(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 ~~October 29, 2019, 185,572,917~~July 24, 2020, 185,924,291 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 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 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 (including the Australian Taxation Office Matter), 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 discussed in Item 1A of Alcoa Corporation’s Form 10-K for the fiscal year ended December 31, ~~2018~~2019, Form 10-Q for the quarter ended March 31, 2020, and this Quarterly Report on Form 10-Q, and other reports filed by Alcoa Corporation with the U.S. Securities and Exchange Commission ~~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.

	Third quarter ended September 30,						Nine months ended September 30,					Second quarter ended June 30,						Six months ended June 30,
	2019			2018			2019			2018		2020			2019			2020			2019
Sales ~~(D)~~(E)	$	2,567		$	3,390		$	7,997		$	10,059	$	2,148		$	2,711		$	4,529		$	5,430
Cost of goods sold (exclusive of expenses below) ~~(H)~~		2,120			2,485			6,489			7,540		1,932			2,189			3,957			4,369
Selling, general administrative, and other expenses		66			58			218			189		44			68			104			152
Research and development expenses		7			7			21			24		5			7			12			14
Provision for depreciation, depletion, and amortization		184			173			530			559		152			174			322			346
Restructuring and other charges, net ~~(C)~~(D)		185			177			668			389		37			370			39			483
Interest expense		30			33			90			91		32			30			62			60
Other expenses, net (N)		27			2			118			32
Other expenses (income), net (Q)													51			50			(81	)		91
Total costs and expenses		2,619			2,935			8,134			8,824		2,253			2,888			4,415			5,515
(Loss) income before income taxes		(52	)		455			(137	)		1,235		(105	)		(177	)		114			(85	)
Provision for income taxes		95			260			361			569		45			116			125			266
Net (loss) income		(147	)		195			(498	)		666
Net loss													(150	)		(293	)		(11	)		(351	)
Less: Net income attributable to noncontrolling interest		74			201			324			467		47			109			106			250
NET (LOSS) INCOME ATTRIBUTABLE TO ALCOA CORPORATION	$	(221	)	$	(6	)	$	(822	)	$	199
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON SHAREHOLDERS (E):
NET LOSS ATTRIBUTABLE TO ALCOA CORPORATION												$	(197	)	$	(402	)	$	(117	)	$	(601	)
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON SHAREHOLDERS (F):
Basic	$	(1.19	)	$	(0.03	)	$	(4.43	)	$	1.07	$	(1.06	)	$	(2.17	)	$	(0.63	)	$	(3.24	)
Diluted	$	(1.19	)	$	(0.03	)	$	(4.43	)	$	1.06	$	(1.06	)	$	(2.17	)	$	(0.63	)	$	(3.24	)

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

	Alcoa Corporation						Noncontrolling interest						Total						Alcoa Corporation						Noncontrolling interest						Total
	Third quarter ended September 30,						Third quarter ended September 30,						Third quarter ended September 30,						Second quarter ended June 30,						Second quarter ended June 30,						Second quarter ended June 30,
	2019			2018			2019			2018			2019			2018			2020			2019			2020			2019			2020			2019
Net (loss) income (H)	$	(221	)	$	(6	)	$	74		$	201		$	(147	)	$	195
Other comprehensive (loss) income, net of tax (F):
Net (loss) income																			$	(197	)	$	(402	)	$	47		$	109		$	(150	)	$	(293	)
Other comprehensive (loss) income, net of tax (G):
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits		19			398			(6	)		4			13			402			(127	)		10			2			(2	)		(125	)		8
Foreign currency translation adjustments		(224	)		(142	)		(75	)		(54	)		(299	)		(196	)		135			40			94			4			229			44
Net change in unrecognized gains/losses on cash flow hedges		61			(29	)		(3	)		5			58			(24	)		(390	)		79			(1	)		(1	)		(391	)		78
Total Other comprehensive (loss) income, net of tax		(144	)		227			(84	)		(45	)		(228	)		182			(382	)		129			95			1			(287	)		130
Comprehensive (loss) income	$	(365	)	$	221		$	(10	)	$	156		$	(375	)	$	377		$	(579	)	$	(273	)	$	142		$	110		$	(437	)	$	(163	)


	Alcoa Corporation						Noncontrolling interest						Total						Alcoa Corporation						Noncontrolling interest						Total
	Nine months ended September 30,						Nine months ended September 30,						Nine months ended September 30,						Six months ended June 30,						Six months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018			2019			2018			2020			2019			2020			2019			2020			2019
Net (loss) income (H)	$	(822	)	$	199		$	324		$	467		$	(498	)	$	666
Other comprehensive (loss) income, net of tax (F):
Net (loss) income																			$	(117	)	$	(601	)	$	106		$	250		$	(11	)	$	(351	)
Other comprehensive (loss) income, net of tax (G):
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits		70			682			(7	)		7			63			689			(89	)		51			2			(1	)		(87	)		50
Foreign currency translation adjustments		(206	)		(586	)		(69	)		(219	)		(275	)		(805	)		(528	)		18			(151	)		6			(679	)		24
Net change in unrecognized gains/losses on cash flow hedges		(148	)		346			2			(25	)		(146	)		321			311			(209	)		(21	)		5			290			(204	)
Total Other comprehensive (loss) income, net of tax		(284	)		442			(74	)		(237	)		(358	)		205			(306	)		(140	)		(170	)		10			(476	)		(130	)
Comprehensive (loss) income	$	(1,106	)	$	641		$	250		$	230		$	(856	)	$	871		$	(423	)	$	(741	)	$	(64	)	$	260		$	(487	)	$	(481	)

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

	September 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents ~~(J)~~(M)	$	841		$	1,113		$	965		$	879
Receivables from customers(I)		596			830			402			546
Other receivables		228			173			105			114
Inventories ~~(H)~~(J)		1,649			1,819			1,419			1,644
Fair value of derivative instruments (J)		84			73
Fair value of derivative instruments (M)								24			59
Prepaid expenses and other current assets ~~(H)~~		245			320			264			288
Total current assets		3,643			4,328			3,179			3,530
Properties, plants, and equipment		21,456			21,807			20,877			21,715
Less: accumulated depreciation, depletion, and amortization		13,527			13,480			13,588			13,799
Properties, plants, and equipment, net		7,929			8,327			7,289			7,916
Investments (G & M)		1,114			1,360
Investments (H)								1,037			1,113
Deferred income taxes		560			560			482			642
Fair value of derivative instruments ~~(J)~~(M)		47			82			5			18
Other noncurrent assets		1,377			1,475			1,308			1,412
Total assets	$	14,670		$	16,132		$	13,300		$	14,631
LIABILITIES
Current liabilities:
Accounts payable, trade	$	1,418		$	1,663		$	1,253		$	1,484
Accrued compensation and retirement costs		404			400			393			413
Taxes, including income taxes		81			426			96			104
Fair value of derivative instruments (J)		67			82
Fair value of derivative instruments (M)								47			67
Other current liabilities		484			347			451			494
Long-term debt due within one year (J)		1			1
Long-term debt due within one year (K & M)								1			1
Total current liabilities		2,455			2,919			2,241			2,563
Long-term debt, less amount due within one year (J)		1,805			1,801
Long-term debt, less amount due within one year (K & M)								1,800			1,799
Accrued pension benefits ~~(I)~~(L)		1,389			1,407			1,602			1,505
Accrued other postretirement benefits ~~(I)~~(L)		820			868			711			749
Asset retirement obligations		491			529			565			606
Environmental remediation ~~(M)~~(P)		238			236			277			296
Fair value of derivative instruments ~~(J)~~(M)		425			261			203			581
Noncurrent income taxes		299			301			245			276
Other noncurrent liabilities and deferred credits		338			222			332			370
Total liabilities		8,260			8,544			7,976			8,745
CONTINGENCIES AND COMMITMENTS ~~(M)~~(P)
EQUITY
Alcoa Corporation shareholders’ equity:
Common stock		2			2			2			2
Additional capital		9,638			9,611			9,655			9,639
Retained (deficit) earnings (H)		(252	)		570
Accumulated deficit								(672	)		(555	)
Accumulated other comprehensive loss ~~(F)~~(G)		(4,849	)		(4,565	)		(5,280	)		(4,974	)
Total Alcoa Corporation shareholders’ equity		4,539			5,618			3,705			4,112
Noncontrolling interest ~~(H)~~		1,871			1,970			1,619			1,774
Total equity		6,410			7,588			5,324			5,886
Total liabilities and equity	$	14,670		$	16,132		$	13,300		$	14,631

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

	Nine Months Ended September 30,						Six months ended June 30,
	2019			2018			2020			2019
CASH FROM OPERATIONS
Net (loss) income (H)	$	(498	)	$	666
Adjustments to reconcile net (loss) income to cash from operations:
Net loss							$	(11	)	$	(351	)
Adjustments to reconcile net loss to cash from operations:
Depreciation, depletion, and amortization		530			559			322			346
Deferred income taxes ~~(H)~~		59			(16	)		(6	)		64
Equity earnings, net of dividends		12			(11	)		15			14
Restructuring and other charges, net ~~(C)~~(D)		668			389			39			483
Net gain from investing activities – asset sales ~~(N)~~(Q)		(6	)		—			(176	)		(1	)
Net periodic pension benefit cost ~~(I)~~(L)		90			115			67			60
Stock-based compensation		29			29			17			21
Provision for bad debt expense		21			—			2			20
Other		19			(64	)		5			24
Changes in assets and liabilities, excluding effects of divestitures and foreign currency translation adjustments:
Decrease (Increase) in receivables		127			(209	)
Decrease (Increase) in inventories (H)		111			(286	)
Decrease in receivables								124			94
Decrease in inventories								184			53
Decrease in prepaid expenses and other current assets		70			3			13			68
(Decrease) in accounts payable, trade		(199	)		(135	)		(183	)		(144	)
(Decrease) in accrued expenses		(147	)		(288	)		(120	)		(51	)
(Decrease) Increase in taxes, including income taxes		(344	)		248
Increase (Decrease) in taxes, including income taxes								7			(342	)
Pension contributions ~~(I)~~(L)		(67	)		(940	)		(59	)		(55	)
(Increase) in noncurrent assets		(24	)		(89	)
Decrease (Increase) in noncurrent assets								19			(32	)
(Decrease) in noncurrent liabilities		(27	)		(58	)		(61	)		(21	)
CASH PROVIDED FROM (USED FOR) OPERATIONS		424			(87	)
CASH PROVIDED FROM OPERATIONS								198			250
FINANCING ACTIVITIES
Additions to debt (original maturities greater than three months)		—			553
Payments on debt (original maturities greater than three months)		—			(105	)
Proceeds from the exercise of employee stock options		2			23			—			1
Financial contributions for the divestiture of businesses (D)								(24	)		—
Contributions from noncontrolling interest		41			109			16			21
Distributions to noncontrolling interest		(388	)		(566	)		(106	)		(286	)
Other		(6	)		(8	)		(1	)		(6	)
CASH (USED FOR) PROVIDED FROM FINANCING ACTIVITIES		(351	)		6
CASH USED FOR FINANCING ACTIVITIES								(115	)		(270	)
INVESTING ACTIVITIES
Capital expenditures		(245	)		(251	)		(168	)		(158	)
Proceeds from the sale of assets		23			—			199			11
Additions to investments		(112	)		(6	)		(3	)		(111	)
CASH USED FOR INVESTING ACTIVITIES		(334	)		(257	)
CASH PROVIDED FROM (USED FOR) INVESTING ACTIVITIES								28			(258	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(11	)		(1	)		(26	)		(1	)
Net change in cash and cash equivalents and restricted cash		(272	)		(339	)		85			(279	)
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	$	844		$	1,026		$	968		$	837

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

	Alcoa Corporation shareholders																	Alcoa Corporation shareholders
	Common stock		Additional capital			Retained earnings (deficit)			Accumulated other comprehensive loss			Non- controlling interest			Total equity
Third quarter ended September 30, 2018
Balance at June 30, 2018	$	2	$	9,650		$	524		$	(4,967	)	$	2,036		$	7,245
Second quarter ended June 30, 2019																		Common stock		Additional capital			Retained earnings (deficit)			Accumulated other comprehensive loss			Non- controlling interest			Total equity
Balance at March 31, 2019																		$	2	$	9,618		$	371		$	(4,834	)	$	1,926		$	7,083
Net (loss) income		—		—			(6	)		—			201			195			—		—			(402	)		—			109			(293	)
Other comprehensive income (loss) (F)		—		—			—			227			(45	)		182
Other comprehensive income (G)																			—		—			—			129			1			130
Stock-based compensation		—		9			—			—			—			9			—		11			—			—			—			11
Common stock issued: compensation plans		—		1			—			—			—			1
Contributions																			—		—			—			—			1			1
Distributions		—		—			—			—			(181	)		(181	)		—		—			—			—			(72	)		(72	)
Other		—		(4	)		—			—			15			11			—		—			—			—			(1	)		(1	)
Balance at September 30, 2018	$	2	$	9,656		$	518		$	(4,740	)	$	2,026		$	7,462
Balance at June 30, 2019																		$	2	$	9,629		$	(31	)	$	(4,705	)	$	1,964		$	6,859

Third quarter ended September 30, 2019
Balance at June 30, 2019	$	2	$	9,629		$	(31	)	$	(4,705	)	$	1,964		$	6,859
Second quarter ended June 30, 2020
Balance at March 31, 2020																		$	2	$	9,647		$	(476	)	$	(4,898	)	$	1,536		$	5,811
Net (loss) income		—		—			(221	)		—			74			(147	)		—		—			(197	)		—			47			(150	)
Other comprehensive loss (F)		—		—			—			(144	)		(84	)		(228	)
Other comprehensive (loss) income (G)																			—		—			—			(382	)		95			(287	)
Stock-based compensation																			—		9			—			—			—			9
Contributions																			—		—			—			—			16			16
Distributions																			—		—			—			—			(75	)		(75	)
Other																			—		(1	)		1			—			—			—
Balance at June 30, 2020																		$	2	$	9,655		$	(672	)	$	(5,280	)	$	1,619		$	5,324

Six months ended June 30, 2019
Balance at December 31, 2018																		$	2	$	9,611		$	570		$	(4,565	)	$	1,970		$	7,588
Net (loss) income																			—		—			(601	)		—			250			(351	)
Other comprehensive (loss) income (G)																			—		—			—			(140	)		10			(130	)
Stock-based compensation		—		8			—			—			—			8			—		21			—			—			—			21
Common stock issued: compensation plans		—		1			—			—			—			1			—		1			—			—			—			1
Contributions		—		—			—			—			20			20			—		—			—			—			21			21
Distributions		—		—			—			—			(102	)		(102	)		—		—			—			—			(286	)		(286	)
Other		—		—			—			—			(1	)		(1	)		—		(4	)		—			—			(1	)		(5	)
Balance at September 30, 2019	$	2	$	9,638		$	(252	)	$	(4,849	)	$	1,871		$	6,410
Balance at June 30, 2019																		$	2	$	9,629		$	(31	)	$	(4,705	)	$	1,964		$	6,859

Nine months ended September 30, 2018
Balance at December 31, 2017	$	2	$	9,590		$	318		$	(5,182	)	$	2,240		$	6,968
Net income		—		—			199			—			467			666
Other comprehensive income (loss) (F)		—		—			—			442			(237	)		205
Six months ended June 30, 2020
Balance at December 31, 2019																		$	2	$	9,639		$	(555	)	$	(4,974	)	$	1,774		$	5,886
Net (loss) income																			—		—			(117	)		—			106			(11	)
Other comprehensive loss (G)																			—		—			—			(306	)		(170	)		(476	)
Stock-based compensation		—		29			—			—			—			29			—		17			—			—			—			17
Common stock issued: compensation plans		—		23			—			—			—			23
Contributions		—		—			—			—			109			109			—		—			—			—			16			16
Distributions		—		—			—			—			(566	)		(566	)		—		—			—			—			(106	)		(106	)
Other		—		14			1			—			13			28			—		(1	)		—			—			(1	)		(2	)
Balance at September 30, 2018	$	2	$	9,656		$	518		$	(4,740	)	$	2,026		$	7,462

Nine months ended September 30, 2019
Balance at December 31, 2018	$	2	$	9,611		$	570		$	(4,565	)	$	1,970		$	7,588
Net (loss) income		—		—			(822	)		—			324			(498	)
Other comprehensive loss (F)		—		—			—			(284	)		(74	)		(358	)
Stock-based compensation		—		29			—			—			—			29
Common stock issued: compensation plans		—		2			—			—			—			2
Contributions		—		—			—			—			41			41
Distributions		—		—			—			—			(388	)		(388	)
Other		—		(4	)		—			—			(2	)		(6	)
Balance at September 30, 2019	$	2	$	9,638		$	(252	)	$	(4,849	)	$	1,871		$	6,410
Balance at June 30, 2020																		$	2	$	9,655		$	(672	)	$	(5,280	)	$	1,619		$	5,324

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

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 Company has experienced certain negative impacts as a result of the COVID-19 pandemic to date, however, the magnitude and duration of the COVID-19 pandemic remains unknown, and the pandemic’s ultimate future impact on the Company’s business, financial condition, operating results, cash flows, and market capitalization is uncertain. In addition, the COVID-19 pandemic could adversely impact estimates made as of June 30, 2020 regarding future results, such as the recoverability of goodwill and long-lived assets and the realizability of deferred tax assets. Despite these inherent limitations, management 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 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. Management elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed carry forward of historical lease classifications. 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~~had a material impact on the Company’s Consolidated Financial Statements:

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

~~2018-07~~ ~~Stock 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. Management has completed our assessment of~~2021. The primary provision expected to impact the ~~impact~~Company is related to ~~this guidance and concluded that~~intraperiod tax allocations, which have historically not had a significant impact on the Company. Upon adoption of this ~~guidance~~provision there will ~~not have a material~~be no impact onto the ~~Company’s~~ Consolidated Financial Statements.

~~In June 2016,~~ Once adopted, the ~~FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses. This ASU added~~provision will eliminate the requirement to make an intraperiod allocation if there is 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~~in continuing operations and income outside 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.continuing operations. Management is ~~finalizing our assessment of~~currently evaluating the ~~impact of these changes on the Company’s Consolidated Financial Statements~~remaining provisions but does not expect a material impact ~~from~~to 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 of the replacement of the London Interbank Offered Rate (LIBOR) as well as the impact that the expected adoption of ~~this~~the applicable provisions within the optional guidance ~~as our current loss models incorporate both historic and forward-looking information.~~will have on the Consolidated Financial Statements. The adoption of the applicable provisions will coincide with the modifications of the affected contracts.

C. Divestitures – During the first quarter of 2020, the Company sold Elemental Environmental Solutions LLC (EES), a wholly-owned Alcoa subsidiary that operated the waste processing facility in Gum Springs, Arkansas, to a global environmental firm in a transaction valued at $250. At the close of the transaction the Company recorded a gain of $180 (pre- and after-tax; see Note Q) and received $200 with another $50 held in escrow to be paid to Alcoa if certain post-closing conditions are satisfied, which would result in additional gain being recorded. During the second quarter of 2020, an additional $1 gain was recorded as a result of certain post-closing adjustments based on the terms of the agreement. Further post-closing adjustments may occur related to this transaction and are not expected to be significant.

D. Restructuring and Other Charges, Net – In the second quarter and six-month period of 2020, Alcoa Corporation recorded Restructuring and other charges, net, of $37 and $39, respectively, which were primarily comprised of costs related to the curtailment of the Intalco (Washington) smelter of $27 (both periods), and $11 and $13, respectively, for additional contract costs related to the curtailed Wenatchee (Washington) smelter, in addition to several insignificant items including impacts related to pension curtailments (see Note L).

In April 2020, as part of the Company’s portfolio review, Alcoa Corporation announced the curtailment of the remaining 230 kmt of uncompetitive smelting capacity at the Intalco (Washington) smelter amid declining market conditions. The full curtailment, which includes 49 kmt of earlier-curtailed capacity is expected to be completed during the third quarter of 2020. The $27 net restructuring charge recorded in the second quarter of 2020 was comprised of $17 for severance and ~~nine-month~~employee termination costs from the separation of approximately 685 employees, $11 for contract termination costs, and a net curtailment gain of $1 related to the U.S. hourly defined benefit pension and retiree life plans (see Note L). The severance costs and contract termination costs are expected to be paid primarily in the third quarter of 2020. At June 30, 2020, approximately 250 of the 685 employees had been terminated with approximately $2 of payments made against the severance and employee termination cost reserve.

In the second quarter and six-month period of 2019, Alcoa Corporation recorded Restructuring and other charges, net of ~~$185~~$370 and ~~$668,~~$483, respectively, which were comprised of the following components: ~~$134~~$5 and ~~$242,~~$108, respectively, for exit costs related to the ~~smelter~~ curtailment ~~and subsequent divestiture~~ of the Avilés and La ~~Coru~~ñCoruña ~~facilities~~smelters in Spain (see below); ~~$37~~$38 (both periods) for employee termination and severance costs related to the implementation of the new operating model (see below); $5 (both periods) related to settlements of certain pension benefits (Note I); $38 (nine-month period only) related to the curtailment of certain pension ~~benefits (see Note I);~~benefits; $319 ~~(nine-month period only)~~(both periods) related to the divestiture of Alcoa Corporation’s interest in the Ma’aden Rolling Company (MRC) (see below); $1 and ~~$9,~~$8, respectively, for closure costs related to a coal mine; and $8$7 and ~~$18,~~$10, respectively, for net charges related to various ~~other~~ items.

In September 2019, Alcoa Corporation announced the implementation of a new operating model that will result in a leaner, more integrated, operator-centric organization. Effective November 1, 2019, the new operating model eliminates the business unit structure, consolidates sales, procurement and other commercial capabilities at an enterprise level, and streamlines the Executive Team from 12 to 7 direct reports to the Chief Executive Officer. The new structure will reduce overhead with the intention of promoting operational and commercial excellence, and increasing connectivity between the Company’s plants and leadership. As a result of the

new operating model, Alcoa Corporation recorded a charge of $37 related to employee termination and severance costs for approximately 260 employees company-wide. The restructuring actions are anticipated to be complete by the end of the first quarter 2020, with cash outlays estimated through March 31, 2020.

In January 2019, Alcoa Corporation reached an agreement with the workers’ representatives at the Avilés and La Coruña (Spain) aluminum facilities as part of the collective dismissal process announced in October 2018 and curtailed the smelters at these two locations, with a combined remaining operating capacity of 124 kmt, in February 2019. As part of the agreement, the Company agreed to conduct a sale process to identify third parties with interest in acquiring the facilities and to maintain the smelters in restart condition up to June 30, 2019. Through the sale process, PARTER Capital Group AG (PARTER), a private equity investment firm, was identified as a potential buyer for both of the Spanish facilities, inclusive of the smelters and casthouses at both facilities and the paste plant at La Coruña. Prior to the June 30, 2019 deadline, Alcoa Corporation agreed with the workers’ representatives to extend the timeline for the potential buyer to meet the financial conditions of a draft share purchase agreement by one week. On July 5, 2019, Alcoa Corporation signed a conditional share purchase agreement with PARTER for the purchase of these2 facilities, which was subject to PARTER meeting certain financial conditions prior to July 31, 2019 to support the facilities future operations. Prior to signing the conditional share purchase agreement with PARTER, Alcoa Corporation reached agreement with the workers’ representatives related to the potential transaction. If PARTER was not able to meet the financial conditions prior to July 31, 2019, the Company would have proceeded with the collective dismissal and social plan as of August 1, 2019.

As of July 31, 2019, PARTER met the financial conditions and the transaction has closed. Alcoa Corporation recorded Restructuring and other charges, net, of $134 in the third quarter of 2019 resulting from financial contributions of up to $95 to PARTER per the agreement and a charge of $39 to meet a working capital commitment and write-off the remaining net book value of the plants’ assets. Cash outflows at the close of the transaction were $37 with the remaining financial contributions of $80 to be paid in quarterly installments through the second quarter of 2021.

Restructuring charges recorded in the first quarter of 2019 related to the ~~collective dismissal process~~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 of 2019 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. Restructuring charges recorded in the second quarter of 2019 related to this process ~~are~~were comprised of severance costs of $3 and other employee-related costs of $2.

In December 2009, Alcoa Corporation invested 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 the Kingdom of 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 originally consisted of three separate companies as follows: the Ma’aden Bauxite and Alumina Company (MBAC; the bauxite mine and alumina refinery), the Ma’aden Aluminium Company (MAC; the aluminum smelter and casthouse), and MRC (the rolling mill). Alcoa Corporation accounts for its investment in the joint venture under the equity method as one integrated investment asset, consistent with the terms of the joint venture agreement.

In the second quarter of 2019, Alcoa Corporation and Ma’aden amended the joint venture agreement that governs the operations of each of the three companies that comprise the joint venture. Under the terms of the amended agreement:

The amendment also defines October 1, 2021 as the date after which Alcoa Corporation is permitted to sell all of its shares in both MBAC and MAC collectively, for which Ma’aden has a right of first refusal. The agreement further outlines that Alcoa Corporation’s call option and Ma’aden’s put option, relating to additional interests in the joint venture, are exercisable for a period of six-months after October 1, 2021.

The parties will maintain their commercial relationship, which includes Alcoa Corporation providing sales, logistics and customer technical services support for MRC products for the North American can sheet market. The Company will retain its 25.1% minority interest in MBAC and MAC, and Ma’aden will continue to own a 74.9% interest. ~~As of September 30, 2019 and December 31, 2018, the carrying value of Alcoa Corporation’s investment in this joint venture was $615 and $874, respectively.~~

The $319 restructuring charge resulting from the MRC divestiture includes the write-off of Alcoa Corporation’s investment in MRC of $161, ~~the~~ cash contributions ~~described above~~ of $100, and the write-off of Alcoa Corporation’s share of MRC’s delinquent payables due to ~~MAC~~Ma’aden Aluminum Company of $59 that were forgiven as part of this transaction, which were partially offset by a gain of $1 resulting from the write-off of the fair value of debt guarantee.

In the third quarter and nine-month period of 2018, Alcoa Corporation recorded Restructuring and other charges, net of $177 and $389, respectively, which were comprised of the following components: $174 and $318, respectively, related to settlements and/or curtailments of certain pension and other postretirement employee benefits; $2 and $86, respectively, for costs related to the energy supply agreement at the curtailed Wenatchee (Washington) smelter, including $73 (nine-month period only) associated with management’s decision not to restart the fully curtailed Wenatchee smelter within the term provided in the energy supply agreement; a $15 net benefit (nine-month period only) for settlement of matters related to the Portovesme (Italy) smelter; and a $1 net charge (third quarter only) for miscellaneous items.

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

	Third quarter ended September 30,				Nine months ended September 30,				Second quarter ended June 30,					Six months ended June 30,
	2019		2018		2019		2018		2020		2019			2020			2019
Bauxite	$	5	$	1	$	5	$	1	$	—	$	(1	)	$	—		$	—
Alumina		15		1		16		3		—		—			2			1
Aluminum		147		2		607		86		37		353			39			460
Segment total		167		4		628		90		37		352			41			461
Corporate		18		173		40		299		—		18			(2	)		22
Total Restructuring and other charges, net	$	185	$	177	$	668	$	389	$	37	$	370		$	39		$	483

During 2019, Alcoa Corporation announced and implemented a new operating model that resulted in a leaner, more integrated, operator-centric organization. As a result of the restructuring, a Severance and other ~~costs~~employee termination cost reserve of $27 remained at December 31, 2019. During the second quarter and six-month period of 2020, changes to the reserve included ~~within~~additional net charges of $1 and $2, respectively, an increase of $1 and a reduction of $1, respectively, caused by foreign currency impacts, and a reduction from cash payments of $9 and $22, respectively. As of June 30, 2020, approximately 225 of the 260 employees expected to be terminated in connection with the implementation of the new operating model were separated. In addition to the employees separated under 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 second quarter and six-month period of 2020, payments of $1 and $2, respectively, were made against the reserve. At June 30, 2020, approximately 30 of the 40 employees were separated.

Also during 2019, Alcoa Corporation curtailed and subsequently divested the aluminum facilities at Avilés and La Coruña (Spain). As a result of the divestiture, a restructuring reserve of $68 remained at December 31, 2019 relating to financial contributions to the investment firm that acquired the facilities. In the second quarter and six-month period of 2020, cash payments of $12 and $24, respectively, were made against the reserve. The remaining reserve of $44 is scheduled to 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
Restructuring and other charges, net		2			117			119
Cash payments		(7	)		(95	)		(102	)
Other⁽¹⁾		(1	)		(14	)		(15	)
Balance at December 31, 2018		5			42			47		$	5		$	42		$	47
Restructuring and other charges, net		52			160			212			51			161			212
Cash payments		(9	)		(84	)		(93	)		(19	)		(99	)		(118	)
Other⁽¹⁾		(6	)		(5	)		(11	)
Balance at September 30, 2019	$	42		$	113		$	155
Reversals and other											(2	)		(2	)		(4	)
Balance at December 31, 2019											35			102			137
Restructuring and other charges, net											19			24			43
Cash payments											(28	)		(43	)		(71	)
Reversals and other											(1	)		(3	)		(4	)
Balance at June 30, 2020										$	25		$	80		$	105

The noncurrent portion of the reserve ~~at September 30, 2019~~ was ~~$19, of which $18 relates~~$1 and $13 at June 30, 2020 and December 31, 2019, respectively. At December 31, 2019, $12 related to financial contributions to ~~PARTER.~~the 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
Third quarter ended September 30, 2019
Second quarter ended June 30, 2020
Sales:
Third-party sales	$	100	$	771	$	1,677		$	2,548		$	66	$	603		$	1,475		$	2,144
Intersegment sales		251		369		4			624			245		289			2			536
Total sales	$	351	$	1,140	$	1,681		$	3,172		$	311	$	892		$	1,477		$	2,680
Segment Adjusted EBITDA	$	134	$	223	$	43		$	400		$	131	$	88		$	(34	)	$	185
Supplemental information:
Depreciation, depletion, and amortization	$	35	$	54	$	88		$	177		$	30	$	37		$	79		$	146
Equity loss	$	—	$	—	$	(5	)	$	(5	)	$	—	$	(8	)	$	(12	)	$	(20	)
Third quarter ended September 30, 2018
Second quarter ended June 30, 2019
Sales:
Third-party sales	$	67	$	1,101	$	2,198		$	3,366		$	67	$	864		$	1,757		$	2,688
Intersegment sales		224		544		6			774			246		445			4			695
Total sales	$	291	$	1,645	$	2,204		$	4,140		$	313	$	1,309		$	1,761		$	3,383
Segment Adjusted EBITDA	$	106	$	660	$	84		$	850		$	112	$	369		$	3		$	484
Supplemental information:
Depreciation, depletion, and amortization	$	27	$	48	$	91		$	166		$	27	$	55		$	85		$	167
Equity income (loss)	$	—	$	10	$	(5	)	$	5		$	—	$	3		$	(17	)	$	(14	)

	Bauxite		Alumina		Aluminum			Total			Bauxite		Alumina			Aluminum			Total
Nine months ended September 30, 2019
Six months ended June 30, 2020
Sales:
Third-party sales											$	137	$	1,310		$	3,073		$	4,520
Intersegment sales												480		625			5			1,110
Total sales											$	617	$	1,935		$	3,078		$	5,630
Segment Adjusted EBITDA											$	251	$	281		$	28		$	560
Supplemental information:
Depreciation, depletion, and amortization											$	64	$	86		$	160		$	310
Equity loss												—		(17	)		(7	)		(24	)
Six months ended June 30, 2019
Sales:
Third-party sales	$	232	$	2,532	$	5,169		$	7,933		$	132	$	1,761		$	3,492		$	5,385
Intersegment sales		733		1,231		11			1,975			482		862			7			1,351
Total sales	$	965	$	3,763	$	5,180		$	9,908		$	614	$	2,623		$	3,499		$	6,736
Segment Adjusted EBITDA	$	372	$	964	$	(50	)	$	1,286		$	238	$	741		$	(93	)	$	886
Supplemental information:
Depreciation, depletion, and amortization	$	90	$	157	$	262		$	509		$	55	$	103		$	174		$	332
Equity income (loss)		—		15		(44	)		(29	)		—		15			(39	)		(24	)
Nine months ended September 30, 2018
Sales:
Third-party sales	$	191	$	3,083	$	6,722		$	9,996
Intersegment sales		699		1,534		14			2,247
Total sales	$	890	$	4,617	$	6,736		$	12,243
Segment Adjusted EBITDA	$	316	$	1,690	$	501		$	2,507
Supplemental information:
Depreciation, depletion, and amortization	$	83	$	150	$	305		$	538
Equity income (loss)		—		23		(13	)		10

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

	Third quarter ended September 30,						Nine months ended September 30,						Second quarter ended June 30,						Six months ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Total Segment Adjusted EBITDA⁽¹⁾	$	400		$	850		$	1,286		$	2,507		$	185		$	484		$	560		$	886
Unallocated amounts:
Transformation⁽²⁾⁽¹⁾		(6	)		1			(1	)		(2	)		(10	)		3			(26	)		5
Intersegment eliminations^(1),(3)		25			21			110			(55	)
Intersegment eliminations														30			(1	)		22			85
Corporate expenses⁽⁴⁾⁽²⁾		(27	)		(22	)		(79	)		(75	)		(21	)		(28	)		(48	)		(52	)
Provision for depreciation, depletion, and amortization		(184	)		(173	)		(530	)		(559	)		(152	)		(174	)		(322	)		(346	)
Restructuring and other charges, net ~~(C)~~(D)		(185	)		(177	)		(668	)		(389	)		(37	)		(370	)		(39	)		(483	)
Interest expense		(30	)		(33	)		(90	)		(91	)		(32	)		(30	)		(62	)		(60	)
Other expenses, net (N)		(27	)		(2	)		(118	)		(32	)
Other (expenses) income, net (Q)														(51	)		(50	)		81			(91	)
Other⁽⁵⁾⁽³⁾		(18	)		(10	)		(47	)		(69	)		(17	)		(11	)		(52	)		(29	)
Consolidated (loss) income before income taxes		(52	)		455			(137	)		1,235			(105	)		(177	)		114			(85	)
Provision for income taxes		(95	)		(260	)		(361	)		(569	)		(45	)		(116	)		(125	)		(266	)
Net income attributable to noncontrolling interest		(74	)		(201	)		(324	)		(467	)		(47	)		(109	)		(106	)		(250	)
Consolidated net (loss) income attributable to Alcoa Corporation	$	(221	)	$	(6	)	$	(822	)	$	199
Consolidated net loss attributable to Alcoa Corporation													$	(197	)	$	(402	)	$	(117	)	$	(601	)

11Other primarily includes realized gains and losses related to embedded derivative instruments designated as cash flow hedges of forward sales of aluminum.

E.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):

	Third quarter ended September 30,						Nine months ended September 30,					Second quarter ended June 30,						Six months ended June 30,
	2019			2018			2019			2018		2020			2019			2020			2019
Net (loss) income attributable to Alcoa Corporation	$	(221	)	$	(6	)	$	(822	)	$	199
Net loss attributable to Alcoa Corporation												$	(197	)	$	(402	)	$	(117	)	$	(601	)
Average shares outstanding – basic		186			186			185			186		186			186			186			185
Effect of dilutive securities:
Stock options		—			—			—			1		—			—			—			—
Stock units		—			—			—			2		—			—			—			—
Average shares outstanding – diluted		186			186			185			189		186			186			186			185

In the ~~third~~second quarter and ~~nine-month~~six-month period of 2020, basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential shares of common stock was anti-dilutive. Had Alcoa generated net income in the second quarter or six-month period of 2020, 1 million common share equivalents related to 6 million outstanding stock units and stock options combined would have been included in diluted average shares outstanding for the periods. Options to purchase 2 million shares of common stock outstanding at June 30, 2020 were excluded because they had a weighted average exercise price of $26.45 per share which was greater than the average market price of Alcoa Corporation’s common stock.

In the second quarter and six-month period of 2019, basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential shares of common stock was anti-dilutive since Alcoa Corporation generated a net loss. As a result, 5 million stock units and stock options combined were not included in the computation of diluted EPS for both the third quarter and nine-month period of 2019.anti-dilutive. Had Alcoa ~~Corporation~~ generated net income in the ~~third~~second quarter or ~~nine-month~~the six-month period of 2019, 1 million common share equivalents related to 5 million outstanding stock units and stock options combined would have been included in diluted average shares outstanding for the ~~respective~~ periods.

~~In the third quarter of 2018, basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential~~ Options to purchase 2 million shares of common stock outstanding at June 30, 2019 were excluded because they had a weighted average exercise price of $33.77 per share which was ~~anti-dilutive since~~greater than the average market price of Alcoa Corporation generated a net loss. As a result, 4 million stock awards and stock options combined were not included in the computation of diluted EPS. Had Alcoa Corporation generated net income in the third quarter of 2018, 2 million potential shares ofCorporation’s common ~~stock related to stock awards and stock options combined would have been included in diluted average shares outstanding.~~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
	Third quarter ended September 30,						Third Quarter Ended September 30,						Second quarter ended June 30,						Second quarter ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Pension and other postretirement benefits ~~(I)~~(L)
Balance at beginning of period	$	(2,232	)	$	(2,502	)	$	(47	)	$	(44	)	$	(2,244	)	$	(2,242	)	$	(56	)	$	(45	)
Other comprehensive income:
Unrecognized net actuarial (loss) gain and prior service cost/benefit		(38	)		174			(11	)		4
Tax benefit (expense)		11			(1	)		4			(1	)
Total Other comprehensive (loss) income before reclassifications, net of tax		(27	)		173			(7	)		3
Other comprehensive (loss) income:
Unrecognized net actuarial loss and prior service cost/benefit														(181	)		(78	)		1			(3	)
Tax benefit														4			16			—			—
Total Other comprehensive loss before reclassifications, net of tax														(177	)		(62	)		1			(3	)
Amortization of net actuarial loss and prior service cost/benefit⁽¹⁾		49			227			2			1			52			83			1			1
Tax expense⁽²⁾		(3	)		(2	)		(1	)		—			(2	)		(11	)		—			—
Total amount reclassified from Accumulated other comprehensive loss, net of tax⁽⁷⁾		46			225			1			1			50			72			1			1
Total Other comprehensive income (loss)		19			398			(6	)		4
Total Other comprehensive (loss) income														(127	)		10			2			(2	)
Balance at end of period		(2,213	)		(2,104	)		(53	)		(40	)	$	(2,371	)	$	(2,232	)	$	(54	)	$	(47	)

Foreign currency translation
Balance at beginning of period		(2,053	)		(1,911	)		(804	)		(746	)	$	(2,823	)	$	(2,093	)	$	(1,079	)	$	(808	)
Other comprehensive loss⁽³⁾		(224	)		(142	)		(75	)		(54	)
Other comprehensive income⁽³⁾														135			40			94			4
Balance at end of period		(2,277	)		(2,053	)		(879	)		(800	)	$	(2,688	)	$	(2,053	)	$	(985	)	$	(804	)

Cash flow hedges ~~(J)~~(M)
Balance at beginning of period		(420	)		(554	)		36			21		$	169		$	(499	)	$	—		$	37
Other comprehensive income (loss):
Other comprehensive (loss) income:
Net change from periodic revaluations		60			(60	)		2			12			(513	)		80			(4	)		6
Tax (expense) benefit		(15	)		10			(1	)		(4	)
Total Other comprehensive income (loss) before reclassifications, net of tax		45			(50	)		1			8
Tax benefit (expense)														112			(12	)		1			(2	)
Total Other comprehensive (loss) income before reclassifications, net of tax														(401	)		68			(3	)		4
Net amount reclassified to earnings:
Aluminum contracts⁽⁴⁾		9			26			—			—			1			12			—			—
Financial contracts⁽⁵⁾		(4	)		(6	)		(6	)		(4	)		4			(6	)		3			(7	)
Interest rate contracts⁽⁶⁾		4			—			—			—			1			—			—			—
Foreign exchange contracts⁽⁴⁾		4			3			—			—			7			4			—			—
Sub-total		13			23			(6	)		(4	)		13			10			3			(7	)
Tax benefit (expense)⁽²⁾		3			(2	)		2			1
Tax (expense) benefit⁽²⁾														(2	)		1			(1	)		2
Total amount reclassified from Accumulated other comprehensive loss, net of tax⁽⁷⁾		16			21			(4	)		(3	)		11			11			2			(5	)
Total Other comprehensive income (loss)		61			(29	)		(3	)		5
Total Other comprehensive (loss) income														(390	)		79			(1	)		(1	)
Balance at end of period		(359	)		(583	)		33			26		$	(221	)	$	(420	)	$	(1	)	$	36

Total Accumulated other comprehensive loss	$	(4,849	)	$	(4,740	)	$	(899	)	$	(814	)	$	(5,280	)	$	(4,705	)	$	(1,040	)	$	(815	)

	Alcoa Corporation						Noncontrolling interest						Alcoa Corporation						Noncontrolling interest
	Nine months ended September 30,						Nine months ended September 30,						Six months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Pension and other postretirement benefits ~~(I)~~(L)
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		(120	)		250			(14	)		7
Tax benefit (expense)		28			(3	)		4			(2	)
Total Other comprehensive (loss) income before reclassifications, net of tax		(92	)		247			(10	)		5
Other comprehensive (loss) income:
Unrecognized net actuarial loss and prior service cost/benefit														(201	)		(82	)		—			(3	)
Tax benefit														10			17			—			—
Total Other comprehensive loss before reclassifications, net of tax														(191	)		(65	)		—			(3	)
Amortization of net actuarial loss and prior service cost/benefit⁽¹⁾		177			487			4			2			106			128			2			2
Tax expense⁽²⁾		(15	)		(52	)		(1	)		—			(4	)		(12	)		—			—
Total amount reclassified from Accumulated other comprehensive loss, net of tax⁽⁷⁾		162			435			3			2			102			116			2			2
Total Other comprehensive income (loss)		70			682			(7	)		7
Total Other comprehensive (loss) income														(89	)		51			2			(1	)
Balance at end of period		(2,213	)		(2,104	)		(53	)		(40	)	$	(2,371	)	$	(2,232	)	$	(54	)	$	(47	)

Foreign currency translation
Balance at beginning of period		(2,071	)		(1,467	)		(810	)		(581	)	$	(2,160	)	$	(2,071	)	$	(834	)	$	(810	)
Other comprehensive loss⁽³⁾		(206	)		(586	)		(69	)		(219	)
Other comprehensive (loss) income⁽³⁾														(528	)		18			(151	)		6
Balance at end of period		(2,277	)		(2,053	)		(879	)		(800	)	$	(2,688	)	$	(2,053	)	$	(985	)	$	(804	)

Cash flow hedges ~~(J)~~(M)
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		(212	)		344			35			(18	)		339			(272	)		(30	)		33
Tax benefit (expense)		39			(58	)		(11	)		5
Total Other comprehensive (loss) income before reclassifications, net of tax		(173	)		286			24			(13	)
Tax (expense) benefit														(63	)		54			8			(10	)
Total Other comprehensive income (loss) before reclassifications, net of tax														276			(218	)		(22	)		23
Net amount reclassified to earnings:
Aluminum contracts⁽⁴⁾		34			87			—			—			14			25			—			—
Financial contracts⁽⁵⁾		(36	)		(26	)		(31	)		(17	)		7			(32	)		1			(25	)
Interest rate contracts⁽⁶⁾		4			—			—			—			2			—			—			—
Foreign exchange contracts⁽⁴⁾		12			2			—			—			15			8			—			—
Sub-total		14			63			(31	)		(17	)		38			1			1			(25	)
Tax benefit (expense)⁽²⁾		11			(3	)		9			5
Tax (expense) benefit⁽²⁾														(3	)		8			—			7
Total amount reclassified from Accumulated other comprehensive loss, net of tax⁽⁷⁾		25			60			(22	)		(12	)		35			9			1			(18	)
Total Other comprehensive (loss) income		(148	)		346			2			(25	)
Total Other comprehensive income (loss)														311			(209	)		(21	)		5
Balance at end of period		(359	)		(583	)		33			26		$	(221	)	$	(420	)	$	(1	)	$	36

Total Accumulated other comprehensive loss	$	(4,849	)	$	(4,740	)	$	(899	)	$	(814	)	$	(5,280	)	$	(4,705	)	$	(1,040	)	$	(815	)

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

	Third quarter ended September 30,				Nine months ended September 30,
	2019		2018		2019			2018
Second quarter ended June 30, 2020										Saudi Arabia Joint Venture			Mining			Energy			Other
Sales	$	1,051	$	1,343	$	3,474		$	3,963	$	507		$	209		$	47		$	85
Cost of goods sold		809		1,062		2,789			3,100		446			130			24			75
Net income (loss)		4		46		(73	)		143
Net (loss) income											(75	)		(5	)		20			(6	)
Equity in net (loss) income of affiliated companies, before reconciling adjustments											(19	)		3			7			(3	)
Other											(1	)		2			1			5
Alcoa Corporation’s equity in net (loss) income of affiliated companies											(20	)		5			8			2

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

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

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

In December 2009, Alcoa Corporation invested 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 the Kingdom of Saudi Arabia. The joint venture is owned 74.9% by Ma’aden and 25.1% by Alcoa Corporation, and originally consisted of three separate companies: MBAC, MAC, and MRC. Alcoa Corporation accounts for its investment in the joint venture under the equity method as one integrated investment asset, consistent with the terms of the joint venture agreement.

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

The Company’s basis in the Elysis^TM Limited Partnership, included in Other in the table above, has been reduced to 0 for its share of losses incurred to date. As a result, the Company ~~retained its 25.1% minority interest~~has $27 in ~~MBAC~~unrecognized losses as of June 30, 2020 that will be recognized upon additional contributions into the partnership.

revolving basis. The unsold portion of the specified receivable pool will be pledged as collateral to the purchasing bank to secure the sold receivables. During both the second quarter and ~~MAC, and Ma’aden will continue to own a 74.9% interest.~~six months ended June 30, 2020, 0 receivables were sold under this agreement.

	September 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
Finished goods	$	282	$	346	$	220	$	305
Work-in-process		276		189		254		282
Bauxite and alumina		493		609		396		446
Purchased raw materials		447		529		392		453
Operating supplies		151		146		157		158
	$	1,649	$	1,819	$	1,419	$	1,644

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

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

ANHBV has the option to extend the periods under Amendment No. 3 to apply to either or both fiscal quarters ending March 31, 2021 and ~~continue to be, valued principally using~~June 30, 2021. However, doing so would also reduce the ~~average cost method. Management believes that~~borrowing availability under the ~~change in accounting is preferable as it results in a consistent method to value inventory across all regions~~Revolving Credit Facility during the respective fiscal quarters by one-third of the ~~business, it improves comparability with industry peers, and it more closely resembles~~net proceeds of any note issuances during the ~~physical flow~~fiscal year ending December 31, 2020. If ANHBV extends the temporary amendments, the bonds issued in July 2020 would reduce the aggregate amount of ~~inventory.~~commitments under the Revolving Credit Facility by approximately $245 during the applicable fiscal quarters.

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

On October 2, 2019, Alcoa Norway ANS, a wholly-owned subsidiary of Alcoa Corporation, entered into a one-year, multicurrency revolving credit facility agreement for NOK 1.3 billion (approximately $134) which is fully and unconditionally guaranteed on an unsecured basis by Alcoa Corporation. On April 8, 2020, Alcoa Norway ANS drew $100 against this facility, and may do so from ~~LIFO~~time to average cost have been retrospectively applied to all periods presented. This change resulted in 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 itemstime in the ~~Company’s Statement~~future, in the ordinary course of ~~Consolidated Operations, Statement~~business. Repayment of ~~Consolidated Comprehensive Income,~~the drawn amount, including interest accrued at 2.93%, occurred upon maturity on June 29, 2020.

On July 3, 2020, Alcoa Norway ANS amended the revolving credit facility agreement to align the terms of the agreement with Amendment No. 2 and ~~Statement~~Amendment No. 3 of ~~Consolidated Cash Flows for~~ the ~~third quarter and the nine months ended September 30, 2018 and Consolidated Balance Sheet as of December 31, 2018 were adjusted as follows:~~Revolving Credit Agreement discussed above.

As Originally Reported

Effect of Change

As Adjusted

Statement of Consolidated Operations for the third quarter ended September 30, 2018:

Cost of goods sold
$
2,534

$
(49
)

$
2,485

Provision for income taxes

251

9

260

Net income

155

40

195

Net income attributable to noncontrolling interest

196

5

201

Net loss attributable to Alcoa Corporation

(41
)

35

(6
)
Earnings per share attributable to Alcoa Corporation common shareholders:

Basic
$
(0.22
)

$
0.19

$
(0.03
)
Diluted

(0.22
)

0.19

(0.03
)

Statement of Consolidated Comprehensive Income for the third quarter ended
September 30, 2018:

Comprehensive income
$
337

$
40

$
377

Comprehensive income attributable to noncontrolling interest

151

5

156

Comprehensive income attributable to Alcoa Corporation

186

35

221

Statement of Consolidated Operations for the nine months ended September 30, 2018:

Cost of goods sold
$
7,547

$
(7
)

$
7,540

Provision for income taxes

569

—

569

Net income

659

7

666

Net income attributable to noncontrolling interest

475

(8
)

467

Net income attributable to Alcoa Corporation

184

15

199

Earnings per share attributable to Alcoa Corporation common shareholders:

Basic
$
0.99

$
0.08

$
1.07

Diluted

0.97

0.09

1.06

Statement of Consolidated Comprehensive Income for the nine months ended
September 30, 2018:

Comprehensive income
$
864

$
7

$
871

Comprehensive income attributable to noncontrolling interest

238

(8
)

230

Comprehensive income attributable to Alcoa Corporation

626

15

641

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 nine months ended September 30, 2018:

Net income
$
659

$
7

$
666

Deferred income taxes

(16
)

—

(16
)
(Increase) in inventories

(279
)

(7
)

(286
)

In July 2020, ANHBV, completed a Rule 144A (U.S. Securities Act of 1933, as amended) debt issuance for $750 aggregate principal amount of 5.500% Senior Notes due 2027 (the 2027 Notes). The ~~following table compares~~net proceeds of this issuance were approximately $736 reflecting a discount to the ~~amounts~~initial purchasers of the 2027 Notes as well as issuance costs. The Company intends to use the net proceeds for general corporate purposes, including adding cash to its balance sheet. The discount to the initial purchasers, as well as costs to complete the financing, was deferred and is being amortized to interest expense over the term of the 2027 Notes. Interest on the 2027 Notes is paid semi-annually in June and December, which will commence December 15, 2020. The indenture contains customary affirmative and negative covenants that ~~would have been reported under LIFO with~~are similar to those included in the ~~amounts recorded under~~indenture from the ~~average cost method~~notes issued in May 2018, such as limitations on liens, limitations on sale and leaseback transactions, and a prohibition on a reduction in the ownership of AWAC entities below an agreed level, and the calculation of certain financial ratios. See Note L to the Consolidated Financial Statements asin Part II Item 8 of ~~September 30,~~the 2019 Annual Report on Form 10-K for additional information related to Alcoa’s existing debt and ~~for the third quarter and nine months then ended:~~ related covenants.

As Computed under LIFO

As Reported under Average Cost

Effect of Change

Statement of Consolidated Operations for the third quarter ended September 30, 2019:

Cost of goods sold
$
2,104

$
2,120

$
16

Provision for income taxes

92

95

3

Net loss

(128
)

(147
)

(19
)
Net income attributable to noncontrolling interest

70

74

4

Net loss attributable to Alcoa Corporation

(198
)

(221
)

(23
)
Earnings per share attributable to Alcoa Corporation common shareholders:

Basic
$
(1.07
)

$
(1.19
)

$
(0.12
)
Diluted

(1.07
)

(1.19
)

(0.12
)

Statement of Consolidated Comprehensive Income for the third quarter ended
September 30, 2019:

Comprehensive loss
$
(356
)

$
(375
)

$
(19
)
Comprehensive loss attributable to noncontrolling interest

(14
)

(10
)

4

Comprehensive loss attributable to Alcoa Corporation

(342
)

(365
)

(23
)

Statement of Consolidated Operations for the nine months ended September 30, 2019:

Cost of goods sold
$
6,495

$
6,489

$
(6
)
Provision for income taxes

348

361

13

Net loss

(491
)

(498
)

(7
)
Net income attributable to noncontrolling interest

305

324

19

Net loss attributable to Alcoa Corporation

(796
)

(822
)

(26
)
Earnings per share attributable to Alcoa Corporation common shareholders:

Basic
$
(4.29
)

$
(4.43
)

$
(0.14
)
Diluted

(4.29
)

(4.43
)

(0.14
)

Statement of Consolidated Comprehensive Income for the nine months ended
September 30, 2019:

Comprehensive loss
$
(849
)

$
(856
)

$
(7
)
Comprehensive income attributable to noncontrolling interest

231

250

19

Comprehensive loss attributable to Alcoa Corporation

(1,080
)

(1,106
)

(26
)

Consolidated Balance Sheet as of September 30, 2019:

Inventories
$
1,471

$
1,649

$
178

Prepaid expenses and other current assets

236

245

9

Retained deficit

(455
)

(252
)

203

Noncontrolling interest

1,887

1,871

(16
)

Statement of Consolidated Cash Flows for the nine months ended September 30, 2019:

Net loss
$
(491
)

$
(498
)

$
(7
)
Deferred income taxes

46

59

13

Decrease in inventories

117

111

(6
)

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

	Third quarter ended September 30,						Nine months ended September 30,						Second quarter ended June 30,						Six months ended June 30,
Pension benefits	2019			2018			2019			2018			2020			2019			2020			2019
Service cost	$	12		$	13		$	36		$	41		$	13		$	12		$	27		$	24
Interest cost⁽¹⁾		55			56			167			170			41			56			83			112
Expected return on plan assets⁽¹⁾		(81	)		(84	)		(244	)		(256	)		(73	)		(82	)		(147	)		(163	)
Recognized net actuarial loss⁽¹⁾		43			47			127			154			53			42			104			84
Amortization of prior service cost⁽¹⁾		1			2			4			6			—			2			—			3
Settlements⁽²⁾		5			232			5			399
Curtailments⁽²⁾		—			—			38			5			1			38			4			38
Net periodic benefit cost	$	35		$	266		$	133		$	519		$	35		$	68		$	71		$	98

	Third quarter ended September 30,					Nine months ended September 30,					Second quarter ended June 30,					Six months ended June 30,
Other postretirement benefits	2019		2018			2019		2018			2020			2019		2020			2019
Service cost	$	1	$	2		$	3	$	4		$	1		$	1	$	2		$	2
Interest cost⁽¹⁾		10		8			28		26			5			10		10			18
Recognized net actuarial loss⁽¹⁾		2		3			7		10			5			2		9			5
Amortization of prior service benefit⁽¹⁾		—		—			—		(1	)		(4	)		—		(7	)		—
Settlements⁽²⁾		—		(56	)		—		(56	)
Curtailments⁽²⁾		—		—			—		(28	)		(2	)		—		(2	)		—
Net periodic benefit cost	$	13	$	(43	)	$	38	$	(45	)	$	5		$	13	$	12		$	25

Plan Actions. In ~~2019,~~2020, management initiated the following actions to certain pension plans:

~~Action# 1~~Action #1 – In ~~June 2019,~~February 2020, the Company entered into a new, six-year collective bargaining agreement with the ~~National~~ Union of ~~Aluminum Employees~~Professional and Office Workers of ~~Baie-Comeau.~~the Alcoa Smelter of Baie-Comeau in Canada. Under the agreement, all ~~Canadian union~~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 ~~700~~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. ~~The Company will also contribute additional contributions of approximately $2 spread over a three-year period to improve the financial position of the newly established target benefit plan.~~ 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~~Action #2 – In ~~July 2019,~~February 2020, the Company ~~entered into a new, six-year collective bargaining agreement with the United Steelworkers representing the~~notified all non-unionized hourly employees of Aluminerie de ~~Bécancour Inc. Under the agreement, all Canadian union employees that~~Deschambault, who are participants in one of the Company’s defined benefit pension plans, ~~ceased~~that they will cease accruing retirement benefits for future service effective ~~July 21, 2019.~~January 1, 2021. This change ~~affected~~will affect approximately ~~900~~430 employees, who ~~were~~will be transitioned to a ~~member-funded pension~~replacement plan yet to be determined, where the funding risk is assumed by the employees. The Company will contribute ~~approximately 12%~~a certain percentage of these participants’ eligible earnings to the new plan on an annual basis. To improve the financial positions of both the existing defined benefit pension plan and newly established member-funded pension plan, the Company will contribute approximately $5 in 2020 to the existing defined benefit pension plan and approximately $2 spread over a five-year period to the newly established member-funded pension plan. Participants already collecting benefits or who terminated with a vested benefit under the defined benefit pension plan are not affected by these changes.

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

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

Action#	Number of affected plan participants	Weighted average discount rate as of December 31, 2018	Plan remeasurement date	Weighted average discount rate as of plan remeasurement date	Increase to accrued pension benefits liability		Curtailment charge⁽¹⁾
Action #									Number of affected plan participants	Weighted average discount rate as of December 31, 2019	Plan remeasurement date	Weighted average discount rate as of plan remeasurement date	Increase to accrued pension benefits liability		Increase to accrued other postretirement benefits liability		Curtailment charge (gain)⁽¹⁾
1	~700	3.85%	May 31, 2019	3.15%	$	52	$	38	~20	3.15%	January 31, 2020	2.75%	$	18	$	—	$	1
2	~900	3.80%	June 30, 2019	3.00%	$	23	$	—	~430	3.20%	January 31, 2020	2.75%		28		—		2
3a									~300	3.25%	April 30, 2020	2.92%		156		—		1
3b									~600	3.75%	April 30, 2020	3.44%		—		—		(2	)
													$	202	$	—	$	2

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

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

Alcoa Corporation is exposed to certain risks relating to its ongoing business operations, including the risks of changing commodity prices, foreign currency exchange rates and interest rates. Alcoa Corporation’s commodity and derivative activities include aluminum, energy, 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 ~~and interest rate~~ 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 $12 and $65, respectively, at September 30, 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 $40 and $43 in the 2019 third quarter and nine-month period, respectively, and an unrealized loss of $7 and an unrealized gain of $6 in the 2018 third quarter and nine-month period, respectively, in Other comprehensive (loss) income. Additionally, Alcoa Corporation reclassified a realized loss of $16 and $28 in the 2019 third quarter and nine-month period, respectively, and $3 and $10 in the 2018 third quarter and nine-month period, respectively, from Accumulated other comprehensive loss 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 9 smelters and 3 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 June 30, 2020, the realized loss of $1 on Level 1 and 2 cash flow hedges was recognized in Cost of goods sold. For the quarter ended June 30, 2019, the realized loss of $8 on Level 1 and 2 cash flow hedges was recognized in Sales.

For the six months ended June 30, 2020, the realized loss of $15 on Level 1 and 2 cash flow hedges was comprised of a ~~power contract at~~$7 loss recognized in Sales and a $8 loss recognized in Cost of goods sold. For the six months ended June 30, 2019, the realized loss of $12 on Level 1 ~~of its facilities which expired~~and 2 cash flow hedges was 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~~Sales.

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. Additional Level 3 Disclosures

In March 2019, Alcoa Corporation 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 power and a corresponding decrease to the derivative asset or increase to the derivative liability. The embedded derivative has been designated as a cash flow hedge of forward sales of aluminum. Unrealized gains and losses will be included in Accumulated other comprehensive loss on the accompanying Consolidated Balance Sheet while realized gains and losses will be included in Sales on the accompanying Statement of Consolidated Operations.

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

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

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

Assuming market rates remain constant with the rates at June 30, 2020, a realized loss of $11 related to power contracts and a gain of $4 related to the financial contract are expected to be recognized in Sales and Cost of goods sold, respectively, over the next 12 months.

At June 30, 2020 and December 31, 2019, the power contracts with embedded derivatives designated as cash flow hedges hedge forecasted aluminum sales of 2,244 kmt and 2,347 kmt, respectively. At June 30, 2020 and December 31, 2019, the financial contract hedges forecasted electricity purchases of 2,265,872 and 3,891,096 megawatt hours, respectively.

The following tables present athe reconciliation of activity for Level 3 derivative instruments:

~~In the first quarter of 2019, there was an expiration of an existing and an issuance of a new embedded aluminum derivative (see above). In the 2019 nine-month period, there~~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 September 30, 2019 and December 31, 2018, these embedded aluminum derivatives hedged forecasted aluminum sales of 2,397 kmt and 2,508 kmt, respectively. Assuming market rates remain constant with the rates at September 30, 2019, a realized loss of $29 is expected to be recognized in Sales over the next 12 months. There was no ineffectiveness related to these six derivative instruments in the ~~2019 and 2018 third quarter and nine-month periods.~~periods presented.

At September 30, 2019 and December 31, 2018, the financial contract hedges forecasted electricity purchases of 4,510,440 and 6,348,276 megawatt hours, respectively. Assuming market rates remain consistent with the rates at September 30, 2019, a realized gain of $76 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 third quarter and nine-month period of 2019. The amount of hedge ineffectiveness related to this derivative instrument was not material in the 2018 third quarter and nine-month period.

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:

	September 30, 2019				December 31, 2018				June 30, 2020				December 31, 2019
	Carrying value		Fair value		Carrying value		Fair value		Carrying value		Fair value		Carrying value		Fair value
Cash and cash equivalents	$	841	$	841	$	1,113	$	1,113	$	965	$	965	$	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		1,805		1,955		1,801		1,863		1,800		1,896		1,799		1,961

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

Cash and cash equivalents and Restricted cash. The carrying amounts approximate fair value because of the short maturity of the instruments. The fair value amounts for Cash and cash equivalents and Restricted cash were classified in Level 1 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.N. Income Taxes – Alcoa Corporation’s estimated annualized effective tax rate (AETR) for ~~2019~~2020 as of ~~September~~June 30, ~~2019~~2020 differs from the U.S. federal statutory rate of 21% primarily due to losses in countries with full valuation reserves resulting in 0 tax benefit, as well as foreign income taxed in higher rate jurisdictions.

	Nine-months ended September 30,							Six months ended June 30,
	2019				2018			2020				2019
(Loss) income before income taxes	$	(137	)		$	1,235
Income (loss) before income taxes								$	114			$	(85	)
Estimated annualized effective tax rate		(686.2	)	%		43.6	%		(183.0	)	%		137.1	%
Income tax expense	$	942			$	538
(Favorable) unfavorable tax impact related to losses in jurisdictions with no tax benefit		(590	)			5
Income tax benefit								$	(209	)		$	(116	)
Unfavorable tax impact related to losses in jurisdictions with no tax benefit									333				381
Discrete tax charge		9				26			1				1
Provision for income taxes	$	361			$	569		$	125			$	266

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 ~~Provision for income taxes for the 2019 nine-month period includes the change in estimated AETR from the second quarter~~future realization of ~~2019. The change in estimated AETR~~net deferred tax assets is ~~primarily due to fluctuating alumina and aluminum market prices as well as restructuring charges incurred~~reviewed quarterly, or more frequently if there are changes in the ~~2019 nine-month period that resulted~~positive and negative evidence used in ~~changes to the distribution~~management’s assessments, and is based on projections of the ~~(Loss)~~respective future taxable income ~~before~~(defined as the sum of pretax income, ~~taxes~~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 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 ~~Company’s various jurisdictions, inclusive of those which receive no tax benefit from generated losses.~~

Asmacroeconomic environment and the economy in Alcoa’s operating locations may arise as a result of the ~~adoption~~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 ~~ASU No. 2016-02, Leases,~~taxable income, including income available in carryback periods, future reversals of taxable temporary differences, projections of taxable income, and income from tax planning strategies. Positive evidence includes factors such as a history of profitable operations, projections of future profitability within the carryforward period, including from tax planning strategies, and Alcoa’s experience with similar operations. Existing favorable contracts and the ability to sell products into established markets are additional positive evidence. Negative evidence includes items such as cumulative losses, projections of future losses, or carryforward periods that are not long enough to allow for the utilization of a deferred tax asset based on existing projections of income. Deferred tax assets for which no valuation allowance is recorded may not be realized upon changes in facts and circumstances, resulting in a future charge to establish a valuation allowance.

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

Management 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 38 years. The discount rate applied to these leases is the Company’s incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments, unless there is a rate implicit in the lease agreement. Lease expense for the third quarter ended September 30, 2019, includes costs from operating leases of $21, variable lease payments of $4 and immaterial short-term rental expense. Lease expense for the nine-months ended September 30, 2019, includes costs from operating leases of $60, variable lease payments of $12 and short-term rental expense of $4. New leases of $4 and $11 were added during the three and nine-months ended September 30, 2019, respectively. The Company does not have material financing leases.

The weighted average lease term and weighted average discount rate as of June 30, 2020 and December 31, 2019 were as follows:

The following represents the aggregate right-of use assets and related lease obligations ~~as of September 30, 2019:~~

~~The weighted average lease term and weighted average discount rate as of September 30, 2019 were as follows:~~recognized in the Consolidated Balance Sheet at:

The future cash flows related to the operating lease obligations as of ~~September~~June 30, ~~2019~~2020 were as follows:

Year Ending December 31,	Operating leases
2019 (excluding the nine months ended September 30)	$	21
2020		68
2020 (excluding the six months ended June 30)				$	36
2021		51			58
2022		19			27
2023		10			17
2024					9
Thereafter		21			24
Total lease payments (undiscounted)		190			171
Less: discount to net present value		(32	)		(23	)
Total	$	158		$	148

~~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
Liabilities incurred		19
Cash payments		(25	)
Reversals of previously recorded liabilities		(3	)
Foreign currency translation and other		(5	)
Balance at December 31, 2018		280		$	280
Liabilities incurred		4			73
Cash payments		(12	)		(17	)
Reversals of previously recorded liabilities		(1	)		(1	)
Balance at December 31, 2019					335
Liabilities incurred					2
Cash payments					(9	)
Foreign currency translation and other		(2	)		(5	)
Balance at September 30, 2019	$	269
Balance at June 30, 2020				$	323

At ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the current portion of Alcoa Corporation’s environmental remediation reserve balance was ~~$31~~$46 and ~~$44,~~$39, respectively. ~~In the third quarter and nine-month period of 2019, the~~The Company incurred liabilities of $2 for the six-month period of 2020 due to charges related to increases for ongoing monitoring and ~~$4, respectively.~~maintenance and environmental consulting work for a remediation project at the Fusina site. These charges are primarily recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations.

Payments related to remediation expenses applied against the reserve were $2$6 and ~~$12~~$9 in the ~~2019 third~~second quarter and ~~nine-month~~six-month period of 2020, respectively. 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 $2$6 in ~~both~~ the ~~third quarter and nine-month~~six-month period of ~~2019,~~2020, due to the effects of foreign currency translation.

In the ~~nine-month~~second quarter and six-month period of ~~2018,~~2019, the ~~remediation reserve was increased by $15~~Company incurred liabilities of $1 and $2, respectively, due to ~~a charge of $9~~charges related to ~~the former Sherwin location (see below), a reversal of $2 related to the Portovesme location,~~increases for ongoing monitoring and ~~a net charge of $8 associated with several sites. Of the changes to the reserve in the nine-month period of 2018, a charge of $15 was~~maintenance. These charges are recorded in Cost of goods sold ~~and both a charge of $2 and a reversal of $2 were recorded in Restructuring and other charges, net~~ on the accompanying Statement of Consolidated Operations.

Payments related to remediation expenses applied against the reserve were $5$7 and ~~$19~~$10 in the ~~2018 third~~second quarter and ~~nine-month~~six-month period ~~respectively. These amounts include mandated expenditures as well as those not required by any regulatory authority or third party. The reserve also reflects both a decrease~~ of $1 and $6 in the 2018 third quarter and nine-month period, respectively, due to the effects of foreign currency translation and an increase of $1 in the 2018 nine-month period for reclassifications made between this reserve and the Company’s liability for asset retirement obligations.2019, respectively.

The estimated timing of cash outflows on the environmental remediation reserve at ~~September~~June 30, ~~2019~~2020 is as follows:

2019 (excluding the nine months ended September 30, 2019)	$	8
2020 - 2024		146
2020 (excluding the six months ended June 30, 2020)			$	17
2021 - 2025				205
Thereafter		115		101
Total	$	269	$	323

Reserve balances at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, associated with significant sites with active remediation underway or for future remediation were ~~$207~~$263 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—~~Brazil~~Associated~~—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 and ~~Portovesme. Cleanup plans at both sites~~Portovesme 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~~2022 for Fusina and ~~expects to complete the project in 2020.~~2020 for Portovesme. Additionally, ~~Trasformazioni agreed to make~~ annual payments are made to MOE over a 10-year period ~~ending in~~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 2020. Additionally, Trasformazioni participates in a~~A groundwater remediation project ~~which~~at Portovesme will ~~not~~

have a final remedial design completed ~~until mid-2020; such design conclusion~~in 2020 which may result in a change to the existing ~~reserve for Portovesme~~.reserve.

~~Suriname—~~Suriname~~Associated~~—The reserve 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 Corporation’s policy to maintain a reserve equal to five years of expected costs.~~

Massena, New ~~York—~~York~~Associated~~—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~~disposal area 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 ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the reserve balance associated with these activities was ~~$62~~$60 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) ~~as of July 6, 2018,~~estimated the amount of the new assessment, including applicable interest, ~~was 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 the Supreme Court of Spain, which was accepted in March 2019 and an ~~updated assessment~~appeal was submitted on May 6, 2019. On June 18, 2019 the State Attorney filed its opposition to the appeal and the Companies are awaiting further response from ~~Spain’s tax authorities, management may revise its estimated liability.~~the Supreme Court.

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 ~~$53.~~$40 (R$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.

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

~~Reynolds—In 2000, ParentCo acquired Reynolds Metals Company (Reynolds, a subsidiary~~During 2020, the SOAP was the subject of ~~Alcoa Corporation)~~an independent review process within the ATO. At the conclusion of this process, the ATO determined to continue with the proposed adjustments and issued Notices of Assessment (the Notices) that were received by AofA on July 7, 2020. The Notices asserted claims for income tax payable by AofA of approximately $147 (A$214), which ~~included~~is $1 (A$2) higher than the amount previously reported by the Company. The Notices also include claims for compounded interest on the tax amount totaling approximately $488 (A$707). The ATO is also expected to assess administrative penalties and has informed AofA that its proposed position will be communicated after August 1, 2020. The ATO has not indicated the amount of administrative penalties it proposes to apply in this matter, and AofA is not in a position to estimate the amount, if any, at this time. AofA expects to have an opportunity to respond to the ATO’s proposed position on penalties, as well as to request reductions on the interest assessment.

The Company does not agree with the ATO’s position, and AofA will continue to defend this matter and pursue all available dispute resolution methods, up to and including the filing of proceedings in the Australian Courts, a process which could last several years and could involve significant expenses. The Company maintains that the sales subject to the ATO’s review, which were ultimately sold to Aluminium Bahrain B.S.C., were the result of arm’s length transactions by AofA over two decades and were made at arm’s length prices consistent with the prices paid by other third-party alumina ~~refinery in Gregory, Texas. As a condition~~customers.

In accordance with the ATO’s dispute resolution practices, AofA will pay 50% of the ~~Reynolds acquisition, ParentCo was required~~assessed income tax amount exclusive of interest and any penalties, or approximately $74 (A$107), in the third quarter 2020 and the ATO is not expected to ~~divest this alumina refinery. Under the terms~~seek further payment prior to final resolution of the ~~divestiture, ParentCo agreed to retain responsibility for certain environmental obligations and assigned~~matter. If AofA is ultimately successful, any amounts paid to the ~~buyer an Energy Services Agreement (ESA) with Gregory Power Partners (Gregory Power) for purchase of steam and electricity by the refinery.~~

~~In January 2016, Sherwin Alumina Company, LLC (Sherwin), a successor owner~~ATO as part of the ~~refinery previously owned~~50% payment would be refunded. AofA expects to fund the payment with cash on hand and will record the payment as a noncurrent prepaid tax asset. Further interest on the unpaid amounts will continue to accrue during the dispute. The initial interest assessment and the additional interest accrued are deductible against taxable income by ~~Reynolds, filed for bankruptcy due~~AofA but would be taxable as income in the year the dispute is resolved if AofA is ultimately successful.

The Company continues to ~~its inability~~believe it is more likely than not that AofA’s tax position will be sustained and therefore is not recognizing any tax expense in relation to ~~continue its bauxite supply agreement. As a result~~this matter. However, because the ultimate resolution of ~~Sherwin’s bankruptcy filing, separate legal actions were initiated against Reynolds by Sherwin and Gregory Power.~~

~~Sherwin: This~~this matter ~~sought to determine responsibility for remediation~~is uncertain at this time, the Company cannot predict the potential loss or range 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 liabilitiesloss associated with the ~~Copano facility~~outcome, which may materially affect its results of operations and assigned to Sherwin all environmental liabilities associated with the Sherwin refinery site. At September 30, 2019 and December 31, 2018, the Company had a reserve of $38 for its share of environmental-related matters at Copano facility. (See Sherwin, Texas in Environmental Matters above.)financial condition.

~~Gregory Power: In January 2016, Gregory Power delivered notice to Reynolds that Sherwin’s bankruptcy filing constitutes a breach~~AofA is part of the ~~ESA. Since that time, various responses, complaints and motions have been actioned, including the addition of Allied~~Company’s joint venture with Alumina ~~LLC (Allied) to~~Limited, 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 conditionedAustralian public company listed on the ~~execution~~Australian Securities Exchange. The Company and Alumina Limited own 60% and 40%, respectively, of ~~various commercial agreements, which have been executed by~~ the ~~parties. On June 2, 2019, the Court entered a Stipulation of Dismissal, formally concluding the litigation. The settlement does not have an impact on the Consolidated Financial Statements.~~joint venture entities, including AofA.

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.

~~In December 2009,Alcoa Corporation invested in~~Net gain from asset sales for the second quarter and six months ended June 30, 2020 includes a ~~joint venture~~net gain of $1 and $181, respectively, related to the ~~ownership and operation~~sale 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 Ma’aden and 25.1% by Alcoa Corporation, and originally consisted of three separate companies: the MBAC, MAC, and MRC. Alcoa Corporation divested its ownership interest in MRC in the second quarter of 2019 as described inEES (see Note C. Alcoa Corporation accounts for its investment in the joint venture under the equity method as one integrated investment asset, consistent with the terms of the joint venture agreement. As of September 30, 2019 and December 31, 2018, the carrying value of Alcoa Corporation’s investment in this joint venture was $615 and $874, respectively.C).

At the time of closing, MRC had project financing totaling $1,179, of which $296 represented Alcoa Corporation’s 25.1% interest in the rolling mill company prior to the divestiture. Alcoa Corporation had issued guarantees to the lenders in the event of default on the debt service requirements by MRC through 2018 and 2021 (Ma’aden issued similar guarantees related to its 74.9% interest). Alcoa Corporation’s guarantees for MRC covered 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 MAC and MBAC. In December 2017 and July 2018, MAC and MBAC, respectively, refinanced and/or amended all of their existing outstanding debt. The guarantees that were previously required of the Company related to both MAC and MBAC were effectively terminated. At December 31, 2018, the combined fair value of the guarantees was $1, which was included in Other noncurrent liabilities and deferred credits on the accompanying Consolidated Balance Sheet. As part of Alcoa Corporation’s divestiture of MRC, the guarantee related to MRC was effectively terminated.

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 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 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.~~

~~As of January 1, 2019,~~information regarding 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.Separation Transaction.

In ~~October 2019,~~response to the coronavirus (COVID-19) pandemic, Alcoa continues to operate with comprehensive measures in place to protect the health of the Company’s workforce, prevent infection in our locations, and mitigate impacts. As a result of these measures and the aluminum industry being classified as an essential business, all of Alcoa’s bauxite mines, alumina refineries, and aluminum manufacturing facilities continue to remain in operation with comprehensive measures in place for health and business continuity. Each location has implemented extensive preparedness and response plans which include social distancing protocols and other protective actions aligned with guidance from the U.S. Centers for Disease Control and Prevention, the World Health Organization, and all other relevant government agencies in countries where we operate. These actions include:

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

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

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

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

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

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

The preceding list of potential adverse effects of the COVID-19 pandemic is not all-inclusive or necessarily in order of importance or magnitude. The potential impact(s) of the pandemic on the Company’s business, financial condition, operating results, cash flows and/or market capitalization is difficult to predict and will continue to be monitored in subsequent periods.Further or prolonged deterioration of adverse conditions could negatively impact our financial condition and result in asset impairment charges, including long-lived assets or goodwill, or affect the realizability of deferred tax assets.

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

Alcoa continues to progress with its strategic actions to drive lower costs and sustainable ~~profitability. Planned initiatives include (i) over~~profitability, however, the ~~next 12 to 18 months, Alcoa Corporation intends to pursue non-core asset sales in support~~global effects of ~~its updated~~the COVID-19 pandemic may impact the timing of the previously announced strategic priorities and (ii) over the next five years, Alcoa Corporation plans to realign its operating portfolio and has placed 1.5 million metric tons of smelting capacity and 4 million metric tons of alumina refining capacity under review. The review will consider opportunities for significant improvement, potential curtailments, closures, or divestitures.

~~Additionally, in September~~actions. In late 2019, Alcoa Corporation announced the following strategic actions:

The new operating model ~~that will result~~has been implemented and the Company is substantially complete with the transition of eliminated roles. At June 30, 2020, approximately 225 of the 260 employees expected to be terminated in ~~a leaner, more integrated, operator-centric organization. Effective November 1, 2019,~~connection with the implementation of the new operating model ~~eliminates the business unit structure, consolidates sales, procurement and other commercial capabilities at an enterprise level, and streamlines the Executive Team from 12 to seven direct reports~~were separated. In addition to the ~~Chief Executive Officer.~~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 ~~new structure will reduce overhead~~transaction closed as of January 31, 2020 whereby the Company received $200 with another $50 held in escrow to be paid to Alcoa if certain post-closing conditions are satisfied, which would result in an additional gain being recorded. As a result of the ~~intention~~transaction, the Company recognized a gain of ~~promoting operational~~$180 (pre- and ~~commercial excellence~~after-tax) in the first quarter of 2020 and ~~increasing connectivity between the Company’s plants and leadership. Annual operating cost savings~~anticipates annual net income improvement of approximately ~~$60 related~~$10. During the second quarter of 2020, an additional $1 gain was recorded as a result of certain post-closing adjustments based on the terms of the agreement.

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

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

On June 25, 2020, Alcoa launched a formal 30-day consultation process with the Spanish Works Council representing employees at the San Ciprián aluminum facility in Spain, which the Company and the Spanish Works Council have agreed to extend until August 4, 2020. The formal consultation began after the conclusion of an informal process that started on May 28, 2020. A collective dismissal could potentially affect up to 534 employees at the aluminum plant. The San Ciprián aluminum facility has incurred significant and recurring financial losses that are expected to continue. The Company envisions a restructuring that retains a portion of the casthouse in operation. No final decisions will be made until the formal consultation process is complete. The San Ciprián site has both an aluminum plant and alumina refinery; the San Ciprián alumina refinery is not included in this formal consultation process.

In December 2019, the Company announced the permanent closure of its alumina refinery in Point Comfort, Texas as its first action of the multi-year portfolio review. The site’s 2.3 million metric tons of refining capacity had been fully curtailed since 2016. As a result of the decision to close the refinery, a $274 charge was recorded to Restructuring and other charges, net (see Note D 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, 2019). Beginning in 2020, the closure is expected to result in annual net income improvement of approximately $15 (after-tax and noncontrolling interest) and cash savings of approximately $10 (Alcoa’s share) when compared to the ongoing spend for curtailment, exclusive of closure costs.

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 operational efficiency programs and specific initiatives taken throughout 2020.

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

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

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

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

See Credit Facilities under the Liquidity and Capital Resources section of Management’s Discussion and Analysis for additional details on the above described liquidity measures.

	Third quarter ended September 30,						Nine months ended September 30,					Second quarter ended June 30,						Six months ended June 30,
	2019			2018			2019			2018		2020			2019			2020			2019
Sales	$	2,567		$	3,390		$	7,997		$	10,059	$	2,148		$	2,711		$	4,529		$	5,430
Net (loss) income attributable to Alcoa Corporation	$	(221	)	$	(6	)	$	(822	)	$	199
Diluted (loss) earnings per share attributable to Alcoa Corporation common shareholders	$	(1.19	)	$	(0.03	)	$	(4.43	)	$	1.06
Net loss attributable to Alcoa Corporation												$	(197	)	$	(402	)	$	(117	)	$	(601	)
Diluted loss per share attributable to Alcoa Corporation common shareholders												$	(1.06	)	$	(2.17	)	$	(0.63	)	$	(3.24	)
Third-party shipments of alumina (kmt)		2,381			2,233			7,009			6,894		2,415			2,299			4,780			4,628
Third-party shipments of aluminum products (kmt)		708			806			2,141			2,453		789			724			1,514			1,433
Average realized price per metric ton of alumina	$	324		$	493		$	361		$	447	$	250		$	376		$	274		$	381
Average realized price per metric ton of primary aluminum	$	2,138		$	2,465		$	2,175		$	2,526	$	1,694		$	2,167		$	1,835		$	2,193

Overview—Net loss attributable to Alcoa Corporation was ~~$221~~$197 in the ~~third~~second quarter of ~~2019~~2020 compared with a Net loss attributable to Alcoa Corporation of $6$402 in the ~~third~~second quarter of ~~2018.~~2019. Net loss attributable to Alcoa Corporation was $117 in the six months ended June 30, 2020 compared with a Net loss attributable to Alcoa Corporation of $601 in the six months ended June 30, 2019. The ~~decrease~~improvement in results in the quarterly and six-month comparable period of ~~$215 was~~$205 and $484 were principally related to:

Net loss attributable to Alcoa Corporation was $822 in the 2019 nine-month period compared with Net income attributable to Alcoa Corporation of $199 in the 2018 nine-month period. The decrease in results of $1,021 was principally related to:Partially offset by:

Additionally, a gain on the divestiture of a waste processing facility in Gum Springs, Arkansas had a favorable impact on the comparable 2020 six-month period.

Sales—Sales ~~were $2,567~~declined $563, or 21%, in the ~~third~~second quarter of 2020 compared with the second quarter of 2019, and $901, or 17%, in the six-month period of 2020 compared with ~~sales of $3,390~~the same period in ~~the third quarter of 2018.~~2019. The decline ~~of $823, or 24%,~~in both periods was principally related to:

~~Sales were $7,997 in the nine-month period of 2019 compared with sales of $10,059 in the nine-month period of 2018. The decline of $2,062, or 21%, was principally related to:~~

Cost of goods sold— As a percentage of Sales, Cost of goods sold was ~~83%~~89.9% and 87.4% in the ~~third~~second quarter and six-month period of 2020, respectively, compared with 80.7% and 80.5% in the second quarter and six-month period of 2019, respectively. The second quarter and ~~81% in the 2019 nine-month~~six-month period ~~compared with 73% in the third quarter of 2018 and 75% in the 2018 nine-month period. The third quarter percentage was~~percentages were negatively impacted by a lower ~~average realized price~~prices for ~~both~~ alumina and aluminum and higher aluminum production costs, partially offset by lower raw material costs, particularly petroleum coke and caustic soda. The 2019 nine-month percentage was negatively impacted by a lower average realized price for both alumina and aluminum along with unfavorable energy costs and higher maintenance-related expenses in the Alumina segment. These negative impactsproducts which were partially offset by ~~lower~~favorable foreign currency impacts and raw material ~~costs, particularly caustic soda.~~costs. The six-month period was also favorably impacted by lower energy costs.

Selling, general administrative, and other expenses— Selling, general administrative, and other expenses ~~increased~~decreased by ~~$8,~~$24, or ~~14%~~35%, and ~~increased by $29,~~$48, or ~~15%~~32%, in the ~~third~~second quarter and ~~nine-month~~six-month period of ~~2019, respectively. Both 2019 periods are higher~~2020, respectively, compared with the corresponding periods ~~of 2018 due primarily to higher consulting costs. Additionally,~~in 2019. Both periods were favorably impacted by cost savings from the ~~nine-month~~new operating model, lower fees for professional services, lower travel expenses, and favorable foreign currency impacts, mainly from the Brazilian real. The 2019 six-month period ~~of 2019 includes~~also included the unfavorable impact of a bad debt reserve recorded against a Canadian customer receivable due to ~~a 2019 bankruptcy filing.~~ bankruptcy.

Provision for depreciation, depletion, and amortization— Provision for depreciation, depletion, and amortization ~~increased $11,~~decreased $22, or 6%13%, and ~~decreased $29,~~$24, or 5%7%, in the ~~third~~second quarter and ~~nine-month~~six-month period ~~of 2019,~~in 2020, respectively, compared with the corresponding periods in ~~2018. The increase in the third quarter of 2019 is primarily attributable to the write-offs of costs for capital projects no longer being pursued. The~~2019. This decrease in ~~the nine-month period of 2019~~both periods is primarily due to ~~a group~~changes in the weighted-average useful lives of assets ~~which were acquired in a former ParentCo transaction, reaching the end of their depreciable lives, the disposition of two Spanish facilities~~ and ~~favorable foreign~~ currency impacts onof the ~~US dollar, primarily against the Brazilian~~Brazil real and ~~the~~ Australian dollar.

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

~~In the third quarter and nine-month period of 2018, Alcoa Corporation recorded Restructuring and other charges, net, of $177 and $389, respectively, which were comprised of the following components:~~

See Note CD to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q for additional detail on the above net charges.

Other expenses (income), net— Other expenses (income), net was ~~$27~~$51 in the ~~third~~second quarter of 2020 compared with $50 in the second quarter of 2019, and ($81) in the 2020 six-month period compared with ~~$2 in the third quarter of 2018, and $118~~$91 in the 2019 ~~nine-month period compared with $32~~six-month period. The change of $1 in the ~~2018 nine-month period. The unfavorable change of $25 in the third~~second quarter of ~~2019~~2020 was largely attributable to ~~the absence~~unfavorable changes in Alcoa Corporation’s share of equity method investment earnings partially offset by lower losses on asset sales and favorable changes in foreign currency movements, mark-to-market gains on derivative instruments, and an unfavorable change in equity earnings, primarily related to the aluminum complex joint venture in Saudi Arabia as a result of lower alumina and aluminum prices. These unfavorable impacts were partially offset by a gain on disposition of surplus property and lower non-service costs related to pension and other postretirement employee benefits.

impacts. The ~~unfavorable~~favorable change of ~~$86~~$172 in the comparable ~~nine-month periods~~six-month period was ~~largely~~primarily attributable to the unfavorable change in foreign currency movements, an unfavorable change in equity earnings, primarily related to the aluminum complex joint venture in Saudi Arabia as a result lower alumina and aluminum prices, and the absence of favorable changes in mark-to-market impacts on derivative instruments. The unfavorable impacts were partially offset by lower non-service costs related to pension and other postretirement employee benefits and a gain on ~~disposition~~divestiture of ~~surplus property.~~

~~Provision for income taxes—~~ ~~Alcoa Corporation’s estimated AETR for 2019 as of September 30, 2019 differs from the U.S. federal statutory rate of 21% primarily due to losses~~a waste processing facility in ~~countries with full valuation reserves resulting~~Gum Springs, Arkansas recorded in no tax benefit, as well as foreign income taxed in higher rate jurisdictions. The Provision for income taxes for the 2019 nine-month period includes the change in estimated AETR from the second quarter of 2019. The change in estimated AETR is primarily due to fluctuating alumina and aluminum market prices as well as restructuring charges incurred in the 2019 nine-month period that resulted in changes to the distribution of the (Loss) income before income taxes in the Company’s various jurisdictions, inclusive of those which receive no tax benefit from generated losses. In the fourth quarter of 2019, the Provision for income taxes is expected to reflect further impacts of fluctuating alumina and aluminum market prices on the estimated AETR.2020.

Noncontrolling interest— Net income attributable to noncontrolling interest was ~~$74~~$47 and ~~$324,~~$106 in the ~~third~~second quarter and ~~nine-month~~six-month period of ~~2019,~~2020, respectively, compared with ~~$201~~$109 and ~~$467,~~$250 in the ~~third~~second quarter and ~~nine-month~~six-month period of ~~2018,~~2019, respectively. These amounts are entirely related to Alumina Limited’s 40% ownership interest in several affiliated operating entities, which own, have an interest in, or operate certain bauxite mines and alumina refineries within Alcoa Corporation’s Bauxite and Alumina segments and a portion (55%) of the Portland smelter (Australia) within the Company’s Aluminum segment.entities. See Note A to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

In the ~~third~~second quarter and ~~nine-months ended 2019,~~six-month periods of 2020 these combined entities, particularly the Alumina segment entities, generated lower net income compared with the ~~same~~second quarter and six-month periods ~~in 2018.~~of 2019. The unfavorable change in earnings was mostly driven by lower alumina prices (see Alumina under Segment Information below).

	Third quarter ended September 30,				Nine months ended September 30,				Second quarter ended June 30,				Six months ended June 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Production⁽¹⁾ (mdmt)		12.1		11.5		35.3		34.0
Production (mdmt)										12.2		11.3		23.8		23.2
Third-party shipments (mdmt)		2.0		1.4		4.7		4.1		1.6		1.5		3.0		2.7
Intersegment shipments (mdmt)		10.6		10.1		31.1		30.5		10.8		10.3		21.3		20.5
Total shipments (mdmt)		12.6		11.5		35.8		34.6		12.4		11.8		24.3		23.2
Third-party sales	$	100	$	67	$	232	$	191	$	66	$	67	$	137	$	132
Intersegment sales		251		224		733		699		245		246		480		482
Total sales	$	351	$	291	$	965	$	890	$	311	$	313	$	617	$	614
Segment Adjusted EBITDA	$	134	$	106	$	372	$	316	$	131	$	112	$	251	$	238
Operating costs⁽²⁾	$	242	$	206	$	657	$	635	$	209	$	220	$	422	$	415
Average cost per dry metric ton of bauxite	$	19	$	18	$	18	$	18	$	17	$	19	$	17	$	18

In October 2019, the Company and representatives of the Australian Workers’ Union (AWU) reached agreement on the terms of a proposed new AWU Enterprise Agreement (EA) for employees at Alcoa’s Western Australian Operations. The proposed EA will be subject to an employee vote in November 2019.

Bauxite production increased 5%8% and 3% in the ~~third~~second quarter and six-month period of ~~2019~~2020, respectively, compared with the ~~third quarter~~corresponding periods of ~~2018,~~2019. The Bauxite segment achieved both a quarterly and first half production record for the ~~Bauxite segment. Compared with~~second quarter and six-month period of 2020, respectively. The improvement in both the ~~third quarter of 2018,~~quarterly and six-month comparable periods was primarily attributable to the ~~third quarter of 2019 had higher production at the Australian mines~~Willowdale (Australia), Juruti (Brazil), and ~~the~~ Boké (Guinea) mine. Bauxite production increased 4% for the nine-month period of 2019 compared with the nine-month period in 2018, primarily due to the increase in production at the Huntly (Australia) mine due to planned production increases. For both periods, the increased stability in the Alumina segment has contributed to the increase in bauxite production from increased demand.mines.

Third-party sales for the Bauxite segment decreased 1% and increased ~~49% and 21%~~4% in the ~~third~~second quarter and ~~nine-month~~six-month period of ~~2019,~~2020, respectively, compared with the corresponding periods of 2019. In the second quarter of 2020, the decrease was due to a lower average realized price, partially offset by an increase in ~~2018.~~shipments. The increase in ~~both periods~~the six-month period of 2020 was ~~primarily due to the~~principally caused by an increase in ~~volume driven~~shipments, partially offset by ~~higher production in addition to a higher~~lower average realized ~~price, primarily due to freight.~~price.

Intersegment sales ~~increased 12% and 5%~~were flat in the ~~third~~second quarter and ~~nine-month~~six-month period of 2020 compared with the corresponding periods of 2019 as a result of increased intersegment shipments offsetting the lower average realized price on intersegment sales. The increased intersegment shipments are due to higher production in the alumina segment driving higher intersegment bauxite demand.

Segment Adjusted EBITDA increased $19 and $13 in the second quarter and six-month period of 2020, respectively, compared with the corresponding periods ~~in 2018.~~of 2019. The ~~increase~~improvements in both periods ~~of 2019 was primarily driven by a higher average realized price in addition to higher volumes driven by higher production.~~

Segment Adjusted EBITDA increased $28 and $56 in third quarter and nine-month period of 2019, respectively, compared with the corresponding periods in 2018. The improvements in the third quarter of 2019 compared with the third quarter of 2018 iswere primarily the result of higher average realized price on intercompany sales and higher sales volume. The increase in the nine-month period of 2019 compared with the nine-month period of 2018 is mainly the result of a higher average realized price for intersegment salesincreased shipments combined with favorable foreign currency movements due to a stronger U.S. dollar against the Australian dollar and Brazilian real.

For the ~~fourth~~third quarter of ~~2019~~2020 in comparison with the ~~fourth~~third quarter of ~~2018, higher production at the Boké (Guinea) mine is projected, in addition to~~ 2019, a ~~higher~~lower average realized price for intersegment sales ~~partially offset by higher planned maintenance costs.~~is expected.

	Third quarter ended September 30,				Nine months ended September 30,				Second quarter ended June 30,				Six months ended June 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Production (kmt)		3,380		3,160		9,929		9,560		3,371		3,309		6,669		6,549
Third-party shipments (kmt)		2,381		2,233		7,009		6,894		2,415		2,299		4,780		4,628
Intersegment shipments (kmt)		1,049		1,083		3,091		3,211		987		1,070		2,062		2,042
Total shipments⁽¹⁾ (kmt)		3,430		3,316		10,100		10,105
Total shipments (kmt)										3,402		3,369		6,842		6,670
Third-party sales	$	771	$	1,101	$	2,532	$	3,083		603	$	864		1,310	$	1,761
Intersegment sales		369		544		1,231		1,534		289		445		625		862
Total sales	$	1,140	$	1,645	$	3,763	$	4,617	$	892	$	1,309	$	1,935	$	2,623
Segment Adjusted EBITDA	$	223	$	660	$	964	$	1,690	$	88	$	369	$	281	$	741
Average realized third-party price per metric ton of alumina	$	324	$	493	$	361	$	447	$	250	$	376	$	274	$	381
Operating costs⁽²⁾	$	902	$	969	$	2,750	$	2,896	$	788	$	925	$	1,632	$	1,848
Average cost per metric ton of alumina	$	263	$	292	$	272	$	287	$	232	$	275	$	238	$	277

In October 2019, the Company and representatives of the AWU reached agreement on the terms of a proposed new AWU Enterprise Agreement for employees at Alcoa’s Western Australian Operations. The proposed EA will be subject to an employee vote in November 2019.

At ~~September~~June 30, ~~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 of 2,519 kmt at June 30, 2019. The decrease in base and curtailed capacity ~~and base capacity were unchanged compared with September 30, 2018.~~was due to the permanent closure of the previously curtailed Point Comfort alumina refinery.

Alumina production increased by 7%2% in both the ~~third~~second quarter ~~of 2019 compared with the third quarter of 2018, a quarterly production record for the Alumina segment,~~ and ~~increased 4% in the 2019 nine-month period compared with the 2018 nine-month period.~~six-month comparable periods. Both increases were principally due to continued stabilization of operations across the refining system. During the second quarter of 2020, the Alumina segment achieved a record quarterly production rate (tonnes per day), and both the Wagerup (Australia) and São Luís (Brazil) refineries set first half production records for the six months ended June 30, 2020.

Third-party sales for the Alumina segment decreased 30% and 26% in the ~~third~~second quarter and six-month period of ~~2019 and 18% in the 2019 nine-month period~~2020, respectively, compared with the corresponding periods in ~~2018.~~2019. The decrease in both periods was primarily ~~related~~due to a decline in average realized price which was principally driven by a lower average alumina index price (on 30-day lag). ~~In third quarter of 2019, the decline in average realized~~Both price ~~was~~decreases were partially offset by ~~a 7%~~an increase in ~~volume.~~

~~Intersegment sales declined 32%~~shipments. Third-party shipments increased 5% and ~~20%~~3% in the ~~third~~second quarter and ~~nine-month~~six-month period of ~~2019,~~2020, respectively, compared with the corresponding periods in ~~2018,~~2019.

Intersegment sales declined 35% and 27% in the second quarter and six-month period of 2020, respectively, compared with the corresponding periods in 2019. The decrease in the second quarter was due primarily to a lower average realized price and, to a lesser extent, a decrease in shipments. The decrease in the six-month period was due to a lower average realized price ~~and decreased~~slightly offset by increased demand from the Aluminum segment. The ~~decreased~~increased demand from the Aluminum segment was ~~partially caused~~primarily driven by the ~~smelter curtailments and subsequent divestiture of the Avilés (Spain) and La Coruña (Spain) facilities and the curtailment~~restart at the Bécancour (Canada) smelter partially offset by the curtailment of the Intalco smelter (see Aluminum below).

Segment Adjusted EBITDA decreased ~~$437~~$281 and ~~$726~~$460 in the ~~third~~second quarter and ~~nine-month~~six-month period of ~~2019, respectively,~~2020 compared with the ~~same~~corresponding periods ~~in 2018.~~of 2019. The decline in the ~~third quarter period of 2019~~both periods was ~~largely attributed~~primarily attributable to the decline in average realized price of alumina, ~~and higher bauxite costs. These impacts were~~ partially offset by ~~increased volume, lower unit costs for caustic soda and~~ net favorable foreign currency movements due to a stronger U.S. dollar (particularly against the Australian dollar). The decline in the nine-month period of 2019 was primarily due to the decline in average realized price, increased maintenance expenses to support the stabilization of operations across the refining system, primarily in Australia, and higher bauxite costs. These unfavorable impacts were partially offset by net favorable foreign currency movements due to a stronger U.S. dollar, particularly against the Australian dollar and Brazilian real), lower ~~unit~~ costs for bauxite and caustic ~~soda.~~soda, as well as increased total shipments.

InFor the ~~fourth~~third quarter of ~~2019~~2020 in comparison with the ~~fourth~~third quarter of ~~2018, an increase in production is expected with~~ 2019, lower ~~unit~~ costs for both bauxite andcaustic soda ~~and an improvement~~partially offset by higher energy costs, primarily natural gas costs in ~~raw material consumption and maintenance activities. Higher bauxite costs~~Australia, are ~~expected to slightly reduce the impact of these favorable changes.~~expected.

	Third quarter ended September 30,				Nine months ended September 30,					Second quarter ended June 30,					Six months ended June 30,
	2019		2018		2019			2018
Third-party aluminum shipments⁽¹⁾ (kmt)		708		806		2,141			2,453
Total Aluminum information										2020			2019		2020		2019
Third-party aluminum shipments (kmt)											789			724		1,514		1,433
Third-party sales	$	1,677	$	2,198	$	5,169		$	6,722	$	1,475		$	1,757	$	3,073	$	3,492
Intersegment sales		4		6		11			14		2			4		5		7
Total sales	$	1,681	$	2,204	$	5,180		$	6,736	$	1,477		$	1,761	$	3,078	$	3,499
Segment Adjusted EBITDA⁽²⁾	$	43	$	84	$	(50	)	$	501	$	(34	)	$	3	$	28	$	(93	)

Primary aluminum information⁽³⁾										2020			2019		2020		2019
Production (kmt)		530		567		1,600			1,686		581			533		1,145		1,070
Third-party shipments⁽⁴⁾ (kmt)		627		673		1,893			2,049
Third-party shipments (kmt)											710			638		1,362		1,266
Third-party sales	$	1,341	$	1,658	$	4,117		$	5,176	$	1,202		$	1,382	$	2,499	$	2,776
Average realized third-party price per metric ton⁽⁵⁾	$	2,138	$	2,465	$	2,175		$	2,526	$	1,694		$	2,167	$	1,835	$	2,193
Total shipments⁽⁴⁾ (kmt)		651		696		1,946			2,137
Total shipments (kmt)											730			656		1,393		1,295
Operating costs⁽⁶⁾	$	1,425	$	1,754	$	4,505		$	5,169	$	1,306		$	1,512	$	2,633	$	3,080
Average cost per metric ton⁽²⁾	$	2,189	$	2,520	$	2,315		$	2,419	$	1,788		$	2,305	$	1,890	$	2,378

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

		September 30, 2019				September 30, 2018											June 30, 2020				June 30, 2019
Facility	Country	Base Capacity		Idle Capacity		Base Capacity		Idle Capacity		Base Change			Idle Change			Country	Base Capacity		Idle Capacity		Base Capacity		Idle Capacity		Base Change			Idle Change
Portland⁽¹⁾	Australia		197		30		197		30		—			—		Australia		197		30		197		30		—			—
São Luís (Alumar)⁽¹⁾	Brazil		268		268		268		268		—			—		Brazil		268		268		268		268		—			—
Baie Comeau	Canada		280		—		280		—		—			—		Canada		280		—		280		—		—			—
Bécancour⁽¹⁾	Canada		310		259		310		207		—			52		Canada		310		25		310		259		—			(234	)
Deschambault	Canada		260		—		260		—		—			—		Canada		260		—		260		—		—			—
Fjarðaál	Iceland		344		—		344		—		—			—		Iceland		344		—		344		—		—			—
Lista	Norway		94		—		94		—		—			—		Norway		94		—		94		—		—			—
Mosjøen	Norway		188		—		188		—		—			—		Norway		188		—		188		—		—			—
San Ciprián	Spain		228		—		228		—		—			—		Spain		228		—		228		—		—			—
Avilés	Spain		—		—		93		32		(93	)		(32	)	Spain		—		—		93		93		(93	)		(93	)
La Coruña	Spain		—		—		87		24		(87	)		(24	)	Spain		—		—		87		87		(87	)		(87	)
Intalco(2)	U.S.		279		49		279		49		—			—		U.S.		279		209		279		49		—			160
Massena West	U.S.		130		—		130		—		—			—		U.S.		130		—		130		—		—			—
Warrick	U.S.		269		108		269		161		—			(53	)	U.S.		269		108		269		108		—			—
Wenatchee	U.S.		146		146		146		146		—			—		U.S.		146		146		146		146		—			—
			2,993		860		3,173		917		(180	)		(57	)			2,993		786		3,173		1,040		(180	)		(254	)

Idle capacity at the Bécancour smelter ~~increased~~decreased by 52234 kmt from the ~~third~~second quarter ~~2018~~2019 to the ~~third~~second quarter ~~2019~~2020 as a result of ~~an additional curtailment in December 2018. This half potline curtailment was deemed necessary to ensure continued safety and maintenance due to retirements and departures among~~ the ~~salaried workforce from January 2018 to December 2018.~~ restart process. Due to the ~~lockout~~economic impacts of ~~bargained hourly employees, which commenced in January 2018,~~ the ~~salaried workforce~~COVID-19 pandemic, the restart at the Bécancour (Canada) smelter had been ~~operating~~slowed at the ~~remaining potline. In July 2019,~~end of the ~~United Steelworkers~~ ~~approved a new six-year labor contract~~first quarter of 2020 but has since resumed, and the ~~plant began the~~ ~~restart process on July 26, 2019. A recall~~operating capacity was at approximately 90 percent of the approximately 900 unionized employees who had been on lockout is being completed in accordance with a specific back-to-work protocol, with those on lockout generally being recalled within eight monthstotal nameplate capacity as of ~~the restart process commencement.~~June 30, 2020. The restart, ~~process is~~which was originally expected to be ~~completed within~~complete by the end of the second quarter of 2020, is now expected to be complete in the third quarter of 2020.

Base and idle capacity at the Avilés and La Coruña facilities decreased from the ~~third~~second quarter of ~~2018~~2019 to the ~~third~~second quarter of ~~2019~~2020 as a result of the curtailment (February 2019) and subsequent divestiture (July 2019) of these smelters. In addition to the smelters at these locations, the casthouse at each facility and the paste plant at La Coruña were also divested. ~~See Note C~~ ~~to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q~~ ~~for additional information related to the curtailment and divestiture of these facilities.~~

Idle capacity at the ~~Warrick~~Intalco (Washington) smelter ~~decreased~~has increased by 53160 kmt from the second quarter of 2019 to the second quarter of 2020 as a result of the curtailment process, which was announced April 22, 2020. The full capacity of 279 kmt at the Intalco smelter is expected to be curtailed during the third quarter of 2018 to the third quarter of 2019. The Company completed the planned restart of the third potline in December 2018, finalizing the previously announced restart plan for the Warrick smelter. The smelter capacity restarted directly supplies the existing rolling mill at the location, improving efficiency of the integrated site and providing an additional source of metal to help meet production volume needs.

In September 2019, members of the United Steelworkers (USW) ratified a new labor agreement, covering approximately 1,700 active employees, primarily from the Aluminum segment. The new agreement, which is now in effect, covers employees represented by the USW at Warrick Operations in Indiana, Massena Operations in New York, Wenatchee Works in Washington, Gum Springs in Arkansas, and Point Comfort in Texas.2020.

Primary aluminum production ~~decreased~~increased 9% and 7% ~~and 5%~~ in the ~~third quarter~~second and ~~nine-month~~the six-month period of ~~2019,~~2020, respectively, compared with the corresponding periods in ~~2018,~~2019, principally due to the ~~capacity changes~~Bécancour smelter restart discussed above.

Third-party sales for the Aluminum segment decreased ~~24%~~16% and ~~23%~~12% in the ~~third~~second quarter and ~~nine-month~~six-month period of ~~2019,~~2020, respectively, compared with the corresponding periods in ~~2018. The decrease was~~2019, primarily ~~attributable~~due to a reduction in realized metal ~~price~~

~~and a decrease in overall aluminum volume.~~prices. The change in average realized price of primary aluminum was mainly driven by a ~~14%~~17% and 12% lower average LME price (on 15-day lag) for ~~both~~ the ~~third~~comparable second quarter and ~~nine-month period~~six-month periods, respectively, combined with a decrease in regional and product premiums for both comparative periods. During the second quarter and six-month period of 2019, product premiums experienced pricing benefits from the section 232 tariffs which were not repeated in the ~~nine-month period ended September 30, 2019.~~

2020 comparable periods. Additionally, product premiums also decreased from reduced demand for value-added products. The unfavorable impact of lower ~~overall~~metal prices was partially offset by an increase in sales volume ~~was~~driven primarily from the ~~result of a decline in flat-rolled aluminum shipments caused by the end~~restart of the ~~tolling arrangement with Arconic~~Bécancour smelter in ~~December 2018, the curtailments and subsequent divestiture of the Avilés and La Coruña facilities, and the half potline curtailment at the Bécancour (Canada) smelter.~~both comparative periods.

Segment Adjusted EBITDA decreased ~~$41 and $551~~$37 in the ~~third~~second quarter of 2020 compared with the second quarter of 2019. The decrease is mainly the result of lower metal prices and ~~nine-month~~an unfavorable mix of value-added products. These unfavorable impacts were partially offset by decreases in the cost of alumina and carbon, and favorable impacts from the restart of the Bécancour smelter and the divestiture of the Avilés and La Coruña facilities. Segment Adjusted EBITDA increased $121 during the six-month period of ~~2019, respectively,~~2020, compared with the corresponding ~~periods~~period in ~~2018.~~2019. The ~~decline~~change during this period was mainly driven by favorable impacts from lower alumina, carbon and energy prices, the restart of the Bécancour smelter and the divestiture of the Avilés and La Coruña facilities, favorable impacts related to Section 232 tariffs, favorable currency impacts, and a favorable impact from the non-recurrence of a bad debt reserve recorded in 2019 against a Canadian customer receivable due to bankruptcy. These favorable impacts were partially offset by lower realized metal prices and unfavorable product mix from lower demand for value-added products.

For the third quarter of 2020 compared with the third quarter of 2019, ~~was mainly related to lower~~continued near-term challenges from low metal prices ~~in addition to lower energy sales prices in Brazil which were partially offset by~~could occur. Additionally, favorable impacts from the ~~absence of Section 232 tariffs on aluminum imported from Canada to the United States in the third quarter of 2019~~Bécancour smelter restart, Intalco smelter curtailment, and lower raw materials costs ~~for alumina and carbon materials. The decline in the 2019 nine-month period was mainly related~~are expected to ~~lower metal prices and regional premiums, lower energy sales prices in Brazil, higher energy production costs~~ ~~and~~ ~~the establishment of a bad debt reserve against a Canadian customer receivable in the first quarter of 2019. The 2019 nine-month period decline was~~be partially offset by lower ~~costs~~margins from lower demand for ~~alumina and~~ ~~favorable foreign currency movements due to a stronger U.S. dollar mainly against the Australian dollar and Brazilian real~~value-added products..

In the fourth quarter of 2019 compared with the fourth quarter of 2018, lower production costs are anticipated, mainly driven by lower alumina and carbon prices, partially offset by lower metal prices. Additionally, a positive impact resulting from the elimination of Section 232 tariffs on Canadian imports is expected.

	Third quarter ended September 30,				Nine months ended September 30,				Second quarter ended June 30,				Six months ended June 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Bauxite	$	100	$	67	$	232	$	191	$	66	$	67	$	137	$	132
Alumina		771		1,101		2,532		3,083		603		864		1,310		1,761
Aluminum:
Primary aluminum		1,341		1,658		4,117		5,176		1,202		1,382		2,499		2,776
Other⁽¹⁾		336		540		1,052		1,546		273		375		574		716
Total segment third-party sales		2,548		3,366		7,933		9,996		2,144		2,688		4,520		5,385
Other		19		24		64		63		4		23		9		45
Consolidated sales	$	2,567	$	3,390	$	7,997	$	10,059	$	2,148	$	2,711	$	4,529	$	5,430

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

	Third quarter ended September 30,						Nine months ended September 30,						Second quarter ended June 30,							Six months ended June 30,
	2019			2018			2019			2018			2020				2019			2020			2019
Bauxite	$	242		$	206		$	657		$	635		$	209			$	220		$	422		$	415
Alumina		902			969			2,750			2,896			788				925			1,632			1,848
Primary aluminum		1,425			1,754			4,505			5,169			1,306				1,512			2,633			3,080
Other⁽¹⁾		333			485			1,060			1,438			312		��		362			626			727
Total segment operating costs		2,902			3,414			8,972			10,138			2,615				3,019			5,313			6,070
Eliminations⁽²⁾		(649	)		(795	)		(2,035	)		(2,192	)		(566	)			(694	)		(1,132	)		(1,436	)
Provision for depreciation, depletion, amortization⁽³⁾		(177	)		(165	)		(507	)		(536	)		(146	)			(166	)		(309	)		(330	)
Other⁽⁴⁾		44			31			59			130			29				30			85			65
Consolidated cost of goods sold	$	2,120		$	2,485		$	6,489		$	7,540		$	1,932			$	2,189		$	3,957		$	4,369

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

	Third quarter ended September 30,						Nine months ended September 30,						Second quarter ended June 30,						Six months ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Total segment Adjusted EBITDA⁽¹⁾	$	400		$	850		$	1,286		$	2,507
Total Segment Adjusted EBITDA													$	185		$	484		$	560		$	886
Unallocated amounts:
Transformation⁽²⁾⁽¹⁾		(6	)		1			(1	)		(2	)		(10	)		3			(26	)		5
Intersegment eliminations^(1),(3)		25			21			110			(55	)
Intersegment eliminations														30			(1	)		22			85
Corporate expenses⁽⁴⁾⁽²⁾		(27	)		(22	)		(79	)		(75	)		(21	)		(28	)		(48	)		(52	)
Provision for depreciation, depletion, and amortization		(184	)		(173	)		(530	)		(559	)		(152	)		(174	)		(322	)		(346	)
Restructuring and other charges, net		(185	)		(177	)		(668	)		(389	)		(37	)		(370	)		(39	)		(483	)
Interest expense		(30	)		(33	)		(90	)		(91	)		(32	)		(30	)		(62	)		(60	)
Other expenses, net		(27	)		(2	)		(118	)		(32	)
Other (expenses) income, net														(51	)		(50	)		81			(91	)
Other⁽⁵⁾⁽³⁾		(18	)		(10	)		(47	)		(69	)		(17	)		(11	)		(52	)		(29	)
Consolidated (loss) income before income taxes		(52	)		455			(137	)		1,235			(105	)		(177	)		114			(85	)
Provision for income taxes		(95	)		(260	)		(361	)		(569	)		(45	)		(116	)		(125	)		(266	)
Net income attributable to noncontrolling interest		(74	)		(201	)		(324	)		(467	)		(47	)		(109	)		(106	)		(250	)
Consolidated net (loss) income attributable to Alcoa Corporation	$	(221	)	$	(6	)	$	(822	)	$	199
Consolidated net loss attributable to Alcoa Corporation													$	(197	)	$	(402	)	$	(117	)	$	(601	)

See the Environmental Matters section of Note MP 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 ability to obtain additional financing and cost of borrowing. 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 or refinance or renegotiate our outstanding debt or credit agreements on terms acceptable to the Company. Additionally, the impact on market conditions from the COVID-19 pandemic 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:

Cash provided from operations was $424 in the 2019 nine-month period compared with cash used for operations of $87 in the same period of 2018, resulting in an increase in cash provided of $511. Notable changes to sources and (uses) of cash include:

Cash used for financing activities was $351 in the 2019 nine-month period compared with cash provided from financing activities of $6 in the corresponding period of 2018, resulting in an unfavorable change of $357.

~~The use of cash in the 2019 nine-month period was primarily the result of $347 in net distributions to Alumina Limited (see Noncontrolling interest in Results of Operations above)~~.

The source of cash in the 2018 nine-month period was primarily the result of $553 in additions to debt, virtually all of which was related to $492 in net proceeds from the issuance of new senior debt securities (see below) and $60 in borrowings under an existing term loan by Alcoa of Australia, and $23 in proceeds from employee exercises of 0.9 million legacy stock options at a weighted average exercise price of $25.06 per share. These items were largely offset by $457 in net distributions to Alumina Limited (see Noncontrolling interest in Results of Operations above) and $105 in payments on debt, mostly related to the early repayment ($94) of a majority of the remaining outstanding loans from Brazil’s National Bank for Economic and Social Development associated with the construction of the Estreito hydroelectric power project.

In October 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 $143) which is guaranteed on an unsecured basis by Alcoa Corporation. Additionally, in October 2019, a wholly-owned subsidiary of the Company entered into a $120 three-year revolving credit facility agreement secured by certain customer receivables. ~~Alcoa Corporation guarantees the performance obligations of the wholly-owned subsidiaries under the facility.~~ ~~These two facilities, along with our existing Revolving Credit Facility, provide the Company with additional liquidity options to utilize in the ordinary course of business.~~

In May 2018, Alcoa Nederland Holding B.V. (ANHBV), a wholly-owned subsidiary of Alcoa Corporation, completed a Rule 144A (U.S. Securities Act of 1933, as amended) debt offering for $500 of 6.125% Senior Notes due 2028 (the “2028 Notes”). ANHBV received $492 in net proceeds from the debt offering reflecting a discount to the initial purchasers of the 2028 Notes. The net proceeds, along with available cash on hand, were used to make discretionary contributions to certain U.S. defined benefit pension plans (see Cash from Operations above). The discount to the initial purchasers, as well as costs to complete the financing, was deferred and is being amortized to interest expense over the term of the 2028 Notes. Interest on the 2028 Notes is paid semi-annually in November and May. Additionally, the 2028 Notes are guaranteed on a senior unsecured basis by Alcoa Corporation and its subsidiaries that are guarantors under the Company’s Amended Revolving Credit Agreement.

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 ~~May 1, 2019,~~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 July 7, Moody’s reaffirmed the Ba1 rating of Alcoa’s long-term debt as well as the stable outlook.

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

On June 26, 2020 Standard and Poor’s Global Ratings (S&P) affirmed the BB+ rating of Alcoa’s long-term debt and revised the outlook to ~~stable~~negative.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Cash provided from investing activities was ~~$334~~$28 in the 2020 six-month period compared with cash used for investing activities of $258 in the 2019 ~~nine-month period compared with $257 in the 2018 nine-month~~six-month period, resulting in ~~an increase~~a favorable change of $286.

In the 2020 six-month period, the source of cash was primarily attributable to proceeds from the sale of assets of $199, primarily the Gum Springs waste treatment facility, partially offset by $168 in ~~cash used~~capital expenditures, composed of ~~$77.~~$137 in sustaining projects and $31 in return-seeking projects.

In the 2019 ~~nine-month~~six-month period, the use of cash was largely attributable to ~~$245~~$158 in capital expenditures, composed of ~~$181~~$112 in sustaining projects and ~~$64~~$46 in return-seeking projects, and additions to investments of ~~$112,~~$111, partially offset by proceeds from the sale of assets of ~~$23.~~$11.

InAs permitted under the ~~2018 nine-month period,~~CARES Act, the ~~use~~Company is deferring approximately $220 of ~~cash~~pension contributions, primarily for the U.S. plans, from 2020 to January 1, 2021. As a result, as of June 30, 2020, Alcoa’s minimum required contribution to defined benefit pension plans in 2020 is now estimated to be approximately $75, of which approximately $40 is primarily for U.S. plans and was ~~mainly due~~contributed in January 2020 before CARES was enacted, and approximately $19 was contributed to ~~$251 in capital expenditures, composed of $200 in sustaining and $51 in return-seeking projects.~~non-U.S. plans during the 2020 six-month period.

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.

See the Derivatives and Other Financial Instruments section of Note JM 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 ~~September~~June 30, ~~2019.~~2020.

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

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

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

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

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

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

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

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

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

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.

⁽¹⁾Certain appendices have been omitted pursuant to Item 601(a)(5) of Regulation S-K promulgated by the Securities and Exchange Commission (SEC). The Company agrees to furnish a supplemental copy of any omitted appendix to the SEC upon request.

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	3027

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4041

Item 4.	Controls and Procedures	4041

PART II – OTHER INFORMATION		4142

Item 1A.	Risk Factors	42

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

Item 4.	Mine Safety Disclosures	4143

Item 6.	Exhibits	4244

SIGNATURES		4345


	~~Fair value at~~ September 30, 2019		~~Unobservable~~ ~~input~~	~~Range~~ ~~($ in full amounts)~~
~~Assets:~~

~~Financial contract~~		~~$119~~	~~Interrelationship of forward energy price and the Consumer Price Index and price of electricity beyond forward curve~~	~~Electricity: $70.04 per megawatt hour in 2019 to $55.30 per megawatt hour in 2021~~
~~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: $1,708 per metric ton in October 2019 to $1,728 per metric ton in December 2019~~ ~~Midwest premium: $0.1800 per pound in October 2019 and to $0.1900 per pound in December 2019~~ ~~Electricity: rate of 2 million megawatt hours per year~~

~~Liabilities:~~

~~Embedded aluminum derivative~~		~~201~~	~~Interrelationship of LME price to the amount of megawatt hours of energy needed to produce the forecasted metric tons of aluminum~~	~~Aluminum: $1,708 per metric ton in 2019 to $2,257 per metric ton in 2027~~ ~~Electricity: rate of 4 million megawatt hours per year~~

~~Embedded aluminum derivatives~~		~~206~~	~~Interrelationship of LME and Midwest premium price to the amount of megawatt hours of energy needed to produce the forecasted metric tons of aluminum~~	~~Aluminum: $1,708 per metric ton in 2019 to $2,365 per metric ton in December 2029 (two contracts) and $2,660 per metric ton in 2036 (one contract)~~ ~~Midwest premium: $0.1800 per pound in 2019 to $0.1900 per pound in 2029 (two contracts) and 2036 (one contract)~~ ~~Electricity: rate of 11 million megawatt hours per year~~

~~Embedded aluminum derivative~~		2	~~Interrelationship of LME price to overall energy price~~	~~Aluminum: $1,847 per metric ton in October 2019 to December 2019~~

~~Embedded credit derivative~~		18	~~Estimated spread between the respective 30-year debt yield of Alcoa Corporation and the counterparty~~	~~3.08% (30-year debt yields: Alcoa Corporation – 6.44% (estimated) and counterparty – 3.36%)~~

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

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 third quarter ended September 30, 2018:
Cost of goods sold	$	2,534		$	(49	)	$	2,485
Provision for income taxes		251			9			260
Net income		155			40			195
Net income attributable to noncontrolling interest		196			5			201
Net loss attributable to Alcoa Corporation		(41	)		35			(6	)
Earnings per share attributable to Alcoa Corporation common shareholders:
Basic	$	(0.22	)	$	0.19		$	(0.03	)
Diluted		(0.22	)		0.19			(0.03	)

Statement of Consolidated Comprehensive Income for the third quarter ended September 30, 2018:
Comprehensive income	$	337		$	40		$	377
Comprehensive income attributable to noncontrolling interest		151			5			156
Comprehensive income attributable to Alcoa Corporation		186			35			221

Statement of Consolidated Operations for the nine months ended September 30, 2018:
Cost of goods sold	$	7,547		$	(7	)	$	7,540
Provision for income taxes		569			—			569
Net income		659			7			666
Net income attributable to noncontrolling interest		475			(8	)		467
Net income attributable to Alcoa Corporation		184			15			199
Earnings per share attributable to Alcoa Corporation common shareholders:
Basic	$	0.99		$	0.08		$	1.07
Diluted		0.97			0.09			1.06

Statement of Consolidated Comprehensive Income for the nine months ended September 30, 2018:
Comprehensive income	$	864		$	7		$	871
Comprehensive income attributable to noncontrolling interest		238			(8	)		230
Comprehensive income attributable to Alcoa Corporation		626			15			641

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 nine months ended September 30, 2018:
Net income	$	659		$	7		$	666
Deferred income taxes		(16	)		—			(16	)
(Increase) in inventories		(279	)		(7	)		(286	)

	As Computed under LIFO			As Reported under Average Cost			Effect of Change
Statement of Consolidated Operations for the third quarter ended September 30, 2019:
Cost of goods sold	$	2,104		$	2,120		$	16
Provision for income taxes		92			95			3
Net loss		(128	)		(147	)		(19	)
Net income attributable to noncontrolling interest		70			74			4
Net loss attributable to Alcoa Corporation		(198	)		(221	)		(23	)
Earnings per share attributable to Alcoa Corporation common shareholders:
Basic	$	(1.07	)	$	(1.19	)	$	(0.12	)
Diluted		(1.07	)		(1.19	)		(0.12	)

Statement of Consolidated Comprehensive Income for the third quarter ended September 30, 2019:
Comprehensive loss	$	(356	)	$	(375	)	$	(19	)
Comprehensive loss attributable to noncontrolling interest		(14	)		(10	)		4
Comprehensive loss attributable to Alcoa Corporation		(342	)		(365	)		(23	)

Statement of Consolidated Operations for the nine months ended September 30, 2019:
Cost of goods sold	$	6,495		$	6,489		$	(6	)
Provision for income taxes		348			361			13
Net loss		(491	)		(498	)		(7	)
Net income attributable to noncontrolling interest		305			324			19
Net loss attributable to Alcoa Corporation		(796	)		(822	)		(26	)
Earnings per share attributable to Alcoa Corporation common shareholders:
Basic	$	(4.29	)	$	(4.43	)	$	(0.14	)
Diluted		(4.29	)		(4.43	)		(0.14	)

Statement of Consolidated Comprehensive Income for the nine months ended September 30, 2019:
Comprehensive loss	$	(849	)	$	(856	)	$	(7	)
Comprehensive income attributable to noncontrolling interest		231			250			19
Comprehensive loss attributable to Alcoa Corporation		(1,080	)		(1,106	)		(26	)

Consolidated Balance Sheet as of September 30, 2019:
Inventories	$	1,471		$	1,649		$	178
Prepaid expenses and other current assets		236			245			9
Retained deficit		(455	)		(252	)		203
Noncontrolling interest		1,887			1,871			(16	)

Statement of Consolidated Cash Flows for the nine months ended September 30, 2019:
Net loss	$	(491	)	$	(498	)	$	(7	)
Deferred income taxes		46			59			13
Decrease in inventories		117			111			(6	)

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

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

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

Amounts recognized in the Consolidated Balance Sheet at September 30, 2019:
Properties, plants and equipment, net	$	158
Other current liabilities		62
Other noncurrent liabilities and deferred credits		96
Total operating lease liabilities	$	158

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



4.1	Indenture, dated July 13, 2020, among Alcoa Nederland Holding B.V., Alcoa Corporation, certain subsidiaries of Alcoa Corporation, and The Bank of New York Mellon Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed July 13, 2020 (File No. 1-37816))

10.1	Amendment No. 13 dated as of ~~August 16, 2019~~June 24, 2020 to the Revolving Credit Agreement dated as of September 16, 2016, as amended as of October 26, 2016, as amended and restated as of November 14, 2017 and as amended and restated as of November 21, 2018, as amended on August 16, 2019, and as amended on April 21, 2020, among Alcoa Corporation, Alcoa Nederland Holding B.V., the lenders and issuers from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent for the lenders and issuers ~~(filed herewith)~~⁽¹⁾

~~10.2~~	~~Terms and Conditions for Employee Restricted Share Units, effective October 1, 2019 (filed herewith)~~⁽¹⁾

~~10.3~~	~~Terms and Conditions for Employee Stock Option Awards, effective October 1, 2019 (filed herewith)~~⁽¹⁾

~~10.4~~	~~Terms and Conditions for Employee Special Retention Awards, effective October 1, 2019 (filed herewith)~~⁽¹⁾

~~10.5~~	~~Amended and Restated Change in Control Severance Plan dated July 30, 2019 (filed herewith)~~⁽¹⁾

~~10.6~~	(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form ~~of Amended and Restated Executive Severance Agreement for the Chief Executive Officer and the Chief Financial Officer, effective as of July 30, 2019 (filed herewith)~~⁽¹⁾

~~10.7~~	~~Form of Amended and Restated Executive Severance Agreement for Corporate Officers, effective as of July 30, 2019 (filed herewith)~~⁽¹⁾8-K filed June 25, 2020 (File No. 1-37816)

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

~~October 31, 2019~~July 29, 2020						By /s/ ~~WILLIAM~~William F. ~~OPLINGER~~Oplinger
Date						William F. Oplinger
						Executive Vice President and
						Chief Financial Officer
						(Principal Financial Officer)

~~October 31, 2019~~July 29, 2020						By /s/ ~~MOLLY~~Molly S. ~~BEERMAN~~Beerman
Date						Molly S. Beerman
						Senior Vice President and Controller
						(Principal Accounting Officer)