The electricity contract for northern Tasmania's Bell Bay Aluminium, one of Australia's big four aluminium smelters, was due to expire at the end of 2026, and it had been at loggerheads with state-owned Hydro Tasmania for months over a new deal.
The state government previously cited a $60 million a year difference between owner Rio Tinto's position and the price Hydro Tasmania could commercially offer, prompting calls for the federal government to intervene.
A $200 million joint support package from the Tasmanian and federal governments announced on Thursday has soothed some concerns surrounding the future of the smelter, even though the parties were originally bargaining for a 10-year deal.
The support package secures the immediate future of the facility, the positions of its 550 workers, and 1000 more workers indirectly employed across northern Tasmania for the next five years, according to a joint statement from the Albanese and Rockliff governments.
In addition to the investment, a five-year power deal has been agreed to by Hydro Tasmania and Rio Tinto, Tasmanian Energy and Renewables Minister Nick Duigan said.
''We have delivered a globally competitive and lowest-possible electricity price for Bell Bay Aluminium through Hydro Tas," he said.
Tasmanian Premier Jeremy Rockliff, who had been working closely with Rio Tinto and federal counterparts to secure the future of the smelter, said the multi-million dollar investment would provide certainty for the Tasmanian supply chain.
''Our Northern Economic Plan highlights the central role the Bell Bay precinct will play in Northern Tasmania's future growth, leveraging renewable energy, advanced manufacturing, export capability and strategic industrial land to attract investment and create jobs," he said
In addition to boosting jobs, the funding supports Australia's aluminium production capability and strengthens national sovereignty, Prime Minister Anthony Albanese said.
''We want Australia to make more things here and support good well-paid jobs for Tasmania," he said.
Australia's oldest aluminium smelter, Bell Bay Aluminium began operations in 1955 and produces about 190,000 tonnes of aluminium annually, the majority for export.
It uses more than 25 per cent of Tasmania's electricity.
Bell Bay workers were already on edge following the July closure of the country's only commercial manganese alloy smelter, in Tasmania's south, which cost 200 jobs.
Calls for federal government help were ramped up by the state government in August, after the nation's largest aluminium smelter at Tomago, in NSW's Hunter region, received a $2.5 billion bailout from Canberra.
The smelter had been relying on support from the Albanese government's upcoming $2 billion Green Aluminium Production Credit scheme before it was told it would be ineligible for support from the policy.
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