Australia’s largest aluminium smelter to run on renewables by 2033 after Rio Tinto strikes $2.5bn taxpayer bailout deal

Rio Tinto-backed Tomago Aluminium agreed with Australia’s federal and NSW governments on a power deal through 2038. Tomago will sign a 10-year power purchase agreement after its AGL contract ends in 2028, targeting fully renewable electricity from 2033. It plans A$1.1bn investment, including A$100m for decarbonisation, and expects Scope 1 and 2 emissions to fall by 7.1m tonnes annually.

Australian Prime Minister Anthony Albanese announced a 2.5 billion Australian dollar, 10-year bailout to keep Rio Tinto’s Tomago aluminum smelter near Newcastle operating from 2029 to 2039. The federal and NSW governments will split funding evenly. Rio Tinto warned the plant could close in 2028 when its electricity contract ends due to higher energy costs.

New South Wales and the Commonwealth will provide a $2.5 billion, 10-year bailout for the Tomago Aluminium Smelter near Newcastle, according to Prime Minister Anthony Albanese. The governments split the cost, with Tomago Aluminium (majority owned by Rio Tinto) investing $1.1 billion. The deal targets closure risk from higher energy prices and includes renewable power plans.

Australia will provide A$2.5 billion ($1.76 billion) to support Rio Tinto’s Tomago aluminum smelter beyond 2028, funding 3 GW of new electricity generation. Tomago will invest at least A$1.1 billion, including A$100 million for decarbonisation. Rio said it will shift to renewable power by 2033. Rio holds 51.55%, with Gove Aluminum and Norsk Hydro also invested.

Rio Tinto said it welcomed an agreement between Tomago Aluminium, the Australian Government and NSW to secure long-term power and operations at the Tomago aluminium smelter to 2038. Tomago will sign a 10-year PPA starting after a Dec 2028 contract expiry, with 100% renewable power from 2033. It will invest A$1.1bn (real terms) including A$100m for decarbonisation, and cut Scope 1 and 2 emissions by 7.1m tonnes/year once fully renewable.

Australia’s Federal and NSW governments agreed on a $2.5 billion package to keep Rio Tinto’s Tomago aluminium smelter operating. Rio Tinto said it would shut the Hunter Valley smelter at end-2028 without an affordable electricity deal. The deal includes up to $1.225 billion from NSW, supports new power generation (including Snowy Hydro), and runs to 2039 with profit sharing tied to sustained high aluminium prices.