On Wednesday, 12 March 2025, Alcoa Corp (NYSE: AA) presented at the J.P. Morgan Industrials Conference 2025, providing insights into their strategic navigation through current industry challenges. The company addressed both opportunities and obstacles, with a strong focus on tariff impacts and energy policy concerns while highlighting significant productivity improvements and future growth plans.
Key Takeaways
- Alcoa is actively seeking a Canadian exemption from Section 232 tariffs on aluminum imports.
- The company exceeded its productivity improvement target, achieving $675 million in savings.
- Alcoa is focused on reducing its debt and repositioning its capital allocation strategy.
- The alumina market is expected to balance by year-end, with increased production.
- Alcoa is not planning new smelter developments but is investing in ELYSIS technology for low carbon products.
Financial Results
Alcoa reported a successful productivity improvement program, surpassing its initial target of $645 million with an actual achievement of $675 million by the end of 2024. This improvement was measured against a 2023 EBITDA of $536 million. The company repaid $385 million in debt related to the Illumina Limited acquisition and is refinancing $1 billion in debt. Additionally, the valuation of Moden shares increased from $1.1 billion to $1.2 billion.
Operational Updates
Alcoa operates 26 locations across nine countries with 13,900 employees and 11 aluminum smelters, of which 87% are powered by renewable energy. The company’s carbon intensity is one-third of the industry average. Five smelters set production records in 2024, with a combined annual aluminum production of 290,000 metric tons in the US and 960,000 metric tons in Canada. The Brazil smelter is operating at 90% capacity after its restart.
Future Outlook
The alumina market is expected to be more balanced by the end of the year due to increased production. Alcoa anticipates improvements in the San Cyprian operation within three years and is committed to restarting the smelter in Spain by October 2025. Long-term aluminum demand is projected to remain strong, necessitating capacity additions. The company aims to reduce its adjusted net debt to $2.1 billion.
Q&A Highlights
During the Q&A, Alcoa emphasized its efforts to gain a Canadian exemption from tariffs and highlighted its focus on ELYSIS technology for low carbon products. The company is prioritizing debt reduction and capital repositioning, aiming for $1 billion in adjusted net debt. Alcoa is also evaluating the monetization of Moden shares and noted that a Russia-Ukraine ceasefire could alter global aluminum flows, though the impact on the US is expected to be limited.
Readers are encouraged to refer to the full transcript for a detailed account of Alcoa’s presentation at the conference.
Full transcript - J.P. Morgan Industrials Conference 2025:
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: Okay. Good morning and welcome to the second day of JPMorgan’s Industrial Conference. My name is Bill Peterson, U. S.
Metals and Mine Analyst. I’m really pleased that Alcoa can join this year’s conference, and we have Molly Biermann with us today. So thanks for joining our conference. And this is being webcast, but we like to start off it’s always good to provide a brief overview of the business, maybe including the company’s vertical integration, global footprint and maybe summarizing major developments over the past year and maybe any other way you’d like to kick us off today. So thanks again.
Molly Biermann, Alcoa: Okay. Thanks, Bill, and thank you, everyone, for your time today and today’s discussion about Alcoa. So let me start with that brief overview of the company. Alcoa is a pure play aluminum company. We’re integrated and organized across two business segments, alumina and aluminum.
We have 26 locations across nine countries and 13,900 employees. Within our alumina asset, of the top our top five mines are among the 20 largest outside of China as well as our top five refineries. Within aluminum, we have 11 smelters. They operate on 87% renewable energy. We have an advantage in the industry.
Our carbon intensity is one third of the industry average. Our locations have logistical advantages as well. They are located near our primary markets in North America and Europe. We had many achievements in 2024. We hit great statistics on our safety.
We had production records in five of our smelters. We delivered a $645,000,000 improvement program ahead of time. We announced and completed the acquisition of Illumina Limited. We initiated the sale of our stake in the modern joint venture. And at the end of the year, we started our program to delever.
We repaid $385,000,000 of the debt brought on with the Illumina Limited acquisition. We’re really maintaining a good pace into 2025. We have strong operating results. We’re generating cash from ops in excess of our normal first quarter. Typically in the first quarter, we consume cash.
Production’s going well in terms of both safety and production volumes. When we look at our order book for value add products, it’s very strong, especially in North America. You’ll see that last week, we announced that we’re refinancing $1,000,000,000 of our debt. We have a new issue in Australia, and we’re making a tender on our 27 and 28 notes in Netherlands. This is consistent with our strategy to place our debt closer to our operations.
This will improve our tax efficiency, and it also extends our maturities a bit. As you might imagine with March 12, the tariff date, we’re working quite closely with the U. S. Administration as well as the aluminum associations in both Canada and The U. S.
To figure out the impacts of the tariffs and their how they’ll result on our industry. We’re presenting to the US administration, some of the practical issues, with the tariffs. While we’re very supportive of their efforts to improve the industry as well as strengthen US manufacturing jobs, we do see that there could be some harm from the from the tariffs. We’re particularly focused on gaining a Canadian exemption. Also talking to the US administration about energy policy because as you all know, affordable and access to energy, particularly renewable, is critical in any decision for additional aluminum investment in the long term.
I want to make a comment on our outlook in the current market and our expectations for the first quarter. If you use our sensitivities, you’ll calculate a considerable sequential change from the declining alumina price and higher aluminum prices, and that includes the Midwest premium, which is already reacting, of course, to the tariffs. These changes are net favorable to Alcoa. We do not expect significant net EBITDA impact from tariffs in the first quarter. We do recognize that we’ll need to provide guidance for next quarter as the tariff costs will show up in our bridge within the other bar as an additional cost of goods sold.
We do see the tariffs creating uncertainty with our customers right now. Some customers are rushing to secure supply ahead of the tariffs, while others are playing wait and see to see how the final tariff structure would will exist. As a result, this quarter, we do have more uncertainty in both our revenue and our working capital that is
Unidentified speaker: more than normal. Overall though,
Molly Biermann, Alcoa: we are expecting a very strong first quarter. And with that, I’ll be happy to take your questions, Bill.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: Yes. And I think we do want to talk about some of the company strategy and some of the things that you’re doing on your side that are in your control. But I think we do need to stay on the topic of tariffs at least for a moment to the extent that you’re able to answer. And the developments are like you said, we hit March 12 Square. And then those when we planned this conference and we planned Alcoa’s attendance, we did not have that as part of the plan.
But how is the company thinking about, I guess, impacts of trade flows, maybe pricing as it relates to the Midwest premium, and then navigating not only Section two thirty two, which took place today, but if there is additional, I guess, Canadian specific tariffs that could on top of that, whether it be doubling of section two thirty two that was brought up briefly yesterday or just the the broader blanket tariffs that have been discussed.
Molly Biermann, Alcoa: Okay. So recall the, The US imports 85% of the aluminum that it needs, and the majority of that comes out of Canada. Just looking at the statistics, The US has 4,000,000 metric tons of imports, When you look at the tariffs, you will see the Midwest premium, obviously, reacting. It was reacting ahead of the effective date today. That benefit from a higher Midwest premium, we will realize that on our US tons produced.
So we have two smelters, producing about 290,000 metric tons, so we’ll have the benefit of that. However, our Canadian operations produce three times that amount, so about 960,000 metric tons. They will lose the 10% exemption on the prior, Section two thirty two tariff. So now they’ll be paying the tariff on 25%. So it’s a net negative to Alcoa.
We’re saying tens of millions now. It’s not hundreds of millions, just tens of millions, but very little impact in the first quarter, but we will give you guidance as we go through the year on the second through the fourth quarter.
Unidentified speaker: If
Molly Biermann, Alcoa: the additional tariff that’s coming up April 2, the 25% for energy and critical minerals, that will only be 10%. If that tariff stacks on top of the current 25 for Canada, aluminum, we’ll have a 35% tariff there. Now the Midwest won’t rise to cover that. So, essentially, you will have a, a change to trade flows because it’ll be less incentive for us to send the metal into Canada. Then we’d be could be looking at options to send our Canadian metal into Europe.
Europe currently receives metal from The Middle East and India. That supply may well make its way over to The US. And you can imagine we’re going to have ships crossing the Atlantic with the same product, just to get the right tariff treatment. So it would be very disruptive, we believe, if we have any Canadian differential in the tariffs.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: Yeah. Thanks to that. You know, one of the goals of the administration appears to spur greater domestic production, whether it be through restarts, or greenfields. I guess, how how realistic or is this realistic? And I think Bill spoke to this at our previous conference a few weeks back.
But what are the key barriers to making this happen? Is it permitting? Is it capital? Is it availability of energy or cost of energy? Like, how should we think about that?
Molly Biermann, Alcoa: Yeah. We would not make a decision on building a new smelter based on tariffs. These are decisions that you’re looking out twenty to forty years. You’re looking at the economics. You’re looking at the availability of energy.
And for us, that means renewable energy as well. So very highly tied to energy policy, getting a lower energy cost before we could see significant investment in US smelting. We do have about 50,000 metric tons of capacity curtailed in our work Smelter, that has not run for a very long time. So that would be a very expensive restart for us. We are looking at the numbers, but we’ll wanna see the cost to restart as well as how the tariffs stick before we’d make a decision on whether we’ll bring that back online.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: So 50,000 tons, is there any other idle capacity? And I and I guess maybe double clicking on earlier comment, like, what is what is Alcoa doing in terms of working with the government? Is there any more color you can provide on what, how it’s working with the policymakers on that front?
Molly Biermann, Alcoa: So I think as we’ve been working with them, we’ve really been educating them on some of the differences between steel and aluminum. Steel, there is additional production capacity available. In aluminum, very little. The smelters that have been curtailed, obviously, we have PartaOne, the 50,000 that I talked about. But the other smelters that are curtailed, there really aren’t plans to restart those.
And some of them didn’t go down very gracefully, so it’d be very, very expensive to restart. So we’ve been educating them on the trade flows, the amount of imports on aluminum, the amount of production capacity that we do have available, and what it would take really to incent investment. And that would be a great energy policy in The US, support for any development of additional renewables. But these are decisions that are that are long, long in length. If you look at building a smelter, it’s a five year plus effort.
So certainly would not be tied to tariffs.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: Yeah. Makes sense. I guess, you know, turning to the markets more broadly and in your intro comments, you talked about some strength in value add in, you know, North America. But I guess, what are you seeing in terms of the global fundamentals for both aluminum and aluminum markets? And I guess, more importantly, how does it vary by region, especially given it’s not all about The US and the tariff environment?
Molly Biermann, Alcoa: Yeah. So I’m actually going to start with alumina. So in December of twenty four, we saw the highest ever alumina price, and that was based on strong smelter demand as well as restricted supply, so very tight supply. In January and February, we saw several of our peers ramp up production. We also saw the Chinese restarting and ramping up production, so has eased the supply somewhat.
We also see market indications that some of the new projects coming online in Indonesia and India will be ready by mid year. So the the, outlook is for much more balanced, alumina market by the end of the year. There are still risks in bauxite supply for all of that alumina production. We still have the restrictions for EGA coming out of their GAC mine in Guinea. They still are unable to export bauxite primarily for their Chinese customers.
So there’s still some risks that remain in alumina. In alumina, as we look at the market, it’s an overall imbalance. The Chinese are still importing, from the rest of the world. If you look at our primary markets in North America and Europe, both of those are are in deficit. I brought a few notes, just in talking to our customers on our value added order book because it gives you a flavor of what we’re seeing.
In North America, the order book for value add products is robust. We’re showing high single digit growth quarter over quarter. The demand for the rolling mills and the extruders remains very healthy, although the tariff uncertainty is starting to affect some of our foundry spot activity. The rod demand continues to be strong. In Europe, though, we are seeing the volume on value add products slightly decrease, and that’s primarily due to some of the spot orders that we got in the fourth quarter that aren’t repeating and also heavily influenced by the geopolitical changes there as well as the initiatives to react relax some of the CO2 targets for 2025.
Those are impacting the automotive sec sector in Europe. Rod demand remains strong in Europe and packaging strong as well.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: Maybe just on the value added North America strength, I’m not sure the way there’s a way to parse out, but is is there any indication that some of those could be pre buying to get it in front of tariffs? Or is there no way for you to really tell if that’s a kind of true demand signal versus just the pre buy?
Molly Biermann, Alcoa: We certainly did see some of that trying to get inventories built quickly. But you have to remember, with the aluminum supply chain, there’s been so much investment in the transportation and the trade flows. It’s not something that you can move dynamically and quickly. So we’ve seen a limited amount of that, but not excessive.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: Yeah. Maybe moving on to some of the company specific. And you spoke in your opening comments about some of the profitability improvements, including kind of exceeding targets. But maybe what areas would be, let’s say, outstanding? Where would be the next major opportunities for improvement as we look out maybe this year, but maybe also over the next few years?
Molly Biermann, Alcoa: So we had a $645,000,000 productivity improvement plan. We exceeded that. We reached $675,000,000 at the end of ’twenty four. So we’re actually closing off what was supposed to be a two year program. And that was positioned against the very low 2023 EBITDA of $536,000,000 If you look at the components, we did really overachieve in raw materials.
We hit $385,000,000 on a $310,000,000 target. We had an advancing competitiveness program that was targeted to get a hundred million in improvements by the end of the first quarter of twenty five. We made decisions of about 80,000,000 on that 100 and the remaining 20 is built into the business plan for the first quarter of ’twenty five, so we expect to reach that run rate target. We had several portfolio, initiatives running as a part of the program. Warwick, did very well on their, their target.
The Alumar smelter way over exceeded its its target. And then Kwinana, the refinery that we curtailed last year, we were trying to get their holding cost down. We still have a bit more work to do on that one. Overall, though, again, we overachieved our $645 target, and so that program, we’re closing that out as a success. But we don’t we’re not stopping efforts on the remaining pieces.
We’ll get those within the $25 plan. If you look beyond 25 at some of the improvements that will come to our business, the most notable is getting into our new mining regions in Western Australia. So we’re operating with the lower bauxite quality. When we complete those mine moves no earlier than 2027, we will pick up additional alumina volume as well as have a lower cost per ton. So that’s the most sizable improvement we have.
I mentioned the Brazil smelter that we’ve been restarting. We spent we spent a lot of money to get that smelter, restarted. It’s about 90% capacity now. We expect as soon as it moves to a % and stable, we’ll be able to take some significant costs out of Brazil. So we should have near term improvements there.
A bit longer term, we talked last year about a bit longer term, we talked last year about some of our investments and return seeking primarily to add, creep capacity as well as to focus on some customer value add product needs. And so those will add mark moderate improvement to the bottom line. And a bit longer out, we’re working very actively on our San Cyprian operation. I do expect that within three years, we will have some improvement through that operation as well.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: We’ll come to San Sipriya in a bit, but maybe just on Western Australia, which should be a pretty good improvement in cost when you’re able to get there. But how is permitting progressing for future access to the mine area? And maybe what are the milestones we should look at between now and 2027?
Molly Biermann, Alcoa: Yeah. The approval process is progressing very well. We actually have the Australian regulators on-site daily observing our mining practices as well as our rehabilitation methods. We’re getting very favorable feedback from them. So we’re advancing our permitting process.
The next, big timeline milestone is on the public comment period. This is when our My Plans will be made available to all of our stakeholders. That should start at the end of this month or early, in the second quarter and really staying on track for approvals in early twenty twenty six, and that would enable us to do our mine move no earlier than 2027.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: Thanks for that.
Molly Biermann, Alcoa: So Sorry. I should I want to mention one more thing. So we, have been in in and out of Australia quite a bit in the last year. And I do wanna call out Bill Opplinger, our CEO, has made it a point to meet with the leaders in government just to make sure we’re getting their view on our progress, and they know our commitment to meeting the timeline. So very good feedback from those parties as well.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: Yeah. Thanks for that. Maybe switching opportunities and somewhat it’s relatively new, but maybe potential opportunities to monetize latent interconnect capabilities. First of all, how should we think about the opportunity? How large of an opportunity is this for Alcoa?
And, you know, other parties showing interest? And and for background, this may be, for example, you know, data center customers and maybe could be potentially interested in in in something like that, but I’ll let you take it.
Molly Biermann, Alcoa: So we do have a track record of monetizing former sites. Two of the most notable recently, well, this is 2021. The East Alco former smelter in Maryland, we monetized that for about a hundred million. That did go to a Dana center, and that’s under development now. Also, we had, 31,000 acres around our rock Rockdale smelter in Texas.
We sold that years ago, 240,000,000, and that is a multiuse site including, data center. So good good track record. If you look at our current list of idle sites in our portfolio, there’s about 20 sites. There are three that are being actively marketed now. We have they’re all former smelters.
So the Point Henry, that’s in Australia near Geelong. It sits on a peninsula. It’s a great piece of land, so we’re marketing that for sale. We also have Longview, Tennessee marketed for sale. And then the last one, I’m forgetting.
Oh, Fusina. So we have a site that held a rolling mill and a smelter in Fusina, Italy, and that is also being marketed. When we look at the whole list and what has the most value potential though, it probably is our Messina West property that has a Bitcoin miner leasing part of it now. That does provide some offset for us on holding costs, but that site is still going through remediation. But we do see that one as having a good value potential in the future.
And then also our Point Comfort former refinery in Texas, that has a small amount of data center lease on it as well. But probably the most valuable part of that site site is Deepwater Port. We’re not in any hurry to sell these sites. We found in the past when we initially started marketing Rockdale, the initial offers were as low as 60,000,000. We held out a while and got the $2.40.
So we have a team of experts within our company. We also use third party experts. And so when these, are ready for for sale and we’re getting the price that we we’ll go ahead and pull the trigger on those. So nothing to announce today, but certainly, we’re working actively on those.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: When when you get approached and, you know, obviously, there’s a key component is time to market for time to build a lot of these data centers. But what are the is there other hurdles like regulatory that need to be considered, by you or by the potential, you know, buyer of these? Or how does that work?
Molly Biermann, Alcoa: So if we look across our our current sites, there are not major regulatory hurdles. However, the environmental condition of the sites, the cost to remediate as well as the timing are what will hold those up.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: I see. Okay. Coming back to San Cyprian, and you could you filled in the details, but you’ve outlined an MOU with the proposed party, Ignis, and the government, as well. Is the partnership still on track to be finalized? Or I mean, we thought maybe we’ll hear something fairly soon, but what’s the feedback then from the local workforce since the MOU was announced earlier this year?
Any sort of color on that would be helpful.
Molly Biermann, Alcoa: So we are working through the final stages of the JV agreement with Ignis. That is going well. When we sign that agreement, Alcoa will make an initial funding into the Spanish operations of €75,000,000. Ignis will put in €25,000,000 for their 25% investment in the entity. Alcoa is still committed to, the next one hun up to the next €100,000,000 in funding need for for the entities.
We’re continuing our dialogue with the, with the local workers union on getting the release on the restricted cash. If you recall, we have cash held there for future, CapEx commitments. We would like to use that money now though to fund the operations. While the national branch of those unions have been supportive of our plan of using that for operations now, the local unions are really holding the authorization key there. And, so far, they’ve they’ve not agreed to release that that money.
We are, though, working on, securing energy contracts for the site. Recall, we have a contractual commitment to restart the smelter by October of twenty five, and so we’re moving on on those energy contracts. What we’re trying to do now is to find energy contracts where we do incur losses. We will have losses for the site, but we’re trying to keep them within the funding commitment. That’s a part of basically this two to three year recovery plan for the operation.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: I think there’s been some questions with higher alumina, higher aluminum pricing. Under the current pricing environment, how should we think about the viability of restarting some of these operations?
Molly Biermann, Alcoa: So it’s difficult because you would not be we would not be restarting the smelter if it were not for the contractual commitment. The numbers aren’t solving it. We don’t have energy prices in Spain that would work for in any normal economic situation.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: I see. I want to stop and pause and see if there’s any questions from the audience. And if there is, please wait for the microphone. Any questions? Right here.
Just wait for the microphone, please.
Unidentified speaker: Where would you go Greenfield now? Clearly not The US, but where would you?
Molly Biermann, Alcoa: We are not we’re not looking at any major smelter development now. We are tied to, LSS. So we have the joint the partnership, sorry, with Rio Tinto developing that technology. The earliest we would look at doing that is really into the next decade. If we do build, we want to build or even a brownfield, we want to do it with the LSYS technology.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: Thank you. Any other questions? Maybe just picking up on that last one. Maybe you can outline maybe the broader low carbon strategy. You already have a very good renewable footprint.
You talked about 87. And Ellis, as you just announced, is still at least five years away. But the Eco line of products, how should we think about the low carbon strategy as well as the interest from your customer base? Where is that coming from?
Molly Biermann, Alcoa: Yes. We continue to promote our low carbon products. We have products in, alumina, both smelter grade and nonmetallurgical. And then within aluminum, we have recycled content as well as the low carbon metal. We continue to invest there on capabilities to expand those products.
We still see strong demand in Europe, the especially the automakers. They have really aggressive goals for 02/1930 for recycled content, And so we’re continuing to develop in those areas as a line of growth.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: Great. Maybe coming to capital allocation, you’ve been transparent, addressing debt remains kind of a key priority. Would this be focused on paydown or repositioning following last year’s, AWC deal? How should we think about that?
Molly Biermann, Alcoa: Yes. It’s both. So first, we have the repositioning, which we’re in the process of completing now with the new issue in Australia and the tender on our, ’27 and ’28 notes. On the pay downs, as I mentioned earlier, we started at the end of last year with the pay down on the $385,000,000 for Illumina Limited’s revolver. We expect to do more pay downs during the year.
We’re probably going to hold cash for a little while while we see how the tariffs shake out, but we expect that as we progress into ’twenty five, we’ll do some more pay downs. We do not have externally stated net debt target now. But if we look back to 2021 and 2022, we had an adjusted net debt for us that includes our pension and OPEB right around a billion. And that was a more comfortable level for us. At that time, we were doing share buybacks.
So while we don’t have a stated target that we’re working toward, we do know at the current 2,100,000,000.0, we’re a bit on the high side, so we will focus on delevering.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: Kind of coming back to growth and the question about greenfield, you mentioned the EcoLSS would be out. But where do you see the biggest opportunities? Maybe expand on that further. Where does the company’s you know, low carbon you’ve spoke to, but what other value add or can you really focus on over the next several years ahead of a bigger investment such as Elesys?
Molly Biermann, Alcoa: So we do have ambitions for growth, but I’ll say that Alcoa has a very pragmatic view. We are not going to invest in growth just for growth’s sake. We do it when we can have returns that meet the thresholds for our shareholders and deliver value. We like, bauxite in alumina. We are becoming much better bauxite miners.
We could absolutely look at other opportunities in the areas where we’re already mining in Brazil. We could also look at opportunities in Guinea. We’ve been active in that space. We still feel like we’re some of the best refiners in the industry, and so that gives us a privilege and a right as well to expand there.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: Mhmm.
Molly Biermann, Alcoa: And then as mentioned, we’ll still take advantage of return seeking projects, especially within smelting when we can grow value add capacities.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: Great. I’m going to pause again and see if there’s questions. Do you have another question? Just there’s two questions. We’ll right here and then we’ll go over there.
Unidentified speaker: Just back on the tariffs. You talked about how you’re trying to explain your position and the position of aluminum. What could be the positive, like how could there be a justification for the tariffs specifically on aluminum? Like, you’re not going to put smelter capacity back in The U. S, you’re not you could maybe restart, but that even seems like iffy iffy.
Like, what good other than it being a bargaining chip?
Molly Biermann, Alcoa: There’s definitely a drive to restore US manufacturing excellence. And so the administration is really committed to that, and we support that. We’re just looking at the aluminum dynamics.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: We need to repeat it.
Molly Biermann, Alcoa: So the question was, if it’s just focused on aluminum, is there anything realistic that can be done? I would say that we don’t necessarily have that answer either.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: Thank you. Yeah. Curious how the value of your Moden shares play into your debt reduction goals and the strategic value of that investment to Alcoa?
Molly Biermann, Alcoa: So the just say, in general, the Moden transaction is still on track to close in the first half of ’twenty five. When we signed that agreement to sell the joint venture in exchange for modern shares, it was valued at about $1,100,000,000 Now it’s up to about $1,200,000,000 We have the opportunity under the agreement to be able to hedge or to monetize ahead of the dates that we can sell the shares, which would occur on the third, fourth, and fifth year anniversary. To date, we’ve made no decision on whether we will actually do the hedging. Almost any arrangement that we could do there to monetize is gonna look like debt. We really don’t wanna add debt to the balance sheet.
So we understand completely that our, shareholders don’t necessarily need to own Modin through us. So it’s not our long term goal to be a Modin shareholder, but we also wanna look at what the economics are to monetize that in a way that’s most efficient where we don’t have to take a huge discount.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: Thanks for that. Any other questions? Maybe just somewhat topical here today. We you know, potential we’re seeing for a ceasefire in Russia and Ukraine. What would that do if we do see a full ceasefire or peace agreement on flows of aluminum globally?
And does that have a real impact on your business?
Molly Biermann, Alcoa: So we absolutely could see a change in the flows. Right now, almost all of the alumina and aluminum trading relationships with Russia are with China. So Russia would come back into the European market. Presumably, China will then adapt. I think Chinese had been getting great discounts, so it’s just simply been a lucrative business for them to do business with Russia during this time.
I think there’s a big unknown in that our customers, a lot of them self sanctioned away from Russian aluminum. How quickly will they be willing to migrate back? So we’ll see there on the trade flows. We had very little Russian metal coming into The US, you know, pre war, so I don’t see it impacting The US, much. Okay.
Unless, of course, there’s some deal made I don’t that we don’t know about.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: See if there’s any last questions. Maybe just wrapping up, I guess, what would you say the key sort of things to look out for over the next few years? And as investors, what would be the areas where things may be less understood or opportunities to really dig deeper you know, to make the investment case in in Alcoa?
Molly Biermann, Alcoa: Yeah. I think we touched on a lot of them today, in terms of our modern monetization. That was an asset that was underappreciated on our books before we announced the transaction. We talked about WA, Western Australia. Clearly, our movement into the new mine regions is going to increase our profitability.
We didn’t really touch on though remember, the long term aluminum demand is still very strong, and there’s going to need to be capacity additions to meet all of that demand. And Alcoa is very well situated, to take advantage of that as an integrated aluminum company.
Bill Peterson, U. S. Metals and Mine Analyst, JPMorgan: Well, Molly, we’ve come near the end of the talk, but really appreciate you sharing the insights and best of luck navigating a lot of these crosscurrents here this year and beyond. But I look forward to following the progress of certainly what you have under your control and Bill’s control. So thanks again.
Molly Biermann, Alcoa: Thank you, Bill. Thanks everyone for your interest.
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