Global Trade
November 10, 2025
Alcoa to take staid approach to portfolio
Written by Greg Wittbecker
Alcoa has a reputation for squeezing the most out of its assets. Current leadership is sticking to a conservative approach that optimizes its existing portfolio, while steadily improving the balance sheet. Alcoa’s presentations during both its most recent earnings call and investor day underscored these goals, while keeping the faith on the breakthrough technologies to eventually hit.
Buy side investors looking for exciting growth plays are not going to spend much time considering Alcoa, which they may see as boring. These analysts may instead be drawn to the storyline of Rio Tinto, which is exploring new smelters in Finland and India. Whether these projects materialize is one thing, the point is that Rio is looking at growth projects and not simply harvesting existing assets. But boring may be a good attribute in these volatile times, keeping your powder dry while waiting for unique value opportunities later in the cycle.
First, let’s look at some highlights of the Pittsburgh-based producer’s Q3’25 earnings:
- Operational performance in aluminum was strong, with production records established at Baie Comeau and Deschambaullt (Canada), Mosjoen (Norway), Portland (Australia) and Warrick (US).
- A $786 million gain on its sale of its 25.1% interest in the Maaden (Saudi Arabia) alumina/aluminum complex.
- The permanent closure of the Kwinana alumina refinery in Western Australia led to a $895 million charge.
- Signed a long-term power agreement with the New York Power Authority, extending its contract for another 10 years for the Massena primary smelter in New York.
- Announced a $60-million project to rebuild the Massena carbon anode baking facility. This decision was part of the terms under which the power authority agreed to the new energy deal. Alcoa agreed to spend $160 million at Massena and maintain certain labor thresholds.
- Started development of gallium extraction from its Western Australia alumina refineries in partnership with Japanese investors and government support.
- There’s been progress toward extending its Western Australian bauxite mining rights. Approval is expected at the end of 2026.
- Perhaps most noteworthy, Alcoa said the recent appreciation in the Midwest premium fully covers its exposure on its Canadian exports to the US.
And here are highlights from Alcoa’s Investor Day on Oct. 30:
- The company sees demand rising at a 2.3% compound annual growth rate between 2025 and 2035, propelled by electrical, packaging and transportation.
- Progress is being made on its inert anode breakthrough technology, Elysis.
- Western Australia mining rights expected by end of 2026. It plans to move extraction to Myara North in 2027 and complete transition by 2029. By 2030 it expects a $15-$20 per ton reduction in unit costs for the refineries.
- Increasing value-added production at Becancour smelter in Quebec by 50% in 2026.
- It sees the Carbon Border Adjustment Mechanism (CBAM) launch delivering up to $40 per metric ton in low carbon premium in 2026.
- Recognizes Indonesian primary investment is coming but believes that higher capital intensity (relative to China domestic capex) will be supportive of price.
- Elysis development has a major role in Alcoa’s 2050 zero emission target, delivering a reduction of 1.9 tons of CO2/ton.
- June 2024 saw 10 pots operating at 100ka amperage with Alcoa having call on 40% of the metal output
- Astraea technology to produce ultra-high purity aluminum from scrap is in pilot program development.
Key financial goals include maintaining a debt target at $1 billion-$1.5 billion and have capital allocation focused on sustaining capex as opposed to growth initiatives.
Meanwhile, the company has identified 10 sites in US for potential sale to data center developers, yielding up to $1 billion by 2030. In addition, the Kwinana alumina site, which is adjacent to Perth/Fremantle in Western Australia, has a very high value.
Why this matters
From our perspective, Alcoa capital allocation plans are conservative and focused on reducing net debt and sustaining capital for existing assets. There were no significant growth capex plans laid out.
Total proceeds from sale of Maaden are still locked up for as long as five years until they can cash out the Maaden shares they got. This could be a reason their growth in capital plans are relatively low.
The company seems confident in securing Australian government approval for their new mining rights in Western Australia. This is crucial to them as their bauxite mining and refining franchise is arguably the crown jewel of the company.
The monetizing of closed, legacy assets looks intriguing and well-timed given the appetite for data centers.
Current Midwest premiums have “made them whole” on Canadian exports to the U.S. and then some; strong fundamentals over 10-year horizon bode well for aluminum sector.
Returns on breakthrough technology via Elysis and Astraea are still aways off. The fact that they have not excluded Hall-Herout, a conventional pre-bake anode technology, for new projects suggests Elysis is not close; as well as the fact that they can not define retrofit costs to move from pre-bake to Elysis. The Astraea technology to take low grade scrap, for example, zorba, to ultra-purity is only in pilot stage at this point. This effectively swaps alumina for scrap as a feedstock. They still need to define how cheaply they do the process, because at the end of the day, the process for converting scrap to aluminum must be very cheap to overcome the higher cost of zorba to alumina.
