Alcoa : Bank of America 2025 Global Metals, Mining and Steel Conference TRANSCRIPT

Published: 2025-05-14 11:01:20 ET AA

Published on 05/14/2025 at 11:01

Alcoa Corporation

Bank of America 2025 Global Metals, Mining and Steel Conference

Wednesday, May 14, 2025, 5:30 AM Eastern

And with that as context, would you mind kicking us off with a brief overview of Alcoa and thinking about the objectives for 2025, the state of the business, and some of the key catalysts upcoming?

Alcoa is a pure-play aluminum company. We're integrated and organized in two business segments, Alumina and Aluminum. We operate 26 locations across nine countries on six continents and we employ 13,900 employees. In Alumina, we have five bauxite mines and five alumina refineries. In Aluminum, we operate our 11 smelters on 87% renewable energy and our carbon intensity is one-third of the industry average. We have logistical advantages with our smelters in that they're located in our customers' primary markets, in North America and Europe.

We had a strong first quarter. We generated cash from operations well in excess of our historical first quarter when we typically consume cash. We had strong operations in terms of production levels as well as safety, and we will continue that trajectory in 2025. We also recently announced a new adjusted net debt target of $1 billion to $1.5 billion. We closed the first quarter at $2.1 billion, so we have a bit more delevering work to do, and we'll stay focused on that during 2025.

We'll also, during the second quarter of 2025, continue our dialogue with the U.S. Administration on tariff relief as well as working with global policymakers and the aluminum associations, both in the U.S. and Canada, to advocate. The U.S. Administration, we really appreciate their support of the aluminum industry in trying to increase domestic production. However, that will take time. And until then, we'll focus on tariff relief and operating safely and stably as well as increasing our competitiveness.

So with that, we're ready for questions.

Our engagement with the U.S. Administration has been across multi-dimensions. At first, the conversations were about education. The U.S. is importing over 4 million metric tonnes of aluminum a year. About two-thirds of that is coming from Canada. We only have 600,000 metric tonnes of curtailed capacity. So, the U.S. right now has no ability to meet the current import need. We would need four to five new smelters. So, think about that in terms of the investment that would be required. It would take five to seven years to build those smelters. We're looking for a payback period, probably over 15 years on that. And then think about the power that's needed, about 12 terawatt hours of power needed for each smelter.

So, these are points that initially the U.S. Administration was not fully aware of. So as we're talking to them about the Canadian exemption, really stressing the importance of enabling that flow to continue without tariffs, like it did under the 232 Section before this latest tariff.

$425 million. Now, that was in the context of what you've just highlighted in terms of pricing. One key factor there, which you touched on, is the Midwest premium. What do you see as the elements keeping the Midwest premium from appreciating? And what do you think would be the next steps to get that Midwest premium up to an acceptable level?

being met by Canadian metal, so that flow will continue into the U.S. However, we do have a certain amount of spot volumes, and there we are aggressively - our commercial team is calculating the net-backs to see where the proper region, and we have sent a small amount of Canadian volume already into Europe, because the net-backs were favoring. We were getting a better margin to send it into Europe. Now, not huge amounts of supply, but that's what you could expect to see over time if the Midwest does not respond and really incent metal to flow into the U.S. from other regions.

If you look across the next set of regional premiums that might be affected by that, the Rotterdam premium could go down even further, if you have excess, your - Russian tonnes coming into Europe, but you could see CIF Japan increase when the Russian tonnes leave Asia. We don't believe we'd see much impact at all on the U.S. Midwest, because Russia has not been supplying material quantities to the U.S. since probably 2018. And I missed LME, we really don't see LME responding too dramatically, again, because the global supply and demand won't have changed. It's just a shifting East-West.

and Brazil as well. So despite the export bans on GAC bauxite, China is still increasing its supply from Guinea. If we looked at the first quarter of 2025, you're seeing about a 35% year-over-year increase of bauxite flowing from Guinea into China.

For China's expansion projects, that bauxite is primarily coming from refineries - the high-cost refineries that are coming offline, and they're also using stockpiled bauxite as well. For Indonesia and India, we expect that they will be using domestic integrated supply for their expansions.

$2,000 to $3,500 per tonne. Beyond that, outside of Asia, you could see prices over $5,000 in terms of CapEx. We believe an incentive price now might be between $2,500 and $2,900 LME.

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Alcoa Corporation published this content on May 14, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 14, 2025 at 15:00 UTC.