The Australian and NSW governments have committed $2.5 billion to secure the future of Tomago Aluminium, in a deal aimed at protecting jobs and keeping Australia's largest aluminium smelter operating for at least another decade, ABC reported.
Prime Minister Anthony Albanese and NSW Premier Chris Minns announced the agreement during a visit to the Hunter region. The package will provide Tomago with cheaper power, with the federal and NSW governments splitting the cost equally.
The deal comes after Tomago warned last year that it could shut in 2028 when its existing energy supply agreement expires.
Governments back cheaper power
Tomago employs about 1,000 people and is a major source of skilled manufacturing jobs in the Hunter region.
Under the agreement, Rio Tinto, which owns the smelter, will invest at least $1.1 billion. This includes $100 million for additional decarbonisation measures.
The government-backed energy arrangement is expected to keep the smelter operating for at least another 10 years while supporting the transition towards renewable energy.
The agreement is also expected to contribute to an additional 3 gigawatts of renewable power across NSW.
Workers welcome certainty
The deal has been welcomed by workers who feared the loss of the smelter could weaken the region's manufacturing skills pipeline.
Dan Lines, an electrical engineer who has worked at Tomago for more than 20 years and a senior Electrical Trades Union delegate, highlighted the role of the smelter's apprenticeship programme.
"There's nearly 200 trades here made up of electricians, fitters, boilermakers and plant mechanics," he told ABC Newcastle Breakfast.
"We built some really great tradesmen."
He said the agreement would give younger workers greater confidence about their future.
"We have a fairly young cohort coming through the business at the moment," he said.
"I can tell you they're all looking forward to long careers and a long career at Tomago is a pretty rewarding one."
Opposition questions cost of deal
The $2.5 billion package has drawn criticism from the federal opposition, which argued that the agreement highlights problems with the government's energy strategy.
"Sadly Labor's net zero wrecking ball has caused this," Opposition Leader Angus Taylor said.
"The only way to keep manufacturing in the country is through government subsidies.
"This is a two and a half billion dollar admission of failure," he said.
Tony Wood, energy and climate change senior fellow at the Grattan Institute, said shifting Tomago towards renewable energy made sense but questioned whether the smelter would remain commercially viable over the longer term.
"It makes sense to convert this through renewable energy but it's also got to be viable," he said.
"The big risk is that in 10 years' time it's still not commercially viable and then you can see there's going to be a question to continue funding this."
Greens call for government stake
Rio Tinto reported a $10 billion profit after tax last year, while the value of its aluminium and lithium projects rose to $4.6 billion.
"These companies that are making billions cry poor when energy prices go up and then they expect governments to bail them out with public money," Greens senator Penny Allman-Payne said.
"It's only fair that for that stake the community gets a share."
The Greens have also challenged the deal, arguing taxpayers should receive an ownership stake if public money is being used to support the private business.