Rio Tinto and the Australian federal and New South Wales governments announced a $2.5bn support package to ensure continued operations at the Tomago aluminium smelter near Newcastle. The facility, jointly owned by Rio Tinto, is the nation’s largest aluminium producer and single largest electricity consumer in NSW, drawing more than 10% of the state’s total generation capacity.
Under the agreement, the governments will provide a 10-year below-market power supply guarantee beginning after the smelter’s existing coal-dependent electricity contract with AGL concludes in December 2028. Rio Tinto committed to transitioning the facility to run entirely on renewable energy by 2033, a shift that would reduce annual greenhouse gas emissions by 7.1 million tonnes—equivalent to 1.5% of Australia’s total annual emissions. The company also pledged to invest $1.1bn in the facility over the next 12 years, including $100m specifically for decarbonisation efforts.
Government officials characterized the arrangement as supporting the development of approximately 3,000 megawatts of new renewable and energy storage capacity across New South Wales. Climate and Energy Minister Chris Bowen stated the smelter operators had indicated they could no longer depend on coal-fired power and lacked confidence sufficient renewable generation was being developed. The renewable projects will include a mix of wind farms and solar installations backed by battery storage, with developments spread across the state rather than concentrated in the Hunter Valley region.
The facility directly employs approximately 1,000 workers and is estimated to indirectly support around 5,000 additional jobs. The deal represents part of a broader government strategy to maintain major industrial operations, with similar arrangements announced for Rio Tinto’s Queensland aluminium smelter and steelworks in South Australia.
Political reactions were mixed, with opposition leader Angus Taylor framing the subsidy as evidence of energy policy failure, while independent MP Nicolette Boele criticized successive governments for failing to address the power contract deadline despite years of advance notice. Some analysts noted that renewable energy represents the cheapest available generation option for replacing aging coal infrastructure, though concerns persist regarding delays in wind farm and transmission line construction.
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