Rio Tinto Flags Risk to Tomago Smelter Operations Due to Energy Supply Challenges

Also, there is significant uncertainty about when renewable projects will be available at the scale it needs, he added.

SEATTLE (Scrap Monster): Global mining giant Rio Tinto has issued a warning that its Tomago Aluminium Smelter, Australia’s largest, could face closure after 2028 due to challenges in securing a viable energy supply once its current electricity agreement with AGL Energy expires.

The company highlighted that rising power costs and supply uncertainties are threatening the future of the facility, which plays a critical role in Australia’s aluminium production. The smelter has already been under pressure from escalating energy prices, largely driven by the nation’s accelerated transition toward renewable energy sources.

Electricity accounts for over 40% of Tomago’s operating costs, making it highly sensitive to fluctuations in power pricing. Both coal-fired and renewable energy options are expected to become more expensive in the coming years, raising serious questions about the site’s long-term commercial viability once the current deal ends.

Tomago Aluminium CEO Jerome Dozol stated that all market offers received so far indicate non-viable pricing, making it impossible to maintain profitable operations under current market conditions. He further pointed out that the timing and scale of renewable energy availability remain uncertain, compounding the challenges of ensuring stable, affordable supply.

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In response to the looming deadline, Rio Tinto has initiated consultations with employees and union representatives to assess potential outcomes for the smelter. Stakeholders have until November 21 to provide feedback on the situation, after which the company will make a final decision regarding the plant’s operational future.

The development underscores the broader tensions facing Australia’s industrial and energy sectors, as major producers grapple with balancing decarbonization goals and energy reliability in a shifting power landscape.