Australia's largest aluminium smelter wins $2.5billion lifeline from taxpayer fund

By NOAH SECOMB FOR AUSTRALIAN ASSOCIATED PRESS Published: 21:42, 12 August 2026 | Updated: 21:43, 12 August 2026 Thousands of workers in and around Australia's largest aluminium smelter will keep their jobs after the state and federal governments agreed to a multibillion-dollar bailout.  The Tomago aluminium smelter in the New South Wales Hunter region faced closure in 2028 due to forecasts of higher energy prices. The smelter is the single largest electricity user in the nation and consumes about 10 per cent of the state's power supply. The Australian Energy Regulator forecast energy contract prices to double by 2029. Electricity accounts for more than 40 per cent of its operating costs. Tomago Aluminium warned it would not have remained commercially viable if prices rose. After months of negotiations, the NSW government and the Commonwealth have agreed to commit $2.5billion to assist in entering into long-term energy contracts in 2029. Tomago Aluminium has agreed to invest a further $1.1billion to decarbonise and upgrade its facilities to better adapt to fluctuations in renewable energy supply and demand. Prime Minister Anthony Albanese said keeping the smelter operating was critical for Australia's manufacturing future. The NSW government and the Commonwealth have agreed to commit $2.5billion to the Tomago aluminium smelter in the New South Wales Hunter region The smelter faced closure in 2028 due to forecasts of higher energy prices 'In December last year, I stood in the rain at Tomago and told the workers, "we have your back",' Albanese said in a statement.  'Today, alongside the NSW government, we deliver on that promise.' Premier Chris Minns welcomed the agreement, under which NSW would contribute almost half the funding. Minns said the Hunter had been an industrial and manufacturing powerhouse, with the agreement set to make sure it remained so 'for generations to come'. Tomago Aluminium produces up to 590,000 tonnes of aluminium a year. The smelter's chief executive Jerome Dozol warned in 2025 the facility would have to close without government intervention on future energy prices from renewable and fossil fuel sources. Rio Tinto, the Tomago smelter majority owner, reported increasing profits of $6.9billion in the first half of 2026. It is the latest in a string of bailouts by state and federal governments for metal processing infrastructure. The federal government has promised billions to support facilities including the Whyalla steelworks, Mount Isa copper smelter and Boyne aluminium smelter in recent years.