New South Wales and the Commonwealth Government have agreed to provide a $2.5 billion bail out for the Tomago Aluminium Smelter over ten years. The smelter consumes around 10 per cent of power supplies in New South Wales, and had been facing closure due to rising energy costs.
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TRANSCRIPT
Prime Minister Anthony Albanese has announced a massive $2.5 billion bailout deal to support the nation's largest aluminium smelter at Tomago, near Newcastle, in New South Wales.
The state and federal governments are expected to split the bill, with Tomago Aluminium, which is majority owned by mining giant Rio Tinto, agreeing to invest a further $1.1 billion.
Mr Albanese says the deal will protect one thousand direct jobs, and 5,000 ancillary jobs.
"This announcement today secures the future of this facility. An example, as well, of governments working with the private sector to make sure that we're not at the end of supply chains, making sure that there is a future made right here in Australia, and a future made right here in the Hunter."
Tomago Aluminium consumes about 10 per cent of power supplies in New South Wales, and had been facing closure in 2029 after current contracts expire, due to forecasts of higher energy prices.
Electricity accounts for about 40 per cent of the facility's operating costs, and Federal Energy Minister Chris Bowen says the deal is designed to support new renewable generation.
"So last year, Jerome came to us on behalf of Tomago and said we can't rely on coal-fired power anymore, and we don't have enough confidence that enough renewable energy is coming forward to keep Tomago alive. And we agreed with him. And so we worked on a very innovative arrangement together with New South Wales, working with our government agencies CEFC and Snowy Hydro to bring on that renewable energy, three gigawatts. Now that'll take various forms."
He says the projects will include wind farms and solar backed by batteries, serving to strengthen the state's broader electricity system.
The investment from Tomago Aluminium includes $100 million to drive decarbonisation, and upgrade facilities so they can cope with fluctuations in renewable supply and demand.
In a statement, Rio Tinto says the company will enter into a 10-year power purchasing agreement, with all electricity due to be drawn from renewable sources from 2033.
Premier Chris Minns says the government was never going to let heavy industry disappear from the region.
"Today's announcement is a shot in the arm when it comes to confidence in this region. This is a community that is re-industrialising in so many so many ways. Whether it's in mining, whether it's returning manufacturing to the old BHP site, or right here at Tomago."
The Prime Minister says the smelter is critical to preserving sovereign industrial capability, and strengthens Australia's ability to supply a growing global market for low-emissions aluminium.
"And we need to have companies that continue to produce aluminum, as as was said here. We have the bauxite that can go through right through the supply chain to the end products that are produced here. That puts Australia in a stronger position that produces a return to the Australian taxpayer and to Australian workers."
As part of the deal, the federal government can collect revenue when aluminium prices are high, although the government hasn't said how much money it anticipates could be recouped.
The public investment, which will start flowing from next year and continue over a decade, has been criticised by opposition leader Angus Taylor.
He says taxpayers are being forced to pay for Labor's net-zero agenda.
"This is a two and a half billion dollar admission of failure on energy policy in this country. The reason they are having to do this is because electricity prices are too high. Chris Bowen has absolutely failed to deliver what he said he was going to deliver. Australians are paying the price, and the only way to keep manufacturing in this country is through government subsidies. This is a true admission of failure."
