Australia’s biggest aluminium smelter in closure talks, needs more renewables, faster

More than 1000 jobs are at risk as Australia’s biggest aluminium smelter begins talks with employees over its potential closure.

Tomago Aluminium, which is majority owned by Rio Tinto, said high energy costs had forced the company to consider ending its operations when its current electricity supply contracts expired in 2028.

The consultation process is set to run until November 21, but Tomago Aluminium’s chief executive Jerome Dozol said the future was uncertain.

“While no decision has been made, this is a difficult point to reach,” he said.

“We continue to engage with stakeholders on a viable pathway for Tomago.”

“Unfortunately, all market proposals received so far show future energy prices are not commercially viable, and there is significant uncertainty about when renewable projects will be available at the scale we need.”

Electricity already makes up more than 40 per cent of the company’s operating costs, the firm said.

As its contract with AGL nears its December 2028 endpoint, future electricity supply options would significantly increase costs and leave the operation unviable.

Tomago’s smelter, located about 13km west of Newcastle, produces almost 40 per cent of Australia’s aluminium every year and employs more than 1000 staff from the NSW Hunter Valley to the Central Coast.

About 90 per cent of its product is exported to the Asia-Pacific region.

Tomago has been looking for a lifeline from the federal and state governments after bailout packages for several other struggling refineries and smelters.

Swiss mining giant Glencore in October received a $600 million injection as part of a joint federal and state deal to keep Queensland’s Mount Isa copper smelter and Townsville copper refinery open, securing about 600 jobs.

Representatives for Tomago were previously in talks with the federal and NSW government over a bailout reportedly worth more than $1 billion.

Bell Bay Aluminium in Tasmania, which is also owned by Rio Tinto, is facing a potential shutdown as a 10-year deal with Hydro Tasmania nears its December 31 deadline.

Source: AAP