Australian taxpayers will spend $2.5 billion over the next decade to rescue the Tomago Aluminium smelter owned by Rio Tinto, a company that posted $10 billion in profit last year. The New South Wales and federal governments announced Thursday they'll split the cost evenly while Rio Tinto contributes just $1.1 billion to secure its own facility's future.
Prime Minister Anthony Albanese and NSW Premier Chris Minns are expected to visit the Hunter region smelter Thursday morning to announce the deal. It's the latest in a string of government bailouts for struggling heavy industries under the Albanese government, including rescue packages for Glencore's Mount Isa Copper smelter and Nyrstar's operations in Tasmania and South Australia.
Corporate Profits Meet Public Subsidies
Rio Tinto warned late last year that the Tomago plant could close when its energy contract expires in 2028 due to rising power costs. The smelter consumes roughly 10 per cent of NSW's total electricity supply annually, making it Australia's largest single electricity user. It's been running 24 hours a day since 1983.
The company's latest annual report showed profit after tax of $10 billion across 2025, attributable to owners. Its aluminium and lithium projects were valued at $4.6 billion, up from $3.6 billion in 2024. Despite this financial strength, the multinational will receive more than twice as much in public funding as it's investing itself.
A government spokesperson said the joint investment would deliver "a long-term renewable energy solution for the Tomago Aluminium smelter that supports commercially sustainable operations beyond 2028 and accelerates decarbonisation of more than 10 per cent of NSW's electricity grid." The NSW government's contribution is capped at $1.225 billion over 10 years from 2029.
Funding Fight Behind Closed Doors
Negotiations between the state and federal governments weren't smooth. Plans stalled when a clear-cut funding agreement couldn't be reached with NSW. The federal government wanted an even 50:50 split, similar to a deal with Queensland for the Boyne Aluminium Smelter near Gladstone.
Minns initially pushed back on the even-funding proposal, saying the deal was being led by the federal government and any state contribution must work in the interests of NSW taxpayers. He ultimately agreed to split the bill down the middle.
During a previous Hunter site visit, Albanese told Tomago workers he suspected a deal could be reached quickly. That optimism proved premature as the funding standoff dragged on for months.
Workers Caught in Uncertainty
The smelter employs about 1,000 workers who've spent months uncertain about their futures. The Electrical Trades Union said employees had been on edge as they waited for an announcement.
Union organiser Brad McDougall said a deal couldn't come fast enough. "It's been very difficult for all employees on the site," he said. "We get comments made like, 'I wake up every day not knowing if today is going to be the day', positive or negative ... so this news will be fantastic."
Rio Tinto will invest $100 million to drive further decarbonisation activities at the smelter and undertake an innovative demand-response program to support the NSW grid. The spokesperson said the demand-response program aims to position Tomago as the international leader in electricity demand response and flexibility services.
Why This Matters:
The Tomago bailout reveals a troubling pattern: profitable multinational corporations securing massive public subsidies while workers and communities bear the risk of closure. Rio Tinto's $10 billion profit demonstrates the company has resources to invest in its own operations, yet taxpayers are contributing more than double what the company itself will spend. This raises fundamental questions about corporate accountability and whether public money should rescue private enterprises that remain profitable. The deal also highlights the challenge of transitioning heavy industry to renewable energy without clear frameworks for sharing costs between corporations and the public. While 1,000 jobs deserve protection, the precedent set by repeated bailouts suggests companies can rely on government rescue packages rather than planning sustainable transitions themselves. The energy transition's costs are being socialized while profits remain private.