Alcoa to record a valuation allowance on certain deferred Brazil tax assets

Alcoa Corporation welcomes the U.S. Treasury Department’s eduction Act or IRA. The Notice of Proposed Rulemaking 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 expects to record a benefit in Cost of goods sold between $35M and $40M after-tax, or 20c to 22c per share, related to its Massena smelter in New York and its Warrick smelter in Indiana. Alcoa intends to submit written comments to Treasury regarding the definition of production costs as requested in the Notice. Alcoa appreciates the leadership of the Biden administration in implementing the IRA and this guidance on Section 45X. Unrelated, the Company expects to record a valuation allowance on certain deferred tax assets in Brazil which will result in a charge to tax expense of $140M to $150M, or 78c to 84c per share. Approximately $100M of this charge, or $ 56c per share, is discrete, resulting in a net loss of $40 to $50M, or an impact to Adjusted loss per share in the fourth quarter of 2023 of 22c to 28c.