Alcoa and AGL Energy sign power agreement for Portland aluminium smelter

Alcoa (ASX: AAI) and AGL Energy (ASX: AGL) have entered a nine-year agreement to support future operations at the Portland aluminium smelter in Victoria.

Effective July 1, 2026, the agreement covers 287MW of power supply and will support smelter operations to mid-2035.

Together with a 300MW contract finalised with AGL in 2023, the combined contract will enable the smelter to produce up to 95% of its nameplate capacity of 358ktpa of aluminium.

Currently, the smelter production averages at about 80% capacity.

Alcoa Australia interim president Tanya Simmonds says this agreement secures power for future production requirements and would help support jobs in the region.

“Alcoa, together with our Portland aluminium smelter joint venture partners, is pleased to have reach agreement with AGL on this contract that helps provide greater certainty about the 760-person workforce, local suppliers, the Portland community and many more in the region,” she said.

The Portland aluminium smelter produces around 18% of Australia’s aluminium and in 2023, the smelter paid more than $74m in direct salaries, wages and benefits, $164m in local supply contracts and $7m in Local and State Government taxes.

Around 40% of the smelter’s consumed electricity comes from renewable sources, including electricity generated by the nearby Portland wind farm.

Alcoa is continuing to explore other opportunities to bring more renewables into the long-term energy use of the smelter.

Currently, Alcoa has memorandums of understanding with the onshore Kentbruck Green Power Hub and Alinta Energy to collaborate on the proposed Spinifex offshore wind farm.