Rio Tinto (LSE:RIO) has backed a new agreement involving Tomago Aluminium, the Australian Government and the New South Wales Government that will provide Australia’s largest aluminium smelter with long-term, internationally competitive electricity through 2038.
The arrangement provides greater certainty for the Tomago operation, which plays an important role in regional employment and Australia’s manufacturing sector. It also supports Rio Tinto’s integrated aluminium operations in eastern Australia and provides a clearer pathway towards lower-carbon production.
Tomago to Invest A$1.1 Billion in Smelter
As part of the agreement, Tomago Aluminium will enter into a 10-year power purchase agreement that will take effect after its existing electricity contract expires in 2028. From 2033, the electricity supplied under the arrangement is expected to come entirely from renewable energy sources.
Tomago also plans to invest A$1.1 billion in the smelter, including A$100 million specifically allocated to decarbonisation initiatives. The investment is intended to strengthen the facility’s competitiveness while positioning it as an important supplier of lower-carbon aluminium for industries supporting the global energy transition.
The long-term power arrangement also allows Tomago to continue providing demand-response services to the New South Wales electricity system, helping support grid stability as renewable generation becomes a larger part of the state’s energy mix.
Australian Aluminium Operations Gain Greater Power Certainty
The Tomago agreement follows a similar electricity arrangement secured in 2026 for Rio Tinto’s Boyne aluminium smelter in Queensland. As a result, Australia’s two largest aluminium smelters now have clearer routes towards long-term, competitive and increasingly low-carbon electricity supplies.
Together, the agreements reinforce one of the world’s largest integrated aluminium supply chains and support Rio Tinto’s wider strategy to reduce Scope 1 and Scope 2 emissions while maintaining significant domestic manufacturing capacity.
Cash Generation Supports Rio Tinto Outlook
Rio Tinto’s broader outlook continues to benefit from solid profitability and operating cash generation. Recent company commentary has also highlighted improved cash generation, productivity gains and visible progress across major development projects.
These strengths are partially offset by weaker conversion of operating cash into free cash flow and higher debt compared with the previous year. Technical indicators are also mixed, with Rio Tinto shares remaining below important intermediate-term moving averages.
More About Rio Tinto
Rio Tinto is a global mining and metals group with operations spanning commodities including iron ore, aluminium, copper and other industrial materials. Its Australian aluminium business includes bauxite mining, alumina refining and aluminium smelting operations across an integrated supply chain.
The group owns a 51.55% interest in Tomago Aluminium, giving it significant exposure to Australia’s largest aluminium smelter. Its wider presence in eastern Australia makes Rio Tinto an important participant in domestic aluminium production, industrial employment and the country’s transition towards lower-carbon manufacturing.
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