Queensland Government to Subsidise Struggling Smelter Amid Net Zero Transition

A worker checks rolls of sheet aluminium at a factory in Wuhan, Hubei province, China, on May 8, 2021. (STR/China OUT/AFP via Getty Images)

The Queensland government has agreed to partner with mining giant Rio Tinto to support the transition of its Boyne aluminium smelter in the industrial city of Gladstone as it transitions to using renewable energy from 2029.

It will provide economic support through its “Energy and Jobs Plan.”

It has not been disclosed how much it will cost Queenslanders, but it is likely to be in the form of subsidised energy costs for the smelter, which is a major electricity user.

Rio Tinto completely wrote off the smelter’s value last year, blaming high energy costs. In 2020, its then-CEO Jean-Sebastien Jacques warned that Australian smelters such as Boyne were on “thin ice” due to high electricity costs and low aluminium prices.

The agreement complements the federal government’s support for a decarbonised aluminium industry in its Future Made in Australia Plan.

In return, Rio Tinto will invest to maintain Boyne Smelter Limited’s (BSL) full operational capacity, ensuring the plant—which has an annual production capacity of more than 500,000 tonnes of aluminium and directly employs more than 1,000 people—will continue to be a significant contributor to the local, Queensland, and national economy.

Rio Tinto holds a 73.5 percent stake in BSL after acquiring Mitsubishi Corporation’s 11.65 percent interest earlier this year.

The miner will also expand its coastal shipping capacity, adding a fifth domestically-crewed vessel to its existing fleet of four. These ships transport bauxite from the company’s Gove and Weipa mines to operations in Gladstone.

It’s also promised additional sustainable energy investments in Queensland, building on its existing commitments to Australia’s largest solar and wind projects across the state.

Solar Energy to Support the Plant in Future

Under a 25-year agreement with European Energy Australia, Rio Tinto will buy all electricity from the proposed 1.1 GW1 Upper Calliope Solar Farm.

Queensland Premier Steven Miles said Rio Tinto will be required to operate the smelter at full capacity until the end of 2040, commit to ongoing maintenance and capital expenditure, and meet employment requirements.

Current Rio Tinto Chief Executive Australia Kellie Parker said the agreement represents “one of the most significant partnerships in our long history of operations in the state.

“It paves the way for a competitive, green-energy powered BSL, supporting employment and lowering Australia’s carbon footprint. The partnership will support Australia’s status as a leading global supplier of aluminium at a time when the world needs the metal for the green energy transition.

“While this is a critical part of the puzzle, we have more to do. We will continue to engage with the federal government on supportive industry policy to help sustain Australia’s green aluminium sector for the future.”