The Albanese government will on Wednesday open consultation for the latest plank in its interventionalist industry policy, a $2 billion tax credit for producers of green aluminium as the sector buckles under high energy prices.
The Green Aluminium Production Credit program was announced ahead of the election in January to encourage the incredibly energy intensive sector to decarbonise.
The consultation on its design arrives as reports emerge that the Rio Tinto-controlled Tomago aluminium smelter in NSW – Australia’s largest — is struggling to stave of closure because of high energy prices.
It also follows a series of direct government bailouts for metals plants around the country, with Tomago in talks with federal and state governments about a similar package before the credits arrive in 2028.
Under the government’s production tax credit program, facilities will be eligible for support for every tonne of clean Australian-made aluminium they make over a period of up to 10 years or to 2044, whichever is sooner.
Similar incentives will soon be provided to green hydrogen producers and critical minerals refiners under sister programs under the government’s Future Made in Australia agenda.
“With the right stable policy settings and incentives, abundant renewable energy and rich mineral resources, Australia has what it takes to lead the world in aluminium production made using renewable energy,” Industry minister Tim Ayres said.
Australia is one of few countries with an end-to-end aluminium industry, which starts with mining bauxite ore, before refining it into alumina and smelting it to produce aluminium at one of four major facilities.
Australia exports almost all its aluminium – which is projected to soar in demand because of its use in electric vehicles, clean energy equipment and construction.
But producing around 10 per cent of the world’s aluminium has come at a cost, with production consuming 10 per cent of the nation’s electricity and producing five per cent of emissions.
The electricity to smelt aluminium comes mostly from burning coal and the new government program is trying to accelerate its decarbonisation
“Aluminium using renewable energy, alongside other metals, is a priority sector under the Future Made in Australia agenda, and decarbonising our aluminium smelters is essential to achieving our net zero targets,” Mr Ayres said.
The government will kick of consultation a week after Tomago Aluminium chief executive Jerome Dozol publicly warned its current energy costs will more than double when a legacy supply agreement ends in 2028.
“Under market proposals for power supply from January 2029, our current energy costs would more than double – fundamentally changing operating economics,” Mr Dozol is quoted as saying.
Australia’s four aluminium smelters employ around 14,000 workers.
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