Rio Tinto will receive $2 billion (USD 1.4 billion) in federal and state government subsidies to secure the long-term future of its Boyne aluminium smelter near Gladstone in central Queensland on the proviso that it underwrites $7.5 billion worth of new renewable energy projects in the state.
Under the agreement the federal and Queensland governments will each invest $1 billion over 10 years to support infrastructure upgrades, efficiency improvements, and the integration of renewable energy sources into Boyne’s operations to keep the smelter viable in a decarbonising market.
The deal specifically ties the smelter’s future to renewable energy, including the buildout of large-scale solar, wind and battery energy storage projects that Rio has been backing through power purchase agreements (PPAs), to ensure the facility can transition to a low-carbon future once its current electricity contract expires in 2029.
Australia Industry Minister Tim Ayres said the deal, part of the federal government’s $22.7 billion Future Made in Australia initiative, is one of the most significant decarbonisation and industrial investment commitments in Australian history.
“With a considerable public investment, we are catalysing a fivefold private investment that will build out the renewable energy grid and keep thousands of good regional jobs in central Queensland,” he said.
Rio Aluminium and Lithium Chief Executive Jérôme Pécresse said the agreement will ensure the Boyne smelter remains internationally competitive and supports the transformation and decarbonisation of the Queensland energy system.
“As fossil fuels become increasingly expensive, this investment, combined with the power purchase agreements we have already signed, positions Boyne to be among the world’s first aluminium smelters underpinned by solar and wind power,” he said.
“It also ensures heavy manufacturing like aluminium smelting can continue in Gladstone for the long term.”
The deal coincides with Rio committing to an offtake agreement for 40% of Lightsource bp’s proposed Lower Wonga solar and battery hybrid project being developed near Woolooga, about 25 kilometres northwest of Gympie.
The project, due to start construction later this year, is to include a 350 MW solar farm coupled with a large-scale battery energy storage system.
Rio’s agreement will deliver the equivalent to 112 MW of solar capacity and approximately three hours duration of associated battery storage.
The new PPA brings the company’s total contracted renewable power in Queensland to more than 2.8 GW of energy generation and more than 600 MW of battery energy storage capacity.
In addition to the newly announced PPA, Rio Tinto has previously agreed to purchase all electricity from the 1.1 GW Upper Calliope Solar Farm being developed by European Energy along with 90% of the power and battery storage capacity generated by Edify Energy’s Smoky Creek and Guthrie’s Gap solar power stations. The adjacent Smoky Creek and Guthrie’s Gap projects will together feature 600 MW of solar and 600 MW / 2,400 MWh of battery storage. Rio has also inked an offtake agreement with Windlab’s planned 1.4 GW Bungaban wind energy project.
Together, the contracted projects are expected to supply more than 80% of Boyne smelter’s annual average electricity demand.
Rio’s integrated aluminium production chain in Queensland is a significant economic driver for the state and Australia, directly employing more than 4,500 people. The company’s operations in Gladstone alone account for more than 3,000 jobs, with 1,000 of those at the Boyne smelter.
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