The state government will reveal its long-awaited contribution towards supporting the continuing operation of Tomago Aluminium, which directly employs 1500 workers, in next month's state budget.
The commitment, believed to be worth hundreds of millions of dollars, will go towards a joint funding package with the federal government.
It is the first sign of a breakthrough between the governments, which have been locked in negotiations since December over the cost breakdown of the deal, which has been estimated to be between $300 million and $470 million.
The state government has been under increasing pressure to agree to a 50-50 funding split, however, it has been holding out because it says it has not been provided with enough detail of the Commonwealth's proposed financial commitment.
It also has a grievance over the redistribution of GST revenue the Commonwealth receives from NSW.
Key independent and Lake Macquarie MP Greg Piper has backed the government's position, arguing that an 80-20 split would be more appropriate.
"The fact of the matter is on major infrastructure investments, it's typically an 80-20 split between the Commonwealth and state. The feds really need to step up here." he said.
Significantly, this week's federal budget did not contain any funding towards the package because of the lack of an agreement.
NSW Treasurer Daniel Mookhey has accused the Commonwealth of treating NSW like a "cash cow," citing poor infrastructure funding and inadequate GST returns following the federal budget.
"People here in NSW are watching money being trucked down the Hume Highway to Victoria," he said.
The state government has also pointed out that the Commonwealth has a greater responsibility for the Tomago package following Prime Minister Anthony Albanese's commitment to workers last December that the plant would remain open.
"The Commonwealth made a clear commitment to Tomago and its workers. That commitment was made and we expect it will be honoured," a government spokesman said on Friday.
"NSW will play its part and deliver on its commitments, while ensuring value for taxpayers."
Mr Piper said NSW did not have the capacity for a 50-50 cost-sharing agreement.
"I actually agree with the government on this. Most of these big projects are on an 80-20 basis. Why? Because the federal government has the resources to do this, and the states don't."
Like others, Mr Piper called for a deal to be finalised with the Commonwealth as soon as possible.
"Even if it doesn't land at 80-20, let's find something that is workable," he said.
"We need to get this sorted out for the workers. The workers don't care who does it. They just want it done."
"The people employed in the thousands of flow-on jobs don't necessarily know this debate is going on, but we will certainly know about it as a community if Tomago closes."
He also voiced his frustration at the federal government's decision to terminate the inland rail project at Parkes.
One of the biggest impacts will be on the development of the Port of Newcastle's container terminal, which was contingent on the establishment of an inland rail hub at Narrabri.
The container terminal was established after Mr Piper introduced the 'Port of Newcastle Extinguishment of Liability Bill 2022', which extinguished the controversial port commitment deeds that constrained the port's diversification.
"We have taken one body blow after the next; inland rail is something we desperately needed to drive investment into north-west NSW," he said.
"This ecosystem [the Hunter economy] is so important to NSW and Australia. The Port of Newcastle won't be able to maximise the outcomes until we get better rail freight services in place."
Hunter Jobs Alliance accused the state government of failing to stand up for Tomago workers, warning that continued inaction was destroying confidence across the Hunter Region.
The criticism follows a written response from NSW Ministers Penny Sharpe and Yasmin Catley after Hunter organisations requested urgent meetings with Premier Chris Minns and relevant ministers regarding the future of Tomago.
Hunter Jobs Alliance Coordinator Justin Page said the response confirmed the Commonwealth continued to lead negotiations with Tomago and Rio Tinto.
"Why has the NSW government still not properly come to the table after more than five months of uncertainty?," he said.
"The Prime Minister stood directly in front of Tomago workers and committed to backing the smelter and protecting jobs," Mr Page said.
"Workers in the Hunter are now asking, where is Chris Minns? The NSW government needs to stop standing on the sidelines and start fighting for Hunter jobs."
Tomago Aluminium chief executive Jerome Dozol confirmed collaborative work with the federal and state governments on a potential long-term energy pathway for Tomago beyond 2028 was continuing.
