latest pitch for a government handout<\/a> is from Australia\u2019s biggest aluminium smelter, Rio Tinto\u2019s Tomago.<\/p>\nThe smelter, based in NSW\u2019s Hunter region, has joined a conga line of metals manufacturers looking for taxpayer cash, and threatening to close shop if they don\u2019t get it.<\/p>\n
Already struggling with its electricity bill, Tomago \u2013 which alone accounts for 10% of NSW\u2019s electricity usage \u2013 said it had failed to lock down a \u201ccommercially viable\u201d energy contract beyond 2028.<\/p>\n
That meant the company may have to close its doors before the end of the decade, Tomago\u2019s boss, Jerome Dozol, said.<\/p>\n
Clearly, high energy costs lie at the heart of the challenges facing Australia\u2019s power-intensive heavy industries, which also face intense international competition.<\/p>\n
The industry minister, Tim Ayres, on Tuesday pointed to \u201ca very tough and volatile global trading environment in aluminium\u201d, including \u201cover-subsidisation in some markets, tariff responses in others\u201d.<\/p>\n
\u201cEach of these assets around the country is a bit different,\u201d Ayres said.<\/p>\n
\u201cBut typically, (it\u2019s) ageing infrastructure that requires investment to lift its level of productivity and efficiency.\u201d<\/p>\n
The minister said the government was in \u201cclose discussions\u201d with Tomago Aluminium about addressing the company\u2019s inability to secure affordable energy for the longer term.<\/p>\n
What seems certain is that the taxpayer is about to be put on the hook again to ensure the smelter\u2019s future.<\/p>\n
This year\u2019s requests for handouts have typically been made under threats of major job losses, mostly in regional areas where the exit of a major employer could be devastating to local towns.<\/p>\n
Reeve said there was a case to protect our industrial base as the country navigates a fraught transition from fossil fuels to renewable energy.<\/p>\n
\u201cSmelting is one area where we can value-add to a mineral resource using energy that should be cheaper and greener than the rest of the world. And once you have lost that capacity, it\u2019s very hard to get back,\u201d she said.<\/p>\n
\u201cThat might provide some limited grounds to help out somebody like Tomago. But you really want to know it has a pathway to becoming viable and green. And that\u2019s where the bailouts should focus: what can governments do to make that come true?\u201d<\/p>\n
A number of observers have compared the contrasting experiences of Tomago in NSW, and that of Rio Tinto\u2019s other aluminium smelting business in Queensland, Boyne Smelters.<\/p>\n
Rather than being at the mercy of existing energy providers, Boyne has signed power purchase agreements that have underpinned the development of major new solar and windfarms.<\/p>\n
Reeve said the lesson was that governments should be thinking harder about how to support the long-term viability of industries considered strategically important, beyond simply showering them in cash.<\/p>\n
In Tomago\u2019s case, the NSW government should be taking steps to streamline renewable projects in a state notorious for its long delays.<\/p>\n
Glencore, a Swiss mining multinational, earlier this month received a $600m taxpayer bailout to keep its loss-making copper smelter open for another three years.<\/p>\n
Ayres at the time defended the decision and said the bailout was \u201cnot a blank cheque\u201d.<\/p>\n
But a look at the history of Queensland\u2019s Mount Isa copper smelter reveals a history of recurring handouts that sets a precedent for this year\u2019s bailouts.<\/p>\n
The owners of the smelter threatened to close it in 2011, in 2016, and again in 2020.<\/p>\n
These threats happened to coincide with the state\u2019s election cycle, and each time the Queensland taxpayer rode to the rescue: to the tune of $85m in 2012, $15m in 2016, and a multimillion-dollar undisclosed amount in 2020.<\/p>\n
That was on top of taxpayer subsidised upgrades to railway and energy infrastructure.<\/p>\n
\u201cMt Isa has been bailed out every roughly five years for the past 20 years,\u201d said Reeve.<\/p>\n
\u201cThat\u2019s the trap you don\u2019t want to fall into.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Will 2025 be remembered as the year of the bailout? More than $3bn of taxpayer money has been…\n","protected":false},"author":2,"featured_media":230466,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":{"0":"post-230465","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-uk","11":"tag-united-kingdom","12":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/230465","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=230465"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/230465\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/230466"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=230465"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=230465"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=230465"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}