Key facts
- Australia's largest aluminium smelter, Tomago, is expected to receive a bailout package of up to $2.5 billion over 10 years.
- The funding is a joint initiative between the federal government and the New South Wales government, split 50-50.
- The deal includes up to $1 billion in capital improvements from the smelter's owners.
- The bailout aims to address concerns about the smelter's viability due to rising energy costs.
- The agreement is expected to create approximately 2.5GW of new energy supply.
Prime Minister Anthony Albanese and New South Wales Premier Chris Minns are set to announce a substantial bailout package for Australia's largest aluminium smelter, Tomago, valued at up to $2.5 billion over 10 years. This intervention comes as the smelter, which accounts for over 10% of New South Wales' energy consumption and employs around 1,000 workers, faced potential closure due to escalating energy costs. The deal, expected to be finalized with an announcement on Thursday, will see the federal and NSW governments each contribute 50% of the funding. Owners Rio Tinto are also expected to invest up to $1 billion in capital improvements. The agreement is anticipated to generate approximately 2.5 gigawatts of new energy supply. This move follows similar government support for other industrial operations, including $600 million for Glencore's copper smelter and refinery in Mt Isa and $240 million for smelters in Hobart and Port Pirie. Tomago has committed to transitioning to 100% renewable energy by the end of the decade. However, the broader context includes criticism from figures like Nationals leader Matt Canavan, who questioned the long-term sustainability of such large-scale government subsidies for heavy industry and linked the issue to net-zero policies. The government argues that producing aluminium domestically is vital for various downstream industries, including manufacturing for solar panels and wind turbines.