en.Wedoany.com Reported - On August 13, the Australian federal government, the New South Wales state government, and Tomago Aluminium announced a long-term operational support agreement, committing at least A$2.5 billion (approximately US$1.76 billion) to ensure the Rio Tinto-controlled Tomago aluminium smelter continues operations after its current electricity contract expires at the end of 2028.
The New South Wales state government's funding contribution is capped at A$1.225 billion, with the support period running for 10 years starting from 2029. The agreement also includes a revenue-sharing arrangement linked to aluminium prices, under which a portion of revenue will be returned to the federal government when aluminium prices reach agreed levels. The specific price thresholds and the federal government's funding structure have not been disclosed.
Tomago Aluminium will enter into a 10-year power purchase agreement, which will take effect after the current electricity contract expires on December 31, 2028, and will run through 2038. The smelter plans to use 100% renewable electricity from 2033, with the long-term power arrangement replacing the current coal-fired electricity contract supplied by AGL Energy.
As part of the agreement, Tomago Aluminium has committed to investing at least A$1.1 billion at the site by 2038, including A$100 million for further decarbonisation and electricity demand response projects. The smelter will continue to participate in demand response for the New South Wales grid, adjusting its electricity load during periods of pressure on the power system, providing industrial-side flexibility for renewable energy integration and grid peak shaving.
The government support package is expected to drive nearly 3 gigawatts of new renewable energy generation and firming capacity. Rio Tinto disclosed that after the Tomago smelter achieves 100% renewable electricity from 2033, it can reduce approximately 7.1 million tonnes of Scope 1 and Scope 2 operational carbon emissions annually. The related energy projects will involve renewable energy generation, energy storage and peaking facilities, electricity transmission, and industrial energy management and control systems.
The Tomago smelter is located approximately 13 kilometres west of Newcastle in New South Wales, with a maximum annual capacity of 590,000 tonnes, accounting for about 40% of Australia's annual primary aluminium production. The smelter is owned by Rio Tinto (51.55%), Gove Aluminium Finance (36.05%), and Hydro (12.4%), and directly employs approximately 1,000 employees and 200 long-term contractors.
In December 2025, the company and the two levels of government initiated consultations on a long-term energy solution, at which time the support amount and final power arrangements had not yet been determined. This agreement advances the project from preliminary negotiations to the execution phase, with the 10-year power purchase agreement to take over after the existing contract expires.
