NEWCASTLE — Rio Tinto announced a $2.5 billion subsidy agreement on Thursday, August 13, 2026, ensuring that Australia's largest aluminium smelter will run entirely on renewable energy by 2033. Prime Minister Anthony Albanese and New South Wales Premier Chris Minns jointly revealed the 10-year below-market power supply guarantee during a press conference at the Tomago smelter near Newcastle. The financial package is designed to prevent a potential facility closure and replaces an expiring coal-focused electricity contract with AGL scheduled to terminate in December 2028.
Under the terms of the agreement, federal and state backing will underpin nearly 3,000 megawatts of new renewable and firming energy capacity across New South Wales. Rio Tinto Aluminium and Lithium chief executive Jérôme Pécresse stated that the initiative secures a long-term pathway to cost-competitive, low-carbon power. Corporate engineers estimate that the clean energy transition will reduce the facility's annual greenhouse gas emissions by 7.1 million tonnes, representing roughly 1.5 percent of Australia's total annual climate pollution.
Industrial sector unions and regional business groups welcomed the long-term operational certainty, noting that the plant supports thousands of manufacturing jobs in the Hunter Valley. Energy market regulators will oversee the tender processes for the new renewable generation projects as construction timelines advance. The initial developmental milestone review for the renewable energy integration infrastructure is scheduled for November 1, 2026.
Why did federal and state governments provide a $2.5 billion deal for the Tomago smelter?
Federal and New South Wales governments provided the $2.5 billion power supply agreement to prevent the premature closure of Australia's largest aluminium smelter and secure regional manufacturing jobs while driving massive investment into new renewable and firming energy infrastructure across the state.
The transition framework officially takes effect following the expiration of the current AGL coal electricity contract on December 31, 2028.