Tomago aluminium smelter: Energy expert urges caution over long-term cost of saving smelter
An energy expert has questioned the ongoing commercial viability of the Tomago aluminium smelter as Labor attempts to broker a rescue package to protect the “security” and “dignity” of regional communities.
An energy expert has questioned the ongoing commercial viability of the Tomago aluminium smelter as Labor attempts to broker a rescue package, with Industry Minister Tim Ayres stressing the need to protect the “security” and the “dignity” of regional communities.
This comes as the federal and state governments have vowed to “exhaust every opportunity” to secure the future of Australia’s largest aluminium smelter beyond 2028 after owners Rio Tinto feared rising energy costs had made the plant economically unviable.
Sources with knowledge of negotiations say they are “cautiously optimistic” of the government striking a deal which would guarantee Tomago reliable power beyond December 2028, which includes a potential energy supply deal with the government-owned Snowy Hydro.
However Grattan Institute's energy and climate change senior fellow Tony Wood said the government needed to be sure the smelter would be a “viable business in five years time, let alone 10” before committing taxpayer funds.
While he acknowledged the importance of protecting jobs, Dr Wood said he was “slightly more on the cynical side” of the smelter’s long-term prospects, adding that Labor needed to factor in an off-ramp if “things go badly”.
“If you get it the wrong way around and you say the priority is to protect these jobs, (then you could be) locking yourself into a permanent subsidy,” he said.
Dr Wood said there would be “tricky consequences” as heavy industry faces the prospect that Australia cannot “afford to shut down coal before we’ve got the renewables ready”.
“I don’t think we’re seeing a situation in which the cost of gas and the cost of electricity is going to come down anytime soon,” he said.
“Therefore, if you are a business that depends on very low cost electricity or very low cost gas … is it the role of the government to continue to provide subsidies to businesses that are not going to survive in the world.”
Mr Ayres, who was a union boss with the Australian Manufacturing Workers’ Union before entering politics, said the jobs associated with major manufacturing families bought “security and dignity … to Australian regional communities”.
Consultations between Tomago and its 1000 direct employees are set to conclude on Friday, however negotiations to secure the smelter’s future remain ongoing.
“There are solid, hard-edged reasons to be focused on the future of aluminium processing in Australia,” said Mr Ayres.
“That’s what a Future Made in Australia is directed toward – our strategic and economic resilience and securing our future industrial competitive advantage.”
Australian Workers Union secretary Paul Farrow urged “all parties to maintain this collaborative approach as negotiations enter late stages”.
He said that while the 3000 workers who are either directly employed through Tomago or operate in the supply chain “deserve certainty,” the smelter was also a “critical piece of Australian manufacturing infrastructure”.
“This is about more than just one smelter – it’s about whether Australia values its manufacturing capability and the skilled jobs that come with it,” he said.
“The progress we’re seeing gives us confidence that decision-makers understand what’s at stake.”
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Originally published as Tomago aluminium smelter: Energy expert urges caution over long-term cost of saving smelter
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