Rio Tinto-backed Tomago on brink on peace deal with union

The giant Tomago aluminium smelter’s management has bowed to striking workers as hopes fade for a US tariff exemption.

Aluminium produced at the Tomago smelter in NSW.

The managers of the Rio Tinto-backed Tomago aluminium smelter have bowed to union demands for an improved pay offer as hopes fade that the industry will be spared from a tariff hit imposed by US President Donald Trump.

Rio and its minority partners in Tomago have offered a one-off $1500 “cost-of-living” sweetener to more than 500 workers in a bid to end strike action that was a threat to the immediate future of the smelter.

They have also increased a pay offer after a bitter stand-off with Australian Workers Union members that led to rolling stoppages at the smelter over the past fortnight.

The union called off an escalation in strike action after Tomago management made the improved pay offer late on Friday.

Tomago reluctantly gave ground after previously digging in its heels over union demands for annual pay rises of 4 per cent over three years with two $1000 payments to each worker and back pay.

Management stood by its offer of 4 per cent in the first year followed by 3.5 per cent in each of the next two years, a one-off $1000 payment and no back pay even as stoppages of up to eight hours a day began to play havoc with production.

The warring parties appear likely to settle on a pay deal of 4 per cent, followed by two increases of 3.75 per cent, with the rises brought forward to January 1 each year, and what Tomago is calling a $1500 “cost-of-living payment”.

Union members are expected to vote on the improved Tomago offer later this week and end industrial action that kicked off as Australia started lobbying the Trump administration to exclude local aluminium and steel makers from a 25 per cent tariff.

With just days to go until the tariffs are due to be slapped on exporters to the US, Trade Minister Don Farrell conceded Australia had so far failed to win an exemption.

The Tomago smelter near Newcastle faces an uncertain future even without the burden of an increased wages bill and tariffs as the owners stare down the barrel of a massive increase in electricity charges.

The smelter is the single largest user of energy in NSW, and its current power contract with AGL Energy expires in late 2028.

Workers at the Tomago plant.

Rio Tinto chief executive Jakob Stausholm confirmed last month that a plan to move the electricity contract from the current coal contract by the end of 2028 would see Tomago’s owners pay twice as much for their electricity.

AWU state secretary Tony Cullinan said the union was waiting for Tomago to formalise its revised offer, and confirmed industrial action had been put on hold.

“We’d had ongoing industrial action through last week and it would have continued across the weekend,” he said.

“I’m not sure why they suddenly decided to put a revised offer on the table, but I’m pleased they did.

“I’m hoping the majority of our members are happy with what’s been negotiated and that we can focus on securing the future of the plant.”

Tomago, which is 51 per cent owned by Rio alongside Europe-based Saint-Gobain and others, declined to comment. The smelter’s management, led chief executive Jerome Dozol, has remained publicly silent throughout the industrial dispute as has Rio.

The industrial dispute at Tomago blew up soon after Prime Minister Anthony Albanese visited the smelter to announce $2bn in incentives to encourage aluminium producers to switch to renewables as part of the government’s Future Made in Australia policy.

Mr Cullinan said the AWU hoped the Albanese government would beef up anti-dumping protection for local manufacturing if aluminium and steel makers were hit with US tariffs.

He said the Anti-Dumping Commission had done little to protect businesses like steelmaker Molycop in Newcastle or copper manufacturer MM Kembla in the past, and needed more teeth.

“We have been calling for that for years,” he said.

BlueScope chief executive Mark Vassella said last month that the company was in talks with the government about how to protect the local industry from Chinese steel dumping in the wake of the US tariff rollout.

Mr Vassella said BlueScope’s biggest concern was how the Trump move might boost Chinese steel imports to Australia and threaten domestic production without the imposition of tough anti-dumping safeguards.

Originally published as Rio Tinto-backed Tomago on brink on peace deal with union