Alcoa Completes Alumar Restart and Advances AliGroup Deal
Alcoa posted $483 million of net income, or $1.81 a share, as aluminum production rose for a sixth straight quarter and alumina output recovered at Pinjarra.
Alcoa Corporation (AA) increased aluminum production for a sixth consecutive quarter and completed the restart of its Alumar smelter in Brazil, even as revenue and adjusted EBITDA receded from second-quarter records.
The global bauxite, alumina, and aluminum producer generated $3.704 billion of third-party revenue, down 7% sequentially after a 24% sequential rise to a quarterly record of $3.966 billion in the second quarter. Net income attributable to Alcoa was $483 million, or $1.81 a share. Adjusted net income was $485 million, or $1.82 a share. Adjusted EBITDA excluding special items declined $112 million sequentially to $789 million.
Sequential results reflected favorable mark-to-market changes on Saudi Arabian Mining Company shares and energy contracts, improved production costs, and higher alumina prices, partially offset by lower aluminum prices and shipments. Notable special items included $32 million of mark-to-market gains on energy contracts, a $28 million mark-to-market gain on Ma’aden shares, $25 million of demolition and remediation costs at closed locations, and $14 million of external costs related to the AliGroup acquisition.
Alumina production increased 11% sequentially to 2.5 million metric tons, primarily due to improved stability at the Pinjarra refinery in Australia. Third-party alumina shipments rose 2% sequentially to 1,652 thousand metric tons. Alumina segment third-party revenue increased 7% sequentially to $595 million on higher average realized alumina prices and shipments. The average realized third-party alumina price was $353 a metric ton. Alumina segment Adjusted EBITDA was a $1 million loss.
Aluminum production increased 2% sequentially to 649,000 metric tons, the sixth consecutive quarterly production increase, following second-quarter capacity restarts and the Alumar completion. Total aluminum shipments decreased 5% sequentially to 693 thousand metric tons after elevated second-quarter volumes tied to first-quarter inventory repositioning. Aluminum segment third-party revenue decreased 9% sequentially to $3.021 billion on lower shipments and average realized prices. The average realized third-party aluminum price was $4,527 a metric ton. Aluminum segment Adjusted EBITDA declined to $862 million from $1.073 billion.
Cash provided from operations was $643 million and free cash flow was $472 million. Alcoa ended the quarter with a cash balance of $4.4 billion, including $2.6 billion of financing obtained for the acquisition of South32 Limited’s interests in its bauxite, alumina, and aluminum assets, referred to as AliGroup. Days working capital rose 4 days sequentially to 50 days, primarily on higher aluminum inventory days.
On September 23, Alcoa completed offerings of $1.5 billion of 6.625% senior notes due 2034 and $1.1 billion of 6.875% senior notes due 2036. The company intends to use the proceeds, together with cash on hand, to fund cash consideration of approximately $3.1 billion for AliGroup as well as related fees and expenses, and terminated remaining bridge financing commitments. South32 shareholders approved the acquisition on October 15, 2026. The transaction remains on track to close in the first half of 2027.
Alcoa also entered definitive agreements to sell portions of the Massena East site in New York, with potential proceeds of up to $315 million. At closing, expected within the next six months, the company expects to receive approximately $50 million to $65 million, depending on approved data center capacity, with an additional approximately $60 million to $250 million possible for capacity expansions and installment payments over seven years.
The company reaffirmed its 2026 alumina production projection of 9.5 to 9.6 million metric tons and shipments of 11.5 to 11.6 million metric tons, and aluminum production of 2.4 to 2.6 million metric tons and shipments of 2.6 to 2.8 million metric tons. For the fourth quarter, Alcoa expects higher production and shipments in both segments, alumina Adjusted EBITDA consistent sequentially, and aluminum Adjusted EBITDA down about $30 million sequentially from higher raw-material costs and planned maintenance, including about $30 million of unfavorable alumina costs. Other income is expected up about $20 million on interest earned on cash held for AliGroup. Interest expense is expected to approximate $185 million for the year, an increase from the prior projection after the notes issuance.
President and CEO William F. Oplinger said the company remains focused on strengthening safety performance, sustaining operational stability, and building on this momentum as it works toward closing AliGroup in the first half of 2027.