Record revenue and a transformative deal for Alcoa

About Alcoa Corporation

Alcoa Corporation (ASX: AAI) is a global leader in bauxite, alumina and aluminium production, headquartered in Pittsburgh, Pennsylvania, with operations across Australia, Brazil, Spain, Norway, Canada, Iceland, New Zealand and the United States. The company traces its origins to 1888 when Charles Martin Hall developed the electrolytic process that made aluminium an affordable industrial material. Today, Alcoa operates as a pure-play upstream aluminium company across three integrated segments — bauxite mining, alumina refining and aluminium smelting — with its Australian operations forming a cornerstone of the global portfolio. In Australia, Alcoa operates the Huntly and Willowdale bauxite mines in Western Australia, the Kwinana, Pinjarra and Wagerup alumina refineries, and the Portland aluminium smelter in Victoria.

The quarter

Alcoa’s second quarter 2026 results, released on 16 July, represent the company’s strongest quarterly revenue performance on record and reflect a sharp improvement in aluminium prices, the benefit of multiple smelter capacity restarts, and progress on strategic initiatives that are reshaping the company’s portfolio.

Revenue of US$3,966 million was up 24% sequentially, driven primarily by the Aluminum segment, where third-party revenue rose 31% to US$3,330 million on higher shipments and a 13% increase in average realised third-party aluminium price to US$4,752 per metric tonne. Total aluminium production increased 5% sequentially to 636,000 metric tonnes, supported by the completion of the San Ciprián smelter restart in Spain on 7 April 2026, continued progress on the Alumar smelter restart in Brazil, and completed capacity restarts at the Lista smelter in Norway and the Portland smelter in Victoria. The company set year-to-date production records at four aluminium smelters and one alumina refinery during the half.

The Alumina segment was softer. Production fell 6% sequentially to 2.2 million metric tonnes, primarily due to instability at the Pinjarra refinery in Western Australia that began in late March and was compounded by gas supply disruptions associated with Cyclone Narelle. Full-year 2026 alumina production guidance was trimmed to 9.5–9.6 million metric tonnes, down 0.2–0.3 million metric tonnes from prior guidance, reflecting Pinjarra’s reduced output. Third-party alumina shipments were flat sequentially at 1.6 million metric tonnes.

Adjusted EBITDA of US$901 million reflected a strong Aluminum segment result of US$1,073 million, which more than offset an Alumina segment Adjusted EBITDA of negative US$96 million, weighed down by higher production costs at Pinjarra and elevated energy prices linked to the Middle East conflict. Net income attributable to Alcoa was US$407 million, or US$1.53 per diluted share. Adjusted net income of US$562 million excluded US$155 million of net special items, the most significant of which were a US$123 million mark-to-market loss on shares held in Saudi Arabian Mining Company (Maaden) and US$45 million in mark-to-market losses on energy contracts. Free cash flow of US$422 million was generated in the quarter, and Alcoa redeemed the remaining US$219 million of its 6.125% senior notes due 2028 in May, further simplifying the balance sheet.

Strategic significance

The defining event of the quarter was the agreement to acquire South32‘s AliGroup interests, announced on 30 June 2026. The transaction covers South32’s stakes in bauxite mining, alumina refining and aluminium smelting assets across Australia, Brazil and South Africa, and is structured as US$4.1 billion in upfront cash consideration plus a contingent value right of up to US$750 million linked to future commodity prices. For Alcoa, the deal meaningfully expands its upstream aluminium footprint, unlocks integration synergies across the value chain and reinforces its position as the world’s leading pure-play upstream aluminium company. The transaction remains subject to customary regulatory approvals and closing conditions.

Alongside the South32 deal, Alcoa took a final investment decision on 14 July 2026 to build a gallium production plant co-located at its Wagerup refinery in Western Australia, in partnership with government and industry partners from Australia, Japan and the United States. Gallium is a critical mineral used in semiconductors, solar cells and defence applications, and the Wagerup plant represents a meaningful step into the critical minerals supply chain from an existing Australian refinery site. Alcoa also committed US$65 million to expand foundry production capabilities at its Mosjøen smelter in Norway, incorporating recycled content into the casting process, with commissioning and ramp-up expected through 2028.

Three new collective bargaining agreements were ratified during the quarter: a four-year agreement with the Australian Workers Union covering approximately 1,400 employees across Western Australia’s mining and refining operations; a four-year agreement with the United Steelworkers at US smelters; and a five-year agreement with the United Steelworkers in Canada at the ABI smelter in Québec.

Conclusion

Alcoa’s Q2 2026 result demonstrates a business firing on multiple fronts: record revenue, a step-change in aluminium segment earnings, smelter restarts converting to volume and a transformative acquisition that will materially expand the group’s upstream footprint. The near-term drag from Pinjarra’s gas-related disruption is expected to ease in Q3, with management guiding for approximately US$10 million in sequential Alumina segment Adjusted EBITDA improvement as stability recovers. With aluminium prices remaining well above year-ago levels and the AliGroup acquisition advancing, the market will look to the second half for confirmation that Alcoa’s strategic and operational momentum is sustainable.