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Alcoa (AA)

Participants
Roy Harvey President and Chief Executive Officer
James Dwyer Vice President of Investor Relations
William Oplinger Executive Vice President and Chief Financial Officer
Carlos De Alba Morgan Stanley
Emily Chieng Goldman Sachsv
Alex Hacking Citi
Lucas Pipes B. Riley Securities
Curt Woodworth Credit Suisse
John Tumazos John Tumazos Very Independent Research
Michael Dudas Vertical Research
Call transcript
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Operator

Good afternoon and welcome to the Alcoa Corporation, Third Quarter 2021 Earnings presentation, and conference call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to James Dwyer, Vice President of Investor Relations. ahead. go Please

James Dwyer

good Harvey, and and I'm today Financial joined Oplinger, Thank Corporation day, President Roy Officer. Chief and Alcoa Vice Officer, and by Executive you, President, everyone. Chief William Executive

after questions your take will the by Bill. Roy comments and We

today's will today's differ are subject future the are forward-looking statements various Company's and may materially cause assumptions statements and presentation actual As events discussion relating in SEC expectations to and from our a these filings. included contain reminder, that results that to to in caveats. Factors

means In measures the addition, financial to directly non-GAAP today presentation. we adjusted measures have included EBITDA in to GAAP appendix in the EBITDA. some financial reference comparable in Reconciliations this discussion Any presentation. found today's can be our most to

announced, slide Finally, our the available on here's and With earnings are release website. presentation that, Roy. as previously

Roy Harvey

those in thanks by quarter joining Jim. seen we've that to call you, prices decade. strong aluminum who Thank another We bolstered today. more a are than than had higher And our are

in will your quarter, these questions. results and take As and discuss Will I every

when our a which us. underway, would how continue It's to at changing the but that achieve and about once particularly results, market we guide launched we like also independent we where an company we get in again experiencing Before dynamics, are established however, I we as to time reinforce rapidly values, XXXX, not just them.

and all to are Our our in for Company embedded values continue be our foundational decisions. of

creating is than that launched. our across as It clear to globe priorities us we've we reflecting are has accomplish. Now, been on the its approaches the when value. achievements much Alcoans Alcoa Corporation anniversary, Alcoa five-year is stronger Today, strategic helped

industry's Initiative. sheet, our the of we've also comprehensive Aluminum assets to Stewardship improved most of certified we've stringent strengthened We've We the many portfolio responsible for our processes, responded have production, low-carbon of standards And we've launching the our products. reshaped balance society's need our portfolio. significantly to

priorities for helped strengthen exactly an what strategic prepare said to And have our we even milestone. important us today, reached do an future. we In addition, to do, wanted brighter company to our we've

we As the to you saw issued, initiate release Alcoa decided quarterly a just dividend. press has from that

a that complement authorized repurchase that in will we've XXXX. was and program authorized important existing concerning framework program points. aligned capital with existing These our share new decisions reflect Additionally, capital allocation two our returns

have of our and we company our the First, commodity until through sustain to programs much a portfolio Today, sheet position in our cycle. substantial in strength generate with no debt to are ability these and balance stronger both maturities confidence cash the operating XXXX.

the strong be foundation. Second, Thankfully, and that is low carbon financial returned the we positive Brazil in am quarter. that shock. recovered An now news, electrical a actions. this Despite achievements we've injury never as These that sustained contractor participate to disappointed to and Alcoa ESG But corrective a will markets the well-positioned life-threatening longer, I our serious has implemented we cycle deliver believe work in electrical and in he had is we serve complete. a will simply world. last work a in focused stronger,

Our our facilities. focus visits must on everyone of the always who or works be safety at

joint first, an positioning Oplinger. CFO, the projects, in and powered like align highlight The initiatives a by strategic high foundation some progress our Aluma for a with this to point. I'd comments our and ambition. development our The research go recent these renewable strength And starting green But priorities we the please improved Will our aluminum revolution Also, in talk let's is purity by strong be as aluminum, project trend happening alumina. energy, are As evidenced today, we'll that used net-zero future. as that ahead. the for and more financials today Will, ourselves fast. review about pricing with pricing will

William Oplinger

Roy. Thanks,

quarter up and up were higher XX% were sequentially year-over-year. sequentially. million $XXX This than [Indiscernible] up aluminum or from Revenues or million even alumina one. better XX% prices. were XX% billion on last previous $XXX aluminum year $X.X XX% prices the at the and Revenues was same period

per taxes In virtually the year's Third-quarter aluminum segment earnings to $X.XX far has the had net share, record Alcoa's items its modest $X.XX share quarter EBITDA share XX% earnings $X.X adjusted months per aluminum to and special EBITDA, first than nearly billion. sequentially continues excluding interest outperform the per minority EBITDA, share. share with increased and year the to year-ago That a and drive of X than XX% with increased $X.X that $XXX Adjusted than XX% These showed per sequentially for million, no which up higher total so quarter, quarter, the quarter. income. debuted income third charts, of Adjusted were last items, net segment prior $X.XX record record-adjusted last higher higher share also the per $XXX of special income. or per best billion segment million. much generated $X.XX XXXX, excluding

net adjusted the best first months is X income $XXX income XXXX million. already $XXX net Before at million was In or for full-year adjusted in year, higher. million this our $XXX XXXX, our

in and better recovering be Now should alumina fourth aluminum prices at even financial with nicely, remaining prices post-global the quarter. highs crisis earnings

adjusted in as by adjusted more driven product review was pricing alumina increase million detail. aluminum. slightly prices, and special better metal currencies, $XXX prices, favorable alumina in higher excluding higher items as in EBITDA and EBITDA, Now The let's well

bauxite volume corresponding outage and had a mostly costs. production the X/X know, damage shipment affecting in impacts Aluma million by quarter, you as structural to However, mid-July sustained down $XX impact ramped in This a unloader at [Indiscernible]. we roughly and production production bauxite with refinery

few higher earnings Brazil to other by from the mostly extent [Indiscernible], in experienced we in million earnings costs for unfavorable energy Spain's highest Norway net $XX alumina impacts million. a in also [Indiscernible]. unfavorable and costs, Europe a of were offset increases product while In Higher Higher quarter. These Brazil costs in experienced costs were lesser carbon in increased strong million. decade impact and Brazil. we a by material and segment favorably addition, $XX raw the $XX a the in caustic by energy

Lastly, [Indiscernible] primarily Canada the the in the in Europe and quarter increased we area storage aluminum segment, Does improvements column Smelter in quarter. facility patterns in after for shipping the the in Brazil. delays July other which in impacted of through accruals the results negatively residue ended and non-recurrence the reflect support, seasonal XXXX the [Indiscernible] Portland second re-powered

impacts strong as the cash from declined the last billion. strong cash to quarter, to $X.XX $XXX very balance of let's flows illustrate cash our The major continue highlight EBITDA. quarter cash Cash from bridged To generation as the we've the second the quarter cash look balance. Now, well actions benefits at million flows. corporate from on third to ending adjusted

our the sources the financial million XX.X% But for EBITDA funding. of the the the XXXX offset non-controlling and non-core million Our now of the flows was $XXX X cash range our you sales million. largest less working Return pension distributions including $XX outlay months X are $XXX third key cash bond alumina capital quarter's to strong million impact EBITDA by at positive XX is of provided can On major million, leverage and to million followed proportional and free of X to $XXX three-day and months of has million partially capital funding, $X.X was billion. factors billion in of capital a in increased with was year-to-date continue and single target as the first metric, $XXX by see the XXXXX. $X.X pension days and a to asset a net metal working strong inflows, million s XXXX increase capital. the other also EBITDA of net debt, OPEB in $XXX use of additional EBITDA price Most second OPEB. Those flow increases. being $XX modest and $XXX rise mostly by in bonds, to joined expenditures, metrics. when September importantly, months benefit is issue. now due on we increased line X negative basis, of cash which key interest quarter prices redeemed million of expectations inflows due below adjusted equity Working

outlook our outlook of is remainder to year. the full-year modest the XXXX see The to changes. expected for Moving

to million the $XX Bauxite are expected spending interest are prior the is shipments, is decreasing due to has the in ARO expected expected $XXX there In due million down be to XX cash improve For changes. outage aluma Depreciation, payment our to to million statement expected million $X to Return $XX to loader lower, and seeking ranges of XXXX million and adjusted expense the improvements section, while tons to amortization million, year. the the expenditures depletion, improve are on million We're to by on year below $XX to notes. expecting tons million EBITDA line. capital and are X also million, be better environmental income the redemption $XXX quarter. by X $XX expected to for $XX XX taxes been million expected third of the flow

levels, For the current alumina fourth quarter, quarter. another expect aluminum and returning index levels production and to refinery if pricing record-setting normal we close persist, IMR operating overall, with

approximately be the $XXX Refinery However, of are million. sequentially expected unfavorable country high-energy XX,XXX sequentially, in quarter strike and $XX we primary if of at expect capital the metric In the and EBITDA in and Ciprian unfavorable expect and the San shipments shipments approximately Ciprian tons decreasing million. sequentially, million lower approximately cost are through XX,XXX of $XX the sequentially lower an and Included adjusted working in persists factors Smelter, to EBITDA, $XXX current we the both San refining, EBITDA million. increasing impact impact smelting, impacts of metric tons end, an

from unloader to in For portfolio, segment $XX due primarily XXXX. Aluma adjusted in Bauxite XQ expected is the the million to by improve the EBITDA recovery the rest sequentially, of outage

million. Higher substantial expect are segment, impacts a expected alumina and San Brazil that the outage in raw index Energy-related increase expected costs is San million shipments Higher segment. to smelter primarily raw are currency index Ciprian prices higher in by from the costs. shipments, decline offset recovery the mentioned, to from pricing, I Ciprian two and be offset pricing, factors; EBITDA and partial to alumina of sequentially. million expected to are impact, we $XX benefit improvements, seasonally $XXX costs hydro the and the higher energy aluminum excluding spot adjusted are Aluma the and to flat and sales in currency, materials the costs. alumina impacts materials impacts, expected of assuming In segment alumina increased unloader energy estimated be cost aluminum segment $XX as Aside the while today's comprised production and Norway. persist, again,

Now, let turn back me it to Roy.

Roy Harvey

has a it years profitability. The the segment aluminum is quarter has doubled in price the been aluminum significant role the noted, highest XXXX. point the in has in relative Will to As of our LME XX second low and

by to In support LME higher in markets, regional North Europe. addition, being America costs and premiums has the transportation supply tightness continued into regional such The of are as influenced continued recovery high premiums. economic and this rally deficit

been and shortages to million occurring ever strong which experienced, see aluminum Europe industrial supports growth. as continued Strong power continue sectors. expect a cuts one particularly its levels curtailments the represent relative in These being the only year the In seen tons surpass occurring to to energy high-power across aluminum demand which has global production costs by demand This policies XXXX, industry China's annual economies, as in and the GDP XXXX and they annualized leading there given and China XX% that related energy regarding curtailed dynamics are positive for have due to and capacity We China, of recent a there the enforcement to that X aluminum. largest increase of the end-use world's net importer is primary of may primary has of shortages supplies across lead aluminum are supported supply have approximately year, XXXX. well. major These of we demand we not cuts smelting in more pre-pandemic to environment. also during to than reports all demand status

for relative only a were volumes. value-add For second the Alcoa's volume our are quarter. sold growth commercial impacts, annual significant earn up value-add from premiums products. we value-add open for quarter, In the for high products premiums Much we third for also aluminum to products year-over-year demand spot the in of so benefits Strong pricing. high are our contracts, supported portion spot seeing

contract current provide However, environment market positive for dynamics a XXXX negotiations.

on also we're seeing comment I'd which rise. the market, Next, aluminum on in what to the like is

of As in also made quarter, this fundamentals unattractive, alumina, more of the favorable world's remained month. to X outside months we've ex-China, largest noted previously, the freight we become are High have China first third-party prices aluminum. last supply. In market over the and more than producer China there, had alumina and shipments muted market costs sufficient the

or last month substantial rally in pricing. in the we so, seen However, have ex-China alumina a

Some and production refineries driven spot China global of dynamics policies At China to energy. outside to alumina dynamics and in due some amount purchases. have the unplanned disruptions environment available time, the to the costs, smelting same for related reduced in in restricted I discussed supply have earlier current of power shortages, regards alumina. the the same production tightness These

of at China net in available short is alumina smelters remains a alumina. competing importer, it China for outside now While with

China been highest outside XXXX. the are a of at since prices As for they've result, levels alumina

move been Alcoa our doing let's future. of support slide to the that items a business has recaps some Now, to for that the

past years of The these. the goals for portfolio future. Our strategic positioning and operating Two sales, We've model, strategic our the two the asset new activities key actions met non-core review. over announced the two three programs. on are already ago, ongoing and we Alcoa years

we savings. implemented the the fully and annual operating new model First, captured

years Second, of position to production we also The has portfolio sales. meanwhile, was our met for cost sustainability remaining target improve our structure asset X the the and top both of designed review end global assets. and non-core

by be refining, by expect global smelters to Portland, market of The capacity. significant we've It addressed or Aluma's At tons of supply Brazilian to we our reach fully also closure with with share restarting Aluma. considers of and nearly equates Focusing the we've in that the Point the for improvement, our metric addressed our percentage already on We've divestiture. Comfort the nameplate mark, are of of portfolio curtailment a and X/X smelting the XXX,XXX In renewable X in of the smelting renewables. of powered primarily with smelter capacity the and Intalco, million at It smelting of earlier conclusion Texas. reported two-year closure, re-powering of announced capacity XXXX. tons XXXX goal half energy of short powered restart Refinery review million in this will the X.X will curtailment, of refining XX% refining. tons XXXX. that by capacity XX% global options And Brazil

in that to including we Now, month, X Initiative, in let's of of verify we our rate took step right-hand system production sustainably. Stewardship of Quebec balance was ASIs XXXX. in slide. Last financial performance used outcome interest move earning imperative debt. decisions our side this certified sites global on strengthen to a added to XX We another X% notes list our Aluminum for In DeChambeau. and and with to our advance strategic in September, standards. the to sheet focus senior at to have redeemed is full most aligning position an this the due responsible Canadian priorities, certifications. $XXX million our repurchase more those cash-on-hand to stronger issued Congratulations The third-party ABI comprehensive certified the to even we facilities teams to Today, industry's smelters, production. these locations latest was A

clean, other for economy. year-over-year sectors. for to a premium Earlier have vehicles, sell is project create market we ASIs, will also beginning on includes alumina need which solutions the to analysis development the LED lighting HPA carbon And batteries this related Industry also alumina. the a sell transportation we've strong sustainable electric applications. non-metallurgical products used with which or alumina to the purity HPA. can for are a earned certification, bauxite HPA and of allows we us we chain in aluminum. of high a shows due ASI-certified energy-efficient custody that variety Importantly, and demand announced low for increasing demand to be products, of of joint globally. and that lithium-ion This emissions-free ASI-certified month, backbone

lowest operational our stage at process important to of believe our we the joint for across note success ensure financial still While refineries, project. and And of both advantage and of the alumina refining can are now, development development, global its more refining with in generally, alumina intensity help it which and carbon that system. Alcoa is businesses, an largest early our of an this has we This China. smelter the in non-metallurgical are the of world's too, future grade outside knowledge

net-zero global of for earlier toward commercializing our and discussed climate increasing fully the annual more on breakthrough this aluminum and to targets, vapor policy complements our To gases eliminates report. across in proud ambition ELYSIS the scope we discussed focused emissions by our month, powered carbon X report. work intensity. renewable sustainability from by previously, our And recompression operations reach scope reduce all some XXXX Announced change our energy low existing process. as snapping greenhouse this am the adapting X we mechanical GHG to already to we've operations. I this share gas the ambition of ambition, which Finally, traditional greenhouse are direct of and our innovations refining the Technology, alumina which such further sustainability

the highlight quickly to news wanted I today. announced we earlier Next,

current dividend talked core to across not buyback Alcoans work nearly succeed, clear We we the new market announcement operations. framework program. the of now seeing capital market our the decision our capital with Alcoa evidence our allocation been about prioritizes the can to we're completed The company. regarding improve authorize and This be and current stronger ago, capital our expected since To review, liquidity but in it Today, this programs corporations investing are that globe and initiate framework. the Since only these position proud is we've the has sustain a to strengthening five than commodity company the launched maintaining aligns flows, returns of environment is through quarterly cash view our to believe have sustained. our cycle. And with favorable inception. years and

across we categories maximize to in order. opportunities listed value-creation four Next, no specific aim

is of returning course, demonstrated those, cash of One which stockholders, to we've today.

the Now, creation let me three briefly other value opportunities. highlight

our great we've in reducing First, progress made debt.

our is Today, of their maturities proportional $X.X are and has X.X expected debt funding Company our substantial debt no at our target below XXXX pension until adjusted lowest our mentioned, levels. to billion. now As requirements net cash range

net our to previously, said we've sheet we As may balance the cycle. through a intend strong but maintain debt fluctuate,

focus transformation building this X-year already our the have is progress another portfolio, Second, the made of in on we program.

we Finally, and pursue growth generate will projects continue evaluate that to value-creating adequate opportunities rate of an return.

prepare Now, we important I for your few a items. summarize questions, want to as

First, very aluminum the to be time it's good upstream a in business.

We have more that made we're cycle. work well-positioned competitive, including of has accomplished segments, we've while of position we're the to continuing markets, capture from seeing. improved three work, enabling benefits our aluminum currently all in us through long to that very a the healthy us succeed and commodity this Because the prices

that I'm other core time. today stronger at corporation than proud to say is our Next, any

are the in you Alcoa. capital your framework, sheet of authorization and our support best improved financial including further allocation investors. is in trust strength to shape more ever. returns This execute Our working flexibility to strategies our our balance and allowed Thank on has the for

ready a for Finally, sustainable future. we're

Will that we are first now As deliver as and Operator, our for I a people, five-year to our value as our about month, our forward company approach move ahead anniversary we to can answer do ready processes, products. question? I'm our questions. and your have what's who stronger we next excited

Operator

When first questions. to called this we Carlos assemble Stanley. Morgan to Alba the session. of momentarily will We ahead. comes question two And [Operator upon, Instructions]. roster. the from our begin pause Please time, question-and-answer yourself De At go limit will please now

Carlos De Alba

the Hello. Good Congratulations on afternoon, guys. quarter.

of couple on smelters. on questions a these Just first

maybe could restarts could on it which you're the fully that is bit on agreement why about give beyond increasing, that will if is been of has year, has potential what changed, the Could you much squeeze restarts guys another now? power? You there -- alumina are only of if economics beyond the you any as of terms prior actions, sourced maybe any what reviewing as And guys -- were on potential the doing then a is a of to on the particularly alumina types on maybe produce? there few very type little you are of planning, a do capacity I market our And project. may comment only you prices mini-hydro? Some more above with you Alumar. HPA on color right secure, maybe [Indiscernible] took so there when else it, Alumar in in quarters is wondering great one the likely and power when much. the color and above Thank but the renewable for recently Xnd And you to maybe it the these mostly able more spread announced that power alumina, XXXX particularly over be if

Roy Harvey

Yeah, for the Carlos, thanks question.

about me as and with smelters. question Bill start can me off let complement let But we through So your go start this.

market very I us decision of of I think work to fact is access good competitive effort needs restart a go pretty any was energy, power. of of example checked type is the so we the It into pretty fact it a think to hit It because very some inside through restart. a the renewable that had we all the competitive domestic that to time the Brazil Alumar, of Alumar clear that it course, starting took the be then, said, you short. plant -- also like is that happened and also to boxes in all and XXXX. were

specific very of So of financial particular the other outcomes have reason. Each curtailed decision. that the curtailed for smelters that now increases we right was that a

those be being I in future that but that what we just curve. smelter and particular potential commodity commodity that on continue you connect today's successful competitive to we And think look where all having think environment, would pricing. cost We how from as at will the today's those pricing obviously a then should we environments the is We through go Alumar at away that so, look we smelters are in analyses, the on the focused, And it through located be back into through decision to future. want very not successful is take cycle. the

is to that And curtailed. to continue more capacity There look. have want further so, nothing right We we'll announce now. we do

we find -- your time that have. need would takes -- would fit to that power to we it long longer-term fact competitiveness bring that about it the the question able would However, be Alumar On cost to that is it criteria Power, up to speed.

smelter we facility, And be energy. re-powering with looking were to possible. part re-power timeline so, wanted it as country. that wanted at the longest capacity of typically in was is through at how up that we once the In we we be to timing full plan of that. move very capacity. it renewable to that's and to wanted We full hydro that question back to that Getting a And Brazil, ready

it of HP in and to add. had the the presentation. looks release your going But the he stages But developing that early let rate think is press saw this original if like, a believe Bill third exactly the saying in project. be without in is anything outline might we commodity that competitive are allows that in I'm we cycle. the On Carlos, question, on very short answer on chime I that to like we A, today's to is through us contract successful it very You what

have And an market. understanding the of so, we

the prove as it to partners We bring that we we technology it the have series bringing a that what out we are we a go about can table. now, to why which is options our an more with those technology feel and of along. need outcomes has as lot structured certain we've of to than understanding are right But

So, the I really down not to on right now. too more economics comment on see you think much will road, but

William Oplinger

Nothing add. to further

it I well, covered Roy. think you

Roy Harvey

Thanks, Carlos.

Carlos De Alba

very Thank you Roy. much.

clarification. if power were one restart fair of be or Is has going production, not say renewable that type aluminum tail to meaning it power, you to Just to that any core remaining the necessarily? it forward,

Roy Harvey

We But the contract as becomes of the that contract, any timeline, how fact is consider decisions. is type a a a of important. which just those facility, because our course, The more that criteria and has to that environmental stepping that fits re-powered and it renewable the long-term energy. more energy Aluma, more goal medium-term, not short-term, we we've When fact at with of and part that short comfortable of renewable move relatively look towards power longer at power were you it was has and into time. this Portland

of power So, it for your I know specifically and that at doesn't decisions. look question specifically make feel you ESG we goes the how a we criteria but those gives as those answer percentage renewable that into contracts

Carlos De Alba

and you, on the Thank congratulations Roy, again. results

Roy Harvey

you. Thanks, Carlos. See

Operator

ahead. next Emily Please go Chieng, The Sachs. of question from comes Goldman

Emily Chieng

shape. Hi, strategy a Roy is I'll good the allocation Congratulations the capital now. and The leverage Bill. on Maybe quarter. in start off with quick question about

place returns half portfolio you've of addressed capital of review. piece your half smelting -- in the and got capacity You've roughly

around do then think how opportunistic about Will you the And thinking in the it nature? Firstly, of or potential buyback? the the and be [Indiscernible]. more pensions systemic execution latest

William Oplinger

So, Emily. thanks,

pensions. are they Pensions pensions At funded. in been are have than take and Global the than around history. XXX% the question in much shape better point, pensions Let first close greater that's this me XX% the second to U.S. are funded.

the significantly will large more we Do liability. been have liability at looking liability? of annuitize gross opportunistically we fairly And to so, gross net that be reduced. has a still And really opportunities

forward. should it from annuitize to We more in defensive will have at we've changes opportunities but that portfolio going inoculate US, a large strategy rates the interest least to asset in -- be the moved we moved looking at

our that goes allocation market we will buybacks, do the as question As your and to of specifically financial far capital other the the analysis around continuing on of factors. timing based --

so, be we'll over time. doing that And

program, if allocation Roy we've at just look now and we've return allocation come program. think the step announced capital we you have on four-prongs, the the I shareholders, to on as back the well where so capital said, executed

Emily Chieng

around really it current markets, about capacity investing potentially Alcoa's think the of production just aluminum assets. at Greenfield opportunities your Thanks. X views lower-cost state follow-up; when I'll what some leave in that. cleaning creep And you Thank you. Brownfield the either or helpful. That's in are at

Roy Harvey

can at is Emily. that we facilities fact the one, that I our long-term very And power. Sure. have The are low-cost first take that some snap of creeping

those It's look a creep actually at of etc. relatively places operators, thoughtful our technology. and engineers It where all of are lot and approach on-site you takes can our we So, nuts-and-bolts. our for Canada

timeline and need supply-demand. aluminum pricing are When or line in we trying through Greenfield with that. and we longer think to comes So, to obviously, much Brownfield, for very look it much a at

talked As -- that about renewable. some are Carlos, It renewable there smelter structural And case. as about we that obviously important the energy certainly and so see, the strengthens becomes happening a And of to decision, with today, a connects be question as to at that that aluminum look find immensely seem is inside low also it's market. shifts something energy. with you we carbon both real

were you good The that expected third still or overproduction, this between had on capital we that have brownfield in time it and something not it the get grown to and be single so can to plants financial what solve they returns construct decade thing last need and stockholders. inexpensively made the issue is made our that of capital we over are by gotten that's that's every costs. so because return impossible to essentially period a China, where spend And greenfield up to capital that able need because very We about cost thinking it?

facts structural very the put It some will ELYSIS time in midst that we into developing that how the takes play Technology. So, to would take out. mix shifts I the of of seriously. also we're see

conventional for between there into long a solution in decision will what when investing the very we we technology think be zero-carbon is preferred the smelting real have future. so, And

that the it tell so project And But for is one and a very heavily wildcard. important is minds I'll it's our you us. weighing on very

Emily Chieng

Thanks for Roy. call, the

Roy Harvey

Emily. Thanks,

Operator

Alex next ahead. The question Please Citi. go of from comes Hacking

Alex Hacking

Thanks, and Bill. Roy

does helpful. this agents, sensitive have on So, commentary bit that deadlines and the a effect second San so resolution? but a dates Alcoa question, any it's situation, understand then, random, or question And but any first of shortages be would Ciprian. on, Thanks. any reach on a obviously there around there alloying -- magnesium, or to I are

Roy Harvey

San let question over the Bill. to Alex, Ciprian pass So, quickly, then and I'll cover me alloying

this pretty global period of the before with this the in experiencing. exacerbated The what So, for in last Ciprian. there The far we Alcoa exceeded now. seek which problem continues is solution we dates crisis markets mind in ride specific Spain, fundamental of little Europe. in price no price in right inside hit energy have San of other smelters that's Spain we've wild are seen power happening has a are that power to over

why denounced And to around said, is which find have collective so, we with financial us to talked strike, had competitive. address that we've the Ciprian us. been deal government dismissal. the we've this being their a on that Since the -- With about the we trying allowed not have impacts San underlying restarted issue then, that we've

Galician We courts. of are made to in an that the in the midst now appeal was decision the

specificity but financial little we keep important very And it more. that, is impact. very will at you informed of learn top when a around obviously minds. our is the there is that settled, will all of as be It so, we very And

William Oplinger

Alex. Hi,

take the me question. Let alloying agent’s

were alloys people's it and -- We metric Just magnesium tons of and put currently a lot minds. of buy that about really silicon are magnesium in in each, silicon. are two the to XX,XXX of perspective,

output Alex, production through the and dynamics about in aluminum XX% either industry large news China. passing a know, smart silicon we're and or output. and that for would As buying through of would the we XX% customers. that to global the are project that good silicon customers in occurring onto silicon our China be and accounts about the of And cuts the of of that customer the the seeing due in impacts of you to is magnesium our contracts magnesium XX% same impact extent pass through industry majority we The though, to higher the magnesium

Alex Hacking

to ability Thanks, Bill. Are a than shortages through? concern, If the I more patch price could just up. the follow so

William Oplinger

enough a be to supply and we But able are trying our Shortages actively concern. that our to customers. on shortages concern is working material procurement make have team sure are our to

Alex Hacking

so the time. thanks Appreciate Okay, much.

William Oplinger

Alex. Thanks,

Operator

ahead. Riley Lucas of Please The next Pipes comes from Securities. question B. go

Lucas Pipes

maybe aluminum like but congratulations quarter. my terms And I would a a a My kind Have prices lead good tried And to on What I where Hey, good similar higher bottlenecks to you appreciate incredibly is add cost-push? could some level, what of here? obviously, demand-pull vein, us? strong. question in of your first afternoon. bit just out tease these is is in much of today, very would perspective.

Roy Harvey

probably non-answer to you Lucas, let this. give Sure. a me

driven chains of around strong, some to by change to pull are little bit. the we out issues seeing causing side. And back what's an I supply which continues think seeing parse on demand, are that very that happening being we're although obviously what's a in supply trying some incredible

influential probably in outside simply starting to I And smelters, those times many first like reaction. of you a couple on China, to which this. look continue European seen we're so, supply, as not of are to And less are tied the see is prices, to which the operate when think able steps we've market of

through in Of continue time time, but us. see course, where point that will we'll that's takes that a

have -- easy not and perfect that not they've with of now, supply of so increased system. It's seemed to environmental Union. dual of to right environmental with have we decisions connecting the easy Inside China, inside when storm control events, much the keep policies. So prices prices flood audits the even their gas around of European have over

we've of XX seen because start project short curtailments term between to short-term have it, that at happened you When I of look think you the that when tons the out that million longer. in issues.

today what's driving future. fundamental for put aluminum this think is is into aluminum the policies not change, longer place into that just I the but China's the fact

on in the regional with the pricing that and people side. new and And capacity right But being as -- that what's to see happening strong enough premiums is the on you drained, And think And by supply very real impact I being sits coming fueled future not energy I But the to there you order simply isn't about that's the see new physical right think demand much with more shortage now, not demand. well. saying future online. meet have inventories certainly and so, you that renewable continues good. enough now I is when are towards very capacity also looking be think structural shift the

that, changes it environment. long-term to both pricing me, which are So, bodes prices, I acquires for structural also think in for happening today's well very the attractive, but the

Lucas Pipes

Thank perspective. follow-up you. my touched much end, you Thank for And on question. very the at you just that

powers will you that earlier to you item increasing is have key energy You've [Indiscernible]? expand tackle you that to renewable more bottleneck assets -- those? developers Do comments look a to And capacity. what that? mentioned to provide own your power? access today. also you that for renewable How can throughout role play You would Could

Roy Harvey

own you've Yeah, or to energy. then our going into at into when We're think that to above. different build I best not types energy one all of two process try business not in of pretty better fact mixing to, those the sell I need whether number a you our decide in subsidize would renewable businesses. to to careful our renewable order put our different renewable comes the and seen ways market. we're And need by the it smelters think we're Brazil. decisions I find position -- we'll is very though of to it's in We could if it a that's answer about I think to the energy. caution aluminum We building look and debottleneck to careful that of

at we've However, has of power plants partnerships When that Norwegian re-powering, when you example, how been we've come been facilities. through our with an Portland suppliers. ways the you wind re-powered look through new at power we've as look some

power go of complicated renewable the of new is, power. not lot a are around. is going announcements to lot the I on And There's in there's so, There renewable But order answer this think to demand. build it a to facility. incredibly be new enough

you structural smelt it's and smartly renewable find which going going one ELYSIS. finding plug so, energy aluminum more is then be And the help and what, but contracts, create able those can to the will end who is spots, for also difficulty, to define the those for be again, going is other can And where to to and build -- future. buy change, the be

XXXX, then that you the that energy ELYSIS, you absolutely X-carbon as world net can demonstrate As world, into connect a are it's in solutions X we such necessary to renewable by really head those that types a process possible. towards make as of

Lucas Pipes

really you. I Thank appreciate really perspective. Really, exciting your developments the in industry.

Roy Harvey

Thanks, Lucas.

Operator

ahead. question comes go Our Suisse. Credit Woodworth Please Curt next from of

Curt Woodworth

Bill. Roy Thanks. Good and afternoon,

Roy Harvey

Hi Curt.

Curt Woodworth

there's shortages foundry a a here anywhere It the Alex potential at dramatically to So, they we've follow-up magnesium like exist up alloy well over and XXX does certainly seen, or to are question premiums, look for seem already on a ton. silicon. to from a billet and thousand you when

going to year? next position you play looking to any you premiums pretty that benefit build could next annual give but know how premiums the year how those you Are year? what alloys? set do it's of is to I on to And safety to your potential your with within And the sense there basis, this the shortage into can you are those you hoped stocks and So, meaningful tend setting today? -- you those value-add us think that in do negotiations around look your feel of guys comfortable an contracts you relative

William Oplinger

Yes.

very So strong. Curt, globally, value-add products is demand

Europe And We focused various in demand on around go and America. North if the we're you strength globe products, value-add on are flat seeing the

Roy Harvey

off strong. a an re-purpose automotive market of very a [Indiscernible] the In of both curtailments the in strong. automotive chip but metal to time North market. Europe due seen fall and markets. you a we lot that been just into when [Indiscernible], is And the bit, little demand then at foundry shortage, out in we've major seen area, in And market supply that situation largely to the is foundry is able some about every the extremely energy America. said, is with have And taking different Europe as of with [Indiscernible], we've of

don't And so, results. it you really hitting see our

we into looking situation some that As and to will XXXX, we market go be use of we

William Oplinger

pass to we we try XXXX. silicon be as the through making premiums that price sure we'll mag all well value-add And as increases. with Do and in can

want building our mag far customer's be of sure fulfill we clearly to to there needs. silicon, As making stocks we out are as and able that

starting see force We by [Indiscernible] to upstream But will can. resource some that us, are we we do the possibly best declared of suppliers.

we So, needs the to meet customer's our we into trying can that XXXX. actively are going customer's and sure make

Roy Harvey

I'll year more increasing with Curt a mentioned all the those And At on it. tease portion but And current reiterating of sales I we premiums, don't because like worthwhile this don't out our point. I its spot. one presentation, time only my we we just a in sell think it during -- realize

prices customers in great midst time because going premiums with we're all our what the is strong discussions of into our and set a those this to see premiums of be to However, XXXX. will

in Europe. business, So, North setting just and also, it's most premiums, looking and choose our can -- it's a very make not therefore, that from us. particularly strong be value-added I those think news for the time really But we products the demand sense good that's to America good now for

Curt Woodworth

And Okay. on then follow-up a just That's helpful. power.

broadly, about see I power continue same portfolio and how through about specifically more in persist. LME the event to think at more expect cost XX% separate issue, the this thinking we have highlighted energy the that? talk indexed. you Should to we I you. shortage can Thank those over Ciprian but levels continue couple to of quarters power inflation headwinds you're San roughly know you the is next of your broadly

Roy Harvey

Curt. Sure,

Let give points. some you me just data

address fairly refinery the the that the would me San said First, let smelter, about Ciprian quickly. and We site, be including

William Oplinger

at Spain. some in alluded have rest portfolio, the but linked. EBITDA roughly a is That's about of to position that of LME as our XX% costs factor If in that's combination and per megawatt-hour a Europe here The you is you not we've look cost we're assuming are impact. EURXXX fixed-price, is and smaller largest to, in $XXX in the million smelting two Europe. we energy have hit fourth self-generation, a strike, costs EURXXX some numbers energy factors. the One then got provided we support that the the a we The in to earnings we’ve quarter. to

And LME Norway. with of up go spot linkages little LME prices. those bit in pricing then So we have a

we will prices have that on aluminum -- in and can the San additional in seasonally both our And and So, negative that prices we're fourth our higher the seeing Because will between a If results impact the of from some though, $XX quarter, When fourth if quarter, breaks the come better back we and energy quarter, that. in I this aluminum the a for that we just then coke offsetting the step $XX very for a of better million outside think the that Ciprian. million energy plan the segment you stage. at down consideration looking and alumina we're that hydros and and is about raw at boil business material shipments Brazil combined expecting segment, look we fourth in second down in quarter. is $XX pitch, strong from of the million volumes much volumes in fourth down and impact

Curt Woodworth

Super you, helpful. Thank guys.

Roy Harvey

Curt. Thanks,

Operator

The next comes Tumazos Please Tumazos go of Very Independent from ahead. John question Research. John

John Tumazos

on Congratulations all good the times.

William Oplinger

John. Thanks,

James Dwyer

John. you, Thank

John Tumazos

Thank you.

perfect, It's references not all been contract but rising X the the XXX spot The LME benchmark, first aluminum weeks in XXX a and reasonable months. is question the as it's it's dramatically or for last for so. various future at the given

guess aggressive question. is Given the too December quarter a lags, First the for alumina? XXX time realization for

William Oplinger

you $XXX particular can around conclusion quarter, If ASI the could of guesses around then pricing own I market typically of per try today sitting give pricing but a away your little John, from we pricing. a to bit you stay draw in ton. at view is and on any

refineries back but had seen shutdown the of and have focus they ship the of the itself, is cuts about power that we issue, which The where in up That back had the a because of all areas China in very market you're Jamalco on reasons coupled with the reading short XX% other not running, shortened same fire. up and on Alumar loader capacity. curtailment for some is up We unloader Atlantic to Atlantic And production with plan that has emissions, about market. powerhouse also, the

shortage a market, up running you and So alumina. Atlantic inventory no two a combined inventory the And are unlike prices China the or quickly. in there market and is of aluminum fairly alumina as of little know, the short very

So, pricing. and very can case you market see alumina, see in changes in short drastic of a of the quick very typically

John Tumazos

Thank you.

was than year's tons $X.XX Second last quarter. third divided aluminum took question. ton, and PSX.XX. the $XX the the ton, [Indiscernible] I EBITDA a price per what And quarter third average. to metal, did was I The alumina, I revenues minus gas. by more calculated

all guidance’s, different of those to presume. continue your accelerate [Indiscernible] Given I

William Oplinger

course the then, strong. the well, some the in market that we're being segment strength had one Bauxite the the Roy in it of side, Bauxite aluminum year. business. on on going that That's about markets And And internally on at think and take the what's into Bauxite. that the during just aluminum on I pricing of just alumina highlighted of we given results. largely what's the pricing markets the time. shown the in the are lowered two We talked year-over-year, a factors a me Let Bauxite We've reflected aluminum sourced on side, I pretty Bauxite change aluminum discussed just very And business.

on maybe is each situation point, Bauxite pretty emphasis in good a So, at with those us. markets, less for of this

John Tumazos

ton Though per was pound. or I referencing the cost

William Oplinger

and extent, some -- case the to to in is was, I that what that's And trying Yes. answer of

John Tumazos

the what well, creep well are I doing you're strong -- is because doesn't cost we're The guess so costs that to on revenue [Indiscernible] is saying. and matter the side. going the

William Oplinger

cheaper think we into costs bauxite -- alumina. year they the going creep when cost to bauxite is not because for about alumina then see this -- should Well, we creep, any actually

refining creep see it's volume of the a And will will some more anticipate benefits then the material is that quarter combination bit third And seen in little we impact. in smelting, On and prices some on as quarter. offset the seeing we we've raw the a that [Indiscernible] fourth in be and comments, energy side, we that raw materials. the are But the fourth said my quarter. We'll in I driving that. an

John Tumazos

you. to good. great so so It's things much. Thank very you see Thank

William Oplinger

here. you Thanks, have to John. Nice

Operator

come Research. Vertical Please will of Dudas question final Michael go My from ahead.

Michael Dudas

you've without I years. does for which previous Thanks that through so good, to think the up flows about I the given buildup Roy, your -- out certainly for the had me in-creep a new putting is strategy? violent strong internal medium today over touched very well is the as about that few future think capital that all opportunities. a talked Is maybe more here. And should capital on this Thank growth budget on spending with received really allocation longer squeezing thoughtful end we've certainly, technology, support capital with and opportunities you. opportunities? or least to that HPA think all a and the afternoon. basis? thought at there allocation, long-term guidance Maybe cycles build over flow very years? Good in How we -- at longer-term and capital flexibility the How through cash last about very the

Roy Harvey

you squeeze to always Mike, space in. I appreciate There's the question.

we months step different XX we we think when and So, about situation think ourselves I today, it's a in very back where ago. certainly find been

that We inside have sit opportunities businesses. our X of

in supportive we Bauxite, or so, can one find that if use we And of internally ability obviously create that our pricing again if the we the environment to have refineries.

we growth continue medium-sized business projects large Brazil but a evaluate. of the in We have Australia series of not inside to of projects, brownfield, and that creep Western refining sort

to those, we cost, going need to costs can that also, but returns revenue For on an confident feel both capital get have the operating side we it. and that the we're a

to and side, already little current have the opportunities smelting create bit talked assets. a we the On we about this,

predictable. So those things somewhat I think are

explain well. I think can them we very

on to going then think, Vapor the I question depends retrofit, all is in and set working your think stage to this to to me, on market, carbon also, proven, meeting broader revolutionary Recompression but And or commercialize for And next around ELYSIS in much smelt. got of We're Today, systems. Mechanical that savings market, or of us whether move whether the once use quickly is course, going to the the technology that inside, of also a I to it we be in we'll refining. on the cost that what we've we commitments have choose comes smelter. build very inside to cost efficiency. gets next. have what's the way will we capital the external on. to ELYSIS of option refining lowest efficiency happening brand-new And very

it refining advantaged that But how if in unblock carbon content what So, pieces starts electrify when that able can cost-efficient side we're what and competitive of of very we also inside can do a process it comes on the to to manner, we solve do to to refining be and produce. as we well.

so, structurally cycle supply-demand is I us I way in also, moving, structural right feel happening last are see shift to in that that ESG the think yes, can that when it's to coming because in smelting the trends And the world But add the you alumina think great that and you what the bring this have we and longer. can I an take we talk goes forward. think I as a about know technology, refining assure smelting, that step to forward. given given to we'll you And ride is big along and given for and you, that opportunity what really time that our now, about legacy, our helps

move now, on we're got keep them. and to as decide So is items as we'll then what rest these we as or to of are creep right Mike. forward and you on we've informed say a And the approved come, well those good more really working projects what set I'd of we

Michael Dudas

forward Look if hire Thank that, Roy, can us. you. truck to to a we take

Roy Harvey

Perfect.

Operator

to question-and-answer This I turn over the to session. Roy conference for Harvey like concludes would remarks. our closing

Roy Harvey

Good. Andrea. you, Thank

to enjoyed you talking have today. I and Bill So,

the team executive material of light, sustainable work global right are matter. right is a are the entire the employees proud our operations to doing. Company What we deliver. and we're recyclable, Our and for thousands of the do Aluminum strong, we across future; that

event, significant as you progress better We're over give plan mark about Mike, of will Next by future. that that anniversary executive Xth, time. an November that be team a including excited we members strong Investor At our strategies, and by I'll independent when the discuss markets, week. event next we've technologies release Day. shared other for my for our details for will we'll this answer, and The be topics, Day to Xth a envisioned talk Investor we'll a leverage press how future. foundation Company, we various And month to made the on the that to specific Virtual hold joined

upcoming of call on you November met today, then, joining until event to with thank healthy. again I So, and at you soon once forward Xth. that night. And talking please many stay look we've for safe Good our and

Operator

now disconnect. for concluded. is conference today's now you presentation, Thank and attending The you may