Global Trade
December 16, 2025
Tomago smelter gets a lifeline
Written by Greg Wittbecker
The Tomago aluminum smelter in New South Wales (NSW), Australia, is getting support from the Australian Federal and NSW state governments to insure its continued operation beyond 2029, according to multiple media reports.
Tomago produces 590,000 metric tons/year of aluminum, representing about 40% of aggregate Australian production. It’s owned by Rio Tinto (51.55%), Gove Aluminum Finance (36.05%), and Norsk Hydro (12.40%). It directly employs about 1,000 people.
The operating partners had been warning of a potential closure of the facility if it was unable to arrive at a new long-term power contract to replace the existing contract with AGL Energy that is scheduled to expire in 2028.
The joint press release from government and Tomago officials indicates the parties are working on a new long-term power purchasing agreement. In exchange, the Tomago partners are pledging A$1 billion in sustaining capital and other capital improvements.
Why this matters
In 2021, Tomago set an ambitious goal of switching entirely to renewable energy by 2029. This timing coincided with the expiration of its AGL Energy contract. However, in late 2024, the company was forced to admit the goal was not achievable due to costs and supply. We suspect that both elements related to the fact that battery technology supporting solar and wind are still in their infancy and could not support a smelter of this size.
This new collaboration between Tomago and the government undoubtedly leveraged the precedent of the deal that Alcoa cut for its Portland, Victoria, smelter in September 2024. At that time, Alcoa announced a 9-year agreement effective July 1, 2026, with AGL Energy (the same entity supplying Tomago). The deal provided for 287 megawatts of power to supplement a 300 megawatt deal signed with AGL in 2023. These deals ensured that Portland would operate until 2035.
We would be surprised if the potential pricing of the post-2028 Tomago power deal does not closely mirror the Portland deal.
Direct government intervention is rising
Other precedents for Australian federal assistance to heavy industry include Whyalla Steel and the A$600 million bailout of Glencore-owned Mount Isa copper smelter.
Australian government direct intervention in aluminum, steel and copper is similar to the pattern of US direct investment in critical minerals. US investments have recently come in rare earths, lithium, and the golden shares in Nippon Steel’s purchase of US Steel. Let’s not forget that Century Aluminum is trying to cash in on the Department of Energy’s $500 million grant to build a greenfield smelter. The State of Oklahoma has provided potential tax incentives of $800 million to over $1 billion for Emirates Global Aluminum.
When people look aghast at Australian’s willingness to intervene in Tomago’s survival, they need to remember that Australia is not breaking new ground.
