Today. For those of you I haven't met, I'm Steve Keenan, Olin's Director of Investor Relations. I've been with Olin for nearly 20 years now. I started out as an Analyst in our chlor alkali marketing group, then moved up through our Strategy Group. In 2020, I was tapped to lead our investor relations efforts, and I've enjoyed this role and working with all of you for nearly five years now. So it's been a great experience for me. At Olin, we always start with a safety moment, and today's no different. Here in Freedom Hall, we have quick access to two different exits. One is behind us here, this lower yellow here, and that you passed this morning. And the second exit is just out this door here.
You know, in the unlikely case of any evacuation or any other interruption, the New York Stock Exchange will guide us swiftly to the right exit and be no problem. If at any point you need to take a break today, the restrooms are out across from the elevators as you came in. Before we begin, I'll remind you that today's discussion, together with the associated slides and question-and-answer session that follows, will include statements regarding estimates or expectations of future performance. Please note that these are our forward-looking statements and Olin's actual results could differ materially from those projected. Some of the factors that could cause results to differ from our projections are described without limitations in the risk factors section of our most recent Form 10-K and in this morning's Investor Day press release.
A replay of today's webcast, as well as a copy of the slides, will be available later today on our website in the Investors section under Past Events. A transcript of this event will be available in the same location by end of business tomorrow. I'd like to take a moment to thank all the talented folks here at the New York Stock Exchange, OpenExchange Webcasting, and our dedicated team from Corbin Advisors for their herculean efforts of getting us all here today and up on stage. We have an exciting agenda for you today, starting out with our President and CEO, Ken Lane, who will walk you through his vision for Olin and how we plan to unlock the potential for each of our businesses through our disciplined value creation strategy .
Next, our two chemicals presidents, Deon Carter and Florian Kohl, will provide an in-depth overview of their respective businesses and share their strategies to achieve Olin's long-term financial targets. We'll then take a short break and pick back up with Brett Flaugher, the President of our Winchester business, who will take us through a deep dive of that iconic Winchester brand. And then we will go on to Todd Slater, our CFO, and bring all the chapters together to provide an overview of Olin's financial performance and targets. After a few brief closing remarks from Ken, we'll have an opportunity to participate in a question-and-answer session with our speakers. Those attending in person are encouraged to join Olin management for lunch.
You'll get to, after that Q&A session during lunch, you'll have an opportunity to meet the rest of the leadership team, to interact, to ask any questions that you'd like to. You know, so now let's kick it off with a brief video on Olin's rich history before I turn the mic over to Ken Lane, Olin's President and Chief Executive Officer. Again, thank you for joining us today.
We are Olin. Since our founding in 1892, we relentlessly invest in the future. We lead in the markets we serve. We maximize value across the Olin portfolio. We make what matters. Our global reach and local impact fill our purpose. We are Olin. We deliver essential materials and solutions that enhance and protect lives today and tomorrow.
All right, good morning, everyone. Glad you could join us today. I know we had a little bit of excitement that we weren't expecting. We were told yesterday we rang the opening bell, and just before that, they informed us that President-elect Trump was going to be here this morning. So we knew that that probably was going to create a little bit of a headache for some folks getting into the building. Hopefully, it wasn't too bad. For those of you that are here in person, we really appreciate you fighting through that because I'm sure it was pretty hectic. We got here quite early to try to avoid that. Also want to welcome everybody that's joining us online. We appreciate your interest in Olin. Just a quick introduction for those of you that don't know me. My name's Ken Lane. I'm the President and CEO of Olin Corporation.
I've been with Olin since March. Really excited to be joining a company that's got such a long and rich history. Olin is one that's got many years of past experiences in many different businesses. Today, we're really happy to be able to share with you how we're going to build on that legacy, on that rich history, and you're going to hear that from the team as we go through the day. Now, just quickly, I do want to cover some of the key takeaways that we want you to have at the end of the day today. First, Olin is a well-established leader in the chemicals and ammunition space. We have a clear strategy, including cost reduction initiatives that are going to create long-term value, and it's going to improve our competitiveness. For our core businesses, we've defined strategies that support our new financial targets.
In Chlor Alkali Products and Vinyls, or you're going to hear me refer to that as CAPV, it's just a little bit easier. We're reinforcing our commitment to our value-first approach, and we're strengthening our leadership position. We're going to explore growth through adjacencies that create higher value options for our products. For Epoxy, we're focused on restoring resiliency and improving earnings through our self-help and leveraging our leading position in formulated solutions. In our Winchester business, we'll build on the tremendous momentum from the past few years, and you're going to see that here a little bit later, and we're going to leverage the industry-leading brand that we have, which is known as the American legend, Winchester. All of this is going to be supported by a very disciplined financial framework.
Our value creation strategy is combined with our leading positions, and that's going to enable us to deliver significantly higher value as we move forward. Now, just a quick snapshot of the company. Olin's been around a long time. We're over 130 years. One thing that we learned yesterday, they told us this when we were opening the market, Olin is the 21st longest trading company on the New York Stock Exchange. That's out of 2,400 companies that have been trading on the Stock Exchange. That's pretty impressive. That's a pretty long history, and Olin's been delivering essential materials and solutions that enhance and protect lives for more than 130 years. We operate safely and reliably, and we create value for our customers, our communities, our shareholders, and our 7,300 teammates. Our corporate headquarters and Winchester headquarters are in Clayton, Missouri.
Some of you know that recently we consolidated our chemicals business headquarters into our Houston office. In the last 12 months, we've generated $1 billion of adjusted EBITDA, and we've returned, on average, 47% of cash, of operating cash to shareholders since 2015. Living our purpose and values every day is a priority for us, and it starts at the highest level with our leadership team. I'm very happy to introduce the team to you now. Obviously, the team is critical for us to be able to succeed and deliver the strategy that we're going to be talking about today. As Steve mentioned, you're going to hear from each one of the business leaders later. You're going to hear from Deon Carter, who runs our CAPV business, Florian Kohl, who runs the Epoxy business, and Brett Flaugher, who runs Winchester.
You guys go ahead and stand up just so they see who you are. I'm also going to invite the rest of the team now to stand up so you can see the leadership team who are all here. There is one new face here. We announced just a couple of weeks ago that Dana O'Brien, our Chief Legal Officer, is going to be retiring next year. And effective March 1st, Angela Castle is going to be replacing Dana. So we want to thank Dana, but she's not going anywhere too quickly, right, Dana? She's going to be sticking around for a little while. But we also want to welcome Angela to the team. So thank you. This is a very experienced team with a lot of expertise and a lot of passion about what you're going to hear today.
We are all highly committed to delivering what we're going to be communicating in terms of our financial targets. More importantly, we're really excited now to get into implementation mode as opposed to just talking about it. So just a quick overview of our core portfolio, which includes CAPV, Epoxy, and Winchester. We're the largest chlor alkali producer in the world. We're the largest integrated producer of epoxy in Europe and in the United States. And we're the largest small caliber producer of ammunition in the United States. What you see here is that we've got a tremendous number of diverse end markets where we can participate. And that optionality provides a lot of value creation opportunities for us. And we've got strong leadership positions in order to serve the subsegments within those industries.
So just a couple of examples of that, and you're going to hear more about this later from the business leaders. We're the leader in the bleach industry, serving both water treatment and many other consumer end uses. We're also the leader in formulated solutions for epoxy wind blades, and that enables the energy transition. And we support domestic and international defense with our industry-leading small caliber ammunition portfolio. Now we're going to zoom out just for a second because I want to take a look at the growing market opportunity that we see. We have a total addressable market of greater than $100 billion, and it is growing faster than GDP. We've got competitive advantages such as our deep chemicals expertise, our value chain integration, our cost advantage positions, our flexible capacities, and the iconic Winchester brand.
All of these advantages help us deliver differential value even during market fluctuations as we're seeing today. Our leading positions combined with these large growing diverse market opportunities are going to enable potential significant value growth for our company. Now, with that broad market opportunity that we see, we've been and we remain focused on a value commercial strategy. We developed this commercial strategy coming out of the pandemic when we saw the trough, a very severe trough during the pandemic. Our operating model has evolved. We've reset the value for our products, and we believe that this is sustainable. This is foundational to our strategy and to our financial targets. This has helped us navigate the current trough to deliver significantly higher value during this trough than we have in previous troughs.
So what this chart depicts here, the gray line is previous cycles and where we would have seen the value for Olin. The red line represents how we see the cycle today. So I'm not saying that the cycle is gone. That's not what we're saying. What we're saying is that we have reset the cycle that we now will realize higher value going forward through the cycle. And you're seeing that today. We're significantly above previous trough levels of earnings. But let me be clear. We're committed to the value-first commercial approach , but we're also committed to maintaining our market leadership position and maximizing the value to our shareholders across the cycle. So our value creation strategy is supported by two pillars. The first is optimizing the core, and that is about self-help, cost reduction initiatives that are going to strengthen our leadership positions and maximize integration value.
But the one thing we're not going to do is sacrifice safety and reliability. Those two things are going to remain high priorities for us. The second pillar is about growing the core. This is going to be a value-first approach where we're going to build on our existing leading positions through high-value adjacencies or bolt-ons that align with our capital allocation framework. And you're going to hear Todd talk about the capital allocation framework that we're going to be using here a little bit later. So for optimizing the core, we've got clear line of sight to more than $250 million of structural cost savings by 2028. With small investments, we're able to reduce costs in our CAPV and epoxy assets from previous asset closures. So this is really about removing ancillary processes and equipment that remain within the plants that we've closed.
So it's really right-sizing the footprint of a lot of the infrastructure and removing those costs going forward. So why does it take us so long to get that? Some of this, and Deon will allude to this later, will be linked to, for instance, the closure of Chlorine 3 at Freeport that we have talked about here this morning. It was announced. But there are other things that we're doing at other sites where we've already closed assets where we can make small investments and get a very high return on that by reducing our cost structure. In Winchester, we're going to be focused on modernization of our facilities with limited but very high-return capital projects. Now, Olin has a track record in its history of being able to offset inflation through productivity initiatives.
That's going to continue to be a very high priority for us in order that we see these cost savings drop straight to the bottom line. We are very confident that combining our focus on productivity with these initiatives around taking these structural costs and remnant costs out, that we can deliver the $250 million. These cost reductions are going to improve our competitiveness. But I want to be clear again, we're not sacrificing safety and reliability. And as a friend of mine says, we're not burning the furniture to stay warm. Now, an added benefit to streamlining our assets is that we're going to drive efficiency and reliability in our operations. And that's also going to achieve or enable us to achieve more with respect to sustainability, all while achieving those cost reductions.
As a result, we're able to increase our CO2 reduction target from 25% to 35% for Scope 1 and 2 emissions. Some examples of how we're going to achieve that include transitioning to more energy-efficient technologies that are very high return, like using the hydrogen that we produce to generate energy in our sites. We're also increasing our water consumption reduction target to 25% by focusing on more efficient resource management practices around how we operate things like our cooling towers and how we consume processed water in our plants. We can achieve all of these benefits while still generating higher value with those cost reductions that I had talked about previously. We're going to provide more updates on exactly how we're going to do this in our sustainability report that we're going to be issuing next year in May.
Now, shifting to how we're going to grow the core and generate value for our Olin shareholders. First, I want to give you an overview of our chemicals value chain. I think that's important for everybody to understand where we're starting from. In CAPV, we start with brine and electrolysis, and from that, we're able to produce what's called an electrochemical unit, an ECU, and the ECU is made up of caustic, chlorine, and to a lesser extent, hydrogen. We sell these products into the merchant market, and we use them also to create other products and other derivatives, primarily in the chlorine business, and what you see here on the chart is we've highlighted where we are integrated and where we have leading positions in chlorine derivatives.
Those are the areas where we're going to focus our growth options that Deon is going to talk more about here a little bit later. Now, caustic soda demand, just based on the dynamics in caustic soda, is actually going to grow faster than chlorine. That's going to set up a dynamic that we see in terms of the value for the ECU to grow faster than chlorine. And that's going to drive values up as we come out of the trough and we see demand recover. For hydrogen, we use that hydrogen that we produce, like I'd mentioned previously, to reduce our costs and to reduce our greenhouse gas emissions. We also sell it as industrial gas. And through our joint venture with Plug Power, which is going to be starting up here in the first quarter, we're going to be selling hydrogen into the transportation market.
But we've found ways to reduce our costs, increase the value of the hydrogen, and benefit us through our sustainability targets as well. Now, just the chart on the right, I want to take a minute to explain what we're talking about with our value-first approach and give you a little bit of perspective on that. As I mentioned earlier, we are in a trough, and it's quite a long trough, probably the longest one that I've seen in my career. Operating rates today are in the mid- to upper-70s chlor alkali. you can see that ours are significantly lower than the industry. And that's how we've been able to manage value for Olin in this very difficult time. But it's important to note that those utilization rates have leveled off. They're not going down any further. We believe that we're in the trough.
What that does is it sets up what we look at as our loaded spring . That loaded spring is the additional capacity that we have that we're going to be able to bring into the market as markets recover. They will recover. We've talked about this on a lot of our earnings calls as well. The chlorine demand in the U.S. is still below where it was at pre-COVID levels. We know that as the housing market recovers and as demand globally recovers, you're going to start to see more demand for chlorine and caustic. We're going to be very well positioned to disproportionately benefit as that volume comes back into the market. I do want to reiterate, while we're very committed to our value-first approach, we're also going to focus on balance to make sure that we maintain our industry leadership position.
Now, moving on to Winchester. Winchester is a company that, or is a division for us that over the past few years has grown by 5x since 2019. We achieved that growth with minimal capital spending. What we did was we capitalized on the high growth that we saw in the commercial side of our business, which is supporting the sports shooting growth that we've seen. It's been really phenomenal, and Brett's going to talk more about that later. But we've also grown significantly in the defense space. A big driver of that, of course, is the fact that we were successful in winning the Lake City, Missouri military small-caliber ammunition plant back in 2020.
So looking ahead, Winchester is going to continue to provide meaningful and stable cash flow at an even higher level as we continue to benefit through the higher growth that we're going to see in commercial shooting, but also in defense. And there are some things that we are going to be looking at to be able to leverage the advantages that I talked about earlier that are going to support Winchester's growth in the future to make it a more meaningful contributor than it is today. Now, while our first priority is going to be on optimizing the core and delivering the things that we can control around those cost reductions that I talked about earlier, we're also looking to build on our existing leading positions. And those are going to be in areas that are adjacent to or just extending the current positions that we have.
So it's not like we're looking to get into big new businesses or anything like that. We're going to do what we know how to do best, and we're going to grow on those positions. In CAPV, we're going to look to extend our leadership position in bleach and also explore some very high return and a high number of options that we've got to potentially enter the PVC market. In Epoxy, we're going to continue to develop solutions, formulated solutions that are aligned to industry mega trends. And a lot of that growth is going to be driven by things like electrification of vehicles. It's going to be driven by the energy transition. And Florian is going to talk a lot more about why we see a lot of growth opportunities there.
Everything that we're going to be doing in the Epoxy business are things that we can control but don't require any investment. For Winchester, we're going to leverage our chemicals expertise, and we're going to look for opportunities to potentially grow within the defense market around raw materials for propellants. Now, many of you have probably heard that there is a shortage of propellants in the world today, and there are a lot of reasons why that is. But we do think that there's an opportunity for Olin, as predominantly a chemical company, to be able to then leverage that expertise into an opportunity for Winchester, which, again, will potentially create a lot more value for us as a business in the future. We're also going to continue to look for small bolt-on businesses that are highly accretive to Winchester.
So we were really successful at doing that with the White Flyer acquisition that we closed on about a year ago now. And we've demonstrated an ability to be able to bring in those small businesses, integrate them within Winchester, and create a lot of value from them. Now, the financial targets that I'm about to share with you don't include any of these growth options. The only thing that's included in the financial targets are the formulated solutions opportunity that we're talking about around epoxy. But none of the other growth options that we're going to be talking about today are included in our financial targets. So with that, I'm very happy to reveal our new financial targets for 2029. We already talked about the greater than $250 million of total structural cost savings that we're targeting to achieve by 2028.
2029 is going to be the first year of a full run rate for those cost reductions. We're also targeting a total Olin adjusted EBITDA of approximately $2 billion. Now, that target assumes that we're at mid-cycle conditions in CAPV. Again, I just want to reiterate that this doesn't include any of the growth options other than the epoxy formulated solutions that I talked about a few minutes ago. We're also targeting cash conversion of at least 85%. We anticipate returning more than 50% of operating cash to shareholders on average through dividends or share repurchases. Hopefully, you saw this morning that we announced we've increased our share repurchase program by $1.3 billion to now we've got about $2 billion on that program. Of course, we're going to continue to be very disciplined, and we're going to continue to target maintaining an investment-grade rating.
So our strategy creates a credible path to reach these targets. And as I said before, this team is very highly committed and motivated to make it a reality. We're looking forward to getting into the implementation of the strategy and progressing some of the options that we're going to talk about here a little bit later. And you'll hear more about that from the business leaders and Todd Slater, the CFO. So now, just to wrap up, going back to where we started, we've got a great strategy that we're very excited to get underway with. We've got a deep history of leadership position in the chemicals and ammunition industries. We're committed to operational, commercial, and financial discipline while we optimize our core and improve our cost position, making sure that we maintain our leading cost competitiveness while maintaining our focus on safety and reliability.
We've defined paths to achieve our targets with the potential for upside if we're successful with some of these growth initiatives. So we believe that we've got the right core businesses. We've got the right talent. We've got the right team here to be able to deliver this value creation strategy for our shareholders. And I'm really excited for you to hear a lot more about it today from our team members and our business leaders. So with that, I'm going to now hand it over to Deon, who is going to walk you through the CAPV business. And you'll hear about where we're going to take that. All right, De on.
Okay, hello. And thank you all for joining us. So my name is Deon Carter. I joined Olin earlier this year, about six months ago, as the President of the CAPV business.
I have over 30 years of broad chemical industry experience, including several roles of increasing responsibility at BASF, which is where Ken and I first met. And I'm excited to lead the excellent CAPV team and this Olin business as we drive the next phase of our growth and value creation. So at a high level, this is what we'd like you to take away today. First, as Ken mentioned, we remain committed to our value-first approach while maintaining our market leader position and optimizing ECU values through the cycle. At the same time, we are further optimizing our business with targeted cost reduction actions while positioning for significant growth when the market strengthens and returns from its current trough conditions. And finally, we're leveraging our leading product positions to grow organically while exploring the upside potential of the PVC adjacency.
For those of you less familiar with our story, here's a quick snapshot of the CAPV business, which became the chlor alkali producer in North America back in 1892. So 55%, a significant portion of Olin's revenue, is derived from the CAPV business. And in the trailing 12 months, we have generated $788 million of Adjusted EBITDA. Importantly, we are the leading producer in our product categories, reliably supplying these essential products to our customers across diverse end markets. The map on the left shows our manufacturing footprint. And as you can see, we have a manufacturing facility in Europe, but the majority of our manufacturing assets are right here in the U.S., which is cost advantaged. And we have a significant global competitive edge with world-class assets and the ability to flex our capacities and leverage our full integration across chlor alkali value chain.
Our products are used in hundreds of industrial applications across a diverse array of end markets, from housing and construction to automotive to renewable energy. Our chlorine-based vinyl derivatives are used to produce PVC, an important product in housing and construction. PVC products are used in roofing, sidings, floorings, profiles for windows and doors, piping, cables. In fact, we estimate over half a ton of PVC is used for each new home built in the U.S. on average. As you can see, caustic soda is widely used across all these end markets. In automotive, there is an important trend towards lightweighting, using increased amounts of aluminum to reduce vehicle weight, which benefits efficiency and safety. Caustic soda is an important processing agent. It's used to extract alumina from the bauxite. Caustic soda plays an important part in the production of lithium, rare earth metals, and recycling of batteries.
These are all essential for the growing EV market. Now, as Ken described when he was explaining the chlor alkali value chain, caustic soda and chlorine combine to form an ECU, an electrochemical unit. It's produced by applying electrical power to a salt brine. Importantly, you cannot produce caustic soda without producing chlorine. They are co-products, and the chart on your left shows the increasing price trend for caustic soda going back many years. We expect that trend to continue through our planning period. What's driving this is a tightening of the supply-demand fundamentals for caustic soda. See, asset operating rates are generally set to the weaker chlorine demand, which is being outpaced by caustic soda demand. As such, the supply of caustic soda is constrained, leading to this tightening and the price increase.
As the world's chlor alkali producer, Olin is well-positioned to support the growing caustic soda market. As Ken mentioned, our long-term value creation strategy is built around optimizing the core and growing the core. Our CAPV business has defined its strategic path forward with focused initiatives that align directly to this framework. Through our asset strategy, we are committed to realizing $150 million of cost savings by 2028. Many of you are aware that Dow Chemical has announced their intention to close their propylene oxide production facility in Freeport, Texas, by the end of 2025. As such, Olin, we are accelerating our phase-out of asbestos from our manufacturing sites, and we will be closing our older ECU production assets dedicated to supplying this propylene oxide facility in Freeport. At our Plaquemine, Louisiana site, we have a plan to transition all our production lines over to non-asbestos technology.
We've actually demonstrated and optimized that technology at a smaller site in Bécancour in Canada. I'll be talking about that site a little later on in the presentation. Importantly, we've identified multiple cost savings opportunities of $10 million a year or more. In particular, we see opportunities to address remnant costs associated with recent asset closures. We see that we can streamline and optimize site configurations, removing ancillary equipment, reducing costs. As an example, at our McIntosh, Alabama facility, we see an opportunity to reduce by low double-digit million dollars costs associated with the 2021 closure of the older diaphragm production line at that facility, and we see cost improvement opportunities through reliability and efficiency improvements. And certainly, these require some capital, but the capital we require is very high return. And Todd Slater, our CFO, will include the capital requirements in the financial planning that he shows.
But most importantly, we see that we can realize these cost savings while maintaining our number one producer position and enhancing safety, reliability, and efficiency of our manufacturing assets such that we can reliably supply our customers through to peak cycle. Now, moving on to our second strategic pillar, I wanted to spend a little more time talking about our value-first commercial approach and our way forward in regards to this. Now, back in 2020, Olin made a shift in our commercial and shifted to a value-first commercial approach for our North American chlor alkali business. We decided that we would no longer push chlorine volumes into weak markets. And this was successful at resetting the value of our chlorine, resetting it from low, no value to good value. Now, through this disciplined approach, Olin's operating rates declined. The operating rates of our competitors increased.
Here, we do want to be clear. Moving forward, as a chlor alkali producer, Olin's operating rates will not decline any further than they are today. Now, as we see today, while in the trough with chlorine demand still below where it was pre-COVID levels, we assess that our competitors have low available capacity, while Olin has excess flexible capacity that we can deploy as the market recovers and grows. We call this our loaded spring. As we look forward, we see that we will be well-positioned for significant incremental volume growth as the market strengthens, and we'll deploy these volumes with our disciplined approach in serving our customers' needs. Now, moving on to growth initiatives. Earlier on, when discussing the asset strategy, I mentioned that we'd successfully converted our site in Bécancour, Canada, over to non-asbestos technology.
Now, in Canada today, we see a growing EV battery market, and we're assessing how we can best serve that growth market while respecting our high return threshold. And so we're evaluating increasing the capacity of this Bécancour facility with a conversion to new membrane technology. Now, this technology has the benefits of lower production cost, improved caustic soda quality, reduced water consumption, and lower costs associated with maintaining the current older technology. The combination of this new technology, together with long-term guaranteed hydroelectric power, would enable this to be a chlor alkali facility. And we assess that the increased capacity, together with the new technology, would better equip us to serve the growing EV battery market in Quebec and the jobs associated with refining rare earth metals, production of advanced battery materials.
There are incentives from the federal and provincial governments in Canada that would support this technology upgrade and the associated economic and sustainability benefits. Importantly, we see that these incentives would significantly offset Olin's required investments such that this project would have or could have a return that exceeds our high return threshold. Certainly, without the incentives, this project won't proceed, and we will keep you informed as we make progress. Now, next, I wanted to talk about the North American bleach market. Now, this is a market where Olin has enjoyed considerable success with strong cash generation, and it's a market that continues to offer growth opportunities. Olin is the number one producer, significantly larger than the number two producer. We reliably supply over 25% of this market's bleach requirements.
This market is seasonal, but it's not cyclical, and it has stable demand supported by predictable factors like population growth and the need for clean water, and given our scale and integration, we see that we are well-positioned to support regional demand growth. Now, a little more background maybe on the bleach market. Those of you less familiar with it, bleach is actually produced by chemically reacting together fairly equal proportions of chlorine and caustic soda, those ECUs, and the high-strength industrial bleach that we produce actually starts to decompose soon after production, and as such, the bleach market relies on local regionalized production facilities with just-in-time supply, and many of these local bleach production facilities rely on chlorine and caustic to be brought in from distant ECU production locations, often by rail, and one such market is Southern California.
It's a large consumer of bleach for essential applications like municipal and industrial wastewater treatment. Importantly, the Southern California market today relies on most of its chlorine being brought in from a production facility in Western Canada, which is at risk of having its chlorine output curtailed by 2030. In addition, the region relies on most of the caustic soda coming in through the West Coast from Asian suppliers subject to higher import costs. So we see an opportunity to elevate our regional position with a localized salt-to-bleach plant, which would secure supply for the region. Our salt-to-bleach plant is a dedicated bleach production facility backward integrated to the electrical power and salt brine to produce ECUs just on a smaller scale.
And as the number one bleach producer, we see the salt-to-bleach plant as a natural step for Olin to both secure and grow our position with potentially attractive returns, and we are active in our due diligence. Another potential growth opportunity for us is in PVC. Just a little more background on myself. In my prior role before joining Olin, I was actually the COO for a company called Continental Industries Group, actually headquartered right here in New York City, involved in the global sales and distribution of chemicals and polymers. And while there, I had the opportunity to gain a deep understanding of the PVC market, and I'm able to apply those learnings as we assess opportunities here. Now, ultimately, PVC is a downstream product of chlor alkali value chain. And in fact, in the U.S., 50%, over half of all the chlorine produced goes into PVC production.
And as the world's chlor alkali company, Olin produces all of the building blocks for PVC: hydrochloric acid, ethylene dichloride, or EDC, and VCM, everything right up to the final polymerization phase. And we have a competitive edge with our chlor alkali integration and our access to cost-advantaged U.S. ethylene feedstock. At attractive cost-based economics, we have an opportunity to grow through a PVC adjacency. On the previous slide, I just mentioned our U.S.-based chlorine chlor alkali chlorine and vinyls intermediates production is cost advantage derived from low-cost natural gas from the U.S. shale. The chart on the left shows the significant cost advantage of U.S. PVC production compared to Northeast Asia and particularly Western Europe. As the other chart shows, the high-cost production in Western Europe has resulted in a significant decline in operating rates there compared to Northeast Asia or the U.S.
Now, previously, I'd mentioned that ethylene dichloride, or EDC, is a key building block, a key vinyl intermediate. The chart on the left there shows increasing price premium for PVC over EDC. Now, Olin is actually the largest seller of EDC, ethylene dichloride, into the merchant market, and we have over one million tons of capacity available for the sale. And we see an opportunity now to enhance the value of our EDC position. Combining our cost-advantaged vinyl intermediates together with available unused capacity in Europe, we see an opportunity to partner with European PVC producers, and we have taken our first step and recently concluded a contract manufacturing agreement with Kem One, who's a leading European PVC producer. And under this arrangement, Olin is supplying our EDC to Kem One, who is converting it into quality PVC grades for Olin's marketing back here in North America.
Importantly, we expect first commercial cargoes to begin shipping early next year, and we have customers lined up. We see this initial low-capital contract partnering approach as an important bridge enabling Olin to enter the North American PVC market and better assess longer-term opportunities while we build our internal capabilities. Those longer-term opportunities could involve further growing, deepening this relationship with Kem One, entering into new similar contract arrangements, leveraging our low-cost vinyl intermediate position. Potentially, we could structurally grow through joint ventures or even M&A. In addition, we continue to believe that we can build on our chlor alkali foundation and our advantageous geographic locations and our strong vinyl intermediate position to build a PVC facility. Whichever option we pursue, though, we will remain focused on building shareholder value, and any capital will be within our capital allocation framework.
Now, looking ahead, assuming the market, chlor alkali market, recovers to mid-cycle conditions by 2029, we are targeting to achieve $1.5 billion of adjusted mid-cycle EBITDA. We're committed to achieving $150 million of structural cost savings through our Optimize the Core initiative with cost reductions associated with recent asset closures, improvements in reliability and efficiency, phase-out of asbestos. Under our Grow the Core umbrella, we see the market's return to mid-cycle is providing significant growth, which is a considerable opportunity for Olin. And furthermore, we're targeting $50 million of adjusted EBITDA with our PVC contract manufacturing approach, which doesn't require any capital. And in addition, there are upsides that are not captured in this financial bridge associated with the initiatives I described earlier, such as the salt-to-bleach plant in Southern California, or the Bécancour capacity expansion.
Those two projects combined, by the way, would require about $350 million-$450 million of capital, excluding any government incentives. And there are further opportunities for us as we explore the PVC adjacency. So to wrap up, as Ken and I both mentioned, we remain committed to maintaining our market leader position while continuing with our disciplined value-first commercial approach. At the same time, we're further optimizing our asset base while maximizing the value of our leading portfolio. And we continue to build. We see that we can build, believe that we can build on our chlor alkali foundation with a high-return PVC adjacency. And with that, I'm now going to hand it over to Florian Kohl, who's the President of our Epoxy business. We'll take you through an epoxy review. I thank you for your time. Thank yo u.
Good morning and thank you for your time today. My name is Florian Kohl, and over the past year or so, I have served as the President of the Epoxy and International Chemicals business here at Olin. While I'm new to Olin, or relatively new to Olin, I've been in the broader chemicals industry for about 25 years and can draw on experience in general management, M&A integration, sales and marketing, procurement, supply chain in the United States, China, Japan, and Europe. Initially, I joined Olin to lead Blue Water Alliance, a newly established joint venture between Olin and Mitsui & Company. Prior to that, I served as the vice president of the global vinyl chain group of businesses at Celanese and as CEO and Chairman of the Fairway Methanol joint venture. At Celanese, we optimized Acetyls value over the cycle by leveraging chain optionality.
I'm excited to lead the Olin Epoxy business into its next chapter with the help of a great team around the globe. At a high level, here is what we would like you to take away about the Epoxy business. As you've heard from Ken, we're a part of the chlor alkali and epoxy value chain, providing benefits from integration and downstream optionality, including formulated solutions. I'm eager to show you our flexible market entry points across the value chain and explain to you how they help us maximize the value that epoxy brings to Olin. We will also touch on opportunities for potential growth over the long term that are supported by durable megatrends. Make no mistake, we're laser-focused on pulling all levers within our control to improve our earnings so that we can evolve better with changing market conditions.
For those new to our story, here's a quick snapshot of the Epoxy business. Today, roughly 19% of Olin's overall revenue is from Epoxy. And while our adjusted EBITDA performance reflects the structural challenges the business and the overall market has been experiencing, I will go into our plan to return our business to profitability. We have a strong foundation to build on and can further improve through our talented team and global footprint. Our eight manufacturing facilities around the world provide reach into key markets, including dedicated facilities for formulated solutions, as well as sites that are backward integrated into CAPV. To be clear, it is the combination between our differentiated technical capabilities and full integration across the epoxy value chain that provides flexible entry points for Olin Epoxy into the market while enabling us to capitalize on durable megatrends. Notably, there are two epoxy anti-dumping cases currently underway.
While not included in our assumptions, successful outcomes of these cases could result in significant advantages to further strengthen our market position. We will also talk about the criticality of epoxy to countless strategic industries later. Now, let me explain how the benefits of our integrated position allow us to maximize value by selling our products to the merchant market at any point across the value chain. So even extend our reach into markets we don't directly play in in a big way, such as aerospace. Further up the value chain, we derive more value for Olin by using chlor alkali molecules to produce other products downstream versus selling them directly to the market while liberating caustic soda for CAPV. As we go further down the value chain, there is more opportunity to capture value by developing tailored formulated solutions across a variety of end markets.
This broad spectrum of end users speaks to the versatility of epoxy resins, which cannot be replicated by any single competing chemistry. We have a broad span of entry points into the epoxy industry with our formulated solutions that are used in a broad range of products, ranging from protective metal coatings to printed circuit boards to composites for vehicle lightweighting of all types. Customers come to us when they need a specific formulated solution tailored to their needs. For example, Olin has developed formulated solutions for different generations of smartphones that are probably in your pocket right now, and even components for the satellites that connect us directly to the internet today. We anticipate formulated solutions to be a significant contributor to our long-term Adjusted EBITDA target, which I will cover in more detail later.
You know, when we look at the market opportunity that we have, we have roughly a $12 billion addressable market space. It is the highly versatile product range that we have and the deep technical expertise that provide us with the opportunity to capture share of this addressable market space, which, despite the current overcapacity that we see, is expected at roughly a 5% rate over the next five years. Our markets are supported over the near and long term by key megatrends, including the energy transition, e-mobility, repair and replacement of aging infrastructure, and the reshoring of critical manufacturing materials for the electronics and semiconductor industry.
For example, epoxy resins are used in multiple ways to repair and replace our aging infrastructure, including bridges and roads, with end users that range from primers for asphalt bonding, membrane coatings for waterproofing of concrete structures, crack filling materials for damaged bridges and roadways, composites to reinforce structures. You can notice I'm excited about this. I could go on and on and give you many more examples. So Ken and Deon have already introduced you to our two strategic pillars here at Olin: optimize the core and grow the core. So let's dive into how epoxy is a key contributor to both of those strategic pillars to maximize value for all stakeholders. So what can we do to optimize the core? As you already know, we have implemented several self-help initiatives over the past year or so to reduce our fixed cost.
We're now targeting additional structural cost savings of approximately $80 million by 2028. We will achieve this by remaining laser-focused on controlling our cost to improve the resiliency of the business. As a continuation of our earlier cost-saving initiatives to right-size our manufacturing footprint given the current demand environment, we now see an opportunity to capture additional cost savings through further efficiency improvements. We will accomplish this by the optimization of ancillary infrastructure, including, for example, the treatment of side streams at our Freeport epoxy facility to adjust all of our operations to the new volume requirements. Finally, we have renegotiated key long-term supplier agreements at our Stade, Germany facility, and as a result, we expect to realize significant cost reductions at that site beginning in 2026. Now, let's turn to the second pillar: grow the core, right? That's the really exciting pillar.
As I mentioned earlier, Olin has the capability to create customized formulated solutions for use in customers' specific applications. This differentiated technical expertise enables us to capture a high return from markets we have identified as having significant growth potential and that are supported by durable long-term megatrends. Today, we're sharing just two examples of this approach with you. Firstly, within the wind market, we see a considerable growth opportunity over the next several years. Wind energy blades are subjected to extreme conditions, and as such, manufacturers require high-performance customized solutions to build longer, lighter, and stronger wind blades. With our global scale and capabilities, including the unmatched innovation and highly tailored technology, Olin has become the leading supplier of wind formulated infusion solutions outside of China. In fact, today, roughly one out of three wind blades outside of China are manufactured using Olin's epoxy resin.
Secondly, within the advanced electronics market, we see a similar high-growth opportunity over the coming years. When we use our vehicles, our vehicles today have become rolling computer centers. A traditional internal combustion engine vehicle today uses approximately one square meter of printed circuit board. If you move on to a hybrid or electric vehicle, the requirements go to five to eight square meters per vehicle. Additionally, those circuit boards must be able to withstand extreme and harsh weather conditions to avoid any unwanted current flow disruptions, and that's where our tailored formulations come into play. Olin has to become a leader in that market segment, and that's just one of many examples that I could give you about the opportunities in advanced electronics. We roll up these strategic initiatives and look ahead. We're targeting approximately $150 million of Adjusted EBITDA by 2029.
As I stated earlier, in optimizing the core, we expect to realize significant cost savings from the renegotiated supplier contracts at our Stade, Germany facility, and additional cost savings from our asset optimization initiative at our Freeport, Texas site. If we shift to grow the core, there is a small amount of overall market recovery that we expect. On top of that, our formulated solutions business will deliver approximately $45 million in incremental adjusted EBITDA. A portion of this will be generated through megatrend-driven growth, including the opportunities in wind and advanced electronics, where we have a competitive edge. And finally, it is important to note that our target does not include the potential upside from a successful outcome in the two anti-dumping cases.
With that, we have defined a clear path ahead for the Epoxy business and its future earnings through our value creation initiatives that are 100% within our control. Now, you know, I could say a lot about the anti-dumping cases. I'll just leave you with a few high points, right? It is encouraging to see that both the regulators in the U.S. and the E.U. have initiated those cases and are progressing those cases, right? So we've seen some initial success in the form of the imposition of the preliminary countervailing and anti-dumping duties here in the U.S., and also the imposition of registration environments in the E.U. What is important to note is that this is against the backdrop of the criticality of epoxy materials for our industries here in the U.S. and for our workers here in the U.S., right?
We go into many strategic end users in aerospace, automotive, defense, and for electrical infrastructures. And if we look ahead, the next steps in this relatively long and drawn-out process, and I'm very impatient to learn about the outcomes, is that in Europe, the regulator will decide about preliminary duties in Q1, and in the United States, the investigations that the Department of Commerce is conducting will come to a close sometime in early Q2. We'll keep you posted about the outcome, and we're every bit as impatient as all of you are. Look, I could go on and on for hours, you know, about how our Epoxy business is advantaged by the full integration across the epoxy value chain and the flexible entry points that enable us to maximize value. We're encouraged by the recent actions that are taken by the U.S. and EU regulators, right?
We see them as merely initial positive steps in the efforts to create a level playing field and a fair playing field in the market space, but our strategy does not hinge on them. Our strategy positions us to create value by aligning the business with long-term durable megatrends while we are adapting to a dynamic market environment in the near term. It is also important to note that our strategy does not require us to deploy any growth capital, and if you think about that, you know, that's why I'm so excited about getting to work and implementing that strategy, and with that, we'll take a short 15-minute break, which will lead us into the second half of the presentation, starting with my colleague Brett Flaugher, who will provide an overview of our Winchester business, also known as the American Legend. Thank you very much for your attention.
Good morning. It's great to be here with you today. Hey, my name is Brett Flaugher, and I'm the President of Winchester Ammunition. I'm a relatively newcomer to Winchester because I've only been with the company about 38 years. I've served in a variety of roles across sales, marketing, strategy, as well as operations. I'm thrilled to talk to you today about Winchester, which has been an iconic American brand since 1866 and the role that we have helped played in to shape, conserve, and defend our great nation. Not too many brands founded over 150 years ago are still operational, so I'm proud to be a part of this legacy and excited about the future of Winchester. We're excited to spend some time today discussing our Winchester business, which is a core element to Olin's future.
Winchester is a household name in the ammunition industry and is known as the American Legend, a status that's built on integrity, hard work, and customer loyalty. We sell ammunition to the commercial markets and support the growing defense industry, including law enforcement. We see a real opportunity to partner with Olin's chemical businesses, as Ken's already pointed out, and draw on their expertise to match with our expertise to grow our participation in defense. So for those that are new to our story, here's just a quick snapshot. About a quarter of Olin's revenue is derived from Winchester, and over the last 12 months, as Ken pointed out, we generated approximately $294 million of Adjusted EBITDA. Our manufacturing footprint is spread across the United States with a total of eight facilities between Winchester and White Flyer.
For those that don't remember, we did acquire White Flyer back in October of 2023, which has far exceeded all of our expectations. We are the industry leader in ammunition, the number one ammunition brand for hunting and recreational shooting, as well as the number one supplier of small caliber ammunition to the U.S. military. Additionally, we strongly believe our brand is a clear competitive advantage, which enables strong price premiums, deep customer relationships, and strategic partnerships. Like the chemical businesses that you already heard about, we are deeply integrated across the ammunition value chain, and I'll talk more about that later. Taken together, our integration, equipment, and facility capabilities, and our operational scale allow Winchester to serve the commercial and defense markets globally. We're pretty proud of our 150-year-plus legacy as a leading market innovator, which we continue to build on every day.
As you will notice this presentation, we highlight the famous horse and rider logo, which is key to our logo, which we created in 1919 to symbolize the American spirit of hope and resilience. As I mentioned, our brand is known as the American legend, a distinction that is well-earned and reflects the robust track record of delivering value-added and advanced products, along with an unwavering commitment to customer excellence. On the right, you can see a letter from General Pershing to employees of the Western Cartridge Company, now known as Winchester, thanking them for supplying the American Expeditionary Forces with critical ammunition during World War I. This legacy and brand value is something we continue to build on as we drive recognition globally. Now I'd like to spend some time on our small caliber ammunition value chain and how we're integrated across it.
All ammunition, like most products, starts with a raw material. We take these raw materials and manufacture the different components of small caliber ammunition, which are the primer, the shell casing, and the projectile, which is a core competency of Winchester. Another key component of the small caliber ammunition value chain is propellant. We do not currently manufacture propellant. As you heard from Ken and Todd on recent earnings calls, the industry faces a propellant shortage for many reasons, including munitions-grade nitrocellulose, which is a critical raw material for manufacturing propellants. We combine these components that we manufacture, including propellant that we source, to create an ammunition round for either defense, law enforcement, or the commercial market. Winchester's near-full integration across the small caliber ammunition value chain is a clear competitive advantage, as very few manufacturers have this level of integration.
On the previous slide, I discussed that we make our products for the defense and commercial markets, including law enforcement. For the commercial market, we primarily produce products for the hunter and recreational shooter, including clay targets from the recent White Flyer acquisition. For the defense and law enforcement markets, we have an industry-leading product portfolio that meets defense and law enforcement specifications that best serves their needs. Also, within the defense space, we participate in contract services with the Army to operate in modernized facilities on behalf of them, as well as conduct research and development. Winchester's participation in the defense market is well-supported by military projected spending in small caliber ammunition, as well as government-owned contractor-operated facilities, which we refer to as GOCOs.
Within small caliber ammunition, we've seen geopolitical events that have driven an increased demand, as well as a need to replace and increase their inventories. As you can see on the left, defense spending on small caliber ammunition is projected to grow at a long-term average rate of approximately 9%. The Army is also expecting to continue spending on the modernization of GOCO facilities to strengthen the U.S. industrial supply base. Authorized spending on GOCOs is projected to grow at a long-term average rate of approximately 13%. So, we believe that we're well-positioned to benefit from both of these positive trends, which I will cover in greater detail later. From a commercial standpoint, small caliber ammunition is well-supported by the ongoing growth in the shooting sports participation and gun ownership, based on the most recent data that we have available.
As you can see, both ammunition industry sales and target shooting participants have continued to grow at a healthy pace, and we expect these trends to continue. Ammunition net industry sales grew at nearly 18% from 2018 to 2022. And the firearms industry has had steady growth for the last 25 years, which supports the sales of ammunition. We continue to see significant growth in target shooting participation across multiple demographics. There were nearly 30 million new participants between 2009 and 2022. The growth of this sport also supports the sales of ammunition. In Winchester, within the U.S. and Europe, we have an exposure to a roughly $5 billion addressable market in small caliber ammunition that is growing at a rate of approximately 6%.
You heard Deon and Florian talk about how they're contributing to Olin's Grow the Core and Optimizing the Core strategic pillars, and Winchester is no different. Over the next few slides, I'll cover how we're contributing as well. At Winchester, a culture of continuous improvement is key for us to optimize our business, as well as increasing the value of our assets. We have established Be Better Today initiatives focused in three key areas: productivity, reliability, and modernization to capture approximately $30 million of structural cost savings by 2028. First, we are driving enhanced productivity through asset optimization and increased operational efficiencies. We are exceeding customer expectations by reliably delivering high-quality products with exceptional customer service, all while maintaining operational resiliency in a capital-light manner.
And finally, we also see the opportunity to further modernize our operations through low-capital projects focused on enhancing capabilities and improving our costs, as well as to continue to execute government-funded projects to do the same at Lake City. Let me give you an example of how we're implementing some of these. At our 22-caliber rimfire ammunition facility, we have a low-capital transformational process underway that will maintain our current level of output while reducing our labor costs by 40% and then creating further downstream synergies through the balance of our process once we've completed. This is just one of many initiatives that we have going on at Winchester to drive cost reductions across the board and sets us up well for future growth. So, as we have shown, the defense and commercial ammunition markets are healthy, with anticipated continued growth.
Building on the strong foundation how we have transformed our business since 2019, we expect continued profitable growth through not only market participation, but through ongoing partnership with both domestic and international militaries, as well as driving new product innovation. The image on the left is a rendering of the Next Generation Squad Weapon, or NGSW, ammunition facility that we are constructing for the U.S. Army at our Lake City GOCO. We have been awarded several contracts to support the manufacturing of ammunition for the U.S. Army's NGSW program, which is the first new caliber of ammunition for the Army in over 50 years. This state-of-the-art facility is designed to support transformational manufacturing methodologies for high-volume capacity to fulfill the U.S. Army's NGSW ammunition requirements.
We also have the opportunity to serve the growing global military market by assisting the U.S. military with supply readiness and high-priority new product development, as well as meeting the needs of international militaries. Now, switching to the commercial market on the right, we see the potential to further grow in the shooting sports market, which, as I just talked about, continues to grow. By maintaining a pulse on the customer needs, we match product innovation to meet the growing demands, whether it's for duck hunting or clay target shooting. We also believe one of the most powerful aspects of our business is the strength of the Winchester brand, which we leverage to capture a greater share of mind and wallet. While our focus is primarily on organic growth, we would consider the right small strategic bolt-on acquisition that meets our disciplined M&A criteria.
Across these two markets, I'm excited to see what Winchester can unlock in terms of profitable growth and what our Winchester team will achieve. You've heard a lot about the American legend today. I'm going to use it a couple more times, but, you know, without a surprise, it's no surprise that we have a deep collaboration with the U.S. military. That's just not only through the Lake City GOCO that's shown here, but all of our ammunition operations, whether it's in East Alton, Illinois, or Oxford, Mississippi, are strong supporters and produce product for the U.S. military. As I mentioned before, a GOCO is a government-owned contractor-operated facility. These facilities are owned by the U.S. Department of Defense, and operators are typically awarded long-term contracts to maintain and modernize facilities while meeting all the critical production requirements.
It's imperative that, as an operator of a GOCO, we maintain readiness to meet the needs of the U.S. military at any time. So, as it relates to the Lake City GOCO, we began operation under a seven-year contract in 2020, with a likely extension through 2030, and manage the largest small caliber ammunition manufacturing site in the world. We are extremely proud to have received the highest possible performance ratings from the Army since we began the contract. We also have been awarded over $1 billion since 2020 by the Army for facility modernization projects at Lake City that we are executing today. All this to say, we have a strong right to win for operating other GOCO facilities, like the upcoming Radford GOCO recompete that Ken talked about earlier.
Recently, you have seen in the public news that the Army is considering re-competing for the operation of the Radford Army Ammunition Plant, which is located in Radford, Virginia. We see this as a real opportunity to cross-collaborate with Olin's chemical business, given Radford's operations manufacture critical chemicals, including nitrocellulose and propellants. Nitrocellulose is a critical chemical in the ammunition value chain that I talked about earlier, and Winchester can expand into it through this GOCO recompete. This is an essential need for the U.S. military, and Radford is the only domestic source for nitrocellulose. The recompete process for Radford has just begun, with the current contract set to end on December 31st, 2026. To summarize the anticipated results of these strategic initiatives. We are targeting approximately $450 million of Adjusted EBITDA by 2029.
As I mentioned earlier, we anticipate capturing $30 million of structural cost savings through Optimize the Core initiatives. In terms of Grow the Core, we expect to add approximately $90 million in adjusted EBITDA through healthy long-term growth in both defense and commercial markets, which we are well-positioned to participate in, given our near-full integration across the ammunition value chain and our operational scale. In addition, we believe that our Lake City GOCO operations, as well as our new product development, can deliver an additional $35 million of EBITDA. As we look to the future, there's even more upside opportunity through GOCO recompetes, like the one at Radford, which are not included in these targets. So, as you can see, we have a well-defined capital-light strategy to significantly expand Winchester's future earnings. So, to summarize, hopefully, you're as excited as I am about the future of Winchester.
We have a great brand that has great potential to deliver exceptional value to Olin through numerous growth initiatives in our core, defense, and commercial markets. Notably, we see the opportunity to cross-collaborate with Olin's chemical business and match that with our expertise to further expand across the ammunition value chain. So, with that, I'm going to turn it over to Todd Slater, Olin's CFO, who will take you through an overview of Olin's financial and long-term outl ook.
Thank you, Brett. And I appreciate everyone online and here today to learn more about Olin. For those who don't know me, I'm Todd Slater, Olin's Chief Financial Officer, and I've been that for over 10 years. During my tenure at Olin, I've seen multiple cycles, so I'm no stranger to how the business performs in both peak and trough environments.
Given this experience, I am confident in our ability to perform and deliver value to our shareholders despite the current trough we're in. Learnings from each cycle enable us to position the company to deliver better performance going forward. As we look to that future, we see ample opportunities based on our discipline, value creation strategy that will be driven by our team. With that, let me walk you through our financial performance and long-term plan. This morning, you heard from Ken and the business presidents on how we will implement our value creation strategy. We will continue to maintain our financial disciplined approach and commitment to achieving and maintaining investment-grade credit ratings. As we consider capital allocation, we will continue to prioritize return of cash to shareholders through dividends and share repurchases while we evaluate potential high-return organic and inorganic growth initiatives.
We expect this financial roadmap will allow us to continue to deliver industry-leading total shareholder returns. Before reviewing my strategy slide, I wanted to give you an update on our outlook for the fourth quarter. First, let's talk about chlor alkali. Our assets that were affected by Hurricane Beryl have returned to normal operations. However, we have experienced a delay in the restart of our Chlorinated Organics plant in Freeport. This was following our fourth quarter planned maintenance turnaround. Epoxy, we have seen weaker demand than expected, particularly in electronics. Winchester is on track to deliver its fourth quarter outlook, but we have continued to see destocking in the commercial ammunition space. In spite of the challenges that we faced, we currently expect to be at the lower end of our fourth quarter Adjusted EBITDA guidance range that we previously provided. Now, let's look back at our historical financial performance.
As we've managed across the cycle, our operational and commercial performance has enabled us to achieve enhanced financial results. Our sales performance has been driven by growth our Chlor Alkali Products and Vinyls business, as well as increased participation in the small caliber ammunition value chain in our Winchester business. Our earnings and margin improvements are the result of a value-first commercial approach, optimization across our asset footprint, and continued cost reduction initiatives. Through these disciplined actions over the last few years, we've built a foundation which we can further drive improved performance as we come out of the current trough to even greater total shareholder returns. As you saw on the last slide, we've been committed to improving our financial performance so we can create value for our shareholders.
Our leadership positions in our chemicals, as well as our defense and commercial ammunition, plus our value-first commercial approach, have enabled us to return approximately 47% of our operating cash flows to shareholders since 2015. Over the last five years, Olin has significantly outperformed its commodity chemical peer groups and major chemical indices to deliver a total shareholder return of 171%. Over the past 10 years, our performance also has significantly outpaced our commodity chemical peers. I believe we can deliver top-level shareholder returns going forward, and I'll go into more detail about what supports that confidence. Our ability to generate superior shareholder return is underpinned by our ability to deliver strong cash conversion. Trough to trough since 2020, we've improved Adjusted EBITDA by over 50% and cash flow by approximately 80%.
Our value-first commercial in Chlor Alkali Products and Vinyls, as well as increased participation in defense and commercial ammunition value chain at Winchester, has enabled Olin to dramatically lift trough-level earnings and cash flow. In addition to improved earnings, our continued focus on working capital management and reduced interest costs by our improved debt profile have resulted in a cash conversion of approximately 80%. Turning to our balance sheet, Olin historically and will continue to maintain a prudent capital structure while being committed to a conservative financial policy. We have a disciplined approach to our debt structure by maintaining manageable and staggered ladders of maturity. We have minimal bond maturities in the near term and opportunities to refinance our long-term debt, such as the recently completed expansion and refinancing of our accounts receivable securitization facility. Of course, we may remain committed to achieving and maintaining investment-grade credit ratings.
This strong financial foundation enables Olin to continue running our disciplined value-first commercial approach while also deploying a substantial portion of our free cash flow towards share repurchases. Speaking of that, over the last five years, we've deployed approximately $4.7 billion of capital primarily towards share repurchases. As we look to the future, we've defined our priorities. We expect sustaining and maintenance capital spending to average approximately $250 million annually. Every business president talked about capital, and they were pointing their fingers at me. We expect all the capital that they talked about to be included in this $250 million average annually. Something we're also extremely proud of is our nearly 100-year history of uninterrupted quarterly dividend payments. We will continue to prioritize return of cash to our shareholders through share repurchases while we evaluate potential high-return organic and inorganic growth projects.
Reaffirming our commitment to returning cash to shareholders, I'm pleased to announce that this morning, our Board of Directors had authorized an additional $1.3 billion share repurchase program. We've delivered almost $4 billion in returns to our shareholders through dividends and share repurchases since our transformational transaction and the acquisition of the Dow Chlorine Products businesses in late 2015. As I said earlier, this represents approximately 47% of our operating cash flows over that period. Since 2015, we've repurchased approximately 35% of our outstanding shares while reducing our debt by approximately 25%. Going forward, we are committing to prioritize returning cash to shareholders, and we expect to return cash to shareholders greater than 50% of our operating cash flows on average between now and the end of the decade. You heard a lot about growth opportunities and growth options today. Let's talk about how we think about these growth opportunities.
A key criterion will continue to be that any opportunity will have to compete with share repurchases, and that's intentionally a very high bar because we already have a strong business. Our investment-grade balance sheet and strong cash flows do enable us to consider high-return growth opportunities within our framework and that meet our financial criteria. We will explore opportunities that overlap with our existing operational capabilities and expertise, expand or deepen our leadership positions, have competitive cost positions, and/or create value in adjacent markets. Additionally, potential opportunities must be accretive to EPS within two years and have a risk-adjusted internal rate of return, or IRR for everybody who likes acronyms, greater than 15%.
Deon and Brett mentioned these earlier, but opportunities that we are primarily focused on are extending our chlor alkali leadership positions, facilitating greater participation in PVC, strengthening our position in bleach, growing our participation across the defense ammunition value chain through the upcoming Radford contract recompete, and potentially advancing our position in the commercial ammunition value chain through small bolt-on acquisitions like we did with White Flyer. I want to reiterate we are committed to achieving and maintaining our investment-grade balance sheet while we evaluate the growth opportunities. You heard these throughout the day, but let me summarize our financial targets. Our adjusted EBITDA target of $2 billion is underpinned by a mid-cycle earnings in Chlor Alkali Products and Vinyls and an improved level of earnings from Epoxy in Winchester. Also embedded in that outlook is at least $250 million of structural cost savings by 2028.
We see a clear pathway to $2 billion with an optimized asset base and, importantly, without any contribution from M&A or major incremental growth capital projects that were mentioned today. We're targeting cash conversion rate of at least 85%, which assumes annual sustaining capital spending of approximately $250 million. This is the level of capital spending necessary to achieve the $2 billion of adjusted EBITDA. As I mentioned earlier, we are targeting returning greater than 50% of our operating cash flows on average to our shareholders through the end of the decade. And finally, we are committed to that prudent capital structure and conservative financial policy with an average net debt to adjusted EBITDA ratio of less than 2x through the cycle, all while maintaining and achieving investment-grade credit ratings.
I want to emphasize that our adjusted EBITDA of $2 billion assumes mid-cycle in Chlor Alkali Products and Vinyls and normalized conditions in Epoxy and Winchester. But as you know, macro market conditions can change. We have not factored any upside beyond mid-cycle conditions, which we view as a tremendous growth opportunity above our current target level. The factors you've heard today support our confidence in the $2 billion of adjusted EBITDA, or approximately a billion-dollar improvement from the current trough-level conditions we've been our Chlor Alkali Products and Vinyls business should deliver roughly $700 million improvement at mid-cycle from its current low levels, and Epoxy and Winchester each should improve by roughly $150 million from today's levels. As you've heard from each business, they have defined plans to contribute to our overall improved adjusted EBITDA, including the achievement of the $250 million of cost reduction initiatives.
Those initiatives are tied to our updated incentive programs, which will enhance accountability and drive our performance-driven culture. We also are expecting to achieve $615 million from capturing market growth and recovery and $130 million of Olin growth initiatives. We do expect, again, to spend $250 million annually on capital spending to achieve this level of earnings. We also do see promising opportunities for Olin to capture additional value, such as the salt-to-bleach plant in California, PVC optionality within chlor alkali, upside from anti-dumping cases in Epoxy, and the Radford GOCO recompete for Winchester. However, these are not included in our Adjusted EBITDA target. We will keep you updated on these and other opportunities as they progress. But as you know, any growth opportunity must compete with buying a share of Olin stock.
After everything you've heard today, I hope you walk away with a deeper understanding of Olin's future value creation potential and financial roadmap to a higher level of profitability. All of this is underpinned by a solid financial foundation, which should enable us to achieve and maintain investment-grade credit ratings. Importantly, we will continue to prioritize return of cash to shareholders and deliver industry-leading shareholder returns. It's my pleasure to return the meeting back to Ken Lane for closing remarks before opening up to the question-and-answer session. Ken?
All right. Thank you very much, Todd. So listen, I hope what you heard today is the excitement from this team, and I want to thank the team that's been working together on this strategy for the last eight months.
I can tell you that yesterday we gave a little bit of a preview to the top 80 or so leaders at Olin, and they're extremely excited and committed to get on with this and start implementing our new strategy. So I'm very convinced that we've got the right team, we've got the right businesses, and we've got the right strategy to be able to deliver confidently what we've talked about today around our financial targets. Todd mentioned briefly about our performance-driven culture, and that ultimately is what's going to help deliver this. It's not just the team that you see here today, but it's the 7,300 teammates that we have around the world. So with that, now we're going to get set up for Q&A. Just take a couple of moments to do that. We'll move into Q&A, and then we'll wrap things up right around noon. All r ight. We have Deon.
Not yet.
So Todd, why don't you sit here? You can go down on the end there, Florian.
Go mix in.
Yeah.
Okay. We got Deon at the right hand of the mic.
Exactly. All right. So we'll start taking your questions here. Steve, you're going to.
Yeah, Deon is going to join us in just a minute here. Well, we can go ahead and get started. So yeah. So for those of you in the room, the usual drill, raise your hand so that everybody on the webinar will be able to hear you. We'll distribute a microphone to you. We'll ask you that you keep it to one question just so that everybody here gets an opportunity to participate. And please state your name. State your name if you can. Please state your name and your firm, and that'll help us on the transcript. Okay. David?
Thank you, David Begleiter, Deutsche Bank. Ken, on Winchester, you've gone through a full review of the portfolio and the strategy preparation. So why did you decide that Winchester should be kept? It's a unique franchise. It's an excellent franchise. But why is it best to keep it within the current construct and with chemical businesses when it's not a chemical business? Thank you.
Absolutely, Dave. Thanks for the question. Listen, Winchester, if you look at what we've done with that business over the last few years, it's 5x larger than it was in 2019. It has flourished as part of Olin. It's part of our legacy. It's a rich part of our legacy. We're finding ways to continue to grow that business going forward. So you saw that earlier listening to what Brett was saying.
It's going to continue to be a really important stable cash flow generator for our company. The more we can leverage our expertise around chemicals into some of the opportunities that we talked about with the Radford GOCO, we think that that's even more value that's not reflected in that number. So today, we're very happy to have Winchester as part of the portfolio because of that.
Let's go to Patrick. Sorry. Third row there.
Hi, good morning. Patrick Cunningham with Citi. So I'm just curious on the PVC market entry, multiple routes here. The conversation on build versus buy seems relatively new. So why the change of tone? What sort of capacity would you potentially target, and how much do you think it would cost to add new capacity in the U.S. Gulf Coast?
Yeah, thanks, Patrick. I mean, listen, Deon explained it well. We've got the majority of the assets already in the ground. And we have a relationship, as you probably know, with a customer that's over the fence. We've had that for many years. And we've got a few years of runway to decide what are we going to do with those assets and to ensure that we get the highest value from those assets that we can. So what we're saying is we're not taking any option off the table. We might continue doing what we're doing today, but there are a lot of options that we have. This first step in terms of the deal that we've done with Kem One and others that we're talking to is a way for us to build the capability to learn more about the PVC market. If we don't do that, we're doing ourselves and our shareholders a disservice. So that's what we're trying to do with this plan.
And Hassan here?
Morning, Ken. Hassan Ahmed, Alembic Global. Just a question around value over volume as I guess it pertains to some of the recent capacity addition announcements we've been hearing. Just the other day, Chemours essentially came out and said that a third party was basically going to supply them chlorine via a new facility, right? Last week, I was talking to a polyurethane producer, and they were talking about how they've invested in infrastructure to increase competition, right, to not just have one supplier for chlorine. So now, as you think about sort of value over volume on a go-forward basis, how do you think about it with, I guess, potentially increased competition, potentially increased supply, maybe some of your customers creating that competition? Thank you.
Yeah, thank you, Hassan. Listen, we've said it a lot today. We're staying committed to our value-first approach. Obviously, when you look at the market where we're at today, and you saw that in the chart that I showed, industry utilization rates are low, and ours are even lower. We're going to continue to be able to participate in the market as a leader. We're not going to give up that position. But at the same time, we believe that with the options that we're talking about around the adjacencies and the growth options that we've got, you can't look at one announcement or what one consumer of chlorine is doing in the market and project that across the entire industry. There's a lot of things that we can go do with the chlorine molecules and the caustic molecules that we have. That's what we were talking about today.
So we're going to grow. Markets are going to grow. It's going to absorb this capacity. And it's very easy when you're sitting in the trough to think you're never going to get out of it. But as many times as I've been here, you do come out of it. And we're going to be ready to come out of it and be even stronger.
How about Kevin here?
Kevin McCarthy, Vertical Research Partners. Question for Ken and perhaps Deon as well. Can you speak to the future trajectory of chlor alkali production capacity? For example, when Dow closes their propylene oxide plant at Freeport by the end of 2025, how much diaphragm-based capacity do you need to take out there? And also, how much might you add in Quebec if you proceed with that decision?
Thanks, Kevin. Yeah, I'll hand it over to Deon in just a minute. But listen, we've said that essentially we're going to be closing the capacity that's supplying that Dow PO plant simultaneously. Beyond that, what we're doing is we're focused on transitioning out of asbestos, as you've heard us talk about. And we'll be able to do that within the time frame that we've so far been dictated to by the EPA. That's part of the asset strategy that we've developed, and that's a key part of what we're going to potentially do at Bécancour. So Deon, do you want to talk any more about the capacity changes?
Yeah, so I think thank you. As we said, we're currently sitting around 4.5 million. And as we close Chlorine 3 related to the Dow propylene oxide, we would go down to around 4 million, and we would continue to be a market leader.
As we said, we're going to continue to focus on optimizing that asset base and improving safety, reliability, and efficiency so we can reliably supply through the peak cycle. In terms of the Bécancour site, we continue to assess the options there. And then we'll announce as we should we decide to move forward with that project. And then in terms of our ongoing diaphragm, I think Ken said it, fundamentally, our Plaquemine, Louisiana site will continue to be based on all the diaphragm technology, but optimized through our new non-asbestos conversion.
How about Bhavesh here? fourth row?
Thank you. Bhavesh Lodaya, BMO Capital Markets. So I'm assuming your $250 million of cost savings is not dependent on a market recovery.
And assuming that's correct, could you break out the timing or cadence of across the three years, what's the biggest pockets when they come in, and perhaps some more color around 2025? What are the incremental benefits there?
Well, you're absolutely right, Bhavesh. The $250 million is not based on any market recovery. And that's why it's so important for us to think about how we're shifting our incentive programs to make sure that our organization is performance-driven and creating that culture where people are really getting after delivering that. And we're going to do just that. You're going to see a step up. We'll start to see some of the cost savings next year, but you're going to see a significant step up in 2026 with the closure of Chlorine 3. So we're already getting ready for that.
We're making some small investments that are going to enable us to be able to take out remnant costs and have some significant cost reductions in 2026. But again, there's a lot of things that have to take place where there's turnaround related or some capital projects that we have to do. That's why this is going to go out to 2028 to realize the full $250 million in savings.
How about John in the back?
Sorry to be so far back. John Roberts, Mizuho. It's been a while since we had a presentation with no ECU Profit Contribution Index or parlay . Are we still going to track those? Are those important metrics that you're going to use in future presentations?
That's a great question, John, and it's something that we've been talking about. I mean, I'll tell you that you probably won't see much about that in the future because parlay volumes for us, it's hard for us to give you that information and you then take it and interpret that into what we're seeing in terms of our results. That's what we found with a lot of analysts. So you're probably not going to see the parlay volumes reported in the future. We're looking at the PCI to see if we want to make any adjustments to that. And if we do, we'll reflect that in our Q4 earnings at the beginning of next year. So stay tuned on that.
Okay. How about Frank here?
Frank Mitsch, Fermium Research. I assume, Ken, that when you're talking about analysts misinterpreting the parlay and ECU, you're talking about everyone other than John and myself.
Of course I was.
Florian, I wanted to drill into epoxy. The goal for 2029 is $150 million. Obviously, the segment did multiples of that not that long ago. So I'm wondering if you could speak to the potential for more or less from that $150 million. And then while you're on the topic, you mentioned that the anti-dumping duties were not factored into your projections. What sort of breadbasket could you envision those meaning for Olin?
Yeah, thanks for the question, Frank. And by the way, I wasn't intending to offend anybody about that comment on the parlay. We just get a lot of questions about it, let's put it that way. In terms of epoxy, one of the things that may not have come across in the presentation is we're really not assuming much recovery in the market. We are assuming some.
But listen, the reason why we're so focused on this anti-dumping case is because we don't believe that there is a fair and level trading field out there today just based on what's happened with the additional capacity that's been subsidized in other markets. So if markets recover faster, then yeah, there's going to be upside. But what Florian and I have been really committed to is we want to talk about things that we can control because there are a lot of things that are outside of our control. But we can control reducing our costs. We can control running our assets better to realize better integration value with CAPV. And we can leverage our know-how without putting any capital into the ground to create more value from the products that we're producing to serve the markets that we see growing the fastest.
So Florian, I don't know if you want to add anything around the anti-dumping duties, but that's how I'd put it.
Yeah, look, Ken, the anti-dumping duties, those are very complex and drawn-out processes. So while we'd love to give you a number today, there are so many moving parts. It's too early. We're too early in the process to really assess what this will mean. We're encouraged by the actions, the preliminary actions that have been taken in the U.S. and in Europe. And we're encouraged by the way that this process is progressing.
How about Jeff?
Yeah. Thanks very much. Jeff Zekauskas from JP Morgan. I guess I have multiple short answer questions. In the case of capital expenditures over a multi-year period of time, you focused on a $250 million number.
But at the same time, you have so many different options for growth opportunities by means of capacity expansion. So the first question is, if you had to guess what your average capital expenditure number was between 2025 and 2029, what would that be? Second question is, when you look at your 2029 numbers and you look at chlor alkali improvement, are the volumes very different from what they are today? Or are they larger? Are they smaller? Or larger by how much? And then lastly, for Florian, you focused very much on the growth opportunities in epoxies, but not so much on the supply that's in the market. Maybe you could comment about global utilization rates today and where you expect them to be in 2029 and how capacity might grow, if that's not too much.
That's a lot for one question, Jeff. But it's a short answer. All right. So listen, let me start with the capital question. One of the first things that I wanted when I arrived at Olin is an asset strategy because we've had a lot of changes to our asset base. And I wanted to make sure that, A, we're focused on safely and reliably operating those assets and that we know we're investing what we need to invest. That's one of the outputs from that is the $250 million. So Holger and his team have done a great job of really looking at the footprint and figuring out how much capital do we need to sustain and operate the assets that we have reliably and safely. Yes, if we decide to go forward with the growth options, we're going to see incremental CapEx.
And Deon mentioned a range of values for the investment options of Bécancour and the salt-to-bleach plant being $350 million-$450 million. I mean, if you just think about the average, if you did that amount of spend, it'd be about another $100 million per year or so. But it's probably not going to happen that we do all of those simultaneously or in the same time frame. So just keep that in mind. But it's not going to break the bank, okay? We're going to stay disciplined and dedicated to what we talked about, which is maintaining our investment-grade credit rating and making sure that we live within the financial framework that Todd had talked about. Now, just in terms of the anti-dumping or the situation around epoxy and I don't know, Florian, if you want to take that one or?
Yeah. So look, I wish I could tell you that within the next five-year time frame, utilization rates would recover to the state that we were in two years ago. If you look at the capacity additions in Asia and if you look at the global picture, that is not in the cards. So what we're doing is we're focusing on the tangible opportunities that we have in the more differentiated part of the spectrum. We focus on the intact growth trends that we have in epoxy. And if you look at the anti-dumping cases, our expectation is that regulators will exercise the discretion that they have and use all the tools at their disposal to create a fair and level playing field because on that fair and level playing field, we believe we can win. We have five decades of expertise that we can leverage.
We have customer relationships that we can leverage. But it's not a utilization question in the classic al sense.
And I think the other question was around volume for next year and.
Volume in 2029 for alkali versus today.
Okay. Yeah. Lis ten, we're not giving a projection for next year, much less in 2029, Jeff. One thing that we know is the markets are going to continue to grow. And we see a tremendous opportunity with all the different optionality that we have for our products. What we're going to do is find the highest value place to put those molecules in the market.
Okay. Thank you.
Thanks, Jeff.
How about Aleksey in the back?
Aleksey. Aleksey Yefremov, K eyBanc. Congrats on getting the Kem One deal done. You mentioned you have several others in the hopper. How close are they to the finish line?
And as you look at those kinds of deals versus building your own PVC capacity, is there a higher chance of you JVing something or building your own PVC, or these are about equal chance events?
Thank you. Yep. Thank you, Aleksey. And I'll start off. And I'll just tell you this: the reason why this is important is for us to be able to ourselves learn more about the PVC market. So we see these deals as being a bridge to be able to do that. As Deon said, we've already got most of the assets built and in the ground. And we do have a customer, fence line customer at Freeport, where we have these assets. And it may be that that's what we continue with, right?
So what we're doing today is we're being prepared to make sure that all of the options are on the table for us. Everything from additional commercial opportunities, joint ventures, potential M&A, potential build, all of those things we have to look at. We've got to be good stewards of those assets and make sure we get the highest value for them. That's going to take a little bit of time. And what we don't want to do is run the clock out on ourselves. So we've got some time to be able to make that decision, build that capability, and build that muscle within Olin. And that's really why we're doing these deals now. I'll let Deon comment about some thoughts maybe on the other deals that may be in the works.
Certainly. Thanks, Ken. And I'll just reiterate what the message we're trying to convey is we remain fundamentally in exploring how we can best position ourselves and grow through our chlor alkali foundation, the geographic advantages that we have, and how we can best position ourselves. And at the end of the day, it is focused on how we can leverage our position. But it is fundamentally around how we get the best shareholder value from any participation that we potentially do in the PVC. The purpose of the contractual manufacturing operation is, as Ken said, it's just an initial bridge that enables us to grow. And we do see other opportunities beyond the Kem One. But it's fundamentally about positioning ourselves, upgrading our EDC value, and learning and positioning ourselves to better assess longer-term opportu nities.
How about Mike Sison here in the aisle?
Mike Sison, Wells Fargo. Deon, I think you said in your opening remarks that your operating rates will not go down from here. So I wanted to understand what that meant, meaning if demand gets a little bit weaker, you're no longer going to be the sort of the governor of the industry. And then just a quick follow-up on 2029. I'll take another stab at it. But do you need a certain operating rate to get to the $2 billion in EBITDA for CAPV? Is there a certain level? Maybe give us an update where you're at now. And then where does that need to get to get that number?
Yeah. So Mike, let me start with your second question first. If you think about it, I had mentioned utilization rates today are mid- to upper 70s.
And if you think about where you would be for a mid-cycle level, it's going to be more in the mid-80s, maybe a little bit higher than that. As an industry, that's where you would expect things to be, to reach a mid-cycle level of earnings. We don't know when that's going to happen. It could happen sooner. It may happen a little later. I don't know. We're not trying to predict that. We're just trying to give you an idea of what we see as mid-cycle earnings. Now, just with respect to how we think about our value positioning in the marketplace, you saw in the chart that I put up there that pretty much for the last year, even maybe a little longer, operating rates across the industry have been flat. Markets have been fairly weak. We're not expecting things to get weaker.
And I had said this pretty clearly that what we want to do is to continue to be focused on value and how we place our products in the market. But we also have to maintain our leadership position. And running that model does get more difficult in the trough. But we're not expecting to see any further deterioration from where we are today, right? It's been a long time that we've been here. So Deon, I don't know if you want to add anything to th at.
Good.
Yep. All right.
How about Steve Byrne here?
Yeah. Steve Byrne, Bank of America. Just following up on that, do you expect chlor alkali operating rates in 2029 to be in line with the market average versus your operating rate being significantly below your competitors now?
And as part of that, do you expect to gain share back that you have lost with your value-first strategy? Are there any particular end markets that you would highlight that your competitors have picked off your customers that you might need to earn them back?
Yeah. Thanks for the question, Steve. Listen, I'm not going to try to predict, again, where we're going to be in 2029. But what I would expect is that as we recover from the trough and we start getting back to mid-cycle and back to the next peak, that gap, that loaded spring is going to uncoil. Remember, that's what we had talked about before. So we're not expecting that gap to remain.
As markets recover and as more volume comes into the market, we believe we're going to disproportionately benefit from that because the other assets that are in the industry, you know what the utilization rates are there. They're running flat out. So we're going to be able to disproportionately share in that volume recovery that we're going to see eventually in the marketplace. That's going to be our focus.
How about Josh here?
Thanks. Josh Spector with UBS. So to beat the chlor alkali question to death here, in your forecast, are you assuming in mid-cycle that chlorine and caustic values are higher than today, or are they at a similar level? And then, Ken, when you talked about the strategy, the value over the volume, you made a comment about a more balanced approach, perhaps.
Can you talk about what that means in terms of what you may have done differently over the last three to four years or expect to do differently in the future?
Yeah, so let me start with that. I would probably say we would have started earlier. Many of you have heard me say that I was the beneficiary of Olin's prior commercial strategies going back probably 15 years ago when I was getting free chlorine, basically, at another company at that time. So that's, again, we're not going back to those days. Deon said it. We're not going back to where we're just going to push volume into the market. That doesn't make any sense. We want to be very purposeful in how we do this and make sure that we're managing our position in the market as the leader that creates the highest value for Olin. That's what we want to do ultimately.
Duffy.
Thank you. Three questions. So first one, what's the latest net impact of the Dow shutdown on your EBITDA and then your commensurate shutdown of chlor alkali? second one, can you size what the Radford opportunity is that's up for competition? And then the last one is on your Lake City plant. How confident are you that you'll get the three-year extension? And as bullets seem to be a sexier place to be over the next decade, when your decade is up, how competitive will you be in that rebid? How much advantage does an incumbent have when those come up for rebid?
Thanks, Duffy. So listen, I'm going to let. I'll talk about the Winchester pieces there real quickly. We have not quantified what that is. We're at the very beginning of the process around Radford.
So we'll explore what that looks like. And as we go through the process, which is going to take a little bit of time, Brett's done this before. And he's done it very, very well around Lake City. But the operations that we have today at Lake City and what we've managed to do there in terms of improving the operations at Lake City really gives us, I think, an advantage there because we've got a great relationship with the Army. They know how serious we are about efficiency, about safely operating those assets. We've been able to modernize those and invest in those in a way that I think has been more efficient than maybe some in the past. So I believe we're really well positioned to be able to get re-upped but also to continue beyond the current contract. Brett, you want to add anything to that?
The only thing I'll add is on that likelihood of a three-year extension. Obviously, it's the Army's decision to do that, but one of the criteria that the Army uses is performance, how you're performing at maintaining, modernizing, and delivering quality product to the Army, and as I mentioned in my presentation, we have been awarded the highest possible ratings since we have taken over that contract from a performance standpoint, and Army will make the final decision, but I feel pretty confident based on our performance.
Now going back to your other question around Dow, that's included in our $250 million cost reduction, and it's included in the $2 billion. We haven't quantified exactly what that is. Any impact related to that, and it's a positive, is included in both of those.
How about Matthew?
Thank you, and good morning, Matthew Blair from TPH. I was hoping to clarify on the propellant opportunity. Do you need to win the Radford GOCO to move into that area, or is there an opportunity for you to just do it on your own? And if so, could you talk about what that looks like? Do you need a partner on the fertilizer side for the potassium? What kind of CapEx would that require? How much capacity could it give you? Any more details would be helpful.
Thank you. Yeah, Matthew. So I'll start, and then I'll let Brett add to it. But the first focus and the obvious one is the one that doesn't require any capital, right? That's the lowest risk for us.
It's one where we can leverage our track record at Lake City and the relationship that we have there with the Army to be able to position ourselves, we believe, to be the best operator of that going forward. If there were anything else that we were going to do, it would likely be in some kind of a partnership with the government if we were to do it. It's not likely that we would do anything on our own.
I don't know if you want to add anything. Not really. I mean, I agree with Ken's assessment there.
Okay. I've got one here from Mike Leithead, who is not able to join in person. So I'll read that off. As it relates to the Dow contract that resets in late 2025, you talk about the Freeport Chlorine closure and the Stade cost savings. But are there other material financial shifts from the contract reset?
Listen, I think we've talked about the resets in Stade and the ones down at Freeport. So there really is not anything more than that. What will come is the cost savings that we talked about around what we can do to take out remnant costs. And with a little bit of investment to kind of reconfigure the site at Freeport, we're going to realize some significant cost savings there.
Okay. Gentlemen here?
Hi. Arun Viswanathan, RBC. Maybe I'll take another chance at the 2025 outlook. So going to be exiting the year at the lower end of the 170-200. It's possible that you'll continue to see some weaker demand in maybe China and Europe as well or coming from China and Europe. Maybe you can just help us u nderstand.
So do you expect any kind of recovery in the first half, maybe of 2025, maybe in the spring as you go into some seasonality, or should we push that into the second half? And any one-time items we should be aware of, hurricane impact or anything else we can add back from 2024 into 2025? Thanks.
Yeah. Thanks, Arun. So listen, we've talked about the Hurricane Beryl impact, right? That's definitely something that you can add back. We're not expecting that. And we certainly hope that that does not happen again.
But yeah, coming out of the end of this year, I'm having a bit of a déjà vu from the end of last year and the end of the prior year prior to me even coming to Olin, where everybody was projecting, "Oh, the second half of the year is going to be better next year." And frankly, that's why we're not going to give any annual guidance, is because of the amount of uncertainty that's out there. The one thing that we're certain about is what we can control. And we're very much excited about getting on with implementing our strategy and realizing some of the cost reductions that we're talking about today. But other than that, there's really not any one-off that I can point to. I expect next year we're going to see normal seasonality.
So you're going to see the bleach season come back when weather warms up. And you're going to see Brett's business improve around hunting season and those sorts of things. We don't see anything that concerns me around a change in the short-term seasonality. But predicting when we may see a significant improvement in global demand, we're not going to go there. It's just too difficult to do that right now.
Here in the aisle.
Thanks. Thank you. Vincent Andrews from Morgan Stanley. Maybe just a couple on my end. Could you give us a little more detail? You said the destocking in Winchester has continued. Did that get better or worse post the election? And do you think we're sort of at the end of it, or is it going to continue into the first half of next year?
And then secondly, just another question on sort of the PVC strategy. And just curious how far downstream you might be willing to go. We know one of your competitors has gone much further downstream into some different products and markets. So is that something that you would consider as well, or do you need to get through this stage gate of the plan before you would consider going much further? Thank you.
Y eah. Thanks, Vincent. The destocking, we haven't seen, and I think we talked about this on the earnings call. We didn't see around the election the step up in demand. We actually saw the opposite, where the retailers who had purchased at the beginning of the year, because it is an election year, expecting to see that bump in demand, well, that bump didn't really come. And it's continued in the fourth quarter.
I don't know if you want to add anything. You good? Yeah. In terms of PVC, first thing we got to do is really learn and understand that market. So you can imagine we're going to start more in the front end of that chain as opposed to the further down PVC components and products in that space. But we'll learn about it. And as we learn about it, it's going to help us make a decision. I wouldn't take it off the table, but right now it's just too early to say. I think the good thing is we're looking at it. We're serious about it. And we're actually doing something to get in the market to learn more about it.
John again.
Yeah. Back in the bleaches again, John Roberts, Mizuho. I think before the Ukraine war, we had some import competition on low-end ammunition here in the U.S. and the commercial market. Does the end of the war eventually, I don't know if they've added capacity in Russia or elsewhere, that will pressure the market a little bit post-war, and does the change in ownership at Remington present any opportunities in the business?
Yeah, so listen, I'll start off, and then I'll hand it over to Brett. I mean, there are a lot of things that are happening around the world, and Brett talked about this before. What we see all countries doing, NATO countries and otherwise, is they're all talking about building their stockpiles and rebuilding inventory. I think everybody understands that the world is a very uncertain place, and they all want to be ready for that. That's stimulating a lot of growth and demand.
We've seen some changes and some shifts in imports into the U.S. Some of that has been related to the fact that China is not exporting some of their components anymore to the rest of the world. But there still is imports, or still are imports that are coming into the U.S. that's competitive. That's not ever going to go away. But certainly, as we go forward, you're going to see a lot of people building stock. So you may hear about capacity being added, but we think that capacity is going to get consumed mostly locally as a lot of these countries want to have their own defense, so.
Yeah. So you mentioned Russia. I'll remind you, we talked about this a few years ago. Russia is not authorized to sell into the U.S. anymore from a commercial or defense standpoint.
Most of that projection that you look out that I talked about with the growth in military spending projected to be pretty healthy is really related to what Ken talked about. International militaries that don't have capability are needing to buy now, as well as even some that do have capability. They need to replenish and even increase their inventories, and that's what's driving it. We see that something that's going to stick around for a while because it will take a lot of action across the world to be able to replenish those.
Okay. David? Hey, Ryan. Right up here. Up front, Ryan. Right in front. Sorry.
Thank you again, Dave Begleiter, Deutsche Bank. Deon, just two things. On the Freeport pl ant, why has it been the operating rate over the last 12 months of that plant? And on Quebec, the expansion, is there a timeframe when you might make a decision, go, no go for the investment? Thank you.
And Deon, you want to take that?
Yeah, certainly. Thank you for the question. Yeah. So we don't sort of track individual site asset utilizations that directly. We look at our overall system and integration and flexibility that we have across our sites. In terms of Bécancour, there's no defined timeframe. We're actively working the project. It is, as I said, contingent on fundamentally the government incentives and whether or not with those and together with the project scope that we're still assessing how best to serve the growing EV battery market in Canada. Once we have that, we'll keep you informed.
Okay. Aleksey again.
Thanks. Aleksey from KeyBanc. If you do decide to build PVC, that's a substantial capital outlay for you. How does that impact your thinking on the buybacks over the next couple of years? Do you feel the need to sort of pad your balance sheet to prepare yourself for that option?
Yeah. Thanks, Aleksey. I'll start with that, and then I'll let Todd comment on it as well. What we've looked at, and if you model out getting back to a mid-cycle level of earnings around $2 billion in the timeframe that we're talking about here in the next four to five years, we believe that we could do that and still commit to repurchasing a significant amount of shares, meeting the targets that we talked about, which is returning greater than 50% of our operating cash flow to shareholders and doing that investment. Now, that doesn't mean that we were going to do all of the investments that we talked about.
But if you look at it on balance, we think that we could do it and still achieve those targets.
Good answer, boss.
Y ou're not going to add anything to that?
No. I was all I could think of.
I'm not that good. Come on.
But one thing I would say, if we decide to do, and I said about 10 x during my presentation, so in case anybody missed it, any of these growth initiatives that we're talking about are going to have to compete and have a better return than buying a share of Olin stock. And that's a very high bar.
Patrick?
Patrick Cunningham with Citi. Ken, how would you assess the performance of the Blue Water JV and its value to Olin?
And given you're making some initial steps into the PVC market, would picking up some trading volume through the JV have any distinctive advantages for market visibility?
Tha nks, Patrick. So listen, the Blue Water joint venture that we have has been a great way for us to expand our reach into the marketplace. And actually, Florian runs that for us down in Houston, as well as running the Epoxy business. So we're going to look for ways that we can continue to build our channels into the market. Potentially, that could be something, but right now, we haven't made any decisions.
Okay. Well, we've got no virtual questions. And Kevin's got one. One more from the room. Kevin. I think this will have to be the last.
All right. Thank you very much. Kevin McCarthy, Vertical Research. I have a confession to make. Sometimes I get a little nervous when chemical companies talk about building plants in the state of California. So can you just put a little bit more color around this salt-to-bleach plant proposition there? How much capital would we be talking about, and maybe timeframe and other options on the menu? Thank you.
Yeah. Thanks, Kevin. I mean, listen, in the environment that we're in today, anywhere, permitting regulation is always going to be sometimes the long pole in the tent, right? So we're going to get started on that very quickly. But again, there's a market opportunity there, and there is demand there. And what we see is we're unique in that we can make this investment, and it can be part of our larger system for supply of bleach into that market, and we can absorb the seasonality.
So we're really uniquely positioned to be able to look at executing that project. At the end of the day, California needs bleach, right? They need it for their water treatment. So we think that we can find a way to potentially make this work. But obviously, we've got a long way to go to get through permitting and that sort of thing. Anything else? Okay. All right. Well, listen, I want to thank all of you for coming out this morning and everybody that's online to listen in on how we see the future of Olin. And I do believe that it is very bright.
I'm excited not only about optimizing our businesses and delivering a lot of value from reducing our costs and creating an even more competitive Olin for the future, but also just thinking about how do we build on value and create more value for our shareholders. Thanks again for coming. If you're going to join us for lunch, I believe we're across the hall in the Hamilton R oom. Is that right?
We are. I think lunch is right here, and then we'll take it into the room.
Great. All right. Thank you very much. We appreciate you being here.