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(Bloomberg) — Alcoa Corp. shares plunged after a company executive warned that its alumina business is facing losses from energy disruptions and the near-closure of the Strait of Hormuz.
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Chief Financial Officer Molly Beerman said Wednesday the unit is getting hammered by upheavals stretching from the Persian Gulf to Western Australia, warning that higher production costs will make the segment unprofitable this quarter.
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“Our alumina segment is very pressured right now,” said Beerman in a presentation at the Wells Fargo Industrials & Materials Conference. “The segment as a whole will be underwater.”
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The company’s stock fell 9.5% on Wednesday in New York, marking the largest one-day drop in 14 months amid a broader selloff in equity markets.
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Alcoa, the top US aluminum producer, has benefitted from soaring prices for the metal this year. But it’s also one of the world’s largest suppliers of seaborne alumina, a commodity that’s particularly exposed to the disruption caused by the Iran War.
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Alumina is refined from bauxite and used to make aluminum. The company’s alumina refineries typically ship the raw material to aluminum smelters in the Persian Gulf. Those refineries also consume large amounts of fuel and electricity, prices for which have surged in the past three months amid the conflict.
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Alcoa’s alumina segment was a significant profit driver in 2025, contributing nearly half of the company’s adjusted earnings before interest, taxes, depreciation and amortization.
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Beerman said Alcoa now expects an additional $15 million of fuel costs at its São Luís refinery in Brazil. It’s also facing about $30 million of higher production costs at its Pinjarra refinery in Western Australia after Cyclone Narelle disrupted regional liquefied natural gas supplies, exacerbating operational instability at the facility.
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Alcoa warned investors in April that higher energy costs tied to unrest in the Middle East would weigh on second-quarter earnings.
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