Australia commits $1.76 billion to keep Rio Tinto aluminium smelter open

Australia announced on Thursday that it will provide a?A$2.5billion ($1,76billion) to keep Rio Tinto's Tomago aluminum smelter - the largest in the country - open beyond 2028 with a more reliable and affordable power supply.

A government statement said that the deal would fund 3 gigawatts for new electricity generation at the smelter. The financial package will be funded jointly by the federal and state governments of New South Wales.

Rio Tinto warned that Tomago could be forced to shut down if the company failed to find commercially viable power beyond 2028.

Tomago is investing at least A$1.1 billion in the facility as part of this deal. This includes A$100 millions to further decarbonise the smelter.

Jerome Pecresse, Chief Executive Officer of Rio Tinto Aluminium & Lithium, said: "It allows Australia to retain a key piece of its manufacturing capability while assisting Tomago Aluminium in continuing to produce the?aluminium required for the global energy transformation.

Tomago, like many other Australian smelters that struggled with high energy costs as a result of the?transition towards renewables?, was built in the last century so it could take advantage cheap coal-fired power.

In December, the federal government announced that it was looking to secure a long-term fixed-priced energy supply for smelters after their?current contract expires in 2028. Tomago employs?more than 1,000 full-time employees and 200 contractors.

(source: Reuters)