Sydney, November 5th (Argus) - British-Australian producer Rio Tinto and Australian state-owned utility Hydro Tasmania have reached a 12-month power supply agreement to support the production of the 190,000-tonne-per-year Bell Bay aluminium plant in Tasmania.
On November 5th, a Rio Tinto spokesperson told Argus that as negotiations for a 10-year agreement with Hydro Tasmania and the Tasmanian government are underway, the principle agreement will ensure continuous safety and stability in production.
Tasmanian Governor Jeremy Rockliff said that the Tinto-Hydro Tasmania deal provides an additional one-year special and affordable electricity for the Bell Bay aluminium industry. The specific terms of the agreement have not been made public.
The current power contract between the British-Australian producer and Hydro Tasmania will expire at the end of December. Richard Curtis, the general manager of Bell Bay Aluminium, told employees on October 8th that the two companies have been negotiating a long-term power deal for 18 months.
Curtis added that the failure to reach an agreement on appropriate terms has brought significant risks to the smelter.
Data from the Australian Energy Market Operator (AEMO) shows that the spot electricity price in Tasmania averaged A$109.26 per megawatt-hour (US$70.70) from July 2024 to June 2025, higher than A$69.07 per megawatt-hour a year ago and only A$37.16 per megawatt-hour ten years ago.
The Tasmanian government has always supported Rio Tinto. However, Tasmanian Energy Minister Nick Duigan said on October 9th that the price offered by Hydro Tasmania is too far from the price the smelter needs and cannot be paid alone.
On November 5th, the Tasmanian government again called on the Australian federal government to support Bell Bay Aluminium. In October, the company requested federal officials to confirm whether the factory is eligible for the Australian A$2 billion low-emission aluminium production credit program, which will provide tax incentives to producers from 2028 to 2029.
Bell Bay Aluminium mainly relies on hydroelectric power and may be eligible for production credits. However, the Australian government has not yet finalized the design of the program.
A company spokesperson told Argus today that the one-year agreement between Tinto and Hydro Tasmania leaves time for the outcome of the Australian government's credit program.
Tinto's 600,000-tonne-per-year Tomago aluminium smelter in New South Wales (NSW) is also facing pressure on electricity costs. Rio Tinto said on October 28th that due to high energy costs, the company may need to close the plant by the end of 2028, but has not yet made a decision on its future.
The spot electricity price level in New South Wales is even higher than that in Tasmania. AEMO data shows that the average price for the 2024-25 fiscal year was A$128.16 per megawatt-hour, higher than A$101.57 per megawatt-hour a year ago and A$35.18 per megawatt-hour ten years ago.
Since June, the Australian federal government and the New South Wales government have been negotiating energy cost support with Rio Tinto. On October 28th, Tim Ayres, the Minister of Industry and Innovation of Australia, stated at a press conference that they had failed to reach an agreement.
