The Alumina Limited (ASX: AWC) share price traded lower today after it announced the release of the June quarterly report from its joint venture partner Alcoa Corp (NYSE: AA) this morning.
Alumina invests worldwide in bauxite mining, alumina refining and aluminium smelting through a joint venture with a company called Alcoa Corp. The business they jointly own is called Alcoa World Alumina & Chemicals (AWAC) and it was formed in 1994.
AWAC is reportedly the largest alumina business in the Western world. Alumina owns 40% of AWAC and Alcoa the remaining 60%.
The Alcoa results shared today include results for the bauxite and alumina segments which include most of AWAC’s operations.
These results showed that the Alcoa alumina segment EBITDA was $369 million compared to $372 million last quarter, while the Alcoa bauxite segment EBITDA declined around 11% to $112 million.
The video below explains what EBTIDA is.
According to the results, favourable impacts from currency, raw materials and sales volumes were offset by a lower alumina price index (API) and increased maintenance costs.
In the bauxite segment, higher maintenance costs were partially offset by a weaker local currency. The EBITDA margin for the Alcoa bauxite segment fell from 41.9% to 35.8% during the quarter.
The AWAC refining business reported production of 3.1 million tonnes (Mt) in the quarter, the same as in 1Q19, while the mining business reported a slight decline to 10.8 Mt.
Alumina’s cash costs (the cost to dig the commodity out of the ground) and realised prices both declined slightly during the quarter. Alumina Limited’s CEO Mike Ferraro said, “Since the end of the quarter API pricing has fallen due to the market being well supplied as production from Alunorte ramps up and other refineries increase supply”.
Will This Affect The Share Price?
Alcoa’s EBITDA results may weigh on the Alumina share price today as they largely represent the AWAC results, of which Alumina owns 40%. With other refineries increasing supply, I’m not confident that Alumina’s price troubles will improve in the near future.
If you’re looking for growth, have a look at the companies mentioned in the free report below.
After searching through a market with over 2,000 shares, our lead expert investment analyst has narrowed it down to just 2 of his favourite small-cap pocket rocket share ideas in a FREE report to Rask Media readers.
Over the past five years, these two shares have gone from being 'tiny caps' to being serious contenders for the ASX 200. Investment in these types of companies have the potential to change lives.
Access the free report by clicking here now or enter your email below! Absolutely no credit card or payment details required.
Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.