Massive bailout for Australia’s largest aluminium smelter expected to be announced by PM and NSW premier

Australia's largest aluminium smelter at Tomago, located north-west of Newcastle, is set to receive a massive $2.5 billion bailout from the federal government and New South Wales premier Chris Minns. The deal, announced by Prime Minister Anthony Albanese and Minns on Thursday morning, aims to keep the smelter operational in the face of rising energy costs and increasing reliance on renewable energy sources.

The site, which accounts for over 10% of energy use in the state and employs about 1,000 workers, was expected to cease operations at the end of its current electricity supply contract. The government will provide $1 billion in capital improvements, while the remaining $1.5 billion will be split equally between the federal and state governments.

The move comes as several smelters around the country prepare to switch to 100% renewable energy in the coming decade, with Tomago having announced its own plans to achieve this goal by the end of the decade. The Australian Financial Review reported the announcement on Wednesday, linking it to power purchase agreements with the government-owned utility Snowy Hydro.

The bailout aims to create about 2.5 gigawatts of new energy supply and follows other taxpayer-funded bailout packages announced by the government, including $600 million for Glencore's copper smelter in Mt Isa and $240 million for smelters in Hobart and Port Pirie.