newy.com.au – Tomago Aluminium will continue operating through 2038 under a decade-long electricity agreement backed by a taxpayer support package described by the federal and NSW governments as worth $2.5 billion.
The final deal removes the immediate threat to more than 1000 direct jobs when the smelter’s existing electricity contract with AGL expires on 31 December 2028. Governments estimate another 5000 jobs across the Hunter depend indirectly on the operation.
Tomago will enter a 10-year power purchase agreement from 2029, with its electricity to come entirely from renewable sources from 2033. The energy mix covering the first four years has not been disclosed.
The government assistance is not a single upfront payment. The NSW contribution is capped at $1.225 billion over 10 years from 2029, while Prime Minister Anthony Albanese and Premier Chris Minns said the cost would be shared equally. An exact matching Commonwealth contribution would bring the total to $2.45 billion.
Tomago and its owners will invest at least another $1.1 billion in real terms at the smelter by 2038. That figure includes $100 million for further decarbonisation and a demand-response program allowing the plant to reduce consumption when the NSW electricity system is under pressure.
The agreement also contains a mechanism returning money to the Commonwealth when aluminium prices are high, although the price threshold, payment formula and potential return to taxpayers have not been released.
The governments say the arrangement will underpin almost three gigawatts of new renewable generation and firming capacity. Federal Energy Minister Chris Bowen said the portfolio would include wind, solar and batteries across NSW, with Snowy Hydro and the Clean Energy Finance Corporation involved in bringing projects forward.
No individual projects have been selected publicly.
Tomago consumes about 950 megawatts continuously, accounting for roughly 10 to 12 per cent of NSW electricity demand. Rio Tinto expects the transition to fully renewable power in 2033 to reduce the smelter’s direct and electricity-related operating emissions by 7.1 million tonnes a year.
The smelter produces up to 590,000 tonnes of aluminium annually and works with more than 500 Hunter suppliers. The company says about $800 million of its economic contribution is spent locally each year.
Tomago began consulting workers about a possible closure last year after concluding that neither the renewable nor coal-fired electricity proposals it received would allow it to remain commercially viable beyond 2028.
Electrical Trades Union organiser Brad McDougall said the agreement ended months of uncertainty for workers.
“This announcement finally gives them confidence that there’s a future for them in the Hunter,” Mr McDougall said.
Analysis prepared by Energy & Resource Insights for the union estimated the electricity requirements created by keeping Tomago open could unlock between $8 billion and $10 billion in renewable investment and support 2400 to 3900 direct jobs during peak construction. Those figures are projections rather than commitments under the agreement.
Federal Opposition Leader Angus Taylor described the package as an admission of failure in national energy policy, while Mr Albanese defended the intervention as necessary to preserve jobs, domestic aluminium production and Australia’s industrial capability.
Paterson MP Meryl Swanson said the agreement provided certainty for workers and businesses that depend on the smelter.
“Hunter workers have helped make Tomago Aluminium one of Australia’s most important manufacturing assets, and today’s announcement provides certainty for the people, families and businesses who depend on it,” Ms Swanson said.
Port Stephens MP Kate Washington said securing the future of one of the electorate’s largest employers had been a priority.
“This is a massive investment in local families and our local economy,” Ms Washington said.
“Tomago Aluminium is one of the largest employers in Port Stephens, and securing its future has been an absolute priority for me and the Minns Labor Government.”
