$2bn in FMIA production credits for cleaner aluminium


Brandon How
Reporter

Aluminium producers that switch to renewables will share in $2 billion worth of production credits under a new policy unveiled by Prime Minister Anthony Albanese ahead of the upcoming election.

The subsidy aimed at helping the energy-intensive sector to decarbonise will require smelters to make the switch by 2036 to be eligible for the credit, which will be paid out per tonne of clean aluminium produced per facility for up to 10 years.

While the government has yet to announce the full details of the Green Aluminium Production Credit, it is expected to be available to Australia’s four industrial aluminium smelting facilities from 2028 to 2044.

Tomago Aluminium’s smelting facility. Image: Tomago Aluminium

Mining conglomerate Rio Tinto controls three of Australia’s four aluminium smelters, including a facility run by Tomago Aluminium Company, the site of the Prime Minister’s announcement. It also owns the Bell Bay smelter outright.

Australia’s fourth smelting facility is owned by United States-headquartered Alcoa.

The Tomago facility is Australia’s largest producer of aluminium. It is also the country’s single largest user of electricity, consuming about 10 per cent of New South Wales’ energy supply by itself. The sector also collectively consumes about 10 per cent of electricity from the National Electricity Market.

The Prime Minister said in a statement on Monday that “investing in the Australian-made aluminium industry is a massive opportunity – to create well-paid jobs in our regions and suburbs and set Australia up for the future”. Australia is currently the world’s sixth largest producer of aluminium.

Industry and Science minister Ed Husic, who has overseen development of green metals policy, said the incentive would provide for a “a secure future for our world-class aluminium industry”.

“With an entire aluminium supply chain uniquely located right here in Australia, we’re well positioned to capture the rewards of the global green energy transition,” Mr Husic said.

The production credit will add to existing support available to helping aluminium smelters to decarbonise under both streams of the $1.9 billion Powering the Regions Fund.

Aluminium smelting is also considered an emissions-intensive trade-exposed activity so is eligible for diminished emissions reduction obligations under the federal government’s safeguard mechanism.

Aluminium Council chief executive Marghanita Johnson, who sits on the green metals advisory panel, said the $2 billion commitment is an “important step in support of the industry’s transition to the competitive, reliable, lower-carbon energy needed”.

Electricity accounts for about 30 to 40 per cent of the cost of smelting aluminium ore. Ms Johnson said the incentive “lays the groundwork” for the industry’s access to lower-carbon energy at competitive prices, capital investment in decarbonisation technologies, and the streamlining of supporting regulatory approval.

In November, Tomago Aluminium chief executive Jerome Dozol said it could not afford to switch to cleaner forms of electricity without government funding support.

The Green Aluminium Production Credit joins similar hydrogen and critical minerals production credits that were announced in the 2024-25 federal Budget.

Legislation to enable the two key initiatives from the Future Made in Australia initiative is currently before the Senate, but is opposed by the Coalition.

High-purity alumina production is eligible for the critical minerals production tax incentive, although there are no existing facilities in Australia that produce this.

Do you know more? Contact James Riley via Email.

1 Comment
  1. k2reed3g@hotmail.com 3 weeks ago

    It would be good, and play better to the “Cost of Living” issue in the elections IF this were to include funding for manufacturing startups producing products using aluminum to reduce our dependence on imports.
    Karl Reed

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