Australia's largest aluminium smelter expected to get emergency bailout

The Australian federal and New South Wales governments are said to have reached an agreement to save the country's largest aluminium smelter, Tomago Aluminium. The smelter faced closure in 2029 due to the escalating expense of renewable and coal-fired power. Prime Minister Anthony Albanese and NSW Premier Chris Minns are anticipated to reveal the deal details during an upcoming visit to the Hunter region.

Sources suggest a bailout for Australia's largest aluminium smelter is set to be announced by the two leaders. In late 2022, mining giant Rio Tinto had warned the Tomago Aluminium plant might be forced to shut down when its energy supply contract expired in 2028, owing to the growing cost of renewable and coal-fired power. It is reported that the federal government has been mulling a supply arrangement with Snowy Hydro, a taxpayer-owned entity that could offer the plant energy at competitive rates.

During a December visit to the Hunter site, the prime minister reportedly expressed confidence in reaching a deal swiftly; however, progress halted when they failed to agree on a fair funding distribution. Initially, the federal government proposed a 50:50 split, comparable to a deal made with the Queensland government for the Boyne Aluminium Smelter near Gladstone.

Premier Minns disagreed, stating that the deal was led by the federal government, and any state contribution should serve NSW taxpayers' interests. Since then, the state government has earmarked an undisclosed budget amount to back the deal. While no specific figure has been disclosed, it is believed the agreement could cost taxpayers hundreds of millions annually.

The smelter accommodates around 1,000 workers and has been in operation round the clock since 1983, making it the biggest single electricity consumer in NSW. The rescue package follows a series of similar government-backed bailouts for struggling heavy industries, such as Glencore's Mount Isa Copper smelter and the faltering Nyrstar smelters in Tasmania and South Australia.

The Electrical Trades Union noted that workers have been apprehensive for months, anxiously awaiting an announcement about their future. Union representative Brad McDougall emphasized the urgency of the situation, stating that the news would bring immense relief to employees. He added, "It's been very challenging for all employees on the site, as they live in constant uncertainty about their daily prospects."