Bell Bay Aluminium smelter in Tasmania's north gets $200 million federal and state bailout

The Australian and Tasmanian governments have announced a $200 million support package for the Bell Bay Aluminium smelter after months of uncertainty.

The smelter's future had been looking shaky with its owner, multi-billion-dollar company Rio Tinto, locked in protracted negotiations with the state-owned power company Hydro Tasmania over a new power deal.

There were fears the smelter, which employs 550 people, would shut if a new deal was not reached before it expired at the end of the year.

The state government has now announced Rio and Hydro have struck a five-year power deal.

The government previously said the gap between what Rio was willing to pay and what Hydro Tasmania wanted was $60 million a year.

It has not provided any details about the new deal beyond claiming it was "globally competitive" and the "lowest possible electricity price".

But it was not just the absence of a new power deal threatening the future of the smelter.

Smelters across the country are struggling and coming under pressure from international rivals.

Bell Bay has already seen the closure of the country's only commercial manganese alloy smelter and, with it, the loss of more than 200 jobs.

The state government said the $200 million support package, which is split evenly with the Commonwealth, was separate from the power deal and was about "securing the future" of the smelter.

Federal Industry Minister Tim Ayres said it was a "complex deal" with the level of support given tied to the price of aluminium.

"There's appropriate arrangements to make sure there's a cap on expenditure every year," he said.

"As the aluminium price is high and continues to rise, there are thresholds to protect that investment.

"It's a good smart deal that protects the interests of the taxpayers but most importantly delivers a platform for investment."

Prime Minister Anthony Albanese said the funding would support local manufacturing.

"We need to ensure that in today's uncertain world, we be less dependent on imports,"

he said.

"This is commonwealth and state government working in the interest of Tasmanians, and working in the interest of the nation."

The state government had long been calling for Commonwealth support for the smelter.

It had been banking on the federal government's upcoming Green Aluminium Production Credits scheme, but was later told it was not eligible.

It upped the pressure on the Australian government to contribute to the Bell Bay smelter in some way after the Commonwealth announced it would chip in over $1 billion to bail out New South Wales' Tomago smelter.

Premier Jeremy Rockliff, who has been personally involved in the negotiations, said the level of cooperation between the state and federal governments had been "extraordinary".

"These agreements aren't easy — they require tough negotiations,"

he said.

"This is a good deal for Tasmania, a great deal for the workforce to secure their future."

Richard Curtis, general manager of Bell Bay Aluminium, said the company had been "part of Tasmania's story" for 71 years.

"It has cemented a place in history as not only the first aluminium smelter in the country but also the southern hemisphere," he said.

"We're very pleased we have a pathway for the ongoing years ahead, it will take us through to the end of 2031."

Mr Curtis thanked the federal and state governments and Hydro Tasmania.

"I also want to acknowledge our employees, and our contractors, our suppliers — the past few years of uncertainty, as has been mentioned, has been challenging,"

he said.

"The professionalism, the patience and the resilience of our people and the local community, and everyone in the supply chain here, has helped support this positive outcome.

"With this agreement in place, our focus remains on what we do best — getting on with the job of making high-quality aluminium for niche markets and supporting Tasmania and Australia's sovereign aluminium manufacturing capability."