AA

Pure-play upstream aluminum: bauxite mining + alumina refining + primary smelting. Earnings = LME aluminum price + Platts alumina index minus energy + bauxite cost - leveraged commodity beta with operating leverage on both legs.

Bull case:

- Aluminum structural deficit: Chinese smelter cap at 45Mt holds, ex-China supply growth near zero, EV + grid + packaging demand grows mid-single digits.

- Alumina spike: Guinea bauxite disruption + Rio Tinto Queensland curtailment tightened alumina market; AA alumina segment swung from drag to majority of EBITDA in 2024-25.

- Low-carbon premium real: auto + can-sheet buyers pay $50-200/t for sub-4t CO2/t aluminum; AA hydro fleet (Brazil, Canada, Norway) is structurally low-carbon vs Chinese coal-fired smelters.

- San Ciprián restart optionality + Alumar smelter ramp add primary metal volume without greenfield capex.

- Alumina Limited (AWAC) fully consolidated 2024 - clean cap structure, no minority drag.

Bear case:

- Commodity cyclical: LME aluminum and Platts alumina are the P&L; China property + macro recession compress both.

- Energy cost sensitivity: smelters are ~30% power, Spain + Australia exposed to merchant power; San Ciprián losses recurring.

- Trump tariffs cut both ways: Section 232 helps US sheet ($MIDD, $KALU) but AA's Canadian smelters face import friction.

- High fixed-cost base - $1.6B+ legacy pension + environmental liabilities don't flex with cycle.

- Capex inflation on any restart or expansion; payback math weaker than 2021 vintage projects.