Rio Tinto Tomago aluminium smelter in NSW reportedly close to collapse

Rio Tinto’s mammoth Tomago aluminium smelter is reportedly close to collapse, putting some 6000 jobs at risk.

Rio Tinto’s massive Tomago aluminium smelter in NSW is reportedly close to collapse.

The facility, situated in Tomago about 13km west of Newcastle, employs some 1000 workers directly, but a stoppage would hit another 5000 indirect workers across the Hunter Valley.

Mining giant Rio Tinto holds a 51.6 per cent interest in the smelter, which produces about 590,000 tonnes of aluminium each year, or about 37 per cent of Australia’s total production.

Multiple reports suggest the company is in emergency talks with state and federal governments for a bailout.

NewsWire has contacted NSW energy minister Penny Sharpe, federal energy minister Chris Bowen and the Australian Workers’ Union for confirmation of the discussions.

Mining giant Rio Tinto is reportedly in discussions with state and federal governments about emergency funding for its Tomago smelter in the Hunter Valley. Picture: NewsWire / Sharon Smith

Rio Tinto declined to comment on Tuesday.

The AFR first reported on the talks on Friday, citing high energy costs for the possible shutdown.

Tomago is currently powered by AGL Energy’s Bayswater coal fired power station, but is pivoting to renewable energy.

In January, the federal government announced a $2bn production credit for aluminium businesses to transition their smelters to green energy, which Rio heralded as a vote of confidence in domestic manufacturing.

“As traditional energy sources for heavy industry become increasingly uncompetitive, today’s announcement is a critical piece in helping future-proof the industry,” Rio Tinto chief executive for Australia Kellie Parker said.

“Such support is crucial for sustaining and growing regional economies.

Rio Tinto is negotiating a new energy contract for the Tomago smelter. Picture: Supplied

“As global industrial customers and consumers increasingly focus on low-carbon products, this support signals Australia’s potential to be a major supplier of the aluminium needed for the global energy transition.”

But negotiations over a new energy contract have troubled the smelter’s operations for months. The current contract with AGL is due to expire in 2028.

2GB’s Ben Fordham, speaking on Tuesday, said the situation was “not good”.

“We’ve got the materials, we’ve got the workers, we’ve got the smelters, but what we don’t have is a working energy system,” he said.

“If it shuts, we’re not just losing a smelter, we’re risking 6000 jobs.”

Some 90 per cent of Tomago aluminium is exported to Asia.

Aluminium is a key material used in a range of industries, from aircraft bodies to drink cans.

Originally published as Rio Tinto Tomago aluminium smelter in NSW reportedly close to collapse