Rescue Plan for Australia's Largest Aluminum Smelter

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)

Summary

The largest aluminum smelter in Australia will be saved from potential closure following the intervention of the Australian Federal government. The Rio Tinto-owned Tomago Aluminum smelter in Hunter Valley, New South Wales (NSW), had faced potential closure in the coming years over rising energy costs.

Saving the Smelter

The Australian government has agreed a plan to save the country's largest aluminum smelter from closure. 

Rio Tinto (London, England), the majority shareholder in the Tomago Aluminium Company smelter in Hunter Valley, New South Wales (NSW), had warned in October that the future of the operation was in doubt due to energy costs. Founded in 1983, Tomago Aluminium produces up to 590,000 tonnes of aluminum a year -- almost 40% of Australia's annual aluminum production. It directly employs more than 1,000 people, along with 200 contractors and supports roughly 5,000 local jobs. 

Government Steps In

The Australian government has agreed to help secure the company's future beyond 2028 with the help of the NSW state government and Tomago Aluminium. They will work on a long-term renewable energy solution to support the smelter's viability when its current energy contract expires in 2028. The goal will be to deliver a long-term, fixed-price power purchasing agreement for the smelter, along with concessional finance arrangements to accelerate renewable energy generation and storage developments in NSW. In addition, Tomago Aluminium will contribute at least A$1 billion (US$660 million) in capital and major maintenance investment over the next decade, which includes additional decarbonisation projects. Details of the plan will be released in the coming months but it is expected to involve the fast-tracking and support for major renewable energy and storage projects in NSW. 

Prime Minister Anthony Albanese, meeting with employees at the smelter, said: "This is an investment. If Australia doesn't produce aluminum, then the knock-on effect to other industries is significant. Tomago has a proud place in Australia's history -- and we will ensure it has a central place in Australia's future." Tomago Aluminium Chief Executive Officer Jerome Dozol said: "We are grateful to both the Federal and New South Wales governments for their commitment and partnership in working to address our energy challenges. It reflects our collective recognition of the importance of maintaining local manufacturing capability in Australia."

Not the First Rescue

In October, Industrial Info reported that Australia's Federal government had signed off on a A$600 million (US$391 million) rescue package for the country's second-largest copper mining, smelting and refining complex at Mount Isa in Queensland. Owned by Glencore (Baar, Switzerland), Mount Isa was facing closure and the loss of 600 direct jobs due to the higher costs of operation versus heavily subsidized Chinese suppliers. For additional information, see October 17, 2025, article--Australia Pledges $391 Million to Save Mount Isa Copper Complex.

In August, the government agreed to provide A$135 million (US$87 million) to keep two Nyrstar (Budel-Dorplein, Netherlands) smelters operational. Both the Port Pirie lead smelter in South Australia and Hobart zinc processing operations in Tasmania were put under strategic review due to high energy and labor costs, as well as weak market prices caused by oversupply from China. In March, the country's largest steelworks, Whyalla, was placed into administration by the South Australian government. The 60-year-old plant suffered a number of long outages lasting several months over the past year, leading to debts of US$828 million. It is currently the focus of a number of bids from prospective buyers. For additional information, see March 21, 2025, article--Struggling Whyalla Steelworks Hit by Stoppage.

Australia's Push For Critical Minerals

Australia wants to be a leading global supplier of critical minerals and green hydrogen. In an effort to promote both, and support domestic investment, the government endorsed new tax incentives earlier this year. The Hydrogen Production Tax Incentive is designed to bridge the gap with cheaper fossil fuels and will run from 2027-28 to 2039-40. At the same time, the Critical Minerals Production Tax Incentive will cover 10% of the relevant processing and refining costs for Australia's 31 critical minerals, over the period 1 July 2027 to 30 June 2040. The critical minerals incentive is valued at A$7 billion (US$4.4 billion) over the decade.

Key Takeaways 

• The largest aluminum smelter in Australia - Tomago - will be saved from potential closure following the intervention of the Australian Federal government. 
• It is the latest in a series of government interventions this year in the country's struggling metals, mining and smelting sectors.
• Australia is introducing tax incentives worth billions of dollars for its critical minerals and green hydrogen sectors in order to become a global supplier.

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, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).