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🇦🇺 Australia /Economy & Trade

$2.5b Tomago Aluminium bailout saves jobs but hits taxpayers

From ABC Australia · () English

Summarized and contextualized by DistantNews.

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  • The Australian government has agreed to a $2.5 billion bailout for the Tomago Aluminium smelter to prevent its closure.
  • The deal, a 50/50 split between federal and state governments, aims to secure cheaper power for the smelter for at least another decade.
  • Critics argue the bailout is an admission of failure in the government's renewable energy policy and raises questions about taxpayer interests.

A $2.5 billion taxpayer-funded package has been announced to save Australia's largest aluminium smelter, Tomago Aluminium, securing jobs and the future of the industry in the Hunter region. Prime Minister Anthony Albanese and NSW Premier Chris Minns visited the smelter to deliver the news to its approximately 1,000 workers. Tomago had previously announced plans to close its doors by the end of its current energy contract in 2028, citing the rising cost of coal-fired power and a lack of reliable renewable energy infrastructure for its 24/7 operations.

There's nearly 200 trades here made up of electricians, fitters, boilermakers and plant mechanics. We build some really great tradesmen.

— Dan LinesDescribing the skilled workforce at the Tomago Aluminium smelter and the importance of its apprentice program.

The agreement involves the federal and state governments splitting the cost of providing cheaper power to the smelter for at least the next decade. In parallel, the smelter's owner, Rio Tinto, will invest at least $1.1 billion, including $100 million dedicated to decarbonisation efforts at the facility. Dan Lines, an electrical engineer and senior delegate for the Electrical Trades Union at Tomago for over 20 years, welcomed the decision. He emphasized the importance of the smelter's apprentice program, which trains skilled tradespeople, and stated that keeping Tomago open secures a vital pipeline of talent for the industry.

Sadly Labor's net zero wrecking ball has caused this. The only way to keep manufacturing in the country is through government subsidies. This is a two and a half billion dollar admission of failure.

— Angus TaylorCriticizing the government's energy policy and the cost of the Tomago Aluminium bailout.

However, the significant government funding has drawn criticism. Opposition Leader Angus Taylor described the bailout as a "two and a half billion dollar admission of failure" for the government's net-zero and renewable energy policies, suggesting that subsidies are the only way to maintain domestic manufacturing. Tony Wood, a senior fellow at the Grattan Institute, acknowledged the theoretical benefit of transitioning the smelter to renewable energy but expressed concern about its long-term commercial viability. He warned that if the smelter remains commercially unviable in 10 years, questions about continued funding will inevitably arise. The Prime Minister maintains that the deal serves the national interest.

It makes sense to convert this through renewable energy but it's also got to be viable. The big risk is that in 10 years' time it's still not commercially viable and then you can see there's going to be a question to continue funding this.

— Tony WoodExpressing concerns about the long-term commercial viability of the Tomago Aluminium smelter despite the transition to renewable energy.
DistantNews Editorial

Originally published by ABC Australia. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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