Tomago aluminium smelter power purchase agreement could keep Rio Tinto’s Australia output running

Australia, Rio Tinto

Australia is advancing a Tomago aluminium smelter power purchase agreement to keep operations running beyond 2028. Rio Tinto says power costs drive its long-term risk. As a result, the Tomago aluminium smelter power purchase agreement becomes a key test for industrial energy policy.

Fixed-price power deal ties support to capital spending

The federal government and New South Wales will work with Tomago Aluminium on the energy solution. Anthony Albanese said the plan centers on a fixed-price power purchase agreement. Meanwhile, the package includes a commitment to invest A$1bn over ten years.

Rio Tinto flagged closure risk as contracts expire

Rio Tinto warned in October that it could close Tomago when its current power contract ends in 2028. However, officials say a long-term agreement supports continued investment and jobs. The smelter produced 426,000 tonnes on a 100% basis in January–September 2025.

Australia framed the move as part of broader support for heavy industry under cost pressure. Tim Ayres defended industrial policy at Sydney Institute. Therefore, Tomago now sits alongside support discussions tied to Glencore and Nyrstar operations.

The Metalnomist Commentary

This Tomago aluminium smelter power purchase agreement signals how governments may underwrite energy-intensive metals capacity. However, the final terms will shape competitiveness versus imported aluminium. Therefore, investors should watch price indexing, duration, and decarbonisation conditions.