Australia Steps In to Save Largest Aluminium Smelter

Written by Martin Lynch, European News Editor for IIR News Intelligence (Sugar Land, Texas)

Summary

A AUD$2.5 billion (US$1.8 billion) bailout from the Australian government has been agreed to save the country's largest aluminium smelter, Tomago, from closure.

Smelter Going Green

The Australian government has stepped in to save the country's largest aluminium smelter in Tomago, New South Wales (NSW), with a AUD$2.5 billion (US$1.8 billion) bailout.

The future of the 590,000-tonne-per-year Tomago facility in the Hunter region of NSW has been in doubt since last year due to high energy costs. The deal with Tomago Aluminium - which is majority owned by mining major Rio Tinto - is for a 10-year below-market power supply guarantee that will start when the smelter's existing coal-fired electricity contract with AGL ends in December 2028. Tomago Aluminium has agreed to invest at least AUD$1.1 billion (US$780 million) in the facility as part of the deal. Going forward, the facility will transition to 100% renewable energy from 2033. Tomago is responsible for almost 40% of Australia's annual aluminium production. It directly employs more than 1,000 people, along with 200 contractors and supports roughly 5,000 local jobs. According to Industrial Info Resources data, there are 10 aluminum-related projectsongoing in Australia worth US$213 million in investment. 

Keeping Promises

Australia's Prime Minister Anthony Albanese said: "In December last year I stood in the rain at Tomago and told the workers 'we have your back.' Today, alongside the NSW government, we deliver on that promise. This site isn't just important for Newcastle and the Hunter, it's a critical asset for the country and our manufacturing future." Minister for Industry and Innovation and Minister for Science Tim Ayres, added: "Australia's end to end aluminium industry - from bauxite to complex aluminium finished products - is critical for Australia's national resilience. Tomago is Australia's largest and youngest smelter and is crucial to Australia's industrial future. Keeping this capability here in Australia matters. It makes our economy stronger, drives new electricity projects and maintains thousands of good quality blue collar and engineering jobs right here in the Hunter."

A Renewable Shift

The joint investment will underpin nearly 3 gigawatts (GW) of new renewable generation and firming capacity to "strengthen the state's electricity system and support long-term energy affordability and reliability for New South Wales," the NSW government stated. The Tomago facility is Australia's largest single electricity user, accounting for 10% of all power used in NSW - the country's most populous state. When it shifts to 100% renewable power from 2033, Rio Tinto said it will cut the smelter's Scope 1 and 2 operating carbon emissions by 7.1 million tonnes per year. Tomago Aluminium's AUD$1.1 billion (US$780 million) investment will include AUD$100 million (US$78 million) to drive further decarbonisation activities at the smelter. In addition, it will undertake a demand-response program to support the NSW grid which Rio Tinto stated would "help reduce electricity use during periods of system stress, improving system reliability and supporting the integration of more renewable energy".

Not the Only Smelter Saved

Earlier this year, Industrial Info Resources reported that the government had agreed to a AUD$2 billion (US$1.4 billion) rescue plan for Rio Tinto's  Boyne aluminium smelter in Gladstone, Queensland. Similarly, the funds will be used to help the smelter transition to renewable energy over a 10-year period, 2030-40. As part of the deal, Rio Tinto agreed to underwrite AUD$7.5 billion (US$5.3 billion) of new wind, solar and battery storage development in the Gladstone region, which it will contract to supply the Boyne smelter going forward through a series of power purchase agreements (PPAs). For additional information, see April 10, 2026, article - Billion-Dollar Rescue for Australian Aluminum Smelter.

Key Takeaways 

• The Australian Government has stepped in to save the country's largest aluminium smelter with a AUD$2.5 billion (US$1.8 billion) bailout.
• The 590,000-tonne-per-year Tomago facility in the Hunter Valley in NSW produces almost 40% of Australia's annual aluminium.
• Earlier this year, it agreed to a similar AUD$2 billion (US$1.4 billion) rescue plan for Rio Tinto's  Boyne aluminium smelter in Gladstone, Queensland. 

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).