Rio Tinto (LSE:RIO) highlighted an agreement between Tomago Aluminium, the Australian Government and the New South Wales Government to secure the long-term future of Australia's largest aluminium smelter.
Tomago Aluminium will sign a 10-year power purchase agreement running to 2038, switching to 100% renewable sources from 2033, once the smelter's existing AGL contract expires at the end of December 2028.
The smelter will back the deal with A$1.1 billion of investment through 2038, including A$100 million earmarked for decarbonisation.
Rio Tinto Aluminium & Lithium chief executive Jérôme Pécresse said the agreement "secures Tomago Aluminium's long-term future, supporting Australian manufacturing, skilled jobs and the Hunter community", and demonstrates what industry, government and workers can achieve together.
The deal follows a March agreement covering Rio Tinto's Boyne smelter in Queensland, meaning Australia's two largest aluminium smelters now have secured pathways to cost-competitive, low-carbon power beyond their current contracts.
Once fully renewable-powered from 2033, Tomago's Scope 1 and 2 operating emissions will fall by 7.1 million tonnes annually.
The smelter, which produces up to 590,000 tonnes of aluminium a year and directly employs around 1,000 people, will keep providing large-scale demand response to New South Wales' grid as its biggest electricity user.
Tomago Aluminium is jointly owned by Rio Tinto (51.55%), Gove Aluminium Finance (36.05%) and Norsk Hydro (12.4%).
News Intelligence what this means for the company
Rio Tinto has secured power supply for Tomago Aluminium, Australia's largest smelter, through 2038 via a 10-year renewable energy deal backed by A$1.1 billion in investment. The agreement—which follows a similar March deal for Rio Tinto's Boyne smelter in Queensland—locks in cost-competitive, low-carbon power for both of Australia's two largest aluminium smelters beyond their current contracts, eliminating a material operational and regulatory risk for the company's aluminium segment.
- Norsk Hydro holds a 12.4% stake in Tomago and benefits from the same long-term power security, though Rio Tinto (51.55% owner) bears primary operational and strategic responsibility.
The deal removes near-term power contract renewal risk for a smelter producing 590,000 tonnes annually and directly employing ~1,000 people, while locking in a transition to 100% renewable power from 2033 that will cut Scope 1 and 2 operating emissions by 7.1 million tonnes annually—material for Rio Tinto's decarbonisation pathway and regulatory standing in Australia.
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