Alcoa’s production streak meets a major South32 deal milestone

Profit rises as production reaches new highs

Alcoa Corporation (NYSE:AA; ASX:AAI) combined stronger operating performance with a pivotal transaction milestone in the third quarter, reporting net income attributable to shareholders of $483 million, or $1.81 per diluted share. That compares with $407 million in the June quarter and $232 million a year earlier, although revenue fell 7% sequentially to $3.7 billion as aluminium shipments and realised prices eased.

Adjusted net income was $485 million, or $1.82 per share, while adjusted EBITDA excluding special items reached $789 million. The latter was down from $901 million in the second quarter, with lower aluminium prices and shipments more than offsetting improved production costs and higher alumina prices. The company’s adjusted figures are non-GAAP measures and exclude items including acquisition costs, mark-to-market movements and remediation charges.

Alumar restart extends production recovery

Operationally, alumina production rose 11% sequentially to 2.5 million metric tons, helped by improved stability at the Pinjarra refinery in Australia. Aluminium production increased 2% to 649,000 metric tons, marking Alcoa’s sixth consecutive quarter of production growth and including completion of the Alumar smelter restart in Brazil.

That progress sits alongside the South32 shareholder approval, which was previously identified as a key hurdle for the proposed acquisition. South32 shareholders approved the transaction on October 15, leaving regulatory approvals, integration planning and other closing conditions before the deal can proceed. Alcoa continues to target completion in the first half of 2027.

Acquisition financing lifts debt and cash balances

Alcoa ended September with $4.4 billion in cash after raising $2.6 billion through senior notes to help fund the acquisition’s approximately $3.1 billion cash consideration and related costs. The debt package comprises $1.5 billion of notes due in 2034 at 6.625% and $1.1 billion due in 2036 at 6.875%. Interest expense is now expected to be about $185 million for 2026, higher than previously projected because of the note issuance.

Despite the financing, reported net debt stood at $414 million at quarter-end, down from $851 million at December 2025 because the new cash balance more than offset the increase in debt. That comparison is temporary in an important sense: the cash is earmarked largely for the acquisition, and the balance sheet will change again if and when the transaction closes.

Massena sale adds conditional funding option

Alcoa also agreed to sell portions of its Massena East site in New York, with an expected $50 million to $65 million payable at closing and potential additional proceeds of up to $250 million as approved data-centre capacity is expanded and commissioned over seven years. The arrangement remains subject to permitting, regulatory approvals and construction-related conditions, so the headline potential proceeds of up to $315 million are not equivalent to cash immediately available to the company.

For the fourth quarter, Alcoa expects higher production and shipments in both segments, while maintaining its full-year production ranges of 9.5 million to 9.6 million metric tons for alumina and 2.4 million to 2.6 million metric tons for aluminium. The immediate tension is between operational momentum and cost pressure: planned maintenance and higher raw material costs are expected to reduce fourth-quarter aluminium segment adjusted EBITDA by about $30 million sequentially, with alumina costs adding a further unfavourable impact of approximately $30 million.