Anthony Albanese Secures Agreement to Sustain Operations at Key Aluminium Smelter

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More than 1,000 jobs at a troubled aluminium smelter have been secured after the federal government stepped in to keep it running with taxpayer support.

Rio Tinto, majority owner of the massive Tomago smelter near Newcastle in NSW, had for months been threatening to shut down the plant due to spiralling energy costs.

But on Friday, the government announced it had reached an agreement with the minerals giant to keep Tomago running, promising to use taxpayer funding to provide the smelter with cheaper power.

Announcing the deal on Friday, Prime Minister Anthony Albanese said: “It’s important we as a nation continue to make things here, and the program that we’ve been working on to ensure that long-term future, by giving security going forward.”

While specifics of the arrangement remain under wraps, it’s anticipated that the NSW government might offer backing and financial assurance for new projects focused on renewable energy generation, storage, and transmission.

The smelter is the single largest electricity user in the nation and consumes about 10 per cent of NSW’s power supply.

Industry Minister Tim Ayres said the cost and how much each government would contribute were still being worked through.

“The core idea behind this is a long-term power purchase agreement that ensures Tomago remains competitive on a global stage by securing energy at the right cost,” he explained.

Since its inception in 1983, the plant has been responsible for producing over a third of Australia’s aluminium, with an annual output capacity of up to 590,000 tonnes.

Electricity constitutes a significant portion of the operating expenses at Tomago, accounting for 40% of the costs. Source: AAP / Michael Gorton

A blue sign that reads "Tomago Aluminium, Australia's largest aluminium smelter".

Electricity makes up 40 per cent of operating costs at Tomago. Source: AAP / Michael Gorton

The Australian Workers’ Union (AWU) welcomed the announcement

AWU national secretary Paul Farrow said: “This is a pivotal moment for Australian manufacturing.”

“For months, we’ve been saying that Tomago isn’t just another industrial site. It’s the test case for whether Australia is serious about having a manufacturing future,” he said.

The announcement comes after a flurry of deals struck by the federal government to keep smelters running across the nation as rising energy costs threatened their sustainability.

In October, the federal and Queensland governments agreed on a $600 million joint support package for a copper smelter in Mt Isa.

A few months prior, the Commonwealth, South Australian and Tasmanian governments stumped up $135 million in taxpayer funds to keep Nyrstar’s lead and zinc smelters operating, with part of the funding going towards expanding production into critical minerals such as antimony.