Alumina (ASX:AWC) share price edges lower on quarterly update

Alumina has updated the market on the quarterly earnings of its joint venture partner, Alcoa Inc.

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The Alumina Limited (ASX: AWC) share price is losing ground in afternoon trade today, trading 0.87% down at $2.27.

Alumina shares are edging lower following a release noting the quarterly earnings of its joint venture (JV) partner, Alcoa Inc.

Read on for more details.

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Image source: Getty Images

What did Alumina announce?

Alumina gave investors an update of Alcoa's Q3 FY21 earnings highlights, and its carry through to the pair's joint venture known as Alcoa World Alumina and Chemicals (AWAC).

Alumina is a 40% owner of AWAC. The bauxite and alumina behemoth, established in 1995, holds about 25% of the global alumina market.

Given the pair's geographically separate operations that are connected by the gulf of AWAC, Alumina found it prudent to provide a consolidated version of the three entities' performance in Q3 FY21.

In its report, Alumina says AWAC produced 3.1 million tonnes in its refining business. It also mined 11.1 tonnes of material in Q3. This is a 3% downstep in both from the previous quarter.

The release also notes that the average one-month lagged alumina price index (API) for Q4 to date is approximately $410 per tonne.

This will "drive AWAC's cash margin significantly higher than the $55 per tonne achieved in the third quarter".

Alumina advises that the benefits of this increase will be reflected in AWAC's Q4 earnings, plus the AWAC distributions to Alumina in Q1 FY22.

Alumina's CEO, Mike Ferraro, said supply disruptions caused "the Chinese import parity price to rise sharply" in Q3.

Speaking about the announcement, Ferraro said:

This has been another solid quarterly performance by AWAC even though production costs remained at elevated levels and alumina prices were subdued due to high freight costs. However, since the end of the quarter, alumina prices have surged from the third quarter average one-month lagged price of $292 per tonne to around $480 per tonne.

The Alumina share price is up about 5.5% in the past week of trading.

Alumina share price snapshot

The Alumina share price has climbed about 21% this year to date and about 58% over the past 12 months.

It has rallied 7% in the past month as broader commodity markets have strengthened.

These returns have outpaced the benchmark S&P/ASX 200 index (ASX: XJO), which is up about 18% in the past year.

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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