Alcoa Australia: Alumina producer’s shares slide amid Cyclone Narelle and Middle East war hits

American manufacturer Alcoa has declared its two remaining refineries in WA are “really challenged” but ruled out the plants following the Kwinana refinery into closure, for now. The revelation came as the New York-listed company’s shares sunk nearly 10 per cent thanks partly to disruption from the Middle East conflict and Cyclone Narelle. Chief financial officer Molly Beerman told the Wells Fargo Industrials & Materials Conference in Chicago that the business’s alumina division was “very pressured”. “Our refineries in WA are really challenged,” she said. ‘They’re running the poor bauxite quality there so under significant cost pressure at this low (alumina price). “The (alumina) segment as a whole will be underwater.” But she ruled out curtailing the WA plants “in the short term” as the company was confident the refineries would be among the lowest-cost producers once a battle over approvals was finished. Ms Beerman said the market was “over-supplied”. “At this level of (price) we expect that 45 to 50 per cent of global refineries outside of China are underwater,” Ms Beerman said. China had switched off capacity in recent months but other producers were yet to do so, she indicated. When Alcoa announced the shutdown of Kwinana early in 2024 the business blamed low bauxite quality, poor economics and the facility’s age — but promised plants at Pinjarra and Wagerup would be online for years to come. The key factor driving low bauxite quality has been an ongoing battle over approvals with the State Government for new mining precincts. That’s because the business has been under scrutiny over rehabilitation failures and risks to Perth’s water supply. The company has never claimed net zero caused the Kwinana closure. Ms Beerman added that gas supply disruption from tropical cyclone Narelle had worsened production instability, adding $US30 million ($43m) of production costs in WA. Bloomberg reported the stock slide was the largest one-day drop in 14 months, amid a broader selloff in equity markets. Alcoa, the top US aluminium producer, benefited 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. Alumina is refined from bauxite and used to make aluminium, a metal found in fighter jets, soft drink cans and fridges. The company’s alumina refineries typically ship the raw material to aluminium 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. 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 amortisation. Ms Beerman said Alcoa now expects an additional $US15m of fuel costs at its Sao Lu¡s refinery in Brazil. Alcoa warned investors in April that higher energy costs tied to unrest in the Middle East would weigh on second-quarter earnings.