Tomago Aluminium in New South Wales, Australia, in which Hydro holds 12.5 percent, Friday announced that it has secured its power supply up until 2028, following the signing of an 11-year base-load power supply contract with Macquarie Generation.
The agreement will replace the existing power supply contract with Macquarie Generation when it expires in 2017.
Tomago Aluminium is a joint venture between global companies Rio Tinto Alcan, Gove Aluminium and Hydro.
Largest energy agreement ever in New South Wales
Tomago Aluminium CEO Brian Cooper acknowledged that reaching agreement had been a complex and longer-than-expected process, resulting in an intended mid-year contract signing being missed.
“We were very encouraged when Macquarie Generation recently contacted us to confirm they would keep working towards a mutually acceptable outcome and the result is a win all-round,” Cooper said.
“This is an excellent outcome for the long-term future of Tomago Aluminium and the 5,300 jobs we sustain directly and indirectly. It’s significant in terms of Hunter Region, New South Wales and national investment and employment."
The contract is the largest energy agreement ever signed in New South Wales and gives Tomago Aluminium critical certainty in terms of its long-term investment, and clarity on the business challenges ahead.
Tomago Aluminium also said the deal opened the door for continued discussions with Bahrain-based Midal Cables International (Midal), which is looking to enter into a long-term hot metal supply opportunity with Tomago Aluminium and build a $30 million aluminium conductor and rod factory on land adjacent to Tomago Aluminium’s operations.
Given recent uncertainty surrounding Tomago Aluminium’s long-term power supply arrangements, discussions with Midal were reluctantly suspended in September.
The Midal arrangement alone would mean the creation of 290 jobs, most of them in the Hunter region.
Large aluminium producer
A distinguishing feature of the agreement is an opportunity for Tomago Aluminium and Macquarie Generation to work together on projects to reduce carbon emissions from Macquarie Generation’s coal-fired assets.
Tomago Aluminium would also maintain its traditional role as being a first line of defense for the New South Wales electricity system. The business has the capability to quickly switch off up to nearly 900 Megawatts for short periods at times of system stress, helping to preserve security of supply to the people of New South Wales.
Established 27 years ago, Tomago Aluminium currently produces 528,000 tonnes of aluminium annually, some 25 percent of Australia’s primary aluminium production.
It contributes an estimated $1.5 billion into the national economy annually (including $500 million into the Hunter Region alone), employs approximately 1,300 employees and contractors and indirectly sustains some 4,000 jobs.