Alcoa Corp
For the period ended Sep 30, 2024. Filed Oct 31, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 31, 2024
AA$39.54+2.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0000950170-24-090092
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-31.
0000950170-24-119557
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 263 previous paragraphs and 284 current paragraphs.
131 unchanged; 69 reworded; 83 added; 59 removed; 4 previous and 1 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (83)
Current report
During the third quarter 2024, Alcoa continued to execute on its strategic priorities while progressing improvement in its operations as described below.
Current report
On September 15, 2024, Alcoa announced the sale of its 25.1% interest in the Saudi Arabia joint venture to Ma’aden. This decision aligns with the Company’s ongoing efforts to streamline its operations and is expected to provide Alcoa with enhanced financial flexibility.
Current report
On October 16, 2024, Alcoa announced that it is progressing toward entering into a strategic cooperation agreement with IGNIS EQT to support the continued operation of the San Ciprián complex. The proposed agreement is conditional upon delivery of key areas of cooperation with San Ciprián’s stakeholders.
Current report
During the third quarter of 2024, Alcoa continued to advance mine approvals for the next major Australian mine regions (Myara North and Holyoake) which were referred for accredited assessment by the Western Australia Environmental Protection Agency (WA EPA) under the bilateral assessment process (Accredited Assessment). Alcoa is focused on modernizing its approvals framework for bauxite mining in the region and securing certainty for ongoing and future operations.
Current report
Saudi Arabia Joint Venture
Current report
On September 15, 2024, Alcoa entered into a share purchase and subscription agreement with Ma’aden, pursuant to which Alcoa agreed to sell its full ownership interest of 25.1% in the Saudi Arabia joint venture, comprised of the Ma’aden Bauxite and Alumina Company and the Ma’aden Aluminium Company, to Ma’aden in exchange for issuance by Ma’aden of approximately 86 million shares and $150 in cash. The implied value of the shares was $950 as of September 12, 2024, based on the volume-weighted average share price of Ma’aden for the previous 30 calendar days. The shares of Ma’aden will be subject to transfer and sale restrictions. Alcoa will hold its Ma’aden shares for a minimum of three years, with one-third of the shares becoming transferable after each of the third, fourth, and fifth anniversaries of closing of the transaction (the holding period). During the holding period, Alcoa would be permitted to hedge and borrow against its Ma’aden shares. Under certain circumstances, such minimum holding period would be reduced. The transaction is subject to regulatory approvals, approval by Ma’aden’s shareholders, and other customary closing conditions and is expected to close in the first half of 2025. The carrying value of Alcoa’s investment was $538 as of September 30, 2024.
Current report
The transaction consisted in substance of the acquisition of Alumina Limited’s noncontrolling interest in AWAC ($1,472), the assumption of Alumina Limited’s indebtedness ($385), the recognition of deferred tax assets ($121) primarily related to Alumina Limited’s prior net operating losses, and the acquisition of cash ($9) and other current liabilities ($1). The transaction was accounted for as an equity transaction where net assets acquired ($1,216) and transaction costs ($32) were reflected as an increase to Additional capital.
Current report
Net income attributable to noncontrolling interest was recognized through July 31, 2024 and was $8 in the third quarter of 2024.
Current report
Australia Mine Plan Approvals
Current report
The Company continued to advance mine approvals for the next major Australian mine regions (Myara North and Holyoake), which were referred for accredited assessment by the WA EPA under the Accredited Assessment. Alcoa began the process in 2020, is focused on receiving approval by the first quarter of 2026, and anticipates mining in new regions will commence no earlier than 2027. Until then, the Company expects bauxite quality will remain similar to recent grades.
Current report
During the third quarter of 2024, the WA EPA set an indicative timeline for the next key step in the approval process, the public comment period, for early 2025.
Current report
The Company continues work to seek annual endorsement from the Western Australian State Government for its rolling five-year mine plan. Separately, a third-party referred the Company’s current five-year mine plan to the WA EPA in 2023 for assessment (Third-Party Referral). This Third-Party Referral remains under assessment, and it is expected that the public comment period will also be in early 2025 in accordance with the WA EPA streamlined process.
Current report
The Company is committed to working collaboratively with the WA EPA and other stakeholders to achieve the indicative timelines set by the WA EPA.
Current report
Additionally, the Company is evaluating conditions recommended by the WA EPA in similar accredited assessment processes to address the majority of relevant published conditions in the Company’s Environmental Review Document, which Alcoa will submit as part of the Accredited Assessment prior to the upcoming public comment period.
Current report
Portfolio Review
Current report
In October 2024, the Company completed its five-year strategic portfolio review to improve cost positioning, or curtail, close, or divest 1.5 million and 4 million metric tons of smelting and refining capacity, respectively. The Company reached approximately 93 percent of its target for smelting capacity with the decision to restart capacity at the Warrick smelter completed in the first quarter 2024, and exceeded its target for refining capacity with the decision to curtail the Kwinana refinery in January 2024. The Company continues to evaluate assets for opportunities for improvement to remain profitable throughout all cycles.
Current report
On October 16, 2024, Alcoa announced that it is progressing toward entering into a strategic cooperation agreement with IGNIS EQT, the majority shareholder in the IGNIS Group of Companies, a vertically integrated energy company based in Spain, to support the continued operation of the San Ciprián complex.
Current report
Under the proposed agreement, Alcoa would contribute approximately $82 (€75), and IGNIS EQT would make an initial investment of approximately $27 (€25) to fund the operations. Alcoa would continue as the managing operator of the San Ciprián complex, with IGNIS EQT holding 25 percent ownership. Additionally, up to approximately $109 (€100) would be funded by Alcoa as needed for operations with a priority position in future cash returns. Further funding would require agreement by both partners and would be shared 75 percent by Alcoa and 25 percent by IGNIS EQT.
Current report
Alcoa has operated the San Ciprián complex for a number of years in a challenging economic environment, primarily due to the high cost of energy. In the first quarter of 2024, Alcoa launched a sale process while also working to identify solutions for the long-term viability of the operations.
Current report
Despite sharing information with 60 potential investors, no viable bid was made for 100 percent of the San Ciprián complex. The potential partnership with IGNIS EQT emerged as an alternative for San Ciprián in which Alcoa can leverage its expertise in managing global aluminum operations, combined with IGNIS EQT’s strong knowledge of energy markets, to create value via market access and energy management services.
Current report
The proposed agreement is conditional upon delivery of key areas of cooperation with San Ciprián’s stakeholders, including the Spanish National Government, the Xunta de Galicia, and San Ciprián employees and workers’ representatives. Key areas include:
Current report
Materially higher carbon dioxide compensation support;
Current report
Permitting of power generation projects, especially those with existing agreements with San Ciprián;
Current report
Support and approval for the bauxite residue area capital project; and,
Current report
Flexibility within the February 2023 updated viability agreement, including access to restricted cash for operating needs and deferral or substitution of capital improvement commitments.
Current report
Increased alumina prices
Current report
Favorable currency revaluation impacts
Current report
Absence of Net income attributable to noncontrolling interest for the full quarter
Current report
Unfavorable mark-to-market results on derivative instruments
Current report
Unfavorable equity earnings
Current report
Net income (loss) attributable to Alcoa Corporation was $(142) in the nine-month period of 2024 compared with $(501) in the nine-month period of 2023. The favorable change of $359 is primarily a result of:
Current report
Higher taxes on higher earnings
Current report
Higher restructuring charges
Current report
Unfavorable selling, general administrative, and other expenses
Current report
Higher interest expense
Current report
Sales decreased $2 primarily as a result of:
Current report
Sales increased $453 primarily as a result of:
Current report
Higher average alumina input costs in the Aluminum segment
Current report
Depreciation decreased $4 primarily as a result of:
Current report
Depreciation increased $14 primarily as a result of:
Showing the first 40 of 83 passages. Open the source sections for the rest.
Removed paragraphs (59)
Previous report
The transaction consisted in substance of the acquisition of Alumina Limited’s noncontrolling interest in AWAC, the assumption of Alumina Limited’s indebtedness (approximately $385 as of August 1, 2024), and the recognition of deferred tax assets (approximately $100) related to Alumina Limited’s prior net operating losses. The accounting for the transaction is not yet complete and the final value of assets and liabilities acquired is subject to change. Alcoa’s fees and expenses related to the transaction include financial advisor fees, filing fees, legal and accounting fees, and regulatory fees. The Company expects to incur approximately $35 of transaction costs related to the transaction. In the third quarter of 2024, Net income attributable to noncontrolling interest will be reported through July 31, 2024 and cease thereafter.
Previous report
Additionally, under the terms of the Agreement, Alcoa agreed to provide a shareholder loan to AWAC in place of required capital contributions by Alumina Limited if Alumina Limited’s net debt position exceeded $420 prior to the acquisition closing. Alcoa was not required to and did not provide any shareholder loans to AWAC under this provision.
Previous report
Alumar Smelter
Previous report
During the second quarter of 2024, Alcoa continued its focus on improving the competitiveness of both the San Ciprián refinery and smelter, while progressing the process for the potential sale of the complex. Alcoa completed the restart of approximately 6 percent of pots at the San Ciprián smelter in the first quarter of 2024, in compliance with the February 2023 updated viability agreement.
Previous report
Improving the competitiveness of the complex is dependent on finding competitive energy for both the smelter and refinery. While electricity and gas prices have declined since the global energy crisis in 2022, power prices remain uneconomical due to (i) a lack of material indirect carbon dioxide cost compensation from the Spanish government; (ii) substantial transmission costs; and (iii) permitting delays and adjustments to renewable power generation projects associated with two long-term power purchase agreements with renewable energy providers that Alcoa entered into in 2022. Additionally, Alcoa initiated a process for the potential sale of the complex during the first quarter of 2024 which is expected to conclude in the second half of 2024. Any long-term solution for the complex requires the support of the government and workers’ representatives.
Previous report
Lower restructuring charges
Previous report
Favorable equity earnings
Previous report
Increased interest expense
Previous report
Net income (loss) attributable to Alcoa Corporation was $(232) in the six-month period of 2024 compared with $(333) in the six-month period of 2023. The favorable change of $101 is primarily a result of:
Previous report
Unfavorable currency revaluation impacts
Previous report
Sales increased $307 primarily as a result of:
Previous report
Higher shipments of aluminum
Previous report
Higher volumes and price from bauxite offtake and supply agreements
Previous report
Lower shipments of alumina
Previous report
Sales increased $151 primarily as a result of:
Previous report
Lower trading activities
Previous report
Lower production costs primarily in the Aluminum segment
Previous report
Higher energy costs primarily due to unfavorable natural gas prices
Previous report
Depreciation increased $2 primarily as a result of:
Previous report
Depreciation increased $18 primarily as a result of:
Previous report
Other (income) expenses, net
Previous report
Other (income) expenses, net was $37 in the six-month period of 2024 compared with $60 in the six-month period of 2023. The favorable change of $23 was primarily a result of:
Previous report
$8 for Wenatchee take-or-pay energy contract
Previous report
In the first quarter of 2024, Restructuring and other charges, net of $202 primarily related to:
Previous report
$197 for the curtailment of the Kwinana refinery
Previous report
$4 for Wenatchee take-or-pay energy contract
Previous report
In the six-month period of 2024, Restructuring and other charges, net of $220 primarily related to:
Previous report
$12 for Wenatchee take-or-pay energy contract
Previous report
In the six-month period of 2023, Restructuring and other charges, net of $173 primarily related to:
Previous report
Provision for (benefit from) income taxes
Previous report
The change is primarily a result of lower restructuring costs, favorable mark-to-market results on derivative instruments, and higher average realized price of alumina, partially offset by higher production costs and higher taxes.
Previous report
The change is primarily a result of higher restructuring costs, higher elimination of intercompany profit in inventory, and higher production costs, partially offset by higher average realized price of alumina, lower raw material and energy costs, and favorable mark-to-market results on derivative instruments.
Previous report
Alumina production decreased 2% primarily as a result of:
Previous report
Third-party sales increased $49 primarily as a result of:
Previous report
Higher average realized price of $27/ton principally driven by a higher average API
Previous report
Higher volumes and price from bauxite offtake and supply agreements
Previous report
Increased trading activity
Previous report
Third-party sales increased $220 primarily as a result of:
Previous report
Higher average realized price of $18/ton principally driven by a higher average API
Previous report
Intersegment sales increased $62 primarily as a result of:
Showing the first 40 of 59 passages. Open the source sections for the rest.
Reworded paragraphs (69)
Previous wording
Alcoa continued to progress the acquisition of Alumina Limited during the second quarter of 2024 and announced the completion of the acquisition on August 1, 2024. The acquisition is intended to enhance Alcoa’s position as a leading pure play, upstream aluminum company globally, while simplifying the Company’s corporate structure and governance, resulting in greater operational and financial flexibility and strategic optionality.
Current wording
Alcoa completed the acquisition of Alumina Limited on August 1, 2024. The acquisition enhances Alcoa’s position as a leading pure play, upstream aluminum company globally, while simplifying the Company’s corporate structure and governance, resulting in greater financial flexibility and strategic optionality.
Previous wording
Additionally, Alcoa continued to execute initiatives to further enhance its operations and reduce controllable costs. The Company’s smelters in Canada and Norway set year-to-date production records, and the Alumar smelter established stability and increased operating capacity to approximately 72 percent. The full curtailment of the Kwinana refinery in Australia was completed in June 2024, as planned.
Current wording
The Company continued to execute initiatives to further enhance its operations and reduce controllable costs during the third quarter of 2024. The Mosjøen smelter (Norway) and the Company’s smelters in Canada set year-to-date production records, while the Alumar smelter steadily improved stability and increased operating capacity to approximately 76 percent at September 30, 2024.
Previous wording
At closing, Alumina Shares outstanding of 2,760,056,014 and 141,625,403 were exchanged for 78,772,422 and 4,041,989 shares of Alcoa common stock and Alcoa preferred stock, respectively. Based on Alcoa’s closing share price as of July 26, 2024, the Agreed Ratio implies a value of A$1.45 per Alumina Share and aggregate purchase consideration of approximately $2,800 for Alumina Limited.
Current wording
At closing, Alumina Shares outstanding of 2,760,056,014 and 141,625,403 were exchanged for 78,772,422 and 4,041,989 shares of Alcoa common stock and Alcoa preferred stock, respectively. Based on Alcoa’s closing share price as of July 31, 2024, the Agreed Ratio implied a value of A$1.45 per Alumina Share and aggregate purchase consideration of approximately $2,700 for Alumina Limited.
Previous wording
As of March 2024, the refinery had approximately 780 employees and this number will be reduced to approximately 250 in the third quarter of 2024 to manage certain processes that will continue until about the third quarter of 2025. At that time, the employee number will be further reduced to approximately 50.
Current wording
As of March 2024, the refinery had approximately 780 employees and this number was reduced to approximately 300 in the third quarter of 2024 to manage certain processes that are expected to continue into 2025. At that time, the employee number will be further reduced to approximately 50.
Previous wording
The refinery and smelter incurred substantial losses in the first half of 2024 and in prior years, which have been funded with internal credit lines that are nearing their limits and for which the operations have no ability to repay. The operations have approximately $100 of available funding with cash on hand and availability under internal credit lines. Although aluminum and alumina prices improved during the first half of 2024, the San Ciprián complex remains unviable based on current and forward market assumptions for delivered energy in Spain and sales prices. While the Company had restricted cash of $86 remaining at June 30, 2024 (see Aluminum below) to be made available for capital improvements at the site and smelter restart costs, the workers’ representatives have rejected the use of this cash to fund operating losses at the smelter. Based on current economic conditions, and barring reaching an acceptable outcome on either achieving economic viability or completing a sale of the complex, the San Ciprián operations are expected to incur losses in 2024 and Alcoa anticipates that available funding will be exhausted by the end of 2024. At that point, Alcoa will not provide additional funding and difficult decisions will have to be considered regarding the future of the San Ciprián complex.
Current wording
The refinery and smelter incurred substantial losses in the nine months of 2024 and in prior years, which have been funded with internal credit lines that are nearing their limits and for which the operations have no ability to repay. The operations have approximately $60 of available funding with cash on hand and availability under internal credit lines. Although aluminum and alumina prices have improved during 2024, the San Ciprián complex remains unviable based on current and forward market assumptions for delivered energy in Spain and sales prices. While the Company had restricted cash of $86 remaining at September 30, 2024 (see Aluminum below) to be made available for capital improvements at the site and smelter restart costs, the workers’ representatives have rejected the use of this cash to fund operating losses at the smelter. Based on economic conditions as of September 30, 2024, the San Ciprián operations are expected to incur losses in 2024 and barring finalizing a partnership agreement with IGNIS EQT, Alcoa anticipates that available funding will be exhausted by the end of 2024.
Previous wording
During the first quarter 2024, the Company completed the restart of one potline (54,000 mtpy) at its Warrick Operations site in Indiana that began in October 2023, and incurred restart expenses of $3.
Current wording
During the first quarter of 2024, the Company completed the restart of one potline (54,000 mtpy) at its Warrick Operations site in Indiana that began in October 2023, and incurred restart expenses of $3.
Previous wording
The Company paid a quarterly cash dividend of $0.10 per share of the Company’s common stock in June 2024, totaling $18.
Current wording
The Company paid a quarterly cash dividend of $0.10 per share of the Company’s common stock (including common stock underlying CDIs) and Series A convertible preferred stock in August 2024, totaling $26.
Previous wording
Net income (loss) attributable to Alcoa Corporation was $20 in the second quarter of 2024 compared with $(252) in the first quarter of 2024. The favorable change of $272 is primarily a result of:
Current wording
Net income (loss) attributable to Alcoa Corporation was $90 in the third quarter of 2024 compared with $20 in the second quarter of 2024. The favorable change of $70 is primarily a result of:
Previous wording
Cost of goods sold as a percentage of sales decreased 2% primarily as a result of:
Current wording
Cost of goods sold as a percentage of sales decreased 6% primarily as a result of:
Previous wording
Selling, general administrative, and other expenses increased $9 in comparison to the first quarter of 2024 and increased $23 in comparison to the six-month period of 2023. Both the sequential and year-to-date increases are primarily a result of higher labor costs.
Current wording
Selling, general administrative, and other expenses decreased $3 in comparison to the second quarter of 2024 primarily due to lower labor costs. Selling, general administrative, and other expenses increased $33 as compared to the nine-month period of 2023 primarily as a result of higher labor costs.
Previous wording
Higher depreciation due to the write off of assets for projects no longer being pursued
Current wording
Lower depreciation due to the absence of write off of assets for projects no longer being pursued
Previous wording
Interest expense increased $13 in comparison to the first quarter of 2024 and increased $14 in comparison to the six-month period of 2023. Both the sequential and year-to-date increases are primarily a result of additional interest on the $750 7.125% Senior Notes issued in March 2024.
Current wording
Interest expense increased $4 in comparison to the second quarter of 2024 and increased $32 in comparison to the nine-month period of 2023. The sequential increase is primarily a result of the assumption of Alumina Limited’s revolving credit facility. The year-to-date increase is a result of the interest incurred on the $750 7.125% Senior Notes issued in March 2024 and the Alumina Limited revolving credit facility.
Previous wording
Other (income) expenses, net was $(22) in the second quarter of 2024 compared with $59 in the first quarter of 2024. The favorable change of $81 was primarily a result of:
Current wording
Other expenses (income), net was $12 in the third quarter of 2024 compared with $(22) in the second quarter of 2024. The unfavorable change of $34 was primarily a result of:
Previous wording
Favorable mark-to-market results on derivative instruments due to higher power prices in the current quarter
Current wording
Unfavorable mark-to-market results on derivative instruments due to lower power prices in the current quarter
Previous wording
Decrease in equity losses from the Ma’aden bauxite and alumina joint venture primarily due to lower raw material and production costs, and higher alumina prices
Current wording
Decrease in equity income from the Ma’aden aluminum joint venture primarily due to higher raw material and production costs
Previous wording
Unfavorable currency revaluation impacts primarily due to losses recognized in the current quarter due to the U.S. dollar strengthening against the Brazilian real, partially offset by the absence of gains recognized in the first quarter due to the U.S. dollar strengthening against the Norwegian krone
Current wording
Favorable currency revaluation impacts primarily due to absence of losses recognized in the second quarter due to the U.S. dollar strengthening against the Brazilian real, partially offset by gains in the current quarter due to U.S dollar weakening against the Brazilian real
Previous wording
Increase in equity income from the Ma’aden aluminum joint venture primarily due to higher aluminum prices
Current wording
Increase in equity income from the Ma’aden bauxite and alumina joint venture primarily due to higher shipments and higher alumina prices
Previous wording
Mark-to-market results on derivative instruments primarily due to higher power prices in the current year
Current wording
Favorable mark-to-market results on derivative instruments primarily due to higher power prices in the current year
Previous wording
Decrease in equity losses from the Ma’aden bauxite and alumina joint venture primarily due to higher shipments, higher alumina prices, and lower production costs
Current wording
Decrease in equity losses from the Ma’aden bauxite and alumina joint venture primarily due to higher alumina prices, higher shipments and lower production costs
Previous wording
The Provision for income taxes in the second quarter of 2024 was $61 on income before taxes of $92 or 66.3%. In comparison, the first quarter of 2024 Benefit from income taxes was $(18) on a loss before taxes of $(325) or 5.5%.
Current wording
The Provision for income taxes in the third quarter of 2024 was $86 on income before taxes of $184 or 46.7%. In comparison, the second quarter of 2024 Provision for income taxes was $61 on income before taxes of $92 or 66.3%.
Previous wording
The decrease in tax expense of $31 is primarily attributable to lower income in the jurisdictions where taxes are paid.
Current wording
The increase in tax expense of $25 is primarily attributable to net higher income in the jurisdictions where taxes are paid.
Previous wording
The Provision for income taxes in the six-month period of 2024 was $43 on a loss before taxes of $(233) or (18.5)%. In comparison, the six-month period of 2023 Provision for income taxes was $74 on a loss before taxes of $(279) or (26.5)%.
Current wording
The Provision for income taxes in the nine-month period of 2024 was $129 on a loss before taxes of $(49) or (263.3)%. In comparison, the nine-month period of 2023 Provision for income taxes was $39 on a loss before taxes of $(507) or (7.7)%.
Previous wording
The increase in tax expense of $79 is primarily attributable to higher income in the jurisdictions where taxes are paid. Additionally, the Company had losses in jurisdictions where it maintains a full tax valuation allowance.
Current wording
The increase in tax expense of $90 is primarily attributable to net higher income in the jurisdictions where taxes are paid.
Previous wording
Net income (loss) attributable to noncontrolling interest was $11 in the second quarter of 2024 compared with $(55) in the first quarter of 2024. These amounts are entirely related to Alumina Limited’s 40% ownership interest in several affiliated operating entities. Alcoa will recognize Net income (loss) attributable to Noncontrolling interest through the closing of the Alumina Limited acquisition.
Current wording
Net income attributable to noncontrolling interest was $8 in the third quarter of 2024 compared with $11 in the second quarter of 2024. These amounts are entirely related to Alumina Limited’s 40% ownership interest in several affiliated operating entities prior to Alcoa’s acquisition of Alumina Limited on August 1, 2024.
Previous wording
Net income (loss) attributable to noncontrolling interest was $(44) in the six-month period of 2024 compared with $(20) in the six-month period of 2023. These amounts are entirely related to Alumina Limited’s 40% ownership interest in several affiliated operating entities. Alcoa will recognize Net income (loss) attributable to Noncontrolling interest through the closing of Alumina Limited acquisition.
Current wording
Net loss attributable to noncontrolling interest was $(36) in the nine-month period of 2024 compared with $(45) in the nine-month period of 2023. These amounts are entirely related to Alumina Limited’s 40% ownership interest in several affiliated operating entities prior to Alcoa’s acquisition of Alumina Limited on August 1, 2024.
Previous wording
Alcoa Corporation is a producer of bauxite, alumina, and aluminum products. The Company has two operating and reportable segments: (i) Alumina and (ii) Aluminum. Segment performance under Alcoa Corporation’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance is the Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) for each segment. The Company calculates Segment Adjusted EBITDA as Total sales (third-party and intersegment) minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; and Research and development expenses. Alcoa Corporation’s Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies. The CODM function regularly reviews the financial information, including Adjusted EBITDA, of these two operating segments to assess performance and allocate resources.
Current wording
Alcoa Corporation is a producer of bauxite, alumina, and aluminum products. The Company has two operating and reportable segments: (i) Alumina and (ii) Aluminum. Segment performance under Alcoa Corporation’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance reported to the CODM is the Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) for each segment. The Company calculates Segment Adjusted EBITDA as Total sales (third-party and intersegment) minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; and Research and development expenses. Alcoa Corporation’s Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies. The CODM function regularly reviews the financial information, including Adjusted EBITDA, of these two operating segments to assess performance and allocate resources.
Previous wording
Business Update. The average API of $392 per metric ton trended favorably compared to the prior quarter reflecting a 10% sequential increase.
Current wording
Business Update. The average API of $496 per metric ton trended favorably compared to the prior quarter reflecting a 27% sequential increase. Compared to the nine-month period of 2023, the average API trended favorably, reflecting a 20% increase year-over-year. The majority of third-party alumina sales are linked to the API and the favorable price trend has resulted in strong results for the segment.
Previous wording
In June 2024, Alcoa completed the full curtailment of the Kwinana refinery, as planned, which was announced in January 2024. As of March 2024, the refinery had approximately 780 employees and this number will be reduced to approximately 250 in the third quarter of 2024 to manage certain processes that will continue until about the third quarter of 2025. At that time, the employee number will be further reduced to approximately 50. In addition to the employees separating as a result of the curtailment, approximately 150 employees will either terminate through the productivity program announced in the third quarter of 2023 or redeploy to other Alcoa operations.
Current wording
In June 2024, Alcoa completed the full curtailment of the Kwinana refinery, as planned, which was announced in January 2024. As of March 2024, the refinery had approximately 780 employees and this number was reduced to approximately 300 in the third quarter of 2024 to manage certain processes that are expected to continue into 2025. At that time, the employee number will be further reduced to approximately 50. In addition to the employees separating as a result of the curtailment, approximately 250 employees have terminated through the productivity program announced in the third quarter of 2023 or redeployed to other Alcoa operations.
Previous wording
In the second quarter of 2024, Alcoa recorded restructuring charges of $8 related to the curtailment of the refinery including $6 for water management costs and $2 for contract terminations. In the first quarter of 2024, Alcoa recorded restructuring charges of $197 including $123 for water management costs, $41 for employee related costs, $15 for asset retirement obligations, $13 for take-or-pay contracts, and $5 for asset impairments. Related cash outlays of approximately $225 (which includes existing employee related liabilities and asset retirement obligations) are expected through 2025, with approximately $145 to be spent in 2024. The Company spent $22 and $24 against the reserve in the second quarter and six-month period of 2024, respectively.
Current wording
In the second quarter of 2024, Alcoa recorded restructuring charges of $8 related to the curtailment of the refinery including $6 for water management costs and $2 for contract terminations. In the first quarter of 2024, Alcoa recorded restructuring charges of $197 including $123 for water management costs, $41 for employee related costs, $15 for asset retirement obligations, $13 for take-or-pay contracts, and $5 for asset impairments. Related cash outlays of approximately $225 (which includes existing employee related liabilities and asset retirement obligations) are expected through 2025, with approximately $145 to be spent in 2024. The Company spent $72 and $96 against the reserve in the third quarter and nine-month period of 2024, respectively.
Previous wording
Capacity. The Alumina segment had a base capacity of 13,843 kmt with 3,204 kmt of curtailed refining capacity. In the second quarter of 2024, curtailed capacity increased 1,752 kmt due to the full curtailment of the Kwinana refinery (see above).
Current wording
Capacity. The Alumina segment had a base capacity of 13,843 kmt with 3,204 kmt of curtailed refining capacity. There was no change in curtailed capacity during the quarter.
Previous wording
Increased production at the San Ciprián refinery as the refinery was operating at 50 percent capacity in the six-month period of 2024 and 30 to 50 percent capacity in the six-month period of 2023
Current wording
Increased production at the San Ciprián refinery as the refinery was operating at 50 percent capacity in the nine-month period of 2024 and 30 to 50 percent capacity in the nine-month period of 2023
Previous wording
Higher average realized price of alumina
Current wording
Higher average realized price of $86/ton principally driven by a higher average API
Previous wording
Lower shipments of alumina primarily due to the full curtailment of the Kwinana refinery
Current wording
Lower shipments of alumina primarily due to the full curtailment of the Kwinana refinery and decreased trading activity, partially offset by increased sales of externally sourced alumina to satisfy certain customer contracts
Previous wording
Higher shipments of alumina primarily due to increased trading activity and sales of externally sourced alumina to satisfy certain customer commitments
Current wording
Higher shipments of alumina primarily due to increased sales of externally sourced alumina to satisfy certain customer commitments
Previous wording
Higher alumina shipments primarily due to the Warrick smelter restart
Current wording
Higher alumina shipments primarily due to the Alumar smelter and Warrick smelter restarts
Previous wording
Forward Look. For the third quarter of 2024 in comparison to the second quarter of 2024, the Alumina segment anticipates increased production costs related to lower bauxite grades in Australia.
Current wording
Forward Look. For the fourth quarter of 2024 in comparison to the third quarter of 2024, the Alumina segment anticipates higher shipments and lower production costs.
Previous wording
The Company expects total 2024 alumina production and shipments to remain unchanged from the prior projection, ranging between 9.8 and 10.0 million metric tons and between 12.7 and 12.9 million metric tons, respectively. The difference between production and shipments reflects trading volumes and externally sourced alumina to fulfill customer contracts due to the curtailment of the Kwinana refinery.
Current wording
Alcoa expects total 2024 Alumina segment production to remain unchanged from the prior projection, ranging between 9.8 and 10.0 million metric tons. The Company is increasing its projection for shipments to range between 12.9 and 13.1 million metric tons, an increase of 0.2 million metric tons from the prior projection primarily due to increased trading volumes. The difference between production and shipments reflects trading volumes and externally sourced alumina to fulfill customer contracts due to the curtailment of the Kwinana refinery.
Previous wording
Business Update. Aluminum prices increased sequentially with LME prices on a 15-day lag averaging $2,486 per metric ton in the second quarter of 2024.
Current wording
Business Update. Aluminum prices decreased sequentially with LME prices on a 15-day lag averaging $2,372 per metric ton in the third quarter of 2024.
Previous wording
During the second quarter of 2024, the Company resumed the controlled pace for the restart of the Alumar smelter and continued actions to improve the smelter’s overall performance, after the smelter experienced operational instability in the prior quarter. The site was operating at approximately 72 percent of the site’s total annual capacity of 268 kmt (Alcoa share) as of June 30, 2024.
Current wording
During the third quarter of 2024, the Company maintained the controlled pace for the restart of the Alumar smelter and continued actions to improve the smelter’s overall performance. The restart resumed in the prior quarter after the smelter experienced operational instability in the first quarter of 2024. The site was operating at approximately 76 percent of the site’s total annual capacity of 268 kmt (Alcoa share) as of September 30, 2024.
Previous wording
In March 2024, Alcoa completed the restart of approximately 6 percent of total pots at the San Ciprián smelter as required by the February 2023 updated viability agreement. The Company incurred restart expenses $2 during the six-month period of 2024. In connection with the December 2021 agreement and the February 2023 updated viability agreement, the Company has restricted cash of $86 remaining at June 30, 2024 to be made available for capital improvements at the site and smelter restart costs. The workers’ representatives have rejected the use of this cash to fund operating losses at the smelter.
Current wording
In March 2024, Alcoa completed the restart of approximately 6 percent of total pots at the San Ciprián smelter as required by the February 2023 updated viability agreement. The Company incurred restart expenses $4 during the nine-month period of 2024. In connection with the December 2021 agreement and the February 2023 updated viability agreement, the Company has restricted cash of $86 remaining at September 30, 2024 to be made available for capital improvements at the site and smelter restart costs. The workers’ representatives have rejected the use of this cash to fund operating losses at the smelter.
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Lower shipments of aluminum and alumina
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Higher average realized price of alumina
Previous report — wording carried elsewhere
Lower ELYSIS capital contributions, reducing loss recognition
Previous report — wording carried elsewhere
Alumina production decreased 5% primarily as a result of:
Previous report — wording carried elsewhere
During the second quarter of 2024, the Company resumed the controlled pace for the restart of the Alumar smelter and continued actions to improve the smelter’s overall performance, after the smelter experienced operational instability in the prior quarter. The site was operating at approximately 72 percent of the site’s total annual capacity of 268 kmt (Alcoa share) as of June 30, 2024.