The continuous surge in energy costs is pushing Australia’s largest aluminium smelter to the brink of closure, posing a severe challenge to the livelihoods of more than 1,000 households.
At present, Tomago Aluminium, an aluminium smelter controlled by Rio Tinto, is in talks over a potential closure, with the fate of more than 1,000 jobs in doubt. High energy costs have forced the company to consider terminating operations after the current three-year power supply contract expires, it says.
In response to this situation, the relevant consultation process will continue until November 21. Business executives have admitted that the future of the factory, located in Hunter, New South Wales, is full of uncertainties. Tomago Aluminium chief executive Jerome Dozol revealed: “Although the decision has not been finalized yet, it is indeed a difficult time right now. We will continue to communicate with all stakeholders to explore feasible development paths for the Tomago plant.” “Unfortunately, all the market-related proposals we have received so far show that future energy prices are not commercially viable, and there is great uncertainty about the time when renewable energy projects of the scale we need will be implemented,” he added. It is reported that electricity costs account for more than 40 percent of the company’s total operating costs.
Tomago smelter’s power supply contract with AGL is set to expire in December 2028, according to reports. Once the contract is terminated, the future power supply plan will result in a significant increase in costs, making it difficult for the plant to continue operating.
Established in 1983, the smelter, located about 13 kilometers west of Newcastle, is Australia’s largest aluminium smelter with a maximum annual output of 590,000 tons, accounting for nearly 40 percent of the country’s total aluminium production. The plant currently employs more than 1,000 workers, all from the Hunt Valley and Central Coast regions. In terms of equity structure, the smelter is an independently managed joint venture with Rio holding a majority stake, while Gove Aluminium and Norsk Hydro are minority shareholders. About 90 percent of its aluminium products are exported to markets in the Asia-Pacific region.
It is notable that Tomago is also actively seeking support from the federal and state governments after several struggling refineries and smelters received government bailouts. Previously, Swiss mining giant Glencore received a $600 million (about 2.85 billion yuan) in funding support in October from a joint agreement between the federal and state governments to keep the Mount Isa copper smelter and Townsville copper refinery in Queensland operating normally, thereby preserving about 600 jobs. Tomago’s representatives had also held talks with the federal and New South Wales governments on a bailout package allegedly worth more than A $1 billion (about 4.75 billion yuan).
Coincidentally, the Bell Bay Aluminium smelter in Tasmania, which is also controlled by Rio Tinto, is also at risk of potential closure. Its 10-year deal with Tasmanian Hydro is set to expire on December 31.