The Tasmanian government has secured a 12-month power deal to keep Bell Bay Aluminium running while talks continue on a long-term agreement.
The short-term arrangement gives the Rio Tinto-owned smelter some breathing space, with its existing 10-year contract due to expire on December 31.
More than 550 jobs were on the line without a deal between the smelter and state-owned Hydro Tasmania.
Premier Jeremy Rockliff said the facility was too important to let fail.
“The smelter is a cornerstone of Tasmania’s economy, directly employing over 550 people and supporting hundreds more through a supply chain of almost 300 local businesses,” he said.
The operation injects about $700 million into the state’s economy each year and consumes up to 25% of Tasmania’s electricity supply.
Energy Minister Nick Duigan said federal government support was vital to secure the smelter’s long-term future.
“As we have seen across the country, federal government support is necessary to provide the smelter with a sustainable operating trajectory,” he said.
In January, the federal government unveiled a $2 billion production credit scheme to help Australian aluminium smelters transition to renewable energy.
But Tasmanian ministers have accused Canberra of double standards, saying mainland smelters are in line for billion-dollar support while Bell Bay risks being left out.
“It would be a perverse outcome for the federal funding arrangements to exclude the nation’s principal green aluminium smelter,” Duigan said.
Industry groups have warned that closure of the smelter would cause widespread economic fallout across Tasmania.
The facility underwrites major costs for TasPorts and about a quarter of TasNetworks’ expenses – costs that could be passed on to other users if operations stopped.
Bell Bay Aluminium has been in talks with Hydro Tasmania for 18 months over power pricing.
The challenge remains striking a balance between keeping the smelter viable and maintaining Hydro’s financial sustainability.
Duigan said he expected Hydro to deliver “a competitive, commercial energy price consistent with its charter obligations to put Tasmanian jobs and the economy first”.
