Rio Tinto Considers Shutting Down Tomago Aluminium Amid Soaring Energy Costs

Rio Tinto Ltd (ASX:RIO) has announced it may shut down operations at Tomago Aluminium, Australia’s largest aluminium smelter, as rising electricity costs threaten the site’s long-term viability. The Anglo-Australian mining giant revealed it has begun consulting employees at Tomago to assess the smelter’s future, with discussions expected to continue until November 21.

The company stated that it has been unable to secure a cost-effective electricity supply for the plant beyond 2028. “Based on market proposals received to date, the cost of both coal-fired and renewable energy options from January 2029 would increase significantly, fundamentally changing operating economics and leaving the smelter unviable,” Rio Tinto said.

Tomago Aluminium, located in New South Wales, has been operating since 1983 and is responsible for nearly 40% of Australia’s aluminium production, with an annual capacity of up to 590,000 tonnes. The smelter is independently managed but majority-owned by Rio Tinto, with minority stakes held by Gove Aluminium and Norsk Hydro.

Rio Tinto’s review of the smelter, initiated in 2022, focused on finding affordable and sustainable electricity solutions. However, the company cited steep power prices and increasing energy demand from other sectors as major challenges. The current electricity contract with AGL Energy is due to expire in December 2028, leaving the smelter’s future uncertain unless a viable deal is reached.

The potential closure of Tomago Aluminium highlights the growing pressure on Australia’s heavy industries amid surging power costs and the nation’s energy transition. As one of the country’s most significant industrial sites, its closure could have far-reaching economic implications for regional employment, aluminium supply, and the broader manufacturing sector.