Australia announces rescue bid for Rio Tinto Tomago Aluminium Smelter

The Prime Minister Anthony Albanese, announced on Friday that a "rescue" effort would be launched to keep Australia's biggest aluminium smelter open, the struggling Tomago plant majority owned by Rio Tinto after its current energy contract expires 2028. The announcement comes after the company had warned in October of a possible closure for Tomago Aluminium. It employs more than 1,000 employees and 200 contractors.

Albanese stated that aluminium was becoming a "vital product", making it vital to keep Tomago operating.

He said that if Australia does not produce aluminium, the knock-on effects in other industries are significant. The smelter is located north of Sydney, in the state of New South Wales.

"We work with the company and we work with the New South Wales Government to ensure that there is a long-term solution to energy beyond 2028."

The government stated that the deal has not yet been finalised and would include securing long-term energy supply at a fixed price for the smelter.

Tomago, the largest power user in the state, was built to take advantage of abundant coal supplies during the transition from fossil fuels to renewables.

In announcing the agreement, Rio Tinto's chief executive Simon Trott said: "This progress is the result of years of collaboration between Tomago, its joint venture partners and Rio Tinto in addressing the most complex energy challenge facing Australian industry."

The government also said that Tomago will invest at least A$1 billion ($666.6 millions) over the next decade in capital projects and major maintenance, as well as identifying opportunities for decarbonisation.

Jerome Dozol said, "We thank both the federal government and the New South Wales government," in a press release. He added that Tomago looked forward to working together with the Government. The government has offered support to the smelter, as it has done in the past for Glencore's Mount Isa Copper Smelter, Townsville Refinery, Trafigura’s Nyrstar Lead and Zinc Operations, and the Whyalla Steel Plant.

The government will also offer concessional financing to speed up the development of renewable energy and storage.

Tim Ayres, Minister of Industry, said that the government is still calculating the total cost of the agreement.

The Australian Workers' Union supported the deal and called it a pivotal point for manufacturing.

Tony Callinan is the secretary of the union in the state. He said, "We are now looking forward to the details of the rescue package. We will continue to work with all parties to make sure Tomago has an sustainable future on the long term."

(source: Reuters)