Australia’s largest aluminium smelter will receive a $2.5 billion bailout package from the NSW and federal governments in a bid to secure its future and provide certainty for more than 1000 workers.
Tomago Aluminium, located in the NSW Hunter region, was at risk of closing at the end of its existing electricity supply contract on December 31, 2028.
Tomago Aluminium is Australia’s largest aluminium smelter. James Brickwood
The new bailout package will be announced by Prime Minister Anthony Albanese and NSW Premier Chris Minns on Thursday.
The smelter, which is majority-owned by resources giant Rio Tinto, is also facing rising electricity costs.
The cost of coal-fired and renewable energy options is expected to increase from January 2029, based on current market proposals.
Tomago Aluminium is the single largest user of electricity in NSW, consuming more than 10 per cent of the state’s power supply.
The smelter is also facing intensifying competition from cheaper producers of metal in China.
Tomago Aluminium has agreed to invest at least $1.1 billion in the facility as part of the new bailout deal, including $100 million to drive further decarbonisation activities at the smelter and support demand from the NSW grid.
The investment is expected to accelerate the decarbonisation of more than 10 per cent of the state’s electricity grid.
The NSW and federal governments estimate the bailout package will secure 5000 indirect jobs in the broader economy in the Hunter region.
“This is a massive investment in local families and our local economy,” Member for Port Stephens Kate Washington said.
“Tomago Aluminium is one of the largest employers in Port Stephens.”
The Tomago Smelter deal is the latest taxpayer-funded rescue package for the country’s struggling metals processors in the last two years.
The Albanese government has also contributed to packages 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.
Tomago Aluminium produces 590,000 tonnes of aluminium every year, which is Australia’s fifth-largest export commodity.
Aluminium is used in the production of cars, planes, homes, sporting equipment and drink cans.