$2b bailout for Rio Tinto as Labor cites national sovereignty
A $2 billion taxpayer-funded subsidy for Rio Tinto’s aluminum smelter in Queensland has been announced as the Albanian government doubles down on its pledge to save local production with another bailout.
The bailout marks the fourth government intervention to support a struggling metal processor at a time when Australian manufacturers are struggling to compete internationally due to high operating costs.
The Albanese and Queensland governments will each invest $1 billion over 10 years to support the Boyne aluminum smelter at Gladstone, which Rio Tinto says creates 1000 jobs at the site and a further 2000 indirect jobs.
“This is a good day for jobs in Queensland, a good day for Australian industry and a step towards an economy where no one is left behind and no one is left behind,” said Industry Minister Tim Ayres, who announced the deal in Gladstone on Wednesday morning.
In return for the funding, Rio will undertake an investment of approximately $7 billion into the Queensland power grid.
“This investment is needed now more than ever to maintain Queensland’s outstanding manufacturing capabilities and build national resilience and international competitiveness,” said Queensland Manufacturing Minister Dale Last.
The Albanian government contributed to the rescue of Glencore’s Queensland copper smelter and refinery in October last year, Nyrstar’s smelters in Port Pirie and Hobart in August and the Whyalla steelworks that collapsed in February.
Prime Minister Anthony Albanese said this week that the world order was breaking down and decades of free trade and economic growth since the Second World War were coming to an end.
Ayres will speak at the National Press Club on Wednesday, where he will say the “rules have changed” and governments must respond.
He told this outlet on Wednesday that the Boyne smelter funding was an extension of that thinking under the government’s Made in Australia Future policy.
“This is the largest pro-production package in Australian history and I can say without contradiction that this investment in Queensland is the largest investment in Queensland’s industrial capacity,” Ayres said.
The public funds will be provided under a tax credit that Rio Tinto won for aluminum production, which will be valid for 10 years from 2030.
Ayres said the deal represents good value for taxpayers’ money.
“This is a slam dunk from an economic standpoint. It’s an investment in economic resilience and future industrial capacity.”
Prime Minister Anthony Albanese said in December the government was close to securing a deal worth billions of dollars to secure the future of the NSW aluminum smelter at Tomago, near Newcastle, which also employs 1,000 people.
Tomago Aluminum’s owners, including Rio Tinto, have warned that its future is under threat as energy costs are doubling when its current electricity contract expires in 2028.
The government is currently negotiating with NSW over the component of the funding.
Mike Foley is the climate and energy correspondent for The Age and The Sydney Morning Herald.Connect via email.
