(Bloomberg) — Rio Tinto Group is seeking a multibillion-dollar government bailout for its Tomago aluminum smelter — Australia’s largest electricity user — due to spiraling energy costs, the Australian Financial Review reported.
The talks center on the smelter’s electricity contract for 2026 to 2029 and the federal government’s production tax credits, the newspaper reported Saturday, citing unidentified sources familiar with the discussions. One person interviewed by the AFR said any bailout package will likely be “more sophisticated” than a direct subsidy and that talks are mainly being conducted with the New South Wales state government.
Tomago, majority-owned by Rio, uses about 12% of New South Wales’ power supply, according to the world’s second-biggest mining company. It’s aiming for renewables to contribute to more than 50% of the smelter’s electricity needs by 2030, and aspires to eradicate fossil fuels from the plant by 2035.
The smelter is Australia’s biggest aluminum producer, generating up to 590,000 tons a year. A request for comment sent to Rio out of working hours wasn’t immediately answered.
Australian Prime Minister Anthony Albanese in January announced A$2 billion ($1.3 billion) in funding to create Green Aluminum Production Credits to help the nation’s smelters switch to renewable energy before 2036.
Prices of the verstaile, lightweight metal have been volatile amid President Donald Trump’s tariff agenda, and are down 4% since the start of the year. This week, the US leader doubled levies on aluminum imports to 50%.
Albanese, whose center-left Labor government was re—elected last month, has described Trump’s move as “an act of economic self harm by the United States that will increase the cost for consumers” in the US.
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