Glyn Lawcock

Glyn Lawcock asked for clarification on a 'back-to-back mine move' in Western Australia and an update on discussions regarding the Canada tariff exemption.

Answer

Molly Beerman, Executive Vice President and Chief Financial Officer, clarified that no 'back-to-back mine move' was mentioned. William Oplinger, Alcoa Corporation President and Chief Executive Officer, updated that the current WA mine move is progressing, with responses submitted to public comments, and EPA recommendation expected by end of H1, with permits by end of 2026. Regarding Canada tariffs, he noted it's difficult to predict, but the Midwest Premium currently covers the gross tariff expense, passing costs to customers.

Glyn Lawcock asked about the public review period for WA mine approvals, specifically if Alcoa was privy to comments and if anything was outside expectations. He also inquired about the high $600 million cost for the Kwinana refinery closure and the potential value and rezoning opportunities for the land sale.

Answer

William Oplinger, CEO, stated Alcoa received approximately 60,000 comments (2,000 individual) on WA mine approvals, focusing on water proximity (Alcoa has 60 years of no impact, agreed to step back mining) and Jarrah forest mining (rehabilitation, black cockatoos). Molly Beerman, CFO, explained the Kwinana closure cost was high due to extensive water management with residue storage areas, the largest seen in prior refinery closures. She noted the land is in an industrial park with port/rail access, making it valuable, and Alcoa will focus on remediating the refinery site for redevelopment and resale to recover or exceed closure costs.

Glyn Lawcock asked if Alcoa had reviewed the public comments from the Australian mine approvals process, noting any unexpected feedback, and inquired about the significant cost of the Kwinana refinery closure and the potential value and zoning of the land sale.

Answer

William Oplinger, CEO, confirmed receipt of approximately 60,000 comments (2,000 individual), primarily focused on water proximity and Jarrah forest mining/rehabilitation. Molly Beerman, CFO, explained the Kwinana closure's high cost ($895 million) is due to extensive water management with residue storage areas. She noted the land is in an industrial park with port/rail access, making it valuable for redevelopment and resale, with expectations to recover or exceed closure costs.

Glyn Lawcock asked for an update on government discussions regarding a potential tariff reduction for Canada and inquired about the timing of future capital management actions as the company approaches its net debt target.

Answer

President, CEO & Director William Oplinger detailed extensive advocacy efforts with U.S. and Canadian governments. EVP & CFO Molly Beerman noted that once the company is within its adjusted net debt target range, it will review all capital allocation priorities, but delevering remains a focus, highlighting callable notes as a potential action.

Glyn Lawcock of Barrenjoey asked for comment on rumored discussions with Glencore, questioning their seriousness and whether they indicated that Rio Tinto was contemplating a return to the coal business.

Answer

CEO Jakob Stausholm declined to comment on rumors, stating it was difficult to address something that may or may not have happened. However, he expressed that he would be surprised if the company were actively looking to re-enter the coal business, especially given the focus on simplification. He reiterated that the company's M&A strategy is focused on pursuing good deals, not M&A for its own sake.

Glyn Lawcock from Barrenjoey asked about the seriousness of rumored discussions with Glencore and whether this implied Rio Tinto was considering a return to the coal business.

Answer

CEO Jakob Stausholm declined to comment on rumors but stated that given the company's current focus on simplification, he would be surprised if Rio Tinto were actively looking to re-enter the coal business. He reiterated that the company's M&A philosophy is to pursue good deals, not M&A for its own sake.

Glyn Lawcock of Barrenjoey asked about the rumored discussions with Glencore, questioning their seriousness and whether they signaled a potential return to the coal business for Rio Tinto.

Answer

CEO Jakob Stausholm declined to comment on rumors but stated he would be surprised if the company were actively looking to re-enter the coal sector, given its current focus on portfolio simplification. He reiterated that Rio Tinto's M&A strategy is focused on pursuing 'good deals' that create value, such as the recent Arcadian acquisition.

Glyn Lawcock asked if the company is seeking to upsize its credit facility as part of the refinancing. He also sought to understand the estimated PLV cash breakeven price for the business in the second half of the year and questioned the likelihood of securing royalty payment relief from the Queensland government.

Answer

CFO Barrie Van Der Merwe explained that while upsizing is possible via other debt baskets, the current focus is on a ~$150 million ABL, which, combined with existing cash and cost savings, should provide sufficient resilience. CEO Douglas Thompson declined to provide a specific breakeven price but stated their planning assumes prices remain relatively flat. Regarding government discussions, Thompson confirmed they are in talks about payment timing relief but do not expect a change to the royalty regime itself.

Glyn Lawcock from Barrenjoey asked if the company is seeking to upsize its ABL facility, what the estimated PLV cash breakeven price would be in the second half of the year, and about the progress of discussions with the Queensland government on royalty relief.

Answer

CFO Barrie Van Der Merwe explained that the current cash position combined with a restructured ABL of a similar size ($150M) and other initiatives should provide sufficient resilience, especially as liquidity pressure eases after Q3. CEO Douglas Thompson declined to provide a specific breakeven price but confirmed their plans assume prices remain low. He stated that while royalty rule changes are unlikely, discussions with the government about the timing of payments are ongoing.

Glyn Lawcock of Barrenjoey questioned if the company was free cash flow positive in April and sought clarity on the potential to recover the Queensland stamp duty payment.

Answer

Group CFO Gerhard Ziems confirmed that based on internal April reports, the company is operating within its cost guidance and is free cash flow positive. Regarding the stamp duty, Ziems and CEO Douglas Thompson stated they have appealed to the Supreme Court of Queensland, disputing a large portion of the AUD 103 million paid, as they must pay the full amount upfront before appealing. They are hopeful for a resolution within the year.

Asked for confirmation of current free cash flow positivity and operating within cost guidance, and inquired about the possibility and timeline of recovering the Queensland stamp duty payment.

Answer

The company confirmed it was operating within guidance and was free cash flow positive in April. They have appealed the stamp duty assessment to the Supreme Court, seeking to recover a significant portion of the payment, with a potential resolution within the year, though the timeline is uncertain.

Questioned the risk of continued wet weather delaying the removal of fleets at Curragh and sought clarity on whether recent geotechnical issues at Buchanan are a recurring problem or specific to the current mining area.

Answer

The company is confident in its plan to remove the three fleets in Q1/early Q2, as the pre-strip work is complete and this is not dependent on weather. They explained the recent geotech issues at Buchanan were specific to the 14 East panel, which is nearly finished, and the new Southern District is expected to have fewer issues and higher productivity due to better geology and design.

Asked if individual project CapEx figures would be updated and likely increased at the upcoming Strategy Day, and questioned the viability of keeping the Mt. Cattlin mine open at current spodumene prices.

Answer

An update on project CapEx will be provided at the Strategy Day, but the aggregate number is expected to remain the same. The question of putting Mt. Cattlin on care and maintenance is being 'intensively' reviewed internally, especially if low, three-digit spodumene prices persist.

Inquired about the specific optimization plans for the two Canadian spodumene operations and asked whether the 2024 volume guidance for chemicals is a fixed maximum or if there is flexibility to increase production if prices recover.

Answer

Optimization in Canada focuses on standardizing processes, support services, and creating an integrated feed for the downstream plant, rather than physical mine integration. The 2024 chemical volume guidance is not being throttled back; it reflects the realistic, complex ramp-up schedule for pond-based systems like Olaroz Stage 2, and there is no immediate flexibility to significantly exceed these targets.

Glyn Lawcock questioned the company's decision to not ramp up U.S. onshore oil production despite attractive IRRs and competitors' actions, asking about the risk of being wrong if oil prices don't rise further.

Answer

CEO Andrew Mackenzie defended the cautious approach, explaining it's driven by a focus on optimizing technology to lower costs before committing capital. He detailed a region-specific strategy: completing existing wells in Black Hawk, appraising and consolidating in the Permian while awaiting infrastructure, and cautiously adding a rig in the Haynesville with hedging. He indicated that rig counts would likely increase as these conditions align.