Aluminium smelter bailout to cost taxpayers $2.5b over 10 years
Under the deal, the Commonwealth and state of NSW will split the cost down the middle, with Rio Tinto contributing at least $1.1 billion to reduce its power usage and gear toward renewables.
The governments of New South Wales and the federal government have reached an agreement to invest $2.5 billion over the next decade to ensure the survival of Australia's largest aluminium smelter, Tomago Aluminium. The smelter's owner, Rio Tinto, had threatened to close it as early as 2029 due to the increasing costs of renewable and coal-fired power. Union officials have hailed the deal as a vital lifeline for Australian manufacturing.
The financial burden will be evenly split between the two governments. Tomago, which is Australia's leading electricity consumer, consumes roughly 10% of the state's annual electricity supply. At a recent meeting with the smelter, Prime Minister Anthony Albanese emphasized the long-term benefits of renewable energy and the importance of maintaining domestic manufacturing capabilities.
The New South Wales government's contribution is capped at $1.225 billion, while Rio Tinto will invest at least $1.1 billion to decrease its energy consumption and transition to renewable energy sources.
The deal is anticipated to boost Australia's decarbonisation efforts by more than 10% of the state's electricity grid and contribute to the development of nearly 3 gigawatts of new renewable energy capacity. The agreement is expected to enhance Tomago's competitiveness in the international market and secure its future. Tomago Aluminium produces approximately 590,000 tonnes of aluminium annually, accounting for over 30% of the country's total production. The majority of aluminium is shipped to the Asia-Pacific region.
Industry Minister Tim Ayres emphasized the significance of the bailout, stating it was one of the largest in the Albanese government's history. Aluminium is considered a crucial national asset for Australia, and the deal is essential for the country's economic resilience and the preservation of blue-collar jobs, particularly in regions like the Hunter Valley.
The rescue package follows a series of similar government intervention efforts for struggling heavy industries, including Glencore's Mount Isa Copper smelter and the Nyrstar smelters in Tasmania and South Australia.
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