Major aluminium smelter in talks over possible closure
More than 1,000 jobs are at risk as Australia’s largest aluminum smelter begins talks with employees about potential closure.
Tomago Aluminum, majority-owned by Rio Tinto, said high energy costs were forcing the company to consider ceasing operations after its current electricity supply contracts expire in 2028.
The consultation process is scheduled to last until November 21, but Jerome Dozol, CEO of Tomago Aluminum, said the future was uncertain.
“Although no decision has been made, this is a difficult point to reach,” he said.
“We continue to engage with stakeholders on a workable path forward for Tomago.”
“Unfortunately, all market quotes received so far suggest that future energy prices are not commercially viable, and there is significant uncertainty about when renewable projects will be available at the scale we need.”
The firm said electricity currently accounts for more than 40 percent of the company’s operating costs.
As its contract with AGL approaches its December 2028 end point, future electricity supply options will significantly increase costs and make the operation unsustainable.
Located about 13 kilometers west of Newcastle, Tomago’s smelter produces almost 40 per cent of Australia’s aluminum each year and employs more than 1,000 staff from the NSW Hunter Valley to the Central Coast.
Approximately 90 percent of its product is exported to the Asia-Pacific region.
Tomago is seeking a lifeline from the federal and state governments following bailouts for other struggling refineries and smelters.
Swiss mining giant Glencore received a $600 million injection in October as part of a joint federal and state deal that will keep open its Mount Isa copper smelter and Townsville copper refinery in Queensland, creating around 600 jobs.
Tomago’s representatives were previously in talks with the federal and NSW governments for a rescue package worth more than $1 billion.
Bell Bay Aluminum in Tasmania, also owned by Rio Tinto, is facing potential closure as the 10-year deal with Hydro Tasmania approaches its December 31 deadline.
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