Bell Bay gets 12-month reprieve

The Tasmania Government has signed an in-principle 12-month power agreement to secure the immediate future of Rio Tinto’s (ASX: RIO) Bell Bay Aluminium smelter.

The agreement will allow time for the Tasmania Government to continue to work with the company and the Federal Government on a long-term plan for the smelter.

In October, the smelter’s more than 500 staff were told the future of operations were uncertain as the smelter nears the expiry of its energy supply deal with state-owned Hydro Tasmania in December.

Tasmania Premier Jeremy Rockliff says the government is doing all it can to make sure the business continues to have a strong future in the state.

“The smelter is a cornerstone of Tasmania’s economy, directly employing over 550 people and supporting hundreds more through a supply chain of almost 300 local businesses,” he said.

“It is important all governments continue to work together with Rio Tinto to secure the future of Bell Bay Aluminium, one of Australia’s greenest smelters.”

Tasmania Energy and Renewables Minister Nick Duigan says the government has collaborated with Rio Tinto and Hydro to develop this immediate solution.

“The smelter injects $700m of economic activity into Tasmania annually, and we are committed to its future,” he said.

“Hydro Tasmania has been engaged in good faith negotiations with Bell Bay Aluminium, and I expect a competitive, commercial energy price consistent with its Charter obligations to put Tasmanian jobs and the economy first.

“As we have seen across the country, Federal Government support is necessary to provide the smelter with a sustainable operating trajectory, when coupled with a new long-term energy arrangement with Hydro Tasmania.

“It would be a perverse outcome for the federal funding arrangements to exclude the nation’s principal green aluminium smelter.”

Bell Bay is just one in a long list of Australian smelters facing an uncertain future in the face of rising energy costs and mounting pressure to move away from coal to renewable energy sources.

Last month, Tomago Aluminium began consulting more than 1000 workers at its Tomago aluminium smelter, Australia’s largest aluminium smelter, as changing operating economics potentially affect the smelters viability.

Also in October, the Federal and Queensland Government confirmed they would be providing a $600m support package to maintain operations at the Mount Isa copper smelter and Townsville copper refinery.