Item 7. Management’s Discussion and Analysis o f Financial Condition and Results of Operations.
(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))
Cautionary Statement on Forward-Looking Statements
This report contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “aims,” “ambition,” “anticipates,” “believes,” “could,” “develop,” “endeavors,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “outlook,” “potential,” “plans,” “projects,” “reach,” “seeks,” “sees,” “should,” “strive,” “targets,” “will,” “working,” “would,” or other words of similar meaning. All statements by Alcoa Corporation that reflect expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, statements regarding forecasts concerning global demand growth for bauxite, alumina, and aluminum, and supply/demand balances; statements, projections or forecasts of future or targeted financial results, or operating performance (including our ability to execute on strategies related to environmental, social and governance matters); statements about strategies, outlook, and business and financial prospects (including related to production and shipments); and statements about capital allocation and return of capital. These statements reflect beliefs and assumptions that are based on Alcoa Corporation ’ s perception of historical trends, current conditions, and expected future developments, as well as other factors that management believes are appropriate in the circumstances.
Forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and changes in circumstances that are difficult to predict. Although Alcoa Corporation believes that the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that these expectations will be attained and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Such risks and uncertainties include, but are not limited to: (a) the impact of global economic conditions on the aluminum industry and aluminum end-use markets; (b) volatility and declines in aluminum and alumina demand and pricing, including global, regional, and product-specific prices, or significant changes in production costs which are linked to the London Metal Exchange (LME) or other commodities; (c) the disruption of market-driven balancing of global aluminum supply and demand by non-market forces; (d) competitive and complex conditions in global markets; (e) our ability to obtain, maintain, or renew permits or approvals necessary for our mining operations; (f) rising energy costs and interruptions or uncertainty in energy supplies; (g) unfavorable changes in the cost, quality, or availability of raw materials or other key inputs, or by disruptions in the supply chain; (h) economic, political, and social conditions, including the impact of trade policies, tariffs, and adverse industry publicity; (i) legal proceedings, investigations, or changes in foreign and/or U.S. federal, state, or local laws, regulations, or policies; (j) changes in tax laws or exposure to additional tax liabilities; (k) climate change, climate change legislation or regulations, and efforts to reduce emissions and build operational resilience to extreme weather conditions; (l) disruptions in the global economy caused by ongoing regional conflicts; (m) fluctuations in foreign currency exchange rates and interest rates, inflation and other economic factors in the countries in which we operate; (n) global competition within and beyond the aluminum industry; (o) our ability to achieve our strategies or expectations relating to environmental, social, and governance considerations; (p) claims, costs, and liabilities related to health, safety and environmental laws, regulations, and other requirements in the jurisdictions in which we operate; (q) liabilities resulting from impoundment structures, which could impact the environment or cause exposure to hazardous substances or other damage; (r) dilution of the ownership position of the Company ’ s stockholders, price volatility, and other impacts on the price of Alcoa common stock by the secondary listing of the Alcoa common stock on the Australian Securities Exchange; (s) our ability to obtain or maintain adequate insurance coverage; (t) our ability to execute on our strategy to reduce complexity and optimize our asset portfolio and to realize the anticipated benefits from announced plans, programs, initiatives relating to our portfolio, capital investments, and developing technologies; (u) our ability to integrate and achieve intended results from joint ventures, other strategic alliances, and strategic business transactions; (v) significant declines in the market value of our marketable securities; (w) our ability to fund capital expenditures; (x) deterioration in our credit profile or increases in interest rates; (y) impacts on our current and future operations due to our indebtedness and our ability to reduce indebtedness; (z) our ability to continue to return capital to our stockholders through the payment of cash dividends and/or the repurchase of our common stock; (aa) cyber attacks, security breaches, system failures, software or application vulnerabilities, or other cyber incidents; (bb) labor market conditions, union disputes and other employee relations issues; and (cc) the other risk factors discussed in Part I Item 1A of this Form 10-K and other reports filed by Alcoa Corporation with the SEC, including those described in this report.
We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. Alcoa Corporation disclaims any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law. Neither Alcoa nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements.
Overview
Our Business
Alcoa Corporation (Alcoa or the Company) is a vertically integrated aluminum company comprised of bauxite mining, alumina refining, aluminum production (smelting and casting), and energy generation. Aluminum is a commodity that is traded on the LME and priced daily. Additionally, alumina is subject to market pricing through the Alumina Price Index (API), which 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. As a result, the prices of both aluminum and alumina are subject to significant volatility and, therefore, influence the operating results of Alcoa.
Through direct and indirect ownership, Alcoa Corporation has 25 operating locations in eight countries around the world, situated primarily in Australia, Brazil, Canada, Iceland, Norway, Spain, and the United States. Governmental policies, laws and regulations, and other economic factors, including inflation and fluctuations in foreign currency exchange rates and interest rates, affect the results of operations in these countries.
Business Update
During 2025, average alumina prices decreased by 11 percent and average aluminum prices increased 9 percent compared with 2024. After reaching an all-time high in the fourth quarter of 2024 primarily due to supply disruptions, alumina prices decreased largely in response to refinery expansions primarily in China and Indonesia. Aluminum prices were supported by strong market fundamentals and macroeconomic trends, including historically low inventory levels and rising demand. In addition, the average Midwest premium increased 211 percent year over year, largely reflecting U.S. Section 232 tariffs on aluminum imports from Canada, which increased from 25 percent on March 12, 2025 to 50 percent on June 4, 2025. Prior to March 12, 2025, the Section 232 tariff was 10 percent and Canadian metal imported into the U.S. was exempt. At recent Midwest premium pricing, tariff costs on U.S. imports of aluminum from Canada are fully covered by the Midwest premium. Energy costs declined primarily due to higher pricing at the Brazil hydro-electric facilities and carbon dioxide compensation within the Aluminum segment, while raw material costs increased primarily due to higher caustic soda prices in the Alumina segment.
The Company delivered strong operational performance in 2025. Five aluminum smelters and one alumina refinery set annual production records. Notably, the Deschambault (Canada) smelter achieved its sixteenth consecutive year of increased production, while the Mosjøen (Norway) smelter achieved its eighth consecutive year of record performance.
Alcoa continued to advance its operational, strategic, and capital allocation priorities during 2025. In March 2025, Alcoa and Trento Equity Holdings, S.L.U. (Trento EQT), formerly known as IGNIS Equity Holdings, SL, entered into a joint venture agreement to support the continued operation of the San Ciprián (Spain) complex. Following the formation of the joint venture, Alcoa resumed the restart of the San Ciprián smelter which had been operating at approximately 6 percent of total pot capacity since March 2024. As of December 31, 2025, the smelter was operating at approximately 65 percent of its annual capacity of 228 kmt, with full restart expected by mid-2026.
In April 2025, the Administrative Review Tribunal of Australia (ART) issued its decision on disputed tax liabilities included within the Notices of Assessment issued by the Australian Taxation Office (ATO) in July 2020 and 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. This matter, with claims totaling more than $800 in tax, interest, and penalties, is now closed in Alcoa’s favor.
In July 2025, Alcoa completed the sale of its full ownership interest of 25.1% in the Saudi Arabia joint venture, to Saudi Arabian Mining Company (Ma’aden) in exchange for total consideration of $1,350, comprised of 85,977,547 shares of Ma’aden (valued at SAR 52.35 per share at closing, or $1,200) and $150 in cash (related to taxes and transaction costs). The sale generated significant value to Alcoa from a non-core asset and is expected to provide Alcoa with enhanced financial flexibility when monetized in the future.
In September 2025, Alcoa announced the permanent closure of the Kwinana (Australia) refinery, which had been fully curtailed since June 2024. The decision to permanently close the refinery allows the Company to progress site remediation efforts, enabling the sale or redevelopment of the land in the future. The projected future proceeds are expected to cover the majority of the remediation costs.
During 2025, the Company strengthened its balance sheet by reducing total debt by $147 and completing the realignment of debt toward Australian operating assets that require significant capital investment for mine relocations and residue storage projects in the coming years. As a result of this debt reduction and a strong cash position, the Company met the high end of its adjusted net debt target as of December 31, 2025.
Australia Mine Approvals
In February 2026, Alcoa of Australia agreed with the Australian federal government to further modernize the approvals framework for its Western Australian mining activities under Australia’s federal Environment Protection and Biodiversity Conservation Act (EPBC Act).
Alcoa had previously initiated an approvals modernization process in 2020 with the referral of its next major mine regions (Myara North and Holyoake) under both Western Australian (WA) state and Australian federal environmental legislation. Managed by the Western Australian Environmental Protection Agency (WA EPA), that assessment is ongoing and is not impacted by the agreement reached in February 2026.
In 2023, the WA EPA also commenced an environmental assessment of the rolling five-year mine plan (2023-2027) at the Huntly and Willowdale mines under state environmental law, while the WA government granted an exemption that allows Alcoa to continue its mining operations while the assessment is undertaken. That assessment is also ongoing and is not impacted by the agreement reached in February 2026.
Federal Strategic Assessment
In February 2026, Alcoa agreed with the Australian federal government to undertake a strategic assessment for all current and potential future mine areas (excluding Myara North and Holyoake) through the term of its existing mine lease ending in 2045 under the EPBC Act. The holistic assessment of potential impacts to significant flora and fauna will provide stakeholders with increased clarity about the long-term sustainable future of mining activities. The Australian federal government granted Alcoa a national interest exemption that allows Alcoa to continue its mining operations at the Huntly and Willowdale mines for 18 months while the strategic assessment is completed. The Company is committed to working collaboratively with the Australian federal government to complete the strategic assessment by August 2027.
In addition, Alcoa entered into two enforceable undertakings with the Department of Climate Change, Energy, the Environment and Water (DCCEEW), related to mining activities for the period from 2019 to 2025 at the Huntly mine. Under the terms of the enforceable undertakings, Alcoa is required to provide a total of $36 (A$55) for investments in environmental offsets to counterbalance impacts caused by mine development and the funding of various conservation programs. A charge of $27 (A$40) was included in Cost of goods sold on the Statement of Consolidated Operations for the year ended December 31, 2025 to increase existing environmental reserves for this matter which is now fully accrued. Associated cash outlays are expected in 2026.
The Company believed its harvesting and clearing activities at the Huntly mine were permitted under previously established provisions of the EPBC Act, which were amended in November 2025.
Myara North and Holyoake and Rolling Mine Plan Approvals
During 2025, the Company continued 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 WA EPA in 2023 by a third party. Alcoa completed a comprehensive review of comments received during the 12-week public comment period which opened in May 2025, and submitted to the WA EPA responses to comments received from government entities in January 2026. The Company is committed to continuing to work collaboratively with stakeholders to achieve Ministerial decisions by the end of 2026, and 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.
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 SAR 52.35 per share at closing, or $1,200) and $150 in cash (related to taxes and transaction costs). The Company recorded a gain of $786, net of $18 in transaction costs, in Other (income) expenses, net on the Statement of Consolidated Operations in the third quarter of 2025.
Subsequent to July 1, 2025, the fair value of the shares is based on the unadjusted quoted price on the Saudi Exchange (Tadawul). For the year ended December 31, 2025, the Company recorded a mark-to-market gain of $197 in Other (income) expenses, net on the Statement of Consolidated Operations related to changes in fair value of the shares.
At December 31, 2025, the shares of Ma’aden were valued at SAR 60.95 per share, or $1,397.
San Ciprián Operations
Following the formation of the joint venture with Trento 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 pot capacity since March 2024. The restart was paused in April 2025 following a widespread power outage across Spain and resumed in July 2025. The smelter was operating at approximately 65 percent of its total annual capacity of 228 kmt as of December 31, 2025, and the Company expects that the restart will be completed by mid-2026.
On March 31, 2025, Alcoa and Trento EQT entered into a joint venture agreement (the Agreement) whereby Alcoa owns 75% and continues as the managing operator and Trento EQT owns 25% of the San Ciprián operations. Under the terms of the Agreement, Alcoa and Trento EQT contributed $81 (€75) and $27 (€25), respectively, to form the joint venture. Subsequent to formation of the joint venture on March 31, 2025, an additional $89 (€76) was funded for operations by Alcoa with a priority position in future cash returns. Further funding requires agreement by both partners, and to maintain their respective ownership in the joint venture, equity funding would be shared 75% by Alcoa and 25% by Trento EQT. In December 2025, Alcoa provided a mandatory convertible note of $153 (€130) to the joint venture that will convert to equity on or before September 1, 2026.
The formation of the joint venture was accounted for as an equity transaction where Trento EQT’s noncontrolling interest was reflected as a decrease to Additional capital on the accompanying Consolidated Balance Sheet. The Agreement also provides Trento EQT a put option whereby Trento EQT can require Alcoa Corporation to purchase from Trento 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 Trento EQT’s redemption of the put option is not solely within the Company’s control. Net loss attributable to noncontrolling interest was $38 for the year ended December 31, 2025.
D ebt Actions
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 $750 aggregate principal amount of 5.500% Notes due 2027 (the 2027 Notes) and $500 aggregate principal amount of 6.125% Notes due 2028 (the 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 supported 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 the 2027 Notes and $281 of the $500 aggregate principal amount of the 2028 Notes for purchase. The issuance of the 2030 Notes and 2032 Notes and the cash tender of the 2027 Notes and the 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.
In December 2025, ANHBV redeemed the remaining $141 aggregate principal amount of the 2027 Notes at a redemption price equal to 100 percent of the principal amount, plus accrued and unpaid interest. As a result, the Company recorded a loss of $1 on the extinguishment of debt in the fourth quarter of 2025 in Interest expense, which was comprised of the write-off of unamortized discounts and deferred financing costs. The redemption was funded using cash on hand.
During 2025, the Company also fully repaid $74 drawn under an existing term loan and cancelled the agreement and reduced short-term borrowings related to inventory repurchase agreements by $41.
Australia Tax Decision
On April 30, 2025, the ART issued its decision related to the proceedings Alcoa of Australia Limited (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 percent of the assessed income tax amount exclusive of interest and any penalties, or $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) were withdrawn. The related prepaid tax asset and 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 were reclassified to Taxes, including income taxes in June 2025 as these amounts are payable by AofA by June 1, 2026. The net cash impact of both the refunded amount and the accrued cash taxes is approximately $152 (A$226). This matter is now closed in Alcoa’s favor.
U.S. Section 232 Tariffs
On March 12, 2025, the U.S. government imposed a 25 percent tariff on certain aluminum imports from Canada under Section 232 of the Trade Expansion Act of 1962 (Section 232) which increased to a 50 percent tariff on June 4, 2025. Prior to March 12, 2025, the Section 232 tariff was 10 percent, and Canadian metal imported into the U.S. was exempt. At recent Midwest premium pricing, tariff costs on U.S. imports of aluminum from Canada are fully covered by the Midwest premium.
Other Matters
Management performed a quantitative assessment for the Alumina reporting unit in the fourth quarter of 2025. As a result of the assessment, the Company recorded a charge of $144 in Impairment of goodwill on the Statement of Consolidated Operations for the year ended December 31, 2025, reducing the amount of goodwill for the Alumina reporting unit to zero.
The goodwill impairment was primarily a result of declining alumina prices, increased capital expenditures primarily related to mine moves and mine reclamation in Australia, and an increase in the discount rate. Following a peak in the fourth quarter of 2024 primarily due to supply disruptions, alumina prices decreased in the first quarter of 2025 and declined further in the fourth quarter of 2025 driven by a global supply surplus, largely due to refinery expansions in China and Indonesia.
In November 2025, a new three-year collective bargaining agreement was ratified with the Australian Workers Union (AWU) representing approximately 400 hourly employees at the Portland, Australia smelter.
In September 2025, a new four-year collective bargaining agreement was ratified with the Starfsgreinafélag Islands (AFL) and the Rafiðnaðarsamband Íslands (RSÍ) representing approximately 400 hourly employees at the Fjarðaál, Iceland smelter.
The Company is actively negotiating three collective bargaining agreements with le Syndicat des Métallos (FTQ) representing about 1,000 employees at the Bécancour (ABI) smelter in Québec, Canada that expired on July 19, 2025. While negotiations continue, the conditions and benefits of the current agreements at ABI remain in effect.
Additionally, the collective bargaining agreement with workers unions representing approximately 800 employees at the San Ciprián refinery and smelter in Spain expired on December 31, 2025. Negotiations for a new agreement will commence in 2026, and the conditions and benefits of the current agreement at San Ciprián remain in effect.
The Company paid 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 during 2025, totaling $105.
See the below sections for additional details on the above-described actions.
Basis of Presentation
The Consolidated Financial Statements of Alcoa Corporation are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). In accordance with GAAP, certain situations require management to make estimates based on judgments and assumptions, which may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. They also may affect the reported amounts of revenues and expenses during the reporting periods. Management uses historical experience and all available information to make these estimates. Management regularly evaluates the judgments and assumptions used in its estimates, and results could differ from those estimates upon future events and their effects or new information.
Results of Operations
The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the fiscal years ended December 31, 2025 and 2024. For a comparison of changes for the fiscal years ended December 31, 2024 and 2023, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operation in Part II Item 7 of Alcoa Corporation’s Annual Report on Form 10-K for the year ended December 31, 2024 (filed February 20, 2025).
For the year ended December 31,
Statement of Operations
Sales
Cost of goods sold (exclusive of expenses below)
Selling, general administrative, and other expenses
Research and development expenses
Provision for depreciation, depletion, and amortization
Impairment of goodwill
Restructuring and other charges, net
Interest expense
Other (income) expenses, net
Total costs and expenses
Income before income taxes
(Benefit from) provision for income taxes
Net income
Less: Net loss attributable to noncontrolling interest
Net income attributable to Alcoa Corporation
Selected Financial Metrics
Diluted income per share attributable to Alcoa
Corporation common shareholders
Third-party shipments of alumina (kmt)
Third-party shipments of aluminum (kmt)
Average realized price per metric ton of alumina
Average realized price per metric ton of aluminum
Average Alumina Price Index (API) (1)
Average London Metal Exchange (LME) 15-day lag (2)
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.
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.
Annual Comparison
Overview
Net income attributable to Alcoa Corporation increased $1,097 primarily as a result of:
Higher aluminum prices
Gain on sale of interest in the Saudi Arabia joint venture
Lower taxes
Favorable mark-to-market results on the Ma’aden shares
Higher volumes and price from bauxite offtake and supply agreements
Favorable currency impacts
Partially offset by:
Higher restructuring charges
Tariffs on U.S. imports of aluminum from Canada
Lower alumina prices
Impairment of goodwill associated with a 1994 acquisition in the Alumina segment
Sales
Sales increased $936 primarily as a result of:
Higher average realized price of aluminum
Higher volumes and price from bauxite offtake and supply agreements
Partially offset by:
Lower average realized price of alumina
Lower shipments of aluminum due to the absence of volumes from a joint venture supply agreement
Cost of goods sold
Cost of goods sold as a percentage of sales decreased 1 percent primarily as a result of:
Higher aluminum prices
Higher volumes and price from bauxite offtake and supply agreements
Partially offset by:
Tariffs on U.S. imports of aluminum from Canada
Lower alumina prices
Selling, general administrative, and other expenses
Selling, general administrative, and other expenses increased $24 primarily as a result of:
Increased fees for professional services, increased information technology services, and higher labor costs
Provision for depreciation, depletion, and amortization
The Provision for depreciation, depletion, and amortization decreased $19 primarily as a result of:
Lower depreciation in Brazil for mine reclamation and bauxite residue storage asset retirement obligations
Favorable currency impacts
Lower depreciation expense related to the Kwinana refinery closure
Partially offset by:
Write offs of assets for projects no longer being pursued
Interest expense
Interest expense increased $2 primarily as a result of:
Interest on $500 6.125% Senior Notes due 2030 and $500 6.375% Senior Notes due 2032 issued in March 2025
Interest on $750 7.125% Senior Notes due 2031 issued in March 2024
Interest on unfavorable value added tax assessments in Brazil
Partially offset by:
Absence of interest partially offset by debt settlement expenses for the portion of the 2027 Notes and the 2028 Notes extinguished in March 2025
Correction to capitalized interest primarily related to certain capital expenditures in Europe associated with prior periods
Absence of interest on the Alumina Limited revolving credit facility that was assumed on August 1, 2024, until Alcoa repaid outstanding amounts under the facility in November 2024
Other (income) expenses, net
Other (income) expenses, net was ($1,057) in 2025 compared with $91 in 2024. The favorable change of $1,148 was primarily a result of:
Gain on sale of interest in the Saudi Arabia joint venture
Favorable mark-to-market change on the Ma’aden shares subsequent to July 1, 2025
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
Absence of costs related to site separation commitments associated with the Warrick Rolling Mill sale
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
Interest income on the refund owed to Alcoa from the ATO
Absence of equity losses from MAC recognized in the prior year partially offset by equity losses from MAC through July 1, 2025
Partially offset by:
Absence of equity income from MBAC recognized in the prior year partially offset by equity income from MBAC through July 1, 2025
Higher ELYSIS capital contributions, increasing loss recognition
Impairment of goodwill
In the fourth quarter of 2025, Management performed its annual review of goodwill in the Alumina reporting unit. The estimated fair value of the Alumina reporting unit was less than its carrying value, and an impairment loss of $144 was recognized. There is no goodwill remaining for the Alumina reporting unit. The decline in the fair value was primarily driven by declining alumina prices, increased capital expenditures primarily related to mine moves and mine reclamation in Australia, and an increase in the discount rate.
In the fourth quarter of 2024, Management performed its annual review of goodwill in the Alumina reporting unit. The estimated fair value of the Alumina reporting unit was substantially in excess of its carrying value, resulting in no impairment.
Restructuring and other charges, net
In 2025, Restructuring and other charges, net of $918 primarily related to:
$856 for the permanent closure of the previously curtailed Kwinana alumina refinery
$39 to record additional asset retirement obligations and environmental remediation at previously closed sites
$11 for certain employee obligations related to the February 2023 updated viability agreement for the San Ciprián aluminum smelter
$10 for take-or-pay power contract costs at previously closed sites
Partially offset by:
$2 of reversals related to lower costs for environmental remediation at a previously closed site
In 2024, Restructuring and other charges, net of $341 primarily related to:
$287 for the curtailment of the Kwinana alumina refinery
$40 to record additional asset retirement obligations and environmental remediation at previously closed sites
$34 for take-or-pay power contract and contract termination costs at previously closed locations
Partially offset by:
$20 of reversals related to lower costs for environmental remediation and asset retirement obligations at previously closed sites
(Benefit from) provision for income taxes
The Benefit from income taxes in 2025 was ($55) on income before taxes of $1,064 or (5.2 percent). In comparison, the 2024 Provision for income taxes was $265 on income before taxes of $289 or 91.7 percent.
The favorable change of $320 was primarily attributable to lower income in jurisdictions where taxes are paid and a tax benefit related to the restructuring charge for the Kwinana refinery closure, partially offset by tax expense on the gain on sale of interest in the Saudi Arabia joint venture and the favorable mark-to-market change on the Ma’aden shares.
Additionally, the tax benefit in 2025 included the full reversal of the valuation allowance recorded against the deferred tax assets of Alcoa World Alumina Brasil Ltda. (AWAB) of $133, partially offset by a tax charge of $30 to revalue the deferred tax assets of AWAB at the tax holiday rate. The tax benefit in 2025 also included the reversal of the valuation allowance of $119 recorded against the deferred tax assets on loss carryforwards of ANHBV, partially offset by a tax charge of $95 to record a reserve for uncertain tax positions.
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 Trento EQT entered into a joint venture agreement. Alcoa owns 75% and continues as the managing operator and Trento EQT owns 25% of the San Ciprián operations. Alcoa began recognizing earnings attributable to Trento EQT’s ownership interest within Noncontrolling interest in the second quarter of 2025.
Net loss attributable to noncontrolling interest of ($38) in 2025 reflects losses incurred at the San Ciprián smelter and refinery. Net loss attributable to noncontrolling interest of ($36) in 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.
Segment Adjusted EBITDA totaled $1,940 in 2025 and $2,065 in 2024. The following information provides production, shipments, sales, Segment Adjusted EBITDA, and Adjusted operating costs data for each reportable segment, as well as certain realized price and average cost data, for each of the two years in the period ended December 31, 2025.
Alum ina
Bauxite production (mdmt)
Third-party bauxite shipments (mdmt)
Alumina production (kmt)
Third-party alumina shipments (kmt)
Intersegment alumina shipments (kmt)
Produced alumina shipments (kmt)
Third-party bauxite sales
Third-party alumina sales
Total segment third-party sales
Intersegment alumina sales
Total sales
Adjusted operating costs
Other segment items
Segment Adjusted EBITDA
Average realized third-party price per metric ton of alumina
Adjusted operating cost per metric ton of produced alumina shipped
In the above table, 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.
Overview. This segment represents the Company’s global bauxite mining operations and worldwide refining system, which processes bauxite into alumina.
A portion of this segment’s bauxite production represents the offtake from an equity method investment in Guinea, as well as Alcoa’s share of bauxite production related to an equity investment in Saudi Arabia (prior to the sale of Alcoa’s interest in the Saudi Arabia joint venture in July 2025). Bauxite mined is primarily used internally within the Alumina segment; a portion of the bauxite is sold to external customers. Bauxite sales to third-parties are conducted on a contract basis.
The alumina produced by this segment is sold primarily to internal and external aluminum smelter customers; a portion of the alumina is sold to external customers who process it into industrial chemical products. Approximately two-thirds of the production of alumina is sold under supply contracts to third parties worldwide, while the remainder is used internally by the Aluminum segment. Alumina produced by this segment and used internally is transferred to the Aluminum segment at prevailing market prices. A portion of this segment’s third-party sales are completed through alumina traders.
Generally, this segment’s sales are transacted in U.S. dollars while costs and expenses are transacted in the local currency of the respective operations, which are the Australian dollar, the Brazilian real, and the euro.
This segment also included Alcoa’s 25.1% ownership interest in a mining and refining joint venture company in Saudi Arabia prior to the sale of Alcoa’s interest on July 1, 2025 (see Saudi Arabia Joint Venture above).
Business Update. The average API of $420 per metric ton trended unfavorably compared to 2024 reflecting an 11 percent year over year decrease. The majority of third-party alumina sales are linked to the API, and the unfavorable price trend impacted the segment’s results.
During 2025, the Alumina segment also experienced charges related to asset retirement obligations, primarily at the Poços de Caldas (Brazil) refinery, and unfavorable raw material costs and higher production costs compared to 2024, partially offset by higher volumes and price from bauxite offtake and supply agreements.
Alumina production decreased 4 percent in 2025 compared to 2024 primarily due to the full curtailment of the Kwinana refinery in the second quarter of 2024.
Kwinana Refinery
In September 2025, Alcoa announced the permanent closure of the Kwinana alumina refinery, which had been fully curtailed since June 2024. The Kwinana refinery had approximately 220 employees at the time of the closure announcement and this number was reduced to approximately 190 employees as of December 31, 2025, including approximately 10 employees that were redeployed to other Alcoa operations. The number of employees will be further reduced during 2026 as the closure progresses, and certain employees will remain beyond 2026 to prepare the site for future redevelopment.
In 2025, the Company recorded charges of $856 in Restructuring and other charges, net, including $430 to establish reserves for asset retirement obligations and environmental remediation, $265 to impair fixed assets, $75 to write-off the remaining net book value of other assets, and $86 to accrue for other costs. Additionally, a charge of $39 was recorded to Cost of goods sold to write down remaining inventories to net realizable value. Associated severance costs were previously recorded in 2024.
Cash outlays (which includes existing reserves for asset retirement obligations, other costs, environmental remediation and employee related liabilities) related to the full curtailment and closure of the Kwinana refinery were $212 in 2025. Additional cash outlays of approximately $525 are expected through 2031 with approximately $120 to be spent in 2026.
Other Matters
In February 2026, Alcoa agreed with the Australian federal government to undertake a strategic assessment for all current and potential future mine areas (excluding Myara North and Holyoake) through the term of its existing mine lease ending in 2045 under the EPBC Act. The Australian federal government granted Alcoa a national interest exemption that allows Alcoa to continue its mining operations at the Huntly and Willowdale mines for 18 months while the strategic assessment is completed. In addition, Alcoa entered into two enforceable undertakings with the DCCEEW, related to mining activities for the period from 2019 to 2025 at the Huntly mine. Under the terms of the enforceable undertakings, Alcoa is required to provide a total of $36 (A$55) for investments in environmental offsets to counterbalance impacts caused by mine development and the funding of various conservation programs. A charge of $27 (A$40) was included in Cost of goods sold to increase existing environmental reserves for this matter which is now fully accrued. Associated cash outlays are expected in 2026.
In September 2025, the Company recorded a charge of $42 to Cost of goods sold related to a change in closure estimates for non-operating bauxite residue areas at the Poços de Caldas refinery to comply with impoundment stability regulations in the region. Improvements to comply with the regulations are required to be completed between October 2026 and November 2029.
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 Saudi Arabia Joint Venture above).
On March 31, 2025, Alcoa and Trento EQT entered into a joint venture agreement, which includes the San Ciprián refinery (see San Ciprián Operations above).
Capacity. At December 31, 2025, the Alumina segment had a base capacity of 11,653 kmt with 1,014 kmt of curtailed refining capacity. In the third quarter of 2025, base capacity and curtailed capacity decreased 2,190 kmt due to the closure of the Kwinana refinery (see above).
Annual Comparison
Production
Alumina production decreased 4 percent primarily as a result of:
Full curtailment of the Kwinana refinery in June 2024
Third-party sales
Third-party sales decreased $215 primarily as a result of:
Lower average realized price of $57/ton principally driven by a lower average API
Unfavorable currency impacts
Partially offset by:
Higher volumes and price from bauxite offtake and supply agreements
Intersegment alumina sales
Intersegment alumina sales decreased $153 primarily as a result of:
Lower average API on sales to the Aluminum segment
Partially offset by:
Higher alumina shipments primarily due to the Alumar (Brazil) and San Ciprián smelter restarts
Segment Adjusted EBITDA
Segment Adjusted EBITDA decreased $526 primarily as a result of:
Lower average realized price
Charges related to increasing asset retirement obligations, primarily at the Poços de Caldas refinery
Unfavorable raw material costs primarily on higher prices for caustic soda and lime
Higher production costs primarily related to higher labor costs, partially offset by the absence of a write down of certain inventories to their net realizable value
Partially offset by:
Higher volumes and price from bauxite offtake and supply agreements
Forward Look.
The Alumina segment is expected to produce between 9.7 to 9.9 million metric tons of alumina in 2026, an increase from 2025 due to productivity improvements. In 2026, alumina shipments are expected to be between 11.8 and 12.0 million metric tons. The difference between production and shipments, which decreased from 2025, reflects trading volumes and externally sourced alumina to fulfill customer contracts.
Further, in 2026, the Alumina segment expects lower sales from bauxite offtake and supply agreements.
Alumi num
Aluminum production (kmt)
Total aluminum shipments (kmt)
Produced aluminum shipments (kmt)
Third-party aluminum sales
Other (1)
Total segment third-party sales
Intersegment sales
Total sales
Adjusted operating costs
Other segment items
Segment Adjusted EBITDA
Average realized third-party price per metric ton of aluminum
Adjusted operating cost per metric ton of produced aluminum shipped
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.
In the above table, 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 prior to its termination in the first quarter of 2025 (see below).
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.
Overview. This segment consists of the Company’s (i) worldwide smelting and casthouse system, which processes alumina into primary aluminum, and the (ii) portfolio of energy assets in Brazil, Canada, and the United States.
Aluminum’s combined smelting and casting operations produce primary aluminum products, virtually all of which are sold to external customers and traders. The smelting operations produce molten primary aluminum, which is then formed by the casting operations into either commodity grade ingot (e.g., t-bar, sow, standard ingot) or into value add ingot products (e.g., foundry, billet, rod, and slab). A variety of external customers purchase the primary aluminum products for use in fabrication operations, which produce products primarily for the transportation, building and construction, packaging, wire, and other industrial markets. Results from the sale of aluminum powder and scrap are also included in this segment, as well as the impacts of embedded aluminum derivatives related to power contracts.
The energy assets supply power to external customers in Brazil and the United States, as well as internal customers in the Aluminum segment (Warrick (Indiana) smelter and Baie-Comeau (Canada) smelter) and, to a lesser extent, the Alumina segment (Brazilian refineries).
Generally, this segment’s aluminum sales are transacted in U.S. dollars while costs and expenses of this segment are transacted in the local currency of the respective operations, which are the Canadian dollar, U.S. dollar, the Icelandic króna, the Brazilian real, the Norwegian krone, the Australian dollar, and the euro.
This segment also included Alcoa Corporation’s 25.1% ownership interest in a smelting joint venture company in Saudi Arabia prior to the sale of Alcoa’s interest on July 1, 2025 (see Saudi Arabia Joint Venture above).
Business Update. Aluminum prices increased 9 percent year over year with LME prices on a 15-day lag averaging $2,614 per metric ton in 2025. Additionally, the average Midwest premium increased 211 percent year over year largely in response to the tariff 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 U.S. Section 232. At recent Midwest premium pricing, tariff costs on U.S. imports of aluminum from Canada are fully covered by the Midwest premium.
During 2025, the Aluminum segment also experienced higher average alumina input costs (due to the consumption of alumina purchased in previous periods when prices were higher), partially offset by favorable energy impacts primarily due to higher pricing at the Brazil hydro-electric facilities and the recognition of carbon dioxide compensation.
Aluminum production increased 5 percent in 2025 compared to 2024 due to smelter restarts and continued strength in operational performance.
San Ciprián Smelter
On March 31, 2025, Alcoa and Trento EQT entered into a joint venture agreement, which includes the San Ciprián smelter (see San Ciprián Operations above). The joint venture agreement allowed 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 and resumed in July 2025. The smelter was operating at approximately 65 percent of its total annual capacity of 228 kmt as of December 31, 2025 and the Company expects that the restart will be completed by mid-2026.
In connection with terms of the updated viability agreement, the Company had restricted cash of $75 remaining at December 31, 2025, available for capital improvements at the site and smelter restart costs. In the first quarter of 2025, $11 was released from restricted cash.
Energy
On October 22, 2025, Alcoa announced a long-term power contract with the New York Power Authority (NYPA) and a capital investment of approximately $60 in the facility’s anode baking furnace to support future operations at the Massena smelter in New York.
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 (Norway) smelter. 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 Part II Item 8 of this Form 10-K in Note P to the Consolidated Financial Statements for additional information.
In 2024, the Norwegian government amended its carbon dioxide compensation scheme to include a condition for companies to implement emission reduction and energy efficiency measures corresponding to 40 percent of the compensation received (conditional compensation). During the second quarter of 2025, Alcoa received $34 (NOK 341) for conditional compensation and deferred the recognition of the conditional compensation in Other noncurrent liabilities and deferred credits. During the fourth quarter of 2025, the Company met the condition related to costs incurred in 2024 and 2025 and recorded a benefit of $25 (NOK 251) in Research and development expenses.
Additionally, in the fourth quarter of 2025, Alcoa recognized a reduction of $32 to Cost of goods sold related to carbon dioxide compensation in Spain that was received in 2022, as the 3-year operating requirement was met.
Additional Capacity Restarts
During 2025, the Company continued to progress the restart of the Alumar smelter, which was operating at approximately 91 percent of the site’s total annual capacity of 268 kmt (Alcoa share) as of December 31, 2025.
In the second quarter of 2025, the Company began the restart of one potline (31 kmt) at the Lista (Norway) smelter that was curtailed in August 2022. The site was operating at approximately 92 percent of the site’s total annual capacity of 95 kmt as of December 31, 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 Saudi Arabia Joint Venture above). In accordance with the transaction, the metal offtake agreement with Ma’aden was terminated in the first quarter of 2025.
Capacity. At December 31, 2025, the Aluminum segment had 196 kmt of idle smelting capacity on a base capacity of 2,645 kmt, a decrease from 2024 of 178 kmt in idle capacity primarily due to the San Ciprián, Lista, and Alumar smelter restarts (see above).
Annual Comparison
Production
Production increased 5 percent primarily as a result of:
Alumar smelter, San Ciprián smelter, and Lista smelter restarts
Third-party sales
Third-party sales increased $1,129 primarily as a result of:
Higher average realized price of $535/ton driven by higher regional premiums, particularly the Midwest premium (United States and Canada) which rose by an average of 211 percent, and a higher average LME (on a 15-day lag)
Higher pricing at the Brazil hydro-electric facilities
Partially offset by:
Lower shipments primarily due to the absence of volumes from a joint venture supply agreement
Segment Adjusted EBITDA
Segment Adjusted EBITDA increased $401 primarily as a result of:
Higher average realized price
Recognition of carbon dioxide compensation in Spain and in Norway
Higher pricing at the Brazil hydro-electric facilities
Partially offset by:
Tariffs on U.S. imports of aluminum from Canada, which were subject to a 50 percent tariff beginning on June 4, 2025 under U.S. Section 232
Unfavorable raw material costs primarily on higher average alumina input costs
Forward Look. Alcoa expects aluminum production to range between 2.4 and 2.6 million metric tons and aluminum shipments to range between 2.6 and 2.8 million metric tons in 2026.
Additionally, the Company engages in trading activity when market conditions and other factors are favorable. Availability of trading opportunities in 2026 may impact the Company’s shipment projection.
The Aluminum segment expects increases related to the full year impact of tariffs on Midwest premium revenue and tariff costs on U.S. imports of aluminum from Canada, which were subject to a 25 percent tariff beginning on March 12, 2025 until increasing to 50 percent on June 4, 2025 under U.S. Section 232. Further in 2026, the Aluminum segment expects higher production costs associated with the restart of the San Ciprián smelter.
Reconciliations of Certain Segment Information
Reconciliation of Total Segment Third-Party Sales to Consolidated Sales
Alumina
Aluminum
Total segment third-party sales
Other
Consolidated sales
Reconciliation of Total Segment Adjusted EBITDA to Consolidated Net Income Attributable to Alcoa Corporation
Total Segment Adjusted EBITDA
Unallocated amounts:
Transformation (1)
Intersegment eliminations
Corporate expenses (2)
Provision for depreciation, depletion, and amortization
Impairment of goodwill
Restructuring and other charges, net
Interest expense
Other income (expenses), net
Other (3)
Consolidated income before income taxes
Benefit from (provision for) income taxes
Net loss attributable to noncontrolling interest
Consolidated net income attributable to Alcoa Corporation
Transformation includes, among other items, the Adjusted EBITDA of previously closed operations.
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.
Other includes certain items that are not included in the Adjusted EBITDA of the reportable segments.
Environmental Matters
See Part II Item 8 of this Form 10-K in Note S to the Consolidated Financial Statements under caption Contingencies—Environmental Matters.
Liquidity and Capital Resources
Alcoa Corporation’s primary future cash flows are centered on operating activities, particularly working capital, as well as capital expenditures and capital returns. Alcoa’s ability to fund its cash needs depends on the Company’s ongoing ability to generate and raise cash in the future.
In 2025, the Company generated higher profitability due to higher prices for aluminum and the gain on sale of interest in the Saudi Arabia joint venture, partially offset by higher restructuring charges and tariffs on U.S. imports of aluminum from Canada. The strong financial results allowed the Company to reduce debt and maintain a strong balance sheet, including a strong cash position. During the year, the Company successfully completed the following actions:
Closed the sale of interest in the Saudi Arabia joint venture for total consideration of $1,350, comprised of 85,977,547 shares of Ma’aden (valued at SAR 52.35 per share at closing, or $1,200) and $150 in cash (related to taxes and transaction costs);
Completed debt actions, including:
Issued $500 of 6.125% Senior Notes due 2030 and $500 of 6.375% Senior Notes due 2032 in Australia;
Settled $609 of tendered 5.500% Senior Notes due 2027 and redeemed remaining $141;
Settled $281 of tendered 6.125% Senior Notes due 2028; and,
Fully repaid $74 drawn under an existing term loan and cancelled the agreement;
Funded $618 in capital expenditures to sustain and grow our operations; and,
Returned capital to stockholders of $105. In each quarter of 2025, the Board of Directors declared and paid a quarterly cash dividend of $0.10 per share of the Company’s stock.
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 a debt maturity of $219 on the 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 (see Material Cash Requirements below for more information).
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.
At December 31, 2025, the Company’s cash and cash equivalents were $1,597, of which $1,449 was held by foreign subsidiaries. Alcoa Corporation has a number of commitments and obligations related to the Company’s operations in various foreign jurisdictions, resulting in the need for cash outside the U.S. Alcoa Corporation continuously evaluates its local and global cash needs for future business operations, which may influence future repatriation decisions. See Part II Item 8 of this Form 10-K in Note Q to the Consolidated Financial Statements for additional information related to undistributed net earnings.
Cash from Operations
Cash provided from operations was $1,185 in 2025 compared with $622 in 2024. Notable changes to sources of cash included:
$886 favorable change in net income, excluding the impacts from restructuring charges and the gain on sale of interest in the Saudi Arabia joint venture, primarily due to higher aluminum pricing, partially offset by tariffs on U.S. imports of aluminum from Canada; and,
$329 in certain working capital accounts, primarily an increase in receivables in 2024 due to higher sales, partially offset by an increase in accounts payable in 2024 due to higher alumina trading payables.
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 percent of the assessed income tax amount exclusive of interest and any penalties, or $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) were withdrawn. The related prepaid tax asset and 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 were reclassified to Taxes, including income taxes in June 2025 as these amounts are payable by AofA by June 1, 2026. The net cash impact of both the refunded amount and the accrued cash taxes is approximately $152 (A$226) through June 2026. This matter is now closed in Alcoa’s favor. See Part II Item 8 of this Form 10-K in Note S to the Consolidated Financial Statements for additional information related to the tax dispute.
The Company utilizes a Receivables Purchase Agreement facility to sell up to $175 of certain receivables through a 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 the financial institution to secure the sold receivables. At December 31, 2025 and December 31, 2024, the SPE held unsold customer receivables of $486 and $247, respectively, 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 2025, the Company sold gross customer receivables of $910, and reinvested collections of $910 from previously sold receivables, resulting in no net cash remittance to or proceeds from the financial institution. In 2024, the Company sold gross customer receivables of $1,186, and reinvested collections of $1,170 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 $69 and $50 were included in Accounts payable, trade on the Consolidated Balance Sheet as of December 31, 2025 and 2024, respectively. Cash received from sold receivables under the agreement are presented within operating activities in the Statement of Consolidated Cash Flows. See Part II Item 8 of this Form 10-K in Note I to the Consolidated Financial Statements for additional information related to this facility.
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 related to the San Ciprián operations. 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 the associated realized gains or losses have no impact on the results of the San Ciprián operations. See Part II Item 8 of this Form 10-K in Note P to the Consolidated Financial Statements.
Financing Activities
Cash used for financing activities was $261 in 2025 compared with cash provided from financing activities of $201 in 2024.
The use of cash in 2025 included $890 to settle tender offers on the 2027 Notes and 2028 Notes, $141 to redeem the remaining aggregate principal amount of the 2027 Notes, $105 of dividends paid on stock, $74 to fully repay an existing term loan, and $41 of net payments on short-term borrowings (see below), partially offset by $985 net proceeds from the issuance of the 2030 Notes and the 2032 Notes and $27 of contributions from Trento EQT (see Noncontrolling interest above).
The source of cash in 2024 was primarily $737 net proceeds from the issuance of the 7.125% Senior Notes due 2031, partially offset by $385 for the repayment of the Alumina Limited debt (see below), and $90 of dividends paid on stock.
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 August 2025, 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. Further, the Revolving Credit Facility contains financial covenants and customary affirmative and negative covenants (applicable to Alcoa Corporation and certain subsidiaries described as restricted), that, subject to certain exceptions, include limitations on (among other things): indebtedness, liens, investments, sales of assets, restricted payments, entering into restrictive agreements, a covenant prohibiting reductions in the ownership of AWAC entities, and certain other specified restricted subsidiaries of Alcoa Corporation, below an agreed level. The Revolving Credit Facility also contains customary events of default, including failure to make payments under the Revolving Credit Facility, cross-default and cross-judgment default, and certain bankruptcy and insolvency events.
On January 17, 2024, Alcoa Corporation, ANHBV, and certain subsidiaries of the Company entered into Amendment No. 1 (Amendment No. 1) to the Revolving Credit Facility (Amended Revolving Credit Facility). The Amended Revolving Credit Facility provided additional flexibility to the Company and the Borrower by temporarily (i) reducing the minimum interest coverage ratio required thereunder from 4.00 to 1.00 to 3.00 to 1.00 and (ii) providing for a maximum addback for cash restructuring charges in Consolidated EBITDA (as defined in the Revolving Credit Facility) of $450, in each case for the 2024 fiscal year. As of January 1, 2025, the minimum interest coverage ratio requirement reverted to 4.00 to 1.00 and the maximum addback for cash restructuring charges in Consolidated EBITDA reverted to 15 percent of Consolidated EBITDA. The requirement that the Company maintain a debt to capitalization ratio not to exceed .60 to 1.00 was not changed by Amendment No. 1.
In connection with Amendment No. 1, the Company also agreed to provide collateral for its obligations under the Amended Revolving Credit Facility, which required it to execute all security documents to re-secure collateral under the Amended Revolving Credit Facility by, subject to certain exceptions, a first priority security interest in substantially all assets of the Company, the Borrower, the material domestic wholly-owned subsidiaries of the Company, and the material foreign wholly-owned subsidiaries of the Company located in Australia, Brazil, Canada, Luxembourg, the Netherlands, Norway, and Switzerland including equity interests of certain subsidiaries that directly hold equity interests in AWAC entities.
After January 1, 2025, the Company may obtain a release of the collateral if the Company or the Borrower (as applicable) (i) has at least two of the following three designated ratings: (x) Baa3 from Moody’s Investor Service (Moody’s), (y) BBB- from Standard and Poor’s (S&P) Global Ratings and (z) BBB- from Fitch Ratings and (ii) does not have any designated rating lower than: (x) Ba1 from Moody’s, (y) BB+ from S&P Global Ratings and (z) BB+ from Fitch Ratings.
The Amended Revolving Credit Facility contains customary affirmative covenants, negative covenants, and events of default substantially comparable to the Revolving Credit Facility (other than those that are described above and other minor changes). The representations, warranties and covenants contained in the Amended Revolving Credit Facility were made only for purposes of Amendment No. 1 and as of specific dates and were solely for the benefit of the parties to the Amended 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.
As of December 31, 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 December 31, 2025 and 2024, and no amounts were borrowed during 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 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 Yen 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 Amended 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 with the same conditions as the Amended Revolving Credit Facility.
As of December 31, 2025, the Company was in compliance with all financial covenants. The Company may access the entire amount of commitments under the facility. There were no borrowings outstanding at December 31, 2025 and 2024. During 2025, no amounts were borrowed. During 2024, $201 (JPY 29,686) was borrowed and $196 (JPY 29,686) was repaid.
Alumina Limited Revolving Credit Facility
In connection with the acquisition of Alumina Limited (see Part II Item 8 of this Form 10-K in Note C to the Consolidated Financial Statements), the Company assumed $385 of indebtedness as of August 1, 2024, representing the amount drawn on the Alumina Limited revolving credit facility.
At acquisition, the Alumina Limited revolving credit facility had tranches maturing in October 2025 ($100), January 2026 ($150), July 2026 ($150), and June 2027 ($100). In August 2024, Alcoa cancelled the undrawn portions of the revolving credit facility maturing in July 2026 ($15) and June 2027 ($100). In November 2024, pursuant to the terms of the Alumina Limited revolving credit facility, Alcoa voluntarily repaid all accrued and unpaid amounts outstanding under the revolving credit facility, totaling $385 and, as of the same date, cancelled the outstanding lender tranche commitments ($385). As a result of the repayment and cancellation of undrawn amounts, the Alumina Limited revolving credit facility agreement was effectively terminated. No early termination penalties or prepayment premiums were incurred by Alcoa in connection with the termination of the Alumina Limited revolving credit facility.
The Company may draw on the remaining facilities periodically to ensure working capital needs are met. See Part II Item 8 of this Form 10-K in Note M to the Consolidated Financial Statements for additional information related to these facilities.
Guarantees of Third Parties. As of December 31, 2025 and 2024, the Company had no outstanding potential future payments for guarantees issued on behalf of a third party.
Bank Guarantees and Letters of Credit. Alcoa Corporation and its subsidiaries have outstanding bank guarantees and letters of credit related to, among others, energy contracts, environmental obligations, legal and tax matters, leasing obligations, workers compensation, and customs duties. The total amount committed under these instruments, which automatically renew or expire at various dates between 2026 and 2028, was $428 (includes $84 issued under a standby letter of credit agreement —see below) at December 31, 2025.
Alcoa Corporation’s former parent company Alcoa Inc. was renamed Arconic Inc. on November 1, 2016 and was subsequently renamed Howmet Aerospace Inc. (Howmet). Howmet has outstanding bank guarantees and letters of credit related to the Company of $10 at December 31, 2025. In the event Howmet would be required to perform under any of these instruments, Howmet would be indemnified by Alcoa Corporation in accordance with the Separation and Distribution Agreement dated October 31, 2016. Likewise, the Company has outstanding bank guarantees and letters of credit related to Howmet of $8 at December 31, 2025. In the event Alcoa Corporation would be required to perform under any of these instruments, the Company would be indemnified by Howmet in accordance with the Separation and Distribution Agreement dated October 31, 2016.
In December 2023, AofA committed to provide a bank guarantee in connection with the approval of the Company’s five-year mine plans that were referred to the Western Australia Environmental Protection Agency (WA EPA), which demonstrates Alcoa’s confidence that its operations will not impair drinking water supplies. On September 30, 2024 and October 1, 2024, AofA delivered bank guarantees totaling $67 (A$100). Alcoa may, with the Western Australian government’s consent, replace the bank guarantee with a parent company guarantee or a surety bond. The requirement to provide financial assurance will expire upon the completion of the WA EPA’s assessment of the Company’s five-year mine plans.
In August 2017, Alcoa Corporation entered into a standby letter of credit agreement with three financial institutions, which was most recently amended in May 2024 and expires on May 1, 2026. The agreement provides for a $200 facility used by the Company for matters in the ordinary course of business. Alcoa Corporation’s obligations under this facility are secured in the same manner as obligations under the Company’s revolving credit facility. Additionally, this facility contains similar representations and warranties and affirmative, negative, and financial covenants as the Company’s Revolving Credit Facility. As of December 31, 2025, letters of credit aggregating $84 were issued under this facility. See Part II Item 8 of this Form 10-K in Note M to the Consolidated Financial Statements for additional information related to the Company’s debt.
Surety Bonds. Alcoa Corporation has outstanding surety bonds primarily related to tax matters, contract performance, workers compensation, environmental-related matters, and customs duties. The total amount committed under these bonds, which automatically renew or expire at various dates between 2026 and 2030, was $357 at December 31, 2025. Additionally, Howmet has outstanding surety bonds related to the Company of $6 at December 31, 2025. In the event Howmet would be required to perform under any of these instruments, Howmet would be indemnified by Alcoa Corporation in accordance with the Separation and Distribution Agreement dated October 31, 2016. Likewise, the Company has outstanding surety bonds related to Howmet of $9 at December 31, 2025. In the event Alcoa Corporation would be required to perform under any of these instruments, the Company would be indemnified by Howmet in accordance with the Separation and Distribution Agreement dated October 31, 2016.
Debt. As of December 31, 2025, Alcoa Corporation had five outstanding series of Notes maturing at varying times. A summary of the Notes and other long-term debt is shown below. See Part II Item 8 of this Form 10-K in Note M to the Consolidated Financial Statements for additional information related to the Company’s debt.
December 31,
5.500% Notes, due 2027
6.125% Notes, due 2028
4.125% Notes, due 2029
6.125% Notes, due 2030
7.125% Notes, due 2031
6.375% Notes, due 2032
Other
Unamortized discounts and deferred financing costs
Total
Less: amount due within one year
Long-term debt, less amount due within one year
In April 2025, the Company amended a $74 term loan, included within Other at December 31, 2024, extending the maturity from May 2025 to November 2025. In September 2025, the Company fully repaid $74 drawn under the term loan and cancelled the agreement.
Inventory Repurchase Agreements
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 $9 and $50 related to these agreements was recorded in Short-term borrowings within Other current liabilities on the Consolidated Balance Sheet as of December 31, 2025 and December 31, 2024, respectively.
In 2025, the Company recorded borrowings of $60 and repurchased $101 of inventory related to these agreements. In 2024, the Company recorded borrowings of $88 and repurchased $94 of inventory related to these agreements. The cash received and subsequently paid under the inventory repurchase agreements is included in Cash (used for) provided from financing activities on the Statement of Consolidated Cash Flows.
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 February 6, 2026, Moody’s Investor Service (Moody’s) affirmed the rating of ANHBV’s long-term debt as Ba1 and affirmed the outlook as stable.
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 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.
Dividend. In 2025, the Board of Directors declared and paid quarterly cash dividends of $0.10 per share of the Company’s common stock (including common stock underlying CDIs) and Series A convertible preferred stock , totaling $104 and $1, respectively, for the year.
In the fourth quarter of 2025, all issued and outstanding shares of preferred stock were converted into common stock, and no preferred stock remains issued and outstanding at December 31, 2025. See Part II Item 8 of this Form 10-K in Note N to the Consolidated Financial Statements for additional information related to the conversion of preferred stock.
The details of any future cash dividend declaration, including the amount of such dividend and the timing and establishment of the record and payment dates, will be determined by the Board of Directors. The decision of whether to pay future cash dividends and the amount of any such dividends will be based on the Company’s financial position, results of operations, cash flows, capital requirements, business conditions, the requirements of applicable law, and any other factors the Board of Directors may deem relevant.
Common Stock Repurchase Program. In July 2022, Alcoa Corporation’s Board of Directors approved a common stock repurchase program under which the Company may purchase shares of its outstanding common stock up to an aggregate transactional value of $500, depending on the Company’s continuing analysis of market, financial, and other factors (the July 2022 authorization).
No shares were repurchased in 2025 or 2024.
As of the date of this report, the Company is currently authorized to repurchase up to a total of $500, in the aggregate, of its outstanding shares of common stock under the July 2022 authorization. Repurchases under this program may be made using a variety of methods, which may include open market purchases, privately negotiated transactions, or pursuant to a Rule 10b5-1 plan. This program may be suspended or discontinued at any time and does not have a predetermined expiration date. Alcoa Corporation intends to retire repurchased shares of common stock.
Investing Activities
Cash used for investing activities was $502 in 2025 compared with $608 in 2024.
In 2025, the use of cash was primarily attributable to $618 related to capital expenditures and $59 of cash contributions to the ELYSIS ® partnership, partially offset by cash received of $150 for the sale of interest in the Saudi Arabia joint venture (see below) and $11 for the sale of a non-core investment.
On July 1, 2025, Alcoa completed the sale of interest in the Saudi Arabia joint venture for total consideration of $1,350, comprised of 85,977,547 shares of Ma’aden (valued at SAR 52.35 per share at closing, or $1,200) and $150 in cash (related to taxes and transaction costs).
In 2024, the use of cash was primarily attributable to $580 related to capital expenditures and $37 of cash contributions to the ELYSIS partnership.
In 2026, Alcoa expects capital expenditures of approximately $750 related to sustaining capital projects and return-seeking capital projects. The timing and amount of capital expenditures may fluctuate as a result of the Company’s normal operations.
Material Cash Requirements
As discussed above, the Company relies primarily on operating cash flows to fund its cash commitments and management believes its 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 has committed cash outflows related to pension and postretirement benefit obligations, asset retirement obligations, environmental remediation, and operating lease agreements. See Part II Item 8 of this Form 10-K in Notes O, R, S, and T, respectively, to the Consolidated Financial Statements for additional information. As of December 31, 2025, a summary of Alcoa Corporation’s outstanding material cash requirements are as follows:
Total
Thereafter
Operating activities:
Energy-related purchase obligations
Raw material purchase obligations
Other purchase obligations
Interest related to debt
Financing activities:
Long-term debt and Short-term borrowings
Totals
Purchase obligations—Energy-related purchase obligations consist primarily of electricity and natural gas contracts with expiration dates ranging from less than 1 year to 22 years. Raw material obligations consist mostly of bauxite (relates to Alcoa’s bauxite mine interests in Guinea and Brazil), caustic soda, lime, alumina, aluminum fluoride, calcined petroleum coke, anodes, and cathode blocks with expiration dates ranging from less than 1 year to 9 years. Other purchase obligations consist principally of freight for bauxite and alumina with expiration dates ranging from less than 1 to 9 years. Many of these purchase obligations contain variable pricing components, and, as a result, actual cash payments may differ from the estimates provided in the preceding table. In accordance with the terms of several of these supply contracts, obligations may be reduced as a result of an interruption to operations, such as a plant curtailment or a force majeure event.
Interest related to total debt—Interest is based on interest rates in effect as of December 31, 2025 and is calculated on debt with maturities that extend to 2032.
Long-term debt and Short-term borrowings—Total debt amounts in the preceding table represent the principal amounts of all outstanding long-term debt and Short-term borrowings, which have maturities that extend to 2032.
Critical Accounting Policies and Estimates
The preparation of the Company’s Consolidated Financial Statements in accordance with GAAP requires management to make certain estimates based on judgments and assumptions regarding uncertainties that affect the amounts reported in the Consolidated Financial Statements and disclosed in the Notes to the Consolidated Financial Statements. Areas that require such estimates include the review of properties, plants, and equipment and goodwill for impairment, and accounting for each of the following: asset retirement and environmental obligations; litigation matters; pension plans and other postretirement benefits obligations; derivatives and hedging activities; and income taxes.
Management uses historical experience and all available information to make these estimates; actual results may differ from those used to prepare the Company’s Consolidated Financial Statements at any given time. Despite these inherent limitations, management believes that the amounts recorded in the financial statements related to these items are based on its best estimates and judgments using all relevant information available at the time.
A summary of the Company’s significant accounting policies is included in Part II Item 8 of this Form 10-K in Note B to the Consolidated Financial Statements.
Properties, Plants, and Equipment. Properties, plants, and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets (asset group) may not be recoverable, including in the period when assets have met the criteria to be classified as held for sale. The model used to determine recoverability of an asset or asset group would leverage the model that management uses for planning and strategic review of the entire business, including related inputs and assumptions. Management’s impairment assessment process is described in Part II Item 8 of this Form 10-K in Note B to the Consolidated Financial Statements. See Part II Item 8 of this Form 10-K in Note K to the Consolidated Financial Statements for more information regarding properties, plants, and equipment.
Goodwill. Goodwill is reviewed for impairment annually (in the fourth quarter) or more frequently if indicators of impairment exist or if a decision is made to sell or exit a business. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others, deterioration in general economic conditions, negative developments in equity and credit markets, adverse changes in the markets in which an entity operates, increases in input costs that have a negative effect on earnings and cash flows, or a trend of negative or declining cash flows over multiple periods. The fair value that could be realized in an actual transaction may differ from that used to evaluate goodwill for impairment.
Under the qualitative impairment test, management considers a number of factors in its assessment, such as: general economic conditions, equity and credit markets, industry and market conditions, and earnings and cash flow trends.
Under the quantitative impairment test, management uses a discounted cash flow (DCF) model to estimate the current fair value of its reporting units. A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows, including production costs, production capability, tax rates, capital expenditures, discount rate, markets and market share, sales volumes and prices, and working capital changes. The model used for the goodwill impairment test leverages the model, including related inputs and assumptions, that management uses for planning and strategic review of the entire business.
Management will test goodwill on a qualitative or quantitative basis. See Part II Item 8 of this Form 10-K in Note B to the Consolidated Financial Statements for more information regarding management’s impairment assessment process.
Management performed a quantitative assessment for the Alumina reporting unit in the fourth quarter of 2025. As a result of the assessment, the Company recorded a charge of $144 in Impairment of goodwill on the Statement of Consolidated Operations for the year ended December 31, 2025, reducing the amount of goodwill for the Alumina reporting unit to zero.
The goodwill impairment was primarily a result of declining alumina prices, increased capital expenditures primarily related to mine moves and mine reclamation in Australia, and an increase in the discount rate. Following a peak in the fourth quarter of 2024 primarily due to supply disruptions, alumina prices decreased in the first quarter of 2025 and declined further in the fourth quarter of 2025 driven by a global supply surplus, largely due to refinery expansions in China and Indonesia.
Prior to the impairment in the fourth quarter of 2025, there were no triggering events that necessitated an impairment test for the Alumina reporting unit, except for the 2023 segment change which resulted in no impairment. See Part II Item 8 of this Form 10-K in Note L to the Consolidated Financial Statements for more information regarding goodwill.
Asset Retirement and Environmental Obligations. Estimates are used to record environmental remediation and asset retirement obligation (ARO) reserves based on the best available information at the time of recognition. Several assumptions are used to estimate the costs required to demolish, environmentally remediate, reclaim, or restore the site, including:
Engineering designs for construction or closure;
Materials and services costs;
Volume of regulated materials to be removed (asbestos, polychlorinated biphenyls, spent potlining);
Disposition of demolition materials;
Extent of contamination based on available data;
Scope of remediation to mitigate human health or environmental risks and/or to meet regulatory requirements;
Timing to complete construction or closure; and,
Commercial availability and pricing for off-site treatment or disposal applications.
As the site is demolished, remediated, reclaimed, or restored, the assumptions and estimates used to record the reserve may change to account for:
Actual site conditions that require more or less remediation or reclamation;
Legislation that becomes more or less stringent;
Regulative authorities requiring updates to final design prior to completion;
Alternative disposal methods for demolition waste;
Technological changes which allow remediation to be more efficient;
Market factors; and,
Variances in work that is atypical from prior work experience.
Changes to the estimates may result in material changes to the reserve that may require an increase to or a reversal of a previously recorded reserve. See Part II Item 8 of this Form 10-K in Note R and Note S to the Consolidated Financial Statements for more information regarding current reserves.
Litigation Matters. For asserted claims and assessments, liabilities are recorded when an unfavorable outcome of a matter is deemed to be probable and the loss is reasonably estimable. Management determines the likelihood of an unfavorable outcome based on many factors such as, and among others, the nature of the matter, available defenses and case strategy, progress of the matter, views and opinions of legal counsel and other advisors, applicability and success of appeals processes, and the outcome of similar historical matters. Once an unfavorable outcome is deemed probable, management weighs the probability of estimated losses, and the most reasonable loss estimate is recorded. If an unfavorable outcome of a matter is deemed to be reasonably possible, then the matter is disclosed to the extent material. With respect to unasserted claims or assessments, management must first determine that the probability that an assertion will be made is likely, then, a determination as to the likelihood of an unfavorable outcome and the ability to reasonably estimate the potential loss is made. Legal matters are reviewed on a continuous basis to determine if there has been a change in management’s judgment regarding the likelihood of an unfavorable outcome or the estimate of a potential loss. See Part II Item 8 of this Form 10-K in Note B to the Consolidated Financial Statements for more information regarding management’s litigation matters policy.
Pension and Other Postretirement Benefits. Liabilities and expenses for pension and other postretirement benefits are determined using actuarial methodologies and incorporate significant assumptions, including the interest rate used to discount the future estimated liability, the expected long-term rate of return on plan assets, and several assumptions relating to the employee workforce (salary increases, health care cost trend rates, retirement age, and mortality).
The yield curve model used to develop the discount rate is based on high-quality corporate bonds, parallels the plans’ projected cash flows and has a weighted average duration of 10 years. If a deep market of high-quality corporate bonds does not exist in a country, then the yield on government bonds plus a corporate bond yield spread is used. The impact of a change in the weighted average discount rate of ¼ of 1 percent would be approximately $60 on combined pension and other postretirement liabilities and immaterial to pretax earnings in the following year.
The expected long-term rate of return on plan assets is generally applied to a five-year market-related value of plan assets (a four-year average or the fair value at the plan measurement date is used for certain non-U.S. plans). The process used by management to develop this assumption is one that relies on forward-looking investment returns by asset class. Management incorporates expected future investment returns on current and planned asset allocations using information from various external investment managers and consultants, as well as management’s own judgment. A change in the assumption for the weighted average expected long-term rate of return on plan assets of ¼ of 1 percent would impact pretax earnings by approximately $5 for 2026.
Mortality rate assumptions are based on mortality tables and future improvement scales published by third parties, such as the Society of Actuaries, and consider other available information including historical data as well as studies and publications from reputable sources.
See Part II Item 8 of this Form 10-K in Note O to the Consolidated Financial Statements for more information regarding pension and other postretirement benefits including accounting impacts of current year actions.
Derivatives and Hedging. To calculate the fair value of certain derivatives, management uses DCF and other simulation models that consider the following inputs and assumptions: quoted market prices (e.g., aluminum prices on the 10-year LME forward curve and energy prices), information concerning time premiums and volatilities for certain option type embedded derivatives and regional premiums for aluminum contracts, aluminum and energy prices beyond those quoted in the market, and the estimated credit spread between Alcoa and the counterparty. The quoted market prices used in the valuation models are dependent on market fundamentals, the relationship between supply and demand at any point in time, seasonal conditions, inventories, and interest rates. For periods beyond the term of quoted market prices, management estimates the price of aluminum by extrapolating the 10-year LME forward curve and estimates the Midwest premium based on recent transactions.
Changes in estimates can have a material impact on the derivative valuations. See Part II Item 8 of this Form 10-K in Note P to the Consolidated Financial Statements for more information regarding derivatives and hedging and related activity during the period.
Income Taxes. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not (greater than 50 percent) that a tax benefit will not be realized. In evaluating the need for a valuation allowance, management applies judgment in assessing all available positive and negative evidence and considers all potential sources of taxable income, including income available in carryback periods, future reversals of taxable temporary differences, projections of taxable income, and income from tax planning strategies. Positive evidence includes factors such as a history of profitable operations, projections of future profitability within the carryforward period, including from tax planning strategies, and Alcoa Corporation’s experience with similar operations. Existing favorable contracts and the ability to sell products into established markets are additional positive evidence. Negative evidence includes items such as cumulative losses, projections of future losses, or carryforward periods that are not long enough to allow for the utilization of a deferred tax asset based on existing projections of income. In certain jurisdictions, deferred tax assets related to cumulative losses may exist without a valuation allowance where in management’s judgment the weight of the positive evidence more than offsets the negative evidence of the cumulative losses. Upon changes in facts and circumstances, management may conclude that deferred tax assets for which no valuation allowance is currently recorded may not be realized, resulting in a future charge to establish a valuation allowance. Financial information utilized in this analysis leverages the same financial information, including related inputs and assumptions, that management uses for planning and strategic review of the entire business.
Tax benefits related to uncertain tax positions taken or expected to be taken on a tax return are recorded when such benefits meet a more likely than not threshold. Otherwise, these tax benefits are recorded when a tax position has been effectively settled, which means that the statute of limitations has expired, or the appropriate taxing authority has completed their examination even though the statute of limitations remains open.
Changes in estimates can have a material impact on the deferred taxes and uncertain tax positions. See Part II Item 8 of this Form 10-K in Note Q to the Consolidated Financial Statements for more information regarding income taxes and deferred tax assets and related activity during the period.
Related Party Transactions
Alcoa Corporation buys products from and sells products to various related companies, consisting of entities in which Alcoa Corporation retains a 50 percent or less equity interest, at negotiated prices between the two parties. These transactions were not material to the financial position or results of operations of Alcoa Corporation for all periods presented.
Recently Adopted Accounting Guidance
See Part II Item 8 of this Form 10-K in Note B to the Consolidated Financial Statements under caption Recently Adopted Accounting Guidance.
Recently Issued Accounting Guidance
See Part II Item 8 of this Form 10-K in Note B to the Consolidated Financial Statements under caption Recently Issued Accounting Guidance.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk.
See Part II Item 8 of this Form 10-K in Note P to the Consolidated Financial Statements under caption Derivatives.
Item 8. Financial Statemen ts and Supplementary Data.
Management’s Reports to Alcoa Corporation Stockholders
Management’s Report on Financial Statements and Practices
The accompanying Consolidated Financial Statements of Alcoa Corporation and its subsidiaries (the Company) were prepared by management, which is responsible for their integrity and objectivity, in accordance with accounting principles generally accepted in the United States of America (GAAP) and include amounts that are based on management’s best judgments and estimates. The other financial information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 is consistent with that in the Consolidated Financial Statements.
Management recognizes its responsibility for conducting the Company’s affairs according to the highest standards of personal and corporate conduct. This responsibility is characterized and reflected in key policy statements issued from time to time regarding, among other things, conduct of its business activities within the laws of the host countries in which the Company operates and potentially conflicting outside business interests of its employees. The Company maintains a systematic program to assess compliance with these policies.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the U.S. Securities Exchange Act of 1934 (as amended), for the Company. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management conducted an assessment to evaluate the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025 using the criteria in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2025.
PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the Company’s financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2025, has audited the Company’s internal control over financial reporting as of December 31, 2025 and has issued an attestation report, which is included herein.
/s/ William F. Oplinger
William F. Oplinger
President and Chief Executive Officer
/s/ Molly S. Beerman
Molly S. Beerman
Executive Vice President and Chief Financial Officer
February 26, 2026
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Alcoa Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Alcoa Corporation and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, of comprehensive income, of changes in mezzanine equity and equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Asset Retirement Obligations – Mine Reclamation and Closure of Bauxite Residue Areas
As described in Notes B and R to the consolidated financial statements, the Company recognizes asset retirement obligations (AROs) related to legal obligations associated with the standard operation of bauxite mines, alumina refineries, and aluminum smelters. For the bauxite mines and alumina refineries, the AROs consist primarily of costs associated with mine reclamation and closure of bauxite residue areas, respectively. The fair values of the AROs are recorded on a discounted basis at the time the obligation is incurred and accreted over time for the change in present value; related accretion is recorded as a component of cost of goods sold. Additionally, the Company capitalizes asset retirement costs by increasing the carrying amount of the related long-lived assets and depreciating the assets over their remaining useful life. As disclosed by management, estimates are used to record AROs based on the best available information at the time of recognition. Several assumptions are used to estimate the cost required for reclamation and restoration of the site including: engineering designs for construction or closure, materials and services costs, regulatory requirements, and timing to complete construction or closure. As of December 31, 2025, the Company had $1,405 million in AROs, of which $355 million related to mine reclamation and $869 million related to the closure of bauxite residue areas. During 2025, the Company incurred liabilities related to mine reclamation and closure of bauxite residue areas, consisting of $380 million related to the closure of bauxite residue areas, including water management, due to the closure of the Kwinana refinery, $78 million related to higher estimated mine reclamation costs and new mining areas opened during the year primarily in Australia, $66 million related to a change in closure estimates for operating bauxite residue areas primarily at the Australia refineries, $51 million related to a change in closure estimates for non-operating bauxite residue areas at operating sites primarily at the Poços de Caldas refinery in Brazil, and $6 million related to a change in closure estimates for non-operating bauxite residue areas, including water treatment, at a previously closed site.
The principal considerations for our determination that performing procedures relating to the AROs for mine reclamation and closure of bauxite residue areas is a critical audit matter are (i) the significant judgment by management in developing the fair value estimate of the AROs; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the engineering designs for construction or closure, materials and services costs, regulatory requirements, and timing to complete construction or closure; (collectively “management’s assumptions”); and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s accounting for AROs, including controls over management’s methodology, assumptions, and valuation of the AROs for mine reclamation and closure of bauxite residue areas. These procedures also included, among others, (i) testing management’s process for developing the fair value estimate of the AROs for mine reclamation and closure of bauxite residue areas; (ii) evaluating the appropriateness of the methodologies used by management, (iii) testing the completeness and accuracy of underlying data used in the methodologies, and (iv) evaluating the reasonableness of management’s assumptions described above. Evaluating management’s assumptions involved (i) evaluating the cost of rehabilitation and restoration of a site, including comparing the cost assumptions used, on a sample basis, to comparable data from external parties and internal source data; (ii) evaluating the consistency of management’s assumptions across mine and bauxite residue areas, as applicable; (iii) the identification of circumstances which may require a modification to a previous estimate; (iv) physically observing the progress of the mine reclamation; (v) evaluating management’s application of and compliance with regulatory requirements; and (vi) evaluating whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in (i) evaluating the appropriateness of the methodology used by management for closure of bauxite residue areas; (ii) evaluating the reasonableness of the application of and compliance with regulatory requirements for closure of bauxite residue areas; and (iii) evaluating the reasonableness of management’s estimate of AROs for closure of bauxite residue areas by developing an independent estimate of the costs included in AROs for a sample of bauxite residue areas, using independently determined assumptions, and comparing the independent estimate of the costs to management’s estimate.
/s/ PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
February 26, 2026
We have served as the Company’s auditor since 2015.
Alcoa Corporation and Subsidiaries
Statement of Consol idated Operations
(in millions, except per-share amounts)
For the year ended December 31,
Sales (E)
Cost of goods sold (exclusive of expenses below)
Selling, general administrative, and other expenses
Research and development expenses
Provision for depreciation, depletion, and amortization
Impairment of goodwill (B & L)
Restructuring and other charges, net (D)
Interest expense (U)
Other (income) expenses, net (U)
Total costs and expenses
Income (loss) before income taxes
(Benefit from) provision for income taxes (Q)
Net income (loss)
Less: Net loss attributable to noncontrolling interest
Net income (loss) attributable to Alcoa Corporation
Earnings per share attributable to Alcoa Corporation common
shareholders (F):
Basic
Diluted
The accompanying notes are an integral part of the consolidated financial statements.
Alcoa Corporation and Subsidiaries
Statement of Consolidated C omprehensive Income
(in millions)
Alcoa Corporation
Noncontrolling interest
Total
For the year ended December 31,
Net income (loss)
Other comprehensive (loss)
income, net of tax (G):
Change in unrecognized net
actuarial gain/loss and prior
service cost/benefit
related to pension and other
postretirement benefits
Foreign currency translation
adjustments
Net change in unrecognized
gains/losses on cash flow
hedges
Total Other comprehensive
(loss) income, net of tax
Comprehensive income (loss)
The accompanying notes are an integral part of the consolidated financial statements.
Alcoa Corporation and Subsidiaries
Consolidated Balance Sheet
(in millions)
December 31,
Assets
Current assets:
Cash and cash equivalents (P)
Receivables from customers (I)
Other receivables
Inventories (J)
Fair value of derivative instruments (P)
Prepaid expenses and other current assets
Total current assets
Properties, plants, and equipment, net (K)
Investments (H)
Noncurrent marketable securities (C & P)
Deferred income taxes (Q)
Fair value of derivative instruments (P)
Other noncurrent assets (U)
Total Assets
Liabilities
Current liabilities:
Accounts payable, trade
Accrued compensation and retirement costs
Taxes, including income taxes
Fair value of derivative instruments (P)
Other current liabilities
Long-term debt due within one year (M & P)
Total current liabilities
Long-term debt, less amount due within one year (M & P)
Accrued pension benefits (O)
Accrued other postretirement benefits (O)
Asset retirement obligations (R)
Environmental remediation (S)
Fair value of derivative instruments (P)
Noncurrent income taxes (Q)
Other noncurrent liabilities and deferred credits (U)
Total liabilities
Contingencies and commitments (S)
Mezzanine equity
Noncontrolling interest (C)
Equity
Preferred stock (N)
Common stock (N)
Additional capital
Accumulated deficit
Accumulated other comprehensive loss (G)
Total equity
Total liabilities, mezzanine equity, and equity
The accompanying notes are an integral part of the consolidated financial statements.
Alcoa Corporation and Subsidiaries
Statement of Consol idated Cash Flows
(in millions)
For the year ended December 31,
Cash from Operations
Net income (loss)
Adjustments to reconcile net income (loss) to cash from operations:
Depreciation, depletion, and amortization
Deferred income taxes (Q)
Equity loss (income), net of dividends (H)
Impairment of goodwill (B & L)
Restructuring and other charges, net (D)
Net (gain) loss from investing activities – asset and investment sales (U)
Mark-to-market gain on noncurrent marketable securities (U)
Net periodic pension benefit cost (O)
Stock-based compensation (N)
(Gain) loss on mark-to-market derivative financial contracts
Other
Changes in assets and liabilities, excluding effects of divestitures and
foreign currency translation adjustments:
Decrease (increase) in receivables
(Increase) decrease in inventories
Decrease (increase) in prepaid expenses and other current assets
Increase (decrease) in accounts payable, trade
Decrease in accrued expenses
(Decrease) increase in taxes, including income taxes
Pension contributions (O)
Increase in noncurrent assets
Decrease in noncurrent liabilities
Cash provided from operations
Financing Activities
Additions to debt (M)
Payments on debt (M)
Proceeds from the exercise of employee stock options (N)
Dividends paid on Alcoa preferred stock (N)
Dividends paid on Alcoa common stock (N)
Payments related to tax withholding on stock-based compensation awards
Financial contributions for the divestiture of businesses (C)
Contributions from noncontrolling interest (A)
Distributions to noncontrolling interest (A)
Acquisition of noncontrolling interest (C)
Other
Cash (used for) provided from financing activities
Investing Activities
Capital expenditures
Proceeds from the sale of assets (C)
Additions to investments (H)
Sale of investments (H)
Other
Cash used for investing activities
Effect of exchange rate changes on cash and cash
equivalents and restricted cash
Net change in cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash at beginning of year
Cash and cash equivalents and restricted cash at end of year
The accompanying notes are an integral part of the consolidated financial statements.
Alcoa Corporation and Subsidiaries
Statement of Changes in Consolidated Mezzanine Equity and Equity
(in millions)
Mezzanine equity
Alcoa Corporation shareholders
Non-
controlling
interest
Preferred
stock
Common
stock
Additional
capital
Accumulated deficit
Accumulated
other
comprehensive
(loss) income
Non-
controlling
interest
Total
equity
Balance at December 31, 2022
Net loss
Other comprehensive (loss) income (G)
Stock-based compensation (N)
Net effect of tax withholding for
compensation plans and exercise of
stock options (N)
Dividends paid on Alcoa
common stock ($ 0.10 per share) (N)
Contributions
Distributions
Other
Balance at December 31, 2023
Net income (loss)
Other comprehensive loss (G)
Stock-based compensation (N)
Net effect of tax withholding for
compensation plans and exercise of
stock options (N)
Dividends paid on Alcoa
preferred stock ($ 0.10 per share) (N)
Dividends paid on Alcoa
common stock ($ 0.10 per share) (N)
Contributions
Distributions
Acquisition of noncontrolling interest (C)
Other
Balance at December 31, 2024
Net (loss) income
Other comprehensive income (loss) (G)
Stock-based compensation (N)
Net effect of tax withholding for
compensation plans and exercise of
stock options (N)
Dividends paid on Alcoa
preferred stock ($ 0.10 per share) (N)
Dividends paid on Alcoa
common stock ($ 0.10 per share) (N)
Joint venture formation (C)
Balance at December 31, 2025
The accompanying notes are an integral part of the consolidated financial statements.
Alcoa Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
(dollars in millions, except per-share amounts; metric tons in thousands (kmt))
A. Basis of Presentation
Alcoa Corporation (Alcoa or the Company), which became an independent, publicly traded company on November 1, 2016, is a vertically integrated aluminum company comprised of bauxite mining, alumina refining, aluminum production (smelting and casting), and energy generation. Through direct and indirect ownership, the Company has 25 operating locations in eight countries around the world, situated primarily in Australia, Brazil, Canada, Iceland, Norway, Spain, and the United States.
Basis of Presentation. The Consolidated Financial Statements of Alcoa Corporation are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). In accordance with GAAP, certain situations require management to make estimates based on judgments and assumptions, which may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. They also may affect the reported amounts of revenues and expenses during the reporting periods. Management uses historical experience and all available information to make these estimates. Management regularly evaluates the judgments and assumptions used in its estimates, and results could differ from those estimates upon future events and their effects or new information.
Principles of Consolidation. The Consolidated Financial Statements of the Company include the accounts of Alcoa Corporation and companies in which Alcoa Corporation has a controlling interest, including those that comprise the San Ciprián (Spain) joint venture (see Note C). Intercompany transactions have been eliminated. The equity method of accounting is used for investments in affiliates and other joint ventures over which the Company has significant influence but does not have effective control. Investments in affiliates in which Alcoa Corporation cannot exercise significant influence are accounted for at cost less any impairment, a measurement alternative in accordance with GAAP.
Prior to Alcoa’s acquisition of Alumina Limited on August 1, 2024 (see Note C ), Alcoa consolidated its 60 % ownership in the entities comprising the Alcoa World Alumina & Chemicals (AWAC) joint venture and Alumina Limited’s interest in the equity of such entities was reflected as Noncontrolling interest within Equity on the accompanying Consolidated Balance Sheet.
Management evaluates whether an Alcoa Corporation entity or interest is a variable interest entity and whether the Company is the primary beneficiary. Consolidation is required if both of these criteria are met. Alcoa Corporation does not have any variable interest entities requiring consolidation.
Related Party Transactions. Alcoa Corporation buys products from and sells products to various related companies, consisting of entities in which the Company retains a 50 percent or less equity interest, at negotiated prices between the two parties. These transactions were not material to the financial position or results of operations of Alcoa Corporation for all periods presented.
B. Summary of Significant Accounting Policies
Cash Equivalents. Cash equivalents are highly liquid investments purchased with an original maturity of three months or less.
Restricted Cash. Restricted cash is included with Cash and cash equivalents when reconciling the Cash and cash equivalents and restricted cash at beginning of year and Cash and cash equivalents and restricted cash at end of year on the accompanying Statement of Consolidated Cash Flows. Current restricted cash amounts are reported in Prepaid expenses and other current assets on the accompanying Consolidated Balance Sheet. Noncurrent restricted cash amounts are reported in Other noncurrent assets on the accompanying Consolidated Balance Sheet (see Note U for a reconciliation of Cash and cash equivalents and restricted cash).
Inventory Valuation. Inventories are carried at the lower of cost or net realizable value, with the cost of inventories principally determined under the average cost method.
Properties, Plants, and Equipment. Properties, plants, and equipment are recorded at cost. Interest related to the construction of qualifying assets is capitalized as part of the construction costs. Depreciation is recorded principally on the straight-line method over the estimated useful lives of the assets. Depreciation is recorded on temporarily idled facilities until such time management approves a permanent closure. The following table details the weighted average useful lives of structures and machinery and equipment by type of operation (numbers in years):
Structures
Machinery
and
equipment
Alumina
Aluminum smelting and casting
Energy generation
Repairs and maintenance are charged to expense as incurred while costs for significant improvements that add productive capacity or that extend the useful life are capitalized. Gains or losses from the sale of assets are generally recorded in Other (income) expenses, net.
Properties, plants, and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets (asset group) may not be recoverable. Recoverability of assets is determined by comparing the estimated undiscounted net cash flows of the operations related to the assets (asset group) to their carrying amount. An impairment loss would be recognized when the carrying amount of the assets (asset group) exceeds the fair value. The amount of the impairment loss to be recorded is calculated as the excess of the carrying value of the assets (asset group) over their fair value, with fair value determined using the best information available, which generally is a discounted cash flow (DCF) model. The determination of what constitutes an asset group, the associated estimated undiscounted net cash flows, and the estimated useful lives of assets also require significant judgments.
Leases. The Company determines whether an arrangement is a lease at the inception of the arrangement based on the terms and conditions in the contract. A contract contains a lease if there is an identified asset which the Company has the right to control. Lease right-of-use (ROU) assets are included in Properties, plants, and equipment, net with the corresponding operating lease liabilities included within Other current liabilities and Other noncurrent liabilities and deferred credits on the accompanying Consolidated Balance Sheet.
Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments unless a rate is implicit in the lease. Lease terms include options to extend the lease when it is reasonably certain that those options will be exercised. Leases with an initial term of 12 months or less, including anticipated renewals, are not recorded on the Consolidated Balance Sheet.
The Company made a policy election not to record any non-lease components of a lease agreement in the lease liability. Variable lease payments are not presented as part of the ROU asset or liability recorded at the inception of a contract. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.
Equity Investments. Alcoa invests in a number of privately-held companies, primarily through joint ventures and consortia, which are accounted for using the equity method. The equity method is applied in situations where the Company has the ability to exercise significant influence, but not control, over the investee. Management reviews equity investments for impairment whenever certain indicators are present suggesting that the carrying value of an investment is not recoverable.
Marketable Securities. Marketable securities consist of shares of Saudi Arabian Mining Company (Ma’aden) acquired by Alcoa during the third quarter of 2025 (see Note C). Marketable securities are measured at fair value using quoted prices in active markets (Level 1). Accordingly, gains and losses in fair value are recognized in Other (income) expenses, net in the Statement of Consolidated Operations. The shares of Ma’aden are presented as Noncurrent marketable securities on the Consolidated Balance Sheet, as they are subject to transfer and sale restrictions, including a restriction requiring Alcoa to hold its Ma’aden shares for a minimum of three years, with one-third of the shares becoming transferable after each of the third, fourth, and fifth anniversaries of the closing of the transaction (the Holding Period). During the Holding Period, Alcoa is permitted, under certain conditions, to hedge and borrow against its Ma’aden shares. Under certain circumstances, such minimum Holding Period may be reduced.
Deferred Mining Costs. Alcoa incurs deferred mining costs during the development stage of a mine life cycle. Such costs include the construction of access and haul roads, detailed drilling and geological analysis to further define the grade and quality of the known bauxite, and overburden removal costs. These costs relate to sections of the related mines where the Company is currently extracting bauxite or preparing for production in the near term. These sections are outlined and planned incrementally and generally are mined over periods ranging from one to five years , depending on specific mine plans. The amount of geological drilling and testing necessary to determine the economic viability of the bauxite deposit being mined is such that the reserves are considered to be proven. Deferred mining costs are amortized on a units-of-production basis and included in Other noncurrent assets on the accompanying Consolidated Balance Sheet.
Goodwill and Other Intangible Assets. Goodwill is not amortized but is reviewed for impairment annually (in the fourth quarter) or more frequently if indicators of impairment exist or if a decision is made to sell or exit a business.
Goodwill is allocated among and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment.
The Company has three reporting units, of which two are included in the Aluminum segment (smelting/casting and energy generation). The remaining reporting unit is the Alumina segment. Prior to the impairment charge recorded in the fourth quarter of 2025, only the Alumina reporting unit contained goodwill (see Note L).
Goodwill is tested for impairment by assessing qualitative factors to determine whether it is more likely than not (greater than 50 percent) that the fair value of the reporting unit is less than its carrying amount or performing a quantitative assessment using a DCF model. If the qualitative assessment indicates a possible impairment, then a quantitative assessment is performed to determine the fair value of the reporting unit using a DCF model. Otherwise, no further analysis is required.
Under the quantitative assessment, the estimated fair value of the reporting unit is compared to its carrying value, including goodwill. A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows, including production costs, production capability, tax rates, capital expenditures, discount rate, markets and market share, sales volumes and prices, and working capital changes. The model used for the goodwill impairment test leverages the model, including related inputs and assumptions, that management uses for planning and strategic review of the entire business. In the event the estimated fair value of a reporting unit is less than the carrying value, an impairment loss equal to the excess of the reporting unit’s carrying value over its fair value not to exceed the total amount of goodwill applicable to that reporting unit would be recognized.
Alcoa’s policy for its annual review of goodwill is to perform the quantitative assessment for its reporting unit containing goodwill at least once during every three-year period.
Intangible assets with finite useful lives are amortized generally on a straight-line basis over the periods benefited. The following table details the weighted average useful lives of software and other intangible assets by type of operation (numbers in years):
Software
Other intangible
assets
Alumina
Aluminum smelting and casting
Energy generation
Asset Retirement Obligations. Alcoa recognizes asset retirement obligations (AROs) related to legal obligations associated with the standard operation of bauxite mines, alumina refineries, and aluminum smelters. These AROs consist primarily of costs associated with mine reclamation, closure of bauxite residue areas, spent pot lining and regulated waste materials disposal, and landfill closure. Additionally, costs are recorded as AROs upon management’s decision to permanently close and demolish certain structures and for significant lease restoration obligations. The fair values of these AROs are recorded on a discounted basis at the time the obligation is incurred and accreted over time for the change in present value; related accretion is recorded as a component of Cost of goods sold. Additionally, the Company capitalizes asset retirement costs by increasing the carrying amount of the related long-lived assets and depreciating these assets over their remaining useful life.
The fair values for AROs are determined using significant assumptions, including engineering designs for construction or closure, materials and services costs, regulatory requirements, volume of regulated material to be removed, disposition of demolition materials, and timing to complete construction or closure.
Subsequent adjustments to estimates of previously established AROs for current operations are capitalized by increasing the carrying amount of the related long-lived assets and depreciating these assets over their remaining useful life. Adjustments to estimates of AROs for closed locations are charged to Restructuring and other charges, net on the accompanying Statement of Consolidated Operations (see Note R).
Certain conditional asset retirement obligations related to alumina refineries, aluminum smelters, and energy generation facilities have not been recorded in the Consolidated Financial Statements due to uncertainties surrounding the ultimate settlement date. The fair value of these asset retirement obligations will be recorded when a reasonable estimate of the ultimate settlement date can be made.
Environmental Matters. Environmental related expenditures for current operations are expensed as a component of Cost of goods sold or capitalized, as appropriate. Expenditures relating to existing conditions caused by past operations, generally for closed locations which will not contribute to future revenues, are charged to Restructuring and other charges, net. Liabilities are recorded when remediation costs are probable and can be reasonably estimated. In instances where the Company has ongoing monitoring and maintenance responsibilities, Alcoa maintains a reserve for expected costs that are probable and can be reasonably estimated, which has historically averaged five years of spend. The liability is continuously reviewed and adjusted to reflect current remediation progress, rate and pricing changes, actual volumes of material requiring management, changes to the original assumptions regarding how the site was to be remediated, and other factors that may be relevant, including changes in technology or regulations. The estimates may also include costs related to other potentially responsible parties to the extent that Alcoa has reason to believe such parties will not fully pay their proportionate share.
Litigation Matters. For asserted claims and assessments, liabilities are recorded when an unfavorable outcome of a matter is deemed to be probable and the loss is reasonably estimable. With respect to unasserted claims or assessments, liabilities are recorded when the probability that an assertion will be made is likely, an unfavorable outcome of the matter is deemed to be probable, and the loss is reasonably estimable. Legal matters are reviewed on a continuous basis to determine if there has been a change in management’s judgment regarding the likelihood of an unfavorable outcome or the estimate of a potential loss. Legal costs, which are primarily for general litigation, environmental compliance, tax disputes, and general corporate matters, are expensed as incurred.
Revenue Recognition. The Company recognizes revenue when it satisfies a performance obligation(s) in accordance with the provisions of a customer order or contract. This is achieved when control of the product has been transferred to the customer, which is generally determined when title, ownership, and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product. Shipping terms vary across all businesses and depend on the product, the country of origin, and the type of transportation. Accordingly, the sale of Alcoa’s products to its customers represent single performance obligations for which revenue is recognized at a point in time, except for the Company’s Energy product division in which the customer simultaneously receives and consumes electricity (see Note E). Revenue is based on the consideration the Company expects to receive in exchange for its products. Returns and other adjustments have not been material. Based on the foregoing, no significant judgment is required to determine when control of a product has been transferred to a customer.
The Company considers shipping and handling activities as costs to fulfill the promise to transfer the related products. As a result, customer payments of shipping and handling costs are recorded as a component of revenue. Taxes collected (e.g., sales, use, value added, excise) from its customers related to the sale of its products are remitted to governmental authorities and excluded from Sales.
Cost of Goods Sold. The Company includes the following in Cost of goods sold: operating costs of its two segments, excluding depreciation, depletion, and amortization, but including all production related costs: raw materials consumed; purchases of metal for consumption; conversion costs, such as labor, materials, and utilities; equity earnings of certain investments integral to the Company’s supply chain; and plant administrative expenses. Also included in Cost of goods sold are: costs related to the Transformation function, which focuses on the management of expenses and obligations of previously closed operations; purchases of bauxite from offtake or other supply agreements, alumina to satisfy customer commitments, and metal for trade; and other costs not included in the operating costs of the segments (see Note E ).
Selling, General Administrative, and Other Expenses. The Company includes the costs of corporate-wide functional support in Selling, general administrative, and other expenses. Such costs include: executive; sales; marketing; strategy; operations administration; finance; information technology; legal; human resources; and government affairs and communications.
Stock-Based Compensation. Compensation expense for employee equity grants is recognized using the non-substantive vesting period approach, in which the expense is recognized ratably over the requisite service period based on the grant date fair value. Forfeitures are accounted for as they occur. The fair value of performance stock units containing a market condition is valued using a Monte Carlo valuation model. Determining the fair value at the grant date requires judgment, including estimates for the average risk-free interest rate, and volatility. These assumptions may differ significantly between grant dates because of changes in the actual results of these inputs that occur over time. As of January 1, 2021, the Company no longer grants stock options.
See Note N for more information regarding stock-based compensation.
Pension and Other Postretirement Benefits. Alcoa sponsors several defined benefit pension plans and health care postretirement benefit plans. The Company recognizes on a plan-by-plan basis the net funded status of these pension and postretirement benefit plans as either an asset or a liability on its Consolidated Balance Sheet. The net funded status represents the difference between the fair value of each plan’s assets and the benefit obligation of the respective plan. The benefit obligation represents the present value of the estimated future benefits the Company currently expects to pay to plan participants based on past service. Unrecognized gains and losses related to the plans are deferred in Accumulated other comprehensive loss on the Consolidated Balance Sheet until amortized into earnings.
The plan assets and benefit obligations are measured at the end of each year or more frequently, upon the occurrence of certain events such as a significant plan amendment, settlement, or curtailment. For interim plan remeasurements, it is the Company’s policy to record the related accounting impacts within the same quarter as the triggering event.
Liabilities and expenses for pension and other postretirement benefits are determined using actuarial methodologies and incorporate significant assumptions, including the interest rate used to discount the future estimated liability, the expected long-term rate of return on plan assets, and several assumptions relating to the employee workforce (salary increases, health care cost trend rates, retirement age, and mortality).
The yield curve model used to develop the discount rate is based on high-quality corporate bonds, parallels the plans’ projected cash flows and has a weighted average duration of 10 years. If a deep market of high-quality corporate bonds does not exist in a country, then the yield on government bonds plus a corporate bond yield spread is used.
The expected long-term rate of return on plan assets is generally applied to a five-year market-related value of plan assets (a four-year average or the fair value at the plan measurement date is used for certain non-U.S. plans). The process used by management to develop this assumption is one that relies on forward-looking investment returns by asset class. Management incorporates expected future investment returns on current and planned asset allocations using information from various external investment managers and consultants, as well as management’s own judgment.
Mortality rate assumptions are based on mortality tables and future improvement scales published by third parties, such as the Society of Actuaries, and consider other available information including historical data as well as studies and publications from reputable sources.
A change in one or a combination of these assumptions, or the effects of actual results differing from assumptions, could have a material impact on Alcoa’s projected benefit obligation. These changes or differences are recorded in Accumulated other comprehensive loss and are amortized into earnings as a component of the net periodic benefit cost (income) over the average future working lifetime or average remaining life expectancy, as appropriate, of the plan’s participants.
One-time accounting impacts, such as curtailment and settlement losses (gains), are recognized immediately and are reclassified from Accumulated other comprehensive loss to Restructuring and other charges, net on the accompanying Statement of Consolidated Operations.
See Note O for more information regarding pension and other postretirement benefits including accounting impacts of current year actions.
Derivatives and Hedging. Derivatives are held for purposes other than trading and are part of a formally documented risk management program.
Alcoa accounts for hedges of firm customer commitments for aluminum and alumina as fair value hedges. The fair values of the derivatives and changes in the fair values of the underlying hedged items are reported as assets and liabilities in the Consolidated Balance Sheet. Changes in the fair values of these derivatives and underlying hedged items generally offset and are recorded each period in Sales, consistent with the underlying hedged item.
The Company accounts for certain hedges of foreign currency exposures and certain forecasted transactions as cash flow hedges. The fair values of the derivatives are recorded as assets and liabilities in the Consolidated Balance Sheet. The changes in the fair values of these derivatives are recorded in Accumulated other comprehensive loss and are reclassified to Sales, Cost of goods sold, or Other (income) expenses, net in the period in which earnings are impacted by the hedged items or in the period that the transaction no longer qualifies as a cash flow hedge. These contracts cover the same periods as known or expected exposures, generally not exceeding five years .
If no hedging relationship is designated, the derivative is marked to market through Other (income) expenses, net.
Cash flows from derivatives are recognized in the Statement of Consolidated Cash Flows in a manner consistent with the underlying transactions.
Income Taxes. The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, the provision for income taxes represents income taxes paid or payable (or received or receivable) for the current year plus the change in deferred taxes during the year. Deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid, resulting from differences between the financial and tax bases of Alcoa’s assets and liabilities, and are adjusted for changes in tax rates and tax laws when enacted.
Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not (greater than 50 percent) that a tax benefit will not be realized. In evaluating the need for a valuation allowance, management applies judgment in assessing all available positive and negative evidence and considers all potential sources of taxable income. Deferred tax assets for which no valuation allowance is recorded may not be realized upon changes in facts and circumstances, resulting in a future charge to establish a valuation allowance. Existing valuation allowances are re-examined under the same standards of positive and negative evidence. If it is determined that it is more likely than not that a deferred tax asset will be realized, the appropriate amount of the valuation allowance, if any, is released. Deferred tax assets and liabilities are also re-measured to reflect changes in underlying tax rates due to law changes and the granting and lapse of tax holidays.
Tax benefits related to uncertain tax positions taken or expected to be taken on a tax return are recorded when such benefits meet a more likely than not threshold. Otherwise, these tax benefits are recorded when a tax position has been effectively settled, which means that the statute of limitations has expired or the appropriate taxing authority has completed their examination even though the statute of limitations remains open. Interest and penalties related to uncertain tax positions are recognized as part of the provision for income taxes and are accrued in the period that such interest and penalties would be applicable under relevant tax law until such time that the related tax benefits are recognized.
Foreign Currency. The local currency is the functional currency for Alcoa’s significant operations outside the United States, except for certain operations in Canada and Iceland, and certain trading and holding companies outside the United States, where the U.S. dollar is the functional currency. The determination of the functional currency for Alcoa’s operations is made based on the appropriate economic and management indicators. Where local currency is the functional currency, assets and liabilities are translated into U.S. dollars using period end exchange rates and income and expenses are translated using the average exchange rates for the reporting period. Unrealized foreign currency translation gains and losses are deferred in Accumulated other comprehensive loss on the Consolidated Balance Sheet.
Recently Adopted Accounting Guidance. In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2023-09 which includes changes to income tax disclosures, including greater disaggregation of information in the rate reconciliation and disclosure of taxes paid by jurisdiction. The Company adopted this guidance retrospectively for the year ended December 31, 2025 , which resulted in enhanced disclosures regarding income taxes for each of the periods presented (see Note Q ) and did no t have a material impact on the Company’s financial position or results of operations.
Recently Issued Accounting Guidance. In December 2025, the FASB issued ASU No. 2025-10 which establishes authoritative guidance on the accounting for government grants received by business entities. The guidance is effective for annual periods beginning after December 15, 2028, and interim periods within those annual periods. Early adoption is permitted. Management does not expect the adoption of this guidance to have a material impact on the Company’s financial position or results of operations.
In November 2024, the FASB issued ASU No. 2024-03 which requires detailed disclosures about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) included within commonly presented expense captions (including cost of goods sold; selling, general administrative, and other expense; and research and development expenses). The guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The adoption of this guidance will no t have a material impact on the Company’s financial position or results of operations and will provide enhanced disclosures regarding expenses beginning in the Company’s Annual Report on Form 10-K for the year ended December 31, 2027.
C. Acquisitions and Divestitures
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 SAR 52.35 per share at closing, or $ 1,200 ) and $ 150 in cash (related to taxes and transaction costs). The Company recorded a gain of $ 786 , net of $ 18 in transaction costs, in Other (income) expenses, net on the Statement of Consolidated Operations for the year ended December 31, 2025 (see Note U). The receipt of shares is a non-cash investing activity and cash received is presented within investing activities in the Statement of Consolidated Cash Flows.
The shares of Ma’aden are presented as Noncurrent marketable securities on the Consolidated Balance Sheet, as they are subject to transfer and sale restrictions, including a restriction requiring Alcoa to hold its Ma’aden shares for a minimum of three years , with one-third of the shares becoming transferable after each of the third, fourth, and fifth anniversaries of the closing of the transaction (the Holding Period). During the Holding Period, Alcoa is permitted, under certain conditions, to hedge and borrow against its Ma’aden shares. Under certain circumstances, such minimum Holding Period may be reduced.
Subsequent to July 1, 2025, the fair value of the shares is based on the unadjusted quoted price on the Saudi Exchange (Tadawul). For the year ended December 31, 2025, the Company recorded a mark-to-market gain of $ 197 in Other (income) expenses, net (see Note U) on the Statement of Consolidated Operations related to changes in fair value of the shares. At December 31, 2025, the shares of Ma’aden were valued at SAR 60.95 per share, or $ 1,397 .
San Ciprián Joint Venture
On March 31, 2025, Alcoa and Trento Equity Holdings, S.L.U. (Trento EQT), formerly known as IGNIS Equity Holdings, SL, entered into a joint venture agreement (the Agreement) whereby Alcoa owns 75 % and continues as the managing operator and Trento EQT owns 25 % of the San Ciprián o perations.
Under the terms of the Agreement, Alcoa and Trento EQT contributed $ 81 (€ 75 ) and $ 27 (€ 25 ), respectively, to form the joint venture. Subsequent to formation of the joint venture on March 31, 2025, an additional $ 89 (€ 76 ) was funded for operations by Alcoa with a priority position in future cash returns. Further funding requires agreement by both partners, and to maintain their respective ownership in the joint venture, equity funding would be shared 75 % by Alcoa and 25 % by Trento EQT. In December 2025, Alcoa provided a mandatory convertible note of $ 153 (€ 130 ) to the joint venture that will convert to equity on or before September 1, 2026.
The formation of the joint venture was accounted for as an e quity transaction where Trento EQT’s noncontrolling interest was reflected as a decrease to Additional capital on the accompanying Consolidated Balance Sheet. Noncontrolling interest was measured at 25 percent of the net assets included in the joint venture at formation ($ 103 ), which includes the initial contributions described above ($ 108 ). Additionally, certain amounts related to foreign currency translation adjustments previously included within Accumulated other comprehensive loss ($ 31 ) were reclassified to Additional capital.
The Agreement also provides Trento EQT a put option whereby Trento EQT can require Alcoa Corporation to purchase from Trento 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 Trento EQT’s redemption of the put option is not solely within the Company’s control. Subsequent to formation of the joint venture on March 31, 2025, changes in the carrying value of Noncontrolling interest on the Consolidated Balance Sheet were solely comprised of the comprehensive loss attributable to Trento EQT’s 25 % interest, as a change in control of the San Ciprián operations was not deemed probable.
Alumina Limited Acquisition
On August 1, 2024, Alcoa completed the acquisition of all of the ordinary shares of Alumina Limited (Alumina Shares) through a wholly-owned subsidiary, AAC Investments Australia 2 Pty Ltd. At acquisition, Alumina Limited held a 40 % ownership interest in the AWAC joint venture, consisting of several affiliated operating entities, which own, have an interest in, or operate the bauxite mines and alumina refineries within Alcoa Corporation’s Alumina segment (except for the Poços de Caldas mine and refinery and portions of the São Luís refinery, all in Brazil) and a portion ( 55 %) of the Portland (Australia) smelter within Alcoa Corporation’s Aluminum segment. Upon completion of the Alumina Limited acquisition, Alumina Limited and, as a result, the operations held by the AWAC joint venture, became wholly-owned subsidiaries of Alcoa Corporation.
Under the Scheme Implementation Deed (the Agreement) entered into in March 2024, as amended in May 2024, holders of Alumina Shares received 0.02854 Alcoa CHESS Depositary Interests (CDIs) for each Alumina Share (the Agreed Ratio), except that i) holders of Alumina Shares represented by American Depositary Shares, each of which represented 4 Alumina Shares, received 0.02854 shares of Alcoa common stock and ii) a certain shareholder received, for certain of their Alumina Shares, 0.02854 shares of Alcoa non-voting convertible preferred stock. The Alcoa CDIs are quoted on the Australian Stock Exchange.
At closing, Alumina Shares outstanding of 2,760,056,014 and 141,625,403 were exchanged for 78,772,422 and 4,041,989 shares of Alcoa common stock and Alcoa preferred stock, respectively (see Note N). Based on Alcoa’s closing share price as of July 31, 2024, the Agreed Ratio implied a value of A$ 1.45 per Alumina Share and aggregate purchase consideration of approximately $ 2,700 for Alumina Limited.
The transaction consisted in substance of the acquisition of Alumina Limited’s noncontrolling interest in AWAC ($ 1,472 ), the assumption of Alumina Limited’s indebtedness ($ 385 , see Note M ), the recognition of deferred tax assets ($ 121 , see Note Q ), and the acquisition of cash ($ 9 ) and other current liabilities ($ 1 ). The transaction was accounted for as an equity transaction where net assets acquired ($ 1,216 ) and transaction costs ($ 32 ) were reflected as an increase to Additional capital. Amounts related to Accumulated other comprehensive loss previously attributable to and included within Noncontrolling interest ($ 1,099 ) were reclassified to Accumulated other comprehensive loss. In the fourth quarter of 2024, the Company recognized an additional deferred tax asset (and a corresponding increase to Additional capital) of $ 95 (see Note Q).
Earnings attributable to Alumina Limited’s ownership interest were recognized within Noncontrolling interest within Equity through July 31, 2024.
Warrick Rolling Mill
In March 2021, Alcoa completed the sale of its rolling mill located at Warrick Operations (Warrick Rolling Mill), an integrated aluminum manufacturing site near Evansville, Indiana (Warrick Operations), to Kaiser Aluminum Corporation (Kaiser) and recorded estimated liabilities for site separation commitments.
In 2025, 2024, and 2023 the Company recorded charges of $ 2 , $ 32 , and $ 17 , respectively, in Other (income) expenses, net on the accompanying Statement of Consolidated Operations rela ted to these commitments. During 2025, 2024, and 2023, the Company spent $ 8 , $ 35 , and $ 52 , respectively, against the reserve. As of December 31, 2025, the obligation related to these commitments was substantially complete.
The cash spent against the reserve was included in Cash (used for) provided from financing activities on the Statement of Consolidated Cash Flows.
D. Restructuring and Other Charges, Net
Restructuring and other charges, net were comprised of the following:
Asset retirement obligations (R)
Asset impairments
Other costs
Environmental remediation (S)
Severance and employee termination costs
Settlements and/or curtailments related to retirement benefits (O)
Reversals of previously recorded charges
Restructuring and other charges, net
Severance and employee termination costs were recorded based on approved detailed action plans that specified positions to be eliminated, benefits to be paid under existing severance plans, union contracts or statutory requirements, and the expected timetable for completion of the plans.
2025 Actions. In 2025 , Alcoa Corporation recorded Restructuring and other charges, net, of $ 918 which were primarily comprised of the following components:
Charges:
$ 856 for the closure of the Kwinana (Australia) refinery (see below);
$ 39 to record additional asset requirement obligations (see Note R) and environmental remediation (see Note S) at previously closed sites;
$ 11 for certain employee obligations related to the February 2023 updated viability agreement reached with the workers’ representatives of the San Ciprián aluminum smelter; and,
$ 10 for take-or-pay contract costs at previously closed sites;
Reversals:
$ 2 due to lower costs for environmental remediation at a previously closed site (see Note S).
In September 2025, Alcoa announced the permanent closure of the Kwinana refinery, which had been fully curtailed since June 2024. The Company recorded charges of $ 856 in Restructuring and other charges, net on the Statement of Consolidated Operations, including $ 430 to establish reserves for asset retirement obligations (see Note R) and environmental remediation (see Note S ), $ 265 to impair fixed assets, $ 75 to write-off the remaining net book value of other assets (see Note U ), and $ 86 to accrue for other costs. Additionally, a charge of $ 39 was recorde d in Cost of goods sold on the Statement of Consolidated Operations to write down remaining inventories to net realizable value.
Cash outlays for other costs and severance and employee termination costs related to the full curtailment (see 2024 actions below) and closure of the Kwinana refinery were $ 179 and $ 136 in 2025 and 2024, respectively. Additional cash outlays for other costs and severance and employee termination costs of approximately $ 50 are expected through 2031 with approximately $ 25 to be spent in 2026.
The Kwinana refinery had approximately 220 employees at the time of the closure announcement and this number was reduced to approximately 190 employees as of December 31, 2025, including approximately 10 employees that were redeployed to other Alcoa operations. The number of employees will be further reduced during 2026 as the closure progresses, and certain employees will remain beyond 2026 to prepare the site for future redevelopment. Associated severance costs were previously recorded in the first quarter of 2024.
2024 Actions. In 2024 , Alcoa Corporation recorded Restructuring and other charges, net, of $ 341 which were primarily comprised of the following components:
Charges:
$ 287 for the curtailment of the Kwinana refinery (see below);
$ 40 to record additional asset retirement obligations (see Note R) and environmental remediation (see Note S) at previously closed sites;
$ 22 for take-or-pay contract costs at a previously closed site; and,
$ 12 for contract termination costs at the closed Intalco (Washington) smelter;
Reversals:
$ 20 due to lower costs for environmental remediation (see Note S) and asset retirement obligations (see Note R) at the Intalco smelter and a previously closed site.
In June 2024, Alcoa completed the full curtailment of the Kwinana refinery, as planned, which was announced in January 2024. As of March 2024, the refinery had approximately 780 employees and this number was reduced to approximately 250 through the fourth quarter of 2024. In addition to the employees separating as a result of the curtailment, approximately 290 employees have terminated through the productivity program announced in the third quarter of 2023 or redeployed to other Alcoa operations. The Company recorded net charges of $ 287 in Restructuring and other charges, net on the Statement of Consolidated Operations comprised of other costs of $ 232 for water management costs ($ 220 ) and take-or-pay contracts ($ 12 ), severance and employee termination costs of $ 41 , asset retirement obligations of $ 9 (see Note R ), and asset impairments of $ 5 .
2023 Actions. In 2023, Alcoa Corporation recorded Restructuring and other charges, net, of $ 184 which were primarily comprised of the following components:
Non-cash settlement charges related to pension benefits (see Note O):
$ 21 related to the purchase of group annuity contracts to transfer approximately $ 235 of pension obligations and assets associated with defined benefit pension plans for approximately 530 Canadian retirees and beneficiaries;
Charges:
$ 101 for the permanent closure of the previously curtailed Intalco smelter (see below);
$ 53 for the updated viability agreement for the San Ciprián smelter;
$ 19 benefit for the sale of unused carbon credits at a previously closed site;
$ 17 to record additional environmental remediation and asset retirement obligations at previously closed sites (see Note R and Note S);
$ 11 for employee termination and severance costs, primarily related to the Kwinana refinery productivity program (see below);
$ 1 to record additional asset retirement obligations at Warrick Operations (Indiana) (see Note R); and,
$ 1 for additional take-or-pay contract costs at a previously closed site and the Intalco smelter;
Reversals:
$ 2 due to lower costs for demolition obligations at previously closed sites (see Note R).
In Decembe r 2023, Alcoa began the closure of a line at its Warrick Operations site that had not operated since 2016 to allow for future capital investments to improve casting capabilities. The Company recorded a charge of $ 1 in Restructuring and other charges, net on the Statement of Consolidated Operations to establish reserves related to demolition obligations. Additionally, Alcoa recorded $ 1 in Cost of goods sold on the Statement of Consolidated Operations to write-off the remaining net book value of related inventory.
In September 2023, the Company initiated productivity programs across its operations in Australia to mitigate the financial impacts of lower grade bauxite and to optimize operating levels. In connection with this program, the Company recorded Restructuring and other charges, net of $ 6 for employee termination and severance costs for approximately 90 employees at the Kwinana refinery. This program was completed in September 2024.
In March 2023, Alcoa Corporation announced the closure of the Intalco aluminum smelter, which had been fully curtailed since 2020. The Company recorded charges of $ 117 related to the closure, including a charge of $ 16 in Cost of goods sold on the Statement of Consolidated Operations to write-down remaining inventories to net realizable value and a charge of $ 101 in Restructuring and other charges, net on the Statement of Consolidated Operations. The restructuring charges were comprised of asset impairments of $ 50 , environmental remediation and demolition obligations of $ 50 , and severance and employee termination costs of $ 1 for the separation of approximately 12 employees.
In February 2023, the Company reached an updated viability agreement with the workers’ representatives of the San Ciprián smelter to commence the restart process in phases beginning in January 2024. The smelter was curtailed in January 2022 as a result of an agreement reached with the workers’ representatives in December 2021. Under the terms of the updated viability agreement, the Company is responsible for certain employee obligations during 2023 through 2025 and capital improvements. In 2025, 2024, and 2023, the Company recorded charges of $ 11 , $ 0 , and $ 53 , respectively, in Restructuring and other charges, net on the Statement of Consolidated Operations related to reserves for these employee obligations. During 2025, 2024, and 2023, cash outlays related to these obligations were $ 21 , $ 34 , and $ 7 , respectively, with $ 2 expected in 2026. At December 31, 2025, the Company had restricted cash of $ 75 to be made available for remaining capital improvement commitments and smelter restart costs, under the terms of the December 2021 and February 2023 viability agreements. Restricted cash is included in Prepaid expenses and other current assets and Other noncurrent assets on the Consolidated Balance Sheet (see Note U). Cash payments in 2023 also included $ 31 related to certain employee obligations under the December 2021 agreement; cash payments related to these obligations were complete as of December 31, 2023.
Alcoa Corporation does not include Restructuring and other charges, net in the results of its reportable segments. The impact of allocating such charges to segment results would have been as follows:
Alumina
Aluminum
Segment total
Corporate
Total Restructuring and other charges, net
Activity and reserve balances for restructuring charges were as follows:
Severance
and
employee
termination
costs
Other
costs
Total
Balances at December 31, 2022
Restructuring charges, net
Cash payments (1)
Reversals and other
Balances at December 31, 2023
Restructuring charges, net
Cash payments
Reversals and other
Balances at December 31, 2024
Restructuring charges, net
Cash payments
Reversals and other
Balances at December 31, 2025
Cash payments in 2023 also include $ 76 to the former employees of the divested Avilés and La Coruña (Spain) facilities to settle various legal disputes related to the 2019 divesture, in accordance with the Global Settlement Agreement.
The activity and reserve balances include only Restructuring and other charges, net that impacted the reserves for Severance and employee termination costs and Other costs. Restructuring and other charges, net that affected other accounts such as Accrued pension benefits and Accrued other postretirement benefits (see Note O), Asset retirement obligations (see Note R), Environmental remediation (see Note S), and Other noncurrent assets (see Note U) are excluded from the above activity and balances. Reversals and other includes reversals of previously recorded liabilities and foreign currency translation impacts.
The current portion of the reserve balance is reflected in Other current liabilities on the Consolidated Balance Sheet and the noncurrent portion of the reserve balance is reflected in Other noncurrent liabilities and deferred credits on the Consolidated Balance Sheet. The noncurrent portion of the reserve was $ 34 and $ 8 at December 31, 2025 and 2024 , respectively.
E. Segmen t and Related Information
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 reported to Alcoa Corporation’s President and Chief Executive Officer, identified as the Company’s chief operating decision maker (CODM), 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 CODM regularly reviews Segment Adjusted EBITDA to assess performance and allocate resources (including employees, property, and financial or capital resources) in the planning and strategic review process. The CODM evaluates actual results versus the annual plan, most recent forecast, and prior period results when making decisions about allocating resources.
Segment assets include, among others, customer receivables (third-party and intersegment), inventories, properties, plants, and equipment, and equity investments. The accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies (see Note B). Transactions between segments are established based on negotiation between the parties. Differences between segment totals and Alcoa Corporation’s consolidated totals for line items not reconciled are in Corporate.
The following are detailed descriptions of Alcoa Corporation’s reportable segments:
Alumina. This segment represents the Company’s global bauxite mining operations and worldwide refining system, which processes bauxite into alumina.
A portion of this segment’s bauxite production represents the offtake from an equity method investment in Guinea, as well as Alcoa’s share of bauxite production related to an equity investment in Saudi Arabia (prior to the sale of Alcoa’s interest in the Saudi Arabia joint venture in July 2025). Bauxite mined is primarily used internally within the Alumina segment; a portion of the bauxite is sold to external customers. Bauxite sales to third-parties are conducted on a contract basis.
The alumina produced by this segment is sold primarily to internal and external aluminum smelter customers; a portion of the alumina is sold to external customers who process it into industrial chemical products. Approximately two-thirds of Alumina’s production is sold under supply contracts to third parties worldwide, while the remainder is used internally by the Aluminum segment. Alumina produced by this segment and used internally is transferred to the Aluminum segment at prevailing market prices. A portion of this segment’s third-party sales are completed through alumina traders.
Generally, this segment’s sales are transacted in U.S. dollars while costs and expenses are transacted in the local currency of the respective operations, which are the Australian dollar, the Brazilian real, and the euro.
This segment also included Alcoa’s 25.1 % ownership interest in a mining and refining joint venture company in Saudi Arabia prior to the sale of Alcoa ’s interest on July 1, 2025 (see Note C and Note H).
Aluminum. This segment consists of the Company’s (i) worldwide smelting and casthouse system, which processes alumina into primary aluminum, and (ii) portfolio of energy assets in Brazil, Canada, and the United States.
Aluminum’s combined smelting and casting operations produce primary aluminum products, nearly all of which are sold to external customers and traders. The smelting operations produce molten primary aluminum, which is then formed by the casting operations into either commodity grade ingot (e.g., t-bar, sow, standard ingot) or into value-add ingot products (e.g., foundry, billet, rod, and slab). A variety of external customers purchase the primary aluminum products for use in fabrication operations, which produce products primarily for the transportation, building and construction, packaging, wire, and other industrial markets. Results from the sale of aluminum powder and scrap are also included in this segment, as well as the impacts of embedded aluminum derivatives (see Note P) related to power contracts.
The energy assets supply power to external customers in Brazil and the United States, as well as internal customers in the Aluminum segment (Warrick (Indiana) smelter and Baie-Comeau (Canada) smelter) and, to a lesser extent, the Alumina segment (Brazilian refineries).
Generally, this segment’s aluminum sales are transacted in U.S. dollars while costs and expenses of this segment are transacted in the local currency of the respective operations, which are the Canadian dollar, the U.S. dollar, the Icelandic króna, the Brazilian real, the Norwegian krone, the Australian dollar, and the euro.
This segment also included Alcoa Corporation’s 25.1 % ownership interest in a smelting joint venture company in Saudi Arabia prior to the sale of Alcoa ’s interest on July 1, 2025 (see Note C and Note H).
The operating results, capital expenditures, and assets of Alcoa Corporation’s reportable segments were as follows:
Alumina
Aluminum
Total
Sales:
Third-party sales
Intersegment sales
Total sales
Adjusted operating costs (1)
Other segment items (2)
Segment Adjusted EBITDA
Supplemental information:
Depreciation, depletion, and amortization
Equity income (loss)
Capital expenditures
Sales:
Third-party sales
Intersegment sales
Total sales
Adjusted operating costs (1)
Other segment items (2)
Segment Adjusted EBITDA
Supplemental information:
Depreciation, depletion, and amortization
Equity income (loss)
Capital expenditures
Sales:
Third-party sales
Intersegment sales
Total sales
Adjusted operating costs (1)
Other segment items (2)
Segment Adjusted EBITDA
Supplemental information:
Depreciation, depletion, and amortization
Equity loss
Capital expenditures
Assets:
Equity investments
Total assets
Assets:
Equity investments
Total assets
Adjusted operating costs include all production related costs for alumina or 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, the Alumina segment’s purchase of bauxite from offtake or other supply agreements, the Alumina segment’s commercial shipping services, and the Aluminum segment’s energy assets; other direct and non-production related charges including tariff costs; Selling, general administrative, and other expenses; and Research and development expenses.
The following tables reconcile certain segment information to consolidated totals:
Sales:
Total segment sales
Elimination of intersegment sales
Other
Consolidated sales
Net income (loss) attributable to Alcoa Corporation:
Total Segment Adjusted EBITDA
Unallocated amounts:
Transformation (1)
Intersegment eliminations
Corporate expenses (2)
Provision for depreciation, depletion, and amortization
Impairment of goodwill (B & L)
Restructuring and other charges, net (D)
Interest expense (U)
Other income (expenses), net (U)
Other (3)
Consolidated income (loss) before income taxes
Benefit from (provision for) income taxes (Q)
Net loss attributable to noncontrolling interest
Consolidated net income (loss) attributable to
Alcoa Corporation
Transformation includes, among other items, the Adjusted EBITDA of previously closed operations.
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.
Other includes certain items that are not included in the Adjusted EBITDA of the reportable segments.
December 31,
Assets:
Total segment assets
Elimination of intersegment receivables
Unallocated amounts:
Cash and cash equivalents
Noncurrent marketable securities
Deferred income taxes
Corporate fixed assets, net
Pension assets
Corporate goodwill
Other
Consolidated assets
Product Information
Alcoa Corporation has four product divisions as follows:
Bauxite— Bauxite is a reddish clay rock that is mined from the surface of the earth’s terrain. This ore is the basic raw material used to produce alumina and is the primary source of aluminum.
Alumina— Alumina is an oxide that is extracted from bauxite and is the basic raw material used to produce primary aluminum. This product can also be consumed for non-metallurgical purposes, such as industrial chemical products.
Primary aluminum— Primary aluminum is metal in the form of a commodity grade ingot or a value-add ingot (e.g., foundry, billet, rod, and slab). These products are sold primarily to customers that produce products for the transportation, building and construction, packaging, wire, and other industrial markets, and traders.
Energy— Energy is the generation of electricity, which is sold in the wholesale market to traders, large industrial consumers, distribution companies, and other generation companies.
The following table represents the general commercial profile of the Company’s Bauxite, Alumina, and Primary aluminum product divisions (see text below table for Energy):
Product division
Pricing components
Shipping terms (3)
Payment terms (4)
Bauxite
Negotiated
FOB/CIF
LC Sight
Alumina:
Smelter grade
API (1) /spot/fixed
FOB/CIF
LC Sight/CAD/Net 30 days
Non-metallurgical
Negotiated
FOB/CIF
Net 30 days
Primary aluminum:
Commodity grade ingot
LME + Regional premium (2)
DAP/CIF/DDP
Net 30 to 45 days
Value add ingot
LME + Regional premium + Product premium (2)
DAP/CIF/DDP
Net 30 to 45 days
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.
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. The regional premium 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). The product premium represents the incremental price for receiving physical metal in a particular shape or alloy.
CIF (cost, insurance, and freight) means that the Company pays for these items until the product reaches the buyer’s designated destination point related to transportation by vessel. DAP (delivered at place) means the same as CIF related to all methods of transportation. FOB (free on board) means that the Company pays for costs, insurance, and freight until the product reaches the seller’s designated shipping point. DDP (delivered duty paid) means that the Company pays for all costs and risks, including export and import clearance, transport costs, and customs formalities, until the product reaches the buyer’s designated destination point.
The net number of days means that the customer is required to remit payment to the Company for the invoice amount within the designated number of days. LC Sight is a letter of credit that is payable immediately (usually within five to ten business days) after a seller meets the requirements of the letter of credit (i.e. shipping documents that evidence the seller performed its obligations as agreed to with a buyer). CAD (cash against documents) is a payment arrangement in which a seller instructs a bank to provide shipping and title documents to the buyer at the time the buyer pays in full the accompanying bill of exchange.
For the Company’s Energy product division, sales of electricity are based on current market prices. Electricity is provided to customers on demand through a national or regional power grid; the customer simultaneously receives and consumes the electricity. Payment terms are generally within 10 days related to the previous 30 days of electricity consumption.
The following table details Alcoa Corporation’s Sales by product division:
Sales:
Aluminum
Alumina
Bauxite
Energy
Other (1)
Other includes realized gains and losses related to embedded derivative instruments designated as cash flow hedges of forward sales of aluminum (see Note P ).
Geographic Area Information
Geographic information for Third-party sales was as follows (based upon the country where the point of sale originated):
Sales:
United States (1)
Australia
Netherlands (2)
Brazil
Spain
Other
Sales of a portion of the alumina from refineries in Australia and Brazil, most of the aluminum from smelters in Canada, and aluminum off-take related to an interest in the Saudi Arabia joint venture (prior to Alcoa’ s sale of its 25.1 % interest in the Saudi Arabia joint venture on July 1, 2025) (see Note C and Note H), occurred in the United States.
Sales of aluminum from smelters in Iceland and Norway occurred in the Netherlands.
Geographic information for long-lived assets was as follows (based upon the physical location of the assets):
December 31,
Long-lived assets:
Australia
Brazil
Canada
Iceland
United States
Norway
Spain
Other
F. Earnings Per Share
Following the issuance of preferred stock on August 1, 2024 (see Note N), basic earnings per share (EPS) was calculated using the two-class method. Under the two-class method, earnings are allocated to Alcoa common stock and preferred stock based on the pro-rata share of each class outstanding. Diluted EPS assumes the issuance of common stock for all potentially dilutive share equivalents outstanding. Diluted EPS is calculated under both the two-class and if-converted methods, and the more dilutive amount is reported.
In 2025 and 2024, dividends paid on preferred stock were $ 1 and $ 1 , respectively, and undistributed earnings of $ 15 and $ 3 , respectively, were allocated to preferred stock under the two-class method.
In the fourth quarter 2025, all issued and outstanding shares of preferred stock were converted into common stock, and no preferred stock remained issued and outstanding at December 31, 2025 (see Note N).
The share information used to compute basic and diluted EPS attributable to Alcoa Corporation common shareholders was as follows (shares in millions):
Average shares outstanding—basic
Effect of dilutive securities:
Stock options
Stock units
Average shares outstanding—diluted
In 2023, basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential shares of common stock was anti-dilutive. Had Alcoa generated net income in 2023, three million common share equivalents related to three million outstanding stock units and stock options combined would have been included in diluted average shares outstanding for the period.
G. Accumulated Other Comprehensive Loss
The following table details the activity of the three components that comprise Accumulated other comprehensive loss for Alcoa Corporation’s shareholders and Noncontrolling interest:
Alcoa Corporation
Noncontrolling interest
Pension and other postretirement benefits (O)
Balance at beginning of period
Other comprehensive (loss) income:
Unrecognized net actuarial gain/loss and prior
service cost/benefit
Tax benefit (expense) (2)
Total Other comprehensive (loss) income
before reclassifications, net of tax
Amortization of net actuarial gain/loss and prior
service cost/benefit (1)
Tax expense (2)
Total amount reclassified from Accumulated
other comprehensive loss, net of tax (7)
Total Other comprehensive (loss) income
Acquisition of noncontrolling interest (C)
Balance at end of period
Foreign currency translation
Balance at beginning of period
Other comprehensive income (loss)
Acquisition of noncontrolling interest (C)
Joint venture formation (C)
Balance at end of period
Cash flow hedges (P)
Balance at beginning of period
Other comprehensive (loss) income:
Net change from periodic revaluations
Tax benefit (2)
Total Other comprehensive loss
before reclassifications, net of tax
Net amount reclassified to earnings:
Aluminum contracts (3)
Financial contracts (4)
Interest rate contracts (5)
Foreign exchange contracts (6)
Sub-total
Tax expense (2)
Total amount reclassified from Accumulated
other comprehensive loss, net of tax (7)
Total Other comprehensive (loss) income
Balance at end of period
Total Accumulated other comprehensive (loss) income
These amounts were included in the computation of net periodic benefit cost for pension and other postretirement benefits. The amounts related to settlements and/or curtailments of certain pension benefits for Alcoa Corporation include ($ 1 ), ($ 1 ), and $ 21 for the years ended December 31, 2025, 2024, and 2023, respectively (see Note O). The amounts related to settlements and/or curtailments of certain pension benefits for Noncontrolling interest were immaterial for the years ended December 31, 2025, 2024, and 2023.
These amounts were reported in (Benefit from) provision for income taxes on the accompanying Statement of Consolidated Operations.
These amounts were reported in Sales on the accompanying Statement of Consolidated Operations.
These amounts were reported in Cost of goods sold on the accompanying Statement of Consolidated Operations.
These amounts were included in Other (income) expenses, net on the accompanying Statement of Consolidated Operations.
In 2025, $ 1 was reported in Sales on the accompanying Statement of Consolidated Operations. In 2024, $ 1 was reported in Cost of goods sold and ($ 2 ) was reported in Sales on the accompanying Statement of Consolidated Operations. In 2023, $ 5 was reported in Cost of goods sold and ($ 31 ) was reported in Sales on the accompanying Statement of Consolidated Operations.
A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings.
H. Investments
December 31,
Equity investments
Other investments (1)
In May 2025, Alcoa sold a non-core investment for total cash consideration of $ 13 , resulting in a gain of $ 3 within Other (income) expenses, net. Cash received of $ 11 is presented within investing activities in the Statement of Consolidated Cash Flows. The remaining $ 2 is expected to be received in May 2026 and was included in Other receivables on the Consolidated Balance Sheet at December 31, 2025 .
Equity Investments. The following table summarizes information of Alcoa Corporation’s equity investments as of December 31, 2025 and 2024 . In 2025, 2024, and 2023 , Alcoa Corporation received $ 34 , $ 37 , and $ 51 , respectively, in dividends from these equity investments. Each of the investees either owns the facility listed or has an ownership interest in an entity that owns the facility listed:
Investee
Country
Nature of investment
Income Statement Location
of Equity Earnings
Ownership
interest
Ma’aden Aluminium Company (1)
Saudi Arabia
Aluminum smelter and casthouse
Other (income) expenses, net
Ma’aden Bauxite and Alumina Company (1)
Saudi Arabia
Bauxite mine and alumina refinery
Other (income) expenses, net
Halco Mining, Inc.
Guinea
Bauxite mine
Cost of goods sold
Energética Barra Grande S.A.
Brazil
Hydroelectric generation facility
Cost of goods sold
Pechiney Reynolds Quebec, Inc.
Canada
Aluminum smelter
Cost of goods sold
Serra do Facão Energia S/A
Brazil
Hydroelectric generation facility
Cost of goods sold
Manicouagan Power Limited Partnership
Canada
Hydroelectric generation facility
Cost of goods sold
Elysis ® Limited Partnership
Canada
Aluminum smelting technology
Other (income) expenses, net
On July 1, 2025, Alcoa completed the sale of its full ownership interest of 25.1 % in the Saudi Arabia joint venture, comprised of MBAC and MAC, to Ma’aden (see Note C ).
Saudi Arabia Joint Venture— Alcoa Corporation and Ma’aden had a 30-year (from December 2009) joint venture shareholders agreement that set forth the terms for development, construction, ownership, and operation of an integrated aluminum complex in Saudi Arabia. The complex includes a bauxite mine from the Al Ba’itha bauxite deposit in the northern part of Saudi Arabia, an alumina refinery, and a primary aluminum smelter.
On July 1, 2025, Alcoa completed the sale of its full ownership interest of 25.1 % in the Saudi Arabia joint venture, comprised of MBAC and MAC, to Ma’aden in exchange for issuance by Ma’aden of 85,977,547 shares (valued at SAR 52.35 per share at closing, or $ 1,200 ) and $ 150 in cash (related to taxes and transaction costs) (see Note C). Upon completion of the sale, MBAC and MAC became wholly-owned by Ma’aden.
The results for the Saudi Arabia joint venture for the year ended December 31, 2023 include a charge related to the settlement of a dispute with an industrial utility for periods in 2021 and 2022. Alcoa’s share of this charge was $ 41 which is included in Other (income) expenses, net on the Statement of Consolidated Operations for the year ended December 31, 2023.
As of December 31, 2024, the carrying value of Alcoa’ s investment in this joint venture was $ 544 .
ELYSIS Limited Partnership— In June 2018, Alcoa Corporation, Rio Tinto Alcan Inc. (Rio Tinto), and Investissement Québec, a company wholly-owned by the Government of Québec, Canada, launched the ELYSIS Limited Partnership (ELYSIS). The purpose of ELYSIS is to advance larger scale development and commercialization of its patent-protected technology that eliminates direct greenhouse gas emissions from the traditional aluminum smelting process and, instead, emits oxygen. Alcoa and Rio Tinto, as general partners, each own a 48.235 % stake in ELYSIS, and Investissement Québec, as a limited partner, owns a 3.53 % stake.
Through December 31, 2025 , the Company has contributed $ 207 (C$ 279 ) toward its investment commitment in ELYSIS. The Company’s basis in the investment has been reduced to zero for its share of losses incurred to date. In addition to cash contributions, Alcoa is contributing approximately $ 3 annually to cover overhead expenses incurred by Alcoa and charged to the joint venture. As a result, the Company has $ 62 in unrecognized losses as of December 31, 2025 that will be recognized upon additional contributions into the partnership.
The following table summarizes the profit and loss data for the respective periods ended December 31, as it relates to Alcoa Corporation’s equity investments. Information shown for the Saudi Arabia Joint Venture for all periods presented includes the combined balances for MAC and MBAC. The investments are grouped based on the nature of the investment. The Mining investments are part of the Alumina segment, while the Energy and Other investments are primarily part of the Aluminum segment.
Saudi Arabia
Joint Venture (1)
Mining
Energy
Other
Sales
Cost of goods sold
Net income (loss)
Equity in net income (loss) of affiliated companies, before
reconciling adjustments
Other
Alcoa Corporation’s equity in net income (loss) of
affiliated companies
Sales
Cost of goods sold
Net income (loss)
Equity in net income (loss) of affiliated companies, before
reconciling adjustments
Other
Alcoa Corporation’s equity in net income (loss) of
affiliated companies
Sales
Cost of goods sold
Net (loss) income
Equity in net (loss) income of affiliated companies, before
reconciling adjustments
Other
Alcoa Corporation’s equity in net (loss) income of
affiliated companies
These amounts do not include the financial information of the Saudi Arabia joint venture after July 1, 2025, due to the sale of Alcoa’s ownership interest (see Note C ).
The following table summarizes the balance sheet data for the respective periods ended December 31, as it relates to Alcoa Corporation’s equity investments.
Saudi Arabia
Joint Venture (1)
Mining
Energy
Other
Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities
Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities
On July 1, 2025, Alcoa completed the sale of its full ownership interest of 25.1 % in the Saudi Arabia joint venture, comprised of MBAC and MAC, to Ma’aden (see Note C ).
I. Recei vables
In November 2025, a wholly-owned special purpose entity (SPE) of the Company amended an agreement with a financial institution to increase the amount of certain customer receivables that can be transferred without recourse on a revolving basis from $ 150 to $ 175 and to extend the maturity to November 13, 2026. The agreement was initially entered into in 2023. Company subsidiaries sell customer receivables to the SPE, which then transfers the receivables to the financial institution. The Company does not maintain effective control over the transferred receivables and therefore accounts for the transfers as sales of receivables.
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. The SPE held unsold customer receivables of $ 486 and $ 247 pledged as collateral against the sold receivables as of December 31, 2025 and 2024, respectively.
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 2025 , the Company sold gross customer receivables of $ 910 , and reinvested collections of $ 910 from previously sold receivables, resulting in no net cash remittance to or proceeds from the financial institution.
In 2024 , the Company sold gross customer receivables of $ 1,186 , and reinvested collections of $ 1,170 from previously sold receivables, resulting in net cash proceeds from the financial institution of $ 16 .
In 2023 , the Company sold gross customer receivables of $ 591 , and reinvested collections of $ 477 from previously sold receivables, resulting in net cash proceeds from the financial institution of $ 114 .
Cash collections from previously sold receivables yet to be reinvested of $ 69 and $ 50 were included in Accounts payable, trade on the Consolidated Balance Sheet as of December 31, 2025 and 2024 , respectively. Cash received from sold receivables under the agreement are presented within operating activities in the Statement of Consolidated Cash Flows.
J. Inventories
December 31,
Finished goods
Work-in-process
Bauxite and alumina
Purchased raw materials
Operating supplies
K. Properties, Plants, and Equipment, Net
December 31,
Land and land rights, including mines
Structures (by type of operation):
Bauxite mining and alumina refining
Aluminum smelting and casting
Energy generation
Other
Machinery and equipment (by type of operation):
Bauxite mining and alumina refining
Aluminum smelting and casting
Energy generation
Other
Less: accumulated depreciation, depletion, and amortization
Construction work-in-progress
L. Goo dwill and Other Intangible Assets
Management performed a quantitative assessment for the Alumina reporting unit in the fourth quarter of 2025. As a result of the assessment, the Company recorded a charge of $ 144 in Impairment of goodwill on the Statement of Consolidated Operations for the year ended December 31, 2025, reducing the amount of goodwill for the Alumina reporting unit to zero .
The goodwill impairment was primarily a result of declining alumina prices, increased capital expenditures primarily related to mine moves and mine reclamation in Australia, and an increase in the discount rate. Following a peak in the fourth quarter of 2024 primarily due to supply disruptions, alumina prices decreased in the first quarter of 2025 and declined further in the fourth quarter of 2025 driven by a global supply surplus, largely due to refinery expansions in China and Indonesia.
Changes in the carrying amount of goodwill in 2025 prior to impairment were attributable to foreign currency translation.
Goodwill, which is included in Other noncurrent assets on the accompanying Consolidat ed Balance Sheet, was as follows:
December 31,
Alumina
Aluminum
Corporate (1)
Goodwill is reflected in Corporate for segment reporting because it is not included in management’s assessment of performance by the reportable segment, and it is allocated to the Alumina reporting unit for purposes of impairment testing (see Goodwill and Other Intangible Assets in Note B ).
The carrying value of Corporate’s goodwill is net of accumulated impairment losses of $ 882 and $ 742 as of December 31, 2025 and December 31, 2024, respectively.
Other intangible assets, which are included in Other noncurrent assets on the accompanying Consolidated Balance Sheet, were as follows:
December 31,
Gross
carrying
amount
Accumulated
amortization
Net
carrying
amount
Gross
carrying
amount
Accumulated
amortization
Net
carrying
amount
Computer software
Patents and licenses
Other intangibles
Total other intangible assets
Computer software consists primarily of software costs associated with the enterprise business solution within Alcoa to drive common systems among all businesses.
Amortization expense related to the intangible assets in the table above for the years ended December 31, 2025, 2024, and 2023 was $ 6 , $ 5 , and $ 5 , respectively, and is expected to be approximately $ 5 annually from 2026 to 2030.
M. Debt
Short-term Borrowings.
December 31,
Short-term borrowings
Short-term borrowings are reported in Other current liabilities on the accompanying Consolidated Balance Sheet.
Inventory Repurchase Agreements
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 $ 9 and $ 50 related to these agreements was recorded in Short-term borrowings within Other current liabilities on the Consolidated Balance Sheet as of December 31, 2025 and December 31, 2024, respectively. The associated inventory sold was reflected in Prepaid expenses and other current assets on the Consolidated Balance Sheet as of December 31, 2025 and December 31, 2024, respectively.
For the year ended December 31, 2025 , the Company recorded borrowings of $ 60 and repurchased $ 101 of inventory related to these agreements. For the year ended December 31, 2024 , the Company recorded borrowings of $ 88 and repurchased $ 94 of inventory related to these agreements. For the year ended December 31, 2023, the Company recorded borrowings of $ 117 and repurchased $ 61 of inventory related to these agreements.
The cash received and subsequently paid under the inventory repurchase agreements is included in Cash (used for) provided from financing activities on the Statement of Consolidated Cash Flows.
Long-term Debt.
December 31,
5.500% Notes, due 2027
6.125% Notes, due 2028
4.125% Notes, due 2029
6.125% Notes, due 2030
7.125% Notes, due 2031
6.375% Notes, due 2032
Other
Unamortized discounts and deferred financing costs
Total
Less: amount due within one year
Long-term debt, less amount due within one year
The principal amount of long-term debt maturing in each of the next five years is: $ 1 in 2026, $ 0 in 2027, $ 219 in 2028, $ 500 in 2029, and $ 500 in 2030.
In April 2025, the Company amended a $ 74 term loan, included within Other at December 31, 2024, extending the maturity from May 2025 to November 2025 . In September 2025, the Company fully repaid $ 74 drawn under the term loan and cancelled the agreement.
144A Debt .
2030 and 2032 Notes. 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) with the following terms:
Net proceeds were approximately $ 985 , reflecting a discount to the initial purchasers on each series of notes as well as issuance costs. The discounts, as well as costs to complete the financing, were deferred and are being amortized to interest expense over the respective terms;
Interest is paid semi-annually in March and September, which commenced September 15, 2025 ;
Indenture contains customary affirmative and negative covenants, see below;
Option to redeem on at least 10 days, but not more than 60 days, notice to the holders under multiple scenarios, including, in whole or in part, at any time, or from time to time on and after March 15, 2027 and March 15, 2028 for the 2030 Notes and 2032 Notes, respectively, at a redemption price up to 103.063 percent and 103.188 percent of the principal amount plus any accrued and unpaid interest in each case for the 2030 Notes and 2032 Notes, respectively; and,
Subject to repurchase upon the occurrence of a change in control repurchase event (as defined in the indenture) at a repurchase price in cash equal to 101 percent of the aggregate principal amount of the notes repurchased, plus any accrued and unpaid interest.
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 $ 750 aggregate principal amount of 5.500 % Notes due 2027 (the 2027 Notes) and $ 500 aggregate principal amount of 6.125 % Notes due 2028 (the 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 (see Tender Offers). The net proceeds also supported Alcoa’s general corporate purposes.
2031 Notes. In March 2024, ANHBV completed a Rule 144A debt issuance for $ 750 aggregate principal amount of 7.125 % Senior Notes due 2031 (the 2031 Notes), which carry a green bond designation, with the following terms:
Net proceeds were approximately $ 737 , reflecti ng a discount to the initial purchasers as well as issuance costs. The discount, as well as costs to complete the financing, were deferred and are being amortized to interest expense over the term;
Interest is paid semi-annually in March and September, which commenced September 15, 2024 ;
Indenture contains customary affirmative and negative covenants, see below;
Option to redeem on at least 10 days, but not more than 60 days, notice to the holders under multiple scenarios, including, in whole or in part, at any time, or from time to time on and after March 15, 2027, at a redemption price up to 103.563 percent of the principal amount, plus any accrued and unpaid interest; and,
Subject to repurchase upon the occurrence of a change in control repurchase event (as defined in the indenture) at a repurchase price in cash equal to 101 percent of the aggregate principal amount of the notes repurchased, plus any accrued and unpaid interest.
The Company utilized the net proceeds to finance and/or refinance, in whole or in part, new and/or existing qualifying projects on a two-year look back and three-year look forward that meet certain eligibility criteria within its Green Finance Framework.
2029 Notes. In March 2021, ANHBV, a wholly-owned subsidiary of Alcoa Corporation, completed a Rule 144A debt issuance for $ 500 aggregate principal amount of 4.125 % Senior Notes due 2029 (the 2029 Notes) with the following terms:
Net proceeds were approximately $ 493 , reflecting a discount to the initial purchasers as well as issuance costs. The discount, as well as costs to complete the financing, were deferred and are being amortized to interest expense over the term;
Interest is paid semi-annually in March and September, which commenced September 30, 2021 ;
Indenture contains customary affirmative and negative covenants, see below;
Option to redeem on at least 10 days, but not more than 60 days, notice to the holders under multiple scenarios, including, in whole or in part, at any time, or from time to time after March 31, 2024, at a redemption price up to 102.063 percent of the principal amount, plus any accrued and unpaid interest; and,
Subject to repurchase upon the occurrence of a change in control repurchase event (as defined in the indenture) at a repurchase price in cash equal to 101 percent of the aggregate principal amount of the notes repurchased, plus any accrued and unpaid interest.
The Company used the net proceeds of the 2029 Notes, together with cash on hand, to contribute $ 500 to its U.S. defined benefit pension plans, to redeem in full $ 750 aggregate principal amount of the Company’s outstanding 6.75 % Senior Notes due 2024 , and to pay transaction-related fees and expenses.
2028 Notes. In May 2018, ANHBV completed a Rule 144A debt issuance for $ 500 aggregate principal amount of 6.125 % Senior Notes due 2028 with the following terms:
Net proceeds were approximately $ 492 , reflecting a discount to the initial purchasers as well as issuance costs. The discount, as well as costs to complete the financing, were deferred and are being amortized to interest expense over the term;
Interest is paid semi-annually in November and May, which commenced November 15, 2018 ;
Indenture contains customary affirmative and negative covenants, see below;
Option to redeem on at least 30 days, but not more than 60 days, notice to the holders under multiple scenarios, including, in whole or in part, at any time, or from time to time after May 2023, at a redemption price up to 103.063 percent of the principal amount, plus any accrued and unpaid interest; and,
Subject to repurchase upon the occurrence of a change in control repurchase event (as defined in the indenture) at a repurchase price in cash equal to 101 percent of the aggregate principal amount of the notes repurchased, plus any accrued and unpaid interest.
The Company used the net proceeds of the 2028 Notes, together with cash on hand, to make discretionary contributions to certain U.S. defined benefit pension plans.
The indentures governing the 2028 Notes, the 2029 Notes, the 2030 Notes, the 2031 Notes, and the 2032 Notes contain customary affirmative and negative covenants, such as limitations on liens, limitations on sale and leaseback transactions, and specific to the 2028 Notes, the 2029 Notes, and the 2031 Notes, a prohibition on a reduction in the ownership of AWAC entities below an agreed level. The negative covenants in the indentures are less extensive than those in the Revolving Credit Facility (see below). For example, the indentures do not include a limitation on restricted payments, such as repurchases of common stock and dividends to stockholders.
The 2028 Notes, the 2029 Notes, and the 2031 Notes are senior unsecured obligations of ANHBV and do not entitle the holders to any registration rights pursuant to a registration rights agreement. ANHBV does not intend to file a registration statement with respect to resales of or an exchange offer for the notes. The notes are guaranteed on a senior unsecured basis by Alcoa Corporation and its subsidiaries that are guarantors under the Revolving Credit Facility (the “subsidiary guarantors” and, together with Alcoa Corporation, the “guarantors”). Each of the subsidiary guarantors will be released from their guarantees upon the occurrence of certain events, including the release of such guarantor from its obligations as a guarantor under the Revolving Credit Facility.
The 2028 Notes, the 2029 Notes, and the 2031 Notes rank equally in right of payment with each other and with all of ANHBV’s existing and future senior unsecured indebtedness; rank senior in right of payment to any future subordinated obligations of ANHBV; and are effectively subordinated to ANHBV’s existing and future secured indebtedness, including under the Revolving Credit Facility, to the extent of the value of property and assets securing such indebtedness. The guarantees of the notes rank equally in right of payment with each other and with all the guarantors’ existing and future senior unsecured indebtedness; rank senior in right of payment to any future subordinated obligations of the guarantors; and are effectively subordinated to the guarantors’ existing and future secured indebtedness, including under the Revolving Credit Facility, to the extent of the value of property and assets securing such indebtedness.
The 2030 Notes and the 2032 Notes are senior unsecured obligations of Alumina Pty Ltd and do not entitle the holders to any registration rights pursuant to a registration rights agreement. Alumina Pty Ltd does not intend to file a registration statement with respect to resales of or an exchange offer for the notes. The notes are guaranteed on a senior unsecured basis by the Company and its subsidiaries that are party to the indenture.
The 2030 Notes and the 2032 Notes rank equally in right of payment with each other and with all existing and future senior unsecured indebtedness of Alumina Pty Ltd, the Company, and its subsidiaries that are party to the indenture; rank senior in right of payment to any future subordinated obligations of Alumina Pty Ltd, the Company, and such subsidiaries; and are effectively subordinated to the existing and future secured indebtedness of Alumina Pty Ltd, the Company, and such subsidiaries, including under the Revolving Credit Agreement, to the extent of the value of property and assets securing such indebtedness. The guarantees of the notes rank equally in right of payment with each other and with all the guarantors’ existing and future senior unsecured indebtedness; rank senior in right of payment to any future subordinated obligations of the guarantors; and are effectively subordinated to the guarantors’ existing and future secured indebtedness, including under the Revolving Credit Facility, to the extent of the value of property and assets securing such indebtedness.
Redemption. On December 15, 2025, ANHBV redeemed the remaining $ 141 aggregate principal amount of the 2027 Notes at a redemption price equal to 100 percent of the principal amount, plus accrued and unpaid interest. As a result, the Company recorded a loss of $ 1 on the extinguishment of debt in the fourth quarter of 2025 in Interest expense, which was comprised of the write-off of unamortized discounts and deferred financing costs. The redemption was funded using cash on hand. The cash flows related to the transaction were included in Cash (used for) provided from financing activities on the Statement of Consolidated Cash Flows.
Tender Offers. 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 the 2027 Notes and $ 281 of the $ 500 aggregate principal amount of the 2028 Notes for purchase. The issuance of the 2030 Notes and 2032 Notes and the cash tender of the 2027 Notes and 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. The cash flows related to the transaction were included in Cash (used for) provided from financing activities on the Statement of Consolidated Cash Flows.
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 August 2025, 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. Further, the Revolving Credit Facility contains financial covenants and customary affirmative and negative covenants (applicable to Alcoa Corporation and certain subsidiaries described as restricted), that, subject to certain exceptions, include limitations on (among other things): indebtedness, liens, investments, sales of assets, restricted payments, entering into restrictive agreements, a covenant prohibiting reductions in the ownership of AWAC entities, and certain other specified restricted subsidiaries of Alcoa Corporation, below an agreed level. The Revolving Credit Facility also contains customary events of default, including failure to make payments under the Revolving Credit Facility, cross-default and cross-judgment default, and certain bankruptcy and insolvency events.
On January 17, 2024, Alcoa Corporation, ANHBV, and certain subsidiaries of the Company entered into Amendment No. 1 (Amendment No. 1) to the Revolving Credit Facility (Amended Revolving Credit Facility). The Amended Revolving Credit Facility provided additional flexibility to the Company and the Borrower by temporarily (i) reducing the minimum interest coverage ratio required thereunder from 4.00 to 1.00 to 3.00 to 1.00 and (ii) providing for a maximum addback for cash restructuring charges in Consolidated EBITDA (as defined in the Revolving Credit Facility) of $ 450 , in each case for the 2024 fiscal year. As of January 1, 2025, the minimum interest coverage ratio requirement reverted to 4.00 to 1.00 and the maximum addback for cash restructuring charges in Consolidated EBITDA reverted to 15 percent of Consolidated EBITDA. The requirement that the Company maintain a debt to capitalization ratio not to exceed .60 to 1.00 was not changed by Amendment No. 1.
In connection with Amendment No. 1, the Company also agreed to provide collateral for its obligations under the Amended Revolving Credit Facility, which required it to execute all security documents to re-secure collateral under the Amended Revolving Credit Facility by, subject to certain exceptions, a first priority security interest in substantially all assets of the Company, the Borrower, the material domestic wholly-owned subsidiaries of the Company, and the material foreign wholly-owned subsidiaries of the Company located in Australia, Brazil, Canada, Luxembourg, the Netherlands, Norway, and Switzerland including equity interests of certain subsidiaries that directly hold equity interests in AWAC entities.
After January 1, 2025, the Company may obtain a release of the collateral if the Company or the Borrower (as applicable) (i) has at least two of the following three designated ratings: (x) Baa3 from Moody’s Investor Service (Moody’s), (y) BBB- from Standard and Poor’s (S&P) Global Ratings and (z) BBB- from Fitch Ratings and (ii) does not have any designated rating lower than: (x) Ba1 from Moody’s, (y) BB+ from S&P Global Ratings and (z) BB+ from Fitch Ratings.
The Amended Revolving Credit Facility contains customary affirmative covenants, negative covenants, and events of default substantially comparable to the Revolving Credit Facility (other than those that are described above and other minor changes). The representations, warranties and covenants contained in the Amended Revolving Credit Facility were made only for purposes of Amendment No. 1 and as of specific dates and were solely for the benefit of the parties to the Amended 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.
As of December 31, 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 December 31, 2025 and 2024 , and no amounts were borrowed during 2025, 2024, and 2023 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 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 Yen 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 Amended 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 with the same conditions as the Amended Revolving Credit Facility.
As of December 31, 2025 , the Company was in compliance with all financial covenants. The Company may access the entire amount of commitments under the facility. There were no borrowings outstanding at December 31, 2025 and 2024 . During 2025, no amounts were borrowed. During 2024, $ 201 (JPY 29,686 ) was borrowed and $ 196 (JPY 29,686 ) was repaid. During 2023, $ 10 (JPY 1,495 ) was borrowed and repaid.
Alumina Limited Revolving Credit Facility
In connection with the acquisition of Alumina Limited (see Note C ), the Company assumed $ 385 of indebtedness as of August 1, 2024, representing the amount drawn on the Alumina Limited revolving credit facility.
At acquisition, the Alumina Limited revolving credit facility had tranches maturing in October 2025 ($ 100 ), January 2026 ($ 150 ), July 2026 ($ 150 ), and June 2027 ($ 100 ). In August 2024, Alcoa cancelled the undrawn portions of the revolving credit facility maturing in July 2026 ($ 15 ) and June 2027 ($ 100 ). In November 2024, pursuant to the terms of the Alumina Limited revolving credit facility, Alcoa voluntarily repaid all accrued and unpaid amounts outstanding under the revolving credit facility, totaling $ 385 and, as of the same date, cancelled the outstanding lender tranche commitments ($ 385 ). As a result of the repayment and cancellation of undrawn amounts, the Alumina Limited revolving credit facility agreement was effectively terminated. No early termination penalties or prepayment premiums were incurred by Alcoa in connection with the termination of the Alumina Limited revolving credit facility.
N. Preferred and Common Stock
Preferred Stock. Alcoa Corporation is authorized to issue 100,000,000 shares of preferred stock at a par value of $ 0.01 per share. In connection with the acquisition of Alumina Limited (see Note C ), on July 31, 2024, the Company’s Board of Directors created and authorized 10,000,000 shares of non-voting preferred stock designated as “Series A convertible preferred stock” with a par value of $ 0.01 per share. At the transaction closing on August 1, 2024, Alumina Shares outstanding were exchanged for 4,041,989 shares of Alcoa Series A convertible preferred stock.
In the fourth quarter 2025, all 4,041,989 issued and outstanding shares of Alcoa Series A convertible preferred stock were converted into 4,041,989 shares of common stock, and the associated preferred shares were retired and cancelled. On February 25, 2026, the Company filed a certificate of cancellation with the Secretary of State of the State of Delaware, thereby eliminating the Series A convertible preferred stock as a designated series and restoring the 10,000,000 previously designated shares to the status of authorized but unissued.
As of December 31, 2025 , the Company had no issued preferred stock. As of December 31, 2024 , the Company had 4,041,989 issued and outstanding shares of Series A convertible preferred stock.
Common Stock. Alcoa Corporation is authorized to issue 750,000,000 shares of common stock at a par value of $ 0.01 per share. In connection with the acquisition of Alumina Limited (see Note C ), Alumina Shares outstanding were exchanged for 78,772,422 shares of Alcoa common stock. As of December 31, 2025 and 2024 , Alcoa Corporation had 263,102,406 and 258,360,908 , respectively, issued and outstanding shares of common stock.
Under its employee stock-based compensation plan, the Company issued shares of 699,509 in 2025 , 1,116,022 in 2024 , and 1,503,373 in 2023. The Company issues new shares to satisfy the exercise of stock options and the conversion of stock units. As of December 31, 2025 , 18,709,900 shares of common stock were available for issuance.
Common Stock Repurchase Program
In July 2022, Alcoa Corporation’s Board of Directors approved a common stock repurchase program under which the Company may purchase shares of its outstanding common stock up to an aggregate transactional value of $ 500 , depending on the Company’s continuing analysis of market, financial, and other factors (the July 2022 authorization).
No shares were repurchased in 2025, 2024, or 2023.
As of the date of this report, the Company is currently authorized to repurchase up to a total of $ 500 , in the aggregate, of its outstanding shares of common stock under the July 2022 authorization. Repurchases under this program may be made using a variety of methods, which may include open market purchases, privately negotiated transactions, or pursuant to a Rule 10b5-1 plan. This program may be suspended or discontinued at any time and does not have a predetermined expiration date. Alcoa Corporation intends to retire repurchased shares of common stock.
Dividend
Dividends on common and preferred stock are subject to authorization by Alcoa Corporation’s Board of Directors.
Quarterly dividends paid on common stock were $ 0.10 per share in 2025, 2024, and 2023 , totaling $ 104 , $ 89 , and $ 72 , respectively. After the acquisition of Alumina Limited (see Note C ), quarterly dividends of $ 0.10 per share were paid on Series A convertible preferred stock, totaling $ 1 in both 2025 and 2024.
The details of any future cash dividend declaration, including the amount of such dividend and the timing and establishment of the record and payment dates, will be determined by the Board of Directors. The decision of whether to pay future cash dividends and the amount of any such dividends will be based on the Company’s financial position, results of operations, cash flows, capital requirements, business conditions, the requirements of applicable law, and any other factors the Board of Directors may deem relevant.
Stock-based Compensation
Restricted stock units are generally granted in January and/or February of each calendar year to eligible employees. The Company’s Board of Directors also receive certain stock units; however, these amounts are not material. Time-based restricted stock units (RSUs) either cliff vest on the third anniversary of the award grant date or vest incrementally over a three-year period (one third each year) on each anniversary of the award grant date. The Company also grants performance restricted stock units (PRSUs), which are subject to performance conditions and earned after the end of the three-year measurement period. As of January 1, 2021, the Company no longer grants stock options.
The final number of PRSUs earned is dependent on Alcoa Corporation’s achievement of certain targets over a three-year measurement period for grants. For PRSUs granted in 2023, the award will be earned after the end of the measurement period of January 1, 2023 through December 31, 2025 based on performance against three measures: (1) the Company’s total shareholder return measured against the ranked total shareholder return of the S&P Metals and Mining Select Industry Index components; (2) a pre-established average return-on-equity target; and (3) a reduction in carbon intensity in both refining (through reduced carbon dioxide emissions) and smelting (through increased production from renewable energy) operations. For PRSUs granted in 2024, the award will be earned after the end of the measurement period of January 1, 2024 through December 31, 2026 based on performance against three measures: (1) the Company’s total shareholder return measured against the ranked total shareholder return of the S&P Metals and Mining Select Industry Index components; (2) a pre-established average return-on-equity target; and (3) a reduction in carbon intensity in both refining (through reduced carbon dioxide emissions) and smelting (through increased production from renewable energy) operations. For PRSUs granted in 2025, the award will be earned after the end of the measurement period of January 1, 2025 through December 31, 2027 based on performance against three measures: (1) the Company’s total shareholder return measured against the ranked total shareholder return of the S&P Metals and Mining Select Industry Index components; (2) a pre-established average return-on-equity target; and (3) a pre-established strategic initiatives target focused on portfolio optimization and capital allocation activities.
In 2025, 2024, and 2023 , Alcoa Corporation recognized stock-based compensation expense of $ 41 , $ 36 , and $ 35 , respectively, related to stock units in each period. There was no stock-based compensation expense capitalized in 2025, 2024, and 2023.
Stock-based compensation expense is based on the grant date fair value of the applicable equity grant. For both RSUs and PRSUs, the fair value was equivalent to the closing market price per share of Alcoa Corporation’s common stock on the date of grant in the respective periods. For stock units with a market condition, the fair value was estimated on the date of grant using a Monte Carlo simulation model, which generated a result of $ 52.74 , $ 40.27 , and $ 71.12 per unit in 2025, 2024, and 2023 , respectively. The Monte Carlo simulation model uses certain assumptions to estimate the fair value of a market-based stock unit, including volatility and a risk-free interest rate, to estimate the probability of satisfying market conditions. Volatility ( 55.03 percent, 59.40 percent, and 64.88 percent in 2025, 2024, and 2023 , respectively) was estimated using the historical volatility of the Company calculated from daily stock price returns. The risk-free interest rate ( 4.18 percent, 4.35 percent, and 4.26 percent in 2025, 2024, and 2023, respectively) was based on the U.S. Treasury yield curve at the time of the grant based on the remaining performance period.
The activity for stock units and stock options during 2025 was as follows:
Stock units
Stock options
Number of
units
Weighted
average FMV
per unit
Number of
options
Weighted
average
exercise price
Outstanding, January 1, 2025
Granted
Exercised
Converted
Expired or forfeited
Performance share adjustment
Outstanding, December 31, 2025
The number of Converted units includes 214,298 shares withheld to meet the Company’s statutory tax withholding requirements related to the income earned by the employees as a result of vesting in the units.
As of December 31, 2025 , the 89,907 outstanding stock options were fully vested and exercisable, had a weighted average remaining contractual life of 2.86 years, a total intrinsic value of $ 2 and a weighted average exercise price of $ 30.64 . Cash received from stock option exercises was immaterial in 2025, 2024, and 2023. The total intrinsic value of stock options exercised was immaterial during 2025, 2024, and 2023. The total fair value of stock units converted during 2025, 2024, and 2023 was $ 40 , $ 37 and $ 35 , respectively.
At December 31, 2025 , there was $ 37 of combined unrecognized compensation expense (pretax) related to non-vested grants of stock units. This expense is expected to be recognized over a weighted average period of 1.40 years.
O. Pension and Other Postretirement Benefits
Defined Benefit Plans
Alcoa sponsors several defined benefit pension plans covering certain employees in the U.S. and foreign locations. Pension benefits generally depend on length of service, job grade, and remuneration. Substantially all benefits are paid through pension trusts that are sufficiently funded to ensure that all plans can pay benefits to retirees as they become due. Most salaried and non-bargaining hourly U.S. employees hired after March 1, 2006 and most bargaining hourly U.S. employees hired after January 1, 2020 participate in a defined contribution plan instead of a defined benefit plan.
The Company also maintains health care postretirement benefit plans covering certain eligible U.S. retired employees and certain retirees from foreign locations. Generally, the medical plans are unfunded and pay a percentage of medical expenses, reduced by deductibles and other coverage. The Company retains the right, subject to existing agreements, to change or eliminate these benefits. All salaried and certain non-bargaining hourly U.S. employees hired after January 1, 2002 and certain bargaining hourly U.S. employees hired after July 1, 2010 are not eligible for postretirement health care benefits.
As of January 1, 2025 , the pension benefit plans and the other postretirement benefit plans covered an aggregate of approximately 15,000 and approximately 18,000 participants, respectively.
2025 Actions. In 2025, the following actions impacted certain pension and other postretirement benefit plans:
Action #1 – In the third quarter of 2025, settlement accounting and a related plan remeasurement was triggered within Alcoa’s Australian pension plan as a result of lump sum payments to participants. Alcoa recorded a $ 2 decrease to Other noncurrent assets and recognized a settlement gain of $ 1 ($ 0 after-tax) in Restructuring and other charges, net on the accompanying Statement of Consolidated Operations.
Action #2 – In the fourth quarter of 2025, the Company recorded a $ 29 increase to Accrued other postretirement benefits as a result of the reinstatement of Company-sponsored retiree health coverage for certain U.S. retirees effective January 1, 2026. The reinstatement is pursuant to an injunction entered by the U.S. District Court for the Southern District of Indiana, which remains under appeal. The Company will continue to assess the impact to Accrued other postretirement benefits as the related legal proceedings progress.
The following table presents certain information and the financial impacts of these actions on t he accompanying Consolidated Financial Statements:
Action #
Number of affected plan participants
Weighted average
discount rate
as of prior plan remeasurement
date
Plan remeasurement date
Weighted average discount rate as of plan remeasurement date
Decrease to
other noncurrent assets (1)
Increase to accrued other postretirement benefits liability
Settlement gain (2)
September 30, 2025
December 31, 2025
Action 1 caused an interim plan remeasurement, including an update to the discount rate used to determine the benefit obligation of the affected plan. This amount includes the impact due to the interim plan remeasurement.
This amount represents the net actuarial gain and was reclassified from Accumulated other comprehensive loss to Restructuring and other charges, net (see Note D ) on the accompanying Statement of Consolidated Operations.
2024 Actions. In 2024, the following actions impacted a certain pension plan:
Action #1 – In the first quarter of 2024, Alcoa announced the full curtailment of the Kwinana refinery. As a result, curtailment accounting was triggered within Alcoa’s Australian pension plan. The Company recorded a $ 1 decrease to Other noncurrent assets and recognized a curtai lment loss of $ 1 ($ 0 after-tax) in Restructuring and other charges, net on the accompanying Statement of Consolidated Operations.
Action #2 – In the second quarter of 2024, settlement accounting and a related plan remeasurement was triggered within Alcoa’ s Australian pension plan as a result of lump sum payments to participants. Alcoa recorded a $ 19 increase to Other noncurrent assets and recognized a non-cash settlement gain of $ 1 ($ 0 after-tax) in Restructuring and other charges, net on the Statement of Consolidated Operations.
Action #3 – In the fourth quarter of 2024, settlement accounting was triggered within Alcoa’s Australian pension plan as a result of lump sum payments to participants . Alcoa recognized a non-cash settlement gain of $ 1 ($ 1 after-tax) in Restructuring and other charges, net on the Statement of Consolidated Operations.
The following table presents certain information and the financial impacts of these actions on the accompanying Consolidated Financial Statements:
Action #
Number of affected plan participants
Weighted average
discount rate
as of prior plan remeasurement
date
Plan remeasurement date
Weighted average discount rate as of plan remeasurement date
(Decrease) increase to
other noncurrent assets (1)
Curtailment
loss (2)
Settlement gain (3)
June 30, 2024
December 31, 2024
Actions 1-2 caused interim plan remeasurements, including an update to the discount rates used to determine the benefit obligations of the affected plans. These amounts include impacts due to interim plan remeasurements.
This amount represents the net actuarial loss arising from the curtailment and was recognized immediately in Restructuring and other charges, net (see Note D) on the accompanying Statement of Consolidated Operations.
These amounts represent the net actuarial gain and were reclassified from Accumulated other comprehensive loss to Restructuring and other charges, net (see Note D) on the accompanying Statement of Consolidated Operations.
2023 Actions. In 2023, the following actions impacted certain pension and other postretirement benefit plans:
Action #1 – In the second quarter of 2023, plan amendment accounting and related plan remeasurements were triggered within the Surinamese pension and other postretirement plans as a result of participants electing to prospectively convert their Surinamese dollar pension and Company-provided retiree medical to a U.S. dollar pension with no Company-provided retiree medical. As a result, Alcoa recorded a $ 15 increase to Accrued pension benefits and a $ 9 decrease to Accrued other postretirement benefits.
Action #2 – In the second quarter of 2023, settlement accounting and related plan remeasurements were triggered within certain Canadian pension plans as a result of the Company’ s purchase of group annuity contracts to transfer the obligation to pay the remaining retirement benefits of approximately 530 retirees and beneficiaries from its Canadian defined benefit pension plans. The transfer of approximately $ 235 in both plan obligations and plan assets was completed in April 2023. As a result, Alcoa recorded a $ 22 increase to Accrued pension benefits and a $ 5 decrease to Other noncurrent assets and recognized a non-cash settlement loss of $ 21 ($ 16 after-tax) in Restructuring and other charges, net on the accompanying Statement of Consolidated Operations.
Action #3 – In the third quarter of 2023, settlement accounting and a related plan remeasurement was triggered within Alcoa’s Australian pension plan as a result of lump sum payments to participants. As a result, Alcoa recorded a $ 2 decrease to Other noncurrent assets.
The following table presents certain information and the financial impacts of these actions on the accompanying Consolidated Financial Statements:
Action #
Number of affected plan participants
Weighted average
discount rate
as of prior plan remeasurement
date
Plan remeasurement date
Weighted average discount rate as of plan remeasurement date
Increase to accrued pension benefits liability
Decrease to other noncurrent assets
Decrease to accrued other postretirement benefits liability
Settlement loss (1)
March 31, 2023
April 30, 2023
September 30, 2023
This amount represents the net actuarial loss and was reclassified from Accumulated other comprehensive loss to Restructuring and other charges, net (see Note D ) on the accompanying Statement of Consolidated Operations.
Obligations and Funded Status
Pension benefits
Other
postretirement benefits
December 31,
Change in benefit obligation
Benefit obligation at beginning of year
Service cost
Interest cost
Amendments
Actuarial losses (gains)
Settlements
Benefits paid, net of participants’ contributions
Foreign currency translation impact
Benefit obligation at end of year
Change in plan assets
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Participant contributions
Benefits paid
Administrative expenses
Settlements
Foreign currency translation impact
Fair value of plan assets at end of year
Funded status
Less: Amounts attributed to joint venture partners
Net funded status
Amounts recognized in the Consolidated Balance
Sheet consist of:
Noncurrent assets
Current liabilities
Noncurrent liabilities
Net amount recognized
Amounts recognized in Accumulated Other
Comprehensive Loss consist of:
Net actuarial loss
Prior service cost (benefit)
Total, before tax effect
Less: Amounts attributed to joint venture partners
Net amount recognized, before tax effect
Other Changes in Plan Assets and Benefit Obligations
Recognized in Other Comprehensive (Loss) Income
consist of:
Net actuarial loss (gain)
Amortization of accumulated net actuarial loss
Prior service (benefit) cost
Amortization of prior service benefit
Total, before tax effect
Less: Amounts attributed to joint venture partners
Net amount recognized, before tax effect
At December 31, 2025 , the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $ 1,060 , $ 982 , and ($ 78 ), respectively. At December 31, 2024 , the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $ 1,056 , $ 988 , and ($ 68 ), respectively.
Pension Plan Benefit Obligations
Pension benefits
The aggregate projected benefit obligation and accumulated benefit obligation
for all defined benefit pension plans was as follows:
Projected benefit obligation
Accumulated benefit obligation
The aggregate projected benefit obligation and fair value of plan assets for
pension plans with projected benefit obligations in excess of plan assets
was as follows:
Projected benefit obligation
Fair value of plan assets
The aggregate accumulated benefit obligation and fair value of plan assets for
pension plans with accumulated benefit obligations in excess of plan assets
was as follows:
Accumulated benefit obligation
Fair value of plan assets
Components of Net Periodic Benefit Cost
Pension benefits (1)
Other postretirement benefits
Service cost
Interest cost (2)
Expected return on plan assets (2)
Amortization of accumulated net actuarial loss (2)
Amortization of prior service benefit (2)
Settlements (3)
Curtailments (4)
Net periodic benefit cost (5)
In 2025, 2024, and 2023 , net periodic benefit cost for U.S. pension plans was $ 15 , $ 7 , and $ 6 , respectively.
These amounts were reported in Other (income) expenses, net on the accompanying Statement of Consolidated Operations.
These amounts were reported in Restructuring and other charges, net on the accompanying Statement of Consolidated Operations (see Note D ). In 2025, 2024 and 2023, settlements were due to plan actions (see Actions above).
This amount was reported in Restructuring and other charges, net on the accompanying Statement of Consolidated Operations (see Note D ). In 2024, curtailments were due to plan actions (see Actions above).
Amounts attributed to joint venture partners are not included.
Assumptions. Liabilities and expenses for pension and other postretirement benefits are determined using actuarial methodologies and incorporate significant assumptions, including the interest rate used to discount the future estimated liability, the expected long-term rate of return on plan assets, and several assumptions relating to the employee workforce (salary increases, health care cost trend rates, retirement age, and mortality).
Weighted average assumptions used to determine benefit obligations for pension and other postretirement benefit plans were as follows:
December 31,
Discount rate—pension plans
Discount rate—other postretirement benefit plans
Rate of compensation increase—pension plans
The yield curve model used to develop the discount rate is based on high-quality corporate bonds, parallels the plans’ projected cash flows and has a weighted average duration of 10 years. If a deep market of high-quality corporate bonds does not exist in a country, then the yield on government bonds plus a corporate bond yield spread is used.
Weighted average assumptions used to determine net periodic benefit cost for pension and other postretirement benefit plans were as follows:
Discount rate—pension plans
Discount rate—other postretirement benefit plans
Expected long-term rate of return on plan assets—pension plans
Rate of compensation increase—pension plans
For 2025, 2024, and 2023 , the expected long-term rate of return used by management was based on the prevailing and planned strategic asset allocations, as well as estimates of future returns by asset class. For 2026, management anticipates that 5.86 percent will be the weighted average expected long-term rate of return.
Assumed health care cost trend rates for U.S. other postretirement benefit plans were as follows (non-U.S. plans are not material):
Health care cost trend rate assumed for next year
Rate to which the cost trend rate gradually declines
Year that the rate reaches the rate at which it is assumed to remain
The assumed health care cost trend rate is used to measure the expected cost of gross eligible charges covered by the Company’s other postretirement benefit plans. For 2026, a 7.25 percent trend rate will be used, reflecting management’s best estimate of the change in future health care costs covered by the plans.
Plan Assets. Alcoa’s pension plan weighted average target and actual asset allocations, by asset class, were as follows:
Target asset allocation
Plan assets at
December 31,
Asset class
Equities
Fixed income
Other investments
Total
The principal objectives underlying the investment of the pension plan assets are to ensure that the Company can properly fund benefit obligations as they become due under a broad range of potential economic and financial scenarios, maximize the long-term investment return with an acceptable level of risk based on such obligations, and broadly diversify investments across and within various asset classes to protect asset values against adverse movements. Investment risk is controlled by rebalancing to target allocations on a periodic basis and ongoing monitoring of investment manager performance.
The portfolio includes an allocation to investments in long-duration corporate credit and government debt, public and private market equities, intermediate duration corporate credit and government debt, global-listed infrastructure, global natural resource equities, high-yield bonds and bank loans, real estate, and securitized credit.
Investment practices comply with the requirements of applicable laws and regulations in the respective jurisdictions, including the Employee Retirement Income Security Act of 1974 (ERISA) in the U.S.
The following section describes the valuation methodologies used by the trustees to measure the fair value of pension plan assets. For plan assets measured at net asset value, this refers to the net asset value of the investment on a per share basis (or its equivalent) as a practical expedient. Otherwise, an indication of the level in the fair value hierarchy in which each type of asset is generally classified is provided (see Note P for the definition of fair value and a description of the fair value hierarchy).
Equities— These securities consist of: (i) direct investments in the stock of publicly traded U.S. and non-U.S. companies and are valued based on the closing price reported in an active market on which the individual securities are traded (generally classified in Level 1); (ii) the plans’ share of commingled funds that are invested in the stock of publicly traded companies and are valued at net asset value; and (iii) direct investments in long/short equity hedge funds and private equity (limited partnerships and venture capital partnerships) and are valued at net asset value.
Fixed income— These securities consist of: (i) U.S. government debt and are generally valued using quoted prices (included in Level 1); (ii) cash and cash equivalents invested in publicly-traded funds and are valued based on the closing price reported in an active market on which the individual securities are traded (generally classified in Level 1); (iii) publicly traded U.S. and non-U.S. fixed interest obligations (principally corporate bonds and debentures) and are valued through consultation and evaluation with brokers in the institutional market using quoted prices and other observable market data (included in Level 2); and (iv) cash and cash equivalents invested in institutional funds and are valued at net asset value.
Other investments— These investments include, among others: (i) real estate investment trusts valued based on the closing price reported in an active market on which the investments are traded (included in Level 1); (ii) the plans’ share of commingled funds that are invested in real estate partnerships and are valued at net asset value; (iii) direct investments in private real estate (includes limited partnerships) and are valued at net asset value; (iv) absolute return strategy funds and are valued at net asset value; and (v) indirect investments of discretionary and systematic macro hedge funds and are valued at net asset value.
The fair value methods described above may not be indicative of net realizable value or reflective of future fair values. Additionally, while Alcoa believes the valuation methods used by the plans’ trustees are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
The following table presents the fair value of pension plan assets classified under either the appropriate level of the fair value hierarchy or net asset value:
December 31, 2025
Level 1
Level 2
Level 3
Net Asset
Value
Total
Equities:
Equity securities
Private equity
Fixed income:
Intermediate and long-duration government/credit
Cash and cash equivalent funds
Other investments:
Real estate
Discretionary and systematic macro hedge funds
Other
Total (1)
December 31, 2024
Level 1
Level 2
Level 3
Net Asset
Value
Total
Equities:
Equity securities
Private equity
Fixed income:
Intermediate and long-duration government/credit
Cash and cash equivalent funds
Other investments:
Real estate
Discretionary and systematic macro hedge funds
Other
Total (2)
As of December 31, 2025 , the total fair value of pension plan assets excludes a net receivable of $ 1 , which primarily represents securities not yet settled plus interest and dividends earned on various investments.
As of December 31, 2024 , the total fair value of pension plan assets excludes a net receivable of $ 7 , which primarily represents securities not yet settled plus interest and dividends earned on various investments.
Funding and Cash Flows. It is Alcoa’s policy to fund amounts for defined benefit pension plans sufficient to meet the minimum requirements set forth in each applicable country’s benefits laws and tax laws, including ERISA for U.S. plans. From time to time, the Company contributes additional amounts as deemed appropriate.
In 2025, 2024, and 2023 , cash contributions to Alcoa’s defined benefit pension plans were $ 20 , $ 16 , and $ 24 .
Alcoa’s minimum required contribution to defined benefit pension plans in 2026 is estimated to be $ 50 , of which approximately $ 40 is for U.S. plans. Under ERISA regulations, a plan sponsor that establishes a pre-funding balance by making discretionary contributions to a U.S. defined benefit pension plan may elect to apply all or a portion of this balance toward its minimum required contribution obligations to the related plan in future years. In 2026, management intends to make such election related to the Company’s U.S. plans.
Benefit payments expected to be paid to pension and other postretirement benefit plan participants are as follows:
Year ending December 31,
Pension
benefits
Other
postretirement
benefits
2031 through 2035
Defined Contribution Plans
The Company sponsors savings and investment plans in several countries. In the U.S., employees may contribute a portion of their compensation to the plans, and Alcoa matches a specified percentage of these contributions in equivalent form of the investments elected by the employee. Also, the Company makes contributions to a retirement savings account based on a percentage of eligible compensation for certain U.S. employees that are not able to participate in Alcoa’s defined benefit pension plans. The Company’s expenses related to all defined contribution plans were $ 94 in 2025 , $ 86 in 2024 , and $ 80 in 2023.
Member-funded Pension Plans
The Company contributes to member-funded pension plans for the employees of Aluminerie de Bécancour Inc. and Aluminerie de Deschambault in Canada. Alcoa makes contributions to the plans based on a percentage of the employees’ eligible compensation. The Company’s expenses related to the member-funded pension plans were $ 17 in 2025 , $ 16 in 2024 , and $ 16 in 2023.
Target Benefit Plan
The Company contributes to a target benefit plan for the employees of Baie-Comeau in Canada. Alcoa makes contributions to the plan based on a percentage of the employees’ eligible compensation. The Company’s expenses related to the target benefit plan were $ 7 in 2025 , $ 8 in 2024 , and $ 8 in 2023 .
P. Derivatives and Other Financial Instruments
Fair Value. The Company follows a fair value hierarchy to measure its assets and liabilities. As of December 31, 2025 and 2024, respectively, the assets and liabilities measured at fair value were primarily derivative instruments and noncurrent marketable securities. In addition, the Company measures its pension plan assets at fair value (see Note O). Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (i) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (ii) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means; and,
Level 3—Inputs that are both significant to the fair value measurement and unobservable.
Derivatives. Alcoa Corporation is exposed to certain risks relating to its ongoing business operations, including the risks of changing commodity prices, foreign currency exchange rates, and interest rates. Alcoa Corporation’s commodity and derivative activities include aluminum, alumina, energy, foreign exchange, and interest rate contracts, which are held for purposes other than trading. They are used to mitigate uncertainty and volatility, and to cover underlying exposures. While Alcoa does not generally enter into derivative contracts to mitigate the risk associated with changes in aluminum or alumina prices, the Company may do so in isolated cases to address discrete commercial or operational conditions. Alcoa is not involved in trading activities for energy, weather derivatives, or other nonexchange commodities.
Alcoa Corporation’s commodity and derivative activities are subject to the management, direction, and control of the Strategic Risk Management Committee (SRMC), which consists of at least three members, including the chief executive officer, the chief financial officer, and the chief commercial officer. The remaining member(s) are other officers and/or employees of the Company as the chief executive officer may designate from time to time. The SRMC meets on a periodic basis to review derivative positions and strategy and reports to the Audit Committee of Alcoa Corporation’s Board of Directors on the scope of its activities.
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 related to the San Ciprián operations. The aluminum, natural gas, and electricity financial contracts qualify for cash flow hedge ac counting. 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 the associated realized gains or losses have no impact on the results of the San Ciprián operations. Due to the widespread power outage across Spain that occurred on April 28, 2025, it became probable that certain forecasted electricity purchases would not occur in 2025. As a result, Alcoa dedesignated a portion of the electricity financial contracts and recognized a gain of $ 3 in Cost of goods sold.
Alcoa Corporation’s aluminum, alumina, foreign exchange, natural gas, and electricity contracts are predominantly classified as Level 1 or Level 2 under the fair value hierarchy. The Level 1 and 2 contracts are predominantly designated as either fair value or cash flow hedging instruments. Alcoa Corporation also has several derivative instruments classified as Level 3 under the fair value hierarchy, which are either designated as cash flow hedges or undesignated. Alcoa included the changes in its equity method investee’s Level 2 derivatives in Accumulated other comprehensive loss through June 30, 2024, when the underlying contracts expired.
The following tables present the detail for Level 1, 2, and 3 derivatives (see additional Level 3 information in further tables below):
Balance at December 31,
Assets
Liabilities
Assets
Liabilities
Level 1 and 2 derivative instruments
Level 1 derivative instruments (undesignated)
Level 3 derivative instruments
Total
Less: Current
Noncurrent
Year ended December 31,
Unrealized loss recognized in Other comprehensive income (loss)
Realized loss reclassified from Accumulated other comprehensive loss to earnings
Unrealized loss recognized in Other comprehensive income (loss)
Realized gain (loss) reclassified from Accumulated other comprehensive loss to earnings
Level 1 and 2 derivative instruments
Level 3 derivative instruments
Noncontrolling and equity interest (Level 2)
Total
The 2025 realized loss of $ 19 on Level 1 and 2 cash flow hedges was comprised of a $ 3 loss recognized in Sales and a $ 16 loss recognized in Cost of goods sold. The 2024 realized gain of $ 1 on Level 1 and 2 cash flow hedges was comprised of a $ 2 gain recognized in Sales and a $ 1 loss recognized in Cost of goods sold.
The following table presents the outstanding quantities of derivative instruments classified as Level 1 or Level 2:
Classification
December 31, 2025
December 31, 2024
Aluminum (in kmt)
Commodity buy forwards
Aluminum (in kmt)
Commodity sell forwards
Alumina (in kmt)
Commodity sell forwards
Foreign currency (in millions of euro)
Foreign exchange buy forwards
Foreign currency (in millions of euro)
Foreign exchange sell forwards
Foreign currency (in millions of euro) (undesignated)
Foreign exchange buy forwards
Foreign currency (in millions of euro) (undesignated)
Foreign exchange sell forwards
Foreign currency (in millions of Norwegian krone)
Foreign exchange buy forwards
Foreign currency (in millions of Brazilian real)
Foreign exchange buy forwards
Foreign currency (in millions of Australian dollar)
Foreign exchange buy forwards
Foreign currency (in millions of Canadian dollar)
Foreign exchange buy forwards
Foreign currency (in millions of Saudi riyal) (undesignated)
Foreign exchange swap
Natural gas (in millions of megawatt hours)
Commodity buy forwards
Electricity (in millions of megawatt hours)
Commodity buy forwards
Alcoa Corporation routinely uses Level 1 aluminum derivative instruments to manage exposures to changes in the fair value of firm commitments for the purchases or sales of aluminum. Additionally, Alcoa uses alumina derivative instruments to manage exposures to changes in the fair value of certain firm commitments for the purchases or sales of alumina (expires December 2026 ) and aluminum derivative instruments to manage LME exposures related to the San Ciprián smelter (see above) (expires December 2027 ) . Alcoa used Level 1 aluminum derivative instruments to manage LME exposures related to profitability improvement actions (expired December 2025 ).
Alcoa Corporation uses Level 1 foreign exchange forward and swap contracts to mitigate the risk of foreign exchange exposure related to euro power purchases in Norway (expires December 2028 ), euro expenses (primarily energy and labor) (expires December 2027 ), U.S. dollar alumina and aluminum sales in Brazil (expires October 2026 ), U.S. dollar alumina sales in Australia (expires December 2032 ), and Saudi riyal expenses (expires March 2026 ). Additionally, Alcoa used Level 1 foreign exchange forward contracts to mitigate the risk of foreign exchange exposure related to U.S. dollar aluminum sales in Norway (expired June 2025 ) and Canadian dollar expenses in Canada (expired March 2025 ).
Alcoa Corporation uses Level 1 and 2 natural gas and electricity forward contracts to mitigate the risk of price fluctuations on associated purchases in Spain (expires December 2027 ).
Derivative instruments classified as Level 3 in the fair value hierarchy represent those in which management has used at least one significant unobservable input in the valuation model. Alcoa Corporation uses discounted cash flow and other simulation models to fair value all Level 3 derivative instruments. Inputs in the valuation models for Level 3 derivative instruments are composed of the following: (i) quoted market prices (e.g., aluminum prices on the 10 -year LME forward curve and energy prices), (ii) significant other observable inputs (e.g., information concerning time premiums and volatilities for certain option type embedded derivatives and regional premiums for aluminum contracts), and (iii) unobservable inputs (e.g., aluminum and energy prices beyond those quoted in the market, and estimated credit spread between Alcoa and the counterparty). For periods beyond the term of quoted market prices for aluminum, Alcoa Corporation estimates the price of aluminum by extrapolating the 10 -year LME forward curve. For periods beyond the term of quoted market prices for the Midwest premium, management estimates the Midwest premium based on recent transactions. Where appropriate, valuations are adjusted for various factors such as liquidity, bid/offer spreads, and credit considerations. Such adjustments are generally based on available market evidence (Level 2). In the absence of such evidence, management’s best estimate is used (Level 3). If a significant input that is unobservable in one period becomes observable in a subsequent period, the related asset or liability would be transferred to the appropriate classification (Level 1 or 2) in the period of such change (there were no such transfers in the periods presented). There were no sales or settlements of Level 3 derivative instruments in the periods presented.
Level 3 derivative instruments outstanding as of December 31, 2025 are described in the table below:
Description
Designation
Contract Termination
Unobservable Inputs Impacting Valuation
Sensitivity to Inputs
Power contracts
Embedded derivative that indexes the price of power to the LME price of aluminum plus the Midwest premium
Cash flow hedge of forward sales of aluminum
March 2026
December 2029
February 2036
LME price, Midwest premium and MWh per year
Increase in LME price and/or the Midwest premium results in a higher cost of power and an increase to the derivative liability
Embedded derivative that indexes the price of power to the LME price of aluminum
Cash flow hedge of forward sales of aluminum
S eptember 2027
March 2036
LME price and MWh per year
Increase in LME price results in a higher cost of power and an increase to the derivative liability
Embedded derivative that indexes the price of power to the credit spread between the Company and the counterparty
Undesignated
October 2028
Estimated credit spread
Wider credit spread results in a higher cost of power and increase to the derivative liability
Financial contracts
Hedge power prices
Undesignated
June 2026
June 2035
LME price and power price
Lower prices in the power market or higher LME prices result in an increase to the derivative liability
Hedge power prices
Undesignated
December 2028
Power price and MWh per year
Lower prices in the power market or decreases in renewable energy production result in an increase to the derivative liability
In August 2023 and September 2024, the Company entered into nine-year financial contracts (undesignated) that hedge the anticipated power requirements at one of its smelters effective July 1, 2026 when the current contracts (undesignated) end.
In June 2025, Alcoa entered into a firming contract (undesignated) to manage the variability and intermittency of renewable energy sources and reduce exposure to the spot energy market at one of its smelters for the period from July 2025 through December 2028. The firming contract converts a certain pay-as-produced wind contract into baseload power.
In October 2025, Alcoa entered into a ten-year power contract (cash flow hedge of forward sales of aluminum) at one of its smelters effective April 1, 2026 when the current contract (cash flow hedge of forward sales of aluminum) ends.
At December 31, 2025 , the outstanding Level 3 instruments are associated with seven smelters and one permanently closed smelter site. At December 31, 2025 and 2024 , the embedded derivatives in power contracts designated as cash flow hedges of forward sales of aluminum hedge 1,005 kmt and 1,230 kmt of aluminum, respectively.
The following table presents quantitative information related to the significant unobservable inputs described above for Level 3 derivative instruments (megawatt hours in MWh; megawatts in MW):
December 31, 2025
Unobservable Input
Unobservable Input Range
Asset Derivatives
Financial contract (undesignated)
Interrelationship of forward energy price, LME forward price and the
Electricity
(per MWh)
Consumer Price Index
LME (per mt)
Financial contract (undesignated)
Interrelationship of forward energy price and the contract price, and the
Electricity
(per MWh)
estimated MW of renewable energy produced (per month)
Electricity
Power contract
MWh of energy needed to produce the forecasted mt of aluminum
LME (per mt)
Midwest premium
(per pound)
Electricity
Rate of 2 million MWh per year
Total Asset Derivatives
Liability Derivatives
Power contract
MWh of energy needed to produce the forecasted mt of aluminum
LME (per mt)
Electricity
Rate of 4 million MWh per year
Power contracts
MWh of energy needed to produce the forecasted mt of aluminum
LME (per mt)
Midwest premium
(per pound)
Electricity
Rate of 18 million MWh per year
Power contract (undesignated)
Estimated spread between the 30-year debt yield of Alcoa and the counterparty
Credit spread
0.15 %: 30-year debt yield spread
5.83 %: Alcoa (estimated)
5.68 %: counterparty
Total Liability Derivatives
The fair values of Level 3 derivative instruments recorded in the accompanying Consolidated Balance Sheet were as follows:
Asset Derivatives
December 31, 2025
December 31, 2024
Derivatives not designated as hedging instruments:
Current—financial contract
Noncurrent—financial contract
Total derivatives not designated as hedging instruments
Total Asset Derivatives
Liability Derivatives
Derivatives designated as hedging instruments:
Current—power contracts
Noncurrent—power contracts
Total derivatives designated as hedging instruments
Derivatives not designated as hedging instruments:
Current—embedded credit derivative
Noncurrent—embedded credit derivative
Total derivatives not designated as hedging instruments
Total Liability Derivatives
The following table shows the net fair values of the Level 3 derivative instruments at December 31, 2025 and the effect on these amounts of a hypothetical change (increase or decrease of 10 percent) in the market prices or rates that existed as of December 31, 2025:
Fair value
(liability) asset
Index change
Power contracts
Embedded credit derivative
Financial contracts
The following tables present a reconciliation of activity for Level 3 derivative instruments:
Assets
Financial contracts
January 1, 2025
Total gains or losses included in:
Other income, net (unrealized/realized)
Settlements and other
December 31, 2025
Change in unrealized gains or losses included in earnings
for derivative instruments held at December 31, 2025:
Other income, net
Liabilities
Power contracts
Embedded credit derivative
January 1, 2025
Total gains or losses included in:
Sales (realized)
Other income, net (unrealized/realized)
Other comprehensive loss (unrealized)
Settlements and other
December 31, 2025
Change in unrealized gains or losses included in earnings
for derivative instruments held at December 31, 2025:
Other income, net
Assets
Financial contracts
January 1, 2024
Total gains or losses included in:
Other income, net (unrealized/realized)
Settlements and other
December 31, 2024
Change in unrealized gains or losses included in earnings
for derivative instruments held at December 31, 2024:
Other income, net
Liabilities
Power contracts
Embedded credit derivative
January 1, 2024
Total gains or losses included in:
Sales (realized)
Other expenses, net (unrealized/realized)
Other comprehensive income (unrealized)
Settlements and other
December 31, 2024
Change in unrealized gains or losses included in earnings
for derivative instruments held at December 31, 2024:
Other expenses, net
Derivatives Designated As Hedging Instruments—Cash Flow Hedges
Assuming market rates remain constant with the rates at December 31, 2025 , a realized loss of $ 353 related to power contracts is expected to be recognized in Sales over the next 12 months.
Material Limitations
The disclosures with respect to commodity prices and foreign currency exchange risk do not consider the underlying commitments or anticipated transactions. If the underlying items were included in the analysis, the gains or losses on the futures contracts may be offset. Actual results will be determined by several factors that are not under Alcoa Corporation’s control and could vary significantly from those factors disclosed.
Alcoa Corporation is exposed to credit loss in the event of nonperformance by counterparties on the above instruments, as well as credit or performance risk with respect to its hedged customers’ commitments. Alcoa Corporation does not anticipate nonperformance by any of these parties. Contracts are with creditworthy counterparties and are further supported by cash, treasury bills, or irrevocable letters of credit issued by carefully chosen banks. In addition, various master netting arrangements are in place with counterparties to facilitate settlement of gains and losses on these contracts.
Other Financial Instruments. The carrying values and fair values of Alcoa Corporation’s other financial instruments were as follows:
December 31,
Carrying
value
Fair
value
Carrying
value
Fair
value
Cash and cash equivalents
Restricted cash
Noncurrent marketable securities
Short-term borrowings
Long-term debt due within one year
Long-term debt, less amount due within one year
The following methods were used to estimate the fair values of other financial instruments:
Cash and cash equivalents and Restricted cash. The carrying amounts approximate fair value because of the short maturity of the instruments. The fair value amounts for Cash and cash equivalents and Restricted cash were classified in Level 1 of the fair value hierarchy.
Noncurrent marketable securities. Noncurrent marketable securities represent shares of Ma’aden acquired by Alcoa in July 2025 (see Note C). The fair value of the shares is based on the unadjusted quoted price on the Saudi Exchange (Tadawul). The fair value amounts for Noncurrent marketable securities were classified in Level 1 of the fair value hierarchy.
Short-term borrowings and Long-term debt, including amount due within one year. The fair value of Long-term debt, less amount due within one year was based on quoted market prices for public debt and on interest rates that are currently available to Alcoa Corporation for issuance of debt with similar terms and maturities for non-public debt. The fair value amounts for all Short-term borrowings and Long-term debt were classified in Level 2 of the fair value hierarchy.
Q. Income Taxes
(Benefit from) provision for income taxes.
The components of Income (loss) before income taxes were as follows:
Domestic
Foreign
Total
( Benefit from) provision for income taxes consisted of the following:
Current:
Federal
Foreign
State and local
Deferred:
Federal
Foreign
State and local
Total
Federal includes U.S. income taxes related to foreign income.
A reconciliation of the U.S. federal statutory rate to Alcoa’s effective tax rate was as follows:
For the year ended December 31,
U.S. federal statutory tax rate
State and local income taxes, net of federal income tax effect
Foreign tax effects
Australia
Tax on foreign operations - statutory rate differential
Other
Brazil
Tax on foreign operations - statutory rate differential
Valuation allowance
Tax holiday
Withholding taxes
Other
Canada
Tax on foreign operations - statutory rate differential
Other foreign tax effects
Valuation allowance
Preferential tax rate
Return to provision
Other
Hong Kong
Equity (loss) income
Nontaxable impact of an investment disposition
Iceland
Valuation allowance
Other
Netherlands
Tax on foreign operations - statutory rate differential
Valuation allowance
Tax credits
Nontaxable impact of an investment disposition
Other
Saudi Arabia
Other foreign tax effects
Spain
Tax on foreign operations - statutory rate differential
Valuation allowance
Equity income
Nondeductible
Other
Suriname
Tax on foreign operations - statutory rate differential
Valuation allowance
Other
Switzerland
Tax on foreign operations - statutory rate differential
Other foreign jurisdictions
Enactment of new tax laws
Change in tax rate
Effect of cross border tax laws
Global intangible low taxed income (GILTI)
Tax impact of disregarded entities and partnerships
Taxes on foreign operations - subpart F income
Tax credits
Section 45X
Valuation allowances
Nontaxable or nondeductible items
Other
Changes in unrecognized tax benefits
Other adjustments
Noncontrolling interest
Other
Effective tax rate
Under the Global Intangible Low Tax Income (GILTI) provisions of the U.S. Tax Cuts and Jobs Act of 2017 (TCJA), taxpayers may elect annually to exclude income subject to a high rate of foreign tax (the “high tax exception”). Differences between local tax rules and U.S. tax principles used to calculate GILTI may cause certain affiliates in high tax jurisdictions to fail to qualify for the exception in a given year. The Company intends to make the high tax exception election for the 2025 tax year in jurisdictions where the applicable requirements are satisfied. Affiliate income subject to GILTI inclusion resulted in a $ 369 tax impact and was fully offset by net operating losses subject to a full valuation allowance.
Certain income earned by Alcoa World Alumina Brasil Ltda. (AWAB) is eligible for a tax holiday, which decreases the tax rate on this income from the 34 percent statutory rate to 15.25 percent, and results in cash tax savings. The holiday related to production at the Alumar refinery was originally expected to end on December 31, 2027. During 2023, it was extended to December 31, 2032. The holiday related to the operation of the Juruti (Brazil) bauxite mine will end on December 31, 2026.
In 2023, the Company determined that it was no longer more likely than not that the deferred tax asset at AWAB would be realized and recorded a full valuation allowance against the deferred tax asset (see below). As a result, the amount reflected in Tax holiday for Brazil above is zero with respect to AWAB as of December 31, 2023 and 2024. In 2025, the Company determined that it was more likely than not that the deferred tax asset at AWAB would be realized and reversed the full valuation allowance against the deferred tax asset (see below). In 2025, it was determined that the deferred tax assets associated with income subject to the tax holiday would be fully exhausted within the holiday period and, as a result, the amounts were revalued at the holiday rate, resulting in a discrete income tax charge of $ 30 , which is included in Tax holiday above.
Deferred income taxes. The components of deferred tax assets and liabilities based on the underlying attributes without regard to jurisdiction were as follows:
December 31,
Deferred
tax
assets
Deferred
tax
liabilities
Deferred
tax
assets
Deferred
tax
liabilities
Tax loss carryforwards
Loss provisions
Derivatives and hedging activities
Employee benefits
Interest
Depreciation
Lease assets and liabilities
Investment basis differences
Deferred income/expense
Tax credit carryforwards
Other
Valuation allowance
Total
The following table details the expiration periods of the deferred tax assets presented above:
December 31, 2025
Expires
within
10 years
Expires
within
years
expiration
Other
Total
Tax loss carryforwards
Tax credit carryforwards
Other
Valuation allowance
Total
Deferred tax assets with no expiration may still have annual limitations on utilization. Other represents deferred tax assets whose expiration is dependent upon the reversal of the underlying temporary difference.
The total deferred tax asset (net of valuation allowance) is supported by projections of future taxable income exclusive of reversing temporary differences and taxable temporary differences that reverse within the carryforward period. The composition of Alcoa’s net deferred tax asset by jurisdiction as of December 31, 2025 was as follows:
Domestic
Foreign
Total
Deferred tax assets
Valuation allowance
Deferred tax liabilities
Total
Alcoa Australia H oldings Pty Ltd (AAH), a wholly-owned indirect subsidiary of Alcoa, made an election prior to July 31, 2024 that resulted in Alcoa’s other wholly-owned Australian subsidiaries joining AAH’s tax consolidated group (the AAH Tax Consolidated Group). As a result of the acquisition of Alumina Limited, Alumina Limited and all of its Australian subsidiaries, as well as Alcoa of Australia Limited (AofA) and all of its subsidiaries, joined the AAH Tax Consolidated Group on August 1, 2024. Upon acquisition, Alcoa recognized a deferred tax asset (and a corresponding increase to Additional capital) of $ 121 primarily related to the portion of Alumina Limited’s Australian net operating loss carryforwards that the Company has determined are more likely than not to be realized as a result of the consolidated return election. In the fourth quarter of 2024, the Company recognized an additional deferred tax asset (and a corresponding increase to Additional capital) of $ 95 primarily due to the tax allocation of the fixed asset valuation to individual assets. Additionally, the Company recorded a deferred tax asset of $ 265 related to capital loss carryforwards, which was fully offset with a valuation allowance due to uncertain recoverability.
The Company has several income tax filers in various foreign countries. The $ 632 net deferred tax asset included under the Foreign column in the table above, relates to the following jurisdictions: a $ 306 net deferred tax asset in Canada; a $ 214 net deferred tax asset in Australia; a $ 99 net deferred tax asset in Brazil; a $ 52 net deferred tax asset in Iceland; a $ 26 net deferred tax liability in the Netherlands; and, a $ 13 net deferred tax liability in Norway.
The future realization of the net deferred tax assets was based on projections of the respective future taxable income (defined as the sum of pretax income, other comprehensive income, and permanent tax differences), exclusive of reversing temporary differences and carryforwards. The realization of the net deferred tax assets is not dependent on any future tax planning strategies. Accordingly, management concluded that the net deferred tax assets of the foreign jurisdictions referenced above will more likely than not be realized in future periods, resulting in no need for a partial or full valuation allowance as of December 31, 2025.
AWAB had a full valuation allowance recorded against deferred tax assets, which was established in 2023, as the Company believed it was more likely than not that these tax benefits would not be realized. The majority of AWAB’s net deferred tax assets relate to prior net operating losses; the loss carryforwards are not subject to an expiration period. During 2025, after considering all positive and negative evidence, including the expectation that the entity will remain in a three-year cumulative income position, the Company determined that it is more likely than not that the net deferred tax assets would be realized. Based on this conclusion, the Company reversed the valuation allowance totaling $ 133 during the fourth quarter of 2025, generating a non-cash benefit fr om income taxes.
ANHBV had a full valuation allowance recorded against deferred tax assets, which was established in 2016, as the Company believed it was more likely than not that these tax benefits would not be realized. The majority of ANHBV’s net deferred tax assets relate to prior net operating losses and interest expense, which are not subject to an expiration period. During 2025, after considering all positive and negative evidence, including the expectation that the jurisdiction will remain in a three-year cumulative income position, the Company determined that it is more likely than not that the net deferred tax assets related to loss carryforwards would be realized. Based on this conclusion, the Company reversed the valuation allowance totaling $ 119 during the fourth quarter of 2025, generating a non-cash benefit from income taxes. A valuation allowance of $ 135 remains on deferred tax assets related to interest expense as it is not more likely than not that these benefits will be realized under current deductibility limitations.
The Company’s subsidiaries in Iceland had a full valuation allowance recorded against deferred tax assets, which was established in 2015 and 2017, as the Company believed it was more likely than not that these tax b enefits would not be realized. During 2023, after considering all positive and negative evidence, including the expectation that the jurisdiction will remain in a three-year cumulative income position, the Company determined that it is more likely than not that the net deferred tax assets will be realized. Based on this conclusion, the Company reversed the valuation allowance totaling $ 58 during 2023, generating a non-cash benefit from income taxes.
The following table details the changes in the valuation allowance:
December 31,
Balance at beginning of year
Establishment of new allowances (1)
Net change to existing allowances (2)
Foreign currency translation
Balance at end of year
Reflects initial establishment of valuation allowances as a result of a change in management’s judgment regarding the realizability of deferred tax assets.
Reflects movements in previously established valuation allowances, which increase or decrease as the related deferred tax assets increase or decrease. Such movements occur as a result of a change in management’s judgment regarding previously established valuation allowances, remeasurement due to a tax rate change and changes in the underlying attributes of the deferred tax assets, including expiration of the attribute and reversal of the temporary difference that gave rise to the deferred tax asset.
Undistributed net earnings. Certain earnings of Alcoa’s foreign subsidiaries are deemed to be permanently reinvested outside the United States. The cumulative amount of Alcoa’s foreign undistributed net earnings deemed to be permanently reinvested was approximately $ 2,857 as of December 31, 2025. Alcoa Corporation has several commitments and obligations related to the Company’s operations in various foreign jurisdictions; therefore, management has no plans to distribute such earnings in the foreseeable future. Alcoa Corporation continuously evaluates its local and global cash needs for future business operations and anticipated debt facilities, which may influence future repatriation decisions. If these earnings were distributed in the form of dividends or otherwise, Alcoa could be subject to foreign income or withholding taxes and U.S. federal and state income taxes. Due to the uncertainty of the manner in which the undistributed earnings would be brought back to the U.S. and the tax laws in effect at that time, it is not practicable to estimate the tax liability that might be incurred if such earnings were remitted to the U.S.
Unrecognized tax benefits. Alcoa and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various foreign and U.S. state jurisdictions. With few exceptions, the Company is not subject to income tax examinations by tax authorities for years prior to 2014. The U.S. federal income tax filings of the Company’s U.S. consolidated tax group have been examined through the 2021 tax year. Foreign jurisdiction tax authorities are in the process of examining income tax returns of several of Alcoa’s subsidiaries for various tax years. The period under foreign examination includes the income tax years from 2014 through 2024. For U.S. state income tax purposes, the Company and its subsidiaries remain subject to income tax examinations for the 2017 tax year and forward.
In April 2025, the Administrative Review Tribunal of Australia (ART) issued its decision on disputed tax liabilities, further described in Note S, related to transfer pricing of certain historic third-party alumina sales. The ART decided that no additional tax is owed. No tax expense had been recognized on this matter, as the Company believed it was more likely than not to prevail. As a result, the ART decision had no impact on unrecognized tax benefits. However, interest on the tax assessed by the Australian Taxation Office (ATO) accrued through the decision date and 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. Because AofA was ultimately successful, the interest deduction became taxable in 2025. The accrued tax liability of $ 225 (A$ 346 ) was reclassified from Other noncurrent liabilities and deferred credits to Taxes, including income taxes in June 202 5 as these amounts are due by June 1, 2026 and will be paid in accordance with the payment schedule applicable to Alcoa’s Australian tax group. At December 31, 2024, the noncurrent liability resulting from the cumulative interest deductions was $ 206 (A$ 332 ). In addition, in the third quarter of 2020, AofA paid approximately $ 74 (A$ 107 ) to the ATO related to the tax dispute with an offset to a noncurrent prepaid tax asset. This prepayment was refunded to AofA in the third quarter of 2025.
In October 2022, Alcoa completed the liquidation of Alcoa Saudi Rolling Inversiones S.L. (ASRI), a wholly owned subsidiary that previously held the Company’s investment in the Ma’aden Rolling Company. This liquidation resulted in a deductible loss in the Netherlands and a tax benefit of $ 94 was recognized in 2022, which was substantially offset by a valuation allowance. During the fourth quarter of 2025, the Company determined that it is not more likely than not that the Netherlands tax position will be sustained and, therefore, recognized tax expense of $ 95 for this matter. At December 31, 2025, $ 91 was recorded as a reduction to the associated tax assets within Deferred income taxes and $ 4 was recorded in the reserve balance for unrecognized tax benefits within Noncurrent income taxes.
The reserve balance for unrecognized tax benefits , excluding $ 91 recorded as a reduction within Deferred income taxes for the Netherlands matter described above, is included in Noncurrent income taxes on the accompanying Consolidated Balance Sheet. A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalties) was as follows:
December 31,
Balance at beginning of year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Balance at end of year
For all periods presented, a portion of the balance at end of year pertains to state tax liabilities, which are presented before any offset for federal tax benefits. The effect of unrecognized tax benefits, if recorded, that would impact the annual effective tax rate for 2025, 2024, and 2023 would be 9 percent, 2 percent, and 1 percent, respectively, of Income (loss) before income taxes. Alcoa does not anticipate that changes in its unrecognized tax benefits will have a material impact on the Statement of Consolidated Operations during 2026.
It is the Company’s policy to recognize interest and penalties related to income taxes as a component of the Provision for income taxes on the accompanying Statement of Consolidated Operations. In 2025, 2024, and 2023 Alcoa recognized $ 0 , $ 0 , and $ 1 , in interest and penalties, respectively. Due to the expiration of the statute of limitations, settlements with tax authorities, and refunded overpayments, the Company also recognized interest income of $ 1 , $ 1 , and $ 1 in 2025, 2024, and 2023, respectively. As of December 31, 2025 and 2024 , the amount accrued for the payment of interest and penalties was $ 3 and $ 3 , respectively.
Other Matters . The U.S. Inflation Reduction Act of 2022 (IRA) includes a 15 percent minimum tax on book income of certain large corporations, a 1 percent excise tax on net stock repurchases after December 31, 2022, and several tax incentives to promote clean energy. Under the provisions of the IRA, the Company will incur an excise tax of 1 percent for certain common stock repurchases made subsequent to December 31, 2022, which will be reflected in the cost of purchasing the underlying shares. The minimum corporate tax did not have an impact on the Company for 2025, 2024, or 2023 and will not have an impact on the Company for 2026.
The IRA contains a number of tax credits and other incentives for investments in renewable energy production, carbon capture, and other climate-related actions, as well as the production of critical minerals. In December 2023, the U.S. Treasury issued guidance on Section 45X of the Advanced Manufacturing Tax Credit. The Notice of Proposed Rulemaking (the Proposed Regulations) clarified that commercial grade aluminum is included in the definition of aluminum eligible for the credit, which was designed to incentivize domestic production of critical materials important for the transition to clean energy. On October 24, 2024, the U.S. Treasury finalized the Proposed Regulations under Section 45X with important modifications including the ability to include the cost of certain direct and indirect materials in the cost base of the credit. The Proposed Regulation on the definition of aluminum was not finalized; however, management believes that commercial grade aluminum continues to qualify for the Section 45X credit. In the Preamble to the Final Regulations, the U.S. Treasury indicated it will finalize the definition at a later date. The One Big Beautiful Bill Act (OBBBA), enacted on July 4, 2025, set a progressive phase-out of Section 45X credits beginning in 2031 and fully eliminates these credits beginning in 2034. Previously under the IRA, there was no phase out for critical materials, including aluminum. No other provisions of the OBBBA had a material impact on the Company’s financial position or results of operations for the year-ended December 31, 2025.
In 2025, 2024, and 2023, the Company recorded benefits of $ 63 , $ 71 , and $ 36 in Cost of goods sold, respectively, related to its Massena West (New York) smelter and its Warrick smelter. Additionally, in 2025, the Company recorded interest income on credits from 2023 and 2024 of $ 3 in Other (income) expenses, net. As of December 31, 2025 , benefits, including accrued interest income, of $ 90 were included in Other receivables and $ 83 were included in Other noncurrent assets on the Consolidated Balance Sheet. As of December 31, 2024 , benefits of $ 36 were included in Other receivables and $ 71 were included in Other noncurrent assets on the Consolidated Balance Sheet.
R. Asset Retirement Obligations
The following table details the carrying value of recorded AROs by major category, of which $ 285 and $ 204 was classified as a current liability as of December 31, 2025 and 2024, respectively:
December 31,
Closure of bauxite residue areas
Mine reclamation
Spent pot lining disposal
Demolition
Landfill closure
Balance at end of year
The following table details the changes in the total carrying value of recorded AROs:
December 31,
Balance at beginning of year
Accretion expense
Liabilities incurred
Payments
Reversals of previously recorded liabilities
Foreign currency translation and other
Balance at end of year
Liabilities incurred in 2025 include:
$ 380 related to the closure of bauxite residue areas, including water management, due to the closure of the Kwinana refinery;
$ 78 related to higher estimated mine reclamation costs and new mining areas opened during the year primarily in Australia;
$ 66 related to a change in closure estimates for operating bauxite residue areas primarily at the Australia refineries;
$ 51 related to a change in closure estimates for non-operating bauxite residue areas at operating sites primarily at the Poços de Caldas refinery in Brazil;
$ 25 related to demolition costs due to the closure of the Kwinana refinery;
$ 20 related to a change in estimate for demolition costs at two previously closed sites;
$ 10 related to spent pot lining transportation and disposal; and,
$ 6 related to a change in closure estimates for non-operating bauxite residue areas, including water treatment, at a previously closed site.
The liabilities incurred related to the closure of the Kwinana refinery and costs at previously closed sites were recorded with a corresponding charge to Restructuring and other charges, net (see Note D) on the accompanying Statement of Consolidated Operations. The liabilities incurred related to non-operating bauxite residue areas at operating sites primarily at the Poços de Caldas refinery and $ 2 related to higher estimated mine reclamations costs were recorded with a corresponding charge to Cost of goods sold on the accompanying Statement of Consolidated Operations. The remaining liabilities were recorded with corresponding capitalized asset retirement costs.
In 2025, reversals of previously recorded liabilities primarily related to the completion of spent pot lining transportation and disposal at various operating sites.
Liabilities incurred in 2024 include:
$ 87 for new mining areas opened during the year and higher estimated mine reclamation costs;
$ 24 for changes in closure estimates at the previously closed Suralco (Suriname) refinery;
$ 22 related to spent pot lining transportation, treatment, and disposal;
$ 11 related to changes in closure estimates for mine reclamation, landfill closure, and demolition at previously closed sites;
$9 related to water treatment due to the curtailment of the Kwinana refinery; and,
$ 6 related to the changes in estimates for residue area closure, landfill closure, and mine reclamation at various operating sites.
The liabilities incurred were recorded with corresponding capitalized asset retirement costs, except for $ 6 rela ted to non-operating bauxite residue areas and spent pot lining transportation and disposal, which was recorded to Cost of goods sold; and a net charge of $ 35 related to changes in closure estimates at previously closed sites and the curtailment of the Kwinana refinery which were recorded to Restructuring and other charges, net (see Note D) on the accompanying Statement of Consolidated Operations.
In 2024, reversals of previously recorded liabilities primarily related to the completion of spent pot lining transportation and disposal at the previously closed Intalco smelter.
The estimated timing of cash outflows for recorded AROs at December 31, 2025 was as follows:
Thereafter
Total
Changes to the estimates may result in material changes to the recorded AROs that may require an increase to or a reversal of previously recorded liabilities, as well as changes in the timing of cash outflows.
S. Contingencies and Commitments
Contingencies
Environmental Matters
Alcoa Corporation participates in environmental assessments and cleanups at several locations. These include currently or previously owned or operated facilities and adjoining properties, and waste sites, including Superfund (Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)) sites.
Alcoa Corporation’s environmental remediation reserve balance reflects the most probable costs to remediate identified environmental conditions for which costs can be reasonably estimated. The following table details the changes in the carrying value of recorded environmental remediation reserves:
Balance at December 31, 2022
Liabilities incurred
Cash payments
Reversals of previously recorded liabilities
Foreign currency translation and other
Balance at December 31, 2023
Liabilities incurred
Cash payments
Reversals of previously recorded liabilities
Foreign currency translation and other
Balance at December 31, 2024
Liabilities incurred
Cash payments
Reversals of previously recorded liabilities
Foreign currency translation and other
Balance at December 31, 2025
At December 31, 2025 and 2024 , the current portion of the remediation reserve balance was $ 76 and $ 38 , respectively.
In 2025, the Company incurred liabili ties of $ 85 and recorded a reversal of $ 2 . The impacts to the accompanying Statement of Consolidated Operations were primarily:
$ 27 for enforceable undertakings with the Department of Climate Change, Energy, the Environment and Water (DCCEEW) at the Huntly mine which was recorded in Cost of goods sold;
$ 25 related to subsurface remediation, investigation of potential site contamination, transportation of refinery waste, and ground water monitoring due to the closure of the Kwinana refinery which was recorded in Restructuring and other charges, net;
$ 13 for increases in estimated scope and costs associated with ongoing remediation work at previously closed sites which was recorded in Restructuring and other charges, net;
$ 9 related to investigation of potential contamination at various sites in Australia which was recorded in Cost of goods sold;
$ 5 for certain other environmental compliance matters which was recorded in Cost of goods sold;
$ 6 for increases in estimated scope and costs associated with ongoing remediation work at various other sites which was recorded in Cost of goods sold; and,
($ 2 ) due to the determination that certain site remediation at a previously closed site was no longer required which was recorded in Restructuring and other charges, net.
In 2024, the Company incurred liabilities of $ 25 and recorded a reversal of $ 12 . The impacts to the accompanying Statement of Consolidated Operations were primarily:
$ 20 for an increase in estimated scope and costs associated with ongoing remediation work at several sites and for certain other environmental compliance matters which were recorded in Cost of goods sold;
$ 5 for an increase in estimated costs associated with ongoing remediation work at previously closed sites which were recorded to Restructuring and other charges, net (see Note D); and,
$ 12 reversal for site remediation that is no longer required at a previously closed site which was recorded in Restructuring and other charges, net (see Note D).
In 2023, the Company incurred liabilities of $ 39 and recorded a reversal of $ 1 . The impacts to the accompanying Statement of Consolidated Operations were primarily:
$ 14 for the closure of the previously curtailed Intalco smelter and $ 13 for an increase in estimated costs associated with ongoing remediation work at the previously closed Longview (Washington) site which were recorded in Restructuring and other charges, net (see Note D);
$ 12 for an increase in estimated costs associated with ongoing remediation work at various other sites which was recorded in Cost of goods sold; and,
$ 1 reversal due to the determination that certain remaining site remediation was no longer required which was recorded in Restructuring and other charges, net (see Note D).
Cash payments include mandated expenditures as well as those not required by any regulatory authority or third party. The estimated timing of cash outflows from the environmental remediation reserve at December 31, 2025 was as follows:
Thereafter
Total
Reserve balances at December 31, 2025 and 2024, associated with significant s ites with active remediation underway or for future remediation were $ 202 and $ 154 , respectively. In management’s judgment, the Company’s reserves are sufficient to satisfy the provisions of the respective action plans. Upon changes in facts or circumstances, a change to the reserve may be required. The Company’s significant sites include:
Huntly, Australia —The reserve associated with enforceable undertakings with the DCCEEW relates to mining activities for the period from 2019 to 2025 at the Huntly mine. Under the terms of the enforceable undertakings, Alcoa is required to provide $ 36 (A$ 55 ) for investments in environmental offsets to counterbalance impacts caused by mine development and the funding of various conservation programs. Associated cash outlays are expected in 2026 .
Kwinana, Australia —The reserve associated with the 2025 closure of the Kwinana refinery is for subsurface remediation, investigation of potential site contamination, transportation of refinery waste, and ground water monitoring. Remediation work is expected to begin in 2026. The final remediation plan is currently being developed, which may result in a change to the existing reserve.
Suriname —The reserve associated with the 2017 closure of the Suralco refinery and bauxite mine is for treatment and disposal of refinery waste and soil remediation. The work began in 2017 and is expected to be completed by the end of 2030.
Massena, New York —The reserve associated with the 2015 closure of the Massena East smelter by the Company’s subsidiary, Reynolds Metals Company, is for subsurface soil remediation to be performed after demolition of the structures. Remediation work commenced in 2021 and will take up to eight years to complete.
Point Comfort, Texas —The reserve associated with the 2019 closure of the Point Comfort alumina refinery is for disposal of industrial wastes contained at the site, subsurface remediation, and post-closure monitoring and maintenance. The final remediation plan is currently being developed, which may result in a change to the existing reserve.
Addy, Washington —The reserve associated with the 2022 closure of the Addy magnesium smelter facility is for site-wide remediation and investigation and post-closure monitoring and maintenance. Remediation work is not expected to begin until 2027 and will take three to five years to complete. The final remediation plan is currently being developed, which may result in a change to the existing reserve.
Ferndale, Washington —The reserve associated with the 2023 closure of the Intalco aluminum smelter in Ferndale, Washington is for subsurface remediation and post-closure maintenance and monitoring. The final remediation plan is under review.
Other Sites —The Company is in the process of decommissioning various other plants and remediating sites in several countries for potential redevelopment or to return the land to a natural state. In aggregate, there are remediation projects at 31 other sites that are planned or underway. These activities will be completed at various times in the future over the next two to four years, after which ongoing monitoring and other activities may be required. At December 31, 2025 and 2024 , the reserve balance associated with these activities was $ 80 and $ 66 , respectively.
Tax
Brazil (AWAB) —Under Brazilian law, taxpayers who generate non-cumulative federal value added tax credits related to exempt exports may either request a refund in cash (monetization) or offset them against other federal taxes owed. In 2012, AWAB requested monetization of $ 136 (R$ 273 ) from the Brazilian Federal Revenue Office (RFB) and received $ 68 (R$ 136 ) that year. In March 2013, AWAB was notified by the RFB that approximately $ 110 (R$ 220 ) of value added tax credits previously claimed were being disallowed and a penalty of 50 percent was assessed. $ 41 (R$ 82 ) of the cash received in 2012 related to the disallowed amount. The value added tax credits were claimed by AWAB for both fixed assets and export sales related to the Juruti bauxite mine and Alumar refinery expansion for tax years 2009 through 2011. The RFB has disallowed credits they allege belong to the consortium in which AWAB owns an interest and should not have been claimed by AWAB. Credits have also been disallowed as a result of challenges to apportionment methods used, questions about the use of the credits, and an alleged lack of documented proof. AWAB presented defense of its claim to the RFB on April 8, 2013.
In February 2022, the RFB notified AWAB that it had inspected the value added tax credits claimed for 2012 and disallowed $ 4 (R$ 19 ). In its decision, the RFB allowed credits of $ 14 (R$ 65 ) that were similar to those previously disallowed for 2009 through 2011. In July 2022, the RFB notified AWAB that it had inspected the value added tax credits claimed for 2013 and disallowed $ 13 (R$ 66 ). In its decision, the RFB allowed credits of $ 10 (R$ 53 ) that were similar to those previously disallowed for 2009 through 2011. In September 2024, the RFB notified AWAB that it had further inspected the value added tax credits claimed for 2013 and issued a first administrative decision allowing additional credits of $ 1 (R$ 5 ) that were similar to those previously disallowed for 2009 through 2011. AWAB received the 2012 allowed credits with interest of $ 9 (R$ 44 ) in March 2022, the 2013 allowed credits with interest of $ 6 (R$ 31 ) in August 2022, and the additional 2013 allowed credits with interest of $ 1 (R$ 6 ) in December 2024. The decisions on the 2012 and 2013 credits provide positive evidence to support management’s opinion that there is no basis for these credits to be disallowed. AWAB will continue to dispute the credits that were disallowed for 2012 and 2013. If AWAB is successful in this administrative process, the RFB would have no further recourse. If unsuccessful in this process, AWAB has the option to litigate at a judicial level. Separately from AWAB’s administrative appeal, in June 2015, a new tax law was enacted repealing the provisions in the tax code that were the basis for the RFB assessing a 50 percent penalty in this matter. As such, the estimated range of reasonably possible loss for these matters is $ 0 to $ 54 (R$ 300 ). It is management’s opinion that the allegations have no basis; however, at this time, the Company is unable to reasonably predict an outcome for this matter.
Australia (AofA) —On April 30, 2025 (the decision date), the ART issued its decision related to the proceedings AofA filed against the ATO in April 2022 to contest the Notices of Assessment (the Notices) issued by the ATO in July 2020 (described below) 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.
The Notices asserted claims for income tax payable by AofA of approximately $ 152 (A$ 214 ) and claims for compounded interest on the tax amount totaling approximately $ 502 (A$ 707 ). In addition to the Notices, the ATO issued a position paper in September 2020 with its preliminary view on the imposition of administrative penalties related to the tax assessment which proposed penalties of approximately $ 91 (A$ 128 ).
In accordance with the ATO’s dispute resolution practices, AofA paid 50 percent of the assessed income tax amount exclusive of interest and any penalties, or $ 74 (A$ 107 ), during the third quarter 2020. The prepaid tax asset of $ 66 (A$ 107 ) was included within Other noncurrent assets at December 31, 2024.
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 accrued tax liability of $ 225 (A$ 346 ) was reclassified to Taxes, including income taxes in June 2025 as these amounts are due by June 1, 2026 and will be paid in accordance with the payment schedule applicable to Alcoa ’ s Australian tax group. The accrued tax liability of $ 206 (A$ 332 ) was included within Other noncurrent liabilities and deferred credits at December 31, 2024.
The ATO did not appeal the ART’s decision and the disputed tax claims (and additional related interest and penalties) were withdrawn. The related prepaid tax asset of $ 69 (A$ 107 ) and interest of $ 9 (A$ 13 ) were refunded to AofA in July 2025, and accrued cash taxes of $ 225 (A$ 346 ) related to the interest deductions were reclassified to Taxes, including income taxes in June 2025 as these amounts are payable by AofA by June 1, 2026. The net cash impact of both the refunded amount and the accrued cash taxes is approximately $ 152 (A$ 226 ). This matter is now closed in Alcoa ’s favor.
References to any assessed U.S. dollar amounts presented in connection with this matter have been converted into U.S. dollars from Australian dollars based on the exchange rate in the respective period.
General
In addition to the matters discussed above, various other lawsuits, claims, and proceedings have been or may be instituted or asserted against Alcoa Corporation, including those pertaining to environmental, safety and health, commercial, tax, product liability, intellectual property infringement, governance, employment, and employee and retiree benefit matters, and other actions and claims arising out of the normal course of business. While the amounts claimed in these other matters may be substantial, the ultimate liability is not readily determinable because of the considerable uncertainties that exist. Accordingly, it is possible that the Company’s liquidity or results of operations in a particular period could be materially affected by one or more of these other matters. However, based on facts currently available, management believes that the disposition of these other matters that are pending or asserted will not have a material adverse effect, individually or in the aggregate, on the financial position of the Company.
Commitments
Purchase Obligations. Alcoa Corporation is party to unconditional purchase obligations for energy that expire between 2040 and 2041 . Commitments related to these contracts total $ 58 in 2026, $ 60 in 2027, $ 62 in 2028, $ 65 in 2029, $ 67 in 2030, and $ 773 thereafter. Expenditures under these contracts totaled $ 54 in 2025 , $ 50 in 2024 , and $ 53 in 2023 . Additionally, the Company has entered into other purchase commitments for energy, raw materials, and other goods and services, which total $ 3,279 in 2026, $ 2,131 in 2027, $ 1,702 in 2028, $ 1,421 in 2029, $ 1,331 in 2030, and $ 7,702 thereafter.
AofA has a gas supply agreement to power its alumina refineries in Western Australia which began in July 2020 for a 12-year period. The terms of this agreement required AofA to make a prepayment of $ 500 prior to 2017. At December 31, 2025 , prepayments of $ 37 and $ 207 were included in Prepaid expenses and other current assets and Other noncurrent assets (see Note U), respectively, on the Consolidated Balance Sheet. At December 31, 2024 , prepayments of $ 35 and $ 225 were included in Prepaid expenses and other current assets and Other noncurrent assets (see Note U), respectively, on the Consolidated Balance Sheet.
Guarantees of Third Parties. As of December 31, 2025 and 2024 , the Company had no outstanding potential future payments for guarantees issued on behalf of a third party.
Bank Guarantees and Letters of Credit. Alcoa Corporation and its subsidiaries have outstanding bank guarantees and letters of credit related to, among others, energy contracts, environmental obligations, legal and tax matters, leasing obligations, workers compensation, and customs duties. The total amount committed under these instruments, which automatically renew or expire at various dates between 2026 and 2028 , was $ 428 (includes $ 84 issued under a standby letter of credit agreement —see below) at December 31, 2025.
Alcoa Corporation’s former parent company Alcoa Inc. was renamed Arconic Inc. on November 1, 2016 and was subsequently renamed Howmet Aerospace Inc. (Howmet). Howmet has outstanding bank guarantees and letters of credit related to the Company of $ 10 at December 31, 2025 . In the event Howmet would be required to perform under any of these instruments, Howmet would be indemnified by Alcoa Corporation in accordance with the Separation and Distribution Agreement dated October 31, 2016. Likewise, the Company has outstanding bank guarantees and letters of credit related to Howmet of $ 8 at December 31, 2025. In the event Alcoa Corporation would be required to perform under any of these instruments, the Company would be indemnified by Howmet in accordance with the Separation and Distribution Agreement dated October 31, 2016.
In December 2023, AofA committed to provide a bank guarantee in connection with the approval of the Company’s five-year mine plans that were referred to the Western Australia Environmental Protection Agency (WA EPA), which demonstrates Alcoa’s confidence that its operations will not impair drinking water supplies. On September 30, 2024 and October 1, 2024, AofA delivered bank guarantees totaling $ 67 (A$ 100 ). Alcoa may, with the Western Australian government’s consent, replace the bank guarantee with a parent company guarantee or a surety bond. The requirement to provide financial assurance will expire upon the completion of the WA EPA’s assessment of the Company’s five-year mine plans.
In August 2017, Alcoa Corporation entered into a standby letter of credit agreement with three financial institutions, which was most recently amended in May 2024 and expires on May 1, 2026 . The agreement provides for a $ 200 facility used by the Company for matters in the ordinary course of business. Alcoa Corporation’s obligations under this facility are secured in the same manner as obligations under the Company’s revolving credit facility. Additionally, this facility contains similar representations and warranties and affirmative, negative, and financial covenants as the Company’s Revolving Credit Facility (see Note M). As of December 31, 2025 , letters of credit aggregating $ 84 were issued under this facility.
Surety Bonds. Alcoa Corporation has outstanding surety bonds primarily related to tax matters, contract performance, workers compensation, environmental-related matters, and customs duties. The total amount committed under these bonds, which automatically renew or expire at various dates between 2026 and 2030 , was $ 357 at December 31, 2025 . Additionally, Howmet has outstanding surety bonds related to the Company of $ 6 at December 31, 2025 . In the event Howmet would be required to perform under any of these instruments, Howmet would be indemnified by Alcoa Corporation in accordance with the Separation and Distribution Agreement dated October 31, 2016. Likewise, the Company has outstanding surety bonds related to Howmet of $ 9 at December 31, 2025 . In the event Alcoa Corporation would be required to perform under any of these instruments, the Company would be indemnified by Howmet in accordance with the Separation and Distribution Agreement dated October 31, 2016.
T. Leasing
The Company records a right-of-use asset and lease liability for several types of operating leases, including land and buildings, plant equipment, vehicles, maritime vessels, and computer equipment. These amounts are equivalent to the aggregate future lease payments on a discounted basis. The leases have remaining terms of less than one to 57 years. The discount rate applied in determining the present value of lease payments is the Company’s incremental borrowing rate at the lease commencement date, unless there is a rate implicit in the lease agreement. The Company does not have material financing leases.
Lease expense and operating cash flows include:
Costs from operating leases
Variable lease payments
Short-term rental expense
The weighted average lease term and weighted average discount rate were as follows:
December 31,
Weighted average lease term for operating leases (years)
Weighted average discount rate for operating leases
The following represents the aggregate right-of-use assets and related lease obligations recognized in the accompanying Consolidated Balance Sheet:
December 31,
Properties, plants, and equipment, net
Other current liabilities
Other noncurrent liabilities and deferred credits
Total operating lease liabilities
New leases of $ 90 , $ 163 , and $ 76 were added during the years ended December 31, 2025, 2024, and 2023 respectively.
The future cash flows related to the operating lease obligations as of December 31, 2025 were as follows:
Year Ending December 31,
Thereafter
Total lease payments (undiscounted)
Less: discount to net present value
Total
U. Other Financial Information
Interest Cost Components
Amount charged to interest expense
Amount capitalized
In 2025, the Company recorded a correction of $ 15 to interest expense to capitalize interest on certain prior period expenditures, of which $ 8 and $ 4 related to 2024 and 2023, respectively.
Other (Income) Expenses, Net
Equity loss
Foreign currency losses (gains), net
Net loss from asset sales
Gain from sale of investments (C & H)
Mark-to-market gain on noncurrent marketable securities (C)
Net (gain) loss on mark-to-market derivative instruments (P)
Non-service costs – pension and other postretirement benefits (O)
Other, net
In 2025 , Other, net of $ 79 was primarily related to interest income on interest bearing accounts and the deposit related to the Australia tax matter (see Note S).
In 2024 and 2023 , Other, net of $ 54 and $ 62 , respectively, was primarily related to interest income on interest bearing accounts.
Other Noncurrent Assets
December 31,
Value added tax credits
Deferred mining costs, net
Prepaid gas transmission contract
Gas supply prepayment (S)
Prepaid pension benefit (O)
IRA Section 45X credit (Q)
Noncurrent restricted cash (see below)
Intangibles, net (L)
Goodwill (L)
Noncurrent prepaid tax asset (S)
Other
Prepaid gas transmission contract —As part of a previous sale transaction of an equity investment, Alcoa maintained access to approximately 30 percent of the Dampier to Bunbury Natural Gas Pipeline transmission capacity for gas supply to its alumina refineries in Western Australia. At December 31, 2025 and 2024 , AofA had an asset of $ 234 and $ 278 , respectively, representing prepayments made under the agreement for future gas transmission services. In September 2025, a portion of the Prepaid gas transmission contract was written off with a charge of $ 74 to Restructuring and other charges, net (see Note D) due to the closure of the Kwinana refinery.
Value added tax credits —The Value added tax (VAT) credits (federal and state) relate to two of the Company’s subsidiaries in Brazil, AWAB, and Alumínio, concerning the Alumar smelter and refinery and the Juruti mine. The mine, refinery and smelter pay VAT on the purchase of goods and services used in the production process. The credits generally can be utilized to offset the VAT charged on domestic sales of bauxite, alumina, and aluminum.
Other Noncurrent Liabilities and Deferred Credits
December 31,
Operating lease obligations (T)
Accrued compensation and retirement costs
Noncurrent restructuring reserve (D)
Value added tax credits payable to Arconic Corporation
Deferred energy credits
Deferred alumina sales revenue
Noncurrent accrued tax liability (S)
Other
Deferred energy credits —Deferred energy credits relate to cash received from governmental agencies in Spain and Norway.
In Spain, deferred energy credits relate to compensation of indirect carbon emissions costs which is paid one year in arrears relative to the production period. The Company is required to comply with certain operating conditions for a period of three years from the grant date. Compensation received is recognized as a reduction to Cost of goods sold when it is determined to be probable that the Company will satisfy all conditions. Should the Company not meet the conditions during the three-year period, the credits would be repaid to the governmental agency. In 2025, the Company recognized a reduction of $ 32 to Cost of goods sold related to carbon dioxide compensation in Spain that was received in 2022, as the 3-year operating requirement was met.
In Norway, deferred energy credits relate to compensation for indirect carbon emissions. Beginning in 2024, the carbon dioxide compensation scheme in Norway includes a requirement for recipients to implement emission reduction and energy efficiency measures corresponding to 40 percent of the carbon dioxide compensation paid. Complying with the additional condition can be achieved over multiple years, but not later than 2034. Compensation received is recognized as the conditions are met. During the second quarter of 2025, the Company deferred the recognition of $ 34 (NOK 341 ) of conditional compensation received in Other noncurrent liabilities and deferred credits, and after meeting the conditions related to costs incurred in 2024 and 2025 recorded a benefit of $ 25 (NOK 251 ) in Research and development expenses in the fourth quarter of 2025. The Company receives carbon dioxide compensation corresponding to 60 percent of the carbon dioxide compensation one year in arrears relative to the production period, and recognizes a reduction to Cost of goods sold in the period earned.
Cash and Cash Equivalents and Restricted Cash
December 31,
Cash and cash equivalents
Current restricted cash
Noncurrent restricted cash
Restricted cash primarily relates to commitments included in the viability agreement reached with the workers’ representatives of the San Ciprián smelter in December 2021 and updated in February 2023.
In 2025, the Company incurred $ 15 of smelter restart expenditures and $1 of capital investment expenditures and against the commitments, and $ 11 was released from restricted cash. At December 31, 2025, the Company had restricted cash of $ 75 available for capital improvements at the site and smelter restart costs.
Cash Flow Information
Cash paid for interest, net of amount capitalized, was as follows:
Interest, net of amount capitalized
Cash paid for income taxes, net of amount refunded, was as follows:
Domestic
U.S. - federal
U.S. - state
Foreign, including U.S. withholding taxes
Australia
Canada
Norway
Brazil
All other
Total
V. Supplie r Finance Programs
The Company has various supplier finance programs with third-party financial institutions that are made available to suppliers to facilitate payment term negotiations. Under the terms of these agreements, participating suppliers receive payment in advance of the payment date from third-party financial institutions for qualifying invoices. Alcoa’s obligations to its suppliers, including amounts due and payment terms, are not impacted by its suppliers’ participation in these programs. The Company does not pledge any assets as security or provide any guarantees beyond payment of outstanding invoices at maturity under these arrangements. The Company does not pay fees to the financial institutions under these arrangements. At December 31, 2025 and December 31, 2024 , qualifying supplier invoices outstanding under these programs were $ 157 and $ 94 , respectively, and have payment terms ranging from 50 to 110 days. These obligations are included in Accounts payable, trade on the accompanying Consolidated Balance Sheet.
The rollforward of Alcoa’s outstanding obligations confirmed as valid under its supplier finance program for the years ended December 31, 2025 and 2024 is as follows:
December 31,
Confirmed obligations outstanding at the beginning of the year
Invoices confirmed during the year
Confirmed invoices paid during the year
Foreign currency translation and other
Confirmed obligations outstanding at the end of the year
