The Australian government has offered support to UK-Australian producer Rio Tinto to operate its 600,000 t/yr Tomago aluminium smelter beyond 2028 through a long-term power purchase agreement.
Rio Tinto subsidiary Tomago Aluminium will work with Australia's federal and New South Wales (NSW) governments over coming months on an energy solution to support the 600,000 t/yr smelter from 2028, Australian prime minister Anthony Albanese said today.
The deal will include a fixed-price power purchase agreement and a commitment from Tomago Aluminium to invest A$1bn ($670mn) into the plant over 10 years, he added.
A long-term power purchasing agreement is in the interest of continued long-term investment into the industrial future of Tomago, Australia's minister of industry and innovation Tim Ayres said at a press conference. But Ayres declined to comment further on the specifics of the deal.
Rio Tinto in October warned that it may need to close Tomago at the end of 2028 when its current electricity contract ends because of unsustainable energy costs. It had been looking for a new energy solution since 2022, but was not able to find one, it said at the time.
The company began talks with NSW state and federal officials over energy cost support for Tomago in June.
It has run the smelter normally over 2025. It produced 426,000t of aluminium on a 100pc basis at Tomago in January-September, down by 2.2pc on the year.
Australia's support for Tomago comes one day after Tim Ayres defended the government's industrial policy record. Industrial policy is "a rational, pragmatic response to the acute challenges of this moment," he said at a speech to the Sydney Institute on 11 December.
The government's support packages for the Whyalla steelworks, global producer Glencore's Queensland copper operations, and global producer Nyrstar's lead and zinc smelters were informed by its obligation to preserve and strengthen economic conditions for Australian workers, he added.
The government may also offer support to another Rio Tinto aluminium smelter. Tasmanian state officials have called on the federal government to back the company's 190,000 t/yr Bell Bay aluminium smelter through low-carbon production subsidies in November.
