Investor Story

THE ALCOA CORPORATION INVESTOR STORY

Alcoa Corporation is a global industry leader in the production of bauxite, alumina and aluminum, enhanced by a strong portfolio of value-added cast and rolled products and substantial energy assets.

Alcoa Corporation’s operations encompass all major production processes in the primary aluminum industry value chain, which we believe provides Alcoa Corporation with a strong platform from which to serve our customers in each critical segment.

KEY ATTRIBUTES

  • Robust projected demand growth
  • Attractive portfolio of low cost assets
  • Diverse sites close to major markets
  • Disciplined capital allocation
  • Operator-focused culture

BUSINESS OPERATIONS

Each of Alcoa Corporation’s six businesses provides a solid foundation upon which to grow.

Premier bauxite position

Alcoa Corporation is the world’s largest bauxite miner, with 45.3 million bone dry metric tons (bdmt) of production in 2015, enjoying a first-quartile cost curve position. We have access to large bauxite deposit areas with mining rights that extend in most cases more than 20 years.

Key Stat

45.3 million bdmt of production in 2015

Attractive alumina portfolio

We are also the world’s largest alumina producer, with a highly competitive first-quartile cost curve position. Alcoa Corporation has nine refineries on five continents, including one of the world’s largest alumina production facilities, the Pinjarra refinery in Western Australia.

Key Stat

17.3 MMT total capacity

Substantial energy assets

Alcoa Corporation has a valuable portfolio of energy assets with power production capacity of approximately 1,685 megawatts, of which approximately 61% is low-cost hydroelectric power. We believe that our energy assets provide us with operational flexibility to profit from market cyclicality.

Key Stat

Power production capacity of approximately 1,685 megawatts

Smelting portfolio positioned to benefit as aluminum demand increases

As a strong global aluminum producer with a second-quartile cost curve portfolio, we believe that Alcoa Corporation is well positioned to benefit from robust growth in aluminum demand. We expect that our proximity to major markets will give us a strategic advantage in capitalizing on this growth. Furthermore, with approximately 75% of our smelter power needs contractually secured through 2022, we believe that Alcoa Corporation is well positioned to manage that important dimension of our cost base.

Key Stat:

Global aluminum demand expected to double between 2010 and 2020

Global network of casthouses

Alcoa Corporation currently operates 15 casthouses providing value-added products to customers in growing markets. We also have three casthouses that are currently curtailed. Our network has enabled us to steadily grow our cast products business by offering differentiated, value-added aluminum products that are cast into specific shapes to meet customer demand.

Key Stat:

67% of shipments from value-add products

Efficient and focused rolling mills

Alcoa Corporation has rolling operations in Warrick, Indiana and Saudi Arabia which, together, serve the North American aluminum can sheet market. As the packaging market in North America has become highly commoditized, we believe that our experience in, and focus on, operational excellence and continuous productivity improvements will be key competitive advantages.

Key Stat:

Leading Can Sheet Supplier in North America

GLOBAL FOOTPRINT

Every Alcoa Corporation business segment operates in multiple countries and both hemispheres.

COMPETITIVE ADVANTAGES AND STRENGTHS

World-class aluminum assets.

Alcoa Corporation has an industry-leading, cost-competitive portfolio comprising six businesses—Bauxite, Alumina, Aluminum, Cast Products, Rolled Products and Energy. These assets include the largest bauxite mining portfolio in the world; a first quartile low cost, globally diverse alumina refining system; and a newly optimized aluminum smelting portfolio.

With our innovative network of casthouses, we can customize the majority of our primary aluminum production to the precise specifications of our customers and we believe that our rolling mills provide us with a cost competitive and efficient platform to serve the North American packaging market. Our portfolio of energy assets provides third-party sales opportunities, and in some cases, has the operational flexibility to either support metal production or capture earnings through third-party power sales. In addition, the expertise within each business supports the next step in our value chain by providing optimized products and process knowledge.

Customer relationships across the industry spectrum and around the world.

As a well-established world leader in the production of bauxite, alumina and aluminum products, Alcoa Corporation has the scale, global reach and proximity to major markets to deliver our products to our customers and their supply chains all over the world.

We believe Alcoa Corporation’s global network, broad product portfolio and extensive technical expertise position us to be the supplier of choice for a range of customers across the entire aluminum value chain. Our global reach also provides portfolio diversity that can enable us to benefit from local or regional economic cycles. Every Alcoa Corporation business segment operates in multiple countries and both hemispheres.

Access to key strategic markets.

As illustrated by our bauxite mining operations in the Brazilian Amazon rainforest, and our participation in the first fully integrated aluminum complex in Saudi Arabia, our ability to operate successfully and sustainably has allowed us to forge partnerships in new markets, enter markets more efficiently, gain local knowledge, develop local capacity and reduce risk. We believe that these attributes also make us a preferred strategic partner of our current host countries and of those looking to evaluate and build future opportunities in our industry.

Experienced management team with substantial industry expertise.

Our management team’s strong track record of performance and execution stems from years of experience in the metals and mining, commodities and aluminum industries.

Roy C. Harvey, who has served as President of Alcoa Inc.’s Global Primary Products business, will be Alcoa Corporation’s Chief Executive Officer. Mr. Harvey has served more than 14 years in various capacities at Alcoa Inc., including as Alcoa Inc.’s Executive Vice President of Human Resources and Environment, Health, Safety and Sustainability and Vice President of Investor Relations. In addition, William F. Oplinger, Alcoa Inc.’s Executive Vice President and Chief Financial Officer, will become Alcoa Corporation’s Chief Financial Officer. Tómas Már Sigurdsson, the Chief Operating Officer of Alcoa Inc.’s Global Primary Products business, will become Alcoa Corporation’s Chief Operating Officer.

History of operational excellence and continuous productivity improvements.

Over the past few years, we have implemented a comprehensive strategy to secure our company as a cost-competitive industry leader in bauxite mining, alumina refining, aluminum production and value-added casting and rolling, positioned for success throughout the market cycle.

We have accomplished this by strengthening each of our businesses for greater efficiency, profitability and value-creation. Our productivity program has allowed us to capture cost savings and, by focusing on continuously improving our manufacturing and procurement processes, we seek to produce ongoing cost benefits through the efficient use of raw materials, resources and other inputs. By reshaping our portfolio, we have made our company more resilient against market down-swings, while remaining prepared to capitalize on the upswings. We have developed new opportunities in establishing our bauxite and cast products businesses and our diverse sites offer close proximity to major markets, well situated to capture robust aluminum demand. We continue to enhance our competitiveness through rigorous portfolio management and strong cost controls and are committed to a philosophy of disciplined capital allocation and prudent return of capital to shareholders.

Positioned for future market scenarios.

Since 2010, we have reshaped our portfolio and implemented other changes to our business model in order to make Alcoa Corporation more resilient in times of market volatility. We believe these changes will continue to drive value-creation opportunities in years ahead. Among other disciplined actions, we have:

  • Improved cost position by closing, divesting or curtailing higher cost smelting and refining capacity;
  • Enhanced portfolio with investment in Alcoa Corporation-Ma’aden joint venture, the lowest-cost integrated aluminum complex in the world;
  • Revolutionized market for pricing smelter-grade alumina;
  • Grown our portfolio of value-added cast product offerings;
  • Reorganized operating structure for greater efficiency, profitability and value-creation at each stage of the value chain; and
  • Reduced costs in Rolled Products operations and intensified focus on innovation.

The combined effect of these actions has been to enhance our business position in a recovering macroeconomic environment for bauxite, alumina, aluminum and aluminum products, which we believe will allow us to weather the market downturns today while preparing to capitalize on upswings in the future.

Dedication to environmental excellence and safety.

We regularly review our strategy and performance with a view toward maximizing our efficient use of resources and our effective control of emissions, waste and land use, and to improve our environmental performance.

For example, in order to lessen the impact of our mining activities, we have targeted minimum environmental footprints for each mine to achieve by 2020. Three of our mines that were active in 2015 have already achieved their minimum environmental footprint. During 2015, we disturbed a total of 2,988 acres of mine lands worldwide and rehabilitated 3,233 acres. Alcoa Corporation’s business lowered its CO2 intensity by more than 12% between 2010 and 2015, achieving its target of 30% reduction in CO2 intensity from a 2005 baseline, a full five years ahead of target.

Alcoa Corporation is also committed to a world-class health and safety culture that has consistently delivered incident rates below industry averages. As part of Alcoa Inc., the Alcoa Corporation business improved its Days Away, Restricted, and Transfer (DART) rate—a measure of days away from work or job transfer due to injury or illnesses—by 62% between 2010 and 2015.

ABOUT OUR SEPARATION

Creating long-term shareholder value by launching two market-leading companies with distinct investment profiles

REASONS FOR SEPARATION
  • Management focus on core business distinct opportunities.
  • Allocation of financial resources and separate capital structures.
  • Targeted investment opportunity.
  • Creation of independent equity currencies.
  • Employee incentives, recruitment and retention.
  • Simplify structures required to manage two businesses.

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