Australia’s largest aluminium smelter, Tomago Aluminium, is currently consulting with its employees regarding the future of its operations amidst escalating energy costs. In a statement released this morning, the company revealed it has yet to identify a sustainable path forward once its existing energy contract expires in 2028.
Located north of Newcastle, Tomago Aluminium employs over 1,000 people and is responsible for nearly 40% of Australia’s annual aluminium production. The company has emphasized that securing competitively priced energy remains a “central challenge” as it grapples with rising costs.
As the country’s largest single consumer of electricity, energy expenses constitute more than 40% of Tomago’s operating costs. The company warned that the anticipated increase in the cost of both coal-fired and renewable energy options post-2029 would render the smelter “unviable.”
Government and Industry Discussions
For several months, Rio Tinto, the majority owner of Tomago Aluminium, has been in negotiations with state and federal governments to explore potential interventions to prevent the smelter’s closure. The company has also engaged in a “market-sounding” process since 2022, seeking viable energy solutions.
However, according to Tomago Aluminium’s Chief Executive Jérôme Dozol, none of the proposals received thus far have offered a commercially viable solution. “Unfortunately, all market proposals received so far show future energy prices are not commercially viable and there is significant uncertainty about when renewable projects will be available at the scale we need,” he stated.
Despite the challenges, Mr. Dozol clarified that no final decision has been made regarding the smelter’s future. “Consultation does not mean we have made a decision,” he added.
Collaborative Efforts to Secure Future
Chief Financial Officer Andrew Newman expressed the company’s openness to discussions with energy providers and government bodies to secure the smelter’s future. “We’re very open to any options that may be on the table and that would be in conjunction with the NSW government and the federal government whom to date we’ve worked very collaboratively with,” Mr. Newman said.
Federal Minister for Industry and Innovation Tim Ayres assured that the government would continue to work with Tomago to find a viable path forward. “I am determined to exhaust every opportunity to secure the future of that site for the Hunter Valley, for the New South Wales economy, for Australian aluminium production more broadly, and for Australia’s economy,” he declared.
“You think about those workers who work hard every day, whose shift starts at 6am, who work through the night, through the day … some of them have been working there since the 1980s, this will be very challenging news for them.” — Tim Ayres
Union’s Grim Forecast
The Australian Manufacturing Workers’ Union (AMWU) has expressed concern over the announcement, describing it as another blow to the manufacturing sector. NSW Secretary Brad Pidgeon remarked, “It’s very disappointing for the workers and community by and large, but I think it really validates the sad news that’s going to occur moving into the future.”
The union has been in discussions with Tomago for the past year about the smelter’s future, but Mr. Pidgeon noted that no definitive decision has been communicated to the workforce. “Today’s announcement confirms that, unfortunately, the business is highly unlikely to operate post-2028,” he stated.
Mr. Pidgeon urged the government and Tomago to collaborate and provide support for workers facing uncertainty. “The pressure of uncertainty really plays on the minds of workers,” he said. “We want to see some sort of project fast-tracked to ensure that there are some jobs for workers in the Hunter, but more importantly making sure we have our communities looked after in the process as well.”
Commitment to Employees
Tomago Aluminium’s leadership has reiterated its commitment to supporting its employees during this uncertain period. “This is a difficult point to reach,” Mr. Dozol acknowledged. “Our focus remains on operating safely and giving our people certainty as soon as possible.”
A consultation process with the smelter’s employees is set to continue for the next four weeks, during which time the company hopes to explore all possible avenues to secure its future operations.
