EVAN WALLACE, HOST: If you've been listening to the show over the last number of months, then you would know great clouds of uncertainty have been hovering over our two smelters at Bell Bay. It's a similar picture in Hobart and on the mainland, with bailout packages being issued across the country. Just today, NSW Premier Chris Minns had this to say about the Rio Tinto majority-owned Tomago smelter. In case you're wondering, what's the connection? Well, Rio, as we know, also owns Bell Bay Aluminium. But here's the Premier.

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CHRIS MINNS: So far, that's been rejected by the company. They haven't accepted it, and we don't have limitless funds here. I mean, ultimately, we can't just be passing over, I can't be passing over taxpayer funds to a private company to keep a smelter open that they don't want to keep open.

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HOST: Gosh, it all sounds pretty ominous, doesn't it? That is Chris Minns, NSW Premier. To talk about what's needed to keep Bell Bay's aluminium and manganese plants smelting is Federal Minister for Industry and Innovation, Tim Ayres. Tim Ayres, good afternoon.

SENATOR TIM AYRES, MINISTER FOR INDUSTRY AND INNOVATION AND MINISTER FOR SCIENCE: G', day, Evan. Good to talk to you again.

HOST: I'm wondering if you feel a bit like Atlas at the moment, trying to hold up Australia's mineral extractive industry.

AYRES: Well, I'm very focused on the job that is in front of us here. In Tasmania, as your listeners would know, we have acted to intervene to support the Nyrstar smelter in Hobart to your south. There are, of course, still remaining challenges in the two Bell Bay facilities. They are different challenges. We're very focused on those. And of course, really the key here is everybody needs to be engaged. We're working closely with the Tasmanian Government and, of course, closely with the owners of Bell Bay Aluminium.

HOST: Well, let's zoom in on that and start with Bell Bay Aluminium, where Rio and the state government haven't been able to work out a power deal. There are lots of workers, not just those employed directly by the smelter, but hundreds more who depend on it staying open. What can you tell us about what's happening behind the scenes to keep the smelter running?

AYRES: Well, it is a critical facility. It's critical locally because of the employment footprint and all of the local contractors who, you know, maintenance contractors and so on, who work through that facility. So, we absolutely understand that. It also plays a role in Australia's national aluminium supply chain. It's an important industrial capability. So, from the Commonwealth Government's perspective, we're very focused on this. It's there in Bell Bay because of access to cheap hydro power, historically from the state government-owned Hydro Tas. And Hydro Tas and the owners are, of course, engaged in negotiations to try and secure a commercial long-term power purchasing agreement that delivers for the facility and delivers for Hydro Tas. What I want to see is those –

HOST: And Tim Ayres, time is ticking on getting that agreement in place. And we have heard from local member for Bass, Jess Teesdale and yourself, you've said in the past that you would like the state government to offer essentially a cheaper deal, because we have here the situation where hydro is state-owned. Is that still the case? Do you think the state government should be offering Rio a better deal?

AYRES: Well, what I think should happen here is that they should conclude a deal that's in both of their interest and secures the future of the facility. That's why each of these smelters is in Queensland, and NSW, and Tasmania, because there's been a history of a publicly owned power utility delivering concessional power purchasing agreements for the facility. I want to see that conclude. I'm very engaged with the Tasmanian Government, my department's engaged with the Tasmanian officials and of course directly with Rio Tinto over this question as well. We're watching it very, very closely. There's not much more I can say than that, except that I know everybody's working hard to secure the future of this facility.

HOST: We have heard, though you say, and we heard this from Jess Teesdale a couple of weeks ago, that the state government should offer a better deal, and that implies cheaper power prices. Is that what you want to see, Tim Ayres?

AYRES: Well, I want to see everybody sharpen their pencil and get to a deal. You know, Jess is making the case. Jess Teesdale making the case really hard there. I can tell you, she's making the case to the Commonwealth Government as well, to make sure we are, we are focused on this issue. I've been –

HOST: Do you, do you agree with that? I just want to clarify here.

AYRES: Yeah. Oh, yes, of course. I want to see a deal reached, and that, of course means it's got to be at a competitive price. But I don't want to prejudge those negotiations. I want them to be concluded. I'm watching them very closely. Of course, it's got to be at a competitive rate. And that does matter, it goes without saying, doesn't it? They haven't reached a deal yet. So, a competitive rate means everybody's sharpening their pencil and getting around the table and fixing the problem.

HOST: You're listening to ABC Northern Tasmania Drive. Tim Ayres, Federal Minister for Industry and Innovation is my guest.

Tim Ayres, when I spoke to the state resources minister, Felix Ellis, he told me that the aluminium smelter has been knocked back, rejected, refused a Green Aluminium Production Credit. Is that correct?

AYRES: Well, those production credits are in their design phase now. They were announced earlier this year. It's a $2 billion credit. Tasmania has operated on the basis of a green production of electricity since the 1950s, and it's a state-owned resource, and that must be the focus of the negotiations. And I would urge everybody in the Tasmanian Government and in Rio Tinto and in Hydro Tas to focus on those negotiations as being the source of Tasmania's competitiveness here.

HOST: But Felix Ellis said that makes the difference. He went as far to say that when it came to the overall sustainability of Rio Tinto's Bell Bay Aluminium, and he said that the State Government had been rejected by your government, the Federal Government for one of those production credits. Is he telling the truth there, Tim Ayres?

AYRES: Well, each of those facilities on the mainland has to get across the bridge. You know, we've had a decade of no investment in the electricity system in Australia. So, the purpose of those credits is to support facilities like Tomago and facilities like Boyne Island, a range of these other facilities that are currently on coal-fired power. And they need a clear investment signal to get through to the other side of what they're facing now, which is elevated electricity prices because of historical underinvestment in the electricity system. That's the purpose of that credit. It's in design now. In the Tasmanian Government they know that is the case. I just say, Evan, you know, as you can imagine, what I'm required to say here is that the source of Tasmania's competitiveness has been cheap publicly owned power delivered by Hydro Tas. The Commonwealth Government is not here to diminish that requirement for competitive electricity prices. That's not what's happened here, what's happened here is –

HOST: Okay. A point, a point that you've made very, very clearly there, Tim Ayres. I think that's been established. I wonder, very briefly, because it's on the minds of so many people relying on the Bell Bay Aluminium smelter. Is there any scenario where the Federal Government would chip in and put money towards a subsidy package or a bailout package for Rio Tinto's Bell Bay Aluminium?

AYRES: Well, on Bell Bay Aluminium – I do want to get to GFG because that is another kettle of fish altogether. But on Bell Bay Aluminium, I think I've been as clear as I can be, Evan, we are watching it very, very closely. We are very engaged on these issues. I want to see that power purchasing agreement concluded. I want to see it done on a competitive basis that provides, you know, future competitiveness for that facility because so many Tasmanian jobs rely upon it.

HOST: Let's talk very quickly about the manganese smelter, because I know time is against us. How do you imagine that the manganese smelter will be smelting once more? It's been mothballed after receiving a $20 million loan from the state government, sitting idle. What would you like to see for the situation to change there, Tim Ayres?

AYRES: Well, it's an utter disgrace the way that this facility has been treated by its owner. The way that Tasmanians have been treated. In 2021, it was in the top 30 per cent competitive manganese facilities in the world. What the owner needs to do is to step up and capitalise that facility properly or give it to somebody who can. It's been profitable in the past. It's got very strong markets to sell into. Manganese is a critical mineral that's required for Australians and, in this facility's case, historically providing to US Steel and other American steel manufacturers. It is absolutely the responsibility of the owner here to step up, of course, just like Bell Bay Aluminium. It's a critical facility we are watching, not just watching, not passively, absolutely full-throated engagement with this question. We intervened in a facility that this owner owned previously in Whyalla, the big steel facility. We've shown our determination to secure our future capability here, but really, right now, the responsibility is on the owners to step up, capitalise it properly and treat people decently.

HOST: Are you planning to intervene and secure a new owner for the manganese smelter, Tim Ayres?

AYRES: Well, the company should capitalise the facility or give it to somebody who can.

HOST: Appreciate your time this afternoon.

AYRES: Good on you Evan.