Delaware

(State or other jurisdiction of

incorporation or organization)

		81-1789115 (I.R.S. Employer Identification No.)
~~Delaware~~		~~81-1789115~~
~~(State of incorporation)~~		~~(I.R.S. Employer Identification No.)~~

201 Isabella Street, Suite 500, Pittsburgh, Pennsylvania		~~15212-5858~~
(Address of principal executive offices)		15212-5858 (Zip ~~code)~~Code)

412-315-2900

(Registrant’s telephone number, including area code)

~~390 Park Avenue, New York, New York 10022-4608~~Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.


Large accelerated filer	☒	☐	Accelerated filer	☐

Non-accelerated filer	☐	~~☒ (Do not check if a smaller reporting company)~~	Smaller reporting company	☐

Emerging growth company	☐	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ☐ No ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October 20, 2017, 185,022,929~~July 24, 2020, 185,924,291 shares of common stock, par value $0.01 per share, of the registrant were outstanding.

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION						1

Item 1.		Financial Statements			3	1

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			40	27

Item 3.		Quantitative and Qualitative Disclosures ~~about~~About Market Risk			53	41

Item 4.		Controls and Procedures			54	41

PART II – OTHER INFORMATION					42

Item 4.	1A.	Risk Factors		42

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		43

Item 4.	Mine Safety Disclosures			55	43

Item 6.		Exhibits			56	44

SIGNATURES				57	45

Forward-Looking Statements

This report contains statements that relate to future events and expectations and, as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of similar meaning. All statements by Alcoa Corporation that reflect expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, forecasts concerning global demand growth for bauxite, alumina, and aluminum, and supply/demand balances; statements, projections or forecasts of future or targeted financial results or operating performance; statements about strategies, outlook, and business and financial prospects; and statements about return of capital. These statements reflect beliefs and assumptions that are based on Alcoa Corporation’s perception of historical trends, current conditions, and expected future developments, as well as other factors that management believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and changes in circumstances that are difficult to predict. Although Alcoa Corporation believes that the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that these expectations will be attained and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Such risks and uncertainties include, but are not limited to: (a) current and potential future impacts of the coronavirus (COVID-19) pandemic on the global economy and our business, financial condition, results of operations, or cash flows and judgments and assumptions used in our estimates; (b) material adverse changes in aluminum industry conditions, including global supply and demand conditions and fluctuations in London Metal Exchange-based prices and premiums, as applicable, for primary aluminum and other products, and fluctuations in indexed-based and spot prices for alumina; (c) deterioration in global economic and financial market conditions generally and which may also affect Alcoa Corporation’s ability to obtain credit or financing upon acceptable terms or at all; (d) unfavorable changes in the markets served by Alcoa Corporation; (e) the impact of changes in foreign currency exchange and tax rates on costs and results; (f) increases in energy costs or uncertainty of energy supply; (g) declines in the discount rates used to measure pension liabilities or lower-than-expected investment returns on pension assets, or unfavorable changes in laws or regulations that govern pension plan funding; (h) the inability to achieve improvement in profitability and margins, cost savings, cash generation, revenue growth, fiscal discipline, or strengthening of competitiveness and operations anticipated from portfolio actions, operational and productivity improvements, cash sustainability, technology advancements, and other initiatives; (i) the inability to realize expected benefits, in each case as planned and by targeted completion dates, from acquisitions, divestitures, restructuring activities, facility closures, curtailments, restarts, expansions, or joint ventures; (j) political, economic, trade, legal, public health and safety, and regulatory risks in the countries in which Alcoa Corporation operates or sells products; (k) labor disputes and/or and work stoppages; (l) the outcome of contingencies, including legal and tax proceedings (including the Australian Taxation Office Matter), government or regulatory investigations, and environmental remediation; (m) the impact of cyberattacks and potential information technology or data security breaches; and (n) the other risk factors discussed in Item 1A of Alcoa Corporation’s Form 10-K for the fiscal year ended December 31, 2019, Form 10-Q for the quarter ended March 31, 2020, and this Quarterly Report on Form 10-Q, and other reports filed by Alcoa Corporation with the U.S. Securities and Exchange Commission (SEC). Alcoa Corporation disclaims any obligation to update publicly any forward-looking statements, whether in response to new information, future events or

otherwise, except as required by applicable law. Market projections are subject to the risks described above and other risks in the market.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Alcoa Corporation and ~~subsidiaries~~Subsidiaries

Statement of Consolidated Operations (unaudited)

(in millions, exceptper-share amounts)

   Third quarter ended
September 30, Nine months ended
September 30,
   2017 2016 2017 2016
Sales to unrelated parties
   $ 2,725 $ 2,075 $ 7,837 $ 6,028
Sales to related parties (A)
   239 254 641 753


Total sales (E)
   2,964 2,329 8,478 6,781
Cost of goods sold (exclusive of expenses below)
   2,361 1,968 6,713 5,775
Selling, general administrative, and other expenses (A)
   70 92 214 267
Research and development expenses
   8 8 23 26
Provision for depreciation, depletion, and amortization
   194 181 563 536
Restructuring and other charges (D)
   (10 ) 17 12 109
Interest expense
   26 67 77 197
Other expenses (income), net (N)
   27 (106 ) (67 ) (90 )


Total costs and expenses
   2,676 2,227 7,535 6,820
Income (loss) before income taxes
   288 102 943 (39 )
Provision for income taxes (L)
   119 92 328 178


Net income (loss)
   169 10 615 (217 )
Less: Net income attributable to noncontrolling interest
   56 20 202 58


NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA CORPORATION
   $ 113 $ (10 ) $ 413 $ (275 )


EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON SHAREHOLDERS (F):

Basic
   $ 0.61 $ (0.06 ) $ 2.24 $ (1.51 )


Diluted
   $ 0.60 $ (0.06 ) $ 2.21 $ (1.51 )

	Second quarter ended June 30,						Six months ended June 30,
	2020			2019			2020			2019
Sales (E)	$	2,148		$	2,711		$	4,529		$	5,430
Cost of goods sold (exclusive of expenses below)		1,932			2,189			3,957			4,369
Selling, general administrative, and other expenses		44			68			104			152
Research and development expenses		5			7			12			14
Provision for depreciation, depletion, and amortization		152			174			322			346
Restructuring and other charges, net (D)		37			370			39			483
Interest expense		32			30			62			60
Other expenses (income), net (Q)		51			50			(81	)		91
Total costs and expenses		2,253			2,888			4,415			5,515
(Loss) income before income taxes		(105	)		(177	)		114			(85	)
Provision for income taxes		45			116			125			266
Net loss		(150	)		(293	)		(11	)		(351	)
Less: Net income attributable to noncontrolling interest		47			109			106			250
NET LOSS ATTRIBUTABLE TO ALCOA CORPORATION	$	(197	)	$	(402	)	$	(117	)	$	(601	)
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON SHAREHOLDERS (F):
Basic	$	(1.06	)	$	(2.17	)	$	(0.63	)	$	(3.24	)
Diluted	$	(1.06	)	$	(2.17	)	$	(0.63	)	$	(3.24	)

The accompanying notes are an integral part of the consolidated financial statements.

Alcoa Corporation and ~~subsidiaries~~Subsidiaries

Statement of Consolidated Comprehensive ~~(Loss)~~ Income (unaudited)

(in millions)

																			Alcoa Corporation						Noncontrolling interest						Total
	Alcoa Corporation						Noncontrolling interest						Total						Second quarter ended June 30,						Second quarter ended June 30,						Second quarter ended June 30,
	Third quarter ended September 30,						Third quarter ended September 30,						Third quarter ended September 30,						2020			2019			2020			2019			2020			2019
	2017			2016			2017			2016			2017			2016
Net income (loss)	$	113		$	(10	)	$	56		$	20		$	169		$	10

Net (loss) income																			$	(197	)	$	(402	)	$	47		$	109		$	(150	)	$	(293	)
Other comprehensive (loss) income, net of tax (G):
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits		44			20			5			(1	)		49			19			(127	)		10			2			(2	)		(125	)		8
Foreign currency translation adjustments		141			32			44			45			185			77			135			40			94			4			229			44
Net change in unrecognized gains/losses on cash flow hedges		(415	)		(370	)		(5	)		(10	)		(420	)		(380	)		(390	)		79			(1	)		(1	)		(391	)		78

Total Other comprehensive (loss) income, net of tax		(230	)		(318	)		44			34			(186	)		(284	)		(382	)		129			95			1			(287	)		130

Comprehensive (loss) income	$	(117	)	$	(328	)	$	100		$	54		$	(17	)	$	(274	)	$	(579	)	$	(273	)	$	142		$	110		$	(437	)	$	(163	)


	Nine months ended September 30,						Nine months ended September 30,						Nine months ended September 30,						Alcoa Corporation						Noncontrolling interest						Total
	2017			2016			2017			2016			2017			2016			Six months ended June 30,						Six months ended June 30,						Six months ended June 30,
Net income (loss)	$	413		$	(275	)	$	202		$	58		$	615		$	(217	)
																			2020			2019			2020			2019			2020			2019
Net (loss) income																			$	(117	)	$	(601	)	$	106		$	250		$	(11	)	$	(351	)
Other comprehensive (loss) income, net of tax (G):
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits		190			19			24			2			214			21			(89	)		51			2			(1	)		(87	)		50
Foreign currency translation adjustments		281			446			121			184			402			630			(528	)		18			(151	)		6			(679	)		24
Net change in unrecognized gains/losses on cash flow hedges		(729	)		(639	)		57			4			(672	)		(635	)		311			(209	)		(21	)		5			290			(204	)

Total Other comprehensive (loss) income, net of tax		(258	)		(174	)		202			190			(56	)		16			(306	)		(140	)		(170	)		10			(476	)		(130	)

Comprehensive income (loss)	$	155		$	(449	)	$	404		$	248		$	559		$	(201	)

Comprehensive (loss) income																			$	(423	)	$	(741	)	$	(64	)	$	260		$	(487	)	$	(481	)

The accompanying notes are an integral part of the consolidated financial statements.

Alcoa Corporation and ~~subsidiaries~~Subsidiaries

Consolidated Balance Sheet (unaudited)

(in millions)


	September 30, 2017			December 31, 2016			June 30, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents (K)	$	1,119		$	853
Receivables from customers		840			668
Cash and cash equivalents (M)							$	965		$	879
Receivables from customers (I)								402			546
Other receivables		193			166			105			114
Inventories (I)		1,323			1,160
Fair value of derivative contracts (K)		112			51
Inventories (J)								1,419			1,644
Fair value of derivative instruments (M)								24			59
Prepaid expenses and other current assets		217			283			264			288

Total current assets		3,804			3,181			3,179			3,530

Properties, plants, and equipment		23,253			22,550			20,877			21,715
Less: accumulated depreciation, depletion, and amortization		13,971			13,225			13,588			13,799

Properties, plants, and equipment, net		9,282			9,325			7,289			7,916

Investments (H & M)		1,408			1,358
Investments (H)								1,037			1,113
Deferred income taxes		862			741			482			642
Fair value of derivative contracts (K)		153			468
Fair value of derivative instruments (M)								5			18
Other noncurrent assets		1,745			1,668			1,308			1,412

Total assets	$	17,254		$	16,741		$	13,300		$	14,631

LIABILITIES
Current liabilities:
Accounts payable, trade	$	1,618		$	1,455		$	1,253		$	1,484
Accrued compensation and retirement costs		450			456			393			413
Taxes, including income taxes		166			147			96			104
Fair value of derivative contracts (K)		139			35
Other current liabilities (C)		376			707
Long-term debt due within one year (K)		17			21

Fair value of derivative instruments (M)								47			67
Other current liabilities								451			494
Long-term debt due within one year (K & M)								1			1
Total current liabilities		2,766			2,821			2,241			2,563

Long-term debt, less amount due within one year (K)		1,384			1,424
Accrued pension benefits		1,703			1,851
Accrued other postretirement benefits		1,076			1,166
Long-term debt, less amount due within one year (K & M)								1,800			1,799
Accrued pension benefits (L)								1,602			1,505
Accrued other postretirement benefits (L)								711			749
Asset retirement obligations		627			604			565			606
Environmental remediation (M)		270			264
Fair value of derivative contracts (K)		689			234
Environmental remediation (P)								277			296
Fair value of derivative instruments (M)								203			581
Noncurrent income taxes		318			310			245			276
Other noncurrent liabilities and deferred credits		303			370			332			370

Total liabilities		9,136			9,044			7,976			8,745

CONTINGENCIES AND COMMITMENTS (M)

CONTINGENCIES AND COMMITMENTS (P)
EQUITY
Alcoa Corporation shareholders’ equity:
Common stock		2			2			2			2
Additional capital		9,584			9,531			9,655			9,639
Retained earnings (deficit)		309			(104	)
Accumulated deficit								(672	)		(555	)
Accumulated other comprehensive loss (G)		(4,033	)		(3,775	)		(5,280	)		(4,974	)

Total Alcoa Corporation shareholders’ equity		5,862			5,654			3,705			4,112

Noncontrolling interest		2,256			2,043			1,619			1,774

Total equity		8,118			7,697			5,324			5,886

Total liabilities and equity	$	17,254		$	16,741		$	13,300		$	14,631

The accompanying notes are an integral part of the consolidated financial statements.

Alcoa Corporation and ~~subsidiaries~~Subsidiaries

Statement of Consolidated Cash Flows (unaudited)

(in millions)

   Nine months ended
September 30,
   2017 2016
CASH FROM OPERATIONS

Net income (loss)
   $ 615 $ (217 )
Adjustments to reconcile net income (loss) to cash from operations:

Depreciation, depletion, and amortization
   564 536
Deferred income taxes
   64 6
Equity income, net of dividends
   1 34
Restructuring and other charges (D)
   12 109
Net gain from investing activities – asset sales (C & N)
   (115 ) (164 )
Net periodic pension benefit cost (J)
   83 43
Stock-based compensation
   21 24
Other
   31 12
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:

(Increase) in receivables
   (112 ) (126 )
(Increase) Decrease in inventories
   (102 ) 39
Decrease (Increase) in prepaid expenses and other current assets
   62 (22 )
Increase (Decrease) in accounts payable, trade
   109 (175 )
(Decrease) in accrued expenses
   (320 ) (338 )
Increase (Decrease) in taxes, including income taxes
   15 (103 )
Pension contributions
   (82 ) (45 )
(Increase) in noncurrent assets
   (88 ) (188 )
Increase in noncurrent liabilities
   11 25


CASH PROVIDED FROM (USED FOR) OPERATIONS
   769 (550 )


FINANCING ACTIVITIES

Net transfers from Parent Company (A)
   —   407
Cash paid to Arconic related to separation (A & C)
   (247 ) —
Net change in short-term borrowings (original maturities of three months or less)
   2 —
Additions to debt (original maturities greater than three months)
   3 —
Payments on debt (original maturities greater than three months)
   (55 ) (16 )
Proceeds from the exercise of employee stock options
   38 —
Contributions from noncontrolling interest
   56 —
Distributions to noncontrolling interest
   (244 ) (176 )
Other
   (6 ) —


CASH (USED FOR) PROVIDED FROM FINANCING ACTIVITIES
   (453 ) 215


INVESTING ACTIVITIES

Capital expenditures
   (255 ) (258 )
Proceeds from the sale of assets and businesses (C)
   243 112
Additions to investments (M)
   (44 ) (3 )
Sales of investments
   —   146
Net change in restricted cash
   —   (2 )


CASH USED FOR INVESTING ACTIVITIES
   (56 ) (5 )


EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
   6 24


Net change in cash and cash equivalents
   266 (316 )
Cash and cash equivalents at beginning of year
   853 557


CASH AND CASH EQUIVALENTS AT END OF PERIOD
   $ 1,119 $ 241

	Six months ended June 30,
	2020			2019
CASH FROM OPERATIONS
Net loss	$	(11	)	$	(351	)
Adjustments to reconcile net loss to cash from operations:
Depreciation, depletion, and amortization		322			346
Deferred income taxes		(6	)		64
Equity earnings, net of dividends		15			14
Restructuring and other charges, net (D)		39			483
Net gain from investing activities – asset sales (Q)		(176	)		(1	)
Net periodic pension benefit cost (L)		67			60
Stock-based compensation		17			21
Provision for bad debt expense		2			20
Other		5			24
Changes in assets and liabilities, excluding effects of divestitures and foreign currency translation adjustments:
Decrease in receivables		124			94
Decrease in inventories		184			53
Decrease in prepaid expenses and other current assets		13			68
(Decrease) in accounts payable, trade		(183	)		(144	)
(Decrease) in accrued expenses		(120	)		(51	)
Increase (Decrease) in taxes, including income taxes		7			(342	)
Pension contributions (L)		(59	)		(55	)
Decrease (Increase) in noncurrent assets		19			(32	)
(Decrease) in noncurrent liabilities		(61	)		(21	)
CASH PROVIDED FROM OPERATIONS		198			250
FINANCING ACTIVITIES
Proceeds from the exercise of employee stock options		—			1
Financial contributions for the divestiture of businesses (D)		(24	)		—
Contributions from noncontrolling interest		16			21
Distributions to noncontrolling interest		(106	)		(286	)
Other		(1	)		(6	)
CASH USED FOR FINANCING ACTIVITIES		(115	)		(270	)
INVESTING ACTIVITIES
Capital expenditures		(168	)		(158	)
Proceeds from the sale of assets		199			11
Additions to investments		(3	)		(111	)
CASH PROVIDED FROM (USED FOR) INVESTING ACTIVITIES		28			(258	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(26	)		(1	)
Net change in cash and cash equivalents and restricted cash		85			(279	)
Cash and cash equivalents and restricted cash at beginning of year		883			1,116
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	968		$	837

The accompanying notes are an integral part of the consolidated financial statements.

Alcoa Corporation and ~~subsidiaries~~Subsidiaries

Statement of Changes in Consolidated Equity (unaudited)

(in millions)

																					Alcoa Corporation shareholders
Second quarter ended June 30, 2019																					Common stock		Additional capital			Retained earnings (deficit)			Accumulated other comprehensive loss			Non- controlling interest			Total equity
Balance at March 31, 2019																					$	2	$	9,618		$	371		$	(4,834	)	$	1,926		$	7,083
Net (loss) income																						—		—			(402	)		—			109			(293	)
Other comprehensive income (G)																						—		—			—			129			1			130
Stock-based compensation																						—		11			—			—			—			11
Contributions																						—		—			—			—			1			1
Distributions																						—		—			—			—			(72	)		(72	)
Other																						—		—			—			—			(1	)		(1	)
Balance at June 30, 2019																					$	2	$	9,629		$	(31	)	$	(4,705	)	$	1,964		$	6,859
	Alcoa Corporation Shareholders
	Parent Company net investment			Common stock		Additional capital			Retained (deficit) earnings			Accumulated other comprehensive loss			Non- controlling interest			Total equity
Balance at June 30, 2016	$	11,127		$	—	$	—		$	—		$	(1,456	)	$	2,180		$	11,851
Second quarter ended June 30, 2020
Balance at March 31, 2020																					$	2	$	9,647		$	(476	)	$	(4,898	)	$	1,536		$	5,811
Net (loss) income		(10	)		—		—			—			—			20			10			—		—			(197	)		—			47			(150	)
Other comprehensive (loss) income (G)		—			—		—			—			(318	)		34			(284	)		—		—			—			(382	)		95			(287	)
Establishment of defined benefit plans		176			—		—			—			(2,704	)		—			(2,528	)
Change in Parent Company net investment		151			—		—			—			—			—			151
Stock-based compensation																						—		9			—			—			—			9
Contributions																						—		—			—			—			16			16
Distributions		—			—		—			—			—			(92	)		(92	)		—		—			—			—			(75	)		(75	)
Other		—			—		—			—			—			4			4			—		(1	)		1			—			—			—
Balance at June 30, 2020																					$	2	$	9,655		$	(672	)	$	(5,280	)	$	1,619		$	5,324

Balance at September 30, 2016	$	11,444		$	—	$	—		$	—		$	(4,478	)	$	2,146		$	9,112

Balance at June 30, 2017	$	—		$	2	$	9,559		$	196		$	(3,803	)	$	2,245		$	8,199
Net income		—			—		—			113			—			56			169
Other comprehensive (loss) income (G)		—			—		—			—			(230	)		44			(186	)
Stock-based compensation		—			—		7			—			—			—			7
Common stock issued: compensation plans		—			—		20			—			—			—			20
Distributions		—			—		—			—			—			(89	)		(89	)
Other		—			—		(2	)		—			—			—			(2	)

Balance at September 30, 2017	$	—		$	2	$	9,584		$	309		$	(4,033	)	$	2,256		$	8,118

Balance at December 31, 2015	$	11,042		$	—	$	—		$	—		$	(1,600	)	$	2,071		$	11,513
Six months ended June 30, 2019
Balance at December 31, 2018																					$	2	$	9,611		$	570		$	(4,565	)	$	1,970		$	7,588
Net (loss) income		(275	)		—		—			—			—			58			(217	)		—		—			(601	)		—			250			(351	)
Other comprehensive (loss) income (G)		—			—		—			—			(174	)		190			16
Establishment of defined benefit plans		176			—		—			—			(2,704	)		—			(2,528	)
Change in Parent Company net investment		501			—		—			—			—			—			501
Distributions		—			—		—			—			—			(176	)		(176	)
Other		—			—		—			—			—			3			3

Balance at September 30, 2016	$	11,444		$	—	$	—		$	—		$	(4,478	)	$	2,146		$	9,112

Balance at December 31, 2016	$	—		$	2	$	9,531		$	(104	)	$	(3,775	)	$	2,043		$	7,697
Net income		—			—		—			413			—			202			615
Other comprehensive (loss) income (G)		—			—		—			—			(258	)		202			(56	)		—		—			—			(140	)		10			(130	)
Stock-based compensation		—			—		21			—			—			—			21			—		21			—			—			—			21
Common stock issued: compensation plans		—			—		37			—			—			—			37			—		1			—			—			—			1
Contributions		—			—		—			—			—			56			56			—		—			—			—			21			21
Distributions		—			—		—			—			—			(244	)		(244	)		—		—			—			—			(286	)		(286	)
Other		—			—		(5	)		—			—			(3	)		(8	)		—		(4	)		—			—			(1	)		(5	)
Balance at June 30, 2019																					$	2	$	9,629		$	(31	)	$	(4,705	)	$	1,964		$	6,859

Balance at September 30, 2017	$	—		$	2	$	9,584		$	309		$	(4,033	)	$	2,256		$	8,118

Six months ended June 30, 2020
Balance at December 31, 2019																					$	2	$	9,639		$	(555	)	$	(4,974	)	$	1,774		$	5,886
Net (loss) income																						—		—			(117	)		—			106			(11	)
Other comprehensive loss (G)																						—		—			—			(306	)		(170	)		(476	)
Stock-based compensation																						—		17			—			—			—			17
Contributions																						—		—			—			—			16			16
Distributions																						—		—			—			—			(106	)		(106	)
Other																						—		(1	)		—			—			(1	)		(2	)
Balance at June 30, 2020																					$	2	$	9,655		$	(672	)	$	(5,280	)	$	1,619		$	5,324

The accompanying notes are an integral part of the consolidated financial statements.

Alcoa Corporation and ~~subsidiaries~~Subsidiaries

Notes to the Consolidated Financial Statements (unaudited)

(dollars in millions, exceptper-share ~~amounts)~~ amounts; metric tons in thousands (kmt))

A.Basis of Presentation– The interim Consolidated Financial Statements of Alcoa Corporation and its subsidiaries (“(Alcoa Corporation, Alcoa, ~~Corporation”~~ or the ~~“Company”)~~Company) are unaudited. These Consolidated Financial Statements include all adjustments, consisting only of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position, and cash flows. The results reported in these Consolidated Financial Statements are not necessarily indicative of the results that may be expected for the entire year. The ~~2016~~2019 year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP). This Quarterly Report on Form10-Q ~~report~~ should be read in conjunction with ~~Alcoa Corporation’s~~the Company’s Annual Report on Form10-K for the year ended December 31, ~~2016,~~2019, which includes all disclosures required by GAAP.

In ~~preparing~~accordance with GAAP, certain situations require management to make estimates based on judgments and assumptions, which may affect the ~~Consolidated Financial Statements~~reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. They also may affect the reported amounts of revenues and expenses during the reporting periods. Management uses historical experience and all available information to make these estimates, including considerations for the ~~year ended December 31, 2016,~~impact of the coronavirus (COVID-19) pandemic on the macroeconomic environment. The Company has experienced certain negative impacts as a result of the COVID-19 pandemic to date, however, the magnitude and duration of the COVID-19 pandemic remains unknown, and the pandemic’s ultimate future impact on the Company’s business, financial condition, operating results, cash flows, and market capitalization is uncertain. In addition, the COVID-19 pandemic could adversely impact estimates made as of June 30, 2020 regarding future results, such as the recoverability of goodwill and long-lived assets and the realizability of deferred tax assets. Despite these inherent limitations, management ~~discovered~~believes that the ~~amount for Cost of goods sold previously reported for the three and nine months ended September 30, 2016 included an immaterial error due to an under-allocation of LIFO(last-in,first-out)~~ ~~expense of $4 and $14, respectively. The amount for Cost of goods sold~~amounts recorded in the ~~accompanying Statement of Consolidated Operations for~~financial statements related to these items are based on its best estimates and judgments using all relevant information available at the ~~three~~time. Management regularly evaluates the judgments and ~~nine months ended September 30, 2016 was revised to correct this immaterial error.~~assumptions used in its estimates, and results could differ from those estimates upon future events and their effects or new information.

References in these Notes to ~~“ParentCo”~~ParentCo refer to Alcoa Inc., a Pennsylvania corporation, and its consolidated subsidiaries ~~(through~~through October 31, 2016, at which time it was renamed Arconic Inc. ~~(Arconic)~~(and since has been subsequently renamed Howmet Aerospace Inc.).

~~Separation Transaction.~~On November 1, 2016 (the ~~“Separation Date”)~~Separation Date), ParentCo separated into two standalone, publicly-traded companies, Alcoa Corporation ~~separated from ParentCo into a standalone, publicly-traded company, effective at 12:01 a.m. Eastern Standard Time,~~and Arconic Inc. (the ~~“Separation Transaction”)~~Separation Transaction). Alcoa Corporation is comprised of the bauxite mining, alumina refining, aluminum smelting and casting, and energy operations of ParentCo’s former Alumina and Primary Metals segments, as well as the Warrick, Indiana rolling operations and the 25.1% equity interest in the rolling mill at the joint venture in Saudi Arabia, both of which were part of ParentCo’s Global Rolled Products segment. ParentCo, which later changed its name to Arconic, continues to own the operations within its Global Rolled Products (except for the aforementioned rolling operations that are owned by Alcoa Corporation), Engineered Products and Solutions, and Transportation and Construction Solutions segments.

To effect the Separation Transaction, ParentCo undertook a series of transactions to separate the net assets and certain legal entities of ParentCo, resulting in a cash payment of $1,072 to ParentCo by Alcoa Corporation (an additional $247 was paid to Arconic by Alcoa Corporation in the 2017 nine-month period, including $243 associated with the sale of certain of the Company’s energy operations – see Note C) with the net proceeds of a previous debt offering. In conjunction with the Separation Transaction, 146,159,428 shares of Alcoa Corporation common stock were distributed to ParentCo shareholders. Additionally, Arconic retained 36,311,767 shares of Alcoa Corporation common stock representing its 19.9% retained interest (Arconic sold 23,353,000 of these shares on February 14, 2017 and the remaining 12,958,767 shares on May 4, 2017).~~“Regular-way”~~ trading of Alcoa Corporation’s common stock began with the opening of the New York Stock Exchange on November 1, 2016 under the ticker symbol “AA.” Alcoa Corporation’s common stock has a par value of $0.01 per share.

In connection with the Separation Transaction, as of October 31, 2016, ~~Alcoa Corporation~~the Company and Arconic Inc. entered into ~~certain~~several agreements ~~with Arconic~~ to ~~implement the legal and structural separation between the two companies, govern the relationship between Alcoa Corporation and Arconic after the completion of~~effect the Separation Transaction, ~~and allocate between Alcoa Corporation and Arconic various assets, liabilities and obligations,~~ including ~~among other things, employee benefits, environmental liabilities, intellectual property, andtax-related~~ ~~assets and liabilities. These agreements included~~ a Separation and Distribution Agreement and a Tax Matters ~~Agreement, Employee Matters Agreement, Transition Services Agreement, certain Patent,Know-How,~~ ~~Trade Secret License and Trademark License Agreements, and Stockholder and Registration Rights~~ Agreement.

ParentCo incurred costs to evaluate, plan, and execute the Separation Transaction, and Alcoa Corporation was allocated a pro rata portion of those costs based on segment revenue (see Cost Allocations below). ParentCo recognized $152 from January 2016 through October 2016 and $24 in 2015 for costs related See Note A to the ~~Separation Transaction,~~Consolidated Financial Statements in Part II Item 8 of ~~which $68 and $12, respectively, was allocated to~~ Alcoa ~~Corporation. Accordingly, in~~Corporation’s Annual Report on Form 10-K for the 2016 third quarter and nine-month period, an allocation of $23 and $54, respectively, was included in Selling, general administrative, and other expenses on the accompanying Statement of Consolidated Operations.

year ended December 31, 2019 for additional information.

Principles of Consolidation. The Consolidated Financial Statements of Alcoa Corporation include the accounts of Alcoa Corporation and companies in which Alcoa Corporation has a controlling interest, including those that comprise the Alcoa World Alumina & Chemicals (AWAC) joint venture (see below). Intercompany transactions have been eliminated. The equity method of accounting is used for investments in affiliates and other joint ventures over which Alcoa Corporation has significant influence but does not have effective control. Investments in affiliates in which Alcoa Corporation cannot exercise significant influence are accounted for on the cost method.

AWAC is an unincorporated global joint venture between Alcoa Corporation and Alumina Limited ~~of Australia (Alumina Limited)~~ and consists of several affiliated operating entities, which own, or have an interest in, or operate the bauxite mines and alumina refineries within Alcoa Corporation’s Bauxite and Alumina segments (except for the Poços de Caldas mine and refinery and ~~a portion~~portions of the São Luís refinery and investment in Mineração Rio do Norte S.A., all in Brazil) and the Portland smelter in ~~Australia.~~Australia within Alcoa Corporation’s Aluminum segment. Alcoa Corporation owns 60% and Alumina Limited owns 40% of these individual entities, which are consolidated by the Company for financial reporting purposes and include Alcoa of Australia Limited (AofA), Alcoa World Alumina LLC (AWA), and Alcoa World Alumina Brasil Ltda. (AWAB). Alumina Limited’s interest in the equity of such entities is reflected as Noncontrolling interest on the accompanying Consolidated Balance Sheet.

Prior to the Separation Date, Alcoa Corporation did not operate as a separate, standalone entity. Alcoa Corporation’s operations were included in ParentCo’s financial results. Accordingly, for all periods prior to the Separation Date, the accompanying Consolidated Financial Statements were prepared from ParentCo’s historical accounting records and were presented on a standalone basis as if Alcoa Corporation’s operations had been conducted independently from ParentCo. Such Consolidated Financial Statements include the historical operations that were considered to comprise Alcoa Corporation’s businesses, as well as certain assets and liabilities that were historically held at ParentCo’s corporate level but were specifically identifiable or otherwise attributable to Alcoa Corporation. ParentCo’s net investment in these operations is reflected as Parent Company net investment on Alcoa Corporation’s Consolidated Balance Sheet. All significant transactions and accounts within Alcoa Corporation have been eliminated. All significant intercompany transactions between ParentCo and Alcoa Corporation were included within Parent Company net investment in the accompanying Consolidated Financial Statements.

~~Cost Allocations.~~ ~~The description and information on cost allocations is applicable for all periods included in the Consolidated Financial Statements prior to the Separation Date.~~

The Consolidated Financial Statements of Alcoa Corporation include general corporate expenses of ParentCo that were not historically charged to Alcoa Corporation for certain support functions that were provided on a centralized basis, such as expenses related to finance, audit, legal, information technology, human resources, communications, compliance, facilities, employee benefits and compensation, and research and development activities. These general corporate expenses were included in the accompanying Statement of Consolidated Operations within Cost of goods sold, Selling, general administrative and other expenses, and Research and development expenses. These expenses were allocated to Alcoa Corporation on the basis of direct usage when identifiable, with the remainder allocated based on Alcoa Corporation’s segment revenue as a percentage of ParentCo’s total segment revenue for both Alcoa Corporation and Arconic.

All external debt not directly attributable to Alcoa Corporation was excluded from Alcoa Corporation’s Consolidated Balance Sheet. Financing costs related to these debt obligations were allocated to Alcoa Corporation based on the ratio of capital invested in Alcoa Corporation to the total capital invested by ParentCo in both Alcoa Corporation and Arconic, and were included in the accompanying Statement of Consolidated Operations within Interest expense.

~~The following table reflects the allocations described above:~~

   Third
quarter
ended    Nine
months
ended
   September 30, 2016
Cost of goods sold⁽¹⁾
   $ 13    $ 39
Selling, general administrative, and other expenses⁽²⁾
   47    124
Research and development expenses
   –      2
Provision for depreciation, depletion, and amortization
   5    15
Restructuring and other charges⁽³⁾
   1    1
Interest expense
   59    178
Other expenses (income), net
   1    (8 )

⁽¹⁾	~~Allocation principally relates to expenses for ParentCo’s retained pension and other postretirement benefits associated with closed and sold operations.~~

⁽²⁾	~~Allocation includes costs incurred by ParentCo associated with the Separation Transaction (see Separation Transaction above).~~

⁽³⁾	~~Allocation primarily relates to layoff programs for ParentCo corporate employees.~~

~~Management believes the assumptions regarding the allocation of ParentCo’s general corporate expenses and financing costs were reasonable.~~

Nevertheless, the Consolidated Financial Statements of Alcoa Corporation may not include all of the actual expenses that would have been incurred and may not reflect Alcoa Corporation’s consolidated results of operations, financial position, and cash flows had it been a standalone company during the periods prior to the Separation Date. Actual costs that would have been incurred if Alcoa Corporation had been a standalone company would depend on multiple factors, including organizational structure, capital structure, and strategic decisions made in various areas, including information technology and infrastructure. Transactions between Alcoa Corporation and ParentCo, including sales to Arconic, were included as related party transactions in the Consolidated Financial Statements and are considered to be effectively settled for cash at the time the transaction was recorded. The total net effect of the settlement of these transactions is reflected in the accompanying Statement of Consolidated Cash Flows as a financing activity and in Alcoa Corporation’s Consolidated Balance Sheet as Parent Company net investment.

~~Cash Management.~~ ~~The description and information on cash management is applicable for all periods included in the Consolidated Financial Statements prior to the Separation Date.~~

Cash was managed centrally with certain net earnings reinvested locally and working capital requirements met from existing liquid funds. Accordingly, the cash and cash equivalents held by ParentCo at the corporate level were not attributed to Alcoa Corporation for any of the periods prior to the Separation Date. Only cash amounts specifically attributable to Alcoa Corporation were reflected on the Company’s Consolidated Balance Sheet. Transfers of cash, both to and from ParentCo’s centralized cash management system, were reflected as a component of Parent Company net investment on Alcoa Corporation’s Consolidated Balance Sheet and as a financing activity on the accompanying Consolidated Statement of Cash Flows.

ParentCo had an arrangement with several financial institutions to sell certain customer receivables without recourse on a revolving basis. The sale of such receivables was completed through the use of a bankruptcy-remote special-purpose entity, which was a consolidated subsidiary of ParentCo. In connection with this arrangement, certain of Alcoa Corporation’s customer receivables were sold on a revolving basis to this bankruptcy-remote subsidiary of ParentCo; these sales were reflected as a component of Parent Company net investment on Alcoa Corporation’s accompanying Consolidated Balance Sheet.

ParentCo participated in several accounts payable settlement arrangements with certain vendors and third-party intermediaries. These arrangements provided that, at the vendor’s request, the third-party intermediary advance the amount of the scheduled payment to the vendor, less an appropriate discount, before the scheduled payment date and ParentCo made payment to the third-party intermediary on the date stipulated in accordance with the commercial terms negotiated with its vendors. In connection with these arrangements, certain of Alcoa Corporation’s accounts payable were settled, at the vendor’s request, before the scheduled payment date; these settlements were reflected as a component of Parent Company net investment on Alcoa Corporation’s Consolidated Balance Sheet.

~~Related Party Transactions.~~ Transactions between Alcoa Corporation and Arconic have been presented as related party transactions in the accompanying Consolidated Financial Statements. Sales to Arconic from Alcoa Corporation were $239 and $641 in the 2017 third quarter and nine-month period, respectively, and $254 and $753 in the 2016 third quarter and nine-month period, respectively. As of

September 30, 2017 and December 31, 2016, outstanding receivables from Arconic were $96 and $67, respectively, and were included in Receivables from customers on the accompanying Consolidated Balance Sheet.

B. Recently Adopted and Recently Issued Accounting Guidance

Adopted

On January 1, ~~2017, Alcoa Corporation~~2020, the Company adopted ~~changes~~the following Accounting Standard Updates (ASU) issued by the Financial Accounting ~~Standards~~Standard Board (FASB), none of which had a material impact on the Company’s Consolidated Financial Statements:

•

ASU No. 2019-08, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606);

•

ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software;

•

ASU No. 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20);

•

ASU No. 2018-13, Fair Value Measurement (Topic 820); and,

•

ASU No. 2016-13, Financial Instruments – Credit Losses.

Issued

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) which is intended to simplify the accounting for income taxes by eliminating certain exceptions and simplifying certain requirements under Topic 740. Updates are related to intraperiod tax allocation, deferred tax liabilities for equity method investments, interim period tax calculations, tax laws or rate changes in interim periods, and income taxes related to employee stock ownership plans. The guidance for ASU No. 2019-12 becomes effective for Alcoa on January 1, 2021. The primary provision expected to impact the Company is related to intraperiod tax allocations, which have historically not had a significant impact on the Company. Upon adoption of this provision there will be no impact to the ~~subsequent measurement~~Consolidated Financial Statements. Once adopted, the provision will eliminate the requirement to make an intraperiod allocation if there is a loss in continuing operations and income outside of ~~inventory. Prior~~continuing operations. Management is currently evaluating the remaining provisions but does not expect a material impact to ~~these changes, an entity was required~~the Consolidated Financial Statements.

In March 2020, the FASB issued ASU No. 2020-04 to ~~measure its inventory at~~provide optional guidance for a limited period of time to ease the lower of cost or market, whereby market can be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. The changes require that inventory be measured atpotential burden in accounting for (or recognizing the ~~lower of cost and net realizable value, thereby eliminating~~effects of) reference rate reform on financial reporting. Management is currently evaluating the ~~use~~impact of the ~~other two market methodologies. Net realizable value is defined~~replacement of the London Interbank Offered Rate (LIBOR) as well as the ~~estimated selling prices in~~impact that the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. These changes do not apply to inventories measured using LIFO or the retail inventory method. Prior to these changes, Alcoa Corporation applied the net realizable value market option to measure~~non-LIFO~~ ~~inventories at the lower of cost or market. The~~expected adoption of ~~these changes had no impact~~the applicable provisions within the optional guidance will have on the Consolidated Financial Statements.

On January 1, 2017, Alcoa Corporation adopted changes issued by the FASB to derivative instruments designated as hedging instruments. These changes clarify that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument does not, in and of itself, require~~de-designation~~ ~~of that hedging relationship provided that all other hedge accounting criteria continue to be met.~~ The adoption of ~~these changes had no immediate impact on~~ the ~~Consolidated Financial Statements; however, this guidance~~applicable provisions will ~~need~~coincide with the modifications of the affected contracts.

C. Divestitures – During the first quarter of 2020, the Company sold Elemental Environmental Solutions LLC (EES), a wholly-owned Alcoa subsidiary that operated the waste processing facility in Gum Springs, Arkansas, to a global environmental firm in a transaction valued at $250. At the close of the transaction the Company recorded a gain of $180 (pre- and after-tax; see Note Q) and received $200 with another $50 held in escrow to be ~~considered~~paid to Alcoa if certain post-closing conditions are satisfied, which would result in additional gain being recorded. During the ~~event the existing counterparty to any~~second quarter of ~~Alcoa Corporation’s derivative instruments changes to a new counterparty.~~

~~On January 1, 2017, Alcoa Corporation adopted changes issued by the FASB to equity method investments. These changes eliminate the requirement for~~2020, an ~~investor to adjust an equity method investment, results of operations, and retained earnings retroactively on astep-by-step~~ ~~basis as if the equity method had been in effect during all previous periods that the investment had been held~~additional $1 gain was recorded as a result of ~~an increase in the level of ownership interest or degree of influence. Additionally, an entity that has anavailable-for-sale~~ equity security that becomes qualified for the equity method of accounting must recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The adoption of these changes had no immediate impact on the Consolidated Financial Statements; however, this guidance will need to be considered in the event any of Alcoa Corporation’s investments undergo a change as previously described.

On January 1, 2017, Alcoa Corporation adopted changes issued by the FASB to employee share-based payment accounting. Prior to these changes, an entity must determine for each share-based payment award whether the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes results in either an excess tax benefit or a tax deficiency. Excess tax benefits are recognized in additional~~paid-in~~ capital; tax deficiencies are recognized either as an offset to accumulated excess tax benefits, if any, or in the income statement. Excess tax benefits are not recognized until the deduction reduces taxes payable. The changes require all excess tax benefits and tax deficiencies related to share-based payment awards to be recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. An entity also should recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. Additionally, the presentation of excess tax benefits related to share-based payment awards in the statement of cash flows is changed. Prior to these changes, excess tax benefits must be separated from other income tax cash flows and classified as a financing activity. The changes require excess tax benefits to be classified along with other income tax cash flows as an operating activity. Also, the changes require cash paid by an employer when directly withholding shares for~~tax-withholding~~ purposes to be classified as a financing activity. Prior to these changes, there was no specific guidance on the classification in the statement of cash flows of cash paid by an employer to the tax authorities when directly withholding shares for~~tax-withholding~~ purposes. Additionally, for a share-based award to qualify for equity classification it cannot partially settle in cash in excess of the employer’s minimum statutory withholding requirements. The changes permit equity classification of share-based awards for withholdings up to the maximum statutory tax rates in applicable jurisdictions. The adoption of these changes had an immaterial impact on the Consolidated Financial Statements.

~~On January 1, 2017, Alcoa Corporation adopted changes issued by the FASB to the accounting for intra-entity transactions, other than inventory. Prior to these changes, no immediate tax impact is~~

recognized in an entity’s financial statements as a result of intra-entity transfers of assets. An entity is precluded from reflecting a tax benefit or expense from an intra-entity asset transfer between entities that file separate tax returns, whether or not such entities are in different tax jurisdictions, until the asset has been sold to a third party or otherwise recovered. The buyer of such asset is prohibited from recognizing a deferred tax asset for the temporary difference arising from the excess of the buyer’s tax basis over the cost to the seller. The changes require the current and deferred income tax consequences of the intra-entity transfer to be recorded when the transaction occurs. The exception to defer the tax consequences of inventory transactions is maintained. The adoption of these changes had an immaterial impact on the Consolidated Financial Statements.

On January 1, 2017, Alcoa Corporation adopted changes issued by the FASB to consolidation accounting. Prior to these changes, an entity was required to consider indirect economic interests in a variable interest entity held through related parties under common control as direct interests in their entirety in the entity’s assessment of whether it is the primary beneficiary of the variable interest entity. The changes result in an entity considering such indirect economic interests only on a proportionate basis as indirect interests instead of as direct interests in their entirety. The adoption of these changes had no impact on the Consolidated Financial Statements; however, this guidance will need to be considered in future assessments of whether Alcoa Corporation is the primary beneficiary of a variable interest entity.

~~Issued~~

In January 2017, the FASB issued changes to accounting for business combinations. These changes clarify the definition of a business for the purposes of evaluating whether a particular transaction should be accounted for as an acquisition or disposal of a business or an asset. Generally, a business is an integrated set of assets and activities that contain inputs, processes, and outputs, although outputs are not required. These changes provide a “screen” to determine whether an integrated set of assets and activities qualifies as a business. If substantially all of the fair value of the gross assets is concentrated in a single identifiable asset or a group of similar identifiable assets, the definition of a business has not been met and the transaction should be accounted for as an acquisition or disposal of an asset. Otherwise, an entity is required to evaluate whether the integrated set of assets and activities include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and are no longer to consider whether a market participant could replace any missing elements. These changes also narrow the definition of an output. Currently, an output is defined as the ability to provide a return in the form of dividends, lower costs, or other economic benefits directly to investors, owners, members, or participants. An output would now be defined as the ability to provide goods or services to customers, investment income, or other revenues. These changes become effective for Alcoa Corporation on January 1, 2018. Management has determined that the adoption of these changes will not have an immediate impact on the Consolidated Financial Statements. This guidance will need to be considered in the event Alcoa Corporation acquires or disposes of an integrated set of assets and activities.

In January 2017, the FASB issued changes to the assessment of goodwill for impairment as it relates to the quantitative test. Currently, there are two steps when performing a quantitative impairment test. The first step requires an entity to compare the current fair value of a reporting unit to its carrying value. In the event the reporting unit’s estimated fair value is less than its carrying value, an entity performs the second step, which is to compare the carrying amount of the reporting unit’s goodwill with the implied fair value of that goodwill. The implied fair value of goodwill is the excess of the fair value of the reporting unit over the fair value amounts assigned to all of the assets and liabilities of that unit as if the reporting unit was acquired in a business combination and the fair value of the reporting unit represented the purchase price. If the carrying value of goodwill exceeds its implied fair value, an impairment loss equal to such excess would be recognized. These changes eliminate the second step of the quantitative impairment test. Accordingly, an entity would recognize an impairment of goodwill for a reporting unit, if under what is currently referred to as the first step, the estimated fair value of the reporting unit is less than the carrying value. The impairment would be equal to the excess of the reporting unit’s carrying value over its fair value not to exceed the total amount of goodwill applicable to that reporting unit. These changes become effective for Alcoa Corporation on January 1, 2020. Management has determined that the adoption of these changes will not have an immediate impact on the Consolidated Financial Statements. This guidance will need to be considered each time Alcoa Corporation performs an assessment of goodwill for impairment under the quantitative test.

In March 2017, the FASB issued changes to the presentation of net periodic benefit cost related to pension and other postretirement benefit plans. These changes require that an entity report the service cost component of net periodic benefit cost in the same line item(s) on the statement of operations as other compensation costs arising from services rendered by the pertinent employees during a reporting period. The other components of net periodic benefit cost (see Note J) are required to be presented

separately from the service cost component. In other words, these other components may be aggregated and presented as a separate line item or they may be included in existing line items on the statement of operations other than such line items that include the service cost component. Currently, Alcoa Corporation includes all components of net periodic benefit cost in Cost of goods sold (business employees) and Selling, general administrative, and other expenses (corporate employees) consistent with the location of other compensation costs related to the respective employees. Additionally, these changes only allow the service cost component to be capitalized as applicable (e.g., as a cost of internally manufactured inventory). These changes become effective for Alcoa Corporation on January 1, 2018. Other than providing additional disclosure, management has determined that the adoption of these changes will not have a material impact on the Consolidated Financial Statements.

In May 2017, the FASB issued changes to the accounting for stock-based compensation when there has been a modification to the terms or conditions of a share-based payment award. These changes require an entity to account for the modification only when there has been a substantive change to the terms or conditions of a share-based payment award. A substantive change occurs when the fair value, vesting conditions or balance sheet classification (liability or equity) of a share-based payment award is/are different immediately before and after the modification. Currently, an entity is required to account for any modification in the terms or conditions of a share-based payment award. These changes become effective for Alcoa Corporation on January 1, 2018. Management has determined that the adoption of these changes will not have an immediate impact on the Consolidated Financial Statements. This guidance will need to be considered if Alcoa Corporation initiates a modification that is determined to be a substantive change to an outstanding stock-based award.

In August 2017, the FASB issued changes to the accounting for hedging activities. These changes permit hedge accounting for risk components in hedging relationships involving nonfinancial risk and interest rate risk; reduce current limitations on the designation and measurement of a hedged item in a fair value hedge of interest rate risk; remove the requirement to separately measure and report hedge ineffectiveness; provide an election to systematically and rationally recognize in earnings the initial value of any amount excluded from the assessment of hedge effectiveness for all types of hedges; and lighten the requirements of effectiveness testing. Additionally, modifications to existing disclosures, as well as additional disclosures, will be required to reflect these changes regarding the measurement and recording of hedging activities. These changes become effective for Alcoa Corporation on January 1, 2019 (early adoption is permitted). Management is currently evaluating early adopting these changes and the potential impact of these changes on the Consolidated Financial Statements.

In May 2014, the FASB issued changes to the recognition of revenue from contracts with customers. These changes created a comprehensive framework for all entities in all industries to apply in the determination of when to recognize revenue, and, therefore, supersede virtually all existing revenue recognition requirements and guidance. This framework is expected to result in less complex guidance in application while providing a consistent and comparable methodology for revenue recognition. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this principle, an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract(s), (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract(s), and (v) recognize revenue when, or as, the entity satisfies a performance obligation. In August 2015, the FASB deferred the effective date by one year, making these changes effective for Alcoa Corporation on January 1, 2018. Through a previously established project team, the Company has completed a detailed review of the terms and provisions of its customer contracts in light of these changes. The project team is in the process of finalizing the evaluation of these contracts under the new guidance, as well as assessing the need for any potential changes to the Company’s accounting policies and internal control structure. That said, Alcoa Corporation recognizes revenue when title, ownership, and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product and iscertain post-closing adjustments based on the ~~applicable shipping terms. Alcoa Corporation’s sales~~terms of ~~its products~~the agreement. Further post-closing adjustments may occur related to ~~customers represent single performance obligations, which~~this transaction and are not expected to be ~~impacted by these changes. As a result, management does not expect the adoption of these changes to have a material impact on the Consolidated Financial Statements.~~significant.

~~C. Acquisitions and Divestitures~~– ~~In February 2017, Alcoa Corporation’s wholly-owned subsidiary, Alcoa Power Generating Inc., completed the sale of its215-megawatt~~ Yadkin Hydroelectric Project (Yadkin) to Cube Hydro Carolinas, LLC for $246 in cash ($241 was received in the 2017 first quarter and $5 was received in the 2017 second quarter). In the 2017 nine-month period, Alcoa Corporation recognized a gain of $120~~(pre-~~ ~~andafter-tax)~~ in Other income, net on the accompanying Statement of Consolidated Operations. In accordance with the Separation and Distribution Agreement (see Note A), Alcoa Corporation remitted $243 of the proceeds to Arconic. At December 31, 2016, Alcoa Corporation had a liability of $243, which was included in Other current liabilities on the accompanying Consolidated

Balance Sheet. The sale of Yadkin is subject to post-closing adjustments related to potential earnouts through January 31, 2027, unless the provisions of the earnouts are met earlier. Any such adjustment would result in Alcoa Corporation receiving additional cash (none of which would be remitted to Arconic) and recognizing income. Yadkin encompasses four hydroelectric power developments (reservoirs, dams, and powerhouses), known as High Rock, Tuckertown, Narrows, and Falls, situated along a~~38-mile~~ stretch of the Yadkin River through the central part of North Carolina. Prior to the divestiture, the power generated by Yadkin was primarily sold into the open market. Yadkin generated sales of $29 in 2016, and had approximately 30 employees as of December 31, 2016.

D. Restructuring and Other Charges, Net– In the ~~third~~second quarter and ~~nine-month~~six-month period of ~~2017,~~2020, Alcoa Corporation recorded ~~$10 of income and $12 of expense, respectively, in~~ Restructuring and other charges, net, of $37 and $39, respectively, which were primarily comprised of costs related to the ~~following components: $6~~curtailment of the Intalco (Washington) smelter of $27 (both periods), and ~~$24,~~$11 and $13, respectively, for additional contract costs related to the curtailed Wenatchee (Washington) ~~and São Luís (Brazil) smelters; $4 and $17, respectively, for layoff costs,~~smelter, in addition to several insignificant items including ~~the separation of approximately 10 and 120 (110 in the Aluminum segment) employees, respectively, and~~impacts related to pension ~~costs of $3 and $6, respectively~~curtailments (see Note ~~J); $7 (both periods) for costs related to the relocation~~L).

In April 2020, as part of the Company’s headquarters and principal executive office from New York, New York to Pittsburgh, Pennsylvania; a charge of $2 (both periods) for other miscellaneous items; and a reversal of $29 and $38, respectively, associated with several reserves related to prior periods (see below).

~~On July 11, 2017,~~portfolio review, Alcoa Corporation announced ~~plans to restart three (161,400 metric tons of capacity)~~the curtailment of the ~~five potlines (268,800 metric tons~~remaining 230 kmt of ~~capacity)~~uncompetitive smelting capacity at the ~~Warrick (Indiana)~~Intalco (Washington) smelter amid declining market conditions. The full curtailment, which includes 49 kmt of earlier-curtailed capacity is expected to be ~~complete~~completed during the third quarter of 2020. The $27 net restructuring charge recorded in the second quarter of ~~2018. This smelter~~2020 was ~~previously permanently closed in March 2016 by ParentCo. The capacity identified~~comprised of $17 for ~~restart will directly supply~~severance and employee termination costs from the ~~existing rolling mill at the Warrick location to improve efficiency~~separation of ~~the integrated site~~approximately 685 employees, $11 for contract termination costs, and ~~provide an additional source~~a net curtailment gain of ~~metal to help meet an anticipated increase in production volumes. As a result of the decision to reopen this smelter, in the 2017 third quarter, Alcoa Corporation reversed $29 in remaining liabilities~~$1 related to the ~~original closure decision. These liabilities consisted of $20 in asset retirement obligations~~U.S. hourly defined benefit pension and ~~$4 in environmental remediation obligations, which were necessary due to the previous decision to demolish the smelter, and $5 in~~retiree life plans (see Note L). The severance costs and contract termination ~~costs. Additionally,~~costs are expected to be paid primarily in the ~~carrying value~~third quarter of 2020. At June 30, 2020, approximately 250 of the ~~smelter~~685 employees had been terminated with approximately $2 of payments made against the severance and related assets was reduced to zero as the smelter ramped down between the permanent closure decision date (end of 2015) and the end of March 2016. Once these assets are placed back into service in conjunction with the restart, their carrying value will remain zero. As such, only newly acquired or constructed assets related to the Warrick smelter will be depreciated.employee termination cost reserve.

In the ~~third~~second quarter and ~~nine-month~~six-month period of ~~2016,~~2019, Alcoa Corporation recorded Restructuring and other charges, net of ~~$17~~$370 and ~~$109, respectively.~~

~~Restructuring~~$483, respectively, which were comprised of the following components: $5 and ~~other charges in the 2016 third quarter included $17~~$108, respectively, for layoff costs related to cost reduction initiatives, including the separation of approximately 30 employees in the Aluminum segment and related pension settlement costs (see Note J); a net credit of $1 for other miscellaneous items; and a net charge of $1 related to corporate actions of ParentCo allocated to Alcoa Corporation.

In the 2016 nine-month period, Restructuring and other charges included $84 for additional net costs related to decisions made in late 2015 to permanently close and demolish the Warrick smelter (see above) and to curtail the Wenatchee smelter and Point Comfort (Texas) refinery (see below); $28 for layoff costs related to cost reduction initiatives, including the separation of approximately 60 employees in the Aluminum segment and related pension settlement costs (see Note J); a net charge of $1 related to corporate actions of ParentCo allocated to Alcoa Corporation (see Cost Allocations in Note A); and a reversal of $4 associated with several layoff reserves related to prior periods.

~~In the 2016 nine-month period, the additional net~~exit costs related to the ~~closure~~curtailment of the Avilés and ~~curtailment actions included accelerated depreciation of $70~~La Coruña smelters in Spain (see below); $38 (both periods) related to the ~~Warrick smelter as it continued~~curtailment of certain pension benefits; $319 (both periods) related to ~~operate through March 2016; a reversal~~the divestiture of ~~$24 ($4~~Alcoa Corporation’s interest in the ~~2016 third quarter) associated with severance~~Ma’aden Rolling Company (MRC) (see below); $1 and $8, respectively, for closure costs ~~initially~~related to a coal mine; and $7 and $10, respectively, for net charges related to various items.

Restructuring charges recorded in ~~late 2015;~~the first quarter of 2019 related to the smelter curtailments in Spain included asset impairments of $80, employee-related costs of $15 and ~~$38 ($2~~contract termination costs of $8. Additional charges recorded in the ~~2016 third quarter) in other costs. Additionally in the 2016 nine-month period,~~first quarter of 2019 included a $15 write down of remaining inventories ~~mostly operating supplies and raw materials, were written down~~ to their net realizable value, ~~resulting in a charge of $5,~~ which was recorded in Cost of goods sold, and $2 in miscellaneous charges recorded in Selling, general administrative, and other expenses on the accompanying Statement of Consolidated Operations. ~~The other~~Restructuring charges recorded in the second quarter of 2019 related to this process were comprised of severance costs of ~~$38 ($2~~$3 and other employee-related costs of $2.

The $319 restructuring charge resulting from the MRC divestiture includes the write-off of Alcoa Corporation’s investment in MRC of $161, cash contributions of $100, and the ~~2016 third quarter) represent $30 ($3 in~~write-off of Alcoa Corporation’s share of MRC’s delinquent payables due to Ma’aden Aluminum Company of $59 that were forgiven as part of this transaction, which were partially offset by a gain of $1 resulting from the ~~2016 third quarter) for contract terminations, $4 (($3) in~~write-off of the ~~2016 third quarter) in asset retirement obligations for the rehabilitation~~fair value of ~~a coal mine related to the Warrick smelter, and $4 ($2 in the 2016 third quarter) in other related costs.~~

debt guarantee.

Alcoa Corporation does not include Restructuring and other charges, net in the results of its reportable segments. The impact of allocating such charges to segment results would have been as follows:


	Third quarter ended September 30,						Nine months ended September 30,					Second quarter ended June 30,					Six months ended June 30,
	2017			2016			2017			2016		2020		2019			2020			2019
Bauxite	$	1		$	–		$	1		$	–	$	—	$	(1	)	$	—		$	—
Alumina		4			(1	)		4			1		—		—			2			1
Aluminum		(22	)		17			(1	)		107		37		353			39			460

Segment total		(17	)		16			4			108		37		352			41			461
Corporate		7			1			8			1		—		18			(2	)		22

Total restructuring and other charges	$	(10	)	$	17		$	12		$	109

Total Restructuring and other charges, net												$	37	$	370		$	39		$	483

During 2019, Alcoa Corporation announced and implemented a new operating model that resulted in a leaner, more integrated, operator-centric organization. As ~~of September 30, 2017, approximately 70~~a result of the ~~120 employees associated with 2017~~ restructuring, ~~programs were separated. The remaining separations for 2017 restructuring programs are expected~~a Severance and other employee termination cost reserve of $27 remained at December 31, 2019. During the second quarter and six-month period of 2020, changes to ~~be completed~~the reserve included additional net charges of $1 and $2, respectively, an increase of $1 and a reduction of $1, respectively, caused by ~~the end~~foreign currency impacts, and a reduction from cash payments of ~~2017.~~$9 and $22, respectively. As of June 30, ~~2017,~~2020, approximately 225 of the ~~separations associated~~260 employees expected to be terminated in connection with ~~2016 and 2015 restructuring programs~~the implementation of the new operating model were ~~essentially complete.~~separated. In addition to the employees separated under the program, the Company eliminated 60 positions as open roles or retirements were not replaced.

In December 2019, Alcoa Corporation announced the ~~2017 third~~closure of its Point Comfort (Texas) alumina refinery. As a result of the restructuring, a Severance and other employee termination cost reserve of $4 remained at December 31, 2019. During the second quarter and ~~nine-month~~six-month period ~~cash~~of 2020, payments of ~~$2 and $7, respectively, were made against layoff reserves related to 2017 restructuring programs, less than~~ $1 and $2, respectively, were made against ~~layoff reserves related~~the reserve. At June 30, 2020, approximately 30 of the 40 employees were separated.

Also during 2019, Alcoa Corporation curtailed and subsequently divested the aluminum facilities at Avilés and La Coruña (Spain). As a result of the divestiture, a restructuring reserve of $68 remained at December 31, 2019 relating to ~~2016 restructuring programs,~~financial contributions to the investment firm that acquired the facilities. In the second quarter and $4six-month period of 2020, cash payments of $12 and ~~$16,~~$24, respectively, were made against ~~layoff reserves related~~the reserve. The remaining reserve of $44 is scheduled to ~~2015 restructuring programs.~~be paid through the second quarter of 2021.

Activity and reserve balances for restructuring charges were as follows:

   Layoff
costs    Other
costs    Total
Reserve balances at December 31, 2015
   $ 137    $ 15    $ 152






2016:

Cash payments
   (74 )    (35 )    (109 )
Restructuring charges
   32    168    200
Other*
   (57 )    (120 )    (177 )






Reserve balances at December 31, 2016
   38    28    66






2017:

Cash payments
   (25 )    (33 )    (58 )
Restructuring charges
   17    30    47
Other*
   (17 )    (2 )    (19 )






Reserve balances at September 30, 2017
   $ 13    $ 23    $ 36

	Severance and employee termination costs			Other costs			Total
Balance at December 31, 2018	$	5		$	42		$	47
Restructuring and other charges, net		51			161			212
Cash payments		(19	)		(99	)		(118	)
Reversals and other		(2	)		(2	)		(4	)
Balance at December 31, 2019		35			102			137
Restructuring and other charges, net		19			24			43
Cash payments		(28	)		(43	)		(71	)
Reversals and other		(1	)		(3	)		(4	)
Balance at June 30, 2020	$	25		$	80		$	105

Other includes reversals of previously recorded restructuring charges and the effects of foreign currency translation. In the 2017 nine-month period and 2016, Other for layoff costs also included a reclassification of $6 (see Note J) and $16, respectively, in pension benefits costs, as these obligations were included in Alcoa Corporation’s separate liability for pension benefits obligations. Additionally in 2016, Other for other costs also included a reclassification of the following restructuring charges: $97 in asset retirement and $26 in environmental obligations, as these liabilities were included in Alcoa Corporation’s separate reserves for asset retirement obligations and environmental remediation.

The activity and reserve balances include only Restructuring and other charges, net that impact the reserves for Severance and employee termination costs and Other costs. Restructuring and other charges, net that affected other liability accounts such as environmental obligations (see Note P), asset retirement obligations, and pension and other postretirement reserves (see Note L) are excluded from the above activity and balances. Reversals and other includes reversals of previously recorded liabilities and foreign currency translation impacts.

The ~~remaining reserves are expected~~noncurrent portion of the reserve was $1 and $13 at June 30, 2020 and December 31, 2019, respectively. At December 31, 2019, $12 related to ~~be paid in cash during~~financial contributions to the ~~remainder of 2017, with~~investment firm that acquired the ~~exception of $15, which is expected to be paid by no later than the end of 2019, for contract termination~~Avilés and ~~special layoff benefit payments.~~La Coruña aluminum facilities.

E. Segment Information – ~~Effective in the first quarter of 2017, management elected to change the profit and loss measure of Alcoa Corporation’s reportable segments fromAfter-tax~~ operating income (ATOI) to Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) for internal reporting and performance measurement purposes. This change was made to enhance the transparency and visibility of the underlying operating performance of each segment. Alcoa Corporation calculates 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. Previously, Alcoa Corporation calculated ATOI as Adjusted EBITDA minus (plus) the following items: Provision for depreciation, depletion, and amortization; Equity loss (income); Loss (gain) on certain asset sales; and Income taxes. Alcoa Corporation’s Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

business, into a new Aluminum business unit, as well as moving the financial results of previously closed operations, such as the Warrick smelter and Suriname refinery, into Corporate. The realignment was executed to align strategic, operational, and commercial activities, as well as to take advantage of synergies and reduce costs. The new Aluminum business unit is managed as a single operating segment. Prior to this change, each of these businesses were managed as individual operating segments and comprised the Aluminum, Cast Products, Energy, and Rolled Products segments. The existing Bauxite and Alumina segments and the new Aluminum segment represent Alcoa Corporation’s operating and reportable segments. The chief operating decision maker function regularly reviews the financial information, including Sales and Adjusted EBITDA, of these three operating segments to assess performance and allocate resources.

~~Segment information for all prior periods presented was revised to reflect the new segment structure, as well as the new measure of profit and loss.~~

The operating results of Alcoa Corporation’s reportable segments were as follows (differences between segment totals and ~~combined totals~~consolidated amounts are in Corporate):

												Bauxite		Alumina			Aluminum			Total
	Bauxite		Alumina			Aluminum			Total
Third quarter ended September 30, 2017
Second quarter ended June 30, 2020
Sales:
Third-party sales – unrelated party	$	104	$	713		$	1,851		$	2,668
Third-party sales – related party		—		—			239			239
Third-party sales												$	66	$	603		$	1,475		$	2,144
Intersegment sales		221		398			9			628			245		289			2			536

Total sales	$	325	$	1,111		$	2,099		$	3,535		$	311	$	892		$	1,477		$	2,680

Adjusted EBITDA	$	113	$	203		$	303		$	619
Segment Adjusted EBITDA												$	131	$	88		$	(34	)	$	185
Supplemental information:
Depreciation, depletion, and amortization	$	24	$	53		$	106		$	183		$	30	$	37		$	79		$	146
Equity loss		—		(5	)		(7	)		(12	)	$	—	$	(8	)	$	(12	)	$	(20	)
Third quarter ended September 30, 2016
Second quarter ended June 30, 2019
Sales:
Third-party sales – unrelated party	$	93	$	585		$	1,346		$	2,024
Third-party sales – related party		—		—			254			254
Third-party sales												$	67	$	864		$	1,757		$	2,688
Intersegment sales		192		317			2			511			246		445			4			695

Total sales	$	285	$	902		$	1,602		$	2,789		$	313	$	1,309		$	1,761		$	3,383

Adjusted EBITDA	$	97	$	78		$	183		$	358
Segment Adjusted EBITDA												$	112	$	369		$	3		$	484
Supplemental information:
Depreciation, depletion, and amortization	$	21	$	47		$	103		$	171		$	27	$	55		$	85		$	167
Equity loss		—		(9	)		(7	)		(16	)
Equity income (loss)												$	—	$	3		$	(17	)	$	(14	)

	Bauxite		Alumina			Aluminum			Total
Six months ended June 30, 2020
Sales:
Third-party sales	$	137	$	1,310		$	3,073		$	4,520
Intersegment sales		480		625			5			1,110
Total sales	$	617	$	1,935		$	3,078		$	5,630
Segment Adjusted EBITDA	$	251	$	281		$	28		$	560
Supplemental information:
Depreciation, depletion, and amortization	$	64	$	86		$	160		$	310
Equity loss		—		(17	)		(7	)		(24	)
Six months ended June 30, 2019
Sales:
Third-party sales	$	132	$	1,761		$	3,492		$	5,385
Intersegment sales		482		862			7			1,351
Total sales	$	614	$	2,623		$	3,499		$	6,736
Segment Adjusted EBITDA	$	238	$	741		$	(93	)	$	886
Supplemental information:
Depreciation, depletion, and amortization	$	55	$	103		$	174		$	332
Equity income (loss)		—		15			(39	)		(24	)

   Bauxite    Alumina    Aluminum Total
Nine months ended
September 30, 2017

Sales:

Third-party sales – unrelated party
   $ 254    $ 2,196    $ 5,243 $ 7,693
Third-party sales – related party
   —      —      641 641
Intersegment sales
   648    1,143    16 1,807






Total sales
   $ 902    $ 3,339    $ 5,900 $ 10,141






Adjusted EBITDA
   $ 321    $ 727    $ 730 $ 1,778
Supplemental information:

Depreciation, depletion, and amortization
   $ 61    $ 155    $ 315 $ 531
Equity loss
   —      (10 )    (11 ) (21 )
Nine months ended
September 30, 2016

Sales:

Third-party sales – unrelated party
   $ 224    $ 1,682    $ 3,996 $ 5,902
Third-party sales – related party
   —      —      753 753
Intersegment sales
   549    930    38 1,517






Total sales
   $ 773    $ 2,612    $ 4,787 $ 8,172






Adjusted EBITDA
   $ 273    $ 207    $ 528 $ 1,008
Supplemental information:

Depreciation, depletion, and amortization
   $ 57    $ 139    $ 310 $ 506
Equity loss
   —      (30 )    (24 ) (54 )

The following table reconciles total ~~segment~~Segment Adjusted EBITDA to consolidated net ~~income (loss)~~loss attributable to Alcoa Corporation:

   Third quarter ended
September 30,    Nine months ended
September 30,
   2017    2016    2017 2016
Total segment Adjusted EBITDA
   $ 619    $ 358    $ 1,778 $ 1,008
Unallocated amounts:

Impact of LIFO (I)
   (14 )    1    (36 ) 18
Metal price lag⁽¹⁾
   5    1    22 5
Corporate expense⁽²⁾
   (34 )    (47 )    (104 ) (133 )
Provision for depreciation, depletion, and amortization
   (194 )    (181 )    (563 ) (536 )
Restructuring and other charges (D)
   10    (17 )    (12 ) (109 )
Interest expense
   (26 )    (67 )    (77 ) (197 )
Other (expenses) income, net (N)
   (27 )    106    67 90
Other⁽³⁾
   (51 )    (52 )    (132 ) (185 )






Consolidated income (loss) before income taxes
   288    102    943 (39 )
Provision for income taxes
   (119 )    (92 )    (328 ) (178 )
Net income attributable to noncontrolling interest
   (56 )    (20 )    (202 ) (58 )






Consolidated net income (loss) attributable to Alcoa Corporation
   $ 113    $ (10 )    $ 413 $ (275 )

	Second quarter ended June 30,						Six months ended June 30,
	2020			2019			2020			2019
Total Segment Adjusted EBITDA	$	185		$	484		$	560		$	886
Unallocated amounts:
Transformation⁽¹⁾		(10	)		3			(26	)		5
Intersegment eliminations		30			(1	)		22			85
Corporate expenses⁽²⁾		(21	)		(28	)		(48	)		(52	)
Provision for depreciation, depletion, and amortization		(152	)		(174	)		(322	)		(346	)
Restructuring and other charges, net (D)		(37	)		(370	)		(39	)		(483	)
Interest expense		(32	)		(30	)		(62	)		(60	)
Other (expenses) income, net (Q)		(51	)		(50	)		81			(91	)
Other⁽³⁾		(17	)		(11	)		(52	)		(29	)
Consolidated (loss) income before income taxes		(105	)		(177	)		114			(85	)
Provision for income taxes		(45	)		(116	)		(125	)		(266	)
Net income attributable to noncontrolling interest		(47	)		(109	)		(106	)		(250	)
Consolidated net loss attributable to Alcoa Corporation	$	(197	)	$	(402	)	$	(117	)	$	(601	)

⁽¹⁾⁽¹⁾

~~Metal price lag describes~~

Transformation includes, among other items, the ~~timing difference created when the average price~~Adjusted EBITDA of ~~metal sold differs from the average cost of the metal when purchased by Alcoa Corporation’s rolled aluminum~~previously closed operations. ~~In general, when the price of metal increases, metal price lag is favorable, and when the price of metal decreases, metal price lag is unfavorable.~~

⁽²⁾⁽²⁾

Corporate ~~expense is primarily~~expenses are composed of general administrative and other expenses of operating the corporate headquarters and other global administrative ~~facilities.~~facilities, as well as research and development expenses of the corporate technical center.

⁽³⁾⁽³⁾

Other includes ~~among~~certain items that impact Cost of goods sold and Selling, general administrative, and other ~~items,~~expenses on Alcoa Corporation’s Statement of Consolidated Operations that are not included in the Adjusted EBITDA of ~~previously closed operations as applicable, pension and other postretirement benefit expenses associated with closed and sold operations, and intersegment profit elimination.~~the reportable segments.

The following table details Alcoa Corporation’s Sales by product division:

	Second quarter ended June 30,						Six months ended June 30,
	2020			2019			2020			2019
Primary aluminum	$	1,202		$	1,382		$	2,499		$	2,776
Alumina		600			862			1,307			1,759
Flat-rolled aluminum		271			327			543			639
Bauxite		61			63			120			121
Energy		22			85			74			154
Other		(8	)		(8	)		(14	)		(19	)
	$	2,148		$	2,711		$	4,529		$	5,430

Other primarily includes realized gains and losses related to embedded derivative instruments designated as cash flow hedges of forward sales of aluminum.

F. Earnings Per Share– Basic earnings per share (EPS) amounts are computed by dividing earnings by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding.

The information used to compute basic and diluted EPS attributable to Alcoa Corporation common shareholders was as follows (shares in millions):

											Second quarter ended June 30,						Six months ended June 30,
	Third quarter ended September 30,					Nine months ended September 30,					2020			2019			2020			2019
	2017		2016			2017		2016
Net income (loss) attributable to Alcoa Corporation	$	113	$	(10	)	$	413	$	(275	)

Net loss attributable to Alcoa Corporation											$	(197	)	$	(402	)	$	(117	)	$	(601	)
Average shares outstanding – basic		185		182			184		182			186			186			186			185
Effect of dilutive securities:
Stock options		1		—			1		—			—			—			—			—
Stock and performance awards		1		—			2		—

Stock units												—			—			—			—
Average shares outstanding – diluted		187		182			187		182			186			186			186			185

In the ~~2016 third~~second quarter and ~~nine-month~~six-month period of 2020, basic average shares outstanding and diluted average shares outstanding were the ~~EPS included on~~same because the ~~accompanying Statement~~effect of ~~Consolidated Operations was calculated based on the 182,471,195~~potential shares of ~~Alcoa Corporation~~ common stock ~~distributed on~~was anti-dilutive. Had Alcoa generated net income in the ~~Separation Date in conjunction with the completion~~second quarter or six-month period of ~~the Separation Transaction and is considered pro forma in nature. Prior~~2020, 1 million common share equivalents related to ~~November 1, 2016, Alcoa Corporation did not have any issued and outstanding publicly-traded common stock.~~

~~As of September 30, 2017, there were 5~~6 million outstanding ~~employee~~stock units and stock options ~~and stock awards (including performance), which resulted~~combined would have been included in diluted average shares outstanding for the periods. Options to purchase 2 million and 3 million of dilutive securities in the 2017 third quarter and nine-month period, respectively. The following describes, in general, how the dilutive securities are calculated. The calculation of dilutive securities requires a company to assume that it will purchase shares of ~~its own~~ common stock ~~from the stock market to offset the dilution that eventual vested employee stock compensation can create. This assumption is based on~~outstanding at June 30, 2020 were excluded because they had a ~~predetermined formula and does not consider whether a company engages in a regular practice~~weighted average exercise price of ~~purchasing its own common stock. The number of shares a company is presumed to have purchased of its own common stock is calculated based on~~$26.45 per share which was greater than the average market price of ~~a company’s~~Alcoa Corporation’s common stock.

In the second quarter and six-month period of 2019, basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential shares of common stock ~~during~~was anti-dilutive. Had Alcoa generated net income in the ~~respective period. The calculated number~~second quarter or the six-month period of 2019, 1 million common share equivalents related to 5 million outstanding stock units and stock options combined would have been included in diluted average shares ~~presumed purchased by~~outstanding for the periods. Options to purchase 2 million shares of common stock outstanding at June 30, 2019 were excluded because they had a ~~company is then subtracted from~~weighted average exercise price of $33.77 per share which was greater than the ~~total number~~average market price of shares issuable to the employees to derive the number of dilutive securities. As a result, each stock option or stock award that impacts the number of dilutive securities in a given period is included on a less than full share basis.

Alcoa Corporation’s common stock.

G. Accumulated Other Comprehensive Loss

The following table details the activity of the three components that comprise Accumulated other comprehensive loss for both Alcoa Corporation’s shareholders and ~~noncontrolling~~Noncontrolling interest:

													Alcoa Corporation						Noncontrolling interest
	Alcoa Corporation						Noncontrolling interest						Second quarter ended June 30,						Second quarter ended June 30,
	Third quarter ended September 30,						Third quarter ended September 30,						2020			2019			2020			2019
	2017			2016			2017			2016
Pension and other postretirement benefits (J)
Pension and other postretirement benefits (L)
Balance at beginning of period	$	(2,184	)	$	(353	)	$	(37	)	$	(53	)	$	(2,244	)	$	(2,242	)	$	(56	)	$	(45	)
Establishment of defined benefit plans		—			(2,704	)		—			—
Other comprehensive income (loss):
Other comprehensive (loss) income:
Unrecognized net actuarial loss and prior service cost/benefit		(6	)		(22	)		6			(1	)		(181	)		(78	)		1			(3	)
Tax benefit (expense)		2			17			(2	)		—

Total Other comprehensive (loss) income before reclassifications, net of tax		(4	)		(5	)		4			(1	)
Tax benefit														4			16			—			—
Total Other comprehensive loss before reclassifications, net of tax														(177	)		(62	)		1			(3	)
Amortization of net actuarial loss and prior service cost/benefit⁽¹⁾		50			38			1			1			52			83			1			1
Tax expense⁽²⁾		(2	)		(13	)		—			(1	)		(2	)		(11	)		—			—

Total amount reclassified from Accumulated other comprehensive loss, net of tax⁽⁷⁾		48			25			1			—			50			72			1			1

Total Other comprehensive income (loss)		44			20			5			(1	)

Total Other comprehensive (loss) income														(127	)		10			2			(2	)
Balance at end of period	$	(2,140	)	$	(3,037	)	$	(32	)	$	(54	)	$	(2,371	)	$	(2,232	)	$	(54	)	$	(47	)

Foreign currency translation
Balance at beginning of period	$	(1,515	)	$	(1,437	)	$	(600	)	$	(640	)	$	(2,823	)	$	(2,093	)	$	(1,079	)	$	(808	)
Other comprehensive income⁽³⁾		141			32			44			45			135			40			94			4

Balance at end of period	$	(1,374	)	$	(1,405	)	$	(556	)	$	(595	)	$	(2,688	)	$	(2,053	)	$	(985	)	$	(804	)

Cash flow hedges (K)
Cash flow hedges (M)
Balance at beginning of period	$	(104	)	$	334		$	63		$	11		$	169		$	(499	)	$	—		$	37
Other comprehensive loss:
Other comprehensive (loss) income:
Net change from periodic revaluations		(545	)		(434	)		(2	)		20			(513	)		80			(4	)		6
Tax benefit (expense)		109			95			1			(6	)		112			(12	)		1			(2	)

Total Other comprehensive (loss) income before reclassifications, net of tax		(436	)		(339	)		(1	)		14			(401	)		68			(3	)		4

Net amount reclassified to earnings:
Aluminum contracts⁽⁴⁾		33			4			—			—			1			12			—			—
Energy contracts⁽⁵⁾		(8	)		(50	)		(5	)		(34	)
Financial contracts⁽⁵⁾														4			(6	)		3			(7	)
Interest rate contracts⁽⁶⁾		—			—			—			—			1			—			—			—

Foreign exchange contracts⁽⁴⁾														7			4			—			—
Sub-total		25			(46	)		(5	)		(34	)		13			10			3			(7	)
Tax (expense) benefit⁽²⁾		(4	)		15			1			10			(2	)		1			(1	)		2

Total amount reclassified from Accumulated other comprehensive (loss) income, net of tax⁽⁷⁾		21			(31	)		(4	)		(24	)

Total Other comprehensive loss		(415	)		(370	)		(5	)		(10	)

Total amount reclassified from Accumulated other comprehensive loss, net of tax⁽⁷⁾														11			11			2			(5	)
Total Other comprehensive (loss) income														(390	)		79			(1	)		(1	)
Balance at end of period	$	(519	)	$	(36	)	$	58		$	1		$	(221	)	$	(420	)	$	(1	)	$	36

Total Accumulated other comprehensive loss													$	(5,280	)	$	(4,705	)	$	(1,040	)	$	(815	)

   Alcoa Corporation Noncontrolling interest
   Nine months ended
September 30, Nine months ended
September 30,
   2017 2016 2017 2016
Pension and other postretirement benefits (J)

Balance at beginning of period
   $ (2,330 ) $ (352 ) $ (56 ) $ (56 )
Establishment of defined benefit plans
   –   (2,704 ) –   –
Other comprehensive income:

Unrecognized net actuarial loss and prior service cost/benefit
   42 (44 ) 24 –
Tax benefit (expense)
   5 25 (2 ) –


Total Other comprehensive income (loss) before reclassifications, net of tax
   47 (19 ) 22 –


Amortization of net actuarial loss and prior service cost/benefit⁽¹⁾
   149 58 2 3
Tax expense⁽²⁾
   (6 ) (20 ) –   (1 )


Total amount reclassified from Accumulated other comprehensive loss, net of tax⁽⁷⁾
   143 38 2 2


Total Other comprehensive income
   190 19 24 2


Balance at end of period
   $ (2,140 ) $ (3,037 ) $ (32 ) $ (54 )


Foreign currency translation

Balance at beginning of period
   $ (1,655 ) $ (1,851 ) $ (677 ) $ (779 )
Other comprehensive income⁽³⁾
   281 446 121 184


Balance at end of period
   $ (1,374 ) $ (1,405 ) $ (556 ) $ (595 )


Cash flow hedges (K)

Balance at beginning of period
   $ 210 $ 603 $ 1 $ (3 )
Other comprehensive (loss) income:

Net change from periodic revaluations
   (975 ) (779 ) 88 35
Tax benefit (expense)
   186 170 (26 ) (10 )


Total Other comprehensive (loss) income before reclassifications, net of tax
   (789 ) (609 ) 62 25


Net amount reclassified to earnings:

Aluminum contracts⁽⁴⁾
   82 (1 ) –   –
Energy contracts⁽⁵⁾
   (11 ) (50 ) (7 ) (34 )
Interest rate contracts⁽⁶⁾
   –   7 –   5


Sub-total
   71 (44 ) (7 ) (29 )
Tax (expense) benefit⁽²⁾
   (11 ) 14 2 8


Total amount reclassified from Accumulated other comprehensive income (loss), net of tax⁽⁷⁾
   60 (30 ) (5 ) (21 )


Total Other comprehensive (loss) income
   (729 ) (639 ) 57 4


Balance at end of period
   $ (519 ) $ (36 ) $ 58 $ 1

	Alcoa Corporation						Noncontrolling interest
	Six months ended June 30,						Six months ended June 30,
	2020			2019			2020			2019
Pension and other postretirement benefits (L)
Balance at beginning of period	$	(2,282	)	$	(2,283	)	$	(56	)	$	(46	)
Other comprehensive (loss) income:
Unrecognized net actuarial loss and prior service cost/benefit		(201	)		(82	)		—			(3	)
Tax benefit		10			17			—			—
Total Other comprehensive loss before reclassifications, net of tax		(191	)		(65	)		—			(3	)
Amortization of net actuarial loss and prior service cost/benefit⁽¹⁾		106			128			2			2
Tax expense⁽²⁾		(4	)		(12	)		—			—
Total amount reclassified from Accumulated other comprehensive loss, net of tax⁽⁷⁾		102			116			2			2
Total Other comprehensive (loss) income		(89	)		51			2			(1	)
Balance at end of period	$	(2,371	)	$	(2,232	)	$	(54	)	$	(47	)

Foreign currency translation
Balance at beginning of period	$	(2,160	)	$	(2,071	)	$	(834	)	$	(810	)
Other comprehensive (loss) income⁽³⁾		(528	)		18			(151	)		6
Balance at end of period	$	(2,688	)	$	(2,053	)	$	(985	)	$	(804	)

Cash flow hedges (M)
Balance at beginning of period	$	(532	)	$	(211	)	$	20		$	31
Other comprehensive income (loss):
Net change from periodic revaluations		339			(272	)		(30	)		33
Tax (expense) benefit		(63	)		54			8			(10	)
Total Other comprehensive income (loss) before reclassifications, net of tax		276			(218	)		(22	)		23
Net amount reclassified to earnings:
Aluminum contracts⁽⁴⁾		14			25			—			—
Financial contracts⁽⁵⁾		7			(32	)		1			(25	)
Interest rate contracts⁽⁶⁾		2			—			—			—
Foreign exchange contracts⁽⁴⁾		15			8			—			—
Sub-total		38			1			1			(25	)
Tax (expense) benefit⁽²⁾		(3	)		8			—			7
Total amount reclassified from Accumulated other comprehensive loss, net of tax⁽⁷⁾		35			9			1			(18	)
Total Other comprehensive income (loss)		311			(209	)		(21	)		5
Balance at end of period	$	(221	)	$	(420	)	$	(1	)	$	36

Total Accumulated other comprehensive loss	$	(5,280	)	$	(4,705	)	$	(1,040	)	$	(815	)

⁽¹⁾	These amounts were included in the computation of net periodic benefit cost for pension and other postretirement benefits (see Note J)L).

⁽²⁾	These amounts were ~~included~~reported in Provision for income taxes on the accompanying Statement of Consolidated Operations.

⁽³⁾	In all periods presented, there were no tax impacts related to rate changes and no amounts were reclassified to earnings.

⁽⁴⁾	These amounts were ~~included~~primarily reported in Sales on the accompanying Statement of Consolidated Operations.

⁽⁵⁾	~~The~~ These amounts ~~for the third quarter and nine months ended September 30, 2017~~ were ~~included~~reported in Cost of goods sold on the accompanying Statement of Consolidated Operations. ~~The~~

⁽⁶⁾	These amounts ~~for the third quarter and nine months ended September 30, 2016~~ were ~~included~~reported in Other ~~income,~~expenses (income), net onof the accompanying Statement of Consolidated Operations.

⁽⁶⁾⁽⁷⁾

~~These amounts were included in Other expenses (income), net on the accompanying Statement of Consolidated Operations.~~

⁽⁷⁾	A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings. ~~These amounts were reflected on the accompanying Statement of Consolidated Operations in the line items indicated in footnotes 1 through 6.~~

H. Investments – A summary of unaudited financial information for Alcoa Corporation’s equity investments is as follows (amounts represent 100% of investee financial information):


	Third quarter ended September 30,					Nine months ended September 30,
	2017		2016			2017		2016
Second quarter ended June 30, 2020										Saudi Arabia Joint Venture			Mining			Energy			Other
Sales	$	979	$	888		$	2,853	$	2,684	$	507		$	209		$	47		$	85
Cost of goods sold		792		840			2,186		2,200		446			130			24			75
Net income (loss)		55		(6	)		97		23
Net (loss) income											(75	)		(5	)		20			(6	)
Equity in net (loss) income of affiliated companies, before reconciling adjustments											(19	)		3			7			(3	)
Other											(1	)		2			1			5
Alcoa Corporation’s equity in net (loss) income of affiliated companies											(20	)		5			8			2

Second quarter ended June 30, 2019
Sales										$	976		$	187		$	64		$	25
Cost of goods sold											821			132			35			23
Net (loss) income											(57	)		2			26			—
Equity in net (loss) income of affiliated companies, before reconciling adjustments											(14	)		3			10			—
Other											(2	)		(2	)		1			—
Alcoa Corporation’s equity in net (loss) income of affiliated companies											(16	)		1			11			—

Six months ended June 30, 2020
Sales										$	1,092		$	427		$	106		$	158
Cost of goods sold											908			278			50			142
Net (loss) income											(88	)		4			47			(15	)
Equity in net (loss) income of affiliated companies, before reconciling adjustments											(22	)		9			18			(7	)
Other											(4	)		(1	)		(1	)		10
Alcoa Corporation’s equity in net (loss) income of affiliated companies											(26	)		8			17			3

Six months ended June 30, 2019
Sales										$	1,934		$	415		$	127		$	39
Cost of goods sold											1,673			281			64			38
Net (loss) income											(125	)		—			54			(6	)
Equity in net (loss) income of affiliated companies, before reconciling adjustments											(31	)		8			21			(3	)
Other											4			6			1			2
Alcoa Corporation’s equity in net (loss) income of affiliated companies											(27	)		14			22			(1	)

During the second quarter of 2019, Alcoa Corporation and the Saudi Arabian Mining Company (Ma’aden) amended the joint venture agreement that governed the operations of each of the three companies that comprised the joint venture at that time. The amendment resulted in various changes including the divestiture of the Company’s investment in Ma’aden Rolling Company (MRC). As a result, Saudi Arabia Joint Venture only includes MRC’s results for the second quarter and six-month period of 2019.

The Company’s basis in the Elysis^TM Limited Partnership, included in Other in the table above, has been reduced to 0 for its share of losses incurred to date. As a result, the Company has $27 in unrecognized losses as of June 30, 2020 that will be recognized upon additional contributions into the partnership.

I. Receivables

revolving basis. The unsold portion of the specified receivable pool will be pledged as collateral to the purchasing bank to secure the sold receivables. During both the second quarter and six months ended June 30, 2020, 0 receivables were sold under this agreement.

J. Inventories


	September 30, 2017			December 31, 2016			June 30, 2020		December 31, 2019
Finished goods	$	257		$	226		$	220	$	305
Work-in-process		264			220			254		282
Bauxite and alumina		429			429			396		446
Purchased raw materials		478			363			392		453
Operating supplies		146			137			157		158
LIFO reserve		(251	)		(215	)
							$	1,419	$	1,644
	$	1,323		$	1,160

~~At September~~

K. Debt.

Credit Facilities.

Revolving Credit Facility

On April 21, 2020, the Company and Alcoa Nederland Holding B.V. (ANHBV), a wholly-owned subsidiary of Alcoa Corporation, entered into Amendment No. 2 (Amendment No. 2) to the Revolving Credit Agreement (as amended, the Revolving Credit Agreement) that temporarily adjusts the Leverage Ratio requirement, calculated as Total Indebtedness divided by Consolidated EBITDA, to 3.00 to 1.00 from 2.50 to 1.00 for the next four consecutive fiscal quarters, beginning in the second quarter of 2020 (the Amendment Period). Leverage Ratio, Total Indebtedness, and Consolidated EBITDA are each defined terms in the Revolving Credit Agreement and may not be comparable to similarly titled measures used by the Company. The Leverage Ratio requirement will return to 2.50 to 1.00 starting in the second quarter of 2021. The temporary revision positively impacts the maximum indebtedness calculation for the Company during the Amendment Period. Additionally, during the Amendment Period, the Company, ANHBV, and any restricted subsidiaries will be restricted from making certain restricted payments or incurring incremental secured loans under the Revolving Credit Agreement.

On June 24, 2020, the Company and ANHBV entered into an additional amendment to the Revolving Credit Agreement (Amendment No. 3) that (i) permanently adjusts the calculation of Consolidated EBITDA by allowing the add back of certain additional non-cash costs, and (ii) temporarily adjusts, for the remaining fiscal quarters in 2020, the manner in which Consolidated Cash Interest Expense (as defined in the Revolving Credit Agreement) and Total Indebtedness are calculated with respect to certain senior notes issuances during the fiscal year ending December 31, 2020, inclusive of the July 2020 issuance discussed below.

ANHBV has the option to extend the periods under Amendment No. 3 to apply to either or both fiscal quarters ending March 31, 2021 and June 30, ~~2017~~2021. However, doing so would also reduce the borrowing availability under the Revolving Credit Facility during the respective fiscal quarters by one-third of the net proceeds of any note issuances during the fiscal year ending December 31, 2020. If ANHBV extends the temporary amendments, the bonds issued in July 2020 would reduce the aggregate amount of commitments under the Revolving Credit Facility by approximately $245 during the applicable fiscal quarters.

The aggregate amount of commitments under the Revolving Credit Facility remains at $1,500, which the Company has the ability to access through a combination of the borrowing capacity and issuances of letters of credit.As of June 30, 2020 and December 31, ~~2016,~~2019, Alcoa Corporation was in compliance with all covenants.

Alcoa Norway ANS Credit Facility

On October 2, 2019, Alcoa Norway ANS, a wholly-owned subsidiary of Alcoa Corporation, entered into a one-year, multicurrency revolving credit facility agreement for NOK 1.3 billion (approximately $134) which is fully and unconditionally guaranteed on an unsecured basis by Alcoa Corporation. On April 8, 2020, Alcoa Norway ANS drew $100 against this facility, and may do so from time to time in the ~~total~~future, in the ordinary course of business. Repayment of the drawn amount, including interest accrued at 2.93%, occurred upon maturity on June 29, 2020.

On July 3, 2020, Alcoa Norway ANS amended the revolving credit facility agreement to align the terms of the agreement with Amendment No. 2 and Amendment No. 3 of the Revolving Credit Agreement discussed above.

144A Debt.

In July 2020, ANHBV, completed a Rule 144A (U.S. Securities Act of 1933, as amended) debt issuance for $750 aggregate principal amount of ~~inventories valued~~5.500% Senior Notes due 2027 (the 2027 Notes). The net proceeds of this issuance were approximately $736 reflecting a discount to the initial purchasers of the 2027 Notes as well as issuance costs. The Company intends to use the net proceeds for general corporate purposes, including adding cash to its balance sheet. The discount to the initial purchasers, as well as costs to complete the financing, was deferred and is being amortized to interest expense over the term of the 2027 Notes. Interest on the 2027 Notes is paid semi-annually in June and December, which will commence December 15, 2020. The indenture contains customary affirmative and negative covenants that are similar to those included in the indenture from the notes issued in May 2018, such as limitations on liens, limitations on sale and leaseback transactions, and a prohibition on a ~~LIFO basis was $432, or 27%,~~reduction in the ownership of AWAC entities below an agreed level, and ~~$393, or 29%, respectively,~~the calculation of ~~total inventories before LIFO adjustments. The inventory values, prior~~certain financial ratios. See Note L to the ~~application~~Consolidated Financial Statements in Part II Item 8 of ~~LIFO, are generally determined under~~ the ~~average cost method, which approximates current cost.~~2019 Annual Report on Form 10-K for additional information related to Alcoa’s existing debt and related covenants.

J.L. Pension and Other Postretirement Benefits – The components of net periodic benefit cost were as follows:

   Third quarter ended
September 30,    Nine months ended
September 30,
   2017    2016**    2017 2016**
Pension benefits

Service cost
   $ 18    $ 18    $ 53 $ 42
Interest cost
   62    44    183 81
Expected return on plan assets
   (101 )    (80 )    (298 ) (140 )
Recognized net actuarial loss
   47    36    139 55
Amortization of prior service cost
   2    2    6 5
Settlements*
   3    13    3 13
Special termination benefits*
   –      –      3 1






Net periodic benefit cost
   $ 31    $ 33    $ 89 $ 57

	Second quarter ended June 30,						Six months ended June 30,
Pension benefits	2020			2019			2020			2019
Service cost	$	13		$	12		$	27		$	24
Interest cost⁽¹⁾		41			56			83			112
Expected return on plan assets⁽¹⁾		(73	)		(82	)		(147	)		(163	)
Recognized net actuarial loss⁽¹⁾		53			42			104			84
Amortization of prior service cost⁽¹⁾		—			2			—			3
Curtailments⁽²⁾		1			38			4			38
Net periodic benefit cost	$	35		$	68		$	71		$	98

	Second quarter ended June 30,					Six months ended June 30,
Other postretirement benefits	2020			2019		2020			2019
Service cost	$	1		$	1	$	2		$	2
Interest cost⁽¹⁾		5			10		10			18
Recognized net actuarial loss⁽¹⁾		5			2		9			5
Amortization of prior service benefit⁽¹⁾		(4	)		—		(7	)		—
Curtailments⁽²⁾		(2	)		—		(2	)		—
Net periodic benefit cost	$	5		$	13	$	12		$	25

⁽¹⁾

These amounts were ~~recorded~~reported in ~~Restructuring and other charges~~Other expenses (income), net on the accompanying Statement of Consolidated Operations (see Note D)Q).

⁽²⁾

These amounts were reported in Restructuring and other charges, net on the ~~2016 third quarter~~accompanying Statements of Consolidated Operations (see Note D) and ~~nine-month period, Alcoa Corporation also recognized multiemployer expense related to pension benefits~~ of ~~$8 and $53, respectively.~~Cash Flows.

   Third quarter ended
September 30,    Nine months ended
September 30,
   2017    2016*    2017 2016*
Other postretirement benefits

Service cost
   $ 2    $ 1    $ 4 $ 1
Interest cost
   9    6    28 8
Recognized net actuarial loss
   3    3    10 3
Amortization of prior service benefit
   (1 )    (2 )    (4 ) (2 )






Net periodic benefit cost
   $ 13    $ 8    $ 38 $ 10

Plan Actions. In 2020, management initiated the following actions to certain pension plans:

Action #1 – In February 2020, the Company entered into a new, six-year collective bargaining agreement with the Union of Professional and Office Workers of the Alcoa Smelter of Baie-Comeau in Canada. Under the agreement, all unionized office employees that are participants in one of the Company’s defined benefit pension plans will cease accruing retirement benefits for future service effective January 1, 2021. This change will affect approximately 20 employees, who are targeted to be transitioned to a target benefit plan, where the funding risk is assumed by the employees. The Company will contribute approximately 12% of these participants’ eligible earnings to the new plan on an annual basis. Participants already collecting benefits or who terminated with a vested benefit under the defined benefit pension plan are not affected by these changes.

Action #2 – In February 2020, the Company notified all non-unionized hourly employees of Aluminerie de Deschambault, who are participants in one of the Company’s defined benefit pension plans, that they will cease accruing retirement benefits for future service effective January 1, 2021. This change will affect approximately 430 employees, who will be transitioned to a replacement plan yet to be determined, where the funding risk is assumed by the employees. The Company will contribute a certain percentage of these participants’ eligible earnings to the new plan on an annual basis. Participants already collecting benefits or who terminated with a vested benefit under the defined benefit pension plan are not affected by these changes.

Action #3 – In April 2020, as part of the Company’s portfolio review, Alcoa announced that it will curtail the remaining capacity at its Intalco smelter in Ferndale, Washington amid declining market conditions. The full curtailment is expected to be complete during the third quarter of 2020. Intalco employed approximately 700 people at the time of the announcement, and the workforce is being significantly reduced due to the curtailment. As a result, curtailment accounting was triggered in the U.S. hourly defined benefit pension and retiree life plans (3a and 3b in the below table, respectively).

The above actions caused the respective plans to be remeasured, including an update to the discount rates used to determine the benefit obligations of the affected plans. The following table presents certain information and the financial impacts of these actions on the accompanying Consolidated Financial Statements:

Action #	Number of affected plan participants	Weighted average discount rate as of December 31, 2019	Plan remeasurement date	Weighted average discount rate as of plan remeasurement date	Increase to accrued pension benefits liability		Increase to accrued other postretirement benefits liability		Curtailment charge (gain)⁽¹⁾
1	~20	3.15%	January 31, 2020	2.75%	$	18	$	—	$	1
2	~430	3.20%	January 31, 2020	2.75%		28		—		2
3a	~300	3.25%	April 30, 2020	2.92%		156		—		1
3b	~600	3.75%	April 30, 2020	3.44%		—		—		(2	)
					$	202	$	—	$	2

⁽¹⁾

These amounts represent the ~~2016 third quarter~~accelerated amortization of a portion of the existing prior service cost or benefit and ~~nine-month period, Alcoa Corporation also recognized multiemployer expense related~~was reclassified from Accumulated other comprehensive loss to Restructuring and other ~~postretirement benefits~~charges, net (see Note D) on the accompanying Statement of ~~$2 and $19, respectively.~~Consolidated Operations.

Funding and Cash Flows. As permitted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Company is deferring approximately $220 of pension contributions, primarily for the U.S. plans, from 2020 to January 1, 2021. As a result, as of June 30, 2020, Alcoa’s minimum required contribution to defined benefit pension plans in 2020 is estimated to be approximately $75, of which approximately $40 is primarily for U.S. plans and was contributed in January 2020 before CARES was enacted, and approximately $19 was contributed to non-U.S. plans during the 2020 six-month period.

K.M. Derivatives and Other Financial Instruments

Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (i) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (ii) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

•

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

•

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

•

Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

~~Level 3 - Inputs that are both significant to the fair value measurement and unobservable.~~

Derivatives

Alcoa Corporation is exposed to certain risks relating to its ongoing business operations, including ~~financial, market, political, and economic risks. The following discussion provides information regarding Alcoa Corporation’s exposure to~~ the risks of changing commodity prices, ~~interest rates, and~~ foreign currency exchange rates and interest rates.

Alcoa Corporation’s commodity and derivative activities are subject to the management, direction, and control of the Strategic Risk Management Committee (SRMC), which consists of at least three members, including the chief executive officer and the chief financial officer. The remaining member(s) are other officers and/or employees of the Company as the chief executive officer may designate from time to time. Currently, the only other member of the SRMC is Alcoa Corporation’s treasurer. The SRMC meets on a periodic basis to review derivative positions and strategy and reports to the Audit Committee of Alcoa Corporation’s Board of Directors on the scope of its activities.

~~Alcoa Corporation’s~~include aluminum, energy, ~~and~~ foreign exchange, and interest rate contracts which are held for purposes other than trading. They are used primarily to mitigate uncertainty and volatility, and to cover underlying exposures. Alcoa Corporation is not involved in trading activities for energy, weather derivatives, or other nonexchange commodity trading activities.

Several of Alcoa Corporation’s aluminum, energy, and foreign exchange contracts are classified as Level 1 or Level 2 under the fair value hierarchy. ~~The total fair value of these derivative contracts recorded as assets and liabilities was $43 and $92, respectively, at September 30, 2017 and $5 and $2, respectively, at December 31, 2016. Certain~~All of these contracts are designated as ~~hedging instruments,~~ either fair value or cash flow ~~and the remaining are not designated as such. Combined,~~hedging instruments. Alcoa Corporation recognized a gain of $1 and a loss of $23 in Other expenses (income), net on the accompanying Statement of Consolidated Operations in the 2017 third quarter and nine-month period, respectively. Additionally, for the contracts designated as cash flow hedges, Alcoa Corporation recognized an unrealized loss of $39 and $64 in Other comprehensive loss in the 2017 third quarter and nine-month period, respectively.

~~In addition to the Level 1 and 2 derivative instruments described above, Alcoa Corporation~~also has several derivative instruments classified as Level 3 under the fair value hierarchy. These instruments are composed of (i) embedded aluminum derivatives and an embedded credit derivative related to energy supply contracts and (ii) freestanding financial contracts related to energy purchases on the spot market, all ofhierarchy, which are associated with nine smelters and three refineries. Certain of the embedded aluminum derivatives and financial contracts were designated as cash flow hedging instruments. All of these Level 3 derivative instruments are described below in detail and are enumerated as D1 through D11.

The following section describes the valuation methodologies used by Alcoa Corporation to measure its Level 3 derivative instruments at fair value. Derivative instruments classified as Level 3 in the fair value hierarchy represent those in which management has used at least one significant unobservable input in the valuation model. Alcoa Corporation uses a discounted cash flow model to fair value all Level 3 derivative instruments. Where appropriate, the description below includes the key inputs to those models and any significant assumptions. These valuation models are reviewed and tested at least on an annual basis.

~~Inputs in the valuation models for Level 3 derivative instruments are composed of the following: (i) quoted market prices (e.g., aluminum prices on the10-year~~ London Metal Exchange (LME) forward curve and energy prices), (ii) significant other observable inputs (e.g., information concerning time premiums and volatilities for certain option type embedded derivatives and regional premiums for aluminum contracts), and (iii) unobservable inputs (e.g., aluminum and energy prices beyond those quoted in the market). For periods beyond the term of quoted market prices for aluminum, Alcoa Corporation estimates the price of aluminum by extrapolating the~~10-year~~ LME forward curve. Additionally, for periods beyond the term of quoted market prices for energy, management has developed a forward curve based on independent consultant market research. Where appropriate, valuations are adjusted for various factors such as liquidity, bid/offer spreads, and credit considerations. Such adjustments are generally based on available market evidence (Level 2). In the absence of such evidence, management’s best estimate is used (Level 3). If a significant input that is unobservable in one period becomes observable in a subsequent period, the related asset or liability would be transferred to the appropriate classification (Level 1 or 2) in the period of such change (there were no such transfers in the periods presented).

~~D1 through D5.~~ Alcoa Corporation has two power contracts (D1 and D2), each of which contain an embedded derivative that indexes the price of power to the LME price of aluminum. Additionally, Alcoa Corporation has three power contracts (D3 through D5), each of which contain an embedded derivative that indexes the price of power to the LME price of aluminum plus the Midwest premium. The embedded derivatives in these five power contracts are primarily valued using observable market prices; however, due to the length of the contracts, the valuation models also require management to estimate the long-term price of aluminum based upon an extrapolation of the~~10-year~~ LME forward curve (one of the contracts no longer requires the use of prices beyond this curve). Additionally, for three of the contracts, management also estimates the Midwest premium, generally, for the next twelve months based on recent transactions and then holds the premium estimated in that twelfth month constant for the remaining duration of the contract. Significant increases or decreases in the actual LME price beyond 10 years would result in a higher or lower fair value measurement. An increase in actual LME price and/or the Midwest premium over the inputs used in the valuation models will result in a higher cost of power and a corresponding decrease to the derivative asset or increase to the derivative liability. The embedded derivatives have beeneither designated as cash flow hedges or undesignated.

The following tables present the detail for Level 1, 2 and 3 derivatives (see additional Level 3 information in further tables below):

	June 30, 2020				December 31, 2019
	Assets		Liabilities		Assets		Liabilities
Level 1 and 2 derivative instruments	$	20	$	44	$	3	$	33
Level 3 derivative instruments		9		206		74		615
Total	$	29	$	250	$	77	$	648
Less: Current		24		47		59		67
Noncurrent	$	5	$	203	$	18	$	581

	Unrealized (loss) gain recognized in Other comprehensive (loss) income						Realized (loss) gain reclassed from Other comprehensive (loss) income to earnings
Second quarter ended June 30,	2020			2019			2020			2019
Level 1 and 2 derivative instruments	$	22		$	5		$	(1	)	$	(8	)
Level 3 derivative instruments		(536	)		80			(14	)		5
Noncontrolling and equity interest		1			(5	)		2			(7	)
Total	$	(513	)	$	80		$	(13	)	$	(10	)

For the quarter ended June 30, 2020, the realized loss of ~~forward sales of aluminum. Unrealized gains~~$1 on Level 1 and losses were included in Other comprehensive (loss) income on the accompanying Consolidated Balance Sheet while realized gains and losses were included in Sales on the accompanying Statement of Consolidated Operations.

~~D6.~~ ~~Alcoa Corporation had a power contract (expired in October 2016 – see D10 below) separate from above that contains anLME-linked~~ ~~embedded derivative. Prior to its expiration, the embedded derivative~~2 cash flow hedges was valued using the probability and interrelationship of future LME prices, Australian dollar to U.S. dollar exchange rates, and the U.S. consumer price index. Significant increases or decreases in the LME price would result in a higher or lower fair value measurement. An increase in actual LME price over the inputs used in the valuation model will result in a higher cost of power and a corresponding decrease to the derivative asset. This embedded derivative did not qualify for hedge accounting treatment. Unrealized gains and losses from the embedded derivative were included in Other expenses (income), net on the accompanying Statement of Consolidated Operations while realized gains and losses were includedrecognized in Cost of goods ~~sold~~sold. For the quarter ended June 30, 2019, the realized loss of $8 on the accompanying Statement of Consolidated Operations as electricity purchases were made under the contract. At the time this derivative asset was recognized, an equivalent amount was recognized as a deferred credit in Other noncurrent liabilitiesLevel 1 and ~~deferred credits on the accompanying Consolidated Balance Sheet. The amortization of this deferred credit~~2 cash flow hedges was recognized in ~~Other expenses (income), net~~Sales.

	Unrealized gain (loss) recognized in Other comprehensive (loss) income						Realized (loss) gain reclassed from Other comprehensive (loss) income to earnings
Six months ended June 30,	2020			2019			2020			2019
Level 1 and 2 derivative instruments	$	(7	)	$	(3	)	$	(15	)	$	(12	)
Level 3 derivative instruments		331			(237	)		(22	)		36
Noncontrolling and equity interest		15			(32	)		(1	)		(25	)
Total	$	339		$	(272	)	$	(38	)	$	(1	)

For the six months ended June 30, 2020, the realized loss of $15 on ~~the accompanying Statement~~Level 1 and 2 cash flow hedges was comprised of ~~Consolidated Operations as power was received over the life of the contract.~~

~~D7.~~ ~~Alcoa Corporation has~~ a ~~natural gas supply contract, which has anLME-linked~~ ~~ceiling. This embedded derivative is valued using probabilities of future LME aluminum prices~~$7 loss recognized in Sales and ~~the price of Brent crude oil (priced on Platts), including the interrelationships between the two commodities subject to the ceiling. Any change in the interrelationship would result in~~ a higher or lower fair value measurement. An LME ceiling was embedded into the contract price to protect against an increase in the price of oil without a corresponding increase in the price of LME. An increase in oil prices with no similar increase in the LME price would limit the increase of the price paid for natural gas. This embedded derivative did not qualify for hedge accounting treatment. Unrealized gains and losses from the embedded derivative were included in Other expenses (income), net on the accompanying Statement of Consolidated Operations while realized gains and losses were included$8 loss recognized in Cost of goods ~~sold~~sold. For the six months ended June 30, 2019, the realized loss of $12 on ~~the accompanying Statement of Consolidated Operations as gas purchases were made under the contract.~~

~~D8.~~ ~~In the second quarter of 2016, Alcoa Corporation~~Level 1 and the related counterparty elected to modify the pricing of an existing power contract for a smelter in the United States. This amendment contains an embedded derivative that indexes the price of power to the LME price of aluminum plus the Midwest premium. The embedded derivative is valued using the interrelationship of future metal prices (LME base

plus Midwest premium) and the amount of megawatt hours of energy needed to produce the forecasted metric tons of aluminum at the smelter. Significant increases or decreases in the metal price would result in a higher or lower fair value measurement. An increase in actual metal price over the inputs used in the valuation model will result in a higher cost of power and a corresponding increase to the derivative liability. Management elected not to qualify the embedded derivative for hedge accounting treatment. Unrealized gains and losses from the embedded derivative were included in Other expenses (income), net on the accompanying Statement of Consolidated Operations while realized gains and losses were included in Cost of goods sold on the accompanying Statement of Consolidated Operations as electricity purchases were made under the contract. At the time this derivative liability2 cash flow hedges was recognized ~~an equivalent amount was recognized as a deferred charge~~ in Other noncurrent assets on the accompanying Consolidated Balance Sheet. The amortization of this deferred charge is recognized in Other expenses (income), net on the accompanying Statement of Consolidated Operations as power is received over the life of the contract.Sales.

~~D9.~~ Alcoa Corporation has a power contract, which contains an embedded derivative that indexes the difference in the respective credit spread of Alcoa Corporation and the counterparty. Management uses market prices, historical relationships, and forecast services to determine fair value. Significant increases or decreases in any of these inputs would result in a lower or higher fair value measurement. A wider credit spread between Alcoa Corporation and the counterparty would result in a higher cost of power and a corresponding increase in the derivative liability. This embedded derivative did not qualify for hedge accounting treatment. Unrealized gains and losses were included in Other expenses (income), net on the accompanying Statement of Consolidated Operations while realized gains and losses were included in Cost of goods sold on the accompanying Statement of Consolidated Operations as electricity purchases were made under the contract.

~~D10 and D11.~~ Alcoa Corporation has a financial contract (D10) that hedges the anticipated power requirements at one of its smelters that began in November 2016. At that time, the energy supply contract related to this smelter had expired (see D6 above) and Alcoa Corporation began purchasing electricity directly from the spot market. Beyond the term where market information is available, management developed a forward curve, for valuation purposes, based on independent consultant market research. Significant increases or decreases in the power market may result in a higher or lower fair value measurement of the financial contract. Lower prices in the power market would cause a decrease in the derivative asset. The financial contract had been designated as a cash flow hedge of future purchases of electricity (this designation ceased in December 2016 – see below). Through November 2016, unrealized gains and losses on this contract were recorded in Other comprehensive (loss) income on the accompanying Consolidated Balance Sheet, while realized gains and losses were recorded in Cost of goods sold as electricity purchases were made from the spot market. In August 2016, Alcoa Corporation gave the required notice to terminate this financial contract one year from the date of notification. As a result, Alcoa Corporation decreased both the related derivative asset recorded in Other noncurrent assets and the unrealized gain recorded in Accumulated other comprehensive loss by $84, which related to the August 2017 through 2036 timeframe, resulting in no impact to Alcoa Corporation’s earnings. In December 2016, the smelter experienced an unplanned outage, resulting in a portion of the financial contract no longer qualifying for hedge accounting, at which point management elected to discontinue hedge accounting for all of the remainder of the contract (through August 2017). As a result, Alcoa Corporation reclassified an unrealized gain of $7 from Accumulated other comprehensive loss to Other income, net related to the portion of the contract that no longer qualified for hedge accounting. The remaining $6 unrealized gain in Accumulated other comprehensive loss related to the portion management elected to discontinue hedge accounting is reclassified to Cost of goods sold as electricity purchases are made from the spot market through the termination date of the financial contract. Additionally, from December 2016 through August 2017, unrealized gains and losses on this contract were recorded in Other expenses (income), net, and realized gains and losses were recorded in Other expenses (income), net as electricity purchases were made from the spot market.18

In January 2017, Alcoa Corporation and the counterparty entered into a new financial contract (D11) to hedge the anticipated power requirements at this smelter for the period from August 2017 through July 2021 and amended the existing financial contract to both reduce the hedged amount of anticipated power requirements and to move up the effective termination date to July 31, 2017. The new financial contract has been designated as a cash flow hedge of future purchases of electricity. Unrealized gains and losses on the new financial contract were recorded in Other comprehensive loss on the accompanying Consolidated Balance Sheet while realized gains and losses were recorded (began in August 2017) in Cost of goods sold as electricity purchases were made from the spot market.Additional Level 3 Disclosures

The following table presents quantitative information related to the significant unobservable inputs described above for Level 3 derivative ~~contracts:~~instruments (megawatt hours in MWh):

	June 30, 2020		Unobservable Input	Unobservable Input Range
Asset Derivatives
Financial contract	$	2	Interrelationship of	Electricity (per MWh)	2020: $32.29
			forward energy price and the Consumer Price Index		2021: $28.35
Total Asset Derivatives	$	2
Liability Derivatives
Power contract	$	147	MWh of energy needed	LME (per mt)	2020: $1,594
			to produce the forecasted		2027: $2,119
			mt of aluminum	Electricity	Rate of 4 million MWh per year
Power contracts		27	MWh of energy needed to produce the forecasted mt of aluminum	LME (per mt)	2020: $1,594 2029: $2,227 2036: $2,523
				Midwest premium (per pound)	2020: $0.0900 2029: $0.1500 2036: $0.1500
				Electricity	Rate of 11 million MWh per year
Power contract		1	MWh of energy needed to produce the forecasted mt of aluminum	LME (per mt)	2020: $1,594 2020: $1,616
				Midwest premium (per pound)	2020: $0.0900 2020: $0.1400
				Electricity	Rate of 2 million MWh per year
Power contract (undesignated)	24		Estimated spread between the 30-year debt yield of Alcoa and the counterparty	Credit spread	3.55%: 30-year debt yield spread 6.55%: Alcoa (estimated) 3.00%: counterparty
Total Liability Derivatives	$	199

The Total Asset Derivatives and Total Liability Derivatives in the table above are lower by $7 compared with the respective amount reflected in the Level 3 tables presented below. This is due to the fact that the financial contract and two of the power contracts are in an asset position for the current portion and are in a liability position for the noncurrent portion and are reflected as such on the accompanying Consolidated Balance Sheet. However, the financial contract is reflected as a net asset and the two power contracts are reflected as a net liability in the above table for purposes of presenting the assumptions utilized to measure the fair value of the derivative instruments in their entirety.


	~~Fair value at~~ ~~September 30, 2017~~	~~Unobservable~~ ~~input~~	~~Range~~ ~~($ in full amounts)~~
~~Assets:~~
~~Embedded aluminum derivative (D7)~~	~~$ —~~	~~Interrelationship of future aluminum and oil prices~~	~~Aluminum: $2,081 per metric ton in 2017 to $2,145 per metric ton in 2018~~ ~~Oil: $58 per barrel in 2017 to $56 per barrel in 2018~~
~~Financial contract (D11)~~	~~222~~	~~Interrelationship of forward energy price and the Consumer Price Index and price of electricity beyond forward curve~~	~~Electricity: $76.44 per megawatt hour in 2017 to $58.78 per megawatt hour in 2021~~
~~Liabilities:~~
~~Embedded aluminum derivative (D1)~~	~~345~~	~~Interrelationship of LME price to the amount of megawatt hours of energy needed to produce the forecasted metric tons of aluminum~~	~~Aluminum: $2,081 per metric ton in 2017 to $2,496 per metric ton in 2027~~ ~~Electricity: rate of 4 million megawatt hours per year~~
~~Embedded aluminum derivatives (D3 through D5)~~	~~311~~	~~Price of aluminum beyond forward curve~~	~~Aluminum: $2,512 per metric ton in 2028 to $2,604 per metric ton in 2029 (two contracts) and $2,899 per metric ton in 2036 (one contract)~~ ~~Midwest premium: $0.0925 per pound in 2017 to $0.1050 per pound in 2029 (two contracts) and 2036 (one contract)~~
~~Embedded aluminum derivative (D8)~~	34	~~Interrelationship of LME price to the amount of megawatt hours of energy needed to produce the forecasted metric tons of aluminum~~	~~Aluminum: $2,081 per metric ton in 2017 to $2,159 per metric ton in 2019~~ ~~Midwest premium: $0.0925 per pound in 2017 to $0.1050 per pound in 2019~~ ~~Electricity: rate of 2 million megawatt hours per year~~
~~Embedded aluminum derivative (D2)~~	18	~~Interrelationship of LME price to overall energy price~~	~~Aluminum: $2,038 per metric ton in 2017 to $2,183 per metric ton in 2019~~
~~Embedded credit derivative (D9)~~	28	~~Estimated credit spread between Alcoa Corporation and counterparty~~	~~3.51% (Alcoa Corporation – 8.07% and counterparty – 4.56%)~~

The fair values of Level 3 derivative instruments recorded ~~as assets and liabilities~~ in the accompanying Consolidated Balance Sheet were as follows:

Asset Derivatives	June 30, 2020		December 31, 2019
Derivatives designated as hedging instruments:
Current—power contracts	$	4	$	—
Current—financial contract		4		57
Noncurrent—power contracts		1		—
Noncurrent—financial contract		—		17
Total derivatives designated as hedging instruments	$	9	$	74
Total Asset Derivatives	$	9	$	74
Liability Derivatives
Derivatives designated as hedging instruments:
Current—power contracts	$	15	$	47
Noncurrent—power contracts		165		551
Noncurrent—financial contract		2		—
Total derivatives designated as hedging instruments	$	182	$	598
Derivatives not designated as hedging instruments:
Current—power contracts	$	4	$	3
Noncurrent—power contracts		20		14
Total derivatives not designated as hedging instruments	$	24	$	17
Total Liability Derivatives	$	206	$	615

Asset Derivatives
   September 30,
2017    December 31,
2016
Derivatives designated as hedging instruments:

Fair value of derivative contracts – current:

Embedded aluminum derivatives
   $ —      $ 29
Financial contract
   93    —
Fair value of derivative contracts – noncurrent:

Embedded aluminum derivatives
   —      468
Financial contract
   129    —




Total derivatives designated as hedging instruments
   $ 222    $ 497




Derivatives not designated as hedging instruments:

Fair value of derivative contracts – current:

Financial contract
   $ —      $ 17




Total derivatives not designated as hedging instruments
   $ —      $ 17




Total Asset Derivatives
   $ 222    $ 514




Liability Derivatives

Derivatives designated as hedging instruments:

Fair value of derivative contracts – current:

Embedded aluminum derivatives
   $ 81    $ 17
Fair value of derivative contracts – noncurrent:

Embedded aluminum derivatives
   593    187




Total derivatives designated as hedging instruments
   $ 674    $ 204




Derivatives not designated as hedging instruments:

Fair value of derivative contracts – current:

Embedded aluminum derivative
   $ 23    $ 10
Embedded credit derivative
   4    5
Fair value of derivative contracts – noncurrent:

Embedded aluminum derivative
   11    18
Embedded credit derivative
   24    30




Total derivatives not designated as hedging instruments
   $ 62    $ 63




Total Liability Derivatives
   $ 736    $ 267

~~The following tables present a reconciliation of activity for Level 3 derivative contracts:~~

   Assets    Liabilities
Third quarter ended
September 30, 2017
   Embedded
aluminum
derivatives    Financial
contracts    Embedded
aluminum
derivatives Embedded
credit
derivative
Opening balance – July 1, 2017
   $ 94    $ 254    $ 326 $ 33
Total gains or losses (realized and unrealized) included in:

Sales
   20    —      (9 ) —
Cost of goods sold
   —      (13 )    —   (2 )
Other expenses, net
   1    (17 )    7 (3 )
Other comprehensive loss
   (114 )    (7 )    388 —
Purchases, sales, issuances, and settlements*
   —      —      —   —
Transfers into and/or out of Level 3*
   —      —      —   —
Other
   (1 )    5    (4 ) —






Closing balance – September 30, 2017
   $ —      $ 222    $ 708 $ 28






Change in unrealized gains or losses included in earnings for derivative contracts held at September 30, 2017:

Sales
   $ —      $ —      $ —   $ —
Cost of goods sold
   —      —      —   —
Other expenses, net
   1    (17 )    7 (3 )

*	In the 2017 third quarter, there were no purchases, sales, issuances or settlements of Level 3 derivative instruments. Additionally, there were no transfers of derivative instruments into or out of Level 3.

   Assets    Liabilities
Nine months ended
September 30, 2017
   Embedded
aluminum
derivatives    Financial
contracts    Embedded
aluminum
derivatives Embedded
credit
derivative
Opening balance – January 1, 2017
   $ 497    $ 17    $ 232 $ 35
Total gains or losses (realized and unrealized) included in:

Sales
   50    —      (24 ) —
Cost of goods sold
   —      (18 )    —   (4 )
Other income, net
   1    (9 )    15 (3 )
Other comprehensive loss
   (547 )    100    496 —
Purchases, sales, issuances, and settlements*
   —      119    —   —
Transfers into and/or out of Level 3*
   —      —      —   —
Other
   (1 )    13    (11 ) —






Closing balance – September 30, 2017
   $ —      $ 222    $ 708 $ 28






Change in unrealized gains or losses included in earnings for derivative contracts held at September 30, 2017:

Sales
   $ —      $ —      $ —   $ —
Cost of goods sold
   —      —      —   —
Other income, net
   1    (9 )    15 (3 )

*	In January 2017, there was an issuance of a new financial contract (see D11 above). In the 2017 nine-month period, there were no purchases, sales or settlements of Level 3 derivative instruments. Additionally, there were no transfers of derivative instruments into or out of Level 3.

~~Derivatives Designated As Hedging Instruments – Cash Flow Hedges~~

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of unrealized gains or losses on the derivative is reported as a component of other comprehensive income. Realized gains or losses on the derivative are reclassified from other comprehensive income into earnings in the same period or periods during which the hedged transaction impacts earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized directly in earnings immediately.

Alcoa Corporation has five Level 3 embedded aluminum derivatives and one Level 3 financial contract (through November 2016 – see D10 above) that have been designated as cash flow hedges as described below. Additionally, in January 2017, Alcoa Corporation entered into a new financial contract, which was designated as a cash flow hedging instrument and was classified as Level 3 under the fair value hierarchy (see D11 above), that replaced the existing financial contract in August 2017.

~~Embedded aluminum derivatives (D1 through D5).~~ ~~Alcoa Corporation has entered into energy supply contracts that contain pricing provisions related to the LME aluminum price. TheLME-linked~~ pricing features are considered embedded derivatives. Five of these embedded derivatives have been designated as cash flow hedges of forward sales of aluminum. At September 30, 2017 and December 31, 2016, these embedded aluminum derivatives hedge forecasted aluminum sales of 2,926 kmt and 3,127 kmt, respectively.

Alcoa Corporation recognized a net unrealized loss of $502 and $1,043 in the 2017 third quarter and nine-month period, respectively, and $462 and $830 in the 2016 third quarter and nine-month period, respectively, in Other comprehensive loss related to these five derivative instruments. Additionally, Alcoa Corporation reclassified a realized loss of $29 and $74 in the 2017 third quarter and nine-month period, respectively, and a realized gain of $4 and a realized loss of $1 in the 2016 third quarter and nine-month period, respectively, from Accumulated other comprehensive loss to Sales. Assuming market rates remain constant with the rates at ~~September~~June 30, ~~2017,~~2020, a realized loss of ~~$61 is~~$11 related to power contracts and a gain of $4 related to the financial contract are expected to be recognized in Sales and Cost of goods sold, respectively, over the next 12 months.

~~There was no ineffectiveness related to these five derivative instruments in~~At June 30, 2020 and December 31, 2019, the ~~2017 third quarter~~power contracts with embedded derivatives designated as cash flow hedges hedge forecasted aluminum sales of 2,244 kmt and ~~nine-month period~~2,347 kmt, respectively. At June 30, 2020 and ~~the 2016 third quarter and nine-month period.~~

~~Financial contracts (D10 and D11).~~ Alcoa Corporation has a financial contract that hedges the anticipated power requirements at one of its smelters that became effective when the existing power contract expired in October 2016. In August 2016, Alcoa Corporation elected to terminate most of the remaining term of this financial contract (see D10 above). Additionally, in December 2016, management elected to discontinue hedge accounting for this contract (see D10 above). This financial contract hedged forecasted electricity purchases of 1,969,544 megawatt hours prior to December 2016.

In31, 2019, the 2017 third quarter and nine-month period, Alcoa Corporation reclassified a realized gain of $1 and $6, respectively, from Accumulated other comprehensive loss to Cost of goods sold. In the 2016 third quarter and nine-month period, Alcoa Corporation recognized an unrealized gain of $49 and $88, respectively, in Other comprehensive loss. Additionally, Alcoa Corporation recognized a gain of $3 in Other expenses, net related to hedge ineffectiveness in the 2016 nine-month period. There was no ineffectiveness related to the financial contract in the 2016 third quarter.

In addition, in January 2017, Alcoa Corporation entered into a new financial contract that hedges the anticipated power requirements at this smelter for the period from August 2017 through July 2021 (see D11 above). At September 30, 2017, this financial contract hedges forecasted electricity purchases of ~~9,424,800~~2,265,872 and 3,891,096 megawatt ~~hours. In~~hours, respectively.

The following tables present the ~~2017 third quarter and nine-month period, Alcoa Corporation recognized an unrealized loss~~reconciliation of ~~$7 and an unrealized gain~~activity for Level 3 derivative instruments:

	Assets						Liabilities
Second quarter ended June 30, 2020	Power contracts			Financial contract			Power contracts			Financial contract		Embedded credit derivative
April 1, 2020	$	461		$	6		$	113		$	2	$	28
Total gains or losses included in:
Sales (realized)		6			—			(1	)		—		—
Cost of goods sold (realized)		—			7			—			—		—
Other expenses (income), net (unrealized/realized)		—			—			—			—		(2	)
Other comprehensive (loss) income (unrealized)		(462	)		(7	)		67			—		—
Other		—			(2	)		1			—		(2	)
June 30, 2020	$	5		$	4		$	180		$	2	$	24
Change in unrealized gains or losses included in earnings for derivative instruments held at June 30, 2020:
Other expenses (income), net	$	—		$	—		$	—		$	—	$	—

	Assets					Liabilities
Six months ended June 30, 2020	Power contracts		Financial contract			Power contracts			Financial contract		Embedded credit derivative
January 1, 2020	$	—	$	74		$	598		$	—	$	17
Total gains or losses included in:
Sales (realized)		5		—			(15	)		—		—
Cost of goods sold (realized)		—		2			—			—		—
Other expenses (income), net (unrealized/realized)		—		—			—			—		9
Other comprehensive (loss) income (unrealized)		—		(68	)		(401	)		2		—
Other		—		(4	)		(2	)		—		(2	)
June 30, 2020	$	5	$	4		$	180		$	2	$	24
Change in unrealized gains or losses included in earnings for derivative instruments held at June 30, 2020:
Other expenses (income), net	$	—	$	—		$	—		$	—	$	11

There were no purchases, sales or settlements of $100, respectively, in Other comprehensive loss. Additionally, Alcoa Corporation reclassified a realized gain of $12 in both the 2017 third quarter and nine-month period from Accumulated other comprehensive loss to Cost of goods sold. Assuming market rates remain consistent with the rates at September 30, 2017, a realized gain of $65 is expected to be recognized in Cost of goods sold over the next 12 months. Additionally, Alcoa Corporation recognized a loss of $6 and $2 in Other expenses (income), net related to hedge ineffectivenessLevel 3 derivative instruments in the ~~2017 third quarter and nine-month period, respectively.~~periods presented.

~~Derivatives Not Designated As Hedging Instruments~~

Alcoa Corporation has two (three prior to October 2016) Level 3 embedded aluminum derivatives (D6 through D8) and one Level 3 embedded credit derivative (D9) that do not qualify for hedge accounting treatment and one Level 3 financial contract that management elected to discontinue hedge accounting treatment (see D10 above). As such, gains and losses related to the changes in fair value of these instruments are recorded directly in earnings. In the 2017 and 2016 third quarter, Alcoa Corporation recognized a loss of $15 and a gain of $1, respectively, in Other expenses (income), net, of which a loss of $7 (both periods) related to the embedded aluminum derivatives, a gain of $3 and $8, respectively, related to the embedded credit derivative, and a loss of $11 (2017 third quarter) related to the financial contract. In the 2017 and 2016 nine-month period, Alcoa Corporation recognized a loss of $19 and $8, respectively, in Other income, net, of which a loss of $15 (both periods) related to the embedded aluminum derivatives, a gain of $3 and $7, respectively, related to the embedded credit derivative, and a loss of $7 (2017 nine-month period) related to the financial contract.

~~Material Limitations~~

The disclosures with respect to commodity prices, interest rates, and foreign currency exchange risk do not consider the underlying commitments or anticipated transactions. If the underlying items were included in the analysis, the gains or losses on the futures contracts may be offset. Actual results will be determined by several factors that are not under Alcoa Corporation’s control and could vary significantly from those factors disclosed.

Alcoa Corporation is exposed to credit loss in the event of nonperformance by counterparties on the above instruments, as well as credit or performance risk with respect to its hedged customers’ commitments. Although nonperformance is possible, Alcoa Corporation does not anticipate nonperformance by any of these parties. Contracts are with creditworthy counterparties and are further supported by cash, treasury bills, or irrevocable letters of credit issued by carefully chosen banks. In addition, various master netting arrangements are in place with counterparties to facilitate settlement of gains and losses on these contracts.

Other Financial Instruments

The carrying values and fair values of Alcoa Corporation’s other financial instruments were as follows:


	September 30, 2017				December 31, 2016				June 30, 2020				December 31, 2019
	Carrying value		Fair value		Carrying value		Fair value		Carrying value		Fair value		Carrying value		Fair value
Cash and cash equivalents	$	1,119	$	1,119	$	853	$	853	$	965	$	965	$	879	$	879
Restricted cash		8		8		6		6		3		3		4		4
Long-term debt due within one year		17		17		21		21		1		1		1		1
Long-term debt, less amount due within one year		1,384		1,565		1,424		1,573		1,800		1,896		1,799		1,961

The following methods were used to estimate the fair values of other financial instruments:

Cash and cash equivalents and Restricted cash.The carrying amounts approximate fair value because of the short maturity of the instruments. The fair value amounts for Cash and cash equivalents and Restricted cash were classified in Level 1.1 of the fair value hierarchy.

Long-term debt due within one year and Long-term debt, less amount due within one year. The fair value was based on quoted market prices for public debt and on interest rates that are currently available to Alcoa Corporation for issuance of debt with similar terms and maturities fornon-public debt. The fair value amounts for all Long-term debt were classified in Level 2 of the fair value hierarchy.

N. Income Taxes – ~~The~~Alcoa Corporation’s estimated annualized effective tax rate ~~was 41.3% (provision on income) and 90.2% (provision on income)~~(AETR) for ~~the 2017 and 2016 third quarters, respectively, and 34.8% (provision on income) and 456.4% (provision on a loss) for the 2017 and 2016 nine-month periods, respectively.~~

~~Alcoa Corporation’s estimated annual effective tax rate for 2017 was 34.2%~~2020 as of ~~September~~June 30, ~~2017. This rate~~2020 differs from the U.S. federal statutory rate of ~~35%~~21% primarily due to losses in countries with full valuation reserves resulting in 0 tax benefit, as well as foreign income taxed in ~~lower~~higher rate ~~jurisdictions, mostly offset by domestic losses not~~jurisdictions.

	Six months ended June 30,
	2020				2019
Income (loss) before income taxes	$	114			$	(85	)
Estimated annualized effective tax rate		(183.0	)	%		137.1	%
Income tax benefit	$	(209	)		$	(116	)
Unfavorable tax impact related to losses in jurisdictions with no tax benefit		333				381
Discrete tax charge		1				1
Provision for income taxes	$	125			$	266

Deferred taxes are recorded for future tax ~~benefitted. The domestic losses~~consequences expected to occur when the reported amounts of assets and liabilities are ~~net of the gain on the sale of Yadkin (see Note C).~~

~~For the 2017 nine-month period, the Provision for income taxes was composed of three components as follows: (i) the application of the estimated annual effective~~recovered or paid. These future tax rate for 2017 of 34.2% to pretax income of $943, (ii) a net discrete income tax charge of $11, including $10 related to a tax holiday (see below), and (iii) a favorable impact of $6 related to the interim period treatment of operational losses in certain jurisdictions for which no tax benefit was recognized (expected to reverse by the end of 2017).

~~For the 2017 third quarter, the Provision for income taxes is composed of three components as follows: (i) the difference~~consequences result from differences between the ~~application~~financial and tax bases of the estimated annual 2017 effective tax rate as of September 30, 2017 of 34.2% to pretax income for the 2017 nine-month period of $943 and the application of the estimated annual 2017 effective tax rate as of June 30, 2017 of 31.9% to pretax income for the 2017~~six-month~~ period of $655, (ii) a net discrete income tax charge of $13, including $10 related to a tax holiday (see below), and (iii) a favorable impact of $8 related to the interim period treatment of operational losses in certain jurisdictions for which no tax benefit was recognized (expected to reverse by the end of 2017).

As a result of this income tax rate change, AWAB’s existing deferred tax assets that are expected to reverse during the holiday period were required to be remeasured at the lower tax rate. This remeasurement resulted in both a decrease to AWAB’s deferred taxAlcoa’s assets and ~~a noncash charge to earnings of $10 ($6 after noncontrolling interest).~~

~~The rate~~liabilities and are adjusted for ~~the 2016 third quarter differs from the U.S. federal statutory rate of 35% primarily due to U.S. losses~~changes in tax rates and tax credits with no tax benefit realizable by Alcoa Corporation, somewhat offset by foreign income taxed in lower rate jurisdictions and tax benefits on interest expense eliminated to Parent Company net investment.

The rate for the 2016 nine-month period differs (by (491.4) percentage points) from the U.S. federal statutory rate of 35% primarily due to U.S. losses and tax credits with no tax benefit realizable by Alcoa Corporation, slightly offset by foreign income taxed in lower rate jurisdictions and tax benefits on interest expense eliminated to Parent Company net investment.

~~The composition of Alcoa Corporation’s net deferred tax asset by jurisdiction as of December 31, 2016 was as follows:~~laws when enacted.

   Domestic    Foreign    Total
Deferred tax assets
   $ 1,346    $ 1,742    $ 3,088
Valuation allowance
   (1,057 )    (698 )    (1,755 )
Deferred tax liabilities
   (272 )    (612 )    (884 )






   $ 17    $ 432    $ 449

The Company has several income tax filers in various foreign countries. Of the $432 million net deferred tax asset included under the “Foreign” column in the table above, approximately 90% relates to four of the Company’s income tax filers as follows: a $259 million net deferred tax asset for Alcoa Alumínio S.A. (“Alumínio”) in Brazil; a $195 million net deferred tax asset for Alcoa World Alumina Brasil Ltda. (“AWAB”) in Brazil; a $108 million deferred tax asset for Alúmina Española, S.A. (“Española” and collectively with Alumínio and AWAB, the “Foreign Filers”) in Spain; and a $177 million net deferred tax liability for Alcoa of Australia Limited in Australia.

The future realization of ~~the~~ net deferred tax ~~asset for each of~~assets is reviewed quarterly, or more frequently if there are changes in the ~~Foreign Filers was~~positive and negative evidence used in management’s assessments, and is based on projections of the respective future taxable income (defined as the sum of pretax income, other comprehensive income, and permanent tax differences), exclusive of reversing temporary differences and carryforwards. The realization of the net deferred tax assets of the Foreign Filers is not dependent on any tax planning strategies. Historically, the Foreign Filers each generated taxable income in the three-year cumulative period ending December 31, 2016. Management has also

Management’s forecasted taxable income ~~for each of the Foreign Filers in 2017 and for the foreseeable future. This forecast~~ is based on macroeconomic indicators and involves assumptions related to, among others: commodity prices; volume levels; and key inputs and raw materials, such as bauxite, alumina, caustic soda, ~~alumina,~~ calcined petroleum coke, liquid pitch, energy, ~~(fuel oil, natural gas, electricity),~~ labor, and transportation costs. These are the same assumptions ~~used~~utilized by management to develop athe financial and operating plan ~~which~~that is used to ~~run~~manage the Company and measure performance against actual results. Additionally, uncertainty and changes in the macroeconomic environment and the economy in Alcoa’s operating locations may arise as a result of the COVID-19 pandemic. Adverse effects from these changes may impact the assumptions utilized to develop the forecasted taxable income and may result in the need for a valuation allowance on certain deferred tax assets.

Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not (greater than 50%) that a tax benefit will not be realized. In evaluating the need for a valuation allowance, management applies judgment in assessing all available positive and negative evidence and considers all potential sources of taxable income, including income available in carryback periods, future reversals of taxable temporary differences, projections of taxable income, and income from tax planning strategies. Positive evidence includes factors such as a history of profitable operations, projections of future profitability within the carryforward period, including from tax planning strategies, and Alcoa’s experience with similar operations. Existing favorable contracts and the ability to sell products into established markets are additional positive evidence. Negative evidence includes items such as cumulative losses, projections of future losses, or carryforward periods that are not long enough to allow for the utilization of a deferred tax asset based on existing projections of income. Deferred tax assets for which no valuation allowance is recorded may not be realized upon changes in facts and circumstances, resulting in a future charge to establish a valuation allowance.

At December 31, 2019, Alcoa Canada Company was in a three-year cumulative loss position without a valuation allowance where, in management’s judgment, the weight of the positive evidence more than offset the negative evidence of the cumulative losses. At June 30, 2020, in management’s judgment, the positive evidence continued to more than offset the negative evidence of the cumulative losses. Upon changes in facts and circumstances, management may conclude that Alcoa Canada Company’s deferred tax assets may not be realized, resulting in a future charge to establish a valuation allowance. Alcoa Canada Company’s net deferred tax assets were $80 and $137 at June 30, 2020 and December 31, 2019, respectively. The majority of the ~~Foreign Filers’~~Alcoa Canada Company net deferred tax assets relate to ~~tax loss carryforwards.~~pension obligations and derivatives.

O. Leasing

Management records a right-of-use asset and lease liability for several types of operating leases, including land and buildings, alumina refinery process control technology, plant equipment, vehicles, and computer equipment. The ~~Foreign Filers do~~leases have remaining terms of one to 38 years. The discount rate applied to these leases is the Company’s incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments, unless there is a rate implicit in the lease agreement. The Company does not have ~~a history of tax loss carryforwards expiring unused. Additionally, tax loss carryforwards have an infinite life under the respective income tax codes in Brazil~~material financing leases.

Lease expense and ~~Spain. That said, utilization of an existing tax loss carryforward is limited to 30%~~operating cash flows include:

	Second quarter ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Costs from operating leases	$	20	$	20	$	38	$	39
Variable lease payments	$	1	$	5	$	5	$	8
Short-term rental expense	$	—	$	1	$	1	$	4

The weighted average lease term and ~~25% of taxable income in a particular year in Brazil and Spain, respectively.~~

Accordingly, management concluded that the net deferred tax assets of the Foreign Filers will more likely than not be realized in future periods, resulting in no need for a partial or full valuation allowanceweighted average discount rate as of June 30, 2020 and December 31, ~~2016.~~2019 were as follows:

~~As of September 30, 2017, Alcoa Corporation’s net deferred tax asset was $562, of which $554 relates to~~

	June 30, 2020		December 31, 2019
Weighted average lease term for operating leases (years)		4.3		4.6
Weighted average discount rate for operating leases	5.3%		5.4%

The following represents the ~~Foreign Filers. There has not been a material change~~aggregate right-of use assets and related lease obligations recognized in the ~~facts~~Consolidated Balance Sheet at:

	June 30, 2020		December 31, 2019
Properties, plants and equipment, net	$	141	$	154
Other current liabilities	$	58	$	61
Other noncurrent liabilities and deferred credits		90		100
Total operating lease liabilities	$	148	$	161

New leases of $18 and ~~circumstances underlying~~$25 were added during the ~~analysis described above. As such, management concluded that the net deferred tax assets of the Foreign Filers will more likely than not be realized in~~three and six months ended June 30, 2020, respectively.

The future ~~periods, resulting in no need for a partial or full valuation allowance as of September 30, 2017.~~

~~M. Contingencies and Commitments~~

~~Contingencies~~

Unless specifically described to the contrary, all matters within Note M are the full responsibility of Alcoa Corporation pursuant to the Separation and Distribution Agreement. Additionally, the Separation and Distribution Agreement provides for cross-indemnities between the Company and Arconic for claims subject to indemnification.

~~Litigation~~

On June 5, 2015, AWA and St. Croix Alumina, L.L.C. (“SCA”) filed a complaint in Delaware Chancery Court for a declaratory judgment and injunctive relief to resolve a dispute between ParentCo and Glencore Ltd. (“Glencore”) with respect to claimed obligations under a 1995 asset purchase agreement between ParentCo and Glencore. The dispute arose from Glencore’s demand that ParentCo indemnify it for liabilities it may have to pay to Lockheed Martin (“Lockheed”)cash flows related to the St. Croix alumina refinery. Lockheed had earlier filed suit against Glencore in federal court in New York seeking indemnity for liabilities it had incurred and would incur to the U.S. Virgin Islands to remediate certain properties at the refinery property and claimed that Glencore was required by an earlier, 1989 purchase agreement to indemnify it. Glencore had demanded that ParentCo indemnify and defend it in the Lockheed case and threatened to claim against ParentCo in the New York action despite exclusive jurisdiction for resolutionoperating lease obligations as of disputes under the 1995 purchase agreement being in Delaware. After Glencore conceded that it was not seeking to add ParentCo to the New York action, AWA and SCA dismissed their complaint in the Chancery Court case and on August 6, 2015 filed a complaint for declaratory judgment in Delaware Superior Court. AWA and SCA filed a motion for judgment on the pleadings on September 16, 2015. Glencore answered AWA’s and SCA’s complaint and asserted counterclaims on August 27, 2015, and on October 2, 2015 filed its own motion for judgment on the pleadings. Argument on the parties’ motions was held by the court on December 7, 2015, and by order dated February 8, 2016, the court granted ParentCo’s motion and denied Glencore’s motion, resulting in ParentCo not being liable to indemnify Glencore for the Lockheed action. The decision also leaves for pretrial discovery and possible summary judgment or trial Glencore’s claims for costs and fees it incurred in defending and settling an earlier Superfund action brought against Glencore by the Government of the Virgin Islands. On February 17, 2016, Glencore filed notice of its application for interlocutory appeal of the February 8, 2016 ruling. AWA and SCA filed an opposition to that application on February 29, 2016. On March 10, 2016, the court denied Glencore’s motion for interlocutory appeal and on the same day entered judgment on claims other than Glencore’s claims for costs and fees it incurred in defending and settling the earlier Superfund action brought against Glencore by the Government of the Virgin Islands. On March 29, 2016, Glencore filed a withdrawal of its notice of interlocutory appeal, and on April 6, 2016, Glencore filed an appeal of the court’s March 10, 2016 judgment to the Delaware Supreme Court, which set the appeal for argument for November 2, 2016. On November 4, 2016, the Delaware Supreme Court affirmed the judgment of the Delaware Superior Court granting ParentCo’s motion. Remaining in the caseJune 30, 2020 were Glencore’s claims for costs and fees it incurred related to the previously described Superfund action. On March 7, 2017, Alcoa Corporation and Glencore agreed in principle to settle these claims and on March 17, 2017 requested and were granted an adjournment of the court’s scheduled March 21, 2017 conference. On April 5, 2017, Alcoa and Glencore entered into a settlement agreement to resolve these remaining claims. Accordingly, on April 24, 2017, the court dismissed the case at the request of the parties. The amount of the proposed settlement was not material. This matter is now closed.as follows:

Before 2002, ParentCo purchased power in Italy in the regulated energy market and received a drawback of a portion of the price of power under a special tariff in an amount calculated in accordance with a published resolution of the Italian Energy Authority, Energy Authority Resolution n. 204/1999 (“204/1999”). In 2001, the Energy Authority published another resolution, which clarified that the drawback would be calculated in the same manner, and in the same amount, in either the regulated or unregulated market. At the beginning of 2002, ParentCo left the regulated energy market to purchase energy in the unregulated market. Subsequently, in 2004, the Energy Authority introduced regulation no. 148/2004, which set forth a different method for calculating the special tariff that would result in a different drawback for the regulated and unregulated markets. ParentCo challenged the new regulation in the Administrative Court of Milan and received a favorable judgment in 2006. Following this ruling, ParentCo continued to receive the power price drawback in accordance with the original calculation method, through 2009, when the European Commission declared all such special tariffs to be impermissible “state aid.” In 2010, the Energy Authority appealed the 2006 ruling to the Consiglio di Stato (final court of appeal). On December 2, 2011, the Consiglio di Stato ruled in favor of the Energy Authority and against ParentCo, thus presenting the opportunity for the energy regulators to seek reimbursement from ParentCo of an amount equal to the difference between the actual drawback amounts received over the relevant time period, and the drawback as it would have been calculated in accordance with regulation 148/2004. On February 23, 2012, ParentCo filed its appeal of the decision of the Consiglio di Stato (this appeal was subsequently withdrawn in March 2013). On March 26, 2012, ParentCo received a letter from the agency (Cassa Conguaglio per il Settore Eletrico (CCSE)) responsible for making and collecting

2020 (excluding the six months ended June 30)	$	36
2021		58
2022		27
2023		17
2024		9
Thereafter		24
Total lease payments (undiscounted)		171
Less: discount to net present value		(23	)
Total	$	148

payments on behalf of the Energy Authority demanding payment in the amount of approximately $110 (€85), including interest. By letter dated April 5, 2012, ParentCo informed CCSE that it disputes the payment demand of CCSE since (i) CCSE was not authorized by the Consiglio di Stato decisions to seek payment of any amount, (ii) the decision of the Consiglio di Stato has been appealed (see above), and (iii) in any event, no interest should be payable. On April 29, 2012, Law No. 44 of 2012 (“44/2012”) came into effect, changing the method to calculate the drawback. On February 21, 2013, ParentCo received a revised request letter from CCSE demanding ParentCo’s subsidiary, Alcoa Trasformazioni S.r.l., make a payment in the amount of $97 (€76), including interest, which reflects a revised calculation methodology by CCSE and represents the high end of the range of reasonably possible loss associated with this matter of $0 to $97 (€76). ParentCo rejected that demand and formally challenged it through an appeal before the Administrative Court on April 5, 2013. The Administrative Court scheduled a hearing for December 19, 2013, which was subsequently postponed until April 17, 2014, and further postponed until June 19, 2014. On that date, the Administrative Court listened to ParentCo’s oral argument, and on September 2, 2014, rendered its decision. The Administrative Court declared the payment request of CCSE and the Energy Authority to ParentCo to be unsubstantiated based on the 148/2004 resolution with respect to the January 19, 2007 through November 19, 2009 timeframe. On December 18, 2014, the CCSE and the Energy Authority appealed the Administrative Court’s September 2, 2014 decision; a date for the hearing has been scheduled for May 2018. As a result of the conclusion of the European Commission Matter on January 26, 2016 (see Note R in Alcoa Corporation’s Annual Report on Form~~10-K~~ for the year ended December 31, 2016), ParentCo’s management modified its outlook with respect to a portion of the pending legal proceedings related to this matter. As such, a charge of $37 (€34) was recorded in Restructuring and other charges for the year ended December 31, 2015 to establish a partial reserve for this matter. At this time, Alcoa Corporation is unable to reasonably predict the ultimate outcome for this matter.P. Contingencies

Environmental Matters

Alcoa Corporation participates in environmental assessments and cleanups at several locations. These include ~~owned~~currently or ~~operating facilities and adjoining properties,~~ previously owned or ~~operating~~operated facilities and adjoining properties, and waste sites, including Superfund (Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)) sites.

A liability is recorded for environmental remediation when a cleanup program becomes probable and the costs can be reasonably estimated. As assessments and cleanups proceed, the liability is adjusted based on progress made in determining the extent of remedial actions and related costs. The liability can change substantially due to factors such as, among others, the nature and extent of contamination, changes in remedial requirements, and ~~technological changes.~~technology advancements.

Alcoa Corporation’s environmental remediation reserve balance ~~was $306 and $324 at September 30, 2017 and December 31, 2016 (of which $36 and $60 was classified as a current liability), respectively, and~~ reflects the most probable costs to remediate identified environmental conditions for which costs can be reasonably estimated. The following table details the changes in the carrying value of recorded environmental remediation reserves:

Balance at December 31, 2018	$	280
Liabilities incurred		73
Cash payments		(17	)
Reversals of previously recorded liabilities		(1	)
Balance at December 31, 2019		335
Liabilities incurred		2
Cash payments		(9	)
Foreign currency translation and other		(5	)
Balance at June 30, 2020	$	323

At June 30, 2020 and December 31, 2019, the ~~2017 third quarter and nine-month period, the~~current portion of Alcoa Corporation’s environmental remediation reserve balance was ~~decreased by $5~~$46 and ~~$2,~~$39, respectively. The ~~change in both periods was~~Company incurred liabilities of $2 for the six-month period of 2020 due to ~~a reversal of $4~~charges related to increases for ongoing monitoring and maintenance and environmental consulting work for a remediation project at the restart of the Warrick smelter (see Note D), a reduction of $2 related to the Mosjøen location (see below), and a charge of $1 (third quarter) and $4 (nine months) associated with several sites. Of the changes to the remediation reserve in both periods, the reversal of $4 was recorded in Restructuring and otherFusina site. These charges ~~while the remainder was~~are primarily recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations.

Payments related to remediation expenses applied against the reserve were ~~$10~~$6 and ~~$30~~$9 in the ~~2017 third~~second quarter and ~~nine-month~~six-month period of 2020, respectively. These amounts include mandated expenditures ~~currently mandated,~~ as well as those not required by any regulatory authority or third party. The ~~respective change in the~~ reserve also reflects ~~an increase~~a decrease of $4$6 in the six-month period of 2020, due to the effects of foreign currency ~~translation~~translation.

In the second quarter and six-month period of 2019, the Company incurred liabilities of $1 and $2, respectively, due to charges related to increases for ongoing monitoring and maintenance. These charges are recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations. Payments related to remediation expenses applied against the reserve were $7 and $10 in the ~~2017 third~~second quarter and ~~an increase~~six-month period of ~~both $9 due~~2019, respectively.

The estimated timing of cash outflows on the environmental remediation reserve at June 30, 2020 is as follows:

2020 (excluding the six months ended June 30, 2020)	$	17
2021 - 2025		205
Thereafter		101
Total	$	323

Reserve balances at June 30, 2020 and December 31, 2019, associated with significant sites with active remediation underway or for future remediation were $263 and $274, respectively. In management’s judgment, the Company’s reserves are sufficient to satisfy the provisions of the respective action plans. Upon changes in facts or circumstances, a change to the ~~effects of foreign currency translation and $5 for the reclassification of an amount previously included in Alcoa Corporation’s liability for asset retirement obligations on the~~reserve may be required. The Company’s ~~Consolidated Balance Sheet as of December 31, 2016 in the 2017 nine-month period.~~significant sites include:

~~Included in annual operating expenses are the recurring costs of managing hazardous substances and environmental programs. These costs are estimated to be approximately 2% of cost of goods sold.~~

Poços de Caldas, Brazil—The ~~Separation and Distribution Agreement includes provisions for the assignment or allocation of environmental liabilities between Alcoa Corporation and Arconic, including certain remediation obligations~~reserve associated with ~~environmental matters. In general,~~ the respective parties are responsible for the environmental matters associated with their operations, and with the properties and other assets assigned to each. Additionally, the Separation and Distribution Agreement lists environmental matters

with a shared responsibility between the two companies with an allocation of responsibility and the lead party responsible for management of each matter. For matters assigned to Alcoa Corporation (Arconic) under the Separation and Distribution Agreement, Alcoa Corporation (Arconic) has agreed to indemnify Arconic (Alcoa Corporation) in whole or in part for environmental liabilities arising from operations prior to the Separation Date. The following description provides details regarding the current status of certain significant reserves related to current or former Alcoa Corporation sites. With the exception of the Fusina, Italy matter, Alcoa Corporation assumed full responsibility of the matters described below.

~~Sherwin, TX—~~In connection with ParentCo’s sale of the Sherwin alumina refinery, which was required to be divested as part of ParentCo’s acquisition of Reynolds Metals Company in 2000, ParentCo agreed to retain responsibility for the remediation of the then existing environmental conditions, as well as a pro rata share of the final2015 closure of the ~~active bauxite residue waste~~Alcoa Alumínio S.A. smelter in Poços de Caldas, Brazil, is for remediation of historic spent potlining storage and disposal areas (known as the Copano facility). All ParentCo obligations regarding the Sherwin refinery and Copano facility were transferred from ParentCo to Alcoa Corporation as part of the Separation Transaction on November 1, 2016. In February 2017, the current owner of the Sherwin alumina refinery and Copano facility received court approval for reorganizationareas. The final remediation plan is currently under Chapter 11 of the U.S. Bankruptcy Code (see Other within Note M). Through the bankruptcy proceedings, the owner of Sherwin exercised its right under the U.S. Bankruptcy Code to reject the agreement from 2000 containing the previously mentioned retained responsibility, which had the effect of terminating all rights and responsibilities of the parties to the agreement. The Company continues to be involved in a legal dispute with the owner of Sherwin related to the allocation of responsibility for the environmental obligations at this site. At this time, it is unclear if the ultimate outcome of this matter will result in a change to Alcoa Corporation’s reserve. At September 30, 2017 and December 31, 2016,review; such review could require the reserve balance ~~associated with Sherwin was $30.~~to be adjusted.

~~Baie Comeau, Quebec, Canada—~~In August 2012, ParentCo presented an analysis of remediation alternatives to the Quebec Ministry of Sustainable Development, Environment, Wildlife and Parks (MDDEP), in response to a previous request, related to known polychlorinated biphenyls (PCBs) and polycyclic aromatic hydrocarbons (PAHs) contained in sediments of the Anse du Moulin bay. As such, ParentCo increased the reserve for Baie Comeau by $25 in 2012 to reflect the estimated cost of ParentCo’s recommended alternative, consisting of both dredging and capping of the contaminated sediments. In July 2013, ParentCo submitted the Environmental Impact Assessment for the project to the MDDEP. The MDDEP notified ParentCo that the project as it was submitted was approved and a final ministerial decree was issued in July 2015. As a result, no further adjustment to the reserve was required in 2015. The decree provided final approval for the project and ParentCo began work on the final project design at that time; Alcoa Corporation began construction on the project in April 2017 with an estimated completion in 2018. At September 30, 2017 and December 31, 2016, the reserve balance associated with this matter was $12 and $24, respectively.

Fusina and Portovesme, ~~Italy—~~~~In 1996, ParentCo acquired the Fusina smelter and rolling operations and the Portovesme smelter, both of which were owned by ParentCo’s former~~Italy—Alcoa Corporation’s subsidiary Alcoa Trasformazioni S.r.l. ~~(“Trasformazioni”) (Trasformazioni is now a subsidiary of Alcoa Corporation and owns the~~has remediation projects underway for its closed smelter sites at Fusina ~~smelter~~ and Portovesme ~~smelter sites, and Fusina Rolling S.r.l., a new ParentCo subsidiary, owns the Fusina rolling operations), from Alumix, an entity owned~~which have been approved by ~~the Italian Government. At the time of the acquisition, Alumix indemnified ParentCo forpre-existing~~ ~~environmental contamination at the sites. In 2004,~~ the Italian Ministry of Environment and Protection of Land and Sea (MOE) ~~issued orders~~. Work is ongoing for soil remediation at both sites with expected completion in 2022 for Fusina and 2020 for Portovesme. Additionally, annual payments are made to ~~Trasformazioni and Alumix~~MOE over a 10-year period through 2022 for ~~the development of aclean-up~~ ~~plan related to soil contamination in excess of allowable limits under legislative decree and to institute~~groundwater emergency actions and pay natural resource damages. Trasformazioni appealed the orders and filed suit against Alumix, among others, seeking indemnification for these liabilities under the provisions of the acquisition agreement. In 2009, Ligestra S.r.l. (“Ligestra”), Alumix’s successor, and Trasformazioni agreed to a stay of the court proceedings while investigations were conducted and negotiations advanced towards a possible settlement.

In December 2009, Trasformazioni and Ligestra reached an initial agreement for settlement of the liabilities related to the Fusina operations while negotiations continued related to Portovesme (see below). The agreement outlined an allocation of payments to the MOE for emergency actioncontainment and natural resource damages ~~and~~at the ~~scope and costs for a proposed soil remediation project, which was formally presented to the MOE inmid-2010.~~ The agreement was contingent upon final acceptance of the remediation project by the MOE. As a result of entering into this agreement, ParentCo increased the reserve by $12 in 2009 for Fusina. Based on comments received from the MOE and local and regional environmental authorities, Trasformazioni submitted a revised remediation plan in the first half of 2012; however, such revisions did not require any change to the existing reserve. In October 2013, the MOE approved the project submitted by ParentCo, resulting in no adjustment to the reserve.

~~In January 2014, in anticipation of ParentCo reaching a final administrative agreement with the MOE, ParentCo and Ligestra entered into a final agreement related to~~ Fusina for allocation of payments to the MOE for emergency action and natural resource damages and the costs for the approved soil remediation project. The agreement resulted in Ligestra assuming 50% to 80% of all payments and remediation costs. On February 27, 2014, ParentCo and the MOE reached a final administrative agreement for conduct of work. The agreement includes both a soil andsite. A groundwater remediation project estimated to cost $33 (€24) and requires payments of $25 (€18) to the MOE for emergency action and natural resource damages. Based on the final agreement with Ligestra, ParentCo’s share of all costs and payments was $17 (€12), of which $9 (€6) related to the damages will be paid annually over a~~10-year~~

period, which began in April 2014, and was previously fully reserved. On March 30, 2017, the MOE provided authorization to Trasformazioni to dispose of excavated waste into a third-party landfill; this work began on October 25, 2017. The responsibility for the execution of groundwater remediation project/emergency containment has been transferred to the MOE in accordance with the February 2014 settlement agreement and remediation is slated to begin in late 2017 or in 2018.

Effective with the Separation Transaction, Arconic retained the portion of this obligation related to the Fusina rolling operations. Specifically, under the Separation and Distribution Agreement, Trasformazioni, and with it the Fusina properties, were assigned to Alcoa Corporation. Fusina Rolling S.r.l., entered into a lease agreement for the portion of property that included the rolling operation. Pursuant to the Separation and Distribution Agreement, the liabilities at Fusina described above were allocated between Alcoa Corporation (Trasformazioni) and Arconic (Fusina Rolling S.r.l.). Arconic will pay $7 (€7) for the portion of remediation expenses associated with the section of property that includes the rolling operation as the project is completed.

~~Separately, in 2009, due to additional information derived from the site investigations conducted~~ at Portovesme ParentCo increased the reserve by $3. In November 2011, Trasformazioni and Ligestra reached an agreement for settlement of the liabilities related to Portovesme, similar to the one for Fusina. A proposed soil remediation project for Portovesme was formally presented to the MOE in June 2012. Neither the agreement with Ligestra nor the proposal to the MOE resulted in a change to the reserve for Portovesme. In November 2013, the MOE rejected the proposed soil remediation project and requested a revised project be submitted. In May 2014, Trasformazioni and Ligestra submitted a revised soil remediation project that addressed certain stakeholders’ concerns. ParentCo increased the reserve by $3 in 2014 to reflect the estimated higher costs associated with the revised soil remediation project, as well as current operating and maintenance costs of the Portovesme site.

In October 2014, the MOE required a further revised project be submitted to reflect the removal of a larger volume of contaminated soil than what had been proposed, as well as design changes for the cap related to the remaining contaminated soil left in place and the expansion of an emergency containment groundwater pump and treatment system that was previously installed. Trasformazioni and Ligestra submitted the further revised soil remediation project in February 2015. As a result, ParentCo increased the reserve by $7 in March 2015 to reflect the increase in the estimated costs of the project. In October 2015, ParentCo receivedwill have a final ~~ministerial decree approving the February 2015 revised soil remediation project. Work on the soil remediation project commenced inmid-2016~~ ~~and is expected to be~~remedial design completed in 2019. After further discussions with the MOE regarding the groundwater remediation project, Alcoa Corporation and Ligestra are working to find a common remediation solution. The ultimate outcome of this matter2020 which may result in a change to the existing reserve.

Suriname—The reserve ~~for Portovesme.~~

~~Mosjøen, Norway—~~~~In September 2012, ParentCo presented an analysis of remediation alternatives to~~associated with the Norwegian Environmental Agency (NEA) (formerly the Norwegian Climate and Pollution Agency, or “Klif”), in response to a previous request, related to known PAHs in the sediments located in the harbor and extending out into the fjord. As such, ParentCo increased the reserve for Mosjøen by $20 in 2012 to reflect the estimated cost2017 closure of the ~~baseline alternative~~Suralco refinery and bauxite mine is for ~~dredging~~treatment and disposal of refinery waste and soil remediation. The work began in 2017 and is expected to be completed at the end of 2025.

Hurricane Creek, Arkansas—The reserve associated with the 1990 closure of two mining areas and refineries near Hurricane Creek, Arkansas is for ongoing monitoring and maintenance for water quality surrounding the mine areas and residue disposal areas.

Massena, New York—The reserve associated with the 2015 closure of the ~~contaminated sediments. A proposed project reflecting this alternative was formally presented to the NEA in June 2014, and was resubmitted in late 2014 to reflect changes~~Massena East smelter by the ~~NEA.~~ Company’s subsidiary, Reynolds Metals Company, is for subsurface soil remediation to be performed after demolition of the structures. Remediation work is expected to commence in 2021 and will take four to eight years to complete.

Point Comfort, Texas—The ~~revised proposal did not~~reserve associated with the 2019 closure of the Point Comfort alumina refinery is for disposal of industrial wastes contained at the site, subsurface remediation, and post-closure monitoring and maintenance. The final remediation plan is currently under review, which may result in a change to the ~~reserve~~existing reserve.

Sherwin, Texas—In connection with the 2018 settlement of a dispute related to the previously-owned Sherwin alumina refinery, the Company’s subsidiary, Copano Enterprises LLC, accepted responsibility for ~~Mosjøen.~~

~~In April 2015, the NEA notified ParentCo that the revised project was approved and required submission of~~ the final project design before issuing a final order. ParentCo completed and submitted the final project design, which identified a need to stabilize the related wharf structure to allow for the sediment dredging in the harbor. As a result, ParentCo increased the reserve for Mosjøen by $11 in June 2015 to reflect the estimated costclosure of ~~the wharf stabilization. Also in June 2015, the NEA issued a final order approving the project as well~~four bauxite residue waste disposal areas (known as the ~~final project design. In September 2015, ParentCo increased~~Copano facility). Work commenced on the ~~reserve by $1~~first residue disposal area in 2018 and will take eight to ~~reflect~~twelve years to complete, depending on the nature of its potential ~~need (based~~re-use. Work on ~~prior experience with similar projects) to perform additional dredging if~~ the ~~results of sampling, which is required by the order, don’t achieve the required cleanup levels. Project construction~~next three areas has not commenced ~~in early 2016 and~~but is expected to be completed by 2048, depending on its potential re-use.

Longview, Washington—In connection with a 2018 Consent Decree and Cleanup Action Plan with the ~~end~~Washington State Department of ~~2017.~~Ecology, the Company’s subsidiary, Northwest Alloys, accepted certain responsibilities for future remediation of contaminated soil and sediments at the site located near Longview, Washington.

Other Sites—The Company is in the process of decommissioning various other plants and remediating sites in several countries for potential redevelopment or to return the land to a natural state. In aggregate, there are approximately 35 remediation projects at these other sites that are planned or underway. These activities will be completed at various times in the ~~2017 third quarter, Alcoa Corporation reduced~~future with the ~~reserve associated with this matter by $2 based on a revised cost estimate of the remaining project work.~~latest expected to be in 2026, after which ongoing monitoring and other activities may be required. At ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, the reserve balance associated with ~~this matter~~these activities was $4$60 and ~~$8,~~$61, respectively.

~~East St. Louis, IL—~~ParentCo had an ongoing remediation project related to an area used for the disposal of bauxite residue from former alumina refining operations. The project, which was selected by the EPA in a Record of Decision (ROD) issued in

Tax

Spain— In July ~~2012, is aimed at implementing a soil cover over the affected area. On November 1,~~ 2013, the U.S. Department of Justice lodged a consent decree on behalf of the U.S. Environmental Protection Agency (EPA) for ParentCo to conduct the work outlined in the ROD. This consent decree was entered as final in February 2014 by the U.S. Department of Justice. As a result, ParentCo began construction in March 2014; the fieldwork on a majority of this project was

completed by the end of June 2016. A completion report was approved by the EPA in September 2016 and this matter, for the completed portion of the project, transitioned into a long-term (approximately 30 years) inspection, maintenance, and monitoring program. Fieldwork for the remaining portion of the project is expected to be completed in 2018, at which time it would also transition into a long-term inspection, maintenance, and monitoring program. This obligation was transferred from ParentCo to Alcoa Corporation as part of the Separation Transaction on November 1, 2016. At September 30, 2017 and December 31, 2016, the reserve balance associated with this matter was $4.

~~Tax~~

~~In September 2010,~~ following a corporate income tax audit covering the ~~2003~~2006 through ~~2005~~2009 tax years, an assessment was received ~~as a result of~~from Spain’s tax authorities disallowing certain interest deductions claimed by aParentCo’s Spanish consolidated tax ~~group owned by ParentCo. An appeal of this assessment in Spain’s Central Tax Administrative Court by ParentCo was denied in October 2013.~~group. In ~~December 2013, ParentCo filed an appeal of the assessment in Spain’s National Court.~~

Additionally, following a corporate income tax audit of the same Spanish tax group for the 2006 through 2009 tax years, Spain’s tax authorities issued an assessment in July 2013 similarly disallowing certain interest deductions. In August 2013,2015, ParentCo filed an appeal of this ~~second~~ assessment into Spain’s Central Tax Administrative Court which was ~~denied in January 2015.~~denied. Two months later, ParentCo filed an appeal ~~of this second assessment~~ in Spain’s National Court (the National Court). The amount of this assessment, including interest, was $152 (€131) as of June 30, 2018.

In July 2018, the National Court denied ParentCo’s appeal of the assessment; however, it required Spain’s tax authorities to issue a new assessment, which considers available net operating losses of the former Spanish consolidated tax group from prior tax years that can be utilized during the assessed tax years. Subsequently, Arconic Inc. and Alcoa Corporation (collectively, the Companies) estimated the amount of the new assessment, including applicable interest, to be in the range of $25 to $61 (€21 to €53) after consideration of available net operating losses and tax credits. Under the Tax Matters Agreement related to the Separation Transaction, unfavorable tax outcomes are split by Arconic Inc. and Alcoa Corporation 51% and 49%, respectively. Based on a review of the basis on which the National Court decided this matter, Alcoa Corporation management no longer believed that the Companies were more likely than not (greater than 50%) to prevail in this matter. Accordingly, in the third quarter of 2018, Alcoa Corporation recorded a charge of $30 (€26) in Provision for income taxes to establish a liability for its 49% share of the estimated loss in this matter, representing management’s best estimate at the time.

On November 8, 2018, the Companies filed a petition for appeal to the Supreme Court of Spain, which was accepted in March ~~2015.~~2019 and an appeal was submitted on May 6, 2019. On June 18, 2019 the State Attorney filed its opposition to the appeal and the Companies are awaiting further response from the Supreme Court.

OnSeparately, in January ~~16,~~ 2017, ~~Spain’s~~the National Court issued a decision in favor of the ~~Company~~former Spanish consolidated tax group related to ~~the~~a similar assessment ~~received in September 2010. On March 6, 2017, the Company was notified that Spain’s tax authorities did not file an appeal,~~ for ~~which the deadline has passed. As a result, the assessment related to~~ the 2003 through 2005 tax years, iseffectively making that assessment null and void. ~~Spain’s National Court has not yet rendered a decision related to the assessment received~~Additionally, in ~~July 2013 for the 2006 through 2009 tax years. The amount of this assessment on a standalone basis, including interest, was $152 (€129) as of September 30, 2017.~~

The Company believes it has meritorious arguments to support its tax position and intends to vigorously litigate the remaining assessment through Spain’s court system. However, in the event the Company is unsuccessful, a portion of the remaining assessment may be offset with existing tax loss carryforwards available to the Spanish consolidated tax group, which would be shared between the Company and Arconic as provided for in the Tax Matters Agreement related to the Separation Transaction. Additionally, it is possible that the Company may receive similar assessments for tax years subsequent to 2009 (see below). Despite the favorable decision received on the first assessment, at this time, the Company is unable to reasonably predict the ultimate outcome for this matter.

This Spanish consolidated tax group had been under audit (began in September 2015) for the 2010 through 2013 tax years. As Spain’s tax authorities neared the end of the audit, they informed both Alcoa Corporation and Arconic of their intent to issue an assessment similarly disallowing certain interest deductions as the two assessments described above. On August 3, 2017, in lieu of receiving a formal assessment, ~~all parties agreed to~~the Companies reached a settlement ~~related to~~with Spain’s tax authorities for the 2010 through 2013 tax ~~years. For~~years that had been under audit for a similar matter. Alcoa ~~Corporation,~~Corporation’s share of this settlement iswas not material to the Company’s Consolidated Financial Statements. ~~Given~~The ultimate outcomes related to the ~~stage~~2003 through 2005 and the 2010 through 2013 tax years are not indicative of the ~~appeal~~potential ultimate outcome of the assessment for the 2006 through 2009 tax years ~~in Spain’s National Court,~~due to procedural differences. Also, it is possible that the ~~settlement of the 2010 through 2013~~Companies may receive similar assessments for tax years ~~will~~subsequent to 2013; however, management does not ~~impact the ultimate outcome of that proceeding.~~expect any such assessment, if received, to be material to Alcoa Corporation’s Consolidated Financial Statements.

Brazil (AWAB)— In March 2013, AWAB was notified by the Brazilian Federal Revenue Office (RFB) that approximately $110 (R$220) of value added tax credits previously claimed are being disallowed and a penalty of 50% assessed. Of this amount, AWAB received $41 (R$82) in cash in May 2012. The ~~value added~~value-added tax credits were claimed by AWAB for both fixed assets and export sales related to the Juruti bauxite mine and São Luís refinery expansion. The RFB has disallowed credits they allege belong to the consortium in which AWAB owns an interest and should not have been claimed by AWAB. Credits have also been disallowed as

a result of challenges to apportionment methods used, questions about the use of the credits, and an alleged lack of documented proof. AWAB presented defense of its claim to the RFB on April 8, 2013. If AWAB is successful in this administrative process, the RFB would have no further recourse. If unsuccessful in this process, AWAB has the option to litigate at a judicial level. Separately from AWAB’s administrative appeal, in June 2015, new tax law was enacted repealing the provisions in the tax code that were the basis for the RFB assessing a 50% penalty in this matter. As such, the estimated range of reasonably possible loss for these matters is $0 to ~~$32~~$40 (R$103), whereby the maximum end of the range represents the portion of the disallowed credits applicable to the export sales and excludes the 50% penalty. Additionally, the estimated range of disallowed credits related to AWAB’s fixed assets is $0 to $37 (R$117), which would increase the net carrying value of AWAB’s fixed assets if ultimately disallowed.220). It is management’s opinion that the allegations have no basis; however, at this time, the Company is unable to reasonably predict an outcome for this matter.

~~Between 2000~~Australia (AofA)— In December 2019, AofA received a statement of audit position (SOAP) from the Australian Taxation Office (ATO) related to the pricing of certain historic third-party alumina sales. The SOAP proposed adjustments that would result in additional income tax payable by AofA of approximately $144 (A$212), exclusive of interest and ~~2002, Alcoa Alumínio (Alumínio)~~penalties.

During 2020, the SOAP was the subject of an independent review process within the ATO. At the conclusion of this process, the ATO determined to continue with the proposed adjustments and issued Notices of Assessment (the Notices) that were received by AofA on July 7, 2020. The Notices asserted claims for income tax payable by AofA of approximately $147 (A$214), which is $1 (A$2) higher than the amount previously reported by the Company. The Notices also include claims for compounded interest on the tax amount totaling approximately $488 (A$707). The ATO is also expected to assess administrative penalties and has informed AofA that its proposed position will be communicated after August 1, 2020. The ATO has not indicated the amount of administrative penalties it proposes to apply in this matter, and AofA is not in a position to estimate the amount, if any, at this time. AofA expects to have an ~~indirect wholly-owned subsidiary~~opportunity to respond to the ATO’s proposed position on penalties, as well as to request reductions on the interest assessment.

The Company does not agree with the ATO’s position, and AofA will continue to defend this matter and pursue all available dispute resolution methods, up to and including the filing of ~~Alcoa Corporation, sold approximately 2,000 metric tons of metal per month from its Poços de Caldas facility, located~~proceedings in the ~~State of Minas Gerais (the “State”), Brazil, to Alfio,~~Australian Courts, a ~~customer also located in~~process which could last several years and could involve significant expenses. The Company maintains that the State. Sales in the State were exempted from value-added tax (VAT) requirements. Alfio subsequently sold metal to customers outside of the State, but did not pay the required VAT on those transactions. In July 2002, Alumínio received an assessment from State auditors on the theory that Alumínio should be jointly and severally liable with Alfio for the unpaid VAT. In June 2003, the administrative tribunal found Alumínio liable, and Alumínio filed a judicial case in the State in February 2004 contesting the finding. In May 2005, the Court of First Instance found Alumínio solely liable, and a panel of a State appeals court confirmed this finding in April 2006. Alumínio filed a special appealsales subject to the ~~Superior Tribunal~~ATO’s review, which were ultimately sold to Aluminium Bahrain B.S.C., were the result of ~~Justice (STJ) in Brasilia (the federal capital of Brazil) later in 2006. In 2011,~~arm’s length transactions by AofA over two decades and were made at arm’s length prices consistent with the STJ (through one of its judges) reversed the judgment of the lower courts, finding that Alumínio should neither be solely nor jointly and severally liable with Alfio for the VAT, which ruling was then appealedprices paid by the State. In August 2012, the STJ agreed to have the case reheard before a five-judge panel. On February 21, 2017, the lead judge of the STJ issued a ruling confirming that Alumínio should be held liable in this matter. On March 16, 2017, Alumínio filed an appeal to have its case reheard before the five-judge panel as originally agreed to by the STJ in August 2012. Separately, in the 2017 second quarter, the State opened a tax amnesty program. At the end of August 2017, Alumínio elected to submit this matter for consideration into the amnesty program, which the State approved. As a result, under the terms of the amnesty program, this matter was settled for $8 (R$25). In the 2017 third quarter, a charge for the settlement amount was recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations. Prior to submitting this matter for consideration into the amnesty program, the assessment, including penalties and interest, totaled $46 (R$145). This matter is now closed.other third-party alumina customers.

~~Other~~

On January 11, 2016, Sherwin Alumina Company, LLC (“Sherwin”), the current owner of a refinery previously owned by ParentCo (see below), and one of its affiliate entities, filed bankruptcy petitions in Corpus Christi, Texas for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Sherwin informed the bankruptcy court that it intends to cease operations because it is not able to continue its bauxite supply agreement. On November 23, 2016, the bankruptcy court approved Sherwin’s plans for cessation of its operations. On February 16, 2017, Sherwin filed a bankruptcy Chapter 11 Plan (the “Plan”) and on February 17, 2017 the court approved that Plan.

In 2000, ParentCo acquired Reynolds Metals Company (“Reynolds,” a subsidiary of Alcoa Corporation), which included an alumina refinery in Gregory, Texas. As a condition of the Reynolds acquisition, ParentCo was required to divest this alumina refinery. In accordance with the ~~terms~~ATO’s dispute resolution practices, AofA will pay 50% of the ~~divestiture~~assessed income tax amount exclusive of interest and any penalties, or approximately $74 (A$107), in ~~2000, ParentCo agreed~~the third quarter 2020 and the ATO is not expected to ~~retain responsibility for certain environmental obligations (see Environmental Matters within Note M) and assigned~~seek further payment prior to final resolution of the matter. If AofA is ultimately successful, any amounts paid to the ~~buyer an Energy Services Agreement (“ESA”) with Gregory Power Partners (“Gregory Power”) for purchase of steam and electricity by the refinery.~~

~~As a result of Sherwin’s initial bankruptcy filing, separate legal actions were initiated against Reynolds by Gregory Power and Sherwin~~ATO as ~~follows.~~

~~Gregory Power—~~ ~~On January 26, 2016, Gregory Power delivered notice to Reynolds that Sherwin’s bankruptcy filing constitutes a breach~~part of the ~~ESA;~~50% payment would be refunded. AofA expects to fund the payment with cash on ~~January 29, 2016, Reynolds responded that~~hand and will record the ~~filing does not constitute~~payment as a ~~breach. On September 16, 2016, Gregory Power filed a complaint~~noncurrent prepaid tax asset. Further interest on the unpaid amounts will continue to accrue during the dispute. The initial interest assessment and the additional interest accrued are deductible against taxable income by AofA but would be taxable as income in the ~~bankruptcy case against Reynolds alleging breach~~year the dispute is resolved if AofA is ultimately successful.

The Company continues to believe it is more likely than not that AofA’s tax position will be sustained and therefore is not recognizing any tax expense in relation to this matter. However, because the ultimate resolution of this matter is uncertain at this time, the Company cannot predict the potential loss or range of loss associated with the outcome, which may materially affect its results of operations and financial condition.

AofA is part of the ~~ESA. In response to this complaint, on November 10, 2016, Reynolds filed both a motion to dismiss, including a jury demand, and a motion to withdraw the reference to the bankruptcy court based~~Company’s joint venture with Alumina Limited, an Australian public company listed on the jury demand. On July 18, 2017, the district court ordered that any trial would be held to a jury in district court, but that the bankruptcy court would retain jurisdiction on all pre-trial matters. At this time, Alcoa Corporation is unable to reasonably predict the ultimate outcome of this matter.

~~Sherwin—~~On October 4, 2016, the state of Texas filed suit against Sherwin in the bankruptcy proceeding seeking to hold Sherwin responsible for remediation of alleged environmental conditions at the facility. On October 11, 2016, Sherwin filed a similar suit against Reynolds in the case. As provided in the Plan, Sherwin, including certain affiliated companies,Australian Securities Exchange. The Company and ~~Reynolds are negotiating an allocation among them as to the ownership of~~Alumina Limited own 60% and ~~responsibility for certain areas~~40%, respectively, of the refinery and related bauxite residue waste disposal areas. On October 10, 2017, the bankruptcy court entered a stipulation by the parties further extending the time to negotiate and file a settlement through October 27, 2017 (previous date was August 28, 2017). The parties are continuing to discuss a comprehensive settlement and, on October 25, 2017, filed a stipulation for a further extension through January 10, 2018. At this time, Alcoa Corporation is unable to reasonably predict the ultimate outcome of this matter.joint venture entities, including AofA.

General

In addition to the matters discussed above, various other lawsuits, claims, and proceedings have been or may be instituted or asserted against Alcoa Corporation, including those pertaining to environmental, ~~product liability,~~ safety and health, ~~contract dispute,~~commercial, tax, product liability, intellectual property infringement, employment, and ~~tax~~employee and retiree benefit matters, and other actions and claims arising out of the normal course of business. While the amounts claimed in these other matters may be substantial, the ultimate liability ~~cannot now be determined~~is not readily determinable because of the considerable

uncertainties that exist. ~~Therefore,~~Accordingly, it is possible that the Company’s liquidity or results of operations in a particular period could be materially affected by one or more of these other matters. However, based on facts currently available, management believes that the disposition of these other matters that are pending or asserted will not have a material adverse effect, individually or in the aggregate, on the financial position of the Company.

~~Commitments~~

~~Investments~~

Alcoa Corporation has an investment in a joint venture related to the ownership and operation of an integrated aluminum complex (bauxite mine, alumina refinery, aluminum smelter, and rolling mill) in Saudi Arabia. The joint venture is owned 74.9% by the Saudi Arabian Mining Company (known as “Ma’aden”) and 25.1% by Alcoa Corporation and consists of three separate companies as follows: one each for the mine and refinery, the smelter, and the rolling mill. Alcoa Corporation accounts for its investment in the joint venture under the equity method. As of September 30, 2017 and December 31, 2016, the carrying value of Alcoa Corporation’s investment in this joint venture was $871 and $853, respectively.

Capital investment in the project is expected to total approximately $10,800 (SAR 40.5 billion) and has been funded through a combination of equity contributions by the joint venture partners and project financing obtained by the joint venture companies, which has been partially guaranteed by both partners (see below). Both the equity contributions and the guarantees of the project financing are based on the joint venture’s partners’ ownership interests. Originally, it was estimated that Alcoa Corporation’s total equity contribution in the joint venture related to the capital investment in the project would be approximately $1,100, of which Alcoa Corporation has contributed $982. Based on changes to both the project’s capital investment and equity and debt structure from the initial plans, the estimated $1,100 equity contribution may be reduced. Separate from the capital investment in the project, Alcoa Corporation contributed $8 and $44 (Ma’aden contributed $23 and $131) to the joint venture in the 2017 third quarter and nine-month period, respectively, for short-term funding purposes in accordance with the terms of the joint venture companies’ financing arrangements. Both partners may be required to make such additional contributions in future periods.

The smelting and rolling mill companies have project financing totaling $4,012 (reflects principal repayments made through September 30, 2017), of which $1,007 represents Alcoa Corporation’s share (the equivalent of Alcoa Corporation’s 25.1% interest in the smelting and rolling mill companies). Alcoa Corporation has issued guarantees (see below) to the lenders in the event that the smelting and rolling mill companies default on their debt service requirements through 2017 and 2020 for the smelting company and 2018 and 2021 for the rolling mill company (Ma’aden issued similar guarantees for its 74.9% interest). Alcoa Corporation’s guarantees for the smelting and rolling mill companies cover total debt service requirements of $89 in principal and up to a maximum of approximately $15 in interest per year (based on projected interest rates). At September 30, 2017 and December 31, 2016, the combined fair value of the guarantees was $2 and $3, respectively, which was included in Other noncurrent liabilities and deferred credits on the accompanying Consolidated Balance Sheet.

The mining and refining company has project financing totaling $2,181 (reflects principal repayments made through September 30, 2017), of which $547 represents AWAC’s 25.1% interest in the mining and refining company. Alcoa Corporation, on behalf of AWAC, has issued guarantees (see below) to the lenders in the event that the mining and refining company defaults on its debt service requirements through 2019 and 2024 (Ma’aden issued similar guarantees for its 74.9% interest). Alcoa Corporation’s guarantees for the mining and refining company cover total debt service requirements of $109 in principal and up to a maximum of approximately $20 in interest per year (based on projected interest rates). At both September 30, 2017 and December 31, 2016, the combined fair value of the guarantees was $3, which was included in Other noncurrent liabilities and deferred credits on the accompanying Consolidated Balance Sheet. In the event Alcoa Corporation would be required to make payments under the guarantees, 40% of such amount would be contributed to Alcoa Corporation by Alumina Limited, consistent with its ownership interest in AWAC.

As a result of the Separation Transaction, the various lenders to the joint venture companies required Arconic to maintain joint and several guarantees with Alcoa Corporation. In the event of default by any of the joint venture companies, the lenders would make a claim against both Alcoa Corporation and Arconic. Accordingly, Alcoa Corporation would perform under its guarantee; however, if the Company failed to perform, Arconic would be required to perform under its own guarantee. Arconic would then subsequently seek indemnification from Alcoa Corporation under the terms of the Separation and Distribution Agreement.

N.Q. Other Expenses (Income), Net


	Third quarter ended September 30,					Nine months ended September 30,						Second quarter ended June 30,						Six months ended June 30,
	2017		2016			2017			2016			2020			2019			2020			2019
Equity loss	$	13	$	18		$	23		$	59		$	22		$	15		$	29		$	27
Foreign currency losses, net		1		8			6			21			2			5			13			17
Net loss (gain) from asset sales		1		(132	)		(115	)		(164	)		1			7			(176	)		(1	)
Net loss (gain) onmark-to-market derivative instruments (K)		6		(4	)		22			5
Other, net		6		4			(3	)		(11	)
Net (gain) loss on mark-to-market derivative instruments (M)													(2	)		—			9			—
Non-service costs – Pension & OPEB (L)													27			30			52			59
Other													1			(7	)		(8	)		(11	)
												$	51		$	50		$	(81	)	$	91
	$	27	$	(106	)	$	(67	)	$	(90	)

~~In the 2017 nine-month period,~~

Net gain from asset sales ~~included~~for the second quarter and six months ended June 30, 2020 includes a ~~$120~~net gain of $1 and $181, respectively, related to the sale of ~~Yadkin~~EES (see Note C). In the 2016 third quarter and nine-month period, Net gain from asset sales included a $118 gain related to the sale of wharf property near the Intalco (Washington) smelter. Also in the 2016 nine-month period, Net gain from asset sales included a $27 gain related to the sale of an equity interest in a natural gas pipeline in Australia.

~~O. Subsequent Events~~ – Management evaluated all activity of Alcoa and concluded that no subsequent events have occurred that would require recognition in the Consolidated Financial Statements or disclosure in the Notes to the Consolidated Financial Statements, except as described below.

On October 10, 2017, Alcoa Corporation and Luminant Generation Company LLC (Luminant) executed an early termination agreement of a power contract, as well as other related fuel and lease agreements, effective October 1, 2017, related to the Company’s Rockdale (Texas) smelter, which has been fully curtailed since the end of 2008. In accordance with the terms of the early termination agreement, Alcoa made a payment of $238 and transferred approximately 2,200 acres of related land and other assets and liabilities to Luminant. The Company will record a charge of approximately $250~~(pre-~~ ~~andafter-tax)~~ ~~in the fourth quarter of 2017 associated with the early termination agreement.~~

Since the curtailment of the Rockdale smelter, the Company had been selling surplus electricity into the energy market. The power contract was set to expire no earlier than 2038, except for limited circumstances in which one or both parties could elect to early terminate without penalty for which conditions had never been met. In the 2017 nine-month period and full year 2016, Alcoa Corporation recognized $105 and $141, respectively, in Sales and $148 and $210, respectively, in Cost of goods sold related to the sale of the surplus electricity and the cost of the Luminant power contract.

As a result of the early termination of the power contract, Alcoa has initiated a strategic review of the remaining buildings and equipment associated with the smelter, casthouse, and the aluminum powder plant at the Rockdale location. Management expects to reach a decision on the future of these assets by the end of 2017. Separately, the Company continues to own more than 30,000 acres of land surrounding the Rockdale operations.

Report of Independent Registered Public Accounting Firm*

~~To the Shareholders and Board of Directors of Alcoa Corporation:~~

We have reviewed the accompanying consolidated balance sheetof Alcoa Corporation and its subsidiaries (Alcoa Corporation) as of September 30, 2017, and the related statements of consolidated operations, consolidated comprehensive (loss) income, and changes in consolidated equity for the three-month and nine-month periods ended September 30, 2017 and 2016 and the statement of consolidated cash flows for the nine-month periods ended September 30, 2017 and 2016. These consolidated interim financial statements are the responsibility of Alcoa Corporation’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2016, and the related statements of consolidated operations, consolidated comprehensive (loss) income, changes in consolidated equity, and consolidated cash flows for the year then ended (not presented herein), and in our report dated March 15, 2017, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of December 31, 2016, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

~~/s/ PricewaterhouseCoopers LLP~~

~~PricewaterhouseCoopers LLP~~

~~Pittsburgh, Pennsylvania~~

~~October 27, 2017~~

*	This report should not be considered a “report” within the meanings of Sections 7 and 11 of the Securities Act of 1933, and the independent registered public accounting firm’s liability under Section 11 does not extend to it.

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(dollars in millions, exceptper-share amounts, average realized prices, and average cost amounts; ~~bauxite production and shipments in millions of~~ dry metric tons in millions (mdmt); ~~alumina and aluminum production and shipments~~metric tons in thousands ~~of metric tons~~ (kmt))

References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to ~~“ParentCo”~~ParentCo refer to Alcoa Inc., a Pennsylvania corporation, and its consolidated subsidiaries ~~(through~~through October 31, 2016, at which time it was renamed Arconic Inc. ~~(Arconic)~~(and has since been subsequently renamed Howmet Aerospace Inc.).

~~Separation Transaction~~

On November 1, 2016 (the ~~“Separation Date”)~~Separation Date), ParentCo separated into two standalone, publicly-traded companies, Alcoa Corporation ~~(or the “Company) separated from ParentCo into a standalone, publicly-traded company, effective at 12:01 a.m. Eastern Standard Time,~~and Arconic Inc. (the ~~“Separation Transaction”)~~Separation Transaction). Alcoa Corporation is comprised of the bauxite mining, alumina refining, aluminum smelting and casting, and energy operations of ParentCo’s former Alumina and Primary Metals segments, as well as the Warrick, Indiana rolling operations and the 25.1% equity interest in the rolling mill at the joint venture in Saudi Arabia, both of which were part of ParentCo’s Global Rolled Products segment. ParentCo, which later changed its name to Arconic, continues to own the operations within its Global Rolled Products (except for the aforementioned rolling operations that are owned by Alcoa Corporation), Engineered Products and Solutions, and Transportation and Construction Solutions segments.

To effect the Separation Transaction, ParentCo undertook a series of transactions to separate the net assets and certain legal entities of ParentCo, resulting in a cash payment of $1,072 to ParentCo by Alcoa Corporation (an additional $247 was paid to Arconic by Alcoa Corporation in the 2017 nine-month period, including $243 associated with the sale of certain of the Company’s energy operations – see Financing Activities in Liquidity and Capital Resources below) with the net proceeds of a previous debt offering. In conjunction with the Separation Transaction, 146,159,428 shares of Alcoa Corporation common stock were distributed to ParentCo shareholders. Additionally, Arconic retained 36,311,767 shares of Alcoa Corporation common stock representing its 19.9% retained interest (Arconic sold 23,353,000 of these shares on February 14, 2017 and the remaining 12,958,767 shares on May 4, 2017).~~“Regular-way”~~ trading of Alcoa Corporation’s common stock began with the opening of the New York Stock Exchange on November 1, 2016 under the ticker symbol “AA.” Alcoa Corporation’s common stock has a par value of $0.01 per share.

In connection with the Separation Transaction, as of October 31, 2016, ~~Alcoa Corporation~~the Company and Arconic Inc. entered into ~~certain~~several agreements ~~with Arconic~~ to ~~implement the legal and structural separation between the two companies, govern the relationship between Alcoa Corporation and Arconic after the completion of~~affect the Separation Transaction, ~~and allocate between Alcoa Corporation and Arconic various assets, liabilities and obligations,~~ including ~~among other things, employee benefits, environmental liabilities, intellectual property, andtax-related~~ ~~assets and liabilities. These agreements included~~ a Separation and Distribution Agreement and a Tax Matters ~~Agreement, Employee Matters Agreement, Transition Services Agreement, certain Patent,Know-How,~~ ~~Trade Secret License~~Agreement. See Overview in Management’s Discussion and ~~Trademark License Agreements,~~Analysis of Financial Condition and ~~Stockholder and Registration Rights Agreement.~~

~~ParentCo incurred costs to evaluate, plan, and execute~~Results of Operations in Part II Item 7 of Alcoa Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019 for additional information regarding the Separation ~~Transaction,~~Transaction.

Business Update

Coronavirus

In response to the coronavirus (COVID-19) pandemic, Alcoa continues to operate with comprehensive measures in place to protect the health of the Company’s workforce, prevent infection in our locations, and mitigate impacts. As a result of these measures and the aluminum industry being classified as an essential business, all of Alcoa’s bauxite mines, alumina refineries, and aluminum manufacturing facilities continue to remain in operation with comprehensive measures in place for health and business continuity. Each location has implemented extensive preparedness and response plans which include social distancing protocols and other protective actions aligned with guidance from the U.S. Centers for Disease Control and Prevention, the World Health Organization, and all other relevant government agencies in countries where we operate. These actions include:

•

Adjusted shift schedules and other work patterns to create separation for the workforce and ensure redundancy for critical resources;

•

Developed and implemented additional hygiene protocols and cleaning routines at each location;

•

Deployed communications to our suppliers, vendors, customers, and delivery personnel on our comprehensive actions, including health and safety protocols;

•

Issued global communications to educate and update employees on public health practices to mitigate the potential spread of the virus in our communities;

•

Implemented access restrictions; everyone must be free of the signs and symptoms of COVID-19 before entering Alcoa sites;

•

Implemented remote work procedures where practical; and,

•

Eliminated non-essential travel.

The Company’s locations have had minimal contractor- and employee-related disruptions to date. Company-wide there have been approximately 475 confirmed employee and contractor COVID-19 cases as of June 30, 2020; however, most of the employees and contractors have received medical treatment, have returned to work, and are currently contributing to our operations.

The COVID-19 pandemic has resulted in certain negative impacts on the Company’s business, financial condition, operating results, and cash flows. For example, due to the economic impacts of the COVID-19 pandemic, the restart at the Bécancour (Canada) smelter had been slowed at the end of the first quarter of 2020 but has since resumed, and the operating capacity was at approximately 90 percent of total nameplate capacity as of June 30, 2020. The restart, which was originally expected to be complete by the end of the second quarter of 2020, is now expected to be complete in the third quarter of 2020. Additionally, COVID-19 has negatively impacted customer demand for value-added aluminum products as customers have reduced production levels in response to the economic impacts of the pandemic. This has resulted in lower margins on aluminum products as sales shift from value-add products to commodity-grade products. Furthermore, Alcoa has experienced challenges from low metal prices which could continue in the near term. The Company has not experienced any significant interruption from its supply sources.

Alcoa and Alcoa Foundation continue to support the communities near our operating locations, with special focus on Brazil communities that have been more adversely affected by the pandemic. Alcoa Foundation has pledged more than $1 to support COVID-19 relief efforts in the communities where Alcoa operates through its humanitarian aid program. This is in addition to the almost $3 the Foundation already committed to grantmaking in communities where we operate, which is being used to provide needed support such as medical supplies, equipment, and food.

As the impact of COVID-19 on the global economy continues to evolve, the Company is constantly evaluating the broad impact of the pandemic on the macroeconomic environment, including specific regions and end markets in which the Company operates. As a result of the pandemic’s impact on the macroeconomic environment, management evaluated the future recoverability of the

Company’s assets, including goodwill and long-lived assets, and the realizability of deferred tax assets while considering the Company’s current market capitalization. Management concluded that no asset impairments and no additional valuation allowances were required in the second quarter and six months ended June 30, 2020.

The magnitude and duration of the COVID-19 pandemic is unknown. The pandemic could have adverse future impacts on the Company’s business, financial condition, operating results, and cash flows. Specifically, if this global health threat persists, it could adversely affect:

•

Global demand for aluminum, negatively impacting our ability to generate cash flows from operations;

•

The liquidity of customers, which could negatively impact the collectability of outstanding receivables and our cash flows;

•

Commercial sustainability of key vendors within our supply chain which could result in higher inventory costs and/or inability to fulfill customer orders;

•

Alcoa’s ability to fund capital expenditures and required maintenance at our facilities, which could negatively impact our ability to operate, results of operations, and profitability;

•

Global financial and credit markets and our ability to obtain additional credit or financing upon acceptable terms or at all, which could negatively affect our liquidity and financial condition;

•

The Company’s ability to meet covenants in our outstanding debt and credit facility agreements;

•

The financial condition of equity method investments and key joint venture partners, negatively impacting the results of operations, cash flows, and recoverability of investment balances;

•

Alcoa’s ability to generate income in certain jurisdictions, negatively impacting the realizability of our deferred tax assets;

•

Investment return on pension assets, declining interest rates, and contribution deferrals, resulting in increased required Company contributions or unfavorable contribution timing, negatively impacting future cash flows;

•

The effectiveness of hedging instruments;

•

The recoverability of certain long-lived and intangible assets, including goodwill;

•

Legal obligations resulting from employee claims related to health and safety; and,

•

The efficiency of production at our operating locations, negatively impacting the results of operations.

The preceding list of potential adverse effects of the COVID-19 pandemic is not all-inclusive or necessarily in order of importance or magnitude. The potential impact(s) of the pandemic on the Company’s business, financial condition, operating results, cash flows and/or market capitalization is difficult to predict and will continue to be monitored in subsequent periods.Further or prolonged deterioration of adverse conditions 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.

In addition to utilizing all preventative and mitigation options available to ensure continuity of operations, the Company has implemented various cash preservation initiatives. These measures include:

•

Reducing non-critical capital expenditures planned for 2020 by $100;

•

Deferring non-regulated environmental and asset retirement obligations payments of $25;

•

Deferring approximately $220 in pension contributions from 2020 to January 1, 2021 and deferring employer payroll taxes of approximately $14 into 2021 and 2022 in the U.S., as permitted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act; and,

•

Implementing hiring restrictions outside of critical production roles, implementing and extending travel restrictions throughout the organization, and utilizing other appropriate government support programs to save or defer approximately $35.

Strategic Actions

Alcoa continues to progress with its strategic actions to drive lower costs and sustainable profitability, however, the global effects of the COVID-19 pandemic may impact the timing of the previously announced strategic actions. In late 2019, Alcoa Corporation announced the following strategic actions:

•

The implementation of a new operating model that results in a leaner, more integrated, operator-centric organization with reduced overhead costs;

•

The pursuit of non-core asset sales by early 2021 expected to generate an estimated $500 to $1,000 in net proceeds in support of its updated strategic priorities; and,

•

The realignment of the operating portfolio over the next five years, placing 1.5 million metric tons of smelting capacity and 4 million metric tons of alumina refining capacity under review. The review will consider opportunities for significant improvement, potential curtailments, closures, or divestitures.

The new operating model has been implemented and the Company is substantially complete with the transition of eliminated roles. At June 30, 2020, approximately 225 of the 260 employees expected to be terminated in connection with the implementation of the new operating model were separated. In addition to the employees separated under severance programs, the Company eliminated 60 positions as open roles or retirements were not replaced.

In January 2020, the Company announced the sale of Elemental Environmental Solutions LLC (EES), a wholly-owned Alcoa subsidiary that operated the waste processing facility in Gum Springs, Arkansas, to a global environmental firm in a transaction valued at $250. The transaction closed as of January 31, 2020 whereby the Company received $200 with another $50 held in escrow to be paid to Alcoa if certain post-closing conditions are satisfied, which would result in an additional gain being recorded. As a result of the transaction, the Company recognized a gain of $180 (pre- and after-tax) in the first quarter of 2020 and anticipates annual net income improvement of approximately $10. During the second quarter of 2020, an additional $1 gain was ~~allocated~~recorded as a ~~pro rata~~result of certain post-closing adjustments based on the terms of the agreement.

On April 22, 2020, Alcoa announced that it will curtail the remaining 230 kmt of uncompetitive smelting capacity at its Intalco smelter in Ferndale, Washington amid declining market conditions. The full curtailment of 279 kmt, which includes 49 kmt of earlier-curtailed capacity, is expected to be complete in the third quarter of 2020. At June 30, 2020, total curtailed capacity at the smelter was approximately 209 kmt of the total base capacity of 279 kmt. The smelter recorded a net loss of $71 in the six months ended June 30, 2020. This action will bring Alcoa’s total curtailed smelting capacity to approximately 830 kmt, or approximately 30%, of its total global smelting capacity upon completion of the Bécancour (Canada) smelter restart.

The Company recorded restructuring charges of approximately $27 (pre- and after-tax) in the second quarter of 2020 associated with the curtailment for employee-related costs and contract termination costs, which are all cash-based charges expected to be paid primarily in the third quarter of 2020. Intalco employed approximately 700 people at the time of announcement, and the workforce is being significantly reduced due to the curtailment.

On June 25, 2020, Alcoa launched a formal 30-day consultation process with the Spanish Works Council representing employees at the San Ciprián aluminum facility in Spain, which the Company and the Spanish Works Council have agreed to extend until August 4, 2020. The formal consultation began after the conclusion of an informal process that started on May 28, 2020. A collective dismissal could potentially affect up to 534 employees at the aluminum plant. The San Ciprián aluminum facility has incurred significant and recurring financial losses that are expected to continue. The Company envisions a restructuring that retains a portion of ~~those costs based on segment revenue (see Cost Allocations below). ParentCo recognized $152 from January 2016 through October 2016~~the casthouse in operation. No final decisions will be made until the formal consultation process is complete. The San Ciprián site has both an aluminum plant and ~~$24 in 2015 for costs related to~~alumina refinery; the Separation Transaction, of which $68 and $12, respectively, was allocated to Alcoa Corporation. Accordingly, in the 2016 third quarter and nine-month period, an allocation of $23 and $54, respectively, wasSan Ciprián alumina refinery is not included in ~~Selling, general administrative,~~this formal consultation process.

In December 2019, the Company announced the permanent closure of its alumina refinery in Point Comfort, Texas as its first action of the multi-year portfolio review. The site’s 2.3 million metric tons of refining capacity had been fully curtailed since 2016. As a result of the decision to close the refinery, a $274 charge was recorded to Restructuring and other ~~expenses on Alcoa Corporation’s Statement of Consolidated Operations.~~

~~Basis of Presentation~~

~~Prior~~charges, net (see Note D to the Separation Date, Alcoa Corporation did not operate as a separate, standalone entity. Alcoa Corporation’s operations were included in ParentCo’s financial results. Accordingly, for all periods prior to the Separation Date, Alcoa Corporation’s Consolidated Financial Statements ~~were prepared from ParentCo’s historical accounting records and were presented on a standalone basis as if~~in Part II Item 8 of Alcoa Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019). Beginning in 2020, the closure is expected to result in annual net income improvement of approximately $15 (after-tax and noncontrolling interest) and cash savings of approximately $10 (Alcoa’s share) when compared to the ongoing spend for curtailment, exclusive of closure costs.

2020 Programs

In February 2020, Alcoa announced 2020 programs to drive leaner working capital and improved productivity. First, by utilizing a holistic solution for managing the supply chain across procurement, operations, ~~had been conducted independently~~and the commercial team, the Company is targeting a working capital benefit between $75 to $100 during 2020 to improve its operating cash flows. Secondly, the Company is expecting greater productivity and lower costs of approximately $100 which will be achieved through operational efficiency programs and specific initiatives taken throughout 2020.

Liquidity Levers

Through a combination of the COVID-19 response initiatives, the strategic actions, and the 2020 programs discussed above, the Company is targeting approximately $900 in cash improvements during 2020. As of June 30, 2020, the Company is on track to achieve the overall target of the programs.

Additionally, management has taken several measures to improve Alcoa’s liquidity levers. These include amending the Company’s Revolving Credit Agreement to temporarily provide a more favorable leverage ratio calculation, permanently adjusting the calculation of Consolidated EBITDA, and temporarily adjusting for up to the next consecutive four full fiscal quarters the manner in which Consolidated Cash Interest Expense and Total Indebtedness are calculated. During the first quarter of 2020, the Company also amended a three-year revolving credit facility agreement of one of its wholly-owned subsidiaries secured by certain customer

receivables, converting it to a Receivables Purchase Agreement that provides the option for faster liquidation of certain customer receivables.

On April 8, 2020, the Company’s wholly-owned subsidiary, Alcoa Norway ANS, drew $100 against its one-year, multicurrency revolving credit facility, and may do so from ~~ParentCo. Such Consolidated Financial Statements include~~time to time in the ~~historical operations that~~future, in the ordinary course of business. Repayment of the drawn amount, including interest accrued at 2.93%, occurred upon maturity on June 29, 2020. On July 3, 2020, Alcoa Norway ANS amended the revolving credit facility agreement to align the terms of the agreement with the amendments to the Revolving Credit Agreement (discussed above).

In July 2020, ANHBV, a wholly-owned subsidiary of Alcoa Corporation, issued $750 aggregate principal amount of 5.500% Senior Notes due 2027 (the 2027 Notes) in a private transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the Securities Act). The net proceeds of this issuance were ~~considered~~approximately $736 reflecting a discount to ~~comprise Alcoa Corporation’s businesses,~~the initial purchasers of the 2027 Notes as well as ~~certain assets~~issuance costs.

See Credit Facilities under the Liquidity and ~~liabilities that were historically held at ParentCo’s corporate level but were specifically identifiable or otherwise attributable to Alcoa Corporation.~~

~~In the 2016 third quarter~~Capital Resources section of Management’s Discussion and ~~nine-month period, the earnings per share included on Alcoa Corporation’s Statement of Consolidated Operations was calculated based~~Analysis for additional details on the ~~182,471,195 shares~~above described liquidity measures.

Results of Alcoa Corporation common stock distributed on the Separation Date in conjunction with the completion of the Separation Transaction and is considered pro forma in nature. Prior to November 1, 2016, Alcoa Corporation did not have any issued and outstanding publicly-traded common stock.

Operations

Selected Financial Data:

	Second quarter ended June 30,						Six months ended June 30,
	2020			2019			2020			2019
Sales	$	2,148		$	2,711		$	4,529		$	5,430
Net loss attributable to Alcoa Corporation	$	(197	)	$	(402	)	$	(117	)	$	(601	)
Diluted loss per share attributable to Alcoa Corporation common shareholders	$	(1.06	)	$	(2.17	)	$	(0.63	)	$	(3.24	)
Third-party shipments of alumina (kmt)		2,415			2,299			4,780			4,628
Third-party shipments of aluminum products (kmt)		789			724			1,514			1,433
Average realized price per metric ton of alumina	$	250		$	376		$	274		$	381
Average realized price per metric ton of primary aluminum	$	1,694		$	2,167		$	1,835		$	2,193

~~Cost Allocations~~

~~The description and information on cost allocations is applicable for all periods included in Alcoa Corporation’s Consolidated Financial Statements prior to the Separation Date.~~

The Consolidated Financial Statements of Alcoa Corporation include general corporate expenses of ParentCo that were not historically charged to Alcoa Corporation for certain support functions that were provided on a centralized basis, such as expenses related to finance, audit, legal, information technology, human resources, communications, compliance, facilities, employee benefits and compensation, and research and development activities. These general corporate expenses were included in Alcoa Corporation’s Statement of Consolidated Operations within Cost of goods sold, Selling, general administrative and other expenses, and Research and development expenses. These expenses were allocated to Alcoa Corporation on the basis of direct usage when identifiable, with the remainder allocated based on Alcoa Corporation’s segment revenue as a percentage of ParentCo’s total segment revenue for both Alcoa Corporation and Arconic.

~~All external debt not directly~~Overview—Net loss attributable to Alcoa Corporation was excluded from Alcoa Corporation’s Consolidated Balance Sheet. Financing costs related to these debt obligations were allocated to Alcoa Corporation based on the ratio of capital invested in Alcoa Corporation to the total capital invested by ParentCo in both Alcoa Corporation and Arconic, and were included in Alcoa Corporation’s Statement of Consolidated Operations within Interest expense.

~~The following table reflects the allocations described above:~~

   Third
quarter
ended    Nine
months
ended
   September 30, 2016
Cost of goods sold⁽¹⁾
   $ 13    $ 39
Selling, general administrative, and other expenses⁽²⁾
   47    124
Research and development expenses
   —      2
Provision for depreciation, depletion, and amortization
   5    15
Restructuring and other charges⁽³⁾
   1    1
Interest expense
   59    178
Other expenses (income), net
   1    (8 )

⁽¹⁾	~~Allocation principally relates to expenses for ParentCo’s retained pension and other postretirement benefits associated with closed and sold operations.~~

⁽²⁾	~~Allocation includes costs incurred by ParentCo associated with the Separation Transaction (see above).~~

⁽³⁾	~~Allocation primarily relates to layoff programs for ParentCo corporate employees.~~

~~Management believes the assumptions regarding the allocation of ParentCo’s general corporate expenses and financing costs were reasonable.~~

Nevertheless, the Consolidated Financial Statements of Alcoa Corporation may not include all of the actual expenses that would have been incurred and may not reflect Alcoa Corporation’s consolidated results of operations, financial position, and cash flows had it been a standalone company during the periods prior to the Separation Date. Actual costs that would have been incurred if Alcoa Corporation had been a standalone company would depend on multiple factors, including organizational structure, capital structure, and strategic decisions made in various areas, including information technology and infrastructure. Transactions between Alcoa Corporation and ParentCo, including sales to Arconic, were included as related party transactions in Alcoa Corporation’s Consolidated Financial Statements and are considered to be effectively settled for cash at the time the transaction was recorded. The total net effect of the settlement of these transactions is reflected in Alcoa Corporation’s Statement of Consolidated Cash Flows as a financing activity and$197 in the ~~Company’s Consolidated Balance Sheet as Parent Company net investment.~~

~~Results~~second quarter of ~~Operations~~

~~Selected Financial Data~~:

   Third quarter ended
September 30,    Nine months ended
September 30,
   2017    2016    2017    2016
Sales
   $ 2,964    $ 2,329    $ 8,478    $ 6,781
Net income (loss) attributable to Alcoa Corporation
   113    (10 )    413    (275 )
Diluted earnings per share attributable to Alcoa Corporation common shareholders
   0.60    (0.06 )    2.21    (1.51 )








Shipments of alumina (kmt)
   2,271    2,361    6,914    6,795
Shipments of aluminum products (kmt)
   868    761    2,502    2,295








Alcoa Corporation’s average realized price per metric ton of alumina
   $ 314    $ 248    $ 318    $ 247
Alcoa Corporation’s average realized price per metric ton of primary aluminum
   2,237    1,873    2,175    1,847

~~Net income attributable to Alcoa Corporation was $113 in the 2017 third quarter and $413 in the 2017 nine-month period~~2020 compared with a Net loss attributable to Alcoa Corporation of ~~$10~~$402 in the ~~2016 third~~second quarter ~~and $275~~of 2019. Net loss attributable to Alcoa Corporation was $117 in the ~~2016 nine-month period.~~six months ended June 30, 2020 compared with a Net loss attributable to Alcoa Corporation of $601 in the six months ended June 30, 2019. The improvement in results ~~of $123~~ in the ~~2017 third quarter~~quarterly and ~~$688 in the 2017 nine-month~~six-month comparable period ~~was~~of $205 and $484 were principally related to a higher average realized price for each of primary aluminum and alumina, the absence of allocated interest expense and costs related to the Separation Transaction, and lower restructuring charges. These positive impacts were partiallyto:

•

Lower Restructuring and other charges, net;

•

Lower Provision for income taxes;

•

Lower Net income attributable to noncontrolling interest;

•

Lower raw material and energy costs; and,

•

Favorable currency impacts, mainly due to changes in the Australian dollar and Brazilian real.

Partially offset ~~in the 2017 third quarter and somewhat offset in the 2017 nine-month period by increased input and maintenance costs, the absence~~by:

•

Lower alumina and aluminum prices; and,

•

Lower product premiums as a result of reduced demand for value-added aluminum products.

Additionally, a gain on the ~~sale~~divestiture of ~~wharf property, net unfavorable foreign currency movements,~~ a ~~higher income tax provision, and higher net income attributable to~~waste processing facility in Gum Springs, Arkansas had a ~~noncontrolling interest partner in certain of Alcoa Corporation’s operations. A gain~~favorable impact on the ~~sale of certain energy operations also contributed to the improvement in the 2017 nine-month~~comparable 2020 six-month period.

Sales ~~improved $635,~~— Sales declined $563, or ~~27%, and $1,697, or 25%~~21%, in the ~~2017 third~~second quarter of 2020 compared with the second quarter of 2019, and ~~nine-month~~$901, or 17%, in the six-month period ~~respectively,~~of 2020 compared towith the same ~~periods~~period in ~~2016.~~2019. The ~~increase~~decline in both periods was ~~largely attributable to~~principally related to:

•

Lower alumina and aluminum prices;

•

Lower product premiums as a result of reduced demand for value-added aluminum products; and,

•

Lower revenue resulting from the divestiture of two Spanish facilities in July 2019.

Partially offset by:

•

Higher sales resulting from the restart of the Bécancour smelter in Québec.

Cost of goods sold— As a ~~higher average realized price for each~~percentage of primary aluminum and alumina and higher overall volume. In the 2017 third quarter, the improvement in overall volume was primarily due to increased shipments for aluminum products and bauxite, partially offset by decreased shipments for alumina. The improvement in overall volume in the 2017 nine-month period was the result of increased shipments in aluminum products, bauxite, and alumina.

Sales, Cost of goods sold ~~(COGS) as a percentage of Sales~~ was ~~79.7%~~89.9% and 87.4% in the ~~2017 third~~second quarter and ~~79.2%~~six-month period of 2020, respectively, compared with 80.7% and 80.5% in the ~~2017 nine-month period compared with 84.5% in the 2016 third~~second quarter and ~~85.2% in the 2016 nine-month period. In both periods, the percentage was positively~~six-month period of 2019, respectively. The second quarter and six-month period percentages were negatively impacted by ~~a higher average realized price~~lower prices for ~~each of primary~~alumina and aluminum ~~and alumina, somewhat~~products which were partially offset by several factors as follows: increased costs for energy (including $8 (third quarter) and $21 (nine months) related to a financial contract – see below), maintenance, and caustic soda; net unfavorablefavorable foreign currency ~~movements due to a weaker U.S. dollar; an unfavorable LIFO (last in, first out) inventory adjustment (difference of $15 (third quarter)~~impacts and $54 (nine months) – see Reconciliation of Total Segment Adjusted EBITDA to Consolidated Net Income (Loss) Attributable to Alcoa Corporation in Segment Information below); costs related to the restart of the Warrick smelter ($17 – see Restructuring and other charges below); and a charge for the settlement of legacy tax matters in Brazil ($9). Higher costs for carbon (coke and pitch)raw material costs. The six-month period was also ~~contributed to the referenced offset in the 2017 third quarter.~~favorably impacted by lower energy costs.

Selling, general administrative, and other expenses ~~(SG&A)~~— Selling, general administrative, and other expenses decreased ~~$22~~by $24, or 35%, and ~~$53~~$48, or 32%, in the ~~2017 third~~second quarter and ~~nine-month~~six-month period of 2020, respectively, compared towith the corresponding periods in ~~2016.~~2019. Both periods were favorably impacted by cost savings from the new operating model, lower fees for professional services, lower travel expenses, and favorable foreign currency impacts, mainly from the Brazilian real. The ~~decline~~2019 six-month period also included the unfavorable impact of a bad debt reserve recorded against a Canadian customer receivable due to bankruptcy.

Provision for depreciation, depletion, and amortization— Provision for depreciation, depletion, and amortization decreased $22, or 13%, and $24, or 7%, in the second quarter and six-month period in 2020, respectively, compared with the corresponding periods in 2019. This decrease in both periods ~~was~~is primarily due to ~~the absence of costs($23-third~~ ~~quarter and$54-nine~~ ~~months) related to the Separation Transaction (see above). SG&A as a percentage of Sales decreased from 4.0%~~changes in the ~~2016 third quarter to 2.4% in~~weighted-average useful lives of assets and currency impacts of the ~~2017 third quarter,~~Brazil real and ~~from 3.9% in the 2016 nine-month period to 2.5% in the 2017 nine-month period.~~Australian dollar.

Restructuring and other charges, innet—In the ~~2017 third~~second quarter and ~~nine-month~~six-month period ~~were $10~~ of ~~income~~2020, Alcoa Corporation recorded Restructuring and ~~$12~~other charges, net, of ~~expense,~~$37 and $39, respectively, which were primarily comprised of costs related to the ~~following components: $6~~curtailment of the Intalco (Washington) smelter of $27 (both periods), and ~~$24,~~$11 and $13, respectively, for additional contract costs related to the curtailed Wenatchee (Washington) smelter.

In the second quarter and ~~São Luís~~

~~(Brazil) smelters; $4~~six-month period of 2019, Alcoa Corporation recorded Restructuring and ~~$17,~~other charges, net of $370 and $483, respectively, ~~for layoff costs, including~~which were primarily comprised of the ~~separation of approximately 10 and 120 (110 in the Aluminum segment) employees,~~following components:

•

$5 and $108, respectively, ~~and related pension costs of $3 and $6, respectively; $7 (both periods)~~ for exit costs related to the curtailment of the Avilés and La Coruña smelters in Spain;

•

$38 (both periods) related to the curtailment of certain pension benefits; and,

•

$319 (both periods) related to the divestiture of Alcoa Corporation’s interest in the MRC.

See Note D to the ~~relocation~~Consolidated Financial Statements in Part I Item 1 of this Form 10-Q for additional detail on the Company’s headquarters and principal executive office from New York, New York to Pittsburgh, Pennsylvania; a charge of $2 (both periods) for other miscellaneous items; and a reversal of $29 and $38, respectively, associated with several reserves related to prior periods (see below).above net charges.

On July 11, 2017, Alcoa Corporation announced plans to restart three (161 kmt of capacity) of the five potlines (269 kmt of capacity) at the Warrick (Indiana) smelter, which is expected to be complete

Other expenses (income), net— Other expenses (income), net was $51 in the second quarter of 2018. This smelter was previously permanently closed in March 2016 by ParentCo. The capacity identified for restart will directly supply the existing rolling mill at the Warrick location to improve efficiency of the integrated site and provide an additional source of metal to help meet an anticipated increase in production volumes. As a result of the decision to reopen this smelter,2020 compared with $50 in the ~~2017 third~~second quarter ~~Alcoa Corporation reversed $29 in remaining liabilities related to the original closure decision. These liabilities consisted~~ of ~~$20 in asset retirement obligations~~2019, and $4 in environmental remediation obligations, which were necessary due to the previous decision to demolish the smelter, and $5 in severance and contract termination costs. Additionally, the carrying value of the smelter and related assets was reduced to zero as the smelter ramped down between the permanent closure decision date (end of 2015) and the end of March 2016. Once these assets are placed back into service in conjunction with the restart, their carrying value will remain zero. As such, only newly acquired or constructed assets related to the Warrick smelter will be depreciated.

~~Restructuring and other charges were $17 and $109~~($81) in the ~~2016 third quarter and nine-month~~2020 six-month period ~~respectively.~~

~~In the 2016 third quarter, Restructuring and other charges included $17 for layoff costs related to cost reduction initiatives, including the separation of approximately 30 employees~~compared with $91 in the ~~Aluminum segment and related pension settlement costs; a net credit of $1 for other miscellaneous items; and a net charge of $1 related to corporate actions of ParentCo allocated to Alcoa Corporation.~~

In the 2016 nine-month period, Restructuring and other charges included $84 for additional net costs related to decisions made in late 2015 to permanently close and demolish the Warrick smelter (see above) and to curtail the Wenatchee smelter and Point Comfort (Texas) refinery (see below); $28 for layoff costs related to cost reduction initiatives, including the separation of approximately 60 employees in the Aluminum segment and related pension settlement costs; a net charge of $1 related to corporate actions of ParentCo allocated to Alcoa Corporation (see Cost Allocations in Separation Transaction above); and a reversal of $4 associated with several layoff reserves related to prior periods.

In the 2016 nine-month period, the additional net costs related to the closure and curtailment actions included accelerated depreciation of $70 related to the Warrick smelter as it continued to operate through March 2016; a reversal of $24 ($4 in the 2016 third quarter) associated with severance costs initially recorded in late 2015; and $38 ($2 in the 2016 third quarter) in other costs. Additionally in the 2016 nine-month period, remaining inventories, mostly operating supplies and raw materials, were written down to their net realizable value, resulting in a charge of $5, which was recorded in COGS. The other costs of $38 ($2 in the 2016 third quarter) represent $30 ($3 in the 2016 third quarter) for contract terminations, $4 (($3) in the 2016 third quarter) in asset retirement obligations for the rehabilitation of a coal mine related to the Warrick smelter, and $4 ($2 in the 2016 third quarter) in other related costs.

~~Alcoa Corporation does not include Restructuring and other charges in the results of its reportable segments. The impact of allocating such charges to segment results would have been as follows:~~

   Third quarter ended
September 30,    Nine months ended
September 30,
   2017    2016    2017 2016
Bauxite
   $ 1    $ —      $ 1 $ —
Alumina
   4    (1 )    4 1
Aluminum
   (22 )    17    (1 ) 107






Segment total
   (17 )    16    4 108
Corporate
   7    1    8 1






Total restructuring and other charges
   $ (10 )    $ 17    $ 12 $ 109

As of September 30, 2017, approximately 70 of the 120 employees associated with 2017 restructuring programs were separated. The remaining separations for 2017 restructuring programs are expected to be completed by the end of 2017. As of June 30, 2017, the separations associated with 2016 and 2015 restructuring programs were essentially complete.

In the 2017 third quarter and nine-month period, cash payments of $2 and $7, respectively, were made against layoff reserves related to 2017 restructuring programs, less than $1 and $2, respectively, were made against layoff reserves related to 2016 restructuring programs, and $4 and $16, respectively, were made against layoff reserves related to 2015 restructuring programs.

Interest expense declined $41, or 61%, in the 2017 third quarter and $120, or 61%, in the 2017 nine-month period compared to the corresponding periods in 2016. In both periods, the decrease was due to the absence of an allocation~~($59-third~~ ~~quarter and$178-nine~~ ~~months) to Alcoa Corporation of ParentCo’s interest expense related to the Separation Transaction (see above), somewhat offset by interest expense($20-third~~ ~~quarter and$63-nine~~ ~~months) associated with $1,250 of debt issued by Alcoa Corporation in September 2016.~~

Other expenses, net was $27 in the 2017 third quarter compared with Other income, net of $106 in the 2016 third quarter, and Other income, net was $67 in the 2017 nine-month period compared to Other income, net of $90 in the 2016 nine-month2019 six-month period.

The change of ~~$133~~$1 in the ~~2017 third~~second quarter ~~was mostly related to the absence~~ of ~~both a gain on the sale of wharf property near the Intalco (Washington) smelter ($118) and gains on the sales of several parcels of land ($13).~~

~~In the 2017 nine-month period, the change of $23~~2020 was largely attributable to ~~the absence of gains on the sales of several assets as follows: wharf property near the Intalco smelter ($118), an equity interest~~unfavorable changes in ~~a natural gas pipeline in Australia ($27), and several parcels of land ($19); a net unfavorable change inmark-to-market~~ derivative instruments ($17); and the absence of a benefit for an arbitration recovery related to a 2010 fire at the Iceland smelter ($14). These items were mostly offset by a gain ($120) on the sale of the Yadkin Hydroelectric Project (Yadkin – see Aluminum in Segment Information below), a smaller equity loss related to Alcoa Corporation’s share of ~~the aluminum complex joint venture~~equity method investment earnings partially offset by lower losses on asset sales and favorable changes in ~~Saudi Arabia ($36), and net favorable~~ foreign currency ~~movements ($15).~~

impacts. The ~~effective tax rate~~favorable change of $172 in the comparable six-month period was 41.3% (provision on income) and 90.2% (provision on income) for the 2017 and 2016 third quarters, respectively, and 34.8% (provision on income) and 456.4% (provision on a loss) for the 2017 and 2016 nine-month periods, respectively.

~~Alcoa Corporation’s estimated annual effective tax rate for 2017 was 34.2% as of September 30, 2017. This rate differs from the U.S. federal statutory rate of 35%~~ primarily ~~due~~attributable to ~~foreign income taxed in lower rate jurisdictions, mostly offset by domestic losses not tax benefitted. The domestic losses are net of~~ the gain on ~~the sale~~divestiture of ~~Yadkin (see Aluminum~~a waste processing facility in ~~Segment Information below).~~Gum Springs, Arkansas recorded in 2020.

For the 2017 nine-month period, the Provision for income taxes was composed of three components as follows: (i) the application of the estimated annual effective tax rate for 2017 of 34.2% to pretax income of $943, (ii) a net discrete income tax charge of $11, including $10 related to a tax holiday (see below), and (iii) a favorable impact of $6 related to the interim period treatment of operational losses in certain jurisdictions for which no tax benefit was recognized (expected to reverse by the end of 2017).

For the 2017 third quarter, the Provision for income taxes is composed of three components as follows: (i) the difference between the application of the estimated annual 2017 effective tax rate as of September 30, 2017 of 34.2% to pretax income for the 2017 nine-month period of $943 and the application of the estimated annual 2017 effective tax rate as of June 30, 2017 of 31.9% to pretax income for the 2017~~six-month~~ period of $655, (ii) a net discrete income tax charge of $13, including $10 related to a tax holiday (see below), and (iii) a favorable impact of $8 related to the interim period treatment of operational losses in certain jurisdictions for which no tax benefit was recognized (expected to reverse by the end of 2017).

In the 2017 third quarter, AWAB received approval for a tax holiday related to the operation of the Juruti (Brazil) bauxite mine. This tax holiday is effective as of January 1, 2017 (retroactively) and decreases AWAB’s income tax rate from 34% to 15.25%, which will result in future cash tax savings over a~~10-year~~ period. As a result of this income tax rate change, AWAB’s existing deferred tax assets that are expected to reverse during the holiday period were required to be remeasured at the lower tax rate. This remeasurement resulted in both a decrease to AWAB’s deferred tax assets and a noncash charge to earnings of $10 ($6 after noncontrolling interest).

The rate for the 2016 third quarter differs from the U.S. federal statutory rate of 35% primarily due to U.S. losses and tax credits with no tax benefit realizable by Alcoa Corporation, somewhat offset by foreign income taxed in lower rate jurisdictions and tax benefits onNoncontrolling interest ~~expense eliminated to Parent Company net investment.~~

— Net income attributable to noncontrolling interest was ~~$56~~$47 and $106 in the ~~2017 third~~second quarter and ~~$202~~six-month period of 2020, respectively, compared with $109 and $250 in the ~~2017 nine-month period compared with $20 in the 2016 third~~second quarter and ~~$58 in the 2016 nine-month period.~~six-month period of 2019, respectively. These amounts are entirely related to Alumina ~~Limited of Australia’s (Alumina Limited)~~Limited’s 40% ownership interest in several affiliated operating ~~entities, which own, or have an interest~~entities. See Note A to the Consolidated Financial Statements in ~~or operate the bauxite mines and alumina refineries within Alcoa Corporation’s Bauxite and Alumina segments (except for the Poços de Caldas mine and refinery and a portion~~Part I Item 1 of the São Luís refinery, all in Brazil) and the Portland smelter (Aluminum segment) in Australia. These individual entities comprise an unincorporated global joint venture between Alcoa Corporation and Alumina Limited known as Alcoa World Alumina and Chemicals (AWAC). Alcoa Corporation owns 60% of these individual entities, which are consolidated by the Company for financial reporting purposes and include Alcoa of Australia Limited, Alcoa World Alumina LLC, and Alcoa World Alumina Brasil Ltda. Alumina Limited’s 40% interest in the earnings of such entities is reflected as Noncontrolling interest on Alcoa Corporation’s Statement of Consolidated Operations.this Form 10-Q.

In the ~~2017 third~~second quarter and ~~nine-month period,~~six-month periods of 2020 these combined entities, particularly the Alumina segment entities, generated ~~higher~~lower net income compared towith the ~~same~~second quarter and six-month periods ~~in 2016.~~of 2019. The ~~favorable~~unfavorable change in earnings ~~in both periods~~ was ~~mainly~~mostly driven by ~~an improvement in operating results, due mostly to a higher average realized price for~~lower alumina ~~somewhat offset by higher costs for caustic soda and maintenance and net unfavorable foreign currency movements~~prices (see ~~Bauxite and~~ Alumina inunder Segment Information below). In the 2017 nine-month period, the improvement in operating results was slightly offset by the absence of a $27 ($8 was noncontrolling interest’s share) gain on the sale of an equity interest in a natural gas pipeline in Australia and $34 ($10 was noncontrolling interest’s share) in combined higher energy costs and~~mark-to-market~~ ~~losses (see below).~~

~~Alcoa Corporation has purchased electricity~~31

Segment Information

Bauxite

	Second quarter ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Production (mdmt)		12.2		11.3		23.8		23.2
Third-party shipments (mdmt)		1.6		1.5		3.0		2.7
Intersegment shipments (mdmt)		10.8		10.3		21.3		20.5
Total shipments (mdmt)		12.4		11.8		24.3		23.2
Third-party sales	$	66	$	67	$	137	$	132
Intersegment sales		245		246		480		482
Total sales	$	311	$	313	$	617	$	614
Segment Adjusted EBITDA	$	131	$	112	$	251	$	238
Operating costs	$	209	$	220	$	422	$	415
Average cost per dry metric ton of bauxite	$	17	$	19	$	17	$	18

Production in the ~~spot market for one~~above table can vary from Total shipments due primarily to differences between the equity allocation of ~~its smelters since~~production and off-take agreements with the Company’s contract with a local energy provider expired in October 2016, as a new energy contract was not able to be negotiated. In order to manage the Company’s exposure against the variable energy rates that occurrespective equity investment. Operating costs in the spot market, Alcoa Corporation had previously entered into a financial contract with a counterparty to effectively convert the Company’s variable power price to a fixed power price. At the beginning of 2017, Alcoa Corporation held a favorable position in the financial contract, which was scheduled to early terminate in August 2017,table above includes all production-related costs: conversion costs, such as ~~a result of a decision made by management in August 2016.~~

In January 2017, Alcoa Corporation began the process of restarting capacity at this smelter, which was halted due to an unexpected power outage that occurred in December 2016. As a result, Alcoa Corporationlabor, materials, and the same counterparty to the existing financial contract entered into a new financial contract to effectively convert the Company’s variable power price to a fixed power price from August 2017 through July 2021. Additionally, the effective termination of the existing financial contract was moved up to July 31, 2017. In order to obtain the most favorable terms under the new financial contract that could be negotiated, Alcoa Corporation conceded a portion of the existing financial contract that was favorable to the Company for the April through July 2017 period.

As a result of this concession, Alcoa Corporation sought an additional financial contract to cover the exposure to variable power rates for the April through July 2017 period. In March 2017, Alcoa Corporation secured such a contract with a different counterparty; however, the price of power in the spot market rose significantly between January and March 2017. Consequently, the fixed power price secured by this additional financial contract was significantly higher than the fixed power price previously secured by the existing financial contract described above. Accordingly, Alcoa Corporation realized higher energy costs (included in COGS) of $8 and $21 in the 2017 third quarter and nine-month period, respectively, and~~mark-to-market~~ ~~losses (included in Other income, net) related to the financial contracts of $13 in the 2017 nine-month period.~~

~~Segment Information~~

~~Effective in the first quarter of 2017, management elected to change the profit and loss measure of Alcoa Corporation’s reportable segments fromAfter-tax~~ operating income (ATOI) to Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) for internal reporting and performance measurement purposes. This change was made to enhance the transparency and visibility of the underlying operating performance of each segment. Alcoa Corporation calculates 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. Previously, Alcoa Corporation calculated ATOI as Adjusted EBITDA minus (plus) the following items: Provision forutilities; depreciation, depletion, and amortization; ~~Equity loss (income); Loss (gain) on certain asset sales;~~ and ~~Income taxes. Alcoa Corporation’s Adjusted EBITDA may not be comparable to similarly titled measures of other companies.~~

Also effective in the first quarter of 2017, management initiated a realignment of the Company’s internal business and organizational structure. This realignment consisted of combining Alcoa Corporation’s aluminum smelting, casting, and rolling businesses, along with the majority of the energy business, into a new Aluminum business unit, as well as moving the financial results of previously closed operations, such as the Warrick smelter and Suriname refinery, into Corporate. The realignment was executed to align strategic, operational, and commercial activities, as well as to take advantage of synergies and reduce costs. The new Aluminum business unit is managed as a single operating segment. Prior to this change, each of these businesses were managed as individual operating segments and comprised the Aluminum, Cast Products, Energy, and Rolled Products segments. The existing Bauxite and Alumina segments and the new Aluminum segment represent Alcoa Corporation’s operating and reportable segments. The chief operating decision maker function regularly reviews the financial information, including Sales and Adjusted EBITDA, of these three operating segments to assess performance and allocate resources.

~~Segment information for all prior periods presented was revised to reflect the new segment structure, as well as the new measure of profit and loss.~~

~~Bauxite~~plant administrative expenses.

   Third quarter ended
September 30,    Nine months ended
September 30,
   2017    2016    2017    2016
Production^(1),(2) (mdmt)
   11.6    11.4    33.7    33.2
Third-party shipments (mdmt)
   2.1    1.8    5.1    4.7
Alcoa Corporation’s average cost per dry metric ton of bauxite⁽³⁾
   $ 19    $ 18    $ 18    $ 16
Third-party sales
   $ 104    $ 93    $ 254    $ 224
Intersegment sales
   221    192    648    549








Total sales
   $ 325    $ 285    $ 902    $ 773








Adjusted EBITDA
   $ 113    $ 97    $ 321    $ 273

⁽¹⁾	The production amounts do not include additional bauxite (approximately 3 million metric tons per annum) that Alcoa Corporation is entitled to receive (i.e. an amount in excess of its equity ownership interest) from certain other partners at the mine in Guinea.

⁽²⁾

In the second quarter of 2017, Alcoa Corporation revised the respective production amount for the 2016 first, second, and third quarters to reflect refinements to individual mine data. As a result, the production reflected in this table for the 2016 third quarter was revised from prior period reports. Total bauxite production for annual 2016 remains unchanged at 45.0 mdmt.

⁽³⁾	~~Includes all production-related costs, including conversion costs, such as labor, materials, and utilities; depreciation, depletion, and amortization; and plant administrative expenses.~~

Bauxite production increased 2%8% and 3% in ~~both~~ the ~~2017 third~~second quarter and ~~nine-month~~six-month period of 2020, respectively, compared with the corresponding periods of 2019. The Bauxite segment achieved both a quarterly and first half production record for the second quarter and six-month period of 2020, respectively. The improvement in ~~2016. In~~ both ~~periods,~~ the ~~improvement~~quarterly and six-month comparable periods was primarily attributable to the ~~result of a planned increase in production at the~~Willowdale (Australia), Juruti (Brazil) ~~mine~~, and ~~higher production at the Huntly (Australia) mine, somewhat offset by lower production at both the~~ Boké (Guinea) mine and the Trombetas (Brazil) mine. The Boké mine has experienced disruption to its normal operations as a result of separate force majeure events (civil unrest) in the 2017 second and third quarters. The Trombetas mine has experienced disruption to its normal operations due to separate weather events that have impacted the tailing ponds (bauxite waste storage areas) and the washing plant in the 2017 first (heavy rain) and third (drought conditions) quarters, respectively.mines.

Third-party sales for the Bauxite segment ~~improved 12%~~decreased 1% and increased 4% in the ~~2017 third~~second quarter and ~~13% in the 2017 nine-month~~six-month period ~~compared to the same periods in 2016. The increase in both periods was primarily due to higher volume as this segment continues to expand its third-party bauxite portfolio.~~

~~Intersegment sales increased 15% and 18% in the 2017 third quarter and nine-month period,~~of 2020, respectively, compared with the corresponding periods ~~in 2016 virtually all~~of 2019. In the second quarter of 2020, the decrease was due to a ~~higher average realized price.~~

~~Adjusted EBITDA for this segment increased $16 in the 2017 third quarter and $48 in the 2017 nine-month period compared to the same periods in 2016.~~

~~In the 2017 third quarter, the improvement was mostly driven by the previously mentioned higher~~lower average realized price, ~~for intersegment sales, somewhat~~partially offset by ~~higher costs for maintenance, transportation (exports from Western Australia to third-party customers), and royalties (higher third-party sales).~~

an increase in shipments. The increase in the ~~2017 nine-month~~six-month period of 2020 was principally caused by an increase in shipments, partially offset by lower average realized price.

Intersegment sales were flat in the second quarter and six-month period of 2020 compared with the corresponding periods of 2019 as a result of increased intersegment shipments offsetting the lower average realized price on intersegment sales. The increased intersegment shipments are due to higher production in the alumina segment driving higher intersegment bauxite demand.

Segment Adjusted EBITDA increased $19 and $13 in the second quarter and six-month period of 2020, respectively, compared with the corresponding periods of 2019. The improvements in both periods were primarily the result of ~~the previously mentioned higher average realized price for intersegment sales and~~ increased third-party shipments. These positive impacts were partially offset by unfavorable impacts from the previously mentioned disruptions in Guinea and Brazil; higher costs for maintenance (including planned overhauls in Western Australia), transportation (exports from Western Australia to third-party customers), and royalties (higher third-party sales); and net unfavorableshipments combined with favorable foreign currency movements due to a ~~weaker~~stronger U.S. dollar against the Australian dollar and Brazilian real.

For the ~~2017 fourth~~third quarter ~~(comparison~~of 2020 in comparison with the ~~2016 fourth quarter), higher production at the Huntly and Juruti mines and increased total shipments are anticipated.~~

~~Alumina~~third quarter of 2019, a lower average realized price for intersegment sales is expected.

   Third quarter ended
September 30,    Nine months ended
September 30,
   2017    2016    2017    2016
Production (kmt)
   3,305    3,310    9,765    9,956
Third-party shipments (kmt)
   2,271    2,361    6,914    6,795
Alcoa Corporation’s average realized third-party price per metric ton of alumina
   $ 314    $ 248    $ 318    $ 247
Alcoa Corporation’s average cost per metric ton of alumina*
   $ 261    $ 230    $ 253    $ 230
Third-party sales
   $ 713    $ 585    $ 2,196    $ 1,682
Intersegment sales
   398    317    1,143    930








Total sales
   $ 1,111    $ 902    $ 3,339    $ 2,612








Adjusted EBITDA
   $ 203    $ 78    $ 727    $ 207

Alumina

*	~~Includes all production-related costs, including raw materials consumed; conversion costs, such as labor, materials, and utilities; depreciation and amortization; and plant administrative expenses.~~

	Second quarter ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Production (kmt)		3,371		3,309		6,669		6,549
Third-party shipments (kmt)		2,415		2,299		4,780		4,628
Intersegment shipments (kmt)		987		1,070		2,062		2,042
Total shipments (kmt)		3,402		3,369		6,842		6,670
Third-party sales		603	$	864		1,310	$	1,761
Intersegment sales		289		445		625		862
Total sales	$	892	$	1,309	$	1,935	$	2,623
Segment Adjusted EBITDA	$	88	$	369	$	281	$	741
Average realized third-party price per metric ton of alumina	$	250	$	376	$	274	$	381
Operating costs	$	788	$	925	$	1,632	$	1,848
Average cost per metric ton of alumina	$	232	$	275	$	238	$	277

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 customer. Additionally, operating costs in the table above includes all production-related costs: raw materials consumed; conversion costs, such as labor, materials, and utilities; depreciation and amortization; and plant administrative expenses.

At ~~September~~June 30, ~~2017, Alcoa Corporation~~2020, the Alumina segment had ~~2,305~~base capacity of 12,759 kmt with 214 kmt of ~~idle~~curtailed refining capacity oncompared with a base capacity of 15,064 ~~kmt. Both idle~~kmt and curtailed refining capacity ~~and base capacity were unchanged compared to~~of 2,519 kmt at June 30, ~~2017.~~2019. The decrease in base and curtailed capacity was due to the permanent closure of the previously curtailed Point Comfort alumina refinery.

Alumina production ~~was flat~~increased by 2% in both the second quarter and six-month comparable periods. Both increases were principally due to continued stabilization of operations across the refining system. During the second quarter of 2020, the Alumina segment achieved a record quarterly production rate (tonnes per day), and both the Wagerup (Australia) and São Luís (Brazil) refineries set first half production records for the six months ended June 30, 2020.

Third-party sales for the Alumina segment decreased 30% and 26% in the ~~2017 third~~second quarter and ~~decreased 2%~~six-month period of 2020, respectively, compared with the corresponding periods in 2019. The decrease in both periods was primarily due to a decline in average realized price which was principally driven by a lower average alumina index price (on 30-day lag). Both price decreases were partially offset by an increase in shipments. Third-party shipments increased 5% and 3% in the ~~2017 nine-month~~second quarter and six-month period of 2020, respectively, compared with the corresponding periods in ~~2016. In the 2017 nine-month period, the decline was largely attributable to the absence of production from the remaining operating capacity at the Point Comfort (Texas) refinery (2,305kmt-per-year),~~ ~~which was fully curtailed by the end of June 2016 (670 kmt was curtailed at the end of 2015).~~

2019.

Third-party sales for the Alumina segment improved 22% in the 2017 third quarter and 31% in the 2017 nine-month period compared to the same periods in 2016. The increase in both periods was mostly related to a 27% (third quarter) and 29% (nine months) rise in average realized price. This positive impact in the 2017 third quarter was slightly offset by a 4% decrease in volume. In both periods, the change in average realized price was principally driven by a 30% (third quarter) and 37% (nine months) higher average alumina index price (on~~30-day~~ lag). In the 2017 third quarter and nine-month period, 85% and 86%, respectively, of smelter-grade third-party shipments were based on the alumina index price, compared with 87% and 86% in the 2016 third quarter and nine-month period, respectively.

Intersegment sales ~~increased 26%~~declined 35% and ~~23%~~27% in the ~~2017 third~~second quarter and ~~nine-month~~six-month period of 2020, respectively, compared with the corresponding periods in ~~2016~~2019. The decrease in the second quarter was due primarily to a lower average realized price and, to a lesser extent, a decrease in shipments. The decrease in the six-month period was due to a ~~higher~~lower average realized ~~price. This positive impact in the 2017 nine-month period was somewhat~~price slightly offset by ~~lower~~increased demand from the Aluminum segment. The increased demand from the Aluminum segment ~~including as a result~~was primarily driven by the restart at the Bécancour (Canada) smelter partially offset by the curtailment of ~~a power outage at a~~the Intalco smelter ~~in Australia~~ (see Aluminum below).

Segment Adjusted EBITDA ~~for this segment climbed $125~~decreased $281 and $460 in the ~~2017 third~~second quarter and ~~$520~~six-month period of 2020 compared with the corresponding periods of 2019. The decline in the ~~2017 nine-month period compared to the same periods in 2016. The improvement in~~ both periods was ~~mainly related~~primarily attributable to the ~~previously mentioned higher~~decline in average realized price ~~somewhat~~of alumina, partially offset by ~~higher~~net favorable foreign currency movements due to a stronger U.S. dollar (particularly against the Australian dollar and Brazilian real), lower costs for bauxite and caustic soda, ~~net unfavorable foreign currency movements due to a weaker U.S. dollar, especially against~~as well as increased total shipments.

For the ~~Australian dollar, and an increase~~third quarter of 2020 in ~~maintenance expense (including outages in Western Australia).~~

~~In the 2017 fourth quarter (comparison~~comparison with the ~~2016 fourth quarter), higher~~ third quarter of 2019, lowercosts for both bauxite andcaustic soda ~~and bauxite~~partially offset by higher energy costs, primarily natural gas costs in Australia, are expected.

~~Aluminum~~

   Third quarter ended
September 30,    Nine months ended
September 30,
   2017    2016    2017    2016
Primary aluminum production (kmt)
   596    586    1,730    1,781
Third-party aluminum shipments (kmt)
   868    761    2,502    2,295
Alcoa Corporation’s average realized third-party price per metric ton of primary aluminum*
   $ 2,237    $ 1,873    $ 2,175    $ 1,847
Alcoa Corporation’s average cost per metric ton of primary aluminum**
   $ 1,987    $ 1,759    $ 1,964    $ 1,748
Third-party sales
   $ 2,090    $ 1,600    $ 5,884    $ 4,749
Intersegment sales
   9    2    16    38








Total sales
   $ 2,099    $ 1,602    $ 5,900    $ 4,787








Adjusted EBITDA
   $ 303    $ 183    $ 730    $ 528

Aluminum

~~Average~~

	Second quarter ended June 30,					Six months ended June 30,
Total Aluminum information	2020			2019		2020		2019
Third-party aluminum shipments (kmt)		789			724		1,514		1,433
Third-party sales	$	1,475		$	1,757	$	3,073	$	3,492
Intersegment sales		2			4		5		7
Total sales	$	1,477		$	1,761	$	3,078	$	3,499
Segment Adjusted EBITDA	$	(34	)	$	3	$	28	$	(93	)

Primary aluminum information	2020			2019		2020		2019
Production (kmt)		581			533		1,145		1,070
Third-party shipments (kmt)		710			638		1,362		1,266
Third-party sales	$	1,202		$	1,382	$	2,499	$	2,776
Average realized third-party price per metric ton	$	1,694		$	2,167	$	1,835	$	2,193
Total shipments (kmt)		730			656		1,393		1,295
Operating costs	$	1,306		$	1,512	$	2,633	$	3,080
Average cost per metric ton	$	1,788		$	2,305	$	1,890	$	2,378

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. Total aluminum information incudes flat-rolled aluminum while Primary aluminum information does not. Operating costs includes all production-related costs: raw materials consumed; conversion costs, such as labor, materials, and utilities; depreciation and amortization; and plant administrative expenses.

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.

The following table provides annual consolidated base and idle capacity (each in kmt) for each smelter owned by Alcoa Corporation:

		June 30, 2020				June 30, 2019
Facility	Country	Base Capacity		Idle Capacity		Base Capacity		Idle Capacity		Base Change			Idle Change
Portland⁽¹⁾	Australia		197		30		197		30		—			—
São Luís (Alumar)⁽¹⁾	Brazil		268		268		268		268		—			—
Baie Comeau	Canada		280		—		280		—		—			—
Bécancour⁽¹⁾	Canada		310		25		310		259		—			(234	)
Deschambault	Canada		260		—		260		—		—			—
Fjarðaál	Iceland		344		—		344		—		—			—
Lista	Norway		94		—		94		—		—			—
Mosjøen	Norway		188		—		188		—		—			—
San Ciprián	Spain		228		—		228		—		—			—
Avilés	Spain		—		—		93		93		(93	)		(93	)
La Coruña	Spain		—		—		87		87		(87	)		(87	)
Intalco⁽²⁾	U.S.		279		209		279		49		—			160
Massena West	U.S.		130		—		130		—		—			—
Warrick	U.S.		269		108		269		108		—			—
Wenatchee	U.S.		146		146		146		146		—			—
			2,993		786		3,173		1,040		(180	)		(254	)

⁽¹⁾

These figures represent Alcoa Corporation’s share of the facility capacity 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 soldits ownership interest in the ~~United States); and c)~~respective smelter.

⁽²⁾

On April 22, 2020, Alcoa announced the ~~product premium,~~curtailment of the remaining 230 kmt of smelting capacity at the Intalco smelter. The full curtailment of 279 kmt, which ~~represents~~includes 49 kmt of earlier-curtailed capacity, is expected to be complete during the ~~incremental price for receiving physical metal in a particular shape (e.g., billet, slab, rod, etc.) or alloy.~~third quarter of 2020.

**	~~Includes all production-related costs, including raw materials consumed; conversion costs, such as labor, materials, and utilities; depreciation and amortization; and plant administrative expenses.~~

~~In February 2017, Alcoa Corporation’s wholly-owned subsidiary, Alcoa Power Generating Inc., completed~~

Idle capacity at the ~~sale of~~Bécancour smelter decreased by 234 kmt from the second quarter 2019 to the second quarter 2020 as a~~215-megawatt~~ hydroelectric project, Yadkin, to Cube Hydro Carolinas, LLC (see Other expenses (income), net in Results of Operations above). Yadkin encompasses four hydroelectric power developments (reservoirs, dams, and powerhouses), known as High Rock, Tuckertown, Narrows, and Falls, situated along a~~38-mile~~ ~~stretch~~ result of the ~~Yadkin River through the central part of North Carolina. Prior~~restart process. Due to the ~~divestiture,~~economic impacts of the ~~power generated by Yadkin~~COVID-19 pandemic, the restart at the Bécancour (Canada) smelter had been slowed at the end of the first quarter of 2020 but has since resumed, and the operating capacity was ~~primarily sold into the open market. Yadkin generated sales~~at approximately 90 percent of ~~$29 in 2016, and had approximately 30 employees~~total nameplate capacity as of ~~December 31, 2016.~~

~~On July 11, 2017, Alcoa Corporation announced plans~~June 30, 2020. The restart, which was originally expected to ~~restart three (161 kmt of capacity)~~be complete by the end of the ~~five potlines (269 kmt~~second quarter of ~~capacity) at the Warrick (Indiana) smelter, which~~2020, is now expected to be complete in the third quarter of 2020.

Base and idle capacity at the Avilés and La Coruña facilities decreased from the second quarter of ~~2018. This smelter was previously permanently closed in March 2016. The~~2019 to the second quarter of 2020 as a result of the curtailment (February 2019) and subsequent divestiture (July 2019) of these smelters. In addition to the smelters at these locations, the casthouse at each facility and the paste plant at La Coruña were also divested.

Idle capacity ~~identified for restart will directly supply the existing rolling mill~~ at the ~~Warrick location,~~Intalco (Washington) smelter has increased by 160 kmt from the second quarter of 2019 to ~~improve efficiency~~the second quarter of 2020 as a result of the ~~integrated site and provide an additional source of metal to help meet an anticipated increase in production volumes. See COGS and Restructuring and other charges in Results of Operations above.~~

~~At September 30, 2017, Alcoa Corporation had 1,047 kmt of idle capacity on a base~~curtailment process, which was announced April 22, 2020. The full capacity of ~~3,402 kmt. In~~279 kmt at the ~~2017~~Intalco smelter is expected to be curtailed during the third quarter ~~both idle capacity and base capacity increased by 269 kmt compared to June 30, 2017 due to the previously mentioned decision to reopen the Warrick smelter. Once the partial restart~~ of ~~the Warrick smelter occurs, idle capacity will decrease by 161 kmt.~~2020.

Primary aluminum production increased 2%9% and 7% in the ~~2017 third quarter~~second and ~~decreased 3% in~~ the ~~2017 nine-month~~six-month period of 2020, respectively, compared with the corresponding periods in ~~2016.~~

~~In the 2017 third quarter, the improvement was primarily due to higher production at the Iceland smelter~~2019, principally due to the ~~absence of process instability that prevented full operation of the potlines in the 2016 third quarter.~~Bécancour smelter restart discussed above.

The decline in the 2017 nine-month period was principally the result of lower production at the Portland (Australia) smelter due to an unexpected power outage that occurred in December 2016 as a result of a fault in the Victorian transmission network. This event resulted in management halting production of one of the potlines at that time; ramp up to full production was completed in the 2017 third quarter.

Third-party sales for the Aluminum segment ~~improved 31%~~decreased 16% and 12% in the ~~2017 third~~second quarter and ~~24% in~~six-month period of 2020, respectively, compared with the ~~2017 nine-month period compared to the same~~corresponding periods in ~~2016. In both periods, the increase was mainly attributable~~2019, primarily due to a ~~19% (third quarter) and 18% (nine months) rise~~reduction in ~~average~~ realized price of primary aluminum and a 14% (third quarter) and 9% (nine months) improvement in overall aluminum volume. Higher energy sales in Brazil also contributed to the improvement in the 2017 third quarter.

metal prices. The change in average realized price of primary aluminum was ~~largely~~mainly driven by a ~~22% (third quarter~~17% and ~~nine months) higher~~12% lower average LME price (on15-day lag)~~. The higher overall aluminum volume was related to this segment’s rolling operations, primarily due to~~ for the comparable second quarter and six-month periods, respectively, combined with a ~~tolling arrangement with Arconic (began on November 1, 2016). In~~decrease in regional and product premiums for both comparative periods. During the ~~2017 nine-month~~second quarter and six-month period of 2019, product premiums experienced pricing benefits from the ~~increased shipments~~section 232 tariffs which were not repeated in the ~~rolling operations were slightly~~2020 comparable periods. Additionally, product premiums also decreased from reduced demand for value-added products. The unfavorable impact of lower metal prices was partially offset by ~~lower demand for primary aluminum, including~~an increase in sales volume driven primarily from ~~Arconic.~~the restart of the Bécancour smelter in both comparative periods.

~~Intersegment sales declined 58%~~

Segment Adjusted EBITDA decreased $37 in the ~~2017 nine-month~~second quarter of 2020 compared with the second quarter of 2019. The decrease is mainly the result of lower metal prices and an unfavorable mix of value-added products. These unfavorable impacts were partially offset by decreases in the cost of alumina and carbon, and favorable impacts from the restart of the Bécancour smelter and the divestiture of the Avilés and La Coruña facilities. Segment Adjusted EBITDA increased $121 during the six-month period of 2020, compared with the corresponding period in ~~2016~~2019. The change during this period was mainly driven by favorable impacts from lower alumina, carbon and energy prices, the restart of the Bécancour smelter and the divestiture of the Avilés and La Coruña facilities, favorable impacts related to Section 232 tariffs, favorable currency impacts, and a favorable impact from the non-recurrence of a bad debt reserve recorded in 2019 against a Canadian customer receivable due to ~~the absence of energy sales to the Warrick smelter (included in Corporate – see description of segment realignment above), which was permanently closed at the end of March 2016 (see above).~~bankruptcy. These favorable impacts were partially offset by lower realized metal prices and unfavorable product mix from lower demand for value-added products.

~~Adjusted EBITDA for this segment rose $120 in~~

For the ~~2017~~ third quarter of 2020 compared with the third quarter of 2019, continued near-term challenges from low metal prices could occur. Additionally, favorable impacts from the Bécancour smelter restart, Intalco smelter curtailment, and ~~$202 in the 2017 nine-month period compared~~lower raw materials costs are expected to ~~the same periods in 2016. The improvement in both periods was mostly related to the previously mentioned higher average realized price of primary aluminum, somewhat~~be partially offset by ~~higher costs~~lower margins from lower demand for ~~both alumina and energy. Additionally, in the 2017 third quarter, higher energy sales in Brazil contributed~~value-added products.

Reconciliation of Certain Segment Information

Reconciliation of Total Segment Third-Party Sales to ~~the referenced improvement and both higher costs for carbon (coke and pitch) and net unfavorable foreign currency movements, especially against the Australian dollar, contributed~~Consolidated Sales

	Second quarter ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Bauxite	$	66	$	67	$	137	$	132
Alumina		603		864		1,310		1,761
Aluminum:
Primary aluminum		1,202		1,382		2,499		2,776
Other⁽¹⁾		273		375		574		716
Total segment third-party sales		2,144		2,688		4,520		5,385
Other		4		23		9		45
Consolidated sales	$	2,148	$	2,711	$	4,529	$	5,430

⁽¹⁾	Other includes third-party sales of flat-rolled aluminum and energy, as well as realized gains and losses related to embedded derivative instruments designated as cash flow hedges of forward sales of aluminum.

Reconciliation of Total Segment Operating Costs to ~~the referenced offset.~~Consolidated Cost of Goods Sold

~~In the 2017 fourth quarter (comparison with the 2016 fourth quarter), higher costs for both alumina and carbon materials are expected.~~

	Second quarter ended June 30,							Six months ended June 30,
	2020				2019			2020			2019
Bauxite	$	209			$	220		$	422		$	415
Alumina		788				925			1,632			1,848
Primary aluminum		1,306				1,512			2,633			3,080
Other⁽¹⁾		312		��		362			626			727
Total segment operating costs		2,615				3,019			5,313			6,070
Eliminations⁽²⁾		(566	)			(694	)		(1,132	)		(1,436	)
Provision for depreciation, depletion, amortization⁽³⁾		(146	)			(166	)		(309	)		(330	)
Other⁽⁴⁾		29				30			85			65
Consolidated cost of goods sold	$	1,932			$	2,189		$	3,957		$	4,369

⁽¹⁾	Other largely relates to the Aluminum segment’s flat-rolled aluminum product division.

⁽²⁾	This line item represents the elimination of cost of goods sold related to intersegment sales between Bauxite and Alumina and between Alumina and Aluminum.

⁽³⁾

Depreciation, depletion, and amortization is included in the operating costs used to calculate average cost for each of the bauxite, alumina, and primary aluminum product divisions (see Bauxite, Alumina, and Aluminum above). However, for financial reporting purposes, depreciation, depletion, and amortization is presented as a separate line item on Alcoa Corporation’s Statement of Consolidated Operations.

⁽⁴⁾

Other includes costs related to Transformation and certain other items that impact Cost of goods sold on Alcoa Corporation’s Statement of Consolidated Operations that are not included in the operating costs of segments (see footnotes 1 and 3 in the Reconciliation of Total Segment Adjusted EBITDA to Consolidated Net Loss Attributable to Alcoa Corporation below).

Reconciliation of Total Segment Adjusted EBITDA to Consolidated Net ~~Income (Loss)~~Loss Attributable to Alcoa Corporation

													Second quarter ended June 30,						Six months ended June 30,
	Third quarter ended September 30,						Nine months ended September 30,						2020			2019			2020			2019
	2017			2016			2017			2016
Total segment Adjusted EBITDA	$	619		$	358		$	1,778		$	1,008
Total Segment Adjusted EBITDA													$	185		$	484		$	560		$	886
Unallocated amounts:
Impact of LIFO		(14	)		1			(36	)		18
Metal price lag⁽¹⁾		5			1			22			5
Corporate expense⁽²⁾		(34	)		(47	)		(104	)		(133	)
Transformation⁽¹⁾														(10	)		3			(26	)		5
Intersegment eliminations														30			(1	)		22			85
Corporate expenses⁽²⁾														(21	)		(28	)		(48	)		(52	)
Provision for depreciation, depletion, and amortization		(194	)		(181	)		(563	)		(536	)		(152	)		(174	)		(322	)		(346	)
Restructuring and other charges		10			(17	)		(12	)		(109	)
Restructuring and other charges, net														(37	)		(370	)		(39	)		(483	)
Interest expense		(26	)		(67	)		(77	)		(197	)		(32	)		(30	)		(62	)		(60	)
Other (expenses) income, net		(27	)		106			67			90			(51	)		(50	)		81			(91	)
Other⁽³⁾		(51	)		(52	)		(132	)		(185	)		(17	)		(11	)		(52	)		(29	)

Consolidated income (loss) before income taxes		288			102			943			(39	)
Consolidated (loss) income before income taxes														(105	)		(177	)		114			(85	)
Provision for income taxes		(119	)		(92	)		(328	)		(178	)		(45	)		(116	)		(125	)		(266	)
Net income attributable to noncontrolling interest		(56	)		(20	)		(202	)		(58	)		(47	)		(109	)		(106	)		(250	)

Consolidated net income (loss) attributable to Alcoa Corporation	$	113		$	(10	)	$	413		$	(275	)

Consolidated net loss attributable to Alcoa Corporation													$	(197	)	$	(402	)	$	(117	)	$	(601	)

⁽¹⁾⁽¹⁾

~~Metal price lag describes~~

⁽²⁾⁽²⁾

⁽³⁾⁽³⁾

The changes in the Impact of LIFO, Metal price lag, Corporate expense, and Other reconciling items (see Results of Operations above for significant changes in the remaining reconciling items) for the 2017 third quarter and nine-month period compared with the corresponding periods in 2016 (unless otherwise noted) consisted of:

a change in the Impact of LIFO, mostly due to an increase in the price of alumina at September 30, 2017 indexed to December 31, 2016 compared to a decrease in the price of alumina at September 30, 2016 indexed to December 31, 2015;

a change in Metal price lag, the result of a higher increase in the price of aluminum at September 30, 2017 indexed to December 31, 2016 compared to the price of aluminum at September 30, 2016 indexed to December 31, 2015 (the increase in the price of aluminum in both periods was mostly driven by higher base metal prices (LME));

~~a decline in Corporate expense, largely attributable to the absence of expenses related to the Separation Transaction($23-third~~ ~~quarter and$54-nine~~ ~~months); and~~

a change in Other, principally the result of the permanent closure of the Warrick smelter (March 2016 – see Restructuring and other charges in Results of Operations above) and the Suriname refinery (December 2016) and a smaller negative impact from a long-term power contract related to the Rockdale smelter (see Results of Operations above), virtually offset in the 2017 third quarter and partially offset in the 2017 nine-month period by costs related to the restart of the Warrick smelter ($17-both periods – see Restructuring and other charges in Results of Operations above), a charge for the settlement of legacy tax matters in Brazil ($9-both periods), and an unfavorable impact due to the near-term power market exposure as a result of renegotiating a hedging contract related to forecasted future spot market power purchases for the Portland smelter ($8-third quarter and $21-nine months – see Results of Operations above).

Environmental Matters

See the Environmental Matters section of Note MP to the Consolidated Financial Statements in Part I Item 1 of this Form10-Q.

Liquidity and Capital Resources

~~Cash From Operations~~

~~Cash provided from operations was $769~~Changes in market conditions caused by the ~~2017 nine-month period compared with cash used for operations~~COVID-19 pandemic could have adverse effects on Alcoa’s ability to obtain additional financing and cost of ~~$550~~borrowing. Inability to generate sufficient earnings could impact the Company’s ability to meet the financial covenants in ~~the same period~~our outstanding debt and revolving credit facility agreements and limit our ability to access these sources of ~~2016. The improvement in cash from operations of $1,319 was mostly due to higher operating results (net income (loss) plus netadd-back~~ for noncash transactions in earnings); a positive change associated with working capital of $377; and a favorable change in noncurrent assets of $100, which was mainly the result of the absence of a $200 prepayment made in April 2016 under a natural gas supply agreement in Australia. These items were slightly offset by higher pension contributions of $37, as the U.S. defined benefit plans were sponsored by ParentCo through July 31, 2016, and an unfavorable change in noncurrent liabilities of $14.

~~On October 10, 2017, Alcoa Corporation paid $238 to early terminate a power contract related~~liquidity or refinance or renegotiate our outstanding debt or credit agreements on terms acceptable to the ~~Company’s Rockdale smelter (see Results~~Company. Additionally, the impact on market conditions from the COVID-19 pandemic could adversely affect the liquidity of ~~Operations above).~~

~~Financing Activities~~

~~Cash used for financing activities was $453 in~~Alcoa’s customers, suppliers, and joint venture partners and equity method investments, which could negatively impact the ~~2017 nine-month period, an increase~~collectability of ~~$668 compared with~~outstanding receivables and our cash ~~provided from financing activities of $215 in the corresponding period of 2016.~~

~~The use of cash in the 2017 nine-month period was principally driven by a cash payment of $247 (see Investing Activities below) to Arconic related~~flows. In response to the ~~Separation Transaction, mostly representing~~impacts caused by the ~~net proceeds from~~COVID-19 pandemic, the ~~sale of Yadkin (see Aluminum in Segment Information above) in accordance with the Separation and Distribution Agreement; $188 in net~~Company has implemented various cash paid to Alumina Limited (see Noncontrolling interest in Results of Operations above); and $55 in payments on debt, most related to the early repayment of the remaining outstanding balance ($41) of a loan from Brazil’s National Bank for Economic and Social Development (BNDES) associated with the construction of the Estreito hydroelectric power project.preservation initiatives. These ~~items were slightly offset by $38 in proceeds from employee exercises of 1.5 million legacy stock options at a weighted average exercise price of $25.79 per share.~~measures include:

In the 2016 nine-month period, the source of cash was primarily the result of $407 in net transfers from Parent Company, partially offset by $176 in cash paid to Alumina Limited (see Noncontrolling interest in Results of Operations above).

•

Reducing non-critical capital expenditures planned for 2020 by $100;

•

Deferring non-regulated environmental and asset retirement obligations payments of $25;

•

Deferring approximately $220 in pension contributions from 2020 to January 1, 2021 and employer payroll taxes of approximately $14 million into 2021 and 2022 in the U.S., as permitted under the CARES Act; and,

•

~~In August 2017, Alcoa Corporation entered into aone-year~~ standby letter of credit agreement with three financial institutions. The agreement provides for a $150 facility, which will be used by Alcoa Corporation for matters in the ordinary course of business. Alcoa Corporation’s obligations under this facility will be secured in the same manner as obligations under the Company’s Revolving Credit Agreement (see Financing Activities in Liquidity and Capital Resources included in Part II Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alcoa Corporation’s Annual Report on Form~~10-K~~ for the year ended December 31, 2016). Additionally, this facility contains similar representations and warranties and affirmative, negative, and financial covenants as the Company’s Revolving Credit Agreement. As of September 30, 2017, letters of credit aggregating $43 were issued under this facility. These letters of credit were previously issued in March 2017 on a standalone basis.

Alcoa Corporation’s cost of borrowing and ability to access the capital markets are affected not only by market conditions but also by the short- and long-term debt ratings assigned to Alcoa Corporation’s debt by the major credit rating agencies.

On April ~~24, 2017,~~9, 2020, Moody’s Investor Service (Moody’s) affirmed a Ba1 rating of Alcoa’s long-term debt. Additionally, Moody’s affirmed the current outlook as stable. On July 7, Moody’s reaffirmed the Ba1 rating of Alcoa’s long-term debt as well as the stable outlook.

On April 29, 2020, Fitch Ratings (Fitch) ~~assigned~~affirmed a BB+ rating for Alcoa Corporation’s long-term debt. Additionally, Fitch ~~assigned~~affirmed the current outlook as stable. On July 7, Fitch reaffirmed the BB+ rating of Alcoa’s long-term debt as well as the stable outlook.

On June ~~20, 2017,~~26, 2020 Standard and Poor’s Global Ratings (S&P) affirmed a~~BB-~~the BB+ rating ~~for Alcoa Corporation’s~~of Alcoa’s long-term ~~debt. Additionally, S&P raised~~debt and revised the ~~current~~ outlook to ~~positive~~negative.

Cash from ~~stable.~~Operations

~~On September 5, 2017, Moody’s Investor Service (Moody’s) upgraded~~

Cash provided from operations was $198 in the 2020 six-month period compared with cash provided from operations of $250 for the same period of 2019, resulting in a decrease in cash provided of $52. Notable changes to (uses) and sources of cash include:

•

$122 in certain working capital accounts (receivables, inventories, and accounts payable, trade);

•

($41) due to timing of the collection of value added tax receivables;

•

($69) from higher accrued expenses caused primarily by the timing of customer advances, employee compensation payments, and the 2020 recognition of the state grant revenue at the Portland (Australia) facility relieving the previous deferred credit recorded during the 2019 six-month period; and,

•

$349 relating to changes in taxes, including income taxes. The source of cash includes changes related to lower tax payments made in the 2020 six-month period compared with the 2019 six-month period, primarily payments on income taxes, and changes in the underlying tax accounts.

The remaining change in Cash used for operations is primarily attributable to the changes in related Statement of Consolidated Operations amounts.

In the third quarter of 2020, AofA will pay approximately $74 (A$107) related to the tax dispute described in Note P to the Consolidated Financial Statements in Part I Item I of this Form 10-Q. Upon payment, AofA will record a noncurrent prepaid tax asset, as the Company continues to believe it is more likely than not that AofA’s tax position will be sustained and therefore is not recognizing any tax expense in relation to this matter. In accordance with Australian tax laws, the initial interest assessment and additional interest are deductible against AofA’s 2020 taxable income resulting in approximately $150 (A$219) lower cash tax payments in the second half of 2020. Interest compounded in future years is also deductible against AofA’s income in the respective periods. If AofA is ultimately successful, the interest deduction would become taxable as income in the year the dispute is resolved. During 2020, AofA will continue to record its ~~ratings for Alcoa Corporation’s long-term debt~~tax provision and tax liability without effect of the ATO assessment, since it expects to ~~Ba2 from Ba3 and short-term debt~~prevail. The 2020 tax payable will remain on AofA’s balance sheet, increased by the tax effect of subsequent years’ interest deductions, until dispute resolution which is expected to ~~Speculative Grade LiquidityRating-1~~ ~~from Speculative Grade LiquidityRating-2.~~ ~~Additionally, Moody’s affirmed the current outlook as stable.~~take several years.

~~Investing~~

Financing Activities

Cash used for financing activities was $115 in the 2020 six-month period compared with $270 in the 2019 six-month period, resulting in a favorable change of $155.

The use of cash in the 2020 six-month period was primarily the result of $90 in net cash paid to Alumina Limited (see Noncontrolling interest in Results of Operations above) and $24 in financial contributions related to the divested Spanish facilities.

The use of cash in the 2019 six-month period was primarily the result of $265 in net cash paid to Alumina Limited (see Noncontrolling interest in Results of Operations above).

Credit Facilities

The Revolving Credit Facility provides a $1,500 senior secured revolving credit facility to be used for working capital and/or other general corporate purposes of Alcoa Corporation and its subsidiaries. The Revolving Credit Agreement includes a number of covenants, including financial covenants, that require maintenance of a specified interest expense coverage ratio and a leverage ratio. The leverage ratio compares total indebtedness to a calculated earnings metric as defined in the credit facility agreement to determine compliance with the financial covenant. The leverage ratio calculation also determines the maximum indebtedness the Company can have based on the defined earnings metric.

On April 21, 2020, the Company and ANHBV entered into Amendment No. 2 to the Revolving Credit Agreement that temporarily revises the Leverage Ratio requirement to 3.00 to 1.00 from 2.50 to 1.00 for the next four consecutive fiscal quarters, beginning in the second quarter of 2020 (Amendment Period). The Leverage Ratio requirement will return to 2.50 to 1.00 starting in the second quarter of 2021. The temporary revision positively impacts the maximum indebtedness calculation for the Company during the Amendment Period. Additionally, during the Amendment Period, the Company, ANHBV, and any restricted subsidiaries will be restricted from making certain restricted payments or incurring incremental secured loans under the Amended Revolving Credit Agreement.

On June 24, 2020, the Company and ANHBV entered into Amendment No. 3 to the Revolving Credit Agreement that (i) permanently adjusts the calculation of Consolidated EBITDA as defined in the Revolving Credit Agreement by allowing the add back of certain additional non-cash costs and (ii) temporarily adjusts, for the remaining fiscal quarters in 2020, the manner in which Consolidated Cash Interest Expense and Total Indebtedness (as defined in the Revolving Credit Agreement) are calculated with respect to certain senior notes issuances during the fiscal year ending December 31, 2020, inclusive of the July 2020 issuance described below.

ANHBV has the option to extend the periods under Amendment No. 3 to apply to either or both fiscal quarters ending March 31, 2021 and June 30, 2021. However, doing so would also reduce the borrowing availability under the Revolving Credit Facility by one-third of the net proceeds of such note issuances during such fiscal quarters. If ANHBV extends the temporary amendments, the bonds issued in July 2020 would reduce the aggregate amount of commitments under the Revolving Credit Facility by $245 during the applicable fiscal quarters.

The aggregate amount of commitments under the Revolving Credit Facility remains at $1,500, which the Company has the ability to access through a combination of borrowing capacity and issuances of letters of credit. As of June 30, 2020 and December 31, 2019, Alcoa Corporation was in compliance with all covenants.

On October 2, 2019, Alcoa Norway ANS, a wholly-owned subsidiary of Alcoa Corporation, entered into a one-year, multicurrency revolving credit facility agreement for NOK 1.3 billion (approximately $134) which is fully and unconditionally guaranteed on an unsecured basis by Alcoa Corporation. On April 8, 2020, Alcoa Norway ANS drew $100 against this facility, and may do so from time to time in the future, in the ordinary course of business. Repayment of the drawn amount, including interest accrued at 2.93%, occurred upon maturity on June 29, 2020. On July 3, 2020, Alcoa Norway ANS amended the revolving credit facility agreement to align the terms of the agreement with Amendment No. 2 and Amendment No. 3 of the Revolving Credit Agreement discussed above.

On October 25, 2019, a wholly-owned subsidiary of the Company entered into a $120 three-year revolving credit facility agreement secured by certain customer receivables. On April 20, 2020, the Company amended this agreement converting it to a Receivables Purchase Agreement to sell up to $120 of the receivables previously secured by the credit facility. The unsold portion of specified receivable pool will be pledged as collateral to the purchasing bank to secure the sold receivables. During the second quarter and six months ended June 30, 2020, no receivables were sold under this program.

Alcoa’s combined additional borrowing capacity can be drawn through Alcoa’s two credit facilities. The Company may draw on these facilities periodically to ensure working capital needs are met. See Note K to the Consolidated Financial Statements in this Form 10-Q and Note L to the Consolidated Financial Statements in Part II Item 8 of the 2019 Annual Report on Form 10-K for additional information related to Alcoa’s credit facilities.

In July 2020, ANHBV, a wholly-owned subsidiary of Alcoa Corporation, issued $750 aggregate principal amount of 5.500% Senior Notes due 2027 (the 2027 Notes) in a private transaction exempt from the registration requirements of the Securities Act. The net proceeds of this issuance were approximately $736 reflecting a discount to the initial purchasers of the 2027 Notes as well as issuance costs. The Company intends to use the net proceeds for general corporate purposes, including adding cash to its balance sheet. The discount to the initial purchasers, as well as costs to complete the financing, was deferred and is being amortized to interest expense over the term of the 2027 Notes. Interest on the 2027 Notes is paid semi-annually in June and December, which will commence December 15, 2020.

The Company’s liquidity options, including the credit facilities and the Receivables Purchase Agreement, provide for flexibility in managing cash flows. Management believes that the Company’s cash on hand, future operating cash flows, and liquidity options, combined with its strategic actions and cash preservation initiatives, are adequate to fund its near term operating and investing needs.

Investing Activities

Cash provided from investing activities was ~~$56~~$28 in the ~~2017 nine-month~~2020 six-month period compared with $5cash used for investing activities of $258 in the ~~2016 nine-month~~2019 six-month period, resulting in ~~an increase in cash used~~a favorable change of ~~$51.~~$286.

In the ~~2017 nine-month~~2020 six-month period, the source of cash was primarily attributable to proceeds from the sale of assets of $199, primarily the Gum Springs waste treatment facility, partially offset by $168 in capital expenditures, composed of $137 in sustaining projects and $31 in return-seeking projects.

In the 2019 six-month period, the use of cash was largely attributable to ~~$255~~$158 in capital expenditures, composed of $112 in sustaining projects and ~~$44~~$46 in ~~equity contributions related~~return-seeking projects, and additions to ~~the aluminum complex joint venture in Saudi Arabia, mostly~~investments of $111, partially offset by ~~$243 in net proceeds received (see Financing Activities above) from the sale of Yadkin (see Aluminum in Segment Information above).~~

The use of cash in the 2016 nine-month period was mainly due to $258 in capital expenditures and a $13 payment as a result of a post-closing adjustment associated with the December 2014 divestiture of an ownership stake in a smelter in the United States. These items were virtually offset by $265 in proceeds from the sale of ~~an equity interest~~assets of $11.

Contractual Obligations

As permitted under the CARES Act, the Company is deferring approximately $220 of pension contributions, primarily for the U.S. plans, from 2020 to January 1, 2021. As a result, as of June 30, 2020, Alcoa’s minimum required contribution to defined benefit pension plans in ~~a natural gas pipeline~~2020 is now estimated to be approximately $75, of which approximately $40 is primarily for U.S. plans and was contributed in ~~Australia ($145)~~January 2020 before CARES was enacted, and approximately $19 was contributed to non-U.S. plans during the ~~sale of wharf property next to the Intalco, WA smelter ($120).~~2020 six-month period.

Recently Adopted and Recently Issued Accounting Guidance

See Note B to the Consolidated Financial Statements in Part I Item 1 of this Form10-Q.

~~Forward-Looking Statements~~

This report contains statements that relate to future events and expectations and, as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of similar meaning. All statements by Alcoa Corporation that reflect expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, forecasts concerning global demand growth for bauxite, alumina, and aluminum, and supply/demand balances; statements, projections or forecasts of future financial results or operating performance; and statements about strategies, outlook, business and financial prospects. These statements reflect beliefs and assumptions that are based on Alcoa Corporation’s perception of historical trends, current conditions and expected future developments, as well as other factors that management believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and changes in circumstances that are difficult to predict. Although Alcoa Corporation believes that the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that these expectations will be attained and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Such risks and uncertainties include, but are not limited to: (a) material adverse changes in aluminum industry conditions, including global supply and demand conditions and fluctuations in London Metal Exchange-based prices and premiums, as applicable, for primary aluminum, alumina, and other products, and fluctuations in indexed-based and spot prices for alumina; (b) deterioration in global economic and financial market conditions generally; (c) unfavorable changes in the markets served by Alcoa Corporation; (d) the impact of changes in foreign currency exchange rates on costs and results; (e) increases in energy costs; (f) declines in the discount rates used to measure pension liabilities or lower-than-expected investment returns on pension assets, or unfavorable changes in laws or regulations that govern pension plan funding; (g) the inability to achieve the level of revenue growth, cash generation, cost savings, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations anticipated from restructuring programs and productivity improvement, cash sustainability, technology advancements, and other initiatives; (h) the inability to realize expected benefits, in each case as planned and by targeted completion dates, from acquisitions, divestitures, facility closures, curtailments, restarts, expansions, or joint ventures; (i) political, economic, and regulatory risks in the countries in which Alcoa Corporation operates or sells products; (j) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation; (k) the impact of cyberattacks and potential information technology or data security breaches; and (l) the other risk factors described in Alcoa Corporation’s Form~~10-K~~ for the year ended December 31, 2016, including under Part I, Item 1A thereof, and in other reports filed by Alcoa Corporation with the United States Securities and Exchange Commission, including in the following sections of this report: Note K (Derivatives section) and Note M to the Consolidated Financial Statements and the discussion included above under Segment Information. Alcoa Corporation disclaims any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law. Market projections are subject to the risks discussed above and other risks in the market.

Dissemination of Company Information

Alcoa Corporation intends to make future announcements regarding company developments and financial performance through its website, athttp://www.alcoa.com.

, as well as through press releases, filings with the Securities and Exchange Commission, conference calls, and webcasts.

~~Item 3.~~

~~Quantitative and Qualitative Disclosures about Market Risk.~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

See the Derivatives and Other Financial Instruments section of Note KM to the Consolidated Financial Statements in Part I Item 1 of this Form10-Q.

~~Item 4.~~

~~Controls and Procedures.~~

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

Alcoa Corporation’s Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures, as defined in Rules13a-15(e) and15d-15(e) of the U.S. Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report, and they have concluded that these controls and procedures are ~~effective.~~effective as of June 30, 2020.

(b) Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the ~~third~~second quarter of ~~2017,~~2020, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1A. Risk Factors.

We face a number of risks that could materially and adversely affect our business, results of operations, cash flow, liquidity, or financial condition. A discussion of our risk factors can be found in Item 1A. Risk Factors, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. The information below includes additional risks relating to the coronavirus (COVID-19) pandemic. The impact of COVID-19 may also exacerbate other risks discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, any of which could have a material adverse effect on us. This situation is continuously evolving, and additional impacts may arise of which we are not currently aware.

A global public health crisis, such as the current coronavirus (COVID-19) pandemic, could adversely affect the Company’s business, financial condition, operating results, and cash flows.

In December 2019, there was an outbreak of a novel strain of coronavirus (COVID-19) in China that has since spread to nearly all regions of the world. The outbreak was subsequently declared a pandemic by the World Health Organization in March 2020. To date, the COVID-19 pandemic and preventative measures taken to contain or mitigate the outbreak have caused, and are continuing to cause, business slowdowns or shutdowns in affected areas and significant disruption in the financial markets both globally and in the United States.

Having global operations exposes the Company to the effects of a global public health crisis, such as the current COVID-19 pandemic. Uncertainty around the magnitude and duration of a global public health crisis can cause instability in the global markets and economies, affecting our business in a multitude of ways and in varying magnitudes. Although we are unable to predict the ultimate impact of the COVID-19 pandemic on our business, financial condition, sales, results of operations, cash flows, and market capitalization, if this global health threat persists, it could adversely affect:

•

Global demand for aluminum, negatively impacting our ability to generate cash flows from operations;

•

Our operations, including causing interruptions, reductions, or closures of our operations, due to decreased demand for our products, government regulations and/or fewer workers in the facilities due to illness or public health restrictions;

•

Commercial sustainability of key vendors or transportation disruptions within our supply chain, which could result in higher inventory costs and/or inability to obtain key raw materials or fulfill customer orders;

•

The liquidity of customers, which could negatively impact the collectability of outstanding receivables and our cash flows;

•

Alcoa’s ability to fund capital expenditures and required maintenance at our facilities, which could negatively impact our results of operations and profitability;

•

Global financial and credit markets and our ability to obtain additional credit or financing upon acceptable terms or at all, which could negatively affect our liquidity and financial condition;

•

The Company’s ability to meet covenants in our outstanding debt and credit facility agreements;

•

Investment return on pension assets and declining interest rates, and contribution deferrals, resulting in increased required Company contributions or unfavorable contribution timing, negatively impacting future cash flows;

•

Alcoa’s ability to generate income in certain jurisdictions, negatively impacting the realizability of our deferred tax assets;

•

The recoverability of certain long-lived and intangible assets, including goodwill;

•

The financial condition of our investments and key joint venture partners, negatively impacting the results of operations, cash flows, and recoverability of investment balances;

•

The effectiveness of hedging instruments;

•

Legal obligations resulting from employee claims related to health and safety; and,

•

Our ability to efficiently manage certain corporate functions and other activities as a result of employees working remotely.

For example, due to the economic impacts of the COVID-19 pandemic, the restart at the Bécancour (Canada) smelter had been slowed at the end of the first quarter of 2020 but has since resumed, and the operating capacity was at approximately 90 percent of total nameplate capacity as of June 30, 2020. The restart, which was originally expected to be complete by the end of the second quarter of 2020, is now expected to be complete in the third quarter of 2020. Additionally, COVID-19 has negatively impacted customer demand for value-added aluminum products as customers have reduced production levels in response to the economic impacts of the pandemic. This has resulted in lower margins on aluminum products as sales shift from value-add products to commodity-grade products. Furthermore, Alcoa has experienced challenges from low metal prices which could continue in the near term. The Company has not experienced any significant interruption from its supply sources.

Further or prolonged deterioration of adverse conditions could negatively impact our business, financial condition, sales, results of operations, cash flows, and/or market capitalization, and result in asset impairment charges, including long-lived assets or goodwill, or affect the realizability of deferred tax assets. The situation surrounding COVID-19 remains fluid, and given its inherent uncertainty, we expect the pandemic will continue to cause instability in the global markets and economies in the near term. The duration and

magnitude of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of the virus, the extent and effectiveness of containment actions and the impact of these and other factors on our employees, customers, suppliers, joint venture partners, and equity method investments. Should these conditions persist for a prolonged period, the COVID-19 pandemic, including any of the above factors and others that are currently unknown, is expected to have a material adverse effect on our business, financial condition, results of operations, and cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

On October 17, 2018, Alcoa Corporation announced that its Board of Directors authorized a common stock repurchase program under which the Company may purchase shares of its outstanding common stock up to an aggregate transactional value of $200, depending on cash availability, market conditions, and other factors. Repurchases under the program may be made using a variety of methods, which may include open market purchases, privately negotiated transactions, or pursuant to a Rule 10b5-1 plan. This program does not have a predetermined expiration date. Alcoa Corporation intends to retire the repurchased shares of common stock.

Second Quarter 2020	Total Number of Shares Purchased		Weighted Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Approximate Dollar Value of Shares that May Yet be Purchased Under the Program
April 1 to April 30		-	$	-		-	$	150,000,000
May 1 to May 31		-		-		-		150,000,000
June 1 to June 30		-		-		-		150,000,000
Total		-		-		-

~~Item 4.~~

~~Mine Safety Disclosures.~~

Item 4. Mine Safety Disclosures.

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of U.S. Securities and Exchange Commission RegulationS-K (17 CFR 229.104) is included in Exhibit ~~95 of~~95.1 to this ~~report, which is incorporated herein by reference.~~

report.

Item 6. Exhibits.

~~Item 6.~~

~~Exhibits.~~


~~15.~~		~~Letter regarding unaudited interim financial information~~
4.1	Indenture, dated July 13, 2020, among Alcoa Nederland Holding B.V., Alcoa Corporation, certain subsidiaries of Alcoa Corporation, and The Bank of New York Mellon Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed July 13, 2020 (File No. 1-37816))
~~31.~~
10.1	~~Certifications~~Amendment No. 3 dated as of June 24, 2020 to the Revolving Credit Agreement dated as of September 16, 2016, as amended as of October 26, 2016, as amended and restated as of November 14, 2017 and as amended and restated as of November 21, 2018, as amended on August 16, 2019, and as amended on April 21, 2020, among Alcoa Corporation, Alcoa Nederland Holding B.V., the lenders and issuers from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent for the lenders and issuers (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 25, 2020 (File No. 1-37816)

31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

~~32.~~ 31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~95.~~ 32.2	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

95.1	Mine Safety Disclosure

101.INS		Inline XBRL Instance Document– the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			Alcoa Corporation

	July 29, 2020	~~October 27, 2017~~	By	/s/ ~~WILLIAM F. OPLINGER~~
		~~Date~~	William F. Oplinger
Date			William F. Oplinger
			Executive Vice President and
			Chief Financial Officer
			(Principal Financial Officer)

	July 29, 2020	~~October 27, 2017~~	By	/s/ ~~MOLLY S. BEERMAN~~
		~~Date~~	Molly S. Beerman
Date			Molly S. Beerman
			Senior Vice President and Controller
			(Principal Accounting Officer)

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