Key facts
- Australia's federal and NSW governments committed A$2.5bn ($1.77bn) to Rio Tinto's Tomago aluminium smelter.
- The smelter will run on renewable energy by 2033 and operate until 2038.
- The deal supports a 10-year power purchase agreement (PPA) and 3GW of new renewable capacity.
- Rio Tinto will invest A$1.1bn, including A$100mn for decarbonisation.
- Similar government support has been provided to other Australian smelters.
The Australian federal and New South Wales (NSW) state governments have committed A$2.5bn ($1.77bn) to ensure Rio Tinto's Tomago aluminium smelter in NSW continues operations until 2038. The smelter's current power supply agreement is set to expire on December 31, 2028, but this subsidy will support a 10-year power purchase agreement (PPA) that will transition the facility to run entirely on renewable energy by 2033.
The government funds are earmarked for the construction of 3GW of new renewable generation and firming capacity, a commitment finalized from a promise made in late 2025. Rio Tinto itself will invest A$1.1bn of its capital to fund the PPA, which includes an allocation of A$100mn dedicated to decarbonizing the smelter.
Rio Tinto holds a 51.55% stake in Tomago. The remaining ownership is divided between Australian distributor Gove Aluminium Finance (36.05%) and Norwegian producer Norsk Hydro (12.4%).
This support follows similar government actions, including A$2bn provided to Rio Tinto's Boyne smelter in Queensland in March and billions in grants and loans to other smelters. The Tasmanian premier has also called for federal support for Rio Tinto's Bell Bay aluminium smelter.
The government stated that taxpayers could benefit from a monetary return if aluminium prices increase. Aluminium prices have seen support from Middle East supply disruptions and strong electric vehicle demand in China, though they have recently fallen from a June peak due to expectations of conflict resolution. Potential shifts in supply fundamentals, such as Indonesia's planned production increase, could also impact prices before 2038. London Metal Exchange aluminium prices were trading at $3,307.250/t on August 12.