Alumina Limited (ASX: AWC) notes Alcoa Corp's ('Alcoa') quarterly earnings release.
Information on the AWAC joint venture and Alumina Limited plus other market data is attached. AWAC benefited from lower costs in the third quarter of 2023, due mainly to the impact of lower caustic prices and better operational stability, with system cash cost declining from $329/t in 2Q23 to $303/t in 3Q23.
The focus on operational improvements at AWAC's operated refineries is generating positive momentum, with higher alumina production volumes at all of those refineries in 3Q23 compared with 2Q23. In WA, Alcoa continues to make progress with relevant state government agencies in support of the annual mine approval process for bauxite mining. Alcoa submitted a revised Mine Management Program (MMP) for the period 2023-2027 with enhancements meant to address stakeholder needs and expectations. We note the Alcoa statement that it is working toward an MMP approval during the fourth quarter of 2023. Separately, following the completion of the public consultation period, the WA EPA has indicated it expects to make a decision on whether to formally assess all or part of the current and next MMP by the end of 2023.
Alumina Limited's CEO, Mike Ferraro, said 'We were pleased to see improving operational stability and lower operating costs at AWAC's refineries in 3Q23. We expect further benefit from lower caustic soda costs in 4Q23 as lower prices flow through inventory, along with positive impacts from the productivity programs in WA.' As previously disclosed, in April 2023 Alcoa began mining lower grade bauxite in areas already permitted under MMPs at the Huntly Mine. Alcoa continues to progress the mine approvals process in WA, including additional commitments, and now expects bauxite quality similar to recent grades until it can access bauxite from the new regions at Myara North and Holyoake (no earlier than 2027). The performance of the Pinjarra refinery in WA continues to improve with increasing experience processing the lower grade bauxite. Together with the improved stability at the Wagerup refinery, Alcoa of Australia is generating positive cash flow.
Alumina Limited retains significant debt capacity within its total debt facility limit of $500m. Current drawn debt is $271m, compared with $268m on 22 August 2023 when AWC announced its 1H23 Results. While global markets for alumina remained tightly balanced in 3Q23, soft end-market demand for aluminium continues to impact alumina prices. Nevertheless, the longer-term outlook for the alumina market remains positive, with the anticipated growth in aluminium metal consumption driven by de-carbonisation. This ASX announcement was approved and authorised for release by Mike Ferraro, Chief Executive Officer.
Contact:
Tel: +61 3 8699 2603
Email: craig.evans@aluminalimited.com
About AWAC & Alcoa's Earnings Release
Alumina Limited owns 40% of each of the AWAC entities, which form a part of the Alcoa bauxite & alumina business segments. The Alcoa aluminium business segment includes the AWAC Portland smelting operations. Any closed operations are included in Transformation & legacy pension/OPEB. Therefore, the AWAC results cannot be directly inferred from the Alcoa earnings release. Further, unlike Alumina Limited, Alcoa reports under US GAAP.
Forward-looking statements
This document may contain certain forward-looking statements, including forward looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. The words 'anticipate', 'aim', 'believe', 'expect', 'project', 'estimate', 'forecast', 'intend', 'likely', 'should', 'could', 'will', 'may', 'target', 'plan' and other similar expressions (including indications of 'objectives') are intended to identify forward-looking statements. Indications of, and guidance on, future financial position and performance and distributions, and statements regarding Alumina Limited's future developments and the market outlook, are also forward-looking statements. Any forward-looking statements contained in this document are not guarantees of future performance. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Alumina Limited and its directors, officers, employees and agents that may cause actual results to differ materially from those expressed or implied in such statements. Those risks, uncertainties and other factors include (without limitation): (a) material adverse changes in global economic conditions, alumina or aluminium industry conditions or the markets served by AWAC; (b) changes in production or development costs, production levels or sales agreements; (c) changes in laws, regulations, policies or regulatory decision making; (d) changes in alumina or aluminium prices or currency exchange rates; (e) Alumina Limited does not hold a majority interest in AWAC and decisions made by majority vote may not be in the best interests of Alumina Limited and (f) the other risk factors summarised in Alumina Limited's Annual Report 2022. Readers should not place undue reliance on forward-looking statements. Except as required by law, Alumina Limited disclaims any responsibility to update or revise any forward-looking statements to reflect any new information or any change in the events, conditions or circumstances on which a statement is based or to which it relates. AWAC is currently facing increased risks and uncertainty in relation to its regulatory permit and approval processes in Western Australia. The permitting and approval rules are complex, may change over time, and are impacted by heightened levels of regulatory oversight and stakeholder focus on addressing environmental and social impacts of mining activities. Failure to obtain, maintain, or renew permits; restrictions or conditions imposed through the process or on approvals and permits obtained and/or ongoing delays in approval or permitting processes may: delay, impede or prevent commencing, continuing or expanding mining and/or refining operations and further impact the quality and/or availability of the bauxite AWAC is able to mine, potentially having a materially adverse impact on AWAC.
ALUMINA LIMITED 
