A bailout package for Tomago Aluminium, Australia's largest aluminium smelter, will cost taxpayers $2.5 billion over 10 years, with the New South Wales (NSW) and federal governments expected to split the cost evenly.

Late last year, mining giant Rio Tinto warned that the Tomago Aluminium plant could face closure when its energy supply contract expires in 2028, due to rising costs of renewable and coal-fired power. The smelter currently consumes about 10% of NSW's total electricity supply annually, making it the state's largest electricity user.

A joint statement from the NSW and federal governments said the funding package would "secure the future of aluminium smelting in the region." A spokesperson added, "The joint investment will 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 starting from 2029. Rio Tinto, the smelter's owner, will invest at least $1.1 billion on top of taxpayer funding to reduce energy usage and shift toward renewables. This includes $100 million dedicated to further decarbonisation activities and an innovative demand-response program aimed at supporting the NSW electricity grid. The program seeks to position Tomago as an international leader in electricity demand response and flexibility services.

Rio Tinto's latest annual report showed a $10 billion profit after tax in 2025, attributable to its owners.

Prime Minister Anthony Albanese announced that a deal would soon be reached during a visit to the site in December 2025.

Sources