Alcoa Corp. shares tumbled 9.5% on Wednesday after Chief Financial Officer Molly Beerman warned that the alumina business is underwater due to energy disruptions from the Persian Gulf to Western Australia. Beerman told investors at the Wells Fargo conference that higher production costs will render the segment unprofitable this quarter.

The alumina unit, which normally ships raw material to aluminum smelters in the Persian Gulf, faces mounting pressure from conflict-driven energy price surges. Refineries consume large amounts of fuel and electricity, costs that have spiked amid Middle East tensions. Earlier in April, Alcoa had already flagged that unrest would weigh on second-quarter earnings.

Alumina production contributed nearly half of Alcoa's adjusted EBITDA in 2025, making it a significant profit driver. The unit's struggles represent a major shift for the top US aluminum producer, which previously benefited from soaring metal prices this year.

Additional headwinds include $15 million in extra fuel costs at the São Luís refinery in Brazil and approximately $30 million higher production costs at the Pinjarra facility in Western Australia after Cyclone Narelle disrupted regional LNG supplies. These operational challenges compound the geopolitical risks affecting the company's seaborne alumina shipments.

The stock's steep decline signals investor concern that geopolitical tensions are eroding profitability in Alcoa's most important business segment.