Aluminum giant Alcoa Inc. (NYSE:AA) and specialty parts maker Arconic Inc (NYSE:ARNC) split apart in late 2016. That's brought Alcoa back to its roots, so to speak, as an aluminum producer. However, there's more to understand, here, as Alcoa charts its own course into the future. Here's a quick primer on Alcoa today and how it makes most of its money.    

The build-up and break-up

Leading up to the November 2016 split of Aloca and Arconic, "old" Alcoa was aggressively acquiring specialty parts business like RTI Metals, which expanded its exposure to both aerospace parts and titanium. But that $1.5 billion deal is just a single example; there were plenty of other acquisitions made as "old" Alcoa attempted to manage through a difficult commodity market by shifting up the value chain.    

Liquid aluminum being poured into ingots

Image source: Getty Images.

Along the way, though, "old" Alcoa was also rightsizing the commodity aluminum business. That included selling assets and shutting down older production facilities. The end goal was to cut costs and improve the efficiency of a struggling business. In other words, on the way to the split up the company, it was also upgrading its aluminum business so it could stand on its own.    

It made a great deal of headway. Alcoa went from the 51st percentile on the aluminum cost curve to the 38th percentile between 2010 and 2016, and from the 30th to the 17th in Alumina. When the late 2016 breakup finally took place, the new Alcoa was a much better business than it had been only a few years earlier.    

Back to basics, sort of

So, Alcoa has gotten back to its roots as a commodity producer. That means its top and bottom lines will generally go up and down with the prices of the commodities it produces. That list includes aluminum, alumina, and bauxite -- the entire aluminum value chain. It has material positions in each business, including being the largest bauxite miner in the world (the first step in the value chain).  

About 15% of the bauxite Alcoa produces goes to third parties, with the rest consumed internally. Roughly 70% of the alumina it makes, meanwhile, goes to outsiders, with the rest feeding Alcoa's own needs. And since Alcoa isn't a consumer of aluminum, it sells all of the aluminum it produces.    

A list of Alcoa's facilities that have been shut or had production curtailed

A lot of hard work went into trimming down Alcoa prior to its break-up with Arconic. Image source: Alcoa Inc. 

Notably, Alcoa isn't just large, it's globally diversified. It owns or is a joint owner of facilities in North America, South America, Europe, Africa, and the Middle East. In other words, it's positioned to provide products across the aluminum value chain and across the globe.    

It's also important to note that Alcoa isn't completely focused on commodity products. Arconic took the high-end businesses, like airplane parts, but Alcoa still produces rolled and cast products. Rolled products go into things like soda cans and food containers, while cast products are bought by industries as varied as auto manufacturing and construction. That's a far cry from what Arconic does, but Alcoa is still adding value to some of what it sells. That's differentiated from simply selling raw commodities. It's not the biggest part of the business, and Alcoa doesn't break it out, but you shouldn't forget about it, either.    

Alcoa today

If you were looking at Alcoa a few years ago, it was a much different company than it is today. After the late 2016 split from Arconic, Alcoa has returned to its roots as an aluminum producer. But it touches every level of the process from bauxite to the aluminum sheets used to make food containers. And it's important to note that Alcoa has made a great deal of progress on the cost front, placing it in a solid position within the aluminum industry. That said, commodity prices will be the driving force on the top and bottom lines. But if you have a positive outlook for aluminum, you should make sure you take the time to do a deep dive on Alcoa.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.