UK-Australian producer Rio Tinto and Australian state-owned utility Hydro Tasmania have agreed to a 12-month electricity deal to support production at the 190,000 t/yr Bell Bay Aluminium smelter in Tasmania.
The in-principle deal will ensure continued safe and stable production as negotiations continue with Hydro Tasmania and the Tasmanian government towards a decade-long agreement, a Rio Tinto spokesperson told Argus on 5 November.
Rio Tinto's deal with Hydro Tasmania provides Bell Bay Aluminium with an extra year of exceptionally affordable power, Tasmania's premier Jeremy Rockliff said. The specifics of the agreement remain private.
The UK-Australian producer's current electricity contract with Hydro Tasmania will expire in late December. The two companies have been locked in talks over a long-term power deal for 18 months, Bell Bay Aluminium general manager Richard Curtis told staff on 8 October.
They have not been able to agree on suitable terms, creating significant risks for the smelter, Curtis added.
Tasmanian spot electricity prices averaged A$109.26/MWh ($70.70/MWh) over the July 2024-June 2025 financial year, up from A$69.07/MWh a year earlier and just A$37.16/MWh a decade earlier, data from the Australian Energy Market Operator (AEMO) show.
Tasmania's government has been supportive of Rio Tinto. But the price gap between what Hydro Tasmania is offering and what the smelter needs is too wide for it to cover alone, the state's energy minister Nick Duigan said on 9 October.
The Tasmanian government repeated its call for Australian federal support for Bell Bay Aluminium on 5 November. In October, it asked federal officials to confirm the plant's eligibility for Australia's A$2bn low-emissions aluminium production credit scheme, which will offer tax incentives to producers from 2028-29.
Bell Bay Aluminium mostly relies on hydroelectric power and could be eligible for production credits. But Australia's government has not finalised the scheme's design yet.
Rio Tinto's year-long deal with Hydro Tasmania allows time for the outcome of the Australian government's credit scheme to be known, a company spokesperson told Argus today.
Rio Tinto is also facing electricity cost pressures at its 600,000 t/yr Tomago aluminium smelter in New South Wales (NSW). The company may need to close the plant at the end of 2028 over high energy costs, but has not made a decision about its future, Rio Tinto said on 28 October.
Spot electricity price levels in NSW are even higher than those in Tasmania. They averaged A$128.16/MWh in 2024-25, up from A$101.57 a year earlier and A$35.18/MWh a decade earlier, AEMO data show.
The Australian federal and NSW state government have been in talks with Rio Tinto about energy cost support since June. They have not been able to reach an agreement, Australia's minister for industry and innovation Tim Ayres said at a press conference on 28 October.
