The New South Wales and federal governments have joined hands to save the country’s largest aluminium smelter from closing down, agreeing to a joint AU$2.5 billion investment.
The government support package delivers a long-term renewable energy pathway for Tomago Aluminium, Australia’s largest single electricity user beyond the expiry of its current supply contract on December 31, 2028.
Under the agreement, the New South Wales government’s contribution is capped at $1.225 billion over 10 years starting from 2029.
As part of the package, Tomago Aluminium has committed to investing at least AU$1.1 billion into its facility through to 2038. This includes AU$100 million dedicated to decarbonisation and an innovative demand-response program designed to flex the smelter’s energy usage during periods of grid stress.
The deal underpins nearly three gigawatts of new wind, solar, and storage capacity, driving the transition of the facility, which currently consumes more than 10 per cent of New South Wales’ electricity, to 100 per cent renewable power by 2033.
Once fully operational on renewables, the smelter is projected to reduce greenhouse gas emissions by 7.1 million tonnes annually.
Prime Minister Anthony Albanese said the agreement fulfilled a promise made to local manufacturing workers.
“In December last year I stood in the rain at Tomago and told the workers ‘we have your back’,” Albanese said.
“Today, alongside the NSW government, we deliver on that promise. This site isn’t just important for Newcastle and the Hunter, it’s a critical asset for the country and our manufacturing future.”
NSW Premier Chris Minns echoed those sentiments, highlighting the Hunter’s role as an industrial powerhouse.
“This is a good day for the Hunter. This agreement secures more than 1,000 jobs at Tomago and thousands more that rely on the smelter, and gives the region certainty about its future,” Minns said.
Rio Tinto Aluminium & Lithium CEO Jérôme Pécresse welcomed the deal, noting that securing cost-competitive, low-carbon power preserves a vital sovereign capability in Australia’s end-to-end aluminium supply chain.
“This agreement secures Tomago Aluminium’s long-term future, supporting Australian manufacturing, skilled jobs and the Hunter community, as well as providing security of supply to the smelter’s global customers.”
To protect taxpayers, the joint government arrangement includes a revenue-sharing mechanism that returns funds to the federal government when global aluminium prices are high.
Environmental and energy advocacy groups also hailed the move as a major milestone for clean industry.
Climate Council Senior Advisor Ben McLeod described the repowering of Australia’s largest power user as a “light bulb moment,” demonstrating that renewable energy can power heavy manufacturing into a cleaner, resilient future.
The Australian Conservation Foundation’s national climate policy adviser Annika Reynolds added that the deal helps the aluminium sector to shift away from coal power.
“Renewable energy is now at the heart of Australian industry and economic growth, revitalising the country’s manufacturing base and green metal export potential.”
