Australia commits US$1.76bil to keep Rio Tinto aluminium smelter open

The Australian government has pledged A$2.5 billion (US$1.76 billion) to ensure the survival of Rio Tinto's Tomago aluminium smelter, which is the country's largest electricity consumer. Rio Tinto had warned in October that the facility could be compelled to shut down if it cannot obtain affordable and dependable electricity beyond 2028.

The agreement, jointly funded by both federal and New South Wales state governments, will provide 3 gigawatts of new electricity generation for the smelter. Rio Tinto is required to allocate at least A$1.1 billion towards the project, including A$100 million to advance decarbonisation efforts at the smelter. Similar to other Australian smelters grappling with escalating energy expenses as the nation transitions to renewable sources, Tomago was constructed in the previous century to capitalize on reasonably priced coal-fired electricity.

The federal government announced in December that it would secure long-term, fixed-price energy supply for the smelter after its present power contract expires in 2028. Tomago employs over 1,000 full-time employees and another 200 contractors.