Australia’s biggest aluminium smelter is set to receive a major bailout package following long-running crisis negotiations with the federal and NSW governments over ways to keep the plant open and safeguard more than 1000 jobs.
Tomago Aluminium, majority-owned by resources giant Rio Tinto, started consulting the smelter’s workforce and their union officials late last year about the risk of the site having to close when its existing power contract expires in 2028 and its cost of electricity is set to double.
Prime Minister Anthony Albanese and NSW Premier Chris Minns are expected to attend the smelter near Newcastle to announce the multi-year deal on Thursday, according to sources briefed on the agreement but not yet authorised to discuss it publicly.
The deal – at an unknown cost – would be the latest in a series of taxpayer-funded rescue packages to prop up struggling metals processors over the past two years after the Albanese government contributed to bailouts worth $2 billion for Rio Tinto’s Boyne smelter in Queensland, $2.4 billion for the collapsed Whyalla steelworks in South Australia, and $600 million for Glencore’s copper smelter and refinery in Mt Isa.
Rio Tinto last month posted a $US6.7 billion ($9.5 billion) half-year profit, up 47 per cent from the same time a year earlier.
Aluminium smelters, which need huge amounts of electricity, have been under mounting financial pressure across the nation as their owners face the dual challenges of intensifying competition from cheaper Chinese producers of the metal and the elevated cost of energy.
The energy-intensive Tomago smelter is the single largest user of electricity in NSW. It consumes more than 10 per cent of the state’s power supply.
Federal government sources have previously indicated that a deal may include a 10-year power purchasing agreement with discounted energy supplied to the Tomago smelter via a Commonwealth-owned entity like Snowy Hydro.
Tomago Aluminium, Australia’s largest aluminium smelter, produces up to 590,000 tonnes a year of the metal, which is widely used to manufacture construction materials, cars, drink cans, foil packaging and electrical products. Aluminium is also increasingly in demand in the construction of solar panels and wind turbines.
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Nick Toscano is a business reporter for The Age and Sydney Morning Herald.Connect via X or email.From our partners
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