Rio Tinto secures $2.5B Tomago net smelter deal
- The federal and New South Wales governments announced a $2.5 billion 10-year bailout for the Tomago aluminium smelter alongside a $1.1 billion facility upgrade by Rio Tinto.
- Following the announcement, the Rio Tinto share price was down at $174.85.
- The companies stated the agreement aims to keep the smelter operating beyond Dec. 31, 2028, and accelerate its decarbonisation.
Rio Tinto (ASX:RIO) and government authorities executed an agreement to deliver a $2.5 billion, 10-year funding package for the Tomago aluminium smelter in the Hunter Valley.
The facility currently employs about 1,000 workers and accounts for 12 per cent of New South Wales electricity demand.
“In December last year I stood in the rain at Tomago and told the workers ‘we have your back’, and today, alongside the NSW government, we deliver on that promise,” said Prime Minister Anthony Albanese.
Rio Tinto will invest $100 million for decarbonisation activities, while federal and state funds will cover electricity supply contracts and facility upgrades.
The company stated that the transaction is expected to underpin nearly 3 gigawatts of new renewable generation and firming capacity over the life of the agreement.
Following the announcement, the Rio Tinto share price was down at $174.84.
The federal package follows previous government support measures for heavy industry, including $2 billion for the Boyne aluminium smelter and $2.4 billion for the Whyalla steelworks.
Government leaders noted the arrangement resolves longstanding negotiations over regional manufacturing and secures baseline power demand for upcoming renewable energy projects.
