Good news for Rio Tinto’s Bell Bay aluminium smelter, with the new power deal inked, it will be running for at least the next 14 months. This came as the Tasmanian government decided to extend its power supply agreement temporarily. This extension ensures production stability while talks are underway regarding a potential federal government support package aimed at securing the smelter’s long-term future.
Where the issue arose
The Bell Bay aluminium smelter, nestled close to Launceston, supports about 500 jobs. As per the recent electricity supply agreement, Tasmania’s state-owned power generator will run out on December 31. Back in April, Rio Tinto expressed concern regarding this pressing issue, highlighting that there’s still “material uncertainty” about the smelter’s operations after 2026.
Bell Bay, among multiple aluminium smelters and refineries in Australia, is grappling with operational hurdles due to rising energy costs, pressures from carbon pricing and intimidating global competition. Considering these challenges, the Albanese government is looking into various financial support options, which could help the federal government with billions of dollars in spending.
Tasmanian Energy Minister Nick Duigan has announced an “in-principle” agreement to extend the Bell Bay power contract through December 2026. With this extension, the smelter can have extra time to create a long-term operational framework. The Minister further reflected that the smelter, powered by low-carbon hydroelectricity, must be a focus for support initiatives from the federal government.