Alcoa Corp

Alcoa Corporation operates as a vertically integrated aluminum company, encompassing bauxite mining, alumina refining, aluminum smelting and casting, and energy generation ¹. The company's operations span 25 locations across eight countries on five continents, with primary presence in Australia, Brazil, Canada, Iceland, Norway, Spain, and the United States ¹. The prices of both aluminum, traded on the London Metal Exchange (LME), and alumina, subject to market pricing through the Alumina Price Index (API), are highly volatile and significantly influence Alcoa's operating results ¹.

Alcoa's business model is centered on extracting bauxite, refining it into alumina, and then smelting alumina into aluminum metal, which is subsequently cast into various shapes and forms for global customers ¹. The company generates revenue from the sale of smelter-grade and non-metallurgical alumina, as well as commodity-grade and value-add primary aluminum ingot products ¹. A significant portion of the alumina produced is consumed internally by Alcoa's own aluminum smelters, which accounted for approximately 34 percent of its total alumina shipments in 2025 ¹. The company also sells bauxite to third-party customers ¹.

The Alumina segment primarily consists of Alcoa's bauxite mines and alumina refineries, focusing on the mining of bauxite and other aluminous ores, and the refining, production, and sale of smelter-grade and non-metallurgical alumina ¹. In 2025, Alcoa-operated mines produced 33.0 million dry metric tons (mdmt) of bauxite, and mines operated by partnerships produced 4.5 mdmt of bauxite on a proportional equity basis, totaling 37.5 mdmt of company bauxite production ¹. The segment had access to 43.2 mdmt of production from its bauxite interests and agreements, selling 10.0 mdmt to third parties and delivering 33.2 mdmt to its own refineries ¹. Alcoa's alumina refining facilities had a total consolidated capacity of 11,653,000 metric tons per year (mtpy) as of December 31, 2025, with approximately 1,014,000 mtpy of idle capacity ¹. Third-party alumina sales for the Alumina segment were $3,710 million in 2025, with intersegment alumina sales of $2,110 million ¹. The average realized third-party price per metric ton of alumina was $415 in 2025 ¹.

The Aluminum segment comprises Alcoa's worldwide smelting and casthouse system and a portfolio of energy assets in Brazil, Canada, and the United States ¹. This segment produces molten primary aluminum, which is cast into commodity-grade or value-add ingot products, almost all of which are sold to external customers and traders ¹. As of December 31, 2025, Alcoa's global smelting consolidated capacity was 2,645,000 mtpy, with approximately 196,000 mtpy of idle capacity ¹. In 2025, Alcoa generated approximately 11 percent of the power used at its smelters worldwide ¹. Third-party aluminum sales for the Aluminum segment were $8,515 million in 2025, with intersegment sales of $20 million ¹. The average realized third-party price per metric ton of aluminum was $3,376 in 2025 ¹.

For the fiscal year ended December 31, 2025, Alcoa reported total sales of $12,831 million ², an increase from $11,895 million in 2024 ². Cost of goods sold was $10,658 million ². Selling, general administrative, and other expenses were $299 million ². Research and development expenses totaled $24 million ². Provision for depreciation, depletion, and amortization was $623 million ². The company recognized an impairment of goodwill of $144 million ². Restructuring and other charges, net, amounted to $918 million ². Interest expense was $158 million ². Other (income) expenses, net, was a favorable ($1,057) million ². Income before income taxes was $1,064 million ². The company reported a benefit from income taxes of ($55) million ². Net income was $1,119 million ², with a net loss attributable to noncontrolling interest of ($38) million ², resulting in net income attributable to Alcoa Corporation of $1,157 million ². Diluted income per share attributable to Alcoa Corporation common shareholders was $4.37 ². Cash and cash equivalents were $1,597 million ³. Total long-term debt, including current portion, was $2,439 million ⁴.

Comparing 2025 to 2024, total sales increased by $936 million ⁵, driven by a higher average realized price of aluminum and increased volumes and price from bauxite offtake and supply agreements, partially offset by a lower average realized price of alumina and lower aluminum shipments due to the absence of volumes from a joint venture supply agreement ⁵. Net income attributable to Alcoa Corporation increased by $1,097 million ⁵. The average realized price per metric ton of alumina decreased from $472 in 2024 to $415 in 2025 ², while the average realized price per metric ton of aluminum increased from $2,841 in 2024 to $3,376 in 2025 ². Alumina production decreased by 4 percent ¹ and third-party alumina shipments decreased from 9,005 kmt in 2024 to 8,829 kmt in 2025 ². Aluminum production increased by 5 percent ¹, while total aluminum shipments decreased from 2,590 kmt in 2024 to 2,522 kmt in 2025 ².

During 2025, Alcoa completed the sale of its 25.1% ownership interest in the Saudi Arabia joint venture for a total consideration of $1,350 million, comprising 85,977,547 shares of Ma'aden valued at $1,200 million and $150 million in cash ¹. The company announced the permanent closure of the Kwinana alumina refinery in Australia, which had been fully curtailed since June 2024 ¹. Alcoa formed a joint venture with Trento Equity Holdings, S.L.U. (Trento EQT) for the San Ciprián complex in Spain, with Alcoa owning 75% and Trento EQT owning 25% ¹. The San Ciprián smelter restart progressed to approximately 65 percent of its annual capacity of 228,000 mtpy by December 31, 2025, with full restart expected by mid-2026 ¹. The company also achieved annual production records at five aluminum smelters and one alumina refinery ¹. In March 2025, Alumina Pty Ltd issued $500 million aggregate principal amount of 6.125% Senior Notes due 2030 and $500 million aggregate principal amount of 6.375% Senior Notes due 2032 ¹. Concurrently, Alcoa Nederland Holding B.V. (ANHBV) settled cash tender offers for $609 million of its 5.500% Senior Notes due 2027 and $281 million of its 6.125% Senior Notes due 2028 ¹. In December 2025, ANHBV redeemed the remaining $141 million aggregate principal amount of the 2027 Notes ¹.

Alcoa expects its Alumina segment to produce between 9.7 million and 9.9 million metric tons of alumina in 2026, representing an increase from 2025 due to anticipated productivity improvements ¹. Alumina shipments for 2026 are projected to be between 11.8 million and 12.0 million metric tons ¹. The Aluminum segment forecasts aluminum production to range between 2.4 million and 2.6 million metric tons and aluminum shipments to range between 2.6 million and 2.8 million metric tons in 2026 ¹. The company notes that the availability of trading opportunities in 2026 may influence its shipment projection ¹.

A key growth area for the company is the continued restart of the San Ciprián smelter in Spain, which was operating at approximately 65 percent of its total annual capacity of 228,000 metric tons as of December 31, 2025 ¹. The company expects this restart to be completed by mid-2026 ¹. Additionally, Alcoa has entered into a new ten-year contract for renewable energy with the New York Power Authority (NYPA) for its Massena West smelter, effective April 1, 2026, with options for two additional five-year extensions ¹. This contract is supported by a capital investment of approximately $60 million in the Massena facility's anode baking furnace ¹.

Another significant growth vector is the advancement of ELYSIS Limited Partnership (ELYSIS), a joint venture with Rio Tinto Alcan Inc. and Investissement Québec, focused on developing and commercializing patent-protected technology that eliminates direct greenhouse gas emissions from aluminum smelting ¹. In November 2025, ELYSIS successfully started the first 450 kiloamperes (kA) inert anode cell at Rio Tinto's Alma smelter in Québec, Canada, marking a key milestone for potential large-scale commercialization ¹. The target for first production from this technology is expected by 2027 ¹. Alcoa has the right to purchase up to 40 percent of the metal produced from the industrial-scale demonstration, allowing its customers to benefit from this carbon-free electrolytic process early in its development cycle ¹.

Operationally, the Aluminum segment anticipates increases in 2026 related to the full-year impact of tariffs on Midwest premium revenue and tariff costs on U.S. imports of aluminum from Canada ¹. These tariffs were subject to a 25 percent rate beginning March 12, 2025, and increased to 50 percent on June 4, 2025, under U.S. Section 232 ¹. Furthermore, the Aluminum segment expects higher production costs in 2026 associated with the restart of the San Ciprián smelter ¹. The Alumina segment expects lower sales from bauxite offtake and supply agreements in 2026 ¹.

The company projects capital expenditures of approximately $750 million in 2026, allocated as $675 million for sustaining capital projects and $75 million for return-seeking capital projects ¹. If technology research and development projects prove feasible with acceptable expected rates of return, capital expenditures for return-seeking projects would increase significantly over the next several years ¹. The company has a common stock repurchase program with $500 million remaining available for repurchase as of December 31, 2025 ¹. Alcoa intends to pay quarterly cash dividends of $0.10 per share ¹.

Management explicitly flagged several structural headwinds and execution risks. The company expects bauxite quality in Western Australia to remain similar to recent lower grades until mining commences in new major mine regions (Myara North and Holyoake) no earlier than 2029 ¹. This prolonged approval process for mine plans has already impacted the company's refineries and cost structures by increasing the use of caustic, energy, and bauxite, and decreasing alumina output ¹. The company is committed to working collaboratively with stakeholders to achieve Ministerial decisions on these mine approvals by the end of 2026 ¹. Additionally, the company entered into two enforceable undertakings with the Department of Climate Change, Energy, the Environment and Water (DCCEEW) related to mining activities at the Huntly mine from 2019 to 2025, requiring a total of $36 million (A$55 million) for environmental offsets and conservation programs ¹. A charge of $27 million (A$40 million) was included in Cost of goods sold in 2025 to increase existing environmental reserves for this matter, with associated cash outlays expected in 2026 ¹.

Alcoa faces significant risks from the highly cyclical nature of the aluminum industry and its end-use markets, which are influenced by global economic conditions, including inflationary and recessionary pressures, and the Chinese market dynamics ¹. Volatility and declines in aluminum and alumina demand and prices, including LME prices, regional premiums, and product premiums, could materially adversely affect profitability ¹. The company is exposed to geopolitical risks such as political instability, sanctions, and changes to import/export regulations in countries like Australia, Brazil, Canada, Europe, and Guinea, which could disrupt operations or increase costs ¹. Operational and profitability impacts can arise from rising energy costs and interruptions in energy supplies, as seen with the San Ciprián refinery and smelter due to high natural gas costs ¹. The company also faces risks from unfavorable changes in the cost, quality, or availability of raw materials like carbon products, caustic soda, and bauxite, or supply chain disruptions ¹. For example, mining lower-grade bauxite in Western Australia has increased production costs ¹. Legal and regulatory risks, including changes in tax laws (such as the progressive phase-out of Section 45X credits beginning in 2031 under the One Big Beautiful Bill Act ¹) and environmental regulations like the EU's Corporate Sustainability Reporting Directive (CSRD) and Australia's climate-related financial disclosures, could lead to increased costs, liabilities, and reputational harm ¹. Cybersecurity threats, including sophisticated attacks and system failures, pose risks to information integrity, operational continuity, and could result in significant remediation costs and reputational damage ¹. Labor disputes, such as ongoing collective bargaining negotiations at the Bécancour (ABI) smelter in Québec, Canada, and the San Ciprián refinery and smelter in Spain, could adversely affect production and financial results ¹.

Management's message to shareholders emphasizes a disciplined approach to creating stockholder value by leveraging assets, capitalizing on long-term market fundamentals, and adhering to disciplined growth and capital allocation strategies. The company aims to maintain operational stability while strategically managing its asset portfolio to maximize profitability, including advancing Australia mine approvals to unlock value from mine transitions in future periods and improving the long-term outlook for the San Ciprián complex ¹. Management also seeks to maintain a strong balance sheet through monetization of non-operating assets and further reductions in total debt, while evaluating value-creating growth opportunities ¹. For 2026, the Alumina segment is expected to produce between 9.7 million and 9.9 million metric tons of alumina and ship between 11.8 million and 12.0 million metric tons ¹. The Aluminum segment forecasts production between 2.4 million and 2.6 million metric tons and shipments between 2.6 million and 2.8 million metric tons ¹. Capital expenditures for 2026 are projected to be approximately $750 million, with $675 million for sustaining projects and $75 million for return-seeking projects ¹. The three strategic priorities highlighted are Safety Performance and Operational Excellence, Building a High-Performance Culture, and Disciplined Capital Allocation and Growth ¹.