Sydney, December 12th (Argus) - The Australian government has signed a long-term power purchase agreement to support BHP, an Anglo-Australian producer, in operating its 600,000-ton-per-year Tomago aluminum smelter beyond 2028. The BHP subsidiary Tomago Aluminum will collaborate with the Australian federal government and the New South Wales state government in the coming months to develop an energy solution that will support the 600,000-ton-per-year smelter starting from 2028. He added that the deal will include a fixed-price power purchase agreement and Tomago Aluminum's commitment to invest 1 billion Australian dollars (670 million US dollars) over 10 years in the plant.
Australian Industry and Innovation Minister Tim Ayres stated at a press conference that the long-term power purchase agreement is beneficial for the continued long-term investment in the future of the Tomago industry. However, Ayres declined to comment further on the details of the transaction. In October this year, BHP warned that due to unsustainable energy costs, it might need to close Tomago by the end of 2028, when its current power contract would expire. The company said at that time that since 2022, it had been seeking a new energy solution but failed to find one. In June this year, the company began negotiations with New South Wales and federal officials on energy cost support for Tomago. The normal operation of the smelter has exceeded 2025. From January to September this year, the company produced 426,000 tons of aluminum at 100% output at Tomago, a decrease of 2.2% compared to the previous year. The day before Australia supported Tomago, Tim Ayres defended the government's industrial policy record. On December 11th, he stated at a speech at the Sydney Institute that industrial policy is "a rational and pragmatic response to the current severe challenges." He added that the government's support plans for the Whyalla steel plant, the global producer Glencore's Queensland copper business, and the global producer Nyrstar's lead-zinc smelter are out of an obligation to maintain and strengthen the economic situation of Australian workers. The government may also provide support for another 10 billion US dollars worth of BHP smelters. Tasmanian officials called on the federal government to pass a low-carbon production subsidy to support the Bell Bay aluminum smelter of the company with an annual output of 190,000 tons in November.
