Governments to Back Struggling Aluminium Smelter in Return for $7 Billion Green Energy Push

The Queensland and federal governments will provide mining giant Rio Tinto with a $2 billion boost in subsidies to help shore up the future of its North Queensland aluminium smelter.

In exchange, the company will support around $7 billion worth of green energy initiatives in the state.

Under the deal, the state and federal governments will each contribute $1 billion over 10 years, aimed at providing job certainty to around 3,000 workers in the regional centres of Gladstone and Weipa.

Minister for Industry Tim Ayres said the move would “unlock potential.”

“With a considerable public investment, we are catalysing a five-fold private investment that will build out the renewable energy grid and keep thousands of good regional jobs in Central Queensland,” he said in a statement.

“This is a joint, 50:50 investment with the Queensland [LNP] government—a fantastic partner who is squarely on the side of blue-collar workers and industry.”

Natural Resources Minister Dale Last said the funds were needed.

“At a time when supply chain disruptions are being felt across the globe, this investment is needed now more than ever to safeguard Queensland’s sovereign manufacturing capabilities, and to build national resilience and international competitiveness,” he said.

“Only in Queensland can we mine, refine and smelt to produce one of the world’s most versatile and ubiquitous metals, being aluminium, and we must protect that capability.”

Under the agreement, Rio Tinto will receive credits for every tonne of aluminium it produces using “green” power—electricity or heat generated from natural or renewable resources.

The credits will be paid quarterly if the company can prove it is using green methods.

Rio Tinto Aluminium and Lithium CEO Jerome Pecresse said the move would ensure the Boyne Smelter remained internationally competitive.

“As fossil fuels become increasingly expensive, this investment, combined with the power purchase agreements we have already signed, positions Boyne to be among the world’s first aluminium smelters underpinned by solar and wind power,” he said.

“It also ensures heavy manufacturing like aluminium smelting can continue in Gladstone for the long term and preserves one of the few fully integrated aluminium value chains in the world—from bauxite mining to alumina refining to aluminium smelting all in Queensland—as demand for aluminium continues to grow with the energy transition.”

In 2025, the federal government also provided taxpayer-backed assistance to Glencore’s copper smelter in Queensland, the Whyalla steelworks in South Australia, and Nyrstar smelters in Hobart and Port Pirie.

The difficulties in the sector stem from Chinese producers flooding global markets with cheaper alternatives that have driven down the price of commodities, putting already-strained refining facilities under more pressure.

Last year, the McKell Institute warned “deliberate geoeconomics interference” from Beijing could impact 73,000 Australian jobs.

“Australia is experiencing the repercussions of a geoeconomics strategy by China, crafted to undermine the industrial foundations of rival economies while establishing China as the central hub of the global industrial landscape,” the Institute found.

Boyne Smelters Limited has been operating since 1982 and is Australia’s second largest aluminium smelter.

Rio Tinto’s integrated aluminium production chain in Queensland is a significant economic driver, employing more than 4,500 people directly.

The Epoch Times contacted Queensland shadow spokesman for natural resources Linus Power for comment.