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Sky News AU
5 hours ago
- Business
- Sky News AU
NSW Premier Chris Minns confirms talks to save Australia's biggest aluminium producer Tomago amid crippling power bills
The NSW government is in discussions to stave off the potential collapse of the nation's largest aluminium smelter as it struggles with crippling power bills and poor availability of renewable energy. Rio Tinto-owned Tomago, located north of Newcastle, is reportedly seeking billions of dollars in public funds to prevent collapse. The producer uses about 10 per cent of NSW's power supply and makes about 37 per cent of Australia's primary aluminium. Its collapse could lead to more than 1,000 people losing their jobs, while 5,000 indirect workers could suffer. NSW Premier Chris Minns on Thursday stressed Tomago was a 'big employer in NSW, it's a dynamic part of the state, the Hunter and manufacturing is a big part of its future'. 'It's difficult for me to speculate about what the next steps are,' Mr Minns told reporters. 'In order for us to have an effective intervention, we need to have commercial discussions with the owners and operators of (Tomago). That's what we're doing.' Tomago executives have reportedly asked the NSW and federal governments for assistance amid crippling power prices and as cost-effective and consistent renewable alternatives remain largely unavailable. Rio Tinto's chief executive Jakob Stausholm earlier this year flagged concerns about the producer's electricity costs where he warned power price contracts beyond 2028 would render Tomago unviable. The Premier acknowledged there remains 'challenges when it comes to big industries in manufacturing like aluminium and steel'. He cited the soaring energy costs which hurt Australian manufacturers, but also noted the Trump Administration's decision to hit foreign-made steel and aluminium with a 50 per cent tariff. 'Part of it is energy costs, there's no doubt about it, part of it is also rapid and dramatic changes to the global trading system, particularly when it comes to (the United States') decision to slap initially a 50 per cent then 10 per cent hit on inbound steel and aluminium,' Mr Minns said. 'It may well be Australian aluminium and Australian steel is used domestically, or used in other markets across south-east Asia, South America and other places. 'The problem is that if Chinese steel and Chinese aluminium move to a third country and are dumped on another market, even if it's not Australia, it affects our trading partners. 'It's a complicated web, it's probably not going to be solved overnight. But we recognise it's an important employer, and we are having discussions with the owners.' Tomago's struggle with power bills comes as the Albanese government has vowed to make the nation a 'renewable energy superpower' with an energy mix of 82 per cent renewables by 2030 and green energy driving local manufacturing. Labor is looking to boost this through production tax credits for leading Australian aluminium smelters, including Tomago, and give $2 billion back to help with the energy transition. A federal government source told the AFR it was involved in discussions with Tomago over the details of the tax credit design as it looks to alleviate the impacts of soaring power costs. The Centre for Independent Studies' senior policy analyst Zoe Hilton said the government's energy policy was crippling the aluminium sector. 'With power prices in Australia rising higher and higher, it simply doesn't make financial sense to run a smelter here,' Ms Hilton told 'Tomago's current predicament is a direct result of state and federal government plans to shift our grid to mostly intermittent energy sources.'
Sky News AU
3 days ago
- Business
- Sky News AU
Chris Bowen's energy revolution pushing Australia's heavy industry to the brink with Tomago Aluminium on the verge of collapse
Australia's largest aluminium smelter is on the brink of collapse under the weight of soaring power prices as Energy Minister Chris Bowen continues with his renewables revolution. A report in the Australian Financial Review emerged on Friday that said Rio Tinto-owned Tomago, Australia biggest aluminium producer, is seeking billions of dollars in public funds to avert collapse as energy costs plague local industry. The producer is located north of Newcastle, uses about 10 per cent of NSW's power supply and makes about 37 per cent of Australia's primary aluminium. The collapse of the massive company could lead to more than 1,000 people losing their jobs, while 5,000 indirect workers could suffer. Tomago executives have reportedly asked the NSW and federal governments for assistance amid crippling power prices and as cost-effective and consistent renewables remain largely unavailable. The damning report sparked concern from the Centre for Independent Studies' senior policy analyst Zoe Hilton who said the government's energy policy was crippling the aluminium sector. 'With power prices in Australia rising higher and higher, it simply doesn't make financial sense to run a smelter here,' Ms Hilton told 'Tomago's current predicament is a direct result of state and federal government plans to shift our grid to mostly intermittent energy sources.' Mr Bowen and Labor have vowed to make the nation a 'renewable energy superpower' with an energy mix of 82 per cent renewables by 2030 and green energy driving local manufacturing. The Albanese government is looking to boost this through production tax credits for leading Australian aluminium smelters, including Tomago, and give $2 billion back to help with the energy transition. A federal government source told the AFR it was involved in discussions with Tomago over the details of the tax credit design as it looks to alleviate the impacts of soaring power costs. Rio Tinto's chief executive Jakob Stausholm flagged concerns about the producer's electricity costs earlier this year where he warned power price contracts beyond 2028 would render Tomago unviable. Ms Hilton said this should come as a brutal warning for the government as it strives to dramatically alter the nation's energy mix. 'The federal government has refused to acknowledge that its plan to make our grid run off 82 per cent renewable energy by 2030 is making energy unaffordable for industrial users, not to mention residential and small business consumers,' Ms Hilton said. 'We are following in the footsteps of Germany, which gets almost half of its power from wind and solar. 'Around 40 per cent of German industrial companies are now considering partly or fully relocating operations abroad due to a lack of affordable and reliable energy. Australia has only just reached over 30 per cent wind and solar. 'We don't have European neighbours with nuclear plants from which to import reliable power as Germany does, so our industries will feel the pain of expensive, unreliable power much earlier in the renewables buildout.' Shadow energy minister Dan Tehan said Labor's ambitious renewables plan could result in job losses at Tomago. 'Spare a thought for the workers at Tomago worried about losing their job because high energy prices, as a result of Labor's obsession with renewable energy, is threatening their livelihood,' Mr Tehan told 'These workers will be worried today about paying the bills and putting food on the table if Tomago is closed because of Labor's higher energy costs. 'Every worker and every business owner in Australia will be looking at Tomago and worrying if their business can survive the exorbitant energy costs under Labor's renewables agenda.' Tomago's turmoil comes as the government looks to shift the aluminium industry to renewable energy while maintaining the operations of the major smelters. The producer was historically powered by cheap coal-fired generators but the shift away from fossil fuels has presented challenges regarding both energy security and power prices. Ms Hilton said Australia needs to ditch the renewables plan if the nation wants to keep heavy industry from moving overseas. 'If we want to minimise electricity costs, new coal plants will be the cheapest way to supply our grid,' Ms Hilton said. 'If industry remains committed to reducing emissions, nuclear plants are the only option to provide the necessary 24/7 power at an affordable price, so the bans will need to be lifted.' Tomago CEO Jerome Dozol in November 2024 said the company urgently needed public help to assist with the smelter's energy bills. 'The price of electricity on offer is too expensive for us to keep operating without government intervention,' Mr Dozol said.
