Good morning. Welcome to Alcoa's 2025 Investor Day. It's great to see many of you who I've known for a long time and a few new faces in the audience. Back in 2023 when I became CEO, I was really excited to become CEO. And you can imagine my excitement to become CEO. I was excited for a number of reasons. First, I'd been preparing for that for over 20 years and worked for the company now for 25 years. But more importantly was the opportunity that I saw for the company. Tremendous opportunity, tremendous potential for the company. And today we're going to talk about that potential and the opportunity. Over the last two years, we're not going to spend a lot of time today on a retrospective, but over the last two years, we've done a tremendous job capturing a lot of the opportunities and the potential for the company. But the point I want to make today is that we are the investment choice in the aluminum industry. And I say that for three reasons. First of all, strength of our assets and the capabilities that we have within the company. You're going to get to see today many of our leaders and you'll get a good sense for exactly how strong the leadership team is and really want you to understand that that transcends through the organization. So strong assets, strong capabilities. Secondly, the market today is different than the market has been over the last two decades. Today we're going to talk about growth in the aluminum industry, but we're also going to talk about constrained supply. That's not been the case over the last two decades, and that's different today than it has been.
And thirdly, you're going to hear us talk about discipline growth. We have opportunities to grow this company. We grew this company substantially in 2024 with the acquisition of Aluminina Limited. It was a tremendous acquisition. It went better than expected and we grew the company. We will have opportunities to grow the company again in the future and you'll see us do that in a disciplined value creating way. We invented this industry. 1888, Charles Martin Hall invented the process for making aluminum, similar process that we use today. For 137 years, Alcoa has been focused on improving our company. In 2016, we spun out of Alcoa Inc., had a fantastic time over the last nine years running the upstream business as an independent company. And it's brought us to our investor day today. We're global in today's world. That's important. Supply chains can get challenged all over the world. We're truly global. Not only are we global, we're near our end markets. Very focused on North America and Europe. And Renato is going to talk to you today about how those two markets will be in deficit in the future.
Not only are we global, we're relevant. We produce about 40 million metric tons of bauxite every year, 10 million metric tons of alumina and 2 million metric tons of aluminum. Have nearly 14,000 employees around the world, 25 operations, eight countries. So we have that breadth and relevance that other people in this industry don't have. And we're profitable. $1.6 billion of EBITDA done in 2024 generating cash. So those three things are what I want you to remember around our assets and our capabilities. Significant improvement over the last five years. I'm not going to spend too much time talking about the last five years because I know you want to know about the future. But I think the last five years are indicative of the capabilities that our organization has and our focus on performance. Haven't shied away from some of the hard decisions. So we've taken the decision to close Kwinana. That facility was an older facility, not as cost competitive. So we're closing Kwinana. We've restarted the San Luis smelter. We're at about 95% of that restart today. And San Luis is extremely focused on improving the profitability of the site. San Cyprien, we're meeting the viability agreement requirements in San Cyprien. We're about 35% through in the restart of San Cyprien today. So we're making really good progress there.
The Aluminina Limited transaction, Molly's going to cover, but the Aluminina Limited transaction was a transaction that was 20 years in the making and is truly a transformational transaction for our company. We increased our exposure to historically the most profitable part of our industry, which is bauxite and alumina. The Aluminina Limited transaction allowed us to get the Modern transaction done. For those of you who don't remember, we swapped out a 25% stake in the ownership of the refinery and the smelter, and now we own shares in the parent company. 86 million shares of the parent company. We're very excited that the gold prices are going up, copper prices are going up, and the value of our ownership stake has increased in Minera. Today, it's worth around $1.5 billion. So, a tremendous asset that we have on our balance sheet.
I'll remind you that we've been very disciplined about monetizing assets. Some people talk about this. We actually do it. So, we've monetized a billion dollars worth of assets. And when Molly comes up here, listen to what she's going to say about the future of monetization of assets. That's allowed us to pay down debt. That's allowed us to strengthen the balance sheet. The balance sheet is as strong as it's ever been in the company. We have a net debt target of $1 to $1.5 billion. We sit currently at about 1.7, so we're very close to our optimal debt structure that leads to optimal WACC, leads to the highest firm value. We've returned money to shareholders, a billion dollars over the last five years. So today I think the company is better positioned than it has ever been to execute on our strategy. In addition to that, the market is improving. So you see metal prices today $2,850, $2,900. The market today is not the same market that we've had over the last two decades. So Renato will run you through that. I won't steal all of his thunder, but we see underlying growth in demand, especially in our two key markets in North America and Europe.
And the supply side, this has never been a demand problem in aluminum, right? Demand for aluminum grows every year because it's used in so many different applications. It's been a supply issue. We're now seeing that with the Chinese sticking to the 45 million metric ton cap, that supply is actually being constrained at the same time. In addition to that, capital costs outside of China are rising. So the first question on your mind may be, well, what about Indonesia? We're seeing that Indonesian capital costs are two and a half to three times what the capital costs were in China. And that's an important fact. So our assets are strong, our capabilities are great, and we're in a growing market.
I'm going to take just a moment to talk through differentiators that make Alcoa different than other companies in this industry. Over the last three years, something is fundamentally different in Alcoa. And what that is is the proven operations model. You're going to get to meet Matt Reed today. You're going to see how impressive of an operator he really is. But we have structured the organization so that there is responsibility in the regions and they are supported by the centers of excellence. We have over 300 people in our centers of excellence that ensure that our operations run safely, run stably and run profitably. We've reintroduced the Alcoa Business System. The Alcoa Business System has been simplified. If you have followed us for as long as I've been with the company, we had made it a little bit too complex and we launched the Alcoa Business System in the late 90s, but today we're relaunching it in a much simplified fashion. It's focused on problem solving on the shop floor. And then I've talked a little bit about it, but our closeness to customers. So in a world where there is tariffs, it's important to be in those regions and we have operations in the US, Canada, and so we have good strong proximity to our customers.
We are going to have an interesting session and it was interesting because I was talking to somebody outside over coffee this morning around culture. Can you really change culture in a company? And my answer was, I think we already have changed the culture in Alcoa. It might not be exactly where we want it to be, but we're in the process of significantly changing the culture of Alcoa. And Tammy and I, Tammy's the head of HR, will talk about how we're doing that. You will also see around you some of the pictures around you. And what this does is it shows that we are reinvigorating the company around a new vision which is to build a legacy of excellence for future generations. And so you saw that in the video. It's the new vision. I believe that's a vision that can completely engage every one of our 14,000 Alcoans. And we're going to have that discussion with Tammy. So I'll leave it to that.
We're global. We're large. So we're relevant. But we all know in a commodity business you have to be low cost. And so our bauxite business, first quartile, and these are crude numbers. Our aluminum business, still first quartile even with the poor bauxite quality that we have in Western Australia today. We're going to talk about how we fix that and the timing around getting into better bauxite. But still low-cost alumina refineries around the world. Aluminum, we're in the third quartile now. Now we've bounced between the second and the third quartile and we've eliminated the Minera smelter out of those calculations. Minera was a low-cost smelter but we've obviously monetized it for a huge amount of value. So the cost curve is very flat between the second and the third quartile and so we typically will bounce between the second and the third. So, not only are we low-cost, we have the broadest suite of green products. We're the only company that has an alumina low-carbon product and we've got two aluminum low-carbon products. 86% of our energy is renewably sourced. So, we're really in good position for the green transition.
But we continue to invest in technology. We continue to invest in technology that will do two things for us. One is breakthrough technologies. You've all heard about ELIAS and the refinery of the future. We continue to invest in those and we will give you an update on where those stand. But there are small technology applications that help us creep our production around the world. When you look at our refining production, we've been able to creep it at generally between one and two percent a year. Same with the smelting production. And Matt's going to walk you through some of the production records that we've had over the last couple of years. You may be wondering, what are we doing in the AI space? We currently have about 70 use cases in the AI space that bubble up from the shop floor that will make incremental improvements in the company. And we're closely connected to our customers.
We launched a commercial excellence program in 2024. That commercial excellence program is really meant to make sure that we're as close as we possibly can to our customers to ensure that we deliver the most value to our customers and ultimately get paid for delivering that value to our customers. And it ends with financial discipline. We will walk you through the capital allocation model. This hasn't changed fundamentally from what you've seen over the last few years. Starts with a very strong balance sheet. That's the core of being a strong commodity company, having a strong balance sheet. It then gets to sustaining the operations that generate the cash flow. That's critically important because they generate the cash flow. Once we have excess free cash flow, we'll use it in three different places. These are not necessarily in rank order, but we've shown that we're willing to return cash to stockholders. We've done that in the past. It will be a priority out of the different options there. We transformed the portfolio. We spent a lot of money over the last couple of years. We're going to continue to spend money on things like Kwinana, closing it in a very responsible way. And then in addition to that there will be opportunities to grow this company. We have had targeted growth over the last couple of years where we've invested in our casthouses to meet customer demands. We had the big growth program in the Aluminina Limited transaction which has been very successful. So we will follow a disciplined capital allocation model.
So I bring it back to where I started two years ago. Got the top job, super excited, and I recognized that there was really three things that would make us the investment of choice. Strength of the assets and our capabilities, the fact that the market has changed, the market has turned, and we have disciplined growth opportunities. So, with that, the other thing that I'm super excited about is that you're going to get to meet Matt Reed, and Matt will walk you through the operations.
Good morning everyone. I'm Matt Reed. I'm Alcoa's chief operating officer and I'm really excited actually to be talking to you today about operational excellence and innovation. And over the course of the next 20 minutes or so, I'm really going to be emphasizing three points. We are a production company. Operations are absolutely central to everything that we do. We have a constant drive to improve every day, every level, every part of our operations organization to improve. And I'm going to show you some examples of that on the way through. And we've got an organizational model, and Bill referenced it briefly, that facilitates nimble decision-making and execution throughout. We're building a philosophy, a mindset, a capability based on speed and on ambition.
I'm going to start with safety. And safety is not only our number one priority, but it's also really very much at the heart of our identity as an organization, as Alcoa. And sadly, as I suspect many of you know from Bill's update during our most recent earnings call, at the end of July, one of our employees at the Alumar smelter was fatally injured. That's our first fatality in over five years and was very much a sobering reminder for us of how important building and strengthening our culture of safe behavior is. And that building of a safe culture of behavior is not just about safety, but it's also about strong operations because we know that a safe organization is also an organization that is capable of delivering operational performance.
So, we're working on not only building that culture of safe behavior, but also in parallel engineering out fatal risk. I'm going to spend a couple of minutes talking about some of our key activities. Over the last 18 months, we have developed a tool in order to assess safety maturity at each of our sites. So we have an understanding of safety maturity across each of our operating sites and we're using that to drive behavioral improvement in three key areas. What we call leadership time in field, secondly our three critical risk questions, that's our code for fatal risk questions, and then the courage to stop. And I'm actually really excited about our leadership time in field work because we're getting really strong feedback from both leaders and frontline employees alike as to the power of that program. And simply this is about us getting our leaders more often in the field where the work is done with our frontline people where the risks are, engaging deeply, coaching, but also getting a better understanding of the business. That's not only improving our safety performance, it's increasing engagement and it's also driving therefore improved productivity.
Now, I was at our Warrick smelter six weeks or so ago and I suspect that a number of you, probably most of you here and also online, have got a better understanding of what Indiana is like in summer than I do. But it was 100 degrees or so outside, in our pot rooms it would be 120 degrees plus. And I spent some time with our pot tenders. And that group, the conversation I had with that team, the level of engagement from that team was night and day compared to previous interactions. And I completely put that down to the effectiveness of our leader time in field work. I spoke about the three critical risk questions. This is about making sure that our systems and our behaviors line up and support each other to ensure that our people understand the fatal risk associated with their tasks and that they are certain that those fatal risks are controlled before that task commences.
You've got in front of you on my left hand side, your right, some examples of our risk reduction work and in particular chemical burns. Over the last three years, we've achieved something like a 50% reduction in serious injuries associated with chemical burns across our refineries. And we've done that through deep engagement with our workforce, thousands of interactions. In fact, we've done it with engineers spending considerable periods of time with frontline employees, taking those ideas from frontline employees, putting the engineering effort and hours in, and developing a range of really innovative solutions to eliminate that risk. And we've got now a whole range of tools, of equipment, of technologies that are named after those frontline employees that we're deploying throughout our organization.
Now we're as you know a fully integrated pure play aluminum company. We've got high quality, in fact we've got world-class bauxite deposits. And through years, decades in fact, of research, of improvement, of hard work, we have world-leading post-mining rehabilitation practices. Our refineries have long been considered a benchmark in the industry. And today, that remains the case. Our refineries in WA and our teams associated with them, the work they have done to adapt to the lower grade bauxite that we are currently consuming is so impressive. And it's not only impressive because of the impact of that work but it's impressive because of the speed at which we've been able to pivot and that comes back to the point that I made earlier about driving a culture, a mindset of speed and ambition.
We invented the smelting industry. We invented aluminum smelting 137 odd years ago. And even today, we continue to drive productivity improvements, production improvements, to innovate, to develop proprietary technologies, to develop new alloys. And I'll reference a couple of those things later and certainly Renato will as he talks after the break.
What makes all of this possible? And Bill referenced it earlier, is our global operations blueprint. And really this is why I say that we're the premier aluminum operator. Three points again. Firstly, our Alcoa Business System, or ABS, this is an industry benchmark. It's been an industry benchmark for decades. It continues to be an industry benchmark and I'm going to spend some time talking about it in a minute. We've got a global network of mines and refineries that are supplying our smelters. They provide security of supply. They allow us to optimize across the full value chain. And because of our geographic spread, we've got the opportunity to take opportunities as they present locally, regionally or globally. And then thirdly, our operating model which leverages our global scale alongside regional leadership. And I'm going to spend a couple of minutes on that operating model because I think this is really fundamental and this is a real differentiator for Alcoa against other organizations.
Our organization is set up such that we have regional leadership. So we're organized in regions. Our regional and local leaders are connected to local context. They're in country. They're empowered to make decisions and they're in a position where they can listen and respond to stakeholders. That's particularly important when we think about regions like Australia and Brazil. They're supported as Bill mentioned earlier by our global COE. So we've got deep subject matter expertise. There's 137 years or so of subject matter expertise that this organization's built up and that's looked after by those global centers of excellence. If you're a site manager in Alcoa, you've got accountability for safety, for environment, social performance, production, cost. You've got accountability for your capital program, for your long-term plans, for the vision indeed for that site. But most importantly, you've got the authority that matches that accountability and you're supported by a group of centers of excellence that you can pull upon whose interest it is in making sure that you succeed, that you're able to take the right decision and deliver the outcome for your site and ultimately for Alcoa. Again connecting authority and accountability, connecting the organizational model such that we can move with ambition and with speed. Local and regional leaders fully empowered to make decisions connected to local context supported by global centers of excellence.
So I move now on to ABS and I referenced a moment ago that ABS is an industry benchmark. It's been replicated across the processing industry many times and over the last 12 months we have refreshed or modernized ABS and we've focused again on making sure that we're connecting that to our operating model. We've got a simplified ABS, our Alcoa Business System model that now is our global standards and expectations, but with enough space that our operations people locally can adjust to their local context. It's a simple, pragmatic, practical set of tools that people can apply and it's a system that is about helping us perform. It's a system that's about helping us continually improve. You can think about it as making sure that people have got the right information at the right time to make the right decision that allows them to succeed. Or in other words, identify and align on objectives. Develop the right measures. Provide a series of tools that people can use to identify early if they're deviating or if indeed there's an opportunity. Then a further set of tools that allow people to address that opportunity or that deviation, look at the result, lock it in, celebrate success, and it's continuing to have a real impact on the performance of our organization.
North America, a 75% reduction in serious injuries over the last several years driven by the application of ABS routines. 75% reduction. So that's a recipe that we are now applying across our global operations. ABS helps us build our leaders. It helps us develop leaders faster. It helps us retain them. It helps us transfer learnings across the organization because we've got a common language, a common set of tools. We can easily translate that from site to site. Only need to adjust to local context. And what that means is we can drive operational stability. And then when we drive operational stability, we've got a platform from which we can improve. And the example that you can see there on the bottom left shows ABS in play at our Alumar refinery over the last 12 months. Application of ABS to stabilize and ABS routines in particular to stabilize, provide a platform, drive improvement. We've increased production there in our refinery at Alumar by something like 330 tons per day this year. And of course, if we've got activities like that occurring across the range, across the network of our Alcoa sites, then that's driving an overall improvement in the bottom line. And in 2024, as part of our profitability improvement program, we delivered $80 million plus of benefits.
This, as the Alcoa people in the room know, is one of my favorite charts. Now the truth is, this is a very
Neat example, but I could show you many examples of this sort of improvement across the network. This happens to be Deshembo. So at Deshembo, we have increased production year on year for the last 15 years. 15 years of improvement. We are on track to deliver that improvement again in 2025. So when we do that, 16 consecutive years of production improvement, no enormous capital expenditure. This is just about day after day, week after week, month after month, driving operational improvement, operational discipline. We are one of the best, if not the best, at that sort of low capital cost, incremental day after day improvement. And the reason is the blueprint that I spoke to you about earlier. Alcoa business system, matching authority and accountability locally, global centers of excellence in support.
Now, Alcoa has always been an innovator. I said we invented the industry 137 years ago, and so today we continue to innovate. We continue to look at the application of new technologies to improve the performance of our business in operations. That's really about the practical application. We've got long-term roadmaps associated with technology, but for us in ops, it's about delivering those practical applications over the course of the day, the year. At Mosion, we're using autonomous vehicles in our pot rooms. We're also using robotics. We have robots at Mosion to build our furnace flue walls, robots to repair anode rods.
I was at Mosion in June and I was with the team there, and they were showing me the work that they're doing on fully automating pot tending. Now, this is a remarkable opportunity. Pot tending. I spoke before about the pleasure of being a pot tender at Warick. This is one of our highest risk tasks. If we can get people out of the line of fire at the same time as increasing precision, and by increasing precision then we'll increase productivity and production, then that's a fantastic result. And the team at Mosion are doing a great piece of work there. I was at Alimar in August, and there the team was showing me the work they're doing with an AI-augmented package that allows us to take video from operators doing their tasks, combine that with existing procedures, and then interviews with operators, and bring that together to produce very simple visual tools, procedures, and training that allows us to upskill our operations people very quickly. I spoke about the innovation associated with reducing chemical burns in Australia, but also in Australia we are trialing the use of drones for aerial seeding and aerial fertilizing as part of that rehabilitation that, as I said to you earlier, is world-leading.
Now, a number of you have requested in the past that we spend a bit of time walking through our operations. So, the next few minutes I'm going to start globally, then break down into regions our operational organization. So, as I said before, we've got a global network of mines and smelters. Our mining operations in Australia and Brazil are supplying adjacent refineries, and then our smelters predominantly in the northern hemisphere, close to their market, as Renato will talk about a little bit later. If I start at North America, North America really is anchored by our three smelters in Quebec, but we also run two of the remaining four operating smelters in the US. And of course our head office is in Pittsburgh.
I spoke earlier about and I showed you my favorite example of Deshembo and the year-after-year improvement at that site. But indeed we are consistently increasing production across the full North American chain via creep or incremental improvement in Quebec, and then also at Warick, most recently in restarting one of our lines back in 2024. In fact, for 11 of the last 12 quarters, we've achieved production milestones out of our Quebec smelters. So again, this mindset, this culture of continuous improvement.
If North America is anchored by Quebec, then our Australian region is anchored by our Western Australian operations, the Huntley and Willowdale bauxite mines and the adjacent Pinjarra and Wagerup refineries. And then on the east coast of the country in Victoria, we've got our joint venture Portland aluminium smelter. Australia is a great example of innovation. We've been operating for over 60 years in the country. We were one of the original downstream processors in Western Australia. I made mention earlier of the innovation associated with managing lower-grade bauxite sites in Western Australia. The team have done a stellar job. We've offset something like a hundred million dollars of the impact of lower bauxite grade through the work that our team have done to drive up recovery. Local teams working with global centers of excellence to drive recoveries to the point where they are among, if not the best, in industry.
Now, you know we are going through an approval process to extend the life of our Huntley mine site via the Myara North and Holly Oak mining regions. Now, approvals, modern approvals are very appropriately a transparent process, and we operate in a very sensitive area close to metropolitan Perth in Western Australia. Our team has done more than 1,400 stakeholder engagements to ensure that we are putting forward a proposition that not only maximizes value for our company and therefore for our shareholders, but also meets the needs of a wide range of stakeholders. And we've laid out here a series of the milestones associated with our approval process. We're currently at a point where we are responding to public comments that have been gathered by the Western Australian EPA. We anticipate that in the middle of 2026, the EPA will put forward its recommendation, and then by the end of 2026, the Western Australian state and then the Australian federal ministerial decisions will be received. That allows us to start the transition into Myara North in 2027 first, or in 2029, and then the first full year of benefits, and they're significant benefits, in 2030. And if we think about the opportunity, the work that's been done to minimize the impacts of those lower grades, then we've got some really exciting times ahead when that grade returns to historic run levels.
Europe. We've got our two smelters in Norway, smelter in Iceland, and then a combined refining and smelting operation at San Cyprien in Spain. Europe has, I think, one of the best, in fact, a textbook example of the application of ABS. Over the last two years, we have worked very hard at Fiat, our smelter in Iceland, to implement the rigor and the discipline associated with ABS. Fiat has historically been a bit of a challenging site for us. It's very remote and it's difficult for us to retain strong talent. ABS has allowed us to improve all of our internal stability metrics over the last couple of years. And in fact that facility is now running at such a level that we are consistently producing high-purity metal, which has an increased margin for us, and that's something that previously had eluded us. I spoke, I think now I've mentioned the Deshembo example three times. We've got a not dissimilar example in Mosion in Norway. Eight consecutive years of improvement in our pot rooms at Mosion. We're currently restarting a line at Listster that's progressing per plan. We're also, as Bill mentioned earlier, restarting at San Cyprien, and that's progressing per plan as well.
If I move now to Brazil, we've got our mining operations at Jury and Poss. We've got refineries at Alimar and also Poss. And then our smelter at Alimar. We have been really focused over the last couple of years in Brazil on improving the health of that business. We've been focused on safety improvement, on environment improvement, and the financial health of our Brazilian region. And that's now starting to pay off. You can see increases in production at Jury. I spoke to the improvements we've delivered at the Alimar refinery, and then Bill stole my thunder a little bit, but we're at 95% now of full pot complement at the Alimar smelter.
I've used a number of examples of the ability that our company has to incrementally improve production and performance with low capital expenditure. But we've got more of these opportunities. And here you can see a couple of those that are currently in train at Becken Core in Quebec. Small investment increasing VIP, improving margin at Mosion. Again, low capital intensity investment allowing us to increase the capacity of our pot rooms and increase total production. Again, as I said, we've got plenty more of these opportunities, and we continue to feed them through our pipeline.
We're really proud, and I'm really proud not only of what we do but the manner in which we do it as Alcoans. I've spoken to you about our safety performance. 75% reduction in serious injuries in North America. 50% reduction in serious chemical burns across our refining network. The work we're doing on safety maturity, the work we're doing on engineering out fatal risk. 18 of our sites are ASI certified. We have been working really hard to build strong relationships with First Nations and traditional owner groups in Norway, in Quebec, in Brazil, and in Australia. And I spoke briefly about what is world-leading rehabilitation efforts that we undertake across our mining operations.
I'm going to hand in a moment to Bill and to Tammy Jones, our chief HR officer, to talk about our performance, culture, talent. Before I do that, I'm going to show an end-to-end video. But before I do that, I'm just going to summarize. We've got 135 years of operations. The desire to get better, the drive to get better is burning brighter today than it has at any point. We are laser focused on our operations. As I said earlier, we are driven to improve every day, every site. And we're aligning our systems, particularly the industry-leading ABS, but our other systems as well, to support our organizational model, authority matching accountability, completely scalable. And there's plenty of further opportunity that we have to chase in the operations, plenty of further opportunity to generate more value for shareholders, and there's plenty of opportunity for us to go after with both speed and with ambition. So we'll throw to the video, and thank you very much.
