Renewables for Tomago drives future made in the Hunter
Tomago was always the perfect place for an aluminium processing facility. At establishment state-owned coal mines and electricity generators supported the smelter's huge energy needs at a globally competitive price. The Port of Newcastle was close by, bringing in alumina and shipping out some of the processed aluminium. When operations commenced in the early 1980s, aluminium prices and investor confidence were riding high.
Tomago has been making good on that promise for 40 years. It is Australia's largest operational aluminium smelter, producing almost 600,000 tonnes of aluminium each year, sustaining thousands of direct and indirect jobs and contributing more than $2 billion annually to the national economy. It is staffed all day and all night by workers who have given, in some cases, their whole working lives to this facility.
To keep fulfilling its promise, Tomago needs high volumes of electricity - specifically, electricity that is cheaper, cleaner and more reliable. Ageing coal-fired power stations, privatised a decade ago, meet none of those criteria. Bayswater power station, for example, is expensive to maintain and more prone to unplanned outages. It's scheduled to close by 2033. Coal offers no affordable energy solution for Tomago's future.
The Albanese government in December announced a joint effort, in partnership with the NSW government and the owners of the Tomago smelter, to get more renewable energy to the facility sooner. Together, we're exploring a long-term power purchasing agreement to support Tomago's access to energy at a fixed price after its current contract expires in 2028. It was crucial we provided certainty to Tomago's workers before Christmas that we are doing everything we can to avoid closure, so they had more confidence about the future of the facility and their jobs beyond 2028.
More low-cost electricity into the grid more quickly is paramount for protecting Australia's sovereign capability and domestic manufacturing. That's why we're exploring concessional finance arrangements in support of Tomago's power supply. Bringing more low-cost generation into the grid helps put downward pressure on prices for everyone, including households and small businesses. And because Tomago is a large, steady user, it can support the kind of firm, investable projects that strengthen reliability. It also ensures that the taxpayer enjoys returns with interest on their investment in Tomago's future.
Investors are already backing in low-cost electricity generation for Australia. In the fourth quarter of 2025 renewable energy hit a record in its share of the national electricity market at 50 per cent of all supply. In the past 12 months, almost 7 gigawatts of additional renewable capacity has come online across Australia, enough to power 2.4 million homes.
Though crucial, renewables and storage are not the whole story for industrial energy needs. Big industrial facilities that use gas as a feedstock, or for hard-to-replace industrial heating processes, still need gas to maintain their competitiveness. The government's domestic gas reservation scheme is about standing up for Australia and its manufacturing first. It will ensure access to affordable and reliable industrial gas.
The Liberals and Nationals were quick to unleash their complaints about this agreement. The shadow minister for regional development and communications, Anne Webster, said the December announcement showed Australia's shift to a low carbon economy wasn't working. What the Tomago challenge actually shows is that the renewable energy transition cannot come fast enough in the Hunter. The Coalition's decade of internal climate warfare, policy uncertainty and disinvestment in the energy grid has only worsened the complex energy challenges we are facing.
The only thing that the Coalition has shown convincingly is that it's cheaper to play politics than to provide the Hunter with real policy leadership for the necessary energy system changes. Dr Webster and her colleagues are hellbent on continuing their ideological war on renewable energy. In doing so, they are a threat to aluminium manufacturing in the Hunter, and are putting Australia's industrial future at risk.
Tim Ayres is the Minister for Industry and Innovation and Minister for Science.
This article was originally published in the Newcastle Herald on 29 January 2026.
