Tomago Aluminium Smelter Faces Uncertainty Over Rising Power Costs
The Tomago aluminium smelter near Newcastle is at risk of closure in 2029 due to the rising cost of transitioning from coal to renewable energy. The planned shift to firmed solar and wind power would double electricity costs compared to its current coal-based contract, raising concerns for the future of over 1,000 workers.
Rio Tinto, which owns 51% of Tomago alongside CSR and Hydro Aluminium, confirmed that a decision on the smelter’s future is expected later this year. CEO Jakob Stausholm stated that without competitively priced electricity, continued operations would be uncertain. The smelter is the largest energy consumer in New South Wales, requiring between 3 to 4 gigawatts of renewable energy to meet its 950-megawatt demand, along with backup options for supply stability.
Tomago currently depends on AGL Energy’s Bayswater coal-fired power station, which is set to shut between 2030 and 2033. Finding affordable coal power beyond 2028, when Tomago’s existing contract expires, poses additional challenges.
“The problem we are facing with a place like Tomago right now is it might take a longer time to get renewables, and the electricity from coal-fired power that we’ve been quoted is extremely expensive,” Stausholm said.
Rio Tinto’s annual profit declined 8% to $US10.9 billion ($17.1 billion) in 2024, missing analyst expectations due to weaker iron ore prices. The company also booked underlying EBITDA of $US23.3 billion, down 3% from 2023, and revenue of $US53.7 billion, a 1% drop. A final dividend of $US2.25 per share was declared, marking a 13% decline from the previous year.
Additionally, Stausholm expressed caution over US President Donald Trump’s proposed 25% tariffs on steel and aluminium imports, though he remains optimistic about Rio Tinto’s investment outlook in North America. “The economic impact on tariffs to Rio Tinto might be both pluses and minuses,” he told analysts.
