Tomago Aluminium, Australia’s biggest aluminium smelter, has begun consulting employees on the possible closure of its operations, warning that soaring power costs could render the business unviable beyond 2028.

The company – a joint ventuer between Rio Tinto, Gove Aluminium Finance and Norsk Hydro – said Tuesday it had started a consultation process with workers and unions to discuss “the potential future of its operations", as it struggled to secure an economically sustainable electricity supply once its current contract expired in December 2028.

“Despite extensive engagement and market approaches, Tomago is yet to identify a pathway that supports commercially sustainable operations beyond 2028,” the company said in a statement.

Tomago Aluminium CEO Jérôme Dozol said the search for a new energy deal had so far failed to produce viable options. “We continue to engage with stakeholders on a viable pathway for Tomago. Unfortunately, all market proposals received so far show future energy prices are not commercially viable, and there is significant uncertainty about when renewable projects will be available at the scale we need,” he said.

Electricity accounts for more than 40% of Tomago’s operating costs, and the company warned that both coal-fired and renewable power options would rise sharply in price from January 2029. “Based on market proposals received to date, the cost of both coal-fired and renewable energy options … would increase significantly, fundamentally changing operating economics and leaving the smelter unviable,” it said.

While no final decision has been made, the consultation period, which runs until November 21, will allow employees and unions to provide feedback before management determines the next steps. “While no decision has been made, this is a difficult point to reach,” Dozol said. “Our focus remains on operating safely and giving our people certainty as soon as possible.”

Tomago Aluminium, founded in 1983, produces up to 590 000 tt/y of aluminium — nearly 40% of Australia’s total output. The company is an independently managed JV owned by Rio Tinto (51.55%), Gove Aluminium Finance (36.05%), and Norsk Hydro (12.40%). Its smelter is located about 13 km west of Newcastle, New South Wales.