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Aluminum producer Alcoa has reduced its production guidance for the raw material alumina by 200,000 to 300,000 metric tons for 2026, citing challenges at its Pinjarra refinery in Western Australia.
The Pittsburgh-based company on Thursday updated its full-year expectations to be between 9.5 million and 9.6 million metric tons of alumina, after its Pinjarra refinery saw "instability in late March [that] was further exacerbated by gas supply disruptions" from Cyclone Narelle.
Alcoa also lowered its alumina shipment expectations and increased its corporate expenses for the year. Pinjarra has since returned to "stable operating rates" as alumina prices remain solid despite ongoing geopolitical disruptions in the Middle East, CEO William Oplinger said on an earnings call Thursday.
As a result of operational disruptions, Alcoa revised its full-year alumina production outlook down from a previously set range of 9.7 million to 9.9 million metric tons. The Pinjarra facility is one of the world's largest alumina refineries, producing about 4.7 million metric tons each year, according to a company fact sheet. Alumina, a fine white powder extracted from bauxite, is a critical raw material used to make aluminum.
For its alumina segment, Alcoa reported a negative adjusted EBITDA of $96 million during the second quarter, driven by $45 million in energy contract losses and $30 million in higher production costs at Pinjarra.
The company has six alumina refineries across Australia, Brazil and Spain and sells roughly half of its production to outside customers, according to its website. Its three-refinery operation in Western Australia, including Pinjarra, Wagerup and Kwinana Beach, is the world's largest source of alumina and supplies 8% of the global market.
During the second quarter, Alcoa's alumina production declined 6% sequentially to 2.2 million metric tons. Third-party alumina sales declined 3.6% sequentially to $552 million for the period ending June 30. That is down 34.5% from a year ago.
Alcoa also lowered its alumina shipments outlook to between 11.5 million and 11.6 million metric tons, down from a previously set range of 11.8 million and 12 million. The company said the overall difference between its production and shipment revisions reflect trading volumes and external sourcing to fulfill customer contracts.
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