Government weighs up saving Tomago smelter - ABC listen

The Tomago aluminium plant in New South Wales makes about 37 per cent of Australia's aluminium and it's power hungry, using 10 per cent of the state's electricity. Yet it could close, because Rio Tinto, a part owner of the plant says it can't secure affordable power from 2028 when its current contract expires. And that means it's a political hot potato with critics suggesting policies to achieve net zero carbon dioxide emissions by 2050 are to blame. The Federal Government says all options are on the table.More InformationFeatured: Tim Ayres, Federal Industry MinisterCreditsSabra Lane, ReporterImage DetailsIndustry Minister Tim Ayres is looking at "all options" to help the struggling smelter.(ABC News: Tim Ayres)Program:More from AMTomago, Mining and Metals IndustryTranscriptSabra Lane: The DeMarco aluminium plant in New South Wales makes about 37% of Australia's aluminium and its power hungry using 10% of the state's electricity. Yet it could close because Rio Tinto, a part owner of the plant, says it can't secure affordable power from 2028 when its current contract expires. That means it's a political hot potato, with critics lining up to suggest policies to achieve net zero carbon emissions by 2050 are to blame. The Federal Government says all options are on the table as the company talks with workers about the plant's potential closure. I spoke with the Federal Industry Minister earlier. Tim Ayres, thanks for joining AM.Tim Ayers: Hey, it's really good to be on the show, Sabra.Sabra Lane: The Federal Government says no option's off the table. Does that include potentially taking a public stake in DeMarco to keep it open or even subsidising its power bills?Tim Ayers: Well, we mean what we say. No option is off the table. We will keep engaging with the company and with the New South Wales Government, with the trade unions who are engaged in all of this work. That's what people would expect. I won't, on your show or any other show, go into the details of those discussions, not because I'm trying to be evasive, Sabra, but because they are confidential discussions calculated to try and secure a good result for the region and for Australia.Sabra Lane: The Federal Government announced a $2 billion green metal fund deal before the Federal election this year, partly aimed at helping this plant stay open, with a tax credit for aluminium and steel produced with renewable energy. The Rio chief at the time claimed credit, saying it meant finding a future for this plant. My colleague David Spears has written about this today. What has happened to that optimism? Within nine months, the company's gone from saying this plant has a good future to we're closing it down.Tim Ayers: This production credit is of course designed to secure the future of aluminium in Australia. It's achieved that, or will achieve that objective, in my view, much more optimistic, about the future of the Boyne Island smelter in central Queensland, where Rio has been out underwriting wind and solar projects around Queensland, investing in the future of that facility. We've got more work to do in New South Wales.Sabra Lane: But what has happened here? The chief said Tomago had a future earlier this year, and now they say it doesn't. What's happened? Do you wonder?Tim Ayers: I obviously would prefer that these issues had been resolved with the Tomago smelter. They are facing a bridge of four or five years between now and securing future investment in wind and solar and transmission in New South Wales. That is a long period. The discussions have been focused on what happens over the course of that four years. And I just say, we need, industrial Australia needs, more electricity, more transmission. And if I can just make the partisan observation for a second, Sabra, having elements of the National Party careering around the country, campaigning against wind and solar and transmission, is harming blue collar jobs, because blue collar jobs and industry in the regions need access to cheap, renewable power. That's what those companies are demanding, not because they're hippies, but because that's what their markets are demanding.Sabra Lane: The Boyne plant in Queensland is being subsidised. The power bills are being subsidised by Queensland. Is that what you're suggesting here, that New South Wales should stump up and subsidise part of the bills for Tomago?Tim Ayers: Well, I just say, I've been around manufacturing for a long time, Sabra, and you can see it when there's investment going on over the years leading up to a decision like this, when you see investment in new plant and equipment, planned investment coming, investment and underwriting energy projects like the wind and solar projects that Rio is investing in Queensland. And of course, in New South Wales, that activity has not been happening in the same way around that plant. So of course, I'm concerned about what that means about the future of the plant. People in the Hunter Valley, workers who work there are concerned about that. They see that every day.Sabra Lane: Your colleague, Ed Husic, the former industry minister, is no Rio fan. He says it's gone from blowing up Aboriginal heritage on the West Coast to undermining smelters on the East Coast. He says it's corporate villainy. He's not alone in those sentiments and he's your predecessor.Tim Ayers: Well, my job here is to work in a careful and calculated way that is about the Australian national interest. We've done that work in a series of smelters around the country in a careful way in the public interest, locking in investment in places like Port Pirie and Hobart, where you're broadcasting from today in Mount Isa. We are, as a government, working through these questions, engaging in Boyne Island, challenges in northern Tasmania. We will keep focused on these issues because, yes, it's about jobs in the regions, but we're also focused here on making sure that we're protecting Australia's economic resilience and our national interest. The Tomago smelter is one of a series of Australian aluminium smelters. I want them all to proceed, but we're going to work on this one carefully in the national interest.Sabra Lane: Tim Ayres, thanks for talking to AM.Tim Ayers: Thanks, Sabra. 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