More than 1000 jobs at a troubled aluminium smelter are secure after the federal government confirmed it would keep the site running with taxpayer support.
Rio Tinto, majority owner of the massive Tomago smelter near Newcastle, had for months been threatening to shut down the plant due to spiralling energy costs after 2028, when its electricity contract runs out.
But on Friday, the government announced it had come to an agreement with the minerals giant to keep Tomago powered with cheap renewable energy underwritten by the taxpayer.
"This is so important for our national interest," Prime Minister Anthony Albanese said as he announced the deal.
"We need to be more resilient as a national economy, and we need to make sure that we do make more things here."
The full details of the arrangements are yet to be revealed but will involve the Commonwealth entering into fixed-price power purchasing agreements and providing concessional finance to accelerate building of renewable energy generation, storage and transmission projects.
The total cost has yet to be agreed and negotiations would continue, Industry Minister Tim Ayres said.
Tomago Aluminium will contribute at least $1 billion to upgrade and maintain the facility in the next decade, including identifying opportunities to further decarbonise the smelter.
What role the NSW government would play in the rescue package was yet to be agreed.
Mr Albanese met with Premier Chris Minns on Thursday to discuss the arrangements, but a NSW government spokesperson could not confirm whether the state would contribute any funding.
Tomago produces more than a third of Australia's aluminium and is the single largest electricity user in the nation.
Electricity makes up 40 per cent of operating costs at Tomago, which began operating in 1983 and produces up to 590,000 tonnes of aluminium a year.
The Australian Workers' Union said it was a pivotal moment for Australian manufacturing.
"For months, we've been saying that Tomago isn't just another industrial site. It's the test case for whether Australia is serious about having a manufacturing future," AWU national secretary Paul Farrow said.
Tomago Aluminium chief executive Jerome Dozol said he was grateful to the federal and NSW governments for their commitment to working to address the energy challenges.
The progress reflected years of collaborative work to address "one of the most complex energy challenges facing Australian industry", Rio Tinto chief executive Simon Trott said.
Prioritising access to low-cost, firmed renewables was exactly the kind of government intervention needed to secure manufacturing and protect the climate, the Australian Conservation Foundation's national climate policy adviser Annika Reynolds said.
The announcement comes after the federal government has struck a flurry of deals to keep smelters running across the nation as rising energy costs threaten their sustainability.
In October, the federal and Queensland governments agreed on a $600 million joint support package for a copper smelter in Mt Isa.
A few months earlier, the Commonwealth, South Australian and Tasmanian governments stumped up $135 million in taxpayer funds to keep Nyrstar's lead and zinc smelters operating, with part of the funding going to expand production into critical minerals such as antimony.
Labor's decision to bail out Tomago was a clear admission it had failed to deliver cheap and reliable energy, the coalition said.
"The government cannot keep hiding the bill," Opposition Leader Sussan Ley said in a joint statement with industry spokesman Alex Hawke and energy spokesman Dan Tehan.
"They must front up and explain to Australians how much of their money is being used in failed attempts to mop up Labor's energy failures."
