Rio Tinto says it is contemplating ceasing operations at its New South Wales-based Tomago aluminium smelter at the end of its current electricity supply contract.

The Tomago aluminium smelter, Australia’s largest, had been struggling with high power prices. It had started a consultation process with employees on the potential future of its operations, but was yet to reach a decision and is weighing a possible closure.

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The smelter’s existing electricity supply contract with AGL Energy expires in December 2028, with Tomago yet to identify a pathway that supports commercially sustainable operations beyond the period “despite extensive engagement and market approaches”, according to the miner’s statement.

“Unfortunately, all market proposals received so far show future energy prices are not commercially viable, and there is significant uncertainty about when renewable projects will be available at the scale we need,” Tomago Aluminium’s CEO, Jérôme Dozol, said.

A number of smelters in Australia are preparing to switch to 100% renewable energy in the coming decade. Tomago Aluminium, located north-west of Newcastle, had announced in 2021 it would “for all intents and purposes” be 100% renewable by 2029.