Rio Tinto assures community it is 'committed' to smelter

A Rio Tinto chief executive says the company will keep a minimum number of workers employed at a northern Tasmanian smelter until at least 2031 in return for a taxpayer-funded support package.

While Jérôme Pécresse did not say how many jobs were guaranteed, the ABC understands it is about 500.

Earlier this year, Hydro Tasmania and Rio Tinto were involved in protracted negotiations for a new power deal for the Bell Bay Aluminium smelter, south of George Town, with the state and federal governments becoming involved.

There were fears the 71-year-old smelter, which employs 550 and supports a further 1,200 jobs, would close if an agreement was not reached.

The region recently lost a major employer with the closure of the Liberty Bell Bay manganese alloy smelter in July, resulting in about 200 job losses.

But on October 1, three months before the current deal was due to expire, Prime Minister Anthony Albanese and federal Energy Minister Tim Ayres stood alongside state counterparts and announced a new power deal had been reached, alongside a support package of up to $200m.

On Tuesday, Mr Pécresse, Rio Tinto's Canada-based chief executive of aluminium and lithium, travelled to the Bell Bay site to meet with workers.

"It has been an important year for the future of Bell Bay, with a lot of effort being spent to renegotiate a new energy contract, which we announced a few weeks ago," he said.

"I wanted to be with the team and discuss on that basis how we are now going to run the smelter together for at least the next five years."

He confirmed the company had committed to maintain a minimum level of employment and continue asset investment through until 2031.

But he did not say what those guaranteed job numbers were.

"I don't think we have disclosed the details of that and so I won't today, but we want to continue to grow with the team."

The ABC understands the figure varies across years, but is around 500 jobs for the course of the agreement. 

Minister Ayres confirmed the support package contained "sensible safeguards" and required Bell Bay Aluminium to continue delivering "green aluminium, jobs and investment in the region". 

Taxpayer support contingent on aluminium price

Mr Pécresse said the $200-million taxpayer-funded support package may not be fully utilised if aluminium prices remain high.

"There are some provisions, and I can't get into too much detail, where above a certain level of price of aluminium, the level of [state and federal] support disappears," he said.

"For example, at today's aluminium pricing, I don't think the level of support would be granted to Rio Tinto."

In August, the federal and New South Wales governments struck a joint $2.5b support package for another of Rio Tinto's aluminium smelters, at Tomago in the Hunter Valley.

"In the event that aluminium prices are at a sustained high level, there will be a return to the taxpayer from this arrangement," Minister Ayres told the ABC at the time.

Beyond 2031

The process to secure a power deal for Bell Bay Aluminium drew out for months, due to the gap between the electricity price Hydro Tasmania offered and what Rio Tinto was prepared to pay.

At one stage, the Tasmanian government said the difference between those two figures was about $60m a year.

"The problem is you need to have a cost of electricity that competes with the power that is being paid by other smelters that serve the same market as you," Mr Pécresse said.

"And that's a discussion we have had with Hydro Tasmania … how do we get to a point where the smelter can just compete?"

He did not say if the final agreement saw Rio Tinto agree to a slightly higher price than it originally intended to.

"I mean, you always end up in a negotiation somewhere in between where you start and where your counterpart is starting,"

he said.

Hydro Tasmania's power prices were also criticised during attempts to rescue Liberty Bell Bay.

While Mr Pécresse did not comment on Hydro specifically, he said energy companies often faced a tension when it came to maximising profits or supporting industry.

He said there was every reason to believe Bell Bay Aluminium would remain competitive, even as green manufacturing was adopted more widely around Australia.

"It's a competitive asset,"

he said.

Mr Pécresse said it was able to produce more "specialty value added products" than any of its other smelters in the region. 

Asked whether the smelter had a future beyond the current power deal, which expires in 2031, he said he hoped it would be there for "many more decades to come".

"Rio Tinto is committed to the future of this site and the future of its people,"

he said.

'Protecting taxpayers' interests' a priority, state government says

In a statement, a Tasmanian government spokesperson said the commercial energy agreement and separate government support packages had secured the future of the smelter.

"As outlined when the support was announced, assistance is linked to aluminium prices. If prices are sufficiently high, taxpayer support will not be required,"

the spokesperson said.

"Rio Tinto has been offered an energy contract on commercial terms, consistent with Hydro Tasmania's Ministerial Charter obligations.

"Global competitiveness of the manufacturing and smelting sector is a national challenge. It would not have been reasonable for Tasmanian taxpayers to have covered the cost alone, whether directly or through our ownership of Hydro; that's why it was important to partner with the Australian government.

"Bell Bay Aluminium is a major economic driver for northern Tasmania, and our focus remains on securing a sustainable, long-term future for the smelter while protecting Tasmanian taxpayers' interests."

In a statement, Hydro Tasmania said it "seeks to negotiate commercial electricity agreements with major industrial customers that have value for the customer and Tasmania".

"Decisions about broader industry policy, subsidies or further public support are matters for government. 

"Hydro Tasmania does not seek the highest possible price for power when negotiating with our major industrials.  

"We take our obligations under the Government Business Enterprises Act and the Ministerial Charter seriously. 

"This includes Hydro Tasmania operating commercially and as a sustainable business so we can continue delivering value back to Tasmania, while balancing the lowest possible power prices."