Alcoa Corp: Form 10-Q for the period ended Jun 30, 2026

(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 2026, Alcoa delivered strong operational and financial performance and continued to execute on its strategic priorities, including the announced agreement to acquire South32 Limited’s (South32) equity interests in its bauxite, alumina, and aluminum assets. The Company set year-to-date production records at four aluminum smelters and at one alumina refinery, progressed multiple smelter capacity restarts, and completed negotiations for new multi-year collective bargaining agreements in Australia, the U.S., and Canada.

Average alumina prices decreased 1 percent and average aluminum prices increased 15 percent in the second quarter of 2026 compared with the first quarter of 2026. In addition, the average Midwest premium increased 10 percent and the average Rotterdam premium increased 47 percent sequentially. Alumina prices continued to be impacted by refinery expansions, primarily in China and Indonesia, in addition to impacts from Middle East conflict disruptions. The aluminum price and regional premium increases were driven by low inventory levels and supply disruptions, which included impacts related to the Middle East conflict.

Since the Middle East conflict began, the region has experienced announced curtailments of more than 2,500 kmt of annual smelting capacity and nearly 2,000 kmt of refining capacity. Additionally, the disruption of transit through the Strait of Hormuz has restricted the inflow of raw materials and caused vessel constraints globally. During the second quarter of 2026, the Company continued to support its customers in managing the logistics for certain alumina shipments. The conflict in the Middle East also caused increases in energy costs; Alcoa has limited its exposure to volatility in spot energy through long-term natural gas and electricity contracts and financial hedges.

AliGroup Acquisition

On June 30, 2026, Alcoa entered into an Umbrella Implementation Deed (Deed) with South32 to acquire South32’s equity interests in its bauxite, alumina, and aluminum assets (referred to as AliGroup) for consideration consisting of $3,100 of cash and approximately 17 million shares of Alcoa common stock (which may, in part, be delivered in the form of Alcoa CHESS Depositary Interests (CDIs)) with an agreed value as of the execution of the Deed of approximately $1,000 (based on the volume weighted average price over the 10 trading days ended June 26, 2026 of $58.79 per share), subject to customary adjustments set forth in the Deed (the Transaction). In addition, Alcoa agreed to pay South32 a ticking fee equal to 5 percent per annum on the $3,100 cash consideration for the period from South32 shareholder approval through the closing date. Alcoa also agreed to pay South32 up to an aggregate $750 in cash contingent on average alumina and aluminum prices exceeding the respective agreed strike prices for each of four successive, annual periods, beginning July 1, 2026 for a specific portion of the related alumina and aluminum production volumes of the acquired assets. The Deed also contains customary representations and warranties, covenants, indemnification obligations, and termination fees for transactions of this nature.

The Transaction reinforces Alcoa’s position as a leading pure-play upstream aluminum company, while strengthening its global portfolio with complementary assets to the Company’s existing portfolio. The acquisition will add a high-quality, low-cost, and globally diversified set of mining, refining, and smelting assets, with greater scale and integration expected to reduce complexity, lower costs, and improve competitiveness while strengthening supply chain resilience across key jurisdictions. Alcoa’s proven operating model, technical expertise, and commercial capabilities are expected to unlock meaningful operational improvements and synergies across the combined portfolio. The Company expects these assets to enhance financial results across business cycles and sustainably improve Alcoa’s position on the global alumina and aluminum cost curves.

The Transaction includes South32’s 86% interests in the Boddington bauxite mine and the Worsley alumina refinery in Australia; 100% interests in the Hillside aluminum smelter and idled Bayside smelter property in South Africa; and interests of 33% in the Mineração Rio do Norte (MRN) bauxite mine, 36% in the Alumar refinery, and 40% interest in the Alumar smelter, each in Brazil.

The Transaction utilizes a locked box mechanism under which the purchase price is based on AliGroup’s financial position as of March 31, 2026 (the Locked Box Date), and Alcoa is entitled to the economic benefits and risks of ownership from the Locked Box Date through the closing date. Customary protections apply to prevent leakage of value from AliGroup between the Locked Box Date and the closing date, subject to customary exceptions for permitted leakage.

The Transaction is expected to close in the first half of 2027, subject to the satisfaction or waiver of closing conditions, including approval by South32’s shareholders, receipt of required regulatory approvals, and other customary conditions specified in the Deed.

In connection with the Transaction, on June 30, 2026, the Company obtained commitments for bridge financing of up to $3,100. The financing consists of commitments for a senior unsecured 364-day bridge term loan credit facility that would be available upon closing of the Transaction, subject to customary conditions, including the consummation of the Transaction in accordance with the terms of the Deed. The facility also contains customary representations, warranties, covenants, and indemnification provisions. The Company currently intends to replace the bridge financing with permanent financing prior to the closing date.

The Company expects to incur transaction-related costs, including advisory, legal, accounting, valuation, and financing fees, which are expensed as incurred. During the six-month period of 2026, the Company recognized transaction-related costs of $13, which were included in Selling, general and administrative expenses on the accompanying Statement of Consolidated Operations.

Australia Mine Approvals

During the second quarter of 2026, the Company continued to work collaboratively with stakeholders to advance mine approvals for its next major mine regions (Myara North and Holyoake) and the rolling five-year mine plan (2023-2027) referred to the Western Australia Environmental Protection Authority (WA EPA) in 2023 by a third party. Recent engagement with government stakeholders provided insight into important steps remaining in the approvals process. The Company anticipates mining in new major mine regions will commence no earlier than 2029. Until then, the Company expects bauxite quality will remain similar to recent grades.

The Company has contingency plans to support operations if Ministerial decisions are delayed beyond 2026. Based on current plans, approval delays extending through the first half of 2027 are not expected to materially affect bauxite supply or quality, or operating costs. For longer delays, the Company could implement additional operational measures, including modifications to mining activities and refinery operating rates, to mitigate potential impacts.

Additionally, during the second quarter of 2026, the Company continued engagement with government stakeholders related to the 2025-2029 mine plan, which the Company aims to have in place in 2026. The WA government has indicated it intends to issue an updated Section 6 exemption order aligned with the 2025-2029 plan, to replace the exemption granted in 2023 that allows Alcoa’s mining operations to continue while the WA EPA assessment is undertaken.

Gallium Joint Venture

On July 14, 2026, Alcoa and government and industry partners of Australia, Japan, and the United States announced the final investment decision for a gallium production plant at the Wagerup refinery in Australia. The Company contributed $24 to the joint venture upon formation in June 2026, which reflects Alcoa’s total expected contribution. Alcoa’s participation in the joint venture, including its role as construction and operating manager, is not expected to have a material impact on the Company’s financial position or results of operations.

San Ciprián Operations

Subsequent to June 30, 2026, the Company converted the mandatory convertible note of $153 (€130), provided to the San Ciprián operations in December 2025, and acquired Trento EQT’s remaining ownership interest for $28 (€25). As a result, Alcoa will hold a 100% ownership interest in the San Ciprián operations as of August 1, 2026 and recognize earnings attributable to noncontrolling interest through July 31, 2026.

Other Matters

On May 15, 2026, Alcoa Nederland Holding B.V. (ANHBV), a wholly-owned subsidiary of Alcoa Corporation, redeemed the remaining $219 aggregate principal amount of its 6.125% notes due in 2028 (the 2028 Notes). The notes were redeemed at a price equal to 100 percent of the principal amount, plus accrued and unpaid interest, using cash on hand.

In July 2026, a new four-year collective bargaining agreement was ratified with the Australian Workers Union (AWU) representing approximately 1,400 employees across the mining and refining operations in Western Australia.

In June 2026, a new four-year collective bargaining agreement was ratified with the United Steelworkers (USW) at the Company’s U.S. smelters, representing approximately 1,000 employees at Warrick, Indiana and Massena, New York.

In May 2026, new five-year collective bargaining agreements were ratified with the United Steelworkers in Canada (Syndicat des Métallos) at the Aluminerie de Bécancour Inc. (ABI) smelter in Québec, Canada, representing approximately 1,000 employees.

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 attributable to Alcoa Corporation decreased $18 primarily as a result of:

• Unfavorable mark-to-market results on the Saudi Arabian Mining Company (Ma’aden) shares
• Unfavorable mark-to-market results on derivative instruments
• Net unfavorable currency impacts
• Unfavorable energy impacts
• Higher production costs in the Alumina segment

Partially offset by:

• Higher aluminum prices
• Higher shipments of aluminum

Year-to-date comparison

Net income attributable to Alcoa Corporation increased $120 primarily as a result of:

• Higher aluminum prices

Partially offset by:

• Lower alumina prices
• Unfavorable mark-to-market results on derivative instruments
• Net unfavorable currency impacts
• Higher costs associated with the restart of the San Ciprián (Spain) smelter
• Lower volumes and price from bauxite offtake and supply agreements
• Higher energy prices in the Alumina segment

Sales

Sequential period comparison

Sales increased $773 primarily as a result of:

• Higher shipments of aluminum
• Higher average realized price of aluminum
• Favorable currency impacts

Partially offset by:

• Lower volumes and price from bauxite offtake and supply agreements
• Unfavorable impacts from certain energy contracts linked to metal prices
• Lower third-party energy sales

Year-to-date comparison

Sales increased $772 primarily as a result of:

• Higher average realized price of aluminum
• Higher shipments of aluminum
• Higher third-party energy sales

Partially offset by:

• Lower average realized price of alumina
• Lower shipments of alumina
• Lower volumes and price from bauxite offtake and supply agreements
• Unfavorable impacts from certain energy contracts linked to metal pricing

Cost of goods sold

Sequential period comparison

Cost of goods sold as a percentage of sales decreased 4 percent primarily as a result of:

• Higher aluminum prices
• Higher shipments of aluminum

Partially offset by:

• Unfavorable energy impacts
• Higher production costs in the Alumina segment
• Unfavorable impacts from certain energy contracts linked to metal prices
• Tariffs on U.S. imports of aluminum from Canada

Year-to-date comparison

Cost of goods sold as a percentage of sales decreased 3 percent primarily as a result of:

• Higher aluminum prices
• Higher third-party energy sales

Partially offset by:

• Tariffs on U.S. imports of aluminum from Canada
• Lower alumina prices
• Unfavorable currency impacts
• Higher costs associated with the restart of the San Ciprián smelter
• Lower volumes and price from bauxite offtake and supply agreements
• Unfavorable impacts from certain energy contracts linked to metal pricing
• Higher energy prices in the Alumina segment

Selling, general administrative, and other expenses

Sequential period comparison

Selling, general administrative, and other expenses increased $18 primarily as a result of increased fees for professional services.

Year-to-date comparison

Selling, general administrative, and other expenses increased $31 primarily as a result of:

• Unfavorable currency revaluation impacts
• Higher labor costs
• Increased fees for professional services
• Increased information technology services

Provision for depreciation, depletion, and amortization

Sequential period comparison

The Provision for depreciation, depletion, and amortization increased $11 primarily as a result of:

• Higher depreciation in Brazil for mine reclamation and bauxite residue storage asset retirement obligations
• Unfavorable currency impacts

Year-to-date comparison

The Provision for depreciation, depletion, and amortization increased $34 primarily as a result of:

• Unfavorable currency impacts
• Higher depreciation in Brazil for mine reclamation and bauxite residue storage asset retirement obligations
• Higher depreciation in Australia for asset retirement obligations
• Higher amortization in Australia for mine development costs

Partially offset by:

• Lower depreciation expense related to the Kwinana (Australia) refinery closure

Interest expense

Sequential period comparison

Interest expense increased $1 primarily as a result of:

• Debt settlement expenses for the remaining 2028 Notes extinguished in May 2026

Year-to-date comparison

Interest expense decreased $38 primarily as a result of:

• Decreased interest and absence of debt settlement expenses for 5.500% Senior Notes due 2027 (the 2027 Notes) extinguished in March 2025 and December 2025
• Decreased interest and debt settlement expenses for the 2028 Notes extinguished in March 2025 and May 2026
• Absence of interest on unfavorable value added tax assessments in Brazil recognized in 2025
• Increased capitalized interest

Partially offset by:

• Interest on $500 6.125% Senior Notes due 2030 (the 2030 Notes) and $500 6.375% Senior Notes due 2032 (the 2032 Notes) issued in March 2025

Other expenses (income), net

Sequential period comparison

Other expenses (income), net was $200 in the second quarter of 2026 compared with ($126) in the first quarter of 2026. The unfavorable change of $326 was primarily a result of:

• Unfavorable mark-to-market results on the Ma’aden shares
• Unfavorable mark-to-market results on derivative instruments primarily due to lower power prices in the current quarter and unfavorable power price changes under a firming contract
• Unfavorable currency revaluation impacts primarily due to absence of gains recognized in the first quarter of 2026 due to the U.S. dollar weakening against the Brazilian real
• Absence of insurance claim settlement recognized in the first quarter of 2026

Year-to-date comparison

Other expenses (income), net was $74 in the six-month period of 2026 compared with ($138) in the six-month period of 2025. The unfavorable change of $212 was primarily a result of:

• Unfavorable mark-to-market results on derivative instruments primarily due to changes in the euro foreign exchange rate and lower power prices in the current year, partially offset by favorable power price changes under a firming contract executed in June 2025
• Unfavorable mark-to-market results on the Ma’aden shares in the six-month period of 2026

Partially offset by:

• Favorable currency revaluation impacts primarily due to gains in the current year from the U.S. dollar weakening against the Brazilian real, partially offset by the absence of gains recognized in the prior year when the U.S. dollar weakened against the Brazilian real
• Insurance claim settlement recognized in the first quarter of 2026

Restructuring and other charges, net

Sequential period comparison

In the second quarter of 2026, Restructuring and other charges, net of ($4) primarily related to:

• ($13) benefit for take-or-pay power contract costs at previously closed sites
• $9 charge to record net additional asset retirement obligations and environmental remediation at previously closed sites

In the first quarter of 2026, Restructuring and other charges, net of $18 primarily related to:

• $18 charge for take-or-pay power contract costs at previously closed sites

Year-to-date comparison

In the six-month period of 2026, Restructuring and other charges, net of $14 primarily related to:

• $9 charge to record net additional asset retirement obligations and environmental remediation at previously closed sites
• $5 charge for take-or-pay power contract costs at previously closed sites

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

• $20 charge to record net additional asset retirement obligations and environmental remediation at previously closed sites
• $9 charge for certain employee obligations related to the February 2023 updated viability agreement reached with the workers’ representatives of the San Ciprián aluminum smelter

Partially offset by:

• ($10) benefit 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 2026 was $73 on income before taxes of $482 or 15.1 percent. In comparison, the first quarter of 2026 Provision for income taxes was $82 on income before taxes of $499 or 16.4 percent.

The decrease in tax expense of $9 is primarily attributable to the absence of a valuation allowance of $22 recorded against certain deferred tax assets of a wholly-owned subsidiary in Canada during the first quarter of 2026, and an overall reduction in income in jurisdictions where taxes are paid, partially offset by the impact of the increased 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 2026 was $155 on income before taxes of $981 or 15.8 percent. In comparison, the six-month period of 2025 Provision for income taxes was $130 on income before taxes of $829 or 15.7 percent.

The increase in tax expense of $25 is primarily attributable to a valuation allowance of $22 recorded against certain deferred tax assets of a wholly-owned subsidiary in Canada during the first quarter of 2026.

Noncontrolling interest

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

Subsequent to June 30, 2026, the Company converted the mandatory convertible note of $153 (€130), provided to the San Ciprián operations in December 2025, and acquired Trento EQT’s remaining ownership interest for $28 (€25). As a result, Alcoa will hold a 100% ownership interest in the San Ciprián operations as of August 1, 2026 and recognize earnings attributable to noncontrolling interest through July 31, 2026.

Net income (loss) attributable to noncontrolling interest was $2 in the second quarter of 2026 compared with $(8) in the first quarter of 2026. The change is primarily a result of higher average realized price of aluminum.

Net income (loss) attributable to noncontrolling interest was $(6) in the six-month period of 2026 compared with $(13) in the six-month period of 2025. The change is primarily a result of higher average realized price of aluminum, partially offset by lower 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 $307 per metric ton decreased 1 percent compared to the prior quarter. Compared to the six-month period of 2025, the average API decreased 38 percent year-over-year.

In the second quarter of 2026, the Alumina segment experienced higher energy prices, primarily fuel oil and diesel, related to the Middle East conflict.

Subsequent to June 30, 2026, the Pinjarra (Australia) refinery recovered stability and operating levels following operational instability that began in late March 2026 and was further exacerbated by gas supply disruptions associated with Cyclone Narelle.

Capacity. The Alumina segment had a base capacity of 11,653 kmt with 1,014 kmt of curtailed refining capacity. There was no change in curtailed capacity in 2026.

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.

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Production

Sequential period comparison

Alumina production decreased 6 percent primarily as a result of:

• Lower production at the Pinjarra refinery due to continued instability following Cyclone Narelle in late March 2026

Year-to-date comparison

Alumina production decreased 3 percent primarily as a result of:

• Lower production at the Pinjarra refinery due to continued instability following Cyclone Narelle in late March 2026

Third-party sales

Sequential period comparison

Third-party sales decreased $20 primarily as a result of:

• Lower volumes and price from bauxite offtake and supply agreements

Partially offset by:

• Favorable currency impacts

Year-to-date comparison

Third-party sales decreased $1,220 primarily as a result of:

• Lower average realized price of $146 per metric ton principally driven by a lower average API
• Lower shipments of alumina primarily due to lower sales of externally sourced alumina to satisfy certain customer commitments, lower production, and decreased trading
• Lower volumes and price from bauxite offtake and supply agreements

Intersegment alumina sales

Sequential period comparison

Intersegment alumina sales increased $8 primarily as a result of:

• Higher average API on sales to the Aluminum segment

Partially offset by:

• Lower alumina shipments primarily due to lower production

Year-to-date comparison

Intersegment alumina sales decreased $281 primarily as a result of:

• Lower average API on sales to the Aluminum segment

Partially offset by:

• Higher alumina shipments primarily due to smelter capacity restarts

Segment Adjusted EBITDA

Sequential period comparison

Segment Adjusted EBITDA decreased $56 primarily as a result of:

• Higher production costs, primarily at the Pinjarra refinery
• Higher energy prices, primarily fuel oil and diesel, associated with the Middle East conflict

Year-to-date comparison

Segment Adjusted EBITDA decreased $939 primarily as a result of:

• Lower average realized price
• Lower volumes and price from bauxite offtake and supply agreements
• Unfavorable currency impacts
• Higher energy prices, primarily fuel oil and diesel, associated with the Middle East conflict
• Lower shipments of alumina

Forward Look. For the third quarter of 2026 in comparison to the second quarter of 2026, the Alumina segment expects favorable production costs related to the recovery of stability at the Pinjarra refinery and lower energy prices, primarily diesel and fuel oil, to be partially offset by planned maintenance in Brazil.

The Company has decreased its 2026 projection for alumina production to range between 9.5 and 9.6 million metric tons, a reduction of between 0.2 and 0.3 million metric tons from the prior projection. The Company has also decreased its 2026 projection for alumina shipments to range between 11.5 and 11.6 million metric tons, a reduction of between 0.3 and 0.4 million metric tons from the prior projection. The reductions are due to lower production at the Pinjarra refinery related to instability experienced primarily in the second quarter of 2026. The overall difference between production and shipments reflects trading volumes and externally sourced alumina to fulfill customer contracts.

Aluminum

Business Update. In the second quarter of 2026, the Aluminum segment experienced record Segment Adjusted EBITDA of $1,073 and Segment Adjusted EBITDA as a percentage of sales of 32 percent. Aluminum prices increased sequentially with LME prices on a 15-day lag averaging $3,585 per metric ton in the second quarter of 2026. Additionally, the average Midwest premium increased 10 percent and the average Rotterdam premium increased 47 percent sequentially.

San Ciprián Smelter

The restart of the San Ciprián smelter was completed on April 7, 2026. At June 30, 2026, in connection with the viability agreement reached with the workers’ representatives of the San Ciprián smelter in December 2021 and subsequently updated in February 2023, the Company had restricted cash of $75 available for capital improvement commitments and restart costs incurred (which is subject to review by the workers’ representatives prior to release) at the site.

Capacity Restarts

During the second quarter of 2026, the Company continued to progress the restart of the Alumar (Brazil) smelter. The site was operating at approximately 93 percent of the site’s total annual capacity of 268 kmt (Alcoa share) as of June 30, 2026.

In the second quarter of 2026, the Company completed the restart of one potline (31 kmt) at the Lista smelter in Norway that began in the first quarter of 2026. The line was curtailed in August 2022.

In the second quarter of 2026, the Company completed the restart of 15 kmt of previously curtailed capacity at the Portland smelter in Australia that began in the first quarter of 2026.

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 in 2025 included offtake from a joint venture supply agreement with Ma’aden prior to its termination in the first quarter of 2025. The contract was terminated in accordance with Alcoa’s sale of its 25.1% ownership in the Saudi Arabia joint venture to Ma’aden, which was completed on July 1, 2025.

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, including tariff costs; 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 5 percent primarily as a result of:

• Completion of the San Ciprián smelter restart, continued progress on the Alumar smelter restart, and completion of capacity restarts at the Lista (Norway) and Portland (Australia) smelters

Year-to-date comparison

Production increased 9 percent primarily as a result of:

• Completion of the San Ciprián smelter restart and completion of capacity restarts at the Lista and Portland smelters

Third-party sales

Sequential period comparison

Third-party sales increased $794 primarily as a result of:

• Higher shipments primarily due to inventory repositioned within North America in the first quarter 2026 and increased production related to capacity restarts
• Higher average realized price of $543 per metric 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 10 percent and the Rotterdam premium (Europe) which rose by an average of 47 percent

Partially offset by:

• Unfavorable impacts from certain energy contracts linked to metal pricing
• Lower third-party energy sales

Year-to-date comparison

Third-party sales increased $2,009 primarily as a result of:

• Higher average realized price of $1,327 per metric 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 179 percent and the Rotterdam premium (Europe) which rose by an average of 102 percent
• Higher shipments primarily due to increased production related to capacity restarts and proactive inventory repositioning actions within North America taken in the first quarter of 2026
• Higher third-party energy sales

Partially offset by:

• Unfavorable impacts from certain energy contracts linked to metal pricing
• Unfavorable currency impacts

Segment Adjusted EBITDA

Sequential period comparison

Segment Adjusted EBITDA increased $379 primarily as a result of:

• Higher average realized price
• Higher shipments, including higher value add product sales

Partially offset by:

• Unfavorable impacts from certain energy contracts linked to metal pricing
• Tariffs on U.S. imports of aluminum from Canada under Section 232 of the Trade Expansion Act of 1962
• Lower third-party energy sales

Year-to-date comparison

Segment Adjusted EBITDA increased $1,536 primarily as a result of:

• Higher average realized price
• Favorable raw material costs primarily on lower average alumina input costs
• Higher third-party energy sales

Partially offset by:

• Tariffs on U.S. imports of aluminum from Canada, which were subject to a 25 percent tariff beginning March 12, 2025 until increasing to 50 percent on June 4, 2025 under Section 232 of the Trade Expansion Act of 1962
• Higher costs associated with the restart of the San Ciprián smelter
• Unfavorable impacts from certain energy contracts linked to metal pricing
• Unfavorable currency impacts

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 second quarter of 2026, the Company completed the restart of 15 kmt of previously curtailed capacity at the Portland smelter in Australia that began in the first quarter of 2026.

(3) In 2021, the Company announced the restart of its 268 kmt share of capacity at the Alumar smelter in São Luís, Brazil. Production began in the second quarter of 2022. During the second quarter of 2026, the Company continued to progress the restart of the smelter.

(4) In the second quarter of 2026, the Company completed the restart of one potline (31 kmt) at the Lista smelter in Norway that began in the first quarter of 2026. The line was curtailed in August 2022.

(5) In the third quarter of 2025, the Company resumed the restart at the San Ciprián smelter in Spain that was paused in April 2025 following a widespread power outage across Spain. The restart was completed on April 7, 2026.

Forward Look. For the third quarter of 2026 in comparison to the second quarter of 2026, the Aluminum segment expects lower production costs, primarily related to operating efficiencies at higher production levels, to fully offset unfavorable raw material costs, primarily on higher market prices for carbon materials, and lower third-party energy sales.

Alcoa expects 2026 total Aluminum segment production and shipments to remain unchanged from its prior projection, ranging between 2.4 and 2.6 million metric tons, and between 2.6 and 2.8 million metric tons, respectively.

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 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 Part I Item 1 of this Form 10-Q in Note N to the Consolidated Financial Statements under caption Environmental Matters.

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. Further, the Company has flexibility related to its use of cash; the Company has no significant debt maturities until 2029 and no significant cash contribution requirements related to its pension plan obligations.

In connection with the Transaction, on June 30, 2026, the Company obtained commitments for bridge financing of up to $3,100. The financing consists of commitments for a senior unsecured 364-day bridge term loan credit facility that would be available upon closing of the Transaction, subject to customary conditions, including the consummation of the Transaction in accordance with the terms of the Deed. The facility also contains customary representations, warranties, covenants, and indemnification provisions. The Company currently intends to replace the bridge financing with permanent financing prior to the closing date.

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 $429 in the six-month period of 2026 compared with $563 in the same period in 2025. Notable changes included:

• $127 favorable change in net income, primarily due to higher aluminum pricing, partially offset by lower alumina pricing, unfavorable currency impacts, higher production costs associated with the restart of the San Ciprián smelter, lower volumes and price from bauxite offtake and supply agreements, and higher energy prices in the Alumina segment; and,
• $474 unfavorable change in certain working capital accounts, primarily an increase in receivables in the six-month period of 2026 on higher pricing for aluminum, partially offset by a higher decrease in accounts payable in the six-month period of 2025 compared to the six-month period of 2026. The higher decrease in accounts payable in the six-month period of 2025 was due to decreased alumina trading activity.

The Company utilizes a Receivables Purchase Agreement facility to sell up to $175 of certain receivables through a wholly-owned special purpose entity (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 secure the sold receivables. At June 30, 2026, the SPE held unsold customer receivables of $812 pledged as collateral against the sold receivables.

The Company continues to service the customer receivables and as customer payments are collected by the Company, the SPE transfers additional receivables to the financial institution rather than remitting cash.

In the six-month period of 2026, the Company sold gross customer receivables of $396 and reinvested collections of $396 from previously sold receivables. In the six-month period of 2025, the Company sold gross customer receivables of $447 and reinvested collections of $447 from previously sold receivables. There were no cash remittances to or from the financial institution in either period.

Cash collections from previously sold receivables yet to be reinvested of $36 were included in Accounts payable, trade on the Consolidated Balance Sheet as of June 30, 2026. Cash received from sold receivables under the agreement are presented within operating activities on the Statement of Consolidated Cash Flows. See Part I Item 1 of this Form 10-Q in Note H to the Consolidated Financial Statements.

Financing Activities

Cash used for financing activities was $293 in the six-month period of 2026 compared with $10 of cash provided from financing activities in the same period in 2025.

The use of cash in the six-month period of 2026 was primarily $219 to redeem the remaining aggregate principal amount of the 2028 Notes (see below), $53 of dividends paid on stock, and $9 of net short-term borrowings (see below).

The source of cash in the six-month period of 2025 was primarily $985 net proceeds from the issuance of the 2030 Notes and 2032 Notes and $27 of contributions from Trento EQT (see Noncontrolling interest above), partially offset by $890 to settle tender offers on the 2027 Notes and 2028 Notes, $53 of dividends paid on stock, and $42 of net payments on short-term borrowings.

Short-term Borrowings

The Company periodically enters into inventory repurchase agreements whereby the Company sells aluminum to a third party and agrees to subsequently repurchase substantially similar inventory. Upon shipment of inventory, the Company does not record the sale and reflects cash received in Short-term borrowings within Other current liabilities on the Consolidated Balance Sheet. The cash received and subsequently paid under these agreements is included in Cash (used for) provided from financing activities on the Statement of Consolidated Cash Flows.

During the six-month period of 2026, the Company recorded borrowings of $104 and repurchased $113 of inventory related to these agreements. During the six-month period of 2025, the Company recorded borrowings of $51 and repurchased $93 of inventory related to these agreements.

There were no net borrowings from inventory repurchase agreements as of June 30, 2026.

144A Debt

On May 15, 2026, ANHBV redeemed the remaining $219 aggregate principal amount of its 2028 Notes. The notes were redeemed at a price equal to 100 percent of the principal amount, plus accrued and unpaid interest, using cash on hand.

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 July 2026, is scheduled to mature in June 2028. 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 (Amendment No. 1), the Company agreed to provide collateral for its obligations under the Revolving Credit Facility. In August 2025, Alcoa Corporation, ANHBV, and certain subsidiaries of the Company entered into Amendment No. 2 to the Revolving Credit Facility to allow for certain changes in the Company’s legal structure and update certain exceptions to collateral requirements. In May 2026, Alcoa Corporation, ANHBV, and certain subsidiaries of the Company entered into Amendment No. 3 to the Revolving Credit Facility extending maturity from June 2027 to June 2028 and modifying certain pricing provisions. In July 2026, Alcoa Corporation, ANHBV, and certain subsidiaries of the Company entered into Amendment No. 4 to the Revolving Credit Facility to exclude from the events of default certain repayments of indebtedness that may occur in connection with the Transaction (see AliGroup Acquisition above). 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, 2025 for more information on the Revolving Credit Facility.

As of June 30, 2026, 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, 2026, and no amounts were borrowed during the six-month periods of 2026 and 2025 under the Revolving Credit Facility.

Japanese Yen Revolving Credit Facility

The Company and ANHBV had a $200 revolving credit facility available to be drawn in Japanese yen (the Japanese Yen Revolving Credit Facility) that matured on April 24, 2026 with no amounts outstanding at expiration. No amounts were borrowed during the six-month periods of 2026 and 2025 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, 2025 for more information on the Japanese Yen Revolving Credit Facility.

Bridge Financing

In connection with the Transaction (see AliGroup Acquisition above), on June 30, 2026, the Company obtained commitments for bridge financing of up to $3,100. The financing consists of commitments for a senior unsecured 364-day bridge term loan credit facility that would be available upon closing of the Transaction, subject to customary conditions, including the consummation of the Transaction in accordance with the terms of the Deed. The facility also contains customary representations, warranties, covenants, and indemnification provisions. The Company currently intends to replace the bridge financing with permanent financing prior to the closing date.

Dividend

On May 7, 2026, the Board of Directors declared a quarterly cash dividend of $0.10 per share of the Company’s common stock to stockholders of record as of the close of business on May 19, 2026. In June 2026, the Company paid cash dividends of $26.

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 that the major credit rating agencies assign to Alcoa Corporation’s debt. Each agency’s rating is on a consolidated basis; therefore, the rating assessment applies to Alcoa Corporation, ANHBV, and Alumina Pty Ltd.

On March 11, 2026, Fitch Ratings affirmed Alcoa’s long-term debt rating as BB+ and revised the outlook from stable to positive.

On March 3, 2026, Standard and Poor’s Global Ratings upgraded the rating of Alcoa’s long-term debt to BB+ from BB and revised the outlook from positive to stable.

On February 6, 2026, Moody’s Investor Service affirmed the rating of Alcoa’s long-term debt as Ba1 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 $332 in the six-month period of 2026 compared with $240 for the same period in 2025.

In the six-month period of 2026, the use of cash was primarily attributable to capital expenditures of $305, cash contributions to the ELYSIS® partnership of $31, and a cash contribution upon formation of the gallium joint venture $24 (see Gallium Joint Venture above).

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

Recently Adopted and Recently Issued Accounting Guidance

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

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 U.S. Securities and Exchange Commission, conference calls, media broadcasts, and webcasts. The Company does not incorporate the information contained on, or accessible through, its corporate website into this quarterly report.

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, 2025. Our exposure to market risk has not changed materially since December 31, 2025. See Part I Item 1 of this Form 10-Q in Note L 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, 2026.

(b) Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the second quarter of 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

(dollars in millions)

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, 2025. The information below includes additional risks relating to Alcoa’s proposed transaction to acquire South32 Limited’s (South32) equity interests in its bauxite, alumina, and aluminum assets (the Transaction), pursuant to the Umbrella Implementation Deed (the Deed), dated as of June 30, 2026.

The Transaction may be delayed or may not be completed, which could adversely affect Alcoa’s business, financial condition, results of operations, and stock price.

Completion of the Transaction is subject to various closing conditions, including approval by South32 shareholders, regulatory and governmental approvals, effectiveness of the Registration Statement on Form S-4, approvals for listing Alcoa common stock and quotation of CHESS Depositary Interests (CDIs) to be issued, and other customary conditions specified in the Deed.

The regulatory and governmental approvals may not be obtained, may be delayed, or may be obtained only subject to conditions that are not acceptable to Alcoa or South32 or consistent with the terms of the Deed. Alcoa and South32 may waive certain of these conditions and also have termination rights under the Deed, in certain circumstances. If the Deed is terminated or any closing condition is not satisfied or, where waivable, waived, the Transaction will not be completed.

Alcoa expects to incur significant costs associated with the Transaction. Alcoa’s fees and expenses related to the Transaction include financial advisor fees, filing fees, legal and accounting fees, and regulatory taxes and fees.

If the Transaction is delayed or not completed, Alcoa may not realize the expected benefits of the Transaction and may be adversely affected by negative reactions from financial markets, customers, suppliers, employees, or other business partners; the incurrence of significant transaction-related costs, including costs that are payable regardless of whether the Transaction is completed; potential termination fee obligations; and litigation relating to the Transaction, its termination, or efforts to compel performance under the Deed. Any of these factors could adversely affect Alcoa’s business, financial condition, results of operations, cash flows, or stock price.

The issuance of shares of Alcoa common stock dilutes the ownership position of the Company’s existing stockholders and the price of Alcoa common stock may be affected.

The consideration payable in the Transaction includes shares of Alcoa common stock representing approximately 6 percent of Alcoa’s outstanding shares post issuance. Consequently, the Company’s existing stockholders will own a smaller proportion of Alcoa common stock.

The issuance of new shares of Alcoa common stock could adversely affect the market price of Alcoa common stock. In addition, South32 shareholders, who will receive Alcoa common stock, may decide to sell some or all of their shares following completion of the Transaction, and South32 may ultimately effect a sale or distribution of the Alcoa common stock it receives, each of which could have the effect of depressing the market price for Alcoa common stock. The price of Alcoa common stock and CDIs may fluctuate significantly in the days following the completion of the Transaction, including as a result of factors over which the Company has no control.

The market price of Alcoa common stock following completion of the Transaction may also be affected by a variety of factors, including whether expected benefits of the Transaction are realized; transaction-related costs are greater than expected; or Alcoa’s financial position, results of operations, or cash flows meet the expectations of investors and financial analysts. Consequently, the market price of Alcoa common stock may decline following completion of the Transaction.

Alcoa may not realize the intended benefits of the Transaction, and integration may disrupt Alcoa’s current plans or operations.

Alcoa may not successfully integrate the acquired operations or otherwise realize the expected benefits of the Transaction. Integration may result in operational disruptions, increased costs, delays in realizing expected synergies, or financial and operating performance that differs from expectations. As a result, the Transaction may not be accretive to earnings per share, improve Alcoa’s balance sheet position, or enhance Alcoa’s ability to generate additional free cash flow.

Integration efforts may also divert management’s attention from existing operations; disrupt customer, supplier, and other business relationships; present challenges in integrating employees, information technology, communications, and other systems; result in previously unknown liabilities; or require unforeseen expenses.

Financing the Transaction may require substantial indebtedness, and permanent financing may not be available on favorable terms, which will increase available capital and credit-related risks.

In connection with the Transaction, the Company obtained commitments for bridge financing of up to $3,100 consisting of a senior unsecured 364-day bridge term loan credit facility available upon closing of the Transaction, subject to customary conditions, including the consummation of the Transaction in accordance with the terms of the Deed. The Company intends to replace the bridge financing with permanent financing prior to the closing date.

Market conditions, volatility in the credit markets, changes in interest rates, or changes in Alcoa’s credit profile, and other factors outside of Alcoa’s control, could increase borrowing costs or limit the availability of permanent financing on terms acceptable to the Company. If permanent financing is not available on favorable terms or in a timely manner, Alcoa may be required to utilize all or a portion of the bridge financing, resulting in higher borrowing costs and reduced financial flexibility. In addition, if attractive debt financing cannot be obtained, Alcoa may seek alternative sources of funding, including the issuance of equity securities, which could dilute existing stockholders.

The increased indebtedness Alcoa expects to incur in connection with the Transaction may, among other impacts, reduce Alcoa’s flexibility to respond to changing business and economic conditions, increase borrowing costs, and limit Alcoa’s ability to pursue strategic opportunities, further increasing capital and credit-related risks. In addition, financing arrangements governing such indebtedness may impose operating and financial restrictions. Risks, uncertainties, and events beyond Alcoa’s control could affect its ability to comply with applicable covenants, and failure to comply could result in a default, trigger cross-default provisions, permit lenders to accelerate debt maturities, or impair Alcoa’s ability to obtain additional financing or satisfy its obligations.

Any of these factors could adversely affect Alcoa’s financial condition, results of operations, cash flows, credit profile, and the anticipated benefits of the Transaction.