Rio Tinto smelter gets $200m bailout and locked-in power deal
The Australian and Tasmanian governments have announced a $200 million support package for the Bell Bay Aluminium smelter after months of uncertainty.
The smelter's future had been looking shaky with its owner, multi-billion-dollar company Rio Tinto, locked in protracted negotiations with the state-owned power company Hydro Tasmania over a new power deal.
The smelter is a major employer in Northern Tasmania. (ABC News: Mitchell Woolnough)
There were fears the smelter, which employs 550 people, would shut if a new deal was not reached before it expired at the end of the year.
The state government has now announced Rio and Hydro have struck a five-year power deal.
The government previously said the gap between what Rio was willing to pay, and what Hydro Tasmania wanted, was $60 million a year.
It has not provided any details about the new deal beyond claiming it was "globally competitive" and the "lowest possible electricity price".
It's been a period of great uncertainty for the George Town municipality in northern Tasmania. (ABC News: Mitchell Woolnough)
But it was not just the absence of a new power deal threatening the future of the smelter.
Smelters across the country are struggling and coming under pressure from international rivals.
Bell Bay has already seen the closure of the country's only commercial manganese alloy smelter and, with it, the loss of more than 200 jobs.
The state government said the $200 million support package, which is split evenly with the Commonwealth, was separate from the power deal and was about "securing the future" of the smelter.
Prime Minister Anthony Albanese said the funding would support local manufacturing.
"We want Australia to make more things here and support good well-paid jobs for Tasmania," he said.
"That's why we're backing Bell Bay Aluminium, supporting hundreds of workers, their families and the region while boosting Australia's national sovereignty."
The state government had long been calling for Commonwealth support for the smelter.
It had been banking on the federal government's upcoming Green aluminium production credits scheme, but was later told it was not eligible.
It upped the pressure on the Australian government to contribute to the Bell Bay smelter in some way after the Commonwealth announced it would chip in over $1 billion to bail out New South Wales' Tomago smelter.
Bell Bay Aluminium is one of the biggest power users connected to the Tasmanian grid. (Facebook: Bell Bay Aluminium)
Premier Jeremy Rockliff, who has been personally involved in the negotiations, said the package would "support hundreds of jobs at BBA, hundreds of associated supply chain jobs, support our economy and back Tasmanians".
"This investment also provides certainty for the supply chain, with many Tasmanian businesses having the confidence to invest, grow and do business,"
Mr Rockliff said.
The $200 million will be spread over five years, and evenly split between state and federal governments. (ABC News: Mitchell Woolnough)
Federal Industry Minister Tim Ayres said the Commonwealth was backing industry, workers and manufacturing, while a future plan is worked through.
He said the joint investment "provides certainty for the workers, their families and the businesses that rely on its ongoing operations".
"The Bell Bay region has been facing difficult industrial circumstances, and the Commonwealth is backing in the Tasmanian government and Rio Tinto as they work through the future of the facility and the region."
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