SYDNEY, Dec 12 (Reuters) – Prime Minister Anthony Albanese announced on Friday measures to save Australia's largest aluminum smelter, the struggling Tomago facility, majority-owned by Rio TintoAX, when its current power contract expires in 2028.
The news comes after the company warned in October that Tomago Aluminum, an employer of more than 1,000 full-time employees and 200 contractors, could be forced to close due to its failure to secure new, affordable energy supplies.
Aluminum is becoming an “increasingly important product,” Albanese said, so it's important to keep Tomago open.
“If Australia doesn't produce aluminum, it will have a significant effect on other industries,” he said at the smelter north of Sydney in New South Wales (NSW) state.
“We're working with the company, we're working with the NSW government to make sure there are long-term energy solutions that go beyond 2028.”
The deal, which is not yet finalized, will include securing long-term power supply to the smelter at a fixed price, the government said.
Tomago is the state's largest consumer of electricity and, like several other Australian smelters plagued by high energy prices during the transition to renewable energy, it was built in the last century to exploit abundant supplies of cheap coal.
“This progress reflects years of work by Tomago and its joint venture partners, including Rio Tinto, to address one of the most challenging energy challenges facing Australian industry,” Simon Trott, chief executive of Rio Tinto, said in a statement welcoming the deal.
Tomago will also contribute at least A$1 billion ($666.6 million) in capital and maintenance investments over the next decade, including identifying decarbonization opportunities, the government said.
“We are grateful to both the federal and New South Wales governments,” Tomago CEO Jerome Dozol said in a statement, adding that the company looked forward to working with the government.
The smelter is the latest to receive support from the government, which has in recent months promised aid packages for Glencore's Mount Isa copper smelter and Townsville oil refinery, Trafigura's Nyrstar lead-zinc operations and Whyalla steelworks.
As part of the agreement with Tomago, the government will also provide concessional financing to accelerate the development of renewable energy generation and storage.
Industry Minister Tim Ayres said the government was still working out the overall cost of the agreement.
