Alcoa Corp: Form 10-Q for the period ended Jun 30, 2025

(dollars in millions, except per-share amounts, average realized prices, and average cost amounts; metric tons in thousands (kmt); dry metric tons in millions (mdmt))

Business Update

During the second quarter of 2025, Alcoa continued to execute on its strategic priorities while maintaining strong operational performance, which included progressing the sale of the Company’s full ownership interest in the joint venture with Saudi Arabian Mining Company (Ma’aden) and successfully concluding a five-year tax dispute in Australia with a favorable ruling for the Company. Additionally, Alcoa maintained advocacy efforts with policy makers regarding the impacts of U.S. tariffs.

On March 12, 2025, the United States government imposed a 25% tariff on certain aluminum imports from Canada under Section 232 of the Trade Expansion Act of 1962 (Section 232) which increased to a 50% tariff on June 4, 2025. Prior to March 12, 2025, the Section 232 tariff was 10%, and Canadian metal imported into the U.S. was exempted. Historically, approximately 70% of the aluminum Alcoa produced in Canada was shipped to U.S. customers, with the majority associated with annual customer contracts.

During the second quarter of 2025, the Company redirected certain Canadian production to customers outside the U.S. to mitigate additional tariff costs. Approximately 30% of the Company’s Canadian aluminum production is available for spot sales, and a portion of this production historically imported into the U.S. can be redirected when economically favorable. Additionally, Alcoa continued to maintain active engagement with administrations, governments, and policy makers, primarily in the U.S. and Canada, regarding the impacts of tariffs.

San Ciprián Operations

Following the formation of the joint venture with IGNIS Equity Holdings, SL (IGNIS EQT) on March 31, 2025 (described below), Alcoa resumed the restart of the San Ciprián smelter that had been operating approximately 6 percent of total pots since March 2024. The restart was paused on April 28, 2025, following a widespread power outage across Spain, until the Spanish government could provide sufficient details on the cause of the power outage and the measures being taken to prevent a reoccurrence. On July 14, 2025, Alcoa and IGNIS EQT announced the restart would resume. The announcement was made after reviewing the Spanish government’s report on the circumstances that caused the power outage, and the planned measures and investments aimed at providing improved grid resilience, and receiving assurances from the Spanish government that it will continue to promote measures to provide reliable and competitive energy. The Company expects that the restart will be completed by mid-2026.

On March 31, 2025, Alcoa and IGNIS EQT entered into a joint venture agreement whereby Alcoa owns 75% and continues as the managing operator and IGNIS EQT owns 25% of the San Ciprián operations. Alcoa and IGNIS EQT contributed $81 (€75) and $27 (€25), respectively, to form the joint venture. Additionally, up to approximately $117 (€100) may be funded by Alcoa as needed for operations with a priority position in future cash returns. Further funding requires agreement by both partners and would be shared 75% by Alcoa and 25% by IGNIS EQT.

The transaction was accounted for as an equity transaction where IGNIS EQT’s noncontrolling interest was reflected as a decrease to Additional capital on the accompanying Consolidated Balance Sheet. Under the terms of the joint venture agreement, IGNIS EQT has a put option whereby IGNIS EQT can require Alcoa Corporation to purchase from IGNIS EQT its 25% interest at the then fair market value upon certain change in control provisions. Alcoa classified the Noncontrolling interest within Mezzanine equity on the Consolidated Balance Sheet, as IGNIS EQT’s redemption of the put option is not solely within the Company’s control. Net loss attributable to noncontrolling interest was $13 in the second quarter of 2025.

Saudi Arabia Joint Venture

On July 1, 2025, Alcoa completed the sale of its full ownership interest of 25.1% in the Saudi Arabia joint venture, comprised of the Ma’aden Bauxite and Alumina Company (MBAC) and the Ma’aden Aluminium Company (MAC), to Ma’aden in exchange for total consideration of $1,350, comprised of 85,977,547 shares of Ma’aden (valued at $1,200 (SAR 4,501) as of closing) and $150 (SAR 562) in cash (to be used primarily for related taxes and transaction costs). The carrying value of Alcoa’s investment was $546 as of June 30, 2025. In the third quarter of 2025, Alcoa will recognize a gain of approximately $780 and subsequent changes in fair value of the shares within Other (income) expenses, net.

Australia Tax Decision

On April 30, 2025, the Administrative Review Tribunal of Australia (ART) issued its decision related to the proceedings Alcoa of Australia Limited (AofA) filed against the Australian Taxation Office (ATO) in April 2022 to contest the Notices of Assessment issued by the ATO in July 2020 related to transfer pricing of certain historic third-party alumina sales. The ART decided that no additional tax is owed, consistent with Alcoa’s long-held position related to this matter.

In accordance with the ATO’s dispute resolution practices, AofA paid 50% of the assessed income tax amount exclusive of interest and any penalties, or approximately $74 (A$107), during the third quarter 2020. Interest on the unpaid tax was accrued through the decision date, which, along with the initial interest assessment, was deductible against taxable income by AofA. AofA applied this deduction beginning in the third quarter of 2020 through the decision date, resulting in reductions in cash tax payments.

The ATO did not appeal the ART’s decision, and the disputed tax claims (and additional related interest and penalties) have been withdrawn. With the withdrawal of the ATO’s claims, the prepaid tax asset and related interest of $78 (A$120) were refunded to AofA in July 2025, and accrued cash taxes of $225 (A$346) related to the interest deductions are payable by AofA by June 1, 2026. The net cash impact of both the refunded amount and the accrued cash taxes is approximately $147 (A$226) through June 2026.

Australia Mine Plan Approvals

On May 29, 2025, the Western Australian Environmental Protection Authority (WA EPA) opened a 12-week public comment period on the Company’s two mine plans in Western Australia, which include the plan for the next major mine regions (Myara North and Holyoake) and the rolling five-year mine plans (2022-2027) referred to the WA EPA by a third party in 2023. Following this public consultation period and the Company’s response to any clarifications requested by the WA EPA, the Company expects that the WA EPA will publish its assessment and recommendations. An appeals process of the assessment and recommendations will follow before Ministerial decisions are finalized.

The Ministerial decisions were expected by the first quarter of 2026 per the indicative timeline the WA EPA set in the third quarter of 2024. From both the Company’s and the WA EPA’s perspective, the indicative timeline is no longer achievable primarily due to the complexity related to advancing both mine approvals, the extensive documentation provided by the Company and independent experts, and the additional work expected in summarizing and responding to submissions received in the public comment period. Following the public consultation, the Company expects that a revised indicative timeline will be published. The Company is committed to continuing to work collaboratively with the WA EPA and other stakeholders to achieve Ministerial decisions as early as possible in 2026. The Company has multiple contingency plans and expects to access bauxite similar to recent grades until the Company can transition to the new mine regions.

Debt Repositioning

In March 2025, Alumina Pty Ltd, a wholly-owned subsidiary of Alcoa Corporation, completed Rule 144A (U.S. Securities Act of 1933, as amended) debt issuances of $500 aggregate principal amount of 6.125% Senior Notes due 2030 (the 2030 Notes) and $500 aggregate principal amount of 6.375% Senior Notes due 2032 (the 2032 Notes, and, collectively with the 2030 Notes, the Notes). The net proceeds of these issuances were $985, reflecting a discount to the initial purchasers of the Notes as well as issuance costs. The Company utilized certain proceeds of these transactions to fund contributions to Alcoa Nederland Holding B.V. (ANHBV), a wholly-owned subsidiary of Alcoa Corporation and the issuer of the outstanding $750 aggregate principal amount of 5.500% Notes due 2027 (the Existing 2027 Notes) and $500 aggregate principal amount of 6.125% Notes due 2028 (the Existing 2028 Notes). These contributions were funded through a series of intercompany transactions, including the repayment of intercompany indebtedness and the issuance of intercompany dividends. ANHBV used such funds, along with cash on hand, to fund the purchase price pursuant to the cash tender offers announced and settled in March 2025, including premiums and transaction costs. The net proceeds also support Alcoa’s general corporate purposes.

In March 2025, ANHBV announced and settled cash tender offers which resulted in the tender and acceptance of $609 of the $750 aggregate principal amount of Existing 2027 Notes and $281 of the $500 aggregate principal amount of Existing 2028 Notes for purchase. The issuance of the 2030 Notes and 2032 Notes and the cash tender of the Existing 2027 Notes and Existing 2028 Notes were determined to be issuances of new debt and extinguishments of existing debt. As a result, the Company incurred $12 of debt settlement expenses in the first quarter of 2025 in Interest expense, which was comprised of the settlement premiums, transaction costs, and the write-off of unamortized discounts and deferred financing costs.

Other Matters

The Company is actively engaged in negotiations related to the following collective bargaining agreements:

• The three collective bargaining agreements with le Syndicat des Métallos (FTQ) representing approximately 1,000 hourly employees at the Bécancour smelter in Québec, Canada that expired on July 19, 2025;
• The collective bargaining agreement with the Australian Workers Union (AWU) representing approximately 400 hourly employees at the Portland, Australia smelter that expired on June 30, 2025. The AWU did not accept the latest offer, proposed by the Company on July 25, 2025, and elected to undertake protected industrial action in the form of a 48-hour work stoppage beginning August 5, 2025. While negotiations continue, the Company has contingency plans to maintain safety and minimize operating disruptions at the Portland smelter if the industrial action were to occur; and,
• The collective bargaining agreement with the Starfsgreinafélag Islands (AFL) and the Rafiðnaðarsamband Íslands (RSÍ) representing approximately 400 hourly employees at the Fjarðaál, Iceland smelter that expired on February 28, 2025.

See the below sections for additional details on the above-described actions.

Results of Operations

The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the quarterly and year-to-date periods outlined in the table below.

Selected Financial Data:

(1) API (Alumina Price Index) is a pricing mechanism that is calculated by the Company based on the weighted average of a prior month’s daily spot prices published by the following three indices: CRU Metallurgical Grade Alumina Price; Platts Metals Daily Alumina PAX Price; and FastMarkets Metal Bulletin Non-Ferrous Metals Alumina Index.

(2) LME (London Metal Exchange) is a globally recognized exchange for commodity trading, including aluminum. The LME pricing component represents the underlying base metal component, based on quoted prices for aluminum on the exchange.

Overview

Sequential period comparison

Net income (loss) attributable to Alcoa Corporation was $164 in the second quarter of 2025 compared with $548 in the first quarter of 2025. The unfavorable change of $384 is primarily a result of:

• Lower alumina and aluminum prices
• Tariffs on U.S. imports of aluminum from Canada

Partially offset by:

• Lower taxes on lower earnings
• Favorable mark-to-market results on derivative instruments

Year-to-date comparison

Net income (loss) attributable to Alcoa Corporation was $712 in the six-month period of 2025 compared with $(232) in the six-month period of 2024. The favorable change of $944 is primarily a result of:

• Higher aluminum and alumina prices
• Lower intersegment profit elimination
• Lower restructuring charges
• Favorable currency impacts
• Higher volumes and price from bauxite offtake and supply agreements
• Favorable mark-to-market results on derivative instruments

Partially offset by:

• Tariffs on U.S. imports of aluminum from Canada
• Higher taxes on higher earnings

Sales

Sequential period comparison

Sales decreased $351 primarily as a result of:

• Lower average realized price of alumina and aluminum

Partially offset by:

• Higher shipments of aluminum and alumina
• Favorable currency impacts

Year-to-date comparison

Sales increased $882 primarily as a result of:

• Higher average realized price of alumina and aluminum
• Higher volumes and price from bauxite offtake and supply agreements

Partially offset by:

• Lower shipments of alumina and aluminum

Cost of goods sold

Sequential period comparison

Cost of goods sold as a percentage of sales increased 16% primarily as a result of:

• Lower average realized price of alumina and aluminum
• Tariffs on U.S. imports of aluminum from Canada
• Higher production costs across both segments

Partially offset by:

• Lower average alumina input costs in the Aluminum segment

Year-to-date comparison

Cost of goods sold as a percentage of sales decreased 10% primarily as a result of:

• Higher average realized price of alumina and aluminum
• Lower intersegment profit elimination
• Higher volumes and price from bauxite offtake and supply agreements
• Favorable currency impacts

Partially offset by:

• Higher average alumina input costs in the Aluminum segment
• Tariffs on U.S. imports of aluminum from Canada

Selling, general administrative, and other expenses

Sequential period comparison

Selling, general administrative, and other expenses increased $11 primarily as a result of:

• Increased fees for professional services
• Unfavorable currency revaluation impacts

Year-to-date comparison

Selling, general administrative, and other expenses increased $24 primarily as a result of:

• Higher labor costs
• Increased fees for professional services
• Increased information technology services

Provision for depreciation, depletion, and amortization

Sequential period comparison

The Provision depreciation, depletion, and amortization increased $5 primarily as a result of:

• Unfavorable currency impacts

Year-to-date comparison

The Provision for depreciation, depletion, and amortization decreased $23 primarily as a result of:

• Favorable currency impacts
• Lower depreciation in Brazil for mine reclamation and bauxite residue storage asset retirement obligations
• Lower depreciation expense related to a group of assets reaching the end of their depreciable lives
• Lower amortization of mine development costs

Interest expense

Sequential period comparison

Interest expense increased $3 primarily as a result of:

• Interest on unfavorable value added tax assessments in Brazil
• Interest on $500 6.125% Senior Notes and $500 6.375% Senior Notes issued in March 2025

Partially offset by:

• Absence of interest and debt settlement expenses for the Existing 2027 Notes and Existing 2028 Notes extinguished in March 2025

Year-to-date comparison

Interest expense increased $42 primarily as a result of:

• Interest on $500 6.125% Senior Notes and $500 6.375% Senior Notes issued in March 2025
• Interest on unfavorable value added tax assessments in Brazil
• Interest on $750 7.125% Senior Notes issued in March 2024

Other (income) expenses, net

Sequential period comparison

Other (income) expenses, net was ($112) in the second quarter of 2025 compared with ($26) in the first quarter of 2025. The favorable change of $86 was primarily a result of:

• Favorable mark-to-market results on derivative instruments primarily due to changes in the euro foreign exchange rate and higher power prices in the current quarter
• Interest income on the refund owed to Alcoa from the ATO
• Increase in equity income from MAC primarily due to lower production costs partially offset by lower aluminum prices

Partially offset by:

• Increase in equity losses from MBAC primarily due to lower alumina prices and lower shipments
• Unfavorable currency revaluation impacts primarily due to absence of gains recognized in the first quarter of 2025 due to the U.S. dollar weakening against the Brazilian real and the Australian dollar, partially offset by gains in the current quarter due to the U.S. dollar weakening against the Brazilian real

Year-to-date comparison

Other (income) expenses, net was ($138) in the six-month period of 2025 compared with $37 in the six-month period of 2024. The favorable change of $175 was primarily a result of:

• Favorable currency revaluation impacts primarily due to the absence of losses recognized in the prior year due to the U.S. dollar strengthening against the Brazilian real and gains in the current year due to the U.S. dollar weakening against the Brazilian real, partially offset by losses in the current year due to the U.S. dollar weakening against the euro
• Favorable mark-to-market results on derivative instruments primarily due to changes in the euro foreign exchange rate partially offset by lower power prices in the current year
• Increase in equity income from MBAC primarily due to higher alumina prices, partially offset by lower shipments and higher production costs
• Absence of costs related to site separation commitments associated with the Warrick Rolling Mill sale
• Interest income on the refund owed to Alcoa from the ATO

Partially offset by:

• Increase in equity losses from MAC primarily due to higher alumina input costs, partially offset by higher aluminum prices
• Higher ELYSIS capital contributions, increasing loss recognition

Restructuring and other charges, net

Sequential period comparison

In the second quarter of 2025, Restructuring and other charges, net of $14 primarily related to:

• $20 to record net additional asset retirement obligation and environmental reserves at previously closed sites
• $6 for certain employee obligations related to the February 2023 updated viability agreement for the San Ciprián aluminum smelter

Partially offset by:

• ($12) net benefit for take-or-pay contract costs at previously closed sites

In the first quarter of 2025, Restructuring and other charges, net of $5 primarily related to:

• $3 for certain employee obligations related to the February 2023 updated viability agreement for the San Ciprián aluminum smelter
• $2 for take-or-pay contract costs at a previously closed site

Year-to-date comparison

In the six-month period of 2025, Restructuring and other charges, net of $19 primarily related to:

• $20 to record net additional asset retirement obligation and environmental reserves at previously closed sites
• $9 for certain employee obligations related to the February 2023 updated viability agreement for the San Ciprián aluminum smelter

Partially offset by:

• ($10) net benefit for take-or-pay contract costs at previously closed sites

In the six-month period of 2024, Restructuring and other charges, net of $220 primarily related to:

• $205 for the curtailment of the Kwinana alumina refinery
• $12 for take-or-pay contract costs at a previously closed site

Provision for income taxes

Sequential period comparison

The Provision for income taxes in the second quarter of 2025 was $10 on income before taxes of $161 or 6.2%. In comparison, the first quarter of 2025 Provision for income taxes was $120 on income before taxes of $668 or 18%.

The decrease in tax expense of $110 is primarily due to decreased income in certain jurisdictions where taxes are paid and the impact of the annualized effective tax rate when applied to current period earnings.

Year-to-date comparison

The Provision for income taxes in the six-month period of 2025 was $130 on income before taxes of $829 or 15.7%. In comparison, the six-month period of 2024 Provision for income taxes was $43 on a loss before taxes of $(233) or (18.5)%.

The increase in tax expense of $87 is primarily attributable to higher income in certain jurisdictions where taxes are paid.

Noncontrolling interest

Through August 1, 2024 when Alcoa completed the acquisition of Alumina Limited, Noncontrolling interest related to Alumina Limited’s 40% ownership interest in the AWAC joint venture. Upon completion of the acquisition by Alcoa, Alumina Limited and, as a result, ownership in the AWAC joint venture, became wholly-owned by Alcoa Corporation.

On March 31, 2025, Alcoa and IGNIS EQT entered into a joint venture agreement. Alcoa owns 75% and continues as the managing operator and IGNIS EQT owns 25% of the San Ciprián operations. Alcoa began recognizing earnings attributable to IGNIS EQT’s ownership interest within Noncontrolling interest in the second quarter of 2025.

Sequential period comparison

Net income (loss) attributable to noncontrolling interest was $(13) in the second quarter of 2025 and $0 in the first quarter of 2025.

Year-to-date comparison

Net income (loss) attributable to noncontrolling interest was $(13) in the six-month period of 2025 compared with $(44) in the six-month period of 2024.

Net income (loss) attributable to noncontrolling interest of $(13) in both the second quarter and six-month period of 2025 reflects losses incurred at the San Ciprián smelter and refinery. Net income (loss) attributable to noncontrolling interest of $(44) in the six-month period of 2024 was driven by restructuring costs partially offset by favorable average realized price of alumina.

Segment Information

Alcoa Corporation is a producer of bauxite, alumina, and aluminum products. The Company has two operating and reportable segments: (i) Alumina and (ii) Aluminum. The primary measure of performance is 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 Chief Operating Decision Maker regularly reviews Segment Adjusted EBITDA to assess performance and allocate resources.

Alumina

Business Update. The average API of $377 per metric ton decreased 38% compared to the prior quarter. Compared to the six-month period of 2024, the average API trended favorably, reflecting a 32% increase year-over-year.

On July 1, 2025, Alcoa completed the sale of its full ownership interest of 25.1 % in the Saudi Arabia joint venture, which includes the Ma’aden Bauxite and Alumina Company (see Portfolio actions above).

In June 2024, Alcoa completed the full curtailment of the Kwinana refinery (Australia), as planned, which was announced in January 2024. As of June 2025, the refinery had approximately 230 employees to manage certain processes, including water management. These processes were expected to continue through the fourth quarter of 2025, when the employee number was expected to be further reduced. Due to the Company’s ongoing assessment of long-term water management, the related processes may need to continue beyond the fourth quarter of 2025 and additional restructuring charges for water management may be required in the second half of 2025.

During the second quarter of 2025, the Company continued to evaluate engineering estimates for improvements on closed bauxite residue areas at the Poços de Caldas refinery (Brazil) to comply with impoundment stability regulations in the region by the end of 2027. Upon completion of these estimates, Alcoa may be required to record a charge in the second half of 2025.

On March 31, 2025, Alcoa and IGNIS EQT entered into a joint venture agreement, which includes the San Ciprián refinery (see Portfolio actions above).

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 in 2025.

In the table below, total alumina shipments include metric tons that were not produced by the Alumina segment. Such alumina was purchased to satisfy certain customer commitments. The Alumina segment bears the risk of loss of the purchased alumina until control of the product has been transferred to this segment’s customers.

Adjusted operating costs include all production related costs for alumina produced and shipped: raw materials consumed; conversion costs, such as labor, materials, and utilities; and plant administrative expenses. Other segment items include costs associated with trading activity, the purchase of bauxite from offtake or other supply agreements, and commercial shipping services; other direct and non-production related charges; Selling, general administrative, and other expenses; and Research and development expenses.

Production

Sequential period comparison

Alumina production was consistent with the first quarter of 2025.

Year-to-date comparison

Alumina production decreased 10% primarily as a result of:

• Full curtailment of the Kwinana refinery in June 2024

Third-party sales

Sequential period comparison

Third-party sales decreased $412 primarily as a result of:

• Lower average realized price of $197/ton principally driven by a lower average API
• Lower volumes and price from bauxite offtake and supply agreements

Partially offset by:

• Higher shipments of alumina primarily due to timing of shipments and increased trading activity, partially offset by lower sales of externally sourced alumina to satisfy certain customer commitments

Year-to-date comparison

Third-party sales increased $543 primarily as a result of:

• Higher average realized price of $90/ton principally driven by a higher average API
• Higher volumes and price from bauxite offtake and supply agreements

Partially offset by:

• Lower shipments of alumina primarily due to the full curtailment of the Kwinana refinery and decreased trading activity, partially offset by higher sales of externally sourced alumina to satisfy certain customer commitments
• Unfavorable currency impacts

Intersegment alumina sales

Sequential period comparison

Intersegment alumina sales decreased $245 primarily as a result of:

• Lower average API on sales to the Aluminum segment

Year-to-date comparison

Intersegment alumina sales increased $327 primarily as a result of:

• Higher average API on sales to the Aluminum segment
• Higher alumina shipments primarily due to timing of shipments and the Alumar (Brazil) smelter restart

Segment Adjusted EBITDA

Sequential period comparison

Segment Adjusted EBITDA decreased $525 primarily as a result of:

• Lower average realized price
• Higher production costs primarily related to increased maintenance
• Lower volumes and price from bauxite offtake and supply agreements

Partially offset by:

• Higher shipments of alumina

Year-to-date comparison

Segment Adjusted EBITDA increased $478 primarily as a result of:

• Higher average realized price
• Higher volumes and price from bauxite offtake and supply agreements

Partially offset by:

• Higher production costs primarily related to higher labor costs, increased maintenance, and direct material usage
• Unfavorable raw material costs primarily higher prices for caustic soda and lime

Forward Look. For the third quarter of 2025 in comparison to the second quarter of 2025, the Alumina segment expects lower production costs, primarily due to decreased maintenance costs.

Alcoa expects 2025 total Alumina segment production and shipments to remain unchanged from its prior projection, ranging between 9.5 to 9.7 million metric tons, and between 13.1 and 13.3 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.

Aluminum

Business Update. Aluminum prices decreased sequentially with LME prices on a 15-day lag averaging $2,458 per metric ton in the second quarter of 2025. Additionally, the average Midwest premium (United States and Canada) increased 36% sequentially following the increase on U.S. Section 232 tariff on aluminum imports from Canada from 25% to 50% on June 4, 2025.

In the second quarter of 2025, Alcoa incurred approximately $115 for tariff costs on imports of aluminum to the U.S. from Canada, a sequential increase of approximately $95.

San Ciprián Smelter

On March 31, 2025, Alcoa and IGNIS EQT entered into a joint venture agreement, which includes the San Ciprián smelter (see Portfolio actions above). The joint venture agreement allows for the planned restart of the San Ciprián smelter in 2025, a commitment included in the viability agreement reached with the workers’ representatives of the San Ciprián smelter in December 2021, and subsequently updated in February 2023.

The restart of the San Ciprián smelter was paused in April 2025 following a widespread power outage across Spain, until the Spanish government could provide sufficient details on the cause of the power outage and the measures being taken to prevent a reoccurrence. On July 14, 2025, Alcoa and IGNIS EQT announced the restart process of the San Ciprián smelter would resume (see Portfolio actions above).

In connection with terms of the updated viability agreement, the Company had restricted cash of $75 remaining at June 30, 2025, to be made available for capital improvements at the site and smelter restart costs. In the first quarter of 2025, $11 was released from restricted cash related to smelter restart and capital expenditures incurred in the fourth quarter of 2024 and first quarter of 2025.

Other Matters

On July 1, 2025, Alcoa completed the sale of its full ownership interest of 25.1% in the Saudi Arabia joint venture, which includes the Ma’aden Aluminium Company (see Portfolio actions above). In accordance with the transaction, the metal offtake agreement with Ma’aden was terminated in the first quarter of 2025.

During the second quarter of 2025, the Company entered into firming contracts and a power purchase agreement (PPA) to manage the variability and intermittency of renewable energy sources and reduce spot market exposure at the Mosjøen smelter (Norway). The firming contracts convert certain pay-as-produced wind contracts into baseload power to eliminate volume risk. One of the firming contracts is a derivative and does not qualify for hedge accounting treatment. See Note M to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

During the first and second quarters of 2025, the Company progressed the restart of the Alumar smelter. The site was operating at approximately 91% of the site’s total annual capacity of 268 kmt (Alcoa share) as of June 30, 2025.

In the table below, total aluminum third-party shipments include metric tons that were not produced by the Aluminum segment. Such aluminum was purchased by this segment to satisfy certain customer commitments. The Aluminum segment bears the risk of loss of the purchased aluminum until control of the product has been transferred to this segment’s customers. Additionally, Total shipments include offtake from a joint venture supply agreement.

The average realized third-party price per metric ton of aluminum includes three elements: a) the underlying base metal component, based on quoted prices from the LME; b) the regional premium, which represents the incremental price over the base LME component that is associated with the physical delivery of metal to a particular region (e.g., the Midwest premium for metal sold in the United States); and c) the product premium, which represents the incremental price for receiving physical metal in a particular shape (e.g., billet, slab, rod, etc.) or alloy.

Adjusted operating costs include all production related costs for aluminum produced and shipped: raw materials consumed; conversion costs, such as labor, materials, and utilities; and plant administrative expenses. Other segment items include costs associated with trading activity and energy assets; other direct and non-production related charges; Selling, general administrative, and other expenses; and Research and development expenses.

(1) Other includes third-party sales of energy, as well as realized gains and losses related to embedded derivative instruments designated as cash flow hedges of forward sales of aluminum.

Production

Sequential period comparison

Production increased 1% primarily as a result of:

• Alumar smelter restart

Year-to-date comparison

Production increased 5% primarily as a result of:

• Alumar smelter and Warrick smelter restarts

Third-party sales

Sequential period comparison

Third-party sales increased $55 primarily as a result of:

• Higher shipments primarily due to the timing of shipments
• Favorable currency impacts
• Higher pricing at the Brazil hydro-electric facilities

Partially offset by:

• Lower average realized price of $70/ton driven by a lower average LME (on a 15-day lag) partially offset by higher regional premiums, particularly the Midwest premium (United States and Canada) which rose by an average of 36%

Year-to-date comparison

Third-party sales increased $324 primarily as a result of:

• Higher average realized price of $434/ton driven by a higher average LME (on a 15-day lag) and higher regional premiums, particularly the Midwest premium (United States and Canada) which rose by an average of 105%
• Higher pricing at the Brazil hydro-electric facilities
• Favorable currency impacts

Partially offset by:

• Lower shipments primarily due to the absence of volumes from a joint venture supply agreement

Segment Adjusted EBITDA

Sequential period comparison

Segment Adjusted EBITDA decreased $37 primarily as a result of:

• Tariffs on U.S. imports of aluminum from Canada, which were subject to a 25% tariff from March 12, 2025 until increasing to 50% on June 4, 2025 under U.S. Section 232
• Lower average realized price
• Higher production costs primarily related to increased maintenance

Partially offset by:

• Favorable raw material costs primarily on lower average alumina input costs
• Lower energy costs primarily in Europe
• Higher pricing at the Brazil hydro-electric facilities

Year-to-date comparison

Segment Adjusted EBITDA decreased $52 primarily as a result of:

• Unfavorable raw material costs primarily on higher average alumina input costs, partially offset by lower market prices for carbon materials
• Tariffs on U.S. imports of aluminum from Canada, which were subject to a 25% tariff from March 12, 2025 until increasing to 50% on June 4, 2025 under U.S. Section 232

Partially offset by:

• Higher average realized price
• Favorable currency impacts
• Higher pricing at the Brazil hydro-electric facilities
• Lower energy costs primarily in Europe
• Lower production costs primarily due to efficiencies at higher production rates

The following table provides consolidated capacity and curtailed capacity (each in kmt) for each smelter owned by Alcoa Corporation:

(1) These figures represent Alcoa Corporation’s share of the facility Nameplate Capacity based on its ownership interest in the respective smelter.

(2) In the fourth quarter of 2024, the Company completed the restart of 16,000 metric tons per year (mtpy) of previously curtailed capacity at the Portland smelter in Australia that began in the fourth quarter of 2023.

(3) In 2021, the Company announced the restart of its 268,000 mtpy share of capacity at the Alumar smelter in São Luís, Brazil. Production began in the second quarter of 2022. Curtailed capacity decreased from June 30, 2024 as a result of the restart process.

(4) In the second quarter of 2025, the Company began the restart of one potline (31,000 mtpy) at the Lista smelter in Norway that was curtailed in August 2022.

Forward Look. For the third quarter of 2025 in comparison to the second quarter of 2025, the Aluminum segment expects increased costs associated with tariffs on U.S. imports of aluminum from Canada.

Alcoa expects 2025 total Aluminum segment production to remain unchanged from its prior projection, ranging between 2.3 and 2.5 million metric tons. The Company has decreased its 2025 projection for aluminum shipments to range between 2.5 and 2.6 million metric tons, a reduction of between 0.1 and 0.2 million metric tons from the prior projection, primarily due to reduced production at the San Ciprián smelter as a result of the delayed restart.

Reconciliations of Certain Segment Information

Reconciliation of Total Segment Third-Party Sales to Consolidated Sales

Reconciliation of Total Segment Adjusted EBITDA to Consolidated Net Income (Loss) Attributable to Alcoa Corporation

(1) Transformation includes, among other items, the Adjusted EBITDA of previously closed operations.

(2) Corporate expenses are composed of general administrative and other expenses of operating the corporate headquarters and other global administrative facilities, as well as research and development expenses of the corporate technical center.

(3) Other includes certain items that are not included in the Adjusted EBITDA of the reportable segments.

Environmental Matters

See the Environmental Matters section of Note O to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Liquidity and Capital Resources

Management believes that the Company’s cash on hand, projected cash flows, and liquidity options, combined with its strategic actions, will be adequate to fund its short-term (at least 12 months) and long-term operating and investing needs. The Company plans to opportunistically access liquidity sources to support its cash position and ongoing cash needs. Further, the Company has flexibility related to its use of cash; the Company has debt maturities of $141 on the Existing 2027 Notes and $219 on the Existing 2028 Notes and no other significant debt maturities until 2029. Additionally, the Company has no significant cash contribution requirements related to its pension plan obligations.

Although management believes that Alcoa’s projected cash flows and other liquidity options will provide adequate resources to fund operating and investing needs, the Company’s access to, and the availability of, financing on acceptable terms in the future will be affected by many factors, including: (i) Alcoa Corporation’s credit rating; (ii) the liquidity of the overall capital markets; (iii) the current state of the economy and commodity markets, and (iv) short- and long-term debt ratings. There can be no assurances that the Company will continue to have access to capital markets on terms acceptable to Alcoa Corporation.

Changes in market conditions caused by U.S., global, or macroeconomic events, such as ongoing regional conflicts, high inflation, and changing U.S. or global monetary or trade policies could have adverse effects on Alcoa’s ability to obtain additional financing and cost of borrowing. Inability to generate sufficient earnings could impact the Company’s ability to meet the financial covenants in our outstanding debt and revolving credit facility agreements and limit our ability to access these sources of liquidity or refinance or renegotiate our outstanding debt or credit agreements on terms acceptable to the Company. Additionally, the impact on market conditions from such events could adversely affect the liquidity of Alcoa’s customers, suppliers, and joint venture partners and equity method investments, which could negatively impact the collectability of outstanding receivables and our cash flows.

Cash from Operations

Cash provided from operations was $563 in the six-month period of 2025 compared with cash provided from operations of $64 in the same period in 2024. Notable changes to sources and (uses) of cash included:

• $774 favorable change in net income, excluding the impacts from restructuring charges, primarily due to higher aluminum and alumina pricing, lower intersegment profit elimination, and favorable currency, partially offset by tariffs on U.S. imports of aluminum from Canada; partially offset by,
• ($74) higher income taxes paid on prior year earnings, as well as on higher current year earnings in the jurisdictions where taxes are paid.

On April 30, 2025, the ART issued its decision related to the proceedings AofA filed against the ATO in April 2022 to contest the Notices of Assessment issued by the ATO in July 2020 related to transfer pricing of certain historic third-party alumina sales. The ART decided that no additional tax is owed, consistent with Alcoa’s long-held position related to this matter.

In accordance with the ATO’s dispute resolution practices, AofA paid 50% of the assessed income tax amount exclusive of interest and any penalties, or approximately $74 (A$107), during the third quarter 2020. Interest on the unpaid tax was accrued through the decision date, which, along with the initial interest assessment, was deductible against taxable income by AofA. AofA applied this deduction beginning in the third quarter of 2020 through the decision date, resulting in reductions in cash tax payments.

The ATO did not appeal the ART’s decision, and the disputed tax claims (and additional related interest and penalties) have been withdrawn. With the withdrawal of the ATO’s claims, the prepaid tax asset and related interest of $78 (A$120) were refunded to AofA in July 2025, and accrued cash taxes of $225 (A$346) related to the interest deductions are payable by AofA by June 1, 2026. The net cash impact of both the refunded amount and the accrued cash taxes is approximately $147 (A$226) through June 2026. See description of the tax dispute in Note O to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

The Company utilizes a Receivables Purchase Agreement facility to sell up to $150 of certain receivables through an SPE to a financial institution on a revolving basis. Alcoa Corporation guarantees the performance obligations of the Company subsidiaries, and unsold customer receivables are pledged as collateral to the financial institution to secure the sold receivables. At June 30, 2025, the SPE held unsold customer receivables of $355 pledged as collateral against the sold receivables.

The Company continues to service the customer receivables that were transferred to the financial institution. As Alcoa collects customer payments, the SPE transfers additional receivables to the financial institution rather than remitting cash. In the six-month period of 2025, the Company sold gross customer receivables of $447 and reinvested collections of $447 from previously sold receivables, resulting in no net cash remittance to or proceeds from the financial institution. In the six-month period of 2024, the Company sold gross customer receivables of $600 and reinvested collections of $584 from previously sold receivables, resulting in net cash proceeds from the financial institution of $16. Cash collections from previously sold receivables yet to be reinvested of $58 were included in Accounts payable, trade on the Consolidated Balance Sheet as of June 30, 2025. Cash received from sold receivables under the agreement are presented within operating activities in the Statement of Consolidated Cash Flows. See Note I to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

During the first and second quarters of 2025, Alcoa entered into financial contracts with multiple counterparties to mitigate financial risks associated with changes in aluminum prices, natural gas prices, electricity prices, and foreign currency exchange rates. The aluminum, natural gas, and electricity financial contracts qualify for cash flow hedge accounting. The foreign exchange financial contracts do not qualify for hedge accounting treatment. These contracts are held by a separate wholly-owned subsidiary of Alcoa Corporation and are intended to limit the Company’s net cash outlays to the committed funding under the San Ciprián joint venture agreement. The associated realized gains or losses have no impact on the results of the San Ciprián operations. See Note M to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Financing Activities

Cash provided from financing activities was $10 in the six-month period of 2025 compared with $679 in the same period in 2024.

The source of cash in the six-month period of 2025 was primarily $985 net proceeds from the bond issuance (see below), $27 of contributions from IGNIS EQT (see Noncontrolling interest above), partially offset by $890 used to settle cash tender offers on existing debt (see below), $53 of dividends paid on stock, and $42 of net payments on short-term borrowings (see below).

The source of cash in the six-month period of 2024 was primarily $737 net proceeds from the debt issuance for $750 aggregate principal amount of 7.125% Senior Notes due 2031 and $33 of net contributions from Alumina Limited (see Noncontrolling interest above), partially offset by $37 of dividends paid on common stock and $25 of net payments on short-term borrowings (see below).

Short-term Borrowings

The Company entered into inventory repurchase agreements whereby the Company sold aluminum to a third party and agreed to subsequently repurchase substantially similar inventory. The Company did not record sales upon each shipment of inventory and the net cash received of $8 related to these agreements was recorded in Short-term borrowings within Other current liabilities on the Consolidated Balance Sheet as of June 30, 2025.

During the six-month period of 2025, the Company recorded borrowings of $51 and repurchased $93 of inventory related to these agreements. During the six-month period of 2024, the Company recorded borrowings of $45 and repurchased $70 of inventory related to these agreements.

The cash received and subsequently paid under the inventory repurchase agreements is included in Cash provided from financing activities on the Statement of Consolidated Cash Flows.

144A Debt

In March 2025, Alumina Pty Ltd, a wholly-owned subsidiary of Alcoa Corporation, completed Rule 144A (U.S. Securities Act of 1933, as amended) debt issuances of $500 aggregate principal amount of 6.125% Senior Notes due 2030 (the 2030 Notes) and $500 aggregate principal amount of 6.375% Senior Notes due 2032 (the 2032 Notes, and, collectively with the 2030 Notes, the Notes). The net proceeds of these issuances were $985, reflecting a discount to the initial purchasers of the Notes as well as issuance costs.

In March 2025, ANHBV announced and settled cash tender offers which resulted in the tender and acceptance of $609 of the $750 aggregate principal amount of Existing 2027 Notes and $281 of the $500 aggregate principal amount of Existing 2028 Notes for purchase.

See Note K to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Credit Facilities

Revolving Credit Facility

The Company and ANHBV, a wholly-owned subsidiary of Alcoa Corporation and the borrower, have a $1,250 revolving credit and letter of credit facility in place for working capital and/or other general corporate purposes (the Revolving Credit Facility). The Revolving Credit Facility, established in September 2016, most recently amended and restated in June 2022 and amended in January 2024, is scheduled to mature in June 2027. Subject to the terms and conditions under the Revolving Credit Facility, the Company or ANHBV may borrow funds or issue letters of credit. Under the terms of the January 2024 amendment, the Company agreed to provide collateral for its obligations under the Revolving Credit Facility. See Part II Item 8 of Alcoa Corporation’s Annual Report on Form 10-K in Note M to the Consolidated Financial Statements for the year ended December 31, 2024 for more information on the Revolving Credit Facility.

As of June 30, 2025, the Company was in compliance with all financial covenants. The Company may access the entire amount of commitments under the Revolving Credit Facility. There were no borrowings outstanding at June 30, 2025, and no amounts were borrowed during the six-month periods of 2025 and 2024 under the Revolving Credit Facility.

Japanese Yen Revolving Credit Facility

The Company and ANHBV have a revolving credit facility available to be drawn in Japanese yen (the Japanese Yen Revolving Credit Facility). In April 2025, the Company and ANHBV entered into an amendment to the Japanese Yen Revolving Credit Facility, reducing the aggregate commitments from $250 to $200 and extending the maturity from April 2025 to April 2026. Subject to the terms and conditions under the facility, the Company or ANHBV may borrow funds.

The Japanese Revolving Credit Facility, established in April 2023 and amended in January 2024, April 2024, and April 2025, includes covenants that are substantially the same as those included in the Revolving Credit Facility. Under the terms of the January 2024 amendment, the Company agreed to provide collateral for its obligations under the Japanese Yen Revolving Credit Facility. See Part II Item 8 of Alcoa Corporation’s Annual Report on Form 10-K in Note M to the Consolidated Financial Statements for the year ended December 31, 2024 for more information on the Japanese Yen Revolving Credit Facility.

As of June 30, 2025, the Company was in compliance with all financial covenants. The Company may access the entire amount of commitments under the Japanese Revolving Credit Facility. There were no borrowings outstanding at June 30, 2025. During the six-month period of 2025, no amounts were borrowed. During the six-month period of 2024, $201 (JPY 29,686) was borrowed and $196 (JPY 29,686) was repaid.

Other

In April 2025, the Company amended a $74 term loan extending maturity from May 2025 to November 2025.

Dividend

On May 9, 2025, the Board of Directors declared 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, to stockholders of record as of the close of business on May 20, 2025. In June 2025, the Company paid cash dividends of $27.

Ratings

Alcoa Corporation’s cost of borrowing and ability to access the capital markets are affected not only by market conditions but also by the short- and long-term debt ratings assigned to Alcoa Corporation’s debt by the major credit rating agencies.

On March 3, 2025, Standard and Poor’s Global Ratings affirmed the rating of Alcoa Corporation’s long-term debt as BB and revised the outlook from stable to positive.

On March 3, 2025, Moody’s Investor Service affirmed the rating of ANHBV’s long-term debt as Ba1 and affirmed the outlook as stable and published Alumina Pty Ltd’s long-term debt rating as Ba1 with a stable outlook.

On March 3, 2025, Fitch Ratings published Alumina Pty Ltd’s long-term debt rating as BB+ with a stable outlook.

On February 28, 2025, Fitch Ratings affirmed the rating for Alcoa Corporation and ANHBV’s long-term debt as BB+ and affirmed the outlook as stable.

Ratings are not a recommendation to buy or hold any of Alcoa’s securities and they may be revised or revoked at any time at the sole discretion of the rating organization.

Investing Activities

Cash used for investing activities was $240 in the six-month period of 2025 compared with $281 for the same period in 2024.

In the six-month period of 2025, the use of cash was primarily attributable to $224 related to capital expenditures and $29 of cash contributions to the ELYSIS partnership, partially offset by cash received of $11 for the sale of a non-core investment.

In the six-month period of 2024, the use of cash was primarily attributable to $265 related to capital expenditures and $17 of cash contributions to the ELYSIS partnership.

Recently Adopted and Recently Issued Accounting Guidance

See Note B to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Dissemination of Company Information

Alcoa Corporation intends to make future announcements regarding company developments and financial performance through its website, https://www.alcoa.com, as well as through press releases, filings with the Securities and Exchange Commission, conference calls, media broadcasts, and webcasts.

See Part II Item 7A Quantitative and Qualitative Disclosures About Market Risk of Alcoa Corporation’s Annual Report on Form 10-K for the year ended December 31, 2024. Our exposure to market risk has not changed materially since December 31, 2024. Refer to Part I Item 1 of this Form 10-Q in Note M to the Consolidated Financial Statements under caption Derivatives for additional information.

(a) Evaluation of Disclosure Controls and Procedures

Alcoa Corporation’s Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the U.S. Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report, and they have concluded that these controls and procedures were effective as of June 30, 2025.

(b) Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the second quarter of 2025, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

We face a number of risks that could materially and adversely affect our business, results of operations, cash flow, liquidity, or financial condition. A full discussion of our risk factors can be found in Part I Item 1A. Risk Factors of Alcoa Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.