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How Did Alcoa’s Production Profile Change in 2016?


Feb. 7 2017, Updated 11:28 a.m. ET

Alcoa’s production profile

After the split, Alcoa (AA) has become a pure-play commodity producer (NHYDY). Aluminum’s value chain starts with mining bauxite, one of the most abundant metals in the earth’s crust.

Due to bauxite’s many impurities, it must be refined to produce alumina, which is then processed to produce raw aluminum. Alcoa is an integrated aluminum producer and sells bauxite, alumina, and aluminum.

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2016 production profile

In fiscal 2016, Alcoa (AA) produced 45.0 million bone dry metric tons of bauxite, 13.2 million metric tons of alumina, and 2.42 million metric tons of aluminum. In fiscal 2015, the company produced 45.3 million bone dry metric tons of bauxite, 15.7 million metric tons of alumina, and 2.81 million metric tons of aluminum. Alcoa’s aluminum and alumina production fell year-over-year in 2016, and its bauxite sales were similar to the previous year.

Although aluminum producers like Rio Tinto (RIO) and Aluminum Corporation of China (ACH) have been ramping up their production, Alcoa and other US-based aluminum producers such as Century Aluminum (CENX) have been curtailing their high-cost capacities to survive the prolonged slump in commodity prices. Alcoa has been quite proactive in managing its portfolio to preserve the company’s profitability amid lower commodity prices.

Bauxite sales

Alcoa’s (AA) bauxite production has received a boost, as the company has been actively pursuing third-party sales. As a result, Alcoa’s bauxite production didn’t fall in 2016 despite lower internal demand from its Alumina segment.

With 2016 behind us, investors might be left wondering what 2017 could bring for Alcoa’s production profile. We’ll discuss this in the next article.


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