RICHARD KING, HOST: My next guest, I've spoken to on a number of occasions about the issue of the future of Tomago Aluminium, and joining me now, nice to be able to have a chat with New South Wales Senator and Federal Minister for Industry and Innovation, very much involved in the future of Tomago, that's Tim Ayres, who's on the line. Good morning Tim.

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

KING: Yeah, no, thanks for your time this morning. Look, just before we get to that, obviously thoughts are with the tragedy that happened at that Endeavor Mine at Cobar yesterday and it does highlight the dangers of underground mining, that Endeavor Mine, I think it's a silver, zinc and lead mine, but two people, a man and a woman, both died in that tragedy yesterday, but as I said, it does highlight the dangers of mining, doesn't it, Tim?

AYERS: Oh, mate, this is a very tough story, like Cobar's, sort of I guess, it's 4,000 people in that town, it's a mining town, if your listeners know that country, it's a little place and its whole history has been in and around that mine, and you know, the mine's absolutely essential to everything that happens in the town. Imagine these, I think, the fellow who was killed was in his 60s, young woman in her 20s, and another young woman in her 20s who's been injured. Desperately sad news, and in those little mining communities, you know, these sort of things happen, and it's really tough for the community to absorb.

KING: Yeah.

AYERS: So everyone will be thinking about them, the mining workers, and you know, blue collar workers more broadly, it's hard work, it's challenging and very rewarding work, but the focus always has to be on safety, making sure –

KING: Yeah.

AYERS: – people return home every day, fit and well, but you know, at the moment we don't know much about what's actually happened, but there's a whole community that's grieving now, it's a terrible thing.

KING: Yes, yeah, very much so, and there is a multi‑agency investigation underway, but it might take some time to find out the cause of the incident, but New South Wales Resources Regulator, New South Wales Police and a number of other agencies involved in that investigation, which is obviously ongoing.

Coming up to 22 to 7. My guest, Federal Industry Minister, Tim Ayres, regarding the future of Tomago Aluminium. We've spoken about this before, Tim. It would appear it's all about trying to secure the, you know, an energy contract between the expiry of the current contract, which is 2028, and it's all about the cost of electricity, Tim, which unfortunately for all of us, it is going through the roof, and they use a lot of electricity at Tomago, I think they're the largest – am I correct in saying – the largest electricity consumer in the country, is that right?

AYERS: Yes, they are. They use about 12 per cent of New South Wales's electricity, so you know, they're a massive electricity consumer. Electricity is one of the challenges that they face, and the biggest input cost for them.

KING: Well, I think it's 40 per cent of their total costs.

AYERS: Yeah, that's exactly right, and they – remember, I've been around this business for, you know, a long time, as a trade union official before I came into Parliament – and the history of why that facility is there is because there were publicly owned state generators that provided concessional power prices to that facility in order to make it competitive and sustain its operation.

Now, of course, they are in a privately owned market trying to source, power for their four‑year long power purchasing agreement. They have not been able to source power at the price that they say they need, they'll make an estimation of what they need to be able to do in order to get into a pretty challenging global environment at the moment, where you've got, you know, overcapacity and subsidies in some markets, you know, and tariff barriers all playing into a very tough global environment.

We've been working with the company on these questions for many, many, many months. Obviously it's a very tough announcement for workers yesterday, they would have finished their shift, and I think at quarter to 6 got word – and were brought in for this discussion, so over the course of the day yesterday were given this news, that's a tough day for them, so –

KING: So is it all about the cost of electricity, and a lot of people are pointing the finger at your government for the fact that the cost of electricity's going through the roof, Tim.

AYERS: Well, there's certainly – there's an immediate political response to this kind of question, Richard, the news was sort of minutes old before our political opponents, the Liberals and Nationals who – this issue is sort of pulling them apart at the moment, about the modernisation of the electricity system, the sort of point, all about pointing the finger of blame rather than being about solving the problem.

If I need to give a political answer, the political is that the previous government sat on their hands for a decade, and all of the generation and all of the transmission that needed to be built wasn't built, 24 out of the country's 28 power stations – coal‑fired power stations – announced their closure, and these guys are currently campaigning against exactly the generation and transmission that Tomago needs in order to provide enough low‑cost electricity.

So there's a political answer to that, sort of knocks that argument out of the park, because it's puerile political argument, but –

KING: Well, yeah –

AYERS: – what I've got to deal with is the situation now, and the situation now is, absolutely, we'll leave no stone unturned as we work through these issues, or continue to work through these issues with the company, but what we need, what Australia needs, what blue collar industry needs is more electricity; it's all about addition to the system, so more supply means lower cost and more supply of the lowest possible cost energy will lower costs –

KING: All right.

AYERS: – and that's what we've got to get on with.  

KING: Okay. Well, look, our newsroom was sent a letter last night, this is about half past 9, I might add, anonymous Hunter mum, who says, "I ask to remain unidentified, no name, suburb or identifying details to protect my husband's employment, and our family from potential backlash". So again because it's anonymous, to a certain extent –

AYERS: Sure, sure.

KING: – you take it with a grain of salt, but it says, "I'm a Hunter mother whose husband has worked at Eraring Power Station for 17 years since he left school. Today's announcement that Tomago Aluminium may close, putting another 1,000 Hunter jobs at risk is the final straw. Since 2022 Eraring workers have lived under a moving guillotine, closing date shifts, subsidies are dangled and families are left in suspended animation. My husband is the sole provider. The uncertainty has stolen our children, we delayed starting a family, then we cancelled the dream of more. I look at our toddler and grieve the siblings he'll never have, not because we don't want them, but because we can't risk feeding another mouth on a job with an expiry date that is constantly moved. This isn't just about two sites" – that's reference to Eraring and Tomago – "it's the deliberate dismantling of the Hunter's economic spine, mining, energy, heavy industry, under net zero targets that treat regional communities as collateral damage." 

What's your response to that, Tim?

AYERS: Well, let's take those issues in turn. Coal mining has a very strong future in the Hunter Valley, because it's all about exports. Overwhelmingly, Hunter Valley coal is all about exports. We will export coal until the cows come home, until our export markets dry up, and there's different projections about how fast that will happen, but there's decades of mining activity in front of us. We've got to make sure we secure enough gas for the electricity system and for heavy industry, and secondly, on the generators, the generators have announced that they are on a pathway to closure because they are reaching the end of their technical life.

This all happened under the previous government, the announcement of these closures, and they will be –

KING: Yes.

AYERS: – some of them will be extended, because, you know, we're fighting a tough battle here where we lost a [indistinct] a generation capacity.

The challenge here is the life of some of those are up and will end up being extended, because we lost a decade where nothing was built. Not wind power, not solar power, not storage, not coal‑fired power, nothing was built by the previous government over a decade. So a lot – like if you could power the electricity system with hot air, then the Morrison and Abbott and Turnbull Governments would have done all right, but nothing was built, and now we are building a modern industrial electricity system the lowest cost way that we can, and it's renewables, plus storage, plus gas is how we're going to get our way through to the lowest cost modern system that's fit‑for‑purpose for Australia.

KING: Well, that's your –

AYERS: But it takes time, and you've got these characters and sorts campaigning against us.  

KING: Yeah.

AYERS: So they sort of complain, on the one hand, that it's not built fast enough, but you've got, you know, Barnaby Joyce and all these silly billies wandering around in regional communities stoking division about building transmission infrastructure. Like this is an industrial heartland, the Hunter Valley, and you've got these guys trying to stop electricity getting to it.

If Tomago Aluminium had the transmission, if it had the generation that should have been built over the last decade, we would not be having this discussion. But as I say, I've got to deal with what I've got in front of me at the moment, and that is trying to secure, you know, all of the Australian aluminium industry; we're making progress in Queensland, much more positive environment there, more investment going on in new –

KING: All right.

AYERS: – generation for Central Queensland.

KING: Okay. But you said you've been working with Tomago for some time on this.

AYERS: Yep.

KING: What does that mean, trying to get them cheaper electricity?

AYERS: It means a focus on whether there's support that can be provided to deliver certainty for that business that gets them through, it goes through to their electricity requirement and what can –

KING: Right.

AYERS: – the Commonwealth and state do to, you know, to work with them on those questions. These are very complex and detailed discussions –

KING: Sure.

AYERS: – I can't go into the sort of –

KING: No.

AYERS: – you know, internals of it, 'cause –

KING: Okay. Okay.

AYERS: We're working as hard as we– as anybody would expect us to. This is a really important business, but the outcome here is very uncertain.

KING: Well, it is, it is. The report on the telly today that you were with the AMWU, weren't you, when you were a union –

AYERS: That's right, that's right.

KING: Well, they've come out today saying, "Manufacturing will completely evaporate unless the Albanese Government establishes a national Gas Reservation Policy". And I know that's a hot topic at the moment, Santos trying to get this pipeline from Narrabri to Newcastle, and I think there were a lot of landholders that were here for a bit of a meeting in Newcastle last week about that. I mean a Gas Reservation Policy – do you agree with that, that your government needs to establish one?

AYERS: Yeah, we are working through a review of the gas market settings right now, and that process commenced after the election, because if you look at it from the perspective of Australian industry, put aside the important role of gas in the electricity system where you want just the right amount of gas, you want enough for peaking capacity, you don't want too much in the electricity system because it makes electricity more expensive, but you need it when there's peak requirements.

But for the industrial, for heavy industry, gas is absolutely essential.

KING: Right, okay.

AYERS: And what we've set up in this country is a market that doesn't work for Australia and doesn't work for heavy industrial gas users who need sufficient gas, and they need it at the right prices, and supply is part of the answer. Narrabri, Beetaloo these other new reserves, making sure that there's supply and there's transport to get gas to where it needs to get to, but it's also about the market settings, and that review's being led by Chris Bowen and Madeleine King, the Energy and Resources Ministers. We'll have more to say about that soon –

KING: All right.

AYERS: – but we're very focused on that heavy industry.

KING: Appreciate your time this morning, you'll be doing a lot of talking, I know in the last 24 hours and over the next 24 hours re the future of Tomago, but we've got our fingers crossed. Good luck with that, Tim, and thanks for your time this morning.

AYERS: Thanks Richard.