Alcoa Corp 10-K

Item 7. Management’s Discussion and Analysis o f Financial Condition and Results of Operations. (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 “aims,” “ambition,” “anticipates,” “believes,” “could,” “develop,” “endeavors,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “outlook,” “potential,” “plans,” “projects,” “reach,” “seeks,” “sees,” “should,” “strive,” “targets,” “will,” “working,” “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 performance (including our ability to execute on strategies related to environmental, social and governance matters); statements about strategies, outlook, and business and financial prospects; and statements about capital allocation and 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) the impact of global economic conditions on the aluminum industry and aluminum end-use markets; (b) volatility and declines in aluminum and alumina demand and pricing, including global, regional, and product-specific prices, or significant changes in production costs which are linked to LME or other commodities; (c) the disruption of market-driven balancing of global aluminum supply and demand by non-market forces; (d) competitive and complex conditions in global markets; (e) our ability to obtain, maintain, or renew permits or approvals necessary for our mining operations; (f) rising energy costs and interruptions or uncertainty in energy supplies; (g) unfavorable changes in the cost, quality, or availability of raw materials or other key inputs, or by disruptions in the supply chain; (h) our ability to execute on our strategy to be a lower cost, competitive, and integrated aluminum production business and to realize the anticipated benefits from announced plans, programs, initiatives relating to our portfolio, capital investments, and developing technologies; (i) our ability to integrate and achieve intended results from joint ventures, other strategic alliances, and strategic business transactions; (j) economic, political, and social conditions, including the impact of trade policies and adverse industry publicity; (k) fluctuations in foreign currency exchange rates and interest rates, inflation and other economic factors in the countries in which we operate; (l) changes in tax laws or exposure to additional tax liabilities; (m) global competition within and beyond the aluminum industry; (n) our ability to obtain or maintain adequate insurance coverage; (o) disruptions in the global economy caused by ongoing regional conflicts; (p) legal proceedings, investigations, or changes in foreign and/or U.S. federal, state, or local laws, regulations, or policies; (q) climate change, climate change legislation or regulations, and efforts to reduce emissions and build operational resilience to extreme weather conditions; (r) our ability to achieve our strategies or expectations relating to environmental, social, and governance considerations; (s) claims, costs, and liabilities related to health, safety and environmental laws, regulations, and other requirements in the jurisdictions in which we operate; (t) liabilities resulting from impoundment structures, which could impact the environment or cause exposure to hazardous substances or other damage; (u) our ability to fund capital expenditures; (v) deterioration in our credit profile or increases in interest rates; (w) restrictions on our current and future operations due to our indebtedness; (x) our ability to continue to return capital to our stockholders through the payment of cash dividends and/or the repurchase of our common stock; (y) cyber attacks, security breaches, system failures, software or application vulnerabilities, or other cyber incidents; (z) labor market conditions, union disputes and other employee relations issues; (aa) a decline in the liability discount rate or lower-than-expected investment returns on pension assets; and (bb) the other risk factors discussed in Part 1 Item 1A of this Form 10-K and other reports filed by Alcoa Corporation with the SEC, including those described in this report. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. 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. 48 Overview Our Business Alcoa Corporation (Alcoa or the Company) is a vertically integrated aluminum company comprised of bauxite mining, alumina refining, aluminum production (smelting and casting), 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 FastMarkets 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 27 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. Business Update During 2023, average alumina and aluminum prices decreased by 6% and 17% respectively, and the cost for energy and raw materials, including carbon products, caustic soda, and other key inputs decreased. The lower costs for energy and raw materials reflect a decline from the elevated costs in 2022, which were driven by regional conflicts, inflation pressures and multiple supply chain disruptions. Despite the alumina and aluminum pricing challenges, Alcoa made progress on its key objectives during 2023. In December 2023, the Company received mine plan approvals from the Western Australian government for its Huntly and Willowdale bauxite mines, delivering on a near-term objective for the Company. The approvals allow the Company to continue bauxite mining and downstream alumina refining in Western Australia, while enhancing the way it operates to meet evolving requirements and expectations. Due to its production of commercial grade aluminum, in December 2023, the Company qualified for Section 45X of the Advanced Manufacturing Tax Credit, enacted as part of the Inflation Reduction Act, which improves the profitability of its smelters in the U.S. The Company has also requested revisions to the December 2023 regulations to allow for the inclusion of materials costs in the credit calculation. During 2023, the Company continued the controlled pace for the restart of the Alumar smelter in São Luís, Brazil and improved the operating stability of restarted pots. The Company also improved operational stability across the portfolio, while achieving annual and fourth quarter production records at four smelters in Canada and Norway. During 2023, the Company targeted improvement of financial results for certain operations. The first announced action was initiated at the Kwinana refinery in the third quarter of 2023, to mitigate the financial impacts of lower bauxite grade and to optimize current operating levels. Further analysis in 2023 also led to the decision in early 2024 to fully curtail the Kwinana refinery by mid-2024. Also, in December 2023, Alcoa began engagement with government stakeholders and workers’ representatives of the San Ciprián refinery and smelter regarding the sustained and ongoing financial losses in order to find a long-term solution for the combined operations. In addition to the actions the Company has taken to date, it has identified additional opportunities to improve profitability in both the near term and medium term, as well as market opportunities with improved alumina and aluminum pricing. Near term opportunities include savings in 2024 for key raw materials - caustic soda and lime for refining and anode carbon products for smelting – realizable due to favorable contractual negotiations and market pricing, as well as inventory lags. Additionally, in January 2024, the Company announced a productivity and competitiveness program aimed at reducing controllable operating costs across the organization (excluding raw materials, energy, and transportation). Near term opportunities also include expected savings from the Warrick smelter optimization, the Alumar smelter restart completion, and the Kwinana refinery curtailment. Medium term opportunities are beyond 2024 and 2025 and include the benefit of better bauxite grades in Western Australia and a fully optimized Alumar refinery. In 2019, the Company announced a five-year strategic portfolio review of its smelting and refining capacity to improve cost positioning or curtail, close, or divest 1.5 million and 4 million metric tons of smelting and refining capacity, respectively. Through January 2024, Alcoa continued to make progress on the portfolio review completing its review of refining capacity and reaching approximately 93 percent of its target for smelting capacity. 49 Despite a challenging market during 2023, the Company began to see evidence of stabilizing demand in the fourth quarter of 2023. Alcoa saw a significant increase in year-over-year demand for its EcoLum aluminum in 2023, which is part of our Sustana brand, through both increased margins and deliveries while still a relatively small portion of the Company’s overall sales volume. The year-over-year volume increase for EcoLum, which is aluminum produced with no more than 4.0 metric tons of carbon dioxide equivalents per metric ton of aluminum produced, was driven mostly by the European market. While the industry is seeing challenges in the short-term, the Company continues to project strong long-term demand for aluminum, as global decarbonization goals and renewable energy scarcity are expected to positively influence the aluminum industry’s demand and supply fundamentals. Due to renewable energy sources and low carbon dioxide intensity in our operations, Alcoa believes that it is well positioned as a supplier of choice, especially in a world that is working to further reduce greenhouse gas emissions. Australia Mine Plan Approvals The Company seeks annual approvals from the Western Australian State Government for its rolling five-year mine plans to maintain continued operations at the Huntly and Willowdale bauxite mines. In December 2023, the Western Australian government approved Alcoa’s latest five-year mine plan – known as the 2023-2027 Mining and Management Program (MMP) – for its Huntly and Willowdale bauxite mines that will allow the Company to continue bauxite mining and downstream alumina refining in Western Australia. Alcoa is subject to a range of stringent conditions addressing key environmental factors that includes enhanced protections for drinking water, including increased distances from reservoirs, and biodiversity along with accelerated forest rehabilitation. The accelerated forest rehabilitation will require an acceleration of cash spend of approximately $40 over the next three and half years from asset retirement obligations already recorded. In addition, the Western Australian government granted an exemption that allows Alcoa to continue its mining operations while the Western Australian Environmental Protection Authority (WA EPA) assesses the environmental impact of parts of the MMP, following a third party’s referral of the Company’s future and existing mine plans in existing mine regions to the WA EPA in the first quarter of 2023. At the request of the Western Australian government, the Company has committed to provide a bank guarantee for approximately $68 (A$100) demonstrating Alcoa’s confidence that its operations will not impair drinking water supplies. In the second quarter of 2023, Alcoa began mining lower grade bauxite in areas at the Huntly mine as it continued to work through the annual mine approvals process. The reduction in grade increased the use of caustic, energy, and bauxite, and decreased alumina output. Separately, Alcoa has committed to continuing to work with the Western Australian government to modernize the approvals framework for its two bauxite mines and three alumina refineries in the state. This includes transitioning all proposed new major mining regions to the more contemporary EPA assessment and approvals process. Alcoa started this process in 2020, when it referred its next two proposed mine regions (Myara North and Holyoake) for WA EPA assessment. The Company expects the bauxite quality at Myara North and Holyoake to be more consistent with the historic higher quality at the existing Myara Central. Alcoa continues to work to secure approvals for these new regions and anticipates mining in the new regions no earlier than 2027. Until then, the Company expects bauxite quality similar to recent grades. San Ciprián Operations The San Ciprián smelter was curtailed in January 2022, as a result of an agreement with the workers’ representatives in December 2021. In February 2023, under the terms of an amended viability agreement, Alcoa agreed to a phased restart of the smelter beginning in January 2024, to operate an initial complement of approximately 6 percent of total pots, to restart all pots by October 1, 2025 and to maintain 75 percent of the annual capacity of 228 kmt from October 1, 2025 until the end of 2026. Long-term economic viability of any ramp up beyond the initial 6 percent of total pots will depend upon the availability of affordable power, which currently does not exist in adequate supply. While the Company has met its commitments to enter into power purchase agreements for the necessary capacity, that capacity has not been fully permitted by the government or built by the power provider, putting an on-time restart at significant risk and causing the smelter to incur substantial operating losses for longer, all of which is rendering the smelter economically unviable. At the refinery, operating losses continue despite the mitigating action taken by the Company in the third quarter of 2022 to curtail capacity to 50 percent. 50 Since the smelter curtailed in January 2022, the Company has honored its commitments under the viability agreements signed in December 2021 and February 2023, including paying all employees, making capital investments, and restarting pots in 2024. However, current market conditions, including the cost for available energy, do not support an economically viable restart. Further, permitting and development of renewable energy projects, which were a critical component of the restart, have been delayed. The refinery and smelter incurred significant losses in 2023 and prior years which have been funded with internal credit lines that are now nearing their limits, and which the operations have no ability to repay. Based on current economic conditions, the San Ciprián operations are expected to incur substantial losses in 2024 and Alcoa anticipates that available funding will be exhausted in the second half of 2024. As a result of the extended duration of the adverse economic environment, in December 2023, Alcoa began engagement with government stakeholders and workers’ representatives of the San Ciprián refinery and smelter regarding the sustained and ongoing financial losses in order to find a long-term solution for the combined operations. Alcoa is seeking flexibility and support from Spanish stakeholders to identify all potential forms of relief and to work collaboratively on a long-term solution. If stakeholder discussions do not secure the long-term economic viability of the operations, it is expected that available funding will be exhausted in the second half of 2024 and difficult decisions will have to be considered regarding the future of the San Ciprián complex. Productivity and Competitiveness Program In January 2024, the Company initiated a productivity and competitiveness program across its global operations and functions. The program is a first step in the Company’s objective and includes a target to save approximately 5 percent of operating costs, exclusive of raw materials, energy, and transportation costs which are already under active management and cost control programs. Total savings are expected to approximate $100 on a run rate basis and to be achieved by the first quarter of 2025. Other Portfolio Actions Kwinana refinery—On January 8, 2024, Alcoa announced the full curtailment of the Kwinana refinery beginning in the second quarter of 2024. The refinery has an annual nameplate capacity of 2.2 million metric tons and has been operating at approximately 80 percent of its nameplate capacity since January 2023, when the Company reduced production in response to a domestic natural gas shortage in Western Australia due to production challenges experienced by key gas suppliers. The Company’s decision to fully curtail the refinery was made based on a variety of factors, including the refinery’s age, scale, operating costs, and current bauxite grades, in addition to current market conditions. The refinery currently has approximately 800 employees and this number will be reduced to approximately 250 in the third quarter of 2024, when alumina production will cease. Certain processes will continue until about the third quarter of 2025, when the employee number will be further reduced to approximately 50. Warrick smelter—During the fourth quarter 2023, the Company took actions to improve the competitiveness of its Warrick Operations site in Indiana. Alcoa began the restart of one line (54,000 mtpy) that was curtailed in July 2022, and also began the closure of a line (54,000 mtpy) that had not operated since 2016 to allow for future capital investments to improve casting capabilities. Intalco smelter—The Company announced the closure of the previously curtailed Intalco aluminum smelter in March 2023 after evaluating various options for the asset. The facility has been fully curtailed since 2020. Capital Returns In each quarter of 2023, the Board of Directors declared a quarterly cash dividend of $0.10 per share of the Company’s common stock, totaling $72 for the year. Balance Sheet Actions On January 17, 2024, the Company amended its Revolving Credit Facility to provide additional flexibility to implement portfolio actions during 2024, by providing for a temporary reduction of the minimum interest coverage ratio required thereunder from 4.00 to 1.00 to 3.00 to 1.00, and increasing the maximum addback for cash restructuring charges to Consolidated EBITDA (as defined in the Revolving Credit Facility), in each case for the 2024 fiscal year. In connection with the amendment, Alcoa also agreed to provide collateral for its obligations under the Revolving Credit Facility, with a ratings-based release mechanism that would apply starting in 2025. In April 2023, the Company purchased group annuity contracts to transfer approximately $235 of pension obligations and assets associated with defined benefit pension plans for approximately 530 Canadian retirees and beneficiaries. As a result, Alcoa recognized a non-cash settlement loss of $21 ($16 after-tax) in Restructuring and other charges, net on the Statement of Consolidated Operations in the second quarter of 2023. See Part II Item 8 of this Form 10-K in Note O to the Consolidated Financial Statements for additional information. 51 Other Matters In July 2023, the Supreme Court of Spain ratified the Global Settlement Agreement (GSA) with the workers of the divested Avilés and La Coruña facilities to settle various legal disputes related to the 2019 divestiture of those facilities. Upon completion of the remaining administrative and judicial approvals, the Company made cash payments of $76 to the former employees of the facilities in 2023 in accordance with the GSA. The remaining payments will be made in early 2024. In the first quarter of 2023, the Company recorded an adjustment related to the Company’s Ma’aden Aluminum joint venture for the settlement of a dispute with an industrial utility for periods in 2021 and 2022. Alcoa’s share of this adjustment was $41 which is included in Other expenses (income), net on the Statement of Consolidated Operations for year ended December 31, 2023. Alcoa’s total share of this dispute of $62 includes $21 that was recorded in the fourth quarter of 2022. In April 2023, the Company entered into a one-year unsecured revolving credit facility for $250 (available to be drawn in Japanese yen). See the below sections for additional details on the above-described actions. 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 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. Management uses historical experience and all available information to make these estimates. Management regularly evaluates the judgments and assumptions used in its estimates, and results could differ from those estimates upon future events and their effects or new information. Results of Operations The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the fiscal years ended December 31, 2023 and 2022. For a comparison of changes for the fiscal years ended December 31, 2022 and 2021, 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, 2022 (filed February 23, 2023). For the year ended December 31, Statement of Operations 2023 2022 Sales $ 10,551 $ 12,451 Cost of goods sold (exclusive of expenses below) 9,813 10,212 Selling, general administrative, and other expenses 226 204 Research and development expenses 39 32 Provision for depreciation, depletion, and amortization 632 617 Restructuring and other charges, net 184 696 Interest expense 107 106 Other expenses (income), net 134 (118 ) Total costs and expenses 11,135 11,749 (Loss) income before income taxes (584 ) 702 Provision for income taxes 189 664 Net (loss) income (773 ) 38 Less: Net (loss) income attributable to noncontrolling interest (122 ) 161 Net loss attributable to Alcoa Corporation $ (651 ) $ (123 ) Selected Financial Metrics 2023 2022 Diluted loss per share attributable to Alcoa Corporation common shareholders $ (3.65 ) $ (0.68 ) Third-party shipments of alumina (kmt) 8,698 9,169 Third-party shipments of aluminum (kmt) 2,491 2,570 Average realized price per metric ton of alumina $ 358 $ 384 Average realized price per metric ton of aluminum $ 2,828 $ 3,457 Average Alumina Price Index (API) (1) $ 343 $ 365 Average London Metal Exchange (LME) 15-day lag (2) $ 2,249 $ 2,726 52 (1) API (Alumina Price Index) is a pricing mechanism that 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 FastMarkets Metal Bulletin Non-Ferrous Metals Alumina Index. (2) LME (London Metal Exchange) is a globally recognized exchange for commodity trading, including aluminum. The LME pricing component represents the underlying base metal component, based on quoted prices for aluminum on the exchange. Annual Comparison Overview Net loss attributable to Alcoa Corporation increased $528 primarily as a result of: • Lower average realized prices of aluminum and alumina • Higher production costs across both segments • Lower equity investment earnings • Absence of favorable mark-to-market results on derivative instruments Partially offset by: • Lower restructuring charges • Lower taxes on lower earnings and a lower net charge for valuation allowances on certain deferred tax assets in 2023 • Lower energy costs, primarily in Europe • Favorable currency impacts Sales Sales decreased $1,900 primarily as a result of: • Lower average realized prices of aluminum and alumina • Lower shipments across both segments • Lower trading activities • Decrease in value add product sales Partially offset by: • Higher volumes and price from bauxite offtake and supply agreements Cost of goods sold Cost of goods sold as a percentage of sales increased 11% primarily as a result of: • Lower average realized prices of aluminum and alumina • Higher production costs primarily related to operating certain of the Australian refineries with lower grade bauxite, the partial curtailment of the San Ciprián refinery, and increased maintenance • Decrease in value add product sales Partially offset by: • Lower energy costs • Favorable currency impacts Selling, general administrative, and other expenses Selling, general administrative, and other expenses increased $22 primarily as a result of: • Higher labor costs and external legal fees Provision for depreciation, depletion, and amortization The Provision for depreciation, depletion, and amortization increased $15 primarily as a result of: • Higher depreciation in Brazil and Australia for mine reclamation and bauxite residue storage asset retirement obligations • Write offs of assets for projects no longer being pursued Partially offset by: • Lower depreciation resulting from the permanent closure of the Intalco aluminum smelter • Favorable currency impacts 53 Interest expense Interest expense increased $1 in comparison to 2022. Other expenses (income), net Other expenses (income), net was $134 in 2023, compared with $(118) in 2022. The unfavorable change of $252 was primarily a result of: • Mark-to-market results on derivative instruments primarily due to the absence of prior year gains driven by elevated power prices in 2022 • Decrease in equity earnings from the Ma’aden aluminum joint venture primarily due to a charge for a utility settlement, lower shipments, and lower aluminum prices • Higher equity losses from the Ma’aden bauxite and alumina joint venture primarily due to lower alumina prices and higher raw material costs partially offset by higher shipments • Higher ELYSIS capital contributions, which triggered loss recognition Partially offset by: • Lower pension expense primarily due to a decrease in recognized net actuarial losses subsequent to pension annuity transactions • Favorable currency revaluation impacts driven by the absence of losses recognized in the prior year due to the U.S. dollar strengthening against most currencies, and gains recognized in the current year primarily due to the U.S. dollar weakening against the Brazilian real Restructuring and other charges, net In 2023, Restructuring and other charges, net of $184 primarily related to: • $101 for the permanent closure of the previously curtailed Intalco aluminum smelter • $53 related to the updated viability agreement for the San Ciprián aluminum smelter • $21 for the settlement of certain pension benefits • $15 to record net additional environmental and asset retirement obligation reserves at previously closed locations • $11 for employee termination and severance costs, primarily related to Kwinana refinery productivity program Partially offset by: • $19 for the sale of unused carbon credits at a previously closed location In 2022, Restructuring and other charges, net of $696 primarily related to: • $632 for U.S. pension group annuity contracts and lump sum settlements • $79 for the accrual related to the GSA for the workers of the divested Avilés and La Coruña facilities • $58 for an asset impairment related to the sale of the Company’s interest in the MRN mine • $29 for the permanent closure of the previously curtailed magnesium smelter in Addy (Washington) Partially offset by: • $83 for the reversal of state VAT valuation allowance associated with the restart of the Alumar smelter • $10 for changes in estimated take-or-pay contract costs at the curtailed Intalco smelter and closed Wenatchee (Washington) smelter • $9 net reversal of environmental and ARO obligations and previously closed locations Provision for income taxes The Provision for income taxes in 2023 was $189 on a loss before taxes of $(584) or (32.4)%. In comparison, the 2022 Provision for income taxes was $664 on income before taxes of $702 or 94.6%. The decrease in tax expense of $475 was primarily attributable to lower income in the jurisdictions where taxes were paid. Additionally, tax expense in 2023 included a charge of $152 to record a full valuation allowance against the deferred tax assets of Alcoa World Alumina Brasil Ltda. (AWAB), partially offset by the full reversal of the valuation allowance of $58 recorded against the deferred tax assets of the Company’s subsidiaries in Iceland. Tax expense in 2022 included charges of $217 to record a full valuation allowance against the deferred tax assets of Alcoa Alumínio (Alumínio) and $30 primarily to write off the deferred tax assets of Alcoa Norway ANS due to a legal entity restructuring, partially offset by a tax benefit of $33 due to changes in the utilization of the tax holiday rate in AWAB. 54 In December 2023, Alcoa recorded a valuation allowance of $154 against the net deferred tax assets of AWAB, of which $106 related to the balance as of December 31, 2022. The 2023 full valuation allowance was a result of AWAB’s three-year cumulative loss position for the period ended December 31, 2023. The majority of AWAB’s net deferred tax assets relate to prior net operating losses; the loss carryforwards are not subject to an expiration period. AWAB’s profitability in future periods could prompt the Company to evaluate the realizability of the deferred tax asset and assess the possibility of a reversal of the valuation allowance, which could have a significant impact on net income in the quarter the valuation allowance is reversed. The Company’s subsidiaries in Iceland had a full valuation allowance recorded against deferred tax assets, which was established in 2015 and 2017, as the Company believed it was more likely than not that these tax benefits would not be realized. During 2023, after considering all positive and negative evidence, including the expectation that the jurisdiction will remain in a three-year cumulative income position, the Company determined that it is more likely than not that the net deferred tax assets will be realized. Based on this conclusion, the Company reversed the valuation allowance totaling $58 during 2023, generating a non-cash benefit from income taxes. In 2022, a valuation allowance of $217 was recorded against the net deferred tax assets of Alumínio. Management concluded that it was more likely than not that Alumínio’s net deferred tax assets, which consisted primarily of tax loss carryforwards, would not be realized as a result of Alumínio’s three-year cumulative loss position for the period ended December 31, 2022. Noncontrolling interest Net (loss) income attributable to noncontrolling interest was $(122) in 2023 compared with $161 in 2022. These amounts are entirely related to Alumina Limited’s 40% ownership interest in several affiliated operating entities. The change is primarily a result of higher production costs, lower average realized price of alumina, unfavorable mark-to-market results on derivative instruments, higher elimination of intercompany profit in inventory, partially offset by lower energy costs and lower taxes. Segment Information Alcoa Corporation is a producer of bauxite, alumina, and aluminum products. In January 2023, the financial information provided to the Chief Operating Decision Maker (CODM) for the activities of the bauxite mines and the alumina refineries was combined into the Alumina segment, and accordingly the Company changed its operating segments. Beginning in the first quarter of 2023, the Company’s operations consisted of two worldwide reportable segments: Alumina and Aluminum. Segment information for all prior periods presented was updated to reflect the new segment structure. 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) for 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 Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies. The CODM function regularly reviews the financial information, including Adjusted EBITDA, of these two operating segments to assess performance and allocate resources. Segment Adjusted EBITDA totaled $734 in 2023 and $2,280 in 2022. 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 two years in the period ended December 31, 2023. 55 Alum ina 2023 2022 Bauxite production (mdmt) 41.0 42.1 Third-party bauxite shipments (mdmt) 7.6 3.5 Alumina production (kmt) 10,908 12,544 Third-party alumina shipments (kmt) 8,698 9,169 Intersegment alumina shipments (kmt) 4,125 3,958 Total alumina shipments (kmt) 12,823 13,127 Third-party bauxite sales $ 484 $ 204 Third-party alumina sales 3,129 3,520 Total segment third-party sales $ 3,613 $ 3,724 Intersegment alumina sales 1,648 1,708 Total sales $ 5,261 $ 5,432 Segment Adjusted EBITDA $ 273 $ 788 Average realized third-party price per metric ton of alumina $ 358 $ 384 Operating costs $ 4,524 $ 4,406 Average cost per metric ton of alumina shipped $ 353 $ 336 In the above table, total alumina shipments include metric tons that were not produced by the Alumina segment. Such alumina was purchased to satisfy certain customer commitments. The Alumina segment bears the risk of loss of the purchased alumina until control of the product has been transferred to this segment’s customers. 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 global bauxite mining operations and 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 the production of alumina 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, and the euro. Most of the operations that comprise the Alumina segment are part of AWAC (see Noncontrolling Interest above). A portion of this segment’s bauxite production represents the offtake from equity method investments in Brazil (prior to the MRN sale in April 2022) and Guinea, as well as AWAC’s share of bauxite production related to an equity investment in Saudi Arabia. Bauxite mined is primarily used internally within the Alumina segment; a portion of the bauxite is sold to external customers. Bauxite sales to third-parties are conducted on a contract basis. This segment also includes AWAC’s 25.1% ownership interest in the mining and refining joint venture company in Saudi Arabia. Business Update. The average API of $343 per metric ton trended unfavorably compared to 2022 reflecting a 6% sequential decrease. During 2023, the Alumina segment experienced higher production costs primarily due to operating certain of the Australian refineries with lower grade bauxite and the partial curtailment of the San Ciprián refinery in 2022, partially offset by lower energy costs compared to 2022. Alumina production decreased 13% in 2023 compared to 2022 primarily due to the partial curtailment of capacity at the San Ciprián refinery in 2022, partial curtailment of the Kwinana refinery in the first quarter of 2023, and reduced production at the Australia refineries due to lower grade bauxite. Production at the Alumar refinery in 2023 was less than 2022 primarily due to unplanned equipment maintenance. 56 Australia Mine Plan Approvals In December 2023, the Western Australian (WA) Government approved Alcoa’s latest five-year mine plan – known as the 2023-2027 Mining and Management Program (MMP) – for its Huntly and Willowdale bauxite mines. Alcoa is subject to a range of stringent conditions addressing key environmental factors that includes enhanced protections for drinking water, including increased distances from reservoirs, and biodiversity along with accelerated forest rehabilitation. The accelerated forest rehabilitation will require an acceleration of cash spend of approximately $40 over the next three and half years from asset retirement obligations already recorded. In addition, the WA Government granted an exemption that allows Alcoa to continue its mining operations while the WA EPA assesses the environmental impact of parts of the MMP, following a third party’s referral of the Company’s future and existing mine plans in existing mine regions to the WA EPA in the first quarter of 2023. In the second quarter of 2023, Alcoa began mining lower grade bauxite in areas at the Huntly mine (that supplies the Pinjarra and Kwinana refineries) as it continued to work through the annual mine approvals process. The reduction in grade increases the use of caustic, energy, and bauxite, and decreases alumina output. Separately, Alcoa has committed to continuing to work with the Western Australian government to modernize the approvals framework for its two bauxite mines and three alumina refineries in the state. This includes transitioning all proposed new major mining regions to the more contemporary EPA assessment and approvals process. Alcoa started this process in 2020, when it referred its next two proposed mine regions (Myara North and Holyoake) for WA EPA assessment. The Company expects the bauxite quality at Myara North and Holyoake to be more consistent with the historic higher quality at the existing Myara Central. Alcoa continues to work to secure approvals for these new regions and anticipates mining in the new regions no earlier than 2027. Until then, the Company expects bauxite quality similar to recent grades. Kwinana Refinery On January 8, 2024, the Company announced the full curtailment of the Kwinana refinery beginning in the second quarter of 2024. The refinery has an annual nameplate capacity of 2.2 million metric tons and has been operating at approximately 80 percent of its nameplate capacity since January 2023, when the Company reduced production by decreasing process flows and taking offline one of five digesters in response to a domestic natural gas shortage in Western Australia due to production challenges experienced by key gas suppliers. While the supply of natural gas improved in April 2023, the Company kept the one digester offline due to the prolonged annual mine plan approvals process. The full curtailment will include a phased reduction of the workforce from around 800 employees at the start of 2024 to approximately 250 in the third quarter of 2024, when all alumina production will cease. Certain processes will continue until about the third quarter of 2025, when employee numbers will be further reduced to approximately 50. In the first quarter of 2024, Alcoa will record restructuring charges between $180 and $200 related to the curtailment of the refinery. The charges include approximately $81 for water management costs, $55 for employee related costs, $26 for asset retirement obligations, and $18 of other costs. Alcoa’s share of related cash outlays of approximately $115 (which includes existing employee related liabilities and asset retirement obligations) is expected to be spent in 2024 ($80) and 2025 ($35). The Kwinana refinery recorded a net loss (pretax and noncontrolling interest) of approximately $130 in 2023. The Company expects annual improvements of approximately $70 (pretax and noncontrolling interest) beginning in the third quarter of 2024 as a result of the curtailment. During the third quarter of 2023, the Company initiated productivity programs across its operations in Australia to mitigate the financial impacts of lower bauxite grade and to optimize current operating levels. The first announced action under the productivity programs was initiated at the Kwinana refinery. In connection with this program, the Company recorded a charge of $6 in Restructuring and other charges, net on the Statement of Consolidated Operations in the third quarter of 2023 for employee termination and severance costs for approximately 90 employees at the Kwinana refinery, which is expected to be paid through the second quarter of 2024. Alumar Refinery During 2023, the Alumar refinery experienced several challenges impacting production levels, maintenance, and production costs. During the fourth quarter of 2023, the Alumar refinery experienced periodic instability in power supply since the nationwide power outage that occurred on August 15, 2023, which caused lower production and other incremental costs to stabilize operations. In early July 2023, the repair of the ship-to-shore conveyance system that failed on March 25, 2023 and other unplanned equipment maintenance was completed at the Alumar refinery. As a result of the conveyance system event, bauxite discharge at the Alumar port was temporarily halted and the refinery operated on existing inventory until initial repairs were completed on April 8, 2023. Bauxite flows to the refinery were fully restored by the end of April 2023. The pier was not damaged and could still berth vessels. 57 Capacity. The Alumina segment had a base refining capacity of 13,843 kmt with 1,452 kmt of curtailed capacity. In the first quarter of 2023, curtailed capacity increased 438 kmt due to the reduction in production at the Kwinana refinery (see above). Annual Comparison Production Alumina production decreased 13% primarily as a result of: • The curtailment of capacity at the San Ciprián refinery in the third quarter of 2022 • The partial curtailment at the Kwinana refinery in the first quarter of 2023 • Reduced production at the Australia refineries due to lower grade bauxite • Unplanned equipment maintenance and periodic instability in power supply at the Alumar refinery in 2023 Third-party sales Third-party sales decreased $111 primarily as a result of: • Lower shipments of alumina primarily due to lower production at the Australian refineries, partially offset by increased trading opportunities • Lower average realized price of $26/ton principally driven by a lower average API • Unfavorable currency impacts Partially offset by: • Higher volumes and price from bauxite offtake and supply agreements primarily caused by the shift to third-party sales due to reduced production at the San Ciprián refinery Intersegment sales Intersegment sales decreased $60 primarily as a result of: • Lower average API on sales to the Aluminum segment Partially offset by: • Higher alumina shipments primarily due to the Alumar smelter restart Segment Adjusted EBITDA Segment Adjusted EBITDA decreased $515 primarily as a result of: • Higher production costs primarily related to operating certain of the Australian refineries with lower grade bauxite, the partial curtailment of the San Ciprián refinery, and increased maintenance • Lower average realized price of $26/ton principally driven by a lower average API Partially offset by: • Lower energy costs, primarily in Europe • Favorable currency impacts Forward Look. For 2024, the Company is providing projections for both production and shipments. Alcoa expects alumina production to range between 9.8 and 10.0 million metric tons and alumina shipments to range between 12.7 and 12.9 million metric tons in 2024. The difference between production and shipments reflects trading volumes and externally sourced alumina to fulfill customer contracts due to the curtailment of the Kwinana refinery. Further, in 2024, the Alumina segment expects to benefit from lower raw material costs. 58 Alumi num 2023 2022 Production (kmt) 2,114 2,010 Total shipments (kmt) 2,491 2,570 Third-party aluminum sales $ 7,045 $ 8,887 Other (1) (120 ) (152 ) Total segment third-party sales $ 6,925 $ 8,735 Intersegment sales 15 27 Total sales $ 6,940 $ 8,762 Segment Adjusted EBITDA $ 461 $ 1,492 Average realized third-party price per metric ton $ 2,828 $ 3,457 Operating costs $ 6,419 $ 7,278 Average cost per metric ton of aluminum shipped $ 2,577 $ 2,831 (1) Other includes third-party sales of energy, as well as realized gains and losses related to embedded derivative instruments designated as cash flow hedges of forward sales of aluminum. In the above table, total aluminum third-party shipments include metric tons that were not produced by the Aluminum segment. Such aluminum was purchased by this segment to satisfy certain customer commitments. 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. Additionally, Total shipments includes offtake from a joint venture supply agreement. The average realized third-party price per metric ton of 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. 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. Overview. This segment consists of the Company’s (i) worldwide smelting and casthouse system, which processes alumina into primary aluminum, and the (ii) portfolio of energy assets in Brazil, Canada, and 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. 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 smelter) and Alumina segments (Brazilian refineries). 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. Business Update. Aluminum prices decreased sequentially with LME prices on a 15-day lag averaging $2,249 per metric ton in 2023. Due to its production of commercial grade aluminum, in December 2023, the Company qualified for Section 45X of the Advanced Manufacturing Tax Credit, enacted as part of the Inflation Reduction Act, which improves the profitability of its smelters in the U.S. In the fourth quarter of 2023, the Company recorded a full year benefit in Cost of goods sold totaling $36 related to its Massena West (New York) smelter and its Warrick smelter. The Company has also requested revisions to the December 2023 regulations to allow for the inclusion of materials costs in the credit calculation. 59 In December 2023, the Norwegian government approved a budget proposal that limits carbon dioxide compensation to be paid in 2024 based on 2023 power purchased and used in production. The Company recorded an adjustment of $18 in the fourth quarter of 2023 to Cost of goods sold to reverse amounts accrued for 2023 credits earned through September 30, 2023, under the prior carbon dioxide compensation program. During the fourth quarter of 2023, the Company took actions to improve the competitiveness of its Warrick smelter. Alcoa began the restart of one line (54,000 mtpy) that was curtailed in July 2022, and also began the closure of one line (54,000 mtpy) that had not operated since 2016 to allow for future capital investments to improve casting capabilities. Restructuring charges related to the closure totaled $1 in the fourth quarter of 2023 to establish reserves related to demolition obligations. Additionally, Alcoa recorded $1 in Cost of goods sold to write-off the remaining net book value of related inventory. In the fourth quarter of 2023, Alcoa began the restart of 16,000 mtpy of previously curtailed capacity at the Portland smelter. The smelter had previously been operating at approximately 75 percent of the site’s total annual capacity of 197 kmt (Alcoa share) since March 2023 due to instability and challenges related to the production of rodded anodes. The smelter was operating at approximately 79 percent of its capacity at December 31, 2023. During 2023, the Company continued the controlled pace for the restart of the Alumar smelter in São Luís, Brazil, which was announced in September 2021. The site was operating at approximately 69 percent of the site’s total annual capacity of 268 kmt (Alcoa share) as of December 31, 2023. Alcoa incurred restart expenses of $33 during 2023. In March 2023, Alcoa announced the closure of the Intalco aluminum smelter (279 kmt of previously curtailed capacity). Charges related to the closure totaled $117 in the first quarter of 2023 and included a charge of $16 for the write down of remaining inventories to net realizable value recorded in Cost of goods sold on the Statement of Consolidated Operations and a charge of $101 recorded in Restructuring and other charges, net on the Statement of Consolidated Operations. The restructuring charges were comprised of $50 of asset impairments, $50 to establish reserves related to environmental and demolition obligations, and $1 of severance and employee termination costs. Cash outlays related to the permanent closure of the site are expected to be approximately $85 in 2024 and 2025. The Company spent $2 against the reserves in 2023. San Ciprián Smelter The San Ciprián smelter was curtailed in January 2022, as a result of an agreement with the workers’ representatives in December 2021. In February 2023, under the terms of an amended viability agreement, Alcoa agreed to a phased restart of the smelter beginning in January 2024, to operate an initial complement of approximately 6 percent of total pots, to restart all pots by October 1, 2025 and to maintain 75 percent of the annual capacity of 228 kmt from October 1, 2025 until the end of 2026. Long-term economic viability of any ramp up beyond the initial 6 percent of total pots will depend upon the availability of affordable power, which currently does not exist in adequate supply. While the Company has met its commitments to enter into power purchase agreements for the necessary capacity, that capacity has not been fully permitted by the government or built by the power provider, putting an on-time restart at significant risk and causing the smelter to incur substantial operating losses for longer, all of which is rendering the smelter economically unviable. Under the terms of both agreements, the Company is responsible for certain employee obligations from 2022 through 2025. As a result, the Company recorded charges of $53 and $62 in 2023 and 2021, respectively, in Restructuring and other charges, net on the Statement of Consolidated Operations to establish the related reserves. Cash payments were $38 and $26 in 2023 and 2022, respectively. The remaining reserves of $48 at December 31, 2023 relate to employee commitments in 2024 and 2025. Additionally, in connection with the agreements, the Company committed to capital improvements of $146 and smelter restart costs of $35, and incurred capital improvement expenditures of $28 during 2023. At December 31, 2023, the Company has restricted cash of $91 to be made available for the remaining capital improvements of $118 and smelter restart costs of $35. Capacity. At December 31, 2023, the Aluminum segment had 465 kmt of idle smelting capacity on a base capacity of 2,645 kmt, a decrease from 2022 of 403 kmt in idle capacity primarily due to the permanent closure of the previously curtailed Intalco smelter, closure of one line at the Warrick smelter, and the Alumar and Warrick smelter restarts, partially offset by the partial curtailment of the Portland smelter (see above). The Company updated nameplate capacity of certain facilities to reflect capital expenditures, upgrades, or other investments which expanded production capacity, and productivity initiatives and process and supply changes that improved capacity in a sustained manner. 60 Annual Comparison Production Production increased 5% primarily as a result of: • Alumar smelter restart Partially offset by: • Partial curtailment of the Lista (Norway) smelter in August 2022 Third-party sales Third-party sales decreased $1,810 primarily as a result of: • Lower average realized price of $629/ton driven by a lower average LME (on a 15-day lag) and lower regional premiums • Lower trading activities • Lower shipments primarily due to the absence of sales of accumulated inventory in 2022 from the San Ciprián smelter due to the strike in 2021 and partial curtailment of the Lista smelter • Decrease in value add product sales due to overall lower market demand and product premiums in both Europe and North America • Lower Warrick power plant energy sales Partially offset by: • Higher shipments due to the Alumar smelter restart and improved availability of railcars or vessels for outbound product from North American smelters Segment Adjusted EBITDA Segment Adjusted EBITDA decreased $1,031 primarily as a result of: • Lower average realized price based on LME (on a 15-day lag) and lower regional premiums • Lower Warrick power plant energy sales • Decrease in value add product sales • Higher production costs primarily associated with higher labor costs and increased maintenance costs Partially offset by: • Favorable raw material costs primarily on lower average alumina input costs • Lower energy costs, primarily in Europe • Favorable currency impacts Forward Look. For 2024, the Company is providing projections for both production and shipments. The Aluminum segment is expected to produce between 2.2 to 2.3 million metric tons of aluminum, an increase from 2023 due to smelter restarts. In 2024, aluminum shipments are expected to be between 2.5 and 2.6 million metric tons, consistent with 2023, as increased shipments from smelter restarts are offset by lower trading volumes. Additionally, the Company engages in aluminum commodity trading activity when favorable market conditions allow. Availability of trading opportunities in 2024 may impact the Company’s shipment projection. Further, in 2024, the Aluminum segment expects benefits from lower raw material and energy costs, primarily in Brazil and Norway, to be partially offset by lower value add aluminum product sales. 61 Reconciliations of Certain Segment Information Reconciliation of Total Segment Third-Party Sales to Consolidated Sales 2023 2022 Alumina $ 3,613 $ 3,724 Aluminum 6,925 8,735 Total segment third-party sales $ 10,538 $ 12,459 Other 13 (8 ) Consolidated sales $ 10,551 $ 12,451 Reconciliation of Total Segment Operating Costs to Consolidated Cost of Goods Sold 2023 2022 Alumina $ 4,524 $ 4,406 Aluminum 6,419 7,278 Other (1) 1,006 721 Total segment operating costs 11,949 12,405 Eliminations (2) (1,670 ) (1,874 ) Provision for depreciation, depletion, and amortization (3) (610 ) (595 ) Other (4) 144 276 Consolidated cost of goods sold $ 9,813 $ 10,212 (1) Other largely relates to the Aluminum segment's energy product division and the Alumina segment's purchases of bauxite from offtake or other supply agreements that is sold to third-parties. (2) Represents the elimination of Cost of goods sold related to intersegment sales between Alumina and Aluminum. (3) Provision for depreciation, depletion, and amortization is included in the operating costs used to calculate average cost for each of the alumina and aluminum product divisions (see Alumina and Aluminum above). However, for financial reporting purposes, Provision for 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 are not included in the operating costs of segments (see footnotes 1 and 3 in the Reconciliation of Total Segment Adjusted EBITDA to Consolidated Net (Loss) Income Attributable to Alcoa Corporation below). Reconciliation of Total Segment Adjusted EBITDA to Consolidated Net Loss Attributable to Alcoa Corporation 2023 2022 Total Segment Adjusted EBITDA $ 734 $ 2,280 Unallocated amounts: Transformation (1) (80 ) (66 ) Intersegment eliminations 7 138 Corporate expenses (2) (133 ) (128 ) Provision for depreciation, depletion, and amortization (632 ) (617 ) Restructuring and other charges, net (184 ) (696 ) Interest expense (107 ) (106 ) Other (expenses) income, net (134 ) 118 Other (3) (55 ) (221 ) Consolidated (loss) income before income taxes (584 ) 702 Provision for income taxes (189 ) (664 ) Net loss (income) attributable to noncontrolling interest 122 (161 ) Consolidated net loss attributable to Alcoa Corporation $ (651 ) $ (123 ) (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 are not included in the Adjusted EBITDA of the reportable segments. 62 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 capital expenditures and capital returns. Alcoa’s ability to fund its cash needs depends on the Company’s ongoing ability to generate and raise cash in the future. In 2023, the Company generated lower profitability due to lower prices for aluminum and alumina and higher production costs, partially offset by lower restructuring charges. Despite the challenging year, the Company maintained a strong cash position and successfully completed the following actions: • Entered into a Receivables Purchase Agreement facility and sold gross customer receivables of $591, and reinvested collections of $477 from previously sold receivables, resulting in net cash proceeds from the financial institution of $114; • Funded $531 in capital expenditures to sustain and grow our operations; • Entered into a revolving credit facility for $250 (available to be drawn in Japanese yen) (Japanese Yen Revolving Credit Facility); • Purchased group annuity contracts to transfer the obligation to pay remaining retirement benefits for approximately 530 retirees and beneficiaries from certain Canadian defined benefit pension plans. Transferred approximately $235 in both plan obligations and plan assets; • Returned capital to stockholders of $72. In each quarter of 2023, the Board of Directors declared and paid a quarterly cash dividend of $0.10 per share of the Company’s common stock; and, • Entered into multiple agreements with a financial institution for the sale and subsequent repurchase of aluminum inventory resulting in net short-term borrowings of $56 in 2023. In January 2024, the Company initiated the following actions: • Amended its Revolving Credit Facility to provide additional flexibility to implement portfolio actions during 2024, by providing for a temporary reduction of the minimum interest coverage ratio required thereunder from 4.00 to 1.00 to 3.00 to 1.00, and increasing the maximum addback for cash restructuring charges to Consolidated EBITDA (as defined in the Revolving Credit Facility), in each case for the 2024 fiscal year. In connection with the amendment, Alcoa also agreed to provide collateral for its obligations under the Revolving Credit Facility, with a ratings-based release mechanism that would apply starting in 2025. • Initiated a productivity and competitiveness program across its global operations and functions. The program is a first step in the Company’s objective to improve competitiveness and includes a target to save approximately 5 percent of operating costs, exclusive of raw materials, energy and transportation costs which are already under active management and cost control programs. Total savings are expected to approximate $100 on a run rate basis and to be achieved by the first quarter of 2025. • Initiated several operational changes to improve profitability, including engaging with government stakeholders and workers’ representatives to discuss ongoing financial difficulties at the San Ciprián operations, optimizing the Warrick smelter operations, completing the Alumar restart, and announcing the curtailment of the Kwinana refinery. Management believes that the Company’s cash on hand, projected cash flows, and liquidity options, combined with its strategic actions, will be adequate to fund its short-term (at least 12 months) and long-term operating and investing needs. On January 24, 2024, ANHBV drew $201 against the Japanese Yen Revolving Credit Facility to fund working capital requirements and reductions to date in the Company’s Cash and cash equivalents. The Company plans to opportunistically access liquidity sources to support its cash position and ongoing cash needs. Further, the Company has flexibility related to its use of cash; the Company has no significant debt maturities until 2027 and no significant cash contribution requirements related to its pension plan obligations (refer to Material Cash Requirements, below, for more information). Although management believes that Alcoa’s projected cash flows and other liquidity options 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; (iii) the current state of the economy and commodity markets, and (iv) short- and long-term debt ratings. There can be no assurances that the Company will continue to have access to capital markets on terms acceptable to Alcoa Corporation. 63 Changes in market conditions caused by global or macroeconomic events, such as ongoing regional conflicts, high inflation, and changing global monetary policies 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 such events 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. At December 31, 2023, the Company’s cash and cash equivalents were $944, of which $801 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. See Part II Item 8 of this Form 10-K in Note Q to the Consolidated Financial Statements for additional information related to undistributed net earnings. Cash from Operations Cash provided from operations was $91 in 2023 compared with $822 in 2022. Notable changes to the sources and (uses) of cash include: • ($1,323) lower net income, excluding the impacts from restructuring charges, primarily due to lower aluminum pricing, higher production costs, partially offset by lower energy costs ; • $690 in certain working capital accounts, primarily an increase in inventories in 2022 on higher raw material prices and a decrease in inventories in 2023 primarily on lower raw material prices; and, • $216 less income taxes paid on prior year earnings, as well as on lower current year earnings in the jurisdictions where taxes are paid. 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 prepaid tax asset, 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 taxable income. AofA applied this deduction beginning in the third quarter of 2020, reducing cash tax payments. 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 2023, AofA continued to record its tax provision and tax liability without effect of the ATO assessment, since it expects to prevail. The tax payable will remain on AofA’s balance sheet as a noncurrent liability, increased by the tax effect of subsequent periods’ interest deductions, until dispute resolution, which is expected to take several years. At December 31, 2023 and December 31, 2022, the noncurrent liability resulting from the cumulative interest deductions was approximately $199 (A$293) and $174 (A$260), respectively. The Company utilizes a Receivables Purchase Agreement facility to sell up to $130 of certain receivables through a special purpose entity (SPE) to a financial institution on a revolving basis. Alcoa Corporation guarantees the performance obligations of the Company subsidiaries, and unsold customer receivables are pledged as collateral to the financial institution to secure the sold receivables. At December 31, 2023, the SPE held unsold customer receivables of $104 pledged as collateral against the sold receivables. The Company continues to service the customer receivables that were transferred to the financial institution. As Alcoa collects customer payments, the SPE transfers additional receivables to the financial institution rather than remitting cash. In 2023, the Company sold gross customer receivables of $591, and reinvested collections of $477 from previously sold receivables, resulting in net cash proceeds from the financial institution of $114. Cash collections from previously sold receivables yet to be reinvested of $99 were included in Accounts payable, trade on the accompanying Consolidated Balance Sheet as of December 31, 2023. Cash received from sold receivables under the agreement are presented within operating activities in the Statement of Consolidated Cash Flows. See Part II Item 8 of this Form 10-K in Note I to the Consolidated Financial Statements for additional information related to this facility. 64 Financing Activities Cash provided from financing activities was $57 in 2023 compared with cash used for financing activities of $768 in 2022. The source of cash in 2023 was primarily $158 of net contributions from Alumina Limited (see Noncontrolling interest above) and $55 primarily related to the net issuance of short-term borrowings (see below), partially offset by $72 of dividends paid, $52 in financial contributions primarily related to the sale of the Warrick Rolling Mill, and $34 for payments related to tax withholding on stock-based compensation awards. The use of cash in 2022 was primarily $165 of net cash paid to Alumina Limited, $500 for the repurchase of common stock, and $72 of dividends paid. Credit Facilities. Revolving Credit Facility On June 27, 2022, Alcoa Corporation and Alcoa Nederland Holding B.V. (ANHBV), a wholly owned subsidiary of Alcoa Corporation and the borrower, entered into an amendment and restatement agreement (the Third Amendment and Restatement) (as amended and restated, the Revolving Credit Facility) that provided additional flexibility to the Company and ANHBV by (i) extending the maturity date of the Revolving Credit Facility from November 2023 to June 2027, (ii) reducing the aggregate commitments under the facility from $1,500 to $1,250, (iii) releasing the collateral package that had previously secured the Revolving Credit Facility, which would have continued so long as certain credit ratings were maintained, (iv) increasing the maximum leverage ratio from 2.75 to 1.00 to 3.25 to 1.00, which increased following material acquisitions for four consecutive fiscal quarters following an acquisition, (v) providing a debt to capitalization ratio not to exceed .60 to 1.00 to replace the maximum leverage ratio upon a ratings upgrade to investment grade by Moody’s Investor Service (Moody’s) or Standard and Poor’s Global Ratings (S&P), and (vi) providing flexibility for dividends and other restricted payments, to make investments, and to incur additional indebtedness. The Revolving Credit Facility implemented a sustainability adjustment to the applicable margin and commitment fee that may result in a positive or negative adjustment based on two of the Company’s existing sustainability metrics. On July 26, 2022, Moody’s upgraded the rating of ANHBV’s senior unsecured notes to Baa3 (investment grade). In addition to the financial covenants, the Revolving Credit Facility includes several customary affirmative and negative covenants (applicable to Alcoa Corporation and certain subsidiaries described as restricted), that, subject to certain exceptions, include limitations on (among other things): indebtedness, liens, investments, sales of assets, restricted payments, entering into restrictive agreements, a covenant prohibiting reductions in the ownership of AWAC entities, and certain other specified restricted subsidiaries of Alcoa Corporation, below an agreed level. The Revolving Credit Facility also contains customary events of default, including failure to make payments under the Revolving Credit Facility, cross-default and cross-judgment default, and certain bankruptcy and insolvency events. As of December 31, 2023, the Company was in compliance with all financial covenants. The Company may access the entire amount of commitments under the Revolving Credit Facility. There were no borrowings outstanding at December 31, 2023 and 2022, and no amounts were borrowed during 2023 and 2022 under the Revolving Credit Facility. On January 17, 2024, Alcoa Corporation, ANHBV, and certain subsidiaries of the Company entered into Amendment No. 1 (Amendment No. 1) to the Revolving Credit Facility (Amended Revolving Credit Facility). The Amended Revolving Credit Facility provides additional flexibility to the Company and the Borrower by temporarily (i) reducing the minimum interest coverage ratio required thereunder from 4.00 to 1.00 to 3.00 to 1.00 and (ii) providing for a maximum addback for cash restructuring charges in Consolidated EBITDA (as defined in the Revolving Credit Facility) of $450, in each case for the 2024 fiscal year. As of January 1, 2025, the minimum interest coverage ratio requirement will revert to 4.00 to 1.00 and the maximum addback for cash restructuring charges in Consolidated EBITDA will revert to 15% of Consolidated EBITDA. The requirement that the Company maintain a debt to capitalization ratio not to exceed .60 to 1.00 was not changed by Amendment No. 1. In connection with Amendment No. 1, the Company also agreed to provide collateral for its obligations under the Amended Revolving Credit Facility, which will require it to execute all security documents to re-secure collateral under the Amended Revolving Credit Facility by, subject to certain exceptions, a first priority security interest in substantially all assets of the Company, the Borrower, the material domestic wholly-owned subsidiaries of the Company, and the material foreign wholly-owned subsidiaries of the Company located in Australia, Brazil, Canada, Luxembourg, the Netherlands, Norway, and Switzerland including equity interests of certain subsidiaries that directly hold equity interests in AWAC entities. The collateral would be released if, on or after January 1, 2025, the Company or the Borrower (as applicable) (i) has at least two of the following three designated ratings: (x) Baa3 from Moody’s, (y) BBB- from S&P and (z) BBB- from Fitch Ratings and (ii) does not have any designated rating lower than: (x) Ba1 from Moody’s, (y) BB+ from S&P and (z) BB+ from Fitch Ratings. 65 The Amended Revolving Credit Facility contains customary affirmative covenants, negative covenants, and events of default substantially comparable to the Revolving Credit Facility (other than those that are described above and other minor changes). The representations, warranties and covenants contained in the Amended Revolving Credit Facility were made only for purposes of Amendment No. 1 and as of specific dates and were solely for the benefit of the parties to the Amended Revolving Credit Facility. Japanese Yen Revolving Credit Facility In April 2023, the Company entered into a one-year unsecured revolving credit facility for $250 (available to be drawn in Japanese yen) (the Japanese Yen Revolving Credit Facility). Subject to the terms and conditions under the facility, the Company or ANHBV may borrow funds. The facility included covenants that are substantially the same as those included in the Revolving Credit Facility. As of December 31, 2023, the Company was in compliance with all financial covenants. The Company may access the entire amount of commitments under the facility. There were no borrowings outstanding at December 31, 2023 and $10 was borrowed and subsequently repaid in 2023. On January 17, 2024, Alcoa Corporation and ANHBV, entered into Amendment No. 1 to the Japanese Yen Revolving Credit Facility (Amended Japanese Yen Revolving Credit Facility) which contains changes that are substantially the same as those included in the Amended Revolving Credit Facility (as described above). Also in connection with this amendment, the Company agreed to provide collateral for its obligations with the same conditions as the Amended Revolving Credit Facility. On January 24, 2024, ANHBV drew $201 against this facility. 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 facilities. Guarantees of Third Parties. As of December 31, 2023 and 2022, the Company had no outstanding potential future payments for guarantees issued on behalf of a third-party. Bank Guarantees and Letters of Credit. Alcoa Corporation and its subsidiaries have outstanding bank guarantees and letters of credit related to, among others, energy contracts, environmental obligations, legal and tax matters, leasing obligations, workers compensation, and customs duties. The total amount committed under these instruments, which automatically renew or expire at various dates between 2024 and 2025, was $294 (includes $86 issued under a standby letter of credit agreement —see below) at December 31, 2023. Additionally, ParentCo has outstanding bank guarantees and letters of credit related to the Company of $13 at December 31, 2023. In the event ParentCo would be required to perform under any of these instruments, ParentCo would be indemnified by Alcoa Corporation in accordance with the Separation and Distribution Agreement. Likewise, the Company has outstanding bank guarantees and letters of credit related to ParentCo of $8 at December 31, 2023. In the event Alcoa Corporation would be required to perform under any of these instruments, the Company would be indemnified by ParentCo in accordance with the Separation and Distribution Agreement. In December 2023, AofA committed to provide a bank guarantee for approximately $68 (A$100) which demonstrates Alcoa’s confidence that its operations will not impair drinking water supplies. In August 2017, Alcoa Corporation entered into a standby letter of credit agreement, which expires on June 27, 2024 (amended in August 2018, May 2019, May 2021, June 2022, and January 2024), with three financial institutions. The agreement provides for a $200 facility used by the Company for matters in the ordinary course of business. Alcoa Corporation’s obligations under this facility are secured in the same manner as obligations under the Company’s revolving credit facility. Additionally, this facility contains similar representations and warranties and affirmative, negative, and financial covenants as the Company’s Revolving Credit Facility. 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. As of December 31, 2023, letters of credit aggregating $86 were issued under this facility. Surety Bonds. Alcoa Corporation has outstanding surety bonds primarily related to tax matters, contract performance, workers compensation, environmental-related matters, and customs duties. The total amount committed under these bonds, which automatically renew or expire at various dates between 2024 and 2028, was $190 at December 31, 2023. Additionally, ParentCo has outstanding surety bonds related to the Company of $8 at December 31, 2023. In the event ParentCo would be required to perform under any of these instruments, ParentCo would be indemnified by Alcoa Corporation in accordance with the Separation and Distribution Agreement. Likewise, the Company has outstanding surety bonds related to ParentCo of $5 at December 31, 2023. In the event Alcoa Corporation would be required to perform under any of these instruments, the Company would be indemnified by ParentCo in accordance with the Separation and Distribution Agreement. 66 Debt. As of December 31, 2023, Alcoa Corporation had three outstanding series of 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, 2023 2022 5.500% Notes, due 2027 $ 750 $ 750 6.125% Notes, due 2028 500 500 4.125% Notes, due 2029 500 500 Other 82 84 Unamortized discounts and deferred financing costs (21 ) (27 ) Total 1,811 1,807 Less: amount due within one year 79 1 Long-term debt, less amount due within one year $ 1,732 $ 1,806 During 2023, the Company entered into multiple agreements with a financial institution for the sale and subsequent repurchase of aluminum inventory. The Company did not record sales upon each shipment of inventory, and the net cash received of $56 was recorded in Short-term borrowings within Other current liabilities on the Consolidated Balance Sheet. During 2023, the Company recorded borrowings of $117 and repurchased $61 of inventory related to these agreements. The cash received and subsequently paid under the inventory repurchase agreements is included in Cash provided from financing activities on the Statement of Consolidated Cash Flows in 2023. 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 January 12, 2024, Moody’s affirmed a Baa3 (investment grade) rating of ANHBV’s long-term debt and revised the outlook from stable to negative. On December 20, 2023, Fitch Ratings affirmed a BBB- rating for Alcoa Corporation’s long-term debt and revised the outlook from stable to negative. On September 13, 2023, S&P affirmed the BB+ rating of Alcoa’s long-term debt and affirmed the current outlook as positive. Ratings are not a recommendation to buy or hold any of our securities and they may be revised or revoked at any time at the sole discretion of the rating organization. Dividend. In each quarter of 2023, the Board of Directors declared and paid a quarterly cash dividend of $0.10 per share of the Company’s common stock, totaling $72 for the year. The details of any future cash dividend declaration, including the amount of such dividend and the timing and establishment of the record and payment dates, will be determined by the Board of Directors. The decision of whether to pay future cash dividends and the amount of any such dividends will be based on the Company's financial position, results of operations, cash flows, capital requirements, business conditions, the requirements of applicable law, and any other factors the Board of Directors may deem relevant. Common Stock Repurchase Program. In October 2021, Alcoa Corporation’s Board of Directors approved a common stock repurchase program under which the Company may purchase shares of its outstanding common stock up to an aggregate transactional value of $500, depending on cash availability, market conditions, and other factors. On July 20, 2022, Alcoa Corporation announced that its Board of Directors approved an additional common stock repurchase program under which the Company may purchase shares of its outstanding common stock up to an aggregate transactional value of $500, depending on the Company’s continuing analysis of market, financial, and other factors (the July 2022 authorization). Prior to this authorization, $150 remained available for common stock repurchases at the end of the second quarter of 2022 from the prior authorization in October 2021 of $500 which was fully exhausted in 2022 with the Company’s repurchase activity (see below). No shares were repurchased in 2023. In 2022, the Company repurchased 8,565,200 shares of its common stock for $500; the shares were immediately retired. 67 In 2021, the Company repurchased 3,184,300 shares of its common stock for $150; the shares were immediately retired. As of the date of this report, the Company is currently authorized to repurchase up to a total of $500, in the aggregate, of its outstanding shares of common stock under the July 2022 authorization. Repurchases under this program may be made using a variety of methods, which may include open market purchases, privately negotiated transactions, or pursuant to a Rule 10b5-1 plan. This program may be suspended or discontinued at any time and does not have a predetermined expiration date. Alcoa Corporation intends to retire repurchased shares of common stock. Investing Activities Cash used for investing activities was $585 in 2023 compared to cash used for investing activities of $495 in 2022. In 2023, the use of cash was primarily attributable to $531 related to capital expenditures and $70 of cash contributions to the ELYSIS TM partnership. In 2022, the use of cash was primarily attributable to $480 related to capital expenditures and $32 of cash contributions to the ELYSIS partnership, partially offset by the sale of the Company’s interest in the MRN mine of $10. In 2024, Alcoa expects capital expenditures of approximately $550 related to sustaining capital projects and return-seeking capital projects. The timing and amount of capital expenditures may fluctuate as a result of the Company’s normal operations. Material Cash Requirements As discussed above, the Company relies primarily on operating cash flows to fund its cash commitments and management believes its cash on hand, projected cash flows, and liquidity options combined with its strategic actions, will be adequate to fund its short-term (at least 12 months) and long-term operating and investing needs. On January 24, 2024, ANHBV drew $201 against the Japanese Yen Revolving Credit Facility to fund working capital requirements and reductions to date in the Company’s Cash and cash equivalents. The Company plans to opportunistically access liquidity sources to support its cash position and ongoing cash needs. The Company has committed cash outflows related to pension and postretirement benefit obligations, asset retirement obligations, environmental remediation, and operating lease agreements. See Part II Item 8 of this Form 10-K in Notes O, R, S, and T, respectively, to the Consolidated Financial Statements for additional information. As of December 31, 2023, a summary of Alcoa Corporation’s outstanding material cash requirements are as follows: Total 2024 2025-2026 2027-2028 Thereafter Operating activities: Energy-related purchase obligations $ 13,997 $ 1,420 $ 2,542 $ 2,298 $ 7,737 Raw material purchase obligations 4,720 1,874 884 500 1,462 Other purchase obligations 1,429 658 258 185 328 Interest related to debt 422 98 185 129 10 Financing activities: Long-term debt and Short-term borrowings 1,888 135 2 1,250 501 Totals $ 22,456 $ 4,185 $ 3,871 $ 4,362 $ 10,038 Purchase obligations—Energy-related purchase obligations consist primarily of electricity and natural gas contracts with expiration dates ranging from 1 year to 24 years. Raw material obligations consist mostly of bauxite (relates to AWAC’s bauxite mine interests in Guinea and Brazil), caustic soda, lime, alumina, aluminum fluoride, calcined petroleum coke, anodes, and cathode blocks with expiration dates ranging from less than 1 year to 11 years. Other purchase obligations consist principally of freight for bauxite and alumina with expiration dates ranging from 1 to 11 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—Interest is based on interest rates in effect as of December 31, 2023 and is calculated on debt with maturities that extend to 2029. Long-term debt and Short-term borrowings—Total debt amounts in the preceding table represent the principal amounts of all outstanding long-term debt and Short-term borrowings, which have maturities that extend to 2029. 68 Critical Accounting Policies and Estimates The preparation of the Company’s Consolidated Financial Statements in accordance with GAAP 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 and environmental obligations; 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; actual results may differ from those used to prepare the Company’s Consolidated Financial Statements at any given time. 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. The model used to determine recoverability of an asset or asset group would leverage the model that management uses for planning and strategic review of the entire business, including related inputs and assumptions. Management’s impairment assessment process is described in Part II Item 8 of this Form 10-K in Note B to the Consolidated Financial Statements. Refer to Part II Item 8 of this Form 10-K in Note K to the Consolidated Financial Statements for more information regarding properties, plants, and equipment. Goodwill. Goodwill is 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. 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 periods. The fair value that could be realized in an actual transaction may differ from that used to evaluate goodwill for impairment. Under the qualitative impairment test, management considers a number of factors in its assessment, such as: general economic conditions, equity and credit markets, industry and market conditions, and earnings and cash flow trends. Under the quantitative impairment test, management uses a discounted cash flow (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, production capability, tax rates, capital spending, discount rate, and working capital changes. The model used for the goodwill impairment test leverages the model, including related inputs and assumptions, that management uses for planning and strategic review of the entire business. Management will test goodwill on a qualitative or quantitative basis. Refer to Part II Item 8 of this Form 10-K in Note B to the Consolidated Financial Statements for more information regarding management’s impairment assessment process. As a result of the January 2023 segment change, the Company reviewed the recoverability of the carrying value of goodwill of its Alumina reporting unit in the first quarter of 2023. The estimated fair value of the Alumina reporting unit substantially exceeded the reporting unit’s carrying value, resulting in no impairment. Management performed a quantitative assessment for the Alumina reporting unit in the fourth quarter of 2023. As a result of the assessment, the estimated fair value of the Alumina reporting unit was substantially in excess of its carrying value, resulting in no impairment. The impact on the estimated fair values of an increase in the discount rate of 1% would not result in a change in the conclusions reached for the impairment assessments performed in 2023, the estimated fair values would remain in excess of carrying values. Further, in all years presented, there have been no triggering events that necessitated an impairment test for the Alumina reporting unit, except for the segment change in the first quarter of 2023 described above. Refer to Part II Item 8 of this Form 10-K in Note L to the Consolidated Financial Statements for more information regarding goodwill. 69 Asset Retirement and Environmental Obligations. Estimates are used to record environmental remediation and asset retirement obligation (ARO) reserves based on the best available information at the time of recognition. Several assumptions are used to estimate the costs required to demolish, environmentally remediate, reclaim, or restore the site, including: • Engineering designs for construction or closure; • Materials and services costs; • Volume of regulated materials to be removed (asbestos, PCB fluids, spent potlining); • Disposition of demolition materials; • Extent of contamination based on available data; • Scope of remediation to mitigate human health or environmental risks and/or to meet regulatory requirements; • Timing to complete construction or closure; and, • Commercial availability and pricing for off-site treatment or disposal applications. As the site is demolished, remediated, reclaimed, or restored, the assumptions and estimates used to record the reserve may change to account for: • Actual site conditions that require more or less remediation or reclamation; • Legislation that becomes more or less stringent; • Regulative authorities requiring updates to final design prior to completion; • Alternative disposal methods for demolition waste; • Technological changes which allow remediation to be more efficient; • Market factors; and, • Variances in work that is atypical from prior work experience. Changes to the estimates may result in material changes to the reserve that may require an increase to or a reversal of a previously recorded reserve. Refer to Part II Item 8 of this Form 10-K in Note R and Note S to the Consolidated Financial Statements for more information regarding current reserves. 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. Refer to Part II Item 8 of this Form 10-K in Note B to the Consolidated Financial Statements for more information regarding management’s litigation matters policy. 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 10 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 of a change in the weighted average discount rate of ¼ of 1% would be approximately $70 on combined pension and other postretirement liabilities and immaterial 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 $6 for 2024. 70 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. Refer to Part II Item 8 of this Form 10-K in Note O to the Consolidated Financial Statements for more information regarding pension and other postretirement benefits including accounting impacts of current year actions. Derivatives and Hedging. To calculate the fair value of certain derivatives, management uses discounted cash flow (DCF) and other simulation models that consider the following inputs and assumptions: quoted market prices (e.g., aluminum prices on the 10-year London Metal Exchange (LME) forward curve and energy prices), information concerning time premiums and volatilities for certain option type embedded derivatives and regional premiums for aluminum contracts, aluminum and energy prices beyond those quoted in the market, and the estimated credit spread between Alcoa and the counterparty. The quoted market prices used in the valuation models are dependent on market fundamentals, the relationship between supply and demand at any point in time, seasonal conditions, inventories, and interest rates. For periods beyond the term of quoted market prices, management estimates the price of aluminum by extrapolating the 10-year LME forward curve and estimates the Midwest premium based on recent transactions. Changes in estimates can have a material impact on the derivative valuations. Refer to Part II Item 8 of this Form 10-K in Note P to the Consolidated Financial Statements for more information regarding derivatives and hedging and related activity during the period. Income Taxes. 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 may 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. Financial information utilized in this analysis leverages the same financial information, including related inputs and assumptions, that management uses for planning and strategic review of the entire business. 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. Changes in estimates can have a material impact on the deferred taxes and uncertain tax positions. Refer to Part II Item 8 of this Form 10-K in Note Q to the Consolidated Financial Statements for more information regarding income taxes and deferred tax assets and related activity during the period. 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. Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk. See Part II Item 8 of this Form 10-K in Note P to the Consolidated Financial Statements under caption Derivatives. 71 Item 8. Financial Statemen ts and Supplementary Data. Management’s Reports to Alcoa Corporation Stockholders Management’s Report on Financial Statements and Practices The accompanying Consolidated Financial Statements of Alcoa Corporation and its subsidiaries (the Company) were prepared by management, which is responsible for their integrity and objectivity, in accordance with accounting principles generally accepted in the United States of America (GAAP) and include amounts that are based on management’s best judgments and estimates. The other financial information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 is consistent with that in the Consolidated Financial Statements. Management recognizes its responsibility for conducting the Company’s affairs according to the highest standards of personal and corporate conduct. This responsibility is characterized and reflected in key policy statements issued from time to time regarding, among other things, conduct of its business activities within the laws of the host countries in which the Company operates and potentially conflicting outside business interests of its employees. The Company maintains a systematic program to assess compliance with these policies. Management’s Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the U.S. Securities Exchange Act of 1934 (as amended), for the Company. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management conducted an assessment to evaluate the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023 using the criteria in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2023. PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the Company’s financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2023, has audited the Company’s internal control over financial reporting as of December 31, 2023 and has issued an attestation report, which is included herein. /s/ William F. Oplinger William F. Oplinger President and Chief Executive Officer /s/ Molly S. Beerman Molly S. Beerman Executive Vice President and Chief Financial Officer February 21, 2024 72 Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Alcoa Corporation Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Alcoa Corporation and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2023, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 73 Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Asset Retirement Obligations – Mine Reclamation and Closure of Bauxite Residue Areas As described in Notes B and R to the consolidated financial statements, the Company recognizes asset retirement obligations (AROs) related to legal obligations associated with the standard operation of bauxite mines, alumina refineries, and aluminum smelters. For the bauxite mines and alumina refineries, the AROs consist primarily of costs associated with mine reclamation and closure of bauxite residue areas, respectively. The fair values of the AROs are recorded on a discounted basis at the time the obligation is incurred and accreted over time for the change in present value; related accretion is recorded as a component of cost of goods sold. Additionally, the Company capitalizes asset retirement costs by increasing the carrying amount of the related long-lived assets and depreciating the assets over their remaining useful life. As disclosed by management, estimates are used to record AROs based on the best available information at the time of recognition. Several assumptions are used to estimate the cost required for reclamation and restoration of the site including: engineering designs for construction or closure, materials and services costs, regulatory requirements, and timing to complete construction or closure. As of December 31, 2023, the Company had $989 million in AROs, of which $328 million related to mine reclamation and $437 million related to the closure of bauxite residue areas. During 2023, the Company incurred liabilities related to mine reclamation and closure of bauxite residue areas, consisting of $97 million for changes in closure estimates of operating bauxite residue areas, $87 million for new mining areas opened during the year and higher estimated mine reclamation costs, and $10 million related to changes in closure estimates of non-operating bauxite residue areas. The principal considerations for our determination that performing procedures relating to the AROs for mine reclamation and closure of bauxite residue areas is a critical audit matter are (i) the significant judgment by management in developing the fair value estimate of the AROs; (ii) a high degree of auditor judgement, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the engineering designs for construction or closure, materials and services costs, regulatory requirements, and timing to complete construction or closure; (collectively “management’s assumptions”); and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s accounting for AROs, including controls over management’s methodology, assumptions, and valuation of the AROs for mine reclamation and closure of bauxite residue areas. These procedures also included, among others, (i) testing management’s process for developing the fair value estimate of the AROs for mine reclamation and closure of bauxite residue areas; (ii) evaluating the appropriateness of the methodologies used by management, (iii) testing the completeness and accuracy of underlying data used in the methodologies, and (iv) evaluating the reasonableness of management’s assumptions described above. Evaluating management’s assumptions involved (i) evaluating the cost of rehabilitation and restoration of a site, including comparing the cost assumptions used, on a sample basis, to comparable data from external parties and internal source data; (ii) evaluating the consistency of management’s assumptions across mine and bauxite residue areas, as applicable; (iii) the identification of circumstances which may require a modification to a previous estimate; (iv) physically observing the progress of the mine reclamation; (vi) evaluating management’s application of and compliance with regulatory requirements; and (vii) evaluating whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in (i) evaluating the appropriateness of the methodology used by management for closure of bauxite residue areas; (ii) evaluating the reasonableness of the application of and compliance with regulatory requirements for closure of bauxite residue areas; and (iii) evaluating the reasonableness of management’s estimate of AROs for closure of bauxite residue areas by developing an independent estimate of the costs included in AROs for a sample of bauxite residue areas, using independently determined assumptions, and comparing the independent estimate of the costs to management’s estimate. /s/ PricewaterhouseCoopers LLP Pittsburgh, Pennsylvania February 21, 2024 We have served as the Company’s auditor since 2015. 74 Alcoa Corporation and Subsidiaries Statement of Consol idated Operations (in millions, except per-share amounts) For the year ended December 31, 2023 2022 2021 Sales (E) $ 10,551 $ 12,451 $ 12,152 Cost of goods sold (exclusive of expenses below) 9,813 10,212 9,153 Selling, general administrative, and other expenses 226 204 227 Research and development expenses 39 32 31 Provision for depreciation, depletion, and amortization 632 617 664 Restructuring and other charges, net (D) 184 696 1,128 Interest expense (U) 107 106 195 Other expenses (income), net (U) 134 ( 118 ) ( 445 ) Total costs and expenses 11,135 11,749 10,953 (Loss) income before income taxes ( 584 ) 702 1,199 Provision for income taxes (Q) 189 664 629 Net (loss) income ( 773 ) 38 570 Less: Net (loss) income attributable to noncontrolling interest ( 122 ) 161 141 Net (loss) income attributable to Alcoa Corporation ( 651 ) ( 123 ) 429 Earnings per share attributable to Alcoa Corporation common shareholders (F): Basic $ ( 3.65 ) $ ( 0.68 ) $ 2.30 Diluted $ ( 3.65 ) $ ( 0.68 ) $ 2.26 The accompanying notes are an integral part of the consolidated financial statements. 75 Alcoa Corporation and Subsidiaries Statement of Consolidated C omprehensive Income (in millions) Alcoa Corporation Noncontrolling interest Total For the year ended December 31, 2023 2022 2021 2023 2022 2021 2023 2022 2021 Net (loss) income $ ( 651 ) $ ( 123 ) $ 429 $ ( 122 ) $ 161 $ 141 $ ( 773 ) $ 38 $ 570 Other comprehensive (loss) income, net of tax (G): Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits ( 62 ) 944 1,654 ( 10 ) 8 54 ( 72 ) 952 1,708 Foreign currency translation adjustments 92 ( 71 ) ( 229 ) 57 ( 103 ) ( 93 ) 149 ( 174 ) ( 322 ) Net change in unrecognized gains/losses on cash flow hedges ( 136 ) 180 ( 388 ) ( 1 ) 2 — ( 137 ) 182 ( 388 ) Total Other comprehensive (loss) income, net of tax ( 106 ) 1,053 1,037 46 ( 93 ) ( 39 ) ( 60 ) 960 998 Comprehensive (loss) income $ ( 757 ) $ 930 $ 1,466 $ ( 76 ) $ 68 $ 102 $ ( 833 ) $ 998 $ 1,568 The accompanying notes are an integral part of the consolidated financial statements. 76 Alcoa Corporation and Subsidiaries Consolidated Balance Sheet (in millions) December 31, 2023 2022 Assets Current assets: Cash and cash equivalents (P) $ 944 $ 1,363 Receivables from customers (I) 656 778 Other receivables 152 131 Inventories (J) 2,158 2,427 Fair value of derivative instruments (P) 29 134 Prepaid expenses and other current assets 466 417 Total current assets 4,405 5,250 Properties, plants, and equipment, net (K) 6,785 6,493 Investments (H) 979 1,122 Deferred income taxes (Q) 333 296 Fair value of derivative instruments (P) 3 2 Other noncurrent assets (U) 1,650 1,593 Total Assets $ 14,155 $ 14,756 Liabilities Current liabilities: Accounts payable, trade $ 1,714 $ 1,757 Accrued compensation and retirement costs 357 335 Taxes, including income taxes 88 230 Fair value of derivative instruments (P) 214 200 Other current liabilities 578 481 Long-term debt due within one year (M & P) 79 1 Total current liabilities 3,030 3,004 Long-term debt, less amount due within one year (M & P) 1,732 1,806 Accrued pension benefits (O) 278 213 Accrued other postretirement benefits (O) 443 480 Asset retirement obligations (R) 772 711 Environmental remediation (S) 202 226 Fair value of derivative instruments (P) 1,092 1,026 Noncurrent income taxes (Q) 193 215 Other noncurrent liabilities and deferred credits (U) 568 486 Total liabilities 8,310 8,167 Contingencies and commitments (S) Equity Alcoa Corporation shareholders’ equity: Common stock (N) 2 2 Additional capital 9,187 9,183 Accumulated deficit ( 1,293 ) ( 570 ) Accumulated other comprehensive loss (G) ( 3,645 ) ( 3,539 ) Total Alcoa Corporation shareholders’ equity 4,251 5,076 Noncontrolling interest (A) 1,594 1,513 Total equity 5,845 6,589 Total Liabilities and Equity $ 14,155 $ 14,756 The accompanying notes are an integral part of the consolidated financial statements. 77 Alcoa Corporation and Subsidiaries Statement of Consol idated Cash Flows (in millions) For the year ended December 31, 2023 2022 2021 Cash from Operations Net (loss) income $ ( 773 ) $ 38 $ 570 Adjustments to reconcile net (loss) income to cash from operations: Depreciation, depletion, and amortization 632 617 664 Deferred income taxes (Q) ( 22 ) 219 147 Equity loss (income), net of dividends (H) 201 4 ( 138 ) Restructuring and other charges, net (D) 184 696 1,128 Net loss (gain) from investing activities—asset sales (U) 18 10 ( 354 ) Net periodic pension benefit cost (O) 6 54 47 Stock-based compensation (N) 35 40 39 Premium paid on early redemption of debt — — 43 Loss (gain) on mark-to-market derivative financial contracts 26 ( 44 ) ( 24 ) Other 78 53 49 Changes in assets and liabilities, excluding effects of divestitures and foreign currency translation adjustments: Decrease (increase) in receivables 104 ( 59 ) ( 414 ) Decrease (increase) in inventories (J) 243 ( 547 ) ( 639 ) Decrease (increase) in prepaid expenses and other current assets 39 44 ( 41 ) (Decrease) increase in accounts payable, trade ( 74 ) 189 354 Decrease in accrued expenses ( 133 ) ( 173 ) ( 38 ) (Decrease) increase in taxes, including income taxes ( 146 ) ( 152 ) 301 Pension contributions (O) ( 24 ) ( 17 ) ( 579 ) Increase in noncurrent assets ( 210 ) ( 87 ) ( 160 ) Decrease in noncurrent liabilities ( 93 ) ( 63 ) ( 35 ) Cash provided from operations 91 822 920 Financing Activities Additions to debt (M) 127 4 495 Payments on debt (M) ( 72 ) ( 1 ) ( 1,294 ) Proceeds from the exercise of employee stock options (N) 1 22 25 Repurchase of common stock (N) — ( 500 ) ( 150 ) Dividends paid on Alcoa common stock (N) ( 72 ) ( 72 ) ( 19 ) Payments related to tax withholding on stock-based compensation awards ( 34 ) ( 19 ) ( 1 ) Financial contributions for the divestiture of businesses (C) ( 52 ) ( 33 ) ( 17 ) Contributions from noncontrolling interest (A) 188 214 21 Distributions to noncontrolling interest ( 30 ) ( 379 ) ( 215 ) Other 1 ( 4 ) ( 3 ) Cash provided from (used for) financing activities 57 ( 768 ) ( 1,158 ) Investing Activities Capital expenditures ( 531 ) ( 480 ) ( 390 ) Proceeds from the sale of assets and businesses (C) 4 5 966 Additions to investments (H) ( 70 ) ( 32 ) ( 11 ) Sale of investments (H) — 10 — Other 12 2 — Cash (used for) provided from investing activities ( 585 ) ( 495 ) 565 Effect of exchange rate changes on cash and cash equivalents and restricted cash 10 ( 9 ) ( 13 ) Net change in cash and cash equivalents and restricted cash ( 427 ) ( 450 ) 314 Cash and cash equivalents and restricted cash at beginning of year 1,474 1,924 1,610 Cash and cash equivalents and restricted cash at end of year $ 1,047 $ 1,474 $ 1,924 The accompanying notes are an integral part of the consolidated financial statements. 78 Alcoa Corporation and Subsidiaries Statement of Changes in Consolidated Equity (in millions) Alcoa Corporation shareholders Common stock Additional capital Accumulated deficit Accumulated other comprehensive (loss) income Noncontrolling interest Total equity Balance at December 31, 2020 $ 2 $ 9,663 $ ( 725 ) $ ( 5,629 ) $ 1,705 $ 5,016 Net income — — 429 — 141 570 Other comprehensive income (loss) (G) — — — 1,037 ( 39 ) 998 Stock-based compensation (N) — 39 — — — 39 Net effect of tax withholding for compensation plans and exercise of stock options (N) — 25 — — — 25 Repurchase of common stock (N) — ( 150 ) — — — ( 150 ) Dividends paid on Alcoa common stock ($ 0.10 per share) (N) — — ( 19 ) — — ( 19 ) Contributions — — — — 21 21 Distributions — — — — ( 215 ) ( 215 ) Other — — — — ( 1 ) ( 1 ) Balance at December 31, 2021 2 9,577 ( 315 ) ( 4,592 ) 1,612 6,284 Net (loss) income — — ( 123 ) — 161 38 Other comprehensive income (loss) (G) — — — 1,053 ( 93 ) 960 Stock-based compensation (N) — 40 — — — 40 Net effect of tax withholding for compensation plans and exercise of stock options (N) — 3 — — — 3 Repurchase of common stock (N) — ( 440 ) ( 60 ) — — ( 500 ) Dividends paid on Alcoa common stock ($ 0.10 per share) (N) — — ( 72 ) — — ( 72 ) Contributions — — — — 214 214 Distributions — — — — ( 379 ) ( 379 ) Other — 3 — — ( 2 ) 1 Balance at December 31, 2022 2 9,183 ( 570 ) ( 3,539 ) 1,513 6,589 Net loss — — ( 651 ) — ( 122 ) ( 773 ) Other comprehensive (loss) income (G) — — — ( 106 ) 46 ( 60 ) Stock-based compensation (N) — 35 — — — 35 Net effect of tax withholding for compensation plans and exercise of stock options (N) — ( 33 ) — — — ( 33 ) Dividends paid on Alcoa common stock ($ 0.10 per share) (N) — — ( 72 ) — — ( 72 ) Contributions — — — — 188 188 Distributions — — — — ( 30 ) ( 30 ) Other — 2 — — ( 1 ) 1 Balance at December 31, 2023 $ 2 $ 9,187 $ ( 1,293 ) $ ( 3,645 ) $ 1,594 $ 5,845 The accompanying notes are an integral part of the consolidated financial statements. 79 Alcoa Corporation and subsidiaries Notes to the Consolidated Financial Statements (dollars in millions, except per-share amounts; metric tons in thousands (kmt)) A. Basis of Presentation Alcoa Corporation (or the Company) is a vertically integrated aluminum company comprised of bauxite mining, alumina refining, aluminum production (smelting and casting), and energy generation. Through direct and indirect ownership, the Company has 27 operating locations in nine countries around the world, situated primarily in Australia, Brazil, Canada, Iceland, Norway, Spain, and the United States. Alcoa Corporation became an independent, publicly traded company on November 1, 2016, following its separation (the Separation Transaction) from its former parent company, Alcoa Inc. References herein to “ParentCo” refer to Alcoa Inc. 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. 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 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. Management uses historical experience and all available information to make these estimates. Management regularly evaluates the judgments and assumptions used in its estimates, and results could differ from those estimates upon future events and their effects or new information. Principles of Consolidation. The Consolidated Financial Statements of the Company include the accounts of Alcoa Corporation and companies in which Alcoa Corporation has a controlling interest, including those that comprise the Alcoa World Alumina & Chemicals (AWAC) joint venture (see below). Intercompany transactions have been eliminated. The equity method of accounting is used for investments in affiliates and other joint ventures over which the Company has significant influence but does not have effective control. Investments in affiliates in which Alcoa Corporation cannot exercise significant influence are accounted at cost less any impairment, a measurement alternative in accordance with GAAP. AWAC is an unincorporated global joint venture between Alcoa Corporation and Alumina Limited and consists of several affiliated operating entities, which own, have an interest in, or operate the bauxite mines and alumina refineries within the Company’s Alumina segment (except for the Poços de Caldas mine and refinery, portions of the São Luís refinery, and investment in Mineração Rio do Norte S.A. (MRN) until its sale in April 2022, all in Brazil) and a portion ( 55 %) of the Portland smelter (Australia) within the Company’s Aluminum segment. Alcoa Corporation owns 60 % and Alumina Limited owns 40 % of these individual entities, which are consolidated by the Company for financial reporting purposes and include Alcoa of Australia Limited (AofA), Alcoa World Alumina LLC (AWA), Alcoa World Alumina Brasil Ltda. (AWAB), and Alúmina Española, S.A. (Española). Alumina Limited’s interest in the equity of such entities is reflected as Noncontrolling interest on the accompanying Consolidated Balance Sheet. Management evaluates whether an Alcoa Corporation entity or interest is a variable interest entity and whether the Company is the primary beneficiary. Consolidation is required if both of these criteria are met. Alcoa Corporation does not have any variable interest entities requiring consolidation. Related Party Transactions. Alcoa Corporation buys products from and sells products to various related companies, consisting of entities in which the Company 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. B. Summary of Significant Accounting Policies Cash Equivalents. Cash equivalents are highly liquid investments purchased with an original maturity of three months or less. Restricted Cash. Restricted cash is included with Cash and cash equivalents when reconciling the Cash and cash equivalents and restricted cash at beginning of year and Cash and cash equivalents and restricted cash at end of year on the accompanying Statement of Consolidated Cash Flows. Current restricted cash amounts are reported in Prepaid expenses and other current assets on the accompanying Consolidated Balance Sheet. Noncurrent restricted cash amounts are reported in Other noncurrent assets on the accompanying Consolidated Balance Sheet (see Note U for a reconciliation of Cash and cash equivalents and restricted cash). Inventory Valuation. Inventories are carried at the lower of cost or net realizable value, with the cost of inventories principally determined under the average cost method. 80 Properties, Plants, and Equipment. Properties, plants, and equipment are recorded at cost. Interest related to the construction of qualifying assets is capitalized as part of the construction costs. Depreciation is recorded principally on the straight-line method over the estimated useful lives of the assets. Depreciation is recorded on temporarily idled facilities until such time management approves a permanent closure. The following table details the weighted average useful lives of structures and machinery and equipment by type of operation (numbers in years): Structures Machinery and equipment Alumina 29 27 Aluminum smelting and casting 37 22 Energy generation 33 25 Repairs and maintenance are charged to expense as incurred while costs for significant improvements that add productive capacity or that extend the useful life are capitalized. Gains or losses from the sale of assets are generally recorded in Other expenses (income), net. 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. 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. Leases. The Company determines whether an arrangement is a lease at the inception of the arrangement based on the terms and conditions in the contract. A contract contains a lease if there is an identified asset which the Company has the right to control. Lease right-of-use (ROU) assets are included in Properties, plants, and equipment, net with the corresponding operating lease liabilities included within Other current liabilities and Other noncurrent liabilities and deferred credits on the accompanying Consolidated Balance Sheet. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments unless a rate is implicit in the lease. Lease terms include options to extend the lease when it is reasonably certain that those options will be exercised. Leases with an initial term of 12 months or less, including anticipated renewals, are not recorded on the Consolidated Balance Sheet. The Company made a policy election not to record any non-lease components of a lease agreement in the lease liability. Variable lease payments are not presented as part of the ROU asset or liability recorded at the inception of a contract. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Equity Investments. Alcoa invests in a number of privately-held companies, primarily through joint ventures and consortia, which are accounted for using the equity method. The equity method is applied in situations where the Company has the ability to exercise significant influence, but not control, over the investee. Management reviews equity investments for impairment whenever certain indicators are present suggesting that the carrying value of an investment is not recoverable. Deferred Mining Costs. Alcoa incurs deferred mining costs during the development stage of a mine life cycle. Such costs include the construction of access and haul roads, detailed drilling and geological analysis to further define the grade and quality of the known bauxite, and overburden removal costs. These costs relate to sections of the related mines where the Company is currently extracting bauxite or preparing for production in the near term. These sections are outlined and planned incrementally and generally are mined over periods ranging from one to five years , depending on specific mine plans. The amount of geological drilling and testing necessary to determine the economic viability of the bauxite deposit being mined is such that the reserves are considered to be proven. Deferred mining costs are amortized on a units-of-production basis and included in Other noncurrent assets on the accompanying Consolidated Balance Sheet. Goodwill and Other Intangible Assets. Goodwill is not amortized but is 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. 81 Goodwill is allocated among and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. Beginning in January 2023, the Company changed its operating segments, by combining the Bauxite and Alumina segments, and reported its financial results in the following two segments: (i) Alumina and (ii) Aluminum (see Note E). The Company has three reporting units, of which two are included in the Aluminum segment (smelting/casting and energy generation). The remaining reporting unit is the Alumina segment. Of these three reporting units, only Alumina contains goodwill (see Note L). Goodwill is tested for impairment by assessing qualitative factors to determine whether it is more likely than not (greater than 50%) that the fair value of the reporting unit is less than its carrying amount or performing a quantitative assessment using a discounted cash flow model. If the qualitative assessment indicates a possible impairment, then a quantitative impairment test is performed to determine the fair value of the reporting unit using a discounted cash flow method. Otherwise, no further analysis is required. Under the quantitative assessment, the evaluation of impairment involves comparing the current fair value of each reporting unit to its carrying value, including goodwill. In the event the estimated fair value of a reporting unit 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. Alcoa’s policy for its annual review of goodwill is to perform the quantitative impairment test for its reporting unit containing goodwill at least once during every three-year period. Intangible assets with finite useful lives are amortized generally on a straight-line basis over the periods benefited. The following table details the weighted average useful lives of software and other intangible assets by type of operation (numbers in years): Software Other intangible assets Alumina 6 25 Aluminum smelting and casting 3 40 Energy generation 3 29 Asset Retirement Obligations. Alcoa 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 and regulated waste materials disposal, and landfill closure. Additionally, costs are recorded as AROs upon management’s decision to permanently close and demolish certain structures and for any significant lease restoration obligations. 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; related accretion is recorded as a component of Cost of goods sold. Additionally, the Company capitalizes asset retirement costs by increasing the carrying amount of the related long-lived assets and depreciating these assets over their remaining useful life. The fair values for AROs are determined using significant assumptions, including engineering designs for construction or closure, materials and services costs, regulatory requirements, volume of regulated material to be removed, disposition of demolition materials, and timing to complete construction or closure. Subsequent adjustments to estimates of previously established AROs for current operations are capitalized by increasing the carrying amount of the related long-lived assets and depreciating these assets over their remaining useful life. Adjustments to estimates of AROs for closed locations are charged to Restructuring and other charges, net on the accompanying Statement of Consolidated Operations (see Note R). Certain conditional asset retirement obligations related to alumina refineries, aluminum smelters, and energy generation facilities have not been recorded in the Consolidated Financial Statements due to uncertainties surrounding the ultimate settlement date. The fair value of these asset retirement obligations will be recorded when a reasonable estimate of the ultimate settlement date can be made. Environmental Matters. Environmental related expenditures for current operations are expensed as a component of Cost of goods sold or capitalized, as appropriate. Expenditures relating to existing conditions caused by past operations, generally for closed locations which will not contribute to future revenues, are charged to Restructuring and other charges, net. Liabilities are recorded when remediation costs are probable and can be reasonably estimated. In instances where the Company has ongoing monitoring and maintenance responsibilities, it is Alcoa’s policy to maintain a reserve equal to five years of expected costs. The liability is continuously reviewed and adjusted to reflect current remediation progress, rate and pricing changes, actual volumes of material requiring management, changes to the original assumptions regarding how the site was to be remediated, and other factors that may be relevant, including changes in technology or regulations. The estimates may also include costs related to other potentially responsible parties to the extent that Alcoa has reason to believe such parties will not fully pay their proportionate share. 82 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. With respect to unasserted claims or assessments, liabilities are recorded when the probability that an assertion will be made is likely, an unfavorable outcome of the matter is deemed to be probable, and the loss is reasonably estimable. 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. Legal costs, which are primarily for general litigation, environmental compliance, tax disputes, and general corporate matters, are expensed as incurred. Revenue Recognition. The Company recognizes revenue when it satisfies a performance obligation(s) in accordance with the provisions of a customer order or contract. This is achieved when control of the product has been transferred to the customer, which is generally determined when title, ownership, and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product. The shipping terms vary across all businesses and depend on the product, the country of origin, and the type of transportation. Accordingly, the sale of Alcoa’s products to its customers represent single performance obligations for which revenue is recognized at a point in time, except for the Company’s Energy product division in which the customer simultaneously receives and consumes electricity (see Note E). Revenue is based on the consideration the Company expects to receive in exchange for its products. Returns and other adjustments have not been material. Based on the foregoing, no significant judgment is required to determine when control of a product has been transferred to a customer. The Company considers shipping and handling activities as costs to fulfill the promise to transfer the related products. As a result, customer payments of shipping and handling costs are recorded as a component of revenue. Taxes collected (e.g., sales, use, value added, excise) from its customers related to the sale of its products are remitted to governmental authorities and excluded from Sales. Cost of goods sold. The Company includes the following in Cost of goods sold: operating costs of our two segments, excluding depreciation, depletion, and amortization, but including all production related costs: raw materials consumed; purchases of metal for consumption; conversion costs, such as labor, materials, and utilities; equity earnings of certain investments integral to the Company’s supply chain; and plant administrative expenses. Also included in Cost of goods sold are: costs related to the Transformation function, which focuses on the management of expenses and obligations of previously closed operations; pension and other postretirement benefit service cost for employees maintaining closed locations; purchases of bauxite from offtake or other supply agreements, alumina to satisfy customer commitments, and metal for trade; and other costs not included in the operating costs of the segments. Selling, general administrative, and other expenses. The Company includes the costs of corporate-wide functional support in Selling, general administrative, and other expenses. Such costs include: executive; sales; marketing; strategy; operations administration; finance; information technology; legal; human resources; and government affairs and communications. Stock-Based Compensation. Compensation expense for employee equity grants is recognized using the non-substantive vesting period approach, in which the expense is recognized ratably over the requisite service period based on the grant date fair value. Forfeitures are accounted for as they occur. The fair value of performance stock units containing a market condition is valued using a Monte Carlo valuation model. Determining the fair value at the grant date requires judgment, including estimates for the average risk-free interest rate, and volatility. These assumptions may differ significantly between grant dates because of changes in the actual results of these inputs that occur over time. As of January 1, 2021, the Company no longer grants stock options. Refer to Note N for more information regarding stock-based compensation. Pension and Other Postretirement Benefits. Alcoa sponsors several defined benefit pension plans and health care postretirement benefit plans. The Company recognizes on a plan-by-plan basis the net funded status of these pension and postretirement benefit plans as either an asset or a liability on its Consolidated Balance Sheet. The net funded status represents the difference between the fair value of each plan’s assets and the benefit obligation of the respective plan. The benefit obligation represents the present value of the estimated future benefits the Company currently expects to pay to plan participants based on past service. Unrecognized gains and losses related to the plans are deferred in Accumulated other comprehensive loss on the Consolidated Balance Sheet until amortized into earnings. The plan assets and benefit obligations are measured at the end of each year or more frequently, upon the occurrence of certain events such as a significant plan amendment, settlement, or curtailment. For interim plan remeasurements, it is the Company’s policy to record the related accounting impacts within the same quarter as the triggering event. 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). 83 The yield curve model used to develop the discount rate parallels the plans’ projected cash flows and has a weighted average duration of 10 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 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. 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. A change in one or a combination of these assumptions, or the effects of actual results differing from assumptions, could have a material impact on Alcoa’s projected benefit obligation. These changes or differences are recorded in Accumulated other comprehensive loss and are amortized into earnings as a component of the net periodic benefit cost (income) over the average future working lifetime or average remaining life expectancy, as appropriate, of the plan’s participants. One-time accounting impacts, such as curtailment and settlement losses (gains), are recognized immediately and are reclassified from Accumulated other comprehensive loss to Restructuring and other charges, net on the accompanying Statement of Consolidated Operations. Refer to Note O for more information regarding pension and other postretirement benefits including accounting impacts of current year actions. 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 certain 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 (income), 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 (income), 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, resulting from differences between the financial and tax bases of Alcoa’s 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. Deferred tax assets for which no valuation allowance is recorded may not be realized upon changes in facts and circumstances, 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. 84 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 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. Foreign Currency. The local currency is the functional currency for Alcoa’s significant operations outside the United States, except for certain operations in Canada and Iceland, and a holding and trading company in the Netherlands, where the U.S. dollar is used as the functional currency. The determination of the functional currency for Alcoa’s operations is made based on the appropriate economic and management indicators. Where local currency is the functional currency, assets and liabilities are translated into U.S. dollars using period end exchange rates and income and expenses are translated using the average exchange rates for the reporting period. Unrealized foreign currency translation gains and losses are deferred in Accumulated other comprehensive loss on the Consolidated Balance Sheet. Recently Adopted Accounting Guidance. On January 1, 2023, the Company adopted Accounting Standard Update (ASU) No. 2022-04 which requires a buyer in a supplier finance program to disclose qualitative and quantitative information about its supplier finance programs, including the key terms of the program, the amount of obligations outstanding at the end of the reporting period, a description of where those obligations are presented in the balance sheet, and effective January 1, 2024, a roll-forward of such amounts during the annual period. The adoption of this guidance resulted in enhanced disclosures regarding these programs (see Note V) and did not have a material impact on the Company's Consolidated Financial Statements. Recently Issued Accounting Guidance. In December 2023, the Financial Accounting Standards Board (FASB) issued ASU No. 2023-09 which includes changes to income tax disclosures, including greater disaggregation of information in the rate reconciliation and disclosure of taxes paid by jurisdiction. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The adoption of this guidance will provide enhanced disclosures regarding income taxes and will not have a material impact on the Company’s financial statements. In November 2023, the FASB issued ASU No. 2023-07 which requires disclosure of significant segment expenses regularly provided to the chief operating decision maker (CODM), other segment items (not included in significant segment expenses for each reportable segment), the title and position of the CODM, and an explanation of how the CODM uses the reported measure of segment profit or loss to assess segment performance and allocate resources. The guidance is effective for fiscal years beginning after December 15, 2023 on an annual basis and beginning after December 15, 2024 on an interim basis. Early adoption is permitted. The adoption of this guidance will provide enhanced disclosures regarding reportable segments and will not have a material impact on the Company’s financial statements. C. Divestitures Rockdale Site During the fourth quarter of 2021, the Company completed the sale of land and industrial assets at the previously closed Rockdale smelter site in the state of Texas in a transaction valued at $ 240 . Upon closing of the transaction, the Company received $ 230 in cash and recorded a net gain of $ 202 in Other expenses (income), net (pre- and after-tax; see Note U) on the Statement of Consolidated Operations. Eastalco Site During the second quarter of 2021, the Company completed the sale of land at the previously closed Eastalco smelter site in the state of Maryland in a transaction valued at $ 100 . Upon closing of the transaction, the Company received $ 94 in cash and recorded a gain of $ 90 in Other expenses (income), net ($ 90 pre- and $ 89 after-tax; see Note U) on the Statement of Consolidated Operations. 85 Warrick Rolling Mill In March 2021, Alcoa completed the sale of 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 included the assumption of $ 69 in other postretirement benefit liabilities. The Company recorded a net gain of $ 30 in Other expenses (income), net (pre- and after-tax, see Note U) on the Statement of Consolidated Operations. Upon the closing of the transaction, the Company recorded estimated liabilities for future site separation commitments and remaining transaction costs associated with the sales agreement. The Company recorded a charge of $ 17 and $ 8 in 2023 and 2022 in Other expenses (income), net, respectively, related to additional costs of existing site separation commitments. In 2023 and 2022, the Company spent $ 52 and $ 37 against the reserve, respectively. The remaining balance of $ 11 at December 31, 2023 is expected to be spent in 2024. The cash spent against the reserve is included in Cash provided from (used for) financing activities on the Statement of Consolidated Cash Flows. D. Restructuring and Other Charges, Net Restructuring and other charges, net were comprised of the following: 2023 2022 2021 Settlements and/or curtailments related to retirement benefits (O) $ 21 $ 632 $ 977 Severance and employee termination costs 11 1 1 Loss on divestitures — 79 — Asset impairments 50 58 75 Asset retirement obligations (R) 41 34 23 Environmental remediation (S) 27 21 15 Other 36 ( 7 ) 82 Reversals of previously recorded charges ( 2 ) ( 122 ) ( 45 ) Restructuring and other charges, net $ 184 $ 696 $ 1,128 Severance and employee termination costs were recorded based on approved detailed action plans submitted by the operating locations that specified positions to be eliminated, benefits to be paid under existing severance plans, union contracts or statutory requirements, and the expected timetable for completion of the plans. 2023 Actions. In 2023 , Alcoa Corporation recorded Restructuring and other charges, net, of $ 184 which were primarily comprised of the following components: • Non-cash settlement charges related to pension benefits (see Note O): o $ 21 related to the purchase of group annuity contracts to transfer approximately $ 235 of pension obligations and assets associated with defined benefit pension plans for approximately 530 Canadian retirees and beneficiaries; • Charges related to portfolio actions: o $ 101 for the permanent closure of the previously curtailed Intalco (Washington) smelter (see below); o $ 53 for the updated viability agreement for the San Ciprián (Spain) smelter; and, o $ 11 for employee termination and severance costs, primarily related to the Kwinana refinery productivity program (see below); • Other net charges: o $ 17 to record additional environmental and asset retirement related reserves at previously closed sites (see Note R and Note S); o $ 19 benefit for the sale of unused carbon credits at a previously closed site; o $ 1 to record additional asset retirement related reserves at Warrick Operations (Indiana) (see Note R); and, o $ 1 for additional take-or-pay contract costs related to the closed Wenatchee (Washington) and Intalco smelters; • Reversals: o $ 2 due to lower costs for demolition and remediation at previously closed sites (see Note R). In December 2023, Alcoa began the closure of a line at its Warrick Operations site in Indiana that had not operated since 2016 to allow for future capital investments to improve casting capabilities. The Company recorded a charge of $ 1 in Restructuring and other charges, net on the Statement of Consolidated Operations to establish reserves related to demolition obligations. Additionally, Alcoa recorded $ 1 in Cost of goods sold on the Statement of Consolidated Operations to write-off the remaining net book value of related inventory. 86 In September 2023, the Company initiated productivity programs across its operations in Australia to mitigate the financial impacts of lower grade bauxite and to optimize operating levels. In connection with this program, the Company recorded Restructuring and other charges, net of $ 6 for employee termination and severance costs for approximately 90 employees at the Kwinana refinery. The restructuring action and associated cash outlays are anticipated to be complete by the end of the second quarter of 2024. In 2023, the Company spent $ 1 against the reserve. In March 2023, Alcoa Corporation announced the closure of the Intalco aluminum smelter, which had been fully curtailed since 2020. The Company recorded charges of $ 117 related to the closure, including a charge of $ 16 in Cost of goods sold on the Statement of Consolidated Operations to write-down remaining inventories to net realizable value and a charge of $ 101 in Restructuring and other charges, net on the Statement of Consolidated Operations. The restructuring charges were comprised of asset impairments of $ 50 , environmental and demolition obligation reserves of $ 50 , and severance and employee termination costs of $ 1 for the separation of approximately 12 employees. Cash outlays related to the permanent closure of the site in 2024 and 2025 are expected to be approximately $ 54 related to environmental and demolition obligation reserves, $ 4 of which was reserved for in prior periods, and $ 31 related to holding costs during the closure. At December 31, 2023, the separation of employees associated with this program was complete with $ 1 of payments made against the severance and employee termination cost reserve. In February 2023, the Company reached an updated viability agreement with the workers’ representatives of the San Ciprián smelter to commence the restart process in phases beginning in January 2024. The smelter was curtailed in January 2022 as a result of an agreement reached with the workers’ representatives in December 2021 (see below). Under the terms of the updated viability agreement, the Company is responsible for certain employee obligations during 2023 through 2025 and made commitments for capital improvements of $ 78 . The Company recorded charges of $ 53 in Restructuring and other charges, net on the Statement of Consolidated Operations to establish the related reserve for employee obligations in 2023. Cash outlays related to these obligations were $ 7 in 2023 and the remainder is expected in 2024 and 2025. At December 31 2023, the Company has restricted cash of $ 91 to be made available for remaining capital improvement commitments at the site of $ 118 and smelter restart costs of $ 35 (see below). Restricted cash is included in Prepaid expenses and other current assets and Other noncurrent assets on the Consolidated Balance Sheet (see Note U). 2022 Actions. In 2022 Alcoa Corporation recorded Restructuring and other charges, net, of $ 696 which were primarily comprised of the following components: • Non-cash settlement charges related to pension benefits (see Note O): o $ 635 related to the purchase of group annuity contracts to transfer approximately $ 1,000 of pension obligations and assets associated with defined benefit pension plans for approximately 4,400 United States retirees and beneficiaries, as well as lump sum settlements; • Charges related to portfolio actions: o $ 79 for the agreement reached with the workers of the divested Avilés and La Coruña facilities to settle various legal disputes related to the 2019 divestiture (see Note S); o $ 58 for an asset impairment related to the sale of the Company’s interest in MRN (see Note H); and, o $ 29 related to the closure of the previously curtailed magnesium smelter facility in Addy (Washington) (see below); • Other charges and credits: o $ 26 to record additional environmental and asset retirement related reserves at previously closed sites (see Note R and Note S); and, o $ 7 net credit for revaluation of adjustments to take-or-pay contract reserves related to the closed Wenatchee and curtailed Intalco smelters; • Reversals: o $ 83 for the release of a valuation allowance on Brazil value added taxes (VAT) (see Note Q); and, o $ 34 due to lower costs for demolition and remediation at previously closed sites (see Note S). In July 2022, Alcoa made the decision to permanently close the previously curtailed magnesium smelter in Addy. The facility has been fully curtailed since 2001. The Company recorded a charge of $ 29 to establish reserves for environmental and demolition obligations in Restructuring and other charges, net on the Statement of Consolidated Operations in the third quarter of 2022. 2021 Actions. In 2021 Alcoa Corporation recorded Restructuring and other charges, net, of $ 1,128 which were comprised of the following components : • Non-cash settlement charges related to pension and certain other postretirement benefits (see Note O): o $ 858 related to the purchase of group annuity contracts to transfer approximately $ 1,500 of pension obligations and assets associated with defined benefit pension plans for approximately 14,000 United States retirees and beneficiaries, as well as lump sum settlements; o $ 63 related to the purchase of a group annuity contract to transfer approximately $ 55 of pension obligations and assets associated with a Suriname pension plan for approximately 800 retirees and beneficiaries; 87 o $ 47 related to lump sum settlements ; and, o Net $ 9 related to the settlement and curtailment of certain other postretirement benefits resulting from the sale of the Warrick Rolling Mill; • Charges related to portfolio actions taken as part of the Company’s ongoing strategic review (see details below): o $ 80 related to the closure of the previously curtailed aluminum smelter facility in Wenatchee (Washington); o $ 62 related to the agreement reached with the workers at the San Ciprián aluminum smelter to curtail smelting capacity; and, o $ 27 related to the closure of the previously curtailed anode facility in Lake Charles (Louisiana) ; • Other charges: o $ 13 for additional take-or-pay contract costs related to the curtailed Wenatchee and Intalco smelters ; o $ 11 to record additional environmental and asset retirement related reserves (see Note R and Note S); and, o $ 3 for several other immaterial items ; • Reversals: o $ 6 for a take-or-pay energy-related obligation at the Alumar (Brazil) smelter no longer required due to the restart ; o $ 17 related to the divestiture of the Avilés and La Coruña entities (see below); and, o $ 22 due to lower costs for demolition and remediation related to previously established reserves (see Note R and Note S) . In December 2021, the Company announced the two-year curtailment of 228 kmt of smelting capacity at the San Ciprián smelter. The temporary curtailment, which began at the end of January 2022, was the result of an agreement reached with the workers' representatives at the site to suspend production due to exorbitant energy prices in Spain. Under the terms of the agreement, the Company is responsible for certain employee obligations during 2022 and 2023, and committed to restart the smelter beginning in January 2024. The Company recorded charges of $ 62 in Restructuring and other charges, net on the Statement of Consolidated Operations to establish the related reserve for employee obligations in 2021. Cash payments were $ 31 and $ 26 in 2023 and 2022, respectively and this program is complete as of December 31, 2023. Additionally, the Company made restricted cash available for capital improvements at the site of $ 68 and smelter restart costs of $ 35 (see above). During the fourth quarter of 2021, as part of the Company’s ongoing strategic portfolio review, the Company announced the permanent closure of the Wenatchee aluminum smelter. The smelter has been fully curtailed since 2015. Charges related to the closure totaled $ 90 in the fourth quarter of 2021 and included a charge of $ 10 for the write-down of remaining inventories to net realizable value recorded in Cost of goods sold on the Statement of Consolidated Operations and a charge of $ 80 recorded in Restructuring and other charges, net on the Statement of Consolidated Operations. The restructuring charges were comprised of: $ 30 to write-off the remaining net book value of various assets; $ 23 of asset impairments; $ 21 to establish reserves related to environmental and demolition obligations; $ 5 related to take-or-pay contractual obligations; and $ 1 of severance and employee termination costs from the separation of approximately 10 employees. Cash payments were $ 3 and $ 1 in 2023 and 2022, respectively. During the third quarter of 2021, as part of the Company’s ongoing strategic portfolio review, the Company announced the decision to permanently close the previously curtailed anode facility in Lake Charles. The anode facility within the Lake Charles site has been fully curtailed since 2015. The Company recorded charges of $ 27 in the third quarter of 2021, which were recorded in Restructuring and other charges, net on the Statement of Consolidated Operations, comprised of asset impairments of $ 22 and cash-based charges for closure and asset retirement obligations of $ 5 . The closure was completed in September 2022. The decision to permanently close the facility was made as part of the Company’s ongoing portfolio review. The Company’s petroleum coke calciner located at the same site in Lake Charles remains in operation, unaffected by the closure of the anode facility. Alcoa Corporation does not include Restructuring and other charges, net in the results of its reportable segments. The impact of allocating such charges to segment results would have been as follows: 2023 2022 2021 Alumina (1) $ 8 $ ( 27 ) $ 1 Aluminum 169 82 184 Segment total 177 55 185 Corporate 7 641 943 Total Restructuring and other charges, net $ 184 $ 696 $ 1,128 (1) Beginning in January 2023, the Company changed its operating segments, by combining the Bauxite and Alumina segments, and reported its financial results in the following two segments: (i) Alumina and (ii) Aluminum (see Note E ). 88 Activity and reserve balances for restructuring charges were as follows: Severance and employee termination costs Other costs Total Balances at December 31, 2020 $ 6 $ 57 $ 63 Restructuring charges, net 1 80 81 Cash payments ( 4 ) ( 25 ) ( 29 ) Reversals and other — ( 22 ) ( 22 ) Balances at December 31, 2021 3 90 93 Restructuring charges, net 1 73 74 Cash payments ( 2 ) ( 37 ) ( 39 ) Reversals and other ( 1 ) ( 10 ) ( 11 ) Balances at December 31, 2022 1 116 117 Restructuring charges, net 11 55 66 Cash payments ( 6 ) ( 118 ) ( 124 ) Reversals and other — 4 4 Balances at December 31, 2023 $ 6 $ 57 $ 63 The activity and reserve balances include only Restructuring and other charges, net that impact the reserves for Severance and employee termination costs and Other costs. Restructuring and other charges, net that affected other accounts such as Investments (see Note H), Accrued pension benefits and Accrued other postretirement benefits (see Note O), Asset retirement obligations (see Note R), and Environmental remediation (see Note S) are excluded from the above activity and balances. Reversals and other include reversals of previously recorded liabilities and foreign currency translation impacts. The current portion of the reserve balance is reflected in Other current liabilities on the Consolidated Balance Sheet and the noncurrent portion of the reserve balance is reflected in Other noncurrent liabilities and deferred credits on the Consolidated Balance Sheet. The noncurrent portion of the reserve was $ 15 and $ 3 at December 31, 2023 and 2022 , respectively. E. Segment and Related Information Segment Information Alcoa Corporation is a producer of bauxite, alumina, and aluminum products. Beginning in January 2023, the financial information provided to the chief operating decision maker (CODM) for the activities of the bauxite mines and the alumina refineries was combined into the Alumina segment, and accordingly the Company changed its operating segments. Beginning with the first quarter of 2023, the Company reported its financial results in the following two segments: (i) Alumina and (ii) Aluminum. Segment information for all prior periods presented has been updated to reflect the new segment structure. 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) for 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 Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies. The CODM function regularly reviews the financial information, including Adjusted EBITDA, of these two operating segments to assess performance and allocate resources. Segment assets include, among others, customer receivables (third-party and intersegment), inventories, properties, plants, and equipment, and equity investments. The accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies (see Note B). Transactions between segments are established based on negotiation between the parties. Differences between segment totals and Alcoa Corporation’s consolidated totals for line items not reconciled are in Corporate. 89 The following are detailed descriptions of Alcoa Corporation’s reportable segments: Alumina. This segment represents the Company’s worldwide refining system, including the mining of bauxite, which is then refined 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, and the euro. Most of the operations that comprise the Alumina segment are part of AWAC (see Principles of Consolidation in Note A). A portion of this segment’s bauxite production represents the offtake from equity method investments in Brazil (prior to the MRN sale in April 2022) and Guinea, as well as AWAC’s share of bauxite production related to an equity investment in Saudi Arabia. Bauxite mined is primarily used internally within the Alumina segment; a portion of the bauxite is sold to external customers. Bauxite sales to third-parties are conducted on a contract basis. This segment also includes AWAC’s 25.1 % ownership interest in a mining and refining joint venture company in Saudi Arabia (see Note H). Aluminum. This segment consists of the Company’s (i) worldwide smelting and casthouse system, which processes alumina into primary aluminum, and (ii) portfolio of energy assets in Brazil, Canada, and the United States. Aluminum’s combined smelting and casting operations produce primary aluminum products, nearly all of which are sold to external customers and traders. 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 (see Note P) related to energy supply contracts. The energy assets supply power to external customers in Brazil and the United States, as well as internal customers in the Aluminum segment (Canadian smelters and Warrick (Indiana) smelter) and, to a lesser extent, the Alumina segment (Brazilian refineries). Results from the Warrick Rolling Mill are included in this segment through the first quarter of 2021 (see Note C). Alcoa continues to own and operate the Warrick Operations aluminum smelter and the power plant. 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 a smelting joint venture company in Saudi Arabia (see Note H). 90 The operating results, capital expenditures, and assets of Alcoa Corporation’s reportable segments were as follows: Alumina Aluminum Total 2023 Sales: Third-party sales $ 3,613 $ 6,925 $ 10,538 Intersegment sales 1,648 15 1,663 Total sales $ 5,261 $ 6,940 $ 12,201 Segment Adjusted EBITDA $ 273 $ 461 $ 734 Supplemental information: Depreciation, depletion, and amortization $ 333 $ 277 $ 610 Equity loss ( 48 ) ( 106 ) ( 154 ) 2022 Sales: Third-party sales $ 3,724 $ 8,735 $ 12,459 Intersegment sales 1,708 27 1,735 Total sales $ 5,432 $ 8,762 $ 14,194 Segment Adjusted EBITDA $ 788 $ 1,492 $ 2,280 Supplemental information: Depreciation, depletion, and amortization $ 312 $ 283 $ 595 Equity (loss) income ( 39 ) 48 9 2021 Sales: Third-party sales $ 3,375 $ 8,766 $ 12,141 Intersegment sales 1,552 18 1,570 Total sales $ 4,927 $ 8,784 $ 13,711 Segment Adjusted EBITDA $ 1,192 $ 1,879 $ 3,071 Supplemental information: Depreciation, depletion, and amortization $ 351 $ 289 $ 640 Equity income 4 116 120 2023 Assets: Capital expenditures $ 323 $ 198 $ 521 Equity investments 395 569 964 Total assets 6,153 5,854 12,007 2022 Assets: Capital expenditures $ 320 $ 153 $ 473 Equity investments 422 685 1,107 Total assets 5,859 6,358 12,217 The following tables reconcile certain segment information to consolidated totals: 2023 2022 2021 Sales: Total segment sales $ 12,201 $ 14,194 $ 13,711 Elimination of intersegment sales ( 1,663 ) ( 1,735 ) ( 1,570 ) Other 13 ( 8 ) 11 Consolidated sales $ 10,551 $ 12,451 $ 12,152 91 2023 2022 2021 Net (loss) income attributable to Alcoa Corporation: Total Segment Adjusted EBITDA $ 734 $ 2,280 $ 3,071 Unallocated amounts: Transformation (1) ( 80 ) ( 66 ) ( 44 ) Intersegment eliminations 7 138 ( 119 ) Corporate expenses (2) ( 133 ) ( 128 ) ( 129 ) Provision for depreciation, depletion, and amortization ( 632 ) ( 617 ) ( 664 ) Restructuring and other charges, net (D) ( 184 ) ( 696 ) ( 1,128 ) Interest expense (U) ( 107 ) ( 106 ) ( 195 ) Other (expenses) income, net (U) ( 134 ) 118 445 Other (3) ( 55 ) ( 221 ) ( 38 ) Consolidated (loss) income before income taxes ( 584 ) 702 1,199 Provision for income taxes (Q) ( 189 ) ( 664 ) ( 629 ) Net loss (income) attributable to noncontrolling interest 122 ( 161 ) ( 141 ) Consolidated net (loss) income attributable to Alcoa Corporation $ ( 651 ) $ ( 123 ) $ 429 (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 are not included in the Adjusted EBITDA of the reportable segments. December 31, 2023 2022 Assets: Total segment assets $ 12,007 $ 12,217 Elimination of intersegment receivables ( 159 ) ( 126 ) Unallocated amounts: Cash and cash equivalents 944 1,363 Corporate fixed assets, net 392 364 Corporate goodwill 142 141 Deferred income taxes 333 296 Pension assets 125 146 Other 371 355 Consolidated assets $ 14,155 $ 14,756 Product Information Alcoa Corporation has four product divisions and one divested product division as follows: Bauxite— Bauxite is a reddish clay rock that is mined from the surface of the earth’s terrain. This ore is the basic raw material used to produce alumina and is the primary source of aluminum. Alumina— Alumina is an oxide that is extracted from bauxite and is the basic raw material used to produce primary aluminum. This product can also be consumed for non-metallurgical purposes, such as industrial chemical products. Primary aluminum— Primary aluminum is metal in the form of a common alloy ingot or a value-add ingot (e.g., foundry, billet, rod, and slab). These products are sold primarily to customers that produce products for the transportation, building and construction, packaging, wire, and other industrial markets, and traders. Energy— Energy is the generation of electricity, which is sold in the wholesale market to traders, large industrial consumers, distribution companies, and other generation companies. Flat-rolled aluminum— Flat-rolled aluminum is metal in the form of sheet, which is sold primarily to customers that produce beverage and food cans, including body, tab, and end stock. As noted above, the Company sold the Warrick Rolling Mill in March 2021 which represented the Company’s only Flat-rolled aluminum asset. The results of the Warrick Rolling Mill are included in this product division through the first quarter of 2021. 92 The following table represents the general commercial profile of the Company’s Bauxite, Alumina, and Primary aluminum product divisions (see text below table for Energy): Product division Pricing components Shipping terms (3) Payment terms (4) Bauxite Negotiated FOB/CIF LC Sight Alumina: Smelter-grade API (1) /spot/fixed FOB/CIF LC Sight/CAD/Net 30 days Non-metallurgical Negotiated FOB/CIF Net 30 days Primary aluminum: Common alloy ingot LME + Regional premium (2) DAP/CIF Net 30 to 45 days Value-add ingot LME + Regional premium + Product premium (2) DAP/CIF Net 30 to 45 days (1) API (Alumina Price Index) is a pricing mechanism that 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 FastMarkets Metal Bulletin Non-Ferrous Metals Alumina Index. (2) LME (London Metal Exchange) is a globally recognized exchange for commodity trading, including aluminum. The LME pricing component represents the underlying base metal component, based on quoted prices for aluminum on the exchange. The regional premium 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). The product premium represents the incremental price for receiving physical metal in a particular shape or alloy. (3) CIF (cost, insurance, and freight) means that the Company pays for these items until the product reaches the buyer’s designated destination point related to transportation by vessel. DAP (delivered at place) means the same as CIF related to all methods of transportation. FOB (free on board) means that the Company pays for costs, insurance, and freight until the product reaches the seller’s designated shipping point. (4) The net number of days means that the customer is required to remit payment to the Company for the invoice amount within the designated number of days. LC Sight is a letter of credit that is payable immediately (usually within five to ten business days) after a seller meets the requirements of the letter of credit (i.e. shipping documents that evidence the seller performed its obligations as agreed to with a buyer). CAD (cash against documents) is a payment arrangement in which a seller instructs a bank to provide shipping and title documents to the buyer at the time the buyer pays in full the accompanying bill of exchange. For the Company’s Energy product division, sales of electricity are based on current market prices. Electricity is provided to customers on demand through a national or regional power grid; the customer simultaneously receives and consumes the electricity. Payment terms are generally within 10 days related to the previous 30 days of electricity consumption. The following table details Alcoa Corporation’s Sales by product division: 2023 2022 2021 Sales: Primary aluminum $ 7,045 $ 8,887 $ 8,420 Alumina 3,103 3,478 3,125 Bauxite 466 168 207 Energy 118 201 286 Flat-rolled aluminum (1) — — 320 Other (2) ( 181 ) ( 283 ) ( 206 ) $ 10,551 $ 12,451 $ 12,152 (1) Flat-rolled aluminum represented sales of the Warrick Rolling Mill through the sale of the facility in March 2021 (see Note C). (2) Other includes realized gains and losses related to embedded derivative instruments designated as cash flow hedges of forward sales of aluminum (see Note P). 93 Geographic Area Information Geographic information for Third-party sales was as follows (based upon the country where the point of sale originated): 2023 2022 2021 Sales: United States (1)(2) $ 4,993 $ 5,462 $ 5,290 Netherlands (3) 2,261 3,031 2,644 Australia 2,240 2,742 2,092 Brazil 735 527 610 Spain (2)(3) 289 618 1,465 Canada 1 1 11 Other 32 70 40 $ 10,551 $ 12,451 $ 12,152 (1) Sales of a portion of the alumina from refineries in Australia and Brazil and most of the aluminum from smelters in Canada occurred in the United States. (2) Sales of aluminum off-take related to an interest in the Saudi Arabia joint venture (see Note H), occurred in Spain through most of the third quarter of 2021, and in the United States thereafter. (3) Sales of aluminum from smelters in Iceland and Norway occurred in Spain through most of the first quarter of 2021, and in the Netherlands thereafter. Geographic information for long-lived assets was as follows (based upon the physical location of the assets): December 31, 2023 2022 Long-lived assets: Australia $ 2,046 $ 1,944 Brazil 1,550 1,298 Iceland 950 1,002 Canada 896 919 United States 780 830 Norway 310 304 Spain 250 194 Other 3 2 $ 6,785 $ 6,493 94 F. Earnings Per Share Basic earnings per share (EPS) amounts are computed by dividing Net (loss) income attributable to Alcoa Corporation by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding. The share information used to compute basic and diluted EPS attributable to Alcoa Corporation common shareholders was as follows (shares in millions): 2023 2022 2021 Average shares outstanding—basic 178 181 186 Effect of dilutive securities: Stock options — — — Stock units — — 4 Average shares outstanding—diluted 178 181 190 In 2023, basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential shares of common stock was anti-dilutive. Had Alcoa generated net income in 2023 , three million common share equivalents related to three million outstanding stock units and stock options combined would have been included in diluted average shares outstanding for the period. In 2022 , basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential shares of common stock was anti-dilutive. Had Alcoa generated net income in 2022, three million common share equivalents related to five million outstanding stock units and stock options combined would have been included in diluted average shares outstanding for the period. In 2021 , options to purchase less than two hundred thousand shares of common stock outstanding as of December 31, 2021 at a weighted average exercise price of $ 38.67 per share were not included in the computation of diluted EPS because the exercise prices of these options were greater than the annual average market price of Alcoa Corporation’s common stock. 95 G. Accumulated Other Comprehensive Loss The following table details the activity of the three components that comprise Accumulated other comprehensive loss for both Alcoa Corporation’s shareholders and Noncontrolling interest: Alcoa Corporation Noncontrolling interest 2023 2022 2021 2023 2022 2021 Pension and other postretirement benefits (O) Balance at beginning of period $ 62 $ ( 882 ) $ ( 2,536 ) $ ( 5 ) $ ( 13 ) $ ( 67 ) Other comprehensive income (loss): Unrecognized net actuarial gain (loss) and prior service cost/benefit ( 112 ) 263 550 ( 13 ) 7 30 Tax (expense) benefit (2) 17 ( 42 ) ( 37 ) 2 — ( 6 ) Total Other comprehensive income (loss) before reclassifications, net of tax ( 95 ) 221 513 ( 11 ) 7 24 Amortization of net actuarial loss and prior service cost/benefit (1) 39 723 1,144 1 1 30 Tax expense (2) ( 6 ) — ( 3 ) — — — Total amount reclassified from Accumulated other comprehensive loss, net of tax (7) 33 723 1,141 1 1 30 Total Other comprehensive income (loss) ( 62 ) 944 1,654 ( 10 ) 8 54 Balance at end of period $ — $ 62 $ ( 882 ) $ ( 15 ) $ ( 5 ) $ ( 13 ) Foreign currency translation Balance at beginning of period $ ( 2,685 ) $ ( 2,614 ) $ ( 2,385 ) $ ( 1,040 ) $ ( 937 ) $ ( 844 ) Other comprehensive income (loss) 92 ( 71 ) ( 229 ) 57 ( 103 ) ( 93 ) Balance at end of period $ ( 2,593 ) $ ( 2,685 ) $ ( 2,614 ) $ ( 983 ) $ ( 1,040 ) $ ( 937 ) Cash flow hedges (P) Balance at beginning of period $ ( 916 ) $ ( 1,096 ) $ ( 708 ) $ 1 $ ( 1 ) $ ( 1 ) Other comprehensive (loss) income: Net change from periodic revaluations ( 295 ) ( 119 ) ( 782 ) — 2 ( 2 ) Tax benefit (2) 70 43 140 — — 1 Total Other comprehensive (loss) income before reclassifications, net of tax ( 225 ) ( 76 ) ( 642 ) — 2 ( 1 ) Net amount reclassified to earnings: Aluminum contracts (3) 181 316 288 — — — Financial contracts (4) ( 20 ) — 2 — — 1 Interest rate contracts (5) ( 5 ) 5 8 ( 1 ) — 1 Foreign exchange contracts (6) ( 26 ) ( 5 ) ( 3 ) — — — Sub-total 130 316 295 ( 1 ) — 2 Tax expense (2) ( 41 ) ( 60 ) ( 41 ) — — ( 1 ) Total amount reclassified from Accumulated other comprehensive loss, net of tax (7) 89 256 254 ( 1 ) — 1 Total Other comprehensive (loss) income ( 136 ) 180 ( 388 ) ( 1 ) 2 — Balance at end of period $ ( 1,052 ) $ ( 916 ) $ ( 1,096 ) $ — $ 1 $ ( 1 ) Total Accumulated other comprehensive loss $ ( 3,645 ) $ ( 3,539 ) $ ( 4,592 ) $ ( 998 ) $ ( 1,044 ) $ ( 951 ) (1) These amounts were included in the computation of net periodic benefit cost for pension and other postretirement benefits. The amounts related to settlements and/or curtailments of certain pension and other postretirement benefits for Alcoa Corporation include $ 21 , $ 633 , and $ 952 for the years ended December 31, 2023, 2022, and 2021 , respectively. The amounts related to settlements and/or curtailments of certain pension and other postretirement benefits for Noncontrolling interest include $ 0 , ($ 1 ), and $ 25 for the years ended December 31, 2023, 2022, and 2021, respectively (see Note O). (2) These amounts were reported in Provision for income taxes on the accompanying Statement of Consolidated Operations. (3) These amounts were reported in Sales on the accompanying Statement of Consolidated Operations. (4) These amounts were reported in Cost of goods sold on the accompanying Statement of Consolidated Operations. (5) These amounts were included in Other (income) expenses, net on the accompanying Statement of Consolidated Operations. (6) In 2023, $ 5 was reported in Cost of goods sold and ($ 31 ) was reported in Sales on the accompanying Statement of Consolidated Operations. In 2022, $ 5 was reported in Cost of goods sold and ($ 10 ) was reported in Sales on the accompanying Statement of Consolidated Operations. (7) A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings. 96 H. Investments December 31, 2023 2022 Equity investments $ 969 $ 1,112 Other investments 10 10 $ 979 $ 1,122 Equity Investments. The following table summarizes information of Alcoa Corporation’s equity investments as of December 31, 2023 and 2022 . In 2023, 2022, and 2021 , Alcoa Corporation received $ 51 , $ 127 , and $ 50 , respectively, in dividends from these equity investments. Each of the investees either owns the facility listed or has an ownership interest in an entity that owns the facility listed: Investee Country Nature of investment Income Statement Location of Equity Earnings Ownership interest Ma’aden Aluminum Company Saudi Arabia Aluminum smelter and casthouse Other expenses (income), net 25.1 % Ma’aden Bauxite and Alumina Company Saudi Arabia Bauxite mine and alumina refinery Other expenses (income), net 25.1 % Halco Mining, Inc. Guinea Bauxite mine Cost of goods sold 45 % Energética Barra Grande S.A. Brazil Hydroelectric generation facility Cost of goods sold 42.18 % Pechiney Reynolds Quebec, Inc. Canada Aluminum smelter Cost of goods sold 50 % Serra do Facão Energia S/A Brazil Hydroelectric generation facility Cost of goods sold 34.97 % Manicouagan Power Limited Partnership Canada Hydroelectric generation facility Cost of goods sold 40 % Elysis TM Limited Partnership Canada Aluminum smelting technology Other expenses (income), net 48.235 % Saudi Arabia Joint Venture— Alcoa Corporation and Ma’aden have a 30 -year (from December 2009) joint venture shareholders agreement (automatic extension for an additional 20 years, unless the parties agree otherwise or unless earlier terminated) setting forth the terms for the development, construction, ownership, and operation of an integrated aluminum complex in Saudi Arabia. The project developed by the joint venture consists of a bauxite mine from the Al Ba’itha bauxite deposit in the northern part of Saudi Arabia, an alumina refinery, a primary aluminum smelter, and an aluminum rolling mill. The joint venture is owned 74.9 % by Ma’aden and 25.1 % by Alcoa Corporation and originally consisted of three separate companies as follows: the bauxite mine and alumina refinery (Ma’aden Bauxite and Alumina Company; MBAC), the smelter (Ma’aden Aluminum Company; MAC), and the rolling mill (Ma’aden Rolling Company; MRC). In June 2019, Alcoa Corporation and Ma’aden amended the joint venture agreement that governs the operations of each of the three companies that comprise the joint venture. Under the terms of the agreement, Alcoa Corporation transferred its 25.1 % interest in MRC to Ma’aden and, as a result, has no further direct or indirect equity interest in MRC. In accordance with the June 2019 amended joint venture agreement, Ma’aden’s put option and Alcoa Corporation’s call option, relating to additional interests in the joint venture, were exercisable for a period of six months after October 1, 2021. On March 31, 2022, Ma’aden’s and Alcoa’s put and call options, respectively, expired with neither party exercising their options. The results for the Saudi Arabia joint venture for the year ended December 31, 2022 include a charge related to a dispute with an industrial utility for periods in 2021 and 2022. Alcoa’s share of this charge was $ 21 which is included in Other expenses (income), net on the Statement of Consolidated Operations for the year ended December 31, 2022. The results for the Saudi Arabia joint venture for the year ended December 31, 2023 include an adjustment to the estimate for the settlement of this dispute. Alcoa’s share of this adjustment is $ 41 which is included in Other expenses (income), net on the Statement of Consolidated Operations for 2023. As of December 31, 2023 and 2022 , the carrying value of Alcoa’s investment in this joint venture was $ 533 and $ 710 , respectively. ELYSIS Limited Partnership— In June 2018, Alcoa Corporation, Rio Tinto Alcan Inc. (Rio Tinto), and Investissement Québec, a company wholly-owned by the Government of Québec, Canada, launched the ELYSIS Limited Partnership (ELYSIS). The purpose of this partnership is to advance larger scale development and commercialization of its patent-protected technology that produces oxygen and eliminates direct greenhouse gas emissions from the traditional aluminum smelting process. Alcoa and Rio Tinto plc, as general partners, each own a 48.235 % stake in ELYSIS, and the Québec provincial government, as a limited partner, owns a 3.53 % stake. The federal government of Canada and Apple Inc., as well as the Québec provincial government, are providing initial financing to the partnership. Through December 31, 2023 , the Company has contributed $ 118 (C$ 155 ) toward its investment commitment in ELYSIS. The Company’s basis in the investment has been reduced to zero for its share of losses incurred to date. In addition to cash contributions, Alcoa is contributing approximately $ 3 annually to cover overhead expenses incurred by Alcoa and charged to the joint venture. As a result, the Company has $ 60 in unrecognized losses as of December 31, 2023 that will be recognized upon additional contributions into the partnership. 97 The following table summarizes the profit and loss data for the respective periods ended December 31, as it relates to Alcoa Corporation’s equity investments. Information shown for the Saudi Arabia Joint Venture for all periods presented includes the combined balances for MAC and MBAC. The investments are grouped based on the nature of the investment. The Mining investments are part of the Alumina segment, while the Energy and Other investments are primarily part of the Aluminum segment. Saudi Arabia Joint Venture Mining Energy Other 2023 Sales $ 2,726 $ 670 $ 236 $ 464 Cost of goods sold 2,550 446 118 425 Net (loss) income ( 457 ) 50 100 ( 97 ) Equity in net (loss) income of affiliated companies, before reconciling adjustments ( 115 ) 23 39 ( 46 ) Other ( 43 ) - 1 ( 9 ) Alcoa Corporation’s equity in net (loss) income of affiliated companies ( 158 ) 23 40 ( 55 ) 2022 Sales $ 3,317 $ 763 $ 252 $ 488 Cost of goods sold 2,696 488 120 445 Net income (loss) 42 110 109 ( 75 ) Equity in net income (loss) of affiliated companies, before reconciling adjustments 11 39 41 ( 36 ) Other ( 7 ) ( 2 ) ( 3 ) 15 Alcoa Corporation’s equity in net income (loss) of affiliated companies 4 37 38 ( 21 ) 2021 Sales $ 3,127 $ 794 $ 264 $ 404 Cost of goods sold 2,083 571 135 365 Net income (loss) 495 30 114 ( 42 ) Equity in net income (loss) of affiliated companies, before reconciling adjustments 124 18 45 ( 20 ) Other ( 8 ) 5 ( 1 ) 25 Alcoa Corporation’s equity in net income of affiliated companies 116 23 44 5 The following table summarizes the balance sheet data for the respective periods ended December 31, as it relates to Alcoa Corporation’s equity investments. Saudi Arabia Joint Venture Mining Energy Other 2023 Current assets $ 1,433 $ 8 $ 103 $ 181 Noncurrent assets 6,958 419 310 764 Current liabilities 1,444 5 16 89 Noncurrent liabilities 4,272 24 34 117 2022 Current assets $ 1,769 $ 5 $ 114 $ 134 Noncurrent assets 6,993 363 301 757 Current liabilities 1,255 3 13 114 Noncurrent liabilities 4,314 24 26 84 On February 15, 2022, the Company signed an agreement to sell its share of its investment in MRN in Brazil for $ 10 to South32 Minerals S.A. Related to this transaction, the Company recorded an asset impairment of $ 58 in the first quarter of 2022 in Restructuring and other charges, net on the Statement of Consolidated Operations. On April 30, 2022, Alcoa completed the sale of its investment in MRN. An additional $ 30 in cash could be paid to the Company in the future if certain post-closing conditions related to future MRN mine development are satisfied. 98 I. Receivables On January 31, 2023, a wholly-owned special purpose entity (SPE) of the Company entered into a one-year agreement with a financial institution to sell up to $ 150 of certain customer receivables without recourse on a revolving basis. On August 27, 2023, the Company amended the agreement to decrease the amount of certain receivables that can be transferred from $ 150 to $ 130 . On November 15, 2023, the Company amended the agreement to extend the termination date from January 30, 2024 to November 14, 2024. Company subsidiaries sell customer receivables to the SPE, which th en transfers the receivables to the financial institution. The Company does not maintain effective control over the transferred receivables, and therefore accounts for the transfers as sales of receivables. Alcoa Corporation guarantees the performance obligations of the Company subsidiaries and unsold customer receivables are pledged as collateral to the financial institution to secure the sold receivables. At December 31, 2023, the SPE held unsold customer receivables of $ 104 pledged as collateral against the sold receivables. The Company continues to service the customer receivables that were transferred to the financial institution. As Alcoa collects customer payments, the SPE transfers additional receivables to the financial institution rather than remitting cash. In 2023, the Company sold gross customer receivables of $ 591 , and reinvested collections of $ 477 from previously sold receivables, resulting in net cash proceeds from the financial institution of $ 114 . Cash collections from previously sold receivables yet to be reinvested of $ 99 were included in Accounts payable, trade on the accompanying Consolidated Balance Sheet as of December 31, 2023. Cash received from sold receivables under the agreement are presented within operating activities in the Statement of Consolidated Cash Flows. J. Inventories December 31, 2023 2022 Finished goods $ 355 $ 385 Work-in-process 287 350 Bauxite and alumina 586 584 Purchased raw materials 700 923 Operating supplies 230 185 $ 2,158 $ 2,427 K. Properties, Plants, and Equipment, Net December 31, 2023 2022 Land and land rights, including mines $ 257 $ 253 Structures (by type of operation): Bauxite mining and alumina refining 4,085 3,515 Aluminum smelting and casting 3,274 3,265 Energy generation 380 354 Other 357 346 8,096 7,480 Machinery and equipment (by type of operation): Bauxite mining and alumina refining 4,352 4,227 Aluminum smelting and casting 5,781 5,813 Energy generation 869 851 Other 457 461 11,459 11,352 19,812 19,085 Less: accumulated depreciation, depletion, and amortization 13,596 13,112 6,216 5,973 Construction work-in-progress 569 520 $ 6,785 $ 6,493 99 L. Goodwill and Other Intangible Assets Goodwill, which is included in Other noncurrent assets on the accompanying Consolidated Balance Sheet, was as follows: December 31, 2023 2022 Alumina $ 4 $ 4 Aluminum — — Corporate (1) 142 141 $ 146 $ 145 (1) The carrying value of Corporate’s goodwill is net of accumulated impairment losses of $ 742 as of both December 31, 2023 and 2022. As of December 31, 2023 , the $ 142 of goodwill reflected in Corporate is allocated to Alcoa Corporation's Alumina reportable segment for purposes of impairment testing (see Note B). This goodwill is reflected in Corporate for segment reporting purposes because it is not included in management’s assessment of performance by the reportable segment. Changes in the carrying amount of goodwill were attributable to foreign currency translation as of December 31, 2023 and 2022 . Management performed a quantitative assessment for the Alumina reporting unit in the fourth quarter 2023 . The estimated fair value of the Alumina reporting unit was substantially in excess of its carrying value, resulting in no impairment. As a result of the January 2023 segment change, the Company reviewed the recoverability of the carrying value of goodwill of its Alumina reporting unit in the first quarter of 2023. The estimated fair value of the Alumina reporting unit substantially exceeded the reporting unit’s carrying value, resulting in no impairment. Other intangible assets, which are included in Other noncurrent assets on the accompanying Consolidated Balance Sheet, were as follows: 2023 2022 December 31, Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Computer software $ 207 $ ( 194 ) $ 13 $ 206 $ ( 202 ) $ 4 Patents and licenses 25 ( 10 ) 15 25 ( 9 ) 16 Other intangibles 21 ( 12 ) 9 20 ( 11 ) 9 Total other intangible assets $ 253 $ ( 216 ) $ 37 $ 251 $ ( 222 ) $ 29 Computer software consists primarily of software costs associated with the enterprise business solution within Alcoa to drive common systems among all businesses. Amortization expense related to the intangible assets in the table above for the years ended December 31, 2023, 2022, and 2021 was $ 5 , $ 7 , and $ 11 , respectively, and is expected to be approximately $ 10 annually from 2024 to 2028. 100 M. Debt Short-term Borrowings. December 31, 2023 2022 Short-term borrowings $ 56 $ — Short-term borrowings are reported in Other current liabilities on the accompanying Consolidated Balance Sheet. Inventory Repurchase Agreements During 2023, the Company entered into inventory repurchase agreements whereby the Company sold aluminum to a third party and agreed to subsequently repurchase substantially similar inventory. The Company did not record sales upon each shipment of inventory and the net cash received of $ 56 related to these agreements was recorded in Short-term borrowings as of December 31, 2023. For the year ended December 31, 2023, the Company recorded borrowings of $ 117 and repurchased $ 61 of inventory related to these agreements. As of December 31, 2023, inventory sold of $ 56 was reflected in Prepaid expenses and other current assets on the Consolidated Balance Sheet. The cash received and subsequently paid under the inventory repurchase agreements is included in Cash provided from financing activities on the Statement of Consolidated Cash Flows for the year-ended December 31, 2023. Long-term Debt. December 31, 2023 2022 5.500% Notes, due 2027 $ 750 $ 750 6.125% Notes, due 2028 500 500 4.125% Notes, due 2029 500 500 Other 82 84 Unamortized discounts and deferred financing costs ( 21 ) ( 27 ) Total 1,811 1,807 Less: amount due within one year 79 1 Long-term debt, less amount due within one year $ 1,732 $ 1,806 The principal amount of long-term debt maturing in each of the next five years is: $ 79 in 2024, $ 1 in each of 2025 and 2026, $ 750 in 2027, and $ 500 in 2028. At December 31, 2023, Other includes $ 78 related to a term loan that matures in November 2024 . 144A Debt . 2029 Notes. In March 2021, Alcoa Nederland Holding B.V. (ANHBV), a wholly-owned subsidiary of Alcoa Corporation, completed a Rule 144A (U.S. Securities Act of 1933, as amended) debt issuance for $ 500 aggregate principal amount of 4.125 % Senior Notes due 2029 (the 2029 Notes) with the following terms: • Net proceeds were approximately $ 493 , reflecting a discount to the initial purchasers as well as issuance costs. The discount, as well as costs to complete the financing, were deferred and are being amortized to interest expense over the term; • Interest is paid semi-annually in March and September, which commenced September 30, 2021 ; • Indenture contains customary affirmative and negative covenants, see below; • Option to redeem on at least 10 days, but not more than 60 days, prior notice to the holders under multiple scenarios, including, in whole or in part, at any time, or from time to time after March 31, 2024, at a redemption price up to 102.063 % of the principal amount, plus any accrued and unpaid interest; and, • Subject to repurchase upon the occurrence of a change in control repurchase event (as defined in the indenture) at a repurchase price in cash equal to 101 % of the aggregate principal amount of the notes repurchased, plus any accrued and unpaid interest. The Company used the net proceeds of the 2029 Notes, together with cash on hand, to contribute $ 500 to its U.S. defined benefit pension plans applicable to salaried and hourly employees on April 1, 2021 (see Note O ), to redeem in full $ 750 aggregate principal amount of the Company’s outstanding 6.75 % Senior Notes due 2024 on April 7, 2021, and to pay transaction-related fees and expenses. 2027 Notes. In July 2020, ANHBV completed a Rule 144A debt issuance for $ 750 aggregate principal amount of 5.500 % Senior Notes due 2027 (the 2027 Notes) with the following terms: 101 • Net proceeds were approximately $ 736 , reflecting a discount to the initial purchasers as well as issuance costs. The discount, as well as costs to complete the financing, were deferred and are being amortized to interest expense over the term; • Interest is paid semi-annually in June and December, which commenced on December 15, 2020 ; • Indenture contains customary affirmative and negative covenants, see below; • Option to redeem on at least 15 days, but not more than 60 days, prior notice to the holders under multiple scenarios, including, in whole or in part, at any time, or from time to time after June 15, 2023, at a redemption price up to 102.750 % of the principal amount, plus any accrued and unpaid interest; and, • Subject to repurchase upon the occurrence of a change in control repurchase event (as defined in the indenture) at a repurchase price in cash equal to 101 % of the aggregate principal amount of the notes repurchased, plus any accrued and unpaid interest. The Company used the net proceeds of the 2027 Notes for general corporate purposes, including adding cash to its balance sheet. 2028 Notes. In May 2018, ANHBV completed a Rule 144A debt issuance for $ 500 aggregate principal amount of 6.125 % Senior Notes due 2028 (the 2028 Notes) with the following terms: • Net proceeds were approximately $ 492 , reflecting a discount to the initial purchasers as well as issuance costs. The discount, as well as costs to complete the financing, were deferred and are being amortized to interest expense over the term; • Interest is paid semi-annually in November and May, which commenced November 15, 2018 ; • Indenture contains customary affirmative and negative covenants, see below; • Option to redeem on at least 30 days, but not more than 60 days, prior notice to the holders under multiple scenarios, including, in whole or in part, at any time, or from time to time after May 2023, at a redemption price up to 103.063 % of the principal amount, plus any accrued and unpaid interest; and, • Subject to repurchase upon the occurrence of a change in control repurchase event (as defined in the indenture) at a repurchase price in cash equal to 101 % of the aggregate principal amount of the notes repurchased, plus any accrued and unpaid interest. The Company used the net proceeds of the 2028 Notes, together with cash on hand, to make discretionary contributions to certain U.S. defined benefit pension plans. The indentures governing the 2027 Notes, 2028 Notes, and 2029 Notes contain customary affirmative and negative covenants, such as limitations on liens, limitations on sale and leaseback transactions, and a prohibition on a reduction in the ownership of AWAC entities below an agreed level. The negative covenants in the indentures are less extensive than those in the Revolving Credit Facility (see below). For example, the indentures do not include a limitation on restricted payments, such as repurchases of common stock and dividends to stockholders. The 2027 Notes, the 2028 Notes, and the 2029 Notes are senior unsecured obligations of ANHBV and do not entitle the holders to any registration rights pursuant to a registration rights agreement. ANHBV does not intend to file a registration statement with respect to resales of or an exchange offer for the notes. The notes are guaranteed on a senior unsecured basis by Alcoa Corporation and its subsidiaries that are guarantors under the Facility (the “subsidiary guarantors” and, together with Alcoa Corporation, the “guarantors”). Each of the subsidiary guarantors will be released from their guarantees upon the occurrence of certain events, including the release of such guarantor from its obligations as a guarantor under the Facility. The 2027 Notes, the 2028 Notes, and the 2029 Notes rank equally in right of payment with each other and with all of ANHBV’S existing and future senior unsecured indebtedness; rank senior in right of payment to any future subordinated obligations of ANHBV; and are effectively subordinated to ANHBV’s existing and future secured indebtedness, including under the Facility, to the extent of the value of property and assets securing such indebtedness. The guarantees of the notes rank equally in right of payment with each other and with all the guarantors’ existing and future senior unsecured indebtedness; rank senior in right of payment to any future subordinated obligations of the guarantors; and are effectively subordinated to the guarantors’ existing and future secured indebtedness, including under the Facility, to the extent of the value of property and assets securing such indebtedness. Redemption events. On April 7, 2021, the Company redeemed in full $ 750 aggregate principal amount notes due in 2024 at a redemption price equal to 103.375 % of the principal amount, plus accrued and unpaid interest. The issuance of the 2029 Notes and this redemption were determined to be an issuance of new debt and an extinguishment of existing debt. As a result, the Company recorded a loss of $ 32 on the extinguishment of debt in the second quarter of 2021 in Interest expense, which was comprised of the redemption premium and the write-off of deferred financing fees and unamortized debt issuance costs. The cash flows related to the transaction were classified as financing cash flows. On September 30, 2021, the Company redeemed in full $ 500 aggregate principal amount notes due in 2026 at a redemption price equal to 103.5 % of the principal amount, plus accrued and unpaid interest. As a result, the Company recorded a loss of $ 22 on the extinguishment of debt in the third quarter of 2021 in Interest expense, which was comprised of the redemption premium and the write-off of deferred financing fees and unamortized debt issuance costs. The cash flows related to the transaction were classified as financing cash flows. 102 Credit Facilities. Revolving Credit Facility On June 27, 2022, Alcoa Corporation and Alcoa Nederland Holding B.V. (ANHBV), a wholly owned subsidiary of Alcoa Corporation and the borrower, entered into an amendment and restatement agreement (the Third Amendment and Restatement) (as amended and restated, the Revolving Credit Facility) that provided additional flexibility to the Company and ANHBV by (i) extending the maturity date of the Revolving Credit Facility from November 2023 to June 2027 , (ii) reducing the aggregate commitments under the facility from $ 1,500 to $ 1,250 , (iii) releasing the collateral package that had previously secured the Revolving Credit Facility, which would have continued so long as certain credit ratings were maintained, (iv) increasing the maximum leverage ratio from 2.75 to 1.00 to 3.25 to 1.00, which increased following material acquisitions for four consecutive fiscal quarters following an acquisition, (v) providing a debt to capitalization ratio not to exceed .60 to 1.00 to replace the maximum leverage ratio upon a ratings upgrade to investment grade by Moody’s Investor Service (Moody’s) or Standard and Poor’s Global Ratings (S&P), and (vi) providing flexibility for dividends and other restricted payments, to make investments, and to incur additional indebtedness. The Revolving Credit Facility implemented a sustainability adjustment to the applicable margin and commitment fee that may result in a positive or negative adjustment based on two of the Company’s existing sustainability metrics. On July 26, 2022, Moody’s upgraded the rating of ANHBV’s senior unsecured notes to Baa3 (investment grade). In addition to the financial covenants, the Revolving Credit Facility includes several customary affirmative and negative covenants (applicable to Alcoa Corporation and certain subsidiaries described as restricted), that, subject to certain exceptions, include limitations on (among other things): indebtedness, liens, investments, sales of assets, restricted payments, entering into restrictive agreements, a covenant prohibiting reductions in the ownership of AWAC entities, and certain other specified restricted subsidiaries of Alcoa Corporation, below an agreed level. The Revolving Credit Facility also contains customary events of default, including failure to make payments under the Revolving Credit Facility, cross-default and cross-judgment default, and certain bankruptcy and insolvency events. As of December 31, 2023, the Company was in compliance with all financial covenants. The Company may access the entire amount of commitments under the Revolving Credit Facility. There were no borrowings outstanding at December 31, 2023 and 2022, and no amounts wer e borrowed during 2023 and 2022 under the Revolving Credit Facility. On January 17, 2024, Alcoa Corporation, ANHBV, and certain subsidiaries of the Company entered into Amendment No. 1 (Amendment No. 1) to the Revolving Credit Facility (Amended Revolving Credit Facility). The Amended Revolving Credit Facility provides additional flexibility to the Company and the Borrower by temporarily (i) reducing the minimum interest coverage ratio required thereunder from 4.00 to 1.00 to 3.00 to 1.00 and (ii) providing for a maximum addback for cash restructuring charges in Consolidated EBITDA (as defined in the Revolving Credit Facility) of $ 450 , in each case for the 2024 fiscal year. As of January 1, 2025, the minimum interest coverage ratio requirement will revert to 4.00 to 1.00 and the maximum addback for cash restructuring charges in Consolidated EBITDA will revert to 15 % of Consolidated EBITDA. The requirement that the Company maintain a debt to capitalization ratio not to exceed .60 to 1.00 was not changed by Amendment No. 1. In connection with Amendment No. 1, the Company also agreed to provide collateral for its obligations under the Amended Revolving Credit Facility, which will require it to execute all security documents to re-secure collateral under the Amended Revolving Credit Facility by, subject to certain exceptions, a first priority security interest in substantially all assets of the Company, the Borrower, the material domestic wholly-owned subsidiaries of the Company, and the material foreign wholly-owned subsidiaries of the Company located in Australia, Brazil, Canada, Luxembourg, the Netherlands, Norway, and Switzerland including equity interests of certain subsidiaries that directly hold equity interests in AWAC entities. The collateral would be released if, on or after January 1, 2025, the Company or the Borrower (as applicable) (i) has at least two of the following three designated ratings: (x) Baa3 from Moody’s, (y) BBB- from S&P and (z) BBB- from Fitch Ratings and (ii) does not have any designated rating lower than: (x) Ba1 from Moody’s, (y) BB+ from S&P and (z) BB+ from Fitch Ratings. The Amended Revolving Credit Facility contains customary affirmative covenants, negative covenants, and events of default substantially comparable to the Revolving Credit Facility (other than those that are described above and other minor changes). The representations, warranties and covenants contained in the Amended Revolving Credit Facility were made only for purposes of Amendment No. 1 and as of specific dates and were solely for the benefit of the parties to the Amended Revolving Credit Facility. Japanese Yen Revolving Credit Facility In April 2023, the Company entered into a one-year unsecured revolving credit facility for $ 250 (available to be drawn in Japanese yen) (the Japanese Yen Revolving Credit Facility). Subject to the terms and conditions under the facility, the Company or ANHBV may borrow funds. The facility included covenants that are substantially the same as those included in the Revolving Credit Facility. 103 As of December 31, 2023, the Company was in compliance with all financial covenants. The Company may access the entire amount of commitments under the facility. There were no borrowings outstanding at December 31, 2023 and $ 10 was borrowed and subsequently repaid in 2023. On January 17, 2024, Alcoa Corporation and ANHBV, entered into Amendment No. 1 to the Japanese Yen Revolving Credit Facility (Amended Japanese Yen Revolving Credit Facility) which contains changes that are substantially the same as those included in the Amended Revolving Credit Facility (as described above). Also in connection with this amendment, the Company agreed to provide collateral for its obligations with the same conditions as the Amended Revolving Credit Facility. On January 24, 2024, ANHBV drew $ 201 against this facility. N. Preferred and Common Stock Preferred Stock. Alcoa Corporation is authorized to issue 100,000,000 shares of preferred stock at a par value of $ 0.01 per share. At December 31, 2023 and 2022 , the Company had no issued preferred stock. Common Stock. Alcoa Corporation is authorized to issue 750,000,000 shares of common stock at a par value of $ 0.01 per share. As of December 31, 2023 and 2022 , Alcoa Corporation had 178,472,464 and 176,969,091 , respectively, issued and outstanding shares of common stock. Under its employee stock-based compensation plan, the Company issued shares of 1,503,373 in 2023 , 1,434,543 in 2022 , and 1,305,979 in 2021. The Company issues new shares to satisfy the exercise of stock options and the conversion of stock units. As of December 31, 2023 , 20,525,431 shares of common stock were available for issuance. Common Stock Repurchase In October 2021, Alcoa Corporation’s Board of Directors approved a common stock repurchase program under which the Company may purchase shares of its outstanding common stock up to an aggregate transactional value of $ 500 , depending on cash availability, market conditions, and other factors. In July 2022, Alcoa Corporation announced that its Board of Directors approved an additional common stock repurchase program under which the Company may purchase shares of its outstanding common stock up to an aggregate transactional value of $ 500 , depending on the Company’s continuing analysis of market, financial, and other factors (the New Repurchase Program). No shares were repurchased in 2023. As of the date of this report, the Company is currently authorized to repurchase up to a total of $ 500 , in the aggregate, of its outstanding shares of common stock under the New Repurchase Program. Repurchases under this program may be made using a variety of methods, which may include open market purchases, privately negotiated transactions, or pursuant to a Rule 10b5-1 plan. This program may be suspended or discontinued at any time and does not have a predetermined expiration date. Alcoa Corporation intends to retire repurchased shares of common stock. In 2022, the Company repurchased 8,565,200 shares of its common stock for $ 500 , which fully exhausted the October 2021 authorization; the shares were immediately retired. In 2021, the Company repurchased 3,184,300 shares of its common stock for $ 150 ; the shares were immediately retired. Dividend Dividends on common stock are subject to authorization by Alcoa Corporation’s Board of Directors. In October 2021 , the Company announced the initiation of a quarterly cash dividend on its common stock and the Board of Directors declared the first quarterly cash dividend of $ 0.10 per share of the Company’s common stock. Dividends paid totaled $ 19 in 2021. Quarterly dividends paid were $ 0.10 per share in 2023 and 2022, totaling $ 72 in both years. The details of any future cash dividend declaration, including the amount of such dividend and the timing and establishment of the record and payment dates, will be determined by the Board of Directors. The decision of whether to pay future cash dividends and the amount of any such dividends will be based on the Company's financial position, results of operations, cash flows, capital requirements, business conditions, the requirements of applicable law, and any other factors the Board of Directors may deem relevant. 104 Stock-based Compensation Restricted stock units are generally granted in January and/or February of each calendar year to eligible employees (the Company’s Board of Directors also receive certain stock units; however, these amounts are not material). Time-based restricted stock units (RSUs) generally cliff vest on the third anniversary of the award grant date. The Company also grants performance restricted stock units (PRSUs), which are subject to performance conditions and earned after the end of the three-year measurement period. As of January 1, 2021, the Company no longer grants stock options. The final number of PRSUs earned is dependent on Alcoa Corporation’s achievement of certain targets over a three-year measurement period for grants. For PRSUs granted in 2021, the award was earned after the end of the measurement period of January 1, 2021 through December 31, 2023 based on performance against four measures: (1) the Company’s total shareholder return measured against the ranked total shareholder return of the Standard & Poor’s Metals and Mining Select Industry Index components; (2) a pre-established return-on-equity target; (3) an improvement in proportional net debt; and (4) a reduction in carbon intensity in both refining (through reduced carbon dioxide emissions) and smelting (through increased production from renewable energy) operations. For PRSUs granted in 2022, the award will be earned after the end of the measurement period of January 1, 2022 through December 31, 2024 based on performance against three measures: (1) the Company’s total shareholder return measured against the ranked total shareholder return of the Standard & Poor’s Metals and Mining Select Industry Index components; (2) a pre-established return-on-equity target; and (3) a reduction in carbon intensity in both refining (through reduced carbon dioxide emissions) and smelting (through increased production from renewable energy) operations. For PRSUs granted in 2023, the award will be earned after the end of the measurement period of January 1, 2023 through December 31, 2025 based on performance against three measures: (1) the Company’s total shareholder return measured against the ranked total shareholder return of the Standard & Poor’s Metals and Mining Select Industry Index components; (2) a pre-established return-on-equity target; and (3) a reduction in carbon intensity in both refining (through reduced carbon dioxide emissions) and smelting (through increased production from renewable energy) operations. In 2023, 2022, and 2021 , Alcoa Corporation recognized stock-based compensation expense of $ 35 , $ 40 , and $ 39 , respectively, of which approximately 95 % to 100 % was related to stock units in each period. There was no stock-based compensation expense capitalized in 2023, 2022, and 2021. Stock-based compensation expense is based on the grant date fair value of the applicable equity grant. For both RSUs and PRSUs, the fair value was equivalent to the closing market price per share of Alcoa Corporation’s common stock on the date of grant in the respective periods. For stock units with a market condition, the fair value was estimated on the date of grant using a Monte Carlo simulation model, which generated a result of $ 71.12 , $ 126.86 , and $ 39.88 per unit in 2023, 2022, and 2021 , respectively. The Monte Carlo simulation model uses certain assumptions to estimate the fair value of a market-based stock unit, including volatility and a risk-free interest rate, to estimate the probability of satisfying market conditions. Volatility ( 64.88 %, 65.25 %, and 60.19 % in 2023, 2022, and 2021 , respectively) was estimated using the historical volatility of the Company calculated from daily stock price returns. The risk-free interest rate ( 4.26 %, 1.71 %, and 0.22 % in 2023, 2022, and 2021, respectively) was based on the U.S. Treasury yield curve at the time of the grant based on the remaining performance period. The activity for stock units and stock options during 2023 was as follows: Stock units Stock options Number of units Weighted average FMV per unit Number of options Weighted average exercise price Outstanding, January 1, 2023 4,606,215 $ 26.08 220,596 $ 23.88 Granted 835,083 49.95 — — Exercised — — ( 70,060 ) 17.94 Converted ( 2,090,761 ) 16.98 — — Expired or forfeited ( 354,230 ) 55.82 ( 1,928 ) 19.89 Performance share adjustment ( 862 ) 127.42 — — Outstanding, December 31, 2023 2,995,445 $ 35.54 148,608 $ 26.73 The number of Converted units includes 657,448 shares withheld to meet the Company’s statutory tax withholding requirements related to the income earned by the employees as a result of vesting in the units. 105 As of December 31, 2023 , the 148,608 outstanding stock options were fully vested and exercisable, had a weighted average remaining contractual life of 3.99 years, a total intrinsic value of $ 2 and a weighted average exercise price of $ 26.73 . Cash received from stock option exercises was $ 1 , $ 22 , and $ 25 in 2023, 2022, and 2021, respectively. The total intrinsic value of stock options exercised during 2023, 2022, and 2021 was $ 2 , $ 22 , and $ 17 , respectively. The total fair value of stock units converted during 2023, 2022, and 2021 was $ 35 , $ 32 and $ 19 , respectively. At December 31, 2023 , there was $ 23 of combined unrecognized compensation expense (pretax) related to non-vested grants of stock units. This expense is expected to be recognized over a weighted average period of 1.80 years. O. Pension and Other Postretirement Benefits Defined Benefit Plans Alcoa sponsors several defined benefit pension plans covering certain employees in the U.S. and foreign locations. Pension benefits generally depend on length of service, job grade, and remuneration. Substantially all benefits are paid through pension trusts that are sufficiently funded to ensure that all plans can pay benefits to retirees as they become due. Most salaried and non-bargaining hourly U.S. employees hired after March 1, 2006 and most bargaining hourly U.S. employees hired after January 1, 2020 participate in a defined contribution plan instead of a defined benefit plan. The Company also maintains health care postretirement benefit plans covering certain eligible U.S. retired employees and certain retirees from foreign locations. Generally, the medical plans are unfunded and pay a percentage of medical expenses, reduced by deductibles and other coverage. The Company retains the right, subject to existing agreements, to change or eliminate these benefits. All salaried and certain non-bargaining hourly U.S. employees hired after January 1, 2002 and certain bargaining hourly U.S. employees hired after July 1, 2010 are not eligible for postretirement health care benefits. As of January 1, 2023, the pension benefit plans and the other postretirement benefit plans covered an aggregate of approximately 17,000 and approximately 21,000 participants, respectively. 2023 Plan Actions. In 2023, management initiated the following actions to certain pension plans: Action #1 – In the second quarter of 2023, plan amendment accounting and related plan remeasurements were triggered within the Surinamese pension and other postretirement plans as a result of participants electing to prospectively convert their Surinamese dollar pension and Company-provided retiree medical to a United States dollar pension with no Company-provided retiree medical. As a result, Alcoa recorded a $ 15 increase to Accrued pension benefits and a $ 9 decrease to Accrued other postretirement benefits. Action #2 – In the second quarter of 2023, settlement accounting and related plan remeasurements were triggered within certain Canadian pension plans as a result of the Company's purchase of group annuity contracts to transfer the obligation to pay the remaining retirement benefits of approximately 530 retirees and beneficiaries from its Canadian defined benefit pension plans. The transfer of approximately $ 235 in both plan obligations and plan assets was completed in April 2023. As a result, Alcoa recorded a $ 22 increase to Accrued pension benefits and a $ 5 decrease to Other noncurrent assets and recognized a non-cash settlement loss of $ 21 ($ 16 after-tax) in Restructuring and other charges, net on the accompanying Statement of Consolidated Operations. Action #3 – In the third quarter of 2023, settlement accounting and a related plan remeasurement was triggered within Alcoa’s Australian pension plan as a result of participants electing lump sum payments. As a result, Alcoa recorded a $ 2 decrease to Other noncurrent assets. The following table presents certain information and the financial impacts of these actions on the accompanying Consolidated Financial Statements: Action # Number of affected plan participants Weighted average discount rate as of prior plan remeasurement date Plan remeasurement date Weighted average discount rate as of plan remeasurement date Increase to accrued pension benefits liability Decrease to other noncurrent assets Decrease to accrued other postretirement benefits liability Settlement loss (1) 1 ~ 370 5.58 % March 31, 2023 5.20 % $ 15 $ — $ ( 9 ) $ — 2 ~ 530 5.20 % April 30, 2023 4.80 % 22 ( 5 ) — 21 3 ~ 50 5.08 % September 30, 2023 5.03 % — ( 2 ) — — ~ 950 $ 37 $ ( 7 ) $ ( 9 ) $ 21 106 (1) This amount represents the net actuarial loss and was reclassified from Accumulated other comprehensive loss to Restructuring and other charges, net (see Note D ) on the accompanying Statement of Consolidated Operations. 2022 Plan Actions. In 2022, management initiated the following actions to certain pension and other postretirement benefit plans: Action #1 – In the third quarter of 2022, settlement accounting and related plan remeasurements were triggered within Alcoa’s U.S. pension plans as a result of the Company’s purchase of group annuity contracts to transfer the obligation to pay the remaining retirement benefits of approximately 4,400 retirees and beneficiaries from its U.S. defined benefit pension plans. The transfer of approximately $ 1,000 in both plan obligations and plan assets was completed in August 2022. As a result, Alcoa recorded a $ 5 increase to Accrued pension benefits and a $ 27 increase to Other noncurrent assets and recognized a non-cash settlement loss of $ 617 (pre- and after-tax) in Restructuring and other charges, net on the Statement of Consolidated Operations. Action #2 – In the third quarter of 2022, settlement accounting and related plan remeasurements were triggered within Alcoa’s U.S. pension plans as a result of participants electing lump sum payments. Alcoa recognized a non-cash settlement loss of $ 11 (pre- and after-tax) in Restructuring and other charges, net on the Statement of Consolidated Operations. Action #3 – In the third quarter of 2022, settlement accounting and a related plan remeasurement was triggered within Alcoa’s U.S. salaried pension plan as a result of participants electing lump sum payments. Alcoa recorded a $ 23 increase to Accrued pension benefits and a $ 12 decrease to Other noncurrent assets and recognized a non-cash settlement loss of $ 1 (pre- and after-tax) in Restructuring and other charges, net on the Statement of Consolidated Operations. Action #4 – In the third quarter of 2022, settlement accounting and a related plan remeasurement was triggered within Alcoa’s Australian pension plan as a result of participants electing lump sum payments. Alcoa recorded a $ 21 increase to Other noncurrent assets and recognized a non-cash settlement gain of $ 3 (pre- and after-tax) in Restructuring and other charges, net on the Statement of Consolidated Operations. Action #5 – In the fourth quarter of 2022, settlement accounting was triggered within Alcoa’s U.S. pension plans as a result of participants electing lump sum payments. Alcoa recorded a $ 3 increase to Accrued pension benefits and recognized a non-cash settlement loss of $ 6 (pre- and after-tax) in Restructuring and other charges, net on the Statement of Consolidated Operations. The following table presents certain information and the financial impacts of these actions on the accompanying Consolidated Financial Statements: Action # Number of affected plan participants Weighted average discount rate as of prior plan remeasurement date Plan remeasurement date Weighted average discount rate as of plan remeasurement date Increase to accrued pension benefits liability (1) Increase (decrease) to other noncurrent assets (1) Settlement loss (gain) (2) 1 ~ 4,400 2.90 % July 31, 2022 4.63 % $ 5 $ 27 $ 617 2 ~ 45 2.90 % July 31, 2022 4.63 % — — 11 3 ~ 5 4.57 % September 30, 2022 5.71 % 23 ( 12 ) 1 4 ~ 25 2.46 % September 30, 2022 4.99 % — 21 ( 3 ) 5 ~ 20 N/A December 31, 2022 N/A 3 — 6 ~ 4,495 $ 31 $ 36 $ 632 (1) Actions 1-4 caused interim plan remeasurements, including an update to the discount rates used to determine the benefit obligations of the affected plans. These amounts include impacts due to interim plan remeasurements. (2) These amounts represent the net actuarial loss (gain) and were reclassified from Accumulated other comprehensive loss to Restructuring and other charges, net (see Note D ) on the accompanying Statement of Consolidated Operations. 2021 Plan Actions. In 2021, management initiated the following actions to certain pension and other postretirement benefit plans: Action #1 – On March 31, 2021, Alcoa completed the sale of the Warrick Rolling Mill to Kaiser Aluminum Corporation for total consideration of $ 670 , which included the assumption of $ 69 in other postretirement benefit liabilities. Approximately 1,150 employees at the rolling operations, which includes the casthouse, hot mill, cold mills, and coating and slitting lines, became employees of Kaiser. As a result, the affected plan was remeasured, including an update to the discount rate used to determine the benefit obligation of the plan. Accrued other postretirement benefits reflects a decrease of $ 40 related to the remeasurement in addition to the $ 69 assumed by Kaiser. Further, Alcoa recognized a curtailment gain of $ 17 (pre- and after-tax) and a settlement loss of $ 26 (pre- and after-tax). 107 Action #2 – In the second quarter of 2021, settlement accounting and a related plan remeasurement was triggered within Alcoa’s U.S. salaried pension plan as a result of a high number of participants electing lump sum payments. This includes former employees of the Warrick Rolling Mill, as well as other Alcoa employees making this election at retirement. Alcoa recorded a $ 90 decrease to Accrued pension benefits related to this remeasurement and recognized a settlement loss of $ 39 (pre- and after-tax). Action #3 – In the third quarter of 2021, settlement accounting and a related plan remeasurement was triggered within Alcoa’s U.S. salaried pension plan as a result of participants electing lump sum payments. Alcoa recorded a $ 7 increase to Accrued pension benefits related to this remeasurement and recognized a settlement loss of $ 7 (pre- and after-tax). Action #4 – In the third quarter of 2021, settlement accounting and a related plan remeasurement was triggered within Alcoa’s Australian pension plan as a result of participants electing lump sum payments. Alcoa recorded a $ 38 decrease to Accrued pension benefits related to this remeasurement and recognized a settlement loss of $ 1 (pre- and after-tax). Action #5 – In the fourth quarter of 2021, the Company purchased a group annuity contract to transfer the obligation to pay the remaining retirement benefits of approximately 800 retirees and deferred vested participants from one of its Suriname pension plans to an insurance company. The transfer of $ 55 in both plan obligations and plan assets were completed on October 19, 2021. As a result, the Company recorded a settlement loss of $ 63 (pre- and after-tax) in Restructuring and other charges, net on the Statement of Consolidated Operations in the fourth quarter of 2021. Action #6 – In the fourth quarter of 2021, settlement accounting and related plan remeasurements were triggered within Alcoa’s U.S. pension plans as a result of the Company purchasing group annuity contracts to transfer the obligation to pay remaining retirement benefits of approximately 14,000 retirees and beneficiaries from its U.S. defined benefit pension plans and transferred approximately $ 1,540 in both plan obligations and plan assets. The transfers were completed on November 23, 2021 and December 16, 2021. As a result, the Company recorded a $ 84 decrease to Accrued pension benefits related to this remeasurement and recognized a non-cash settlement loss of $ 848 (pre- and after-tax) in Restructuring and other charges, net on the Statement of Consolidated Operations in the fourth quarter of 2021. Action #7 – In the fourth quarter of 2021, settlement accounting and related plan remeasurements were triggered within Alcoa’s U.S. pension plans as a result of participants electing lump sum payments (and the group annuity contracts discussed in Action 6 above). Alcoa recorded a $ 1 decrease to Accrued pension benefits related to this remeasurement and recognized a settlement loss of $ 10 (pre- and after-tax). The following table presents certain information and the financial impacts of these actions on the accompanying Consolidated Financial Statements: Action # Number of affected plan participants Weighted average discount rate as of prior plan remeasurement date Plan remeasurement date Weighted average discount rate as of plan remeasurement date Increase (decrease) to accrued pension benefits liability Decrease to accrued other postretirement benefits liability Curtailment gain (1) Settlement loss (1) 1 ~ 840 2.45 % March 31, 2021 3.06 % $ — $ ( 106 ) $ ( 17 ) $ 26 2 ~ 120 2.38 % June 30, 2021 2.71 % ( 90 ) — — 39 3 ~ 20 2.71 % September 30, 2021 2.74 % 7 — — 7 4 ~ 20 1.34 % September 30, 2021 1.53 % ( 38 ) — — 1 5 ~ 800 N/A N/A N/A N/A — — 63 6 ~ 14,000 2.59 % November 30, 2021 2.79 % ( 84 ) — — 848 7 ~ 60 2.59 % November 30, 2021 2.79 % ( 1 ) — — 10 $ ( 206 ) $ ( 106 ) $ ( 17 ) $ 994 (1) These amounts primarily represent the accelerated amortization of a portion of the existing prior service benefit for curtailments and net actuarial loss for settlements and were reclassified from Accumulated other comprehensive loss to Restructuring and other charges, net (see Note D ) on the accompanying Statement of Consolidated Operations. 108 Obligations and Funded Status Pension benefits Other postretirement benefits December 31, 2023 2022 2023 2022 Change in benefit obligation Benefit obligation at beginning of year $ 2,518 $ 4,594 $ 536 $ 710 Service cost 11 13 3 4 Interest cost 119 107 26 15 Amendments 2 — — — Actuarial losses (gains) 117 ( 803 ) ( 7 ) ( 140 ) Settlements ( 280 ) ( 1,090 ) — — Benefits paid, net of participants’ contributions ( 133 ) ( 211 ) ( 52 ) ( 53 ) Suriname resident election transfer 12 — ( 12 ) — Foreign currency translation impact 27 ( 92 ) — — Benefit obligation at end of year $ 2,393 $ 2,518 $ 494 $ 536 Change in plan assets Fair value of plan assets at beginning of year $ 2,434 $ 4,306 $ — $ — Actual return on plan assets 141 ( 528 ) — — Employer contributions 24 18 — — Participant contributions 3 4 — — Benefits paid ( 125 ) ( 204 ) — — Administrative expenses ( 9 ) ( 6 ) — — Settlements ( 280 ) ( 1,090 ) — — Annuity purchase premium refund 7 22 — — Foreign currency translation impact 24 ( 88 ) — — Fair value of plan assets at end of year $ 2,219 $ 2,434 $ — $ — Funded status $ ( 174 ) $ ( 84 ) $ ( 494 ) $ ( 536 ) Less: Amounts attributed to joint venture partners ( 11 ) ( 6 ) — — Net funded status $ ( 163 ) $ ( 78 ) $ ( 494 ) $ ( 536 ) Amounts recognized in the Consolidated Balance Sheet consist of: Noncurrent assets $ 125 $ 146 $ — $ — Current liabilities ( 10 ) ( 11 ) ( 51 ) ( 55 ) Noncurrent liabilities ( 278 ) ( 213 ) ( 443 ) ( 481 ) Net amount recognized $ ( 163 ) $ ( 78 ) $ ( 494 ) $ ( 536 ) Amounts recognized in Accumulated Other Comprehensive Loss consist of: Net actuarial loss $ 1,098 $ 1,016 $ 88 $ 95 Prior service cost (benefit) 4 2 ( 97 ) ( 111 ) Total, before tax effect 1,102 1,018 ( 9 ) ( 16 ) Less: Amounts attributed to joint venture partners 33 27 — — Net amount recognized, before tax effect $ 1,069 $ 991 $ ( 9 ) $ ( 16 ) Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss) consist of: Net actuarial loss (benefit) $ 131 $ ( 141 ) $ ( 2 ) $ ( 140 ) Amortization of accumulated net actuarial loss ( 49 ) ( 720 ) ( 5 ) ( 18 ) Prior service cost 2 — — — Amortization of prior service benefit — — 14 14 Total, before tax effect 84 ( 861 ) 7 ( 144 ) Less: Amounts attributed to joint venture partners 6 ( 11 ) — — Net amount recognized, before tax effect $ 78 $ ( 850 ) $ 7 $ ( 144 ) At December 31, 2023 , the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $ 1,119 , $ 1,054 , and ($ 65 ), respectively. At December 31, 2022 , the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $ 1,113 , $ 1,064 , and ($ 49 ), respectively. 109 Pension Plan Benefit Obligations Pension benefits 2023 2022 The aggregate projected benefit obligation and accumulated benefit obligation for all defined benefit pension plans was as follows: Projected benefit obligation $ 2,393 $ 2,518 Accumulated benefit obligation 2,285 2,453 The aggregate projected benefit obligation and fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets was as follows: Projected benefit obligation 1,636 1,465 Fair value of plan assets 1,336 1,232 The aggregate accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets was as follows: Accumulated benefit obligation 1,425 1,458 Fair value of plan assets 1,169 1,232 Components of Net Periodic Benefit Cost Pension benefits (1) Other postretirement benefits 2023 2022 2021 2023 2022 2021 Service cost $ 10 $ 13 $ 22 $ 3 $ 4 $ 4 Interest cost (2) 114 104 116 26 15 15 Expected return on plan assets (2) ( 146 ) ( 151 ) ( 281 ) — — — Recognized net actuarial loss (2) 28 88 190 5 18 21 Amortization of prior service cost (benefit) (2) — — — ( 14 ) ( 14 ) ( 14 ) Settlements (3) 21 632 968 — — 26 Curtailments (4) — — — — — ( 17 ) Net periodic benefit cost (5) $ 27 $ 686 $ 1,015 $ 20 $ 23 $ 35 (1) In 2023, 2022, and 2021 , net periodic benefit cost for U.S pension plans was $ 6 , $ 698 , and $ 962 , respectively. (2) These amounts were reported in Other expenses (income), net on the accompanying Statement of Consolidated Operations. (3) These amounts were reported in Restructuring and other charges, net on the accompanying Statement of Consolidated Operations (see Note D ). In 2023, 2022 and 2021, settlements were due to management actions (see Plan Actions above). (4) These amounts were reported in Restructuring and other charges, net on the accompanying Statement of Consolidated Operations (see Note D ). In 2021, curtailments were due to management actions (see Plan Actions above). (5) Amounts attributed to joint venture partners are not included. Assumptions. 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). Weighted average assumptions used to determine benefit obligations for pension and other postretirement benefit plans were as follows: December 31, 2023 2022 Discount rate—pension plans 5.03 % 5.41 % Discount rate—other postretirement benefit plans 5.19 5.54 Rate of compensation increase—pension plans 3.77 3.21 The yield curve model used to develop the discount rate parallels the plans’ projected cash flows and has a weighted average duration of 10 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. 110 Weighted average assumptions used to determine net periodic benefit cost for pension and other postretirement benefit plans were as follows: 2023 2022 2021 Discount rate—pension plans 5.34 % 2.66 % 1.91 % Discount rate—other postretirement benefit plans 5.45 2.46 1.99 Expected long-term rate of return on plan assets—pension plans 6.21 4.94 5.66 Rate of compensation increase—pension plans 3.21 3.11 2.58 For 2023, 2022, and 2021 , the expected long-term rate of return used by management was based on the prevailing and planned strategic asset allocations, as well as estimates of future returns by asset class. For 2024, management anticipates that 6.13 % will be the weighted average expected long-term rate of return. Assumed health care cost trend rates for U.S. other postretirement benefit plans were as follows (non-U.S. plans are not material): 2023 2022 2021 Health care cost trend rate assumed for next year 6.5 % 7.0 % 5.5 % Rate to which the cost trend rate gradually declines 5.0 % 5.0 % 4.5 % Year that the rate reaches the rate at which it is assumed to remain 2032 2028 2026 The assumed health care cost trend rate is used to measure the expected cost of gross eligible charges covered by the Company’s other postretirement benefit plans. For 2024, a 6.5 % trend rate will be used, reflecting management’s best estimate of the change in future health care costs covered by the plans. Plan Assets. Alcoa’s pension plan weighted average target and actual asset allocations at December 31, 2023 and 2022, by asset class, were as follows: Target asset allocation Plan assets at December 31, Asset class 2023 2022 2023 2022 Equities 20 % 20 % 17 % 29 % Fixed income 65 65 70 57 Other investments 15 15 13 14 Total 100 % 100 % 100 % 100 % The principal objectives underlying the investment of the pension plan assets are to ensure that the Company can properly fund benefit obligations as they become due under a broad range of potential economic and financial scenarios, maximize the long-term investment return with an acceptable level of risk based on such obligations, and broadly diversify investments across and within various asset classes to protect asset values against adverse movements. Investment risk is controlled by rebalancing to target allocations on a periodic basis and ongoing monitoring of investment manager performance. The portfolio includes an allocation to investments in long-duration corporate credit and government debt, public and private market equities, intermediate duration corporate credit and government debt, global-listed infrastructure, high-yield bonds and bank loans, real estate, and securitized credit. In late 2022, management began restructuring the asset portfolios of certain non-U.S. pension plans. The new strategy increased the amount and duration of the fixed income asset portfolios to reduce exposure to interest rates and was substantially implemented at the end of the first quarter in 2023. Investment practices comply with the requirements of applicable laws and regulations in the respective jurisdictions, including the Employee Retirement Income Security Act of 1974 (ERISA) in the United States. The following section describes the valuation methodologies used by the trustees to measure the fair value of pension plan assets. For plan assets measured at net asset value, this refers to the net asset value of the investment on a per share basis (or its equivalent) as a practical expedient. Otherwise, an indication of the level in the fair value hierarchy in which each type of asset is generally classified is provided (see Note P for the definition of fair value and a description of the fair value hierarchy). Equities— These securities consist of: (i) direct investments in the stock of publicly traded U.S. and non-U.S. companies and are valued based on the closing price reported in an active market on which the individual securities are traded (generally classified in Level 1); (ii) the plans’ share of commingled funds that are invested in the stock of publicly traded companies and are valued at net 111 asset value; and (iii) direct investments in long/short equity hedge funds and private equity (limited partnerships and venture capital partnerships) and are valued at net asset value. Fixed income— These securities consist of: (i) U.S. government debt and are generally valued using quoted prices (included in Level 1); (ii) cash and cash equivalents invested in publicly-traded funds and are valued based on the closing price reported in an active market on which the individual securities are traded (generally classified in Level 1); (iii) publicly traded U.S. and non-U.S. fixed interest obligations (principally corporate bonds and debentures) and are valued through consultation and evaluation with brokers in the institutional market using quoted prices and other observable market data (included in Level 2); and (iv) cash and cash equivalents invested in institutional funds and are valued at net asset value. Other investments— These investments include, among others: (i) real estate investment trusts valued based on the closing price reported in an active market on which the investments are traded (included in Level 1); (ii) the plans’ share of commingled funds that are invested in real estate partnerships and are valued at net asset value; (iii) direct investments in private real estate (includes limited partnerships) and are valued at net asset value; and (iv) absolute return strategy funds and are valued at net asset value. The fair value methods described above may not be indicative of net realizable value or reflective of future fair values. Additionally, while Alcoa believes the valuation methods used by the plans’ trustees are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The following table presents the fair value of pension plan assets classified under either the appropriate level of the fair value hierarchy or net asset value: December 31, 2023 Level 1 Level 2 Level 3 Net Asset Value Total Equities: Equity securities $ 108 $ — $ — $ 134 $ 242 Private equity — — — 127 127 $ 108 $ — $ — $ 261 $ 369 Fixed income: Intermediate and long-duration government/credit $ 403 $ 517 $ — $ 496 $ 1,416 Cash and cash equivalent funds 14 — — 114 128 $ 417 $ 517 $ — $ 610 $ 1,544 Other investments: Real estate $ 21 $ — $ — $ 253 $ 274 Other — — — 19 19 $ 21 $ — $ — $ 272 $ 293 Total (1) $ 546 $ 517 $ — $ 1,143 $ 2,206 December 31, 2022 Level 1 Level 2 Level 3 Net Asset Value Total Equities: Equity securities $ 71 $ — $ — $ 480 $ 551 Long/short equity hedge funds — — — 8 8 Private equity — — — 145 145 $ 71 $ — $ — $ 633 $ 704 Fixed income: Intermediate and long-duration government/credit $ 390 $ 426 $ — $ 420 $ 1,236 Cash and cash equivalent funds 38 — — 118 156 $ 428 $ 426 $ — $ 538 $ 1,392 Other investments: Real estate $ 20 $ — $ — $ 282 $ 302 Other — — — 28 28 $ 20 $ — $ — $ 310 $ 330 Total (2) $ 519 $ 426 $ — $ 1,481 $ 2,426 (1) As of December 31, 2023 , the total fair value of pension plan assets excludes a net receivable of $ 13 , which primarily represents securities not yet settled plus interest and dividends earned on various investments. (2) As of December 31, 2022 , the total fair value of pension plan assets excludes a net receivable of $ 8 , which primarily represents securities not yet settled plus interest and dividends earned on various investments. 112 Funding and Cash Flows. It is Alcoa’s policy to fund amounts for defined benefit pension plans sufficient to meet the minimum requirements set forth in applicable country benefits laws and tax laws, including ERISA for U.S. plans. From time to time, the Company contributes additional amounts as deemed appropriate. In 2023, 2022, and 2021 , cash contributions to Alcoa’s defined benefit pension plans were $ 24 , $ 17 , and $ 579 . During 2021, Alcoa made $ 500 in unscheduled contributions to certain U.S. defined benefit pension plans. The additional contributions were discretionary in nature and were funded with net proceeds from a March 2021 debt issuance (see Note M ) plus available cash on hand. There were no discretionary contributions made in 2022 or 2023. Alcoa’s minimum required contribution to defined benefit pension plans in 2024 is estimated to be $ 60 , of which approximately $ 40 is for U.S. plans. Under ERISA regulations, a plan sponsor that establishes a pre-funding balance by making discretionary contributions to a U.S. defined benefit pension plan may elect to apply all or a portion of this balance toward its minimum required contribution obligations to the related plan in future years. In 2024, management intends to make such election related to the Company’s U.S. plans. Benefit payments expected to be paid to pension and other postretirement benefit plan participants are as follows: Year ending December 31, Pension benefits Other postretirement benefits 2024 $ 180 $ 50 2025 175 50 2026 175 45 2027 180 45 2028 175 45 2029 through 2033 855 195 $ 1,740 $ 430 Defined Contribution Plans The Company sponsors savings and investment plans in several countries, primarily in Australia and the United States. In the United States, employees may contribute a portion of their compensation to the plans, and Alcoa matches a specified percentage of these contributions in equivalent form of the investments elected by the employee. Also, the Company makes contributions to a retirement savings account based on a percentage of eligible compensation for certain U.S. employees that are not able to participate in Alcoa’s defined benefit pension plans. The Company’s expenses related to all defined contribution plans were $ 80 in 2023 , $ 71 in 2022 , and $ 72 in 2021. Member-funded Pension Plans The Company contributes to member-funded pension plans for the employees of Aluminerie de Bécancour Inc. and Aluminerie de Deschambault in Canada. Alcoa makes contributions to the plans based on a percentage of the employees’ eligible compensation. The Company’s expenses related to the member-funded pension plans were $ 16 in 2023 , $ 17 in 2022 , and $ 17 in 2021. Target Benefit Plan The Company contributes to a target benefit plan for the employees of Baie-Comeau in Canada. Alcoa makes contributions to the plan based on a percentage of the employees’ eligible compensation. The Company’s expenses related to the target benefit plan were $ 8 in 2023 , $ 9 in 2022 , and $ 9 in 2021. 113 P. Derivatives and Other Financial Instruments Fair Value. The Company follows a fair value hierarchy to measure its assets and liabilities. As of December 31, 2023 and 2022, respectively, the assets and liabilities measured at fair value on a recurring basis were primarily derivative instruments. In addition, the Company measures its pension plan assets at fair value (see Note O). Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (i) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (ii) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: • Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; • Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means; and, • Level 3—Inputs that are both significant to the fair value measurement and unobservable. Derivatives. Alcoa Corporation is exposed to certain risks relating to its ongoing business operations, including the risks of changing commodity prices, foreign currency exchange rates and interest rates. Alcoa Corporation’s commodity and derivative activities include aluminum, energy, foreign exchange, and interest rate contracts, which are held for purposes other than trading. They are used to mitigate uncertainty and volatility, and to cover underlying exposures. While Alcoa does not generally enter into derivative contracts to mitigate the risk associated with changes in aluminum price, the Company may do so in isolated cases to address discrete commercial or operational conditions. Alcoa is not involved in trading activities for energy, weather derivatives, or other nonexchange commodities. Alcoa Corporation’s commodity and derivative activities are subject to the management, direction, and control of the Strategic Risk Management Committee (SRMC), which consists of at least three members, including the chief executive officer, the chief financial officer, and the chief commercial officer. The remaining member(s) are other officers and/or employees of the Company as the chief executive officer may designate from time to time. The SRMC meets on a periodic basis to review derivative positions and strategy and reports to the Audit Committee of Alcoa Corporation’s Board of Directors on the scope of its activities. Alcoa Corporation’s aluminum and foreign exchange contracts are predominately classified as Level 1 under the fair value hierarchy. All of the Level 1 contracts are designated as either fair value or cash flow hedging instruments (except as described below). Alcoa Corporation also has several derivative instruments classified as Level 3 under the fair value hierarchy, which are either designated as cash flow hedges or undesignated. Alcoa includes the changes in its equity method investee’s Level 2 derivatives in Accumulated other comprehensive loss. The following tables present the detail for Level 1 and 3 derivatives (see additional Level 3 information in further tables below): 2023 2022 Balance at December 31, Assets Liabilities Assets Liabilities Level 1 derivative instruments $ 16 $ 9 $ 84 $ 14 Level 3 derivative instruments 16 1,297 52 1,212 Total $ 32 $ 1,306 $ 136 $ 1,226 Less: Current 29 214 134 200 Noncurrent $ 3 $ 1,092 $ 2 $ 1,026 2023 2022 Year ended December 31, Unrealized gain (loss) recognized in Other comprehensive loss Realized gain (loss) reclassed from Other comprehensive loss to earnings Unrealized gain (loss) recognized in Other comprehensive loss Realized gain (loss) reclassed from Other comprehensive loss to earnings Level 1 derivative instruments $ 31 $ 86 $ 116 $ 35 Level 3 derivative instruments ( 326 ) ( 221 ) ( 247 ) ( 345 ) Noncontrolling and equity interest (Level 2) — 5 12 ( 6 ) Total $ ( 295 ) $ ( 130 ) $ ( 119 ) $ ( 316 ) 114 The 2023 realized gain of $ 86 on Level 1 cash flow hedges was comprised of a $ 91 gain recognized in Sales and a $ 5 loss recognized in Cost of goods sold. The 2022 realized gain of $ 35 on Level 1 cash flow hedges was comprised of a $ 40 gain recognized in Sales and a $ 5 loss recognized in Cost of goods sold. The following table presents the outstanding quantities of derivative instruments classified as Level 1: Classification December 31, 2023 December 31, 2022 Aluminum (in kmt) Commodity buy forwards 78 176 Aluminum (in kmt) Commodity sell forwards 46 337 Foreign currency (in millions of euro) Foreign exchange buy forwards 48 60 Foreign currency (in millions of euro) Foreign exchange sell forwards 9 — Foreign currency (in millions of Norwegian krone) Foreign exchange buy forwards 138 302 Foreign currency (in millions of Brazilian real) Foreign exchange buy forwards 467 1,008 Foreign currency (in millions of Brazilian real) Foreign exchange sell forwards — 7 Foreign currency (in millions of Canadian dollar) Foreign exchange buy forwards 31 — Alcoa routinely uses Level 1 aluminum derivative instruments to manage exposures to changes in the fair value of firm commitments for the purchases or sales of aluminum. Additionally, Alcoa uses Level 1 aluminum derivative instruments to manage exposures to changes in the LME associated with the Alumar (Brazil) restart ( April 2022 through December 2023 ) and the San Ciprián (Spain) strike (expired October 2022 ). As a result of delays with the Alumar restart, it became probable that certain of the original forecasted transactions would not occur by the end of the originally specified time period and Alcoa dedesignated certain aluminum sell forwards. The Company reclassified the related unrealized gain of $ 11 and $ 20 included in Accumulated other comprehensive loss to Sales during the year ended December 31, 2023 and 2022, respectively. In conjunction with the dedesignations, the Company entered into aluminum buy forwards in 2023 and 2022 for the same volume and periods which were also not designated. The unrealized and realized gains and losses on the aluminum buy and sell forwards that are not designated offset resulting in no impact to Alcoa’s earnings. Alcoa Corporation uses Level 1 foreign exchange forward contracts to mitigate the risk of foreign exchange exposure related to euro power purchases in Norway (expires December 2026 ), U.S. dollar aluminum sales in Norway (expires June 2025 ), U.S. dollar alumina and aluminum sales in Brazil (expires August 2025 ), and U.S. dollar aluminum sales in Canada (expires March 2025 ). Derivative instruments classified as Level 3 in the fair value hierarchy represent those in which management has used at least one significant unobservable input in the valuation model. Alcoa Corporation uses a discounted cash flow model to fair value all Level 3 derivative instruments. Inputs in the valuation models for Level 3 derivative instruments are composed of the following: (i) quoted market prices (e.g., aluminum prices on the 10 -year LME forward curve and energy prices), (ii) significant other observable inputs (e.g., information concerning time premiums and volatilities for certain option type embedded derivatives and regional premiums for aluminum contracts), and (iii) unobservable inputs (e.g., aluminum and energy prices beyond those quoted in the market, and estimated credit spread between Alcoa and the counterparty). For periods beyond the term of quoted market prices for aluminum, Alcoa Corporation estimates the price of aluminum by extrapolating the 10 -year LME forward curve. For periods beyond the term of quoted market prices for the Midwest premium, management estimates the Midwest premium based on recent transactions. Where appropriate, valuations are adjusted for various factors such as liquidity, bid/offer spreads, and credit considerations. Such adjustments are generally based on available market evidence (Level 2). In the absence of such evidence, management’s best estimate is used (Level 3). If a significant input that is unobservable in one period becomes observable in a subsequent period, the related asset or liability would be transferred to the appropriate classification (Level 1 or 2) in the period of such change (there were no such transfers in the periods presented). There were no sales or settlements of Level 3 derivative instruments in the periods presented. 115 Level 3 derivative instruments outstanding as of December 31, 2023 are described in the table below: Description Designation Contract Termination Unobservable Inputs Impacting Valuation Sensitivity to Inputs Power contracts Embedded derivative that indexes the price of power to the LME price of aluminum plus the Midwest premium Cash flow hedge of forward sales of aluminum March 2026 December 2029 February 2036 LME price, Midwest premium and MWh per year Increase in LME price and/or the Midwest premium results in a higher cost of power and an increase to the derivative liability Embedded derivative that indexes the price of power to the LME price of aluminum Cash flow hedge of forward sales of aluminum September 2027 LME price and MWh per year Increase in LME price results in a higher cost of power and an increase to the derivative liability Embedded derivative that indexes the price of power to the credit spread between the Company and the counterparty Not designated October 2028 Estimated credit spread Wider credit spread results in a higher cost of power and increase in the derivative liability Financial contracts Hedge power prices Not designated June 2035 LME price and power price Lower prices in the power market or higher LME prices result in an increase in the derivative liability In December 2022, Alcoa entered into a financial contract with a counterparty to hedge power price exposure through March 31, 2023. The Financial contract was designated as a cash flow hedge of future sales of power. Unrealized gains and losses were recognized in Accumulated other comprehensive loss on the accompanying Consolidated Balance Sheet, and realized gains and losses were recognized in Cost of goods sold on the accompanying Statement of Consolidated Operations. In addition to the instruments presented above, Alcoa had a financial contract that expired in July 2021 that hedged the anticipated power requirements at one of its smelters and was designated as a cash flow hedge of future purchases of electricity. In March 2021, Alcoa entered into four financial contracts (Financial contracts (undesignated), below) with three counterparties to hedge the anticipated power requirements at this smelter for the period from August 1, 2021 through June 30, 2026. A fifth financial contract (undesignated) was entered into in November 2021, with an effective date of September 30, 2022 through June 30, 2026. In August 2023, the Company entered into a nine-year financial contract (undesignated) effective July 1, 2026 when the current contracts end. Three of these financial contracts include LME-linked pricing components and do not qualify for hedge accounting treatment. Management elected not to apply hedge accounting treatment for the other three financial contracts. Unrealized and realized gains and losses on these financial contracts are included in Other expenses (income), net on the accompanying Statement of Consolidated Operations. At December 31, 2023 , the outstanding Level 3 instruments are associated with seven smelters. At December 31, 2023 and 2022 , the power contracts with embedded derivatives designated as cash flow hedges hedge forecasted aluminum sales of 1,456 kmt and 1,683 kmt, respectively. 116 The following table presents quantitative information related to the significant unobservable inputs described above for Level 3 derivative instruments (megawatt hours in MWh): December 31, 2023 Unobservable Input Unobservable Input Range Asset Derivatives Financial contract (undesignated) $ 16 Interrelationship of forward energy price, LME forward price and the Consumer Price Index Electricity (per MWh) 2024: $ 50.99 2024: $ 53.55 LME (per mt) 2024: $ 2,352 2024: $ 2,424 Total Asset Derivatives $ 16 Liability Derivatives Power contract $ 197 MWh of energy needed to produce the forecasted mt of aluminum LME (per mt) 2024: $ 2,352 2027: $ 2,796 Electricity Rate of 4 million MWh per year Power contracts 1,100 MWh of energy needed to produce the forecasted mt of aluminum LME (per mt) 2024: $ 2,352 2029: $ 2,904 2036: $ 3,153 Midwest premium (per pound) 2024: $ 0.1880 2029: $ 0.2300 2036: $ 0.2300 Electricity Rate of 18 million MWh per year Power contract — MWh of energy needed to produce the forecasted mt of aluminum LME (per mt) 2024: $ 2,352 2024: $ 2,381 Midwest premium (per pound) 2024: $ 0.1880 2024: $ 0.2140 Electricity Rate of 2 million MWh per year Power contract (undesignated) — Estimated spread between the 30-year debt yield of Alcoa and the counterparty Credit spread 1.15 %: 30-year debt yield spread 6.33 %: Alcoa (estimated) 5.18 %: counterparty Total Liability Derivatives $ 1,297 The fair values of Level 3 derivative instruments recorded in the accompanying Consolidated Balance Sheet were as follows: Asset Derivatives December 31, 2023 December 31, 2022 Derivatives designated as hedging instruments: Current—financial contract $ — $ 20 Total derivatives designated as hedging instruments $ — $ 20 Derivatives not designated as hedging instruments: Current—financial contract $ 16 $ 32 Total derivatives not designated as hedging instruments $ 16 $ 32 Total Asset Derivatives $ 16 $ 52 Liability Derivatives Derivatives designated as hedging instruments: Current—power contracts $ 210 $ 195 Noncurrent—power contracts 1,087 1,017 Total derivatives designated as hedging instruments $ 1,297 $ 1,212 Total Liability Derivatives $ 1,297 $ 1,212 The following table shows the net fair values of the Level 3 derivative instruments at December 31, 2023 and the effect on these amounts of a hypothetical change (increase or decrease of 10%) in the market prices or rates that existed as of December 31, 2023: Fair value asset (liability) Index change of + / -10% Power contracts $ ( 1,297 ) $ 300 Embedded credit derivative - - Financial contracts 16 8 117 The following tables present a reconciliation of activity for Level 3 derivative instruments: Assets 2023 Power contracts Financial contracts January 1, 2023 $ — $ 52 Total gains or losses included in: Sales (realized) ( 4 ) — Cost of goods sold (realized) — ( 20 ) Other expenses, net (unrealized/realized) — ( 5 ) Other comprehensive income (unrealized) 4 — Settlements and other — ( 11 ) December 31, 2023 $ — $ 16 Change in unrealized gains or losses included in earnings for derivative instruments held at December 31, 2023: Other expenses, net $ — $ ( 5 ) Liabilities 2023 Power contracts January 1, 2023 $ 1,212 Total gains or losses included in: Sales (realized) ( 245 ) Other comprehensive income (unrealized) 330 December 31, 2023 $ 1,297 Assets 2022 Financial contracts January 1, 2022 $ 2 Total gains or losses included in: Sales (realized) — Other income, net (unrealized/realized) 171 Other comprehensive income (unrealized) 20 Settlements and other ( 141 ) December 31, 2022 $ 52 Change in unrealized gains or losses included in earnings for derivative instruments held at December 31, 2022: Other income, net $ 171 Liabilities 2022 Power contracts Embedded credit derivative January 1, 2022 $ 1,290 $ 3 Total gains or losses included in: Sales (realized) ( 345 ) — Other income, net (unrealized/realized) — ( 3 ) Other comprehensive (income) loss (unrealized) 267 — December 31, 2022 $ 1,212 $ — Change in unrealized gains or losses included in earnings for derivative instruments held at December 31, 2022: Other income, net $ — $ ( 3 ) Derivatives Designated As Hedging Instruments—Cash Flow Hedges Assuming market rates remain constant with the rates at December 31, 2023 , a realized loss of $ 210 related to power contracts is expected to be recognized in Sales over the next 12 months. Material Limitations The disclosures with respect to commodity prices and foreign currency exchange risk do not consider the underlying commitments or anticipated transactions. If the underlying items were included in the analysis, the gains or losses on the futures contracts may be offset. Actual results will be determined by several factors that are not under Alcoa Corporation’s control and could vary significantly from those factors disclosed. 118 Alcoa Corporation is exposed to credit loss in the event of nonperformance by counterparties on the above instruments, as well as credit or performance risk with respect to its hedged customers’ commitments. Alcoa Corporation does not anticipate nonperformance by any of these parties. Contracts are with creditworthy counterparties and are further supported by cash, treasury bills, or irrevocable letters of credit issued by carefully chosen banks. In addition, various master netting arrangements are in place with counterparties to facilitate settlement of gains and losses on these contracts. Other Financial Instruments. The carrying values and fair values of Alcoa Corporation’s other financial instruments were as follows: 2023 2022 December 31, Carrying value Fair value Carrying value Fair value Cash and cash equivalents $ 944 $ 944 $ 1,363 $ 1,363 Restricted cash 103 103 111 111 Short-term borrowings 56 56 — — Long-term debt due within one year 79 79 1 1 Long-term debt, less amount due within one year 1,732 1,702 1,806 1,744 Cash and cash equivalents and Restricted cash. The carrying amounts approximate fair value because of the short maturity of the instruments. The fair value amounts for Cash and cash equivalents and Restricted cash were classified in Level 1 of the fair value hierarchy. Short-term borrowings and Long-term debt, including amounts due within one year. The fair value of Long-term debt, less amount due within one year was based on quoted market prices for public debt and on interest rates that are currently available to Alcoa Corporation for issuance of debt with similar terms and maturities for non-public debt. The fair value amounts for all Short-term borrowings and Long-term debt were classified in Level 2 of the fair value hierarchy. Q. Income Taxes Provision for income taxes. The components of (Loss) income before income taxes were as follows: 2023 2022 2021 Domestic $ ( 277 ) $ ( 652 ) $ ( 663 ) Foreign ( 307 ) 1,354 1,862 Total $ ( 584 ) $ 702 $ 1,199 Provision for income taxes consisted of the following: 2023 2022 2021 Current: Federal $ — $ — $ 8 Foreign 211 445 473 State and local — — 1 $ 211 $ 445 $ 482 Deferred: Federal — ( 3 ) 6 Foreign ( 22 ) 222 141 State and local — — — $ ( 22 ) $ 219 $ 147 Total $ 189 $ 664 $ 629 Federal includes U.S. income taxes related to foreign income. 119 A reconciliation of the U.S. federal statutory rate to Alcoa’s effective tax rate was as follows: 2023 2022 2021 U.S. federal statutory rate 21.0 % 21.0 % 21.0 % Taxes on foreign operations—rate differential 7.1 9.9 10.8 Tax credits 1.4 ( 0.2 ) — Adjustment of prior year income taxes 0.3 — — Noncontrolling interest 0.2 0.8 0.5 Internal legal entity reorganizations 0.2 ( 9.0 ) — Tax holidays 0.1 ( 5.2 ) ( 2.8 ) Impacts of the U.S. Tax Cuts and Jobs Act of 2017 — — 2.0 Uncertain tax positions ( 0.1 ) 0.4 — Equity loss ( 5.3 ) ( 2.0 ) ( 2.5 ) Tax on foreign operations—other ( 6.1 ) 1.3 1.7 Changes in valuation allowances ( 50.8 ) 76.7 23.4 Other ( 0.4 ) 0.9 ( 1.6 ) Effective tax rate ( 32.4 %) 94.6 % 52.5 % Certain income earned by AWAB is eligible for a tax holiday, which decreases the tax rate on this income from 34 % to 15.25 %, which will result in future cash tax savings. The holiday related to production at the Alumar refinery was originally expected to end on December 31, 2027. During 2023, it was extended to December 31, 2032. The holiday related to the operation of the Juruti (Brazil) bauxite mine will end on December 31, 2026. In 2021, it was determined that the deferred taxes associated with income subject to the tax holiday would be fully exhausted within the holiday period and the amounts were therefore maintained on the balance sheet at the holiday tax rate. In 2022, the Company’s projection of the r eversal of deferred tax assets during the holiday tax period was lowered, and as a result, the remainder was revalued at the statutory rate of 34 %, resulting in a discrete income tax benefit of $ 33 , which is included in Tax holidays, above. In 2023, the Company determined that it was no longer more likely than not that the deferred tax asset at AWAB would be realized and recorded a full valuation allowance against the deferred tax asset (see below). As a result, the amount reflected in Tax holidays, above, is zero with respect to AWAB as of December 31, 2023. In October 2022, Alcoa completed the liquidation of Alcoa Saudi Rolling Inversiones S.L. (ASRI), a wholly owned subsidiary that previously held the Company’s investment in MRC. This liquidation resulted in a deductible loss in the Netherlands and a tax benefit of $ 94 was recognized in 2022, however, this tax benefit was substantially offset by a valuation allowance. In December 2022, Alcoa commenced an internal reorganization to reduce its number of legal entities in Norway from four to one to simplify accounting and treasury functions and reduce external costs. As a result of the simplification, the Company recorded a deferred tax expense of $ 30 in 2022. Deferred income taxes. The components of deferred tax assets and liabilities based on the underlying attributes without regard to jurisdiction were as follows: 2023 2022 December 31, Deferred tax assets Deferred tax liabilities Deferred tax assets Deferred tax liabilities Tax loss carryforwards $ 2,042 $ — $ 1,781 $ — Employee benefits 312 — 297 — Derivatives and hedging activities 312 10 283 24 Loss provisions 161 — 174 — Interest 142 6 127 2 Depreciation 94 318 128 336 Investment basis differences 78 — 75 — Lease assets and liabilities 34 33 24 23 Tax credit carryforwards 24 — 23 — Deferred income/expense 16 131 10 153 Other 25 — 36 — $ 3,240 $ 498 $ 2,958 $ 538 Valuation allowance ( 2,595 ) — ( 2,333 ) — Total $ 645 $ 498 $ 625 $ 538 120 The following table details the expiration periods of the deferred tax assets presented above: December 31, 2023 Expires within 10 years Expires within 11-20 years No expiration Other Total Tax loss carryforwards $ 203 $ 333 $ 1,471 $ 35 $ 2,042 Tax credit carryforwards 24 — — — 24 Other ( 1 ) — 154 1,021 1,174 Valuation allowance ( 226 ) ( 333 ) ( 1,613 ) ( 423 ) ( 2,595 ) Total $ — $ — $ 12 $ 633 $ 645 Deferred tax assets with no expiration may still have annual limitations on utilization. Other represents deferred tax assets whose expiration is dependent upon the reversal of the underlying temporary difference. The total deferred tax asset (net of valuation allowance) is supported by projections of future taxable income exclusive of reversing temporary differences and taxable temporary differences that reverse within the carryforward period. The composition of Alcoa’s net deferred tax asset by jurisdiction as of December 31, 2023 was as follows: Domestic Foreign Total Deferred tax assets $ 1,050 $ 2,190 $ 3,240 Valuation allowance ( 988 ) ( 1,607 ) ( 2,595 ) Deferred tax liabilities ( 62 ) ( 436 ) ( 498 ) Total $ — $ 147 $ 147 The Company has several income tax filers in various foreign countries. Of the $ 147 net deferred tax asset included under the Foreign column in the table above, approximately 90 % relates to six of Alcoa’s income tax filers (the Foreign Filers) as follows: a $ 135 net deferred tax asset for Alcoa Canada Company in Canada; a $ 90 net deferred tax asset for Alcoa-Lauralco Management Company in Canada; a $ 39 net deferred tax asset for Alcoa Wolinbec Company in Canada; a $ 19 net deferred tax asset for Alcoa Islandi and a $ 35 net deferred tax asset for Fjarðaál, both in Iceland; and a $ 185 net deferred tax liability for AofA in Australia. The future realization of the net deferred tax asset for each of the Foreign Filers was based on projections of the respective future taxable income (defined as the sum of pretax income, other comprehensive income, and permanent tax differences), exclusive of reversing temporary differences and carryforwards. The realization of the net deferred tax assets of the Foreign Filers is not dependent on any future tax planning strategies. Accordingly, management concluded that the net deferred tax assets of the Foreign Filers referenced above will more likely than not be realized in future periods, resulting in no need for a partial or full valuation allowance as of December 31, 2023. In December 2023, Alcoa recorded a valuation allowance of $ 154  against the net deferred tax assets of AWAB, of which $ 106  related to the balance as of December 31, 2022. The 2023 full valuation allowance for AWAB was a result of AWAB’s three-year cumulative loss position for the period ended December 31, 2023. The majority of AWAB’s net deferred tax assets relate to prior net operating losses; the loss carryforwards are not subject to an expiration period. AWAB’s profitability in future periods could prompt the Company to evaluate the realizability of the deferred tax asset and assess the possibility of a reversal of the valuation allowance, which could have a significant impact on net income in the quarter the valuation allowance is reversed. The Company’s subsidiaries in Iceland had a full valuation allowance recorded against deferred tax assets, which was established in 2015 and 2017, as the Company believe d it was more likely than not that these tax benefits would not be realized. During 2023, after considering all positive and negative evidence, including the expectation that the jurisdiction will remain in a three-year cumulative income position, the Company determined that it is more likely than not that the net deferred tax assets will be realized. Based on this conclusion, the Company reversed the valuation allowance totaling $ 58 during 2023, generating a non-cash benefit from income taxes. 121 In December 2022, Alcoa recorded a valuation allowance of $ 217 against the net deferred tax assets of Alcoa Alumínio (Alumínio), of which $ 150 related to the balance as of December 31, 2021. The 2022 full valuation allowance for Alumínio was a result of Alumínio’s three-year cumulative loss position for the period ended December 31, 2022. Although the Company entered into aluminum contracts to manage exposures associated with the restart, these contracts were held by another legal entity, and the associated realized gains are not available to Alumínio to offset the restart losses. While management believes Alumínio will return to profitability in the future with the restart of the Alumar smelter, current volatility in the market does not provide a reliable basis for concluding that it is more likely than not that Alumínio’s net deferred tax assets, which consist primarily of tax loss carryforwards with indefinite life, will be realized. Alumar smelter profitability in future periods could prompt the Company to evaluate the realizability of the deferred tax asset and assess the possibility of a reversal of the valuation allowance, which could have a significant impact on net income in the quarter the valuation allowance is reversed. In 2021, Alcoa recorded a valuation allowance of $ 103 against the net deferred tax assets of Alúmina Española, S.A. (Española). Management concluded that it was more likely than not that Española’s net deferred tax assets, which consisted primarily of tax loss carryforwards, would not be realized as the entity’s sole operating asset, the San Ciprián refinery, was in a three-year cumulative loss position for the period ended December 31, 2021. This cumulative loss position was the result of recent operating losses due to the high energy costs in Spain and the impact of the refinery workers’ strike on the fourth quarter of 2021. After weighing all available positive and negative evidence as of December 31, 2023, management’s position continues to be that it is more likely than not that Alcoa Corporation will not realize the benefit of these deferred tax assets and continues to have a full valuation allowance recorded against the deferred tax assets. The following table details the changes in the valuation allowance: December 31, 2023 2022 2021 Balance at beginning of year $ ( 2,333 ) $ ( 2,062 ) $ ( 2,127 ) Establishment of new allowances (1) ( 106 ) ( 150 ) ( 103 ) Net change to existing allowances (2) ( 113 ) ( 151 ) 139 Foreign currency translation ( 43 ) 30 29 Balance at end of year $ ( 2,595 ) $ ( 2,333 ) $ ( 2,062 ) (1) Reflects valuation allowances initially established as a result of a change in management’s judgment regarding the realizability of deferred tax assets. (2) Reflects movements in previously established valuation allowances, which increase or decrease as the related deferred tax assets increase or decrease. Such movements occur as a result of a change in management’s judgment regarding previously established valuation allowances, remeasurement due to a tax rate change and changes in the underlying attributes of the deferred tax assets, including expiration of the attribute and reversal of the temporary difference that gave rise to the deferred tax asset. Undistributed net earnings. Certain earnings of Alcoa’s foreign subsi diaries are deemed to be permanently reinvested outside the United States. The cumulative amount of Alcoa’s foreign undistributed net earnings deemed to be permanently reinvested was approximately $ 2,676 as of December 31, 2023. Alcoa Corporation has several commitments and obligations related to the Company’s operations in various foreign jurisdictions; therefore, management has no plans to distribute such earnings in the foreseeable future. Alcoa Corporation continuously evaluates its local and global cash needs for future business operations and anticipated debt facilities, which may influence future repatriation decisions. If these earnings were distributed in the form of dividends or otherwise, Alcoa could be subject to foreign income or withholding taxes and state income taxes. Due to the uncertainty of the manner in which the undistributed earnings would be brought back to the United States and the tax laws in effect at that time, it is not practicable to estimate the tax liability that might be incurred if such earnings were remitted to the U.S. 122 Unrecognized tax benefits. Alcoa and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various foreign and U.S. state jurisdictions. With few exceptions, the Company is not subject to income tax examinations by tax authorities for years prior to 2014 . The U.S. federal income tax filings of the Company’s U.S. consolidated tax group have been examined through the 2018 tax year. Foreign jurisdiction tax authorities are in the process of examining income tax returns of several of Alcoa’s subsidiaries for various tax years. Excluding the Australia tax matter discussed in Note S , the period under foreign examination includes the income tax years from 2014 through 2022 . For U.S. state income tax purposes, the Company and its subsidiaries remain subject to income tax examinations for the 2017 tax year and forward. In the third quarter of 2020, AofA paid approximately $ 74 (A$ 107 ) to the ATO related to the tax dispute described in Note S . Upon payment, AofA recorded a noncurrent prepaid tax asset, 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 taxable income. AofA applied this deduction beginning in the third quarter of 2020, reducing cash tax payments. Interest compounded in future years is also deductible against AofA’s income in future 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 2023, AofA continued to record its tax provision and tax liability without effect of the ATO assessment, since it expects to prevail. The tax payable will remain on AofA’s balance sheet as a noncurrent liability, increased by the tax effect of subsequent periods’ interest deductions, until dispute resolution, which is expected to take several years. The noncurrent liability resulting from the cumulative interest deductions was approximately $ 199 (A$ 293 ) and $ 174 (A$ 260 ) at December 31, 2023 and 2022, respectively. The reserve balance for unrecognized tax benefits is included in Noncurrent income taxes on the Consolidated Balance Sheet. A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalties) was as follows: December 31, 2023 2022 2021 Balance at beginning of year $ 5 $ 4 $ 4 Additions for tax positions of prior years — 2 — Reductions for tax positions of prior years — — — Expiration of the statute of limitations — ( 1 ) — Foreign currency translation — — — Balance at end of year $ 5 $ 5 $ 4 For all periods presented, a portion of the balance at end of year pertains to state tax liabilities, which are presented before any offset for federal tax benefits. The effect of unrecognized tax benefits, if recorded, that would impact the annual effective tax rate for 2023, 2022, and 2021 would be 1 %, 1 %, and 0 %, respectively, of (Loss) income before income taxes. Alcoa does not anticipate that changes in its unrecognized tax benefits will have a material impact on the Statement of Consolidated Operations during 2024. It is the Company’s policy to recognize interest and penalties related to income taxes as a component of the Provision for income taxes on the accompanying Statement of Consolidated Operations. In 2023, 2022, and 2021 Alcoa recognized $ 1 , $ 1 , and $ 0 , in interest and penalties, respectively. Due to the expiration of the statute of limitations, settlements with tax authorities, and refunded overpayments, the Company also recognized interest income of $ 1 , $ 1 , and $ 0 in 2023, 2022, and 2021, respectively. As of December 31, 2023 and 2022 , the amount accrued for the payment of interest and penalties was $ 4 and $ 3 , respectively. Other Matters. On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022 (IRA), which includes a 15 % minimum tax on book income of certain large corporations, a 1 % excise tax on net stock repurchases after December 31, 2022, and several tax incentives to promote clean energy. As a result of the provisions of the IRA, we will incur an excise tax of 1 % for certain common stock repurchases made subsequent to December 31, 2022, which will be reflected in the cost of purchasing the underlying shares. The minimum corporate tax did not have an impact on the Company for 2023 and will not have an impact on the Company for 2024. The IRA contains a number of tax credits and other in centives for investments in renewable energy production, carbon capture, and other climate-related actions, as well as the production of critical minerals. In December 2023, the U.S. Treasury issued guidance on Section 45X of the Advanced Manufacturing Tax Credit. The Notice of Proposed Rulemaking (the Notice) clarifies that commercial grade aluminum can qualify for the credit, which was designed to incentivize domestic production of critical materials important for the transition to clean energy. In the fourth quarter of 2023, the Company recorded a benefit of $ 36 in Cost of goods sold and Other receivables related to its Massena West smelter (New York) and its Warrick smelter (Indiana). 123 R. Asset Retirement Obligations The following table details the carrying value of recorded AROs by major category, of which $ 217 and $ 117 was classified as a current liability as of December 31, 2023 and 2022, respectively: December 31, 2023 2022 Closure of bauxite residue areas $ 437 $ 342 Mine reclamation 328 279 Spent pot lining disposal 124 115 Demolition 76 61 Landfill closure 24 31 Balance at end of year $ 989 $ 828 The following table details the changes in the total carrying value of recorded AROs: December 31, 2023 2022 Balance at beginning of year $ 828 $ 738 Accretion expense 33 20 Liabilities incurred 254 224 Payments ( 148 ) ( 114 ) Reversals of previously recorded liabilities ( 8 ) ( 12 ) Foreign currency translation and other 30 ( 28 ) Balance at end of year $ 989 $ 828 Liabilities incurred in 2023 include: • $ 97 for changes in closure estimates of operating bauxite residue areas; • $ 87 for new mining areas opened during the year and higher estimated mine reclamation costs; • $ 36 related to the closure of the previously curtailed Intalco smelter; • $ 23 related to spent pot lining treatment an d disposal; • $ 10 for changes in closure estimates of non-operating bauxite residue areas; and, • $ 1 related to an accrual for demolition for the closure of a potline at Warrick Operations. The additional accruals were primarily recorded with corr esponding capitalized asset retirement costs except for $ 15 related to non-operating bauxite residue areas at the Alumar refinery, spent pot lining and treatment, and mine reclamation which was recorded to Cost of goods sold; and $ 41 related to the closure of the Intalco smelter, updated estimates for spent pot lining treatment and disposal at a previously closed site, and demolition accruals for the closure of a potline at Warrick Operations, which was recorded to Restructuring and other charges, net on the accompanying Statement of Consolidated Operations (see Note D). Liabilities incurred in 2022 include: • $ 81 related to improvements required on both operating and non-operating bauxite residue areas at the Poços de Caldas and Alumar refineries for changes in closure estimates and to comply with updated impoundment regulations in the regions; • $ 79 for new mining areas opened during the year and higher estimated mine reclamation costs; • $ 28 related to spent pot lining treatment and disposal; • $ 18 for bauxite residue areas related to water management at non-operating bauxite residue areas and changes in engineering designs for closure of operating bauxite residue areas; • $ 15 related to the closure of the previously curtailed magnesium smelter in Addy (Washington). The facility has been fully curtailed since 2001; and, • $ 3 related to accruals for demolition projects at closed sites. The additional accruals were primarily recorded with corresponding capitalized asset retirement costs (see Note B ) except for $ 72 related to non-operating bauxite reside areas which was recorded to Cost of goods sold at the Poços de Caldas and Alumar refineries and $ 34 related to the closure of the magnesium smelter in Addy and adjustments to other previously closed sites which were recorded to Restructuring and other charges, net on the accompanying Statement of Consolidated Operations (see Note D). In 2023 , reversals of previously recorded liabilities included a reversal of $ 8 due to changes in estimates at various sites and the completion of a site demolition project. In 2022 , reversals of previously recorded liabilities included a reversal of $ 12 due to the completion of demolition projects at numerous permanently closed sites. 124 The estimated timing of cash outflows for recorded AROs at December 31, 2023 was as follows: 2024 $ 217 2025 – 2028 573 Thereafter 199 Total $ 989 Changes to the estimates may result in material changes to the recorded AROs that may require an increase to or a reversal of previously recorded liabilities, as well as changes in the timing of cash outflows. S. Contingencies and Commitments Contingencies Environmental Matters Alcoa Corporation participates in environmental assessments and cleanups at several locations. These include currently or previously owned or operated facilities and adjoining properties, and waste sites, including Superfund (Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)) sites. Alcoa Corporation’s environmental remediation reserve balance reflects the most probable costs to remediate identified environmental conditions for which costs can be reasonably estimated. The following table details the changes in the carrying value of recorded environmental remediation reserves: Balance at December 31, 2020 $ 322 Liabilities incurred 21 Cash payments ( 23 ) Reversals of previously recorded liabilities ( 17 ) Foreign currency translation and other 6 Balance at December 31, 2021 309 Liabilities incurred 32 Cash payments ( 26 ) Reversals of previously recorded liabilities ( 30 ) Foreign currency translation and other ( 1 ) Balance at December 31, 2022 284 Liabilities incurred 39 Cash payments ( 55 ) Reversals of previously recorded liabilities ( 1 ) Foreign currency translation and other 1 Balance at December 31, 2023 $ 268 At December 31, 2023 and 2022 , the current portion of the remediation reserve balance was $ 66 and $ 58 , respectively. In 2023, the Company incurred liabilities of $ 39 primarily related to $ 14 for the closure of the previously curtailed Intalco smelter and $ 13 for an increase in estimated costs associated with ongoing remediation work at the previously closed Longview (Washington) site which were recorded in Restructuring and other charges, net on the Statement of Consolidated Operations, and $ 12 for an increase in estimated costs associated with ongoing remediation work at various other sites which was recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations. Payments related to remediation expenses applied against the reserve were $ 55 in 2023. These amounts include mandated expenditures as well as those not required by any regulatory authority or third party. Further, the Company reversed reserves of $ 1 during 2023 due to the determination that certain remaining site remediation is no longer required. In 2022, the Company incurred liabilities of $ 32 primarily related to $ 14 for the closure of the previously curtailed magnesium smelter in Addy (Washington), $ 6 for estimates for environmental remediation at the Point Henry site, $ 4  for a new phase of work at the former East St. Louis site and $ 9  for environmental activities at various sites. These charges are recorded in Cost of goods sold and Restructuring and other charges, net (see Note D) on the accompanying Statement of Consolidated Operations. Payments related to remediation expenses applied against the reserve were $ 26 in 2022. These amounts include mandated expenditures as well as those not required by any regulatory authority or third party. Further, the Company reversed reserves of $ 30  during 2022, primarily related to changes in estimates for site remediation at Massena East of $ 18 and Suralco of $ 5 , and completion of remediation at a previously closed site in Brazil of $ 6 . 125 In 2021, the Company incurred liabilities of $ 21 primarily related to remediation design considerations at the Longview site in Washington, closure of the Wenatchee aluminum smelter in Washington, environmental activities at the Point Comfort site in Texas, closure of the anode plant at the Lake Charles site in Louisiana, and wetlands mitigation at the Longview site in Washington, as well as other increases for ongoing monitoring and maintenance at various sites. These charges are primarily recorded in Cost of goods sold and Restructuring and other charges, net on the accompanying Statement of Consolidated Operations. Payments in 2021 include mandated expenditures as well as those not required by any regulatory authority or third-party. Further, the Company reversed reserves of $ 17 related to: • $ 7 due to the determination that previously estimated site remediation is not required at the previously closed Tennessee site; • $ 5 due to lower costs for waste treatment at a previously closed Suriname site; and, • $ 5 due to lower costs for site remediation related to a previously closed site in Brazil. The estimated timing of cash outflows from the environmental remediation reserve at December 31, 2023 was as follows: 2024 $ 66 2025 – 2028 112 Thereafter 90 Total $ 268 Reserve balances at December 31, 2023 and 2022 , associated with significant sites with active remediation underway or for future remediation were $ 211 and $ 234 , respectively. In management’s judgment, the Company’s reserves are sufficient to satisfy the provisions of the respective action plans. Upon changes in facts or circumstances, a change to the reserve may be required. The Company’s significant sites include: Suriname —The reserve associated with the 2017 closure of the Suralco refinery and bauxite mine is for treatment and disposal of refinery waste and soil remediation. The work began in 2017 and is expected to be completed at the end of 2025. Hurricane Creek, Arkansas —The reserve associated with the 1990 closure of two mining areas and refineries near Hurricane Creek, Arkansas is for ongoing monitoring and maintenance for water quality surrounding the mine areas and residue disposal areas. Massena, New York —The reserve associated with the 2015 closure of the Massena East smelter by the Company’s subsidiary, Reynolds Metals Company, is for subsurface soil remediation to be performed after demolition of the structures. Remediation work commenced in 2021 and will take four to eight years to complete. Point Comfort, Texas —The reserve associated with the 2019 closure of the Point Comfort alumina refinery is for disposal of industrial wastes contained at the site, subsurface remediation, and post-closure monitoring and maintenance. The final remediation plan is currently being developed, which may result in a change to the existing reserve. Sherwin, Texas —In connection with the 2018 settlement of a dispute related to the previously-owned Sherwin alumina refinery, the Company’s subsidiary, Copano Enterprises LLC, accepted responsibility for the final closure of four bauxite residue waste disposal areas (known as the Copano facility). Work commenced on the first residue disposal area in 2018 and is expected to take up to an additional four years to complete, depending on the nature of its potential re-use. Other than ongoing maintenance and repair activities, work on the next three areas has not commenced but is expected to be completed by 2048, depending on its potential re-use. Longview, Washington — In connection with a 2018 Consent Decree and Cleanup Action Plan with the State of Washington Department of Ecology, the Company’s subsidiary, Northwest Alloys as landowner, accepted certain responsibilities for future remediation of contaminated soil and sediments at the site located near Longview, Washington. In December 2020, the lessee of the land, who was a partner in the remediation of the site, filed for bankruptcy and exited the site in January 2021. The full site remediation project design, long-term and post-closure monitoring and maintenance at the site was approved in March 2023. In the third quarter of 2023, changes in scope and cost increases for remediation resulted in an increase to the reserve. The project is planned to be completed in the next two years. Addy, Washington —The reserve associated with the 2022 closure of the Addy magnesium smelter facility is for site-wide remediation and investigation and post-closure monitoring and maintenance. Remediation work is not expected to begin until 2026 and will take three to five years to complete. The final remediation plan is currently being developed, which may result in a change to the existing reserve. Ferndale, Washington —The reserve associated with the 2023 closure of the Intalco aluminum smelter in Ferndale, Washington is for below grade site remediation and five years of post-closure maintenance and monitoring. The final remediation plan is under review. 126 Other Sites —The Company is in the process of decommissioning various other plants and remediating sites in several countries for potential redevelopment or to return the land to a natural state. In aggregate, there are remediation projects at 32 other sites that are planned or underway. These activities will be completed at various times in the future with the latest expected to be in 2026, after which ongoing monitoring and other activities may be required. At December 31, 2023 and 2022 , the reserve balance associated with these activities was $ 57 and $ 50 , respectively. Tax Brazil (AWAB) — In March 2013, AWAB was notified by the Brazilian Federal Revenue Office (RFB) that approximately $ 110 (R$ 220 ) of value added tax credits previously claimed were being disallowed and a penalty of 50 % was assessed. Of this amount, AWAB received $ 41 (R$ 82 ) in cash in May 2012. The value added tax credits were claimed by AWAB for both fixed assets and export sales related to the Juruti bauxite mine and Alumar refinery expansion for tax years 2009 through 2011. The RFB has disallowed credits they allege belong to the consortium in which AWAB owns an interest and should not have been claimed by AWAB. Credits have also been disallowed as a result of challenges to apportionment methods used, questions about the use of the credits, and an alleged lack of documented proof. AWAB presented defense of its claim to the RFB on April 8, 2013. In February 2022, the RFB notified AWAB that it had inspected the value added tax credits claimed for 2012 and disallowed $ 4 (R$ 19 ). In its decision, the RFB allowed credits of $ 14 (R$ 65 ) that were similar to those previously disallowed for 2009 through 2011. In July 2022, the RFB notified AWAB that it had inspected the value added tax credits claimed for 2013 and disallowed $ 13 (R$ 70 ). In its decision, the RFB allowed credits of $ 16 (R$ 84 ) that were similar to those previously disallowed for 2009 through 2011. The decisions on the 2012 and 2013 credits provide positive evidence to support management’s opinion that there is no basis for these credits to be disallowed. AWAB received the 2012 allowed credits with interest of $ 9 (R$ 44 ) in March 2022 and the 2013 allowed credits with interest of $ 6 (R$ 31 ) in August 2022. AWAB will continue to dispute the credits that were disallowed for 2012 and 2013. If AWAB is successful in this administrative process, the RFB would have no further recourse. If unsuccessful in this process, AWAB has the option to litigate at a judicial level. Separately from AWAB’s administrative appeal, in June 2015, a new tax law was enacted repealing the provisions in the tax code that were the basis for the RFB assessing a 50 % penalty in this matter. As such, the estimated range of reasonably possible loss for these matters is $ 0 to $ 49 (R$ 239 ). It is management’s opinion that the allegations have no basis; however, at this time, the Company is unable to reasonably predict an outcome for this matter. Australia (AofA) — In December 2019, AofA received a statement of audit position (SOAP) from the Australian Taxation Office (ATO) related to the pricing of certain historic third-party alumina sales. The SOAP proposed adjustments that would result in additional income tax payable by AofA. During 2020, the SOAP was the subject of an independent review process within the ATO. At the conclusion of this process, the ATO determined to continue with the proposed adjustments and issued Notices of Assessment (the Notices) that were received by AofA on July 7, 2020. The Notices asserted claims for income tax payable by AofA of approximately $ 145 (A$ 214 ). The Notices also included claims for compounded interest on the tax amount totaling approximately $ 481 (A$ 707 ). On September 17, 2020, the ATO issued a position paper with its preliminary view on the imposition of administrative penalties related to the tax assessment issued to AofA. This paper proposed penalties of approximately $ 87 (A$ 128 ). AofA disagreed with the Notices and with the ATO’s proposed position on penalties. During 2020, AofA lodged formal objections to the Notices, provided a submission on the ATO’s imposition of interest and submitted a response to the ATO’s position paper on penalties. After the ATO completes its review of AofA’s response to the penalties position paper, the ATO could issue a penalty assessment. To date, AofA has not received a response to its submission on the ATO’s imposition of interest or its response to the ATO’s position paper on penalties. Through February 1, 2022, AofA did not receive a response from the ATO on AofA’s formal objections to the Notices and, on that date, AofA submitted statutory notices to the ATO requiring the ATO to make decisions on AofA’s objections within a 60-day period. On April 1, 2022, the ATO issued its decision disallowing the Company’s objections related to the income tax assessment, while the position on penalties and interest remains outstanding. On April 29, 2022, AofA filed proceedings in the Australian Administrative Appeals Tribunal (AAT) against the ATO to contest the Notices, a process which could last several years. The AAT held the first directions hearing on July 25, 2022 ordering AofA to file its evidence and related materials by November 4, 2022, ATO to file its materials by April 14, 2023 and AofA to file reply materials by May 26, 2023. AofA filed its evidence and related materials on November 4, 2022. The ATO did not file its materials by April 14, 2023. At a directions hearing on May 17, 2023, the ATO was granted an extension to file its materials by August 18, 2023. At a directions hearing on September 26, 2023, the ATO was granted an additional extension to file its materials by November 3, 2023. The ATO filed its materials on November 13, 2023. At a directions hearing on November 22, 2023, AofA was ordered to file any reply materials by March 15, 2024. The substantive hearing is scheduled for June 2024. 127 The Company maintains that the sales subject to the ATO’s review, which were ultimately sold to Aluminium Bahrain B.S.C., were the result of arm’s length transactions by AofA over two decades and were made at arm’s length prices consistent with the prices paid by other third-party alumina customers. In accordance with the ATO’s dispute resolution practices, AofA paid 50 % of the assessed income tax amount exclusive of interest and any penalties, or approximately $ 74 (A$ 107 ), during the third quarter 2020, and the ATO is not expected to seek further payment prior to final resolution of the matter. If AofA is ultimately successful, any amounts paid to the ATO as part of the 50 % payment would be refunded. AofA funded the payment with cash on hand and recorded the payment within Other noncurrent assets as a noncurrent prepaid tax asset; the re lated December 31, 2023 balance is $ 73 (A$ 107 ). Further interest on the unpaid tax will continue to accrue during the dispute. The initial interest assessment and the additional interest accrued are deductible against taxable income by AofA but would be taxable as income in the year the dispute is resolved if AofA is ultimately successful. AofA applied this deduction beginning in the third quarter of 2020, reducing cash tax payments. At December 31, 2023 and December 31, 2022, total reductions in cash tax payments were $ 199 (A$ 293 ) and $ 174 (A$ 260 ), respectively, and are reflected within Other noncurrent liabilities and deferred credits as a noncurrent accrued tax liability. 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. However, because the ultimate resolution of this matter is uncertain at this time, the Company cannot predict the potential loss or range of loss associated with the outcome, which may materially affect its results of operations and financial condition. References to any assessed U.S. dollar amounts presented in connection with this matter have been converted into U.S. dollars from Australian dollars based on the exchange rate in the respective period. AofA is part of the Company’s joint venture with Alumina Limited, an Australian public company listed on the Australian Securities Exchange. The Company and Alumina Limited own 60 % and 40 %, respectively, of the joint venture entities, including AofA. Other Spain — In July 2019, the Company completed the divestiture of the Avilés and La Coruña (Spain) aluminum facilities to PARTER Capital Group AG (PARTER) in a sale process endorsed by the Spanish government and supported by the workers’ representatives following a collective dismissal process. In connection with the divestiture, Alcoa committed to make financial contributions to the divested entities of up to $ 95 ; a total of $ 78 was paid through December 31, 2021. In early 2020, PARTER sold a majority stake in the facilities to an unrelated party. Alcoa had no knowledge of the subsequent transaction prior to its announcement and on August 28, 2020, Alcoa filed a lawsuit with the Court of First Instance in Madrid, Spain asserting that the sale was in breach of the sale agreement between Alcoa and PARTER. In June 2023, the Court of First Instance in Madrid issued a declaratory judgment in Alcoa’s favor ruling that the transaction between PARTER and the unrelated party was a breach of the sale agreement. There was no financial compensation to the Company as a result of this ruling. Related to this subsequent sale transaction, certain proceedings and investigations were initiated by or at the request of the employees of the facilities against their current employers, the new owners of the current employers, and Alcoa, alleging that certain agreements from the 2019 collective dismissal process remain in force and that, under such agreements, Alcoa remains liable for certain related employment benefits. During 2022, Alcoa reached a Global Settlement Agreement (GSA) with the workers of the divested Avilés and La Coruña facilities to settle various legal disputes related to the 2019 divestiture, and Alcoa recorded a charge of $ 79 in Restructuring and other charges, net to reflect its estimated liability for the GSA. In July 2023, the Supreme Court of Spain ratified the GSA. Upon completion of the remaining administrative and judicial approvals, the Company made cash payments of $ 76 to the former employees of the facilities in 2023 in accordance with the GSA. The remaining payments will be made in the early 2024 . General In addition to the matters discussed above, various other lawsuits, claims, and proceedings have been or may be instituted or asserted against Alcoa Corporation, including those pertaining to environmental, safety and health, commercial, tax, product liability, intellectual property infringement, employment, and employee and retiree benefit matters, and other actions and claims arising out of the normal course of business. While the amounts claimed in these other matters may be substantial, the ultimate liability is not readily determinable because of the considerable uncertainties that exist. Accordingly, it is possible that the Company’s liquidity or results of operations in a particular period could be materially affected by one or more of these other matters. However, based on facts currently available, management believes that the disposition of these other matters that are pending or asserted will not have a material adverse effect, individually or in the aggregate, on the financial position of the Company. 128 Commitments Purchase Obligations. Alcoa Corporation is party to unconditional purchase obligations for energy that expire between 2040 and 2041 . Commitments related to these contracts total $ 56 in 2024, $ 59 in 2025, $ 61 in 2026, $ 63 in 2027, $ 65 in 2028, and $ 770 thereafter. Expenditures under these contracts totaled $ 53 in 2023 , $ 58 in 2022 , and $ 86 in 2021 . Additionally, the Company has entered into other purchase commitments for energy, raw materials, and other goods and services, which total $ 3,896 in 2024, $ 1,998 in 2025, $ 1,566 in 2026, $ 1,448 in 2027, $ 1,407 in 2028, and $ 8,757 thereafter. AofA has a gas supply agreement to power its three alumina refineries in Western Australia which began in July 2020 for a 12-year period. The terms of this agreement required AofA to make a prepayment of $ 500 prior to 2017. At December 31, 2023, prepayments of $ 37 and $ 283 were included in Prepaid expenses and other current assets and Other noncurrent assets (see Note U), respectively, on the accompanying Consolidated Balance Sheet. At December 31, 2022, prepayments of $ 37 and $ 311 were included in Prepaid expenses and other current assets and Other noncurrent assets (see Note U), respectively, on the accompanying Consolidated Balance Sheet. Guarantees of Third Parties. As of December 31, 2023 and 2022 , the Company had no outstanding potential future payments for guarantees issued on behalf of a third party. Bank Guarantees and Letters of Credit. Alcoa Corporation and its subsidiaries have outstanding bank guarantees and letters of credit related to, among others, energy contracts, environmental obligations, legal and tax matters, leasing obligations, workers compensation, and customs duties. The total amount committed under these instruments, which automatically renew or expire at various dates between 2024 and 2025 , was $ 294 (includes $ 86 issued under a standby letter of credit agreement —see below) at December 31, 2023 . Additionally, ParentCo has outstanding bank guarantees and letters of credit related to the Company of $ 13 at December 31, 2023 . In the event ParentCo would be required to perform under any of these instruments, ParentCo would be indemnified by Alcoa Corporation in accordance with the Separation and Distribution Agreement. Likewise, the Company has outstanding bank guarantees and letters of credit related to ParentCo of $ 8 at December 31, 2023. In the event Alcoa Corporation would be required to perform under any of these instruments, the Company would be indemnified by ParentCo in accordance with the Separation and Distribution Agreement. In December 2023, AofA committed to provide a bank guarantee for approximately $ 68 (A$ 100 ) which demonstrates Alcoa’s confidence that its operations will not impair drinking water supplies. In August 2017, Alcoa Corporation entered into a standby letter of credit agreement, which expires on June 27, 2024 (amended in August 2018, May 2019, May 2021, June 2022, and January 2024), with three financial institutions. The agreement provides for a $ 200 facility used by the Company for matters in the ordinary course of business. Alcoa Corporation’s obligations under this facility are secured in the same manner as obligations under the Company’s revolving credit facility. Additionally, this facility contains similar representations and warranties and affirmative, negative, and financial covenants as the Company’s Revolving Credit Facility (see Note M). As of December 31, 2023 , letters of credit aggregating $ 86 were issued under this facility. Surety Bonds. Alcoa Corporation has outstanding surety bonds primarily related to tax matters, contract performance, workers compensation, environmental-related matters, and customs duties. The total amount committed under these bonds, which automatically renew or expire at various dates between 2024 and 2028 , was $ 190 at December 31, 2023 . Additionally, ParentCo has outstanding surety bonds related to the Company of $ 8 at December 31, 2023 . In the event ParentCo would be required to perform under any of these instruments, ParentCo would be indemnified by Alcoa Corporation in accordance with the Separation and Distribution Agreement. Likewise, the Company has outstanding surety bonds related to ParentCo of $ 5 at December 31, 2023 . In the event Alcoa Corporation would be required to perform under any of these instruments, the Company would be indemnified by ParentCo in accordance with the Separation and Distribution Agreement. 129 T. Leasing The Company records a right-of-use asset and lease liability for several types of operating leases, including land and buildings, alumina refinery process control technology, plant equipment, vehicles, and computer equipment. These amounts are equivalent to the aggregate future lease payments on a discounted basis. The leases have remaining terms of less than one to 59 years . The discount rate applied in determining the present value of lease payments is the Company’s incremental borrowing rate at the lease commencement date, unless there is a rate implicit in the lease agreement. The Company does not have material financing leases. Lease expense and operating cash flows include: 2023 2022 Costs from operating leases $ 53 $ 54 Variable lease payments $ 25 $ 16 Short-term rental expense $ 11 $ 2 The weighted average lease term and weighted average discount rate were as follows: December 31, 2023 2022 Weighted average lease term for operating leases (years) 12.9 5.1 Weighted average discount rate for operating leases 6.7 % 5.6 % The following represents the aggregate right-of-use assets and related lease obligations recognized in the Consolidated Balance Sheet: December 31, 2023 2022 Properties, plants, and equipment, net $ 135 $ 89 Other current liabilities 31 30 Other noncurrent liabilities and deferred credits 104 59 Total operating lease liabilities $ 135 $ 89 New leases of $ 76 and $ 26 were added during the years ended December 31, 2023 and 2022, respectively. The future cash flows related to the operating lease obligations as of December 31, 2023 were as follows: Year Ending December 31, 2024 $ 40 2025 26 2026 20 2027 16 2028 11 Thereafter 112 Total lease payments (undiscounted) 225 Less: discount to net present value ( 90 ) Total $ 135 U. Other Financial Information Interest Cost Components 2023 2022 2021 Amount charged to expense $ 107 $ 106 $ 195 Amount capitalized 4 3 6 $ 111 $ 109 $ 201 130 Other Expenses (Income), Net 2023 2022 2021 Equity loss (income) $ 228 $ 27 $ ( 105 ) Foreign currency (gains) losses, net ( 64 ) 9 3 Net loss (gain) from asset sales 14 10 ( 354 ) Net loss (gain) on mark-to-market derivative instruments (P) 5 ( 174 ) ( 25 ) Non-service costs – pension and other postretirement benefits (O) 13 60 47 Other, net ( 62 ) ( 50 ) ( 11 ) $ 134 $ ( 118 ) $ ( 445 ) In 2023 , Other, net of $ 62 was primarily related to interest income on interest bearing accounts. In 2022 , Other, net of $ 50 was primarily related to interest income for the Brazil value added tax credits (see Note S). In 2021 , Net loss (gain) from asset sales of $ 354 was primarily related to the sales of the Rockdale site, the Eastalco site, and the Warrick Rolling Mill (see Note C). Other Noncurrent Assets December 31, 2023 2022 Value added tax credits $ 336 $ 294 Prepaid gas transmission contract 297 285 Gas supply prepayment (S) 283 311 Deferred mining costs, net 187 161 Goodwill (L) 146 145 Prepaid pension benefit (O) 125 146 Noncurrent prepaid tax asset (S) 73 72 Noncurrent restricted cash (see below) 71 56 Intangibles, net (L) 37 29 Other 95 94 $ 1,650 $ 1,593 Prepaid gas transmission contract —As part of a previous sale transaction of an equity investment, Alcoa maintained access to approximately 30 % of the Dampier to Bunbury Natural Gas Pipeline transmission capacity in Western Australia for gas supply to three alumina refineries. At December 31, 2023 and 2022 , AofA had an asset of $ 297 and $ 285 , respectively, representing prepayments made under the agreement for future gas transmission services. Value added tax credits —The Value added tax (VAT) credits (federal and state) relate to two of the Company’s subsidiaries in Brazil, AWAB and Alumínio, concerning the Alumar smelter and refinery and the Juruti mine. The mine, refinery and smelter pay VAT on the purchase of goods and services used in the mining, alumina, and production process. The credits generally can be utilized to offset the VAT charged on domestic sales of bauxite, alumina, and aluminum. In March 2021, the Brazil Federal Supreme Court provided clarification on an earlier ruling that found the inclusion of state VAT within the federal VAT tax base to be unconstitutional. After receiving further clarification from the court in August 2021, the Company finalized the amount of its recovery claim and submitted the claim to the tax authorities in the fourth quarter and received acknowledgment of the claim in January 2022. As a result, in the fourth quarter of 2021, the Company recorded $ 95 of additional VAT credits in Other noncurrent assets, $ 47 payable to Arconic Corporation within Other noncurrent liabilities, $ 34 in Sales, and $ 14 of interest income within Other (income) expenses, net. The amount due to Arconic Corporation represents VAT payments related to an Arconic subsidiary previously owned by Alumínio for a portion of the claim years and covered under agreements related to the Separation Transaction (see Note A). In the fourth quarter of 2018, after an assessment of the future realizability of Brazil state VAT credits recorded, the Company established an allowance on the accumulated state VAT credit balances and stopped recording any future credit benefits. With the restart of the Alumar smelter and its first metal sales in June 2022, the Company had the ability to monetize these credits. In June 2022, the Company reversed the allowance with a credit of $ 83 to Restructuring and other charges, net and reversed the subsequent additions to the valuation allowance with a credit to Cost of goods sold of $ 46 (same accounts as when incurred). 131 Other Noncurrent Liabilities and Deferred Credits December 31, 2023 2022 Noncurrent accrued tax liability (S) $ 199 $ 174 Operating lease obligations (T) 104 59 Accrued compensation and retirement costs 94 95 Value added tax credits payable to Arconic Corporation 58 51 Deferred energy credits 42 37 Noncurrent restructuring reserve (D) 15 3 Deferred alumina sales revenue 20 28 Other 36 39 $ 568 $ 486 Deferred energy credits —Deferred energy credits relate to cash received for 2022 and 2021 carbon dioxide emissions related to the San Ciprián smelter and refinery during the years ended December 31, 2023 and 2022, respectively, from a governmental agency in Spain. The terms of the credits require the Company to comply with certain conditions for a period of three years. These deferred credits will be recognized as a reduction to Cost of goods sold once it is determined to be probable the Company will satisfy all conditions. Should the Company not meet all conditions during the three-year period, the credits will be repaid to the governmental agency. Value added tax credits payable to Arconic Corporation —See, Other noncurrent assets—Value added tax credits, above. Cash and Cash Equivalents and Restricted Cash December 31, 2023 2022 Cash and cash equivalents $ 944 $ 1,363 Current restricted cash 32 55 Noncurrent restricted cash 71 56 $ 1,047 $ 1,474 Restricted cash primarily relates to commitments made for the D