---
title: "Rio Tinto secures $2.5bn renewable energy deal for Tomago smelter"
publisher: "Stockmark.IT"
author: "Stockmark.IT Website"
published: "2026-08-14T06:31:28+00:00"
modified: "2026-08-14T06:31:28+00:00"
date: 2026-08-14
canonical: "https://stockmark.it/australias-largest-aluminium-smelter-to-run-on-renewables-by-2033-afte/"
category: "Business"
categories: ["Business", "Companies", "Energy"]
image: "https://i0.wp.com/stockmark.it/wp-content/uploads/2026/08/rio-tinto-secures-2-5bn-renewable-energy-deal-for-tomago.png?fit=1536%2C1024&quality=80&ssl=1"
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language: "en-GB"
---

# Rio Tinto secures $2.5bn renewable energy deal for Tomago smelter

**Published:** August 14, 2026
**Author:** Stockmark.IT Website
**Categories:** Business, Companies, Energy
**Featured image:** ![Rio Tinto secures $2.5bn renewable energy deal for Tomago smelter](https://i0.wp.com/stockmark.it/wp-content/uploads/2026/08/rio-tinto-secures-2-5bn-renewable-energy-deal-for-tomago.png?fit=1536%2C1024&quality=80&ssl=1)

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Australia’s largest aluminium smelter is set to operate entirely on renewable energy by 2033, following a significant agreement between Rio Tinto and the federal and New South Wales governments. The arrangement involves a $2.5 billion subsidy package designed to decarbonise the facility and prevent its potential closure. The deal was announced at the Tomago smelter near Newcastle by Prime Minister Anthony Albanese and NSW Premier Chris Minns, marking a pivotal shift in the energy supply for the nation’s most substantial industrial electricity consumer.

The agreement provides a ten-year guarantee of below-market power supply, commencing after the smelter’s existing coal-based electricity contract with AGL expires in December 2028. This intervention aims to underpin nearly 3,000 megawatts of new renewable and firming capacity within the state, a volume exceeding that of a large coal-fired power station. Rio Tinto, which holds a joint ownership stake in the smelter, confirmed that the transition would enable the facility to run on clean energy exclusively by 2033. This shift is projected to reduce annual greenhouse gas emissions by 7.1 million tonnes, representing approximately 1.5 per cent of Australia’s total annual climate pollution.

Jérôme Pécresse, chief executive of Rio Tinto Aluminium and Lithium, stated that the smelter now has a clear pathway to long-term, cost-competitive, low-carbon power. As part of the broader agreement, the smelter’s owners have committed to investing $1.1 billion in Tomago over the next twelve years. This investment includes $100 million specifically allocated for decarbonisation activities. The federal climate change and energy minister, Chris Bowen, explained that Tomago Aluminium had indicated it could no longer rely on coal-fired power and lacked confidence in the current pipeline of renewable energy projects sufficient to maintain operations.

To address these concerns, the governments collaborated with agencies including the Clean Energy Finance Corporation and Snowy Hydro to develop an innovative arrangement. Minister Bowen noted that the new renewable energy developments would not be confined to the Hunter Valley but would be spread predominantly across New South Wales. The projects include wind farms and solar installations backed by battery storage, many of which have already received environmental approval but had not yet reached final investment decisions.

The Tomago smelter is Australia’s largest single electricity user, consuming more than ten per cent of total generation in NSW. It directly employs around 1,000 people and is estimated to indirectly support approximately 5,000 additional jobs. Premier Minns emphasised the economic importance of the deal, warning against the deindustrialisation seen in other regions and stressing the need to maintain economic stimulus in the Hunter area.

This agreement follows other recent government interventions to support major industries, including a $2 billion package for Rio Tinto’s Boyne aluminium smelter in Queensland and $2.4 billion for steelworks in Whyalla, South Australia. Aluminium production is highly sensitive to electricity costs due to its intensive energy requirements, having historically relied on cheap, long-term supply deals.

Political reactions to the deal have been mixed. Federal opposition leader Angus Taylor described the cost as an admission of failure in energy policy, attributing rising electricity prices to net zero targets. However, analysts contend that recent power bill increases are largely driven by global factors, such as the impact of Russia’s invasion of Ukraine on fossil fuel costs, rather than domestic climate policies. They argue that firm renewable energy is the most cost-effective replacement for ageing coal infrastructure, though concerns remain regarding delays in transmission and wind farm construction.

Independent MP Nicolette Boele criticised successive governments for failing to act earlier, noting that the power contract expiry was known years in advance. She highlighted that countries like Canada, Norway, and Iceland successfully operate smelters on hydro and geothermal energy, suggesting Australia should leverage its superior solar and wind resources rather than subsidising shortages. Meanwhile, Greens senator Penny Allman-Payne argued that the government should have taken an equity stake in Tomago to ensure Australians share in the wealth generated from domestic resources.

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