Tomago Aluminium in Australia’s aluminium ecosystem
Tomago Aluminium is the largest aluminium smelter in New South Wales and a key player in Australia’s broader aluminium production network. Located near Newcastle, the smelter is a joint venture between Rio Tinto (51.55%), Gove Aluminium Finance Limited (GAF) (25.2%) (representing CSR Limited and AMP Life), and Hydro Aluminium (23.25%). With a workforce of over 1,000, the plant is critical to the local economy and supplies both domestic and international markets with aluminium ingots and cast products. It plays a pivotal role in the value chain, transforming imported alumina into high-purity metal through advanced electrolytic reduction processes. The facility has long benefited from competitive coal-based electricity contracts, enabling it to maintain consistent potline operations and high-volume aluminium output.
Power consumption and smelting technology
Aluminium production at Tomago relies on high-intensity electrolytic reduction, a power-intensive process that converts alumina (Al₂O₃) into pure aluminium using direct current in electrolytic cells. The smelter operates several potlines, each comprising hundreds of reduction pots, drawing nearly 950 megawatts of continuous power — more than any other industrial facility in New South Wales.
This energy demand reflects the fundamental nature of aluminium smelting, where maintaining potline temperature stability is crucial. The process cannot easily be stopped or restarted, making Tomago’s operations uniquely sensitive to fluctuations in energy supply. The smelter produces aluminium ingots and cast shapes that feed into a wide range of sectors, from construction and packaging to automotive and aerospace.
The site currently sources its electricity from AGL Energy’s Bayswater coal-fired power plant under a long-term agreement, expected to run until around 2028. Post-contract, the transition to renewable sources such as firmed solar and wind is widely expected to raise operational costs due to the current lack of continuous baseload capacity and stable backup generation.
Energy transition and cost pressures
The rising cost of electricity amid Australia’s shift from coal to renewables poses a substantial threat to Tomago’s long-term viability. Estimates suggest that replacing its current coal-powered supply with firmed renewable energy could double its electricity costs. This increase challenges the economic feasibility of continuing smelting operations without a subsidized or cost-competitive power agreement.
Rio Tinto CEO Jakob Stausholm has expressed serious concerns, stating that the quoted prices for coal-based electricity beyond 2028 are prohibitively expensive, while the renewable infrastructure required to meet Tomago’s roughly 950 MW demand is not yet fully operational. These challenges are compounded by the planned decommissioning of the Bayswater plant between 2030 and 2033, leaving Tomago with limited energy options.
In parallel, Rio Tinto’s broader financial picture in 2024 showed a decline in profit — an 8% drop to $10.1 billion, with revenue slipping slightly to $54.0 billion — due in part to weaker iron ore prices. This financial strain places additional pressure on the company’s capital allocation and investment decisions, including the future of Tomago.
Market dynamics, policy and strategic implications
The uncertainty surrounding Tomago’s future is emblematic of broader tensions in Australia’s energy policy. While the country commits to decarbonization, industrial players face transitional risks that threaten their competitiveness on the global stage. Aluminium smelting, by nature energy-intensive, is particularly exposed.
Tomago’s strategic importance extends beyond New South Wales. It contributes significantly to Australia’s position as a global aluminium exporter and supports downstream industries through the provision of raw aluminium products. Disruptions at Tomago could ripple through supply chains, from construction materials to automotive manufacturing.
Policy decisions at both federal and state levels will be instrumental in shaping the smelter’s future. Investment in renewable infrastructure, regulatory clarity on firming capacity, and potential subsidies for energy-intensive exporters are all under consideration.
Additionally, international trade tensions — such as former U.S. President Donald Trump’s proposed 25% tariffs on steel and aluminium — add a layer of complexity. While Rio Tinto sees opportunities in North America, such tariffs could reshape export strategies and cost structures, indirectly influencing decisions around Australian operations.
FAQ
Who owns Tomago Aluminium?
Tomago Aluminium is a joint venture owned by three shareholders: Rio Tinto (51.55%), Gove Aluminium Finance Limited (GAF) (25.2%), and Hydro Aluminium (23.25%). Rio Tinto serves as the managing partner, overseeing operations and strategic planning. The ownership structure ensures a blend of global expertise in aluminium smelting and infrastructure investment.
What does Tomago Aluminium do?
Tomago Aluminium operates an electrolytic smelter that produces primary aluminium metal from refined alumina. The plant converts alumina into aluminium ingots through a high-energy smelting process involving potline operation and electrolytic reduction. The final products are used in sectors like construction, transportation, and manufacturing.
How much does Tomago Aluminium pay?
While specific salary figures vary by role, industry reports suggest competitive compensation for technical, engineering, and operations staff at Tomago Aluminium. The site’s strategic role and energy-intensive processes require a skilled workforce, often offering above-average wages for the region. Additionally, union representation ensures compliance with Australian labour standards.
What items are prohibited at Tomago Aluminium?
As an industrial site with stringent safety protocols, prohibited items typically include:
- Flammable or explosive materials
- Unauthorized recording devices
- Personal electronic devices in restricted areas
- Alcohol and drugs
Strict adherence to safety and compliance standards is enforced to protect both personnel and equipment.
