Tomago Aluminium to invest A$1 bil to extend New South Wales smelter beyond 2028

Tomago Aluminium Company will contribute A$1 billion (US$666.44 million) over the next decade as part of an Australian government plan to keep the smelter in New South Wales open beyond 2028.

In a Dec. 12 joint statement with Minister for Industry and Innovation Tim Ayres and Minister for Climate Change and Energy Chris Bowen, Australian Prime Minister Anthony Albanese unveiled a plan to collaborate with the New South Wales government and Tomago to save the smelter.

Tomago, which runs Australia's largest aluminum smelter in New South Wales, will contribute "at least A$1 billion in capital and major maintenance investment over the next decade, which includes identifying further decarbonization opportunities for the smelter," according to the joint statement.

Tomago produces up to 590,000 metric tons/year of aluminum, almost 40% of Australia's annual production, according to the company. It is an independently managed joint venture owned by Rio Tinto (51.55%), Gove Aluminium Finance Ltd. (36.05%) and Norsk Hydro (12.40%).

The company said in October it may cease operations after December 2028 when its existing electricity supply contract with AGL Energy expires.

Over the coming months, Tomago and the state and federal governments will work on a "long-term renewable energy solution to support the smelter's viability" beyond 2028, according to the joint statement.

"The fundamental premise of this is a long-term power purchasing agreement that delivers security at the right price for Tomago so they are internationally competitive," Ayres told the media Dec. 12.

"This is Australia's youngest aluminum plant. This is a good facility. This agreement will underwrite the development of new generation wind-solar storage projects and transmission."

Albanese told the media at a press conference held the same day at Tomago that "this is so important for our national interest."

The announcement "reflects constructive engagement between Tomago and the federal and New South Wales governments to address the smelter's energy challenges after its current electricity contract expires," according to a Dec. 12 statement from Tomago.

A coalition of unions, environmental and industry groups had called for government intervention in November to save Tomago with renewable energy.

Albanese acknowledged the roles played in the engagement by Rio Tinto Australia CEO Kellie Parker, Tomago CEO Jerome Dozol and Tomago CFO Andrew Newman, along with the unions, to find a solution.

Albanese also spoke with Rio Tinto CEO Simon Trott "overnight" just before the Dec. 12 announcement, the prime minister said.

Competitiveness boost

The Australian Aluminium Council, or AAC, welcomed the news, as the country's aluminum industry is "no longer competing against foreign companies but against foreign governments writing the rules to their own advantage," CEO Marghanita Johnson said in a Dec. 12 statement.

"To counter this, Australian governments must use every tool available to secure competitively priced electricity and support our industrial base -- including working together to get the job done," Johnson said.

Johnson said the move was a "step in the right direction in creating the conditions needed to help restore Australia's industrial competitiveness."

"Australia must ensure we retain our value-added industrial capability -- to maintain our role in global supply chains with significant economic and geostrategic benefits," Johnson said.

Aluminum is the highest-earning manufacturing export for Australia, which is the world's largest exporter of alumina, with five alumina refineries producing about 17 million mt/year of alumina, according to the AAC.

Australia is the world's seventh-largest producer of aluminum, with four aluminum smelters and additional downstream processing industries, including more than 20 extrusion presses, according to the AAC.

Paul Farrow, national secretary of the Australian Workers Union, called the announcement "a pivotal moment for Australian manufacturing" in a Dec. 12 statement.

"For months, we have been saying that Tomago is not just another industrial site. It is the test case for whether Australia is serious about having a manufacturing future," Farrow said.

"You cannot have the largest aluminum smelter in the country closing while talking up the future of local manufacturing."