offices held by them in the Company, their current principal occupations, their principal occupations during the last five years and, in the case of the directors, the month and year in which they became directors:

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| | | | |
|:---|:---|:---|:---|
| **Name and<br>Municipality of Residence** | **Office** | **Principal Occupations and<br>Positions During the Last Five Years** | **Director** <br>**Since**<sup>(14)</sup> |
| ARNELL, DOUG<br>West Vancouver<br>British Columbia<br>Canada | Director and Chair of the Board | Chief Executive Officer of Cedar LNG LLC<sup>(5)</sup> since June 2021 and President and Chief Executive Officer of Helm Energy Advisors Inc.<sup>(6)</sup> since March 2015. | October 2016 |
| BERTRAM, JIM<sup>(1)(3)</sup><br>Calgary, Alberta<br>Canada | Director | Corporate Director. | October 2018 |
| DOBSON, PAUL<sup>(1)(4)</sup><br>Naples, Florida<br>USA | Director | Senior Vice President and Chief Financial Officer of Ballard Power Systems<sup>(7)</sup> since March 2021. Prior thereto Acting President and Chief Executive Officer of Hydro One Limited<sup>(8)</sup> from July 2018 to May 2019; prior thereto Chief Financial Officer of Hydro One Limited from May 2018; prior thereto Chief Financial Officer of Direct Energy Ltd.<sup>(9)</sup> from January 2016 to February 2018. | April 2019 |
| HOWE, MAUREEN<sup>(1)(2)</sup><br>Vancouver, British Columbia<br>Canada | Director | Corporate Director. | June 2018 |
| KOSTELNIK, ROBERT<sup>(3)(4)</sup><br>Fulshear, Texas<br>USA | Director | Corporate Director. Principal of GlenRock Recovery Partners, LLC<sup>(10)</sup> since February 2012. | September 2008 |
| O'DONOGHUE, LESLIE<sup>(1)(4)</sup><br>Calgary, Alberta<br>Canada | Director | Corporate Director. Executive Vice President and Adviser to the Chief Executive Officer of Nutrien Ltd.<sup>(11)</sup> from June 2019 to December 2019; prior thereto Executive Vice President, Chief Strategy and Business Development Officer of Nutrien Ltd. from January 2018 to June 2019. | April 2020 |
| RODGERS, KEVIN<sup>(2)(3)</sup><br>London<br>UK | Director | Corporate Director. | July 2019 |
| SUMNER, RICH<br>North Vancouver<br>British Columbia<br>Canada | Director, President and Chief Executive Officer | President and Chief Executive Officer of the Company since January 2023. Prior thereto Senior Vice President, Global Marketing and Logistics of the Company since October 2021; prior thereto Regional President, Marketing and Logistics, Asia Pacific of the Company since February 2019; prior thereto Vice President, Marketing and Logistics, North America of the Company since March 2015. | January 2023 |
| WALKER, MARGARET<sup>(3)(4)</sup><br>Austin, Texas<br>USA | Director | Corporate Director. Owner of MLRW Group, LLC<sup>(12)</sup> since 2011. | April 2015 |
| WARMBOLD, BENITA<sup>(1)(2)</sup><br>Toronto, Ontario<br>Canada | Director | Corporate Director. | February 2016 |
| YANG, XIAOPING<sup>(2)(4)</sup><br>Henderson, Nevada<br>USA | Director | Corporate Director. President and Chair of BP China<sup>(13)</sup> from November 2016 to September 2020. | January 2022 |

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&nbsp;&nbsp;&nbsp;&nbsp;(1)Member of the Audit, Finance and Risk Committee.

&nbsp;&nbsp;&nbsp;&nbsp;(2)Member of the Corporate Governance Committee.

&nbsp;&nbsp;&nbsp;&nbsp;(3)Member of the Human Resources Committee.

&nbsp;&nbsp;&nbsp;&nbsp;(4)Member of the Responsible Care Committee.

&nbsp;&nbsp;&nbsp;&nbsp;(5)Cedar LNG LLC is developing an LNG export terminal in Northeastern British Columbia.

&nbsp;&nbsp;&nbsp;&nbsp;(6)Helm Energy Advisors, Inc. is a private company which provides advisory services to the global energy sector.

&nbsp;&nbsp;&nbsp;&nbsp;(7)Ballard Power Systems is a global provider of innovative clean energy and fuel cell solutions.

&nbsp;&nbsp;&nbsp;&nbsp;(8)Hydro One Limited is a major transmission and distribution provider in Ontario, Canada.

&nbsp;&nbsp;&nbsp;&nbsp;(9)Direct Energy Ltd. is a North American retailer of energy and energy services.

&nbsp;&nbsp;&nbsp;&nbsp;(10)GlenRock Recovery Partners, LLC is a company that facilitates the sale of non-fungible hydrocarbons in the United States.

&nbsp;&nbsp;&nbsp;&nbsp;(11)Nutrien Ltd. is a Canadian fertilizer company, and is the world's largest provider of crop inputs, services and solutions.

&nbsp;&nbsp;&nbsp;&nbsp;(12)MLRW Group Inc. is a consulting firm focusing on working with companies to improve capital investment outcomes and to improve overall safety performance.

&nbsp;&nbsp;&nbsp;&nbsp;(13)BP is a multinational energy company.

&nbsp;&nbsp;&nbsp;&nbsp;(14)The directors of the Company are elected each year at the Annual General Meeting of the Company and hold office until the close of the next Annual General Meeting or until their successors are elected or appointed.

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| | | |
|:---|:---|:---|
| **Name and<br>Municipality of Residence** | **Office** | **Principal Occupations and<br>Positions During the Last Five Years** |
| ALLARD, MARK<br>West Vancouver, British Columbia<br>Canada | Senior Vice President, Low Carbon Solutions | Senior Vice President, Low Carbon Solutions of the Company since January 2023; prior thereto Vice President, North America of the Company since January 2019; prior thereto Vice President, Corporate Development of the Company since November 2012. |
| BOYD, BRAD<br>West Vancouver, British Columbia<br>Canada | Senior Vice President, <br>Corporate Resources | Senior Vice President, Corporate Resources of the Company since January 2018. |
| DELBARRE, KARINE<br>West Vancouver, British Columbia<br>Canada | Senior Vice President, Global Marketing and Logistics | Senior Vice President, Global Marketing and Logistics of the Company since January 2023; prior thereto Vice President, Marketing and Logistics, North America of the Company since February 2019; prior thereto Director, Operations of the Company from April 2014. |
| MALONEY, Kevin<br>West Vancouver, British Columbia<br>Canada | Senior Vice President, Corporate Development | Senior Vice President, Corporate Development of the Company since January 2023; prior thereto Vice President, Corporate Development of the Company since April 2018; prior thereto Managing Director, New Zealand of the Company since April 2015. |
| PARRA, GUSTAVO<br>Santiago<br>Chile | Senior Vice President,<br>Manufacturing | Senior Vice President, Manufacturing of the Company since January 2023; prior thereto Vice President, Manufacturing Strategy and Planning of the Company since September 2019; prior thereto.Managing Director and President, Trinidad of the Company since January 2017. |
| PRICE, KEVIN<br>Vancouver, British Columbia<br>Canada | Senior Vice President, General Counsel & Corporate Secretary | Senior Vice President, General Counsel and Corporate Secretary of the Company since January 2023; prior thereto General Counsel and Corporate Secretary of the Company since March 2016. |
| RICHARDSON, DEAN<br>Vancouver, British Columbia<br>Canada | Senior Vice President, Finance and Chief Financial Officer | Senior Vice President, Finance and Chief Financial Officer of the Company since January 2023; prior thereto Vice President, Corporate Finance of the Company since January 2022; prior thereto Managing Director, New Zealand of the Company since April 2018; prior thereto Vice President, Treasury and Investor Relations of the Company since August 2017. |

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**INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS**

Since the start of our most recently completed financial year, and for the three most recently completed financial years, no director or executive officer of the Company, and no person or company that beneficially owns, controls or directs, directly or indirectly, more than 10% of the Company's voting securities, or any associate or affiliate of such persons, has had any material interest in any transaction involving the Company.

**EXPERTS**

Our Independent Registered Public Accounting Firm is KPMG LLP ("KPMG"), who prepared the Report of the Independent Registered Public Accounting Firm dated March 10, 2023 with respect to the Company's consolidated financial statements as at December 31, 2022 and 2021, and for the years ended December 31, 2022 and 2021, and on the effectiveness of the Company's internal control over financial reporting as at December 31, 2022. KPMG has confirmed that they are independent with respect to the Company, in compliance with the Chartered Professional Accountants of British Columbia Code of Professional Conduct and in compliance with Public Company Accounting Oversight Board (United States) Rule 3520, *Auditor Independence*, and the independence requirements of the U.S. Securities and Exchange Commission.

**LEGAL PROCEEDINGS**

The Board of Inland Revenue of Trinidad and Tobago has audited and issued assessments against our 63.1% owned joint venture, Atlas, in respect of the 2005 to 2016 financial years. All subsequent tax years remain open to assessment. The assessments relate to the pricing arrangements of certain long-term fixed-price sales contracts with affiliates that commenced in 2005 and continued with affiliates through 2014 and with an unrelated third party through 2019. The long-term fixed-price sales contracts with affiliates were established as part of the formation of Atlas and management believes these were reflective of market considerations at that time.

During the periods under assessment and continuing through 2014, approximately 50% of Atlas-produced methanol was sold under these fixed-price contracts. From late 2014 through 2019 fixed-prices sales to an unrelated third party represented approximately 10% of Atlas-produced methanol. Atlas had partial relief from corporation income tax until late July 2014.

The Company believes it is impractical to disclose a reasonable estimate of the potential contingent liability due to the wide range of assumptions and interpretations implicit in the assessments.

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The Company has lodged objections to the assessments. No deposits have been required to lodge objections. Although there can be no assurance that these tax assessments will not have a material adverse impact, based on the merits of the case and advice from legal counsel, we believe our position should be sustained, that Atlas has filed its tax returns and paid applicable taxes in compliance with Trinidadian tax law, and as such has not accrued for any amounts relating to these assessments. Contingencies inherently involve the exercise of significant judgment, and as such the outcomes of these assessments and the financial impact to the Company could be material.

We anticipate the resolution of this matter through the court systems to be lengthy and, at this time, cannot predict a date as to when we expect this matter to be ultimately resolved.

**AUDIT COMMITTEE INFORMATION**

**The Audit Committee Charter**

The Audit, Finance and Risk Committee (the "Audit Committee") is appointed by the Board to assist the Board in fulfilling its oversight responsibility relating to: the integrity of the Company's financial statements; the financial reporting process; the systems of accounting and financial controls; the professional qualifications and independence of the Company's external auditors; the performance of the internal and external auditors; risk management processes; financing plans; and compliance by the Company with ethics policies and legal and regulatory requirements.

The Audit Committee's mandate sets out its responsibilities and duties. A copy of the Committee's mandate is attached here as Appendix "A".

**Composition of the Audit Committee**

The Audit Committee is comprised of five directors: Benita Warmbold (Chair), Jim Bertram, Paul Dobson, Maureen Howe and Leslie O'Donoghue. Each Audit Committee member is "independent" and "financially literate" as determined in accordance with Canadian National Instrument 52-110 - *Audit Committees*. Ms. Warmbold is currently designated as the "audit committee financial expert" (as that term is defined by U.S. securities regulations). The U.S. Securities and Exchange Commission has indicated that the designation of a director as an audit committee financial expert does not make such director an "expert" for any other purpose, impose any duties, obligations or liability on such director that are greater than those imposed on members of the Audit Committee and Board who do not carry this designation or affect the duties, obligations or liability of any other member of the Audit Committee or the Board.

**Relevant Education and Experience**

The following is a brief summary of the education and experience of each member of the Audit Committee that is relevant to the performance of his or her responsibilities as a member of the Audit Committee, including any education or experience that has provided the member with an understanding of the accounting principles we use to prepare our annual and interim financial statements.

***Ms. Benita Warmbold***

Ms. Warmbold is a corporate director and former Senior Managing Director and Chief Financial Officer of the Canada Pension Plan Investment Board ("CPPIB"). CPPIB is a professional investment management organization responsible for investing funds on behalf of the Canada Pension Plan. Over her nine years at CPPIB, Ms. Warmbold was responsible for finance, risk, tax, internal audit, legal, technology, data and investment operations. Prior to joining CPPIB, Ms. Warmbold held leadership positions with Northwater Capital Management Inc., Canada Development Investment Corporation and KPMG LLP.

Ms. Warmbold holds a bachelor of commerce (honours) degree from Queen's University, is a chartered professional accountant and is a Fellow of the Institute of Chartered Accountants of Ontario. She is also a Fellow of the Institute of Corporate Directors and has been granted their ICD.D designation.

Ms. Warmbold serves on the board of SNC-Lavalin Group Inc. and is Chair of their Audit Committee. She is also a director of the Bank of Nova Scotia and chairs their Audit and Conduct Review Committee and is their designated financial expert. She is also Chair of the Canadian Public Accountability Board.

Ms. Warmbold has served on the Audit Committee since February 2016 and has been Chair of the Audit Committee since April 2018.

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***Mr. Jim Bertram***

Mr. Bertram is a corporate director. From its inception in 1998 until his retirement in December 2014, he was Chief Executive Officer of Keyera Corporation ("Keyera"), a publicly traded midstream oil and gas operator.

Mr. Bertram holds a bachelor of commerce from the University of Calgary and has been granted the ICD.D designation by the Institute of Corporate Directors.

Mr. Bertram has served on the board of Keyera since 2003, and was appointed Chair of the Board in 2016. Mr. Bertram attends all Keyera Audit Committee meetings in his current capacity as Chair of the Board and also did so during his tenure as Chief Executive Officer.

Mr. Bertram also serves on the board of Emera Inc.

Mr. Bertram has served on the Audit Committee since October 2020.

***Mr. Paul Dobson***

Mr. Dobson has been Senior Vice President, Chief Financial Officer of Ballard Power Systems ("Ballard") since March 2021. Ballard is a global provider of innovative clean energy and fuel cell solutions. From July 2018 to May 2019 Mr. Dobson was Acting President and Chief Executive Officer of Hydro One Limited, a major transmission and distribution provider in Ontario, Canada, and prior to that was Chief Financial Officer of Hydro One Limited from March 2018. Mr. Dobson also served as Chief Financial Officer of Direct Energy Ltd. in Houston, Texas, and held senior leadership positions in finance across the Centrica Group, the parent company of Direct Energy.

Mr. Dobson holds a bachelor of arts in management accounting (honours) from the University of Waterloo as well as an MBA from the University of Western Ontario. He is a chartered professional accountant and a certified management accountant.

Mr. Dobson has served on the Audit Committee since April 2019.

***Ms. Maureen Howe***

Ms. Howe is a corporate director. From 1996 to 2008 she was Managing Director of RBC Capital Markets specializing in the area of energy infrastructure, which included power generation, transmission and distribution, oil and gas transmission and distribution, gas processing and alternative energy. Prior to joining RBC Capital Markets, Ms. Howe held finance positions in the utility industry, investment banking and portfolio management.

Ms. Howe holds a bachelor of commerce (honours) from the University of Manitoba and a Ph.D. in Finance from the University of British Columbia.

Ms. Howe is a director and Audit Committee chair of both Pembina Pipeline Corporation and Freehold Royalties Ltd.

Ms. Howe has served on the Audit Committee since June 2018.

***Ms. Leslie O'Donoghue***

Ms. O'Donoghue is a corporate director. She was Executive Vice President and Advisor to the Chief Executive Officer of Nutrien Ltd. ("Nutrien") from June 2019 until her retirement in December 2019. Nutrien is a Canadian fertilizer company and is the wold's largest provider of crop inputs, services and solutions. Ms. O'Donoghue was the Executive Vice President, Chief Strategy and Business Development Officer of Nutrien from January 2018 to June 2019, and prior to this she was Executive Vice President, Corporate Development and Strategy and Chief Risk Officer of Agrium Inc. (Nutrien's predecessor company) from 2012 to 2017.

Through Ms. O'Donoghue's experience at Nutrien and from serving on other audit committees, she has gained an understanding of accounting and financial reporting, including internal controls and procedures for financial reporting.

Ms. O'Donoghue holds a Bachelor of Arts (Economics) degree from the University of Calgary and a LLB, from Queen's University.

Ms. O'Donoghue is a director of Pembina Pipeline Corporation and serves on their Audit Committee. She is also a director of Dye & Durham.

------

Ms. O'Donoghue has served on the Audit Committee since April 2021.

**Pre-Approval Policies and Procedures**

The Audit Committee annually reviews and approves the terms and scope of the external auditors' engagement. The Audit Committee oversees the Audit and Non-Audit Pre-Approval Policy, which sets forth the procedures and the conditions by which permissible non-audit services proposed to be performed by KPMG LLP are pre-approved in order to mitigate the risk of non-audit services impacting the auditor's independence. The Audit Committee has delegated to the Chair of the Audit Committee pre-approval authority for any services not previously approved by the Audit Committee. All such services approved by the Chair of the Audit Committee are subsequently reviewed by the Audit Committee.

All non-audit service engagements, regardless of the cost estimate, must be coordinated and approved by the Chief Financial Officer of the Company to further ensure that adherence to this policy is monitored.

**Audit and Non-Audit Fees Billed by the Independent Auditors**

KPMG LLP's global fees relating to the years ended December 31, 2022 and December 31, 2021 are as follows:

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| | | |
|:---|:---|:---|
| **US$000s** | **2022** | **2021** |
| Audit Fees | **2264** | **2055** |
| Audit-Related Fees | **168** | **67** |
| Tax Fees | **66** | **14** |
| All Other Fees | **—** | **—** |
| **Total** | **2498** | **2136** |

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Each fee category is described below.

***Audit Fees***

Audit fees for professional services rendered by the external auditors for the audit of the Company's consolidated financial statements; statutory audits of the financial statements of the Company's subsidiaries; quarterly reviews of the Company's financial statements; consultations as to the accounting or disclosure treatment of transactions reflected in the financial statements; and services associated with registration statements, prospectuses, periodic reports and other documents filed with securities regulators.

Audit fees for professional services rendered by the external auditors for the audit of the Company's consolidated financial statements were in respect of an "integrated audit" performed by KPMG LLP globally. The integrated audit encompasses an opinion on the fairness of presentation of the Company's financial statements as well as an opinion on the effectiveness of the Company's internal controls over financial reporting.

***Audit-Related Fees***

Audit-related fees for professional services rendered by the auditors for financial audits of employee benefit plans; procedures and audit or attest services not required by statute or regulation; and financial statement preparation services relating to the statutory audits of certain of the Company's subsidiaries, the fees for which represented less than 5% of total audit-related fees for fiscal 2022.

***Tax Fees***

Tax fees for professional services rendered for tax compliance, including the review of tax returns; assistance in completing routine tax schedules and calculations; review of transfer pricing and indirect tax items.

***Other Fees***

There were no other fees in 2022 and 2021.

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**TRANSFER AGENT AND REGISTRAR**

Our principal transfer agent for our Common Shares is TSX Trust Company at its offices in Vancouver, British Columbia. Our co-transfer agent in the United States for our Common Shares is American Stock Transfer & Trust Company, LLC at its offices in New Jersey.

**MATERIAL CONTRACTS**

Other than those contracts entered into during the normal course of business, the only material contract that was entered into before December 31, 2022 and after January 1, 2002, that is still in effect, and which is required to be filed with Canadian securities regulatory authorities pursuant to applicable securities laws, is the amended and restated credit agreement (2021) dated for reference June 16, 2021, between the Company, as borrower, Royal Bank of Canada, as agent bank, and the financial institutions party thereto, as lenders (the "Credit Agreement"). The Credit Agreement is described above in "Three-Year History - 2021".

**CONTROLS AND PROCEDURES**

Our disclosure controls and procedures are described under the heading *Controls and Procedures* in our 2022 MD&A and are incorporated in this AIF by reference.

**CODE OF ETHICS**

We have a written code of ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. A copy of our code, entitled "Code of Business Conduct" can be found on our website at <u>www.methanex.com</u> or upon request from the Corporate Secretary at the address below under the heading *Additional Information*.

**ADDITIONAL INFORMATION**

Additional information relating to the Company, including directors' and officers' remuneration and indebtedness, principal holders of the Company's securities and securities authorized for issuance under equity compensation plans, is contained in our Information Circular dated March 9, 2023, relating to our Annual General Meeting that will be held on April 27, 2023.

Additional financial information about the Company is provided in the Company's financial statements for the year ended December 31, 2022, and in our 2022 MD&A.

Copies of the documents referred to above are available on the Canadian Securities Administrators' SEDAR website at <u>www.sedar.com</u> and may also be obtained upon request from:

Methanex Corporation

Kevin Price

Senior Vice President, General Counsel and Corporate Secretary

1800 Waterfront Centre

200 Burrard Street

Vancouver, British Columbia V6C 3M1

Telephone: 604 661 2600

Facsimile: 604 661 2602

Additional information relating to the Company may be found on the Canadian Securities Administrators' SEDAR website at <u>www.sedar.com</u>, on the United States Securities and Exchange Commission's EDGAR website at <u>www.sec.gov</u> and on our website at <u>www.methanex.com</u>.

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**APPENDIX "A"**

**METHANEX CORPORATION**

**AUDIT, FINANCE AND RISK COMMITTEE MANDATE**

A committee of the directors to be known as the "Audit, Finance and Risk Committee" (hereinafter referred to as the "Committee") is hereby established.

**A.PURPOSE**

The Committee is appointed by the Board of Directors (the "Board") to assist the Board in fulfilling its oversight responsibility relating to: the integrity of the Corporation's financial statements; the financial reporting process; the systems of accounting and financial controls; the professional qualifications and independence of the Corporation's external auditor; the performance of the external and internal auditors; risk management processes; financing plans; and compliance by the Corporation with ethics policies and legal and regulatory requirements.

The Committee's role is one of oversight. It is the responsibility of the Corporation's management to plan audits and to prepare consolidated financial statements in accordance with applicable generally accepted accounting principles ("GAAP"), and it is the responsibility of the Corporation's external auditor to audit these financial statements. Therefore, each member of the Committee, in exercising their business judgment, shall be entitled to rely on the integrity of those persons and organizations within and outside the Corporation from whom they receive information and on the accuracy of the financial and other information provided to the Committee by such persons or organizations. The Committee does not provide any expert or other special assurances as to the Corporation's financial statements or any expert or professional certification as to the work of the Corporation's external auditor.

**B.&nbsp;&nbsp;&nbsp;&nbsp;STRUCTURE**

1.&nbsp;&nbsp;&nbsp;&nbsp;The Committee shall be composed of a minimum of three directors.

2.&nbsp;&nbsp;&nbsp;&nbsp;The members of the Committee shall be appointed or reappointed at the organizational meeting of the Board concurrent with each Annual General Meeting of the shareholders of the Corporation. Each member of the Committee shall continue to be a Committee member until a successor is appointed, unless they resign or are removed by the Board or cease to be a director of the Corporation. Where a vacancy occurs at any time in the membership of the Committee, it may be filled by the Board and shall be filled by the Board if the membership of the Committee is less than three directors as a result of the vacancy.

3.&nbsp;&nbsp;&nbsp;&nbsp;Each member of the Committee shall meet the independence and financial literacy requirements of the Corporation's Corporate Governance Principles and the applicable rules and regulations of the stock exchanges on which the Corporation is listed, the U.S. Securities and Exchange Commission (the "SEC") and the Canadian Securities Administrators (collectively, the "Applicable Rules"), and at least one member of the Committee shall qualify as an "audit committee financial expert" in accordance with the rules of the SEC.

4.&nbsp;&nbsp;&nbsp;&nbsp;The Board shall appoint a Chair from among the Committee members and the Chair shall set the agendas for Committee meetings. If the Chair of the Committee is not present at any meeting of the Committee, the Chair of the meeting shall be chosen by the Committee from among the members present. The Chair presiding at any meeting of the Committee has a deciding vote in the case of deadlock. The Committee shall also appoint a Secretary who need not be a director.

**C.&nbsp;&nbsp;&nbsp;&nbsp;MEETINGS**

1. The Committee shall meet at least quarterly. The time and place of Committee meetings and the procedure at such meetings shall be determined from time to time by Committee members, provided that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.a quorum for meetings shall be a majority of the members of the Committee, present in person or by tele- or video-conference that permits all persons participating in the meeting to communicate with each other;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.notice of the time and place of every meeting shall be given in writing, by electronic transmission or otherwise, to each member of the Committee and the external auditor of the Corporation at least 24 hours prior to the time fixed for such meeting, provided, however, that a member may in any manner waive notice of a meeting, and attendance of a member at the meeting is a waiver of notice of the meeting, except where a member attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.the Committee shall, at least annually, meet with the Chief Financial Officer without other members of management present;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.each regular meeting of the Committee shall conclude with a session without any members of management present;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.the external auditor shall be entitled to attend each meeting at the Corporation's expense;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f.a meeting of the Committee may be called by the Secretary of the Committee on the direction of the Chair or any other member of the Committee, the Chief Executive Officer of the Corporation or the external auditor; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g.notwithstanding the provisions of this paragraph, the Committee has the right to request any officer or employee of the Corporation or the Corporation's outside counsel or external auditor to be present or not present at any part of the Committee meeting.

2.&nbsp;&nbsp;&nbsp;&nbsp;The Committee shall report to the Board following each meeting with respect to its activities and such recommendations as the Committee deems appropriate. The report may take the form of an oral report by the Chair or any other member of the Committee designated by the Committee to make such report.

3.&nbsp;&nbsp;&nbsp;&nbsp;The Committee shall maintain minutes or other records of its meetings and activities.

**D.&nbsp;&nbsp;&nbsp;&nbsp;RESPONSIBILITIES AND DUTIES**

The following functions shall be the common recurring responsibilities of the Committee. The Committee may carry out additional functions as may be appropriate in light of changing business, legislative and other conditions. The Committee shall also carry out any other responsibilities delegated to it by the Board from time to time.

The Committee, in carrying out its duties and discharging its oversight role, shall have the sole authority to retain independent legal, accounting or other experts as it determines necessary, including the authority to set and pay the fees payable to such experts at the Corporation's expense. The Board shall be kept apprised of both the selection of the experts and the experts' findings through the Committee's regular reports to the Board.

**Financial Statements and Disclosure**

1.&nbsp;&nbsp;&nbsp;&nbsp;Review and discuss with management and the external auditor, and recommend to the Board for approval prior to public disclosure, the Corporation's Annual Report, Annual Information Form, audited Consolidated Financial Statements and related Management's Discussion and Analysis, Management Information Circular and any reports on adequacy of internal controls.

2.&nbsp;&nbsp;&nbsp;&nbsp;Review and discuss with management, and recommend to the Board for approval prior to public disclosure, prospectuses and other offering documents.

3.&nbsp;&nbsp;&nbsp;&nbsp;Review and discuss with management and the external auditor, and approve prior to public disclosure, the Corporation's interim reports, including the unaudited Condensed Consolidated Interim Financial Statements and related Management's Discussion and Analysis.

4.&nbsp;&nbsp;&nbsp;&nbsp;Review and discuss with management and the external auditor, and approve prior to public disclosure, press releases on quarterly and year-end financial results and any other disclosure documents not identified above that are required to be filed with regulators and contain significant financial information respecting the Corporation.

5.&nbsp;&nbsp;&nbsp;&nbsp;Review and discuss with management and the external auditor significant accounting policies and critical accounting estimates that would have a significant effect on the Corporation's financial statements, and any changes to such policies. This review shall include a discussion with management and the external auditor concerning:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.any areas of management judgment and estimates that may have a significant effect on the financial statements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.the appropriateness, acceptability and quality of the Corporation's accounting policies; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.any material written communication between the external auditor and management.

6.&nbsp;&nbsp;&nbsp;&nbsp;Discuss with management the use of ''pro forma'' or ''non-GAAP information'' in the Corporation's disclosure documents.

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7.&nbsp;&nbsp;&nbsp;&nbsp;Discuss with management and the external auditor the effect of regulatory and accounting initiatives as well as the use of off-balance sheet arrangements on the Corporation's financial statements.

8.&nbsp;&nbsp;&nbsp;&nbsp;Discuss with the Corporation's General Counsel (and with external legal counsel if necessary) and other members of management, as applicable, any litigation, claim or other contingency (including tax assessments) that could have a material effect on the financial position or operating results of the Corporation, and the manner in which these matters have been disclosed in the financial statements.

**Financing Plans**

1.&nbsp;&nbsp;&nbsp;&nbsp;Review and discuss with management the financing plans and objectives of the Corporation.

**Risk Management and Internal Controls**

1.&nbsp;&nbsp;&nbsp;&nbsp;Review and discuss with management at least annually:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.the Corporation's risk management framework, including the Corporation's processes and controls to identify, monitor, evaluate and manage enterprise-wide risks and the Corporation's policies and practices relating to enterprise risk management. The Committee shall recommend to the Board for approval any changes considered advisable to such policies and practices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.the Corporation's financial and taxation risks, shipping risk and IT-related risks (including cybersecurity and data privacy) and steps management has taken to monitor, evaluate and manage such risks; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.the insurance coverage maintained by the Corporation.

2.&nbsp;&nbsp;&nbsp;&nbsp;Review such other risk management matters from time to time as the Committee may consider appropriate or the Board may specifically direct.

3.&nbsp;&nbsp;&nbsp;&nbsp;Review, at least quarterly, the results of management's evaluation of the adequacy and effectiveness of internal controls within the Corporation in connection with the certifications signed by the CEO and CFO. Management's evaluation shall include a review of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.policies and procedures to ensure completeness and accuracy of information disclosed in the quarterly and annual reports, prevent earnings management and detect material financial statement misstatements due to fraud and error; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.internal control recommendations of the external auditor and arising from the results of the internal audit procedures, including any special steps taken to address material control deficiencies and any fraud, whether or not material, that involves management or other employees who have a significant role in the Corporation's internal controls.

**External Auditors**

1.&nbsp;&nbsp;&nbsp;&nbsp;Review the selection, evaluation, reappointment or, where appropriate, replacement of the external auditor and recommend to the Board the nomination and remuneration of the external auditor to be appointed by the Corporation's shareholders.

2.&nbsp;&nbsp;&nbsp;&nbsp;Resolve any disagreements between management and the external auditor regarding financial reporting.

3.&nbsp;&nbsp;&nbsp;&nbsp;Receive reports directly from, and communicate directly with, the external auditor.

4.&nbsp;&nbsp;&nbsp;&nbsp;Review a formal written statement obtained at least annually from the external auditor describing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.the external auditor's internal quality control procedures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.any material issues raised by the most recent internal quality control review, peer review of the external auditor or any investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits of the Corporation carried out by the external auditor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.any steps taken to deal with any such issues; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.all relationships between the external auditor and the Corporation.

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As part of such review, the Committee shall discuss with the external auditor whether the external auditor's quality controls are adequate and whether any of the disclosed relationships or non-audit services may impact the objectivity and independence of the external auditor based on the independence requirements of the Applicable Rules. The Committee shall also conduct a comprehensive review of the external auditor at least every five years.

5.&nbsp;&nbsp;&nbsp;&nbsp;Review the external audit plan and enquire as to the extent the planned audit scope can be relied upon to detect weaknesses in internal control or fraud or other illegal acts. Any significant recommendations made by the external auditor for strengthening internal controls shall be reviewed.

6.&nbsp;&nbsp;&nbsp;&nbsp;Monitor the rotation of senior audit personnel who have primary responsibility for the audit work, as required by law.

7.&nbsp;&nbsp;&nbsp;&nbsp;Review and approve, in advance, the scope and related fees for all auditing services and non-audit services permitted by regulation that are to be provided by the external auditor in accordance with the Corporation's Audit and Non-Audit Services Pre-Approval Standard, which is to be annually reviewed and approved by the Committee.

8.&nbsp;&nbsp;&nbsp;&nbsp;Review the establishment of policies relating to the Corporation's hiring of present and former employees of the external auditor, if such individuals have participated in the audit of the Corporation, as required by law.

9.&nbsp;&nbsp;&nbsp;&nbsp;Prior to filing the Corporation's Condensed Consolidated Interim Financial Statements and the Consolidated Financial Statements, receive a report from the external auditor on the results of their review or audit.

10.&nbsp;&nbsp;&nbsp;&nbsp;Meet with (a) the external auditor without management present and discuss any issues related to performance of the audit work, any restrictions and any significant disagreement with management and (b) separately with management to discuss the same matters as those discussed with the external auditor.

**Internal Audit**

1.&nbsp;&nbsp;&nbsp;&nbsp;Review the scope of responsibilities of the Corporation's Internal Audit function, including its reporting relationships, activities, organizational structure and resources and whether there are any unjustified or inappropriate restrictions or limitations on the functioning of Internal Audit.

2.&nbsp;&nbsp;&nbsp;&nbsp;Discuss the appointment and performance of the head of the Corporation's Internal Audit function.

3.&nbsp;&nbsp;&nbsp;&nbsp;Review and approve the annual Internal Audit Plan and objectives.

4.&nbsp;&nbsp;&nbsp;&nbsp;Review the responses and actions taken by management to address any control weaknesses or deficiencies identified in internal audit reports issued to management.

5.&nbsp;&nbsp;&nbsp;&nbsp;Meet, without management present, with the Corporation's Internal Auditor and/or representatives of any external firm that executed the annual Internal Audit Plan. The Committee shall also meet, without management and the external auditor present, with the Corporation's Internal Auditor to discuss any matters that the Committee or the Internal Auditor believes should be discussed privately.

**Ethics and Compliance**

1.&nbsp;&nbsp;&nbsp;&nbsp;Review annually the Corporation's compliance with the Code of Business Conduct and make recommendations to the Board regarding any requests by directors or officers for waivers of the Code of Business Conduct.

2.&nbsp;&nbsp;&nbsp;&nbsp;Review the processes and procedures established by the Corporation for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters or non-compliance with the Code of Business Conduct, including procedures for the confidential, anonymous submission of such complaints from employees.

3.&nbsp;&nbsp;&nbsp;&nbsp;Discuss with management and the external auditor any correspondence with regulators or governmental agencies and any published reports that raise material issues regarding the Corporation's compliance policies or that could have a material effect on the Corporation's financial statements.

4.&nbsp;&nbsp;&nbsp;&nbsp;Review annually the Corporation's Corporate Disclosure Policy and recommend to the Board for approval any changes thereto.

5.&nbsp;&nbsp;&nbsp;&nbsp;Review and approve all related party transactions between the Corporation (or any of its subsidiaries) and its officers or directors (or any affiliates of such officers or directors), other than those disclosed in the Corporation's financial statements.

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**E.&nbsp;&nbsp;&nbsp;&nbsp;ANNUAL PERFORMANCE EVALUATION**

1.&nbsp;&nbsp;&nbsp;&nbsp;The Committee shall review and evaluate, at least annually, the performance of the Committee and its members, including the compliance of the Committee with its mandate.

2.&nbsp;&nbsp;&nbsp;&nbsp;The Committee shall annually review and assess the adequacy of its mandate and recommend to the Board for approval any improvements to the mandate that the Committee considers necessary or desirable.

## Exhibit 99.2

**Exhibit 99.2**

**Management's Discussion and Analysis** 

**Index** 

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| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;7 | Overview of the Business | &nbsp;&nbsp;&nbsp;40 | Critical Accounting Estimates |
| &nbsp;&nbsp;&nbsp;9 | Our Strategy | &nbsp;&nbsp;&nbsp;43 | Adoption of New Accounting Standards |
| &nbsp;&nbsp;&nbsp;12 | Financial Highlights | 43 | Anticipated Changes to International Financial Reporting Standards |
| &nbsp;&nbsp;&nbsp;13 | Production Summary | &nbsp;&nbsp;&nbsp;44 | Non-GAAP Measures |
| &nbsp;&nbsp;&nbsp;14 | How We Analyze Our Business | 46 | Quarterly Financial Data (Unaudited) |
| &nbsp;&nbsp;&nbsp;15 | Financial Results | &nbsp;&nbsp;&nbsp;47 | Selected Annual Information |
| &nbsp;&nbsp;&nbsp;22 | Liquidity and Capital Resources | 48 | Controls and Procedures |
| &nbsp;&nbsp;&nbsp;29 | Risk Factors and Risk Management | &nbsp;&nbsp;&nbsp;49 | Forward-Looking Statements |

---

This Management's Discussion and Analysis ("MD&A") is dated March 10, 2023, and should be read in conjunction with our consolidated financial statements and the accompanying notes for the year ended December 31, 2022. Except where otherwise noted, the financial information presented in this MD&A is prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (the "IASB"). We use the United States dollar as our reporting currency and, except where otherwise noted, all currency amounts are stated in United States dollars. In this MD&A, a reference to the "Company" refers to Methanex Corporation and a reference to "Methanex," "we," "our" and "us" refers to the Company and its subsidiaries or any one of them as the context requires, as well as their respective interests in joint ventures and partnerships.

Throughout this document we use non-GAAP measures and ratios that do not have any standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. Refer to the Non-GAAP Measures section on page 44 for a description of each non-GAAP measure and reconciliations to the most comparable GAAP measures.

Some of the historical price data and supply and demand statistics for methanol and certain other industry data contained in this MD&A are derived by the Company from industry consultants or from recognized industry reports regularly published by independent consulting and data compilation organizations in the methanol industry, including Chemical Market Analytics by OPIS, a Dow Jones company, Tecnon OrbiChem Ltd., Argus, ICIS, S&P Global Platts and Methanol Market Services Asia. Industry consultants and industry publications generally state that the information provided has been obtained from sources believed to be reliable. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon in these reports.

As at March 9, 2023, we had 68,701,783 common shares issued and outstanding and stock options exercisable for 1,561,567 additional common shares.

Additional information relating to Methanex, including our Annual Information Form, is available on our website at www.methanex.com, the Canadian Securities Administrators' SEDAR website at www.sedar.com and on the United States Securities and Exchange Commission's EDGAR website at www.sec.gov.

**OVERVIEW OF THE BUSINESS**

Methanol is a clear liquid commodity chemical that is predominantly produced from natural gas and is also produced from coal, particularly in China. Traditional chemical demand, which represents just over 50% of global methanol demand, is used to produce traditional chemical derivatives, including formaldehyde, acetic acid and a variety of other chemicals that form the basis of a wide variety of industrial and consumer products. Demand for energy-related applications, which represents over 30% of global methanol demand, includes several applications including methyl tertiary-butyl ether ("MTBE"), fuel applications (including vehicle fuel, marine fuel and other thermal applications), di-methyl ether and biodiesel. Demand into methanol-to-olefins ("MTO") represents over 15% of global methanol demand. MTO plants produce light olefins which have wide applications in packaging, textiles, plastic parts and automotive components.

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We are the world's largest producer and supplier of methanol to the major international markets in Asia Pacific, North America, Europe and South America. Our total annual operating capacity, including Methanex's interests in jointly owned plants, is currently 9.3 million tonnes and is located in the United States, New Zealand, Trinidad, Chile, Egypt, and Canada. In addition to the methanol produced at our sites, we purchase methanol produced by others under methanol offtake contracts and on the spot market. This gives us flexibility in managing our supply chain while continuing to meet customer needs and support our marketing efforts. We have marketing rights for 100% of the production from the jointly-owned plants in Trinidad and Egypt, which provides us with an additional 1.3 million tonnes per year of methanol offtake supply when the plants are operating at full capacity.

Refer to the *Production Summary* section on page 13 for more information.

**2022 Industry Overview & Outlook** 

Methanol is a global commodity and our earnings are significantly affected by fluctuations in the price of methanol, which is directly impacted by changes in methanol supply and demand. Based on the diversity of end products in which methanol is used, demand for methanol is driven by a number of factors, including: the strength of global and regional economies, industrial production levels, energy prices, pricing of end products, downstream capacity additions and government regulations and policies. Methanol industry supply is impacted by the cost of production, methanol industry operating rates and new methanol industry capacity additions.

**Demand**

We estimate that global methanol demand increased slightly to approximately 88 million tonnes in 2022. Traditional chemical demand decreased by approximately 1% year-over-year due to the slowdown in global economic growth and high energy costs. Demand into energy-related applications increased by approximately 2% year-over-year, driven by an increase in methyl tertiary-butyl (MTBE) and other fuel applications. Demand into methanol-to-olefins (MTO) increased by approximately 7% year-over-year driven by strong operating rates in the first half of the year, a new plant starting up in the third quarter, and the restart of an idle plant in November.

We believe that traditional chemical demand is influenced by the strength of global and regional economies and industrial production levels and that demand for energy-related applications will be influenced by energy prices, pricing of end products and government regulations and policies. The future operating rates and methanol consumption of MTO producers will depend on a number of factors, including pricing for their various final products, the degree of downstream integration of these units with other products, the impact of olefin industry feedstock costs, including naphtha, on relative competitiveness and plant maintenance schedules.

Ongoing regulatory changes as part of the global energy transition have led to a growing interest in methanol as a fuel due to its cleaner-burning attributes and potential to reduce greenhouse gas emissions.

There is growing interest in methanol as a marine fuel given its environmental benefits, wide availability, cost competitiveness and ease of use. When made from renewable sources, methanol can be carbon neutral on a life-cycle basis, providing a future-proof pathway to meet the decarbonization goals of the shipping industry. Approximately 60% of our long-term shipping fleet, or 18 vessels in total, have the capability to run on methanol. In 2022, many announcements were made by shipping companies for orders of dual-fueled vessels that can run on methanol. Based on existing dual fuel ships and orders to date, we expect that demand potential will grow from approximately 300,000 tonnes today to three million tonnes by 2027.

Methanol is also being used as a vehicle fuel in China. Methanol can be blended with gasoline in low quantities and used in existing vehicles and can be used in high-proportion blends such as M85 in flex-fuel vehicles or M100 in dedicated methanol-fueled vehicles. There is significant interest in high-level methanol fuel blends for M100 taxis and trucks (able to run on 100% methanol fuel) in China. There are approximately 27,000 taxis and 3,000 heavy-duty trucks in China, running on M100 fuel, representing approximately 800,000 tonnes of annual methanol demand. Other countries are in the assessment or near-commercial stage for using methanol as a vehicle fuel.

In China, stricter air quality emissions regulations in several provinces are leading to a phase-out of coal-fueled commercial boilers, kilns, and cooking stoves in favour of cleaner fuels, creating a growing market for methanol as an alternative fuel. We estimate that this growing demand segment already represents approximately five million tonnes of methanol demand. We continue to support various pilot projects and the development of operational and safety standards to support the commercialization of methanol as a thermal fuel for industrial boilers, kilns and cooking stoves.

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**Supply**

Methanol is predominantly produced from natural gas and is also produced from coal, particularly in China. The cost of production is influenced by the availability and cost of raw materials, including coal and natural gas, freight costs, other operating and maintenance costs and government policies. An increase in economically competitive methanol supply, all else equal, can displace supply from higher cost producers and have a negative impact on methanol price.

Approximately two million tonnes of new annualized capacity, outside of China was introduced in 2022, including Sabalan in Iran (1.8 million tonnes) and Liberty One Methanol in the US (0.2 million tonnes). In China, we estimate that approximately three million tonnes of new production capacity was added in 2022, including coal-based Jiutai Line No. Two (1.8 million tonnes) and several small coke-oven-gas-based plants. The methanol industry ran at slightly lower operating rates in 2022 due to various planned and unplanned outages, limited feedstock availability in some regions and high energy prices making production uneconomic in certain regions.

In North America, we are building a 1.8 million tonne plant, the Geismar 3 project, which will be our third plant in Louisiana, with first methanol production expected in the fourth quarter of 2023. In Iran, the 1.8 million tonne Dena plant is under construction which is scheduled to be completed in the next few years although actual timing is uncertain. The completion of major projects as well as ongoing plant operating rates in Iran continue to be challenged due to the impact of ongoing sanctions, plant technical issues as well as ongoing natural gas constraints (particularly in the winter months). In Malaysia, a 1.8 million tonne plant is under construction with a scheduled start up in 2024. In China, there are planned capacity additions over the near-to-medium term which we expect will be somewhat offset by the closure of some small-scale, inefficient and older plants. Methanol production from new capacity built in China will likely be consumed in that country.

**Price**

The methanol business is a highly competitive commodity industry and future methanol prices will ultimately depend on the strength of global demand and methanol industry supply. Methanol demand and industry supply are driven by several factors as described above. Methanol prices have historically been, and are expected to continue to be, characterized by cyclicality.

Methanex's average realized price in 2022 was $397 per tonne compared to $393 per tonne in 2021.

**OUR STRATEGY**

Our primary objective is to create value through our leadership in the global production, marketing and delivery of methanol to customers. To achieve this objective we have a simple, clearly defined strategy: leadership, low cost and operational excellence. We pride ourselves in being a leader in Responsible Care (an operating ethic and set of principles for sustainability developed by the Chemistry Industry Association of Canada and recognized by the United Nations) to have a strategic focus on managing risks and proactive plans relating to personnel health and safety, environmental protection, community involvement, social responsibility, sustainability, security and emergency preparedness. Our brand differentiator "*The Power of Agility*<sup>®</sup>" defines our culture of flexibility, responsiveness and creativity that allows us to capitalize on opportunities quickly as they arise, and swiftly respond to customer needs.

**Leadership** 

Leadership is a key element of our strategy. We are focused on creating value through our position as the leading producer and supplier in the global methanol industry, improving our ability to cost-effectively deliver methanol to customers and supporting both traditional and energy-related global methanol demand growth.

We are the leading producer and supplier of methanol to the major international markets in Asia Pacific, North America, Europe and South America. Our 2022 sales volume of 10.8 million tonnes of methanol represented approximately 12% of global methanol demand. This scale allows us the flexibility to meet customer needs across international markets. Our leadership position has also enabled us to play an important role in the methanol industry, which includes publishing Methanex reference prices that are used in each major market as the basis of pricing for our customer contracts.

The geographically diverse locations of our production sites allow us to deliver methanol cost-effectively to customers in all major global markets. We continue to invest in global distribution and supply infrastructure, which includes the world's largest methanol ocean tanker fleet and terminal capacity in all major international markets, enabling us to enhance value to customers by providing reliable and secure supply.

Another key component of our global leadership strategy is our ability to supplement methanol production with methanol purchased from third parties to give us flexibility in our supply chain to meet customer commitments. We purchase methanol

------

through a combination of methanol offtake contracts and spot purchases. We manage the cost of purchased methanol by taking advantage of our global supply chain infrastructure, which allows us to purchase methanol in the most cost-effective region while still maintaining overall security of supply.

The Asia Pacific region continues to lead global methanol demand growth. We have storage capacity in China, South Korea, Japan and Singapore that allows us to cost-effectively manage supply to customers and we have offices in Shanghai, Beijing, Hong Kong, Tokyo, and Seoul to ensure customer service and industry positioning in the region. This enables us to participate in and improve our knowledge of the rapidly evolving and growing methanol markets in China and other Asian countries including the use of methanol as a clean-burning fuel.

**Low Cost** 

A low cost structure is an important competitive advantage in a commodity industry and is a key element of our strategy. Our approach to major business decisions is guided by a drive to improve our cost structure and create value for shareholders. The most significant components of total costs are natural gas for feedstock and distribution costs associated with delivering methanol to customers.

We manage our natural gas costs in two ways: through gas contracts linked to methanol price and through fixed price contracts. Our production facilities outside North America are largely underpinned by natural gas purchase agreements where the natural gas price is linked to methanol prices. This pricing relationship enables these facilities to be competitive throughout the methanol price cycle. In North America, we have fixed price contracts and hedges in place targeting minimum operating rate requirements of approximately 70% in the near-term, declining over time. For 2023, approximately 85% of our North American gas requirements are contracted at fixed prices. We purchase our remaining North American gas requirements through the spot market.

Our production facilities are well located to supply global methanol markets and we take a long-term approach to contracting shipping capacity to meet customer needs. Nonetheless, the cost to distribute methanol from production locations to customers is a significant component of total operating costs. These include costs for ocean shipping, in-market storage facilities and in-market distribution. We focus on identifying initiatives to reduce these costs, including optimizing the use of our shipping fleet, third-party backhaul arrangements and taking advantage of prevailing conditions in the shipping market by varying the type and term of ocean vessel contracts. Tanker shipping rates rose significantly in 2022 and our approach to managing distribution resulted in a lower cost structure compared to being fully exposed to spot shipping rates. We also look for opportunities to leverage our global asset position by entering into geographic product exchanges with other methanol producers to reduce distribution and transportation costs.

**Operational Excellence** 

We maintain a focus on operational excellence in all aspects of our business. This includes excellence in manufacturing and supply chain processes, marketing and sales, Responsible Care and financial management.

To differentiate ourselves from competitors, we strive to be the best operator and the preferred supplier to customers. We believe that reliability of supply is critical to the success of our customers' businesses and our goal is to deliver methanol reliably and cost-effectively. Our commitment to Responsible Care drives our adherence to the highest principles of health, safety, environmental stewardship, and social responsibility. We believe this commitment helps us achieve an excellent overall environmental and safety record and aligns our community involvement and social investments with our core values.

Product stewardship is a vital component of a Responsible Care culture and guides our actions through the complete life cycle of our product. We aim for the highest safety standards to minimize risk to employees, customers and suppliers as well as to the environment and the communities in which we do business. We promote the proper use and safe handling of methanol at all times through a variety of internal and external health, safety and environmental initiatives, and we work with industry colleagues to improve safety standards. We readily share technical and safety expertise with key stakeholders (including customers, end-users, suppliers, and logistics providers) through direct communication and active participation in local and international industry associations, seminars and conferences and online education initiatives.

In 2022, our strategy of operational excellence in financial management supported the construction of the Geismar 3 project to be funded from our cash balance, while continuing to return cash to shareholders through initiating a new share repurchase program and a regular dividend. As at December 31, 2022, we had strong liquidity with $858 million in cash and $600 million of undrawn back-up liquidity through our revolving and construction credit facilities, and no significant debt maturities until late 2024. We actively manage our liquidity and capital structure in light of changes to economic conditions, the underlying risks inherent in our operations and the capital requirements of our business.

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**Environmental, Social & Governance ("ESG")**

We have embedded sustainability into our long-term strategy alongside our commitment to Responsible Care. We conducted an internal materiality assessment to prioritize the sustainability topics that are most relevant to our business and stakeholders. In a sustainability context, material topics are ESG topics that can significantly impact our business success and are of interest to our key stakeholders. These material topics are greenhouse gas ("GHG") emissions, transition to a low-carbon economy, employee and contractor safety, process safety, diversity and inclusion, and the societal benefits of methanol.

In 2021, we formalized accountability for sustainability by adding direct ESG-related responsibility within our executive team and established internal leadership teams with the responsibility to (i) evaluate emissions reduction opportunities, technologies and strategies in our manufacturing operations to reduce our GHG emissions and (ii) assess potential market-related impacts of a transition to a low-carbon economy and opportunities for lower-carbon methanol, including green methanol.

We believe that having a diverse team and an inclusive workplace creates a better culture, better decision making and a better company. In 2021, we established a Global Diversity & Inclusion Council made up of senior leaders from around the globe to lead the development of our Diversity & Inclusion Vision and Guiding Principles, and Strategic Priorities. Our Vision is to have an inclusive culture where diversity is valued, differences are embraced and everyone has the opportunity to contribute, develop and advance. In 2022, we established a 3-year Diversity & Inclusion Roadmap based on the Vision and Guiding Principles and the feedback collected from team members through our D&I assessment.

In March 2023, we issued our 2022 Sustainability Report, aligned with the Sustainability Accounting Standards Board (SASB) and the Task-Force on Climate-related Financial Disclosures (TCFD). Our 2022 Sustainability Report is available at https://www.methanex.com/sustainability.

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**FINANCIAL HIGHLIGHTS**

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| | | |
|:---|:---|:---|
| ($ Millions, except as noted) | **2022** | 2021 |
| Production (thousands of tonnes) (attributable to Methanex shareholders) | **6118** | 6514 |
| Sales volume (thousands of tonnes) |  |  |
| Methanex-produced methanol | **6141** | 6207 |
| Purchased methanol | **3688** | 3750 |
| Commission sales | **945** | 1227 |
| Total sales volume <sup>1</sup> | **10774** | 11184 |
| Methanex average non-discounted posted price ($ per tonne) <sup>2</sup> | **503** | 492 |
| Average realized price ($ per tonne) <sup>3 4</sup> | **397** | 393 |
| Revenue | **4311** | 4415 |
| Net income (attributable to Methanex shareholders) | **354** | 482 |
| Adjusted net income <sup>4</sup> | **343** | 460 |
| Adjusted EBITDA <sup>4</sup> | **932** | 1108 |
| Cash flows from operating activities | **987** | 994 |
| Basic net income per common share ($ per share) | **4.95** | 6.34 |
| Diluted net income per common share ($ per share) | **4.86** | 6.13 |
| Adjusted net income per common share ($ per share) <sup>4</sup> | **4.79** | 6.03 |
| Common share information (millions of shares) |  |  |
| &nbsp;&nbsp;Weighted average number of common shares | **71** | 76 |
| &nbsp;&nbsp;Diluted weighted average number of common shares | **72** | 76 |
| &nbsp;&nbsp;Number of common shares outstanding, end of year | **69** | 75 |

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<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp; Methanex-produced methanol represents our equity share of volume produced at our facilities and excludes volume marketed on a commission basis related to 36.9% of the Atlas facility and 50% of the Egypt facility that we do not own.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp; Methanex average non-discounted posted price represents the average of our non-discounted posted prices in North America, Europe, China and Asia Pacific weighted by sales volume. Current and historical pricing information is available at www.methanex.com.

<sup>3</sup>&nbsp;&nbsp;&nbsp;&nbsp; The Company has used Average realized price ("ARP") throughout this document. This is a non-GAAP ratio that does not have any standardized meaning prescribed by GAAP and therefore is unlikely to be comparable to similar measures presented by other companies. ARP is calculated as revenue, excluding commissions earned and the Egypt non-controlling interest share of revenue, but including an amount representing our share of Atlas revenue, divided by the total sales volume of Methanex-produced and purchased methanol. It is used by management to assess the realized price per unit of methanol sold, and is relevant in a cyclical commodity environment where revenue can fluctuate widely in response to market prices.

<sup>4</sup>&nbsp;&nbsp;&nbsp;&nbsp; The Company has used the terms Adjusted EBITDA, Adjusted net income, Adjusted net income per common share, and ARP throughout this document. These items are non-GAAP measures and ratios that do not have any standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. Refer to the *Non-GAAP Measures* section on page 44 for a description of each non-GAAP measure and reconciliations to the most comparable GAAP measures.

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**PRODUCTION SUMMARY** 

The following table details the annual operating capacity and actual production at our facilities in 2022 and 2021:

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| | | | |
|:---|:---|:---|:---|
| (Thousands of tonnes) | &nbsp;&nbsp;&nbsp;&nbsp;Annual operating <br>capacity <sup>1</sup> | **2022<br>Production** | 2021<br>Production |
| USA (Geismar) | 2200 | **2041** | 1989 |
| New Zealand <sup>2</sup> | 2200 | **1230** | 1348 |
| Trinidad (Methanex interest) <sup>3</sup> | 1960 | **981** | 1161 |
| Chile | 1700 | **888** | 807 |
| Egypt (50% interest) | 630 | **385** | 581 |
| Canada (Medicine Hat) | 640 | **593** | 628 |
|  | 9330 | **6118** | 6514 |

---

<sup>1</sup> The annual operating capacity of our production facilities may be higher or lower than original nameplate capacity as, over time, these figures have been adjusted to reflect ongoing operating efficiencies. Actual production for a facility in any given year may be higher or lower than operating capacity due to a number of factors, including natural gas availability, feedstock composition, the age of the facility's catalyst, turnarounds and access to CO2 from external suppliers for certain facilities. We review and update the operating capacity of our production facilities on a regular basis based on historical performance.

<sup>2&nbsp;&nbsp;&nbsp;&nbsp;</sup>The operating capacity of New Zealand is made up of the two Motunui facilities and the Waitara Valley facility. The Waitara Valley facility is idled indefinitely due to natural gas constraints. (Refer to the *New Zealand* section below.)

<sup>3&nbsp;&nbsp;&nbsp;&nbsp;</sup>The operating capacity of Trinidad is made up of the Titan (100% interest) and Atlas (63.1% interest) facilities. The Titan plant is idled indefinitely due to natural gas constraints. (Refer to the *Trinidad* section below.)

**United States** 

Our Geismar plant in Louisiana produced 2.0 million tonnes of methanol in both 2022 and 2021. Production at the Geismar site was below operating capacity in both years. Production in 2021 was impacted by the planned turnaround at Geismar 2. Production in 2022 was impacted by unplanned outage from late September until mid October as the utilities supplier for the Geismar site experienced a loss of power due to a failed transformer. Refer to the *Risk Factors and Risk Management – United States* section on page 33 for more information.

**New Zealand** 

In New Zealand, we produced 1.2 million tonnes of methanol in 2022 compared with 1.3 million tonnes in 2021. Production for 2022 was lower than 2021 due to a longer than forecasted planned turnaround and lower gas deliveries from the Maui gas field. We operate two Motunui plants in New Zealand with our smaller Waitara Valley plant idled indefinitely since the beginning of 2021 due to natural gas constraints.

We estimate production in 2023 to be between 1.3 - 1.4 million tonnes. Refer to the *Risk Factors and Risk Management – New Zealand* section on page 34 for more information.

**Trinidad** 

Our ownership interest in the methanol facilities in Trinidad represents 2.0 million tonnes of annual operating capacity. The Atlas facility produced 1.0 million tonnes of methanol (Methanex share) in 2022, compared with 1.2 million tonnes in 2021. Production in Trinidad was lower in 2022 due to unplanned outages and higher operating rates in 2021 following a turnaround completed in 2020. Titan remains idled indefinitely since 2020 due to natural gas constraints. Refer to the *Risk Factors and Risk Management – Trinidad* section on page 34 for more information.

**Chile** 

The Chile facilities produced 0.9 million tonnes of methanol in 2022 compared with 0.8 million tonnes in 2021. Production in Chile is impacted by seasonal demand for natural gas whereby only one of our two methanol plants has operated during the Southern hemisphere winter months when seasonal demand for natural gas in the region is at its peak. We estimate production in 2023 to be between 0.8 - 0.9 million tonnes. Refer to the *Risk Factors and Risk Management – Chile* section on page 34 for more information.

**Egypt** 

We operate the 1.3 million tonne per year methanol facility in Egypt, in which we have a 50% economic interest and marketing rights for 100% of the production. We produced 0.8 million tonnes of methanol (Methanex share of 0.4 million) in Egypt in 2022

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compared to 1.2 million tonnes (Methanex share of 0.6 million) in 2021. We had lower levels of production from Egypt in 2022 as we completed an extended planned turnaround. The timing of the turnaround enabled us to enter into an agreement to redirect and sell the plant's contracted natural gas, from late July to late October, to utilize excess LNG capacity in Egypt to serve energy demand in Europe. Refer to the *Risk Factors and Risk Management – Egypt* section on page 35 for more information.

**Canada** 

Medicine Hat produced 0.6 million tonnes of methanol in 2022 compared with 0.6 million tonnes in 2021. Refer to the *Risk Factors and Risk Management – Canada* section on page 35 for more information.

**HOW WE ANALYZE OUR BUSINESS** 

Our operations consist of a single operating segment: the production and sale of methanol. We review our financial results by analyzing changes in the components of Adjusted EBITDA, mark-to-market impact of share-based compensation, depreciation and amortization, finance costs, finance income and other expenses, and income taxes.

The Company has used the terms Adjusted EBITDA, Adjusted net income, Adjusted net income per common share, and Average realized price throughout this document. These items are non-GAAP measures and ratios that do not have any standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. Refer to the *Non-GAAP Measures* section on page 44 for a description of each non-GAAP measure and reconciliations to the most comparable GAAP measures.

In addition to the methanol that we produce at our facilities, we also purchase and resell methanol produced by others and we sell methanol on a commission basis. We analyze the results of all methanol sales together, excluding commission sales volume. The key drivers of changes in Adjusted EBITDA are average realized price, cash costs and sales volume, which are defined and calculated as follows:

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| | |
|:---|:---|
| **PRICE** | The change in Adjusted EBITDA as a result of changes in average realized price is calculated as the difference from period to period in the selling price of methanol multiplied by the current period total methanol sales volume, including produced and purchased methanol and excluding commission sales volume, plus the difference from period to period in commission revenue. |
| **CASH <br>COSTS** | The change in Adjusted EBITDA as a result of changes in cash costs is calculated as the difference from period to period in cash costs per tonne multiplied by the current period total methanol sales volume including produced and purchased methanol and excluding commission sales volume in the current period. The cash costs per tonne is the weighted average of the cash cost per tonne of Methanex-produced methanol and the cash cost per tonne of purchased methanol. The cash cost per tonne of Methanex-produced methanol includes absorbed fixed cash costs per tonne and variable cash costs per tonne. The cash cost per tonne of purchased methanol consists principally of the cost of methanol itself. In addition, the change in Adjusted EBITDA as a result of changes in cash costs includes the changes from period to period in unabsorbed fixed production costs, consolidated selling, general and administrative expenses and fixed storage and handling costs. |
| **SALES VOLUME** | The change in Adjusted EBITDA as a result of changes in sales volume is calculated as the difference from period to period in total methanol sales volume, excluding commission sales volume, multiplied by the margin per tonne for the prior period. The margin per tonne for the prior period is the weighted average margin per tonne of Methanex-produced methanol and margin per tonne of purchased methanol. The margin per tonne for Methanex-produced methanol is calculated as the selling price per tonne of methanol less absorbed fixed cash costs per tonne and variable cash costs per tonne. The margin per tonne for purchased methanol is calculated as the selling price per tonne of methanol less the cost of purchased methanol per tonne. |

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We own 63.1% of the Atlas methanol facility and market the remaining 36.9% of its production through a commission offtake agreement, both of which we recognize as revenue on a gross basis. A contractual agreement between us and our partners establishes joint control over Atlas. As a result, we account for this investment using the equity method of accounting, which results in 63.1% of the net assets and net earnings of Atlas being presented separately in the consolidated statements of financial position and consolidated statements of income, respectively. For the purpose of analyzing our business, Adjusted EBITDA, Adjusted net income and Adjusted net income per common share include an amount representing our 63.1% equity

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share in Atlas. Our analysis of depreciation and amortization, finance costs, finance income and other expenses, and income taxes is consistent with the presentation of our consolidated statements of income (loss) and excludes amounts related to Atlas.

We own 50% of the Egypt methanol facility and market the remaining 50% of its production through a commission offtake agreement. We own 60% of Waterfront Shipping, which provides service to Methanex for the ocean freight component of our distribution and logistics costs. We consolidate both Egypt and Waterfront Shipping, which results in 100% of the financial results being included in our financial statements. Non-controlling interests are included in the Company's consolidated financial statements and represent the non-controlling shareholders' interests in the Egypt methanol facility and Waterfront Shipping. For the purpose of analyzing our business, Adjusted EBITDA, Adjusted net income and Adjusted net income per common share exclude the amounts associated with non-controlling interests.

**FINANCIAL RESULTS** 

For the year ended December 31, 2022, we reported a net income attributable to Methanex shareholders of $354 million ($4.86 income per common share on a diluted basis), compared with a net income attributable to Methanex shareholders of $482 million ($6.13 income per common share on a diluted basis) for the year ended December 31, 2021. Net income attributable to Methanex shareholders for the year ended December 31, 2022 is lower compared to the year ended December 31, 2021, primarily due to a lower sales of Methanex-produced methanol and higher production costs. Production costs were higher mainly due to higher logistics and gas costs driven by a higher energy price environment.

For the year ended December 31, 2022, we reported Adjusted EBITDA of $932 million and Adjusted net income of $343 million ($4.79 Adjusted net income per common share), compared with Adjusted EBITDA of $1,108 million and Adjusted net income of $460 million ($6.03 Adjusted net income per common share) for the year ended December 31, 2021.

We calculate Adjusted EBITDA and Adjusted net income by including amounts related to our equity share of the Atlas facility (63.1% interest) and by excluding the non-controlling interests' share, the mark-to-market impact of share-based compensation as a result of changes in our share price, the impact of the Egypt gas contract revaluation included in finance income and other expenses and the impact of certain items associated with specific identified events. For 2022 and 2021, there have been no specifically identified events impacting Adjusted EBITDA or Adjusted net income.

A reconciliation from net income attributable to Methanex shareholders to Adjusted net income and the calculation of Adjusted diluted net income per common share is as follows:

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| | | |
|:---|:---|:---|
| ($ Millions, except number of shares and per share amounts) | **2022** | 2021 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income attributable to Methanex shareholders | $**354** | $482 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mark-to-market impact of share-based compensation, net of tax | **(6)** | (22) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impact of Egypt gas contract revaluation, net of tax | **(5)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjusted net income | $**343** | $460 |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted weighted average shares outstanding (millions) | **72** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;76 |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjusted net income per common share | $**4.79** | $6.03 |

---

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A summary of our consolidated statements of income for 2022 and 2021 is as follows:

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| | | |
|:---|:---|:---|
| ($ Millions) | **2022** | 2021 |
| Consolidated statements of income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue  | $**4311** | $4415 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of sales and operating expenses  | **(3446)** | (3340) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Egypt gas redirection and sale proceeds | **118** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mark-to-market impact of share-based compensation | **(7)** | (23) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjusted EBITDA (attributable to associate) | **151** | 181 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amounts excluded from Adjusted EBITDA attributable to non-controlling interests  | **(195)** | (125) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjusted EBITDA attributable to Methanex shareholders | **932** | 1108 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mark-to-market impact of share-based compensation | **7** | 23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization  | **(372)** | (363) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finance costs  | **(131)** | (144) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finance income and other expenses | **25** | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax expense | **(120)** | (110) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Earnings of associate adjustment <sup>1</sup> | **(74)** | (84) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-controlling interests adjustment <sup>1</sup> | **87** | 51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income attributable to Methanex shareholders | $**354** | $482 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income | $**462** | $556 |

---

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp; These adjustments represent depreciation and amortization, finance costs, finance income and other expenses and income taxes associated with our 63.1% interest in the Atlas methanol facility and the non-controlling interests.

**Revenue** 

There are many factors that impact our global and regional revenue. The methanol business is a global commodity industry affected by supply and demand fundamentals. Based on the diversity of end products in which methanol is used, demand for methanol is driven by a number of factors, including: strength of global and regional economies, industrial production levels, energy prices, pricing of end products and government regulations and policies. Revenue was $4.3 billion in 2022 compared to $4.4 billion in 2021. The lower revenue reflects a lower sales volume in 2022 compared to 2021, partially offset by a slightly higher average realized price.

We publish regional non-discounted reference prices for each major methanol market and these posted prices are reviewed and revised monthly or quarterly based on industry fundamentals and market conditions. Most of our customer contracts use published Methanex reference prices as a basis for pricing, and we offer discounts to customers based on various factors. Our average non-discounted published reference price in 2022 was $503 per tonne compared with $492 per tonne in 2021. Our average realized price in 2022 was $397 per tonne compared to $393 per tonne in 2021.

**Distribution of Revenue** 

The geographic distribution of revenue by customer location for 2022 was comparable to 2021 . Details are as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| ($ Millions, except where noted) | **2022** | **2022** | 2021 | 2021 |
| &nbsp;&nbsp;&nbsp;&nbsp;China | $**1106** | **26%** | $1264 | 29% |
| &nbsp;&nbsp;&nbsp;&nbsp;Europe | **830** | **19%** | 883 | 20% |
| &nbsp;&nbsp;&nbsp;&nbsp;United States | **657** | **15%** | 671 | 15% |
| &nbsp;&nbsp;&nbsp;&nbsp;South Korea | **543** | **13%** | 526 | 12% |
| &nbsp;&nbsp;&nbsp;&nbsp;South America | **459** | **11%** | 438 | 10% |
| &nbsp;&nbsp;&nbsp;&nbsp;Canada | **197** | **4%** | 177 | 4% |
| &nbsp;&nbsp;&nbsp;&nbsp;Other Asia | **519** | **12%** | 456 | 10% |
|  | $**4311** | **100%** | $4415 | 100% |

---

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**Adjusted EBITDA (Attributable to Methanex Shareholders)** 

2022 Adjusted EBITDA was $932 million compared with 2021 Adjusted EBITDA of $1.1 billion, a decrease of $176 million. The key drivers of change in our Adjusted EBITDA are average realized price, sales volume and cash costs as described below (refer to the *How We Analyze Our Business* section on page 14 for more information).

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| | |
|:---|:---|
| ($ Millions) | **2022 vs. 2021** |
| Average realized price | $**58** |
| Sales volume | **(16)** |
| Total cash costs | **(218)** |
| Decrease in Adjusted EBITDA | $**(176)** |

---

**Average Realized Price** 

Our average realized price for the year ended December 31, 2022, was $397 per tonne compared to $393 per tonne for 2021, and this increased Adjusted EBITDA by $58 million (refer to the *Financial Results – Revenue* section on page 16 for more information).

**Sales Volume** 

Methanol sales volume, excluding commission sales volume, for the year ended December 31, 2022, decreased to 9.8 million tonnes from 10.0 million tonnes in 2021, and this decreased Adjusted EBITDA by $16 million. Including commission sales volume from the Atlas and Egypt facilities, our total methanol sales volume was 10.8 million tonnes in 2022 compared with 11.2 million tonnes in 2021.

**Total Cash Costs** 

The primary drivers of change in our total cash costs are changes in the cost of Methanex-produced methanol and changes in the cost of methanol we purchase from others ("purchased methanol"). We supplement our production with methanol produced by others through methanol offtake contracts and purchases on the spot market to meet customer needs and support our marketing efforts in major global markets.

We apply the first-in, first-out method of accounting for inventories and it generally takes between 30 and 60 days to sell the methanol we produce or purchase. Accordingly, the changes in Adjusted EBITDA as a result of changes in Methanex-produced and purchased methanol costs primarily depend on changes in methanol pricing and the timing of inventory flows.

In a rising price environment, our margins at a given price are higher than in a stable price environment as a result of methanol purchases and production versus sales. Generally, the opposite applies when methanol prices are decreasing.

The changes in Adjusted EBITDA due to changes in total cash costs for 2022 compared with 2021 were due to the following:

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| | |
|:---|:---|
| ($ Millions) | **2022 vs. 2021** |
| Methanex-produced methanol costs | $**(159)** |
| Proportion of Methanex-produced methanol sales | **(14)** |
| Purchased methanol costs | **(58)** |
| Logistics costs | **(59)** |
| Egypt gas redirection and sale proceeds | **59** |
| Other, net | **13** |
| Decrease in Adjusted EBITDA due to changes in total cash costs | $**(218)** |

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**Methanex-Produced Methanol Costs** 

Natural gas is the primary feedstock at our methanol facilities and is the most significant component of Methanex-produced methanol costs. We purchase natural gas for more than half of our production under natural gas purchase agreements where the unique terms of each contract include a base price and a variable price component linked to methanol revenue to reduce our commodity price risk exposure. The variable price component of each gas contract is adjusted by a formula linked to methanol sales prices above a certain level. Methanex-produced methanol costs were higher in 2022 compared with 2021 by $159 million, primarily due to the increase in the cost of natural gas which was impacted by the changes in realized methanol

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prices on the variable portion of our natural gas cost, higher spot gas prices which impact the unhedged portion of our North American operations and timing of inventory flows which resulted in higher opening inventory costs released in 2022. For additional information regarding our natural gas supply agreements, refer to the *Liquidity and Capital Resources – Summary of Contractual Obligations and Commercial Commitments* section on page 26.

**Proportion of Methanex-Produced Methanol Sales** 

The cost of purchased methanol is directly linked to the selling price for methanol at the time of purchase and the cost of purchased methanol is generally higher than the cost of Methanex-produced methanol. Accordingly, an increase in the proportion of Methanex-produced methanol sales results in a decrease in our overall cost structure for a given period, while a decrease in the proportion of Methanex-produced methanol will increase our cost structure. The proportion of Methanex-produced methanol sales decreased in 2022 due to lower production and this increased costs and decreased Adjusted EBITDA by $14 million for 2022 compared with 2021.

**Purchased Methanol Costs** 

A key element of our corporate strategy is global leadership and, as such, we have built a leading market position in each of the major global markets where methanol is sold. We supplement our production with purchased methanol through methanol offtake contracts and on the spot market to meet customer needs and support our marketing efforts within the major global markets. In structuring purchase agreements, we look for opportunities that provide synergies with our existing supply chain that allow us to purchase methanol in the most cost-effective region. The cost of purchased methanol consists principally of the cost of the methanol itself, which is directly related to the price of methanol at the time of purchase. Higher methanol prices in 2022 and the timing of inventory flows and purchases increased the cost of purchased methanol per tonne and this decreased Adjusted EBITDA by $58 million compared with 2021.

**Logistics Costs**

Our investment in global distribution and supply infrastructure includes a dedicated fleet of ocean-going vessels. We utilize these vessels to enhance value to customers by providing reliable and secure methanol supply. Additionally we carry third-party backhaul cargoes, when available, to optimize supply chain costs overall. Logistics costs can also vary from period to period primarily depending on the levels of production from each of our production facilities, the resulting impact on our supply chain, and variability in bunker fuel costs. Higher logistics costs in 2022 decreased Adjusted EBITDA by $59 million compared to 2021. Logistics costs increased in 2022 compared to 2021 primarily due to higher bunker fuel costs. Additionally, the sale of a 40% interest in Waterfront Shipping in the first quarter of 2022 to Mitsui O.S.K. Lines, Ltd. ("MOL") resulted in a proportionate interest of Adjusted EBITDA earned by Waterfront Shipping to be attributed to MOL in 2022, which was not applicable in 2021.

**Egypt Gas Redirection and Sale Proceeds** 

In 2022, we entered into an agreement to redirect and sell the Egypt plant's contracted natural gas during an extended turnaround for a three-month period from late July to late October. This was a unique opportunity to utilize excess LNG capacity in Egypt during a period of elevated LNG prices in Europe and was done in collaboration with our Egyptian government partners. As a result, we recognized $59 million (attributable to Methanex) of gas redirection and sales proceeds in Adjusted EBITDA for 2022 which was not present in 2021. Net of the foregone benefit of producing and selling methanol during the extended turnaround, we estimate that the sale and redirection of our gas resulted in an incremental benefit of approximately $35 million (attributable to Methanex) in 2022.

**Other, Net** 

Other, net relates to unabsorbed fixed costs, selling, general and administrative expenses and other operational items. For the year ended December 31, 2022 compared with the same period in 2021, other costs were lower by $13 million primarily due to incremental costs recognized in 2021 relating to completed IT projects and organizational restructurings not incurred in 2022.

**Mark-to-Market Impact of Share-Based Compensation** 

We grant share-based awards as an element of compensation. Share-based awards granted include stock options, share appreciation rights, tandem share appreciation rights, deferred share units, restricted share units and performance share units. For all share-based awards, share-based compensation is recognized over the related vesting period for the proportion of the service that has been rendered at each reporting date. Share-based compensation includes an amount related to the grant date value and a mark-to-market impact as a result of subsequent changes in the fair value of the share-based awards

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primarily driven by the Company's share price. The grant date value amount is included in Adjusted EBITDA and Adjusted net income. The mark-to-market impact of share-based compensation as a result of changes in our share price is excluded from Adjusted EBITDA and Adjusted net income and is analyzed separately.

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| | | |
|:---|:---|:---|
| ($ Millions, except share price) | **2022** | 2021 |
| Methanex Corporation share price <sup>1</sup> | $**37.86** | $39.55 |
| Grant date fair value expense included in Adjusted EBITDA and Adjusted net income | **22** | 22 |
| Mark-to-market impact due to change in share price <sup>2</sup> | **(7)** | (23) |
| Total share-based compensation expense (recovery), before tax | $**15** | $(1) |

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<sup>1</sup> U.S. dollar share price of Methanex Corporation as quoted on the NASDAQ Global Select Market on the last trading day of the respective period.

<sup>2</sup> For the periods presented, the mark-to-market impact on share-based compensation is primarily due to changes in the Methanex Corporation share price.

For stock options, the cost is measured based on an estimate of the fair value at the grant date using the Black-Scholes option pricing model, and this grant date fair value is recognized as compensation expense over the related vesting period with no subsequent re-measurement to fair value.

Share appreciation rights ("SARs") are non-dilutive units that grant the holder the right to receive a cash payment upon exercise for the difference between the market price of the Company's common shares and the exercise price that is determined at the grant date. Tandem share appreciation rights ("TSARs") give the holder the choice between exercising a regular stock option or a SAR. The fair value of SARs and TSARs are re-measured each quarter using the Black-Scholes option pricing model, which considers the market value of the Company's common shares on the last trading day of each quarter.

Deferred, restricted and performance share units are grants of notional common shares that are redeemable for cash based on the market value of the Company's common shares and are non-dilutive to shareholders. Performance share units granted annually reflect a long-term incentive plan where units are redeemable for cash based on the market value of the Company's common shares and are non-dilutive to shareholders. Units vest over three years and include two performance factors: (i) relative total shareholder return of Methanex shares versus a specific market index, and (ii) the three-year average return on capital employed. The relative total shareholder performance factor is measured by the Company at the grant date and each reporting date using a Monte-Carlo simulation model to determine fair value. The three-year average return on capital employed performance factor reflects the actual return on capital employed for historical periods and management's best estimate for forecast periods to determine the expected number of units to vest.

For deferred, restricted and performance share units, the cost of the service received as consideration is initially measured based on the market value of the Company's common shares at the date of grant. The grant date fair value is recognized as compensation expense over the vesting period with a corresponding increase in liabilities. Deferred, restricted and performance share units are re-measured at each reporting date based on the market value of the Company's common shares with changes in fair value recognized as compensation expense for the proportion of the service that has been rendered at that date.

The price of the Company's common shares as quoted on the NASDAQ Global Select Market Composite decreased from $39.55 per share at December 31, 2021, to $37.86 per share at December 31, 2022. As a result of the decrease in the share price and the resulting impact on the fair value of the outstanding units, we recorded a $7 million mark-to-market recovery related to share-based compensation during 2022.

**Depreciation and Amortization** 

Depreciation and amortization was $372 million for the year ended December 31, 2022, and is marginally higher than $363 million for the year ended December, 31 2021.

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**Finance Costs** 

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| | | |
|:---|:---|:---|
| ($ Millions) | **2022** | 2021 |
| Finance costs before capitalized interest | $**167** | $165 |
| Less capitalized interest | **(36)** | (21) |
| Finance costs | $**131** | $144 |

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Finance costs are primarily comprised of interest on borrowings and lease obligations and were $131 million for the year ended December 31, 2022, compared to $144 million for the year ended December 31, 2021. Finance costs are lower primarily due to higher capitalized interest. Capitalized interest relates to interest costs capitalized for the Geismar 3 project. Refer to the *Liquidity and Capital Resources* section of page 22 for more information.

**Finance Income and Other Expenses** 

Finance income and other expenses were $25 million for the year ended December 31, 2022, compared to $1 million for the year ended December 31, 2021. Finance income and other expenses for the 2022 period includes an unrealized gain of $11.2 million on the derivative Egypt gas supply contract, not present in 2021. Refer to note 19 of our 2022 consolidated financial statements. Finance income in 2022 also includes the benefit of higher interest income, foreign exchange gains and proceeds from vessel sales, as compared to 2021.

**Income Taxes**

A summary of our income taxes for 2022 compared with 2021 is as follows:

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| ($ Millions, except where noted) | **2022** | **2022** | **2022** | **2022** | 2021 | 2021 | 2021 | 2021 |
|  | **Per consolidated statement of income** | **Per consolidated statement of income** | **Adjusted** <sup>1 2 3 4</sup> | **Adjusted** <sup>1 2 3 4</sup> | Per consolidated statement of income | Per consolidated statement of income | Adjusted <sup>1 2 3 4</sup> | Adjusted <sup>1 2 3 4</sup> |
| Net income before income tax | **$** | **582** | **$** | **482** | $| 666 | $| 606 |
| Income tax expense | **(120)** | **(120)** | **(139)** | **(139)** | (110) | (110) | (146) | (146) |
| Net income after income tax | **$** | **462** | **$** | **343** | $| 556 | $| 460 |
| Effective tax rate | **21%** | **21%** | **29%** | **29%** | 17% | 17% | 24% | 24% |

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<sup>1</sup> Adjusted net income before income tax reflects amounts required for the inclusion of 63.1% of Atlas income, and 50% of Egypt, as well as amounts required to exclude the mark-to-market impact of share-based-compensation expense or recovery and the impact of the Egypt gas contract revaluation. In 2022, Adjusted net income before tax also reflects MOL's 40% equity interest in Waterfront Shipping, which did not apply in 2021.The most directly comparable measure in the financial statements is net income before tax.

<sup>2</sup> Adjusted income tax expense reflects amounts required for the inclusion of 63.1% of Atlas income and 50% of Egypt, as well as amounts required to exclude the tax impact of mark-to-market impact of share-based-compensation expense or recovery and the impact of the Egypt gas contract revaluation, calculated at the appropriate applicable tax rate for their respective jurisdictions. The most directly comparable measure in the financial statements is income tax expense.

<sup>3</sup> Adjusted effective tax rate is a non-GAAP ratio and is calculated as adjusted income tax expense or recovery, divided by adjusted net income before tax.

<sup>4</sup> Adjusted net income before income tax and Adjusted income tax (expense) recovery are non-GAAP measures. Adjusted effective tax rate is a non-GAAP ratio. These do not have any standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. Management uses these to assess the effective tax rate. These measures and ratios are useful as they are a better measure of our underlying tax rate across the jurisdictions in which we operate.

We earn the majority of our income in the United States, New Zealand, Trinidad, Chile, Egypt and Canada. Including applicable withholding taxes, the statutory tax rate applicable to Methanex in the United States is 23%, New Zealand is 28%, Trinidad is 38%, Chile is 35%, Egypt is 30% and Canada is 24.5% . We accrue for taxes that will be incurred upon distributions from our subsidiaries when it is probable that the earnings will be repatriated. As the Atlas entity is accounted for using the equity method, any income taxes related to Atlas are included in earnings of associate and therefore excluded from total income taxes but included in the calculation of Adjusted net income.

The Adjusted effective tax rate based on Adjusted net income was an expense of 29% for the year ended December 31, 2022, compared to 24% for the year ended December 31, 2021. Adjusted net income represents the amount that is attributable to Methanex shareholders and excludes the mark-to-market impact of share-based compensation and the impact of certain items associated with specific identified events. The effective tax rate differs from period to period depending on the source of earnings (losses) and the impact of foreign exchange fluctuations against the United States dollar on our tax balances. In periods with low income levels or losses, the distribution of income and loss between jurisdictions can result in income tax rates that are not indicative of the longer-term corporate tax rate. In addition, the effective tax rate is impacted by changes in tax legislation in the jurisdictions in which we operate. The 2022 Adjusted effective tax rate was higher than the 2021 Adjusted

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effective tax rate primarily due to a decrease in statutory tax rates applicable to Methanex in Chile in 2021 from 44.5% to 35% which were applied retrospectively to undistributed earnings resulting in a one-time decrease in the effective tax rate in 2021 as well as other non-recurring net changes impacting the 2021 tax provision associated with the resolution of certain outstanding audits, tax disputes and other matters.

The following table shows a reconciliation of Net income to Adjusted net income before tax, and of Income tax expense to Adjusted income tax expense:

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| | | |
|:---|:---|:---|
| ($ Millions, except where noted) | **2022** | 2021 |
| Net income | $**462** | $556 |
| Adjusted for: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax expense | **120** | 110 |
| &nbsp;&nbsp;&nbsp;&nbsp;Earnings from associate | **(77)** | (98) |
| &nbsp;&nbsp;&nbsp;&nbsp;Share of earnings of associate's income before tax | **120** | 151 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income before tax of non-controlling interests | **(130)** | (90) |
| &nbsp;&nbsp;&nbsp;&nbsp;Mark-to-market impact of share-based compensation | **(7)** | (23) |
| &nbsp;&nbsp;&nbsp;&nbsp;Impact of Egypt gas contract revaluation | **(6)** |  |
| Adjusted net income before tax | $**482** | $606 |
| Income tax expense | $**(120)** | $(110) |
| Adjusted for: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Inclusion of tax expense of associate | **(43)** | (53) |
| &nbsp;&nbsp;&nbsp;&nbsp;Removal of tax expense of non-controlling interest | **22** | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax on mark-to-market impact of share-based compensation | **1** | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax on impact of Egypt gas contract revaluation | **1** |  |
| Adjusted income tax expense | $**(139)** | $(146) |

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For additional information regarding income taxes, refer to note 16 of our 2022 consolidated financial statements.

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**LIQUIDITY AND CAPITAL RESOURCES** 

A summary of our consolidated statements of cash flows is as follows:

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| | | |
|:---|:---|:---|
| ($ Millions) | **2022** | 2021 |
| Cash flows from/(used in) operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash flows from operating activities before changes in non-cash working capital | $**933** | $1077 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in non-cash working capital related to operating activities | **54** | (83) |
|  | **987** | 994 |
| Cash flows from/(used in) financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments for the repurchase of shares | **(253)** | (63) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividend payments to Methanex Corporation shareholders | **(44)** | (25) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest paid | **(162)** | (165) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayment on Geismar 3 construction facility | **—** | (173) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayment of long-term debt and financing fees | **(9)** | (62) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayment of lease obligations | **(106)** | (101) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Release of restricted cash relating to limited recourse debt facilities | **—** | 29 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions to non-controlling interests, net of contributions | **(85)** | (109) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds on issue of shares on exercise of stock options | **1** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from other limited recourse debt | **—** | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restricted cash for debt service accounts | **(1)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sale of partial interest in subsidiary | **149** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in non-cash working capital relating to financing activities | **2** | 1 |
|  | **(508)** | (643) |
| Cash flows from/(used in) investing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property, plant and equipment | **(145)** | (103) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Geismar plant under construction | **(432)** | (142) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in non-cash working capital relating to investing activities | **24** | (8) |
|  | **(553)** | (253) |
| Increase (decrease) in cash and cash equivalents | **(74)** | 98 |
| Cash and cash equivalents, end of year | $**858** | $932 |

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**Cash Flow Highlights** 

**Cash Flows from Operating Activities** 

Cash flows from operating activities for the year ended December 31, 2022 were $987 million compared with $994 million for the year ended December 31, 2021. The decrease in cash flows from operating activities is primarily due to lower earnings and higher tax payments, offset by timing of dividends received from the Atlas joint venture and changes in non-cash working capital.

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The following table provides a summary of these items for 2022 and 2021:

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| | | |
|:---|:---|:---|
| ($ Millions) | **2022** | 2021 |
| Net income | $**462** | $556 |
| Deduct earnings of associate | **(77)** | (98) |
| Add dividends received from associate | **97** | 74 |
| Add (deduct) non-cash items: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | **372** | 363 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax expense | **120** | 110 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share-based compensation expense (recovery) | **15** | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finance costs | **131** | 144 |
| Interest received | **10** |  |
| Income taxes paid | **(164)** | (58) |
| Other | **(33)** | (13) |
| Cash flows from operating activities before changes in non-cash working capital | **933** | 1077 |
| Changes in non-cash working capital: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade and other receivables | **38** | (127) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | **33** | (148) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses | **(3)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities, including long-term payables | **(14)** | 192 |
|  | **54** | (83) |
| Cash flows from operating activities | $**987** | $994 |

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For a discussion of the changes in net income, depreciation and amortization, income tax expense, share-based compensation expense (recovery) and finance costs, refer to the *Financial Results* section on page 15.

Changes in non-cash working capital increased cash flows from operating activities by $54 million for the year ended December 31, 2022, compared with a decrease of $83 million for the year ended December 31, 2021. Trade and other receivables decreased in 2022 and this increased cash flows from operating activities by $38 million, primarily due to the impact of decreasing methanol prices during 2022 resulting in lower receivables outstanding on the balance sheet at the end of 2022 compared to 2021. Inventories decreased primarily due to the lower cost of production in the fourth quarter of 2022 compared to the fourth quarter of 2021 driven by the impact of lower methanol prices on our natural gas costs, which increased cash flows from operating activities by $33 million. Accounts payable and accrued liabilities decreased in 2022 compared to 2021 due to the impact of lower gas costs and lower methanol prices on purchased methanol at the end of 2022 compared to at the end of 2021, which decreased cash flows from operating activities by $14 million.

**Cash Flows from Financing Activities** 

In 2022, we repurchased 5,551,751 common shares under a normal course issuer bid for approximately $253 million, compared to 1,435,193 common shares repurchased in 2021 for approximately $63 million.

Total dividend payments in 2022 were $44 million compared with $25 million in 2021 as a result of two increases in quarterly dividends in 2022. Our quarterly dividend was increased from $0.125 per share to $0.145 per share in April of 2022 and to $0.175 per share in July of 2022.

Total interest payments decreased from $165 million in 2021 to $162 million in 2022 as a result of repayment of the Geismar 3 construction facility and the limited recourse Egypt debt facility in 2021. The Company has no debt maturities until December 2024, other than normal course obligations for principal repayments related to our other limited recourse debt facilities.

Distributions to non-controlling interests, including the 50% ownership of the Egypt entity and, beginning in 2022, the 40% ownership of Waterfront Shipping not attributable to Methanex, were $85 million in 2022 compared to $110 million in 2021. The

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lower distributions to non-controlling interests for 2022 compared to 2021 were primarily due to the timing of dividend payments from Egypt.

In 2022, the Company completed the sale of a 40% equity interest in Waterfront Shipping Limited for cash proceeds of approximately $149 million. Refer to Strategic Partnership section below.

**Cash Flows from Investing Activities** 

During 2022, we incurred cash outflows on capital expenditures relating to our consolidated operations of $146 million (2021 - $103 million) primarily related to planned turnarounds in New Zealand and Egypt as well as refurbishment work in Chile. The 2021 capital expenditures related to a planned turnaround, completion of a debottleneck project at Geismar, and the completion of construction of one ocean-going vessel. In addition, we incurred cash outflows on capital expenditures of $432 million (2021 - $142 million) related to the construction of the Geismar 3 project.

**Liquidity and Capitalization** 

Our objective in 2022 in managing liquidity and capital was to provide financial capacity and flexibility to meet our strategic objectives, with a focus on cash preservation and liquidity.

The following table provides information on our liquidity and capitalization position as at December 31, 2022, and December 31, 2021:

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| | | | |
|:---|:---|:---|:---|
| ($ Millions, except where noted) | **2022** | **2022** | 2021 |
| Liquidity: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | **$** | **858** | 932 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Undrawn credit facility | **300** | **300** | 300 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Undrawn G3 construction facility | **300** | **300** | 600 |
| Total liquidity <sup>1</sup> | **$** | **1458** | 1832 |
| Capitalization: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unsecured notes, including current portion | **1983** | **1983** | 1981 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other limited recourse debt facilities, including current portion | **168** | **168** | 177 |
| Total debt | **2151** | **2151** | 2158 |
| Non-controlling interests | **317** | **317** | 271 |
| Shareholders' equity | **2112** | **2112** | 1684 |
| Total capitalization | **$** | **4580** | 4113 |
| Total debt to capitalization <sup>2</sup> | **47%** | **47%** | 52% |
| Net debt to capitalization <sup>3</sup> | **35%** | **35%** | 39% |

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<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp; Total liquidity consists of cash and cash equivalents, as well as any undrawn amounts from facilities. Total liquidity is a non-GAAP capital management measure, see *Non-GAAP Measures* on page 44 for more information.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp; Defined as total debt (including other limited recourse debt facilities) divided by total capitalization.

<sup>3</sup> Net debt to capitalization is defined as total debt (including other limited recourse debt facilities) less cash and cash equivalents divided by total capitalization less cash and cash equivalents. Net debt to capitalization is a non-GAAP capital management measure. See *Non-GAAP Measures* on page 44 for more information.

We manage our liquidity and capital structure in light of changes to economic conditions, the underlying risks inherent in our operations and the capital requirements for the business. Total liquidity is useful because it illustrates the extent to which management has immediate access to cash for operational and construction purposes, and is indicative of our flexibility should uses for these facilities immediately arise. Net debt to capitalization is useful because it illustrates the relative risk of our financing structure to potential lenders and investors. The strategies we have employed include the issue or repayment of general corporate debt, the issue of project debt, the payment of dividends and the repurchase of shares.

We are not subject to any statutory capital requirements and have no commitments to sell or otherwise issue common shares except pursuant to outstanding employee stock options and TSARs.

We operate in a highly competitive commodity industry and believe that it is appropriate to maintain a strong balance sheet and maintain financial flexibility. As at December 31, 2022, we had a cash balance of $858 million, including $53 million of

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cash related to our Egypt and $93 million of cash related to Waterfront Shipping entities consolidated on a 100%. We invest our cash only in highly rated instruments that have maturities of three months or less to ensure preservation of capital and appropriate liquidity.

As at December 31, 2022, we have access to a $300 million committed revolving credit facility expiring in July 2026, and a non-revolving construction facility for the Geismar 3 project expiring in July 2025. Both facilities are with a syndicate of highly rated financial institutions. During the year ended December 31, 2022, the non-revolving construction facility was reduced from $600 million to $300 million.

We have covenant and default provisions under our long-term debt obligations and we also have certain covenants that could restrict access to our credit facilities. The covenants governing the unsecured notes, which are specified in an indenture, apply to the Company and its subsidiaries, excluding the Egypt entity and the Atlas joint venture entity, and include restrictions on liens, sale and lease-back transactions, a merger or consolidation with another corporation or sale of all or substantially all of our assets. The indenture also contains customary default provisions. The significant covenants and default provisions under the two credit facilities include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)&nbsp;&nbsp;&nbsp;&nbsp;the obligation to maintain an EBITDA to interest coverage ratio of greater than or equal to 2:1 calculated on a four-quarter trailing basis, where for only one quarter during the term of the credit facility the ratio can be as low as, but not less than 1.25:1, and a debt to capitalization ratio of less than or equal to 60%, both calculated in accordance with definitions in the credit agreement that include adjustments related to the limited recourse subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)&nbsp;&nbsp;&nbsp;&nbsp;a default if payment is accelerated by a creditor on any indebtedness of $50 million or more of the Company and its subsidiaries, except for the limited recourse subsidiaries; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)&nbsp;&nbsp;&nbsp;&nbsp;a default if a default occurs that permits a creditor to demand repayment on any other indebtedness of $50 million or more of the Company and its subsidiaries, except for the limited recourse subsidiaries.

The credit facilities are secured by certain assets of the Company, and also include other customary covenants including restrictions on the incurrence of additional indebtedness, restrictions against the sale or abandonment of the Geismar 3 project, as well as requirements associated with completion of plant construction and commissioning.

The limited recourse debt facilities are described as limited recourse as they are secured only by the assets of the entity that carries the debt. Accordingly, the lenders to the limited recourse debt facilities have no recourse to the Company or its other subsidiaries.

Failure to comply with any of the covenants or default provisions of the long-term debt facilities described above could result in a default under the applicable credit agreement that would allow the lenders to not fund future loan requests, accelerate the due date of the principal and accrued interest on any outstanding loans or restrict the payment of cash or other distributions.

As at December 31, 2022, management believes the Company was in compliance with all covenants related to its long-term debt obligations.

**Capital Projects**

The Geismar 3 project is a 1.8 million tonne methanol plant, budgeted for $1.25 to $1.30 billion, under construction in Geismar, Louisiana adjacent to our Geismar 1 and Geismar 2 plants with significant capital and operating cost advantages.

We have capitalized $908 million on the project, before capitalized interest and finance charges. We estimate that as of December 31, 2022, there is $415 to $465 million of remaining capital expenditure, including approximately $75 million of spending accrued in accounts payable, which is fully funded with cash on hand. Commercial operations are targeted in the fourth quarter of 2023.

Geismar 3 is expected to significantly enhance our cash generation capability and help us meet our commitment to reduce our greenhouse gas emissions intensity.

**Strategic Partnership**

In February 2022, the Company completed the sale of a 40% equity interest in Waterfront Shipping Limited for cash proceeds of approximately $149 million. Methanex retains the remaining 60% majority interest in Waterfront Shipping and will continue to operate it as a key element within our globally integrated supply chain.

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**Summary of Contractual Obligations and Commercial Commitments** 

A summary of the amount and estimated timing of cash flows related to our contractual obligations and minimum commercial commitments as at December 31, 2022, is as follows:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| ($ Millions) | 2023 | 2024-2025 | 2026-2027 | After 2027 | &nbsp;&nbsp;&nbsp;Total |
| Long-term debt repayments | $15 | $326 | $729 | $1101 | $2171 |
| Long-term debt interest obligations | 111 | 208 | 186 | 381 | 886 |
| Lease obligations | 157 | 265 | 207 | 524 | 1153 |
| Repayments of other long-term liabilities | 35 | 42 | 11 | 76 | 164 |
| Natural gas and other | 410 | 892 | 517 | 1128 | 2947 |
| Other commitments | 49 | 23 | 1 | 2 | 75 |
|  | $777 | $1756 | $1651 | $3212 | $7396 |

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**Long-Term Debt Repayments and Long-Term Debt Interest Obligations** 

We have $300 million of unsecured notes that mature in 2024, $700 million of unsecured notes that mature in 2027, $700 million of unsecured notes that mature in 2029, and $300 million of unsecured notes that mature in 2044. The remaining debt repayments represent the normal course obligations for principal repayments related to our limited recourse debt facilities. For additional information, refer to note 8 of our 2022 consolidated financial statements.

**Lease obligations** 

Lease obligations represent contractual payment dates and amounts for right-of-use assets recognized on balance sheet. The majority of lease obligations are for ocean-going vessels.

**Repayments of Other Long-Term Liabilities** 

Repayments of other long-term liabilities represent contractual payment dates or, if the timing is not known, we have estimated the timing of repayment based on management's expectations.

**Natural Gas and Other** 

We have commitments under take-or-pay contracts to purchase natural gas, to pay for transportation capacity related to the delivery of natural gas and to purchase oxygen and other feedstock requirements for our operating plants and Geismar 3 project. Take-or-pay means that we are obliged to pay for the supplies regardless of whether we take delivery. Such commitments are common in the methanol industry. These contracts generally provide a quantity that is subject to take-or-pay terms that is lower than the maximum quantity that we are entitled to purchase. The amounts disclosed in the table above represent only the minimum take-or-pay quantity.

The natural gas supply contracts for our facilities in New Zealand, Trinidad, Egypt and certain contracts in Chile are take-or-pay contracts denominated in United States dollars and include base and variable price components to manage our commodity price risk exposure. The variable price component of each natural gas contract is adjusted by a formula linked to methanol prices. We believe this pricing relationship enables these facilities to be competitive throughout the methanol price cycle. The amounts disclosed in the table for these contracts represent only the base price component representative of the minimum take-or-pay commitment.

We also have multi-year fixed price natural gas contracts and hedges to manage exposure to natural gas price risk and supply our production facilities in Geismar and Medicine Hat. We believe that the fixed price contracts, hedges and long-term natural gas dynamics in North America support the long-term operation of these facilities. In the above table, we have included natural gas commitments, not accounted for as financial instruments, in North America for Geismar and Medicine Hat at the contractual volume and fixed prices.

We have marketing rights for 100% of the production from our jointly owned Atlas and Egypt plants that results in purchase commitments of up to an additional 1.3 million tonnes per year of methanol offtake supply when these plants operate at capacity. As at December 31, 2022, the Company also had commitments to purchase methanol from other suppliers for approximately 0.9 million tonnes for 2023 and 1.1 million tonnes in aggregate thereafter. The pricing under these purchase commitments is referenced to pricing at the time of purchase or sale, and accordingly, no amounts have been included in the table above.

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The above table does not include costs for planned capital maintenance or expansion expenditures, as these expenditures may change, or any obligations with original maturities of less than one year.

**Other Commitments** 

We have future minimum lease payments under leases relating primarily to vessel charter, terminal facilities, office space and equipment that are outside the scope of IFRS 16. For additional information, refer to note 22 of our 2022 consolidated financial statements.

**Off-Balance Sheet Arrangements** 

As at December 31, 2022, we did not have any off-balance sheet arrangements, as defined by applicable securities regulators in Canada and the United States, that have, or are reasonably likely to have, a current or future material effect on our results of operations or financial condition.

**Financial Instruments** 

A financial instrument is any contract that gives rise to a financial asset of one party and a financial liability or equity instrument of another party. Financial instruments are either measured at amortized cost or fair value.

In the normal course of business, the Company's assets, liabilities and forecasted transactions, as reported in U.S. dollars, are impacted by various market risks including, but not limited to, natural gas prices and currency exchange rates. The time frame and manner in which the Company manages those risks varies for each item based on the Company's assessment of the risk and the available alternatives for mitigating risks.

The Company uses derivatives as part of its risk management program to mitigate variability associated with changing market values. Changes in the fair value of derivative financial instruments are recorded in earnings unless the instruments are designated as cash flow hedges, in which case the changes in fair value are recorded in other comprehensive income and are reclassified to profit or loss or accumulated other comprehensive income (loss) when the underlying hedged transaction is recognized in earnings or inventory. The Company designates as cash flow hedges certain derivative financial instruments to hedge its risk exposure to fluctuations in natural gas prices and to hedge its risk exposure to fluctuations on certain foreign-currency-denominated transactions.

Until settled, the fair value of Level 2 derivative financial instruments will fluctuate based on changes in commodity prices or foreign currency exchange rates and the fair value of Level 3 derivative financial instruments will fluctuate based on changes in the observable and unobservable valuation model inputs.

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The following table shows the carrying value of each of our categories of financial assets and liabilities and the related balance sheet items as at December 31, 2022 and December 31, 2021:

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| | | |
|:---|:---|:---|
| ($ Millions) | **2022** | 2021 |
| Financial assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial assets measured at fair value: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative instruments designated as cash flow hedges <sup>1</sup> | $**323** | $57 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair value of Egypt gas supply contract derivative <sup>2</sup> | **11** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial assets not measured at fair value: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | **858** | 932 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade and other receivables, excluding tax receivable | **488** | 541 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restricted cash included in other assets | **14** | 13 |
| Total financial assets <sup>3</sup> | $**1694** | $1543 |
| Financial liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial liabilities measured at fair value: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative instruments designated as cash flow hedges <sup>1</sup> | $**8** | $60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial liabilities not measured at fair value: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade, other payables and accrued liabilities, excluding tax payable | **656** | 661 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease obligations, including current portion | **870** | 717 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-term debt, including current portion | **2152** | 2158 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Land mortgage | **29** | 29 |
| Total financial liabilities | $**3715** | $3625 |

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<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp; Geismar and Medicine Hat natural gas hedges and euro foreign currency hedges designated as cash flow hedges are measured at fair value based on industry-accepted valuation models and inputs obtained from active markets.

<sup>2</sup> The Egypt natural gas supply contract is measured at fair value using a Monte-Carlo model classified within Level 3 of the fair value hierarchy.

<sup>3</sup>&nbsp;&nbsp;&nbsp;&nbsp; The carrying amount of the financial assets represents the maximum exposure to credit risk at the respective reporting periods.

As at December 31, 2022, all of the financial instruments were recorded on the consolidated statements of financial position at amortized cost with the exception of derivative financial instruments, which were recorded at fair value unless exempted.

The fair value of derivative instruments is determined based on industry-accepted valuation models using market observable inputs and are classified within Level 2 of the fair value hierarchy and those using significant unobservable inputs classified as Level 3. The fair value of all of the Company's derivative contracts as presented in the consolidated statements of financial position are determined based on present values and the discount rates used are adjusted for credit risk. The effective portion of the changes in fair value of derivative financial instruments designated as cash flow hedges is recorded in other comprehensive income. The spot element of forward contracts in the hedging relationships is recorded in other comprehensive income as the change in fair value of cash flow hedges. The change in the fair value of the forward element of forward contracts is recorded in other comprehensive income as the forward element excluded from the hedging relationships. Once a commodity hedge settles, the amount realized during the period and not recognized immediately in the statement of income is reclassified from accumulated other comprehensive income (equity) to inventory and ultimately through cost of goods sold. Foreign currency hedges settled, are realized during the period directly to the statement of income reclassified from the statement of other comprehensive income.

The Company has derivative instruments designated as cash flow hedges for Geismar and Medicine Hat to manage its exposure to changes in natural gas prices for its highly probable forecast natural gas purchases in North America.

The Company manages its foreign currency exposure to euro denominated sales by executing a number of forward contracts which it has designated as cash flow hedges for its highly probable forecast euro collections.

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**Related Party Transactions**

We own 63.1% of the Atlas methanol facility and our contractual agreement with our partners establishes joint control which results in our accounting for Atlas as an equity investment. As our equity investee, Atlas is our most significant related party. Refer to note 23 to the 2022 consolidated financial statements for information on our related party transactions.

**RISK FACTORS AND RISK MANAGEMENT** 

We are subject to risks that require prudent risk management. We believe the following risks, in addition to those described in the *Critical Accounting Estimates* section on page 40, to be among the most important for understanding the issues that face our business and our approach to risk management. Our strategic risk management process drives the identification, measurement, prioritization and management of our principal strategic risks. The Audit, Finance and Risk Committee of the Board provides oversight to the Company's risk management process.

**Methanol Market Fundamentals**

***Methanol Price*** 

The methanol business is a highly competitive commodity industry and future methanol prices will ultimately depend on the strength of global demand and methanol industry supply but can also be impacted by other factors such as global trade disputes and government sanctions. Methanol demand and industry supply are driven by several factors as described below. Methanol prices have historically been, and are expected to continue to be, characterized by cyclicality. We are not able to predict future methanol prices, which are driven by several factors that are beyond our control. Since methanol is the only product we produce and market, a decline in the price of methanol has a significant negative effect on our results of operations and financial condition.

***Methanol Demand***

Based on the diversity of end products in which methanol is used, demand for methanol is driven by a number of factors, including: the strength of global and regional economies, industrial production levels, energy prices, pricing of end products, downstream capacity additions and government regulations and policies. In addition, increasing focus on climate change and the timing and pace of the transition to a lower-carbon economy could impact the demand for methanol that is manufactured in a manner that produces GHG emissions. Changes in methanol demand based on availability of substitute products, consumer preference (including preference for low- or zero-carbon emission products), government regulation, or other factors may have a significant negative effect on our results of operations and financial condition irrespective of energy prices or economic growth rates. We cannot provide assurance that methanol demand will not be negatively impacted and this could have an adverse effect on our results of operations and financial condition.

***Energy Prices***

Demand for energy-related applications, which represents over 30% of global methanol demand, includes several applications including methyl tertiary-butyl ether ("MTBE"), fuel applications (including vehicle fuel, marine fuel and other thermal applications), di-methyl ether and biodiesel. Demand into methanol-to-olefins ("MTO") represents over 15% of global methanol demand. MTO plants produce light olefins which have wide applications in packaging, textiles, plastic parts and automotive components.

Methanol is an alternative feedstock for the production of light olefins in the methanol-to-olefins application and in 2022, methanol demand for MTO represented approximately 17% of global demand. MTO competes with olefins made from ethane, propane and naptha, which are typically derived from natural gas and oil-based feedstocks. The price of methanol relative to the price of ethane, propane and naptha can impact the competitiveness of methanol in this application. The price of olefins and downstream derivative products are also affected by their industry supply and demand fundamentals. In a low olefin product price environment, methanol could be a less competitive feedstock in the production of olefins, which could reduce demand for methanol or contribute to negative pressure on methanol prices.

Methanol can also be used to produce MTBE (an oxygenate blended into gasoline to improve air quality), blended directly with gasoline and used to produce di-methyl ether which can be blended with liquefied petroleum gas (propane). Because of this relationship, methanol demand is sensitive to the pricing of these energy products, which in turn are generally linked to global energy prices.

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We cannot provide assurance that energy prices will not negatively impact methanol demand, which could have an adverse effect on our results of operations and financial condition.

***Global Economic Growth Rates***

Traditional chemical demand, which represents just over 50% of global methanol demand, is used to produce traditional chemical derivatives, including formaldehyde, acetic acid and a variety of other chemicals that form the basis of a wide variety of industrial and consumer products. We believe that traditional chemical demand is influenced by the strength of global and regional economies and industrial production levels. Any slowdown in the global or regional economies, specifically manufacturing and industrial economies, can negatively impact demand for methanol and have a detrimental impact on methanol prices.

***Methanol Supply***

Methanol industry supply is impacted by the cost of production, methanol industry operating rates and new methanol industry capacity additions. Methanol is predominantly produced from natural gas and is also produced from coal, particularly in China. The cost of production is influenced by the availability and cost of raw materials, including coal and natural gas, freight costs, other operating and maintenance costs and government policies. An increase in economically competitive methanol supply, all else equal, can displace supply from higher cost producers and have a negative impact on methanol price. The industry has historically operated below stated capacity on a consistent basis, even in periods of high methanol prices, primarily due to shutdowns for planned or unplanned maintenance and feedstock shortages and/or uneconomical feedstock costs. Methanol industry supply can increase through improving operating rates of existing methanol plants. Methanol industry capacity can increase through the construction of new methanol plants, by restarting idle methanol plants, or by expanding or debottlenecking existing plants to increase their operating capacity. There is typically a span of four to six years to plan and construct a new world-scale methanol plant. Typical of most commodity chemicals, periods of high methanol prices encourage high-cost producers to operate at maximum rates and encourage the construction of new plants and expansion projects, leading to the possibility of oversupply in the market. However, historically, many of the announced capacity additions have not been constructed for a variety of reasons. There are significant barriers to entry in this industry. The construction of world-scale methanol facilities requires significant capital over a long lead time, a location with access to significant natural gas or coal feedstock with appropriate pricing, and an ability to market and deliver methanol cost-effectively and reliably to customers.

Approximately two million tonnes of new annualized capacity, outside of China was introduced in 2022, including Sabalan in Iran (1.8 million tonnes) and Liberty One Methanol in the US (0.2 million tonnes). In China, we estimate that approximately three million tonnes of new production capacity was added in 2022, including coal-based Jiutai Line No. Two (1.8 million tonnes) and several small coke-oven-gas-based plants. The methanol industry ran at slightly lower operating rates in 2022 due to various planned and unplanned outages, limited feedstock availability in some regions and high energy prices making production uneconomic in certain regions.

In North America, we are building a 1.8 million tonne plant, the Geismar 3 project, which will be our third plant in Louisiana, with first methanol production expected in the fourth quarter of 2023. In Iran, the 1.8 million tonne Dena plant is under construction which is scheduled to be completed in the next few years although actual timing is uncertain. The completion of major projects as well as ongoing plant operating rates in Iran continue to be challenged due to the impact of ongoing sanctions, plant technical issues as well as ongoing natural gas constraints (particularly in the winter months). In Malaysia, a 1.8 million tonne plant is under construction with a scheduled start up in 2024. In China, there are planned capacity additions over the near-to-medium term which we expect will be somewhat offset by the closure of some small-scale, inefficient and older plants. Methanol production from new capacity built in China will likely be consumed in that country.

We cannot provide assurance that increases in methanol supply will not outpace the level of future demand growth thereby contributing to negative pressure on methanol price.

**Macroeconomic Risks**

**Pandemic Risk**

Since early 2020, the COVID-19 pandemic and measures introduced in response to the pandemic by governments and health authorities have, at times, led to greater uncertainty in our business, commodity industries, energy markets and the broader global economy. The substantial reduction in global manufacturing and general economic activity that immediately followed the

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outbreak of the pandemic was subsequently followed by supply constraints and supply chain disruptions which impacted the supply-demand balance and inventory levels across many industries.

The potential future impacts of COVID-19 remain uncertain, including the emergence of new variants of the virus, future viral outbreaks or pandemics and the varying measures taken by governments and health authorities on the global economy and our business. A pandemic may increase our exposure to, and the magnitude of, each of the risks identified hereunder. The magnitude of the impact will depend on future developments that cannot be predicted and therefore we cannot provide assurance that a deterioration in economic conditions related to a pandemic will not have an adverse impact on our results of operations and financial condition.

**Global Economic Conditions**

In addition to the potential influence of global economic activity levels on methanol demand and price, changing global economic conditions can also result in changes in capital markets. A deterioration in economic conditions could have a negative impact on supply or demand for methanol, our investments, diminish our ability to access existing or future credit, and it could increase the risk of defaults by customers, suppliers, insurers and other counterparties. Also, inflationary pressures associated with buoyant economic activity, supply chain challenges or geopolitical events such as war, could have a negative impact on our cost structure. Considering these potential impacts, we cannot provide assurance that a deterioration in economic conditions or inflationary pressures associated with buoyant economic activity will not have an adverse impact on our results of operations and financial condition.

**Global Operations**

Our operations and investments are primarily located in North America, New Zealand, Trinidad, Egypt, Chile, Europe and Asia. We are subject to risks inherent in global operations which are more significant in certain jurisdictions, such as loss of revenue, property and equipment as a result of expropriation; import or export restrictions; anti-dumping measures; nationalization, war, insurrection, civil unrest, social activism, sabotage, terrorism and other political risks; increases in duties, taxes and governmental royalties; renegotiation of contracts with governmental entities; as well as changes in laws or policies or other actions by governments that may adversely affect our operations, including lack of certainty with respect to foreign legal systems, corruption and other factors inconsistent with the rule of law. Many of the foregoing risks related to foreign operations may also exist for our domestic operations in North America. We are also subject to potential risks associated with geopolitical disputes including: (i) those between countries in which we operate, buy, sell or transport methanol, (ii) those that border such countries such as over rights to water flowing across political boundaries including the Nile river which supplies water to our Egypt plant, and (iii) significant geopolitical disputes including wars, such as the current invasion of the Ukraine by Russia where the globalized nature of our operations and the commodity we sell could be negatively impacted by the actions of multiple countries and stakeholders.

The Company is committed to doing business in accordance with all applicable laws and its code of business conduct, but there is a risk that it, its subsidiaries or affiliated entities or their respective officers, directors, employees or agents could act in violation of its codes and applicable laws. Any such violation could severely damage our reputation and could result in substantial civil and criminal fines or penalties. Such damage to our reputation and fines and penalties could materially affect the Company's business and have an adverse impact on our results of operations and financial condition.

Because we derive a significant portion of our revenues from production and sales by subsidiaries outside of Canada, the payment of dividends or the making of other cash payments or advances by these subsidiaries may be subject to restrictions or exchange controls on the transfer of funds in or out of the respective countries or result in the imposition of taxes on such payments or advances.

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**Global Trade**

Methanol is a globally traded commodity produced at facilities located around the world. Trade in methanol is subject to duty in a number of jurisdictions. Methanol sold in certain markets from the countries in which we produce methanol is currently subject to import duties ranging from 0% to 5.5%. As well, there is currently an additional 25% duty on methanol imported from the US to China and from China to the US. Over the past number of years, methanol demand has grown faster in China compared to other markets. This growth has resulted in China currently representing approximately 60% of total methanol demand, which is supplied by both local and imported methanol. This concentration of industry demand creates a risk of market access from any production source as China may increase duties, restrict imports or take other measures to prevent or limit the import of methanol from a particular producing country. There can be no assurance that the countries where we produce methanol will continue to have access to all markets, including China, that duties will not increase, that duties will not be levied in other jurisdictions in the future or that we will be able to mitigate the impact of future duties, if levied, or that future duties will not have a significant negative effect.

Some producers and marketers of methanol may have direct or indirect contacts with countries that may, from time to time, be subject to international trade sanctions or other similar prohibitions ("sanctioned countries"). Methanol produced in sanctioned countries may sell at a lower price to methanol produced in non-sanctioned countries creating competitive price pressure for the methanol we produce. In addition to the methanol we produce, we purchase methanol from third parties under purchase contracts or on the spot market in order to meet our commitments to customers, and we also engage in product exchanges with other producers and marketers. We believe that we are in compliance with all applicable laws with respect to sales and purchases of methanol and product exchanges. However, as a result of the participation of sanctioned countries in our industry, we cannot provide assurance that we will not be exposed to reputational or other risks that could have an adverse impact on our results of operations and financial condition.

**Financial Risks**

**Taxation Risk**

The Company is subject to taxes, duties, levies, governmental royalties and other government-imposed compliance costs in numerous jurisdictions. New taxes and/or increases to the rates at which these amounts are determined could have an adverse impact on our results of operations and financial condition.

We have organized our operations in part based on certain assumptions about various tax laws (including capital gains, withholding taxes and transfer pricing), foreign currency exchange and capital repatriation laws and other relevant laws of a variety of foreign jurisdictions. While we believe that such assumptions are reasonable, we cannot provide assurance that foreign taxation or other authorities will reach the same conclusion. The results of audit of prior tax filings and the final determination of these events may have a material impact on the Company. Refer to *Litigation Risk and Legal Proceedings* on page 39 for more information related to current legal matters. Further, if such foreign jurisdictions were to change or modify such laws, we could suffer adverse tax and financial consequences.

**Liquidity Risk** 

As at December 31, 2022, we had a cash balance of $858 million, an undrawn $300 million revolving credit facility, and an undrawn $300 million non-revolving construction credit facility specifically related to the Geismar 3 project. Both credit facilities are with a syndicate of highly rated financial institutions with the construction facility expiring in July 2025 and the revolving facility expiring in July 2026. Our ability to maintain access to each facility is subject to meeting certain financial covenants, including an EBITDA to interest coverage ratio and a debt to capitalization ratio. Both ratios are calculated in accordance with definitions in the credit agreement that include adjustments related to the Company's limited recourse subsidiaries.

As at December 31, 2022, our long-term debt obligations include $1,983 million in unsecured notes and $168 million related to other limited recourse debt for ocean-going vessels (100% basis).

The covenants governing the unsecured notes, which are specified in an indenture, apply to the Company and its subsidiaries, excluding the Egypt entity and the Atlas joint venture entity, and include restrictions on liens, sale and lease-back transactions, a merger or consolidation with another corporation or a sale of all or substantially all of the Company's assets. The indenture also contains customary default provisions.

For additional information regarding long-term debt, refer to note 8 of our 2022 consolidated financial statements.

We cannot provide assurance that we will have sufficient liquidity to fund future capital projects without incurring additional debt. Additionally, we cannot provide assurance that we will be able to access capital in the future on commercially acceptable terms or at all, or that the financial institutions providing the credit facilities will have the ability to honour future draws.

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Additionally, failure to comply with any of the covenants or default provisions of the long-term debt facilities described above could result in a default under the applicable credit agreement that would allow the lenders to not fund future loan requests, accelerate the due date of the principal and accrued interest on any outstanding loans or restrict the payment of cash or other distributions. Any of these factors could have a significant negative effect on our results of operations, our ability to pursue and complete strategic initiatives or on our financial condition.

**Foreign Currency Risk**

The dominant currency in which we conduct business is the United States dollar, which is also our reporting currency. The most significant components of our costs are natural gas feedstock and ocean-shipping costs and substantially all of these costs are incurred in United States dollars. Some of our underlying operating costs, capital expenditures and purchases of methanol, however, are incurred in currencies other than the United States dollar, principally the Canadian dollar, the Chilean peso, the Trinidad and Tobago dollar, the New Zealand dollar, the euro, the Egyptian pound, the Chinese yuan and Korean won. We are exposed to increases in the value of these currencies that could have the effect of increasing the United States dollar equivalent of cost of sales, operating expenses and capital expenditures. A portion of our revenue is earned in Chinese Yuan, euros, Canadian dollars and, to a lesser extent, other currencies. We are exposed to declines in the value of these currencies compared to the United States dollar, which could have the effect of decreasing the United States dollar equivalent of our revenue.

**Customer Credit Risk** 

Our customers are large global or regional petrochemical manufacturers or distributors and a number are highly leveraged, though we have not experienced significant credit losses in the past. We monitor our customers' financial status closely; however, some customers may not have the financial ability to pay for methanol in the future and this could have an adverse effect on our results from operations and financial condition.

**Insurance Risks** 

Although we maintain operational and construction insurance, including business interruption insurance, we cannot provide assurance that we will not incur losses beyond the limits of, or outside the coverage of, such insurance or that insurers will be financially capable of honouring future claims. From time to time, various types of insurance for companies in the chemical and petrochemical industries have not been available on commercially acceptable terms or, in some cases, have been unavailable. We cannot provide assurance that in the future we will be able to maintain existing coverage or that premiums will not increase substantially.

**Operational Risks** 

**Security of Natural Gas Supply and Price** 

Natural gas is the principal feedstock for producing methanol and it accounts for a significant portion of our operating costs. Accordingly, our results from operations depend in large part on the availability and security of supply and the price of natural gas. If, for any reason, we are unable to obtain sufficient natural gas for any of our plants on commercially acceptable terms or we experience interruptions in the supply of contracted natural gas, we could be forced to curtail production or close such plants, which could have an adverse effect on our results of operations and financial condition.

***United States***

We have two plants in Geismar, Louisiana with an annual operating capacity of 2.2 million tonnes. The Geismar 3 project, with an expected annual production capacity of 1.8 million tonnes, is currently under construction, with commercial operations expected in the fourth quarter of 2023.

We have several fixed price hedges and fixed price physical supply agreements to manage natural gas price risk for our Geismar facilities. In North America, we have fixed price contracts and hedges in place targeting minimum operating rate requirements of approximately 70% in the near-term, declining over time. The balance of our gas requirements are purchased at spot prices.

We believe that the long-term natural gas dynamics in North America will support the long-term operations of these facilities; however, we cannot provide assurance that our contracted suppliers will be able to meet their commitments or that we will be able to secure additional natural gas on commercially acceptable terms and this could have an adverse impact on our results of operations and financial condition.

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***New Zealand***

We have three plants in New Zealand with a total operating capacity of 2.2 million tonnes of methanol per year. Two plants are located at Motunui and can produce 1.7 million tonnes per year and the third is located at nearby Waitara Valley and can produce 0.5 million tonnes. The Waitara Valley Plant was idled indefinitely in the first quarter of 2021 due to a lack of available gas supply. We have entered into several agreements with various natural gas suppliers with terms that range in length up to 2029. All gas supply agreements in New Zealand are take-or-pay agreements and include U.S. dollar base and variable price components where the variable price component is adjusted by a formula linked to methanol prices above a certain level. We believe this pricing relationship enables these facilities to be competitive at all points in the methanol price cycle. Certain contracts require the supplier to deliver a minimum amount of natural gas with additional volume dependent on the success of exploring and developing the related natural gas field.

We continue to pursue opportunities to contract additional natural gas to supply our plants in New Zealand, including gas to underpin the restart of the currently idled Waitara Valley plant.

The future operation of our New Zealand facilities, including the restart of the currently idled Waitara Valley plant, depends on the ability of our contracted suppliers to meet their commitments and the success of ongoing exploration and development activities in the region. We cannot provide assurance that our contracted suppliers will be able to meet their commitments or that exploration and development activities in New Zealand will be successful to enable us to operate at capacity or at all. We cannot provide assurance that we will be able to secure additional natural gas on commercially acceptable terms. These factors could have an adverse impact on our results of operations and financial condition.

***Trinidad*** 

We have two plants in Trinidad, Atlas (Methanex interest 63.1%) and Titan, with Methanex's interest in Trinidad representing an operating capacity of 2.0 million tonnes per year. Natural gas for our Atlas methanol production facility in Trinidad, with our share of total production capacity being 1.1 million tonnes per year, is supplied under a take-or-pay contract with the National Gas Company of Trinidad and Tobago Limited ("NGC"), which purchases the natural gas from upstream gas producers. The contract for Atlas has a U.S. dollar base and variable price components, where the variable portion is adjusted by a formula linked to methanol prices above a certain level and expires in September 2024.

The Titan plant was idled indefinitely since the first quarter of 2020 and we continue to engage with the NGC to secure an economic natural gas supply.

We cannot provide assurance that our contracted supplier will be able to meet their commitments, that we will be able to secure additional natural gas on commercially acceptable terms or that exploration and development activities in Trinidad will be successful to enable us to operate at capacity or at all. These factors could have an adverse impact on our results of operations and financial condition.

***Chile***

Natural gas for our two plants in Chile is supplied by various producers in Chile and Argentina. A portion of the contracted gas is subject to deliver-or-pay and take-or-pay provisions. Our current gas agreements and gas export permits from Argentina provide for sufficient gas to allow for a two-plant operation in Chile during the Southern hemisphere summer months. In 2022, one plant operated throughout the year and a second plant operated for seven months.

Our primary Chilean natural gas supplier is Empresa Nacional del Petróleo ("ENAP"). ENAP has made significant investments over the past several years in the development of natural gas from unconventional reservoirs, which has resulted in increased gas deliveries from ENAP to our facilities. The agreements for natural gas supply with ENAP underpin approximately 25% of the 1.7 million tonnes of annual operating capacity for 2023 through 2025.

In 2022, we received natural gas from Argentina from three different natural gas suppliers pursuant to firm supply agreements. These agreements commenced in October 2021 and expired at the end of April 2022. We also received Argentine natural gas in 2022 from a fourth supplier, YPF S.A. from January until April 2022 and from October through December 2022. We have a gas supply agreement with YPF S.A. that expires at the end of 2025. The price paid for natural gas for our Chilean facilities from our Chilean and Argentine suppliers is a U.S. dollar base price plus a variable price component that is adjusted by a formula linked to methanol prices above a certain level.

While we continue to work with gas suppliers in Chile and Argentina to secure sufficient natural gas to sustain our Chile operations, we cannot provide assurance that our contracted suppliers will be able to meet their commitments, that we will be able to secure additional natural gas on commercially acceptable terms, that Argentina will grant future export permits for natural gas to be delivered to Chile or that exploration and development activities in Chile and Argentina will be successful to

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enable us to operate at capacity or at all. These factors could have an adverse impact on our results of operations or financial condition.

***Egypt***

We have a 25-year, take-or-pay natural gas supply agreement expiring in 2035 for the 1.3 million tonne per year methanol plant in Egypt in which we have a 50% equity interest. The price paid for gas is based on a U.S. dollar base price plus a variable price component that is adjusted by a formula linked to methanol prices above a certain level. Under the contract, the gas supplier is obligated to supply, and we are obliged to take or pay for, a specified annual quantity of natural gas. In addition, the natural gas supply agreement has a mechanism whereby we are partially compensated when gas delivery shortfalls in excess of a certain threshold occur. Natural gas is supplied to this facility from the same gas delivery grid infrastructure that supplies other industrial users in Egypt, as well as the general Egyptian population.

Our Egypt facility has experienced gas restrictions in the past during periods of significant social unrest and government transition and we believe this contributed to past constraints in the development of natural gas reserves. The restrictions experienced in past years may occur in the future. We cannot provide assurance that our contracted supplier will be able to meet its commitments or that exploration and development activities in Egypt will be successful to enable us to operate at capacity or at all. These factors could have an adverse impact on our results of operations and financial condition.

***Canada*** 

We have entered into fixed price contracts to supply 80-90% of our natural gas requirements for our Medicine Hat facility through 2031. The balance of our gas requirements is purchased under contracts at spot prices.

We cannot provide assurance that our contracted suppliers will be able to meet their commitments or that we will be able to secure additional natural gas for our Medicine Hat facility on commercially acceptable terms and this could have an adverse impact on our results of operations and financial condition.

**Production Risks** 

Most of our earnings are derived from the sale of methanol produced at our plants. Many of our methanol plants have been in operation for multiple decades and with appropriate maintenance they are still capable of operating efficiently and cost-effectively today. Our business is subject to the risks of operating methanol production facilities, such as equipment breakdowns, interruptions in the supply of natural gas and other feedstocks, including oxygen and utilities such as water and steam, power failures, longer-than-anticipated planned maintenance activities, loss of port facilities, natural disasters or any other event, including unanticipated events beyond our control, that could result in a prolonged shutdown of any of our plants or impede our ability to produce and deliver methanol to customers. A prolonged plant shutdown at any of our major facilities could have an adverse effect on our results of operations and financial condition.

**Capital Projects**

Our ability to effectively allocate capital, including successfully identifying, developing and completing capital projects is subject to a number of risks, including finding and selecting favourable locations for new facilities where sufficient natural gas and other feedstock is available with acceptable commercial terms, obtaining project or other financing on satisfactory terms, constructing and completing the projects within the contemplated budgets and schedules, and other risks commonly associated with the design, construction and startup of large complex industrial projects. Further risks include the impact of evolving government regulation relating to carbon intensive industries and evaluating the technological feasibility and anticipated operation of new plant designs such as those with lower carbon intensity.

In addition, the COVID-19 pandemic or other similar events could impact our ability to access necessary parts and equipment in a timely manner, meet key equipment delivery timelines, obtain permits, complete testing and inspection, and carry out project activities as a result of labour shortages or restrictions. These factors could result in schedule delays and cost escalation in completing capital projects.

We cannot provide assurance that we will be able to effectively allocate capital to identify or develop methanol projects or that any changes to the targeted timing of completion or estimated cost or ability to complete capital projects or future ability to operate at production capacity, due to a number of factors, which could have an adverse impact on our results of operations and financial condition.

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**Technological Risks** 

New technologies for natural-gas-based methanol production have been primarily incremental rather than transformational. Alternative feedstocks and methods for methanol production, including producing methanol from renewable resources exist today, but are not currently economically competitive at scale. The adoption of new technologies for methanol production, including those that reduce the GHG emissions intensity, may make our plants less competitive or obsolete over time. In addition, implementing technologies to reduce GHG emissions, including carbon capture and storage, could result in significant capital expenditures.

As a result, we cannot provide assurance that new technologies in methanol production will not have an adverse effect on our results of operations and financial condition.

**Joint Arrangement Risk**

Certain Methanex assets are jointly held and are governed by partnership and shareholder agreements. As a result, certain decisions regarding these assets require a simple majority, while others require 100 percent approval of the owners. In addition, certain of these assets (ocean-going vessels) are operated by unrelated third-party entities. The operating results of these assets is to some extent dependent on the effectiveness of the business relationship and decision making among Methanex and the other joint owner(s) and the expertise and ability of these third-party operators to successfully operate and maintain the assets. While Methanex believes that there are prudent governance and contractual rights in place, there can be no assurance that Methanex will not encounter disputes with partners. Such events could impact operations or cash flows of these assets which, in turn, could have an adverse effect on our results of operations and financial condition.

**Purchased Product Price Risk**

In addition to the sale of methanol produced at our plants, we also purchase methanol produced by others on the spot market and through purchase contracts to meet our customer commitments and support our marketing efforts. We have adopted the first-in, first-out method of accounting for inventories and it generally takes between 30 and 60 days to sell the methanol we purchase. Consequently, we have the risk of holding losses on the resale of this product to the extent that methanol prices decrease from the date of purchase to the date of sale. Holding losses, if any, on the resale of purchased methanol could have an adverse effect on our results of operations and financial condition.

**Supply Chain Risks** 

Our production is transported through various pipelines, terminals, marine, rail and road networks making up our integrated supply chain. These networks, and ultimately our supply chain, may be interrupted by means outside of our control or have operational constraints or restrictions that could prohibit the safe and timely transportation and distribution of methanol to our customers and prolonged disruptions could have an adverse effect on our results of operations and financial condition.

**Shipping Capacity Risks** 

Excess capacity within our fleet of ocean vessels resulting from a prolonged plant shutdown or other event could have an adverse effect on our results of operations and financial condition as our vessel fleet is subject to fixed time charter costs. In the event we have excess shipping capacity, we may be able to mitigate some of the excess costs by entering into sub-charters or third-party backhaul arrangements, although the success of this mitigation is dependent on conditions within the broader global shipping industry. If we suffer any disruptions in our distribution system and are unable to mitigate these costs, this could have an adverse effect on our results from operations and financial condition.

**Talent Attraction and Retention Risks**

The safe and reliable operation of our methanol plants, logistics and supporting functions rely on a skilled and experienced workforce. We compete for skilled employees in various locations globally where labour market conditions can be highly competitive. If we are unable to attract, develop, and retain a skilled and experienced workforce or effectively manage succession in key roles, this may be an impediment to the operations of our methanol plants, the optimization of logistics and impact our daily operations which could have an adverse impact on our results of operations and financial condition.

**Cybersecurity Risks**

Our business processes rely on Information Technology ("IT") systems that are interconnected with external networks and increasingly hosted by third parties in the cloud. The interconnection of external networks increases the threat of cyberattack and the importance of cybersecurity. In particular, if a cyberattack was targeted at our production facilities, our supply chain or other key infrastructure networks, the result could harm our plants, customers, environment, people and our ability to meet

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customer commitments for a period of time. In addition, targeted attacks on our systems (or third parties that we rely on), failure of a key IT system or a breach in security measures designed to protect our IT systems, including attempts to divert financial assets or introduce ransomware to extract payment could have an adverse impact on our results of operations, financial condition and reputation. We have previously been the subject of cyber attacks on our internal systems, but these incidents have not had a significant negative impact on our results of operations.

We have a comprehensive program reviewed by an independent third party on a periodic basis to protect our assets, detect an intrusion and respond in the event of a cybersecurity incident. As the cyberthreat landscape continues to evolve, we implement continuous mitigation efforts, including: cyber education for our staff; risk-prioritized controls to protect against known and emerging threats; segregating core operating systems from our corporate systems; tools to provide automated monitoring and alerting; and backup and recovery systems to restore systems and return to normal operations. We may be required to commit additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerabilities to cyberattacks. The Audit, Finance and Risk Committee is responsible for overseeing our cybersecurity mitigation efforts.

We collect, use and store sensitive data in the normal course of business, including intellectual property, proprietary business information and personal information of our employees and third parties. Despite our security measures in place, our IT systems may be vulnerable to cyberattacks or breaches. Any such breach could compromise information used or stored on our IT systems and/or networks and, as a result, the information could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties or other negative consequences, including disruption to our operations and damage to our reputation, which could have an adverse impact on our results of operations and financial condition.

**Reputational Risk** 

Damage to our reputation could result from the actual or perceived occurrence of any number of events, and could include any negative publicity (for example, with respect to our handling of environmental, carbon dioxide, employment, health or safety matters), whether true or not. There is a risk of increasing stakeholder expectations around climate change and transition to a lower-carbon economy. Further risks arise from these changing stakeholder perceptions related to the way in which we are viewed as contributing to (or hindering) a transition to a low-carbon economy and responding to climate change. In March 2023, we issued our 2022 Sustainability Report, aligned with the Sustainability Accounting Standards Board (SASB) and the Task-Force on Climate-related Financial Disclosures (TCFD). Our 2022 Sustainability Report is available at https://www.methanex.com/sustainability. Our reputation could be impacted by evolving perceptions of carbon-intensive industries, petrochemical industries and, most specifically, the methanol industry and its associated downstream derivatives. Although we believe that we conduct our operations in a prudent manner and that we take care in protecting our reputation, we do not ultimately have direct control over how we are perceived by others. Reputation loss may result in decreased access to capital and insurance coverage, decreased investor confidence, challenges with employee retention and talent attraction, an impediment to our overall ability to advance our projects, difficulty in obtaining permits, or increased challenges in maintaining our social license to operate, which could have an adverse impact on our results of operations and financial condition.

**Climate Related Risks**

**Transition Risks - Regulatory**

***GHG Legislation***

Methanex generates GHG emissions, primarily as carbon dioxide, directly and indirectly through the production, distribution and use of its products. Carbon dioxide ("CO2") is a byproduct of the development and extraction of hydrocarbons, including natural gas used as a feedstock in methanol production. Carbon dioxide is also a by-product of the methanol production process. The amount of CO2 generated by the methanol production process depends on the production technology, feedstock, operating rate of the plant and any export of the by-product hydrogen. Carbon dioxide emissions are also generated when fuel is consumed during the global transport of methanol. The GHG Protocol Corporate Standard classifies a company's GHG emissions into three 'scopes'. Scope 1 emissions are direct emissions from owned or controlled sources. Scope 2 emissions are indirect emissions from the generation of purchased energy. Scope 3 emissions are all indirect emissions (not included in Scope 2) that occur in the value chain, including both upstream and downstream emissions.

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We monitor and manage our GHG emissions intensity for Scope 1 and Scope 2 emissions, defined as the equivalent quantity of CO2 released per unit of production or transported tonne, relating to both methanol production and our Methanex owned marine operations. Plant efficiency, and thus CO2 emissions, is highly dependent on the design of the methanol plant, plant reliability and availability of natural gas among other factors, and accordingly CO2 emissions may vary from year to year depending on the mix of production assets and vessels in operation.

Public attitudes around climate change and the transition to a lower-carbon economy continue to evolve. Under the Paris Agreement within the United Nations Framework Convention on Climate Change, many of the countries we operate in have agreed to put forth substantial efforts and commitments to reduce GHG emissions, and/or impose carbon taxes. We are currently subject to GHG regulations in New Zealand, Canada and Chile, while our production in the United States, Trinidad and Egypt is currently not subject to such regulations. These regulations result in additional costs to produce methanol. Many of our competitors produce methanol in countries with no imposed GHG regulations or carbon taxes and as such, further increases in regulations or carbon taxes in the countries in which we operate may negatively impact our competitive position within the methanol industry. There are ongoing reviews and potential changes to government GHG regulations in countries where we have operations or conduct business, including potential carbon adjustment mechanisms that could impact the efficient management of our global supply chain.

We cannot provide assurance that GHG legislation changes, new legislation, or changes in carbon prices and initiatives related to climate change in these jurisdictions, or others, will not have an adverse impact on our results of operations and financial condition.

***Shipping Regulations***

The International Maritime Organization (IMO) has targets and Europe has proposed regulations to reduce GHG emissions from shipping. Methanol is one of several potential fuels that could be used to comply with these regulations. We cannot provide assurance that methanol will be the preferred fuel for demand under shipping or clean fuel regulations, or that we will be able to supply sufficient compliant methanol to meet this demand.

**Physical Impacts** 

Climate change poses a number of potential risks and impacts to Methanex that may increase over time. The prospective impact of climate change may have an adverse impact on our operations, our suppliers or customers. The physical impacts of climate change may include water scarcity, changing sea or river levels, changing storm patterns and intensities, and changing temperature levels, and the impact of any of these changes could be severe.

Four of our methanol production sites rely on access to fresh water in the methanol production process. Potential shortages or constraints in fresh water supply could impact methanol production at these sites. Our other two sites, Trinidad and Chile, rely on ocean water and have equipment to desalinate water for the methanol production process.

Our transport of methanol relies primarily on vessels to ship methanol from our production sites to customers around the world. We have, at times, experienced logistics delays in our supply chain due to high and low river levels in exporting methanol from a production site or delivering methanol by vessel or barge to customers. High or low river levels impacting our production assets and supply chain, more severe and frequent storms and weather events could have a material adverse impact on our operating capacity and supply chain. We cannot predict, at this time, the prospective impact of climate change on our operations, suppliers or customers, which could have an adverse impact on our results of operations and financial condition.

**Regulatory and Compliance Risks**

**Environmental Regulation**

The countries in which we operate and international and jurisdictional waters in which our vessels operate have laws, regulations, treaties and conventions in force to which we are subject, governing the environment and the management of natural resources as well as the handling, storage, transportation and disposal of hazardous or waste materials. We are also subject to laws and regulations governing emissions and the import, export, use, discharge, storage, disposal and transportation of toxic substances. The products we use and produce are subject to regulation under various health, safety and environmental laws. Non-compliance with these laws and regulations may give rise to compliance orders, fines, injunctions, civil liability and criminal sanctions.

Laws and regulations with respect to protecting the environment have become more stringent over time and may, in certain circumstances, impose absolute liability rendering a person liable for environmental damage without regard to negligence or fault on the part of such person. Such laws and regulations may also expose us to liability for the conduct of, or conditions

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caused by others or for our own acts even if we complied with applicable laws at the time such acts were performed. To date, environmental laws and regulations have not had a significant adverse effect on our capital expenditures, earnings or competitive position. However, operating petrochemical manufacturing plants and distributing methanol exposes us to risks in connection with compliance with such laws and we cannot provide assurance that we will not incur significant costs or liabilities in the future.

Although we have formal and proactive compliance management systems in place, we cannot provide assurance over ongoing compliance with existing legislation or that future laws and regulations to which we are subject governing the environment and the management of natural resources as well as the handling, storage, transportation and disposal of hazardous or waste materials will not have an adverse effect on our results of operations and financial condition.

***Government Regulations and Policies – Methanol***

Changes in environmental, health and safety laws, regulations or requirements in any country where methanol is produced or consumed could impact methanol demand.

Above certain inhalation and ingestion levels, methanol is toxic to humans. The United States Environmental Protection Agency ("EPA") issued a draft assessment for methanol in 2010 classifying methanol as likely to be carcinogenic to humans. A final non-cancer assessment released by the EPA in 2013 established the maximum ingestion and inhalation levels for methanol that it claims will not result in adverse health impacts. We are unable to determine whether the current draft classification relating to the carcinogenicity of methanol will be maintained in the final cancer assessment or if this will lead other government agencies to take actions related to methanol. Any further action or reclassification of methanol could reduce future methanol demand, which could have an adverse effect on our results of operations and financial condition.

***Government Regulations and Policies – Formaldehyde and Other Methanol-Derived Products***

In 2022, methanol demand for the production of formaldehyde represented approximately 26% of global methanol demand and is the largest demand segment. The largest use for formaldehyde is as a component of urea-formaldehyde and phenol-formaldehyde resins, which are used in adhesives for plywood, particleboard, oriented strand board, medium-density fibreboard and other reconstituted or engineered wood products. There is also demand for formaldehyde as a raw material for engineering plastics and in the manufacture of a variety of other products, including elastomers, paints, building products, foams, polyurethane and automotive products.

Formaldehyde is classified as a known human carcinogen by the EPA, and as carcinogenic to humans by the World Health Organization. The EPA classifies a substance in this manner when there is sufficient evidence of carcinogenicity from studies in humans, which indicates a causal relationship between exposure to the agent, substance, or mixture, and human cancer. In 2019, formaldehyde was selected as one of 20 priority chemicals for review under the *Toxic Substances Control Act* of the EPA and we understand this review is ongoing. We are unable to determine whether the current classification or future reclassifications of formaldehyde could impose limits or restrictions related to formaldehyde in the United States or elsewhere. Any such actions could reduce future methanol demand for use in producing formaldehyde, which could have an adverse effect on our results of operations and financial condition.

Further, any government regulation or policy relating to any other methanol-derived product could also reduce future methanol demand for that product, which could have an adverse effect on our results of operations and financial condition.

**Litigation and Legal Proceedings** 

The Company is subject, from time to time, to litigation and may be involved in disputes with other parties in the future, which may result in litigation and claims under such litigation may be material. Various types of claims may be raised in these proceedings, including, but not limited to breach of contract, product liability, tax, employment matters and in relation to an attack, breach or unauthorized access to Methanex's information technology and infrastructure, environmental damage, climate change and the impact thereof, antitrust, bribery, and other forms of corruption. The Company cannot predict the outcome of any litigation. Defense and settlement costs may be substantial, even with respect to claims that have no merit. If the Company cannot resolve these disputes favourably, its business, financial condition, results of operations and future prospects may be materially adversely affected.

***Trinidad*** 

The Board of Inland Revenue of Trinidad and Tobago has audited and issued assessments against our 63.1% owned joint venture, Atlas, in respect of the 2005 to 2016 financial years. All subsequent tax years remain open to assessment. The assessments relate to the pricing arrangements of certain long-term fixed-price sales contracts with affiliates that

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commenced in 2005 and continued with affiliates through 2014 and with an unrelated third party through 2019. The long-term fixed-price sales contracts with affiliates were established as part of the formation of Atlas and management believes these were reflective of market considerations at that time.

During the periods under assessment and continuing through 2014, approximately 50% of Atlas-produced methanol was sold under these fixed-price contracts. From late 2014 through 2019 fixed-prices sales to an unrelated third party represented approximately 10% of Atlas-produced methanol. Atlas had partial relief from corporation income tax until late July 2014.

The Company believes it is impractical to disclose a reasonable estimate of the potential contingent liability due to the wide range of assumptions and interpretations implicit in the assessments.

The Company has lodged objections to the assessments. No deposits have been required to lodge objections. Although there can be no assurance that these tax assessments will not have a material adverse impact, based on the merits of the case and advice from legal counsel, we believe our position should be sustained, that Atlas has filed its tax returns and paid applicable taxes in compliance with Trinidadian tax law, and as such has not accrued for any amounts relating to these assessments. Contingencies inherently involve the exercise of significant judgment, and as such the outcomes of these assessments and the financial impact to the Company could be material.

We anticipate the resolution of this matter through the court systems to be lengthy and, at this time, cannot predict a date as to when we expect this matter to be ultimately resolved.

**CRITICAL ACCOUNTING ESTIMATES** 

We believe the following selected accounting policies and issues are critical to understanding the estimates, assumptions and uncertainties that affect the amounts reported and disclosed in our consolidated financial statements and related notes. Certain of our accounting policies, including depreciation and amortization, recoverability of asset carrying values, leases, income taxes and fair value measurement of financial instruments require us to make assumptions relating to operations and about the price and availability of natural gas feedstock. See additional discussion of the risk factors and risk management by region in the *Security of Natural Gas Supply and Price* section on page 33. See note 2 to our 2022 consolidated financial statements for our significant accounting policies.

**Property, Plant and Equipment** 

Our business is capital intensive and has required, and will continue to require, significant investments in property, plant and equipment. As at December 31, 2022, the net book value of our property, plant and equipment was $4.2 billion.

**Capitalization** 

Property, plant and equipment are initially recorded at cost. The cost of purchased equipment includes expenditures that are directly attributable to the purchase price, delivery and installation. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to the location and condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and borrowing costs on self-constructed assets that meet certain criteria. Routine repairs and maintenance costs are expensed as incurred.

As at December 31, 2022, we had accrued $37 million for site restoration costs relating to the decommissioning and reclamation of our methanol production sites. Inherent uncertainties exist in this estimate because the restoration activities will take place in the future and there may be changes in governmental and environmental regulations and changes in removal technology and costs. It is difficult to estimate the future costs of these activities as our estimate of fair value is based on current regulations and technology. Because of uncertainties related to estimating the cost and timing of future site restoration activities, future costs could differ materially from the amounts estimated.

**Depreciation and Amortization** 

Depreciation and amortization is generally provided on a straight-line basis at rates calculated to amortize the cost of property, plant and equipment from the commencement of commercial operations over their estimated useful lives to estimated residual value.

The estimated useful lives of the Company's buildings, plant installations and machinery at installation, excluding costs related to turnarounds, initially range from 10 to 25 years depending on the specific asset component and the production facility to

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which it is related. The Company determines the estimated useful lives of individual asset components based on the shorter of its physical life or economic life. The physical life of these assets is generally longer than the economic life. The economic life is primarily determined by the nature of the natural gas feedstock available to our various production facilities. The estimated useful life of production facilities may be adjusted from time-to-time based on turnarounds, plant refurbishments and gas availability. Factors that influence the nature of natural gas feedstock availability include the terms of individual natural gas supply contracts, access to natural gas supply through open markets, regional factors influencing the exploration and development of natural gas and the expected price of securing natural gas supply. We review the factors related to each production facility on an annual basis to determine if changes are required to the estimated useful lives.

**Recoverability of Asset Carrying Values** 

Long-lived assets are tested for recoverability whenever events or changes in circumstances, either internal or external, indicate that the carrying amount may not be recoverable ("triggering events"). Examples of such triggering events related to our long-lived assets include, but are not restricted to: a significant adverse change in the extent or manner in which the asset is being used or in its physical condition; a change in management's intention or strategy for the asset, which includes a plan to dispose of the asset or idle the asset for a significant period of time; a significant adverse change in our long-term methanol price assumption or in the price or availability of natural gas feedstock required to manufacture methanol; a significant adverse change in legal factors or in the business climate that could affect the asset's value, including an adverse action or assessment by a foreign government that impacts the use of the asset; or a current period operating or cash flow loss combined with a history of operating or cash flow losses, or a projection or forecast that demonstrates continuing losses associated with the asset's use.

When a triggering event is identified, recoverability of long-lived assets is measured by comparing the carrying value of an asset or cash-generating unit to the estimated recoverable amount, which is the higher of its estimated fair value less costs to sell or its value in use. Fair value less costs of disposal is determined by ascertaining the price that would be received to sell an asset in an orderly transaction between market participants under current market conditions, less incremental costs directly attributable to the disposal, excluding finance costs and income tax expense. Value in use is determined by measuring the pre-tax cash flows expected to be generated from the cash-generating unit over its estimated useful life discounted by a pre-tax discount rate. An impairment writedown is recorded if the carrying value exceeds the estimated recoverable amount. An impairment writedown recognized in prior periods for an asset or cash-generating unit is reversed if there has been a subsequent recovery in the value of the asset or cash-generating unit due to changes in events and circumstances. For the purposes of recognition and measurement of an impairment writedown or reversal, we group our long-lived assets with other assets and liabilities to form a cash-generating unit at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. To the extent that our methanol facilities in a particular location are interdependent as a result of common infrastructure and/or feedstock from shared sources that can be shared within a facility location, we group our assets based on site locations for the purpose of determining impairment.

When impairment indicators exist, there are two key variables that impact our estimate of future cash flows from producing assets: (1) the methanol price and (2) the price and availability of natural gas feedstock. Short-term methanol price estimates are based on current supply and demand fundamentals and current methanol prices. Long-term methanol price estimates are based on our view of long-term supply and demand, incorporating third-party assumptions, forecasts and market-observable prices when appropriate. Consideration is given to many factors, including, but not limited to, estimates of global industrial production rates, energy prices, changes in general economic conditions, the ability for the industry to add further global methanol production capacity and earn an appropriate return on capital, industry operating rates and the global industry cost structure. Our estimate of the price and availability of natural gas takes into consideration the current contracted terms, as well as factors that we believe are relevant to supply under these contracts and supplemental natural gas sources. Other assumptions included in our estimate of future cash flows include the estimated cost incurred to maintain the facilities, estimates of transportation costs and other variable costs incurred in producing methanol in each period. Changes in these assumptions will impact our estimates of future cash flows when testing for impairment and could impact our estimates of the useful lives of property, plant and equipment. Consequently, it is possible that our future operating results could be adversely affected by further asset impairment charges or by changes in depreciation and amortization rates related to property, plant and equipment. In relation to previous impairment charges, we do not believe that there are significant changes in events or circumstances that would support their reversal.

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In Trinidad the Titan plant has remained idled since 2020. The extended outage has been identified as an impairment indicator in our Titan cash generating unit ("Titan CGU"). The impairment test performed on the Titan CGU resulted in no impairment provision recognized as the estimated recoverable value, determined on a fair value less costs of disposal methodology, exceeded the carrying value. The estimated recoverable value was based on an operating period for Titan aligned to natural gas reserves estimates in Trinidad with no terminal value, discounted at an after-tax rate of 16%.

The following table indicates the percentages by which key assumptions would need to change individually for the estimated Titan CGU recoverable value to be equal to the carrying value:

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| | |
|:---|:---|
| Key Assumptions | Change Required for Carrying Value to Equal Recoverable Value |
| Long-term average realized price | 18 percent decrease |
| Production volumes | 27 percent decrease |
| Gas price | 21 percent increase |
| Discount rate (after-tax) | 15 percent increase |

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The sensitivity above has been prepared considering each variable independently. Historically, our natural gas contracts in Trinidad have included terms whereby a change in methanol price results in a change in natural gas price, protecting margins should revenue decrease.

**Leases**

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

In determining the lease term, the Company considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. The assessment is reviewed upon a trigger by an event or a significant change in circumstances.

Certain leases contain non-lease components, excluded from the right-of-use asset and lease liability, related to operating charges for ocean vessels and terminal facilities. Judgment is applied in the determination of the stand-alone price of the lease and non-lease components. All related operating charges are classified as variable payments and all such costs are accounted for as a non-lease component charged to the consolidated statement of operations as incurred.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. In measuring lease liabilities, the Company discounts lease payments using the incremental borrowing rate applicable at lease inception. The incremental borrowing rate is determined using a credit rating specific to the entity, location, asset security and term of the lease.

**Income Taxes** 

We calculate current and deferred tax provisions for each of the jurisdictions in which we operate. Actual amounts of income tax expense or recoveries are not final until tax returns are filed and accepted by the relevant tax authorities and as a result, the ultimate amount of taxes the Company may owe could differ from the amounts recognized in the consolidated financial statements. The filing of annual tax returns primarily occurs subsequent to the issuance of the financial statements and the final determination of actual amounts may not be completed for a number of years. Transactions may be challenged by tax authorities and the Company's operations may be assessed in subsequent periods, which could result in significant additional taxes, penalties and interest. Uncertain tax positions derive from the complexity of tax law and its interpretation by tax authorities and ultimately the judicial system in place in each jurisdiction. Uncertain tax positions, including interest and penalties, are recognized and measured applying management estimates. Given the complexity, management engages third-party experts as required, for the interpretation of tax law, transfer pricing regulations and determination of the ultimate resolution of its tax positions. The Company is subject to various taxation authorities who may interpret tax legislation differently, and resolve matters over longer periods of time. The differences in judgement in assessing uncertain tax positions may result in material differences in the final amount or timing of the payment of taxes or settlement of tax assessments.

Deferred income tax assets and liabilities are determined using enacted or substantially enacted tax rates for the effects of net operating losses and temporary differences between the book and tax bases of assets and liabilities. We recognize deferred tax assets to the extent it is probable that taxable profit will be available against which the asset can be utilized. In making this

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determination, certain judgments are made relating to the level of expected future taxable income and to available tax-planning strategies and their impact on the use of existing loss carryforwards and other income tax deductions. We also consider historical profitability and volatility to assess whether we believe it is probable that the existing loss carryforwards and other income tax deductions will be used to offset future taxable income otherwise calculated. Management routinely reviews these judgments. As at December 31, 2022, we had recognized deferred tax assets of $46 million primarily relating to non-capital loss carryforwards and other temporary differences in the United States and Trinidad. As at December 31, 2022, the Company had $231 million of unrecognized deductible temporary differences in the United States. If judgments or estimates in the determination of our current and deferred tax provision prove to be inaccurate, or if certain tax rates or laws change, or new interpretations or guidance emerge on the application of tax legislation, our results from operations and financial position could be materially impacted.

**Financial Instruments Measured at Fair Value**

The Company uses derivatives as part of its risk management program to mitigate variability associated with changing market values. Changes in the fair value of derivative financial instruments are recorded in earnings unless the instruments are designated as cash flow hedges, in which case the changes in fair value are recorded in other comprehensive income and are reclassified to profit or loss or accumulated other comprehensive income (loss) when the underlying hedged transaction is recognized in earnings or inventory. The Company designates as cash flow hedges certain derivative financial instruments to hedge its risk exposure to fluctuations in natural gas prices and to hedge its risk exposure to fluctuations on certain foreign-currency-denominated transactions. Assessment of contracts as derivative instruments, applicability of the own use exemption, determination of whether contracts contain embedded derivatives to be separated, the valuation of financial instruments and derivatives and hedge effectiveness assessments require a high degree of judgment and are considered critical accounting estimates due to their complex nature and the potential impact on our financial statements.

The Company holds a long-term natural gas supply contract expiring in 2035 with the Egyptian Natural Gas Holding Company, a State-Owned enterprise in Egypt. The natural gas supply contract includes a base fixed price plus a premium based on the realized price of methanol for the full volume of natural gas to supply the plant for the remainder of its useful life. The terms of this contract were amended during the third quarter of 2022 to redirect and sell the plant's contracted natural gas for a three-month period. The amendment has modified the accounting for the contract resulting in the contract being treated as a derivative measured at fair value.

There is no observable, liquid spot market or forward curve for natural gas in Egypt. In addition, there are limited observable prices for natural gas in Egypt as all natural gas purchases and sales are controlled by the government and the observed prices differ based on the produced output or usage.

Due to the absence of an observable market price for an equivalent or similar contract to measure fair value, the contract's fair value is estimated using a Monte-Carlo model. We consider market participant assumptions in establishing the model inputs and determining fair value, including adjusting the base fixed price and methanol based premium at the valuation date to consider estimates of inflation since contract inception.

Refer to note 19 to our 2022 consolidated financial statements for more information.

**ADOPTION OF NEW ACCOUNTING STANDARDS** 

The Company has adopted the amendments to IAS 16, *Property Plant, and Equipment*, regarding the accounting for proceeds before intended use, and amendments to IAS 37, Provisions, *Contingent Liabilities and Contingent Assets*, regarding the inclusion of all costs of fulfilling an onerous contract, which were effective for annual periods beginning on or after January 1, 2022. The amendments did not have a material impact on the Company's consolidated financial statements.

**ANTICIPATED CHANGES TO INTERNATIONAL FINANCIAL REPORTING STANDARDS** 

The following new or amended standards or interpretations that are effective for annual periods beginning on or after January 1, 2023 are being reviewed to determine the potential impact: amendments to *IAS 1 Presentation of Financial Statements* regarding the classification of liabilities as current or non-current, *IAS 8 Changes in Accounting Estimates and Errors*, and *IAS 12, Income Taxes* regarding deferred tax related to assets and liabilities arising from a single transaction.

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**NON-GAAP MEASURES** 

In addition to providing measures prepared in accordance with IFRS, we present certain supplemental measures that are not defined terms under IFRS (non-GAAP measures or ratios). These are Adjusted EBITDA, Adjusted net income (loss), Adjusted net income (loss) per common share, Average realized price, Adjusted net income (loss) before income tax, Adjusted income tax expense, and Adjusted effective tax rate. These non-GAAP financial measures and ratios reflect our 63.1% economic interest in the Atlas facility, 50% economic interest in the Egypt facility and our 60% economic interest in Waterfront Shipping, and are useful as they are a better measure of our underlying performance and assist in assessing the operating performance of the Company's business. These measures, at our economic share, are a better measure of our underlying performance, as we fully run the operations on our partners' behalf, despite having less than full share of the economic interest. Adjusted EBITDA is also frequently used by securities analysts and investors when comparing our results with those of other companies.

In addition, the Company also presents non-GAAP capital management measures, specifically, Net debt to capitalization and Total liquidity, which are useful in assessing the liquidity of the Company's ongoing business. Total liquidity is useful because it illustrates the extent to which management has immediate access to cash for operational and construction purposes, and is indicative of our flexibility should uses for these facilities immediately arise. Net debt to capitalization is useful because it illustrates the relative risk of our financing structure to potential lenders and investors.These measures and ratios do not have any standardized meaning prescribed by IFRS and therefore are unlikely to be comparable to similar measures presented by other companies.

These measures should be considered in addition to, and not as a substitute for, net income, cash flows and other measures of financial performance and liquidity reported in accordance with IFRS.

**Adjusted EBITDA (Attributable to Methanex shareholders)** 

Adjusted EBITDA is a non-GAAP financial measure and differs from the most comparable GAAP measure, net income attributable to Methanex shareholders, because it excludes finance costs, finance income and other expenses, income tax expense, depreciation and amortization and mark-to-market impact of share-based compensation. Adjusted EBITDA includes an amount representing our 63.1% share of the Atlas facility and excludes the non-controlling shareholders' interests in entities which we control but do not fully own.

Adjusted EBITDA and Adjusted net income exclude the mark-to-market impact of share-based compensation related to the impact of changes in our share price on SARs, TSARs, deferred share units, restricted share units and performance share units. The mark-to-market impact related to share-based compensation that is excluded from Adjusted EBITDA and Adjusted net income is calculated as the difference between the grant date value and the fair value recorded at each period-end. As share-based awards will be settled in future periods, the ultimate value of the units is unknown at the date of grant and therefore the grant date value recognized in Adjusted EBITDA and Adjusted net income may differ from the total settlement cost.

The following table shows a reconciliation from net income attributable to Methanex shareholders to Adjusted EBITDA:

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| | | |
|:---|:---|:---|
| ($ Millions) | **2022** | 2021 |
| Net income attributable to Methanex shareholders | $**354** | $482 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mark-to-market impact of share-based compensation | **(7)** | (23) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | **372** | 363 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finance costs  | **131** | 144 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finance income and other expenses | **(25)** | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax expense  | **120** | 110 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Earnings of associate adjustment <sup>1</sup> | **74** | 84 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-controlling interests adjustment <sup>1</sup> | **(87)** | (51) |
| Adjusted EBITDA (attributable to Methanex shareholders) | $**932** | $1108 |

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<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>These adjustments represent depreciation and amortization, finance costs, finance income and other expenses and income taxes associated with our 63.1% interest in the Atlas methanol facility and the non-controlling interests.

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**Adjusted Net Income and Adjusted Net Income per Common Share**

Adjusted net income and Adjusted net income per common share are a non-GAAP measure and ratio, respectively, because they exclude the mark-to-market impact of share-based compensation, the impact of the Egypt gas contract revaluation included in finance income (loss) and other expenses and the impact of certain items associated with specific identified events. The following table shows a reconciliation from net income attributable to Methanex shareholders to Adjusted net income and the calculation of Adjusted diluted net income per common share:

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| | | |
|:---|:---|:---|
| ($ Millions, except number of shares and per share amounts) | **2022** | 2021 |
| Net income attributable to Methanex shareholders | $**354** | $482 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mark-to-market impact of share-based compensation, net of tax | **(6)** | (22) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impact of Egypt gas contract revaluation, net of tax | **(5)** |  |
| Adjusted net income | $**343** | $460 |
| Diluted weighted average shares outstanding (millions) | **72** | 76 |
| Adjusted net income per common share | $**4.79** | $6.03 |

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Management uses these measures to analyze net income and net income per common share after adjusting for our economic interest in the Atlas and Egypt facilities and Waterfront Shipping, for reasons as described above. The exclusion of the mark-to-market portion of the impact of shared-based compensation is due to these amounts not being seen as indicative of the operational performance and can fluctuate in the intervening periods until settlement, at which time they are included appropriately as the cost of employee compensation. The exclusion of the impact of the Egypt gas contract revaluation is due to the change in the derivative being unrealized with the fair value of the derivative expected to fluctuate in the intervening periods until settlement. The exclusion of the impact of the Egypt gas contract revaluation commencing in 2022 had no impact on comparative periods as the contract amendment leading to fair value measurement of the contract occurred in 2022.

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**QUARTERLY FINANCIAL DATA (UNAUDITED)** 

Our operations consist of a single operating segment – the production and sale of methanol. Quarterly results vary due to the average realized price of methanol, sales volume and total cash costs.

A summary of selected financial information is as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| | Three months ended | Three months ended | Three months ended | Three months ended |
| ($ Millions, except per share amounts) | &nbsp;&nbsp;&nbsp;Dec 31 | &nbsp;&nbsp;&nbsp;Sep 30 | &nbsp;&nbsp;&nbsp;Jun 30 | &nbsp;&nbsp;&nbsp;Mar 31 |
| **2022** |  |  |  |  |
| **Revenue** | $**986** | $**1012** | $**1137** | $**1176** |
| **Cost of sales and operating expenses** | **(841)** | **(861)** | **(852)** | **(892)** |
| **Net income (attributable to Methanex shareholders)** | **41** | **69** | **125** | **119** |
| **Basic net income per common share** | **0.59** | **0.99** | **1.74** | **1.60** |
| **Diluted net income per common share** | **0.59** | **0.87** | **1.41** | **1.60** |
| **Adjusted EBITDA** <sup>1</sup> | **160** | **192** | **243** | **337** |
| **Adjusted net income** <sup>1</sup> | **51** | **49** | **84** | **159** |
| **Adjusted net income per common share** <sup>1</sup> | **0.73** | **0.69** | **1.16** | **2.16** |
| 2021 |  |  |  |  |
| Revenue | $1253 | $1078 | $1068 | $1016 |
| Cost of sales and operating expenses | (919) | (858) | (817) | (746) |
| Net income (attributable to Methanex shareholders) | 201 | 71 | 107 | 105 |
| Basic net income per common share | 2.66 | 0.93 | 1.40 | 1.37 |
| Diluted net income per common share | 2.51 | 0.93 | 1.31 | 1.19 |
| Adjusted EBITDA <sup>1</sup> | 340 | 264 | 262 | 242 |
| Adjusted net income <sup>1</sup> | 185 | 99 | 95 | 82 |
| Adjusted net income per common share <sup>1</sup> | 2.43 | 1.29 | 1.24 | 1.07 |

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<sup>1</sup> The Company has used the terms Adjusted EBITDA, Adjusted net income, and Adjusted net income per common share, throughout this document. These items are non-GAAP measures and ratios that do not have any standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. Refer to the *Non-GAAP Measures* section on page 44 for a description of each non-GAAP measure and reconciliations to the most comparable GAAP measures.

A discussion and analysis of our results for the fourth quarter of 2022 is set out in our fourth quarter of 2022 Management's Discussion and Analysis filed with the Canadian Securities Administrators on SEDAR at www.sedar.com and the U.S. Securities and Exchange Commission on EDGAR at www.sec.gov and is incorporated herein by reference.

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**SELECTED ANNUAL INFORMATION** 

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| | | | |
|:---|:---|:---|:---|
| ($ Millions, except per share amounts) | **2022** | 2021 | 2020 |
| Revenue | $**4311** | $4415 | $2650 |
| Adjusted EBITDA <sup>1</sup> | **932** | 1108 | 346 |
| Adjusted net income (loss) <sup>1</sup> | **343** | 460 | (123) |
| Net income (loss) (attributable to Methanex shareholders) | **354** | 482 | (157) |
| Adjusted net income (loss) per common share <sup>1</sup> | **4.79** | 6.03 | (1.62) |
| Basic net income (loss) per common share | **4.95** | 6.34 | (2.06) |
| Diluted net income (loss) per common share | **4.86** | 6.13 | (2.06) |
| Cash dividends declared per common share | **0.620** | 0.325 | 0.470 |
| Total assets  | **6631** | 6090 | 5696 |
| Total long-term liabilities (excluding deferred income tax) | **3032** | 2959 | 3276 |

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<sup>1</sup> &nbsp;&nbsp;&nbsp;&nbsp;The Company has used the terms Adjusted EBITDA, Adjusted net income (loss), and Adjusted net income (loss) per common share,throughout this document. These items are non-GAAP measures and ratios that do not have any standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. Refer to the *Non-GAAP Measures* section on page 44 for a description of each non-GAAP measure and reconciliations to the most comparable GAAP measures.

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**CONTROLS AND PROCEDURES** 

**Disclosure Controls and Procedures** 

Disclosure controls and procedures (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), and NI 52-109, are those controls and procedures that are designed to ensure that the information required to be disclosed in the filings under applicable securities regulations is recorded, processed, summarized and reported within the time periods specified. As of December 31, 2022, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of that date.

**Management's Annual Report on Internal Control over Financial Reporting** 

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Internal control over financial reporting has inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements will not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of December 31, 2022, based on the framework set forth in Internal Control – Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission (the "COSO framework"). Based on its evaluation under this framework, management concluded that our internal control over financial reporting was effective as of that date.

KPMG LLP, an independent registered public accounting firm that audited and reported on our consolidated financial statements, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2022. The attestation report is included in our consolidated financial statements on page 54.

**Changes in Internal Control over Financial Reporting** 

There have been no changes in the Company's internal control over financial reporting that occurred during the most recent interim period and year ended December 31, 2022, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

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**FORWARD-LOOKING STATEMENTS** 

This 2022 Management's Discussion and Analysis ("MD&A") contains forward-looking statements with respect to us and our industry. These statements relate to future events or our future performance. All statements other than statements of historical fact are forward-looking statements. Statements that include the words "believes," "expects," "may," "will," "should," "potential," "estimates," "anticipates," "aim", "goal," "targets," "plan," "predict" or other comparable terminology and similar statements of a future or forward-looking nature identify forward-looking statements.

More particularly, and without limitation, any statements regarding the following are forward-looking statements:

▪ expected demand for methanol and its derivatives,

▪ expected new methanol supply or restart of idled capacity and timing for startup of the same,

▪ expected shutdowns (either temporary or permanent) or restarts of existing methanol supply (including our own facilities), including, without limitation, the timing and length of planned maintenance outages,

▪ expected methanol and energy prices,

▪ expected levels of methanol purchases from traders or other third parties,

▪ expected levels, timing and availability of economically priced natural gas supply to each of our plants,

▪ capital committed by third parties towards future natural gas exploration and development in the vicinity of our plants,

▪ our expected capital expenditures and anticipated timing and rate of return of such capital expenditures,

▪ anticipated operating rates of our plants,

▪ expected operating costs, including natural gas feedstock costs and logistics costs,

▪ expected tax rates or resolutions to tax disputes,

▪ expected cash flows, cash balances, earnings capability, debt levels and share price,

▪ availability of committed credit facilities and other financing,

▪ our ability to meet covenants associated with our long-term debt obligations,

▪ our shareholder distribution strategy and anticipated distributions to shareholders,

▪ commercial viability and timing of, or our ability to execute future projects, plant restarts, capacity expansions, plant relocations or other business initiatives or opportunities, including our Geismar 3 project,

▪ our financial strength and ability to meet future financial commitments,

▪ expected global or regional economic activity (including industrial production levels) and GDP growth,

▪ expected outcomes of litigation or other disputes, claims and assessments,

▪ expected actions of governments, governmental agencies, gas suppliers, courts, tribunals or other third parties, and

▪ the potential future impact of the COVID-19 pandemic.

We believe that we have a reasonable basis for making such forward-looking statements. The forward-looking statements in this document are based on our experience, our perception of trends, current conditions and expected future developments as well as other factors. Certain material factors or assumptions were applied in drawing the conclusions or making the forecasts or projections that are included in these forward-looking statements, including, without limitation, future expectations and assumptions concerning the following:

▪ the supply of, demand for and price of methanol, methanol derivatives, natural gas, coal, oil and oil derivatives,

▪ our ability to procure natural gas feedstock on commercially acceptable terms,

▪ operating rates of our facilities,

▪ receipt or issuance of third-party consents or approvals or governmental approvals related to rights to purchase natural gas,

▪ the establishment of new fuel standards,

▪ operating costs, including natural gas feedstock and logistics costs, capital costs, tax rates, cash flows, foreign exchange rates and interest rates,

------

▪ the availability of committed credit facilities and other financing,

▪ the expected timing and capital cost of our Geismar 3 project,

▪ global and regional economic activity (including industrial production levels) and GDP growth,

▪ absence of a material negative impact from major natural disasters,

▪ absence of a material negative impact from changes in laws or regulations,

▪ absence of a material negative impact from political instability in the countries in which we operate, and

▪ enforcement of contractual arrangements and ability to perform contractual obligations by customers, natural gas and other suppliers and other third parties.

However, forward-looking statements, by their nature, involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The risks and uncertainties primarily include those attendant with producing and marketing methanol and successfully carrying out major capital expenditure projects in various jurisdictions, including, without limitation:

▪ conditions in the methanol and other industries, including fluctuations in the supply, demand and price for methanol and its derivatives, including demand for methanol for energy uses,

▪ the price of natural gas, coal, oil and oil derivatives,

▪ our ability to obtain natural gas feedstock on commercially acceptable terms to underpin current operations and future production growth opportunities,

▪ the ability to carry out corporate initiatives and strategies,

▪ actions of competitors, suppliers and financial institutions,

▪ conditions within the natural gas delivery systems that may prevent delivery of our natural gas supply requirements,

▪ our ability to meet timeline and budget targets for the Geismar 3 project, including the impact of any cost pressures arising from tightening construction labour market conditions,

▪ competing demand for natural gas, especially with respect to any domestic needs for gas and electricity,

▪ actions of governments and governmental authorities, including, without limitation, implementation of policies or other measures that could impact the supply of or demand for methanol or its derivatives,

▪ changes in laws or regulations,

▪ import or export restrictions, anti-dumping measures, increases in duties, taxes and government royalties and other actions by governments that may adversely affect our operations or existing contractual arrangements,

▪ worldwide economic conditions,

▪ the impacts of the COVID-19 pandemic, and

▪ other risks described in this 2022 MD&A.

Having in mind these and other factors, investors and other readers are cautioned not to place undue reliance on forward-looking statements. They are not a substitute for the exercise of one's own due diligence and judgment. The outcomes implied in forward-looking statements may not occur and we do not undertake to update forward-looking statements except as required by applicable securities laws.

## Exhibit 99.3

?xml version="1.0" ? mx-20221231_d2

**Exhibit 99.3**

**Responsibility for Financial Reporting** 

**The consolidated financial statements and all financial information contained in the annual report are the responsibility of management.** 

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and, where appropriate, have incorporated estimates based on the best judgment of management.

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the internal control framework set out in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2022.

The Board of Directors ("the Board") is responsible for ensuring that management fulfills its responsibilities for financial reporting and internal control, and is responsible for reviewing and approving the consolidated financial statements. The Board carries out this responsibility principally through the Audit, Finance and Risk Committee ("the Committee").

The Committee consists of five non-management directors, all of whom are independent as defined by the applicable rules in Canada and the United States. The Committee is appointed by the Board to assist the Board in fulfilling its oversight responsibility relating to: the integrity of the Company's financial statements; the financial reporting process; the systems of accounting and financial controls; the professional qualifications and independence of the external auditor; the performance of the external and internal auditors; risk management processes; financing plans; and the Company's compliance with ethics policies and legal and regulatory requirements.

The Committee meets regularly with management and the Company's auditors, KPMG LLP, Chartered Professional Accountants, to discuss internal controls and significant accounting and financial reporting issues. KPMG LLP has full and unrestricted access to the Committee. KPMG LLP audited the consolidated financial statements and the effectiveness of internal controls over financial reporting. Their opinions are included in the annual report.

&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | |
|:---|:---|:---|
| ![mx-20221231_g1.jpg](mx-20221231_g1.jpg) | ![mx-20221231_g2.jpg](mx-20221231_g2.jpg) | ![mx-20221231_g3.jpg](mx-20221231_g3.jpg) |
| <br>**Benita Warmbold**<br>Chair of the Audit,<br>Finance and Risk Committee<br>March 10, 2023 | <br>**Rich Sumner**<br>President and <br>Chief Executive Officer | <br>**Dean Richardson**<br>Senior Vice President, Finance and Chief Financial Officer |

---

**51**

------

**Report of Independent Registered Public Accounting Firm** 

**To the Shareholders and Board of Directors of Methanex Corporation:** 

***Opinion on the Consolidated Financial Statements***

We have audited the accompanying consolidated statements of financial position of Methanex Corporation (the Company) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the two-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and its financial performance and its cash flows for each of the years in the two-year period ended December 31, 2022, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 10, 2023 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

***Basis for Opinion***

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

***Critical Audit Matters***

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

***Recognition and Measurement of Uncertain Tax Positions***

As discussed in Notes 6(b) and 16 to the consolidated financial statements, the Company has identified and, in certain cases, recognized uncertain tax positions (tax positions) including associated interest and penalties. As discussed in Note 2(q) to the consolidated financial statements, the Company's tax positions are subject to audit by local taxing authorities across multiple global jurisdictions and the resolution of such audits may span multiple years. Tax law is complex and often subject to varied interpretations. Accordingly, the ultimate outcome with respect to taxes the Company may owe may differ from the amounts recognized in the consolidated financial statements.

**52**

------

We identified the assessment of recognition and measurement of tax positions as a critical audit matter. Complex auditor judgment was required to evaluate the Company's interpretation of tax law and its identification and determination of the ultimate resolution of its tax positions. Additionally, the evaluation of the recognition and measurement of the Company's tax positions required specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of an internal control related to (1) the interpretation of tax law and identification of tax positions, (2) the determination of the probability that the tax authorities would accept the Company's tax positions, and (3) the estimation of reserves recorded for tax positions. We involved domestic and international tax professionals with specialized skills and knowledge, who assisted in assessing the Company's tax positions by:

–inspecting tax rulings and correspondence between the Company and the applicable taxation authorities;

–inspecting transfer pricing studies and information obtained from external tax specialists and legal counsel; and

–comparing our understanding and interpretation of tax laws to the Company's evaluation.

***Initial accounting for amendment to Egyptian natural gas supply contract***

As discussed in Note 19 to the consolidated financial statements, the Company holds a long-term natural gas supply contract with the Egyptian Natural Gas Holding Company. The terms of this contract were amended during 2022 to redirect and sell the contracted natural gas for a three-month period. The amendment has modified the accounting for the contract, resulting in the requirement to recognize the amended long-term contract as a derivative financial instrument, to be measured at fair value, over its remaining term. The Company recognized an unrealized gain of $11.2 million in Finance income and other expenses during the year ended December 31, 2022. As there is no observable, liquid spot market or forward curve for natural gas in Egypt, the fair value of the amended contract as of December 31, 2022 was determined using a Monte-Carlo valuation model.

We have identified the evaluation of the Company's initial accounting for the contract amendment including the selection and application of a valuation model to determine the fair value of the amended contract as a critical audit matter. Complex auditor judgment and specialized skill was required in evaluating the contract amendment and the application of the relevant accounting guidance and the selection of the valuation model to determine fair value of the amended contract.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of internal controls over the Company's evaluation of the initial accounting for the contract amendment. This included controls related to (1) the application of relevant accounting guidance and (2) the selection and application of the valuation model to determine fair value of the amended contract. We evaluated the Company's assessment of the accounting for the contract amendment by reading the underlying agreement to understand the relevant terms and conditions. We determined whether the Company's assessment of the accounting for the amendment was in accordance with the relevant accounting standards. We involved valuation professionals with specialized skills and knowledge who assisted in assessing the Company's selection of the valuation model to determine fair value of the amended contract by:

–inspecting supporting documentation obtained from the Company and the Company's external valuation specialists; and

–evaluating that the valuation model selected was appropriate to determine the fair value.

![mx-20221231_g4.jpg](mx-20221231_g4.jpg)

Chartered Professional Accountants

We have served as the Company's auditor since 1992.

Vancouver, Canada

March 10, 2023

**53**

------

**Report of Independent Registered Public Accounting Firm** 

**To the Shareholders and Board of Directors of Methanex Corporation:** 

***Opinion on Internal Control Over Financial Reporting***

We have audited Methanex Corporation's internal control over financial reporting as of December 31, 2022, based on criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, Methanex Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Company as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the two-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated March 10, 2023 expressed an unqualified opinion on those consolidated financial statements.

***Basis for Opinion***

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included under the heading "Management's Annual Report on Internal Control Over Financial Reporting" in Management's Discussion and Analysis for the year ended December 31, 2022. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

***Definition and Limitations of Internal Control Over Financial Reporting***

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

![mx-20221231_g4.jpg](mx-20221231_g4.jpg)

Chartered Professional Accountants

Vancouver, Canada

March 10, 2023

**54**

------

**Consolidated Statements of Financial Position** 

*(thousands of U.S. dollars, except number of common shares)*

---

| | | |
|:---|:---|:---|
| As at | **Dec 31<br>2022** | Dec 31<br>2021 |
| &nbsp;&nbsp;&nbsp;&nbsp;**ASSETS** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $**857747** | $932069 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade and other receivables (note 3) | **500925** | 551367 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories (note 4) | **439771** | 459556 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses | **38585** | 35963 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets (note 7) | **39346** | 9842 |
|  | **1876374** | 1988797 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property, plant and equipment (note 5) | **4155283** | 3686149 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment in associate (note 6) | **197083** | 217319 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax assets (note 16) | **46353** | 98169 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets (note 7) | **356387** | 99186 |
|  | **4755106** | 4100823 |
|  | $**6631480** | $6089620 |
| &nbsp;&nbsp;&nbsp;&nbsp;**LIABILITIES AND EQUITY** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade, other payables and accrued liabilities | $**789200** | $835951 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current maturities on long-term debt (note 8) | **15133** | 11775 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current maturities on lease obligations (note 9) | **108736** | 98301 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current maturities on other long-term liabilities (note 10) | **29548** | 17191 |
|  | **942617** | 963218 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-term debt (note 8) | **2136380** | 2146417 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease obligations (note 9) | **761427** | 618800 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other long-term liabilities (note 10) | **134603** | 193749 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax liabilities (note 16) | **226996** | 212705 |
|  | **3259406** | 3171671 |
| &nbsp;&nbsp;&nbsp;&nbsp;Equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital stock |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25,000,000 authorized preferred shares without nominal or par value |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unlimited authorization of common shares without nominal or par value |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issued and outstanding common shares at December 31, 2022 were 69,239,136 (2021 - 74,774,087) | **401295** | 432728 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contributed surplus | **1904** | 1928 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retained earnings | **1466872** | 1251640 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income (loss) | **241942** | (2720) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders' equity | **2112013** | 1683576 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-controlling interests | **317444** | 271155 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total equity | **2429457** | 1954731 |
|  | $**6631480** | $6089620 |

---

*Commitments and contingencies (note 22)*

*See accompanying notes to consolidated financial statements.* 

**Approved by the Board:** 

---

| | |
|:---|:---|
| ![mx-20221231_g1.jpg](mx-20221231_g1.jpg) | ![mx-20221231_g2.jpg](mx-20221231_g2.jpg) |
| **Benita Warmbold (Director)** | **Rich Sumner (Director)** |

---

**55**

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**Consolidated Statements of Income** 

*(thousands of U.S. dollars, except number of common shares and per share amounts)* 

---

| | | |
|:---|:---|:---|
| For the years ended December 31 | **2022** | 2021 |
| &nbsp;&nbsp;&nbsp;&nbsp;Revenue | $**4311188** | $4414559 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cost of sales and operating expenses (note 11) | **(3446101)** | (3339510) |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization (note 11) | **(372420)** | (363084) |
| &nbsp;&nbsp;&nbsp;&nbsp;Egypt gas redirection and sale proceeds (note 26) | **117946** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating income | **610613** | 711965 |
| &nbsp;&nbsp;&nbsp;&nbsp;Earnings of associate (note 6) | **76938** | 97743 |
| &nbsp;&nbsp;&nbsp;&nbsp;Finance costs (note 12) | **(130752)** | (144406) |
| &nbsp;&nbsp;&nbsp;&nbsp;Finance income and other expenses | **25348** | 1036 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income before income taxes | **582147** | 666338 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax (expense) recovery (note 16): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current | **(127578)** | (115767) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred | **7719** | 5340 |
|  | **(119859)** | (110427) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income | $**462288** | $555911 |
| &nbsp;&nbsp;&nbsp;&nbsp;Attributable to: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Methanex Corporation shareholders | $**353830** | $482358 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-controlling interests (note 24) | **108458** | 73553 |
|  | $**462288** | $555911 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income per common share for the year attributable to Methanex Corporation shareholders: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic net income per common share (note 13) | $**4.95** | $6.34 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted net income per common share (note 13) | $**4.86** | $6.13 |
| &nbsp;&nbsp;&nbsp;&nbsp;Weighted average number of common shares outstanding (note 13) | **71422360** | 76039118 |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted weighted average number of common shares outstanding (note 13) | **71677484** | 76243777 |

---

*See accompanying notes to consolidated financial statements.* 

**56**

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**Consolidated Statements of Comprehensive Income**

*(thousands of U.S. dollars)* 

---

| | | |
|:---|:---|:---|
| For the years ended December 31 | **2022** | 2021 |
| Net income | $**462288** | $555911 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Items that may be reclassified to income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in cash flow hedges and excluded forward element (note 19) | **378287** | 188423 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Realized gains on foreign exchange hedges reclassified to revenue | **(5674)** | (1064) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Items that will not be reclassified to income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Actuarial gain (loss) on defined benefit pension plans (note 21(a)) | **(726)** | 7499 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxes on above items | **(72440)** | (42919) |
|  | **299447** | 151939 |
| Comprehensive income | $**761735** | $707850 |
| &nbsp;&nbsp;&nbsp;&nbsp;Attributable to: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Methanex Corporation shareholders | $**653277** | $634297 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-controlling interests (note 24) | **108458** | 73553 |
|  | $**761735** | $707850 |

---

*See accompanying notes to consolidated financial statements.* 

**57**

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**Consolidated Statements of Changes in Equity** 

*(thousands of U.S. dollars, except number of common shares)* 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | &nbsp;&nbsp;&nbsp;Number of common shares | &nbsp;&nbsp;&nbsp;Capital <br>stock | &nbsp;&nbsp;&nbsp;Contributed <br>surplus | &nbsp;&nbsp;&nbsp;Retained <br>earnings | &nbsp;&nbsp;&nbsp;Accumulated <br>other <br>comprehensive <br>loss | &nbsp;&nbsp;&nbsp;Shareholders' <br>equity | &nbsp;&nbsp;&nbsp;&nbsp;Non-controlling<br>interests | &nbsp;&nbsp;&nbsp;Total <br>equity |
| &nbsp;&nbsp;&nbsp;&nbsp;Balance, December 31, 2020 | 76201980 | $440723 | $1873 | $843606 | ($137102) | $1149100 | $292357 | $1441457 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income |  |  |  | 482358 |  | 482358 | 73553 | 555911 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive income |  |  |  | 4903 | 147036 | 151939 |  | 151939 |
| &nbsp;&nbsp;&nbsp;&nbsp;Compensation expense recorded for stock options |  |  | 113 |  |  | 113 |  | 113 |
| &nbsp;&nbsp;&nbsp;&nbsp;Issue of shares on exercise of stock options | 7300 | 252 |  |  |  | 252 |  | 252 |
| &nbsp;&nbsp;&nbsp;&nbsp;Reclassification of grant date fair value on exercise of stock options |  | 58 | (58) |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments for repurchase of shares | (1435193) | (8305) |  | (54593) |  | (62898) |  | (62898) |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividend payments to Methanex Corporation shareholders ($0.325 per common share) |  |  |  | (24634) |  | (24634) |  | (24634) |
| &nbsp;&nbsp;&nbsp;&nbsp;Distributions made and accrued to non-controlling interests |  |  |  |  |  |  | (95405) | (95405) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity contributions by non-controlling interest |  |  |  |  |  |  | 650 | 650 |
| &nbsp;&nbsp;&nbsp;&nbsp;Hedging gains transferred to inventory |  |  |  |  | (12654) | (12654) |  | (12654) |
| &nbsp;&nbsp;&nbsp;&nbsp;Balance, December 31, 2021 | 74774087 | $432728 | $1928 | $1251640 | ($2720) | $1683576 | $271155 | $1954731 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income | **—** | **—** | **—** | **353830** | **—** | **353830** | **108458** | **462288** |
| &nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive income (loss) | **—** | **—** | **—** | **(252)** | **299699** | **299447** | **—** | **299447** |
| &nbsp;&nbsp;&nbsp;&nbsp;Compensation expense recorded for stock options | **—** | **—** | **110** | **—** | **—** | **110** | **—** | **110** |
| &nbsp;&nbsp;&nbsp;&nbsp;Issue of shares on exercise of stock options | **16800** | **582** | **—** | **—** | **—** | **582** | **—** | **582** |
| &nbsp;&nbsp;&nbsp;&nbsp;Reclassification of grant date fair value on exercise of stock options | **—** | **134** | **(134)** | **—** | **—** | **—** | **—** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sale of partial interest in subsidiary (note 25) | **—** | **—** | **—** | **126445** | **—** | **126445** | **22545** | **148990** |
| &nbsp;&nbsp;&nbsp;&nbsp;Payments for repurchase of shares | **(5551751)** | **(32149)** | **—** | **(220836)** | **—** | **(252985)** | **—** | **(252985)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividend payments to Methanex Corporation shareholders ($0.620 per common share) | **—** | **—** | **—** | **(43955)** | **—** | **(43955)** | **—** | **(43955)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Distributions made and accrued to non-controlling interests | **—** | **—** | **—** | **—** | **—** | **—** | **(84714)** | **(84714)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Hedging gains transferred to inventory | **—** | **—** | **—** | **—** | **(55037)** | **(55037)** | **—** | **(55037)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Balance, December 31, 2022 | **69239136** | **$401295** | **$1904** | **$1466872** | **$241942** | **$2112013** | **$317444** | **$2429457** |

---

*See accompanying notes to consolidated financial statements.* 

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**Consolidated Statements of Cash Flows** 

*(thousands of U.S. dollars)* 

---

| | | |
|:---|:---|:---|
| For the years ended December 31 | **2022** | 2021 |
| **CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES** |  |  |
| Net income | $**462288** | $555911 |
| Deduct earnings of associate | **(76938)** | (97743) |
| Dividends received from associate | **97174** | 74458 |
| Add (deduct) non-cash items: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | **372420** | 363084 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax expense | **119859** | 110427 |
| &nbsp;&nbsp;&nbsp;&nbsp;Share-based compensation expense (recovery) | **15398** | (1160) |
| &nbsp;&nbsp;&nbsp;&nbsp;Finance costs | **130752** | 144406 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | **(12985)** | (3877) |
| Interest received | **9590** | 443 |
| Income taxes paid | **(163828)** | (57941) |
| Other cash payments, including share-based compensation | **(20503)** | (10530) |
| Cash flows from operating activities before undernoted | **933227** | 1077478 |
| Changes in non-cash working capital (note 17(a)) | **54122** | (83109) |
|  | **987349** | 994369 |
| **CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES** |  |  |
| Payments for repurchase of shares | **(252985)** | (62898) |
| Dividend payments to Methanex Corporation shareholders | **(43955)** | (24634) |
| Interest paid | **(161816)** | (165059) |
| Repayment on Geismar 3 construction facility | **—** | (173000) |
| Repayment of long-term debt and financing fees (note 8) | **(9151)** | (62381) |
| Repayment of lease obligations | **(105863)** | (101054) |
| Release of restricted cash relating to limited recourse debt facilities | **—** | 28926 |
| Equity contributions by non-controlling interests | **—** | 650 |
| Distributions to non-controlling interests | **(84713)** | (110406) |
| Proceeds on issue of shares on exercise of stock options | **582** | 252 |
| Proceeds from other limited recourse debt | **—** | 25161 |
| Restricted cash for debt service accounts | **(1394)** | **—** |
| Sale of partial interest in subsidiary | **148990** | **—** |
| Changes in non-cash working capital related to financing activities (note 17(a)) | **1771** | 1350 |
|  | **(508534)** | (643093) |
| **CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES** |  |  |
| Property, plant and equipment | **(145701)** | (103485) |
| Geismar plant under construction | **(431680)** | (141952) |
| Changes in non-cash working capital related to investing activities (note 17(a)) | **24244** | (7611) |
|  | **(553137)** | (253048) |
| Increase (decrease) in cash and cash equivalents | **(74322)** | 98228 |
| Cash and cash equivalents, beginning of year | **932069** | 833841 |
| Cash and cash equivalents, end of year | $**857747** | $932069 |

---

*See accompanying notes to consolidated financial statements.*

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**Notes to Consolidated Financial Statements** 

*(Tabular dollar amounts are shown in thousands of U.S. dollars, except where noted)* 

*Year ended December 31, 2022* 

**1. Nature of operations:** 

Methanex Corporation ("the Company") is an incorporated entity with corporate offices in Vancouver, Canada. The Company's operations consist of the production and sale of methanol, a commodity chemical. The Company is the world's largest producer and supplier of methanol to the major international markets of Asia Pacific, North America, Europe and South America.

**2. Significant accounting policies:** 

**a) Statement of compliance:** 

These consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB"). These consolidated financial statements were approved and authorized for issue by the Board of Directors on March 9, 2023.

**b) Basis of presentation and consolidation:** 

These consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, less than wholly-owned entities for which it has a controlling interest and its equity-accounted joint venture. Wholly-owned subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. For less than wholly-owned entities for which the Company has a controlling interest, a non-controlling interest is included in the Company's consolidated financial statements and represents the non-controlling shareholders' interest in the net assets of the entity. All significant intercompany transactions and balances have been eliminated. Preparation of these consolidated financial statements requires estimates, judgments and assumptions that affect the amounts reported and disclosed in the financial statements and related notes. The areas of estimation and judgment that management considers most significant are property, plant and equipment (note 2(g)), financial instruments (note 2(o)), fair value measurements (note 2(p)), leases (note 2(i)), and income taxes (note 2(q)). Actual results could differ from those estimates.

**c) Reporting currency and foreign currency translation:** 

Functional currency is the currency of the primary economic environment in which an entity operates. The majority of the Company's business in all jurisdictions is transacted in United States dollars and, accordingly, these consolidated financial statements have been measured and expressed in that currency. The Company translates foreign currency denominated monetary items at the period-end exchange rates, foreign currency denominated non-monetary items at historic rates and revenues and expenditures at the exchange rates at the dates of the transactions. Foreign exchange gains and losses are included in earnings.

**d) Cash and cash equivalents:** 

Cash and cash equivalents include securities with maturities of three months or less when purchased.

**e) Receivables:** 

The Company provides credit to its customers in the normal course of business. The Company performs ongoing credit evaluations of its customers and records provisions for expected credit losses for receivables measured at amortized cost. The Company records an allowance for doubtful accounts or writes down the receivable to estimated net realizable value, if not collectible in full, based on expected credit losses. Expected credit losses are based on historic and forward looking customer specific factors including historic credit losses incurred.

**f) Inventories:** 

Inventories are valued at the lower of cost and estimated net realizable value. Cost is determined on a first-in, first-out basis and includes direct purchase costs, cost of production, allocation of production overhead and depreciation based on normal operating capacity and ocean freight costs for the shipment of product.

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**g) Property, plant and equipment:** 

**Initial recognition** 

Property, plant and equipment are initially recorded at cost. The cost of purchased equipment includes expenditures that are directly attributable to the purchase price, delivery and installation. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to the location and condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and borrowing costs on self-constructed assets that meet certain criteria. Borrowing costs incurred during construction and commissioning are capitalized until the plant is operating in the manner intended by management.

**Subsequent costs** 

Routine repairs and maintenance costs are expensed as incurred. At regular intervals, the Company conducts a planned shutdown and inspection (turnaround) at its plants to perform major maintenance and replacement of catalysts. Costs associated with these shutdowns are capitalized and amortized over the period until the next planned turnaround and the carrying amounts of replaced components are derecognized and included in earnings.

**Depreciation** 

Depreciation and amortization is generally provided on a straight-line basis at rates calculated to amortize the cost of property, plant and equipment from the commencement of commercial operations over their estimated useful lives to estimated residual value.

The estimated useful lives of the Company's buildings, plant installations and machinery at installation, excluding costs related to turnarounds, initially ranges from 10 to 25 years depending on the specific asset component and the production facility to which it is related. Right-of-use (leased) assets are depreciated from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Company determines the estimated useful lives of individual asset components based on the shorter of its physical life or economic life. The physical life of these assets is generally longer than the economic life. The economic life is primarily determined by the nature of the natural gas feedstock available to the various production facilities. The estimated useful life of production facilities may be adjusted from time-to-time based on turnarounds, plant refurbishments and gas availability. Factors that influence the nature of natural gas feedstock availability include the terms of individual natural gas supply contracts, access to natural gas supply through open markets, regional factors influencing the exploration and development of natural gas and the expected price of securing natural gas supply. The Company reviews the factors related to each production facility on an annual basis to determine if changes are required to the estimated useful lives.

**Recoverability of asset carrying values** 

Long-lived assets are tested for recoverability whenever events or changes in circumstances, either internal or external, indicate that the carrying amount may not be recoverable ("triggering events"). Examples of such triggering events related to our long-lived assets may include, but are not restricted to: a significant adverse change in the extent or manner in which the asset is being used or in its physical condition; a change in management's intention or strategy for the asset, which includes a plan to dispose of the asset or idle the asset for a significant period of time; a significant adverse change in our long-term methanol price assumption or in the price or availability of natural gas feedstock required to manufacture methanol; a significant adverse change in legal factors or in the business climate that could affect the asset's value, including an adverse action or assessment by a foreign government that impacts the use of the asset; or a current period operating or cash flow loss combined with a history of operating or cash flow losses, or a projection or forecast that demonstrates continuing losses associated with the asset's use.

When a triggering event is identified, recoverability of long-lived assets is measured by comparing the carrying value of an asset or cash-generating unit to the estimated recoverable amount, which is the higher of its estimated fair value less costs to sell or its value in use. Fair value less costs of disposal is determined by estimating the price that would be received to sell an asset in an orderly transaction between market participants under current market conditions, less incremental costs directly attributable to the disposal, excluding finance costs and income tax expense. Value in use is determined by measuring the pre-tax cash flows expected to be generated from the cash-generating unit over its estimated useful life discounted by a pre-tax discount rate. An impairment writedown is recorded if the carrying value exceeds the estimated recoverable amount. An impairment writedown recognized in prior periods for an asset or cash-generating unit is reversed if there has been a subsequent recovery in the value of the asset or cash-generating unit due to changes in events and circumstances. For the purposes of recognition and measurement of an impairment writedown or reversal, we group our long-lived assets with other assets and liabilities to form a "cash-generating unit" at the lowest level for which identifiable cash flows are largely

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independent of the cash flows of other assets and liabilities. To the extent that our methanol facilities in a particular location are interdependent as a result of common infrastructure and/or feedstock from shared sources that can be shared within a facility location, we group our assets based on site locations for the purpose of determining impairment.

When impairment indicators exist, there are two key variables that impact our estimate of future cash flows from producing assets: (1) the methanol price and (2) the price and availability of natural gas feedstock. Short-term methanol price estimates are based on current supply and demand fundamentals and current methanol prices. Long-term methanol price estimates are based on our view of long-term supply and demand, incorporating third-party assumptions, forecasts and market observable prices when appropriate. Consideration is given to many factors, including, but not limited to, estimates of global industrial production rates, energy prices, changes in general economic conditions, the ability for the industry to add further global methanol production capacity and earn an appropriate return on capital, industry operating rates and the global industry cost structure. Our estimate of the price and availability of natural gas takes into consideration the current contracted terms, as well as factors that we believe are relevant to supply under these contracts and supplemental natural gas sources. Other assumptions included in our estimate of future cash flows include the estimated cost incurred to maintain the facilities, estimates of transportation costs and other variable costs incurred in producing methanol in each period. Changes in these assumptions will impact our estimates of future cash flows when testing for impairment and could impact our estimates of the useful lives of property, plant and equipment. Consequently, it is possible that our future operating results could be adversely affected by further asset impairment charges or by changes in depreciation and amortization rates related to property, plant and equipment. In relation to previous impairment charges, we do not believe that there are significant changes in events or circumstances that would support their reversal.

**h) Other assets:** 

Intangible assets are capitalized to other assets and amortized to depreciation and amortization expense on an appropriate basis to charge the cost of the assets against earnings.

Financing fees related to undrawn credit facilities are capitalized to other assets and amortized to finance costs over the term of the credit facility.

**i) Leases:** 

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

&nbsp;&nbsp;&nbsp;&nbsp;• the contract involves the use of an identified asset - this may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;

&nbsp;&nbsp;&nbsp;&nbsp;• the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

&nbsp;&nbsp;&nbsp;&nbsp;• the Company has the right to direct the use of the asset. The Company has the right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used.

For contracts that contain a lease, the Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is assessed for impairment losses, should a trigger be identified and adjusted for impairment if required. Lease terms range up to 22 years for vessels, terminals, equipment, and other items.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding

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adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. The assessment is reviewed upon a trigger by an event or a significant change in circumstances.

Certain leases contain non-lease components, excluded from the right-of-use asset and lease liability, related to operating charges for ocean vessels, terminal facilities and rail transport contracts. Judgment is applied in the determination of the stand-alone price of the lease and non-lease components.

The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets, except for terminal and vessel leases. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

**j) Site restoration costs:** 

The Company recognizes a liability to dismantle and remove assets or to restore a site upon which the assets are located. The Company estimates the present value of the expenditures required to settle the liability by determining the current market cost required to settle the site restoration costs, adjusts for inflation through to the expected date of the expenditures and then discounts this amount back to the date when the obligation was originally incurred. As the liability is initially recorded on a discounted basis, it is increased each period until the estimated date of settlement. The resulting expense is referred to as accretion expense and is included in finance costs. The Company reviews asset retirement obligations and adjusts the liability and corresponding asset as necessary to reflect changes in the estimated future cash flows, timing, inflation and discount rates underlying the measurement of the obligation.

**k) Employee future benefits:** 

The Company has non-contributory defined benefit pension plans covering certain employees and defined contribution pension plans. The Company does not provide any significant post-retirement benefits other than pension plan benefits. For defined benefit pension plans, the net of the present value of the defined benefit obligation and the fair value of plan assets is recorded to the consolidated statements of financial position. The determination of the defined benefit obligation and associated pension cost is based on certain actuarial assumptions including inflation rates, mortality, plan expenses, salary growth and discount rates. The present value of the net defined benefit obligation (asset) is determined by discounting the net estimated future cash flows using current market bond yields that have terms to maturity approximating the terms of the net obligation. Actuarial gains and losses arising from differences between these assumptions and actual results are recognized in other comprehensive income and transferred to retained earnings. The Company recognizes gains and losses on the settlement of a defined benefit plan in income when the settlement occurs. The cost for defined contribution benefit plans is recognized in net income (loss) as earned by the employees.

**l) Share-based compensation:** 

The Company grants share-based awards as an element of compensation. Share-based awards granted by the Company can include stock options, tandem share appreciation rights, share appreciation rights, deferred share units, restricted share units or performance share units.

For stock options granted by the Company, the cost of the service received is measured based on an estimate of the fair value at the date of grant. The grant date fair value is recognized as compensation expense over the vesting period with a corresponding increase in contributed surplus. On the exercise of stock options, consideration received, together with the compensation expense previously recorded to contributed surplus, is credited to share capital. The Company uses the Black-Scholes option pricing model to estimate the fair value of each stock option tranche at the date of grant.

Share appreciation rights ("SARs") are units that grant the holder the right to receive a cash payment upon exercise for the difference between the market price of the Company's common shares and the exercise price that is determined at the date of grant. Tandem share appreciation rights ("TSARs") give the holder the choice between exercising a regular stock option or a SAR. For SARs and TSARs, the cost of the service received is initially measured based on an estimate of the fair value at the date of grant. The grant date fair value is recognized as compensation expense over the vesting period with a corresponding increase in liabilities. For SARs and TSARs, the liability is re-measured at each reporting date based on an estimate of the fair value with changes in fair value recognized as compensation expense for the proportion of the service that has been rendered at that date. The Company uses the Black-Scholes option pricing model to estimate the fair value for SARs and TSARs.

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Deferred, restricted and performance share units are grants of notional common shares that are redeemable for cash based on the market value of the Company's common shares and are non-dilutive to shareholders.

Performance share units ("PSUs") granted from 2019 onwards are redeemable for cash based on the market value of the Company's common shares and are non-dilutive to shareholders. PSUs vest over three years and include two performance factors: (i) relative total shareholder return of Methanex shares versus a specific market index (the market performance factor) and (ii) three year average Return on Capital Employed ("ROCE") (the non-market performance factor). The market performance factor is measured by the Company at the grant date and reporting date using a Monte-Carlo simulation model to determine fair value. The non-market performance factor reflects management's best estimate of ROCE over the performance period (using actual ROCE as applicable) to determine the expected number of units to vest. Based on these performance factors the performance share unit payout will range between 0% to 200%.

For deferred, restricted and performance share units, the cost of the service received as consideration is initially measured based on the market value of the Company's common shares at the date of grant. The grant date fair value is recognized as compensation expense over the vesting period with a corresponding increase in liabilities. Deferred, restricted and performance share units are re-measured at each reporting date based on the market value of the Company's common shares with changes in fair value recognized as compensation expense for the proportion of the service that has been rendered at that date.

Additional information related to the stock option plan, TSARs, SARs and the deferred, restricted and performance share units is described in note 14.

**m) Net income (loss) per common share:** 

The Company calculates basic net income (loss) per common share by dividing net income (loss) attributable to Methanex shareholders by the weighted average number of common shares outstanding and calculates diluted net income (loss) per common share under the treasury stock method. Under the treasury stock method, diluted net income (loss) per common share is calculated by considering the potential dilution that would occur if outstanding stock options and, under certain circumstances, TSARs were exercised or converted to common shares. Stock options and TSARs are considered dilutive when the average market price of the Company's common shares during the period disclosed exceeds the exercise price of the stock option or TSAR.

Outstanding TSARs may be settled in cash or common shares at the holder's option. For the purposes of calculating diluted net income (loss) per common share, the more dilutive of the cash-settled or equity-settled method is used, regardless of how the plan is accounted for. Accordingly, TSARs that are accounted for using the cash-settled method will require adjustments to the numerator and denominator if the equity-settled method is determined to have a dilutive effect on diluted net income (loss) per common share.

The calculation of basic net income (loss) per common share and a reconciliation to diluted net income (loss) per common share is presented in note 13.

**n) Revenue recognition:** 

Revenue is recognized based on individual contract terms at the point in time when control of the product transfers to the customer, which usually occurs at the time shipment is made. Revenue is recognized at the time of delivery to the customer's location if the contractual performance obligation has not been met during shipment. For methanol sold on a consignment basis, revenue is recognized at the point in time the customer draws down the consigned methanol. Revenue is measured and recorded at the most likely amount of consideration the Company expects to receive.

By contract, the Company sells all the methanol produced by the Atlas Joint Venture and earns a commission on the sale of the methanol. As the Company obtains title and control of the methanol from the Atlas facility and directs the sale of the methanol to the Company's customers, the Company recognizes the revenue on these sales to customers at the gross amount receivable from the customers based on the Company's revenue recognition policy noted above. Cost of sales is recognized for these sales as the amount due to the Atlas Joint Venture which is the gross amount receivable less the commission earned by the Company.

**o) Financial instruments:** 

All financial instruments are measured at fair value on initial recognition. Measurement in subsequent periods is dependent on the classification of the respective financial instrument. Financial instruments are classified into one of three categories and, depending on the category, will either be measured at amortized cost or fair value with fair value changes either recorded

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through profit or loss or other comprehensive income. All non-derivative financial instruments held by the Company are classified and measured at amortized cost.

The Company enters into derivative financial instruments to manage certain exposures to commodity price and foreign exchange volatility. Under these standards, derivative financial instruments, including embedded derivatives, are classified as fair value through profit or loss and are recorded in the consolidated statements of financial position at fair value unless they are in accordance with the Company's normal purchase, sale or usage requirements. The valuation of derivative financial instruments is a critical accounting estimate due to the complex nature of these instruments, the degree of judgment required to appropriately value these instruments and the potential impact of such valuation on the Company's financial statements. The Company records all changes in fair value of derivative financial instruments in profit or loss unless the instruments are designated as cash flow hedges. The Company enters into and designates as cash flow hedges certain forward contracts to hedge its highly probable forecast natural gas purchases and certain forward exchange purchase and sales contracts to hedge foreign exchange exposure on anticipated purchases or sales. The Company assesses at inception and on an ongoing basis whether the hedges are and continue to be effective in offsetting changes in the cash flows of the hedged transactions. The effective portion of changes in the fair value of these hedging instruments is recognized in other comprehensive income. Any gain or loss in fair value relating to the ineffective portion is recognized immediately in profit or loss. Until settled, the fair value of the derivative financial instruments will fluctuate based on changes in commodity prices, foreign currency exchange rates or variable interest rates.

Assessment of contracts as derivative instruments, applicability of the own use exemption, determination of whether hybrid instruments contain embedded derivatives to be separated, the valuation of financial instruments and derivatives and hedge effectiveness assessments require a high degree of judgment and are considered critical accounting judgements and estimates due to the complex nature of these products and the potential impact on our financial statements.

**p) Fair value measurements:** 

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements within the scope of IFRS 13 are categorized into Level 1, 2 or 3 based on the degree to which the inputs are observable and the significance of the inputs to the fair value measurement in its entirety. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Financial instruments measured at fair value and categorized within the fair value hierarchy are disclosed in note 19.

**q) Income taxes:** 

Income tax expense represents current tax and deferred tax. The Company records current tax based on the taxable profits for the period calculated using tax rates that have been enacted or substantively enacted by the reporting date. Income taxes relating to uncertain tax positions are provided for based on the Company's best estimate. Deferred income taxes are accounted for using the liability method. The liability method requires that income taxes reflect the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred income tax assets and liabilities are determined for each temporary difference based on currently enacted or substantially enacted tax rates that are expected to be in effect when the underlying items are expected to be realized. The effect of a change in tax rates or tax legislation is recognized in the period of substantive enactment. Deferred tax assets, such as non-capital loss carryforwards, are recognized to the extent it is probable that taxable profit will be available against which the asset can be utilized.

The Company accrues for taxes that will be incurred upon distributions from its subsidiaries when it is probable that the earnings will be repatriated.

Uncertain tax positions derive from the complexity of tax law and its interpretation by tax authorities and ultimately the judicial system in place in each jurisdiction. Uncertain tax positions, including interest and penalties, are recognized and measured applying management estimates. Given the complexity, management engages third-party experts as required, for the interpretation of tax law, transfer pricing regulations and determination of the ultimate resolution of its tax positions. The Company is subject to various taxation authorities who may interpret tax legislation differently, and resolve matters over longer-periods of time. The differences in judgement in assessing uncertain tax positions may result in material differences in the final amount or timing of the payment of taxes or settlement of tax assessments.

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**r) Provisions:** 

Provisions are recognized where a legal or constructive obligation has been incurred as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation.

**s) Segmented information:** 

The Company's operations consist of the production and sale of methanol, which constitutes a single operating segment.

**t) Application of new and revised accounting standards:**

The Company has adopted the amendments to IAS 16, *Property Plant, and Equipment*, regarding the accounting for proceeds before intended use, and amendments to IAS 37, Provisions, *Contingent Liabilities and Contingent Assets*, regarding the inclusion of all costs of fulfilling an onerous contract, which were effective for annual periods beginning on or after January 1, 2022. The amendments did not have a material impact on the Company's consolidated financial statements.

**u) Anticipated changes to International Financial Reporting Standards:** 

The following new or amended standards or interpretations that are effective for annual periods beginning on or after January 1, 2023 are being reviewed to determine the potential impact: amendments to *IAS 1 Presentation of Financial Statements* regarding the classification of liabilities as current or non-current, *IAS 8 Changes in Accounting Estimates and Errors*, and *IAS 12, Income Taxes* regarding deferred tax related to assets and liabilities arising from a single transaction.

**3. Trade and other receivables:** 

---

| | | |
|:---|:---|:---|
| As at | **Dec 31<br>2022** | Dec 31<br>2021 |
| Trade | $**407733** | $458116 |
| Value-added and other tax receivables | **14986** | 11955 |
| Other | **78206** | 81296 |
|  | $**500925** | $551367 |

---

**4. Inventories:** 

Inventories are valued at the lower of cost, determined on a first-in first-out basis, and estimated net realizable value. The amount of inventories recognized as an expense in cost of sales and operating expenses and depreciation and amortization for the year ended December 31, 2022 is $3,157 million (2021 - $3,022 million).

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**5. Property, plant and equipment:** 

---

| | | | |
|:---|:---|:---|:---|
| | **Owned Assets <br>(a)** | **Right-of-use assets <br>(b)** | **Total** |
| **Net book value at December 31, 2022** | $**3398805** | $**756478** | $**4155283** |
| Net book value at December 31, 2021 | $3075198 | $610951 | $3686149 |

---

**a) Owned assets:**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | &nbsp;&nbsp;&nbsp;**Buildings, plant <br>installations and <br>machinery** | &nbsp;&nbsp;**Plants Under Construction**<sup>1</sup> | **Ocean-going vessels** | &nbsp;&nbsp;**Other** | &nbsp;&nbsp;**TOTAL** |
| **Cost at January 1, 2022** | $**4908492** | $**561860** | $**240525** | $**138378** | $**5849255** |
| **Additions** | **140326** | **440028** | **342** | **1703** | **582399** |
| **Disposals and other** | **(47819)** | **—** | **—** | **—** | **(47819)** |
| **Cost at December 31, 2022** | **5000999** | **1001888** | **240867** | **140081** | **6383835** |
| **Accumulated depreciation at January 1, 2022** | **2631268** | **—** | **37271** | **105518** | **2774057** |
| **Depreciation** | **248032** | **—** | **12039** | **2332** | **262403** |
| **Disposals and other** | **(51430)** | **—** | **—** | **—** | **(51430)** |
| **Accumulated depreciation at December 31, 2022** | **2827870** | **—** | **49310** | **107850** | **2985030** |
| **Net book value at December 31, 2022** | $**2173129** | $**1001888** | $**191557** | $**32231** | $**3398805** |

---

<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>The Company is constructing a 1.8 million tonne methanol plant in Geismar, Louisiana adjacent to its Geismar 1 and Geismar 2 facilities. Included in cost of Plants Under Construction are $94 million (2021: $54 million) of capitalized interest and finance charges.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | &nbsp;&nbsp;&nbsp;Buildings, plant <br>installations and <br>machinery | &nbsp;&nbsp;&nbsp;Plants under <br>construction | Ocean-going vessels | Other | &nbsp;&nbsp;TOTAL |
| Cost at January 1, 2021 | $4861912 | $386905 | $210099 | $155882 | $5614798 |
| Additions | 66802 | 174955 | 30426 | 849 | 273032 |
| Disposals and other | (20222) |  |  | (18353) | (38575) |
| Cost at December 31, 2021 | 4908492 | 561860 | 240525 | 138378 | 5849255 |
| Accumulated depreciation at January 1, 2021 | 2413176 |  | 27926 | 121636 | 2562738 |
| Depreciation | 238314 |  | 9345 | 2235 | 249894 |
| Disposals and other | (20222) |  |  | (18353) | (38575) |
| Accumulated depreciation at December 31, 2021 | 2631268 |  | 37271 | 105518 | 2774057 |
| Net book value at December 31, 2021 | $2277224 | $561860 | $203254 | $32860 | $3075198 |

---

**67**

------

**b) Right-of-use (leased) assets:**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Ocean-going vessels** | &nbsp;&nbsp;&nbsp;**Terminals and tanks** | &nbsp;&nbsp;&nbsp;**Plant installations and machinery** | &nbsp;&nbsp;**Other** | &nbsp;&nbsp;**TOTAL** |
| **Cost at January 1, 2022** | $**657774** | $**258743** | $**23797** | $**40903** | $**981217** |
| **Additions** | **232536** | **27293** | **—** | **4001** | **263830** |
| **Disposals and other** | **(43333)** | **—** | **—** | **—** | **(43333)** |
| **Cost at December 31, 2022** | **846977** | **286036** | **23797** | **44904** | **1201714** |
| **Accumulated depreciation at January 1, 2022** | **214004** | **125494** | **12850** | **17918** | **370266** |
| **Depreciation** | **75586** | **34669** | **2464** | **5968** | **118687** |
| **Disposals and other** | **(43717)** | **—** | **—** | **—** | **(43717)** |
| **Accumulated depreciation at December 31, 2022** | **245873** | **160163** | **15314** | **23886** | **445236** |
| **Net book value at December 31, 2022** | $**601104** | $**125873** | $**8483** | $**21018** | $**756478** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | Ocean-going vessels | &nbsp;&nbsp;&nbsp;Terminals and tanks | &nbsp;&nbsp;&nbsp;Plant installations and machinery | &nbsp;&nbsp;Other | &nbsp;&nbsp;TOTAL |
| Cost at January 1, 2021 | $582072 | $246553 | $23761 | $39670 | $892056 |
| Additions | 86610 | 12206 | 36 | 1679 | 100531 |
| Disposals and other | (10908) | (16) |  | (446) | (11370) |
| Cost at December 31, 2021 | 657774 | 258743 | 23797 | 40903 | 981217 |
| Accumulated depreciation at January 1, 2021 | 152616 | 91834 | 10408 | 12202 | 267060 |
| Depreciation | 71711 | 33660 | 2442 | 5716 | 113529 |
| Disposals and other | (10323) |  | 0 | 0 | (10323) |
| Accumulated depreciation at December 31, 2021 | 214004 | 125494 | 12850 | 17918 | 370266 |
| Net book value at December 31, 2021 | $443770 | $133249 | $10947 | $22985 | $610951 |

---

In Trinidad the Titan plant has remained idled since 2020. The extended outage has been identified as an impairment indicator in our Titan cash generating unit ("Titan CGU"). The impairment test performed on the Titan CGU resulted in no impairment provision recognized as the estimated recoverable value, determined on a fair value less costs of disposal methodology, exceeded the carrying value. The estimated recoverable value was based on an operating period for Titan aligned to natural gas reserves estimates in Trinidad with no terminal value, discounted at an after-tax rate of 16%.

The following table indicates the percentages by which key assumptions would need to change individually for the estimated Titan CGU recoverable value to be equal to the carrying value:

---

| | |
|:---|:---|
| Key Assumptions | Change Required for Carrying Value to Equal Recoverable Value |
| Long-term average realized price | 18 percent decrease |
| Production volumes | 27 percent decrease |
| Gas price | 21 percent increase  |
| Discount rate (after-tax) | 15 percent increase |

---

The sensitivity above has been prepared considering each variable independently. Historically, our natural gas contracts in Trinidad have included terms whereby a change in methanol price results in a change in natural gas price, protecting margins should revenue decrease.

**68**

------

**6. Investment in associate:** 

**a)** The Company has a 63.1% equity interest in Atlas Methanol Company Unlimited ("Atlas"). Atlas owns a 1.8 million tonne per year methanol production facility in Trinidad. The Company accounts for its interest in Atlas using the equity method. Summarized financial information of Atlas (100% basis) is as follows:

---

| | | |
|:---|:---|:---|
| Consolidated statements of financial position as at | **Dec 31<br>2022** | Dec 31<br>2021 |
| Cash and cash equivalents | $**24420** | $12619 |
| Other current assets<sup>1</sup> | **182103** | 190594 |
| Non-current assets | **184373** | 219812 |
| Current liabilities<sup>1</sup> | **(92108)** | (79124) |
| Other long-term liabilities, including current maturities | **(107416)** | (120461) |
| Net assets at 100% | $**191372** | $223440 |
| Net assets at 63.1% | $**120755** | $140991 |
| Long-term receivable from Atlas<sup>1</sup> | **76328** | 76328 |
| Investment in associate | $**197083** | $217319 |

---

---

| | | |
|:---|:---|:---|
| Consolidated statements of income for the years ended December 31 | **2022** | 2021 |
| Revenue<sup>1</sup> | $**532456** | $620236 |
| Cost of sales and depreciation and amortization | **(332999)** | (371205) |
| Operating income | **199457** | 249031 |
| Finance costs, finance income and other expenses | **(9433)** | (10071) |
| Income tax expense | **(68093)** | (84059) |
| Net earnings at 100% | $**121931** | $154901 |
| Earnings of associate at 63.1% | $**76938** | $97743 |
| Dividends received from associate | $**97174** | $74458 |

---

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp; Includes related party transactions between Atlas and the Company (see note 23).

**b) Atlas Tax Assessments:** 

The Board of Inland Revenue of Trinidad and Tobago ("the BIR") has audited and issued assessments against Atlas in respect of the 2005 to 2016 financial years. All subsequent tax years remain open to assessment. The assessments relate to the pricing arrangements of certain long-term fixed-price sales contracts with affiliates that commenced in 2005 and continued with affiliates through 2014 and with an unrelated third party through 2019.

The long-term fixed-price sales contracts with affiliates were established as part of the formation of Atlas and management believes were reflective of market considerations at that time.

During the periods under assessment and continuing through 2014, approximately 50% of Atlas-produced methanol was sold under these fixed-price contracts. From late 2014 through 2019 fixed-price sales to an unrelated third party represented approximately 10% of Atlas produced methanol. Atlas had partial relief from corporation income tax until late July 2014.

The Company believes it is impractical to disclose a reasonable estimate of the potential contingent liability due to the wide range of assumptions and interpretations implicit in the assessments.

The Company has lodged objections to the assessments. No deposits have been required to lodge objections. Based on the merits of the cases and advice from legal counsel, the Company believes its position should be sustained, that Atlas has filed its tax returns and paid applicable taxes in compliance with Trinidadian tax law, and as such has not accrued for any amounts relating to these assessments. Contingencies inherently involve the exercise of significant judgment, and as such the outcomes of these assessments and the financial impact to the Company could be material.

The Company anticipates the resolution of this matter in the court system to be lengthy and, at this time, cannot predict a date as to when this matter is expected to be ultimately resolved.

**69**

------

**7. Other assets:** 

---

| | | |
|:---|:---|:---|
| As at | **Dec 31 2022** | Dec 31 2021 |
| Cash flow hedges (note 19) | $**322748** | $56802 |
| Chile VAT receivable | **18343** | 18493 |
| Restricted cash for debt service and major maintenance of vessels <sup>(a)</sup> | **14349** | 13053 |
| Fair value of Egypt gas supply contract derivative (note 19) | **11220** | **—** |
| Investment in Carbon Recycling International | **5620** | 4620 |
| Defined benefit pension plans (note 21) | **3977** | 5017 |
| Deferred financing fees | **1119** | 1431 |
| Other | **18357** | 9612 |
| Total other assets | **395733** | 109028 |
| Less current portion <sup>(b)</sup> | **(39346)** | (9842) |
|  | $**356387** | $99186 |

---

**a) Restricted cash**

The Company holds $14.3 million (2021 - $13.1 million) of restricted cash for the funding of debt service and major maintenance accounts.

**b) Current portion of other assets**

Other assets presented as current assets as at December 31, 2022 includes $32.8 million for the current portion of the cash flow hedge (see note 19), $3.2 million of restricted cash for major maintenance, in particular the anticipated operating costs of four vessels, as well as $3.4 million in other deposits.

**8. Long-term debt:**

---

| | | |
|:---|:---|:---|
| As at | **Dec 31<br>2022** | Dec 31<br>2021 |
| Unsecured notes |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;(i) $300 million at 4.25% due December 1, 2024 | $**298836** | $298408 |
| &nbsp;&nbsp;&nbsp;&nbsp;(ii) $700 million at 5.125% due October 15, 2027 | **693649** | 692516 |
| &nbsp;&nbsp;&nbsp;&nbsp;(iii) $700 million at 5.25% due December 15, 2029 | **695283** | 694770 |
| &nbsp;&nbsp;&nbsp;&nbsp;(iv) $300 million at 5.65% due December 1, 2044 | **295606** | 295505 |
|  | **1983374** | 1981199 |
| Other limited recourse debt facilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;(i) 5.58% due through June 30, 2031 | **61978** | 65745 |
| &nbsp;&nbsp;&nbsp;&nbsp;(ii) 5.35% due through September 30, 2033 | **70312** | 73836 |
| &nbsp;&nbsp;&nbsp;&nbsp;(iii) 5.08% due through September 15, 2036 | **35849** | 37412 |
|  | **168139** | 176993 |
| Total long-term debt<sup>1</sup> | **2151513** | 2158192 |
| Less current maturities<sup>1</sup> | **(15133)** | (11775) |
|  | $**2136380** | $2146417 |

---

<sup>1</sup> Long-term debt and current maturities are presented net of discounts and deferred financing fees of $19.4 million as at December 31, 2022 (2021 - $21.8 million).

**70**

------

Other limited recourse debt facilities relate to financing for certain ocean-going vessels which we own through less than wholly-owned entities under the Company's control.

For the year ended December 31, 2022, non-cash accretion, on an effective interest basis, of deferred financing costs included in finance costs was $2.2 million (2021 - $3.5 million).

The gross minimum principal payments for long-term debt in aggregate and for each of the five succeeding years are as follows:

---

| | | | |
|:---|:---|:---|:---|
| | Other limited recourse debt facilities | Unsecured<br>notes | Total |
| 2023 | $15067 | $— | $15067 |
| 2024 | 12580 | 300000 | 312580 |
| 2025 | 13660 |  | 13660 |
| 2026 | 13796 |  | 13796 |
| 2027 | 15173 | 700000 | 715173 |
| Thereafter | 100599 | 1000000 | 1100599 |
|  | $170875 | $2000000 | $2170875 |

---

The Company has access to a $300 million committed revolving credit facility and a $300 million non-revolving construction facility for the Geismar 3 project, both with a syndicate of highly rated financial institutions.

The covenants governing the Company's unsecured notes, which are specified in an indenture, apply to the Company and its subsidiaries, excluding the Egypt entity and the Atlas joint venture entity, and include restrictions on liens, sale and lease-back transactions, a merger or consolidation with another corporation or sale of all or substantially all of the Company's assets. The indenture also contains customary default provisions.

Significant covenants and default provisions under both facilities include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i)&nbsp;&nbsp;&nbsp;&nbsp;the obligation to maintain an EBITDA to interest coverage ratio of greater than or equal to 2:1 calculated on a four-quarter trailing basis where for only one quarter during the term of the credit facility the ratio can be as low as, but not less than 1.25:1, and a debt to capitalization ratio of less than or equal to 60%, both ratios calculated in accordance with definitions in the credit agreement that include adjustments related to the limited recourse subsidiaries,

ii)&nbsp;&nbsp;&nbsp;&nbsp;a default if payment is accelerated by a creditor on any indebtedness of $50 million or more of the Company and its subsidiaries, except for the limited recourse subsidiaries, and

iii)&nbsp;&nbsp;&nbsp;&nbsp;a default if a default occurs that permits a creditor to demand repayment on any other indebtedness of $50 million or more of the Company and its subsidiaries, except for the limited recourse subsidiaries.

The credit facilities are secured by certain assets of the Company, and also include other customary covenants including restrictions on the incurrence of additional indebtedness, restrictions against the sale or abandonment of the Geismar 3 project, as well as requirements associated with completion of plant construction and commissioning.

The limited recourse debt facilities are described as limited recourse as they are secured only by the assets of the entity that carries the debt. Accordingly, the lenders to the limited recourse debt facilities have no recourse to the Company or its other subsidiaries.

Failure to comply with any of the covenants or default provisions of the long-term debt facilities described above could result in a default under the applicable credit agreement that would allow the lenders to not fund future loan requests, accelerate the due date of the principal and accrued interest on any outstanding loans or restrict the payment of cash or other distributions.

As at December 31, 2022, management believes the Company was in compliance with all covenants related to its long-term debt obligations.

**71**

------

**9. Lease obligations:**

---

| | | |
|:---|:---|:---|
| | **2022** | 2021 |
| Opening lease obligations | $**717101** | $722234 |
| Additions, net of disposals | **262470** | 97673 |
| Interest expense | **48039** | 45394 |
| Lease payments | **(153901)** | (146448) |
| Effect of movements in exchange rates and other | **(3546)** | (1752) |
| Lease obligations at December 31 | **870163** | 717101 |
| Less: current portion | **(108736)** | (98301) |
| Lease obligations - non current portion | $**761427** | $618800 |

---

The Company incurs lease payments related to ocean vessels, terminal facilities, rail cars, vehicles and equipment, and office facilities. Leases are entered into and exited in coordination with specific business requirements which includes the assessment of the appropriate durations for the related leased assets.

The following table presents the contractual undiscounted cash flows for lease obligations as at December 31, 2022:

---

| | | | |
|:---|:---|:---|:---|
| | Lease<br>payments | Interest<br>component | Lease obligations |
| 2023 | $156807 | $48978 | $107829 |
| 2024 | 140462 | 43760 | 96702 |
| 2025 | 124474 | 38546 | 85928 |
| 2026 | 108587 | 33599 | 74988 |
| 2027 | 98123 | 28639 | 69484 |
| Thereafter | 523526 | 88294 | 435232 |
|  | $1151979 | $281816 | $870163 |

---

**Variable lease payments and short-term and low value leases**

Certain leases contain non-lease components, excluded from the right-of-use asset and lease liability, related to operating charges for ocean vessels and terminal facilities. The total expense recognized in cost of sales relating to operating charges for 2022 was $81.9 million (2021 - $80.8 million). Short-term leases are leases with a lease term of twelve months or less while low-value leases are comprised of information technology and miscellaneous equipment. Such items recognized within cost of sales in 2022 were $0.2 million (2021 - $0.2 million).

**Extension options**

Some leases contain extension options exercisable by the Company. Where practicable, the Company seeks to include extension options in new leases to provide operational flexibility. The extension options held are exercisable only by the Company and not by the lessors. The Company assesses, at lease commencement, whether it is reasonably certain to exercise the extension options. The Company reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant change in circumstances within its control. Total potential future lease payments not included in the lease liabilities should the Company exercise these extension options totals $53.5 million (2021 - $52.6 million).

**72**

------

---

| | | |
|:---|:---|:---|
| | Lease liabilities recognized (discounted) | Potential future lease payments not included in lease liabilities (undiscounted) |
| Ocean-going vessels | $659010 | $4968 |
| Terminals and tanks | 169518 | 34634 |
| Other | 41635 | 13864 |
| Total | $870163 | $53466 |

---

**Leases not yet commenced** 

As at December 31, 2022, the Company has entered into lease agreements for which the leases have not yet commenced. Total exposure to undiscounted future cash outflows not reflected in lease liabilities is $132.6 million (2021 - $392.0 million). The leases not yet commenced as at December 31, 2022 related to terminal agreements, storage tank agreements and the addition of 1 new ocean vessel in 2023 with a 15-year term, replacing expiring time charter vessels. The leases not yet commenced as at December 31, 2021 related to terminal agreements, storage tank agreements and 6 new ocean vessels, some of which are now in place.

**10. Other long-term liabilities:** 

---

| | | |
|:---|:---|:---|
| As at | **Dec 31<br>2022** | Dec 31<br>2021 |
| Share-based compensation liability (note 14) | $**70569** | $68634 |
| Site restoration costs | **36581** | 29355 |
| Land mortgage | **28514** | 28985 |
| Defined benefit pension plans (note 21) | **19216** | 20616 |
| Cash flow hedges (note 19) | **6739** | 60098 |
| Other | **2532** | 3252 |
|  | **164151** | 210940 |
| Less current maturities | **(29548)** | (17191) |
|  | $**134603** | $193749 |

---

**Site restoration costs:** 

The Company has accrued liabilities related to the decommissioning and reclamation of its methanol production sites and oil and gas properties. Because of uncertainties in estimating the amount and timing of the expenditures related to the sites, actual results could differ from the amounts estimated. As at December 31, 2022, the total undiscounted amount of estimated cash flows required to settle the liabilities was $52.1 million (2021 - $33.9 million). The movement in the provision during the year is explained as follows:

---

| | | |
|:---|:---|:---|
| | **2022** | 2021 |
| Balance at January 1 | $**29355** | $31941 |
| New or revised provisions | **6915** | (2767) |
| Accretion expense | **311** | 181 |
| Balance at December 31 | $**36581** | $29355 |

---

**73**

------

**11. Expenses:** 

---

| | | |
|:---|:---|:---|
| For the years ended December 31 | **2022** | 2021 |
| Cost of sales | $**3238312** | $3111924 |
| Selling and distribution | **498552** | 522539 |
| Administrative expenses | **81657** | 68131 |
| Total expenses by function | $**3818521** | $3702594 |
| Cost of raw materials and purchased methanol | **2789921** | 2739817 |
| Ocean freight and other logistics | **325893** | 356520 |
| Employee expenses, including share-based compensation | **219012** | 210849 |
| Other expenses | **111275** | 32324 |
| Cost of sales and operating expenses | **3446101** | 3339510 |
| Depreciation and amortization | **372420** | 363084 |
| Total expenses by nature | $**3818521** | $3702594 |

---

For the year ended December 31, 2022 we recorded a share-based compensation expense of $15.4 million (2021 - recovery of $1.2 million), the majority of which is included in administrative expenses for the total expenses by function presentation above.

Included in cost of sales is $532.5 million (2021 - $620.2 million) of cost of sales which are recognized as sales to Methanex in our Atlas equity investee's statements of income.

**12. Finance costs:** 

---

| | | |
|:---|:---|:---|
| For the years ended December 31 | **2022** | 2021 |
| Finance costs before capitalized interest | $**167066** | $165391 |
| Less capitalized interest related to Geismar 3 plant under construction | **(36314)** | &nbsp;&nbsp;(20985) |
| Finance costs | $**130752** | $144406 |

---

Finance costs are primarily comprised of interest on the unsecured notes, credit and construction facilities, limited recourse debt facilities, finance lease obligations, amortization of deferred financing fees, and accretion expense associated with site restoration costs. Interest during construction projects is capitalized until the plant is substantially completed and ready for productive use.

**13. Net income per common share:** 

Diluted net income per common share is calculated by considering the potential dilution that would occur if outstanding stock options and, under certain circumstances, TSARs were exercised or converted to common shares.

Outstanding TSARs may be settled in cash or common shares at the holder's option and for purposes of calculating diluted net income per common share, the more dilutive of the cash-settled and equity-settled method is used, regardless of how the plan is accounted for. Accordingly, TSARs that are accounted for using the cash-settled method will require adjustments to the numerator and denominator if the equity-settled method is determined to have a dilutive effect on diluted net income per common share as compared to the cash-settled method. The equity-settled method was more dilutive for the year ended December 31, 2022 and 2021, and an adjustment was required for the numerator. TSARs, if calculated using the equity-settled method, are considered dilutive when the average market price of the Company's common shares during the period disclosed exceeds the exercise price of the TSAR. For the year ended December 31, 2022 and 2021 TSARs were dilutive, resulting in an adjustment to the denominator.

**74**

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Stock options are considered dilutive when the average market price of the Company's common shares during the period disclosed exceeds the exercise price of the stock option. For the year ended December 31, 2022 and 2021, stock options were dilutive, resulting in an adjustment to the denominator.

A reconciliation of the numerator used for the purposes of calculating diluted net income per common share is as follows:

---

| | | |
|:---|:---|:---|
| For the years ended December 31 | **2022** | 2021 |
| Numerator for basic net income per common share | $**353830** | $482358 |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjustment for the effect of TSARs: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash-settled recovery included in net income | **(316)** | (9168) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity-settled expense | **(5503)** | (5742) |
| Numerator for diluted net income per common share | $**348011** | $467448 |

---

A reconciliation of the denominator used for the purposes of calculating diluted net income per common share is as follows:

---

| | | |
|:---|:---|:---|
| For the years ended December 31 | **2022** | 2021 |
| Denominator for basic net income per common share | **71422360** | 76039118 |
| &nbsp;&nbsp;&nbsp;&nbsp;Effect of dilutive stock options | **10108** | 7028 |
| &nbsp;&nbsp;&nbsp;&nbsp;Effect of dilutive TSARS | **245016** | 197631 |
| Denominator for diluted net income per common share | **71677484** | 76243777 |

---

For the years ended December 31, 2022 and 2021, basic and diluted net income per common share attributable to Methanex shareholders were as follows:

---

| | | |
|:---|:---|:---|
| For the years ended December 31 | **2022** | 2021 |
| Basic net income per common share | $**4.95** | $6.34 |
| Diluted net income per common share | $**4.86** | $6.13 |

---

**14. Share-based compensation:** 

The Company provides share-based compensation to its directors and certain employees through grants of stock options, TSARs, SARs and deferred, restricted or performance share units.

As at December 31, 2022, the Company had 3,852,797 common shares reserved for future grants of stock options and tandem share appreciation rights under the Company's stock option plan.

**75**

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**a) Share appreciation rights and tandem share appreciation rights:** 

All SARs and TSARs granted have a maximum term of seven years with one-third vesting each year from the date of grant. SARs and TSARs units outstanding at December 31, 2022 and 2021 are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | &nbsp;&nbsp;SARs | &nbsp;&nbsp;SARs | &nbsp;&nbsp;TSARs | &nbsp;&nbsp;TSARs |
| | &nbsp;&nbsp;&nbsp;Number of <br>units | &nbsp;&nbsp;&nbsp;Exercise <br>price USD | &nbsp;&nbsp;&nbsp;Number of <br>units | &nbsp;&nbsp;&nbsp;Exercise <br>price USD |
| Outstanding at December 31, 2020 | 840772 | $50.61 | 2340490 | $45.43 |
| &nbsp;&nbsp;Granted | 39490 | 38.79 | 338260 | 38.79 |
| &nbsp;&nbsp;Exercised | (30151) | 34.06 | (50623) | 33.89 |
| &nbsp;&nbsp;Cancelled | (25100) | 52.34 | (21460) | 50.98 |
| &nbsp;&nbsp;Expired | (158755) | 71.10 | (226430) | 73.13 |
| Outstanding at December 31, 2021 | 666256 | $45.70 | 2380237 | $42.05 |
| &nbsp;&nbsp;**Granted** | **32730** | **48.49** | **266090** | **48.49** |
| &nbsp;&nbsp;**Exercised** | **(129162)** | **37.17** | **(290577)** | **35.94** |
| &nbsp;&nbsp;**Cancelled** | **(12900)** | **55.70** | **(21922)** | **46.45** |
| &nbsp;&nbsp;**Expired** | **(149237)** | **55.66** | **(145469)** | **55.82** |
| **Outstanding at December 31, 2022** | **407687** | $**44.67** | **2188359** | $**42.68** |

---

Information regarding the SARs and TSARs outstanding as at December 31, 2022 is as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | Units outstanding at December 31, 2022 | Units outstanding at December 31, 2022 | Units outstanding at December 31, 2022 | Units exercisable at December 31, 2022 | Units exercisable at December 31, 2022 |
| Range of exercise prices | &nbsp;&nbsp;&nbsp;Weighted average <br>remaining <br>contractual <br>life (years) | &nbsp;&nbsp;&nbsp;Number <br>of units <br>outstanding | &nbsp;&nbsp;&nbsp;Weighted <br>average <br>exercise <br>price | &nbsp;&nbsp;&nbsp;Number <br>of units <br>exercisable | &nbsp;&nbsp;&nbsp;Weighted <br>average <br>exercise <br>price |
| SARs |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**$29.27 to $35.51** | **2.86** | **123387** | $**31.02** | **91327** | $**31.63** |
| &nbsp;&nbsp;&nbsp;&nbsp;**$38.79 to $50.17** | **3.17** | **161340** | **47.03** | **102284** | **48.69** |
| &nbsp;&nbsp;&nbsp;&nbsp;**$54.65 to $78.59** | **2.38** | **122960** | **55.28** | **122960** | **55.28** |
|  | **2.84** | **407687** | $**44.67** | **316571** | $**46.33** |
| TSARs |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**$29.27 to $35.51** | **3.56** | **784886** | $**30.09** | **535876** | $**30.47** |
| &nbsp;&nbsp;&nbsp;&nbsp;**$38.79 to $50.17** | **4.33** | **838663** | **45.19** | **351245** | **46.72** |
| &nbsp;&nbsp;&nbsp;&nbsp;**$54.65 to $78.59** | **2.66** | **564810** | **56.48** | **564810** | **56.48** |
|  | **3.62** | **2188359** | $**42.68** | **1451931** | $**44.52** |

---

**76**

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The fair value of each outstanding SARs and TSARs grant was estimated on December 31, 2022 and 2021 using the Black-Scholes option pricing model with the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
| | **2022** | 2021 |
| Risk-free interest rate | **4.4%** | 0.7% |
| Expected dividend yield | **1.9%** | 1.3% |
| Expected life of SARs and TSARs (years) | **1.8** | 1.7 |
| Expected volatility | **51%** | 51% |
| Expected forfeitures | **0%** | 0% |
| Weighted average fair value (USD per unit) | $**8.72** | $8.81 |

---

Compensation expense for SARs and TSARs is measured based on their fair value and is recognized over the vesting period. Changes in fair value each period are recognized in net income for the proportion of the service that has been rendered at each reporting date. The fair value as at December 31, 2022 was $23 million compared with the recorded liability of $22.1 million. The difference between the fair value and the recorded liability of $0.9 million will be recognized over the weighted average remaining vesting period of approximately 1.4 years.

For the year ended December 31, 2022, compensation expense related to SARs and TSARs included an expense in cost of sales and operating expenses of $1.8 million (2021 - recovery of $13.5 million). This included a recovery of $3.7 million (2021 - recovery of $20.5 million) related to the effect of the change in the Company's share price.

**b) Deferred, restricted and performance share units (old plan and new plan):** 

Deferred, restricted and performance share units (old plan and new plan) outstanding as at December 31, 2022 and 2021 are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | &nbsp;&nbsp;&nbsp;Number of <br>deferred share <br>units | &nbsp;&nbsp;&nbsp;Number of <br>restricted share <br>units | &nbsp;&nbsp;&nbsp;Number of <br>performance share <br>units (old plan) | &nbsp;&nbsp;&nbsp;Number of <br>performance share <br>units (new plan) |
| Outstanding at December 31, 2020 | 122947 | 228872 | 146801 | 443170 |
| &nbsp;&nbsp;&nbsp;Granted | 23384 | 132360 |  | 258970 |
| &nbsp;&nbsp;&nbsp;Performance factor impact on redemption<sup>1</sup> |  |  | (110354) |  |
| &nbsp;&nbsp;&nbsp;Granted in lieu of dividends | 1074 | 2729 |  | 5545 |
| &nbsp;&nbsp;&nbsp;Redeemed | (13987) | (6103) | (36447) |  |
| &nbsp;&nbsp;&nbsp;Cancelled |  | (25473) |  | (17997) |
| Outstanding at December 31, 2021 | 133418 | 332385 |  | 689688 |
| &nbsp;&nbsp;&nbsp;**Granted** | **19909** | **104810** | **—** | **199430** |
| &nbsp;&nbsp;&nbsp;**Performance factor impact on redemption**<sup>1</sup> | **—** | **—** | **—** | **(14796)** |
| &nbsp;&nbsp;&nbsp;**Granted in lieu of dividends** | **2434** | **5561** | **—** | **11764** |
| &nbsp;&nbsp;&nbsp;**Redeemed** | **—** | **(82039)** | **—** | **(119714)** |
| &nbsp;&nbsp;&nbsp;**Cancelled** | **—** | **(19788)** | **—** | **(21485)** |
| **Outstanding at December 31, 2022** | **155761** | **340929** | **—** | **744887** |

---

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp; Performance share units have a feature where the ultimate number of units that vest are adjusted by a performance factor of the original grant as determined by the Company's total shareholder return in relation to a predetermined target over the period to vesting. These units relate to performance share units redeemed in the quarter ended March 31, 2021, and the quarter ended March 31, 2022.

Performance share units granted since 2019 reflect a new long-term incentive plan. The performance share units granted under the new plan are redeemable for cash based on the market value of the Company's common shares and are non-dilutive to shareholders. They vest over three years and include two performance factors: (i) relative total shareholder return of Methanex shares versus a specific market index (the market performance factor) and (ii) three year average Return on Capital Employed (the non-market performance factor). The market performance factor is measured by the Company at the grant date

**77**

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and reporting date using a Monte-Carlo simulation model to determine fair value. The non-market performance factor reflects management's best estimate to determine the expected number of units to vest. Based on these performance factors the performance share unit payout will range between 0% to 200%.

Compensation expense for deferred, restricted and performance share units is measured at fair value based on the market value of the Company's common shares and is recognized over the vesting period. Changes in fair value are recognized in net income for the proportion of the service that has been rendered at each reporting date. The fair value of deferred, restricted and performance share units as at December 31, 2022 was $55.7 million compared with the recorded liability of $48.3 million. The difference between the fair value and the recorded liability of $7.4 million will be recognized over the weighted average remaining vesting period of approximately 1.6 years.

For the year ended December 31, 2022, compensation expense related to deferred, restricted and performance share units included in cost of sales and operating expenses was an expense of $13.5 million (2021 - expense of $12.2 million). This included a recovery of $3.4 million (2021 - recovery of $2.3 million) related to the effect of the change in the Company's share price.

**c) Stock options:** 

The exercise price of each stock option is equal to the quoted market price of the Company's common shares at the date of the grant. Options granted have a maximum term of seven years with one-third of the options vesting each year after the date of grant.

Common shares reserved for outstanding incentive stock options as at December 31, 2022 and 2021 are as follows:

---

| | | |
|:---|:---|:---|
| | &nbsp;&nbsp;&nbsp;Number of <br>stock <br>options | &nbsp;&nbsp;&nbsp;Weighted <br>average <br>exercise price |
| Outstanding at December 31, 2020 | 173251 | $49.44 |
| &nbsp;&nbsp;Granted | 6880 | 38.79 |
| &nbsp;&nbsp;Exercised | (7300) | 34.59 |
| &nbsp;&nbsp;Expired | (27210) | 73.13 |
| Outstanding at December 31, 2021 | 145621 | $45.25 |
| &nbsp;&nbsp;**Granted** | **5300** | $**48.49** |
| &nbsp;&nbsp;**Exercised** | **(16800)** | **34.59** |
| &nbsp;&nbsp;**Expired** | **(31590)** | **55.66** |
| **Outstanding at December 31, 2022** | **102531** | $**43.96** |

---

Information regarding the stock options outstanding as at December 31, 2022 is as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | Options outstanding at December 31, 2022 | Options outstanding at December 31, 2022 | Options outstanding at December 31, 2022 | Options exercisable at December 31, 2022 | Options exercisable at December 31, 2022 |
| Range of exercise prices | &nbsp;&nbsp;Weighted<br>average<br>remaining <br>contractual <br>life (years) | &nbsp;&nbsp;Number of<br>stock<br>options<br>outstanding | &nbsp;&nbsp;Weighted<br>average<br>exercise<br>price | &nbsp;&nbsp;Number of<br>stock<br>options<br>exercisable | &nbsp;&nbsp;Weighted<br>average<br>exercise<br>price |
| **Options** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**$29.27 to $35.51** | **1.75** | **39207** | $**32.49** | **34059** | $**32.98** |
| &nbsp;&nbsp;&nbsp;&nbsp;**$38.79 to $50.17** | **2.66** | **36214** | **47.76** | **26328** | **49.18** |
| &nbsp;&nbsp;&nbsp;&nbsp;**$54.65 to $78.59** | **2.44** | **27110** | **55.46** | **27110** | **55.46** |
|  | **2.25** | **102531** | $**43.96** | **87497** | $**44.82** |

---

For the year ended December 31, 2022, compensation expense related to stock options was $0.1 million (2021 - $0.1 million).

**78**

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**15. Segmented information:** 

The Company's operations consist of the production and sale of methanol, which constitutes a single operating segment.

During the years ended December 31, 2022 and 2021, revenues attributed to geographic regions, based on the location of customers, were as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Revenue | &nbsp;&nbsp;China | &nbsp;&nbsp;Europe | &nbsp;&nbsp;United States | &nbsp;&nbsp;South Korea | &nbsp;&nbsp;&nbsp;&nbsp;South America | &nbsp;&nbsp;Canada | Other Asia | &nbsp;&nbsp;TOTAL |
| **2022** | $**1105610** | $**830507** | $**657495** | $**542646** | $**458989** | $**197040** | $**518901** | $**4311188** |
|  | **26%** | **19%** | **15%** | **13%** | **11%** | **4%** | **12%** | **100%** |
| 2021 | $1263753 | $883290 | $670617 | $525850 | $438463 | $176796 | $455790 | $4414559 |
|  | 29% | 20% | 15% | 12% | 10% | 4% | 10% | 100% |

---

As at December 31, 2022 and 2021, the net book value of property, plant and equipment by geographic region, and the Company's shipping business, was as follows:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Property, plant and equipment <sup>1</sup> | &nbsp;&nbsp;United<br>States | &nbsp;&nbsp;Egypt | &nbsp;&nbsp;&nbsp;New <br>Zealand | &nbsp;&nbsp;Trinidad | &nbsp;&nbsp;Canada | &nbsp;&nbsp;Chile | Waterfront Shipping | &nbsp;&nbsp;Other | &nbsp;&nbsp;TOTAL |
| **December 31, 2022** | $**2211333** | $**564454** | $**211544** | $**70432** | $**165783** | $**102467** | $**792016** | $**37254** | $**4155283** |
| December 31, 2021 | $1840893 | $576721 | $208340 | $95082 | $174905 | $102766 | $645707 | $41735 | $3686149 |

---

<sup>1</sup> Includes right-of-use (leased) assets.

**16. Income and other taxes:** 

**a) Income tax (expense) recovery:** 

---

| | | |
|:---|:---|:---|
| For the years ended December 31 | **2022** | 2021 |
| Current tax (expense) recovery: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Current period before undernoted items | $**(127254)** | $(115629) |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjustments to prior years | **(324)** | (138) |
|  | **(127578)** | (115767) |
| Deferred tax recovery (expense): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Origination and reversal of temporary differences | **9589** | 4360 |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjustments to prior years | **(400)** | (235) |
| &nbsp;&nbsp;&nbsp;&nbsp;Changes in tax rates | **(23)** | 3630 |
| &nbsp;&nbsp;&nbsp;&nbsp;Impact of foreign exchange and other | **(1447)** | (2415) |
|  | **7719** | 5340 |
| Total income tax (expense) recovery | $**(119859)** | $(110427) |

---

**79**

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**b) Reconciliation of the effective tax rate:** 

The Company operates in several tax jurisdictions and therefore its income is subject to various rates of taxation. Income tax expense differs from the amounts that would be obtained by applying the Canadian statutory income tax rate to net income before income taxes as follows:

---

| | | |
|:---|:---|:---|
| For the years ended December 31 | **2022** | 2021 |
| Income (loss) before income taxes | $**582147** | $666338 |
| Deduct earnings of associate | **(76938)** | (97743) |
|  | **505209** | 568595 |
| Canadian statutory tax rate | **24.5%** | 24.5% |
| Income tax recovery (expense) calculated at Canadian statutory tax rate | **(123776)** | (139306) |
| Decrease (increase) in income tax expense resulting from: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Impact of income and losses taxed in foreign jurisdictions | **1346** | (24313) |
| &nbsp;&nbsp;&nbsp;&nbsp;Utilization of unrecognized loss carryforwards and temporary differences | **7077** | 7008 |
| &nbsp;&nbsp;&nbsp;&nbsp;Impact of tax rate changes and tax settlements | **(23)** | 43515 |
| &nbsp;&nbsp;&nbsp;&nbsp;Impact of foreign exchange | **3783** | (3198) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other business taxes | **(11065)** | (3691) |
| &nbsp;&nbsp;&nbsp;&nbsp;Impact of items (expenses) not taxable (deductible) for tax purposes | **3624** | 8377 |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjustments to prior years | **(724)** | (373) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | **(101)** | 1554 |
| Total income tax (expense) recovery | $**(119859)** | $(110427) |

---

**c) Net deferred income tax assets and liabilities:** 

(i) The tax effect of temporary differences that give rise to deferred income tax liabilities and deferred income tax assets is as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| As at |  | &nbsp;&nbsp;&nbsp;**Dec 31, 2022** | &nbsp;&nbsp;&nbsp;**Dec 31, 2022** |  | &nbsp;&nbsp;&nbsp;&nbsp;Dec 31, 2021 | &nbsp;&nbsp;&nbsp;&nbsp;Dec 31, 2021 |
|  | &nbsp;&nbsp;**Net** | &nbsp;&nbsp;**Deferred tax assets** | &nbsp;&nbsp;**Deferred tax liabilities** | &nbsp;&nbsp;&nbsp;&nbsp;Net | &nbsp;&nbsp;&nbsp;&nbsp;Deferred tax assets | &nbsp;&nbsp;&nbsp;&nbsp;Deferred tax liabilities |
| &nbsp;&nbsp;&nbsp;&nbsp;Property, plant and equipment (owned) | $**(403505)** | $**(230756)** | $**(172749)** | $(427001) | $(253108) | $(173893) |
| &nbsp;&nbsp;&nbsp;&nbsp;Right-of-use assets | **(33477)** | **(26486)** | **(6991)** | (35571) | (28047) | (7524) |
| &nbsp;&nbsp;&nbsp;&nbsp;Repatriation taxes | **(106989)** | **—** | **(106989)** | (106339) |  | (106339) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | **(78305)** | **(60850)** | **(17455)** | (13467) | (270) | (13197) |
|  | **(622276)** | **(318092)** | **(304184)** | (582378) | (281425) | (300953) |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-capital loss carryforwards | **353986** | **322608** | **31378** | 370642 | 329405 | 41237 |
| &nbsp;&nbsp;&nbsp;&nbsp;Lease obligations | **46438** | **35957** | **10481** | 48481 | 37153 | 11328 |
| &nbsp;&nbsp;&nbsp;&nbsp;Share-based compensation | **17068** | **2096** | **14972** | 14063 | 1832 | 12231 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | **24141** | **3784** | **20357** | 34656 | 11204 | 23452 |
|  | **441633** | **364445** | **77188** | 467842 | 379594 | 88248 |
| Net deferred income tax assets (liabilities) | $**(180643)** | $**46353** | $**(226996)** | $(114536) | $98169 | $(212705) |

---

**80**

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As at December 31, 2022, deferred income tax assets have been recognized in respect of non-capital loss carryforwards generated in the United States. These loss carryforwards expire as follows:

---

| | | |
|:---|:---|:---|
| | **Dec 31 2022** | **Dec 31 2022** |
| | **Gross amount** | **Tax effect** |
| Expire |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Losses generated in 2015 (expires 2035) | $**280549** | $**64526** |
| &nbsp;&nbsp;&nbsp;&nbsp;Losses generated in 2016 (expires 2036) | **432581** | **99494** |
| &nbsp;&nbsp;&nbsp;&nbsp;Losses generated in 2017 (expires 2037) | **234941** | **54036** |
|  | **948071** | **218056** |
| No expiry |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Losses generated in 2019 | **255244** | **58706** |
| &nbsp;&nbsp;&nbsp;&nbsp;Losses generated in 2020 | **111894** | **25736** |
| Total non-capital loss carryforwards | $**1315209** | $**302498** |

---

Losses generated in the United States on or after January 1, 2018 may be carried forward indefinitely against future taxable income. Tax losses generated before December 31, 2017 may be carried forward for a 20 year period.

As at December 31, 2022 the Company had $231.0 million (2021 - $262.0 million) of deductible temporary differences in the United States that have not been recognized.

As at December 31, 2022, deferred income tax assets have been recognized in respect of non-capital loss carryforwards generated in Trinidad. The loss carryforwards total $69.8 million (2021 - $59.8 million), which result in a deferred income tax asset of $24.4 million (2021 - $20.9 million). The losses generated in Trinidad may be carried forward indefinitely against future taxable income.

As at December 31, 2022, deferred income tax assets have been recognized in respect of non-capital loss carryforwards generated in New Zealand. The loss carryforwards total $6.5 million (2021 - nil), which result in a deferred income tax asset of $1.8 million (2021 - nil). The losses generated in New Zealand may be carried forward indefinitely against future taxable income.

As at December 31, 2022, deferred income tax assets have been recognized in respect of non-capital loss carryforwards generated in Canada. The loss carryforwards total $120.8 million (2021 - $167.8 million), which result in a deferred income tax asset of $29.6 million (2021 - $41.0 million). The losses were generated in 2020 and can be carried forward 20 years against future taxable income.

(ii) Analysis of the change in deferred income tax assets and liabilities:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | | **2022** | | | 2021 | |
| | **Net** | **Deferred tax assets** | **Deferred tax liabilities** | Net | Deferred tax assets | Deferred tax liabilities |
| Balance, January 1 | $**(114536)** | $**98169** | $**(212705)** | $(75868) | $137524 | $(213392) |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax recovery included in net income | **7719** | **22578** | **(14859)** | 5340 | (592) | 5932 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax recovery (expense) included in other comprehensive income | **(72440)** | **(74394)** | **1954** | (42919) | (38763) | (4156) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | **(1386)** | **—** | **(1386)** | (1089) |  | (1089) |
| Balance, December 31 | $**(180643)** | $**46353** | $**(226996)** | $(114536) | $98169 | $(212705) |

---

**81**

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**17. Supplemental cash flow information:** 

**a) Changes in non-cash working capital:**

Changes in non-cash working capital for the years ended December 31, 2022 and 2021 are as follows:

---

| | | |
|:---|:---|:---|
| For the years ended December 31 | **2022** | 2021 |
| Changes in non-cash working capital: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Trade and other receivables | $**50442** | $(139367) |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories | **19785** | (150860) |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses | **(2622)** | (2217) |
| &nbsp;&nbsp;&nbsp;&nbsp;Trade, other payables and accrued liabilities | **(46751)** | 234998 |
|  | **20854** | (57446) |
| Adjustments for items not having a cash effect and working capital changes relating to taxes and interest paid and received | **59283** | (31924) |
| Changes in non-cash working capital | $**80137** | $(89370) |
| These changes relate to the following activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating | $**54122** | $(83109) |
| &nbsp;&nbsp;&nbsp;&nbsp;Financing | **1771** | 1350 |
| &nbsp;&nbsp;&nbsp;&nbsp;Investing | **24244** | (7611) |
| Changes in non-cash working capital | $**80137** | $(89370) |

---

**b) Reconciliation of movements in liabilities to cash flows arising from financing activities:**

---

| | | |
|:---|:---|:---|
| | Long term debt<br> (note 8) | &nbsp;&nbsp;&nbsp;&nbsp;Lease obligations (note 9) |
| Balance at December 31, 2021 | $2158192 | $717101 |
| Changes from financing cash flows |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Repayment of long-term debt and financing fees | (9151) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Payment of lease obligations |  | (105863) |
| Total changes from financing cash flows | (9151) | (105863) |
| Liability-related other changes |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Finance costs | 2472 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;New lease obligations |  | 262470 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other |  | (3545) |
| Total liability-related other changes | 2472 | 258925 |
| Balance at December 31, 2022 | $2151513 | $870163 |

---

**82**

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**18. Capital disclosures:** 

The Company's objective in managing liquidity and capital is to safeguard the Company's ability to continue as a going concern and to provide financial capacity and flexibility to meet its strategic objectives, with a focus on cash preservation and liquidity.

---

| | | | |
|:---|:---|:---|:---|
| As at | **Dec 31<br>2022** | **Dec 31<br>2022** | Dec 31<br>2021 |
| Liquidity: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | **$** | **857747** | 932069 |
| &nbsp;&nbsp;&nbsp;&nbsp;Undrawn credit facility | **300000** | **300000** | 300000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Undrawn G3 construction facility | **300000** | **300000** | 600000 |
| Total liquidity  | **$** | **1457747** | 1832069 |
| Capitalization: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Unsecured notes, including current portion | **1983374** | **1983374** | 1981199 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other limited recourse debt facilities, including current portion | **168139** | **168139** | 176993 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total debt | **2151513** | **2151513** | 2158192 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-controlling interests | **317444** | **317444** | 271155 |
| &nbsp;&nbsp;&nbsp;&nbsp;Shareholders' equity | **2112013** | **2112013** | 1683576 |
| Total capitalization | **$** | **4580970** | 4112923 |
| Total debt to capitalization <sup>1</sup> | **47%** | **47%** | 52% |
| Net debt to capitalization <sup>2</sup> | **35%** | **35%** | 39% |

---

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp; Total debt (including Other limited recourse debt facilities) divided by total capitalization.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp; Total debt (including Other limited recourse debt facilities) less cash and cash equivalents divided by total capitalization less cash and cash equivalents.

The Company manages its liquidity and capital structure and makes adjustments to it in light of changes to economic conditions, the underlying risks inherent in its operations and capital requirements to maintain and grow its operations. The strategies employed by the Company may include the issue or repayment of general corporate debt, the issue of project debt, private placements by limited recourse subsidiaries, the issue of equity, the payment of dividends and the repurchase of shares.

The Company is not subject to any statutory capital requirements and has no commitments to sell or otherwise issue common shares except pursuant to outstanding employee stock options.

The Company has access to a $300 million committed revolving credit facility expiring in July 2026, and a non-revolving construction facility for the Geismar 3 project expiring in July 2025. Both facilities are with a syndicate of highly rated financial institutions. During the year ended December 31, 2022, the non-revolving construction facility was reduced from $600 million to $300 million. The credit facilities are subject to certain financial covenants (note 8).

**19. Financial instruments:** 

Financial instruments are either measured at amortized cost or fair value.

In the normal course of business, the Company's assets, liabilities and forecasted transactions, as reported in U.S. dollars, are impacted by various market risks including, but not limited to, natural gas prices and currency exchange rates. The time frame and manner in which the Company manages those risks varies for each item based on the Company's assessment of the risk and the available alternatives for mitigating risks.

The Company uses derivatives as part of its risk management program to mitigate variability associated with changing market values. Changes in the fair value of derivative financial instruments are recorded in earnings unless the instruments are designated as cash flow hedges, in which case the changes in fair value are recorded in other comprehensive income and are reclassified to profit or loss or accumulated other comprehensive income (loss) when the underlying hedged transaction is recognized in earnings or inventory. The Company designates as cash flow hedges certain derivative financial instruments to

**83**

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hedge its risk exposure to fluctuations in natural gas prices and to hedge its risk exposure to fluctuations on certain foreign-currency-denominated transactions.

The following table provides the carrying value of each category of financial assets and liabilities and the related balance sheet item:

---

| | | |
|:---|:---|:---|
| As at | **Dec 31<br>2022** | Dec 31<br>2021 |
| Financial assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Financial assets measured at fair value: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative instruments designated as cash flow hedges <sup>1</sup> | $**322748** | $56802 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair value of Egypt gas supply contract derivative <sup>2</sup> | **11220** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Financial assets not measured at fair value: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | **857747** | 932069 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade and other receivables, excluding tax receivable | **488184** | 540891 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restricted cash included in other assets | **14349** | 13053 |
| Total financial assets <sup>3</sup> | $**1694248** | $1542815 |
| Financial liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Financial liabilities measured at fair value: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative instruments designated as cash flow hedges <sup>1</sup> | $**8466** | $60098 |
| &nbsp;&nbsp;&nbsp;&nbsp;Financial liabilities not measured at fair value: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade, other payables and accrued liabilities, excluding tax payable | **656010** | 660475 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease obligations, including current portion | **870163** | 717101 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-term debt, including current portion | **2151513** | 2158192 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Land mortgage | **28514** | 28985 |
| Total financial liabilities | $**3714666** | $3624851 |

---

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp; The Geismar and Medicine Hat natural gas hedges and euro foreign currency hedges designated as cash flow hedges are measured at fair value based on industry accepted valuation models and inputs obtained from active markets.

<sup>2</sup> The Egypt natural gas supply contract is measured at fair value using a Monte-Carlo model classified within Level 3 of the fair value hierarchy.

<sup>3</sup>&nbsp;&nbsp;&nbsp;&nbsp; The carrying amount of the financial assets represents the maximum exposure to credit risk at the respective reporting periods.

As at December 31, 2022, all of the financial instruments were recorded on the consolidated statements of financial position at amortized cost with the exception of derivative financial instruments, which were recorded at fair value unless exempted.

The fair value of derivative instruments is determined based on industry-accepted valuation models using market observable inputs and are classified within Level 2 of the fair value hierarchy and those using significant unobservable inputs classified as Level 3. The fair value of all of the Company's derivative contracts as presented in the consolidated statements of financial position are determined based on present values and the discount rates used are adjusted for credit risk. The effective portion of the changes in fair value of derivative financial instruments designated as cash flow hedges is recorded in other comprehensive income. The spot element of forward contracts in the hedging relationships is recorded in other comprehensive income as the change in fair value of cash flow hedges. The change in the fair value of the forward element of forward contracts is recorded in other comprehensive income as the forward element excluded from the hedging relationships. Once a commodity hedge settles, the amount realized during the period and not recognized immediately in the statement of income is reclassified from accumulated other comprehensive income (equity) to inventory and ultimately through cost of goods sold. Foreign currency hedges settled, are realized during the period directly to the statement of income reclassified from the statement of other comprehensive income.

Until settled, the fair value of Level 2 derivative financial instruments will fluctuate based on changes in commodity prices or foreign currency exchange rates and the fair value of Level 3 derivative financial instruments will fluctuate based on changes in the observable and unobservable valuation model inputs.

**84**

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**North American natural gas forward contracts**

The Company manages its exposure to changes in natural gas prices for a portion of its North American natural gas requirements by executing a number of fixed price forward contracts: both financial and physical.

The Company has entered into forward contracts designated as cash flow hedges to manage its exposure to changes in natural gas prices for Geismar and Medicine Hat. Natural gas is fungible across the Geismar plants. Other costs incurred to transport natural gas from the contracted delivery point, either Henry Hub or AECO, to the relevant production facility represent an insignificant portion of the overall underlying risk and are recognized as incurred outside of the hedging relationship. No hedge ineffectiveness has been recognized in 2022 or 2021.

---

| | | |
|:---|:---|:---|
| As at | **Dec 31<br>2022** | Dec 31<br>2021 |
| Maturities | **2023-2032** | 2022-2032 |
| Notional quantity <sup>1</sup> | **307900** | 322880 |
| Notional quantity per day, annualized <sup>1</sup> | **50 - 150** | 50 - 130 |
| Notional amount | $**1014264** | $1053917 |
| Net fair value | $**316008** | $(3986) |

---

<sup>1</sup>*&nbsp;&nbsp;&nbsp;&nbsp;*In thousands of Million British Thermal Units (mmBtu)

Information regarding the gross amounts of the Company's natural gas forward contracts designated as cash flow hedges in the audited consolidated statements of financial position is as follows:

---

| | | |
|:---|:---|:---|
| As at | **Dec 31<br>2022** | Dec 31<br>2021 |
| Other current assets | $**32768** | $5905 |
| Other non-current assets | **289979** | 50208 |
| Other current liabilities | **(317)** | (3961) |
| Other long-term liabilities | **(6422)** | (56138) |
| Net fair value | $**316008** | $(3986) |

---

For the year ended December 31, 2022, the Company reclassified a gain of $55.0 million (2021 - gain of $12.7 million) for natural gas hedge settlements from accumulated other comprehensive income. Realized gains and losses related to settlements of natural gas hedges are presented separately within the Consolidated Statement of Changes in Equity.

**Euro forward exchange contracts**

The Company manages its foreign currency exposure to euro denominated sales by executing a number of forward contracts which it has designated as cash flow hedges for its highly probable forecast euro collections. The Company has elected to designate the spot element of the forward contracts as cash flow hedges. The forward element of the forward contracts are excluded from the designation and only the spot element is considered for the purpose of assessing effectiveness and measuring ineffectiveness. The excluded forward element of the swap contracts will be accounted for as a cost of hedging (transaction cost) to be recognized in profit or loss over the term of the hedging relationships. Ineffectiveness may arise in the hedging relationship due to changes in the timing of the anticipated transactions and/or due to changes in credit risk of the hedging instrument not replicated in the hedged item. No hedge ineffectiveness has been recognized in 2022 or 2021.

As at December 31, 2022, the Company had outstanding forward exchange contracts designated as cash flow hedges to sell a notional amount of 21.1 million euros (2021 - 25.8 million euros). The euro contracts had a negative fair value of $1.7 million included in other current liabilities (2021 - positive fair value of $0.7 million included in other current assets).

For the year ended December 31, 2022, the Company reclassified a gain of $5.7 million (2021 - gain of $1.1 million) for foreign currency hedge settlements from other comprehensive income.

**85**

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**Changes in cash flow hedges and excluded forward element**

Information regarding the impact of changes in cash flow hedges and cost of hedging reserve in the consolidated statement of comprehensive income is as follows:

---

| | | |
|:---|:---|:---|
| For the years ended December 31 | **2022** | 2021 |
| Change in fair value of cash flow hedges | $**(27742)** | $289824 |
| Forward element excluded from hedging relationships | **406029** | (101401) |
|  | $**378287** | $188423 |

---

The amounts presented in the table above were previously presented separately in the consolidated statements of comprehensive income, but have been presented on a net basis in the consolidated statements of comprehensive income and disclosed separately in the notes to the consolidated financial statements to simplify the presentation for the users of the financial statements.

**Fair value - Level 2 instruments**

The table below shows the nominal cash outflows for derivative hedging instruments including natural gas forward contracts and forward exchange contracts, excluding credit risk adjustments, based upon contracted settlement dates. The amounts reflect the maturity profile of the hedging instruments and are subject to change based on the prevailing market rate at each of the future settlement dates. Financial asset derivative positions, if any, are held with investment-grade counterparties and therefore the settlement day risk exposure is considered to be negligible.

---

| | | |
|:---|:---|:---|
| As at | **Dec 31<br>2022** | Dec 31<br>2021 |
| Within one year | $**2050** | $3854 |
| 1-3 years | **7132** | 24250 |
| 3-5 years | **—** | 21500 |
| More than 5 years | **—** | 17737 |
|  | $**9182** | $67341 |

---

The fair value of the Company's derivative financial instruments as disclosed above are determined based on Bloomberg quoted market prices, which are adjusted for credit risk.

The Company is exposed to credit-related losses in the event of non-performance by counterparties to derivative financial instruments but does not expect any counterparties to fail to meet their obligations. The Company deals with only highly rated investment-grade counterparties. The Company is exposed to credit risk when there is a positive fair value of derivative financial instruments at a reporting date. The maximum amount that would be at risk if the counterparties to derivative financial instruments with positive fair values failed completely to perform under the contracts was $322.7 million as at December 31, 2022 (2021 - $56.8 million).

The carrying values of the Company's financial instruments approximate their fair values, except as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| As at | **December 31, 2022** | **December 31, 2022** | December 31, 2021 | December 31, 2021 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Carrying**<br>**value** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Fair**<br>**value** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Carrying<br>value | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair<br>value |
| Long-term debt excluding deferred financing fees | $**2168585** | $**1953932** | $2177499 | $2292787 |

---

Long-term debt consists of limited recourse debt facilities and unsecured notes. There is no publicly traded market for the limited recourse debt facilities. The fair value of the limited recourse debt facilities as disclosed on a recurring basis and categorized as Level 2 within the fair value hierarchy is estimated by reference to current market rates as at the reporting date. The fair value of the unsecured notes disclosed on a recurring basis and also categorized as Level 2 within the fair value hierarchy is estimated using quoted prices and yields as at the reporting date. The fair value of the Company's long term debt will fluctuate until maturity.

**86**

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**Fair value - Level 3 instrument** 

The Company holds a long-term natural gas supply contract expiring in 2035 with the Egyptian Natural Gas Holding Company ("EGAS"), a State-Owned enterprise in Egypt. The natural gas supply contract includes a base fixed price plus a premium based on the realized price of methanol for the full volume of natural gas to supply the plant for the remainder of its useful life. The terms of this contract were amended during the third quarter of 2022 to redirect and sell the plant's contracted natural gas for a three-month period (see note 26). The amendment has modified the accounting for the contract resulting in the contract being treated as a derivative measured at fair value.

There is no observable, liquid spot market or forward curve for natural gas in Egypt. In addition, there are limited observable prices for natural gas in Egypt as all natural gas purchases and sales are controlled by the government and the observed prices differ based on the produced output or usage.

Due to the absence of an observable market price for an equivalent or similar contract to measure fair value, the contract's fair value is estimated using a Monte-Carlo model. The Monte-Carlo model includes significant unobservable inputs and as a result is classified within Level 3 of the fair value hierarchy. We consider market participant assumptions in establishing the model inputs and determining fair value, including adjusting the base fixed price and methanol based premium at the valuation date to consider estimates of inflation since contract inception.

At December 31, 2022 the fair value of the derivative associated with the remaining term of the natural gas supply contract is $11.2 million recorded in Other assets. Changes in fair value of the contract are recognized in Finance income and other expenses.

The table presents the Level 3 inputs and the sensitivities of the Monte-Carlo model valuation to changes in these inputs:

---

| | | | |
|:---|:---|:---|:---|
| | **Sensitivities** | **Sensitivities** | **Sensitivities** |
|<br>**Valuation input** | **Input value or range** | **Change in input** | **Resulting change in valuation** |
| Methanol price volatility (before impact of mean reversion) | 35% | +/- 5% | $+6/-5 million |
| Methanol price forecast | $330 - $500 per MT | +/- $25 per MT | $+4/-3 million |
| Discount rate | 8.9% | +/- 1% | $+/-1 million |

---

It is possible that the assumptions used in establishing fair value amounts will differ from future outcomes and the impact of such variations could be material.

**20. Financial risk management:** 

**a) Market risks:** 

The Company's operations consist of the production and sale of methanol. Market fluctuations may result in significant cash flow and profit volatility risk for the Company. Its worldwide operating business as well as its investment and financing activities are affected by changes in methanol and natural gas prices and interest and foreign exchange rates. The Company seeks to manage and control these risks primarily through its regular operating and financing activities and uses derivative instruments to hedge these risks when deemed appropriate. This is not an exhaustive list of all risks, nor will the risk management strategies eliminate these risks.

 **Methanol price risk** 

The methanol industry is a highly competitive commodity industry and methanol prices fluctuate based on supply and demand fundamentals and other factors. The profitability of the Company is directly related to the market price of methanol. A decline in the market price of methanol could negatively impact the Company's future operations. The Company does not hedge its methanol sales through derivative contracts. The Company manages its methanol price risk, to a certain degree, through natural gas supply contracts that include a variable price component linked to methanol prices, as described below.

**87**

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**Natural gas price risk** 

Natural gas is the primary feedstock for the production of methanol. The Company has entered into multi-year natural gas supply contracts for its production facilities in New Zealand, Trinidad, Egypt and certain contracts in Chile that include base and variable price components to reduce the commodity price risk exposure. The variable price component is adjusted by formulas related to methanol prices above a certain level. The Company also has multi-year fixed price natural gas contracts to supply its production facilities in Geismar, Medicine Hat and Chile and natural gas financial hedges in Geismar to manage its exposure to natural gas price risk.

**Interest rate risk** 

Interest rate risk is the risk that the Company suffers financial loss due to changes in the value of an asset or liability or in the value of future cash flows due to movements in interest rates. The Company's interest rate risk exposure is mainly related to undrawn credit facilities.

---

| | | |
|:---|:---|:---|
| As at | **Dec 31<br>2022** | Dec 31<br>2021 |
| Fixed interest rate debt: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Unsecured notes | $**1983374** | $1981199 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other limited recourse debt facilities | **168139** | 176993 |
|  | $**2151513** | $2158192 |

---

For fixed interest rate debt, a 1% change in interest rates would result in a change in the fair value of the debt (disclosed in note 19) of approximately $104.8 million as of December 31, 2022 (2021 - $155.1 million).

**Foreign currency risk** 

The Company's international operations expose the Company to foreign currency exchange risks in the ordinary course of business. Accordingly, the Company has established a policy that provides a framework for foreign currency management and hedging strategies and defines the approved hedging instruments. The Company reviews all significant exposures to foreign currencies arising from operating and investing activities and hedges exposures if deemed appropriate.

The dominant currency in which the Company conducts business is the United States dollar, which is also the reporting currency.

Methanol is a global commodity chemical that is priced in United States dollars. In certain jurisdictions, however, the transaction price is set either quarterly or monthly in the local currency. Accordingly, a portion of the Company's revenue is transacted in Chinese yuan, euros, Canadian dollars and, to a lesser extent, other currencies. For the period from when the price is set in local currency to when the amount due is collected, the Company is exposed to declines in the value of these currencies compared to the United States dollar. The Company also purchases varying quantities of methanol for which the transaction currency is the euro, Chinese yuan and, to a lesser extent, other currencies. In addition, some of the Company's underlying operating costs and capital expenditures are incurred in other currencies. The Company is exposed to increases in the value of these currencies that could have the effect of increasing the United States dollar equivalent of cost of sales and operating expenses and capital expenditures. The Company has elected not to actively manage these exposures at this time except for a portion of the net exposure to euro revenues, which is hedged through forward exchange contracts each quarter when the euro price for methanol is established.

As at December 31, 2022, the Company had a net working capital asset of $69.9 million in non U.S. dollar currencies (2021 - $148.4 million). Each 10% strengthening (weakening) of the U.S. dollar against these currencies would decrease (increase) the value of net working capital and pre-tax cash flows and earnings by approximately $7.0 million (2021 - $14.8 million).

**b) Liquidity risks:** 

Liquidity risk is the risk that the Company will not have sufficient funds to meet its liabilities, such as the settlement of financial debt and lease obligations and payment to its suppliers. The Company maintains liquidity and makes adjustments to it in light of changes to economic conditions, underlying risks inherent in its operations and capital requirements to maintain and grow its operations. As at December 31, 2022, the Company had a strong liquidity position including a cash and cash equivalents balance of $858 million. In addition, the Company has access to a $300 million committed revolving credit facility, and a $300 million construction credit facility for the Geismar 3 project.

**88**

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In addition to the above-mentioned sources of liquidity, the Company monitors funding options available in the capital markets, as well as trends in the availability and costs of such funding, with a view to maintaining financial flexibility and limiting refinancing risks.

The expected cash flows of financial liabilities from the date of the balance sheet to the contractual maturity date are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| As at December 31, 2022 | &nbsp;&nbsp;&nbsp;**Carrying <br>amount** | &nbsp;&nbsp;&nbsp;**Contractual <br>cash flows** | &nbsp;&nbsp;**1 year or less** | &nbsp;&nbsp;**1-3 years** | &nbsp;&nbsp;**3-5 years** | &nbsp;&nbsp;&nbsp;**More than <br>5 years** |
| Trade and other payables <sup>1</sup> | $**641338** | $**641338** | $**641338** | $**—** | $**—** | $**—** |
| Lease obligations <sup>2</sup> | **870163** | **1151979** | **156807** | **264936** | **206710** | **523526** |
| Other long-term liabilities<sup>2</sup> | **28514** | **55548** | **2200** | **4400** | **4400** | **44548** |
| Long-term debt <sup>2</sup> | **2151513** | **3057230** | **126373** | **533974** | **915014** | **1481869** |
| Cash flow hedges <sup>3</sup> | **8466** | **9182** | **2050** | **7132** | **—** | **—** |
|  | $**3699994** | $**4915277** | $**928768** | $**810442** | $**1126124** | $**2049943** |

---

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp; Excludes tax, accrued interest and euro foreign currency hedges.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp; Contractual cash flows include contractual interest payments related to debt obligations and lease obligations.

<sup>3</sup> The expected cash flows of hedges are based on current valuations of the expected settlement amounts, which will fluctuate at settlement dependent on the market prices at the future settlement dates

**c) Credit risks:** 

Counterparty credit risk is the risk that the financial benefits of contracts with a specific counterparty will be lost if a counterparty defaults on its obligations under the contract. This includes any cash amounts owed to the Company by those counterparties, less any amounts owed to the counterparty by the Company where a legal right of offset exists and also includes the fair values of contracts with individual counterparties that are recorded in the financial statements.

**Trade credit risk** 

Trade credit risk is defined as an unexpected loss in cash and earnings if the customer is unable to pay its obligations in due time or if the value of the security provided declines. The Company has implemented a credit policy that includes approvals for new customers, annual credit evaluations of all customers and specific approval for any exposures beyond approved limits. The Company employs a variety of risk-mitigation alternatives, including credit insurance, certain contractual rights in the event of deterioration in customer credit quality and various forms of bank and parent company guarantees and letters of credit to upgrade the credit risk to a credit rating equivalent or better than the stand-alone rating of the counterparty. Trade credit losses have historically been minimal and as at December 31, 2022 substantially all of the trade receivables were classified as current.

**Cash and cash equivalents** 

To manage credit and liquidity risk, the Company's investment policy specifies eligible types of investments, maximum counterparty exposure and minimum credit ratings. Therefore, the Company invests only in highly rated investment-grade instruments that have maturities of three months or less.

**Derivative financial instruments** 

The Company's hedging policies specify risk management objectives and strategies for undertaking hedge transactions. The policies also include eligible types of derivatives and required transaction approvals, as well as maximum counterparty exposures and minimum credit ratings. The Company does not use derivative financial instruments for trading or speculative purposes.

To manage credit risk, the Company only enters into derivative financial instruments with highly rated investment-grade counterparties. Hedge transactions are reviewed, approved and appropriately documented in accordance with Company policies.

**89**

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**21. Retirement plans:** 

**a) Defined benefit pension plans:** 

The Company has non-contributory defined benefit pension plans covering certain employees. The Company does not provide any significant post-retirement benefits other than pension plan benefits. Information concerning the Company's defined benefit pension plans, in aggregate, is as follows:

---

| | | |
|:---|:---|:---|
| As at | **Dec 31<br>2022** | Dec 31<br>2021 |
| Accrued benefit obligations: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Balance, beginning of year | $**62208** | $78810 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current service cost | **2329** | 3232 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest cost on accrued benefit obligations | **2007** | 1619 |
| &nbsp;&nbsp;&nbsp;&nbsp;Benefit payments | **(5760)** | (9188) |
| &nbsp;&nbsp;&nbsp;&nbsp;Settlements | **—** | (123) |
| &nbsp;&nbsp;&nbsp;&nbsp;Actuarial (gain) loss  | **(4047)** | (7911) |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange (gain) loss  | **(3151)** | (4231) |
| &nbsp;&nbsp;&nbsp;&nbsp;Balance, end of year | **53586** | 62208 |
| Fair values of plan assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Balance, beginning of year | **46608** | 46958 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income on assets | **1221** | 1057 |
| &nbsp;&nbsp;&nbsp;&nbsp;Contributions | **4457** | 7528 |
| &nbsp;&nbsp;&nbsp;&nbsp;Benefit payments | **(5760)** | (9188) |
| &nbsp;&nbsp;&nbsp;&nbsp;Return on plan assets | **(5173)** | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange gain (loss) | **(3006)** | 251 |
| &nbsp;&nbsp;&nbsp;&nbsp;Balance, end of year | **38347** | 46608 |
| Unfunded status | **15239** | 15600 |
| Minimum funding requirement | **—** |  |
| Defined benefit obligation, net | $**15239** | $15600 |

---

The net defined benefit obligation above is comprised of unfunded retirement obligations and funded retirement net assets from defined benefit pension plans, as follows:

The Company has an unfunded retirement obligation of $19.2 million as at December 31, 2022 (2021 - obligation of $19.5 million) for its employees in Chile that will be funded in accordance with Chilean law. The accrued benefit for the unfunded retirement arrangement in Chile is paid when an employee leaves the Company in accordance with plan terms and Chilean regulations. The Company estimates that it may make benefit payments based on actuarial assumptions related to the unfunded retirement obligation in Chile of $9.7 million in 2023. Actual benefit payments in future periods will fluctuate based on employee retirements.

The Company has a net funded retirement asset of $3.6 million as at December 31, 2022 (2021 - $5.0 million) for certain employees and retirees in Canada and a net funded retirement asset of $0.4 million as at December 31, 2022 (2021 - obligation of $1.1 million) in Europe. The Company estimates that it will make no additional contributions relating to its defined benefit pension plan in Canada and that it will make additional contributions relating to its defined benefit pension plan in Europe of $0.7 million in 2023.

These defined benefit plans expose the Company to actuarial risks, such as longevity risk, currency risk, interest rate risk and market risk on the funded plans. Additionally, as the plans provide benefits to plan members predominantly in Canada and Chile, the plans expose the Company to foreign currency risk for funding requirements. The primary long-term risk is that the Company will not have sufficient plan assets and liquidity to meet obligations when they fall due. The weighted average duration of the net defined benefit obligation is 7 years.

**90**

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The Company's net defined benefit pension plan expense charged to the consolidated statements of income for the years ended December 31, 2022 and 2021 is as follows:

---

| | | |
|:---|:---|:---|
| For the years ended December 31 | **2022** | 2021 |
| Net defined benefit pension plan expense: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Current service cost | $**2329** | $3232 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net interest cost | **786** | 562 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cost of settlement | **—** | (123) |
| Total net defined benefit pension plan expense | $**3115** | $3671 |

---

The Company's current year actuarial losses, recognized in the consolidated statements of comprehensive income for the years ended December 31, 2022 and 2021, are as follows:

---

| | | |
|:---|:---|:---|
| For the years ended December 31 | **2022** | 2021 |
| Actuarial gain (loss)  | $**(726)** | $7499 |

---

The Company had no minimum funding requirement for the years ended December 31, 2022 and 2021.

The Company uses a December 31 measurement date for its defined benefit pension plans. Actuarial reports for the Company's defined benefit pension plans were prepared by independent actuaries for funding purposes as of December 31, 2019 in Canada. The next actuarial reports for funding purposes for the Company's Canadian defined benefit pension plans are scheduled to be completed as of December 31, 2022.

The discount rate is the most significant actuarial assumption used in accounting for the defined benefit pension plans. As at December 31, 2022, the weighted average discount rate for the defined benefit obligation was 5.1% (2021 - 3.7%). A change of 1% in the weighted average discount rate at the end of the reporting period, while holding all other assumptions constant, would result in a change to the defined benefit obligation of approximately $3.4 million.

The asset allocation for the defined benefit pension plan assets as at December 31, 2022 and 2021 is as follows:

---

| | | |
|:---|:---|:---|
| As at | **Dec 31<br>2022** | Dec 31<br>2021 |
| Equity securities | **20%** | 19% |
| Debt securities | **49%** | 54% |
| Cash and other short-term securities | **31%** | 27% |
| Total | **100%** | 100% |

---

The fair value of the above equity and debt instruments are determined based on quoted market prices in active markets whereas the fair value of cash and other short-term securities are not based on quoted market prices in active markets. The plan assets are held separately from those of the Company in funds under the control of trustees.

**b) Defined contribution pension plans:** 

The Company has defined contribution pension plans. The Company's funding obligations under the defined contribution pension plans are limited to making regular payments to the plans, based on a percentage of employee earnings. Total net pension expense for the defined contribution pension plans charged to operations during the year ended December 31, 2022 was $9.7 million (2021 - $9.1 million).

**91**

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**22. Commitments and contingencies:** 

**a) Take-or-pay purchase contracts and related commitments:** 

The Company has commitments under take-or-pay contracts to purchase natural gas, to pay for transportation capacity related to the delivery of natural gas and to purchase oxygen and other feedstock requirements for our operating plants and Geismar 3 project up to 2043. The minimum estimated commitment under these contracts, except as noted below, is as follows:

**As at December 31, 2022** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **2023** | **2024** | **2025** | **2026** | **2027** | &nbsp;&nbsp;**Thereafter** |
| $**406713** | $**446052** | $**445894** | $**269830** | $**246872** | $**1108607** |

---

Take-or-pay means that we are obliged to pay for the supplies regardless of whether we take delivery. Such commitments are common in the methanol industry. These contracts generally provide a quantity that is subject to take-or-pay terms that is lower than the maximum quantity that we are entitled to purchase. The amounts disclosed in the table above represent only the minimum take-or-pay quantity.

The natural gas supply contracts for our facilities in New Zealand, Trinidad, Egypt and certain contracts in Chile are take-or-pay contracts denominated in United States dollars and include base and variable price components to manage our commodity price risk exposure. The variable price component of each natural gas contract is adjusted by a formula linked to methanol prices. We believe this pricing relationship enables these facilities to be competitive throughout the methanol price cycle. The amounts disclosed in the table for these contracts represent only the base price component representative of the minimum take-or-pay commitment.

**b) Other commitments:** 

The Company has future minimum payments relating primarily to short-term vessel charters, terminal facilities, and other commitments that are not leases, as follows:

**As at December 31, 2022** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **2023** | **2024** | **2025** | **2026** | **2027** | &nbsp;&nbsp;**Thereafter** |
| $**52235** | $**19718** | $**3107** | $**568** | $**568** | $**1655** |

---

**c) Purchased methanol:** 

The Company has marketing rights for 100% of the production from its jointly owned plants (the Atlas plant in Trinidad in which it has a 63.1% interest and the plant in Egypt in which it has a 50% interest), which results in purchase commitments of an additional 1.3 million tonnes per year of methanol offtake supply when these plants operate at capacity. As at December 31, 2022, the Company also had commitments to purchase methanol from other suppliers for approximately 0.9 million tonnes for 2023 and 1.1 million tonnes in aggregate thereafter. The pricing under these purchase commitments is referenced to pricing at the time of purchase or sale, and accordingly, no amounts have been included in the table above.

**92**

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**23. Related parties:** 

The Company has interests in significant subsidiaries and joint ventures as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| Name | &nbsp;&nbsp;Country of <br>incorporation | &nbsp;&nbsp;Principal activities | Interest % | Interest % |
| Name | &nbsp;&nbsp;Country of <br>incorporation | &nbsp;&nbsp;Principal activities | **Dec 31<br>2022** | Dec 31<br>2021 |
| Significant subsidiaries: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Methanex Asia Pacific Limited | &nbsp;&nbsp;Hong Kong | &nbsp;&nbsp;Marketing & distribution | **100%** | 100% |
| &nbsp;&nbsp;&nbsp;&nbsp;Methanex Services (Shanghai) Co., Ltd. | &nbsp;&nbsp;&nbsp;China | &nbsp;&nbsp;Marketing & distribution | **100%** | 100% |
| &nbsp;&nbsp;&nbsp;&nbsp;Methanex Europe NV | &nbsp;&nbsp;Belgium | &nbsp;&nbsp;Marketing & distribution | **100%** | 100% |
| &nbsp;&nbsp;&nbsp;&nbsp;Methanex Methanol Company, LLC | &nbsp;&nbsp;United States | &nbsp;&nbsp;Marketing & distribution | **100%** | 100% |
| &nbsp;&nbsp;&nbsp;&nbsp;Egyptian Methanex Methanol Company S.A.E.<br>("Methanex Egypt") | &nbsp;&nbsp;Egypt | &nbsp;&nbsp;Production | **50%** | 50% |
| &nbsp;&nbsp;&nbsp;&nbsp;Methanex Chile SpA | &nbsp;&nbsp;Chile | &nbsp;&nbsp;Production | **100%** | 100% |
| &nbsp;&nbsp;&nbsp;&nbsp;Methanex New Zealand Limited | &nbsp;&nbsp;New Zealand | &nbsp;&nbsp;Production | **100%** | 100% |
| &nbsp;&nbsp;&nbsp;&nbsp;Methanex Trinidad (Titan) Unlimited | &nbsp;&nbsp;Trinidad | &nbsp;&nbsp;Production | **100%** | 100% |
| &nbsp;&nbsp;&nbsp;&nbsp;Methanex USA LLC | &nbsp;&nbsp;United States | &nbsp;&nbsp;Production | **100%** | 100% |
| &nbsp;&nbsp;&nbsp;&nbsp;Methanex Louisiana LLC | &nbsp;&nbsp;United States | &nbsp;&nbsp;Production | **100%** | 100% |
| &nbsp;&nbsp;&nbsp;&nbsp;Waterfront Shipping Limited <sup>1</sup> | &nbsp;&nbsp;Cayman Islands | &nbsp;&nbsp;Shipping | **60%** | 100% |
| Significant joint ventures: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Atlas Methanol Company Unlimited <sup>2</sup> | &nbsp;&nbsp;Trinidad | &nbsp;&nbsp;Production | **63.1%** | 63.1% |

---

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp; On February 1, 2022, we closed the shipping partnership with Mitsui O.S.K. Lines, Ltd. ("MOL") whereby MOL acquired a 40% minority interest in Waterfront Shipping Limited. See note 25.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp; Summarized financial information for the investment in Atlas is disclosed in note 6.

Transactions between the Company and Atlas are considered related party transactions and are included within the summarized financial information in note 6. Atlas revenue for the year ended December 31, 2022 of $532 million (2021 - $620 million) is a related party transaction included in cost of sales of the Company as Methanex has marketing rights for 100% of the methanol produced by Atlas. Balances outstanding with Atlas as at December 31, 2022 and provided in the summarized financial information in note 6 include receivables owing from Atlas to the Company of $73 million (2021 - $37 million), and payables to Atlas of $198 million (2021 - $211 million). The Company has total loans outstanding to Atlas as at December 31, 2022 of $76 million (2021 - $76 million) which are unsecured and due at maturity.

Remuneration to non-management directors and senior management, which includes the members of the executive leadership team, is as follows:

---

| | | |
|:---|:---|:---|
| For the years ended December 31 | **2022** | 2021 |
| Short-term employee benefits | $**11760** | $6273 |
| Post-employment benefits | **656** | 766 |
| Other long-term employee benefits | **52** | 53 |
| Share-based compensation expense (recovery) <sup>1</sup> | **6142** | (1545) |
| Total | $**18610** | $5547 |

---

<sup>1</sup> Balance includes realized and unrealized expenses and recoveries from share-based compensation awards granted.

**93**

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**24. Non-controlling interests:** 

Set out below is summarized financial information for each of our subsidiaries that have non-controlling interests. The amounts disclosed are before inter-company eliminations.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| As at |  | &nbsp;&nbsp;&nbsp;**Dec 31, 2022** | &nbsp;&nbsp;&nbsp;**Dec 31, 2022** |  | &nbsp;&nbsp;&nbsp;Dec 31, 2021 | &nbsp;&nbsp;&nbsp;Dec 31, 2021 |
|  | **Methanex<br>Egypt** | **Waterfront Shipping Limited**<sup>1</sup> | **Total** | Methanex<br>Egypt | Vessels<sup>2</sup> | Total |
| Current assets | $**133499** | $**180227** | $**313726** | $135813 | $8646 | $144459 |
| Non-current assets | **557484** | **806079** | **1363563** | 551279 | 216307 | 767586 |
| Current liabilities | **(56689)** | **(112085)** | **(168774)** | (52543) | (16773) | (69316) |
| Non-current liabilities | **(104101)** | **(744936)** | **(849037)** | (105600) | (166119) | (271719) |
| Net assets | **530193** | **129285** | **659478** | 528949 | 42061 | 571010 |
| Carrying amount of Methanex non-controlling interests | $**251949** | $**65495** | $**317444** | $250813 | $20342 | $271155 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| For the years ended December 31 |  | **2022** |  |  | 2021 |  |
|  | **Methanex<br>Egypt** | **Waterfront Shipping Limited**<sup>1</sup> | **Total** | Methanex<br>Egypt | Vessels<sup>2</sup> | Total |
| Revenue | $**212339** | $**576810** | $**789149** | $366859 | $37949 | $404808 |
| Net and total comprehensive income | **107375** | **67670** | **175045** | 119260 | 7092 | 126352 |
| Net and total comprehensive income attributable to Methanex non-controlling interests | **77133** | **31325** | **108458** | 70010 | 3543 | 73553 |
| Sale of partial interest in non-controlling interests and equity contributions by non-controlling interest | $**—** | $**22545** | $**22545** | $— | $650 | $650 |
| Distributions paid to non-controlling interests | $**(75996)** | $**(8718)** | $**(84714)** | $(91646) | $(3759) | $(95405) |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| For the years ended December 31 |  | **2022** |  |  | 2021 |  |
|  | **Methanex<br>Egypt** | **Waterfront Shipping Limited**<sup>1</sup> | **Total** | Methanex<br>Egypt | Vessels<sup>2</sup> | Total |
| Cash flows from operating activities | $**226647** | $**94335** | $**320982** | $26049 | $27960 | $54009 |
| Cash flows from (used in) financing activities | **(152806)** | **(52796)** | **(205602)** | (84382) | 1399 | (82983) |
| Cash flows from (used in) investing activities | $**(35110)** | $**215** | $**(34895)** | $(4563) | $(31312) | $(35875) |

---

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;On February 1, 2022, we closed the shipping partnership with Mitsui O.S.K. Lines, Ltd. ("MOL") whereby MOL acquired a 40% minority interest in Waterfront Shipping Limited. See note 25.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;Comprised of multiple ocean-going vessels controlled by Waterfront Shipping Limited through less than wholly-owned entities.

**25. Sale of interest in subsidiary:**

In 2022, the Company completed the sale of a 40% equity interest in Waterfront Shipping Limited ("WFS") for cash proceeds of approximately $149 million. The sale reduces the Company's interest in WFS to 60% while retaining control of the consolidated WFS group of companies. The sale has been accounted for as a transaction between equity holders as Methanex controls WFS before and after the transaction and the $126 million gain on sale has been reflected as an increase in shareholders' equity.

**26. Egypt gas redirection and sale proceeds:**

The Company entered into an agreement to redirect and sell the Egypt plant's contracted natural gas during an extended turnaround for a three-month period from late July to late October 2022.

The Company has recognized $118 million ($59 million - attributable to Methanex) for the year ended December 31, 2022 to redirect and sell the contracted natural gas during the diversion period.

**94**