Tomago, which is majority owned by Rio Tinto, has been locked in make-or-break negotiations with state and federal governments for months to find โviable pathwaysโ to keep the 40-year-old smelter in NSW open.
The energy-intensive plant accounts for 12 per cent of NSWโs electricity consumption, and has been on the brink of closure as it faces a doubling of its electricity costs from 2028, when its current electricity contract with AGL expires.
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Rio Tinto chief executive Simon Trott thanked the federal and NSW governments on Friday for their commitment to explore a new pathway for โreliable, long-term and competitively priced energy beyond 2028โ.
โThis progress reflects years of collaborative work between Tomago and its joint venture partners including Rio Tinto, in addressing one of the most complex energy challenges facing Australian industry.โ
Soaring energy prices are a test of the Albanese governmentโs ambitious goal to boost clean energy to deliver 82 per cent of electricity in the grid by 2030.
The opposition has sought to blame the federal governmentโs renewable energy agenda for rising energy prices, even though Tomago reported the offers it was receiving for coal-fired generation contracts had also risen dramatically.
If the taxpayer-funded support deal proceeds, it will mark the fourth time the Albanese government has intervened to prop up a struggling metals processor this year after it contributed to bailouts of Glencoreโs Queensland copper smelter and refinery in October, Nyrstarโs smelters in Port Pirie and Hobart in August, and the collapsed Whyalla steelworks in February.
When asked if it was fair on taxpayers to spend public funds on private businesses, Albanese said his government was committed to supporting manufacturing as a strategically important sector.
โI tell you whatโs not fair to the taxpayer โฆ is to not have manufacturing in this country,โ he said. โIf Australia doesnโt produce aluminium, then the knock-on effect in other industries is significant because aluminium is increasingly a vital product.โ
Australian Workers Union national secretary Paul Farrow said Tomago was crucial to the manufacturing sector.
โYou canโt have the largest aluminium smelter in the country closing while talking up the future of local manufacturing.โ
Tomago produces up to 590,000 tonnes a year of the metal, which is widely used in construction, cars, drink cans, foil packaging and electrical products. Aluminium is also increasingly in demand in the construction of solar panels and wind turbines.
Processing alumina into aluminium is highly energy-intensive. Tomago said its energy costs accounted for 40 per cent of the smelterโs expenses, and it needed internationally competitive price to remain commercially viable.
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