Tomago Aluminium has begun formal consultation with its workforce about the future of its smelter at Tomago, near Newcastle, as it struggles to secure competitively priced energy once its current electricity contract expires in December 2028.
The company said electricity accounts for more than 40 per cent of its operating costs and that all power supply proposals to date — from both coal and renewable sources — would make the smelter unviable after 2028.
Since 2022, Tomago Aluminium has been sounding out the market to find an economically feasible energy supply. Despite extensive engagement with energy providers and government, Chief Executive Officer Jérôme Dozol said no commercially viable options have emerged.
“We continue to engage with stakeholders on a viable pathway for Tomago. 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,” Mr Dozol said.
He added that no decision had yet been made on the future of the smelter and that consultation with employees and unions would run until 21 November.
“While no decision has been made, this is a difficult point to reach. Our focus remains on operating safely and giving our people certainty as soon as possible.”
Federal and state response
Federal Minister for Industry and Innovation Tim Ayres told ABC Newcastle that the government was working closely with the NSW Government and Tomago’s owners to explore options. He confirmed the Commonwealth would “leave no stone unturned” in discussions aimed at securing the smelter’s future and maintaining industrial jobs in the Hunter.
Mr Ayres compared the situation with Rio Tinto’s Boyne Island smelter in Queensland, which has benefited from renewable energy investments and a $2 billion federal aluminium production credit. He said similar challenges in New South Wales were compounded by an electricity market still recovering from years of under-investment in new generation and transmission.
The NSW Government also expressed concern, saying it recognised how distressing the uncertainty was for workers, families, and the wider Hunter community. In a joint ministerial statement, the Premier and senior ministers said the state was committed to ongoing talks with Tomago Aluminium, the Commonwealth, and unions “to support future manufacturing in the Hunter”.
A cornerstone of Hunter industry
Established in 1983, Tomago Aluminium is Australia’s largest aluminium smelter, producing around 590,000 tonnes each year — roughly 40 per cent of national output. The operation is jointly owned by Rio Tinto (51.55%), Gove Aluminium Finance (36.05%), and Norsk Hydro (12.4%), and contributes an estimated $2.2 billion to the national economy, including $400 million locally.
Earlier this year, the company hosted federal leaders to announce an aluminium production credit under the Future Made in Australia Plan. At the time, Mr Dozol said the support recognised Tomago’s role in onshore manufacturing and its goal to decarbonise operations by 2035.
The coming weeks will determine whether that ambition can continue at its Hunter base or whether energy costs will bring four decades of aluminium production at Tomago to an end.
