Rio Tinto Wins A$2.5 Billion Government Backing to Secure Tomago’s Future
Synopsis
The package will underpin a new 10-year power agreement for the Hunter-region aluminium smelter, supporting thousands of manufacturing jobs and nearly 3GW of new renewable generation and firming capacity.
Key Highlights
- Rio Tinto won a government package worth $2.5 billion as crucial to establishing Australian aluminium and securing Tomago Aluminium’s future.
- This agreement proposes a new 10-year power contract until 2038.
- By 2033, all the power of the smelter would come from renewables.
Rio Tinto secures a $2.5 billion agreement with the federal and NSW governments. The company said it will help ensure a new power contract for Tomago Aluminium is secured through to 2038.
The deal comes after warnings that the smelter would have to shut around 2028 due to high energy costs. It is capped at $1.225 billion from 2029 over a period of 10 years for the NSW government.
Tomago to Invest $1.1 Billion
The smelter will receive $1.1 billion from Tomago Aluminium, including $100 million for decarbonisation initiatives. Tomago Aluminium will take part in a power purchasing agreement starting December 31, 2028, to coincide with the expiry of its existing agreement over the full term of ten years.
The smelter will be 100% powered by renewable energy from 2033, Rio Tinto said. The investment aims at almost three gigawatts of additional renewable generation and firming capacity.
Government Supports Smelter’s Future
Rio Tinto owns 51.55% of Tomago Aluminium, with Gove Aluminium Finance owning 36.05%, and Norsk Hydro owning a further 12.4%. The facility presently accounts for roughly 10% of New South Wales’ total energy demand.
A deal that guarantees the long-term future of Tomago Aluminium is also a boon for Australian manufacturing and skilled jobs, and the local Hunter community according to Rio Tinto Aluminium and Lithium chief executive Jérôme Pécresse.
Prime Minister Anthony Albanese also announced that the deal fulfills promises made to Tomago workers and called the site a vital part of Australia’s manufacturing future.
Source: Reuters
At Inspirepreneurs Magazine, covering entrepreneurship, business failures, and the human stories behind the world's most ambitious founders. She writes at the intersection of strategy and storytelling.
