ALCOA CORP Management’s discussion and analysis of financial condition and results of operations. (Form 10-Q)

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(in millions of dollars, except per share amounts, average realized prices and average cost amounts; dry metric tons in millions (mdmt); metric tons in thousands (kmt))

Company update

The Company has maintained all operations throughout the coronavirus (COVID-19)
pandemic with only minimal employee-and contractor-related disruptions by
following comprehensive health measures and crisis response plans. The duration
of the COVID-19 pandemic continues to be unknown. The pandemic could have
adverse future impacts on the Company's business, financial condition, operating
results, and cash flows which could negatively impact our financial condition
and result in asset impairment charges, including long-lived assets or goodwill,
or affect the realizability of deferred tax assets.

The Company has experienced isolated interruptions from its supply sources but
has identified alternate solutions to avoid significant production impacts.
Additionally, in the first quarter of 2022, the Company intermittently faced
challenges, primarily in North America, with securing railcars or vessels for
outbound product sales due to global disruptions in the supply chain. While
logistics challenges persist, the Company saw some improvement in the second
quarter of 2022, which facilitated higher shipments as discussed in the Results
of Operations below. Additionally, the Company experienced labor shortages at
one of its smelters in North America (see Segment Information, Aluminum below).

In addition to inflation and supply disruptions in the global economy during the
COVID-19 pandemic, the global economy has been impacted by the conflict between
Russia and Ukraine. Such adverse and uncertain economic conditions have
exacerbated supply chain disruptions and increased our costs for energy,
particularly in Spain, and altered our sources for certain raw materials.

In March 2022, in response to the conflict between Russia and Ukraine, the
Company announced that it ceased the purchase of raw materials from and the sale
of our products to Russian businesses. The Company identified alternate sources
for securing the limited number of materials that would have been purchased from
Russian suppliers without any supply interruption or material financial impact.
Due to the cessation of bauxite sales to Russian-owned alumina refineries,
beginning in the second quarter of 2022, the Company slowed production in its
Juruti mine in Brazil with associated cost inefficiencies. Additionally,
Atlantic bauxite market demand has decreased which impacted shipments in the
second quarter of 2022 (see Segment Information, Bauxite below).

Key actions

The Company paid a quarterly cash dividend of $0.10 per share of the Company's
common stock in June 2022, totaling $19. Also in the second quarter of 2022, the
Company repurchased 4.5 million shares for $275 under its common stock
repurchase program; these shares were immediately retired. As the average
repurchase price of $60.69 exceeded the share price implicit in additional paid
in capital, $39 million of the equity impact was allocated to retained earnings.
Refer to Liquidity and Capital, below, for more information.

On June 27, 2022, the Company successfully amended and restated its Revolving
Credit Facility from $1,500 to $1,250 and extended the maturity date from
November 2023 to June 2027. The Revolving Credit Facility, which has not been
drawn, includes terms that provide improved flexibility to execute on Alcoa's
long-term strategies. Among other improvements, the Revolving Credit Facility
removes prior restrictions on both share repurchases and the payment of
dividends. It released the prior collateral package, based on the Company
maintaining specific credit ratings. The Revolving Credit Facility now includes
metrics on greenhouse gas intensity in the Alumina and Aluminum segments and the
percentage of renewable energy consumption for smelters in the Aluminum segment
which may result in a positive or negative adjustment to margin and commitment
fees based on performance against the metrics.

In the first quarter of 2022, the Company recorded a restructuring charge of $77
to reflect its estimate for the offer made to the workers of the divested Avilés
and La Coruña facilities (Spain) to settle various legal disputes related to the
2019 divestiture. The offer was made to avoid prolonged legal proceedings over
the following years; it does not represent an acknowledgement of wrongdoing or a
belief that the Company would not succeed in the legal process. In April 2022,
the Company received unanimous acceptance of the offer from all active workers
of the divested Avilés and La Coruña facilities and a GSA was fully executed.
The Company recorded a charge of $2 in Restructuring and other charges, net in
the quarter ended June 30, 2022 to reflect an update to its estimated liability
for the GSA. The Company expects to make cash payments in the third quarter of
2022 upon completion of certain administrative and judicial approvals.

On December 29, 2021, the Company and workers' representatives of the San
Ciprián (Spain) aluminum and alumina facilities reached an agreement to
temporarily curtail the smelter's 228,000 metric tons of annual capacity due to
exorbitant energy prices in Spain, and to resume normal operations at the
refinery. The smelter curtailment was safely completed in January 2022, while
the casthouse continues to operate.

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During the second quarter of 2022, the Company repaid carbon dioxide credits
related to the San Ciprián smelter. Spain has a compensatory mechanism for the
indirect cost of carbon dioxide and provides associated credits. Upon receipt of
the credits in each of the applicable years, the Company recorded the cash
received as deferred income (liability) due to a three-year clawback provision
based on continued operations and employment. In June 2021, the Spanish Ministry
of Industry, Trade and Tourism (the Ministry) initiated the process to request
repayment of 2018 and 2019 credits due to Alcoa's decision to implement the
collective dismissal process and its potential impact on operations and
employment at San Ciprián. Alcoa disagreed with the Ministry's position as the
collective dismissal process was not concluded and qualifying operations and
employment at San Ciprián were maintained during the relevant three-year period.
The Company requested to suspend the payment of the claimed credits (and
interest) in exchange for a bank guarantee. On April 26, 2022, the Spanish
National Court rejected the Company's request and the Company made a payment of
approximately $41 (€37) for the 2018 and 2019 compensation credits and interest.

On April 30, 2022, Alcoa completed the sale of its investment in MRN for
proceeds of $10. An additional $30 in cash could be paid to the Company in the
future if certain post-closing conditions related to future MRN mine development
are satisfied. Related to this transaction, the Company recorded an asset
impairment of $58 in the first quarter of 2022 in Restructuring and other
charges, net on the Statement of Consolidated Operations. In addition, the
Company entered into several bauxite offtake agreements with South 32 Minerals
S.A. to provide bauxite supply for existing long-term supply contracts.

On March 31, 2022, Ma'aden's put option and the Company's call option, relating
to additional interests in the joint venture, expired with neither party
exercising their options. In accordance with the joint venture agreement, the
call and put options were exercisable for a period of six months after October
1, 2021.

See the sections below for more details on the actions described above.

Operating results

The discussion that follows includes a comparison of our results of operations
and liquidity and capital resources for the quarterly and year-to-date periods
outlined in the table below.

Selected Financial Data:
                                              Quarter ended                   Six months ended
                                               Sequential                       Year-to-date
                                        June 30,        March 31,        June 30,        June 30,
Statement of Operations                   2022            2022             2022            2021
Sales                                  $     3,644     $     3,293     $      6,937     $     5,703
Cost of goods sold (exclusive of
expenses below)                              2,767           2,181            4,948           4,448
Selling, general administrative, and
other expenses                                  52              44               96             106
Research and development expenses                7               9               16              13
Provision for depreciation,
depletion, and amortization                    161             160              321             343
Restructuring and other charges, net           (75 )           125               50              40
Interest expense                                30              25               55             109
Other income, net                             (206 )           (14 )           (220 )          (129 )
Total costs and expenses                     2,736           2,530            5,266           4,930
Income before income taxes                     908             763            1,671             773
Provision for income taxes                     234             210              444             204
Net income                                     674             553            1,227             569
Less: Net income attributable to
noncontrolling interest                        125              84              209              85
Net income attributable to Alcoa
Corporation                            $       549     $       469     $      1,018     $       484



                                             Quarter ended                         Six months ended
                                     June 30,            March 31,           June 30,            June 30,
Selected Financial Metrics             2022                2022                2022                2021
Diluted income per share
attributable to Alcoa
  Corporation common shareholders   $      2.95         $      2.49         $      5.44         $      2.56
Third-party shipments of alumina
(kmt)                                     2,438               2,277               4,715               4,909
Third-party shipments of aluminum
products (kmt)                              674                 634               1,308               1,598
Average realized price per metric
ton of alumina                      $       442         $       375         $       410         $       295
Average realized price per metric
ton of primary aluminum             $     3,864         $     3,861         $     3,863         $     2,533
Average Alumina Price Index
(API)(1)                            $       418         $       373         $       395         $       290
Average London Metal Exchange
(LME) 15-day lag(2)                 $     3,062         $     3,147         $     3,104         $     2,210


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(1) API (Alumina Price Index) is a pricing mechanism calculated by the

Company based on the weighted average of daily spot prices of the previous month

published by the following three indexes: CRU Metallurgical Quality alumina

      Price; Platts Metals Daily Alumina PAX Price; and FastMarkets Metal
      Bulletin Non-Ferrous Metals Alumina Index.

(2) EML (London Metals Exchange) is a globally recognized commodity exchange

trading, including aluminum. The LME pricing component represents the

underlying base metal component, based on quoted aluminum prices on the

      exchange.



               Sequential Period Comparison         Year-to-date Comparison
Overview     Net income attributable to Alcoa  Net income attributable to Alcoa
             Corporation increased $80         Corporation increased $534
             primarily as a result of:         primarily as a result of:
             •Lower restructuring charges      •Higher average realized prices
             •Favorable mark-to-market results of aluminum and alumina
             on derivative instruments         •Favorable mark-to-market results
             •Higher shipments primarily due   on derivative instruments
             to improved availability of       •Increase in value add product
             railcars or vessels for outbound  sales
             product from North American       Partially offset by:
             smelters, increased production at •Higher raw material costs due to
             certain of the Australian         inflation pressures
             refineries and absence of weather •Higher taxes on improved
             delays at the Alumar refinery in  earnings
             Brazil which occurred in the      •Higher energy costs, primarily
             first quarter of 2022             in Europe
             •Reversal of a valuation          •Higher costs primarily
             allowance on Brazil state value   associated with maintenance,
             added taxes (VAT)                 transportation, labor, and higher
             Partially offset by:              mining production costs due to
             •Higher costs primarily           inefficiencies at lower
             associated with maintenance,      production rates
             direct material usage,            •Absence of gains on the sale of
             transportation, and               the former Eastalco site and the
             inefficiencies at the mines at    divestiture of the Warrick
             lower production rates            Rolling Mill
             •Higher raw material costs due to
             inflation pressures
             •Charge related to impoundments
             at the Poços de Caldas refinery
             •Higher energy costs, primarily
             in Europe
             •Higher taxes on improved
             earnings
Sales        Sales increased $351 primarily as Sales increased $1,234 primarily
             a result of:                      as a result of:
             •Higher shipments mainly related  •Higher average realized prices
             to improved availability of       of aluminum and alumina
             railcars or vessels for outbound  •Increase in value add product
             product sales from North American sales
             smelters and increased shipments  •Higher trading activities
             from refineries                   Partially offset by:
             •Higher average realized price of •Absence of sales from the
             alumina                           divested Warrick Rolling Mill,
             •Higher trading activities        partially offset by new
             •Favorable currency impacts       third-party revenue from the
                                               Warrick smelter
                                               •Decreased sales from the San
                                               Ciprián smelter due to the
                                               smelter curtailment and timing of
                                               sales of accumulated inventory
                                               from the strike, partially offset
                                               by increased price
                                               •Lower shipments across all three
                                               segments
                                               •Lower pricing at the Brazil
                                               hydro-electric facilities as
                                               first half 2021 drought
                                               conditions elevated prices in the
                                               prior year period
Cost of      Cost of goods sold as a           Cost of goods sold as a

goods sold percentage of sales increased by 10% percentage of sales decreased by 7%

             primarily as a result of:         primarily as a result of:
             •Higher costs primarily           •Higher average realized prices
             associated with maintenance,      for aluminum and alumina
             direct material usage,            •Higher value add product sales
             transportation, and               •Reversal of a valuation
             inefficiencies at the mines at    allowance on Brazil VAT
             lower production rates            Partially offset by:
             •Higher raw material costs due to •Higher raw material

costs due to

             inflation pressures               inflation pressures
             •Higher energy costs, primarily   •Higher energy costs, primarily
             in Europe                         in Europe
             •Higher costs associated with     •Higher costs primarily
             impoundments                      associated with maintenance,
             Partially offset by:              transportation, labor, higher
             •Higher average realized price    mining production costs due to
             for alumina                       inefficiencies at lower
             •Reversal of a valuation          production rates and direct
             allowance on Brazil state VAT     material usage
                                               •Higher costs associated with
                                               impoundments


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                  Sequential Period Comparison         Year-to-date 

Comparison

Selling,        Selling, general administrative,  Selling, general administrative,
general         and other selling expenses        and other selling expenses
administrative, increased $8 primarily as a       decreased $10 primarily as a
and other       result of:                        result of:

expenses •Higher contractual services, •Lower variable compensation,

                information technology services,  external legal fees, insurance,
                and travel                        and information technology
                •Higher accruals for stock-based  services
                compensation                      •Favorable currency impacts
Provision for   Depreciation increased $1         Depreciation decreased $22
depreciation,   primarily as a result of:         primarily as a result of:
depletion, and  •Currency translation impacts     •Lower depreciation at the
amortization                                      Australian mines due to
                                                  completion of mine moves in the
                                                  prior year
                                                  •Currency translation impacts

Interest charges increased $5 Interest charges decreased $54
mainly due to: mainly due to:

                •Interest expense related to the  •Absence of interest 

on $750

                repayment of the San Ciprián 2018 6.75% Senior Notes 

redeemed early

                and 2019 CO2 compensation credits in April 2021 and early
                •Amortization of deferred         redemption costs
                financing fees related to the     •Absence of interest on $500
                Revolving Credit Facility         7.00% Senior Notes

redeemed early

                •One more day in the period       in September 2021
                                                  Partially offset by:
                                                  •Interest on $500 4.125% Senior
                                                  Notes issued in March 2021
                                                  •Interest expense related to the
                                                  repayment of the San Ciprián 2018
                                                  and 2019 CO2 compensation credits
                                                  •Amortization of deferred
                                                  financing fees related to the
                                                  Revolving Credit Facility

Other income, Other income, net increase $192 Other income, net increase $91
report

             primarily as a result of:         primarily as a result of:
                •Favorable mark-to-market results •Favorable

mark-to-market results

                on derivative instruments         on derivative instruments
                primarily due to higher power     primarily due to higher power
                prices in the current quarter     prices in the current year
                •Absence of loss recognition      •Higher equity

income from

                triggered by ELYSISTM capital     Ma'aden joint ventures primarily
                contributions                     on higher aluminum and alumina
                •Favorable currency impacts due   prices
                to gains recognized in the second •Interest income received on
                quarter due to the U.S. dollar    Brazil VAT credits
                strengthening against most        Partially offset by:
                currencies and the absence of     •Absence of gains on the sale of
                first quarter losses due to a     the former Eastalco site and
                weakening U.S. dollar against the divestiture of the Warrick
                same currencies                   Rolling Mill
                Partially offset by:              •Higher ELYSISTM capital
                •An increase in the Warrick site  contributions, which triggered
                separation reserve                loss recognition
                •Decrease in equity earnings from •Higher non-service costs related
                the Ma'aden bauxite and alumina   to pension and OPEB
                joint venture primarily due to    •An increase in the Warrick site
                lower alumina prices              separation reserve




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                 Sequential Period Comparison         Year-to-date Comparison
Restructuring  In the second quarter of 2022,    In the six-month period of 2022,
and other      Restructuring and other charges,  Restructuring and other charges,
charges, net   net of $(75) primarily related    net of $50 primarily related to:
               to:                               •$83 for the reversal of state
               •$83 for the reversal of state    VAT valuation allowance
               VAT valuation allowance           associated with the restart of
               associated with the restart of    the Alumar smelter
               the Alumar smelter                •$12 for changes in estimated
               •$1 for changes in estimated      take-or-pay contract costs at the
               take-or-pay contract costs at the closed Wenatchee smelter
               closed Wenatchee (Washington)     Partially offset by:
               smelter                           •$79 for the accrual related to
               Partially offset by:              the GSA for the workers of the
               •$4 for additional take-or-pay    divested Avilés and La Coruña
               contract costs at the closed      facilities
               Intalco (Washington) smelter      •$58 for an asset impairment
               •$3 to adjust an asset retirement related to the sale of the
               obligation reserve at a           Company's interest in the MRN
               previously closed location        mine
               •$2 to increase the accrual       •$6 for additional take-or-pay
               related to the GSA for the        contract costs at the closed
               workers of the divested Avilés    Intalco smelter
               and La Coruña facilities          •$2 to adjust asset retirement
                                                 obligation reserves at previously
               In the first quarter of 2022,     closed locations
               Restructuring and other charges,
               net of $125 primarily related to: In the six-month period of 2021,
               •$77 for the accrual related to   Restructuring and other charges,
               the GSA for the workers of the    net of $40 primarily related to:
               divested Avilés and La Coruña     •$39 for the settlement of
               facilities                        certain pension benefits
               •$58 for an asset impairment      •$9 in settlements and
               related to the sale of the        curtailments of certain other
               Company's interest in the MRN     postretirement benefits related
               mine                              to the sale of the Warrick
               •$2 for additional take-or-pay    Rolling Mill
               contract costs at the closed      •$9 related to

additional outlet or

               Intalco (Washington) smelter      pay energy contract costs at the
               Partially offset by:              curtailed Intalco and Wenatchee
               •$11 for changes in estimated     smelters
               take-or-pay contract costs at the Partially offset by:
               closed Wenatchee (Washington)     •$22 of reversals for
               smelter                           environmental and asset
                                                 retirement obligation reserves at
                                                 closed locations

Provision for The provision for income taxes in The provision for income taxes in income taxes for the second quarter of 2022 was the six-month period of 2022 was

               $234 on income before taxes of    $444 on income before 

taxes of

               $908 or 25.8%. In comparison, the $1,671 or 26.6%. In 

comparison,

               first quarter of 2022 Provision   the six-month period of 2021
               for income taxes was $210 on      Provision for income taxes was
               income before taxes of $763 or    $204 on income before taxes of
               27.5%.                            $773 or 26.4%.

               The increase in tax expense of    The increase in tax

the expense is

               $24 is primarily attributable to  attributable to the overall
               the overall higher income before  higher income before taxes noted
               taxes noted above. Specifically,  above.
               higher tax expense, primarily in
               Australia and Brazil related to
               additional profits on higher
               alumina prices and favorable
               mark-to-market results on
               derivative instruments in
               Australia. This was partially
               offset by less tax expense
               related to lower aluminum prices.
Noncontrolling Net income attributable to        Net income attributable to
interest       noncontrolling interest was $125  noncontrolling interest was $209
               in the second quarter of 2022     in the six-month period of 2022
               compared with $84 in the first    compared with $85 in the
               quarter of 2022. These amounts    six-month period of 2021. These
               are entirely related to Alumina   amounts are entirely related to
               Limited's 40% ownership interest  Alumina Limited's 40% ownership
               in several affiliated operating   interest in several affiliated
               entities.                         operating entities.
               The increase is primarily a       The increase is primarily a
               result of higher alumina prices,  result of higher alumina prices,
               higher other income primarily     higher other income primarily
               related to favorable              related to favorable
               mark-to-market results on         mark-to-market results on
               derivative instruments, and lower derivative instruments, lower
               restructuring charges primarily   elimination of intercompany
               due to the Brazil state VAT       profit in inventory, lower
               valuation allowance reversal and  restructuring charges primarily
               the absence of the asset          due to the Brazil state VAT
               impairment related to the sale of valuation allowance reversal
               the Company's interest in MRN,    partially offset by the asset
               partially offset by a higher      impairment related to the sale of
               elimination of intercompany       the Company's interest in MRN,
               profit in inventory, and higher   and lower depreciation, partially
               taxes due to higher profits       offset by higher taxes on higher
               before taxes.                     profits before taxes.




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Segment information

Alcoa Corporation is a producer of bauxite, alumina, and aluminum products. The
Company's operations consist of three worldwide reportable segments: Bauxite,
Alumina, and Aluminum. Segment performance under Alcoa Corporation's management
reporting system is evaluated based on a number of factors; however, the primary
measure of performance is the adjusted earnings before interest, taxes,
depreciation, and amortization (Adjusted EBITDA) of each segment. The Company
calculates Segment Adjusted EBITDA as Total sales (third-party and intersegment)
minus the following items: Cost of goods sold; Selling, general administrative,
and other expenses; and Research and development expenses. Alcoa Corporation's
Adjusted EBITDA may not be comparable to similarly titled measures of other
companies. See Reconciliations of Certain Segment Information below.

Bauxite

Business Update. Third-party shipments decreased 0.2 million dry metric tons
compared to the first quarter of 2022 due to decreased demand in the Atlantic
bauxite market partially offset by higher volumes from offtake agreements.

On April 30, 2022, Alcoa completed the sale of its investment in MRN for
proceeds of $10. An additional $30 in cash could be paid to the Company in the
future if certain post-closing conditions related to future MRN mine development
are satisfied. Related to this transaction, the Company recorded an asset
impairment of $58 in the first quarter of 2022 in Restructuring and other
charges, net on the Statement of Consolidated Operations. In addition, the
Company entered into several bauxite offtake agreements with South 32 Minerals
S.A. to provide bauxite supply for existing long-term supply contracts.

Mining operations are relocated periodically in support of optimizing the value
extracted from bauxite reserves. In the second quarter of 2022, the Company
continued the process of moving the Juruti mining operations, which is scheduled
to complete by the end of 2022. During the second quarter and six-month period
of 2022, the Company incurred $6 and $9, respectively, in capital expenditures
related to Juruti mining operation relocation.

Production in the below table can vary from Total shipments due primarily to
differences between the equity allocation of production, offtake agreements with
the respective equity investment, and other supply agreements. Additionally,
Total shipments include dry metric tons that were not produced by the Bauxite
segment. Such bauxite was purchased to satisfy certain customer commitments. The
Bauxite segment bears the risk of loss of the purchased bauxite until control of
the product has been transferred to this segment's customers.

Operating costs in the table below include all production-related costs: conversion costs, such as labor, materials, and services; depreciation, depletion and amortization; and plant administrative expenses.

                                              Quarter ended                   Six months ended
                                         June 30,        March 31,       June 30,         June 30,
                                           2022            2022            2022             2021
Production (mdmt)                              10.2            11.0            21.2             24.1
Third-party shipments (mdmt)                    0.6             0.8             1.4              2.6
Intersegment shipments (mdmt)                  10.0            10.1            20.1             21.3
Total shipments (mdmt)                         10.6            10.9            21.5             23.9
Third-party sales                      $         34     $        43     $        77      $        97
Intersegment sales                              165             170             335              364
Total sales                            $        199     $       213     $       412      $       461
Segment Adjusted EBITDA                $          5     $        38     $        43      $       100
Operating costs                        $        225     $       207     $       432      $       443
Average cost per dry metric ton of
bauxite                                $         21     $        19     $        20      $        19










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               Sequential Period Comparison         Year-to-date Comparison

Production Production decreased by 7% mainly Production decreased by 12%

             as a result of:                   primarily as a result of:
             •Sale of the Company's interest   •Lower demand from certain
             in the MRN mine                   Alumina segment refineries
             •Cessation of bauxite sales to    •Cessation of bauxite sales to
             Russian aluminum businesses       Russian aluminum businesses
                                               •Lower demand due to the
                                               expiration of the Company's
                                               license to export bauxite from
                                               Australia
                                               •Sale of the Company's interest
                                               in the MRN mine
Third-party  Third-party sales decreased $9    Third-party sales decreased $20
sales        primarily as a result of:         primarily as a result of:
             •Lower mining royalties           •Lower shipments due to the
             •Lower shipments due to decreased expiration of the Company's
             demand in the Atlantic bauxite    license to export bauxite from
             market                            Australia, Juruti lower customer
             Partially offset by:              demand and the cessation of
             •Higher volumes from offtake and  bauxite sales to Russian aluminum
             supply agreements                 businesses, and decreased demand
                                               in the Atlantic bauxite market
                                               Partially offset by:
                                               •Higher volumes from offtake and
                                               supply agreements
                                               •Higher mining royalties
Intersegment Intersegment sales decreased $5   Intersegment sales decreased $29
sales        primarily as a result of:         primarily as a result of:
             •Lower average internal prices on •Lower intersegment shipments
             sales with the Alumina segment    primarily due to lower demand
             •Lower intersegment shipments     from certain Alumina segment
             primarily due to lower demand     refineries
             from certain of the Alumina       •Lower average internal prices on
             segment refineries                sales with the Alumina segment

Segment      Segment adjusted EBITDA           Segment adjusted EBITDA
Adjusted     decreased $33 primarily as a      decreased $57 primarily as a
EBITDA       result of:                        result of:
             •Higher production costs in       •Lower shipments as discussed
             Western Australia and Brazil due  above
             to inefficiencies at lower        •Lower average margins on sales
             production rates and maintenance  with the Alumina segment
             •Lower mining royalties           •Higher production costs
             •Lower average margins on sales   primarily due to

inefficiencies

             with the Alumina segment          at lower production rates
             •Lower equity earnings due to the Partially offset by:
             sale of the Company's interest in •Higher earnings from equity
             the MRN mine                      investments
                                               •Higher mining royalties



Forward Look. For the third quarter of 2022 in comparison to the second quarter,
the segment expects higher volume as refinery demand improves on a sequential
basis. Increased production costs are expected to be offset with higher
intersegment prices in the Atlantic region.

The Company has decreased its annual projection for bauxite shipments in 2022 by
2 million dry metric tons to range between 44.0 and 45.0 million dry metric tons
due to continuing disruptions in the Atlantic bauxite market and lower demand
from refineries recorded in the first half of 2022.

Alumina

Business Update. During the second quarter of 2022, the average API of $418 per
metric ton trended favorably compared to the prior quarter reflecting a 12%
sequential increase. Compared to the six-month period of 2021, the average API
trended favorably, reflecting a 36% increase year-over-year.

Alumina production increased 1% in the second quarter of 2022 compared to the
first quarter of 2022 due to increased production at certain of the Australian
refineries, partially offset by decreased production at the Alumar refinery due
to unplanned maintenance in

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the second quarter of 2022 and decreased demand from the San Ciprián smelter.
The alumina segment also experienced higher energy costs, predominantly related
to the San Ciprián refinery, and higher raw materials costs.

During the second quarter of 2022, the Company recorded the reversal of a
valuation allowance on Brazil state VAT of $46 in Cost of goods sold. (See
Restructuring and other charges, net above for additional reversal). In the
fourth quarter of 2018, after an assessment of the future realizability of the
state VAT credits, Alcoa established an allowance on the accumulated state VAT
credit balances and stopped recording any future credit benefits. With the
restart of the Alumar smelter in Brazil and the first metal sales in June 2022,
the Company now has the ability to monetize these credits and reversed the
valuation allowance.

During the second quarter of 2022, the Company recorded a charge of $39 to Cost
of goods sold and an increase to the capitalized asset retirement cost of $8 to
increase the Asset retirement obligation at the Poços de Caldas refinery when an
initial estimate became available for improvements required on both operating
and closed bauxite residue areas to comply with updated impoundment regulations
in the region. Alcoa is in the process of obtaining regulatory approval for its
estimated work, and additional charges may be recognized when the final scope of
work is approved. As of June 30, 2022, the Alumina segment had a base capacity
of 13,843 mtpy with 214 mtpy of curtailed refining capacity. There was no change
in curtailed capacity.

Total shipments include metric tons that were not produced by the Alumina
segment. Such alumina was purchased to satisfy certain customer commitments. The
Alumina segment bears the risk of loss of the purchased alumina until control of
the product has been transferred to this segment's customers. Additionally,
operating costs in the table below includes all production-related costs: raw
materials consumed; conversion costs, such as labor, materials, and utilities;
depreciation and amortization; and plant administrative expenses.


                                              Quarter ended                 Six months ended
                                        June 30,        March 31,       June 30,        June 30,
                                          2022            2022            2022            2021
Production (kmt)                             3,226           3,209           6,435           6,715
Third-party shipments (kmt)                  2,438           2,277           4,715           4,909
Intersegment shipments (kmt)                   984             940           1,924           2,155
Total shipments (kmt)                        3,422           3,217           6,639           7,064
Third-party sales                      $     1,077     $       855     $     1,932     $     1,448
Intersegment sales                             489             418             907             707
Total sales                            $     1,566     $     1,273     $     2,839     $     2,155
Segment Adjusted EBITDA                $       343     $       262     $       605     $       351
Average realized third-party price
per metric ton of alumina              $       442     $       375     $       410     $       295
Operating costs                        $     1,190     $       988     $     2,178     $     1,794
Average cost per metric ton of
alumina                                $       348     $       307     $       328     $       254



                    Sequential Period Comparison         Year-to-date

Comparison

Production Production increased by 1% mainly Production decreased by 4% mainly

                  as a result of:                   as a result of:
                  •Increased production at certain  •Reduced alumina 

manufacturing at

                  of the Australian refineries due  the Australian 

refineries due to

                  to less unplanned equipment       unplanned equipment maintenance
                  maintenance                       Partially offset by:
                  Partially offset by:              •Increased production at the San
                  •Decreased production at the      Ciprián refinery following the
                  Alumar refinery due to unplanned  resumption of normal operations
                  equipment maintenance
                  •Decreased production at the San
                  Ciprián refinery due to lower
                  demand from the San Ciprián
                  smelter

Sales to third parties Sales to third parties on the rise $222 Sales to third parties increased $484

                  primarily as a result of:         primarily as a result 

of:

                  •Higher average realized price of •Higher average 

realized price of

                  $67/ton principally driven by a   $115/ton principally driven by a
                  higher average API                higher average API
                  •Favorable currency impacts       •Favorable changes to customer
                  •Higher shipments due to          mix
                  non-recurrence of unplanned       Partially offset by:
                  equipment maintenance at the      •Lower shipments due to lower
                  Australian refineries and weather production at the Australian
                  delays in Brazil in the first     refineries, partially offset by
                  quarter of 2022                   increased production and
                                                    shipments at the San Ciprián
                                                    refinery, including a shift to
                                                    third-party sales with the San
                                                    Ciprián smelter curtailment in
                                                    January 2022


                                       33
--------------------------------------------------------------------------------
               Sequential Period Comparison         Year-to-date Comparison
Intersegment Intersegment sales increased $71  Intersegment sales increased $200
sales        primarily as a result of:         primarily as a result of:
             •Higher average realized prices   •Higher average realized prices
             on sales with the Aluminum        on sales with the Aluminum
             segment                           segment
             •Higher shipments primarily due   Partially offset by:
             to increased production at        •Lower shipments primarily at the
             certain of the Australian         Australian refineries
             refineries and absence of weather
             delays in Brazil in the first
             quarter of 2022
Segment      Segment adjusted EBITDA increased Segment adjusted EBITDA increased
Adjusted     $81 primarily as a result of:     $254 primarily as a result of:
EBITDA       •Higher average realized price of •Higher average realized price of
             $67/ton principally driven by a   $115/ton principally driven 

by a

             higher average API                higher average API
             •Reversal of a valuation          •Favorable changes to 

customer

             allowance on Brazil VAT           mix
             associated with the restart of    •Reversal of a valuation
             the Alumar smelter                allowance on Brazil VAT
             •Favorable currency impacts       •Favorable currency 

impacts

             •Higher shipments primarily due   Partially offset by:
             to unplanned equipment            •Higher energy prices 

generally

             maintenance at the Australian     regions
             refineries and absence of weather •Higher raw material costs
             delays in Brazil in the first     primarily due to higher market
             quarter of 2022                   prices for caustic and lime
             Partially offset by:              •Higher costs primarily
             •Higher energy prices, primarily  associated with

maintenance and

             in Spain                          higher transportation costs
             •Charge related to AROs at the    •Charge related to AROs at the
             Poços de Caldas refinery          Poços de Caldas refinery
             •Higher raw material costs        •Lower shipments

mainly due to

             primarily due to higher market    unplanned maintenance at the
             prices for caustic and lime       Australian refineries
             •Higher costs primarily
             associated with maintenance and
             transportation costs
             •Unfavorable changes to customer
             contract mix

Looking forward. Beginning in July 2022the Company reduced production by approximately 15% at the San Ciprián refinery to mitigate the impact of high natural gas costs.

For the third quarter of 2022 in comparison to the second quarter, the segment
expects higher energy and raw materials costs to be partially offset with higher
shipments.

Revisions to the initial asset retirement obligation established for the Poços de Caldas reservoir works are also planned for the second half of 2022.

The Company has reduced its annual projection of alumina shipments in 2022 by 0.6 million metric tons to between 13.6 and 13.8 million metric tons, mainly due to lower shipments recorded in the first half 2022.

Aluminum

Business Update. During the second quarter of 2022, third-party sales increased
6% sequentially on higher shipments and higher regional premiums, despite lower
LME. Metal prices decreased with LME prices on a 15-day lag averaging $3,062 per
metric ton. The Aluminum segment also experienced higher raw material and
production costs during the quarter.

On December 29, 2021, the Company and workers' representatives at the San
Ciprián, Spain aluminum facility reached an agreement that calls for the
two-year curtailment of the smelter's 228,000 metric tons of annual capacity due
to exorbitant energy prices in Spain. The curtailment was completed in January
2022 while the casthouse continues to operate. During the second quarter and
six-month period of 2022, $6 and $8, respectively, of payments were made to
reduce the employee leave compensation and take or pay contractual obligations
of $62 recorded in the fourth quarter of 2021. The Company has not made any
expenditures against the commitments for capital investments of $68 and restart
costs of $35. During the quarter, the Company signed an agreement with a
renewable energy provider for approximately 45% of the smelter's power needs
upon restart, and continues to negotiate with other generators to secure the
remaining power supply needs for the smelter.

                                       34
--------------------------------------------------------------------------------
In conjunction with the previously announced restart of the Alumar smelter in
São Luís, Brazil, Alcoa incurred restart expenses of $22 and $34 during the
second quarter and six-month period of 2022, respectively. The first metal sales
occurred in the second quarter of 2022 and full capacity is expected to be
operational in the first quarter of 2023.

In conjunction with the previously announced restart of 19,000 metric tons
(Alcoa share) of previously curtailed capacity at the Portland smelter, Alcoa
incurred restart expenses of $3 during the second quarter and six-month period
of 2022. Metal production is expected to start in the third quarter of 2022.

Total aluminum third-party shipments and total primary aluminum shipments
include metric tons that were not produced by the Aluminum segment. Such
aluminum was purchased by this segment to satisfy certain customer commitments.
The Aluminum segment bears the risk of loss of the purchased aluminum until
control of the product has been transferred to this segment's customer. Until
the sale of the Warrick Rolling Mill on March 31, 2021, total aluminum
information includes flat-rolled aluminum while primary aluminum information
does not. Primary aluminum third-party sales exclude realized gains and losses
related to embedded derivative instruments designated as cash flow hedges of
forward sales of aluminum.

The average realized third-party price per metric ton of primary aluminum
includes three elements: a) the underlying base metal component, based on quoted
prices from the LME; b) the regional premium, which represents the incremental
price over the base LME component that is associated with the physical delivery
of metal to a particular region (e.g., the Midwest premium for metal sold in the
United States); and c) the product premium, which represents the incremental
price for receiving physical metal in a particular shape (e.g., billet, slab,
rod, etc.) or alloy.

Operating expenses include all production-related costs: raw materials consumed; conversion costs, such as labor, materials and utilities; depreciation and amortization; and plant administrative expenses.


                                              Quarter ended                 Six months ended
                                        June 30,        March 31,       June 30,        June 30,
Total Aluminum information                2022            2022            2022            2021
Third-party aluminum shipments (kmt)           674             634           1,308           1,598
Third-party sales                      $     2,539     $     2,388     $     4,927     $     4,149
Intersegment sales                               8               7              15               5
Total sales                            $     2,547     $     2,395     $     4,942     $     4,154
Segment Adjusted EBITDA                $       596     $       713     $     1,309     $       743

                                              Quarter ended                 Six months ended
                                        June 30,        March 31,       June 30,        June 30,
Primary Aluminum information              2022            2022            2022            2021
Production (kmt)                               499             498             997           1,094
Third-party shipments (kmt)                    674             634           1,308           1,515
Third-party sales                      $     2,624     $     2,447     $     5,071     $     3,839
Average realized third-party price
per metric ton                         $     3,864     $     3,861     $     3,863     $     2,533
Total shipments (kmt)                          674             634           1,308           1,540
Operating costs                        $     1,936     $     1,677     $     3,613     $     3,166
Average cost per metric ton            $     2,872     $     2,647     $     2,763     $     2,056



                 Sequential Period Comparison          Year-to-date 

Comparison

Production   Production was flat between periods. Production decreased 9% primarily
                                                  as a result of:
                                                  •Curtailment of the San Ciprián
                                                  smelter, completed in January
                                                  2022


                                       35
--------------------------------------------------------------------------------
               Sequential Period Comparison         Year-to-date Comparison
Third-party  Third-party sales increased $151  Third-party sales increased $778
sales        primarily as a result of:         primarily as a result of:
             •Higher trading revenue           •Higher average realized price of
             •Higher shipments mainly due to   $1,330/ton driven by a higher
             improved availability of railcars average LME (on a 15-day lag) and
             or vessels for outbound product   regional premiums
             from North American smelters      •Increase in value add product
             •Favorable currency impacts       sales on higher price
             Partially offset by:              •Higher trading activities
             •Lower average LME (on a 15-day   Partially offset by:
             lag) partially offset by higher   •Absence of sales from the
             regional premiums                 divested Warrick Rolling Mill,
             •Lower pricing at the Brazil      partially offset by new
             hydro-electric facilities         third-party revenue from the
                                               Warrick smelter
                                               •Decreased sales from the San
                                               Ciprián smelter due to the
                                               smelter curtailment and timing of
                                               sales of accumulated inventory
                                               from the strike, partially offset
                                               by increased price
                                               •Lower shipments mainly due to
                                               the timing of maintenance at the
                                               European smelters
                                               •Lower pricing at the Brazil
                                               hydro-electric facilities as
                                               first half 2021 drought
                                               conditions elevated prices in the
                                               prior year period
Segment      Segment adjusted EBITDA decreased Segment adjusted EBITDA increased
Adjusted     $117 primarily as a result of:    $566 primarily as a result of:
EBITDA       •Lower average LME (on a 15-day   •Higher average realized price
             lag) partially offset by higher   driven by higher average LME (on
             regional premiums                 a 15-day lag) and regional
             •Unfavorable raw material costs,  premiums
             primarily on higher average       Increase in value add product
             alumina input costs and higher    sales Partially offset by:
             prices for carbon                 •Unfavorable raw material costs,
             •Higher costs primarily           primarily on higher average
             associated with increased         alumina input costs and higher
             maintenance costs, higher         market prices for carbon
             transportation costs, and direct  •Higher costs primarily
             material usage                    associated with increased
             •Decrease in trading margins      maintenance costs, higher
             •Lower pricing at the Brazil      transportation costs, and higher
             hydro-electric facilities         labor expenses
             Partially offset by:              •Curtailment of the San Ciprián
             •Higher shipments mainly related  smelter
             to improved availability of       •Lower pricing at the Brazil
             railcars or vessels for outbound  hydro-electric facilities
             product from North American       •Divestiture of the Warrick
             smelters                          Rolling Mill
             •Favorable currency impacts

The following table presents the consolidated capacity and the reduced capacity (each in kmt) for each smelter owned by Alcoa Corporation:

                                            June 30, 2022                      March 31, 2022                      June 30, 2021
Facility               Country      Capacity (1)       Curtailed       Capacity (1)       Curtailed        Capacity (1)       Curtailed
Portland(2)            Australia              197               30               197               30                197               30
São Luís (Alumar)(3)   Brazil                 268              239               268              268                268              268
Baie Comeau            Canada                 312                -               312                -                280                -
Bécancour              Canada                 347                -               347                -                310                -
Deschambault           Canada                 287                -               287                -                260                -
Fjarðaál               Iceland                351                -               351                -                344                -
Lista                  Norway                  94                -                94                -                 94                -
Mosjøen                Norway                 200                -               200                -                188                -
San Ciprián(4)         Spain                  228              228               228              228                228                -
Intalco                U.S.                   279              279               279              279                279              279
Massena West           U.S.                   130                -               130                -                130                -
Warrick(5)             U.S.                   269              108               269              108                269              108
Wenatchee(6)           U.S.                     -                -                 -                -                146              146
                                            2,962              884             2,962              913              2,993              831


                                       36
--------------------------------------------------------------------------------

(1) These figures represent Alcoa Corporation part of the installation Rating plate

Ability based on its stake in the respective smelter.

(2) In 2021, the Company announced that the Portland Aluminum joint venture

will restart 35,000 mtpa of idle smelter capacity at Portland foundry

in Australia (19,000 mtpa Alcoa share), and metal production is expected to

     start in the third quarter of 2022.


(3)  In 2021, the Company announced the restart of its 268,000 mtpy of idle

melting capacity of the Alumar smelter at Brazil; full capacity is expected

be operational in the first quarter of 2023.

(4) Walk December 29, 2021the Company and the representatives of the workers at the

San Ciprian, Spain the aluminum plant has entered into an agreement providing for the

two-year reduction in the smelter’s 228,000 mtpa annual smelting capacity;

the reduction was completed in January 2022.

(5) Walk July 1, 2022the Company announced a reduction of approximately 54,000

     mtpy at the Warrick smelter in the state of Indiana.


(6)  In December 2021, the Company permanently closed 146,000 mtpy of idled
     smelting capacity at the Wenatchee smelter in the state of Washington.


Forward Look. On July 1, 2022, the Company announced curtailment of one of three
operating potlines, approximately 54,000 mtpy, at its Warrick Operations
facility in Indiana due to operational challenges stemming from labor shortages
in the region. The Company anticipates approximately $20 million in negative
impact on net income in the third quarter as a result of the curtailment.

Additionally, for the third quarter of 2022 in comparison to the second quarter,
the segment expects higher energy and raw material costs which cannot be fully
offset with production cost savings.

Reconciliations of certain segment information

Reconciliation of total segment third-party sales with consolidated sales

                                        Quarter ended                Six months ended
                                   June 30,       March 31,      June 30,       June 30,
                                     2022           2022           2022           2021
Bauxite                           $       34     $        43     $      77     $       97
Alumina                                1,077             855         1,932          1,448
Aluminum:
Primary aluminum                       2,624           2,447         5,071          3,839
Other(1)                                 (85 )           (59 )        (144 )          310
Total segment third-party sales        3,650           3,286         6,936          5,694
Other                                     (6 )             7             1              9
Consolidated sales                $    3,644     $     3,293     $   6,937     $    5,703


(1) Other includes sales to third parties of flat-rolled aluminum and energy, as well as

as realized gains and losses related to embedded derivative instruments

designated as cash flow hedges of aluminum forward sales. Following the

sale of the Warrick Rolling Mill on March 31, 2021Other no longer includes

flat-rolled aluminum sales.


Reconciliation of Total Segment Operating Costs to Consolidated Cost of Goods
Sold

                                              Quarter ended                 Six months ended
                                        June 30,        March 31,       June 30,        June 30,
                                          2022            2022            2022            2021
Bauxite                                $       225     $       207     $       432     $       443
Alumina                                      1,190             988           2,178           1,794
Primary aluminum                             1,936           1,677           3,613           3,166
Other(1)                                       149             127             276             442
Total segment operating costs                3,500           2,999           6,499           5,845
Eliminations(2)                               (682 )          (697 )        (1,379 )        (1,104 )
Provision for depreciation,
depletion, amortization(3)                    (156 )          (153 )          (309 )          (330 )
Other(4)                                       105              32             137              37

Consolidated cost of goods sold $2,767 $2,181 $

4,948 $4,448

                                       37
--------------------------------------------------------------------------------
(1)  Prior to the sale of the Warrick Rolling Mill on March 31, 2021, Other
     largely relates to the Aluminum segment's flat-rolled aluminum product
     division.

(2) Represents the elimination of inter-segment cost of goods sold

     sales between Bauxite and Alumina and between Alumina and Aluminum.


(3)  Provision for depreciation, depletion, and amortization is included in the

the operating costs used to calculate the average cost of each of the bauxites,

alumina and primary aluminum products divisions (see Bauxite, Alumina and

Aluminum above). However, for financial reporting purposes, the provision for

depreciation, depletion and amortization are shown on a separate line

article on Alcoa Corporation Statement of Consolidated Operations.

(4) Other includes the costs related to the Transformation and certain other elements

are not included in segment operating costs (see footnotes 1 and 3

in the reconciliation of total segment adjusted EBITDA to consolidated net income

Income attributable to Alcoa Corporation below).

Reconciliation of segment total adjusted EBITDA to consolidated net income

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