Rio Tinto (ASX:RIO) in talks to keep Australia’s biggest aluminium smelter open
Mining giant Rio Tinto is locked in make-or-break talks with the federal and NSW governments to prevent the closure of Australia’s largest aluminum smelter as a looming boom in electricity costs threatens the plant’s viability.
Tomago Aluminum, majority owned by Rio Tinto, said on Friday it was working with government ministers on “viable pathways” to keep its 40-year-old smelter in NSW afloat beyond 2028 and secure jobs for more than 1,500 workers in the Hunter region.
Crisis talks are ongoing over aid to the Tomago aluminum smelter in NSW.
If a taxpayer-funded support deal is reached, it would be the fourth time this year the Albanian government has intervened to support a struggling metals processing plant, after contributing to the rescue of Glencore’s Queensland copper smelter and refinery on Wednesday, Nyrstar’s smelters in Port Pirie and Hobart in August and the Whyalla steelworks that collapsed in February It will mean that.
Tomago CEO Jerome Dozol said energy costs, which make up more than 40 percent of the smelter’s operating expenses, will more than double when its current contract with AGL expires at the end of 2028, increasing its economic sustainability.
The energy-intensive smelter is the largest user of electricity in NSW. It consumes more than 10 percent of the state’s electricity.
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“The biggest challenge for our business is the reliable and affordable energy required for aluminum smelting on a sustainable basis,” Dozol said.
“Under market offers for power supply from January 2029, our current energy costs will more than double, which will fundamentally change the economics of the business.”
Tomago Aluminium, Australia’s largest aluminum smelter, produces up to 590,000 tonnes a year of the metal, which is widely used in the production of building materials, cars, drinks cans, foil packaging and electrical products. Aluminum is also increasingly in demand in the construction of solar panels and wind turbines.
