Arq Pauses GAC Production, No Output Expected in FY 2026
Arq announced its decision to pause GAC production to conduct a comprehensive engineering and production process optimization review of the path forward for the Company's GAC business. As a result, the company does not expect any GAC production in fiscal year 2026. This decision follows independent testing results received in late January 2026 showing the company's current thermal oxidizer can only support approximately 15M pounds of annual GAC production and would require additional modifications to achieve our original target of 25M pounds of annual GAC production or higher. The company's analysis indicates that a 15M pound scenario does not deliver acceptable returns and volumes above that amount are required to generate attractive economic returns. The optimization review will determine production scale, capital requirements, and return profiles, all of which need to be finalized before the company will commit additional investment. These constraints emerged as the company prepared to transition from its Corbin Wetcake feedstock to bituminous proven performance coal feedstock from other sources, a solution which is expected to address previously announced design challenges. The thermal oxidizer issues and their impact on capacity stem from design flaws by the company's original engineering consultant, with whom Arq remains in litigation. As a result of the decision to transition away from using Corbin Wetcake for its GAC products, the company is temporarily idling its Corbin facility and in connection recorded a non-cash impairment charge of $45M in Q4 2025. Alternative applications for Corbin Wetcake, including asphalt emulsion blending, continue to advance.
