The Federal Government and Tasmanian Government will support Rio Tinto’s Bell Bay aluminium smelter with A$250 million of investment to maintain production at the plant until the end of 2031.
The Federal and Tasmanian Governments plan to give Rio Tinto cash support over five years to improve Bell Bay’s global competitiveness. But they will reduce payments to Rio Tinto if aluminium prices rise, Federal Industry Minister Tim Ayres told ABC Hobart Tasmania Mornings on 1 October.
Hydro Tasmania – the state’s publicly-owned hydroelectric generator – has also agreed to supply power to Rio Tinto’s Bell Bay smelter at a globally competitive price from 2027 until the end of 2031, Tasmanian Energy Minister Nick Duigan said.
Rio Tinto’s current Bell Bay power supply contract will end on 31 December 2026. The company previously threatened to shutter its smelter at the end of the contract period because of high electricity costs.
“[But] with [Hydro Tasmania and Government support] in place, we can continue to safely deliver high-quality aluminium products for our customers in Australia and around the world,” Rio Tinto Aluminium & Lithium Chief Executive Jérôme Pécresse said.
Rio Tinto produced 94,000 tonnes of aluminium at Bell Bay in January-June 2026, unchanged on the year, the company said in a quarterly production report on 15 July. Power purchases accounted for 23% of its global aluminium smelting costs over the period, up from 17% in January-June 2025.
Tasmanian wholesale electricity prices averaged A$78.17/MWh in the 2025-26 financial year, down from A$109.26/MWh in 2024-25, but up from just A$36.47/MWh over 2009-2015.
The Federal Government has financially backed each of Rio Tinto’s Australian aluminium smelters since the start of 2025, largely because of high domestic electricity prices.
The New South Wales and Federal Governments agreed to support the company’s Tomago smelter with A$2.5 billion of power subsidies over 12 years in August. The Queensland and Federal Governments also partnered to invest A$2 billion in its Boyne smelter in March.
“We live in an era where [aluminium] production can happen anywhere in the world. And we’ve acted to secure it in [Boyne], to secure it in Tomago … and to secure it here in Bell Bay,” Ayres told reporters.
The Federal Government conditioned its Boyne and Tomago support on specific investment guarantees from Rio Tinto. But its Bell Bay package only requires Rio Tinto to maintain the plant’s current capabilities, according to Ayres.
The Federal Government has also supported other Australian smelters in recent years. It backed Glencore’s Mount Isa copper smelter, GFG’s now-shuttered Liberty Bell Bay ferro-manganese smelter, and Nyrstar’s Tasmanian and South Australian zinc and lead smelters in 2025-26.
By Avinash Govind