The governments of New South Wales and Australia have reached an agreement to allocate $2.5 billion over the next decade to ensure the longevity of the Tomago Aluminium smelter, which is the largest of its kind in the country.
Rio Tinto, the entity that owns the smelter, had previously indicated that it might shut down operations starting in 2029 due to increasing expenses associated with both renewable and coal-based energy sources.
On Thursday morning, the Prime Minister and the NSW Premier are scheduled to visit the facility located in the Hunter region of New South Wales.
This financial package, which will be shared equally between the two governments, is aimed at preventing the closure of Tomago Aluminium, the largest electricity consumer in Australia, accounting for around 10 percent of the state’s total annual electricity usage.
A joint statement from the NSW and federal governments emphasized that the funding initiative is designed to “secure the future of aluminium smelting in the area.”
A government spokesperson elaborated that this collaborative investment will provide a sustainable renewable energy solution for the smelter, enabling it to operate successfully beyond 2028 while also aiding in the decarbonization of over 10 percent of New South Wales’s electricity grid.
The spokesperson noted that the NSW government’s contribution is capped at $1.225 billion over the ten-year period beginning in 2029. Additionally, Rio Tinto will invest a minimum of $1.1 billion, which will focus on enhancing energy efficiency and transitioning towards renewable energy sources.
This investment includes $100 million dedicated to advancing decarbonization measures at the smelter, as well as implementing an innovative demand-response program intended to support the New South Wales electricity grid.
The goal of this program is to establish Tomago as a global leader in electricity demand response and flexibility services.
During their visit to the smelter, Prime Minister Anthony Albanese and Premier Chris Minns are expected to highlight the significance of the agreement.
In a prior visit to the Hunter facility, the Prime Minister expressed optimism that a deal would be finalized swiftly. However, negotiations were delayed due to the lack of a clear funding arrangement.
Reports indicate that the federal government sought an equal funding split of 50:50, similar to an arrangement made with the Queensland government for the Boyne Aluminium Smelter near Gladstone. In contrast, Mr. Minns raised concerns about this proposal, emphasizing that any state contribution needed to be in the best interests of New South Wales taxpayers.
The Tomago smelter has been operational since 1983 and employs approximately 1,000 workers, operating around the clock. Its extensive production processes have made it the largest single user of electricity in New South Wales.
This financial support follows a series of similar interventions by the Albanese administration for struggling heavy industries, including Glencore’s Mount Isa copper smelter and Nyrstar’s facilities in Tasmania and South Australia.
Members of the Electrical Trades Union have expressed anxiety over the past months as they awaited news regarding their employment situation. Union organizer Brad McDougall stated that the uncertainty had been challenging for workers, noting that they often felt apprehensive about their job security. He remarked that the announcement of this deal is incredibly positive for the workforce.
According to Rio Tinto’s most recent annual report, the company achieved a profit of $10 billion after tax for the year 2025, benefiting its shareholders. The total value of its aluminium and lithium projects increased to $4.6 billion, up from $3.6 billion in 2024.
