The news: Rio Tinto has welcomed a $2.5 billion agreement with the federal and New South Wales state governments to help it secure an additional 10-year power contract out to 2038, after warnings the facility would need to be shuttered due to high energy costs beyond 2028.
The numbers: The headline funding has been jointly committed by the two Australian governments, with the NSW government contribution capped at $1.225 billion over 10 years from 2029.
As part of the package, Tomago Aluminium — jointly owned by Rio Tinto (51.55%), Gove Aluminium Finance (36.05%) and Norsk Hydro (12.4%) — will invest $1.1 billion in the smelter, of which $100 million will be spent on decarbonisation initiatives.
The context: Tomago Aluminium will enter a 10-year purchasing power agreement that will begin on 31 December 2028 when the current agreement expires.
The smelter will be fully powered by renewables from 2033, according to Rio Tinto. The joint investment will underpin nearly three gigawatts of new renewable generation and firming capacity, according to a joint government press release.
The facility’s energy use is currently 10% of NSW’s total energy demand.
What they said: “This agreement secures Tomago Aluminium’s long-term future, supporting Australian manufacturing, skilled jobs and the Hunter community, as well as providing security of supply to the smelter’s global customers,” Rio Tinto Aluminium and Lithium chief executive Jérôme Pécresse said.
“It demonstrates what can be achieved when industry, governments and workers come together to strengthen Australia’s manufacturing sector.”
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.”
The sources: Rio Tinto media release, Joint government media release