ALCOA : Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-K)

(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))

                           Forward-Looking Statements

This report contains statements that relate to future events and expectations
and as such constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
include those containing such words as "anticipates," "believes," "could,"
"estimates," "expects," "forecasts," "goal," "intends," "may," "outlook,"
"plans," "projects," "seeks," "sees," "should," "targets," "will," "would," or
other words of similar meaning. All statements by Alcoa Corporation that reflect
expectations, assumptions or projections about the future, other than statements
of historical fact, are forward-looking statements, including, without
limitation, forecasts concerning global demand growth for bauxite, alumina, and
aluminum, and supply/demand balances; statements, projections or forecasts of
future or targeted financial results, or operating or sustainability
performance; statements about strategies, outlook, and business and financial
prospects; and statements about return of capital. These statements reflect
beliefs and assumptions that are based on Alcoa Corporation's perception of
historical trends, current conditions, and expected future developments, as well
as other factors that management believes are appropriate in the circumstances.
Forward-looking statements are not guarantees of future performance and are
subject to known and unknown risks, uncertainties, and changes in circumstances
that are difficult to predict. Although Alcoa Corporation believes that the
expectations reflected in any forward-looking statements are based on reasonable
assumptions, it can give no assurance that these expectations will be attained
and it is possible that actual results may differ materially from those
indicated by these forward-looking statements due to a variety of risks and
uncertainties. Such risks and uncertainties include, but are not limited to: (a)
current and potential future impacts of the coronavirus (COVID-19) pandemic on
the global economy and our business, financial condition, results of operations,
or cash flows and judgments and assumptions used in our estimates; (b) material
adverse changes in aluminum industry conditions, including global supply and
demand conditions and fluctuations in London Metal Exchange-based prices and
premiums, as applicable, for primary aluminum and other products, and
fluctuations in indexed-based and spot prices for alumina; (c) deterioration in
global economic and financial market conditions generally and which may also
affect Alcoa Corporation's ability to obtain credit or financing upon acceptable
terms or at all; (d) unfavorable changes in the markets served by Alcoa
Corporation; (e) the impact of changes in foreign currency exchange and tax
rates on costs and results; (f) increases in energy or raw material costs or
uncertainty of energy supply or raw materials; (g) 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 and 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; and (n) the
other risk factors discussed in Part I Item 1A of this Form 10-K and other
reports filed by Alcoa Corporation with the U.S. Securities and Exchange
Commission, including those described in this report.

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.

Overview

Our Business

Alcoa Corporation (Alcoa or the Company) is a vertically integrated aluminum
company comprised of bauxite mining, alumina refining, aluminum production
(smelting, casting, and rolling), and energy generation. Aluminum is a commodity
that is traded on the London Metal Exchange (LME) and priced daily.
Additionally, alumina is subject to market pricing through the Alumina Price
Index (API), which 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
Metal Bulletin Non-Ferrous Metals Alumina Index. As a result, the price of both
aluminum and alumina is subject to significant volatility and, therefore,
influences the operating results of Alcoa Corporation.

Through direct and indirect ownership, Alcoa Corporation has 28 operating
locations in nine countries around the world, situated primarily in Australia,
Brazil, Canada, Iceland, Norway, Spain, and the United States. Governmental
policies, laws and regulations, and other economic factors, including inflation
and fluctuations in foreign currency exchange rates and interest rates, affect
the results of operations in these countries.

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Business Update

Coronavirus

In response to the ongoing coronavirus (COVID-19) pandemic, Alcoa has
implemented comprehensive measures which remain in place 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
remained in operation during 2020 and continue to remain in operation. Each
location has implemented extensive preparedness and response plans which include
social distancing protocols and other protective actions aligned with guidance
from the U.S. Centers for Disease Control and Prevention, the World Health
Organization, and all other relevant government agencies in countries where we
operate. These actions remain in effect and include:

• Adjusted shift schedules and other work patterns to create separation for

the workforce and ensure redundancy for critical resources;

• Developed and implemented additional hygiene protocols and cleaning

routines at each location;

• Deployed communications to our suppliers, vendors, customers, and delivery

       personnel on our comprehensive actions, including health and safety
       protocols;

• Issued global communications to educate and update employees on public

       health practices to mitigate the potential spread of the virus in our
       communities;

• Implemented access restrictions; everyone must be free of the signs and

symptoms of COVID-19 before entering Alcoa sites;

• Implemented remote work procedures where practical or mandated by law; and,

• Eliminated non-essential travel.

During 2020, the COVID-19 pandemic resulted in certain negative impacts on the
Company's business, financial condition, operating results, and cash flows. For
example, the restart at the Bécancour (Canada) smelter was slowed at the end of
the first quarter of 2020 but was safely and successfully completed during the
third quarter of 2020. Additionally, the COVID-19 pandemic negatively impacted
customer demand for value-add aluminum products as customers reduced production
levels in response to the economic impacts of the pandemic. This resulted in
lower margins on aluminum products as sales shifted from value-add products to
commodity-grade products, primarily during the second quarter of 2020. However,
during the third and fourth quarters of 2020, value-add sales volume increased
11 and 13 percent, respectively, on a sequential basis, primarily due to solid
demand recovery, particularly in the automotive sector. Alcoa experienced
challenges from low metal prices during mid-2020; however, metal prices
increased and stabilized in the second half of 2020. 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 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. The Company could experience negative impacts if there is an
increase in COVID-19 cases.

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

As the ultimate impact of COVID-19 on the global economy continues to evolve,
the Company is constantly evaluating the broad impact of the pandemic on the
macroeconomic environment, including specific regions and end markets in which
the Company operates. As a result of the pandemic's impact on the macroeconomic
environment, management evaluated the future recoverability of the Company's
assets, including goodwill and long-lived assets, and the realizability of
deferred tax assets while considering the Company's current market
capitalization. Management concluded that no asset impairments and no additional
valuation allowances were required during the year ended December 31, 2020.

The pandemic is continuing, and the ultimate magnitude and duration of the
COVID-19 pandemic is unknown. Uncertainty around the global public health crisis
can cause instability in the global markets and economies, affecting our
business. Although we are unable to predict the ultimate impact of the COVID-19
pandemic on our business, financial condition, and results of operations, if
this global health threat persists, it could adversely affect:

• Global demand for aluminum, negatively impacting our ability to generate

cash flows from operations;

• Our operations, including causing interruptions, reductions, or closures of

our operations, due to decreased demand for our products, government

regulations and/or fewer workers in the facilities due to illness or public

       health restrictions;


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• Commercial sustainability of key vendors or transportation disruptions

within our supply chain, which could result in higher inventory costs

and/or inability to obtain key raw materials or fulfill customer orders;

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

• Alcoa's ability to fund capital expenditures and required maintenance at

our facilities, which could negatively impact our results of operations and

profitability;

• Global financial and credit markets and our ability to obtain additional

credit or financing upon acceptable terms or at all, which could negatively

affect our liquidity and financial condition;

• The Company's ability to meet covenants in our outstanding debt and credit

facility agreements;

• Investment return on pension assets and interest rates, and contribution

deferrals, resulting in increased required Company contributions or

unfavorable contribution timing, negatively impacting future cash flows;

• Alcoa's ability to generate income in certain jurisdictions, negatively

impacting the realizability of our deferred tax assets;

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

goodwill;

• The financial condition of our investments and key joint venture partners,

       negatively impacting the results of operations, cash flows, and
       recoverability of investment balances;


  • The effectiveness of hedging instruments;

• Legal obligations resulting from employee claims related to health and

safety; and

• Our ability to efficiently manage certain corporate functions and other

activities as a result of employees working remotely.

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

In addition to utilizing all preventative and mitigation options available to ensure continuity of operations, the Company implemented various cash preservation initiatives, with results as follows:

• Reduced non-critical capital expenditures planned for 2020 by $122, in

excess of the $100 target;

• Deferred non-regulated environmental and asset retirement obligations

payments of $38, in excess of the $25 target;

• Initially deferred approximately $200 in pension contributions under

provisions in the U.S. Government's Coronavirus Aid, Relief, and Economic

Security (CARES) Act; with ample cash on hand and having achieved its

objective to hold cash during uncertain times in 2020, the Company made a

$250 pension contribution to its U.S. pension plans in late December to

cover both the $197 deferred contributions due on January 4, 2021 and a $53

discretionary prepayment;

• Deferred employer payroll taxes of approximately $14 into 2021 and 2022 in

       the U.S., also as permitted under the U.S. Government's CARES Act; and,


    •  Implemented hiring restrictions outside of critical production roles,

restricted travel throughout the organization, and utilized other

appropriate government support programs to save $30, slightly short of the

$35 target.


Strategic Actions

In late 2019, Alcoa Corporation announced strategic actions to drive lower costs and sustainable profitability:

• The implementation of a new operating model that resulted in a leaner, more

integrated, operator-centric organization with reduced overhead costs;

    •  The pursuit of non-core asset sales by early 2021 with the goal of
       generating $500 to $1,000 in net proceeds in support of its updated
       strategic priorities; and,

• The realignment of the operating portfolio over the next five years,

placing 1.5 million metric tons of smelting capacity and 4 million metric

tons of alumina refining capacity under review. The review will consider

opportunities for significant improvement, potential curtailments,

closures, or divestitures.

The new operating model was implemented in 2020. In addition to the approximately 260 employees terminated in connection with the implementation of the new operating model, 60 positions were eliminated as open roles or retirements were not replaced.

In January 2020, the Company announced the sale of Elemental Environmental
Solutions LLC (EES), a wholly-owned Alcoa subsidiary that operated the waste
processing facility in Gum Springs, Arkansas, to a global environmental firm in
a transaction valued at $250. The transaction closed as of January 31, 2020.
Related to this transaction, the Company received

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

On November 30, 2020, the Company entered into an agreement to sell 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) for total consideration of approximately
$670, which includes $587 in cash and the assumption of $83 in other
postretirement benefit liabilities. The sale is expected to close by the end of
the first quarter of 2021, subject to customary closing conditions. Alcoa will
retain ownership 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. After closing, Alcoa expects annual decreases in sales of
approximately $800 and net income (pre- and after-tax) of $45 to $55, based on
last 12-month pricing through December 2020. Alcoa expects to spend
approximately $100 for site separation and transaction costs, with approximately
half being spent in 2021 and the remainder in 2022 and 2023.

In October 2020, the Company made the decision to curtail the 228 kmt of
uncompetitive annual smelting capacity at the San Ciprián smelter in Spain.
Prior to this decision, the Company had completed a four month collective
dismissal consultation process with the workers' representatives which followed
an informal process to discuss the significant and unsustainable circumstances
at the facility. The process included a formal 30-day consultation period with
the workers' representatives with the goal of achieving the best possible
outcome for the Company and its workforce, and included proposals by Alcoa to
discuss a restructuring plan for the aluminum facility to end persistent and
recurring financial losses. The aluminum facility incurred $56, $70, $58 of pre-
and after-tax losses in 2018, 2019 and 2020, respectively.

While an agreement could not be reached within the initial period, the workers'
representatives and the Company agreed to extend the formal consultation period
to evaluate a potential sale of the aluminum facility with endorsement from the
Spanish national and regional governments. After a comprehensive negotiation
process, the potential buyer and Alcoa did not agree on terms. Subsequently,
Alcoa and the workers' representatives made one more attempt to agree upon a
social plan that would include government-supported unemployment benefits (ERTE)
or the implementation of a permanent collective dismissal. The workers'
representatives declined to discuss a social plan, and Alcoa announced its
decision to initiate collective dismissal and curtail the smelter.

Following Alcoa's announcement, the workers' representatives challenged the
collective dismissal process in a legal proceeding before the High Court of
Justice of Galicia, which ruled in favor of the workers on December 17, 2020. As
a result, the Company suspended its plans to curtail the San Ciprián smelter and
filed an appeal of the ruling with the Spanish Supreme Court as the Company
continues to believe it has acted in good faith and in full compliance with the
law. Additionally, in the fourth quarter of 2020, the Company did not incur the
approximately $35 to $40 it previously announced as an expected charge for
employee related costs associated with the curtailment and collective dismissal
process.

Although the San Ciprián alumina refinery was not included in the formal
consultation process, on October 4, 2020, the labor force at both the refinery
and the aluminum facilities initiated a strike which has reduced refinery
production and metal shipments. On January 22, 2021, the Company and the
workers' representatives reached an agreement to suspend the strike. As part of
the agreement, the Company agreed to conduct a sale process with Sociedad
Estatal de Participaciones Industriales (SEPI), a Spanish government owned
entity, which expressed interest in acquiring the smelter facility. Alcoa
expects to incur additional charges in 2021 if an agreement is reached on the
sale of the smelter.

In April 2020, Alcoa announced the curtailment of the remaining 230 kmt of
uncompetitive smelting capacity at its Intalco smelter in Ferndale, Washington
amid declining market conditions. The full curtailment of 279 kmt, which
included 49 kmt of earlier-curtailed capacity, was completed during the third
quarter of 2020. During 2020, the Company recorded Restructuring and other
charges, net of $28 (see Part II Item 8 of this Form 10-K in Note D to the
Consolidated Financial Statements) for employee-related costs and contract
termination costs, which were all cash-based charges. At December 31, 2020, the
separation of employees and related severance and employee termination cost
payments associated with this program were essentially complete.

In December 2019, the Company announced the permanent closure of its alumina
refinery in Point Comfort, Texas as its first action of the multi-year portfolio
review. The site's 2.3 million metric tons of refining capacity had been fully
curtailed since 2016. As a result of the decision to close the refinery, a $274
charge was recorded to Restructuring and other charges, net during 2019 (see
Part II Item 8 of this Form 10-K in Note D to the Consolidated Financial
Statements).

2020 Programs

Early in 2020, Alcoa announced programs to drive leaner working capital and
improved productivity. During 2020, the Company met the combined $175 to $200
full year working capital reduction and productivity savings target with $111 in
working capital and $73 in productivity cost savings. This achievement would
have been $82 higher without the impact of the workers' strike at San Ciprián
which increased year-end inventory balances at the facility.

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Liquidity Levers

In 2020, Alcoa exceeded its $900 target in cash actions through a combination of the COVID-19 response initiatives, strategic actions, and 2020 programs discussed above.

In addition to the cash actions programs, throughout 2020, management took
several measures to improve and maintain Alcoa's liquidity levers. These
included amending the Company's Revolving Credit Facility (see Liquidity and
Capital Resources below) to temporarily provide a more favorable leverage ratio
calculation through April 1, 2021, permanently adjusting the calculation of
Consolidated EBITDA (as defined in the Revolving Credit Facility), and
temporarily adjusting the manner in which Consolidated Cash Interest Expense and
Total Indebtedness are calculated. As of December 31, 2020, these temporary
adjustments to the calculations of Consolidated Cash Interest Expense and Total
Indebtedness apply through March 31, 2021 and ANHBV may, at its option, extend
these adjustments through June 30, 2021. During the second quarter of 2020, the
Company also amended a three-year revolving credit facility agreement of one of
its wholly-owned subsidiaries secured by certain customer receivables,
converting it to a Receivables Purchase Agreement that provides the option for
faster liquidation of certain customer receivables.

On April 8, 2020, the Company's wholly-owned subsidiary, Alcoa Norway ANS, drew
$100 against its one-year, multicurrency revolving credit facility, and may do
so from time to time in the future, in the ordinary course of business.
Repayment of the drawn amount, including interest accrued at 2.93%, occurred
upon maturity on June 29, 2020. On July 3, 2020, Alcoa Norway ANS amended the
revolving credit facility agreement to align the terms of the agreement with the
amendments to the Revolving Credit Facility (discussed above). On September 30,
2020, Alcoa Norway ANS entered into an Amendment and Restatement Agreement (the
A&R Agreement) to the multicurrency revolving credit facility agreement. The A&R
Agreement extended the maturity one year from the original maturity date to
October 2, 2021, unless further extended or terminated early in accordance with
the provisions of the A&R Agreement. The A&R Agreement also amended certain
financial ratio covenants, specifying calculations based upon the results of
Alcoa Norway ANS rather than the calculations outlined in the Revolving Credit
Facility.

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

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

Section 232 Tariffs

In August 2020, the U.S. government reinstated 10 percent tariffs on certain
aluminum imports from Canada under Section 232 of the Trade Expansion Act of
1962 (Section 232). In September 2020, the U.S. government announced that it
would not impose this tariff from September 2020 to December 2020 if total
aluminum imports of non-alloyed, unwrought aluminum from Canada met certain
conditions. In October 2020, the U.S. government fully reinstated the exemption
on aluminum imports from Canada retroactive to September 1, 2020. The Company
recorded net expense of $3 related to Section 232 tariffs in 2020. (See Aluminum
under Segment Information below).

Separation Transaction

References 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 ParentCo, effective
at 12:01 a.m. Eastern Time (the Separation Transaction). Regular-way trading of
Alcoa Corporation's common stock began with the opening of the New York Stock
Exchange on November 1, 2016 under the ticker symbol "AA." The Company's common
stock has a par value of $0.01 per share.

In connection with the Separation Transaction, Alcoa Corporation and ParentCo
entered into certain agreements to implement the legal and structural separation
between the two companies, govern the relationship between the Company and
ParentCo after the completion of the Separation Transaction, and allocate
between Alcoa Corporation and ParentCo various assets, liabilities, and
obligations. These agreements included a Separation and Distribution Agreement,
Tax Matters Agreement, Employee Matters Agreement, Transition Services
Agreement, certain Patent, Know-How, Trade Secret License and Trademark License
Agreements, and Stockholder and Registration Rights Agreement.

Basis of Presentation. The Consolidated Financial Statements of Alcoa Corporation are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). In accordance with GAAP, certain situations require management to make estimates based on judgments and assumptions, which may affect the reported

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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. Actual
results could differ from those estimates upon subsequent resolution of
identified matters. Certain amounts in previously issued financial statements
were reclassified to conform to the current period presentation.

The discussion that follows includes a comparison of our results of operations
and liquidity and capital resources for the fiscal years ended December 31, 2020
and 2019. For a discussion of changes from the fiscal year ended December 31,
2018 to the fiscal year ended December 31, 2019, refer to Management's
Discussion and Analysis of Financial Condition and Results of Operation in Part
II Item 7 of Alcoa Corporation's Annual Report on Form 10-K for the year ended
December 31, 2019 (filed February 21, 2020).

Results of Operations

Earnings Summary

Net loss attributable to Alcoa Corporation for 2020 was $170 compared with
$1,125 in 2019. The favorable change of $955 was primarily due to lower
restructuring costs, favorable foreign currency movements, a lower income tax
provision, favorable impacts from portfolio actions, and lower net income
attributable to noncontrolling interest, partially offset by lower margin from
declining alumina and aluminum prices.

Sales-Sales for 2020 were $9,286 compared with $10,433 in 2019, a change of
$1,147, or 11%. The decrease was largely attributed to a lower average realized
price for alumina and aluminum, reduced sales from the July 2019 divestiture of
two aluminum facilities in Spain and the curtailment of the Intalco (Washington)
smelter which completed in the second half of 2020, partially offset by higher
sales resulting from the restart of the Bécancour (Canada) smelter which
completed in the second half of 2020.

Cost of Goods Sold-Cost of goods sold as a percentage of Sales was 86% in 2020
compared with 82% in 2019. The percentage was negatively impacted by a lower
average realized price for both alumina and aluminum products. The unfavorable
impacts were partially offset by lower raw material costs, net favorable foreign
currency movements due to a stronger U.S. dollar, primarily against the
Australian dollar, the euro, and the Brazilian real, improvements due to the
July 2020 divestiture of two aluminum facilities in Spain, the curtailment of
the Intalco (Washington) smelter which completed in the second half of 2020, the
restart of the Bécancour (Canada) smelter which completed in the second half of
2020, and the absence of unfavorable impacts from the tariffs on certain
aluminum imports in 2019 (see Aluminum in Segment Information below).

Selling, General Administrative, and Other Expenses-Selling, general
administrative, and other expenses were $206, or 2% of Sales, in 2020 compared
with $280, or 3% of Sales, in 2019. The favorable change of $74 was primarily
related to cost savings from the Company's strategic actions and COVID-19
response initiatives, lower fees for professional services, and the
nonrecurrence of a bad debt reserve recorded against a Canadian customer
receivable due to a 2019 bankruptcy filing.

Provision for Depreciation, Depletion, and Amortization-The provision for DD&A
was $653 in 2020 compared with $713 in 2019. The decrease of $60, or 8%, was
principally caused by favorable foreign currency movements from the Brazilian
real and the Canadian dollar, and the nonrecurrence of write offs of assets in
2019 for projects no longer being pursued.

Restructuring and Other Charges, Net-Restructuring and other charges, net was
$104 in 2020 compared with $1,031 in 2019. In 2020, management executed several
actions that impacted Restructuring and other charges, net. These included $59
related to settlements and curtailments of certain pension and other
postretirement benefits, $28 (net) for costs related to the curtailment of the
Intalco (Washington) smelter, and $20 for additional contract costs related to
the curtailed Wenatchee (Washington) smelter.

In 2019, management took several actions to strengthen the Company which totaled
$1,031 in Restructuring and other charges, net. These actions included $319 to
divest Alcoa's equity investment in Ma'aden Rolling Company, $274 related to the
decision to permanently close the Point Comfort alumina refinery, $235 to
curtail and subsequently divest the Avilés and La Coruña (Spain) aluminum
facilities, $119 in additional actions taken to reduce the overall pension and
other postretirement benefit (OPEB) liabilities, and $37 associated with the new
operating model that streamlined reporting to assist in operational
effectiveness. See Part II Item 8 of this Form 10-K in Note D to the
Consolidated Financial Statements for a detailed description of each
restructuring action.

Other Expenses, net-Other expenses, net was $8 in 2020 compared with $162 in
2019. The change of $154 was primarily due to a gain on the divestiture of a
waste processing facility in Gum Springs, Arkansas which was partially offset by
losses related to mark-to-market derivative instruments.

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Income Taxes-Alcoa Corporation's effective tax rate was 108.1% in 2020 compared
with the U.S. federal statutory rate of 21%. Alcoa's effective tax rate and
federal statutory rate for 2019 were (94.9)% (provision on loss) and 21%,
respectively. The effective tax rate differs from the U.S. federal statutory
rate primarily due to losses in countries with full valuation reserves resulting
in no tax benefit, as well as foreign income taxed in higher rate jurisdictions.
In 2019, the effective tax rate was also impacted by restructuring expenses
related to divestitures in foreign jurisdictions that are not deductible for tax
purposes.

In addition to reviewing the effective tax rate, management utilizes an adjusted
effective tax rate (the operational tax rate) to assess the tax on operations
exclusive of special items. Management reviews the operating results of the
Company exclusive of special items, and therefore believes that this measure is
meaningful for assessing the impact of these special items on the effective tax
rate. Beginning in the first quarter of 2021, the Company will revise the way
our operational tax provision is calculated on an interim basis. The operational
tax provision will begin to include the interim tax impacts required under GAAP
that have previously been excluded from our operational tax provision
calculation. In periods of volatility when profit before tax by jurisdiction
moves considerably between periods, inclusion of the GAAP interim tax impacts
can reduce the fluctuations in the interim operational tax provision. This
change will have no impact on our full year forecasted operational tax provision
and will be used in all future periods. The change will also have no impact on
the GAAP tax provision in any period.

In summary, for 2021 and future periods, the calculation of the Company's operational tax is calculated on a full year basis in a manner consistent with our GAAP tax provision except for exclusion of the following items:

• Tax cost or benefit attributable to special items based on the applicable

statutory rates in the jurisdictions where the special items occurred; and

• Discrete tax items (generally unusual or infrequently occurring items,

changes in law, items associated with uncertain tax positions, or effects of

      measurement-period adjustments).




Noncontrolling Interest-Net income attributable to noncontrolling interest was
$156 in 2020 compared with $272 in 2019. These amounts are entirely related to
Alumina Limited's 40% ownership interest in several affiliated operating
entities, which own, have an interest in, or operate the bauxite mines and
alumina refineries within Alcoa's Bauxite and Alumina segments (except for the
Poços de Caldas mine and refinery and portions of the São Luís refinery and
investment in Mineração Rio do Norte S.A., all in Brazil) and a portion (55%) of
the Portland smelter (Australia) within the Company's Aluminum segment. These
individual entities comprise an unincorporated global joint venture between
Alcoa Corporation and Alumina Limited known as Alcoa World Alumina and Chemicals
(AWAC). Alcoa Corporation owns 60% of these individual entities, which are
consolidated by the Company for financial reporting purposes and include Alcoa
of Australia Ltd. (AofA), Alcoa World Alumina LLC (AWA), Alcoa World Alumina
Brasil Ltda. (AWAB), and Alúmina Española, S.A. (Española). Alumina Limited's
40% interest in the earnings of such entities is reflected as Noncontrolling
interest on Alcoa Corporation's Statement of Consolidated Operations.

In 2020, these combined entities generated lower net income compared to 2019, primarily driven by lower alumina prices which were partially offset by favorable foreign currency movements.

Segment Information

Alcoa Corporation is a producer of bauxite, alumina, and aluminum products
(primary and flat-rolled). 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's Adjusted EBITDA may not be comparable
to similarly titled measures of other companies.

Segment Adjusted EBITDA totaled $1,317 in 2020, $1,626 in 2019, and $3,250 in
2018. The following information provides production, shipments, sales, and
Segment Adjusted EBITDA data for each reportable segment, as well as certain
realized price and average cost data, for each of the three years in the period
ended December 31, 2020. See Part II Item 8 of this Form 10-K in Note E to the
Consolidated Financial Statements for additional information.

                                       42

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Bauxite



                                                      2020        2019        2018
Production (mdmt)                                       48.0        47.4        45.8
Third-party shipments (mdmt)                             6.5         6.2         5.7
Intersegment shipments (mdmt)                           42.2        41.4        41.2
Total shipments (mdmt)                                  48.7        47.6        46.9
Third-party sales                                    $   272     $   297     $   271
Intersegment sales                                       941         979         944
Total sales                                          $ 1,213     $ 1,276     $ 1,215
Segment Adjusted EBITDA                              $   495     $   504     $   426
Operating costs                                      $   835     $   859     $   869
Average cost per dry metric ton of bauxite shipped   $    17     $    18     $    19

Operating costs in the table above includes all production-related costs: conversion costs, such as labor, materials, and utilities; depreciation, depletion, and amortization; and plant administrative expenses.

Overview. This segment represents the Company's global bauxite mining
operations. A portion of this segment's production represents the offtake from
equity method investments in Brazil and Guinea, as well as AWAC's share of
production related to the equity investment in Saudi Arabia. Production in the
above 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. The bauxite mined by this segment is sold primarily to
internal customers within the Alumina segment; a portion of the bauxite is sold
to external customers. Bauxite mined by this segment and used internally is
transferred to the Alumina segment at negotiated terms that are intended to
approximate market prices; sales to third-parties are conducted on a contract
basis. Generally, this segment's sales are transacted in U.S. dollars while
costs and expenses are transacted in the local currency of the respective
operations, which are the Australian dollar and the Brazilian real. Most of the
operations that comprise the Bauxite segment are part of AWAC (see
Noncontrolling Interest in Earnings Summary above).

Business Update. The Bauxite segment had record annual production in 2020 which
included annual production records for the Willowdale (Australia) and Juruti
(Brazil) mines. The record annual production is the result of stable mining
conditions and increased focus on operating efficiencies as part of the
Company's 2020 strategic initiatives.

Mining operations are relocated periodically in support of optimizing the value
extracted from bauxite reserves. During 2019, the Company began the process of
moving the Willowdale mining operations to the next planned location in the
Darling range and began preparing for movement of the Juruti mining operations
which began in 2020. During 2020, the Company incurred $82 and $1 in capital
expenditures related to the Willowdale and Juruti mining operation relocations,
respectively. As a result of these movements, approximately $37 and $16 of
additional capital expenditures related to Willowdale and Juruti, respectively,
are anticipated for 2021. The relocation of the Willowdale mining operations is
expected to be completed during the first quarter of 2021 and the relocation of
the Juruti mining operations is expected to be completed during the first
quarter of 2022.

Production. In 2020, bauxite production increased 1% compared with 2019, from higher production at four of the segment's seven mines.

Sales. Third-party sales for the Bauxite segment decreased 8% in 2020 compared
with 2019 due primarily to a lower average realized price. The price decrease
was partially offset by a 5% increase in Third-party shipments in 2020, compared
with 2019.

Intersegment sales for the Bauxite segment decreased 4% in 2020 compared with
2019 due primarily to a lower average realized price. The price decrease was
partially offset by a 2% increase in intersegment shipments in 2020, compared
with 2019.

Segment Adjusted EBITDA. Bauxite Segment Adjusted EBITDA decreased $9 in 2020
compared with 2019, principally as a result of the previously mentioned lower
average realized price for third-party and intersegment sales partially offset
by net favorable foreign currency movements due to a stronger U.S. dollar
against the Brazilian real.

Forward-Look. In 2021, lower intersegment and third-party prices are anticipated
along with additional capital expenditures related to the previously mentioned
Willowdale and Juruti mining location moves. The lower intersegment bauxite
price will provide a corresponding benefit to the Alumina segment as discussed
below. The Company projects total bauxite shipments to range between 49.0 and
50.0 million dry metric tons, an improvement from 2020.

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Alumina



                                                   2020           2019           2018
Production (kmt)                                    13,475         13,302         12,857
Third-party shipments (kmt)                          9,641          9,473          9,259
Intersegment shipments (kmt)                         4,243          4,072          4,326
Total shipments (kmt)                               13,884         13,545         13,585
Third-party sales                               $    2,627     $    3,250     $    4,215
Intersegment sales                                   1,268          1,561          2,101
Total sales                                     $    3,895     $    4,811     $    6,316
Segment Adjusted EBITDA                         $      497     $    1,097     $    2,373
Average realized third-party price per metric
ton of alumina                                  $      273     $      343     $      455
Operating costs                                 $    3,379     $    3,646     $    3,892
Average cost per metric ton of alumina
shipped                                         $      243     $      269

$ 286

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

Overview. This segment represents the Company's worldwide refining system, which
processes bauxite into alumina. The alumina produced by this segment is sold
primarily to internal and external aluminum smelter customers; a portion of the
alumina is sold to external customers who process it into industrial chemical
products. Approximately two-thirds of Alumina's production is sold under supply
contracts to third parties worldwide, while the remainder is used internally by
the Aluminum segment. Alumina produced by this segment and used internally is
transferred to the Aluminum segment at prevailing market prices. A portion of
this segment's third-party sales are completed through the use of alumina
traders. Generally, this segment's sales are transacted in U.S. dollars while
costs and expenses are transacted in the local currency of the respective
operations, which are the Australian dollar, the Brazilian real, the U.S.
dollar, and the euro. Most of the operations that comprise the Alumina segment
are part of AWAC (see Noncontrolling Interest in Earnings Summary above). This
segment also includes AWAC's 25.1% ownership interest in the mining and refining
joint venture company in Saudi Arabia.

Business Update. The Alumina segment had record annual production in 2020, which
included annual production records for the Wagerup, Pinjarra, and Kwinana
(Australia) alumina refineries and the São Luís (Brazil) alumina refinery, as
operating efficiencies were gained across the refining system.

During 2020, the average API (on 30-day lag) reached a low in May 2020 and
trended favorably throughout the remainder of the year. The Alumina segment
gained efficiencies across the refining system with additional operations focus
and support, a critical component of the Company's new operating model and
realized the benefit of declining prices for caustic soda and lower prices for
bauxite.

On October 4, 2020, the labor force at both the refinery and the aluminum
facilities at San Ciprián (Spain) initiated a strike which reduced refinery
production and metal shipments. On January 22, 2021, the Company and the
workers' representatives reached an agreement to suspend the strike. The Company
does not expect the impact of the strike to have a material impact on Alumina
Segment Adjusted EBITDA in 2021.

Capacity. At December 31, 2020, the Alumina segment had a base capacity of 12,759 kmt with 214 kmt of curtailed refining capacity. There were no changes to curtailed or base capacity during 2020.

Production. In 2020, alumina production increased by 173 kmt compared with 2019,
principally due to operating efficiencies gained across the refining system. The
2020 annual production record exceeded the previous annual record set in 2019.

Sales. Third-party sales for the Alumina segment decreased 19% in 2020 compared
with 2019, primarily attributable to a decline in average realized price which
was principally driven by a lower average API (on 30-day lag). The price
decrease was partially offset by a 2% increase in Third-party shipments in 2020,
compared with 2019.

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Intersegment sales for the Alumina segment decreased 19% in 2020 compared with
2019 primarily due to a lower average realized price, partially offset by
increased demand from the Aluminum segment. The increased demand from the
Aluminum segment was primarily driven by the restart at the Bécancour (Canada)
smelter partially offset by the curtailment of the Intalco smelter (see Aluminum
below).

Segment Adjusted EBITDA. Alumina Segment Adjusted EBITDA decreased $600 in 2020
compared with 2019, largely attributed to the decline in average realized price
of alumina and higher energy costs in Australia. These negative impacts were
partially offset by lower costs for bauxite and caustic soda, increased total
shipments and net favorable foreign currency movements due to a stronger U.S.
dollar (particularly against the Australian dollar and Brazilian real).

Forward-Look. In 2021, the lower intersegment bauxite price will benefit the
Alumina segment while higher natural gas costs in Australia are expected to be
more than offset by lower costs for both bauxite and caustic soda. The Company
projects total alumina shipments to range between 13.9 and 14.0 million metric
tons, stable in comparison to 2020.

Aluminum



Total Aluminum information                                 2020        2019        2018
Third-party aluminum shipments (kmt)                        3,016       2,859       3,268
Third-party sales                                         $ 6,365     $ 6,803     $ 8,829
Intersegment sales                                             12          17          18
Total sales                                               $ 6,377     $ 6,820     $ 8,847
Segment Adjusted EBITDA                                   $   325     $    25     $   451

Primary aluminum information                                2020        2019        2018
Production (kmt)                                            2,263       2,135       2,259
Third-party shipments (kmt)                                 2,710       2,535       2,732
Third-party sales                                         $ 5,190     $ 5,426     $ 6,787
Average realized third-party price per metric ton         $ 1,915     $ 2,141     $ 2,484
Total shipments (kmt)                                       2,773       2,597       2,844
Operating costs                                           $ 5,222     $

5,847 $ 6,974 Average cost per metric ton of primary aluminum shipped $ 1,883 $ 2,251 $ 2,452

In the above table, 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 or requirements. The Aluminum segment bears the risk of loss of the
purchased aluminum until control of the product has been transferred to this
segment's customer. Total aluminum information includes flat-rolled aluminum
while Primary aluminum information does not. Operating costs includes all
production-related costs: raw materials consumed; conversion costs, such as
labor, materials, and utilities; depreciation and amortization; and plant
administrative expenses.

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

Overview. This segment consists of the Company's (i) worldwide smelting and
casthouse system, which processes alumina into primary aluminum, (ii) portfolio
of energy assets in Brazil, Canada, and the United States, and (iii) a rolling
mill in the United States.

Aluminum's combined smelting and casting operations produce primary aluminum
products, virtually all of which are sold to external customers and traders; a
portion of this primary aluminum is consumed by the rolling mill. The smelting
operations produce molten primary aluminum, which is then formed by the casting
operations into either common alloy ingot (e.g., t-bar, sow, standard ingot) or
into value-add ingot products (e.g., foundry, billet, rod, and slab). A variety
of external customers purchase the primary aluminum products for use in
fabrication operations, which produce products primarily for the transportation,
building and construction, packaging, wire, and other industrial markets.
Results from the sale of aluminum powder and scrap are also included in this
segment, as well as the impacts of embedded aluminum derivatives related to
energy supply contracts.

The energy assets supply power to external customers in Brazil and, to a lesser
extent, in the United States, as well as internal customers in the Aluminum
(Canadian smelters and Warrick (Indiana) smelter and rolling mill) and Alumina
segments (Brazilian refineries).

                                       45

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The rolling mill produces aluminum sheet primarily sold directly to customers in
the packaging market for the production of aluminum cans (beverage and
food). Additionally, from the Separation Date through the end of 2018, Alcoa
Corporation had a tolling arrangement (contractually ended on December 31, 2018)
with ParentCo whereby ParentCo's rolling mill in Tennessee produced can sheet
products for certain customers of the Company's rolling operations. Alcoa
supplied all of the raw materials to the Tennessee facility and paid ParentCo
for the tolling service. Seasonal increases in can sheet sales are generally
experienced in the second and third quarters of the calendar year.

Generally, this segment's aluminum sales are transacted in U.S. dollars while
costs and expenses of this segment are transacted in the local currency of the
respective operations, which are the U.S. dollar, the euro, the Norwegian krone,
the Icelandic króna, the Canadian dollar, the Brazilian real, and the Australian
dollar.

This segment also includes Alcoa Corporation's 25.1% ownership interest in the
smelting joint venture company in Saudi Arabia (Alcoa's interest in the rolling
mill joint venture was divested in June 2019).

Business Update. On October 4, 2020, the labor force at both the refinery and
the aluminum facilities at San Ciprián (Spain) initiated a strike which reduced
refinery production and metal shipments. The strike remained in place through
December 31, 2020 and prevented the smelter from shipping finished product to
customers. On January 22, 2021, the Company reached agreement with the workers'
representatives to suspend the strike. As part of the agreement, the Company
agreed to conduct a sale process to Sociedad Estatal de Participaciones
Industriales (SEPI), a Spanish government owned entity, which expressed interest
in acquiring the smelter facility.

On November 30, 2020, the Company entered into an agreement to sell the Warrick
Rolling Mill to Kaiser Aluminum Corporation for total consideration of
approximately $670, which includes $587 in cash and the assumption of $83 in
other postretirement benefit liabilities. The sale is expected to close by the
end of the first quarter of 2021, subject to customary closing conditions. See
Part II Item 8 of this Form 10-K in Note C to the Consolidated Financial
Statements for additional information.

As a result of a more competitive and long-term labor agreement reached in 2019,
the process to restart the Bécancour (Canada) smelter began in July 2019 and was
completed during the third quarter of 2020. The restart process had favorable
impacts to the Aluminum segment during 2020 as increased production resulted in
higher shipments and Adjusted Segment EBITDA compared with 2019.

In August 2020, the U.S. government reinstated 10 percent tariffs on certain
aluminum imports from Canada under Section 232 of the Trade Expansion Act of
1962 (Section 232). In September 2020, the U.S. government announced that it
would not impose this tariff from September 2020 to December 2020 if total
aluminum imports of non-alloyed, unwrought aluminum from Canada met certain
conditions. In October 2020, the U.S. government fully reinstated the exemption
on aluminum imports from Canada retroactive to September 1, 2020. The Company
recorded net expense of $3 related to Section 232 tariffs in 2020.

In April 2020, Alcoa announced the curtailment of the remaining 230 kmt of
smelting capacity at the Intalco (Washington) smelter. The full curtailment of
279 kmt, which includes 49 kmt of earlier-curtailed
capacity, was completed during the third quarter of 2020. See Part II Item 8 of
this Form 10-K in Note D to the Consolidated Financial Statements for additional
information.

Capacity. At December 31, 2020, the Aluminum segment had 831 kmt of idle
smelting capacity on a base capacity of 2,993 kmt. During 2020, the curtailment
of the Intalco smelter increased idle capacity by 230 kmt which was partially
offset by the remainder of the restart process at the Bécancour smelter, begun
in July 2019, which decreased idle capacity by 165 kmt.

Production. In 2020, primary aluminum production increased by 128 kmt compared
with 2019, primarily due to higher production at the Bécancour smelter as a
result of the restart process partially offset by the curtailment of the Intalco
smelter.

Sales. Third-party sales for the Aluminum segment decreased 6% in 2020 compared
with 2019, primarily attributed to a lower average realized price of primary
aluminum. The change in average realized price of primary aluminum was mainly
driven by a 6% lower average LME price (on 15-day lag) combined with decreases
in regional and product premiums from reduced demand for value-add aluminum
products. The unfavorable impact of lower metal prices and product premiums was
partially offset by an increase in sales volume driven primarily from the
restart of the Bécancour smelter, which exceeded the volume decrease from the
Intalco curtailment in mid-year 2020.

Segment Adjusted EBITDA. Aluminum Segment Adjusted EBITDA increased $300 in 2020
compared with 2019. The increase was attributable to lower alumina, carbon, and
energy costs outweighing the negative impact from lower metal prices and
unfavorable mix of value-add products by $95, net. Adjusted EBITDA improved $126
on the Company's combined portfolio actions which include the divestiture of
the Avilés and La Coruña facilities in the third quarter of 2019, the restart of
the Bécancour smelter, and the curtailment of the Intalco smelter. Other
favorable impacts to Adjusted EBITDA in 2020 include favorable foreign currency
changes and the non-recurrence of a bad debt reserve recorded in 2019 against a

                                       46

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Canadian customer receivable due to bankruptcy. Additionally, impacts from Section 232 tariffs had a favorable impact to Adjusted EBITDA of $21.

Forward-Look. In 2021, we expect favorable impacts from the Bécancour smelter
operating at full capacity and the Intalco curtailment, partially offset by
increased raw materials and energy costs and unfavorable impacts from the sale
of the Warrick Rolling Mill. Total aluminum shipments are expected to range
between 2.7 and 2.8 million metric tons, a decrease from 2020 related to the
changes in the portfolio but well positioned to benefit from the recovery in
value-add products.

Reconciliations of Certain Segment Information

Reconciliation of Total Segment Third-Party Sales to Consolidated Sales

                                   2020         2019         2018
Bauxite                           $   272     $    297     $    271
Alumina                             2,627        3,250        4,215
Aluminum:
Primary aluminum                    5,190        5,426        6,787
Other(1)                            1,175        1,377        2,042
Total segment third-party sales     9,264       10,350       13,315
Other                                  22           83           88
Consolidated sales                $ 9,286     $ 10,433     $ 13,403

(1) Other includes third-party sales of flat-rolled aluminum and energy, as well

as realized gains and losses related to embedded derivative instruments

designated as cash flow hedges of forward sales of aluminum.

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



                                                   2020           2019           2018
Bauxite                                         $      835     $      859     $      869
Alumina                                              3,379          3,646          3,892
Primary aluminum                                     5,222          5,847          6,974
Other(1)                                             1,233          1,404          1,915
Total segment operating costs                       10,669         11,756         13,650
Eliminations(2)                                     (2,213 )       (2,707 )       (3,055 )
Provision for depreciation, depletion,
amortization(3)                                       (627 )         (676 )         (699 )
Other(4)                                               140            164   

157

Consolidated cost of goods sold                 $    7,969     $    8,537     $   10,053

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

division.

(2) This line item represents the elimination of cost of goods sold related to

intersegment sales between Bauxite and Alumina and between Alumina and

Aluminum.

(3) Depreciation, depletion, and amortization is included in the operating costs

used to calculate average cost for each of the bauxite, alumina, and primary

aluminum product divisions (see Bauxite, Alumina, and Aluminum

above). However, for financial reporting purposes, depreciation, depletion,

and amortization is presented as a separate line item on Alcoa Corporation's

Statement of Consolidated Operations.

(4) Other includes costs related to Transformation, and certain other items that

impact Cost of goods sold on Alcoa Corporation's Statement of Consolidated

Operations that are not included in the operating costs of the segments (see

footnotes 1 and 3 in the Reconciliation of Total Segment Adjusted EBITDA to

Consolidated Net (Loss) Income Attributable to Alcoa Corporation below).

                                       47

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

                                                   2020           2019      

2018

Net (loss) income attributable to Alcoa
Corporation:
Total segment Adjusted EBITDA                   $    1,317     $    1,626     $    3,250
Unallocated amounts:
Transformation(1)                                      (45 )           (7 )           (3 )
Intersegment eliminations                               (8 )          150             (8 )
Corporate expenses(2)                                 (102 )         (101 )          (96 )
Provision for depreciation, depletion, and
amortization                                          (653 )         (713 )         (733 )
Restructuring and other charges, net                  (104 )       (1,031 )         (527 )
Interest expense                                      (146 )         (121 )         (122 )
Other expenses, net                                     (8 )         (162 )          (64 )
Other(3)                                               (78 )          (79 )          (72 )
Consolidated income (loss) before income
taxes                                                  173           (438 ) 

1,625

Provision for income taxes                            (187 )         (415 )         (732 )
Net income attributable to noncontrolling
interest                                              (156 )         (272 )         (643 )
Consolidated net (loss) income attributable
to Alcoa
  Corporation                                   $     (170 )   $   (1,125 )   $      250

(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 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 Part II Item 8 of this Form 10-K in Note S to the Consolidated Financial Statements under caption Contingencies-Environmental Matters.

Liquidity and Capital Resources

Alcoa Corporation's primary future cash flows are centered on operating
activities, particularly working capital, as well as sustaining and
return-seeking capital expenditures. Alcoa's ability to fund its cash needs
depends on the Company's ongoing ability to generate and raise cash in the
future. Although management believes that Alcoa's future cash from operations,
together with the Company's access to capital markets, will provide adequate
resources to fund operating and investing needs, 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 the COVID-19 pandemic could have adverse
effects on Alcoa's ability to obtain additional financing and cost of borrowing.
Inability to generate sufficient earnings could impact the Company's ability to
meet the financial covenants in our outstanding debt and revolving credit
facility agreements and limit our ability to access these sources of liquidity
or refinance or renegotiate our outstanding debt or credit agreements on terms
acceptable to the Company. Additionally, the impact on market conditions from
the COVID-19 pandemic could adversely affect the liquidity of Alcoa's customers,
suppliers, and joint venture partners and equity method investments, which could
negatively impact the collectability of outstanding receivables and our cash
flows.

In addition to utilizing all preventative and mitigation options available to
ensure continuity of operations during the COVID-19 pandemic, Alcoa instituted
measures to manage cash during the global health crisis. Taking advantage of
strategic actions that were already underway, as well as active working capital
and productivity programs, Alcoa added its COVID-19 response initiatives to an
overall cash action program targeted to save or defer $900. In 2020, Alcoa
exceeded its $900 target in cash actions through a combination of the COVID-19
response initiatives, strategic actions, and 2020 programs as discussed under
Business Update above.

In 2021, the Company anticipates cash inflows from the previously announced sale of its rolling mill business to Kaiser Aluminum Corporation for total consideration of approximately $670, which includes $587 in cash and the assumption of

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$83 in other postretirement benefit liabilities. The sale is expected to close by the end of the first quarter of 2021, subject to customary closing conditions.

The Company's liquidity options discussed below, including the credit facilities
and the Receivables Purchase Agreement, provide flexibility in managing cash
flows. Management believes that the Company's cash on hand, future operating
cash flows, and liquidity options, combined with its strategic actions and cash
preservation initiatives, are adequate to fund its near term operating and
investing needs. For an analysis of long-term liquidity, see Contractual
Obligations and Off-Balance Sheet Arrangements below.

At December 31, 2020, the Company's cash and cash equivalents were $1,607, of
which $1,521 was held outside the United States. Alcoa Corporation has a number
of commitments and obligations related to the Company's operations in various
foreign jurisdictions, resulting in the need for cash outside the United States.
Alcoa Corporation continuously evaluates its local and global cash needs for
future business operations, which may influence future repatriation decisions.

Cash from Operations

Cash provided from operations was $394 in 2020 compared with cash provided from
operations of $686 in 2019. Notable changes to the sources and (uses) of cash
for 2020 include:

• ($104) in certain working capital accounts (receivables, inventories, and

accounts payable, trade), including $82 use of cash related to finished

goods inventory at San Ciprián which could not be shipped at year end due

to the workers' strike;

• ($170) from higher pension contributions, including a $250 pension

contribution to the Company's U.S. pension plans in late December to cover

        both the $197 deferred contributions due on January 4, 2021 and a $53
        discretionary prepayment;

• ($35) due to timing of the collection of value added tax receivable;

• ($74) included as a change in Other noncurrent assets related to a tax

payment on the AofA tax matter (see below); and

• $449 relating to changes in taxes, including income taxes. The source of

cash includes changes related to lower tax payments made in 2020 compared

with 2019, primarily payments on income taxes, and changes in the

underlying tax accounts. Also includes $169 from the impact of interest

        deductions on 2020 cash tax payments related to the AofA tax matter (see
        below).

The remaining change in Cash provided from operations is primarily attributable to the 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 S to the Consolidated Financial
Statements in Part II Item 8 of this Form 10-K. Upon payment, AofA recorded a
noncurrent tax assessment deposit, 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 and resulted in $169 (A$219) lower
cash tax payments in 2020. Interest compounded in future years is also
deductible against AofA's income in the respective periods. If AofA is
ultimately successful, the interest deduction would become taxable as income in
the year the dispute is resolved. 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 2020, AofA continued to record its tax
provision and tax liability without effect of the ATO assessment, since it
expects to prevail. The 2020 tax payable remains on AofA's balance sheet as a
noncurrent accrued tax liability and will be increased by the tax effect of
subsequent periods' interest deductions, until dispute resolution, which is
expected to take several years. At December 31, 2020, the noncurrent accrued tax
liability resulting from the cumulative interest deductions was approximately
$169 (A$219).

Financing Activities

Cash provided from financing activities was $514 in 2020 compared with cash used
for financing activities of $444 in 2019. The primary source of cash in 2020 was
the issuance of $750 aggregate principal amount of 2027 Notes by ANHBV in July
2020 resulting in net proceeds of $736. The net proceeds were partially offset
by $183 in net cash paid to Alumina Limited and $38 in financial contributions
related to the divested Spanish facilities. The use of cash in 2019 was
primarily due to $421 in net cash paid to Alumina Limited and $12 in financial
contributions related to the divested Spanish facilities.

Credit Facilities. Alcoa Corporation has access to various sources of liquidity
outside of cash generated from operations. Included in these sources is the
Second Amended Revolving Credit Agreement ("Revolving Credit Facility" or "the
Facility") entered into by Alcoa Corporation and Alcoa Nederland Holding B.V.
(ANHBV) and a multicurrency revolving credit facility entered into by Alcoa
Norway ANS. Additionally, the Company has a Receivables Purchase Agreement that
also provides flexibility for managing cash needs.

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The Revolving Credit Facility provides a $1,500 senior secured revolving credit
facility to be used for working capital and/or other general corporate purposes
of Alcoa Corporation and its subsidiaries. The Revolving Credit 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 Consolidated EBITDA (an
earnings metric as defined in the Revolving Credit Facility) to determine
compliance with the financial covenant. The calculation also determines the
maximum indebtedness permitted under the Revolving Credit Facility. Based on the
leverage ratio calculation as of December 31, 2020, the maximum additional
borrowing capacity available to the Company to remain in compliance with the
covenant was $1,322; below full capacity based on insufficient 2020 earnings
levels as defined in the earnings metric. Based on the leverage ratio
calculation as of December 31, 2019, the maximum additional borrowing capacity
available to the Company to remain in compliance with the covenant was $1,200;
the lower capacity in 2019 primarily resulting from the impact of the
restructuring-related charges considered in the earnings metric. However, the
Company still has the ability to access the full $1,500 credit facility through
a combination of the maximum additional borrowing capacity and the issuances of
letters of credit at December 31, 2020.

On April 21, 2020, the Company and ANHBV entered into an amendment (Amendment
No. 2) to the Revolving Credit Facility that temporarily adjusts the leverage
ratio requirement to 3.00 to 1.00 from 2.50 to 1.00 for the subsequent four
consecutive fiscal quarters, beginning in the second quarter of 2020 (the
Amendment Period). The leverage ratio requirement will return to 2.50 to 1.00
starting in the second quarter of 2021. During the Amendment Period, the
Company, ANHBV, and any restricted subsidiaries will be restricted from making
certain restricted payments or incurring incremental secured loans under the
Revolving Credit Facility.

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

ANHBV has the option to extend the periods under Amendment No. 3 to apply to
either or both fiscal quarters ending March 31, 2021 and June 30, 2021. However,
doing so would also reduce the borrowing availability under the Revolving Credit
Facility during the respective fiscal quarters by one-third of the net proceeds
of such note issuances during the fiscal year ending December 31, 2020. During
the fourth quarter of 2020, ANHBV has elected to extend the period under
Amendment No. 3 through the quarter ending March 31, 2021, and if ANHBV elects
to extend the period through June 30, 2021, the request for extension must be
provided on or prior to April 1, 2021. As a result of the election, the 2027
Notes issued in July 2020 will reduce the aggregate amount of commitments under
the Revolving Credit Facility by approximately $245 during the applicable fiscal
quarters.

The Revolving Credit Facility is scheduled to mature on November 21, 2023 unless
extended or earlier terminated in accordance with the provisions of the
Facility. ANHBV may make extension requests during the term of the Revolving
Credit Facility, subject to the lender consent requirements set forth in the
Facility. As of December 31, 2020, Alcoa Corporation was in compliance with all
covenants. There were no borrowings outstanding at December 31, 2020, and there
were no amounts borrowed during 2020 related to this facility.

On October 2, 2019, Alcoa Norway ANS, a wholly-owned subsidiary of Alcoa
Corporation, entered into a one-year, multicurrency revolving credit facility
agreement for NOK 1.3 billion (approximately $152) which is fully and
unconditionally guaranteed on an unsecured basis by Alcoa Corporation. On April
8, 2020, Alcoa Norway ANS drew $100 against this facility, and may do so from
time to time in the future, in the ordinary course of business. Repayment of the
drawn amount, including interest accrued at 2.93%, occurred upon maturity on
June 29, 2020. On July 3, 2020, Alcoa Norway ANS amended the revolving credit
facility agreement to align the terms of the agreement with Amendment No. 2 and
Amendment No. 3 of the Revolving Credit Facility discussed above.

On September 30, 2020, Alcoa Norway ANS entered into an Amendment and
Restatement Agreement (the A&R Agreement) to the multicurrency revolving credit
facility agreement that extended the maturity one year from the original
maturity date to October 2, 2021, unless further extended or terminated early in
accordance with the provisions of the A&R Agreement. The A&R Agreement also
amended certain financial ratio covenants, specifying calculations based upon
the results of Alcoa Norway ANS rather than the calculations outlined in the
Revolving Credit Facility. As of December 31, 2020, Alcoa Norway ANS was in
compliance with all such covenants. At December 31, 2020, there were no amounts
outstanding against this facility.

On October 25, 2019, a wholly-owned subsidiary of the Company entered into a
$120 three-year revolving credit facility agreement secured by certain customer
receivables. On April 20, 2020, the Company amended this agreement converting it
to a Receivables Purchase Agreement to sell up to $120 of the receivables
previously secured by the credit facility without recourse on a revolving basis.
The unsold portion of specified receivable pool will be pledged as collateral to
the purchasing

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bank to secure the sold receivables. During the year ended December 31, 2020, no receivables were sold under this agreement.

Alcoa's maximum additional borrowing capacity discussed above can be used
through any combination of Alcoa's two credit facilities or through additional
indebtedness. The Company may draw on these facilities periodically to ensure
working capital needs are met. See Part II Item 8 of this Form 10-K in Note M to
the Consolidated Financial Statements for additional information related to
these credit facilities.

Debt. As of December 31, 2020, Alcoa Corporation had four outstanding Notes
maturing at varying times. A summary of the Notes and other long-term debt is
shown below. See Part II Item 8 of this Form 10-K in Note M to the Consolidated
Financial Statements for additional information related to the Company's debt.



December 31,                                          2020        2019
6.75% Notes, due 2024                                $   750     $   750
7.00% Notes, due 2026                                    500         500
5.500% Notes, due 2027                                   750           -
6.125% Notes, due 2028                                   500         500
Other                                                      6          84

Unamortized discounts and deferred financing costs (41 ) (34 ) Total

                                                  2,465       1,800
Less: amount due within one year                           2           1

Long-term debt, less amount due within one year $ 2,463 $ 1,799

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

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

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

On June 26, 2020 Standard and Poor's Global Ratings (S&P) affirmed the BB+ rating of Alcoa's long-term debt and revised the outlook to negative. On December 21, 2020, S&P affirmed the BB+ rating of Alcoa's long-term debt and revised the outlook to stable from negative.

Common Stock Repurchase Program. In October 2018, Alcoa Corporation's Board of
Directors authorized a common stock repurchase program with an aggregate
transactional value of $200, depending on cash availability, market conditions,
and other factors. This program does not have a predetermined expiration date.
Alcoa Corporation intends to retire the repurchased shares of common stock. In
December 2018, the Company repurchased 1,723,800 shares of its common stock for
$50; these shares were immediately retired. No amounts were repurchased during
2020 or 2019.

Investing Activities

Cash used for investing activities was $167 in 2020 compared with $468 in 2019.
The decrease in use of cash for 2020 was largely attributed to the nonrecurrence
of cash expenditures made in 2019 related to the divestiture of Alcoa's
investment in Ma'aden Rolling Company, as well as higher proceeds in 2020 from
the sale of assets, primarily the Gum Springs waste treatment facility, and
lower capital expenditures.

In 2021, Alcoa expects capital expenditures to be approximately $375 related to
sustaining capital projects and approximately $50 related to growth projects.
The timing and amount of capital expenditures may fluctuate as a result of the
Company's normal operations.

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Contractual Obligations and Off-Balance Sheet Arrangements

Contractual Obligations. Alcoa Corporation is required to make future payments
under various contracts, including long-term purchase obligations and financing
arrangements. The Company also has commitments to fund its pension plans and
provide payments for other postretirement benefit plans. As of December 31,
2020, a summary of Alcoa Corporation's outstanding contractual obligations is as
follows:



                                        Total         2021        2022-2023       2024-2025       Thereafter
Operating activities:
Energy-related purchase obligations    $ 13,774     $  1,093     $     2,416     $     2,346     $      7,919
Raw material purchase obligations         5,434          989             897             657            2,891
Other purchase obligations                  767          249             308             136               74
Estimated minimum required pension
funding                                     965          255             455             255                -
Other postretirement benefit
payments                                    560           65             125             115              255
Interest related to total debt              932          159             315             264              194
Operating leases                            165           68              54              21               22
Layoff and other restructuring
payments                                     63           62               1               -                -
Deferred revenue arrangements                52            8              16              16               12
Uncertain tax positions                       7            -               -               -                7
Financing activities:
Long-term debt and Short-term
borrowings                                2,583           79               2             751            1,751
Investing activities:
Equity contributions                          7            7               -               -                -
Totals                                 $ 25,309     $  3,034     $     4,589     $     4,561     $     13,125

Obligations for Operating Activities

Energy-related purchase obligations consist primarily of electricity and natural
gas contracts with expiration dates ranging from 1 year to 27 years. Raw
material obligations consist mostly of bauxite (relates to AWAC's bauxite mine
interests in Guinea and Brazil), caustic soda, alumina, aluminum fluoride,
calcined petroleum coke, and cathode blocks with expiration dates ranging from
less than 1 year to 15 years. Other purchase obligations consist principally of
freight for bauxite and alumina with expiration dates ranging from 1 to 12
years. Many of these purchase obligations contain variable pricing components,
and, as a result, actual cash payments may differ from the estimates provided in
the preceding table. In accordance with the terms of several of these supply
contracts, obligations may be reduced as a result of an interruption to
operations, such as a plant curtailment or a force majeure event.

Interest related to total debt is based on interest rates in effect as of
December 31, 2020 and is calculated on debt with maturities that extend to 2028.
Some of the contractual interest rates for certain debt are variable; actual
cash payments may differ from the estimates provided in the preceding table.

Estimated minimum required pension funding and other postretirement benefit
payments are based on actuarial estimates using current assumptions for, among
others, discount rates, long-term rate of return on plan assets, rate of
compensation increases, and/or health care cost trend rates. Actual payments may
differ based on changes in assumptions. Alcoa Corporation has determined that it
is not practicable to present pension funding and other postretirement benefit
payments beyond 2025 and 2030, respectively.

Layoff and other restructuring payments expected to be paid within one year
relate to financial contributions under the share purchase agreement related to
the divestiture of two Spanish aluminum facilities, take-or-pay provisions of
supply contracts associated with curtailed facilities, a contractual commitment
to an Italian government agency related to the transfer of the Portovesme
smelter, severance costs, and the termination of an office lease contract.

Deferred revenue arrangements require Alcoa Corporation to deliver alumina to a
certain customer over the specified contract period (through 2027). While this
obligation is not expected to result in cash payments, it is included in the
preceding table as the Company would have such an obligation if the specified
product deliveries could not be made.

Uncertain tax positions taken or expected to be taken on an income tax return
may result in additional payments to tax authorities. The amount in the
preceding table includes interest and penalties accrued related to such
positions as of December 31, 2020. The total amount of uncertain tax positions
is included in the Thereafter column as the Company is not able to reasonably
estimate the timing of potential future payments. If a tax authority agrees with
the tax position taken or expected to be taken or the applicable statute of
limitations expires, then additional payments will not be necessary.

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Obligations for Financing Activities

Total debt amounts in the preceding table represent the principal amounts of all outstanding long-term debt, which have maturities that extend to 2028.

In October 2018, Alcoa Corporation's Board of Directors authorized a common
stock repurchase program under which the Company may purchase shares of its
outstanding common stock up to an aggregate transactional value of $200,
depending on various factors. The program does not have a predetermined
expiration date. Accordingly, amounts have not been included in the preceding
table. In December 2018, the Company repurchased 1,723,800 shares of its common
stock for $50 at a weighted average share price of $29.01 (includes $0.02 broker
commission). No shares were repurchased in 2020 or 2019.

Obligations for Investing Activities

Equity contributions are related to the joint venture, ElysisTM Limited
Partnership (ElysisTM). This joint venture requires Alcoa Corporation to invest
a total of $21 (C$28) through 2021. In 2018, the Company contributed $5 (C$6)
toward its initial investment commitment in ElysisTM. In 2020, the Company
contributed an additional $9 (C$11).

Off-Balance Sheet Arrangements. Alcoa Corporation has outstanding bank
guarantees and letters of credit related to, among others, energy contracts,
environmental obligations, legal and tax matters, outstanding debt, leasing
obligations, workers compensation, and customs duties. Alcoa Corporation also
has outstanding surety bonds primarily related to tax matters, contract
performance, workers compensation, environmental-related matters, and customs
duties. See Part II Item 8 of this Form 10-K in Note S to the Consolidated
Financial Statements for additional information.

Critical Accounting Policies and Estimates

The preparation of the Company's Consolidated Financial Statements in accordance
with accounting principles generally accepted in the United States of America
requires management to make certain estimates based on judgments and assumptions
regarding uncertainties that affect the amounts reported in the Consolidated
Financial Statements and disclosed in the Notes to the Consolidated Financial
Statements. Areas that require such estimates include the review of properties,
plants, and equipment and goodwill for impairment, and accounting for each of
the following: asset retirement obligations; environmental and litigation
matters; pension plans and other postretirement benefits obligations;
derivatives and hedging activities; and income taxes.

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, and actual results may
differ from those used to prepare the Company's Consolidated Financial
Statements at any given time. The Company has experienced certain negative
impacts as a result of the COVID-19 pandemic to date; however, the ultimate
magnitude and duration of the COVID-19 pandemic continues to be unknown, and the
pandemic's ultimate future impact on the Company's business, financial
condition, operating results, cash flows, and market capitalization is
uncertain. In addition, the COVID-19 pandemic could adversely impact estimates
made as of December 31, 2020 regarding future results, such as the
recoverability of goodwill and long-lived assets and the realizability of
deferred tax assets. Despite these inherent limitations, management believes
that the amounts recorded in the financial statements related to these items are
based on its best estimates and judgments using all relevant information
available at the time.

A summary of the Company's significant accounting policies is included in Part II Item 8 of this Form 10-K in Note B to the Consolidated Financial Statements.

Properties, Plants, and Equipment. Properties, plants, and equipment are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of such assets (asset group) may not be recoverable,
including in the period when assets have met the criteria to be classified as
held for sale. Recoverability of assets is determined by comparing the estimated
undiscounted net cash flows of the operations related to the assets (asset
group) to their carrying amount. An impairment loss would be recognized when the
carrying amount of the assets (asset group) exceeds the fair value. The amount
of the impairment loss to be recorded is calculated as the excess of the
carrying value of the assets (asset group) over their fair value, with fair
value determined using the best information available, which generally is a
discounted cash flow (DCF) model. The determination of what constitutes an asset
group, the associated estimated undiscounted net cash flows, and the estimated
useful lives of assets also require significant judgments.

Goodwill. Goodwill is not amortized; it is instead reviewed for impairment
annually (in the fourth quarter) or more frequently if indicators of impairment
exist or if a decision is made to sell or exit a business. Management will test
goodwill on a qualitative or quantitative basis. A significant amount of
judgment is involved in determining if an indicator of impairment has occurred.
Such indicators may include, among others, deterioration in general economic
conditions, negative developments in equity and credit markets, adverse changes
in the markets in which an entity operates, increases in input costs that have a
negative effect on earnings and cash flows, or a trend of negative or declining
cash flows over multiple

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periods. The fair value that could be realized in an actual transaction may differ from that used to evaluate goodwill for impairment.

In reviewing goodwill for impairment under the qualitative assessment, an entity
will consider if the existence of events or circumstances leads to a
determination that it is more likely than not (greater than 50%) that the
estimated fair value of a reporting unit is less than its carrying amount. If it
is determined that an impairment is more likely than not, the entity is then
required to perform a quantitative impairment test, otherwise no further
analysis is required.

Under the quantitative impairment test, the evaluation of impairment involves
comparing the current fair value of each reporting unit to its carrying value,
including goodwill. Management uses a DCF model to estimate the current fair
value of its reporting units. A number of significant assumptions and estimates
are involved in the application of the DCF model to forecast operating cash
flows, including markets and market share, sales volumes and prices, production
costs, tax rates, capital spending, discount rate, and working capital changes.

In the event the estimated fair value of a reporting unit per the DCF model is less than the carrying value, an impairment loss equal to the excess of the reporting unit's carrying value over its fair value not to exceed the total amount of goodwill applicable to that reporting unit would be recognized.

Management performed qualitative assessments of the Bauxite and Alumina
reporting units in 2020 and determined that it was not more likely than not that
the fair value of either reporting unit was less than carrying value. Management
last performed a quantitative impairment test for the Bauxite reporting unit in
2018 and the Alumina reporting unit in 2019. At the time of each quantitative
assessment, the estimated fair value of each respective reporting unit was
substantially in excess of carrying value, resulting in no impairment.
Additionally, in all prior years presented, there have been no triggering events
that necessitated an impairment test for either the Bauxite or Alumina reporting
units.

Asset Retirement Obligations. Alcoa Corporation recognizes asset retirement
obligations (AROs) related to legal obligations associated with the standard
operation of bauxite mines, alumina refineries, and aluminum smelters. These
AROs consist primarily of costs associated with mine reclamation, closure of
bauxite residue areas, spent pot lining disposal, and landfill closure. Alcoa
Corporation also recognizes AROs for any significant lease restoration
obligation, if required by a lease agreement, and for the disposal of regulated
waste materials related to the demolition of certain power facilities. The fair
values of these AROs are recorded on a discounted basis, at the time the
obligation is incurred, and accreted over time for the change in present value.
Additionally, Alcoa Corporation capitalizes asset retirement costs by increasing
the carrying amount of the related long-lived assets and depreciating these
assets over their remaining useful life.

Certain conditional asset retirement obligations (CAROs) related to alumina
refineries, aluminum smelters, rolling mills, and energy generation facilities
have not been recorded in the Consolidated Financial Statements due to
uncertainties surrounding the ultimate settlement date. A CARO is a legal
obligation to perform an asset retirement activity in which the timing and/or
method of settlement are conditional on a future event that may or may not be
within Alcoa Corporation's control. Such uncertainties exist as a result of the
perpetual nature of the structures, maintenance and upgrade programs, and other
factors. At the date a reasonable estimate of the ultimate settlement date can
be made (e.g., planned demolition), Alcoa Corporation would record an ARO. Such
amounts may be material to the Consolidated Financial Statements.

Environmental Matters. Expenditures for current operations are expensed or
capitalized, as appropriate. Expenditures relating to existing conditions caused
by past operations, which will not contribute to future revenues, are expensed.
Liabilities are recorded when remediation costs are probable and can be
reasonably estimated. The liability may include costs such as site
investigations, consultant fees, feasibility studies, outside contractors, and
monitoring expenses. Estimates are generally not discounted or reduced by
potential claims for recovery, which are recognized as agreements are reached
with third parties. The estimates also include costs related to other
potentially responsible parties to the extent that Alcoa Corporation has reason
to believe such parties will not fully pay their proportionate share. The
liability is continuously reviewed and adjusted to reflect current remediation
progress, prospective estimates of required activity, and other factors that may
be relevant, including changes in technology or regulations.

Litigation Matters. For asserted claims and assessments, liabilities are
recorded when an unfavorable outcome of a matter is deemed to be probable and
the loss is reasonably estimable. Management determines the likelihood of an
unfavorable outcome based on many factors such as, among others, the nature of
the matter, available defenses and case strategy, progress of the matter, views
and opinions of legal counsel and other advisors, applicability and success of
appeals processes, and the outcome of similar historical matters. Once an
unfavorable outcome is deemed probable, management weighs the probability of
estimated losses, and the most reasonable loss estimate is recorded. If an
unfavorable outcome of a matter is deemed to be reasonably possible, then the
matter is disclosed, and no liability is recorded. With respect to unasserted
claims or assessments, management must first determine that the probability that
an assertion will be made is likely, then, a determination as to the likelihood
of an unfavorable outcome and the ability to reasonably estimate the potential
loss is made. Legal matters are reviewed on a continuous basis to determine if
there has been a change in management's judgment regarding the likelihood of an
unfavorable outcome or the estimate of a potential loss.

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Pension and Other Postretirement Benefits. Liabilities and expenses for pension
and other postretirement benefits are determined using actuarial methodologies
and incorporate significant assumptions, including the interest rate used to
discount the future estimated liability, the expected long-term rate of return
on plan assets, and several assumptions relating to the employee workforce
(salary increases, health care cost trend rates, retirement age, and mortality).

The yield curve model used to develop the discount rate parallels the plans'
projected cash flows and has a weighted average duration of 11 years. The
underlying cash flows of the high-quality corporate bonds included in the model
exceed the cash flows needed to satisfy the Company's plan obligations multiple
times. If a deep market of high-quality corporate bonds does not exist in a
country, then the yield on government bonds plus a corporate bond yield spread
is used. The impact on the combined pension and other postretirement liabilities
of a change in the weighted average discount rate of ¼ of 1% would be
approximately $205 and either a charge or credit of approximately $3 to pretax
earnings in the following year.

The expected long-term rate of return on plan assets is generally applied to a
five-year market-related value of plan assets (a four-year average or the fair
value at the plan measurement date is used for certain non-U.S. plans). The
process used by management to develop this assumption is one that relies on
forward-looking investment returns by asset class. Management incorporates
expected future investment returns on current and planned asset allocations
using information from various external investment managers and consultants, as
well as management's own judgment. A change in the assumption for the weighted
average expected long-term rate of return on plan assets of ¼ of 1% would impact
pretax earnings by approximately $11 for 2021.

Mortality rate assumptions are based on mortality tables and future improvement scales published by third parties, such as the Society of Actuaries, and consider other available information including historical data as well as studies and publications from reputable sources.

Derivatives and Hedging. Derivatives are held for purposes other than trading
and are part of a formally documented risk management program. Alcoa accounts
for hedges of firm customer commitments for aluminum as fair value hedges. The
fair values of the derivatives and changes in the fair values of the underlying
hedged items are reported as assets and liabilities in the Consolidated Balance
Sheet. Changes in the fair values of these derivatives and underlying hedged
items generally offset and are recorded each period in Sales, consistent with
the underlying hedged item.

The Company accounts for hedges of foreign currency exposures and certain
forecasted transactions as cash flow hedges. The fair values of the derivatives
are recorded as assets and liabilities in the Consolidated Balance Sheet. The
changes in the fair values of these derivatives are recorded in Other
comprehensive (loss) income and are reclassified to Sales, Cost of goods sold,
or Other expenses, net in the period in which earnings are impacted by the
hedged items or in the period that the transaction no longer qualifies as a cash
flow hedge. These contracts cover the same periods as known or expected
exposures, generally not exceeding five years. If no hedging relationship is
designated, the derivative is marked to market through Other expenses, net. Cash
flows from derivatives are recognized in the Statement of Consolidated Cash
Flows in a manner consistent with the underlying transactions.

Income Taxes. The provision for income taxes is determined using the asset and
liability approach of accounting for income taxes. Under this approach, the
provision for income taxes represents income taxes paid or payable (or received
or receivable) for the current year plus the change in deferred taxes during the
year. Deferred taxes represent the future tax consequences expected to occur
when the reported amounts of assets and liabilities are recovered or paid and
result from differences between the financial and tax bases of assets and
liabilities and are adjusted for changes in tax rates and tax laws when enacted.

Valuation allowances are recorded to reduce deferred tax assets when it is more
likely than not (greater than 50%) that a tax benefit will not be realized. In
evaluating the need for a valuation allowance, management applies judgment in
assessing all available positive and negative evidence and considers all
potential sources of taxable income, including income available in carryback
periods, future reversals of taxable temporary differences, projections of
taxable income, and income from tax planning strategies. Positive evidence
includes factors such as a history of profitable operations, projections of
future profitability within the carryforward period, including from tax planning
strategies, and Alcoa Corporation's experience with similar operations. Existing
favorable contracts and the ability to sell products into established markets
are additional positive evidence. Negative evidence includes items such as
cumulative losses, projections of future losses, or carryforward periods that
are not long enough to allow for the utilization of a deferred tax asset based
on existing projections of income. In certain jurisdictions, deferred tax assets
related to cumulative losses exist without a valuation allowance where in
management's judgment the weight of the positive evidence more than offsets the
negative evidence of the cumulative losses. Upon changes in facts and
circumstances, management may conclude that deferred tax assets for which no
valuation allowance is currently recorded may not be realized, resulting in a
future charge to establish a valuation allowance. Existing valuation allowances
are re-examined under the same standards of positive and negative evidence. If
it is determined that it is more likely than not that a deferred tax asset will
be realized, the appropriate amount of the valuation allowance, if any, is
released. Deferred tax assets and liabilities are also re-measured to reflect
changes in underlying tax rates due to law changes and the granting and lapse of
tax holidays.

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Tax benefits related to uncertain tax positions taken or expected to be taken on
a tax return are recorded when such benefits meet a more likely than not
threshold. Otherwise, these tax benefits are recorded when a tax position has
been effectively settled, which means that the statute of limitations has
expired, or the appropriate taxing authority has completed their examination
even though the statute of limitations remains open. Interest and penalties
related to uncertain tax positions are recognized as part of the provision for
income taxes and are accrued beginning in the period that such interest and
penalties would be applicable under relevant tax law until such time that the
related tax benefits are recognized.

Related Party Transactions

Alcoa Corporation buys products from and sells products to various related companies, consisting of entities in which Alcoa Corporation retains a 50% or less equity interest, at negotiated prices between the two parties. These transactions were not material to the financial position or results of operations of Alcoa Corporation for all periods presented.

Recently Adopted Accounting Guidance

See Part II Item 8 of this Form 10-K in Note B to the Consolidated Financial Statements under caption Recently Adopted Accounting Guidance.

Recently Issued Accounting Guidance

See Part II Item 8 of this Form 10-K in Note B to the Consolidated Financial Statements under caption Recently Issued Accounting Guidance.

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