Alcoa CEO Says Lasting Tariffs Required to Boost U.S. Production
What would it take for Alcoa Corp. to restart idled U.S. capacity? More certainty on the tariff front—but maybe not the expected kind.
Speaking to analysts and investors on July 16 after Alcoa reported its second-quarter results, President and CEO Bill Oplinger said his team has looked at bringing back online the fourth line at the company’s Warrick smelter in Indiana, which is the country’s second-largest.
The Warrick complex, which started operations in 1960 and employs about 860 people, today runs three smelter potlines that produce about 156,000 metric tons of aluminum per year. Restarting the plant’s fourth line would grow that capacity by about 50,000 tons and, by the calculations of B. Riley analysts, potentially generate $100 million in earnings before interest, taxes, depreciation and amortization annually for Pittsburgh-based Alcoa.
Oplinger, who was critical of tariffs early this year, said taking advantage of that scenario would require that the Trump administration’s measures endure, not go away. Making the call to restart fourth-line production would mean spending about $100 million on equipment and the like and take about a year, he said.
“We will certainly continue to run the numbers,” Oplinger said. “We would need to ensure that the tariffs will stick around for quite a while given that ramp-up curve in Warrick before we made the decision of investing another $100 million in a restart.”
Oplinger made his comments after a quarter in which Alcoa took a $115 million hit to its books on aluminum it imported into the United States from Canada. Oplinger and CFO Jessica Beerman expect that figure to be $90 million this quarter. Prices for that aluminum have risen since tariffs were instated but the Alcoa team also diverted some of its Canadian production to other markets because price gains weren’t enough to offset the impact of tariffs.
Alcoa earned a net profit of $151 million on sales of a little more than $3.0 billion in the three months that ended June 30. In the same period of last year, those numbers were $20 million and $2.9 billion, respectively. The company produced 572,000 metric tons of aluminum during the quarter—which was up slightly from Q1 and an increase of about 5% from the spring of 2024—but the EBITDA for the segment fell to $97 million from $233 million a year earlier.
Demand from most customers “remained steady” during the quarter, Oplinger told analysts. In North America, Alcoa’s order book for value-added products is in good shape, particularly when it comes to slab, billet and rod. The one standout on the negative side is, not surprisingly, the automotive sector, which is being particularly pushed around by the uncertainty around tariffs.
Shares of Alcoa (Ticker: AA) rose nearly 3% to $29.39 on the heels of its leaders’ earnings report and conference call. Over the past six months, however, they have lost about a quarter of their value. That has left the company’s market capitalization at about $7.6 billion.
