PAUL CULLIVER, HOST: To what is obviously absolutely the talk of the town, and it literally broke at this time yesterday that Tomago Aluminium is officially entering into consultation with its employees over potentially closing. They have a power purchase agreement that will end in 2028, which means they're off the grid metaphorically and potentially off the grid literally, because they need cheap, reliable energy constantly to produce aluminium. 

Here is the CEO of Tomago Aluminium spelling it out in pretty simple terms yesterday at a press conference. 

[Excerpt]

JEROME DOZAL: An aluminium smelter like Tomago needs long-term, reliable and internationally competitive price. 

[End of excerpt] 

CULLIVER: It's as simple as that, and what they're saying is they have not found a way to do that yet. They have been in meetings, consultation with the state and federal governments, they've gone out to basically anyone who generates power in New South Wales and Australia to see whether they can get a deal that would make Tomago Aluminium viable beyond 2028. Jerome Dozal there making the point they have not found that solution yet. 

So, let's find out what the federal government might do about it. Tim Ayres is the Federal Minister for Industry and Innovation and joins you this morning. Tim Ayres, good morning. 

SENATOR TIM AYRES, MINISTER FOR INDUSTRY AND INNOVATION AND MINISTER FOR SCIENCE: G'day Paul, thanks for having me on the show. 

CULLIVER: How far is the federal government willing to go to make sure Tomago Aluminium doesn't close? 

AYRES: Well as I indicated yesterday we will leave no stone unturned in these discussions that we're having jointly with the government of New South Wales and with the owners of the Tomago facility. 

Since I was appointed as the Minister for Industry, I have been engaged in this process. It is obviously very difficult news for staff and the Hunter Valley community. I think quarter to six yesterday morning as the shift change began staff were notified. 

We will keep working through this over the course of the next month and then the coming months and years. Irrespective of what happens we're on a two-track discussion. Firstly, focussed on securing the future of aluminium production here and in Gladstone and in Tasmania and the assets that Rio owns, or part owns. But also of course we're focussed on the industrial future for the Hunter and making sure that there's good blue-collar jobs and industrial capability in Australia's industrial heartland. 

CULLIVER: I understand obviously some kind of agreement has not been reached and we've talked multiple times about those conversations ongoing for both federal and state stakeholders and the government in part potentially coming to the table with some kind of bail out. Does any kind of bail out need to be continuous, ongoing? Because if Tomago Aluminium must have the certainty to keep going, what will the structure be, some kind of payment or bail out? 

AYRES: Well you can see that, facing the same sorts of challenges the Rio owned asset in Central Queensland, the Boyne Island aluminium smelter is not, facing the same challenges. They have had strong investment, including investment in underwriting wind and solar projects in regional Queensland to secure the power that they need. And the government's $2 billion aluminium production credit package is providing them with the security that they need for the ongoing operations of that asset. 

In New South Wales, in the Hunter Valley facility, they have not been able to, what the owners here say is, they have not been able to secure the agreements that they need to work their way through the next four-year power purchasing agreement. 

Of course we're engaged in all sorts of discussions about this, about what can be done. You know, we've had a decade of no power generation being built and power going out of the system as power stations close or signal their closure. We have got between the Commonwealth and New South Wales a big job to do here rebuilding the electricity system for the future. 

I guess what I'm saying is every aspect of the competitiveness of this facility has been examined and is being examined. We're working through options, as was traversed yesterday. Offers have been made for support, have not reached agreement on those questions. We will continue to work that through. 

CULLIVER: Minister, your comparison with the Boyne smelter in Gladstone is an interesting one. They also have a power purchase agreement that's set to expire in March 2029. As people may well know they take their power from the Gladstone power station, and we've obviously heard the news recently that they intend to close possibly around the same time. So what is different here, like is there a pinpointing of a difference of approach or a failure to plan that has led to Tomago Aluminium being in this problem compared to Boyne smelter? 

AYRES: Well I guess what I'd say is I've been around these facilities for most of my working life, you know, these kind of facilities. What is required is constant investment to lift competitiveness and what you see in addition in Queensland is the underwriting of significant new power generation capacity within the State. So securing off‑take agreements and supporting massive wind farm and other developments that have secured the cheap renewable power that they need for the future. 

I mean Rio Tinto has made a decision that is in their commercial interest, that is to make sure that they are in the long‑term sourcing renewable power plus storage so that they are producing low or zero emissions aluminium, because that's what their markets demand, their global markets demand. 

They're selling into a very tough environment. Of course the input costs are important, but the aluminium price is important, and you've got over capacity in some markets, subsidies, unfair trade subsidies, of tariffs being applied including by the United States. It's a very challenging global market that they are selling into. Ageing assets that require constant investment and a changing electricity market here in New South Wales. 

CULLIVER: Okay. 

AYRES: The history of this is publicly owned electricity generators providing concessional power. Now it is a privatised electricity market, it is a different ball game for this company. 

CULLIVER: Okay. So this is really interesting because Tomago Aluminium is majority owned by Rio Tinto. You're pointing out that there was some forward planning going on by Rio Tinto in Queensland for the Gladstone Boyne smelter. Has this been a state government failure to plan for renewable energy? Is this a blame that you're putting at the feet of Tomago Aluminium? Who didn't do the work here? 

AYRES: Well I'm certainly not casting blame. You know, there's been a consistency of approach here in New South Wales, working on, rebuilding the electricity system. The state government's grabbed hold of that. The previous Minister, Matt Kean, who's now the Chair of the Climate Change Authority, was engaged with that work too. I'm not engaged and never have been engaged in politics on these questions. 

You know, we've worked closely with the Liberal National Government in Queensland over the Mount Isa facility and the Boyne Island aluminium facility. My job is to work with the governments, to make sure that we're on the same page and, you know, finger pointing or nit‑picking about who did what when is very unhelpful here. 

I want to see the owners of this facility and the two governments land on a good outcome for the region for this industrial facility. And as I said, we're on two tracks. One is trying to secure the future of the facility’s aluminium production, but the outcome here is uncertain so we're also looking at what it is that, you know, there is a long run up to a potential closure in 2028/29, what it is that we do to secure those jobs and future industrial investment in the Hunter Valley no matter what happens. 

You know, we have a proud industrial heritage in the Hunter but a strong industrial future, and it's got to be about new investment and competitiveness and that's what we're going to bring to bear irrespective of the outcome here. 

CULLIVER: Minister, can I just put this to you, and when we were talking about this yesterday we got multiple, multiple text messages saying – basically illustrating the same point, people saying this is a failure as a result of a net zero ambition. This is why we shouldn't be going down the path we're going down. Do you agree, have we got this failure of policy that has led to potentially an economic collapse for Tomago Aluminium? 

AYRES: Well, I can categorically rule out that the problem here is the targets. The problem – the real problem – the real problem for this facility is that there was a decade of policy failure and nothing happening. Electricity price is a function of how much supply, that is how much generation and transmission is in the system. And over the decade between 2013 and 2022 nothing happened, 24 of the 28 coal‑fired power stations announced their closure under the Abbott and Turnbull and Morrison Governments, and nothing was built in response. 

Now that has consequences, and the same characters who sat on their hands and split and fell apart in government and couldn't deliver electricity generation for the Hunter and for Hunter industry are now the same ones who are wandering around country communities where we need to build wind and we need to build solar and we need to build hydro and storage and transmission, to defend competitiveness for blue collar jobs, are now wandering around campaigning against them, campaigning against offshore wind, making all sorts of wild and silly claims about it, and spend their whole time here in Canberra blowing themselves up and taking shots at each other, talking the country down ‑‑ 

CULLIVER: All right. 

AYRES: ‑‑ and forcing us to go backwards when what Tomago needed, and needs, is cheap power built yesterday. Really it's their policy failure that puts us in this position. There's not much point complaining about it because [indistinct] – 

CULLIVER: All right. It does seem, Minister, like we did end up with some blame being laid. 

AYRES: – you get what you get, and you don't get upset, you get on with it, right. You have to get on with it because we've got what we've got. 

CULLIVER: All right, understood. 

AYRES: And what's what we're working with today. 

CULLIVER: All right, Minister, I appreciate your time today. 

AYRES: Thanks Paul. 

CULLIVER: Tim Ayres, the Federal Minister for Industry and Innovation.