By Rhiannon Hoyle


Australian federal and state governments will work with Rio Tinto's Tomago Aluminium to keep the country's largest aluminum smelter open after its current electricity contract ends in 2028, Prime Minister Anthony Albanese said.

Tomago Aluminium, in which Rio Tinto holds a roughly 52% stake, said in October that it might need to shut the 42-year-old smelter once its power-supply contract with Australian utility AGL Energy ends. It said it had been searching since 2022 for "an economically viable energy solution" beyond then, but hadn't found an option that would allow the operation to continue.

On Friday, Albanese said the Australian and New South Wales governments will work with Tomago on long-term, renewable-energy supply to keep the smelter viable.

"This is so important for our national interest," he said. "It's important we as a nation continue to make things here."

Albanese said the aim is to agree a fixed-price power-purchasing agreement for the smelter, as well as finance arrangements to accelerate renewable-energy generation and storage developments in New South Wales.

Under a successful deal, Tomago Aluminium would make at least 1 billion Australian dollars, or roughly $666 million, in investments over the next decade, he said.

Power-hungry smelters in many parts of the world have been strained by rising energy costs. In Australia, government officials recently announced support for Glencore's Mount Isa copper smelter and Townsville refinery, among others.

Electricity accounts for more than 40% of Tomago's operating costs, and the smelter is the single largest user of power in New South Wales, Australia's most populous state.

Discussions with federal and state governments on a power-supply solution reflect "our collective recognition of the importance of maintaining local manufacturing capability in Australia," said Tomago Aluminium Chief Executive Jerome Dozol. "We look forward to working collaboratively with government on this next phase."

Tomago Aluminium is a joint venture between Rio Tinto, Gove Aluminium Finance, which owns roughly 36%, and Norway's Norsk Hydro, which holds about 12%.

In operation since 1983, the smelter can produce up to 590,000 metric tons of aluminum annually, nearly 40% of Australia's total output of the metal.


Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com


(END) Dow Jones Newswires

12-11-25 2336ET