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

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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-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 Rule 12b-2 of the Exchange Act.

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 Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~May 3, 2019, 185,534,704~~April 24, 2020, 185,918,829 shares of common stock, par value $0.01 per share, of the registrant were outstanding.

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; ~~(b)~~(c) deterioration in global economic and financial market conditions generally and which may also affect Alcoa Corporation’s ability to obtain credit or financing ~~under~~upon acceptable ~~terms; (c)~~terms or at all; (d) unfavorable changes in the markets served by Alcoa Corporation; ~~(d)~~(e) the impact of changes in foreign currency exchange and tax rates on costs and results; ~~(e)~~(f) increases in energy costs or uncertainty of energy supply; ~~(f)~~(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; ~~(g)~~(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 asset portfolio actions, operational and productivity improvements, cash sustainability, technology advancements, and other initiatives; ~~(h)~~(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; ~~(i)~~(j) political, economic, trade, legal, public health and safety, and regulatory risks in the countries in which Alcoa Corporation operates or sells products; ~~(j)~~(k) labor disputes and/or and work stoppages; ~~(k)~~(l) the outcome of contingencies, including legal and tax proceedings, government or regulatory investigations, and environmental remediation; ~~(l)~~(m) the impact of cyberattacks and potential information technology or data security breaches; and ~~(m)~~(n) the other risk factors ~~described~~discussed in ~~Part I~~ Item 1A of Alcoa Corporation’s Form 10-K for the fiscal year ended December 31, ~~2018~~2019 and in this Quarterly Report on Form 10-Q, and other reports filed by Alcoa Corporation with the U.S. Securities and Exchange Commission ~~including those described in this report.~~(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.

	First quarter ended March 31,						First quarter ended March 31,
	2019			2018			2020			2019
Sales ~~(D)~~(E)	$	2,719		$	3,090		$	2,381		$	2,719
Cost of goods sold (exclusive of expenses below) ~~(H)~~		2,180			2,302			2,025			2,180
Selling, general administrative, and other expenses		84			67			60			84
Research and development expenses		7			8			7			7
Provision for depreciation, depletion, and amortization		172			194			170			172
Restructuring and other charges, net ~~(C)~~(D)		113			(19	)		2			113
Interest expense		30			26			30			30
Other expenses, net (N)		41			21
Other (income) expenses, net (O)								(132	)		41
Total costs and expenses		2,627			2,599			2,162			2,627
Income before income taxes		92			491			219			92
Provision for income taxes		150			151			80			150
Net (loss) income		(58	)		340
Net income (loss)								139			(58	)
Less: Net income attributable to noncontrolling interest		141			145			59			141
NET (LOSS) INCOME ATTRIBUTABLE TO ALCOA CORPORATION	$	(199	)	$	195
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON SHAREHOLDERS (E):
NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA CORPORATION							$	80		$	(199	)
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON SHAREHOLDERS (F):
Basic	$	(1.07	)	$	1.05		$	0.43		$	(1.07	)
Diluted	$	(1.07	)	$	1.04		$	0.43		$	(1.07	)

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

Alcoa Corporation

Noncontrolling
interest

Total

First quarter ended
March 31,

First quarter ended
March 31,

First quarter ended
March 31,

2019

2018

2019

2018

2019

2018

Net (loss) income (H)

$
(199
)

$
195

$
141

$
145

$
(58
)

$
340

Other comprehensive (loss) income, net of tax (F):

Change in unrecognized net actuarial loss and
   prior service cost/benefit related to pension
   and other postretirement benefits

41

101

1

1

42

102

Foreign currency translation adjustments

(22
)

1

2

(14
)

(20
)

(13
)
Net change in unrecognized gains/losses on cash
   flow hedges

(288
)

550

6

(20
)

(282
)

530

Total Other comprehensive (loss) income, net of tax

(269
)

652

9

(33
)

(260
)

619

Comprehensive (loss) income

$
(468
)

$
847

$
150

$
112

$
(318
)

$
959

	Alcoa Corporation						Noncontrolling interest					Total
	First quarter ended March 31,						First quarter ended March 31,					First quarter ended March 31,
	2020			2019			2020			2019		2020			2019
Net income (loss)	$	80		$	(199	)	$	59		$	141	$	139		$	(58	)
Other comprehensive income (loss), net of tax (G):
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits		38			41			—			1		38			42
Foreign currency translation adjustments		(663	)		(22	)		(245	)		2		(908	)		(20	)
Net change in unrecognized gains/losses on cash flow hedges		701			(288	)		(20	)		6		681			(282	)
Total Other comprehensive income (loss), net of tax		76			(269	)		(265	)		9		(189	)		(260	)
Comprehensive income (loss)	$	156		$	(468	)	$	(206	)	$	150	$	(50	)	$	(318	)

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

	March 31, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents ~~(J)~~(K)	$	1,017		$	1,113		$	829		$	879
Receivables from customers		758			830			570			546
Other receivables		184			173			95			114
Inventories ~~(H)~~(I)		1,799			1,819			1,509			1,644
Fair value of derivative instruments (J)		71			73
Fair value of derivative instruments (K)								53			59
Prepaid expenses and other current assets ~~(H)~~		285			320			277			288
Total current assets		4,114			4,328			3,333			3,530
Properties, plants, and equipment		22,015			21,807			20,181			21,715
Less: accumulated depreciation, depletion, and amortization		13,687			13,480			13,021			13,799
Properties, plants, and equipment, net		8,328			8,327			7,160			7,916
Investments (G & M)		1,362			1,360
Investments (H)								1,059			1,113
Deferred income taxes(L)		604			560			425			642
Fair value of derivative instruments ~~(J)~~(K)		68			82			446			18
Other noncurrent assets		1,480			1,475			1,228			1,412
Total assets	$	15,956		$	16,132		$	13,651		$	14,631
LIABILITIES
Current liabilities:
Accounts payable, trade	$	1,503		$	1,663		$	1,276		$	1,484
Accrued compensation and retirement costs		383			400			353			413
Taxes, including income taxes		395			426			78			104
Fair value of derivative instruments (J)		84			82
Fair value of derivative instruments (K)								80			67
Other current liabilities		437			347			435			494
Long-term debt due within one year ~~(J)~~(K)		1			1			1			1
Total current liabilities		2,803			2,919			2,223			2,563
Long-term debt, less amount due within one year ~~(J)~~(K)		1,802			1,801			1,801			1,799
Accrued pension benefits ~~(I)~~(J)		1,387			1,407			1,455			1,505
Accrued other postretirement benefits ~~(I)~~(J)		851			868			729			749
Asset retirement obligations		543			529			548			606
Environmental remediation ~~(M)~~(N)		243			236			289			296
Fair value of derivative instruments ~~(J)~~(K)		580			261			164			581
Noncurrent income taxes(L)		300			301			299			276
Other noncurrent liabilities and deferred credits		364			222			332			370
Total liabilities		8,873			8,544			7,840			8,745
CONTINGENCIES AND COMMITMENTS ~~(M)~~(N)
EQUITY
Alcoa Corporation shareholders’ equity:
Common stock		2			2			2			2
Additional capital		9,618			9,611			9,647			9,639
Retained earnings (H)		371			570
Accumulated deficit								(476	)		(555	)
Accumulated other comprehensive loss ~~(F)~~(G)		(4,834	)		(4,565	)		(4,898	)		(4,974	)
Total Alcoa Corporation shareholders’ equity		5,157			5,618			4,275			4,112
Noncontrolling interest ~~(H)~~		1,926			1,970			1,536			1,774
Total equity		7,083			7,588			5,811			5,886
Total liabilities and equity	$	15,956		$	16,132		$	13,651		$	14,631

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

	Three Months Ended March 31,						Three months ended March 31,
	2019			2018			2020			2019
CASH FROM OPERATIONS
Net (loss) income (H)	$	(58	)	$	340
Adjustments to reconcile net (loss) income to cash from operations:
Net income (loss)							$	139		$	(58	)
Adjustments to reconcile net income (loss) to cash from operations:
Depreciation, depletion, and amortization		172			194			170			172
Deferred income taxes ~~(H)~~		33			2			23			33
Equity earnings, net of dividends		(3	)		(6	)		—			(3	)
Restructuring and other charges, net ~~(C)~~(D)		113			(19	)		2			113
Net gain from investing activities – asset sales ~~(N)~~(O)		(8	)		(5	)		(177	)		(8	)
Net periodic pension benefit cost ~~(I)~~(J)		30			40			33			30
Stock-based compensation		10			10			8			10
Provision for bad debt expense		20			—			2			20
Other		23			(14	)		4			23
Changes in assets and liabilities, excluding effects of foreign currency translation adjustments:
Decrease in receivables		42			43
Decrease (Increase) in inventories (H)		17			(248	)
Changes in assets and liabilities, excluding effects of divestitures and foreign currency translation adjustments:
(Increase) Decrease in receivables								(70	)		42
Decrease in inventories								41			17
Decrease in prepaid expenses and other current assets		13			2			11			13
(Decrease) in accounts payable, trade		(159	)		(106	)		(121	)		(159	)
(Decrease) in accrued expenses		(18	)		(186	)		(85	)		(18	)
(Decrease) Increase in taxes, including income taxes		(43	)		84
(Decrease) in taxes, including income taxes								(11	)		(43	)
Pension contributions ~~(I)~~(J)		(7	)		(40	)		(48	)		(7	)
(Increase) in noncurrent assets		(10	)		(13	)
Increase (Decrease) in noncurrent liabilities		1			(23	)
CASH PROVIDED FROM OPERATIONS		168			55
Decrease (Increase) in noncurrent assets								32			(10	)
(Decrease) Increase in noncurrent liabilities								(43	)		1
CASH (USED FOR) PROVIDED FROM OPERATIONS								(90	)		168
FINANCING ACTIVITIES
Additions to debt (original maturities greater than three months)		—			61
Payments on debt (original maturities greater than three months)		—			(4	)
Proceeds from the exercise of employee stock options		1			15			—			1
Financial contributions for the divestiture of businesses								(12	)		—
Contributions from noncontrolling interest		20			53			—			20
Distributions to noncontrolling interest		(214	)		(267	)		(31	)		(214	)
Other		(6	)		(5	)		(1	)		(6	)
CASH USED FOR FINANCING ACTIVITIES		(199	)		(147	)		(44	)		(199	)
INVESTING ACTIVITIES
Capital expenditures		(69	)		(74	)		(91	)		(69	)
Proceeds from the sale of assets		11			—			199			11
Additions to investments		(1	)		—			(1	)		(1	)
CASH USED FOR INVESTING ACTIVITIES		(59	)		(74	)
CASH PROVIDED FROM (USED FOR) INVESTING ACTIVITIES								107			(59	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(6	)		4			(24	)		(6	)
Net change in cash and cash equivalents and restricted cash		(96	)		(162	)		(51	)		(96	)
Cash and cash equivalents and restricted cash at beginning of year		1,116			1,365			883			1,116
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	1,020		$	1,203		$	832		$	1,020

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

	Alcoa Corporation shareholders																	Alcoa Corporation shareholders
	Common stock		Additional capital			Retained earnings			Accumulated other comprehensive loss			Non- controlling interest			Total equity
Balance at December 31, 2017	$	2	$	9,590		$	318		$	(5,182	)	$	2,240		$	6,968
Net income		—		—			195			—			145			340
Other comprehensive income (loss) (F)		—		—			—			652			(33	)		619
Stock-based compensation		—		10			—			—			—			10
Common stock issued: compensation plans		—		15			—			—			—			15
Contributions		—		—			—			—			53			53
Distributions		—		—			—			—			(267	)		(267	)
Other		—		18			—			—			(3	)		15
Balance at March 31, 2018	$	2	$	9,633		$	513		$	(4,530	)	$	2,135		$	7,753

First quarter ended March 31, 2019																		Common stock		Additional capital			Retained earnings (deficit)			Accumulated other comprehensive loss			Non- controlling interest			Total equity
Balance at December 31, 2018	$	2	$	9,611		$	570		$	(4,565	)	$	1,970		$	7,588		$	2	$	9,611		$	570		$	(4,565	)	$	1,970		$	7,588
Net (loss) income		—		—			(199	)		—			141			(58	)		—		—			(199	)		—			141			(58	)
Other comprehensive (loss) income (F)		—		—			—			(269	)		9			(260	)
Other comprehensive (loss) income (G)																			—		—			—			(269	)		9			(260	)
Stock-based compensation		—		10			—			—			—			10			—		10			—			—			—			10
Common stock issued: compensation plans		—		1			—			—			—			1			—		1			—			—			—			1
Contributions		—		—			—			—			20			20			—		—			—			—			20			20
Distributions		—		—			—			—			(214	)		(214	)		—		—			—			—			(214	)		(214	)
Other		—		(4	)		—			—			—			(4	)		—		(4	)		—			—			—			(4	)
Balance at March 31, 2019	$	2	$	9,618		$	371		$	(4,834	)	$	1,926		$	7,083		$	2	$	9,618		$	371		$	(4,834	)	$	1,926		$	7,083

First quarter ended March 31, 2020
Balance at December 31, 2019																		$	2	$	9,639		$	(555	)	$	(4,974	)	$	1,774		$	5,886
Net income																			—		—			80			—			59			139
Other comprehensive income (loss) (G)																			—		—			—			76			(265	)		(189	)
Stock-based compensation																			—		8			—			—			—			8
Distributions																			—		—			—			—			(31	)		(31	)
Other																			—		—			(1	)		—			(1	)		(2	)
Balance at March 31, 2020																		$	2	$	9,647		$	(476	)	$	(4,898	)	$	1,536		$	5,811

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

A.Basis of Presentation – The interim Consolidated Financial Statements of Alcoa Corporation and its subsidiaries (Alcoa Corporation, Alcoa, or the 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 ~~2018~~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 Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, which includes all disclosures required by GAAP.

In accordance with GAAP, certain situations require management to make estimates based on judgments and assumptions, which may affect the 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 impact of the coronavirus (COVID-19) pandemic on the macroeconomic environment. The extent and duration of the pandemic is unknown, causing uncertainty of the future impact on the Company’s business, financial condition, operating results, cash flows, and market capitalization and could adversely impact future results, including estimates, such as the recoverability of goodwill and long-lived assets and the realizability of deferred tax assets, made at March 31, 2020. Despite these inherent limitations, management believes that the amounts recorded in the financial statements related to these items are based on its best estimates and judgments using all relevant information available at the time. Management regularly evaluates the judgments and 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 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.). On November 1, 2016 (the Separation Date), ParentCo separated into two standalone, publicly-traded companies, Alcoa Corporation and Arconic Inc. (the Separation Transaction). In connection with the Separation Transaction, as of October 31, 2016, the Company and Arconic Inc. entered into several agreements to effect the Separation Transaction, including a Separation and Distribution Agreement and a Tax Matters Agreement. See Note A to the Consolidated Financial Statements in Part II Item 8 of Alcoa Corporation’s Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 for additional information.

As of January 1, 2019, the Company changed its accounting method for valuing certain inventories from last-in, first-out (LIFO) to average cost. The effects of the change in accounting principle have been retrospectively applied to all prior periods presented. See Note H for more information regarding the change in inventory accounting method.

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 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 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.

On January 1, ~~2019 Alcoa Corporation~~2020, the Company adopted the following Accounting ~~Standards Update~~Standard Updates (ASU) ~~No. 2016-02, Leases,~~ issued by the Financial Accounting ~~Standards~~Standard Board (FASB) regarding the accounting for leases, using the modified retrospective approach. This ASU requires lessees to recognize a right-of-use asset and lease liability on the balance sheet for operating and finance leases with a term, none of 12 months or more. Additionally, when measuring assets and liabilities arising from a lease, optional payments should be included only if the lessee is reasonably certain to exercise an option to extend the lease, exercise a purchase option, or not exercise an option to terminate the lease. A right-of-use asset represents an entity’s right to use the underlying asset for the lease term, and a lease liability represents an entity’s obligation to make lease payments. The Company has made a policy election not to record any non-lease components in the lease liability. Previously, an asset and liability were only recorded for leases classified as capital leases (financing leases). The measurement, recognition, and presentation of expenses and cash flows arising from leases by a lessee remains the same. Additionally, in July 2018, the FASB issued ASU No. 2018-11, Targeted Improvements, to provide for an alternative transition method to the new lease guidance, whereby an entity can choose to not reflect the impact of the new lease guidance in the prior periods included in its financial statements. The Company elected this alternative transition method upon adoption on January 1, 2019. Management also elected the practical expedient related to land easements, allowing the Company to carry forward the current treatment on existing arrangements.

As a result of the adoption, management recorded a right-of-use asset and lease liability, each in the amount of $201, on Alcoa Corporation’s Consolidated Balance Sheet as of January 1, 2019 for several types of operating leases, including land and buildings, alumina refinery process control technology, plant equipment, vehicles, and computer equipment. See Note L for additional information related to the adoption of this standard.

~~Alcoa Corporation’s adoption of the following accounting guidance in 2019 did not have~~which had a material impact on the Company’s ~~consolidated financial statements:~~Consolidated Financial Statements:

~~2018-02Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~

~~2018-07Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting~~

In ~~August 2018,~~December 2019, the FASB issued ASU No. ~~2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General. This ASU makes changes~~2019-12, Income Taxes (Topic 740) which is intended to the disclosures of fair value measurements and defined benefit plans through several removals, modifications, additions, and/or clarifications of the existing requirements. Certain disclosures associated with accumulated other comprehensive income, valuation of Level 3 assets, and sensitivities in assumed health care trend rates and interest rates have been eliminated. New disclosures have been added to explain significant gains and losses related to changes in benefit obligations, changes included in other comprehensive income for recurring Level 3 fair value measurements, and information on significant unobservable inputs used to develop Level 3 fair value measurements. These changes become effective for Alcoa Corporation for its fiscal year ending December 31, 2020 and for interim periods therein with early adoption permitted and retrospective presentation for all periods presented required. Other than updating the applicable disclosures, the adoption of this guidance will not have an impact on the Company’s Consolidated Financial Statements.

~~In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software. This ASU aligns~~simplify the accounting for ~~cloud computing implementation costs with that of costs to develop or obtain internal-use software, meaning such costs that~~income taxes by eliminating certain exceptions and simplifying certain requirements under Topic 740. Updates are part of the application development stage are capitalized as an asset and amortized over the term of the arrangement, otherwise, such costs are expensed as incurred. It also clarifies the classification of amounts related to ~~capitalized implementation costs~~intraperiod tax allocation, deferred tax liabilities for equity method investments, interim period tax calculations, tax laws or rate changes in ~~the financial statements. This~~interim periods, and income taxes related to employee stock ownership plans. The guidance for ASU No. 2019-12 becomes effective for Alcoa ~~Corporation~~ on January 1, ~~2020, with early adoption permitted.~~2021. Management is currently evaluating the ~~potential impact of this guidance on the Consolidated Financial Statements.~~

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses. This ASU added a new impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes an allowance for its estimate of expected credit losses and applies to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments. The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss. These changes become effective for Alcoa Corporation on January 1, 2020. Management is currently evaluating the potential impact of these changes on the Consolidated Financial Statements.

In March 2020, the FASB issued ASU No. 2020-04 to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. Management is currently evaluating the impact from the replacement of the London Interbank Offered Rate (LIBOR) and whether the Company will elect the adoption of the optional guidance.

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 O) and received $200 with another $50 held in escrow to be paid to Alcoa if certain post-closing conditions are satisfied.

D. Restructuring and Other Charges, Net – In the first quarter of 2020, Alcoa Corporation recorded Restructuring and other charges, net, of $2 which was comprised of several insignificant items including $3 related to pension curtailments (see Note J).

In the first quarter of 2019, Alcoa Corporation recorded Restructuring and other charges, net of $113, which were comprised of the following components: $103 for exit costs related to the collective dismissal process and curtailment of the Avilés and La ~~Coru~~ñCoruña smelters in Spain (see below); $7 for closure costs related to a coal mine; and a $3 net charge for various items.

On January 22, 2019, the workforce at the Company’s Avilés and La Coruña aluminum facilities in Spain ratified an agreement between Alcoa Corporation and the workers’ representatives related to the Company’s initiation of a collective dismissal process in October 2018. As part of the agreement, the two facilities’ smelters, with a combined remaining operating capacity of 124 kmt, were curtailed in February 2019 and are being maintained in restart condition through June 30, 2019, in the event that third parties have interest in acquiring the facilities. The casthouse at each facility and the paste plant at La Coruña remain in operation.

Restructuring charges recorded in the first quarter of 2019 related to ~~this~~the collective dismissal process and smelter curtailments in Spain included asset impairments of $80, employee-related costs of $15 and contract termination costs of $8. Additional charges recorded in the first quarter included a $15 write down of remaining inventories to their net realizable value, 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.

Alcoa Corporation expects to incur additional charges to fulfill the agreement’s social plan, which includes severance plans, early retirement benefits, and potential employee relocation to the Company’s San Ciprián (Spain) facility, or to execute a third-party acquisition of the facilities. Such charges are expected to be recorded in the second quarter of 2019 and are estimated to range from $70 to $125 (pre- and after-tax), depending on the outcome of the collective dismissal process. Approximately 75 percent would be cash outlays in 2019.

In the first quarter of 2018, Alcoa Corporation recorded a net benefit of $19 in Restructuring and other charges, net, which was comprised of a $23 net gain related to the curtailment of certain pension and other postretirement employee benefits and a $4 charge for additional contract costs related to the curtailed Wenatchee (Washington) smelter.

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:

	First quarter ended March 31,					First quarter ended March 31,
	2019		2018			2020			2019
Bauxite	$	1	$	—		$	—		$	1
Alumina		1		(1	)		2			1
Aluminum		107		5			2			107
Segment total		109		4			4			109
Corporate		4		(23	)		(2	)		4
Total Restructuring and other charges, net	$	113	$	(19	)	$	2		$	113

~~The activity related to layoff costs~~During 2019, Alcoa Corporation announced and implemented a new operating model that resulted in a leaner, more integrated, operator-centric organization. As a result of the restructuring, a Severance and other ~~costs~~employee termination cost reserve of $27 remained at December 31, 2019. During the first quarter of 2020, changes to the reserve included ~~within~~additional net charges of $1, a reduction of $2 caused by foreign currency impacts, and a reduction from cash payments of $13. As of March 31, 2020, approximately 210 of the 260 employees were 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 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 first quarter of 2020, payments of $1 were made against the reserve. At March 31, 2020, approximately 20 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 financial contributions

to the investment firm that acquired the facilities. In the first quarter of 2020, cash payments of $12 were made against the reserve. The remaining reserve of $56 will be paid through the second quarter of 2021.

	Layoff costs			Other costs			Total			Severance and employee termination costs			Other costs			Total
Balance at December 31, 2017	$	11		$	34		$	45
Balance at December 31, 2018										$	5		$	42		$	47
Restructuring and other charges, net											51			161			212
Cash payments		(7	)		(95	)		(102	)		(19	)		(99	)		(118	)
Reversals and other											(2	)		(2	)		(4	)
Balance at December 31, 2019											35			102			137
Restructuring and other charges, net		2			117			119			1			3			4
Other⁽¹⁾		(1	)		(14	)		(15	)
Balance at December 31, 2018		5			42			47
Cash payments		(3	)		(11	)		(14	)		(17	)		(20	)		(37	)
Restructuring and other charges, net		2			28			30
Other⁽¹⁾		—			(2	)		(2	)
Balance at March 31, 2019	$	4		$	57		$	61
Reversals and other											(2	)		(2	)		(4	)
Balance at March 31, 2020										$	17		$	83		$	100

The noncurrent portion of the reserve was $7 and $13 at March 31, 2020 and December 31, 2019, is ~~$11,~~respectively, of which ~~$8 is expected~~$6 and $12, respectively, relate to ~~be paid in 2020 related~~financial contributions to the ~~Portovesme smelter.~~investment firm that acquired the Avilés and La Coruña aluminum facilities.

D.E. Segment Information – The operating results of Alcoa Corporation’s reportable segments were as follows (differences between segment totals and consolidated amounts are in Corporate):

	Bauxite		Alumina			Aluminum			Total			Bauxite		Alumina			Aluminum			Total
First quarter ended March 31, 2020
Sales:
Third-party sales												$	71	$	707		$	1,598		$	2,376
Intersegment sales													235		336			3			574
Total sales												$	306	$	1,043		$	1,601		$	2,950
Segment Adjusted EBITDA												$	120	$	193		$	62		$	375
Supplemental information:
Depreciation, depletion, and amortization												$	34	$	49		$	81		$	164
Equity (loss) income												$	—	$	(9	)	$	5		$	(4	)
First quarter ended March 31, 2019
Sales:
Third-party sales	$	65	$	897		$	1,735		$	2,697		$	65	$	897		$	1,735		$	2,697
Intersegment sales		236		417			3			656			236		417			3			656
Total sales	$	301	$	1,314		$	1,738		$	3,353		$	301	$	1,314		$	1,738		$	3,353
Segment Adjusted EBITDA	$	126	$	372		$	(96	)	$	402		$	126	$	372		$	(96	)	$	402
Supplemental information:
Depreciation, depletion, and amortization	$	28	$	48		$	89		$	165		$	28	$	48		$	89		$	165
Equity income (loss)	$	—	$	12		$	(22	)	$	(10	)	$	—	$	12		$	(22	)	$	(10	)
First quarter ended March 31, 2018
Sales:
Third-party sales	$	47	$	914		$	2,111		$	3,072
Intersegment sales		249		454			4			707
Total sales	$	296	$	1,368		$	2,115		$	3,779
Segment Adjusted EBITDA	$	110	$	392		$	187		$	689
Supplemental information:
Depreciation, depletion, and amortization	$	29	$	53		$	106		$	188
Equity loss	$	—	$	(1	)	$	—		$	(1	)

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

	First quarter ended March 31,						First quarter ended March 31,
	2019			2018			2020			2019
Total Segment Adjusted EBITDA⁽¹⁾	$	402		$	689		$	375		$	402
Unallocated amounts:
Transformation⁽²⁾⁽¹⁾		2			(2	)		(16	)		2
Intersegment eliminations^(1),(3)		86			76
Intersegment eliminations								(8	)		86
Corporate expenses⁽⁴⁾⁽²⁾		(24	)		(27	)		(27	)		(24	)
Provision for depreciation, depletion, and amortization		(172	)		(194	)		(170	)		(172	)
Restructuring and other charges, net ~~(C)~~(D)		(113	)		19			(2	)		(113	)
Interest expense		(30	)		(26	)		(30	)		(30	)
Other expenses, net (N)		(41	)		(21	)
Other income (expenses), net (O)								132			(41	)
Other⁽⁵⁾⁽³⁾		(18	)		(23	)		(35	)		(18	)
Consolidated income before income taxes		92			491			219			92
Provision for income taxes		(150	)		(151	)		(80	)		(150	)
Net income attributable to noncontrolling interest		(141	)		(145	)		(59	)		(141	)
Consolidated net (loss) income attributable to Alcoa Corporation	$	(199	)	$	195
Consolidated net income (loss) attributable to Alcoa Corporation							$	80		$	(199	)

E.Other 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):

	First quarter ended March 31,					First quarter ended March 31,
	2019			2018		2020		2019
Net (loss) income attributable to Alcoa Corporation	$	(199	)	$	195
Net income (loss) attributable to Alcoa Corporation						$	80	$	(199	)
Average shares outstanding – basic		185			186		186		185
Effect of dilutive securities:
Stock options		—			1		—		—
Stock units		—			1		1		—
Average shares outstanding – diluted		185			188		187		185

Options to purchase 2 million shares of common stock outstanding at March 31, 2020 were excluded because they had a weighted average exercise price of $26.55 per share which was greater than the average market price of Alcoa Corporation’s common stock.

In the first quarter of 2019, basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential shares of common stock was ~~anti-dilutive since Alcoa Corporation generated a net loss. As a result, five million stock units and stock options combined were not included in the computation of diluted EPS.~~anti-dilutive. Had Alcoa ~~Corporation~~ generated net income in the first quarter of 2019, ~~one~~1 million common share equivalents related to 5 million outstanding stock units and stock options combined would have been included in diluted average shares ~~outstanding.~~outstanding for the period. Options to purchase 1 million shares of common stock outstanding at March 31, 2019 would have also been excluded had Alcoa generated net income because they had a weighted average exercise price of $38.49 per share which was greater than the average market price of Alcoa Corporation’s common stock.

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

	Alcoa Corporation						Noncontrolling interest						Alcoa Corporation						Noncontrolling interest
	First quarter ended March 31,						First quarter ended March 31,						First quarter ended March 31,						First quarter ended March 31,
	2019			2018			2019			2018			2020			2019			2020			2019
Pension and other postretirement benefits ~~(I)~~(J)
Balance at beginning of period	$	(2,283	)	$	(2,786	)	$	(46	)	$	(47	)	$	(2,282	)	$	(2,283	)	$	(56	)	$	(46	)
Other comprehensive income:
Unrecognized net actuarial (loss) gain and prior service cost/benefit		(4	)		75			—			1
Tax benefit (expense)		1			(8	)		—			(1	)
Total Other comprehensive (loss) income before reclassifications, net of tax		(3	)		67			—			—
Unrecognized net actuarial loss and prior service cost/benefit														(20	)		(4	)		(1	)		—
Tax benefit														6			1			—			—
Total Other comprehensive loss before reclassifications, net of tax														(14	)		(3	)		(1	)		—
Amortization of net actuarial loss and prior service cost/benefit⁽¹⁾		45			36			1			1			54			45			1			1
Tax expense⁽²⁾		(1	)		(2	)		—			—			(2	)		(1	)		—			—
Total amount reclassified from Accumulated other comprehensive loss, net of tax⁽⁶⁾⁽⁷⁾		44			34			1			1			52			44			1			1
Total Other comprehensive income		41			101			1			1			38			41			—			1
Balance at end of period		(2,242	)		(2,685	)		(45	)		(46	)		(2,244	)		(2,242	)		(56	)		(45	)

Foreign currency translation
Balance at beginning of period		(2,071	)		(1,467	)		(810	)		(581	)		(2,160	)		(2,071	)		(834	)		(810	)
Other comprehensive (loss) income⁽³⁾		(22	)		1			2			(14	)		(663	)		(22	)		(245	)		2
Balance at end of period		(2,093	)		(1,466	)		(808	)		(595	)		(2,823	)		(2,093	)		(1,079	)		(808	)
Cash flow hedges (J)

Cash flow hedges (K)
Balance at beginning of period		(211	)		(929	)		31			51			(532	)		(211	)		20			31
Other comprehensive (loss) income:
Other comprehensive income (loss):
Net change from periodic revaluations		(352	)		635			27			(20	)		852			(352	)		(26	)		27
Tax benefit (expense)		66			(99	)		(8	)		6
Total Other comprehensive (loss) income before reclassifications, net of tax		(286	)		536			19			(14	)
Tax (expense) benefit														(175	)		66			7			(8	)
Total Other comprehensive income (loss) before reclassifications, net of tax														677			(286	)		(19	)		19
Net amount reclassified to earnings:
Aluminum contracts⁽⁴⁾		13			27			—			—			13			13			—			—
Financial contracts⁽⁵⁾		(26	)		(13	)		(18	)		(9	)		3			(26	)		(2	)		(18	)
Interest rate contracts⁽⁶⁾														1			—			—			—
Foreign exchange contracts⁽⁴⁾		4			(1	)		—			—			8			4			—			—
Sub-total		(9	)		13			(18	)		(9	)		25			(9	)		(2	)		(18	)
Tax benefit⁽²⁾		7			1			5			3
Total amount reclassified from Accumulated other comprehensive (loss) income, net of tax⁽⁶⁾		(2	)		14			(13	)		(6	)
Total Other comprehensive (loss) income		(288	)		550			6			(20	)
Tax (expense) benefit⁽²⁾														(1	)		7			1			5
Total amount reclassified from Accumulated other comprehensive loss, net of tax⁽⁷⁾														24			(2	)		(1	)		(13	)
Total Other comprehensive income (loss)														701			(288	)		(20	)		6
Balance at end of period		(499	)		(379	)		37			31			169			(499	)		—			37

Total Accumulated other comprehensive loss	$	(4,834	)	$	(4,530	)	$	(816	)	$	(610	)	$	(4,898	)	$	(4,834	)	$	(1,135	)	$	(816	)

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

	First quarter ended March 31,
	2019			2018
First quarter ended March 31, 2020						Saudi Arabia Joint Venture			Mining			Energy			Other
Sales	$	1,263		$	1,253	$	585		$	218		$	59		$	73
Cost of goods sold		1,045			960		462			148			26			67
Net (loss) income		(48	)		65		(13	)		9			27			(9	)
Equity in net (loss) income of affiliated companies, before reconciling adjustments							(3	)		6			11			(4	)
Other							(3	)		(3	)		(2	)		5
Alcoa Corporation’s equity in net (loss) income of affiliated companies							(6	)		3			9			1
First quarter ended March 31, 2019
Sales							958			228			63			14
Cost of goods sold							852			149			29			15
Net (loss) income							(68	)		(2	)		28			(6	)
Equity in net (loss) income of affiliated companies, before reconciling adjustments							(17	)		5			11			(3	)
Other							6			8			—			2
Alcoa Corporation’s equity in net (loss) income of affiliated companies							(11	)		13			11			(1	)

AsDuring the second quarter of ~~January 1,~~ 2019, Alcoa Corporation and the Saudi Arabian Mining Company ~~changed its method for valuing certain~~(Ma’aden) amended the joint venture agreement that governed the operations of ~~its inventories held in the United States and Canada to the average cost method of accounting from the LIFO method. Inventories held by other subsidiaries~~each of the ~~parent company were previously, and continue to be, valued principally using~~three companies that comprised the ~~average cost method. Management believes~~joint venture at that time. The amendment resulted in various changes including the ~~change in accounting is preferable as it results in a consistent method to value inventory across all regions~~divestiture of the ~~business, it improves comparability with industry peers, and it more closely resembles the physical flow of inventory.~~

~~The effects of the change~~Company’s investment in ~~accounting principle from LIFO to average cost have been retrospectively applied to all periods presented. This change resulted in~~Ma’aden Rolling Company (MRC). As a favorable adjustment to Retained earnings of $205 and an unfavorable adjustment to Noncontrolling interest of $35 as of January 1, 2018. In addition, certain financial statement line items in the Company’s Statement of Consolidated Operations, Statement of Consolidated Comprehensive Income, and Statement of Consolidated Cash Flowsresult, Saudi Arabia Joint Venture only includes MRC’s results for the ~~three months~~first quarter ended March 31, ~~2018 and Consolidated Balance Sheet as of December 31, 2018 were adjusted as follows:~~2019.

As Originally Reported

Effect of Change

As Adjusted

Statement of Consolidated Operations for the first quarter ended March 31, 2018:

Cost of goods sold
$
2,381

$
(79
)

$
2,302

Provision for income taxes

138

13

151

Net income

274

66

340

Net income attributable to noncontrolling interest

124

21

145

Net income attributable to Alcoa Corporation

150

45

195

Earnings per share attributable to Alcoa Corporation common shareholders:

Basic
$
0.81

$
0.24

$
1.05

Diluted

0.80

0.24

1.04

Statement of Consolidated Comprehensive Income for the first quarter ended
March 31, 2018:

Comprehensive income
$
893

$
66

$
959

Comprehensive income attributable to Alcoa Corporation

802

45

847

Comprehensive income attributable to noncontrolling interest

91

21

112

Consolidated Balance Sheet as of December 31, 2018:

Inventories
$
1,644

$
175

$
1,819

Prepaid expenses and other current assets

301

19

320

Retained earnings

341

229

570

Noncontrolling interest

2,005

(35
)

1,970

Statement of Consolidated Cash Flows for the three months ended March 31, 2018:

Net income
$
274

$
66

$
340

Deferred income taxes

(11
)

13

2

(Increase) in inventories

(169
)

(79
)

(248
)

The ~~following table compares the amounts that would have been reported under LIFO with the amounts recorded under the average cost method~~Company’s basis in the ~~Consolidated Financial Statements~~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 $21 in unrecognized losses as of March 31, ~~2019 and for~~2020 that will be recognized upon additional contributions into the ~~three months then ended:~~

As Computed under LIFO

As Reported under Average Cost

Effect of Change

Statement of Consolidated Operations for the first quarter ended March 31, 2019:

Cost of goods sold
$
2,228

$
2,180

$
(48
)
Provision for income taxes

137

150

13

Net loss

(93
)

(58
)

35

Net income attributable to noncontrolling interest

127

141

14

Net loss attributable to Alcoa Corporation

(220
)

(199
)

21

Earnings per share attributable to Alcoa Corporation common shareholders:

Basic
$
(1.19
)

$
(1.07
)

$
0.12

Diluted

(1.19
)

(1.07
)

0.12

Statement of Consolidated Comprehensive Income for the first quarter ended
March 31, 2019:

Comprehensive loss
$
(353
)

$
(318
)

$
35

Comprehensive income attributed to noncontrolling interest

136

150

14

Comprehensive loss attributable to Alcoa Corporation
$
(489
)

$
(468
)

$
21

Consolidated Balance Sheet as of March 31, 2019:

Inventories
$
1,579

$
1,799

$
220

Prepaid expenses and other current assets

276

285

9

Retained earnings

121

371

250

Noncontrolling interest

1,947

1,926

(21
)

Statement of Consolidated Cash Flows for the three months ended March 31, 2019:

Net loss
$
(93
)

$
(58
)

$
35

Deferred income taxes

20

33

13

Decrease (Increase) in inventories

65

17

(48
)

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

	Pension benefits						Other postretirement benefits					Pension benefits						Other postretirement benefits
First quarter ended March 31,	2019			2018			2019		2018			2020			2019			2020			2019
Service cost	$	12		$	14		$	1	$	1		$	14		$	12		$	1		$	1
Interest cost⁽¹⁾		56			59			8		9			42			56			5			8
Expected return on plan assets⁽¹⁾		(81	)		(90	)		—		—			(74	)		(81	)		—			—
Recognized net actuarial loss⁽¹⁾		42			55			3		3			51			42			4			3
Amortization of prior service cost⁽¹⁾		1			2			—		—			—			1			(3	)		—
Curtailments⁽²⁾		—			5			—		(28	)		3			—			—			—
Net periodic benefit cost	$	30		$	45		$	12	$	(15	)	$	36		$	30		$	7		$	12

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.

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:

Funding and Cash Flows. As permitted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Company is planning on deferring approximately $220 of pension contributions, primarily for the U.S. plans, from 2020 to January 1, 2021. As a result, as of March 31, 2020, Alcoa’s minimum required contribution to defined benefit pension plans in 2020 is now estimated to be approximately $75, of which approximately $40 is primarily for U.S. plans.

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~~ (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:

Alcoa Corporation is exposed to certain risks relating to its ongoing business operations, including the risks of changing commodity prices, ~~and~~ foreign currency exchange rates and interest rates. Alcoa Corporation’s commodity and derivative activities 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 $2 and $49, respectively, at March 31, 2019 and $2 and $54, respectively, at December 31, 2018. Certain~~All of these contracts are designated as either fair value or cash flow hedging instruments. ~~For the contracts designated as cash flow hedges,~~ Alcoa Corporation recognized an unrealized loss of $8 in the first quarter of 2019 and an unrealized gain of $68 in the first quarter of 2018 in Other comprehensive (loss) income. Additionally, Alcoa Corporation reclassified a realized loss of $4 and $1 in 2019 and 2018, respectively, from Accumulated other comprehensive (loss) income to Sales.

~~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 made in the spot market, all ofhierarchy, which are ~~associated with nine smelters and three refineries. Certain of the embedded aluminum derivatives and financial contracts are~~either designated as cash flow ~~hedging instruments.~~hedges or undesignated.

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

For the quarter ended March 31, 2020, the realized loss of $14 on Level 1 and 2 cash flow hedges was comprised of a ~~power contract at one of its facilities which expired~~$7 loss recognized in March 2019 that indexed the price of power to the London Metal Exchange (LME) price of aluminum plus the Midwest premium. Prior to its expiration, this embedded derivative was 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. Management elected not to qualify the embedded derivative for hedge accounting treatment.

In March 2019, Alcoa and the counterparty to the power contract described above entered into a new power contract which also contains an embedded derivative that indexes the price of power to the LME price of aluminum plus the Midwest premium. The embedded aluminum 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. An overall increase in actual LME price and the Midwest premium will result in a higher cost of powerSales and a ~~corresponding decrease to~~$7 loss recognized in Cost of goods sold. For the ~~derivative asset or increase to~~quarter ended March 31, 2019, the ~~derivative liability. The embedded derivative has been designated as a~~realized loss of $4 on Level 1 and 2 cash flow ~~hedge of forward sales of aluminum. Unrealized gains and losses will be included~~hedges was recognized in ~~Other comprehensive (loss) income on the accompanying Consolidated Balance Sheet while realized gains and losses will be included in Sales on the accompanying Statement of Consolidated Operations.~~Sales.

The following table presents quantitative information related to the significant unobservable inputs described above for Level 3 derivative ~~instruments:~~

	March 31, 2020		Unobservable Input	Unobservable Input Range
Asset Derivatives
Financial contract	~~Fair value at~~ March 31, 2019$	4	~~Unobservable~~ ~~input~~Interrelationship of	~~Range~~Electricity (per MWh)	~~($ in full amounts)~~	2020: $31.87
~~Assets:~~			forward energy price and the Consumer Price Index			2021: $34.16
Power contracts		458	MWh of energy needed to produce the forecasted mt of aluminum	LME (per mt)		2020: $1,502 2029: $2,173 2036: $2,470
				Midwest premium (per pound)		2020: $0.1175 2029: $0.1300 2036: $0.1300
				Electricity		Rate of 11 million MWh per year
Power contract	3		MWh of energy needed to produce the forecasted metric	LME (per mt)		2020: $1,502 2020: $1,523
			tons of aluminum	Midwest premium (per pound)		2020: $0.1175 2020: $0.1250
				Electricity		Rate of 2 million MWh per year
Total Asset Derivatives	$	465
Liability Derivatives
Power contract	$	113
~~Financial contract~~MWh of energy needed		~~137~~LME (per mt)	~~Interrelationship of forward energy price and the Consumer Price Index and price of electricity beyond forward curve~~	~~Electricity: $73.13 per megawatt hour in 2019 to $55.02 per megawatt hour in 2021~~2020: $1,502

~~Liabilities:~~	to produce the forecasted		2027: $2,065
			mt of aluminum	Electricity		Rate of 4 million MWh per year
Power contract (undesignated)	28		Estimated spread between the 30-year debt yield of Alcoa and the counterparty	Credit spread		4.48%: 30-year debt yield spread 8.98%: Alcoa (estimated) 4.50%: counterparty
Total Liability Derivatives	$	141

~~Embedded aluminum derivative~~		~~267~~	~~Interrelationship of LME price to the amount of megawatt hours of energy needed to produce the forecasted metric tons of aluminum~~	~~Aluminum: $1,900 per metric ton in 2019 to $2,445 per metric ton in 2027~~ ~~Electricity: rate of 4 million megawatt hours per year~~

~~Embedded aluminum derivatives~~		~~320~~	~~Price of aluminum beyond forward curve~~	~~Aluminum: $2,533 per metric ton in July 2029 to $2,553 per metric ton in December 2029 (two contracts) and $2,850 per metric ton in 2036 (one contract)~~ ~~Midwest premium: $0.1900 per pound in 2019 to $0.1850 per pound in 2029 (two contracts) and 2036 (one contract)~~

~~Embedded aluminum derivative~~		-	~~Interrelationship of LME price to the amount of megawatt hours of energy needed to produce the forecasted metric tons of aluminum~~	~~Aluminum: $1,900 per metric ton in April 2019 to $1,911 per metric ton in June 2019~~ ~~Midwest premium: $0.1900 per pound in April 2019 and June 2019~~ ~~Electricity: rate of 2 million megawatt hours per year~~

~~Embedded aluminum derivative~~		7	~~Interrelationship of LME price to overall energy price~~	~~Aluminum: $1,857 per metric ton in April 2019 to $1,954 per metric ton in December 2019~~

~~Embedded credit derivative~~		21	~~Estimated spread between the respective 30-year debt yield of Alcoa Corporation and the counterparty~~	~~3.25% (30-year debt yields: Alcoa Corporation – 7.21% (estimated) and counterparty – 3.96%)~~

The Total Asset Derivatives and Total Liability Derivatives in the table above are lower by $2 compared to the respective amount reflected in the Level 3 tables presented below. This is due to the fact that the Financial contract is in an asset position for the current portion and is in a liability position for the noncurrent portion and is reflected as such on the accompanying Consolidated Balance Sheet. However, this derivative is reflected as a net asset in the above table for purposes of presenting the assumptions utilized to measure the fair value of the derivative instrument in its entirety.

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

March 31, 2019

December 31, 2018

Asset Derivatives

Derivatives designated as hedging instruments:

Fair value of derivative instruments – current:

Financial contract

$
69

$
70

Fair value of derivative instruments – noncurrent:

Embedded aluminum derivatives

—

41

Financial contract

68

42

Total derivatives designated as hedging instruments

137

153

Total Asset Derivatives

$
137

$
153

Liability Derivatives

Derivatives designated as hedging instruments:

Fair value of derivative instruments – current:

Embedded aluminum derivatives

$
59

$
46

Fair value of derivative instruments – noncurrent:

Embedded aluminum derivatives

535

218

Total derivatives designated as hedging instruments

594

264

Derivatives not designated as hedging instruments:

Fair value of derivative instruments – current:

Embedded aluminum derivative

—

5

Embedded credit derivative

4

4

Fair value of derivative instruments – noncurrent:

Embedded credit derivative

17

16

Total derivatives not designated as hedging instruments

21

25

Total Liability Derivatives

$
615

$
289

Assuming market rates remain constant with the rates at March 31, 2020, a realized gain of $16 related to power contracts and $6 related to the financial contract are expected to be recognized in Sales and Cost of goods sold, respectively, over the next 12 months.

At March 31, 2020 and December 31, 2019, the power contracts with embedded derivatives designated as cash flow hedges hedge forecasted aluminum sales of 2,298 kmt and 2,347 kmt, respectively. At March 31, 2020 and December 31, 2019, the financial contract hedges forecasted electricity purchases of 3,278,484 and 3,891,096 megawatt hours, respectively.

The following ~~tables present~~table presents a reconciliation of activity for Level 3 derivative instruments:

Assets

Liabilities

First quarter ended
March 31, 2019

Embedded
aluminum
derivatives

Financial
contracts

Embedded
aluminum
derivatives

Embedded
credit
derivative

Balance at January 1, 2019

$
41

$
112

$
269

$
20

Total gains or losses (realized and unrealized)
included in:

Sales

—

—

(13
)

—

Cost of goods sold

—

(42
)

—

—

Other expenses, net

—

—

(2
)

1

Other comprehensive (loss) income

(41
)

68

344

—

Other

(1
)

(4
)

—

Balance at March 31, 2019

$
—

$
137

$
594

$
21

Change in unrealized gains or losses included in earnings for
derivative instruments held at March 31, 2019:

Other expenses, net

$
—

$
—

$
(2
)

$
1

	Assets						Liabilities
	Power contract			Financial contract			Power contract			Financial contract		Embedded credit derivative
January 1, 2020	$	—		$	74		$	598		$	—	$	17
Total gains or losses included in:
Sales (realized)		(1	)		—			(17	)		—		—
Cost of goods sold (realized)		—			(4	)		—			—		—
Other (income) expenses, net (unrealized/realized)		—			—			—			—		11
Other comprehensive (loss) income (unrealized)		462			(61	)		(468	)		2		—
Other		—			(3	)		—			—		—
March 31, 2020	$	461		$	6		$	113		$	2	$	28
Change in unrealized gains or losses included in earnings for derivative instruments held at March 31, 2020:
Other (income) expenses, net	$	—		$	—		$	—		$	—	$	11

~~In the first quarter of 2019, there was an expiration of an existing and an issuance of a new embedded aluminum derivative (see above).~~ 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.~~

~~Alcoa Corporation has six Level 3 embedded aluminum derivatives and one Level 3 financial contract that have been designated as cash flow hedges.~~

At March 31, 2019 and December 31, 2018, these embedded aluminum derivatives hedge forecasted aluminum sales of 2,496 kmt and 2,508 kmt, respectively. Assuming market rates remain constant with the rates at March 31, 2019, a realized loss of $59 is expected to be recognized in Sales over the next 12 months. ~~There was no ineffectiveness related to these six derivative~~ instruments in the ~~first quarter of 2019 and 2018.~~periods presented.

At March 31, 2019 and December 31, 2018, the financial contract hedges forecasted electricity purchases of 5,742,396 and 6,348,276 megawatt hours, respectively. Assuming market rates remain consistent with the rates at March 31, 2019, a realized gain of $69 is expected to be recognized in Cost of goods sold over the next 12 months. There was no ineffectiveness related to this derivative instrument in the first quarter of 2019. The amount of hedge ineffectiveness related to this derivative instrument was not material in the first quarter of 2018.

The disclosures with respect to commodity prices 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. 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.

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

	March 31, 2019				December 31, 2018				March 31, 2020				December 31, 2019
	Carrying value		Fair value		Carrying value		Fair value		Carrying value		Fair value		Carrying value		Fair value
Cash and cash equivalents	$	1,017	$	1,017	$	1,113	$	1,113	$	829	$	829	$	879	$	879
Restricted cash		3		3		3		3		3		3		4		4
Long-term debt due within one year		1		1		1		1		1		1		1		1
Long-term debt, less amount due within one year		1,802		1,939		1,801		1,863		1,801		1,668		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 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 for non-public debt. The fair value amounts for all Long-term debt were classified in Level 2 of the fair value hierarchy.

K.L. Income Taxes – ~~The~~Alcoa Corporation’s estimated annualized effective tax rate ~~was 162.4% and 30.9%~~(AETR) for ~~the first quarter of 2019 and 2018, respectively. Alcoa Corporation’s estimated annual effective tax rate for 2019 was 72.2%~~2020 as of March 31, ~~2019. This rate~~2020 differs from the U.S. federal statutory rate of 21% primarily due to ~~foreign income taxed in higher rate jurisdictions, as well as by domestic losses and foreign~~ losses in countries with full valuation reserves resulting in ~~no tax benefit.~~

For the first quarter of 2019, the Provision for income taxes of $150 included two components: (i) the application of the estimated annual tax rate of 72.2% to pre-tax income of $92 ($67), and (ii) an unfavorable tax impact related to the interim period treatment of operational losses in certain jurisdictions for which no0 tax benefit, ~~was recognized ($83).~~

For the first quarter of 2018, the Provision for income taxes of $151 included two components: (i) the application of the estimated annual tax rate of 30.5% to pre-tax income of $491 ($150), and (ii) an unfavorable tax impact related to the interim period

treatment of operational losses in certain jurisdictions for which no tax benefit was recognized ($1). The rate for the first quarter of 2018 differs from the U.S. federal statutory rate of 21% primarily due toas well as foreign income taxed in higher rate ~~jurisdictions,~~jurisdictions.

Deferred taxes are recorded for future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. These future tax consequences result from differences between the financial and tax bases of Alcoa’s assets and liabilities and are adjusted for changes in tax rates and tax laws when enacted.

The future realization of net deferred tax assets is reviewed quarterly, or more frequently if there are changes in the positive and negative evidence used in management’s assessments, and is based on projections of the respective future taxable income (defined as ~~well~~the sum of pretax income, other comprehensive income, and permanent tax differences), exclusive of reversing temporary differences and carryforwards.

Management’s forecasted taxable income 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, calcined petroleum coke, liquid pitch, energy, labor, and transportation costs. These are the same assumptions utilized by ~~domestic~~management to develop the financial and operating plan that is used to 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 ~~foreign losses in countries with full valuation reserves~~circumstances, resulting in ~~no tax benefit.~~a future charge to establish a valuation allowance.

L.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 March 31, 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 $46 and $137 at March 31, 2020 and December 31, 2019, respectively. The majority of the Alcoa Canada Company net deferred tax assets relate to pension obligations and derivatives.

~~As a result of adoption of ASU No. 2016-02, Leases, management recorded~~Managements records a right-of-use asset and lease liability ~~each in the amount of $201, on Alcoa Corporation’s Consolidated Balance Sheet as of January 1, 2019~~ for several types of operating leases, including land and buildings, alumina refinery process control technology, plant equipment, vehicles, and computer equipment. ~~These amounts are equivalent to the aggregate future lease payments on a discounted basis.~~ The leases have remaining terms of one to 3938 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. Lease expense for the three months ended March 31, 2019, includes costs from operating leases of $19, short-term rental expense of $3 and variable lease payments of $3. New leases added during the three months ended March 31, 2019 were not material. The Company does not have material financing leases.

The weighted average lease term and weighted average discount rate as of March 31, 2020 and December 31, 2019 were as follows:

The future cash flows related to the operating lease obligations as of March 31, ~~2019~~2020 were as follows:

Year Ending December 31,	Operating leases
2019 (excluding the three months ended March 31)	$	59
2020		64
2020 (excluding the three months ended March 31)				$	49
2021		48			53
2022		17			21
2023		9			13
2024					7
Thereafter		20			26
Total lease payments (undiscounted)		217			169
Less: discount to net present value		(32	)		(23	)
Total	$	185		$	146

~~Disclosures related to periods presented prior to the adoption of ASU No. 2016-02~~

The Company adopted ASU No. 2016-02, Leases, on January 1, 2019 using the modified retrospective approach which requires the following disclosure for periods presented prior to adoption. The following table represents minimum annual lease commitments as of December 31, 2018 under long-term operating leases:

Alcoa Corporation participates in environmental assessments and cleanups at several locations. These include currently or previously owned or 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 technology advancements.

Alcoa Corporation’s environmental remediation reserve balance 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, 2017	$	294
Balance at December 31, 2018				$	280
Liabilities incurred					73
Cash payments		(25	)		(17	)
Reversals of previously recorded liabilities					(1	)
Balance at December 31, 2019					335
Liabilities incurred		19			2
Reversals of previously recorded liabilities		(3	)
Cash payments					(3	)
Foreign currency translation and other		(5	)		(7	)
Balance at December 31, 2018		280
Cash payments		(3	)
Liabilities incurred		1
Reversals of previously recorded liabilities		(1	)
Foreign currency translation and other		(1	)
Balance at March 31, 2019	$	276
Balance at March 31, 2020				$	327

At March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, the current portion of Alcoa Corporation’s environmental remediation reserve balance was ~~$33~~$38 and ~~$44,~~$39, respectively. InThe Company incurred liabilities of $2 and $1 for the ~~first~~ quarter ~~of 2018, the remediation reserve was increased by an immaterial amount. The changes to the remediation reserve~~ended March 31, 2020 and 2019, respectively, which were primarily recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations.

Payments related to remediation expenses applied against the reserve were $3 for the quarters ended March 31, 2020 and 2019. These amounts include mandated expenditures as well as those not required by any regulatory authority or third party. The reserve also reflects a decrease of $6 in the first quarter of 2020, and $1 in the first quarter of 2019 due to the effects of foreign currency translation. The first quarter of 2019 also included a $1 reversal of previously recorded liabilities.

The estimated timing of cash outflows on the environmental remediation reserve at March 31, ~~2019~~2020 is as follows:

2019	$	30
2020 - 2024		126
2020 (excluding the three months ended March 31, 2020)			$	24
2021 - 2025				194
Thereafter		120		109
Total	$	276	$	327

Reserve balances at March 31, ~~2019~~2020 and December 31, ~~2018~~2019, associated with significant sites with active remediation underway or for future remediation were ~~$212~~$268 and ~~$214,~~$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 reserve may be required. The Company’s significant sites include:

~~Pocos~~Poços de Caldas, ~~Brazil—Associated~~Brazil—The reserve associated with the 2015 closure of the Alcoa Alumínio S.A. smelter in ~~Pocos~~Poços de Caldas, Brazil, ~~an environmental remediation reserve was established~~is for remediation of historic spent potlining storage and disposal areas. The final remediation plan is currently under review; such review could require the reserve balance to be adjusted.

Fusina and Portovesme, ~~Italy—~~Italy—Alcoa Corporation’s subsidiary Alcoa Trasformazioni S.r.l. ~~(Trasformazioni)~~ has remediation projects underway for its closed smelter sites at Fusina ~~(Italy)~~ and Portovesme ~~(Italy). Cleanup plans at both sites~~which have been approved by the Italian Ministry of Environment and Protection of Land and Sea (MOE). ~~For the Fusina site, Trasformazioni began work on a~~Work is ongoing for soil remediation ~~project~~at both sites with expected completion in ~~October 2017 and expects to complete the project by the end of 2019.~~2020. Additionally, ~~Trasformazioni agreed to make~~ annual payments are made to MOE over a 10-year period ~~ending in 2024,~~through 2022 for groundwater emergency containment and natural resource damages ~~related to~~at the Fusina site. ~~For the Portovesme site, Trasformazioni began work on a soil remediation project in mid-2016 and expects it to be complete by the end of 2019. Additionally, Trasformazioni participates in a~~A groundwater remediation project ~~which~~at Portovesme will ~~not~~ have a final remedial design completed ~~until mid-2019; such design conclusion~~in 2020 which may result in a change to the existing reserve.

~~Suriname—Associated~~associated with the 2017 closure of the Suralco refinery and bauxite mine ~~an environmental remediation reserve was established~~is for 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—~~Arkansas—The ~~Company, through its subsidiaries, operated~~reserve associated with the 1990 closure of two mining areas and refineries near Hurricane Creek, Arkansas ~~before their closure in 1990. In accordance with regulations, the Company~~ is ~~responsible~~ for ongoing monitoring and maintenance for water quality surrounding the mine areas and residue disposal areas. ~~In instances where the Company has ongoing monitoring and maintenance responsibilities, it is Alcoa’s policy is to maintain a reserve equal to five years of expected costs.~~

Massena, New ~~York—Associated~~York—The reserve associated with the 2015 closure of the Massena East smelter by the Company’s subsidiary, Reynolds Metals Company, ~~in 2015, an environmental remediation reserve was established~~is for subsurface soil remediation to be performed after demolition of the structures. Remediation work is expected to commence in ~~2020~~2021 and will take four to eight years to complete.

Point Comfort, Texas—The 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 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 the final closure of four bauxite residue waste disposal areas (known as the Copano facility). Work commenced on the first residue ~~bed~~ in 2018 and will take eight to twelve years to

complete, depending on the nature of its potential re-use. Work on the next three ~~beds~~areas has not commenced but is expected to be completed by 2048, depending on its potential re-use. ~~See Sherwin in the Other section below for a complete description of this matter.~~

Longview, ~~Washington—~~Washington—In connection with a 2018 Consent Decree and Cleanup Action Plan with the Washington State ~~of Washington~~ Department of 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—~~Sites—The Company is in the process of decommissioning various other plants and remediating sites in several ~~countries. As a result, redeveloping these sites~~countries for ~~reuse~~potential redevelopment or ~~returning~~to return the land to a natural ~~state requires the performance of certain remediation activities.~~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 future with the latest expected to be in 2026, after which ongoing monitoring and other activities may be required. At March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, the reserve balance associated with these activities was ~~$64~~$59 and ~~$66,~~$61, respectively.

Spain—In July 2013, following a corporate income tax audit covering the 2006 through 2009 tax years, an assessment was received from Spain’s tax authorities disallowing certain interest deductions claimed by ParentCo’s Spanish consolidated tax group. In 2015, ParentCo filed an appeal of this assessment ~~and provided financial assurance in the form of both a bank guarantee (Arconic) and a lien secured with the San Ciprian smelter (Alcoa Corporation)~~ to ~~Spain’s tax authorities. In January 2015,~~ Spain’s Central Tax Administrative Court ~~denied ParentCo’s appeal of this assessment.~~which was denied. Two months later, ParentCo filed an appeal ~~of the assessment~~ in Spain’s National Court (the National Court). The amount of this assessment, including interest, was $152 (€131) as of June 30, 2018.

OnIn July 6, 2018, the National Court denied ParentCo’s appeal of the assessment; however, ~~the decision includes a requirement that~~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. ~~Spain’s tax authorities will not issue a new assessment until this matter is resolved; however, based on estimated calculations completed by~~Subsequently, Arconic Inc. and Alcoa Corporation (collectively, the Companies), estimated the amount of the new assessment, including applicable interest, ~~is expected~~ 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 ~~are responsible for~~ 51% and 49%, respectively, of the assessed amount in the event of an unfavorable outcome. On November 8, 2018, the Companies filed a petition for appeal to Spain’s Supreme Court, to which Spain’s tax authorities have filed their opposition.

~~In March 2019, the Spanish Supreme Court accepted the Companies’ petition for appeal which allowed the Companies to prepare and submit an appeal on May 6, 2019.~~

~~Notwithstanding the appeal process, based~~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. ~~As the appeal progresses or when~~

On November 8, 2018, the Companies ~~receive~~filed a petition for appeal to Spain’s Supreme Court, which was accepted in March 2019 and an ~~updated assessment from Spain’s tax authorities, management may revise its estimated liability.~~appeal was submitted on May 6, 2019.

Separately, in January 2017, the National Court issued a decision in favor of the former Spanish consolidated tax group related to a similar assessment for the 2003 through 2005 tax years, effectively making that assessment null and void. Additionally, in August 2017, in lieu of receiving a formal assessment, the Companies reached a settlement with Spain’s tax authorities for the 2010 through 2013 tax years that had been under audit for a similar matter. Alcoa Corporation’s share of this settlement was not material to the Company’s Consolidated Financial Statements. The ultimate outcomes related to the 2003 through 2005 and the 2010 through 2013 tax years are not indicative of the potential ultimate outcome of the assessment for the 2006 through 2009 tax years due to procedural differences. Also, it is possible that the Companies may receive similar assessments for tax years subsequent to 2013; however, management does not 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 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 ~~$27~~$43 (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 $30 (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.

AofA is part of the ~~divestiture, ParentCo agreed to retain responsibility for certain environmental obligations~~Company’s joint venture with Alumina Limited, an Australian public company listed on the Australian Securities Exchange. The Company and ~~assigned to the buyer an Energy Services Agreement (ESA) with Gregory Power Partners (Gregory Power) for purchase of steam~~Alumina Limited own 60% and ~~electricity by the refinery.~~

~~In January 2016, Sherwin Alumina Company, LLC (Sherwin)~~40%, ~~a successor owner~~respectively, of the refinery previously owned by Reynolds, filed for bankruptcy due to its inability to continue its bauxite supply agreement. As a result of Sherwin’s bankruptcy filing, separate legal actions were initiated against Reynolds by Sherwin and Gregory Power.joint venture entities, including AofA.

~~Sherwin~~: This matter sought to determine responsibility for remediation of environmental conditions at the Sherwin refinery site and related bauxite residue waste disposal areas (known as the Copano facility). In May 2018, Reynolds and Sherwin concluded a settlement agreement, which was accepted by the bankruptcy court in June 2018, that assigned to Reynolds all environmental liabilities associated with the Copano facility and assigned to Sherwin all environmental liabilities associated with the Sherwin refinery site. At March 31, 2019, the Company had a reserve of $38 for its share of environmental-related matters at Copano facility. (See Sherwin, Texas in Environmental Matters above.)

~~Gregory Power~~: In January 2016, Gregory Power delivered notice to Reynolds that Sherwin’s bankruptcy filing constitutes a breach of the ESA. Since that time, various responses, complaints and motions have been actioned, including the addition of Allied Alumina LLC (Allied) to an amended complaint. (Sherwin operated as a subsidiary of Allied.) In May 2019, a settlement agreement was reached between Gregory Power, Allied and Reynolds in which all claims pending against the parties will be voluntarily dismissed. The settlement is conditioned on the execution of various commercial agreements, which are being finalized at this time. The settlement does not have an impact on the Consolidated Financial Statements.

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, safety and health, commercial, tax, product liability, intellectual property infringement, employment, and 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 is not readily determinable because of the considerable uncertainties that exist. 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.

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 March 31, 2019 and December 31, 2018, the carrying value of Alcoa Corporation’s investment in this joint venture was $863 and $874, 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 $66 (Ma’aden contributed $199) to the joint venture in 2017 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 rolling mill company has project financing totaling $1,179 (reflects principal repayments made through March 31, 2019), of which $296 represents Alcoa Corporation’s 25.1% interest in the rolling mill company. Alcoa Corporation has issued guarantees (see below) to the lenders in the event of default on the debt service requirements by the rolling mill company through 2018 and 2021 (Ma’aden issued similar guarantees related to its 74.9% interest). Alcoa Corporation’s guarantees for the rolling mill cover total remaining debt service requirements of $50 in principal and up to a maximum of approximately $10 in interest per year (based on projected interest rates). Previously, Alcoa Corporation issued similar guarantees related to the project financing of both the smelting company and the mining and refining company. In December 2017 and July 2018, the smelting company and the mining and refining company, respectively, refinanced and/or amended all of their existing outstanding debt. The guarantees that were previously required of the Company related to both the smelting company and the mining and refining company were effectively terminated. At both March 31, 2019 and December 31, 2018, the combined fair value of the guarantees was $1, which was included inO. Other ~~noncurrent liabilities and deferred credits on the accompanying Consolidated Balance Sheet.~~

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.

	First quarter ended March 31,						First quarter ended March 31,
	2019			2018			2020			2019
Equity loss	$	12		$	2		$	7		$	12
Foreign currency losses, net		12			3			11			12
Net gain from asset sales		(8	)		(5	)		(177	)		(8	)
Net gain on mark-to-market derivative instruments (J)		—			(17	)
Net loss on mark-to-market derivative instruments (K)								11			—
Non-service costs – Pension & OPEB ~~(I)~~(J)		29			38			25			29
Other		(4	)		—			(9	)		(4	)
	$	41		$	21		$	(132	)	$	41

24Net gain from asset sales for the first quarter of 2020 includes a net gain of $180 related to the sale of EES (see Note C).

On April 22, 2020, as part of the Company’s portfolio review, Alcoa announced that it will curtail the remaining 230,000 metric tons of uncompetitive smelting capacity at its Intalco smelter in Ferndale, Washington amid declining market conditions. The full curtailment of 279,000 metric tons, which includes 49,000 metric tons of earlier-curtailed capacity, is expected to be complete by the end of July 2020. The smelter recorded a net loss of $24 in the first quarter of 2020. This action will bring Alcoa’s total curtailed smelting capacity to 880,000 metric tons, or approximately 30 percent of its total global smelting capacity.

The Company will record estimated restructuring charges of approximately $25 (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 employs approximately 700 people, and the workforce will be significantly reduced due to the curtailment.

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

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

References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to 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.). On November 1, 2016 (the Separation Date), ParentCo separated into two standalone, publicly-traded companies, Alcoa Corporation and Arconic Inc. (the Separation Transaction). In connection with the Separation Transaction, as of October 31, 2016, the Company and Arconic Inc. entered into several agreements to ~~effect~~affect the Separation Transaction, including a Separation and Distribution Agreement and a Tax Matters Agreement. See Overview in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II Item 7 of Alcoa Corporation’s Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 for additional ~~information.~~information regarding the Separation Transaction.

In response to the threat of coronavirus (COVID-19), Alcoa has implemented swift measures to protect the health of the Company’s workforce, prevent infection in our locations, and mitigate impacts from the global pandemic. Currently, all of Alcoa’s bauxite mines, alumina refineries, and aluminum manufacturing facilities 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. Additional actions include:

Due to the economic impacts of the COVID-19 pandemic and to comply with restrictions in the Canadian province, the previously announced restart at the Bécancour (Canada) smelter has been slowed, leaving the operating capacity at approximately 85 percent of total nameplate capacity at March 31, 2020. The restart, which was originally expected to be complete by the end of the second quarter of 2020, may be extended past such date. Additionally, COVID-19 has negatively impacted customer demand of value-added aluminum products, resulting in lower margins on aluminum product sales from a shift to commodity-grade products from value-add products.

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 existed and no additional valuation allowances were required in the first quarter of 2020. Additionally, the pandemic did not have a significant impact on the 2020 first quarter financial and operating results of Alcoa Corporation.

The extent 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 the global health threat persists, it could adversely affect:

The preceding list of potential adverse effects of the coronavirus 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:

Through a combination of these initiatives, the previously announced strategic actions, and the 2020 programs discussed below, the Company is targeting approximately $900 in cash actions during 2020.

Additionally, during April 2020, management took measures to improve Alcoa’s liquidity levers. These include amending the Second Amended Revolving Credit Facility to temporarily provide a more favorable leverage ratio calculation and amending the three-year revolving credit facility secured by certain receivables, converting it to a Receivables Purchase Agreement which 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 time to time in the future, in the ordinary course of business. Interest on the drawn $100 will be accrued at 2.93%. See Credit Facilities under the Liquidity and Capital Resources section of Management’s Discussion and Analysis for additional detail on the amendments.

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

The new operating model has been implemented and the Company is substantially complete with the transition of eliminated roles. At March 31, 2020, approximately 210 of the 260 employees 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 1,31, 2020 whereby the Company received $200 with another $50 held in escrow to be paid to Alcoa if certain post-closing conditions are satisfied. 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.

On April 22, 2020, Alcoa announced that it will curtail the remaining 230,000 metric tons of uncompetitive smelting capacity at its Intalco smelter in Ferndale, Washington amid declining market conditions. The full curtailment of 279,000 metric tons, which includes 49,000 metric tons of earlier-curtailed capacity, is expected to be complete by the end of July 2020. The smelter recorded a net loss of $24 in the first quarter of 2020. This action will bring Alcoa’s total curtailed smelting capacity to 880,000 metric tons, or approximately 30 percent of its total global smelting capacity.

In December 2019, the Company ~~changed~~announced the permanent closure of its ~~accounting method for valuing certain inventories from last-in, first-out (LIFO) to average cost. The effects~~alumina refinery in Point Comfort, Texas as its first action of the ~~change~~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 charges, net (see Note D to the Consolidated Financial Statements in ~~accounting principle have been retrospectively applied~~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 ~~all prior periods presented.~~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.

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, 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 efficiency programs and specific initiatives taken throughout 2020.

Overview—Net income attributable to Alcoa Corporation was $80 in the first quarter of 2020 compared with a Net loss attributable to Alcoa Corporation ~~was~~of $199 in the first quarter of ~~2019 compared with net income~~2019. The improvement in results of ~~$195~~$279 was principally related to:

Sales—Sales were $2,381 in the first quarter of ~~2018. The decrease in results~~2020 compared with sales of ~~$394 was principally related to lower metal prices, higher energy costs in the Aluminum segment, higher maintenance costs in the Alumina segment, and costs related to curtailing two smelters in Spain.~~

~~Sales—Sales declined $371, or 12%,~~$2,719 in the first quarter of ~~2019 compared with the same period in 2018.~~2019. The ~~decrease~~decline of $338, or 12%, was largely attributable to a lower metal price, lower shipments of alumina and primary aluminum, and lower revenue from flat-rolled aluminum products due to the end of the tolling arrangement with Arconic in December 2018.principally related to:

Cost of goods sold—As a percentage of Sales, Cost of goods sold was ~~80.2%~~85% in the first quarter of 2020 compared with 80% in the first quarter of 2019. The first quarter of 2020 percentage was negatively impacted by a lower average realized price for both alumina and primary aluminum partially offset by lower raw material costs, particularly petroleum coke and caustic soda, and lower alumina prices.

Selling, general administrative, and other expenses— Selling, general administrative, and other expenses decreased by $24, or 29% in the first quarter of 2020 compared with the first quarter of 2019, due primarily to the absence of a $20 charge to bad debt expense in the first quarter of 2019, ~~compared with 74.5% in~~ the ~~first quarter~~absence of ~~2018. The 2019 percentage was negatively impacted by lower sales for aluminum products along with higher costs for carbon materials, energy and maintenance related expenses.~~

~~Selling, general administrative, and other expenses~~—Selling, general administrative, and other expenses increased by $17, or 25%, in the first quarter of 2019 compared with the corresponding period in 2018 primarily due to the recording of a bad debt reserve against a Canadian customer receivable caused by bankruptcy and higher costs to support the SpanishSpain collective dismissal ~~process, partially offset by~~costs, cost savings from the new operating model, and favorable foreign currency ~~impact from a strengthening U.S. dollar.~~impacts.

Provision for depreciation, depletion, and amortization—Provision for depreciation, depletion, and amortization decreased ~~$22,~~$2, or ~~11%~~1%, in the first quarter of ~~2019~~2020 compared with the ~~corresponding period in 2018~~first quarter of 2019 primarily due to ~~a group of assets related to ParentCo’s 1998 acquisition of Alumax reaching the end of their depreciable lives along with favorable foreign~~ currency impacts ~~primarily against the Brazilian real and~~of the Australian ~~dollar.~~dollar and Brazil real.

Restructuring and other charges, net— In the first quarter of 2020, Alcoa Corporation recorded Restructuring and other charges, net, of $2 which was comprised of several insignificant items, including pension curtailment charges of $3 as discussed in Note J to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

In the first quarter of 2019, ~~was a~~Alcoa Corporation recorded Restructuring and other charges, net, ~~charge~~ of $113, which iswere comprised primarily ~~comprised~~ of $103 for exit costs related to the collective dismissal process and curtailment of the Avilés and La Coruña ~~aluminum facilities in Spain;~~Spanish smelters and $7 for closure costs related to a coal ~~mine; and a $3 net charge for various items.~~mine.

~~On January 22, 2019, the workforce at the Company’s Avilés and La Coruña aluminum facilities in Spain ratified an agreement between Alcoa Corporation and the workers’ representatives related~~See Note D to the ~~Company’s initiation~~Consolidated Financial Statements in Part I Item 1 of ~~a collective dismissal process in October 2018. As part of~~this Form 10-Q for additional detail on the agreement, the two facilities’ smelters, with a combined remaining operating capacity of 124 kmt, were curtailed in February 2019 and are being maintained in restart condition through June 30, 2019, in the event that third parties have interest in acquiring the facilities. The casthouse at each facility and the paste plant at La Coruña remain in operation. Restructuring charges recordedabove net charges.

Other (income) expenses, net— Other (income) expenses, net was ($132) in the first quarter ~~related to this process included asset impairments~~ of $80, employee-related costs of $15 and contract termination costs of $8. Additional charges recorded in the first quarter included a $15 write down of remaining inventories to their net realizable value, 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.

Alcoa Corporation expects to incur additional charges to fulfill the agreement’s social plan, which includes severance plans, early retirement benefits and potential employee relocation to the Company’s San Ciprián (Spain) facility, or to execute a third-party acquisition of the facilities. Such charges are expected to be recorded in the second quarter of 2019 and are estimated to range from $70 to $125 (pre- and after-tax), depending on the outcome of the collective dismissal process. Approximately 75 percent would be cash outlays in 2019.

~~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:~~

~~Other expenses, net— Other expenses, net was~~2020 compared with $41 in the first quarter of ~~2019 compared with $21~~2019. The favorable change of $173 in the first quarter of ~~2018. The change of $20~~2020 was largely attributable to the ~~unfavorable change~~gain on the divestiture of a waste processing facility in mark-to-market impacts on derivative instruments ($17), the unfavorable change in Alcoa Corporation’s share of the earnings from equity method investments ($10), and unfavorable foreign currency movements ($9),Gum Springs, Arkansas, partially offset by ~~lower non-service costs related to pension and other postretirement employee benefit plans ($9) and a higher gain~~mark-to-market losses on ~~the sale of assets ($3).~~derivative instruments.

Noncontrolling interest—Net income attributable to noncontrolling interest was $59 in the first quarter of 2020, compared with $141 in the first quarter of ~~2019 compared with $145 in the first quarter of 2018.~~2019. These amounts are entirely related to Alumina Limited’s 40% ownership interest in several affiliated operating ~~entities, which own, 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 (AofA), 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 first quarter of ~~2019,~~2020 these combined entities, particularly the Alumina segment entities, generated lower net income compared with the ~~same period in 2018.~~first quarter of 2019. The unfavorable change in earnings was mostly driven by ~~higher costs~~lower alumina prices (see Alumina under Segment Information below).

	First quarter ended March 31,				First quarter ended March 31,
	2019		2018		2020		2019
Production⁽¹⁾ (mdmt)		11.9		11.2
Production (mdmt)						11.6		11.9
Third-party shipments (mdmt)		1.2		1.1		1.4		1.2
Intersegment shipments (mdmt)		10.2		10.4		10.5		10.2
Total shipments (mdmt)		11.4		11.5		11.9		11.4
Third-party sales	$	65	$	47	$	71	$	65
Intersegment sales		236		249		235		236
Total sales	$	301	$	296	$	306	$	301
Segment Adjusted EBITDA	$	126	$	110	$	120	$	126
Operating costs⁽²⁾	$	195	$	206	$	213	$	195
Average cost per dry metric ton of bauxite	$	17	$	18	$	18	$	17

Bauxite production ~~increased 6%~~decreased 3% in the first quarter of ~~2019~~2020 compared with the first quarter of ~~2018. The improvement was largely attributable~~2019, primarily due to ~~higher production at five of the segment’s seven mines, primarily at the Huntly (Australia) and Willowdale (Australia) mines, offset by slightly~~ lower production at the ~~Boké (Guinea) and Trombetas (Brazil) mining operations~~.

Australian mines. Third-party sales for the Bauxite segment increased ~~38%~~9% in the first quarter of ~~2019,~~2020 compared with the first quarter of ~~2018. The increase was principally~~2019, caused primarily by anthe increase in ~~the realized price, primarily due to freight, combined with a 9% increase in volume.~~

shipments. Intersegment sales ~~decreased 5% in~~were flat for the first quarter of 2020 compared with the first quarter of 2019 ~~compared with~~as a result of increased intersegment shipments offsetting the ~~corresponding period in 2018, primarily driven by a reduction in volume.~~lower average realized price on intersegment sales.

Segment Adjusted EBITDA ~~increased $16~~decreased $6 in first quarter of 2020 compared with the first quarter of 2019, ~~compared with the same period in 2018. The improvement was mainly the result of the increase in third-party realized price and favorable foreign currency movements~~primarily due to ~~a stronger U.S. dollar against~~ the ~~Australian dollar and Brazilian real, offset by~~previously mentioned lower average realized price ~~and volume for~~on intersegment sales.

For the ~~2019~~ second quarter of 2020 in comparison with the ~~2018~~ second quarter of 2019, a ~~production increase at the Juruti (Brazil) mine~~lower average realized price for intersegment sales is ~~planned to cover an expected decrease in production at the Trombetas (Brazil) mining operations. Additionally, higher production at the Huntly (Australia) mine is projected.~~expected.

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 March 31, ~~2019,~~2020, the Alumina segment had ~~2,519~~base capacity of 12,759 kmt with 214 kmt of curtailed refining capacity oncompared with a base capacity of 15,064 ~~kmt. Both~~kmt and curtailed refining capacity ~~and base capacity were unchanged compared with~~of 2,519 kmt of at March 31, ~~2018.~~2019. The decrease in base and curtailed was due to the permanent closure of the previously curtailed Point Comfort alumina refinery.

Alumina production increased by 2% in the first quarter of ~~2019~~2020 compared with the ~~corresponding period in 2018,~~first quarter of 2019, principally due to continued stabilization of operations across the refining system.

Third-party sales for the Alumina segment decreased 2%21% in the first quarter of ~~2019~~2020 compared with ~~the same period in 2018, due primarily to decreased volume. In~~ the first quarter of 2019, ~~93% of smelter-grade third-party shipments were based on the~~primarily due to a decline in average realized price which was principally driven by a lower average alumina ~~index/spot~~index price ~~compared with 96%~~(on 30-day lag), partially offset by a 2% increase in shipments.

~~Intersegment sales declined 8% in~~2020 compared with the first quarter of 2019, ~~compared with the corresponding period in 2018. The decline was~~ primarily due to a ~~decreased~~lower average realized price partially offset by increased demand from the Aluminum segment. The increased demand from the Aluminum segment ~~which~~ was ~~partially caused~~primarily driven by the ~~curtailments of~~restart at the ~~Avilés (Spain) and La Coruña (Spain) smelters~~Bécancour (Canada) smelter (see Aluminum below).

Segment Adjusted EBITDA decreased ~~$20~~$179 in the first quarter of ~~2019~~2020 compared with the ~~same period in 2018.~~first quarter of 2019. The decline ~~was~~is largely ~~attributable~~attributed to ~~higher costs for direct materials including bauxite and energy, as well as increased maintenance expenses due to equipment and process issues~~the decline in ~~Australia and the São Luís (Brazil) refinery. These impacts were~~average realized price of alumina. This decrease was partially offset by net favorable foreign currency movements due to a stronger U.S. dollar ~~particularly~~(particularly against the Australian ~~dollar.~~dollar and Brazilian real), lower unit costs for bauxite and caustic soda, and increased shipments.

For the ~~2019~~ second quarter of 2020 in comparison with the ~~2018~~ second quarter ~~an increase in production is expected with~~of 2019, lower unit costs for bauxite and caustic soda ~~but higher usage due to the anticipation of lower bauxite quality. In addition, the Alumina segment projects higher bauxite costs, along with~~and an ~~increase~~improvement in maintenance ~~expense due to planned outages.~~activities are expected.

First quarter ended March 31,

2019

2018

Third-party aluminum shipments⁽¹⁾ (kmt)

709

794

Third-party sales

$
1,735

$
2,111

Intersegment sales

3

4

Total sales

$
1,738

$
2,115

Segment Adjusted EBITDA⁽²⁾

$
(96
)

$
187

Primary aluminum information⁽³⁾

Production (kmt)

537

554

Third-party shipments⁽⁴⁾ (kmt)

628

663

Third-party sales

$
1,394

$
1,647

Average realized third-party price per metric ton⁽⁵⁾

$
2,219

$
2,483

Total shipments⁽⁴⁾ (kmt)

639

698

Operating costs⁽⁶⁾

$
1,568

$
1,626

Average cost per metric ton⁽²⁾

$
2,454

$
2,328

	First quarter ended March 31,
Total Aluminum information	2020		2019
Third-party aluminum shipments (kmt)		725		709
Third-party sales	$	1,598	$	1,735
Intersegment sales		3		3
Total sales	$	1,601	$	1,738
Segment Adjusted EBITDA	$	62	$	(96	)

Primary aluminum information	2020		2019
Production (kmt)		564		537
Third-party shipments (kmt)		652		628
Third-party sales	$	1,297	$	1,394
Average realized third-party price per metric ton	$	1,988	$	2,219
Total shipments (kmt)		663		639
Operating costs	$	1,327	$	1,568
Average cost per metric ton	$	2,002	$	2,454

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:

		March 31, 2020				March 31, 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		49		310		259		—			(210	)
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		49		279		49		—			—
Massena West	U.S.		130		—		130		—		—			—
Warrick	U.S.		269		108		269		108		—			—
Wenatchee	U.S.		146		146		146		146		—			—
			2,993		650		3,173		1,040		(180	)		(390	)

~~In January 2018,~~Idle capacity at the Bécancour smelter decreased by 210 kmt from the first quarter 2019 to the first quarter 2020 as a ~~lockout~~result of the ~~bargained hourly employees commenced~~restart process. Due to the economic impacts of the COVID-19 pandemic, the restart at the Bécancour (Canada) smelter ~~as labor negotiations reached an impasse. Accordingly, management initiated a curtailment~~has been slowed, leaving the operating capacity at approximately 85 percent of ~~two (207 kmt (Alcoa’s share))~~total nameplate capacity at March 31, 2020. The restart, which was originally expected to be complete by the end of the ~~three potlines at the smelter. Additionally, in December 2018, half (52 kmt (Alcoa’s share))~~second quarter of the remaining operating potline being operated by salaried employees was curtailed. This additional curtailment was deemed necessary to ensure continued safety and maintenance due to recent retirements and departures among the salaried workforce.2020, may be extended past such date.

~~In accordance with the previously announced plan of restarting three (161 kmt) of the five potlines~~Base and idle capacity at the Warrick (Indiana) smelter, Alcoa completed the restart of two potlines (108 kmt) in June 2018 and one other (53 kmt) in December 2018. The smelter capacity restarted directly supplies the existing rolling mill at the location improving efficiency of the integrated site and providing additional source of metal to help meet an anticipated increase in production volumes.

~~In February 2019, the Company’s~~ Avilés and La Coruña facilities decreased from the first quarter of 2019 to the first quarter of 2020 as a result of the curtailment (February 2019) and subsequent divestiture (July 2019) of these smelters. In addition to the smelters ~~with a combined remaining operating capacity of 124 kmt, were curtailed and are being maintained in restart condition through June 30, 2019, in~~at these locations, the ~~event that third parties have interest in acquiring the facilities. The~~ casthouse at each facility and the paste plant at La Coruña ~~remain in operation.~~

At March 31, 2019, the Aluminum segment had 1,040 kmt of idle smelting capacity on a base smelting capacity of 3,173 kmt. In comparison with March 31, 2018, idle capacity increased 124 kmt due to the curtailments at the Spanish smelters, and increased 52 kmt due to ~~the half potline curtailment at the Bécancour (Canada) smelter. The idle increases~~ were ~~offset by~~ decreases of 161 kmt due to the partial restart of Warrick (Indiana) smelting capacity, and 38 kmt due to the removal of a permanently closed potline (one of four) at the Wenatchee (Washington) smelter in June 2018. Correspondingly, base smelting capacity also ~~decreased 38 kmt due to the permanent closure of the one potline at the Wenatchee smelter.~~divested.

Primary aluminum production ~~decreased 3%~~increased 5% in the first quarter of ~~2019~~2020 compared with the ~~corresponding period in 2018~~first quarter of 2019, principally due to the ~~production~~capacity changes discussed above.

Third-party sales for the Aluminum segment decreased ~~18%~~8% in the first quarter of ~~2019~~2020 compared with the ~~same period in 2018. The decrease was~~first quarter of 2019, primarily ~~attributable~~due to a reduction in metal ~~price and a decrease in overall aluminum volume.~~price. The change in average realized price of primary aluminum was mainly driven by a ~~14%~~7% lower average LME price (on 15-day lag) ~~offset by increased~~combined with a decrease in regional premiums, particularly the Midwest premium (United States and Canada), which rose by an average of 37%. Since the first quarter of 2018, the Midwest premium has significantly increased as a result of the imposition of a 10% tariff on aluminum imports under the U.S. government’s Section 232 action. The lowerpremiums. Additionally, higher overall ~~volume was~~shipments were primarily the result of a decline in flat-rolled aluminum shipments caused by the end of the tolling arrangement with Arconic in December 2018. Additionally, primary aluminum shipments were lower in the first quarter due to the curtailments at the Spanish smelters (Avilés and La Coruña) and the half potline curtailment at the Bécancour ~~(Canada) smelter.~~smelter restart process, partially offset by lower trading activity.

Segment Adjusted EBITDA ~~decreased $283~~increased $158 in the first quarter of ~~2019~~2020 compared with the ~~corresponding period in 2018.~~first quarter of 2019. The ~~decline was largely~~ ~~related to~~increase is mainly the result of lower ~~LME price, higher~~ costs for alumina and carbon materials, favorable impacts from the divestiture of the Avilésand ~~energy, as well as Section 232 tariffs for Canadian~~La Coruña facilities, and state grant revenue recognized at the Portland (Australia) facility. These favorable impacts were partially offset by lower metal ~~imported~~prices, an unfavorable mix of value-added products, and unfavorable production costs related to ~~the U.S. In addition, the lower results include a $20 charge to establish a~~ ~~bad debt reserve against a Canadian customer receivable due to bankruptcy.~~rolling operations.

InFor the second quarter of 2020 compared with the second quarter of 2019, ~~Alcoa expects~~favorable impacts from the Bécancour smelter restart process and lower ~~alumina~~raw materials costs are expected to be partially offset by lower margins from decreased demand of value-added products (as discussed in the ~~Aluminum segment and improved results related to the Spanish smelter curtailments.~~Business Update).

	First quarter ended March 31,				First quarter ended March 31,
	2019		2018		2020		2019
Bauxite	$	65	$	47	$	71	$	65
Alumina		897		914		707		897
Aluminum:
Primary aluminum		1,394		1,647		1,297		1,394
Other⁽¹⁾		341		464		301		341
Total segment third-party sales		2,697		3,072		2,376		2,697
Other		22		18		5		22
Consolidated sales	$	2,719	$	3,090	$	2,381	$	2,719

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

	First quarter ended March 31,						First quarter ended March 31,
	2019			2018			2020			2019
Bauxite	$	195		$	206		$	213		$	195
Alumina		923			965			844			923
Primary aluminum		1,568			1,626			1,327			1,568
Other⁽¹⁾		365			433			314			365
Total segment operating costs		3,051			3,230			2,698			3,051
Eliminations⁽²⁾		(742	)		(783	)		(566	)		(742	)
Provision for depreciation, depletion, amortization⁽³⁾		(164	)		(187	)		(163	)		(164	)
Other⁽⁴⁾		35			42			56			35
Consolidated cost of goods sold	$	2,180		$	2,302		$	2,025		$	2,180

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

	First quarter ended March 31,						First quarter ended March 31,
	2019			2018			2020			2019
Total segment Adjusted EBITDA⁽¹⁾	$	402		$	689		$	375		$	402
Unallocated amounts:
Transformation⁽²⁾⁽¹⁾		2			(2	)		(16	)		2
Intersegment eliminations^(1),(3)		86			76
Intersegment eliminations								(8	)		86
Corporate expenses⁽⁴⁾⁽²⁾		(24	)		(27	)		(27	)		(24	)
Provision for depreciation, depletion, and amortization		(172	)		(194	)		(170	)		(172	)
Restructuring and other charges, net		(113	)		19			(2	)		(113	)
Interest expense		(30	)		(26	)		(30	)		(30	)
Other expenses, net		(41	)		(21	)
Other income (expenses), net								132			(41	)
Other⁽⁵⁾⁽³⁾		(18	)		(23	)		(35	)		(18	)
Consolidated income before income taxes		92			491			219			92
Provision for income taxes		(150	)		(151	)		(80	)		(150	)
Net income attributable to noncontrolling interest		(141	)		(145	)		(59	)		(141	)
Consolidated net (loss) income attributable to Alcoa Corporation	$	(199	)	$	195
Consolidated net income (loss) attributable to Alcoa Corporation							$	80		$	(199	)

See the Environmental Matters section of Note MN to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Changes in market conditions caused by the COVID-19 pandemic could have adverse effects on Alcoa’s cost of borrowing and ability to access capital markets. Inability to generate sufficient earnings could impact the Company’s ability to meet the financial covenants in our outstanding debt and revolving credit facility agreements and limit our ability to access these sources of liquidity. Additionally, the impact on market conditions from COVID-19 could adversely affect the liquidity of Alcoa’s customers, suppliers, and joint venture partners and equity method investments, which could negatively impact the collectability of outstanding receivables and our cash flows. In response to the impacts caused by the COVID-19 pandemic, the Company has implemented various cash preservation initiatives. These measures include:

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 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 April 29, 2020, Fitch Ratings (Fitch) affirmed a BB+ rating for Alcoa Corporation’s long-term debt. Additionally, Fitch affirmed the current outlook as stable.

Cash ~~provided from~~used for operations was ~~$168~~$90 in the ~~2019~~2020 three-month period compared with ~~$55 in~~cash provided from operations of $168 for the same period of ~~2018,~~2019, resulting in an increase in cash ~~provided~~used of ~~$113.~~ $258. Notable changes to (uses) and sources of cash include:

In the second quarter of 2019, AofA expects to make the final true-up tax payment of approximately $310 related to the 2018 tax year. Annually, AofA elects the income tax installment plan which produces the best cash flow results. During periods ofConsolidated Operations amounts.

~~increasing profitability, large adjusting payments can result from the difference between elected monthly installment payments and the actual tax liability calculated for the full tax year.~~

Cash used for financing activities was $44 in the 2020 three-month period compared with $199 in the 2019 three-month period, ~~an increase~~resulting in ~~cash used~~a favorable change of ~~$52 compared with~~$155.

The use of cash ~~used of $147~~ in the ~~corresponding~~2020 three-month period was primarily the result of ~~2018.~~$31 in net cash paid to Alumina Limited (see Noncontrolling interest in Results of Operations above) and $12 in financial contributions related to the divested Spanish facilities.

The use of cash in the 2019 three-month period was primarily the result of $194 in net cash paid to Alumina Limited (see Noncontrolling interest in Results of Operations above).

The ~~use~~Second Amended Revolving Credit Facility (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 ~~cash~~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 ~~2018 three-month period~~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 completed an amendment to the Revolving Credit Facility 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, the Borrower and any restricted subsidiaries will be restricted from making certain restricted payments or incurring incremental secured loans under the Amended Revolving Credit Agreement.

At March 31, 2020, the maximum additional borrowing capacity available to the Company to remain in compliance with the covenant was ~~primarily~~approximately $1,430. The Company still has the ~~result~~ability to access the full $1,500 of ~~$214~~the Revolving Credit Facility through a combination of the maximum additional borrowing capacity and the issuances of letters of credit at March 31, 2020. As of March 31, 2020 and December 31, 2019, Alcoa Corporation was in ~~net~~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 $123) which is guaranteed on an unsecured basis by Alcoa Corporation. On April 8, 2020, the Company drew $100 against this facility, and may do so from time to time in the future, in the ordinary course of business. Interest on the drawn $100 will be accrued at 2.93%.

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.

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 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.

The Company’s liquidity options, including the credit facilities and the Receivables Purchase Agreement, provide for flexibility in managing cash ~~paid~~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 ~~Alumina Limited (see Noncontrolling interest in Results of Operations above), somewhat offset by $60 in borrowings under an existing~~fund its near term ~~loan by AofA~~.operating and investing needs.

Cash provided from investing activities was $107 in the 2020 three-month period compared with cash used for investing activities ~~was~~of $59 in the 2019 three-month period, ~~compared with $74 in the 2018 three-month period,~~ resulting in a ~~decrease~~favorable change of $166.

In the 2020 three-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 $91 in ~~cash used~~capital expenditures, composed of ~~$15.~~$70 in sustaining projects and $21 in return-seeking projects.

In the 2019 three-month period, the use of cash was largely attributable to $69 in capital expenditures, composed of $51 in sustaining projects and $18 in return-seeking projects, partially offset by proceeds from the sale of assets of $11.

As permitted under the ~~2018 three-month period,~~CARES Act, the ~~use~~Company is planning on deferring approximately $220 of ~~cash was all due~~pension contributions, primarily for the U.S. plans, from 2020 to ~~capital expenditures, composed~~January 1, 2021. As a result, as of ~~$56~~March 31, 2020, Alcoa’s minimum required contribution to defined benefit pension plans in ~~sustaining projects and $18 in return-seeking projects.~~ 2020 is now estimated to be approximately $75, of which approximately $40 is primarily for U.S. plans.

See Note B to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Alcoa Corporation intends to make future announcements regarding company developments and financial performance through its website, http://www.alcoa.com, as well as through press releases, filings with the Securities and Exchange Commission, conference calls, and webcasts.

Item 3. Quantitative and ~~Qualitati~~veQualitative Disclosures ~~about~~About Market Risk.

See the Derivatives and Other Financial Instruments section of Note JK to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Alcoa Corporation’s Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-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 as of March 31, ~~2019.~~2020.

There have been no changes in internal control over financial reporting during the first quarter of ~~2019,~~2020, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~The following represents certain matters previously reported~~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 ~~Alcoa Corporation’s~~Item 1A. Risk Factors, in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018. Please reference said~~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 ~~full description~~material adverse effect on us. This situation is changing rapidly 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 ~~matter presented below.~~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.

~~Gregory Power: In January 2016, Gregory Power Partners (Gregory Power) delivered notice~~Having global operations exposes the Company to ~~Reynolds Metals Company (Reynolds,~~the effects of a ~~subsidiary~~global public health crisis, such as the current COVID-19 pandemic. Uncertainty around the extent and duration of ~~Alcoa Corporation) that Sherwin Alumina Company, LLC’s (Sherwin) bankruptcy filing constitutes~~ a ~~breach~~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 ~~Energy Services Agreement (ESA). Since~~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:

For example, due to the economic impacts of the COVID-19 pandemic and to comply with restrictions in the Canadian province, the previously announced restart at the Bécancour (Canada) smelter has been slowed, leaving the operating capacity at approximately 85 percent of total nameplate capacity at March 31, 2020. The restart, which was originally expected to be complete by the end of the second quarter of 2020, may be extended past such date. Additionally, COVID-19 has negatively impacted customer demand of value-added aluminum products, resulting in lower margins on aluminum product sales from a shift to commodity-grade products from value-add products.

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 extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, ~~various responses, complaints~~

On October 17, 2018, Alcoa Corporation announced that its Board of Directors authorized a common stock repurchase program under which the ~~addition~~Company may purchase shares of ~~Allied Alumina LLC (Allied)~~its outstanding common stock up to an ~~amended complaint. (Sherwin operated as~~aggregate transactional value of $200, depending on cash availability, market conditions, and other factors. Repurchases under the program may be made using a ~~subsidiary~~variety of ~~Allied.) In May 2019,~~methods, which may include open market purchases, privately negotiated transactions, or pursuant to a ~~settlement agreement was reached between Gregory Power, Allied and Reynolds in which all claims pending against~~Rule 10b5-1 plan. This program does not have a predetermined expiration date. Alcoa Corporation intends to retire the ~~parties will be voluntarily dismissed. The settlement is conditioned on the execution~~repurchased shares of various commercial agreements, which are being finalized at this time. See the Other section of Note M to the Consolidated Financial Statements in Part I Item I of this Form 10-Q for additional information.common stock.

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 Regulation S-K (17 CFR 229.104) is included in Exhibit 95.1 to this report.

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.

PART I – FINANCIAL INFORMATION		1

Item 1.	Financial Statements	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2522

Item 3.	Quantitative and Qualitative Disclosures ~~about~~About Market Risk	33

Item 4.	Controls and Procedures	33

PART II – OTHER INFORMATION		34

Item 1.1A.	~~Legal Proceedings~~Risk Factors	34

Item 4.2.	~~Mine Safety Disclosures~~	34

~~Item 6.~~	~~Exhibits~~Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 4.	~~SIGNATURES~~Mine Safety Disclosures	35

Item 6.	Exhibits	36

SIGNATURES		37

	March 31, 2019		December 31, 2018
Finished goods	$	304	$	346
Work-in-process		297		189
Bauxite and alumina		525		609
Purchased raw materials		528		529
Operating supplies		145		146
	$	1,799	$	1,819

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		Curtailment charge⁽¹⁾
1	~20	3.15%	January 31, 2020	2.75%	$	18	$	1
2	~430	3.20%	January 31, 2020	2.75%		28		2
	~450				$	46	$	3

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

	As Originally Reported			Effect of Change			As Adjusted
Statement of Consolidated Operations for the first quarter ended March 31, 2018:
Cost of goods sold	$	2,381		$	(79	)	$	2,302
Provision for income taxes		138			13			151
Net income		274			66			340
Net income attributable to noncontrolling interest		124			21			145
Net income attributable to Alcoa Corporation		150			45			195
Earnings per share attributable to Alcoa Corporation common shareholders:
Basic	$	0.81		$	0.24		$	1.05
Diluted		0.80			0.24			1.04

Statement of Consolidated Comprehensive Income for the first quarter ended March 31, 2018:
Comprehensive income	$	893		$	66		$	959
Comprehensive income attributable to Alcoa Corporation		802			45			847
Comprehensive income attributable to noncontrolling interest		91			21			112

Consolidated Balance Sheet as of December 31, 2018:
Inventories	$	1,644		$	175		$	1,819
Prepaid expenses and other current assets		301			19			320
Retained earnings		341			229			570
Noncontrolling interest		2,005			(35	)		1,970

Statement of Consolidated Cash Flows for the three months ended March 31, 2018:
Net income	$	274		$	66		$	340
Deferred income taxes		(11	)		13			2
(Increase) in inventories		(169	)		(79	)		(248	)

	As Computed under LIFO			As Reported under Average Cost			Effect of Change
Statement of Consolidated Operations for the first quarter ended March 31, 2019:
Cost of goods sold	$	2,228		$	2,180		$	(48	)
Provision for income taxes		137			150			13
Net loss		(93	)		(58	)		35
Net income attributable to noncontrolling interest		127			141			14
Net loss attributable to Alcoa Corporation		(220	)		(199	)		21
Earnings per share attributable to Alcoa Corporation common shareholders:
Basic	$	(1.19	)	$	(1.07	)	$	0.12
Diluted		(1.19	)		(1.07	)		0.12

Statement of Consolidated Comprehensive Income for the first quarter ended March 31, 2019:
Comprehensive loss	$	(353	)	$	(318	)	$	35
Comprehensive income attributed to noncontrolling interest		136			150			14
Comprehensive loss attributable to Alcoa Corporation	$	(489	)	$	(468	)	$	21

Consolidated Balance Sheet as of March 31, 2019:
Inventories	$	1,579		$	1,799		$	220
Prepaid expenses and other current assets		276			285			9
Retained earnings		121			371			250
Noncontrolling interest		1,947			1,926			(21	)

Statement of Consolidated Cash Flows for the three months ended March 31, 2019:
Net loss	$	(93	)	$	(58	)	$	35
Deferred income taxes		20			33			13
Decrease (Increase) in inventories		65			17			(48	)

	Unrealized gain (loss) recognized in Other comprehensive income (loss)						Realized (loss) gain reclassed from Other comprehensive income (loss) to earnings
First quarter ended March 31,	2020			2019			2020			2019
Level 1 and 2 derivative instruments	$	(29	)	$	(8	)	$	(14	)	$	(4	)
Level 3 derivative instruments		867			(317	)		(8	)		31
Noncontrolling and equity interest		14			(27	)		(3	)		(18	)
Total	$	852		$	(352	)	$	(25	)	$	9

	Assets						Liabilities
First quarter ended March 31, 2019	Embedded aluminum derivatives			Financial contracts			Embedded aluminum derivatives			Embedded credit derivative
Balance at January 1, 2019	$	41		$	112		$	269		$	20
Total gains or losses (realized and unrealized) included in:
Sales		—			—			(13	)		—
Cost of goods sold		—			(42	)		—			—
Other expenses, net		—			—			(2	)		1
Other comprehensive (loss) income		(41	)		68			344			—
Other					(1	)		(4	)		—
Balance at March 31, 2019	$	—		$	137		$	594		$	21
Change in unrealized gains or losses included in earnings for derivative instruments held at March 31, 2019:
Other expenses, net	$	—		$	—		$	(2	)	$	1

	Three-months ended March 31,
	2020				2019
Income before income taxes	$	219			$	92
Estimated annualized effective tax rate		57.1		%		72.2	%
Income tax expense	$	125			$	67
(Favorable) unfavorable tax impact related to losses in jurisdictions with no tax benefit		(46	)			83
Discrete tax charge		1				—
Provision for income taxes	$	80			$	150

Amounts recognized in the Consolidated Balance Sheet at March 31, 2019:
Properties, plants and equipment, net	$	185
Other current liabilities		66
Other noncurrent liabilities and deferred credits		119
Total operating lease liabilities	$	185

First 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
January 1 to January 31		-	$	-		-	$	150,000,000
February 1 to February 29		-		-		-		150,000,000
March 1 to March 31		-		-		-		150,000,000
Total		-		-		-


~~18.1~~
10.1	~~Preferability Letter~~Amendment No. 2 dated as of April 21, 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 and as amended on August 26, 2019, 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 ~~Change in Accounting Principle~~the lenders and issuers (filed herewith)

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

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

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)


						Alcoa Corporation

~~May 9, 2019~~April 29, 2020						By /s/ ~~WILLIAM~~William F. ~~OPLINGER~~Oplinger
Date						William F. Oplinger
						Executive Vice President and
						Chief Financial Officer
						(Principal Financial Officer)

~~May 9, 2019~~April 29, 2020						By /s/ ~~MOLLY~~Molly S. ~~BEERMAN~~Beerman
Date						Molly S. Beerman
						Senior Vice President and Controller
						(Principal Accounting Officer)