Alcoa commits to Victoria smelter with AGL power deal
US aluminium group Alcoa has signed up to a new long-term electricity supply contract with AGL Energy for its Portland smelter in Victoria, meaning the energy-intensive plant will be at least partly reliant on coal-fired power at least through to the middle of next decade.
The deal locks in another nine years of operations at the plant, which employs more than 760 people and was threatened with closure as recently as 2021 before a $155 million rescue package was secured with the Victorian and federal governments. The details of the package, secured over four years, have never been revealed.
AGL, whose existing contract with the smelter expires in mid-2026, will from then supply 300 megawatts of power, covering half the plant’s requirements at full production. Its portfolio in Victoria is still dominated by the large Loy Yang A coal-fired generator in the Latrobe Valley, which supplies about 30 per cent of the state’s electricity requirements.
The end date for the new contract, the commercial terms for which were not disclosed, matches AGL’s revised closure date for Loy Yang A, whichit brought forward by 10 years from 2045 last September.
News of the contract comes after Rio Tinto CEO Jakob Stausholm recently set a five-year deadline to meet the enormous challenge of finding a low-carbon solution for the miner’s Australian aluminium assets, which include the Tomago aluminium smelter in NSW, the country’s biggest consumer of electricity.
Tomago is seeking firmed renewable energy to replace an existing supply contract with AGL that expires in December 2028. It is reviewing bids made as part of an expressions-of-interest process for power supply to the plant, which needs 950MW of constant electricity and which has previously
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