Rio Tinto secures bailout for aluminium smelter in Australia

Rio Tinto Group has secured a A$2 billion ($1.4 billion) government bailout to keep the Boyne aluminium smelter in Australia running until at least 2040 and support its transition to renewable electricity.

The funding will be provided by the federal government and the state of Queensland over 10 years from 2030. It will ensure the smelter “remains internationally competitive,” Rio Tinto Aluminium and Lithium Chief Executive Officer Jérôme Pécresse said in a statement on Wednesday.

Aluminum production is highly energy-intensive and Rio is under pressure to decarbonise assets that account for the largest portion of its direct emissions. The Boyle smelter’s current power contract expires in 2029 and Rio had said previously the plant did not have a long-term future if it could not reduce emissions.

In 2024, the company signed Australia’s largest pact for the supply of renewable energy for the smelter, as well as two alumina refineries in Queensland. Pécresse said in the statement that government funding combined with earlier power-purchase deals had positioned Boyne “to be among the world’s first aluminum smelters underpinned by solar and wind power.”

A decade of rapid Chinese expansion throughout the metals supply chain has intensified competition, leading to the closure of many smelters worldwide, including in Australia. Over the last two years, the federal government has made manufacturing and metals processing a priority.

“At a time when supply-chain disruptions are being felt across the globe, this investment is needed now more than ever,” Dale Last, Queensland’s minister for natural resources, mines and manufacturing, said in a separate statement announcing the funding.

Rio is the latest company to receive a government lifeline to ensure smelters and refineries remain open. Last year, the federal and state governments provided packages of support to Glencore Plc for its Mount Isa copper smelter and associated refinery, while Trafigura Group subsidiary Nyrstar Australia received funding for its Port Pirie lead smelter and Hobart zinc works.

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