0001675149 us-gaap:RetainedEarningsMember 2021-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, ~~2021~~2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to _____

Commission File Number 1-37816

ALCOA CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

81-1789115

(I.R.S. Employer

Identification No.)

201 Isabella Street, Suite 500,

Pittsburgh, Pennsylvania

(Address of principal executive offices)

15212-5858

(Zip Code)

412-315-2900

(Registrant’s telephone number, including area code)

Not applicable

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

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

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

New York Stock Exchange

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

Indicate by check mark whether the registrant has submitted electronically 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.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

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 April ~~30, 2021, 186,724,745~~29, 2022, 184,448,686 shares of common stock, par value $0.01 per share, of the registrant were outstanding.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION		1

Item 1.	Financial Statements	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2423

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3937

Item 4.	Controls and Procedures	3937

PART II – OTHER INFORMATION		4038

Item 1.	Legal Proceedings	4038

Item 1A.	Risk Factors	4038

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40

~~Item 4.~~	~~Mine Safety Disclosures~~	4039

Item 6.	Exhibits	4140

SIGNATURES		4241

Forward-Looking Statements

This report ~~may contain~~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 “aims,” “ambition,” “anticipates,” “believes,” “could,” “develop,” “endeavors,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “outlook,” “potential,” “plans,” “projects,” “reach,” “seeks,” “sees,” “should,” “strive,” “targets,” “will,” “working,” “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 or sustainability ~~performance;~~performance (including our ability to execute on strategies related to environmental, social and governance matters); statements about strategies, outlook, and business and financial prospects; and statements about capital allocation and 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~~to the global economy and our industry, business and financial condition ~~results of operations,~~caused by various worldwide or ~~cash flows~~macroeconomic events, such as the COVID-19 pandemic and ~~judgments~~the ongoing conflict between Russia and ~~assumptions used in our estimates;~~Ukraine, and related regulatory developments; (b) material adverse changes in aluminum industry conditions, including global supply and demand conditions and fluctuations in London Metal Exchange-based prices and premiums, as applicable, for primary aluminum and other products, and fluctuations in indexed-based and spot prices for alumina; (c) ~~deterioration~~changes in global economic and financial market conditions generally, such as inflation and interest rate increases, and which may also affect Alcoa Corporation’s ability to obtain credit or financing upon acceptable terms or at all; (d) unfavorable changes in the markets served by Alcoa Corporation; (e) the impact of changes in foreign currency exchange and tax rates on costs and results; (f) increases in energy or raw material costs, or uncertainty of or disruption to energy ~~supply~~ or raw ~~materials;~~materials supply, and to the supply chain including logistics; (g) the inability to execute on strategies related to or achieve improvement in profitability and margins, cost savings, cash generation, revenue growth, fiscal discipline, environmental- and social-related goals and targets (including due to delays in scientific and technological developments), or strengthening of competitiveness and operations anticipated from portfolio actions, operational and productivity improvements, technology advancements, and other initiatives; (h) the inability to realize expected benefits, in each case as planned and by targeted completion dates, from acquisitions, divestitures, restructuring activities, facility closures, curtailments, restarts, expansions, or joint ventures; (i) political, economic, trade, legal, public health and safety, and regulatory risks in the countries in which Alcoa Corporation operates or sells products; (j) labor disputes and/or work stoppages and strikes; (k) the outcome of contingencies, including legal and tax proceedings, government or regulatory investigations, and environmental remediation; (l) the impact of cyberattacks and potential information technology or data security breaches; (m) risks associated with long-term debt obligations; (n) the timing and amount of future cash dividends and share repurchases; (o) declines in the discount rates used to measure pension and other postretirement benefit liabilities or lower-than-expected investment returns on pension assets, or unfavorable changes in laws or regulations that govern pension plan funding; ~~(h) the inability to achieve improvement in profitability~~ and, margins, cost savings, cash generation, revenue growth, fiscal discipline, sustainability targets, or strengthening of competitiveness and operations anticipated from portfolio actions, operational and productivity improvements, technology advancements, and other initiatives; (i) the inability to realize expected benefits, in each case as planned and by targeted completion dates, from acquisitions, divestitures, restructuring activities, facility closures, curtailments, restarts, expansions, or joint ventures; (j) political, economic, trade, legal, public health and safety, and regulatory risks in the countries in which Alcoa Corporation operates or sells products; (k) labor disputes and/or work stoppages; (l) the outcome of contingencies, including legal and tax proceedings, government or regulatory investigations, and environmental remediation; (m) the impact of cyberattacks and potential information technology or data security breaches; (n) risks associated with long-term debt obligations; and (o)(p) the other risk factors discussed in Part I Item 1A of Alcoa Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 and other reports filed by Alcoa Corporation with the U.S. Securities and Exchange Commission. Alcoa Corporation disclaims any obligation to update publicly any forward-looking statements,

whether in response to

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

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Alcoa Corporation and Subsidiaries

Statement of Consolidated Operations (unaudited)

(in millions, except per-share amounts)

	First quarter ended March 31,						First quarter ended March 31,
	2021			2020			2022			2021
Sales (E)	$	2,870		$	2,381		$	3,293		$	2,870
Cost of goods sold (exclusive of expenses below)		2,292			2,025			2,181			2,292
Selling, general administrative, and other expenses		52			60			44			52
Research and development expenses		7			7			9			7
Provision for depreciation, depletion, and amortization		182			170			160			182
Restructuring and other charges, net (D)		7			2			125			7
Interest expense		42			30			25			42
Other income, net ~~(Q)~~(P)		(24	)		(132	)		(14	)		(24	)
Total costs and expenses		2,558			2,162			2,530			2,558
Income before income taxes		312			219			763			312
Provision for income taxes		93			80			210			93
Net income		219			139			553			219
Less: Net income attributable to noncontrolling interest		44			59			84			44
NET INCOME ATTRIBUTABLE TO ALCOA CORPORATION	$	175		$	80		$	469		$	175
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON SHAREHOLDERS (F):
Basic	$	0.94		$	0.43		$	2.54		$	0.94
Diluted	$	0.93		$	0.43		$	2.49		$	0.93

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

Alcoa Corporation and Subsidiaries

Statement of Consolidated Comprehensive Income (unaudited)

(in millions)

	Alcoa Corporation						Noncontrolling interest						Total						Alcoa Corporation						Noncontrolling interest					Total
	First quarter ended March 31,						First quarter ended March 31,						First quarter ended March 31,						First quarter ended March 31,						First quarter ended March 31,					First quarter ended March 31,
	2021			2020			2021			2020			2021			2020			2022			2021			2022		2021			2022			2021
Net income	$	175		$	80		$	44		$	59		$	219		$	139		$	469		$	175		$	84	$	44		$	553		$	219
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		131			38			1			—			132			38			22			131			1		1			23			132
Foreign currency translation adjustments		(176	)		(663	)		(60	)		(245	)		(236	)		(908	)		326			(176	)		98		(60	)		424			(236	)
Net change in unrecognized gains/losses on cash flow hedges		(204	)		701			(3	)		(20	)		(207	)		681			(830	)		(204	)		1		(3	)		(829	)		(207	)
Total Other comprehensive (loss) income, net of tax		(249	)		76			(62	)		(265	)		(311	)		(189	)		(482	)		(249	)		100		(62	)		(382	)		(311	)
Comprehensive (loss) income	$	(74	)	$	156		$	(18	)	$	(206	)	$	(92	)	$	(50	)	$	(13	)	$	(74	)	$	184	$	(18	)	$	171		$	(92	)

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

Alcoa Corporation and Subsidiaries

Consolidated Balance Sheet (unaudited)

(in millions)

	March 31, 2021			December 31, 2020			March 31, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents ~~(M)~~(L)	$	2,544		$	1,607		$	1,554		$	1,814
Receivables from customers ~~(I)~~		587			471			952			757
Other receivables		90			85			98			127
Inventories ~~(J)~~(I)		1,417			1,398			2,495			1,956
Fair value of derivative instruments (M)		15			21
Assets held for sale (C)		—			648
Fair value of derivative instruments (L)								64			14
Prepaid expenses and other current assets		238			290			435			358
Total current assets		4,891			4,520			5,598			5,026
Properties, plants, and equipment		20,199			20,522			20,445			19,753
Less: accumulated depreciation, depletion, and amortization		13,269			13,332			13,621			13,130
Properties, plants, and equipment, net		6,930			7,190			6,824			6,623
Investments (H)		1,055			1,051			1,224			1,199
Deferred income taxes		653			655			667			506
Fair value of derivative instruments (L)								20			7
Other noncurrent assets		1,402			1,444			1,655			1,664
Total assets	$	14,931		$	14,860		$	15,988		$	15,025
LIABILITIES
Current liabilities:
Accounts payable, trade	$	1,284		$	1,403		$	1,645		$	1,674
Accrued compensation and retirement costs		365			395			357			383
Taxes, including income taxes		92			91			358			374
Fair value of derivative instruments (M)		181			103
Liabilities held for sale (C)		—			242
Fair value of derivative instruments (L)								514			274
Other current liabilities		554			525			591			517
Long-term debt due within one year (K & M)		745			2
Long-term debt due within one year (J & L)								1			1
Total current liabilities		3,221			2,761			3,466			3,223
Long-term debt, less amount due within one year (K & M)		2,214			2,463
Accrued pension benefits (L)		1,393			1,492
Accrued other postretirement benefits (L)		671			744
Long-term debt, less amount due within one year (J & L)								1,727			1,726
Accrued pension benefits (K)								407			417
Accrued other postretirement benefits (K)								642			650
Asset retirement obligations		596			625			637			622
Environmental remediation (P)		278			293
Fair value of derivative instruments (M)		923			742
Environmental remediation (O)								264			265
Fair value of derivative instruments (L)								1,795			1,048
Noncurrent income taxes		204			209			192			191
Other noncurrent liabilities and deferred credits		558			515			601			599
Total liabilities		10,058			9,844			9,731			8,741
CONTINGENCIES AND COMMITMENTS (P)
CONTINGENCIES AND COMMITMENTS (O)
EQUITY
Alcoa Corporation shareholders’ equity:
Common stock		2			2			2			2
Additional capital		9,674			9,663			9,537			9,577
Accumulated deficit		(550	)		(725	)
Retained earnings (deficit)								114			(315	)
Accumulated other comprehensive loss (G)		(5,878	)		(5,629	)		(5,074	)		(4,592	)
Total Alcoa Corporation shareholders’ equity		3,248			3,311			4,579			4,672
Noncontrolling interest		1,625			1,705			1,678			1,612
Total equity		4,873			5,016			6,257			6,284
Total liabilities and equity	$	14,931		$	14,860		$	15,988		$	15,025

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

Alcoa Corporation and Subsidiaries

Statement of Consolidated Cash Flows (unaudited)

(in millions)

	Three months ended March 31,						Three months ended March 31,
	2021			2020			2022			2021
CASH FROM OPERATIONS
Net income	$	219		$	139		$	553		$	219
Adjustments to reconcile net income to cash from operations:
Depreciation, depletion, and amortization		182			170			160			182
Deferred income taxes		18			23			(4	)		18
Equity earnings, net of dividends		(11	)		—			(25	)		(11	)
Restructuring and other charges, net (D)		7			2			125			7
Net gain from investing activities – asset sales (Q)		(27	)		(177	)
Net loss (gain) from investing activities – asset sales (P)								1			(27	)
Net periodic pension benefit cost ~~(L)~~(K)		12			33			14			12
Stock-based compensation		8			8			9			8
Provision for bad debt expense		—			2
Other		(1	)		4			22			(1	)
Changes in assets and liabilities, excluding effects of divestitures and foreign currency translation adjustments:
(Increase) in receivables		(212	)		(70	)		(120	)		(212	)
(Increase) Decrease in inventories		(68	)		41
Decrease in prepaid expenses and other current assets		57			11
(Increase) in inventories								(479	)		(68	)
(Increase) Decrease in prepaid expenses and other current assets								(15	)		57
(Decrease) in accounts payable, trade		(64	)		(121	)		(81	)		(64	)
Increase (Decrease) in accrued expenses		3			(85	)
(Decrease) Increase in accrued expenses								(72	)		3
(Decrease) in taxes, including income taxes		(1	)		(11	)		(42	)		(1	)
Pension contributions (L)		(63	)		(48	)
(Increase) Decrease in noncurrent assets		(22	)		32
Pension contributions (K)								(4	)		(63	)
Decrease (Increase) in noncurrent assets								29			(22	)
(Decrease) in noncurrent liabilities		(31	)		(43	)		(37	)		(31	)
CASH PROVIDED FROM (USED FOR) OPERATIONS		6			(90	)
CASH PROVIDED FROM OPERATIONS								34			6
FINANCING ACTIVITIES
Additions to debt (original maturities greater than three months)		495			—			—			495
Proceeds from the exercise of employee stock options		4			—			21			4
Repurchase of common stock								(75	)		—
Dividends paid on Alcoa common stock								(18	)		—
Payments related to tax withholding on stock-based compensation awards								(19	)		(1	)
Financial contributions for the divestiture of businesses (D)		(6	)		(12	)		(3	)		(6	)
Contributions from noncontrolling interest								46			—
Distributions to noncontrolling interest		(62	)		(31	)		(162	)		(62	)
Other		(3	)		(1	)		1			(2	)
CASH PROVIDED FROM (USED FOR) FINANCING ACTIVITIES		428			(44	)
CASH (USED FOR) PROVIDED FROM FINANCING ACTIVITIES								(209	)		428
INVESTING ACTIVITIES
Capital expenditures		(75	)		(91	)		(74	)		(75	)
Proceeds from the sale of assets		591			199			2			591
Additions to investments		(2	)		(1	)		(21	)		(2	)
CASH PROVIDED FROM INVESTING ACTIVITIES		514			107
CASH (USED FOR) PROVIDED FROM INVESTING ACTIVITIES								(93	)		514
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(11	)		(24	)		9			(11	)
Net change in cash and cash equivalents and restricted cash		937			(51	)		(259	)		937
Cash and cash equivalents and restricted cash at beginning of year		1,610			883			1,924			1,610
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	2,547		$	832		$	1,665		$	2,547

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

Alcoa Corporation and Subsidiaries

Statement of Changes in Consolidated Equity (unaudited)

(in millions)

	Alcoa Corporation shareholders																	Alcoa Corporation shareholders
First quarter ended March 31, 2020	Common stock		Additional capital			Accumulated deficit			Accumulated other comprehensive loss			Non- controlling interest			Total equity
Balance at December 31, 2019	$	2	$	9,639		$	(555	)	$	(4,974	)	$	1,774		$	5,886
Net income		—		—			80			—			59			139
Other comprehensive income (loss) (G)		—		—			—			76			(265	)		(189	)
Stock-based compensation		—		8			—			—			—			8
Distributions		—		—			—			—			(31	)		(31	)
Other		—		—			(1	)		—			(1	)		(2	)
Balance at March 31, 2020	$	2	$	9,647		$	(476	)	$	(4,898	)	$	1,536		$	5,811
																		Common stock		Additional capital			Retained earnings (deficit)			Accumulated other comprehensive loss			Non- controlling interest			Total equity
First quarter ended March 31, 2021
Balance at December 31, 2020	$	2	$	9,663		$	(725	)	$	(5,629	)	$	1,705		$	5,016
Balance at January 1, 2021																		$	2	$	9,663		$	(725	)	$	(5,629	)	$	1,705		$	5,016
Net income		—		—			175			—			44			219			—		—			175			—			44			219
Other comprehensive loss (G)		—		—			—			(249	)		(62	)		(311	)		—		—			—			(249	)		(62	)		(311	)
Stock-based compensation		—		8			—			—			—			8			—		8			—			—			—			8
Common stock issued: compensation plans		—		4			—			—			—			4			—		4			—			—			—			4
Contributions																			—		—			—			—			—			—
Distributions		—		—			—			—			(62	)		(62	)		—		—			—			—			(62	)		(62	)
Other		—		(1	)		—			—			—			(1	)		—		(1	)		—			—			—			(1	)
Balance at March 31, 2021	$	2	$	9,674		$	(550	)	$	(5,878	)	$	1,625		$	4,873		$	2	$	9,674		$	(550	)	$	(5,878	)	$	1,625		$	4,873

Balance at January 1, 2022																		$	2	$	9,577		$	(315	)	$	(4,592	)	$	1,612		$	6,284
Net income																			—		—			469			—			84			553
Other comprehensive (loss) income (G)																			—		—			—			(482	)		100			(382	)
Stock-based compensation																			—		9			—			—			—			9
Common stock issued: compensation plans																			—		2			—			—			—			2
Repurchase of common stock																			—		(54	)		(21	)		—			—			(75	)
Dividends paid on Alcoa common stock ($0.10 per share)																			—		—			(19	)		—			—			(19	)
Contributions																			—		—			—			—			46			46
Distributions																			—		—			—			—			(162	)		(162	)
Other																			—		3			—			—			(2	)		1
Balance at March 31, 2022																		$	2	$	9,537		$	114		$	(5,074	)	$	1,678		$	6,257

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

Alcoa Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (unaudited)

(dollars in millions, except per-share amounts; metric tons in thousands (kmt))

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 ~~2020~~2021 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, ~~2020,~~2021, 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 COVID-19 pandemic could adversely impact estimates made as of March 31, 2021 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.estimates. 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). 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, 2020 for additional information.

Principles of Consolidation. The Consolidated Financial Statements of Alcoa Corporation include the accounts of Alcoa Corporation and companies in which Alcoa Corporation has a controlling interest, including those that comprise the Alcoa World Alumina & Chemicals (AWAC) joint venture (see below). Intercompany transactions have been eliminated. The equity method of accounting is used for investments in affiliates and other joint ventures over which Alcoa Corporation has significant influence but does not have effective control. Investments in affiliates in which Alcoa Corporation cannot exercise significant influence are accounted for using 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, portions of the São Luís refinery, and investment in Mineração Rio do Norte ~~S.A.~~S.A (MRN), all in Brazil) and the Portland smelter in Australia within Alcoa Corporation’s Aluminum segment. Alcoa Corporation and Alumina Limited ultimately own 60% and 40%, respectively, of the AWAC 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.

B. Recently Adopted and Recently Issued Accounting Guidance

Adopted

~~On January 1, 2021,~~Management considers the ~~Company adopted the following~~applicability and impact of all Accounting ~~Standard~~Standards Updates ~~(ASU) issued by the Financial Accounting Standard Board (FASB), none of which had~~(ASUs). Management assessed ASUs not disclosed and determined that they were either not applicable or are not expected to have a material impact on the ~~Company’s~~Company's Consolidated Financial ~~Statements:~~

•

~~ASU No. 2019-12, Income Taxes (Topic 740); and,~~

•

~~ASU No. 2020-03, Codification Improvements to Financial Instruments.~~

Statements.

Issued

In March 2020 and January 2021, the ~~FASB~~Financial Accounting Standards Board issued ASU No. 2020-04 and ASU No. 2021-01, respectively. Together, the ASUs provide temporary optional expedients and exceptions to ~~provide optional~~the U.S. GAAP guidance ~~for a limited period of time~~on contract modifications and hedge accounting to ease the ~~potential burden in accounting for (or recognizing~~financial reporting burdens related to the ~~effects of) reference rate reform on financial reporting. Management is currently evaluating the impact of the replacement of~~expected market transition from the London Interbank Offered Rate (LIBOR) ~~as well as the~~and other interbank offered rates to alternative reference rates. The Company is working to transition from LIBOR to alternative reference rates. Management has identified a total company inventory of affected financial instruments and contracts, has taken action to transition certain legacy contracts linked to LIBOR to alternative reference rates, and intends to utilize alternative reference rates for new contracts in 2022. The transition from LIBOR is not expected to have a material impact ~~that the expected adoption of the applicable provisions within the optional guidance will have~~ on ~~the Consolidated Financial Statements. The adoption of the applicable provisions will coincide with the modifications of the affected contracts.~~Alcoa.

C. Divestitures

~~Gum Springs Waste Treatment Business~~

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. During 2020, the Company received $200 in cash and recorded a total gain of $181 (pre- and after-tax; see Note Q). Further, an additional $50 is held in escrow to be paid to Alcoa if certain post-closing conditions are satisfied, which would result in an additional gain being recorded.

Warrick Rolling Mill

On ~~November 30, 2020,~~March 31, 2021, Alcoa ~~entered into an agreement to sell~~completed the sale of its rolling mill located at Warrick Operations (Warrick Rolling Mill), an integrated aluminum manufacturing site near Evansville, Indiana (Warrick Operations), to Kaiser Aluminum Corporation (Kaiser)~~. At December 31, 2020, the Company had assets and liabilities held for sale of $648 and $242, respectively, related to the transaction.~~

~~On March 31, 2021, Alcoa completed the sale~~ for total consideration of approximately $670, which ~~includes~~included the assumption of ~~$72~~$69 in other postretirement benefit ~~liabilities (subject to further post-closing adjustments). Additionally, as of March 31, 2021, the Company incurred transaction costs of $7.~~ liabilities.The Company recorded a net gain of ~~$27~~$30 in Other income, net (pre- and ~~after-tax)~~after-tax, see Note P) on the Statement of Consolidated Operations, $27 of which was recorded in the first quarter of ~~2021 (see Note Q). The consideration and gain amounts are subject to customary post-closing adjustments. Further,~~2021. Upon the closing of the transaction, the Company recorded estimated liabilities ~~of approximately $70 in the first quarter of 2021~~ for future site separation commitments and remaining transaction costs associated with the ~~sale~~sales agreement. At December 31, 2021, the remaining reserve was approximately $70. Over half of the expected cash outlay is to be spent in 2022, with the remainder to be spent through 2023. In the first quarter of 2022, the Company spent $2 against the reserve.

In connection with the transaction, Alcoa and Kaiser entered into a market-based metal supply agreement ~~with Kaiser in connection with the transaction. Alcoa also entered into~~and a ground lease agreement ~~with Kaiser~~ for the Warrick Rolling Mill property, which Alcoa continues to own. Approximately 1,150 employees at Warrick Rolling Mill, which includes the casthouse, hot mill, cold mills, and coating and slitting lines, became employees of Kaiser as a result of the transaction. Alcoa continues to own and operate the site’s 269,000 metric ton per year aluminum smelter and the power plant, which together employ approximately 670 people. The remaining Warrick Operations site results are included within the Aluminum segment.

D. Restructuring and Other Charges, Net– In the first quarter of 2022, Alcoa Corporation recorded Restructuring and other charges, net, of $125 – which were comprised of:

•

A charge of $77 for the offer made to the workers of the divested Avilés and La Coruña facilities to settle various legal disputes related to the 2019 divestiture (see Note O);

•

A charge of $58 for an asset impairment related to the sale of the Company’s interest in MRN (see Note H); and

•

A net reversal of $9 for changes in estimated take-or-pay contract costs at the closed Wenatchee (Washington) smelter and the curtailed Intalco (Washington) smelter.

In the first quarter of 2021, Alcoa Corporation recorded Restructuring and other charges, net, of $7 which were comprised ~~of the following components:~~of:

•

A net charge of $9 related to the settlement and curtailment of certain other postretirement benefits resulting from the sale of the Warrick Rolling Mill ~~(see Note L)~~;

•

A charge of $6 for additional ~~take or pay~~take-or-pay contract costs related to the curtailed Wenatchee ~~(Washington)~~ and Intalco ~~(Washington)~~ smelters;

•

A ~~$12~~ reversal of ~~remaining environmental and asset retirement obligation reserves at a previously closed Tennessee site~~$12 due to ~~the completion of~~lower costs for demolition and ~~the determination that remaining site~~ remediation ~~is no longer required~~related to previously established reserves (see Note ~~P). The reserves were originally established through a restructuring charge upon closure of the site;~~O); and,

•

A net charge of $4 for several other insignificant ~~items.~~items.

In the first quarter of 2020, Alcoa Corporation recorded Restructuring and other charges, net of $2 which was comprised of several insignificant items including a $3 charge related to pension curtailments.

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

	First quarter ended March 31,						First quarter ended March 31,
	2021			2020			2022			2021
Bauxite	$	—		$	—		$	58		$	—
Alumina		—			2			—			—
Aluminum		15			2			68			15
Segment total		15			4			126			15
Corporate		(8	)		(2	)		(1	)		(8	)
Total Restructuring and other charges, net	$	7		$	2		$	125		$	7

During 2019, the Company completed the divestiture of the Avilés and La Coruña (Spain) aluminum facilities to PARTER Capital Group AG (PARTER) in a sale process endorsed by the Spanish government and supported by the workers’ representatives. In 2020, PARTER sold its majority stake in the facilities to an unrelated party. The Company had no knowledge of the subsequent transaction prior to its announcement, and has filed a lawsuit asserting that the sale was in breach of the sale agreement between Alcoa and PARTER.

As a result of the divestiture, a restructuring reserve of $30 remained at December 31, 2020 related to financial contributions to the divested entities pursuant to the sale agreement. In the first quarter of 2021, cash payments of $6 were made against the reserve. In accordance with the terms of the agreement, payments against the restructuring reserve may be made through the fourth quarter of 2021. These payments are dependent upon the divested entities meeting certain capital expenditure obligations. A portion of the remaining payments could be offset by financial compensation of indirect carbon costs received by the divested entities from the Spanish government.

Activity and reserve balances for restructuring charges were as follows:

	Severance and employee termination costs			Other costs			Total			Severance and employee termination costs			Other costs			Total
Balance at December 31, 2019	$	35		$	102		$	137
Balance at December 31, 2020										$	6		$	57		$	63
Restructuring and other charges, net		16			36			52			1			80			81
Cash payments		(41	)		(79	)		(120	)		(4	)		(25	)		(29	)
Reversals and other		(4	)		(2	)		(6	)		—			(22	)		(22	)
Balance at December 31, 2020		6			57			63
Balance at December 31, 2021											3			90			93
Restructuring and other charges, net		—			6			6			—			68			68
Cash payments		(2	)		(11	)		(13	)		(1	)		(4	)		(5	)
Balance at March 31, 2021	$	4		$	52		$	56
Balance at March 31, 2022										$	2		$	154		$	156

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

The noncurrent portion of the reserve was $1$36 and $43 at ~~both~~ March 31, ~~2021~~2022 and December 31, ~~2020.~~2021, respectively.

E. Segment Information – Alcoa Corporation is a producer of bauxite, alumina, and aluminum products. The ~~Company’s operations consist of~~Company has 3 ~~worldwide~~operating and reportable ~~segments:~~segments, which are organized by product on a global basis: Bauxite, Alumina, and Aluminum. Segment performance under Alcoa Corporation’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance is the Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) of each segment. The Company calculates Segment Adjusted EBITDA as Total sales (third-party and intersegment) minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; and Research and development expenses. Alcoa Corporation believes that the presentation of Adjusted EBITDA is useful to investors because such measure provides both additional information about the operating performance of Alcoa Corporation and insight on the ability of Alcoa Corporation to meet its financial obligations. The presentation of Adjusted EBITDA is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP. Alcoa Corporation’s Adjusted EBITDA may not be comparable to similarly titled measures of other companies. The chief operating decision maker function regularly reviews the financial information, including Sales and Adjusted EBITDA, of these three operating segments to assess performance and allocate resources.

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

	Bauxite		Alumina			Aluminum		Total			Bauxite		Alumina			Aluminum		Total
First quarter ended March 31, 2022
Sales:
Third-party sales											$	43	$	855		$	2,388	$	3,286
Intersegment sales												170		418			7		595
Total sales											$	213	$	1,273		$	2,395	$	3,881
Segment Adjusted EBITDA											$	38	$	262		$	713	$	1,013
Supplemental information:
Depreciation, depletion, and amortization											$	35	$	50		$	69	$	154
Equity income											$	—	$	1		$	39	$	40
First quarter ended March 31, 2021
Sales:
Third-party sales	$	58	$	760		$	2,047	$	2,865		$	58	$	760		$	2,047	$	2,865
Intersegment sales		185		364			2		551			185		364			2	$	551
Total sales	$	243	$	1,124		$	2,049	$	3,416		$	243	$	1,124		$	2,049	$	3,416
Segment Adjusted EBITDA	$	59	$	227		$	283	$	569		$	59	$	227		$	283	$	569
Supplemental information:
Depreciation, depletion, and amortization	$	57	$	46		$	73	$	176		$	57	$	46		$	73	$	176
Equity (loss) income	$	—	$	(5	)	$	13	$	8		$	—	$	(5	)	$	13	$	8
First quarter ended March 31, 2020
Sales:
Third-party sales	$	71	$	707		$	1,598	$	2,376
Intersegment sales		235		336			3		574
Total sales	$	306	$	1,043		$	1,601	$	2,950
Segment Adjusted EBITDA	$	120	$	193		$	62	$	375
Supplemental information:
Depreciation, depletion, and amortization	$	34	$	49		$	81	$	164
Equity (loss) income	$	—	$	(9	)	$	5	$	(4	)

The following table reconciles total Segment Adjusted EBITDA to Consolidated net income attributable to Alcoa Corporation:

	First quarter ended March 31,						First quarter ended March 31,
	2021			2020			2022			2021
Total Segment Adjusted EBITDA	$	569		$	375		$	1,013		$	569
Unallocated amounts:
Transformation⁽¹⁾		(11	)		(16	)		(14	)		(11	)
Intersegment eliminations		(7	)		(8	)		102			(7	)
Corporate expenses⁽²⁾		(26	)		(27	)		(29	)		(26	)
Provision for depreciation, depletion, and amortization		(182	)		(170	)		(160	)		(182	)
Restructuring and other charges, net (D)		(7	)		(2	)		(125	)		(7	)
Interest expense		(42	)		(30	)		(25	)		(42	)
Other income, net ~~(Q)~~(P)		24			132			14			24
Other⁽³⁾		(6	)		(35	)		(13	)		(6	)
Consolidated income before income taxes		312			219			763			312
Provision for income taxes		(93	)		(80	)		(210	)		(93	)
Net income attributable to noncontrolling interest		(44	)		(59	)		(84	)		(44	)
Consolidated net income attributable to Alcoa Corporation	$	175		$	80		$	469		$	175

⁽¹⁾	Transformation includes, among other items, the Adjusted EBITDA of previously closed operations.

⁽²⁾	Corporate expenses are composed of general administrative and other expenses of operating the corporate headquarters and other global administrative facilities, as well as research and development expenses of the corporate technical center.

⁽³⁾	Other includes certain items that impact Cost of goods sold on Alcoa Corporation’s Statement of Consolidated Operations that are not included in the Adjusted EBITDA of the reportable segments.

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

	First quarter ended March 31,						First quarter ended March 31,
	2021			2020			2022			2021
Primary aluminum	$	1,727		$	1,297		$	2,447		$	1,727
Alumina		760			707			850			760
Flat-rolled aluminum		320			272
Energy								41			39
Bauxite		52			59			28			52
Energy		39			52
Flat-rolled aluminum⁽¹⁾								—			320
Other(2)		(28	)		(6	)		(73	)		(28	)
	$	2,870		$	2,381		$	3,293		$	2,870

⁽¹⁾	Flat-rolled aluminum represented sales of the Warrick Rolling Mill through the sale of the facility on March 31, 2021 (see Note C).

⁽²⁾	Other includes realized gains and losses related to embedded derivative instruments designated as cash flow hedges of forward sales of aluminum.

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

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

	First quarter ended March 31,				First quarter ended March 31,
	2021		2020		2022		2021
Net income attributable to Alcoa Corporation	$	175	$	80	$	469	$	175
Average shares outstanding – basic		186		186		184		186
Effect of dilutive securities:
Stock options		—		—		—		—
Stock units		3		1		4		3
Average shares outstanding – diluted		189		187		188		189

~~Options~~All options to purchase ~~1 million~~ shares of common stock outstanding atas of March 31, ~~2021~~2022 were ~~excluded because they~~included in the computation of diluted EPS. No options had ~~a weighted average~~an exercise price ~~of $35.67 per share which was~~ greater than the average market price of Alcoa Corporation’s common stock.

Options to purchase 21 million shares of common stock outstanding atas of March 31, ~~2020 were excluded because they had~~2021 at a weighted average exercise price of ~~$26.55~~$35.67 per share ~~which was~~were not included in the computation of diluted EPS because the exercise prices of these options were greater than the average market price of Alcoa Corporation’s common stock.

G. Accumulated Other Comprehensive Loss

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

	Alcoa Corporation						Noncontrolling interest						Alcoa Corporation						Noncontrolling interest
	First quarter ended March 31,						First quarter ended March 31,						First quarter ended March 31,						First quarter ended March 31,
	2021			2020			2021			2020			2022			2021			2022			2021
Pension and other postretirement benefits ~~(L)~~(K)
Balance at beginning of period	$	(2,536	)	$	(2,282	)	$	(67	)	$	(56	)	$	(882	)	$	(2,536	)	$	(13	)	$	(67	)
Other comprehensive income:
Other comprehensive (loss) income:
Unrecognized net actuarial loss and prior service cost/benefit		69			(20	)		—			(1	)		(7	)		69			—			—
Tax benefit(2)		2			6			—			—			1			2			—			—
Total Other comprehensive income (loss) before reclassifications, net of tax		71			(14	)		—			(1	)
Total Other comprehensive (loss) income before reclassifications, net of tax														(6	)		71			—			—
Amortization of net actuarial loss and prior service cost/benefit⁽¹⁾		61			54			1			1			28			61			1			1
Tax expense⁽²⁾		(1	)		(2	)		—			—			—			(1	)		—			—
Total amount reclassified from Accumulated other comprehensive loss, net of tax⁽⁷⁾⁽⁶⁾		60			52			1			1			28			60			1			1
Total Other comprehensive income		131			38			1			—			22			131			1			1
Balance at end of period	$	(2,405	)	$	(2,244	)	$	(66	)	$	(56	)	$	(860	)	$	(2,405	)	$	(12	)	$	(66	)

Foreign currency translation
Balance at beginning of period	$	(2,385	)	$	(2,160	)	$	(844	)	$	(834	)	$	(2,614	)	$	(2,385	)	$	(937	)	$	(844	)
Other comprehensive loss⁽³⁾		(176	)		(663	)		(60	)		(245	)
Other comprehensive income (loss)														326			(176	)		98			(60	)
Balance at end of period	$	(2,561	)	$	(2,823	)	$	(904	)	$	(1,079	)	$	(2,288	)	$	(2,561	)	$	(839	)	$	(904	)

Cash flow hedges ~~(M)~~(L)
Balance at beginning of period	$	(708	)	$	(532	)	$	(1	)	$	20		$	(1,096	)	$	(708	)	$	(1	)	$	(1	)
Other comprehensive (loss) income:
Net change from periodic revaluations		(303	)		852			(10	)		(26	)		(1,063	)		(303	)		1			(10	)
Tax benefit (expense)		56			(175	)		3			7
Tax benefit⁽²⁾														153			56			—			3
Total Other comprehensive (loss) income before reclassifications, net of tax		(247	)		677			(7	)		(19	)		(910	)		(247	)		1			(7	)
Net amount reclassified to earnings:
Aluminum contracts⁽⁴⁾⁽³⁾		41			13			—			—			110			41			—			—
Financial contracts⁽⁵⁾⁽⁴⁾		9			3			6			(2	)		—			9			—			6
Interest rate contracts⁽⁶⁾⁽⁵⁾		3			1			—			—			4			3			—			—
Foreign exchange contracts⁽⁴⁾⁽³⁾		(1	)		8			—			—			—			(1	)		—			—
Sub-total		52			25			6			(2	)		114			52			—			6
Tax (expense) benefit⁽²⁾		(9	)		(1	)		(2	)		1
Tax expense⁽²⁾														(34	)		(9	)		—			(2	)
Total amount reclassified from Accumulated other comprehensive loss, net of tax⁽⁷⁾⁽⁶⁾		43			24			4			(1	)		80			43			—			4
Total Other comprehensive (loss) income		(204	)		701			(3	)		(20	)		(830	)		(204	)		1			(3	)
Balance at end of period	$	(912	)	$	169		$	(4	)		—		$	(1,926	)	$	(912	)	$	—		$	(4	)

Total Accumulated other comprehensive loss	$	(5,878	)	$	(4,898	)	$	(974	)	$	(1,135	)	$	(5,074	)	$	(5,878	)	$	(851	)	$	(974	)

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

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

⁽³⁾⁽³

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

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

⁽⁵⁾⁽⁴⁾

These amounts were reported in Cost of goods sold on the accompanying Statement of Consolidated Operations.

⁽⁶⁵⁾	These amounts were reported in Other income, net of the accompanying Statement of Consolidated Operations.

⁽⁷⁶⁾	A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings.

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

First quarter ended March 31, 2022													Saudi Arabia Joint Venture			Mining			Energy		Other
Sales													$	897		$	231		$	62	$	117
Cost of goods sold														616			146			30		107
Net income (loss)														155			49			23		(28	)
Equity in net income (loss) of affiliated companies, before reconciling adjustments														39			14			9		(13	)
Other														—			—			1		(4	)
Alcoa Corporation’s equity in net income (loss) of affiliated companies														39			14			10		(17	)

First quarter ended March 31, 2021	Saudi Arabia Joint Venture			Mining			Energy			Other
Sales	$	682		$	173		$	55		$	95		$	682		$	173		$	55	$	95
Cost of goods sold		503			123			25			63			503			123			25		63
Net income (loss)		45			(5	)		25			(2	)		45			(5	)		25		(2	)
Equity in net income (loss) of affiliated companies, before reconciling adjustments		11			1			10			(1	)		11			1			10		(1	)
Other		(4	)		—			—			3			(4	)		—			—		3
Alcoa Corporation’s equity in net income of affiliated companies		7			1			10			2			7			1			10		2

First quarter ended March 31, 2020
Sales	$	585		$	218		$	59		$	73
Cost of goods sold		462			148			26			67
Net (loss) income		(13	)		9			27			(9	)
Equity in net (loss) income of affiliated companies, before reconciling adjustments		(3	)		6			11			(4	)
Other		(3	)		(3	)		(2	)		5
Alcoa Corporation’s equity in net (loss) income of affiliated companies		(6	)		3			9			1

The Saudi Arabia joint venture consisting of the bauxite mine and alumina refinery (MBAC) and the smelter (MAC) is owned 74.9% by the Saudi Arabian Mining Company (Ma’aden) and 25.1% by Alcoa. In accordance with the June 2019 amended joint venture agreement, Ma’aden’s put option and Alcoa Corporation’s call option, relating to additional interests in the joint venture, were exercisable for a period of six months after October 1, 2021. On March 31, 2022, Ma’aden’s and Alcoa’s put and call options, respectively, expired with neither party exercising their options.

The Company’s basis in the ~~Elysis~~ELYSIS^TM Limited Partnership, included in Other in the table above, has been reduced to 0 for its share of losses incurred to date. As a result, the Company has ~~$35~~$52 in unrecognized losses as of March 31, ~~2021~~2022 that will be recognized upon additional contributions into the partnership.

~~I. Receivables~~

On ~~October 25, 2019, a wholly-owned subsidiary of~~February 15, 2022, the Company ~~entered into a $120 three-year revolving credit facility~~signed an agreement ~~secured by certain customer receivables. On April 20, 2020,~~to sell its share of its investment in MRN in Brazil for $10 to South32 Minerals S.A. Related to this transaction, the Company ~~amended this agreement converting it to a Receivables Purchase Agreement to sell up to $120~~recorded an asset impairment of the receivables previously secured by the credit facility without recourse on a revolving basis. The unsold portion of the specified receivable pool will be pledged as collateral to the purchasing bank to secure the sold receivables. ~~Through~~$58 in the first quarter of ~~2021, 0 receivables have been sold under this agreement.~~

~~J. Inventories~~

March 31, 2021

December 31, 2020

Finished goods

$
303

$
321

Work-in-process

106

112

Bauxite and alumina

439

412

Purchased raw materials

397

377

Operating supplies

172

176

$
1,417

$
1,398

~~Inventories related to~~2022 in Restructuring and other charges, net on the ~~Warrick Rolling Mill were excluded from the December 31, 2020 balances in the above table due to~~Statement of Consolidated Operations. On April 30, 2022, Alcoa completed the sale of its investment in MRN. Further, an additional $30 in cash could be paid to the ~~rolling mill and were reclassified~~Company in the future if certain post-closing conditions related to ~~Assets held for sale (see Note C)~~future MRN mine development are satisfied.

I. Inventories

	March 31, 2022		December 31, 2021
Finished goods	$	736	$	538
Work-in-process		195		85
Bauxite and alumina		588		539
Purchased raw materials		798		619
Operating supplies		178		175
	$	2,495	$	1,956

K.J. Debt

Credit ~~Facilities.~~Facilities

Revolving Credit Facility

~~On March 4, 2021 (the Amendment No. 4 Effective Date), Alcoa Corporation and Alcoa Nederland Holding B.V. (ANHBV),~~The Company has a wholly-owned subsidiary of the Company, entered into an amendment (Amendment No. 4) to the Revolving Credit Facility (as amended, Revolving Credit Facility) that provides additional flexibility to the Company and ANHBV by (i) increasing the maximum leverage ratio from 2.50 to 1.00 to 2.75 to 1.00 as of the Amendment No. 4 Effective Date (which maximum leverage ratio had been temporarily increased to 3.00 to 1.00 prior to the Amendment No. 4 Effective Date), (ii) decreasing the minimum interest expense coverage ratio from 5.00 to 1.00 to 4.00 to 1.00 as of the Amendment No. 4 Effective Date, (iii) amending the definition of Total Indebtedness (as defined in the Revolving Credit Facility) to permit the Company to exclude the principal amount of new senior notes issued during 2021 from indebtedness for purposes of the calculation of the leverage ratioin fiscal year 2021 (subject to adjustments based on pension obligations funded), and (iv) ending temporary restrictions on the Company’s ability to make certain restricted payments or incur incremental loans under the Revolving Credit Facility.

Amendment No. 4 also (i) provides additional debt capacity to permit the Company to issue up to $750 million in aggregate principal amount of new senior notes prior to the end of fiscal year 2021 and (ii) a corresponding increase in the maximum leverage ratio commensurate with the increase in leverage resulting from the issuance of such notes up to the amount of pension obligations funded after the issuance of such notes but prior to December 31, 2021, which increase shall in any event not be in excess of the principal amount of such notes. Such additional increase in the maximum leverage ratio will be available beginning in the first quarter of 2022.

~~The Revolving Credit Facility provides a $1,500~~ senior secured $1,500 revolving credit and letter of credit facility ~~to be used~~in place for working capital and/or other general corporate purposes (the Facility). The Facility was established on September 16, 2016, was amended in each of 2017, 2018, 2019, 2020, and 2021, and is scheduled to mature on November 21, 2023. Subject to the terms and conditions under the Facility, the Company may borrow funds or issue letters of credit through its Alcoa Corporation or ANHBV legal entities. See Note M in Part II Item 8 of Alcoa ~~Corporation and its subsidiaries. In~~Corporation’s Annual Report on Form 10-K for the ~~fourth quarter~~year ended December 31, 2021 for more information on the Facility.

As of ~~2020, ANHBV elected to extend the period under which temporary adjustments in Amendment No. 3 would apply, through~~ March 31, 2021. The amendment temporarily adjusted the manner in which Consolidated Cash Interest Expense and Total Indebtedness (as defined in the Revolving Credit Facility) are calculated with respect to the 5.500% Senior Notes due 2027 issued in July 2020. In addition, this election to extend the temporary amendments resulted in a reduction of the aggregate amount of commitments under the Revolving Credit Facility by approximately $245 during the first quarter of 2021, to $1,255.

~~At March 31, 2021, the maximum additional borrowing capacity available to~~2022, the Company ~~to remain~~was in compliance with ~~the maximum leverage ratio covenant in the Revolving Credit Facility was approximately $1,687. Therefore, the~~all covenants. The Company may access the entire amount of commitments under the ~~Revolving Credit~~ Facility.~~As of March 31, 2021, Alcoa Corporation was in compliance with all covenants.~~ There were 0 borrowings outstanding at March 31, 2022 and December 31, 2021, and ~~there were~~ 0 amounts were borrowed during the first ~~quarter of 2021 related to this facility.~~

~~144A Debt.~~

In March 2021, ANHBV, completed a Rule 144A (U.S. Securities Act of 1933, as amended) debt issuance for $500 aggregate principal amount of 4.125% Senior Notes due 2029 (the 2029 Notes). The net proceeds of this issuance were approximately $493 reflecting a discount to the initial purchasers of the 2029 Notes, as well as issuance costs. The Company used the net proceeds, together with cash on hand, to contribute $500 to its U.S. defined benefit pension plans applicable to salaried and hourly employees on April 1, 2021, and to redeem in full $750 aggregate principal amount of the Company’s outstanding 6.75% Senior Notes due 2024 (the 2024 Notes) on April 7, 2021, and to pay transaction-related fees and expenses.

The discount to the initial purchasers, as well as costs to complete the financing, were deferred and are being amortized to interest expense over the term of the 2029 Notes. Interest on the 2029 Notes is paid semi-annually in March and September, and interest payments will commence September 30, 2021. The indenture contains customary affirmative and negative covenants that are similar to those included in the indenture from the 5.500% Senior Notes due 2027 issued in July 2020, such as limitations on liens, limitations on sale and leaseback transactions, a prohibition on a reduction in the ownership of AWAC entities below an agreed level, and the calculation of certain financial ratios.

ANHBV has the option to redeem the 2029 Notes on at least 10 days, but not more than 60 days, prior notice to the holders of the 2029 Notes under multiple scenarios, including, in whole or in part, at any time or from time to time afterquarters ended March 31, ~~2024, at a redemption price specified in the indenture (up to 102.063% of the principal amount plus any accrued~~2022 and unpaid interest in each case). Also, the 2029 Notes are subject to repurchase upon the occurrence of a change in control repurchase event (as defined in the indenture) at a repurchase price in cash equal to 101% of the aggregate principal amount of the 2029 Notes repurchased, plus any accrued and unpaid interest on the 2029 Notes repurchased.

The 2029 Notes rank equally in right of payment with all of ANHBV’s existing and future senior unsecured indebtedness, including the Senior Notes with maturities in 2024 (redeemed on April 7, 2021), 2026, 2027 and 2028; rank senior in right of payment to any future subordinated obligations of ANHBV; and are effectively subordinated to ANHBV’s existing and future secured indebtedness, including under the Revolving Credit Agreement, to the extent of the value of property and assets securing such indebtedness. See Note M to the Consolidated Financial Statements in Part II Item 8 of the 2020 Annual Report on Form 10-K for additional information related to ANHBV’s existing debt and related covenants.

~~Redemption~~. On April 7, 2021 (the Redemption Date), the Company redeemed in full $750 aggregate principal amount of the 2024 Notes at a redemption price equal to 103.375% of the principal amount of the 2024 Notes, plus accrued and unpaid interest to but not including the Redemption Date. As of March 31, 2021 under the ~~2024 Notes were classified as Long-term debt, due within one year as an irrevocable commitment to redeem the Notes existed.~~Facility.

The issuance of the 2029 Notes and the redemption of the 2024 Notes were determined to be an issuance of new debt and an extinguishment of existing debt. As a result, the Company will record a loss of $32 on the extinguishment of debt in the second quarter of 2021 in Interest expense, which is comprised of the redemption premium, the write-off of deferred financing fees and unamortized debt issuance costs. The cash flows related to the transaction will be classified as financing cash flows.

L.K. Pension and Other Postretirement Benefits –

The components of net periodic benefit cost were as follows:

	Pension benefits						Other postretirement benefits						Pension benefits						Other postretirement benefits
First quarter ended March 31,	2021			2020			2021			2020			2022			2021			2022			2021
Service cost	$	5		$	14		$	2		$	1		$	3		$	5		$	1		$	2
Interest cost⁽¹⁾		29			42			4			5			27			29			4			4
Expected return on plan assets⁽¹⁾		(73	)		(74	)		—			—			(44	)		(73	)		—			—
Recognized net actuarial loss⁽¹⁾		51			51			6			4			28			51			4			6
Amortization of prior service cost⁽¹⁾		—			—			(4	)		(3	)		—			—			(3	)		(4	)
Settlements⁽²⁾		—			—			26			—			—			—			—			26
Curtailments⁽²⁾		—			3			(17	)		—			—			—			—			(17	)
Net periodic benefit cost	$	12		$	36		$	17		$	7		$	14		$	12		$	6		$	17

⁽¹⁾	These amounts were reported in Other income, net on the accompanying Statement of Consolidated Operations (see Note Q)P).

⁽²⁾	These amounts were reported in Restructuring and other charges, net on the accompanying Statements of Consolidated Operations (see Note D) and of Cash Flows.

~~Plan Actions.~~ ~~In 2021, management initiated the following actions to certain other postretirement benefit plans:~~

~~Action #1~~ – On March 31, 2021, Alcoa completed the sale of the Warrick Rolling Mill to Kaiser Aluminum Corporation for total consideration of $670, which included the assumption of $72 in other postretirement benefit liabilities (subject to further post-closing adjustments). The consideration amount is subject to customary post-closing adjustments. Approximately 1,150 employees at the rolling operations, which includes the casthouse, hot mill, cold mills, and coating and slitting lines, became employees of Kaiser. As a result, the affected plan was remeasured, including an update to the discount rate used to determine the benefit obligation of the plan. Accrued other postretirement benefits reflects a decrease of $40 related to the remeasurement in addition to the $72 assumed by Kaiser. Further, Alcoa recognized a curtailment gain of $17 and a settlement charge of $26.

~~The following table presents certain information and the financial impacts of this action on the accompanying Consolidated Financial Statements:~~

Action #

Number of
affected
plan
participants

Weighted
average
discount
rate as of
December 31,
2020

Plan
remeasurement
date

Weighted
average
discount rate
as of plan
remeasurement
date

Decrease to
accrued other
postretirement
benefits
liability

Curtailment
gain⁽¹⁾

Settlement
charge⁽¹⁾

1

~840

2.45%

March 31, 2021

3.06%

$
(112
)

$
(17
)

$
26

⁽¹⁾

These amounts represent the accelerated amortization of a portion of the existing prior service benefit for curtailments and net actuarial loss for settlements and were reclassified from Accumulated other comprehensive loss to Restructuring and other charges, net (see Note D) on the accompanying Statement of Consolidated Operations.

Funding and Cash Flows. It is Alcoa’s policy to fund amounts for defined benefit pension plans sufficient to meet the minimum requirements set forth in applicable country benefits laws and tax laws, including ERISA for U.S. plans. From time to time, the Company contributes additional amounts as deemed appropriate.

On April 1, 2021, Alcoa made $500 in unscheduled contributions to certain U.S. defined benefit pension plans. The additional contributions were discretionary in nature and were funded with net proceeds from a March 2021 debt issuance (see Note K) plus available cash on hand.

Under ERISA regulations, a plan sponsor that establishes a pre-funding balance by making discretionary contributions to a U.S. defined benefit pension plan may elect to apply all or a portion of this balance toward its minimum required contribution obligations to the related plan in future years.

In ~~2021,~~the first quarter of 2022, management ~~will consider making~~made such ~~election~~elections related to the Company’s U.S. ~~plans.~~

~~The Company~~plans and intends to ~~adopt~~do so for the ~~single-employer pension relief provisions under the American Rescue Plan Act~~remainder of ~~2021.~~2022. As a result, Alcoa’s minimum required contribution to defined benefit pension plans in ~~2021~~2022 is estimated to be approximately ~~$135,~~$15, of which approximately $4 was contributed to non-U.S. plans during the first quarter of 2022.

In the first quarter of 2021, $49 and $14 were contributed to U.S. and non-U.S. plans, ~~respectively, during the first quarter ended 2021.~~respectively.

M.13

L. Derivatives and Other Financial Instruments

Fair Value

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

•

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

•

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

•

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

Derivatives

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. While Alcoa ~~Corporation~~does not generally enter into derivative contracts to mitigate the risk associated with changes in aluminum price, the Company may do so in isolated cases to address discrete commercial or operational conditions. Alcoa is not involved in trading activities for energy, weather derivatives, or other nonexchange commodity trading activities.

~~Several of~~ Alcoa Corporation’s aluminum, energy, and foreign exchange contracts are predominantly classified as Level 1 ~~or Level 2~~ under the fair value hierarchy. All of ~~these~~the Level 1 contracts are designated as either fair value or cash flow hedging instruments. Alcoa Corporation also has several derivative instruments classified as Level 3 under the fair value hierarchy, which are either designated as cash flow hedges or undesignated. Alcoa includes the changes in its equity method investee’s Level 2 derivatives in Accumulated other comprehensive (loss) income.

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

	March 31. 2021				December 31, 2020				March 31, 2022				December 31, 2021
	Assets		Liabilities		Assets		Liabilities		Assets		Liabilities		Assets		Liabilities
Level 1 and 2 derivative instruments	$	15	$	24	$	21	$	7
Level 1 derivative instruments									$	70	$	285	$	19	$	29
Level 3 derivative instruments		—		1,080		—		838		14		2,024		2		1,293
Total	$	15	$	1,104	$	21	$	845	$	84	$	2,309	$	21	$	1,322
Less: Current		15		181		21		103		64		514		14		274
Noncurrent	$	—	$	923	$	—	$	742	$	20	$	1,795	$	7	$	1,048

	2021						2020						2022						2021
First quarter ended March 31,	Unrealized (loss) gain recognized in Other comprehensive (loss) income			Realized (loss) gain reclassed from Other comprehensive (loss) income to earnings			Unrealized gain (loss) recognized in Other comprehensive (loss) income			Realized (loss) gain reclassed from Other comprehensive (loss) income to earnings			Unrealized loss recognized in Other comprehensive loss			Realized loss reclassed from Other comprehensive loss to earnings			Unrealized loss recognized in Other comprehensive loss			Realized loss reclassed from Other comprehensive loss to earnings
Level 1 and 2 derivative instruments	$	(14	)	$	—		$	(29	)	$	(14	)
Level 1 derivative instruments													$	(233	)	$	(6	)	$	(14	)	$	-
Level 3 derivative instruments		(300	)		(55	)		867			(8	)		(837	)		(104	)		(300	)		(55	)
Noncontrolling and equity interest		11			3			14			(3	)
Noncontrolling and equity interest (Level 2)														7			(4	)		11			3
Total	$	(303	)	$	(52	)	$	852		$	(25	)	$	(1,063	)	$	(114	)	$	(303	)	$	(52	)

For the quarter ended March 31, 2022, the realized loss of $6 on Level 1 cash flow hedgeswas comprised of a $5 loss recognized in Sales and a $1 loss recognized in Cost of goods sold.For the quarter ended March 31, 2021, the realized gains and losses on Level 1 ~~and Level 2~~ cash flow hedges were immaterial.~~For~~

The following table presents the ~~quarter ended March 31, 2020, the realized loss~~outstanding quantities of ~~$14 on~~derivative instruments classified as Level 1:

	Classification	March 31, 2022		March 31, 2021
Aluminum (in kmt)	Commodity forwards		481		21
Foreign currency (in millions of euro)	Foreign exchange forwards		80		124
Foreign currency (in millions of A$)	Foreign exchange forwards		—		94
Foreign currency (in millions of R$)	Foreign exchange forwards		1,323		354

Alcoa routinely uses Level 1 aluminum derivative instruments to manage exposures to changes in the fair value of firm customer commitments for the purchases or sales of aluminum. Additionally, Alcoa uses Level 1 aluminum derivative instruments to manage exposures to changes in the LME associated with the Alumar (Brazil) restart (April 2022 through December 2023) and ~~2 cash flow hedges was comprised of a $7 loss recognized in Sales and a $7 loss recognized in Cost of goods sold.~~the San Ciprián (Spain) strike (expires April 2022).

Alcoa Corporation ~~has a financial contract that hedges~~uses Level 1 foreign exchange forward contracts to mitigate the ~~anticipated~~risk of foreign exchange exposure related to euro power ~~requirements at one of its smelters that expires~~purchases in ~~July~~Norway (expires December 2026), U.S. dollar aluminum sales in Australia (expired June 2021 ~~(Financial contract, below)~~), and U.S. dollar alumina sales in Brazil (expires December 2024).

In March 2021, Alcoa entered into 4 ~~new~~ financial contracts (Financial contracts (undesignated), below) with three counterparties to hedge the anticipated power requirements at ~~this smelter~~one of its smelters for the period from August 1, 2021 through ~~July~~June 30, 2026. A fifth financial contract (undesignated) was entered into in November 2021 with an effective date of September 30, 2022 through June 30, 2026. Two of these financial contracts include LME-linked pricing components and do not qualify for hedge accounting treatment. Management elected not to apply hedge accounting treatment for the other ~~two~~three financial contracts as the value of these contracts is not significant. Significant increases or decreases in the power market or the LME may result in a higher or lower fair value measurement of the financial contracts. Lower prices in the power market would cause an increase in the derivative liability, while higher LME prices would cause an increase in the derivative liability. Unrealized and realized gains and losses on these financial contracts ~~will be~~are included in Other income, net on the accompanying Statement of Consolidated Operations.

Additional Level 3 Disclosures

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

March 31, 2021

Unobservable Input

Unobservable Input Range

March 31, 2022

Unobservable Input

Unobservable Input Range

Asset Derivatives

Financial contract

Interrelationship of

Electricity (per MWh)

2022: $61.49

(undesignated)

forward energy price, LME

2022: $59.25

forward price and the

LME (per mt)

2022: $3,484

Consumer Price Index

Total Asset Derivatives

Liability Derivatives

Power contract

248

MWh of energy needed

LME (per mt)

2021: $2,194

436

MWh of energy needed

LME (per mt)

2022: $3,484

to produce the forecasted

2027: $2,283

to produce the forecasted

2027: $2,868

mt of aluminum

Electricity

Rate of 4 million MWh per year

mt of aluminum

Electricity

Rate of 4 million MWh per year

Power contracts

797

MWh of energy needed

to produce the forecasted

mt of aluminum

LME (per mt)

2021: $2,194

2029: $2,360

2036: $2,656

1,587

MWh of energy needed

to produce the forecasted

mt of aluminum

LME (per mt)

2022: $3,484

2029: $2,917

2036: $3,213

Midwest premium

(per pound)

2021: $0.2125

2029: $0.2125

2036: $0.2125

Midwest premium

(per pound)

2022: $0.4000

2029: $0.3700

2036: $0.3699

Electricity

Rate of 17 million MWh per year

Electricity

Rate of 18 million MWh per year

Power contract

MWh of energy needed to produce the forecasted mt of aluminum

LME (per mt)

2021: $2,194

2021: $2,209

Midwest premium

(per pound)

2021: $0.2125

Electricity

Rate of 2 million MWh per year

Power contract (undesignated)

Estimated spread between

the 30-year debt yield of

Alcoa and the counterparty

Credit spread

2.23%: 30-year debt yield spread

5.51%: Alcoa (estimated)

3.28%: counterparty

Estimated spread between

the 30-year debt yield of

Alcoa and the counterparty

Credit spread

1.13%: 30-year debt yield spread

5.15%: Alcoa (estimated)

4.02%: counterparty

Financial contract

Interrelationship of

Electricity (per MWh)

2021: $25.26

forward energy price and the Consumer Price Index

2021: $27.58

Financial contracts

Interrelationship of

Electricity (per MWh)

2021: $27.58

(undesignated)

forward energy price, LME

2021: $27.58

forward price and the

LME (per mt)

2021: $2,220

Consumer Price Index

2021: $2,224

Total Liability Derivatives

1,080

2,024

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

Asset Derivatives					March 31, 2022		December 31, 2021
Derivatives not designated as hedging instruments:
Current—financial contract					$	14	$	2
Total derivatives not designated as hedging instruments					$	14	$	2
Total Asset Derivatives					$	14	$	2
Liability Derivatives	March 31. 2021		December 31, 2020
Derivatives designated as hedging instruments:
Current—power contracts	$	145	$	94	$	386	$	262
Current—financial contract		14		1
Noncurrent—power contracts		902		720		1,637		1,028
Total derivatives designated as hedging instruments	$	1,061	$	815	$	2,023	$	1,290
Derivatives not designated as hedging instruments:
Current—embedded credit derivative	$	3	$	4	$	—	$	1
Current—financial contract		1		—
Noncurrent—embedded credit derivative		15		19		1		2
Total derivatives not designated as hedging instruments	$	19	$	23	$	1	$	3
Total Liability Derivatives	$	1,080	$	838	$	2,024	$	1,293

Assuming market rates remain constant with the rates at March 31, ~~2021,~~2022, a realized loss of ~~$145~~$386 related to power contracts ~~and a realized loss of $14 related to the financial contract are~~ isexpected to be recognized in Sales ~~and Cost of goods sold, respectively,~~ over the next 12 months.

At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the power contracts with embedded derivatives designated as cash flow hedges hedge forecasted aluminum sales of ~~2,074~~1,849 kmt and ~~2,130~~1,905 kmt, respectively. ~~At March 31, 2021 and December 31, 2020, the financial contract hedges forecasted electricity purchases of 821,304 and 1,427,184 megawatt hours, respectively.~~

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

Liabilities

First quarter ended March 31, 2021

Power contracts

Financial
contract

Embedded
credit
derivative

January 1, 2021

$
814

$
1

$
23

Total gains or losses included in:

Sales (realized)

(40
)

—

—

Cost of goods sold (realized)

—

(15
)

—

Other income, net (unrealized/realized)

—

—

(6
)
Other comprehensive (loss) income (unrealized)

273

27

—

Other

—

2

1

March 31, 2021

$
1,047

$
15

$
18

Change in unrealized gains or losses included in earnings
for derivative instruments held at March 31, 2021:

Other income, net

$
—

$
—

$
(5
)

	Assets			Liabilities
Three months ended March 31, 2022	Financial contract			Power contracts			Embedded credit derivative
January 1, 2022	$	2		$	1,290		$	3
Total gains or losses included in:
Sales (realized)		—			(104	)		—
Other income, net (unrealized/realized)		13			—			(2	)
Other comprehensive income (unrealized)		—			837			—
Other		(1	)		—			—
March 31, 2022	$	14		$	2,023		$	1
Change in unrealized gains or losses included in earnings for derivative instruments held at March 31, 2022:
Other income, net	$	13		$	—		$	(2	)

There were no purchases, sales, or settlements of Level 3 derivative instruments in the periods presented.

Other Financial Instruments

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

	March 31, 2021				December 31, 2020				March 31, 2022				December 31, 2021
	Carrying value		Fair value		Carrying value		Fair value		Carrying value		Fair value		Carrying value		Fair value
Cash and cash equivalents	$	2,544	$	2,544	$	1,607	$	1,607	$	1,554	$	1,554	$	1,814	$	1,814
Restricted cash		3		3		3		3		111		111		110		110
Short-term borrowings		77		77		77		77		75		75		75		75
Long-term debt due within one year		745		777		2		2		1		1		1		1
Long-term debt, less amount due within one year		2,214		2,386		2,463		2,692		1,727		1,797		1,726		1,865

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.

Short-term borrowings and Long-term debt, including amounts 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.

N.M. Income Taxes – Alcoa Corporation’s estimated annualized effective tax rate (AETR) for ~~2021~~2022 as of March 31, ~~2021~~2022 differs from the U.S. federal statutory rate of 21% primarily due to ~~losses~~foreign jurisdictions with higher statutory tax rates partially offset by income in ~~countries~~certain jurisdictions with full valuation allowances resulting in 0 additional tax ~~benefit, as well as foreign income taxed in higher rate jurisdictions.~~expense.

Three months ended March 31,

2021

2020

Income before income taxes

$
312

$
219

Estimated annualized effective tax rate

39.2

%

57.1

%
Income tax expense

$
122

$
125

Favorable tax impact related to losses in jurisdictions with no tax benefit

(28
)

(46
)

Discrete tax (benefit) expense

(1
)

1

Provision for income taxes

$
93

$
80

	Three months ended March 31,
	2022			2021
Income before income taxes	$	763		$	312
Estimated annualized effective tax rate		26.4	%		39.2		%
Income tax expense	$	202		$	122
Unfavorable (favorable) tax impact related to losses in jurisdictions with no tax benefit		7			(28	)
Discrete tax expense (benefit)		1			(1	)
Provision for income taxes	$	210		$	93

O.The Company’s subsidiaries in Iceland have a full valuation allowance recorded against deferred tax assets, which was established in 2015 and 2017, as the Company believes it is more likely than not that these tax benefits will not be realized. If current market conditions were to continue or improve, management may conclude that Iceland’s deferred tax assets may be realized, resulting in a future reversal of the valuation allowance, generating a non-cash benefit in the period recorded. Iceland’s net deferred tax assets, excluding the valuation allowance, were $166 as of March 31, 2022.

N. Leasing

Management records a right-of-use asset and lease liability for several types of operating leases, including land and buildings, ~~alumina refinery process control technology,~~ plant equipment, vehicles, and computer equipment. The leases have remaining terms of less than one to 3735 years. The discount rate applied to these leases is the Company’s incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments, unless there is a rate implicit in the lease agreement. The Company does not have material financing leases.

Lease expense and operating cash flows include:

	First quarter ended March 31,				First quarter ended March 31,
	2021		2020		2022		2021
Costs from operating leases	$	21	$	18	$	12	$	21
Variable lease payments	$	1	$	4		3		1
Short-term rental expense	$	—	$	1		—		—

The weighted average lease term and weighted average discount rate as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows:

	March 31, 2021		December 31, 2020		March 31, 2022		December 31, 2021
Weighted average lease term for operating leases (years)		4.7		4.4		4.8		4.9
Weighted average discount rate for operating leases	5.2%		5.2%		5.3%		5.2%

The following represents the aggregate right-of use assets and related lease obligations recognized in the Consolidated Balance Sheet at:

	March 31, 2021		December 31, 2020		March 31, 2022		December 31, 2021
Properties, plants and equipment, net	$	131	$	137	$	93	$	97
Other current liabilities	$	54	$	60	$	35	$	35
Other noncurrent liabilities and deferred credits		80		82		59		64
Total operating lease liabilities	$	134	$	142	$	94	$	99

Right-of-use assets and lease liabilities related to the Warrick Rolling Mill were excluded from the December 31, 2020 balances in the above table due to the sale of the rolling mill and were reclassified to Assets held for sale (see Note C).

New leases of $3 and $8 were added during the first quarter of ~~2021.~~2022 and 2021, respectively.

The future cash flows related to the operating lease obligations as of March 31, ~~2021~~2022 were as follows:

2021 (excluding the three months ended March 31)	$	47
2022		35
2022 (excluding the three months ended March 31)				$	31
2023		23			28
2024		14			17
2025		9			11
2026					8
Thereafter		24			18
Total lease payments (undiscounted)		152			113
Less: discount to net present value		(18	)		(19	)
Total	$	134		$	94

P.O. Contingencies

Environmental Matters

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, 2019	$	335
Liabilities incurred		7
Cash payments		(19	)
Foreign currency translation and other		(1	)
Balance at December 31, 2020		322		$	322
Liabilities incurred		4			21
Cash payments		(5	)		(23	)
Reversals of previously recorded liabilities		(7	)		(17	)
Foreign currency translation and other		(3	)		6
Balance at March 31, 2021	$	311
Balance at December 31, 2021					309
Liabilities incurred					5
Cash payments					(4	)
Reversals of previously recorded liabilities					(2	)
Foreign currency translation and other					2
Balance at March 31, 2022				$	310

At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the current portion of Alcoa Corporation’s environmental remediation reserve balance was ~~$33~~$46 and ~~$29,~~$44, respectively.

In the first quarter of 2022, the Company incurred liabilities of $5 primarily related to a new phase of work at the former East St. Louis site, which was recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations. Payments related to remediation expenses applied against the reserve were $4 in the first quarter of 2022. These amounts include mandated expenditures as well as those not required by any regulatory authority or third party. Further, the Company recorded a reversal of a reserve of $2 due to the determination that certain remaining site remediation is no longer required.

In the first quarter of 2021, the Company incurred liabilities of $4 related to wetlands mitigation at the Longview site and increases for ongoing monitoring and maintenance at various sites. These charges are primarily recorded in Restructuring and other charges, net and Cost of goods sold on the accompanying Statement of Consolidated Operations.Payments related to remediation expenses applied against the reserve were $5 in the first quarter of 2021. These amounts include mandated expenditures as well as those not required by any regulatory authority or third party. Further, the Company recorded a reversal of a reserve of $7 due to thedetermination that remaining site remediation is no longer required related to the previously closed Tennessee site.

~~In the first quarter of 2020, the Company incurred liabilities of $2 due to charges related to increases for ongoing monitoring and maintenance~~. 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 $3 in the first quarter of 2020. These amounts include mandated expenditures as well as those not required by any regulatory authority or third party. The reserve also reflected a decrease of $6 in the first quarter of 2020, due to the effects of foreign currency translation.

The estimated timing of cash outflows on the environmental remediation reserve at March 31, ~~2021~~2022 is as follows:

2021 (excluding the three months ended March 31, 2021)
$
24

2022 - 2026

164

Thereafter

123

Total
$
311

2022 (excluding the three months ended March 31, 2022)	$	39
2023 - 2027		207
Thereafter		64
Total	$	310

Reserve balances at March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, associated with significant sites with active remediation underway or for future remediation were ~~$254~~$248 and ~~$259,~~$247, respectively. In ~~management’s~~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:

Poços de Caldas, Brazil—The reserve associated with the 2015 closure of the Alcoa Alumínio S.A. smelter in Poços de Caldas, Brazil, 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—Alcoa Corporation’s subsidiary Alcoa Trasformazioni S.r.l. has remediation projects underway for its closed smelter sites at Fusina and Portovesme which have been approved by the Italian Ministry ~~of Environment and Protection of Land and Sea (MOE)~~for Ecologic Transition (MET). Work is ongoing for soil remediation at the Fusina site with expected completion ~~in 2022~~by the end of 2023 and at the Portovesme site with expected completion in the ~~second~~first half of ~~2021. Additionally, annual payments are made to MOE over a 10-year period through 2022~~2022. The final remedial design for ~~groundwater emergency containment and natural resource damages at~~ the ~~Fusina site. A~~ groundwater remediation project at Portovesme ~~had a final remedial design~~was completed in 2020 and is awaiting approval from the ~~MOE.~~MET.

Suriname—The reserve associated with the 2017 closure of the Suralco refinery and bauxite mine 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—The reserve associated with the 1990 closure of two mining areas and refineries near Hurricane Creek, Arkansas is for ongoing monitoring and maintenance for water quality surrounding the mine areas and residue disposal areas.

Massena, New York—The reserve associated with the 2015 closure of the Massena East smelter by the Company’s subsidiary, Reynolds Metals Company, is for subsurface soil remediation to be performed after demolition of the structures. Remediation work ~~is expected to commence~~commenced in 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 disposal area in 2018 and will take ~~eight~~up to ~~ten~~five additional years to complete, depending on the nature of its potential re-use. Work on the next three areas has not commenced but is expected to be completed by 2048, depending on its potential re-use.

Longview, Washington—In connection with a 2018 Consent Decree and Cleanup Action Plan with the State of Washington Department of Ecology, the Company’s subsidiary, Northwest Alloys as landowner, accepted certain responsibilities for future remediation of contaminated soil and sediments at the site located near Longview, Washington. In December 2020, the lessee of the land, who iswas a partner in the remediation of the site, filed for ~~bankruptcy.~~bankruptcy and exited the site in January 2021. Remediation design changes for consolidation and remediation of the onsite industrial waste landfills, groundwater remediation, and post-closure monitoring and maintenance at the site was completed in 2021. As of March 31, ~~2021,~~2022, the reserve related to the site is deemed to be sufficient.

Other Sites—The Company is in the process of decommissioning various other plants and remediating sites in several countries for potential redevelopment or to return the land to a natural state. In aggregate, there are approximately 35 remediation projects at these other sites that are planned or underway. These activities will be completed at various times in the future with the latest expected to be in 2026, after which ongoing monitoring and other activities may be required. At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the reserve balance associated with these activities was ~~$57 and $63, respectively.~~$62.

Tax

~~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. Through various stages of subsequent appeal, denial and re-assessment through the third quarter of 2018, Alcoa Corporation management came to believe that it was no longer 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 portion of the estimated loss in this matter, representing management’s best estimate at the time.

On November 8, 2018, Alcoa filed a petition for appeal to the Supreme Court of Spain. During the fourth quarter of 2020, the Supreme Court of Spain met and ruled in favor of Alcoa on the 2006 through 2009 tax year assessment. The ruling is final and cannot be further appealed. As a result of the final ruling, in the fourth quarter of 2020 Alcoa reversed the $32 (€26) reserve that was established in 2018 and the matter is now considered closed. Additionally, a lien secured with the San Ciprián smelter to Spain’s tax authorities that was provided in relation to this matter has been released.

Brazil (AWAB)—In March 2013, AWAB was notified by the Brazilian Federal Revenue Office (RFB) that approximately $110 (R$220) of value added tax credits previously claimed are being disallowed and a penalty of 50% assessed. Of this amount, AWAB received $41 (R$82) in cash in May 2012. The ~~value-added~~value added tax credits were claimed by AWAB for both fixed assets and export sales related to the Juruti bauxite mine and São Luís refinery ~~expansion.~~expansion for tax years 2009 through 2011. 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. In February 2022, the RFB notified AWAB that it had inspected the value added tax credits claimed for 2012 and disallowed $4 (R$19). In its decision, the RFB allowed credits of $14 (R$65) that were similar to those previously disallowed for 2009 through 2011. The decision on the 2012 credits provides positive evidence to support Management’s opinion that there is no basis for these credits to be disallowed. AWAB received the 2012 allowed credits in cash, with interest of $9 (R$44), in March 2022. AWAB will continue to dispute the credits that were disallowed for 2012. 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, a 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 ~~$38~~$50 (R$~~220)~~239). It is ~~management’s~~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)—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. During 2020, the SOAP was the subject of an independent review process within the ATO. At the conclusion of this process, the ATO determined to continue with the proposed adjustments and issued Notices of Assessment (the Notices) that were received by AofA on July 7, 2020. The Notices asserted claims for income tax payable by AofA of approximately ~~$162~~$160 (A$214). The Notices also included claims for compounded interest on the tax amount totaling approximately ~~$537~~$530 (A$707).

On September 17, 2020, the ATO issued a position paper with its preliminary view on the imposition of administrative penalties related to the tax assessment issued to AofA. This paper proposed penalties of approximately ~~$97~~$96 (A$128).

AofA ~~disagrees~~disagreed with the Notices and with the ATO’s proposed position on ~~penalties~~penalties. In September 2020, AofA lodged formal objections to the Notices. In the fourth quarter of 2020, AofA provided a submission on the ATO’s imposition of interest and also submitted a response to the ATO’s position paper ~~in the fourth quarter of 2020.~~on penalties. After the ATO completes its review of AofA’s response to the penalties position paper, the ATO could issue a penalty assessment.

~~The Company does~~To date, AofA has not ~~agree with~~received a response to its submission on the ATO’s ~~positions,~~imposition of interest or its response to the ATO’s position paper on penalties.

Through February 1, 2022, AofA did not receive a response from the ATO on AofA’s formal objections to the Notices and, on that date, AofA ~~will continue~~submitted statutory notices to ~~defend this matter~~the ATO requiring the ATO to make decisions on AofA’s objections within a 60-day period. On April 1, 2022, the ATO issued its decision disallowing the Company’s objections related to the income tax assessment, while the position on penalties and ~~pursue all available dispute resolution methods, up to and including the filing of~~interest remains outstanding.

On April 29, 2022, AofA filed proceedings in the Australian ~~Courts,~~Administrative Appeals Tribunal to contest the Notices, a process which could last several ~~years and could involve significant expenses.~~years. 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 customers.

In accordance with the ATO’s dispute resolution practices, AofA paid 50% of the assessed income tax amount exclusive of interest and any penalties, or approximately $74 (A$107), during the third quarter 2020, and the ATO is not expected to seek further payment prior to final resolution of the matter. If AofA is ultimately successful, any amounts paid to the ATO as part of the 50% payment would be refunded. AofA funded the payment with cash on hand and recorded the payment within Other noncurrent assets as a noncurrent prepaid tax ~~assessment deposit;~~asset; the related March 31, ~~2021~~2022 balance is ~~$81~~$80 (A$107).

Further interest on the unpaid tax and interest amounts will continue to accrue during the dispute. The initial interest assessment and the additional interest accrued are deductible against taxable income by AofA but would be taxable as income in the year the dispute is resolved if AofA is ultimately successful. AofA applied this deduction beginning in the third quarter of 2020 which reduced cash tax payments by approximately ~~$166~~$169 (A$219) in 2020, $14 (A$19) in 2021, and $4 (A$5) in the first quarter of ~~2021.~~2022. This amount has been reflected within Other noncurrent liabilities and deferred credits as a noncurrent accrued tax liability; the related March 31, ~~2021~~2022 balance is ~~$170~~$182 (A$~~224)~~243).

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

operations and financial condition. References to any assessed U.S. dollar amounts presented in connection with this matter have been converted into U.S. dollars from Australian dollars based on the exchange rate in ~~effect as of March 31, 2021.~~the respective period.

AofA is part of the Company’s joint venture with Alumina Limited, an Australian public company listed on the Australian Securities Exchange. The Company and Alumina Limited own 60% and 40%, respectively, of the joint venture entities, including AofA.

Other

Spain—In July 2019, the Company completed the divestiture of the Avilés and La Coruña (Spain) aluminum facilities to PARTER Capital Group AG (PARTER) in a sale process endorsed by the Spanish government and supported by the workers’ representatives following a collective dismissal process.

In early 2020, PARTER sold a majority stake in the facilities to an unrelated party. Alcoa had no knowledge of the subsequent transaction prior to its announcement and on August 28, 2020, Alcoa filed a lawsuit with the Court of First Instance in Madrid, Spain asserting that the sale was in breach of the sale agreement between Alcoa and PARTER.

Related to this subsequent sale transaction, certain proceedings and investigations have been initiated by or at the request of the employees of the facilities against their current employers, the new owners of the current employers, and Alcoa, alleging that certain agreements from the 2019 collective dismissal process remain in force and that, under such agreements, Alcoa remains liable for certain related employment benefits. One such proceeding is a collective case before the Spanish National Court, filed on November 10, 2020, wherein the workers’ representatives and employees are seeking to have the terms of a Collective Dismissal Agreement signed between Alcoa and the workers in January 2019 be fulfilled. Other proceedings include: a second collective claim filed in National Court on behalf employees that were not affected by the 2019 collective dismissal process, numerous individual labor claims filed in the labor courts of Avilés and La Coruña and the initiation of a separate criminal investigation by the National Court.

On June 15, 2021, the Spanish National Court ruled that the collective dismissal agreement for the divested Avilés and La Coruña aluminum facilities should be applied to the situation of the claimant workers, and that Alcoa should be liable for the severance of those employees to the extent they were affected by the 2019 collective dismissal process. Alcoa has appealed this ruling to the Supreme Court of Spain.

In July 2021, the Spanish National Court appointed a judicial director to oversee the facilities and later declared the facilities insolvent. In early 2022, the insolvency administrators appointed by the courts (one for each facility) announced their intention to collectively dismiss all employees at the two facilities.

In February 2022, Alcoa initiated discussions with certain of the relevant stakeholders to explore a potential global resolution of all pending matters involving Alcoa arising from the prior divestiture of the two facilities, including a waiver of all claims and investigations previously initiated by or at the request of the employees of the facilities. Due to the progress of negotiations through the end of the first quarter of 2022 and the comprehensive offer proposed by the Company, Alcoa concluded as of March 31, 2022 that it was probable that the workers of the divested facilities would accept the offer and an agreement would be reached. As such, the Company recorded a restructuring charge of $77 to reflect its estimated liability for the offer made to the workers of the divested Avilés and La Coruña facilities in the quarter ended March 31, 2022.

As of the date of this filing, the Company has received unanimous acceptance of the offer from all active workers of the divested Avilés and La Coruña facilities. Additional conditions under the agreement are required to be completed before an agreement on the settlement is formally reached. If the remaining conditions are completed, it is expected that the Company will make cash payments within 90 days of the finalization of the agreement.

In the case that the conditions under the agreement are not completed successfully, Alcoa will continue with its appeal to the National Court ruling to the Spanish Supreme Court and will strongly defend all other pending and future legal proceedings arising from the sale of the Avilés and La Coruña facilities. Alcoa acted in good faith, in full compliance with the law and with all of the terms that it committed to in the contract for the sale of the Avilés and La Coruña facilities to PARTER and in the agreements that it entered into with the representatives of the workers of both facilities.

General

In addition to the matters discussed above, various other lawsuits, claims, and proceedings have been or may be instituted or asserted against Alcoa Corporation, including those pertaining to environmental, 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~~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.

Q.P. Other Income, Net

First quarter ended
March 31,

2021

2020

Equity (gain) loss

$
(5
)

$
7

Foreign currency (gains) losses, net

(4
)

11

Net gain from asset sales

(26
)

(177
)
Net (gain) loss on mark-to-market derivative instruments (M)

(5
)

11

Non-service costs – Pension & OPEB (L)

13

25

Other

3

(9
)

$
(24
)

$
(132
)

	First quarter ended March 31,
	2022			2021
Equity income	$	(18	)	$	(5	)
Foreign currency losses (gains), net		12			(4	)
Net loss (gain) from asset sales		1			(26	)
Net gain on mark-to-market derivative instruments (L)		(15	)		(5	)
Non-service costs – Pension & OPEB (K)		16			13
Other		(10	)		3
	$	(14	)	$	(24	)

Net gain from asset sales for the first quarter ended March 31, 2021 included a net gain of $27 related to the sale of ~~the~~ Warrick Rolling Mill (see Note C). ~~Net gain from asset sales for the first quarter ended 2020 included a net gain of $180 related to the sale of EES (see Note C).~~

~~R. Subsequent Events~~

On April 1, 2021, Alcoa made $500 in discretionary contributions to certain U.S. defined benefit pension plans. The contributions were funded with net proceeds from the March 2021 debt issuance (see Note K) and available cash on hand.

On April 7, 2021, Alcoa redeemed in full $750 aggregate principal amount of the 2024 Notes at a redemption price equal to 103.375% of the principal amount of the 2024 Notes, plus accrued and unpaid interest to but not including the Redemption Date.

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))

Business Update

~~Coronavirus~~

~~In response to~~The Company has maintained all operations throughout the ~~ongoing~~ coronavirus (COVID-19) pandemic ~~Alcoa implemented~~with only minimal employee-and contractor-related disruptions by following comprehensive ~~measures to protect the~~ health ~~of the Company’s workforce, prevent infection in our locations, mitigate impacts, and safeguard business continuity. 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. The Company continues, through its operations leadership team and global crisis response ~~team, to ensure that each location’s preparedness and response plans are up to date.~~

plans. The ~~Company has not experienced any significant interruption from its supply sources, and the Company’s locations have had minimal contractor- and employee-related disruptions to date. The magnitude and~~ duration of the COVID-19 pandemic iscontinues to be unknown. The pandemic could have adverse future impacts on the Company’s business, financial condition, operating results, and cash ~~flows. Further adverse conditions or prolonged deterioration of conditions~~flows which could negatively impact our financial condition and result in asset impairment charges, including long-lived assets or goodwill, or affect the realizability of deferred tax assets.

AsThe Company has experienced isolated interruptions from its supply sources but has identified alternate solutions to avoid any significant production impacts. Additionally, in the first quarter of 2022 the Company intermittently faced challenges, primarily in North America, with securing railcars or vessels for outbound product sales due to global disruptions in the supply chain. The unavailability of outbound transportation has delayed shipments as discussed in the Results of Operations below.

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

In March 2022, in response to the conflict between Russia and Ukraine, the Company announced that it ceased the purchase of raw materials from and the sale of our products to Russian businesses. Financial impacts in the first quarter of 2022 as a result of these actions were not material. The Company identified alternate sources for securing the ~~pandemic’s~~limited number of materials that would have been purchased from Russian suppliers without any supply interruption or material financial impact. Due to the lack of bauxite sales to Russian-owned alumina refineries, the Company expects to slow production in its Juruti mine in Brazil with associated cost inefficiencies. The Company is also observing Russia-related changes in the Atlantic bauxite market which may 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 through March 31, 2021.shipments (see Segment Information, Bauxite below).

Key Actions

~~On November 30, 2020,~~The Company paid a quarterly cash dividend of $0.10 per share of the Company’s common stock in March 2022, totaling $18. Also in the first quarter of 2022, the Company ~~entered into~~repurchased 1 million shares for $75 under its common stock repurchase program; these shares were immediately retired. As the average repurchase price of $72.06 exceeded the share price implicit in additional paid in capital, a portion of the equity impact ($21) was allocated to retained earnings. Refer to Liquidity and Capital, below, for more information.

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

In March 2022, the Company recorded a restructuring charge of $77 to reflect its estimate for the offer made to the workers of the divested Avilés and La Coruña facilities (Spain) to settle various legal disputes related to the 2019 divestiture. The offer represents an opportunity to avoid prolonged legal proceedings over the following years; it does not represent an acknowledgement of wrongdoing or a belief that the Company would not succeed in the legal process.

On February 15, 2022, the Company signed an agreement to sell its ~~rolling mill located at Warrick Operations (Warrick Rolling Mill), an integrated aluminum manufacturing site near Evansville, Indiana (Warrick Operations),~~share of its investment in Mineração Rio do Norte S.A (MRN) in Brazil for $10 to ~~Kaiser Aluminum Corporation (Kaiser). On March 31, 2021,~~South32 Minerals S.A. Related to this transaction, the Company ~~completed~~recorded an asset impairment of $58 in the ~~sale for total consideration~~first quarter of ~~approximately $670, which includes the assumption of $72~~2022 in Restructuring and other postretirement benefit liabilities (subject to further post-closing adjustments). Additionally, as of March 31, 2021, the Company incurred transaction costs of $7 and capital expenditures of $8 related to site separation. The Company recorded a gain of $27 in Other income,charges, net ~~(pre- and after-tax)~~ on the Statement of Consolidated ~~Operations upon closure.The consideration and gain amounts are subject to customary post-closing adjustments.~~Operations. On April 30, 2022 Alcoa ~~retains ownership~~completed the sale of ~~the site’s 269 kmt aluminum smelter and~~ its ~~electricity generating units at Warrick Operations with a market-based metal supply agreement with Kaiser. In addition~~investment in MRN. Further, an additional $30 in cash could be paid to the ~~$15 in spend noted above,~~Company in the ~~first quarter of~~future if certain post-closing conditions related to future MRN mine development are satisfied.

On December 29, 2021, the Company ~~recorded estimated liabilities of approximately $70 for future site separation commitments~~ and ~~remaining transaction costs associated with the sales agreement. Approximately half~~workers’ representatives of the ~~obligation~~San Ciprián (Spain) aluminum and alumina facilities reached an agreement to temporarily curtail the smelter’s 228,000 metric tons of annual capacity due to exorbitant energy prices in Spain, and to resume normal operations at the refinery. The smelter curtailment was safely completed in January 2022, while the casthouse continues to operate. On April 26, 2022, the Spanish National Court rejected the Company’srequest to suspend the repayment of carbon dioxide compensation credits to the Spanish Ministry of Industry, Trade and Tourism. Upon receipt of the credits

in each of the applicable years, the Company recorded the cash received as deferred income (liability) due to clawback provisions. In the second quarter of 2022, the Company is expected to ~~be spent in 2021, with the remainder to be spent in 2022 and 2023.Additionally, the Company expects to incur $5~~make a payment of ~~additional capital expenditures for assets required~~approximately $41 (€37) for the ~~Company to separately operate its portion of the site.~~

In March 2021, ANHBV, a wholly-owned subsidiary of Alcoa Corporation, issued $500 aggregate principal amount of 4.125% Senior Notes due 2029 (the 2029 Notes) in a private transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the Securities Act). The net proceeds of this issuance were approximately $493 reflecting a discount to the initial purchasers of the 2029 Notes, as well as issuance costs. The Company used the proceeds, together with cash on hand, to contribute $500 to its U.S. defined benefit pension plans~~applicable to salaried~~2018 and ~~hourly employees on April 1, 2021,~~2019 compensation credits and ~~to redeem in full $750 aggregate principal amount of the Company’s outstanding 6.75% Senior Notes due 2024 (the 2024 Notes) on April 7, 2021, and to pay transaction-related fees and expenses.~~

On March 18, 2021, the Company signed 5-year agreements to repower the Portland Aluminum Smelter in the State of Victoria, Australia. The agreements with three separate providers will commence on August 1, 2021. Further, the Australian Federal Government has committed, subject to approval, to provide up to $15 (A$19) per year for four years to underwrite the smelter’s participation in the Reliability and Emergency Reserve Trader (RERT) scheme. The arrangement will recognize the smelter’s ability to rapidly shed load when required to help protect the power grid from unexpected interruptions when it is under duress.interest.

See the below sections for additional details on the ~~above described~~above-described actions.

~~Spain Matters~~

~~In January 2021, the Company reached an agreement with the workers’ representatives to temporarily suspend the labor strike at its San Ciprián alumina refinery and aluminum smelter in Spain~~through April 30, 2021 (subsequently extended through May 11, 2021). As part of the agreement, the Company agreed to conduct an exclusive sale process with Sociedad Estatal de Participaciones Industriales (SEPI), a Spanish government-owned entity. The Company has complied with the terms of the agreement to pursue a sale, has delivered a term sheet to SEPI, and is continuing to evaluate potential solutions.

The refinery and smelter have continued operations and the Company remains open to an agreement to further extend the strike suspension period. Although the ultimate outcome is currently unknown, the reactivation of the strike may negatively affect the Company’s operating and financial results due to reduced refinery production and metal shipments.

During 2019, the Company completed the divestiture of the Avilés and La Coruña (Spain) aluminum facilities to PARTER Capital Group AG (PARTER) in a sale process endorsed by the Spanish government and supported by the workers’ representatives following a collective dismissal process. In 2020, PARTER sold its majority stake in the facilities to an unrelated party. The Company had no knowledge of the subsequent transaction prior to its announcement, and has filed a lawsuit asserting that the sale was in breach of the sale agreement between Alcoa and PARTER.

Related to this divestiture, certain claims and investigations have been initiated by or at the request of the employees of the facilities against their current employers, the owners of the current employers, and Alcoa, alleging that the agreements of the collective dismissal process remain in force and that Alcoa remains liable for related social benefits to the employees. The Company continues to believe it acted in good faith, in full compliance with the law and the agreements, with the endorsement of the Spanish government, and with the support of the workers’ representatives throughout the sale process.

Results of Operations

In accordance with the recently adopted amendments to Item 303 of Regulation S-K, Management has updated its comparison of interim periods to compare the results of the most recent quarter against the results of the immediately preceding sequential quarter in an effort to provide a more meaningful analysis as we are not a seasonal business and to align theThe discussion ~~with how management reviews the results of the Company. The Company will continue to present~~that follows includes a comparison of our results of operations and liquidity and capital resources for the ~~most recent~~quarterly and year-to-date ~~period and~~periods outlined in the ~~corresponding year-to-date period of the preceding fiscal year.~~table below.

Selected Financial Data:

	Quarter ended						Three months ended						Quarter ended						Three months ended
	Sequential						Year-to-date						Sequential						Year-to-date
Statement of Operations	March 31, 2021			December 31, 2020			March 31, 2021			March 31, 2020			March 31, 2022			December 31, 2021			March 31, 2022			March 31, 2021
Sales	$	2,870		$	2,392		$	2,870		$	2,381		$	3,293		$	3,340		$	3,293		$	2,870
Cost of goods sold (exclusive of expenses below)		2,292			1,974			2,292			2,025			2,181			2,383			2,181			2,292
Selling, general administrative, and other expenses		52			55			52			60			44			68			44			52
Research and development expenses		7			9			7			7			9			10			9			7
Provision for depreciation, depletion, and amortization		182			170			182			170			160			165			160			182
Restructuring and other charges, net		7			60			7			2			125			1,055			125			7
Interest expense		42			43			42			30			25			28			25			42
Other (income) expenses, net		(24	)		44			(24	)		(132	)
Other income, net														(14	)		(298	)		(14	)		(24	)
Total costs and expenses		2,558			2,355			2,558			2,162			2,530			3,411			2,530			2,558
Income before income taxes		312			37			312			219
Income (loss) before income taxes														763			(71	)		763			312
Provision for income taxes		93			20			93			80			210			298			210			93
Net income		219			17			219			139
Net income (loss)														553			(369	)		553			219
Less: Net income attributable to noncontrolling interest		44			21			44			59			84			23			84			44
Net income (loss) attributable to Alcoa Corporation	$	175		$	(4	)	$	175		$	80		$	469		$	(392	)	$	469		$	175

	Quarter ended					Three months ended				Quarter ended					Three months ended
Selected Financial Metrics	March 31, 2021		December 31, 2020			March 31, 2021		March 31, 2020		March 31, 2022		December 31, 2021			March 31, 2022		March 31, 2021
Diluted income (loss) per share attributable to Alcoa Corporation common shareholders	$	0.93	$	(0.02	)	$	0.93	$	0.43	$	2.49	$	(2.11	)	$	2.49	$	0.93
Third-party shipments of alumina (kmt)		2,472		2,312			2,472		2,365		2,277		2,294			2,277		2,472
Third-party shipments of aluminum products (kmt)		831		735			831		725		634		687			634		831
Average realized price per metric ton of alumina	$	308	$	268		$	308	$	299	$	375	$	407		$	375	$	308
Average realized price per metric ton of primary aluminum	$	2,308	$	2,094		$	2,308	$	1,988	$	3,861	$	3,382		$	3,861	$	2,308
Average Alumina Price Index (API)⁽¹⁾	$	301	$	274		$	301	$	282	$	373	$	423		$	373	$	301
Average London Metal Exchange (LME) 15-day lag⁽²⁾	$	2,060	$	1,870		$	2,060	$	1,730	$	3,147	$	2,783		$	3,147	$	2,060

⁽¹⁾

API (Alumina Price Index) is a pricing mechanism that is calculated by the Company based on the weighted average of a prior month’s daily spot prices published by the following three indices: CRU Metallurgical Grade Alumina Price; Platts Metals Daily Alumina PAX Price; and FastMarkets Metal Bulletin Non-Ferrous Metals Alumina Index.

⁽²⁾	LME (London Metal Exchange) is a globally recognized exchange for commodity trading, including aluminum. The LME pricing component represents the underlying base metal component, based on quoted prices for aluminum on the exchange.

Sequential Period Comparison

Year-to-date Comparison

Overview

Net income attributable to Alcoa Corporation increased ~~$179~~$861 primarily as a result of:

•~~Higher aluminum and alumina prices~~

•Lower restructuring charges

•~~Gain~~Lower taxes due to a valuation allowance recorded in the fourth quarter of 2021 against the deferred tax assets of a Spanish subsidiary

•Higher average realized price of aluminum

•Higher value-add product sales

Partially offset by:

•Absence of gains on the sale of non-core assets

•Lower shipments from the ~~Warrick Rolling Mill~~Australian refineries, as well as limited availability of railcars or vessels for outbound product sales from North American smelters

•Higher raw material costs due to inflation pressures

•Seasonal pricing declines at the Brazil hydro-electric facilities

•Higher energy costs in the refineries, primarily in Spain

Net income attributable to Alcoa Corporation increased $294 primarily as a result of:

•Higher average realized prices of aluminum and alumina

•Higher value-add product sales

Partially offset by:

•Higher ~~provision for income taxes~~raw material costs due to ~~higher earnings~~inflation pressures

•Higher ~~non-controlling interest due primarily to higher~~restructuring charges

•Higher taxes on improved earnings in jurisdictions with higher tax rates

•Higher energy costs, primarily in Europe

•Higher costs primarily associated with maintenance, labor, and freight

Sales

Sales decreased $47 primarily as a result of:

•Lower shipments mainly related to limited availability of railcars or vessels for outbound product sales from North American smelters, lower shipments from the Australian refineries and absence of bauxite export volume from Australia

•Lower metal trading activities; fluctuates based on market opportunities in quarter

•Lower average realized price of alumina

•Seasonal pricing declines at the Brazil hydro-electric facilities

Partially offset by:

•Higher average realized price of aluminum

•Higher value-add product sales, including the resumption of sales from the San Ciprián casthouse after conclusion of the strike in late December 2021

•Favorable changes to alumina ~~segment~~customer contract mix

~~Net income attributable to Alcoa Corporation~~Sales increased ~~$95~~$423 primarily as a result of:

•Higher ~~aluminum and alumina prices~~

•~~Lower production and raw material costs~~

•~~Gain on the sale of the Warrick Rolling Mill~~

~~Partially offset by:~~

•~~Unfavorable currency movements as the U.S. dollar weakened against most major currencies except the Brazilian real~~

•~~Higher energy costs mainly in our Australian refineries due to a new gas contract~~

•~~Absence of a gain related to the divestiture of the Gum Springs waste treatment facility~~

~~Sales~~

~~Sales increased $478 primarily as a result of:~~

•~~Higher~~average realized prices ~~for~~of aluminum and alumina

•Higher ~~shipments due to~~value-add product sales

Partially offset by:

•Absence of sales from the ~~end of~~divested Warrick Rolling Mill, partially offset by new third-party revenue from the ~~strike at the San Ciprián~~Warrick smelter

•~~Higher alumina shipments on~~Decreased sales from the San Ciprián smelter due to timing of ~~vessels~~sales of accumulated inventory from the strike and the smelter curtailment

•~~Higher rolled products volume due to 7 kmt higher~~Lower shipments ~~and higher aluminum prices~~

~~Sales increased $489 primarily as a result of:~~

•~~Higher realized prices for aluminum and alumina~~

•~~Restart of the Bécancour smelter~~

•~~Higher shipments due to the end of the strike at the San Ciprián smelter~~

•~~Higher rolled products revenue due to 9 kmt higher shipments and higher aluminum prices~~

~~Partially offset by:~~

•~~Curtailment of the Intalco smelter~~across all three segments

Cost of goods sold

Cost of goods sold as a percentage of sales decreased ~~2.7%~~5% primarily as a result of:

•Higher average realized price for aluminum

•Higher value-add product sales

•Favorable changes to alumina customer contract mix

Partially offset by:

•Higher raw material costs due to inflation pressures

•Higher energy costs, primarily in Spain

Cost of goods sold as a percentage of sales decreased 14% primarily as a result of:

•Higher average realized prices for aluminum and alumina

•Higher value-add product sales

Partially offset by:

•Higher energy costs, ~~at the alumina refineries~~primarily due to higher ~~spot~~market prices ~~during~~in Europe and Brazil

•Higher raw material costs due to inflation pressures

•Decreased costs due to the ~~first quarter~~curtailment of the San Ciprián smelter

Selling, general administrative, and other expenses

~~Cost of goods sold as a percentage of sales~~Selling, general administrative, and other selling expenses decreased ~~5.2%~~$24 primarily as a result of:

•~~Higher realized prices for aluminum~~Lower contract services, external legal fees, information technology services, and ~~alumina~~

~~Partially offset by:~~

•~~Higher energy costs at the Australia alumina refineries due to a new gas contract~~other professional service fees

•~~Net unfavorable foreign~~Lower accruals for stock-based compensation

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

•Lower external legal fees, other professional service fees and insurance

Partially offset by:

•Unfavorable currency ~~movements due to a weaker U.S. dollar against most major currencies except the Brazilian real~~impacts

Sequential Period Comparison

Year-to-date Comparison

~~Selling, general administrative,~~Provision for depreciation, depletion, and ~~other expenses~~amortization

~~Selling, general administrative, and other selling~~Depreciation decreased $5 primarily as a result of:

•The nonrecurrence of write-offs of assets in the fourth quarter of 2021 for projects no longer being pursued

Depreciation decreased $22 primarily as a result of:

•Lower depreciation at the Australian mines due to completion of mine moves in the prior year

Interest expense

Interest expense decreased $3 primarily as a result of:

•~~Lower external portfolio action costs as~~Two fewer days in the ~~sale of the Warrick Rolling Mill has completed~~period

~~Selling, general administrative, and other selling~~Interest expense decreased $8$17 primarily as a result of:

•~~Lower personnel and travel costs due to completion~~Absence of ~~the new operating model at end of first quarter 2020 and pandemic travel limitations~~interest on $750 6.75% Senior Notes redeemed early in April 2021

•Absence of ~~increase~~interest on $500 7.00% Senior Notes redeemed early in ~~bad debt reserve~~September 2021

Partially offset by:

•Interest on the $500 4.125% Senior Notes issued in March 2021

~~Provision for depreciation, depletion, and amortization~~Other income, net

~~Depreciation increased $12~~Other income, net decreased $284 primarily as a result of:

•~~Higher depreciation at~~Absence of gains on the ~~Australian mines due to mine moves~~sale of non-core assets, including the Rockdale site

•~~Foreign exchange impacts~~Higher ELYSIS^TM capital contributions which triggered loss recognition~~due to a weaker U.S. dollar, particularly against the Australian dollar~~

~~Partially offset by:~~

•Absence of ~~depreciation at~~favorable mark-to-market results on embedded credit derivative due to tightening credit spreads in the ~~Warrick Rolling Mill as it was classified as held for sale~~prior quarter

•Unfavorable currency impacts due to a weaker U.S. dollar against the Brazilian real

•Decrease in equity earnings from Ma'aden bauxite and alumina joint venture primarily due to lower alumina prices

~~Depreciation increased $12~~Other income, net decreased $10 primarily as a result of:

•~~Higher depreciation at the Australian mines due to mine moves~~

•~~Foreign exchange impacts due to a weaker U.S. dollar against most major currencies except the Brazilian real~~

~~Partially offset by:~~

•Absence of ~~depreciation at~~a gain for the ~~Warrick Rolling Mill as it was classified as held for sale~~

~~Interest expense~~

~~Interest expense decreased $1 primarily as a result of:~~

•~~Lower interest due to two fewer days in the period~~

~~Partially offset by:~~

•~~Additional interest on the $500 notes that were issued in March 2021 at a rate of 4.125%~~

~~Interest expense increased $12 primarily as a result of:~~

•~~Additional interest on the $750 notes that were issued in July 2020 at a rate of $5.5%~~

•~~Additional interest on the $500 notes that were issued in March 2021 at a rate of 4.125%~~

~~Other (income) expenses, net~~

~~Other (income) expenses, net increased $68 primarily as a result of:~~

•~~Gain on the sale~~divestiture of the Warrick Rolling Mill

•~~Lower non-service costs related to pension and OPEB~~Higher ELYSIS^TM capital contributions which triggered loss recognition

•~~Favorable foreign exchange revaluation~~Unfavorable currency impacts ~~from the sequential strengthening of the~~due to a weaker U.S. dollar ~~at first quarter 2021 end (despite weak U.S. dollar for most of~~against the ~~quarter)~~Brazilian real

Partially offset by:

•Higher equity earnings from ~~the Ma’aden aluminum~~Ma'aden joint venture ~~due to~~primarily on higher aluminum and alumina prices

~~Other (income) expenses, net decreased $108 primarily as a result of:~~

•~~The absence of gain related to the divestiture of a waste processing facility at Gum Springs~~

~~Partially offset by:~~

•~~Gain on the sale of the Warrick Rolling Mill~~

•Favorable ~~mark to market~~mark-to-market results on ~~embedded credit~~ derivative ~~due to tightening credit spreads~~

•~~Favorable foreign exchange revaluation impacts from the strengthening of the U.S. dollar at first quarter 2021 end~~

•~~Higher equity earnings from the Ma’aden joint venture~~instruments due to higher ~~aluminum~~power prices

•~~Lower non-service costs related to pension and OPEB~~ in the current quarter

Restructuring and other charges, net

In the first quarter of 2022, Restructuring and other charges, net of $125 primarily related to:

•$77 for the offer made to the workers of the divested Avilés and La Coruña facilities to settle various legal disputes related to the 2019 divestiture

•$58 for an asset impairment related to the sale of the Company’s interest in the MRN mine

•$2 for additional take-or-pay contract costs at the closed Intalco (Washington) smelter

Partially offset by:

•$11 for changes in estimated take-or-pay contract costs at the closed Wenatchee (Washington) smelter

In the fourth quarter of 2021, Restructuring and other charges, net of $1,055 primarily related to:

•$858 for U.S. pension group annuity contracts and lump sum settlement

•$80 for the ~~Company recorded~~permanent closure of the previously curtailed Wenatchee smelter

•$63 for Suriname pension group annuity contract

•$62 for the temporary curtailment of the San Ciprián smelter

In the three-month period of 2022, Restructuring and other charges, net of $125 primarily related to:

•$77 for the offer made to the workers of the divested Avilés and La Coruña facilities to settle various legal disputes related to the 2019 divestiture

•$58 for an asset impairment related to the sale of the Company’s interest in the MRN mine

•$2 for additional take-or-pay contract costs at the closed Intalco smelter

Partially offset by:

•$11 for changes in estimated take-or-pay contract costs at the closed Wenatchee smelter

In the three-month period of 2021, Restructuring and other charges, net of $7 ~~which was~~ primarily related to to:

•$9 in settlements and curtailments of certain other postretirement benefits related to the sale of the Warrick Rolling ~~Mill; $6~~Mill

•$6 related to additional ~~take or pay~~take-or-pay contract costs at the curtailed Intalco and Wenatchee ~~smelters; $3~~smelters (prior to closure)

•$3 to record additional environmental related ~~to remediation costs at a former facility; and a $12 reversal~~reserves.

Partially offset by:

•$12 of ~~remaining~~reversals for environmental and asset retirement obligation reserves at a previously closed Tennessee site due to the completion of demolition and the determination that remaining site remediation is no longer required.

In the fourth quarter of 2020, the Company recorded net charges of $60 which was primarily related to $52 in settlements and curtailments of certain pension and other postretirement benefits.

~~In the three-month period of 2021, the Company recorded net charges of $7 which was primarily related to~~ ~~$9 in~~ locationssettlements and curtailments of certain other postretirement benefits related to the sale of the Warrick Rolling Mill; $6 related to additional take or pay contract costs at the Intalco and Wenatchee smelters; $3 related to remediation costs at a former facility; and a $12 reversal of remaining environmental and asset retirement obligation reserves at a previously closed Tennessee site due to the completion of demolition and the determination that remaining site remediation is no longer required.

In the three-month period of 2020, Alcoa Corporation recorded net charges of $2 comprised of several insignificant items, including pension curtailment charges of $3.

Sequential Period Comparison

Year-to-date Comparison

Provision for income taxes

The Provision for income taxes in the first quarter of ~~2021~~2022 was ~~$93~~$210 on income before taxes of ~~$312~~$763 or ~~29.8%~~27.5%. In comparison, the fourth quarter of ~~2020~~2021 Provision for income taxes was ~~$20~~$298 on ~~income~~loss before taxes of ~~$37~~$(71) or ~~53.7%~~(420.9)%.

The ~~increase~~reduction in ~~taxes~~tax expense of $88 is primarily attributable to ~~the higher income before taxes noted above, as well as the distribution~~a valuation allowance of ~~earnings among tax jurisdictions. In the current quarter, the Company had lower losses~~$103 recorded in the fourth quarter of 2021 against the net deferred tax assets of Alúmina Española, S.A (Spain). Additionally, higher tax expense, primarily in Canada and Norway related to additional profits on higher aluminum prices, was partially offset by less tax expense related to lower alumina prices in jurisdictions ~~where it maintains a full~~with higher tax ~~valuation reserve bringing the effective tax rate down from the prior period.~~rates, primarily Australia and Brazil.

The Provision for income taxes in the three-month period of 2022 was $210 on income before taxes of $763 or 27.5%. In comparison, the three-month period of 2021 Provision for income taxes was $93 on income before taxes of $312 or 29.8%. ~~In comparison, the three-month period of 2020 Provision for income taxes was $80 on income before taxes of $219 or 36.8%.~~

The increase in ~~taxes~~tax expense is ~~primarily~~ attributable to the overall higher income before taxes noted above.

In Additionally, in the three-month period in ~~2021,~~2022, the Company had ~~similar losses~~higher income in the jurisdictions where it maintains a full tax valuation ~~reserve but higher~~allowance. This change in composition of taxable income inreduced the ~~jurisdictions with statutory rates of approximately 30% pulling the overall~~effective tax rate ~~toward that mark.~~from the prior period.

Noncontrolling interest

Net income attributable to noncontrolling interest was ~~$44~~$84 in the first quarter of ~~2021~~2022 compared with ~~$21~~$23 in the fourth quarter of ~~2020.~~2021. These amounts are entirely related to Alumina Limited’s 40% ownership interest in several affiliated operating entities.

In

Despite the ~~first quarter of 2021 these combined entities, particularly the Alumina segment entities, generated higher~~lower alumina price in 2022, net income ~~compared with~~attributable to noncontrolling interest increased in 2022 due to the ~~fourth quarter~~following: lower depreciation, lower restructuring charges, lower taxes due to both a valuation allowance established against deferred taxes in 2021 and lower profits before taxes in affiliated operating entities, and lower elimination of ~~2020. The favorable change~~intercompany profit in ~~earnings was mainly driven~~inventory, partially offset by ~~higher alumina prices (see Alumina under Segment Information below).~~lower gain on sale of non-core assets.

Net income attributable to noncontrolling interest was $84 in the three-month period of 2022 compared with $44 in the three-month period of ~~2021 compared with $59~~2021.

The increase is primarily a result of higher alumina prices, lower depreciation, lower elimination of intercompany profit in the three-month period of 2020.

Netinventory, other income attributed to non-controlling interest decreased due to higher energy costs at the Australia alumina refineries due to a new gas contract, unfavorable foreign exchange impacts as the U.S. dollar weakened mainly against the Australian dollar,primarily related mark-to-market gains on derivative instruments, partially offset by higher ~~alumina prices.~~

restructuring charges primarily for the asset impairment related to the sale of the Company’s interest in MRN, and higher taxes on higher profits before taxes in affiliated operating entities.

Segment Information

Alcoa Corporation is a producer of bauxite, alumina, and aluminum products. The Company’s operations consist of three worldwide reportable segments: Bauxite, Alumina, and Aluminum. Segment performance under Alcoa Corporation’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance is the Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) of each segment. The Company calculates Segment Adjusted EBITDA as Total sales (third-party and intersegment) minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; and Research and development expenses. Alcoa Corporation believes that the presentation of Adjusted EBITDA is useful to investors because such measure provides both additional information about the operating performance of Alcoa Corporation and insight on the ability of Alcoa Corporation to meet its financial obligations. The presentation of Adjusted EBITDA is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP. Alcoa Corporation’s Adjusted EBITDA may not be comparable to similarly titled measures of other companies. See Reconciliation of Total Segment Adjusted EBITDA to Consolidated Net Income (Loss) Attributable to Alcoa Corporation below.

Bauxite

Business Update. During the first quarter of 2022 compared to the fourth quarter of 2021, the Bauxite segment ~~realized~~had 0.2 million dry metric tons lower ~~internal~~third-party shipments and $6 lower third-party sales from the Australian mines due to the expiration of the Company’s license to export bauxite ~~pricing and lower earnings~~ from ~~minority owned mines. Further,~~Australia.

On February 15, 2022, the Company ~~successfully relocated the Willowdale mining operations~~signed an agreement to ~~the next planned location~~sell its share of its investment in MRN in Brazil for $10 to South32 Minerals S.A. Further, an additional $30 in cash could be paid to Alcoa in the ~~Darling range and operations have resumed. Additional costs~~future if certain post-closing conditions related to ~~finalize~~future MRN mine development are satisfied. Related to this transaction, the ~~move are anticipated through the third quarter~~Company recorded an asset impairment of ~~2021. The segment incurred higher depreciation expense~~$58 in the first quarter of 2022 in Restructuring and other charges, net on the Statement of Consolidated Operations. On April 30, 2022 Alcoa completed the sale of its investment in MRN. In conjunction with the sale, the Company entered into several bauxite supply agreements with South 32 Minerals S.A. to provide bauxite supply for existing long-term supply contracts.

Mining operations are relocated periodically in support of optimizing the value extracted from bauxite reserves. In the first quarter of 2022, the Company continued the process of moving the Juruti mining operations, which is expected to complete by the end of 2022. During the first quarter of 2022, the Company incurred $3 in capital expenditures related to ~~these mine moves.~~ Juruti mining operation relocation.

Production in the below table can vary from Total shipments due primarily to differences between the equity allocation of production and off-take agreements with the respective equity investment. Operating costs in the table below includes all production-related costs: conversion costs, such as labor, materials, and utilities; depreciation, depletion, and amortization; and plant administrative expenses.

	Quarter ended				Three months ended				Quarter ended				Three months ended
	March 31, 2021		December 31, 2020		March 31, 2021		March 31, 2020		March 31, 2022		December 31, 2021		March 31, 2022		March 31, 2021
Production (mdmt)		11.9		12.2		11.9		11.6		11.0		11.8		11.0		11.9
Third-party shipments (mdmt)		1.5		1.9		1.5		1.4		0.8		1.6		0.8		1.5
Intersegment shipments (mdmt)		10.5		10.4		10.5		10.5		10.1		10.6		10.1		10.5
Total shipments (mdmt)		12.0		12.3		12.0		11.9		10.9		12.2		10.9		12.0
Third-party sales	$	58	$	79	$	58	$	71	$	43	$	83	$	43	$	58
Intersegment sales		185		225		185		235		170		175		170		185
Total sales	$	243	$	304	$	243	$	306	$	213	$	258	$	213	$	243
Segment Adjusted EBITDA	$	59	$	120	$	59	$	120	$	38	$	49	$	38	$	59
Operating costs	$	237	$	217	$	237	$	213	$	207	$	237	$	207	$	237
Average cost per dry metric ton of bauxite	$	20	$	18	$	20	$	18	$	19	$	19	$	19	$	20

Sequential Period Comparison

Year-to-date Comparison

Production

Production decreased ~~2% primarily as a result of:~~

•~~Slightly lower production across most of the portfolio due to two fewer days in the period~~

~~Partially offset by:~~

•~~Better operational performance at the Huntly mine~~

~~Production increased 3% primarily as a result of:~~

•~~Higher production across Alcoa operated mines~~

~~Partially offset by:~~

•~~Slightly lower production at most equity-owned mines~~

•~~One less day in the period~~

~~Third-party sales~~

~~Third-party sales decreased $21~~7% primarily as a result of:

•Lower ~~sales volumes~~demand from certain Alumina segment refineries

•Lower ~~royalties due to the absence of a favorable true-up that occurred~~seasonal demand and fewer days in the ~~fourth quarter 2020~~period

•~~Lower average realized prices~~

~~Partially offset by:~~

•~~Unfavorable foreign currency impacts~~Slightly lower demand due to ~~a weaker U.S. dollar against most currencies except~~ the ~~Brazilian real~~expiration of the Company’s license to export bauxite from Australia

~~Third-party sales~~Production decreased ~~$13~~8% primarily as a result of:

•Lower ~~average realized prices~~demand from certain Alumina segment refineries

•~~Lower royalties~~Slightly lower demand due to the ~~absence~~expiration of ~~a favorable true-up that occurred in~~ the ~~first quarter of 2020~~

~~Partially offset by:~~

•~~Higher sales volumes~~Company’s license to export bauxite from Australia

Sequential Period Comparison

Year-to-date Comparison

~~Intersegment~~Third-party sales

~~Intersegment~~Third-party sales decreased $40 primarily as a result of:

•Lower ~~average realized prices on sales with~~shipments primarily due to decreased trading activity, Juruti lower customer demand, and the ~~Alumina segment~~expiration of the Company’s license to export bauxite from Australia

Partially offset by:

•Higher mining royalties

Third-party sales decreased $15 primarily as a result of:

•Lower shipments primarily due to the expiration of the Company’s license to export bauxite from Australia, Juruti lower customer demand and decreased trading ~~volumes~~activity

Partially offset by:

•Higher mining royalties

Intersegment sales

Intersegment sales decreased $5 primarily as a result of:

•Lower intersegment shipments primarily due to lower demand from certain Alumina segment refineries

Partially offset by:

•Slightly higher average internal prices on sales to the Alumina segment

Intersegment sales decreased ~~$50~~$15 primarily as a result of:

•Lower average ~~realized~~internal prices on sales with the Alumina segment

•Lower ~~sales volumes~~intersegment shipments primarily due to lower demand from certain Alumina segment refineries

Segment Adjusted EBITDA

Segment adjusted EBITDA decreased ~~51%~~$11 primarily as a result of:

•Lower ~~average realized prices~~shipments as discussed above

Partially offset by:

•Higher earnings from equity investments

Segment adjusted EBITDA decreased $21 primarily as a result of:

•Lower ~~earnings from equity investments~~

•~~Lower royalties due to the absence of a favorable true-up that occurred in the fourth quarter~~

~~Partially offset by:~~

•~~Higher trading volumes~~shipments as discussed above

•Higher ~~rehabilitation credits~~

~~Segment adjusted EBITDA decreased 51% primarily as a result of:~~

•~~Lower average realized prices~~

•~~Lower royalties~~ production costs in Brazil and Australia due ~~to the absence of a favorable true up in the first quarter of 2020~~

•~~Lower earnings from equity investments~~

~~Partially offset by:~~

•~~Higher third-party sales volumes~~inefficiencies at lower production rates

Forward Look. For the second quarter of ~~2021, operations are expected~~2022 in comparison to ~~be consistent with~~ the first quarter of ~~2021.~~2022, the segment expects lower results as one-time mining benefits in the first quarter do not recur, lower equity earnings due to the sale of its interest in the MRN mine, as well as higher production costs due to inefficiencies from decreased production rates after the Company’s decision to cease business with Russian companies.

The Company has decreased its annual projection for bauxite shipments in 2022 by 2 million dry metric tons to range between 46.0 and 47.0 million dry metric tons. Due to Alcoa’s cessation of bauxite sales to Russian aluminum businesses, the Company expects to slow production in its Juruti mine in Brazil by approximately 1.1 million dry metric tons and to experience unfavorable impacts to production costs related to inefficiencies in operating at less that optimal capacity. The Company is also observing Russia-related changes in the Atlantic bauxite market which may impact shipments by approximately 1 million dry metric tons. In the second quarter of 2022 in comparison to the first quarter of 2022, the related financial impacts from the changes in production and expected market impacts are approximately $9 in pre-tax income, $4 after taxes and noncontrolling interest.

Alumina

Business Update. During the first quarter of 2022, the average API of $373 per metric ton trended unfavorably compared to the prior quarter reflecting a 12% sequential quarter decrease. Compared to the three-month period of 2021, the average API trended favorably, ~~showing~~reflecting a ~~7% and 10% improvement over~~24% increase year-over-year.

In the first quarter of 2022, alumina production decreased due to two less days in the quarter and ~~fourth quarters~~unplanned equipment maintenance in certain of ~~2020, respectively. The alumina segment also experienced lower internal bauxite costs which were~~the Australian refineries, partially offset by higher ~~energy costs in both periods.~~production from the San Ciprián, Spain refinery as a result of the strike resolution. On December 29, 2021, the Company and the workers’ representatives reached an agreement which ended the ongoing strike and led to the immediate resumption of normal operations at the refinery.

AtAs of March 31, ~~2021,~~2022, the Alumina segment had a base capacity of ~~12,759 kmt~~13,843 mtpy with 214 ~~kmt~~mtpy of curtailed refining capacity. There ~~were~~was no ~~changes to base or~~change in curtailed capacity during ~~2020 or through~~ the ~~first three months of 2021.~~quarter.

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

Quarter ended

Three months ended

March 31,
2021

December 31,
2020

March 31,
2021

March 31,
2020

Production (kmt)

3,327

3,371

3,327

3,298

Third-party shipments (kmt)

2,472

2,312

2,472

2,365

Intersegment shipments (kmt)

1,101

1,046

1,101

1,075

Total shipments (kmt)

3,573

3,358

3,573

3,440

Third-party sales

760

$
620

760

$
707

Intersegment sales

364

314

364

336

Total sales

$
1,124

$
934

$
1,124

$
1,043

Segment Adjusted EBITDA

$
227

$
97

$
227

$
193

Average realized third-party price per metric ton of alumina

$
308

$
268

$
308

$
299

Operating costs

$
886

$
841

$
886

$
844

Average cost per metric ton of alumina

$
248

$
250

$
248

$
245

	Quarter ended				Three months ended
	March 31, 2022		December 31, 2021		March 31, 2022		March 31, 2021
Production (kmt)		3,209		3,291		3,209		3,327
Third-party shipments (kmt)		2,277		2,294		2,277		2,472
Intersegment shipments (kmt)		940		1,121		940		1,101
Total shipments (kmt)		3,217		3,415		3,217		3,573
Third-party sales		855		935		855		760
Intersegment sales		418		530		418		364
Total sales	$	1,273	$	1,465	$	1,273	$	1,124
Segment Adjusted EBITDA	$	262	$	503	$	262	$	227
Average realized third-party price per metric ton of alumina	$	375	$	407	$	375	$	308
Operating costs	$	988	$	944	$	988	$	886
Average cost per metric ton of alumina	$	307	$	276	$	307	$	248

Sequential Period Comparison

Year-to-date Comparison

Production

Production decreased 1%2% primarily as a result of:

•~~Slightly lower production across most of the portfolio due to two~~Two fewer days in the period

~~Partially offset by:~~

•~~Recovery in~~Reduced alumina production at certain of the Australian refineries due to unplanned equipment maintenance, mostly offset by increased production at the San Ciprián refinery following the ~~suspension~~resumption of ~~a labor strike~~normal operations

Production ~~increased 1%~~decreased 4% primarily as a result of:

•~~Slightly higher~~Reduced alumina production ~~across most of~~at the ~~portfolio~~Australian refineries due to ~~better operational performance~~

~~Partially~~unplanned equipment maintenance, only partially offset ~~by:~~

•~~One less day~~by increased production at the San Ciprían refinery following the resumption of normal operations; the San Ciprián refinery also faced slowed production from strike actions in the ~~period~~first quarter 2021 before the strike was suspended on January 22, 2021

Third-party sales

Third-party sales ~~increased 23%~~decreased $80 primarily as a result of:

•~~160 kmt higher third-party shipments~~Lower average realized price of $32/ton principally driven by a lower average API

•~~Higher average realized price of $40/ton principally driven~~Lower shipments due to lower production at the Australian refineries, partially offset by increased production and shipments at the San Ciprián refinery, including a ~~higher average API (on a 30-day lag)~~shift to third-party sales with the San Ciprián smelter curtailment in January 2022

Partially offset by:

•Favorable changes to customer contract mix

Third-party sales increased ~~7% primarily as a result of:~~

•~~107 kmt higher third-party shipments~~

•~~Higher average realized price of $9/ton principally driven by a higher average API (on a 30-day lag)~~

~~Intersegment sales~~

~~Intersegment sales increased 16%~~$95 primarily as a result of:

•Higher average realized price of ~~$40/~~$67/ton principally driven by a higher average API

Partially offset by:

•Lower shipments due to lower production at the Australian refineries, partially offset by increased production and shipments at the San Ciprián refinery, including a shift to third-party sales with the San Ciprián smelter curtailment in January 2022

Intersegment sales

Intersegment sales decreased $112 primarily as a result of:

•Lower shipments due to lower production across the refineries

•~~Slightly higher demand from~~Lower average realized prices on sales with the Aluminum segment

Intersegment sales increased 8%$54 primarily as a result of:

•Higher average realized prices on sales with the Aluminum segment

Partially offset by:

•Lower shipments across the refineries

Segment Adjusted EBITDA

Segment adjusted EBITDA decreased $241 primarily as a result of:

•Lower average realized price of $32/ton principally driven by a lower average API

•Lower shipments primarily due to unplanned equipment maintenance at the Australian refineries and weather delays in Brazil

•Higher raw material costs primarily due to higher prices for caustic

•Energy cost increases primarily in Spain

•Unfavorable currency impacts

Partially offset by:

•Favorable changes to customer contract mix

•San Ciprián refinery resuming full production after strike resolution

Segment adjusted EBITDA increased $35 primarily as a result of:

•Higher average realized price of ~~$9/~~$67/ton principally driven by a higher average API

•~~Slightly higher demand from the Aluminum segment~~

~~Segment Adjusted EBITDA~~

~~Segment adjusted EBITDA increased $130 primarily as a result of:~~

•~~Higher average realized price of $40/ton~~

•~~Lower costs for bauxite and caustic soda~~Favorable changes to customer mix

Partially offset by:

•Higher energy prices ~~in Australia and Spain due to higher spot market prices~~across all regions

~~Segment adjusted EBITDA increased $34 primarily as a result of:~~

•Higher ~~average realized price of $9/ton~~raw material costs primarily due to higher market prices for caustic and lime

•Lower ~~costs for bauxite and caustic soda~~shipments primarily due to unplanned equipment maintenance at the Australian refineries

~~Partially offset by:~~

•Higher ~~energy prices in Australia due to a new gas contract~~

•~~Net unfavorable foreign currency movements due to a weaker U.S. dollar (particularly against the Australian dollar)~~costs primarily associated with timing of maintenance, increased consumption of direct materials and higher transportation costs

Forward Look. For the second quarter of ~~2021~~2022 in comparison ~~with~~to the first quarter ~~we expect stable operations with~~of 2022, the segment expects higher ~~production~~energy and raw materials costs, ~~due~~predominantly related to ~~seasonal~~the San Ciprián refinery’s energy costs. The segment also expects higher shipments to fully offset higher maintenance and ~~energy~~other costs.

Aluminum

Business Update. During the first quarter ~~metal~~of 2022, the segment saw continued strength in aluminum pricing with LME prices on a 15-day lag averaging $3,147 per metric ton. Despite raw material inflation pressures and outbound transportation challenges, the Segment adjusted EBITDA increased 36% in the first quarter of 2022 compared to the fourth quarter of 2021.

On December 29, 2021, the Company and ~~shipments remained strong, including improved demand for value-add products. The suspension of the labor strike~~workers’ representatives at the San Ciprián, ~~smelter resulted~~Spain aluminum facility reached an agreement that calls for the two-year curtailment of the smelter’s 228,000 metric tons of annual capacity due to exorbitant energy prices in ~~higher sales volumes from metal shipments that had been blocked~~Spain. The curtailment was completed in January 2022 while the casthouse continues to operate. During the first quarter of 2022, $2 was spent against the employee leave compensation and take-or-pay contractual obligations of $62 recorded in the fourth quarter of 2021. The Company has not yet made any expenditures against the commitments for capital investments of $68 or restart costs of $35. The capital investment cash spend is expected to begin in the second quarter of 2022 and the majority of restart cash spend is expected in 2023. Also during the ~~strike.~~ first quarter of 2022, the Company worked to secure long term power supply contracts for the smelter upon restart with various power generators. Under memoranda of understanding with the generators, the period to conclude related negotiations was extended to May 20, 2022.

In conjunction with the previously announced restart of the Alumar smelter (São Luís, Brazil), Alcoa incurred restart expenses of $12 in the first quarter of 2022. Despite an approximate one-month delay for technical production adjustments, the first molten metal is expected in the second quarter of 2022 and full capacity is expected to be operational by the end of 2022.

In conjunction with the previously announced restart of 35,000 metric tons of previously curtailed capacity at the Portland smelter, Alcoa incurred restart expenses of $1 in the first quarter of 2022. Metal production is expected to start in the third quarter of 2022.

Total aluminum third-party shipments and total primary aluminum shipments include metric tons that were not produced by the Aluminum segment. Such aluminum was purchased by this segment to satisfy certain customer commitments. The Aluminum segment bears the risk of loss of the purchased aluminum until control of the product has been transferred to this segment’s customer. ~~Total~~Until the sale of the Warrick Rolling Mill on March 31, 2021, total aluminum information includes flat-rolled aluminum while ~~Primary~~primary aluminum information does not. ~~Operating costs includes all production-related costs: raw materials consumed; conversion costs, such~~Primary aluminum third-party sales exclude realized gains and losses related to embedded derivative instruments designated as ~~labor, materials, and utilities; depreciation and amortization; and plant administrative expenses.~~cash flow hedges of forward sales of aluminum.

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

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

	Quarter ended				Three months ended
Total Aluminum information	March 31, 2022		December 31, 2021		March 31, 2022		March 31, 2021
Third-party aluminum shipments (kmt)		634		687		634		831
Third-party sales	$	2,388	$	2,322	$	2,388	$	2,047
Intersegment sales		7		5		7		2
Total sales	$	2,395	$	2,327	$	2,395	$	2,049
Segment Adjusted EBITDA	$	713	$	523	$	713	$	283

	Quarter ended				Three months ended
Primary Aluminum information	March 31, 2022		December 31, 2021		March 31, 2022		March 31, 2021
Production (kmt)		498		554		498		548
Third-party shipments (kmt)		634		687		634		748
Third-party sales	$	2,447	$	2,326	$	2,447	$	1,727
Average realized third-party price per metric ton	$	3,861	$	3,382	$	3,861	$	2,308
Total shipments (kmt)		634		687		634		773
Operating costs	$	1,677	$	1,821	$	1,677	$	1,494
Average cost per metric ton	$	2,647	$	2,649	$	2,647	$	1,933

Quarter ended

Three months ended

Total Aluminum information

March 31,
2021

December 31,
2020

March 31,
2021

March 31,
2020

Third-party aluminum shipments (kmt)

831

735

831

725

Third-party sales

$
2,047

$
1,685

$
2,047

$
1,598

Intersegment sales

2

5

2

3

Total sales

$
2,049

$
1,690

$
2,049

$
1,601

Segment Adjusted EBITDA

$
283

$
181

$
283

$
62

Quarter ended

Three months ended

Primary Aluminum information

March 31,
2021

December 31,
2020

March 31,
2021

March 31,
2020

Production (kmt)

548

559

548

564

Third-party shipments (kmt)

748

660

748

652

Third-party sales

$
1,727

$
1,380

$
1,727

$
1,297

Average realized third-party price per metric ton

$
2,308

$
2,094

$
2,308

$
1,988

Total shipments (kmt)

773

672

773

663

Operating costs

$
1,494

$
1,281

$
1,494

$
1,327

Average cost per metric ton

$
1,933

$
1,906

$
1,933

$
2,002

Sequential Period Comparison

Year-to-date Comparison

Production

~~Primary production~~Production decreased 2%10% primarily as a result of:

•Curtailment of the San Ciprián smelter, completed in January 2022

•Two fewer days in the period

•~~Production per day remained flat across portfolio~~

Production decreased 3%9% primarily as a result of:

•Curtailment of ~~Intalco~~the San Ciprián smelter, completed in ~~3Q20~~

•~~One less day in the period~~

~~Partially offset by:~~

•~~ABI restart completed in 3Q20~~January 2022

Third-party sales

Third-party sales increased ~~$362~~$66 primarily as a result of:

•~~Increase in~~Higher average realized price of $479/ton principally driven by a higher average LME

•~~Higher shipments due to the end of the strike at the San Ciprián smelter~~

•~~Higher rolled products sales on higher shipments~~ (on a 15-day lag) and ~~price~~regional premiums

•Increase in value-add ~~primary aluminum~~product sales ~~volume~~on higher price and resumption of ~~10%~~sales from the San Ciprián casthouse after conclusion of the strike in late December 2021

Partially offset by:

•Lower shipments mainly due to limited availability of railcars or vessels for outbound product from North American smelters

•Seasonal pricing declines at the Brazil hydro-electric facilities

•Lower trading activities

Third-party sales increased ~~$449~~$341 primarily as a result of:

•~~Increase in~~Higher average realized price of $1,553/ton principally driven by a higher average LME

•~~Restart of the Bécancour smelter~~

•~~Higher shipments due to the end of the strike at the San Ciprián smelter~~

•~~Higher rolled products sales on higher shipments~~ (on a 15-day lag) and ~~price~~regional premiums

•Increase in value-add ~~primary aluminum~~product sales on higher price

Partially offset by:

•~~Curtailment~~Absence of sales from the ~~Intalco~~divested Warrick Rolling Mill, partially offset by new third-party revenue from the Warrick smelter

•Decreased sales from the San Ciprián smelter due to timing of sales of accumulated inventory from the strike and the smelter curtailment

•Lower shipments mainly due to limited availability of railcars or vessels for outbound product from North American smelters

•Lower pricing at the Brazil hydro-electric facilities as first quarter 2021 drought conditions elevated prices in the prior year period

Segment Adjusted EBITDA

Segment adjusted EBITDA increased ~~$102~~$190 primarily as a result of:

•~~Increase in~~Higher average realized ~~metal prices~~

~~Partially offset by:~~

•~~Higher alumina~~price driven by higher average LME (on a 15-day lag) and ~~raw material costs~~regional premiums

~~Segment adjusted EBITDA increased $221 primarily as a result of:~~

•Increase in ~~realized metal prices~~value-add product sales

•~~Favorable impacts from~~Curtailment of the ~~curtailment of Intalco and ABI restart~~San Ciprián smelter

Partially offset by:

•Unfavorable ~~currency impacts~~raw material costs, primarily on higher average alumina input costs due to the consumption of alumina purchased in the previous periods when prices were higher and higher market prices for carbon

•Lower shipments mainly related to limited availability of railcars or vessels for outbound product from North American smelters

•Seasonal lower prices at the Brazil hydro-electric facilities

Segment adjusted EBITDA increased $430 primarily as a result of:

•Higher average realized price driven by higher average LME (on a 15-day lag) and regional premiums

•Increase in value-add product sales

Partially offset by:

•Unfavorable raw material costs, primarily on higher average alumina input costs and higher market prices for carbon

•Higher costs primarily associated with increased maintenance costs, higher inbound transportation costs and higher labor expenses

•Lower shipments mainly related to limited availability of railcars or vessels for outbound product from North American smelters

•Pricing declines at the Brazil hydro-electric facilities

•Divestiture of the Warrick Rolling Mill

•Higher market energy prices in Europe, partially offset by Australia

•Curtailment of the San Ciprián smelter

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

		March 31, 2021				December 31, 2020					March 31, 2020					March 31, 2022				December 31, 2021				March 31, 2021
Facility	Country	Capacity⁽¹⁾		Curtailed		Capacity⁽¹⁾		Curtailed			Capacity⁽¹⁾		Curtailed		Country	Capacity⁽¹⁾		Curtailed		Capacity⁽¹⁾		Curtailed		Capacity⁽¹⁾		Curtailed
Portland	Australia		197		30		197		30			197		30
São Luís (Alumar)	Brazil		268		268		268		268			268		268
Portland⁽²⁾															Australia		197		30		197		30		197		30
São Luís (Alumar)⁽³⁾															Brazil		268		268		268		268		268		268
Baie Comeau	Canada		280		—		280		—			280		—	Canada		312		—		312		—		280		—
Bécancour⁽³⁾	Canada		310		—		310		—	��		310		49	Canada		347		—		347		—		310		—
Deschambault	Canada		260		—		260		—			260		—	Canada		287		—		287		—		260		—
Fjarðaál	Iceland		344		—		344		—			344		—	Iceland		351		—		351		—		344		—
Lista	Norway		94		—		94		—			94		—	Norway		94		—		94		—		94		—
Mosjøen	Norway		188		—		188		—			188		—	Norway		200		—		200		—		188		—
San Ciprián	Spain		228		—		228		—			228		—
San Ciprián⁽⁴⁾															Spain		228		228		228		—		228		—
Intalco⁽²⁾	U.S.		279		279		279		279			279		49	U.S.		279		279		279		279		279		279
Massena West	U.S.		130		—		130		—			130		—	U.S.		130		—		130		—		130		—
Warrick	U.S.		269		108		269		108			269		108	U.S.		269		108		269		108		269		108
Wenatchee	U.S.		146		146		146		146			146		146
Wenatchee⁽⁵⁾															U.S.		—		—		—		—		146		146
			2,993		831		2,993		831			2,993		650			2,962		913		2,962		685		2,993		831

⁽¹⁾	These figures represent Alcoa Corporation’s share of the facility Nameplate Capacity based on its ownership interest in the respective smelter.

⁽²⁾

~~On April 22, 2020, Alcoa~~In 2021, the Company announced that the ~~curtailment~~Portland Aluminium joint venture will restart 35,000 mtpy of ~~the remaining 230 kmt of~~idle smelting capacity at the ~~Intalco smelter. The full curtailment of 279 kmt, which includes 49 kmt of earlier-curtailed capacity, was completed during~~Portland smelter in Australia (19,000 mtpy Alcoa share), and metal production is expected to start in the third quarter of ~~2020.~~2022.

⁽³⁾	~~Curtailed~~In 2021, the Company announced the restart of its 268,000 mtpy of idle smelting capacity at the ~~Bécancour (Canada)~~Alumar smelter ~~decreased~~in Brazil, of which full capacity will be operational by ~~49 kmt from~~ the ~~first quarter 2020 to~~end of 2022.

⁽⁴⁾

On December 29, 2021, the ~~first quarter 2021 as a result~~Company and the workers’ representatives at the San Ciprián, Spain aluminum plant reached an agreement that called for the two-year curtailment of the ~~restart process.~~ smelter’s 228,000 mtpy annual smelting capacity, completed in January of 2022.

⁽⁵⁾	~~The restart completed during~~In December 2021, the ~~third quarter~~Company permanently closed 146,000 mtpy of ~~2020.~~idled smelting capacity at the Wenatchee smelter in the State of Washington.

Forward Look. For the second quarter of ~~2021~~2022 in comparison to the first quarter ~~we expect sustained strong~~of 2022, the segment expects to increase shipments with the easing of outbound transportation constraints in North America. The segment also expects inflation in raw materials and ~~demand for value-add products, partially offset by unfavorable~~energy impacts ~~from~~to continue, as well as higher maintenance costs.

In the ~~absence~~second quarter of 2022, the ~~Warrick Rolling Mill results, lower hydro~~Alumar smelter (Sao Luis, Brazil) is expected to begin initial metal production. However, third-party sales ~~from a seasonal decline in market prices, unfavorable impacts from current energy market conditions, and higher seasonal maintenance.~~are not expected to begin until the third quarter of 2022 as initial metal is directed to intra-segment casting operations.

~~Reconciliation~~Reconciliations of Certain Segment Information

Reconciliation of Total Segment Third-Party Sales to Consolidated Sales

	Quarter ended				Three months ended				Quarter ended						Three months ended
	March 31, 2021		December 31, 2020		March 31, 2021		March 31, 2020		March 31, 2022			December 31, 2021			March 31, 2022			March 31, 2021
Bauxite	$	58	$	79	$	58	$	71	$	43		$	83		$	43		$	58
Alumina		760		620		760		707		855			935			855			760
Aluminum:
Primary aluminum		1,727		1,380		1,727		1,297		2,447			2,326			2,447			1,727
Other⁽¹⁾		320		305		320		301		(59	)		(4	)		(59	)		320
Total segment third-party sales		2,865		2,384		2,865		2,376		3,286			3,340			3,286			2,865
Other		5		8		5		5		7			—			7			5
Consolidated sales	$	2,870	$	2,392	$	2,870	$	2,381	$	3,293		$	3,340		$	3,293		$	2,870

⁽¹⁾

Other includes third-party sales of flat-rolled aluminum and energy, as well as realized gains and losses related to embedded derivative instruments designated as cash flow hedges of forward sales of aluminum. Following the sale of the Warrick Rolling Mill on March 31, 2021, Other no longer includes the sales of flat-rolled aluminum.

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

	Quarter ended						Three months ended						Quarter ended						Three months ended
	March 31, 2021			December 31, 2020			March 31, 2021			March 31, 2020			March 31, 2022			December 31, 2021			March 31, 2022			March 31, 2021
Bauxite	$	237		$	217		$	237		$	213		$	207		$	237		$	207		$	237
Alumina		886			841			886			844			988			944			988			886
Primary aluminum		1,494			1,281			1,494			1,327			1,677			1,821			1,677			1,494
Other⁽¹⁾		374			322			374			314			127			101			127			374
Total segment operating costs		2,991			2,661			2,991			2,698			2,999			3,103			2,999			2,991
Eliminations⁽²⁾		(544	)		(549	)		(544	)		(566	)		(697	)		(589	)		(697	)		(544	)
Provision for depreciation, depletion, amortization⁽³⁾		(176	)		(164	)		(176	)		(163	)		(153	)		(159	)		(153	)		(176	)
Other⁽⁴⁾		21			26			21			56			32			28			32			21
Consolidated cost of goods sold	$	2,292		$	1,974		$	2,292		$	2,025		$	2,181		$	2,383		$	2,181		$	2,292

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

⁽²⁾	Represents the elimination of cost of goods sold related to intersegment sales between Bauxite and Alumina and between Alumina and Aluminum.

⁽³⁾

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

⁽⁴⁾

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

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

	Quarter ended						Three months ended						Quarter ended						Three months ended
	March 31, 2021			December 31, 2020			March 31, 2021			March 31, 2020			March 31, 2022			December 31, 2021			March 31, 2022			March 31, 2021
Total Segment Adjusted EBITDA	$	569		$	398		$	569		$	375		$	1,013		$	1,075		$	1,013		$	569
Unallocated amounts:
Transformation⁽¹⁾		(11	)		(8	)		(11	)		(16	)		(14	)		(10	)		(14	)		(11	)
Intersegment eliminations		(7	)		5			(7	)		(8	)		102			(121	)		102			(7	)
Corporate expenses⁽²⁾		(26	)		(30	)		(26	)		(27	)		(29	)		(45	)		(29	)		(26	)
Provision for depreciation, depletion, and amortization		(182	)		(170	)		(182	)		(170	)		(160	)		(165	)		(160	)		(182	)
Restructuring and other charges, net		(7	)		(60	)		(7	)		(2	)		(125	)		(1,055	)		(125	)		(7	)
Interest expense		(42	)		(43	)		(42	)		(30	)		(25	)		(28	)		(25	)		(42	)
Other income (expenses), net		24			(44	)		24			132
Other income, net														14			298			14			24
Other⁽³⁾		(6	)		(11	)		(6	)		(35	)		(13	)		(20	)		(13	)		(6	)
Consolidated income before income taxes		312			37			312			219			763			(71	)		763			312
Provision for income taxes		(93	)		(20	)		(93	)		(80	)		(210	)		(298	)		(210	)		(93	)
Net income attributable to noncontrolling interest		(44	)		(21	)		(44	)		(59	)		(84	)		(23	)		(84	)		(44	)
Consolidated net income (loss) attributable to Alcoa Corporation	$	175		$	(4	)	$	175		$	80		$	469		$	(392	)	$	469		$	175

⁽¹⁾	Transformation includes, among other items, the Adjusted EBITDA of previously closed operations.

⁽²⁾	Corporate expenses are composed of general administrative and other expenses of operating the corporate headquarters and other global administrative facilities, as well as research and development expenses of the corporate technical center.

⁽³⁾	Other includes certain items that impact Cost of goods sold and ~~Selling, general administrative, and~~ other expenses on Alcoa Corporation’s Statement of Consolidated Operations that are not included in the Adjusted EBITDA of the reportable segments.

Environmental Matters

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

Liquidity and Capital Resources

Alcoa Corporation’s primary future cash flows are centered on operating activities, particularly working capital, as well as ~~sustaining~~capital expenditures and ~~return-seeking~~ capital ~~expenditures. Alcoa’s ability~~returns. Management believes that the Company’s cash on hand, future operating cash flows, and liquidity options, combined with its strategic actions, are adequate to fund its ~~cash needs depends on the Company’s ongoing ability to generate~~short term and raise cash in the future. Although management believes that Alcoa’s future cash from operations, together with the Company’s Revolving Credit Facility (as defined below) and access to capital markets, will provide adequate resources to fundlong term operating and investing ~~needs,~~needs. Further, the Company has no significant debt maturities until 2027 and no significant cash contribution requirements related to its U.S. pension plan obligations for the foreseeable future. However, the Company’s access to, and the availability of, financing on acceptable terms in the future will be affected by many factors, including: (i) Alcoa Corporation’s credit rating; (ii) the liquidity of the overall capital markets; and (iii) the current state of the economy and commodity markets. There can be no assurances that the Company will continue to have access to capital markets on terms acceptable to Alcoa Corporation.

Changes in market conditions caused by global or macroeconomic events, such as the COVID-19 pandemic and the conflict between Russia and Ukraine, 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~~such events 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.

~~The~~In March 2022, in response to the conflict between Russia and Ukraine, the Company ~~has completed~~announced that it ceased the ~~following~~purchase of raw materials from and the sale of our products to Russian businesses and identified alternate source for securing the limited number of materials purchased from Russian suppliers. To date, these actions ~~thus far in 2021 to strengthen its balance sheet and provide more flexibility in~~have not had a material impact on the ~~use of excess cash:~~

•

On March 31, completed the sale of the Warrick Rolling Mill for initial net cash proceeds of $583; cash consideration of $598 less transaction costs of $7 and initial spending on site separation capital expenditures of $8;

•

~~In March, issued $500 of 4.125% Senior Notes due 2029;~~

•

~~On April 1, made discretionary contribution of $500 to its U.S. defined benefit pension plans; and~~

•

~~On April 7, fully redeemed $750 of 6.75% Senior Notes due 2024 at a redemption price equal to 103.375% plus accrued and unpaid interest.~~

Additionally, management has taken actions to improve and maintain Alcoa’s liquidity levers. These include amending the Company’s Revolving Credit Facility to provide a more favorable leverage ratio calculation and a more favorable minimum interest expense coverage ratio.

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

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. address any impacts going forward.

Cash from Operations

Cash provided from operations was $34 in the three-month period of 2022 compared with $6 in the ~~2021 three-month~~same period ~~compared with cash used for operations~~ of ~~$90 in the 2020 three-month period, resulting in an increase in cash provided of $96.~~2021. Notable changes to sources and (uses) of cash include:

•

~~($194) in certain working capital accounts (receivables, inventories, and accounts payable, trade),~~$334 higher net income generation primarily ~~an increase in receivables balance~~ on higher aluminum and alumina ~~prices in the 2021 three-month period;~~

•

$88 from changes in accrued expenses caused primarily by higher customer advances, lower use of accrued vacation, and lower payments on restructuring, interest, and other postretirement benefits; partially offset by slightly higher payments on asset retirement obligations and environmental remediation;prices;

•

($~~54) included~~336) in certain working capital accounts (receivables from customers, inventories, and accounts payable, trade); primarily an increase in inventories on higher prices in both raw materials and finished goods, as ~~a change in noncurrent assets~~well as higher volumes on hand due to: metal purchases to serve annual contracts related to the ~~receipt of payment on an outstanding receivable with~~Alumar (Brazil) smelter restart, logistics constraints in North America delaying outbound shipments; lower shipments from Australian refineries; and, weather related delays in shipments from the ~~Suriname government in the first quarter or 2020 and an increase in a receivable for royalties in the first quarter of 2021;~~Alumar refinery; and

•

$~~46 from changes~~59 in ~~other current assets primarily due~~lower contributions to ~~higher payments received for earned carbon compensation credits.~~the Company’s defined benefit pension plans

~~The remaining change in Cash provided from operations is primarily attributable to higher Net income and other changes in related Statement of Consolidated Operations amounts.~~

In the third quarter of 2020, AofA paid approximately $74 (A$107) to the ATO 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 recorded 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 $166 (A$219) and ~~$4 (A$5)~~ ~~lower cash tax payments in the second half of 2020~~ ~~and the first quarter of 2021, respectively~~. Interest compounded in future periods 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. In addition, should the ATO decide in the interim to reduce any interest already assessed, the reduction would be taxable as income at that point in time. During ~~2021,~~2022, AofA will continue to record its tax provision and tax liability without effect of the ATO assessment, since it expects to prevail. The tax payable will remain on AofA’s balance sheet as a noncurrent liability, increased by the tax effect of subsequent periods’ interest deductions, until dispute resolution, which is expected to take several years. At March 31, ~~2021,~~2022, the noncurrent liability resulting from the cumulative interest deductions was approximately ~~$170~~$182 (A$~~224)~~243). See description of the tax dispute in Note O to the Consolidated Financial Statements in Part I Item I of this Form 10-Q.

Financing Activities

Cash used for financing activities was $209 in the three-month period of 2022 compared to cash provided from financing activities ~~was~~of $428 in the ~~2021~~same period of 2021.

The use of cash in the three-month period ~~compared with~~of 2022 was primarily $116 of net cash ~~used for financing activities~~paid to Alumina Limited, $75 from the repurchase of ~~$44~~common stock, and $18 of dividends paid in the ~~2020 three-month period, resulting in a favorable change of $472.~~quarter.

The source of cash in the ~~2021~~ three-month period of 2021 was primarily due to the issuance of $500 aggregate principal amount of 2029 Notes by ANHBV in March 2021 resulting in net proceeds of approximately $493. The net proceeds were partially offset by $62 in net cash paid to Alumina Limited ~~(see Noncontrolling interest in Results of Operations above)~~and $6 in financial contributions related to the divested Spanish facilities.

The use of cash in the 2020 three-month period was primarily the result of $31 in net cash paid to Alumina Limited (see Noncontrolling interest in Results of Operations above) and $12 in financial contributions related to the divested Spanish facilities.35

Credit Facilities

The ~~Revolving Credit Facility provides~~Company has a ~~$1,500~~ senior secured $1,500 revolving credit and letter of credit facility ~~to be used~~in place for working capital and/or other general corporate purposes (the Facility). The Facility was established on September 16, 2016, was amended in each of 2017, 2018, 2019, 2020, and 2021, and is scheduled to mature on November 21, 2023. Subject to the terms and conditions under the Facility, the Company may borrow funds or issue letters of credit through its Alcoa Corporation or ANHBV legal entities. See Note M in Part II Item 8 of Alcoa Corporation and its subsidiaries. The Revolving Credit Facility 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 inCorporation’s Annual Report on Form 10-K for 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 March 4, 2021 (the Amendment No. 4 Effective Date), Alcoa Corporation and Alcoa Nederland Holding B.V. (ANHBV), a wholly-owned subsidiary of the Company, entered into an amendment (Amendment No. 4) to the Revolving Credit Facility (as amended, Revolving Credit Facility) that provides additional flexibility to the Company and ANHBV by (i) increasing the maximum leverage ratio from 2.50 to 1.00 to 2.75 to 1.00 as of the Amendment No. 4 Effective Date (which maximum leverage ratio had been temporarily increased to 3.00 to 1.00 prior to the Amendment No. 4 Effective Date), (ii) decreasing the minimum interest expense coverage ratio from 5.00 to 1.00 to 4.00 to 1.00 as of the Amendment No. 4 Effective Date, (iii) amending the definition of Total Indebtedness (as defined in the Revolving Credit Facility) to permit the Company to exclude the principal amount of new senior notes issued during 2021 from indebtedness for purposes of the calculation of the leverage ratio in fiscal year 2021 (subject to adjustments based on pension obligations funded) and (iv) ending temporary restrictions on the Company’s ability to make certain restricted payments or incur incremental loans under the Revolving Credit Facility.

Amendment No. 4 also (i) provides additional debt capacity to permit the Company to issue up to $750 million in aggregate principal amount of new senior notes prior to the end of fiscal year 2021 and (ii) a corresponding increase in the maximum leverage ratio commensurate with the increase in leverage resulting from the issuance of such notes up to the amount of pension obligations funded after the issuance of such notes but prior toended December 31, 2021 ~~which increase shall in any event not be in excess~~for more information on the Facility.

As of ~~the principal amount of such notes. Such additional increase in the maximum leverage ratio will be available beginning in the first quarter of 2022.~~

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. In the fourth quarter of 2020, ANHBV elected to extend the period under which temporary adjustments in Amendment No. 3 would apply, through March 31, 2021. The amendment temporarily adjusted the manner in which Consolidated Cash Interest Expense and Total Indebtedness (as defined in the Revolving Credit Facility) are calculated with respect to the 5.500% Senior Notes due 2027 issued in July 2020. In addition, this election to extend the temporary amendments resulted in a reduction of the aggregate amount of commitments under the Revolving Credit Facility by approximately $245 during the first quarter of 2021, to $1,255.

~~At March 31, 2021, the maximum additional borrowing capacity available to~~2022, the Company ~~to remain~~was in compliance with ~~the maximum leverage ratio covenant in the Revolving Credit Facility was approximately $1,687. Therefore, the~~all covenants. The Company may access the entire amount of commitments under the ~~Revolving Credit~~ Facility.~~As of March 31, 2021, Alcoa Corporation was in compliance with all covenants.~~ There were no borrowings outstanding at March 31, 2022 and December 31, 2021, and ~~there were~~ no amounts were borrowed during the ~~three month period~~first quarters ended March 31, 2022 and March 31, 2021 under the Facility.

Dividend

In the fourth quarter of 2021, ~~related to this facility.~~

~~See Note K to~~ the ~~Consolidated Financial Statements in this Form 10-Q and Note M to~~Company announced the ~~Consolidated Financial Statements in Part II Item 8~~initiation of a quarterly cash dividend on its common stock. On February 24, 2022, the Board of Directors declared a cash dividend of $0.10 per share of the ~~2020 Annual Report~~Company’s common stock to stockholders of record as of the close of business on ~~Form 10-K for additional information related to Alcoa’s credit facilities.~~March 8, 2022. On March 24, 2022, the Company paid cash dividends of $18.

~~144A Debt~~Common Stock Repurchase Program

In ~~March 2021, ANHBV, a wholly-owned subsidiary~~the first quarter of ~~Alcoa Corporation, issued $500 aggregate principal amount~~2022, the Company repurchased 1,041,100 shares of ~~2029 Notes in a private transaction exempt from~~its common stock for $75; the ~~registration requirements of the Securities Act. The net proceeds of this issuance~~shares were ~~approximately $493 reflecting a discount to the initial purchasers of the 2029 Notes as well as issuance costs.~~immediately retired. The Company ~~used~~has remaining authorization to repurchase up to a total of $425, in the ~~net proceeds, together with cash on hand, to contribute $500 to~~aggregate, of its ~~U.S. defined benefit pension plans applicable to salaried and hourly employees on April 1, 2021, and to redeem~~outstanding shares of common stock, under the share repurchase program approved in full the outstanding the 2024 Notes on April 7, 2021, and to pay transaction-related fees and expenses. 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 2029 Notes. Interest on the 2029 Notes is paid semi-annually in March and September, and interest payments will commence September 30, 2021.

Investing Activities

Cash used for investing activities was $93 in the three-month period of 2022 compared to cash provided from investing activities ~~was~~of $514 ~~in the 2021 three-month period compared with $107~~ for the same period of ~~2020, resulting in a favorable change in $407.~~2021.

In the ~~2021~~ three-month period of 2022, the use of cash was primarily attributable to $74 related to capital expenditures and $21 of cash contributions to the ELYSIS^TM joint venture.

In the three-month period of 2021, the source of cash was primarily attributable to proceeds from the sale of assets of $591, primarily the Warrick Rolling Mill, partially offset by $75 in capital ~~expenditures, composed of $71 in sustaining projects and $4 in return-seeking projects.~~

In the 2020 three-month period, the source of cash was primarily attributable to proceeds from the sale of assets of $199, primarily the Gum Springs waste treatment facility, partially offset by $91 in capital expenditures, composed of $70 in sustaining projects and $21 in return-seeking projects.

~~Contractual Obligations~~

In March 2021, ANHBV, a wholly-owned subsidiary of Alcoa Corporation, issued $500 aggregate principal amount of 2029 Notes and issued a notice of redemption to redeem all $750 aggregate principal amount outstanding of its 2024 Notes. On April 7, 2021 (Redemption Date), ANHBV completed the transaction at a redemption price equal to 103.375% of the principal amount of the 2024 Notes, plus accrued and unpaid interest to but not including the Redemption Date. As of March 31, 2021, Alcoa’s interest related to total debt is expected to be $169 for 2021 (including $25 redemption premium), $255 for the 2022-2023 period, $255 for the 2024-2025 period, and $266 thereafter for a combined total of $945. Further, contractual obligations related to the repayment of long-term debt and short-term borrowings are expected to be $829 for 2021, $2 for the 2022-2023 period, $1 for the 2024-2025 period, and $2,251 thereafter for a combined total of $3,083.

In addition to redeeming the 2024 Notes, the Company used the net proceeds from the issuance of the notes being offered, together with cash on hand, to contribute $500 on April 1, 2021, to its U.S. defined benefit pension plans applicable to salaried and hourly employees.

Further, as a result of the enactment of the American Rescue Plan, which was signed into law on March 11, 2021, the Company intends to adopt the relief provisions allowable under the law related to single-employer pensions. As a result of the American Rescue Plan and the $500 unscheduled contribution, Alcoa’s minimum required contribution to defined benefit pension plans in 2021 is now estimated to be approximately $135, of which approximately $105 is primarily for U.S. plans. Further, Alcoa’s minimum required contributions to defined benefit pension plans are expected to be $220 for the 2022-2023 period, $205 for the 2024-2025 period, for a combined total of $560, with approximately 80% applicable to U.S. plans.

The $500 U.S. pension contribution in April was added to the Company’s pre-funding balance, the current balance of which is more than sufficient to cover the U.S. portion of the minimum obligations presented. Under ERISA regulations, a plan sponsor that establishes a pre-funding balance by making discretionary contributions to a U.S. defined benefit pension plan may elect to apply all or a portion of this balance toward its minimum required contribution obligations to the related plan in future years. In 2021, management will continue to consider making such election related to the Company’s U.S. plans.expenditures.

Recently Adopted and Recently Issued Accounting Guidance

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

Dissemination of Company Information

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

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

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

Alcoa Corporation’s Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures, as defined in 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 were effective as of March 31, ~~2021.~~2022.

(b) Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the first quarter of ~~2021,~~2022, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

In the ordinary course of its business, Alcoa is involved in a number of lawsuits and claims, both actual and potential. In addition to the matter discussed below, 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, 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. See Part I Item 1 of this Form 10-Q in Note PO to the Consolidated Financial Statements for additional information.

Environmental Matters

In ~~connection with three soil erosion events~~August 2005, Dany Lavoie, a resident of Baie-Comeau in the Canadian Province of Québec, filed a Motion for Authorization to Institute a Class Action and for Designation of a Class Representative against Alcoa Canada Ltd., Alcoa Limitée, Société Canadienne de Metaux Reynolds Limitée, and Canadian British Aluminum in the Superior Court of Québec in the District of Baie-Comeau, alleging that ~~occurred between December 2020~~defendants, as the present and ~~March 2021 after significant rainfall at~~past owners and operators of an aluminum smelter in Baie-Comeau, had negligently allowed the emission of certain contaminants from the smelter on the lands and houses of the St. Georges neighborhood and its environs causing property damage and personal injury. In May 2007, the court authorized a class action suit on behalf of all people who suffered property or personal injury damages caused by the emission of polycyclic aromatic hydrocarbons from the Company’s ~~Juruti~~aluminum smelter in Baie-Comeau. In September 2007, plaintiffs filed the claim against the original defendants. The Soderberg smelting operations that plaintiffs allege to be the source of emissions of concern ceased operations in ~~Brazil,~~2013 and have been dismantled. A court appointed expert, engaged to perform analysis of the potential impacts from the emissions in ~~April~~accordance with a sampling protocol agreed to by the parties, submitted its report to the court in May 2019. In 2021, plaintiffs filed their amended claim and expert reports, and defendants filed their amended defense and expert reports. In October 2021, the ~~State Secretariat of Environment and Sustainability of Pará (SEMAS)~~parties participated in ~~Brazil performed site inspections and subsequently issued infraction notices and assessed fines totaling approximately $380,000 (R$2,000,000). Though Alcoa World Alumina Brasil Ltda. (AWAB),~~mediation. In March 2022, the ~~legal entity~~parties reached a settlement for damages that is subject to ~~which~~court approval. The settlement is not expected to have a material impact on the fines were issued (60% owned by Alcoa Corporation), is working to resolve the matter with SEMAS, additional infraction notices for the incidents remain under review and it is possible that additional fines could be issued. AWAB is disputing these fines at the administrative level. None of these incidents involved or affected bauxite residues or impoundments.Company’s financial results.

Item 1A. Risk Factors.

We face a number of risks that could materially and adversely affect our business, results of operations, cash flow, liquidity, or financial condition. A full discussion of our risk factors can be found in Part I Item 1A. Risk Factors of Alcoa Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020. As of March 31, 2021, there have been no material changes~~2021. The information below includes additional risks relating to the ~~risk factors. The~~conflict between Russia and Ukraine. Furthermore, impacts from the continuing coronavirus (COVID-19) pandemic ~~continues to present a risk to the business~~ and the ~~impacts from COVID-19~~conflict between Russia and Ukraine could exacerbate other risks discussed in Part I Item 1A. Risk Factors of Alcoa Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2021, 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.

Our business, financial condition and results of operations could be adversely affected by disruptions in the global economy caused by the ongoing conflict between Russia and Ukraine.

The global economy has been negatively impacted by the conflict between Russia and Ukraine. Such adverse and uncertain economic conditions have exacerbated supply chain disruptions and increased our costs for energy, particularly in Spain, and for certain raw materials. During the first quarter of 2022, in response to the conflict, we ceased purchasing raw materials from and selling our products to Russian businesses. To date, these actions have not had a material adverse impact on the Company’s business, financial condition and results of operations, but they could have material negative impacts if the conflict continues and global sales of our products are impacted. Furthermore, governments in the U.S., United Kingdom and European Union have each imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia. Although we have no operations in Russia or Ukraine and our sales into these regions were historically minimal and have recently been discontinued, we will continue to monitor the conflict between Russia and Ukraine and the potential impact of financial and economic sanctions on the regional and global economy.

Increased trade barriers or restrictions on global trade, or retaliatory measures taken by Russia, or other countries in response, as well as the destabilizing effects of the conflict, could also adversely affect our business, financial condition and results of operations by limiting sales, restricting access to required raw materials, or raising costs thereof. Destabilizing effects that the ongoing conflict may pose for the global oil and natural gas markets could also adversely impact our operations by further increasing our energy costs. In addition, further escalation of geopolitical tensions related to the conflict could result in loss of property, cyberattacks, additional supply disruptions, an inability to obtain key supplies and materials, reduced production and sales, and/or operational curtailments, and adversely affect our business and our supply chain.

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

Issuer Purchases of Equity Securities

~~On October 17, 2018, Alcoa Corporation announced that its Board~~The table below sets forth information regarding the repurchase of ~~Directors authorized~~shares of our common stock during the periods indicated.

Period	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⁽¹⁾
January 1 to January 31		—	$	—		—	$	500,000,000
February 1 to February 28		1,041,100		72.06		1,041,100		425,000,000
March 1 to March 31		—		—		—		425,000,000
Total		1,041,100	$	72.06		1,041,100

⁽¹⁾

On October 14, 2021, Alcoa Corporation announced that its Board of Directors approved a common stock repurchase program under which the Company may purchase shares of its outstanding common stock up to an aggregate transactional value of $500, depending on cash availability, market conditions, and other factors.

In the first quarter of 2022, the Company repurchased 1,041,100 shares of its ~~outstanding~~ common stock for $75 (weighted average share price of $72.06 (includes $0.02 broker commission)); these shares were immediately retired.

As of March 31, 2022, the Company is currently authorized to repurchase up to ana total of $425, in the aggregate, ~~transactional value~~ of ~~$200, depending on cash availability, market conditions, and other factors.~~its outstanding shares of common stock under this authorization. Repurchases under ~~the~~this 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~~The program does not have a predetermined expiration date. Alcoa Corporation intends to retire ~~the~~ repurchased shares of common stock.

First Quarter 2021

Total Number of Shares Purchased

Weighted Average Price Paid Per Share

Total Number of Shares Purchased as Part of Publicly Announced Program

Approximate Dollar Value of Shares that May Yet be Purchased Under the Program

January 1 to January 31

-

$
-

-

$
150,000,000

February 1 to February 28

-

-

-

150,000,000

March 1 to March 31

-

-

-

150,000,000

Total

-

-

-

~~Item 4. Mine Safety Disclosures.~~39

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

Item 6. Exhibits.


~~2.1~~	Purchase Agreement, dated as of November 30, 2020, by and between Alcoa Corporation and Kaiser Aluminum Corporation (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed April 6, 2021 (File No. 1-37816))

~~4.1~~	~~Indenture, dated as of March 24, 2021, among Alcoa Nederland Holding B.V., Alcoa Corporation, certain subsidiaries of Alcoa Corporation, and The Bank of New York Mellon Trust Company, N.A., as trustee~~ ~~(incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed March 24, 2021 (File No. 1-37816))~~

~~10.1~~	Amendment No. 4 dated as of March 4, 2021 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 as of August 16, 2019, as amended as of April 21, 2020 and as amended as of June 24, 2020, among Alcoa Corporation, Alcoa Nederland Holding B.V., the lenders and issuers from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent for the lenders and issuers (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 4, 2021 (File No. 1-37816))

31.1	Certification ~~pursuant to Section 302~~ of ~~the Sarbanes-Oxley Act of 2002~~Principal Executive Officer required by Rule 13a-14(a) or 15d-14(a)

31.2	Certification ~~pursuant to Section 302~~ of ~~the Sarbanes-Oxley Act of 2002~~Principal Financial Officer required by Rule 13a-14(a) or 15d-14(a)

32.1	Certification ~~pursuant to~~of Principal Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section ~~906~~1350 of Chapter 63 of Title 18 of the ~~Sarbanes-Oxley Act of 2002~~United States Code

32.2	Certification ~~pursuant to~~of Principal Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section ~~906~~1350 of Chapter 63 of Title 18 of the ~~Sarbanes-Oxley Act of 2002~~

~~95.1~~	~~Mine Safety Disclosure~~United States Code

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 (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES

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


						Alcoa Corporation

May 5, ~~2021~~ 2022						/s/ William F. Oplinger
Date						William F. Oplinger
						Executive Vice President and
						Chief Financial Officer
						(Principal Financial Officer)

May 5, ~~2021~~2022						/s/ Molly S. Beerman
Date						Molly S. Beerman
						Senior Vice President and Controller
						(Principal Accounting Officer)

4241

2021 (excluding the three months ended March 31, 2021)	$	24
2022 - 2026		164
Thereafter		123
Total	$	311

First Quarter 2021	Total Number of Shares Purchased		Weighted Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Approximate Dollar Value of Shares that May Yet be Purchased Under the Program
January 1 to January 31		-	$	-		-	$	150,000,000
February 1 to February 28		-		-		-		150,000,000
March 1 to March 31		-		-		-		150,000,000
Total		-		-		-