Originally published by Madeleine Bower of The Daily Telegraph
16.05.2026
The struggling Tomago smelter will have a lifeline thrown to it in the upcoming NSW budget, ending months of speculation over whether the state’s biggest aluminium manufacturer will be saved from closure.
The move comes as One Nation gears up to capitalise on the uncertainty around Tomago in the Hunter region, saying they are preparing an all out assault on the major parties in the upcoming NSW election.
The Saturday Telegraph can reveal the Minns government will place provisions in the upcoming state budget to bail out the struggling aluminium manufacturer, though an exact amount has yet to be determined.
Negotiations between the state and federal governments are still underway to determine a precise figure, but it is likely the bail out could cost taxpayers billions of dollars over a ten year period. The Albanese government has requested a 50/50 split, but the NSW government will not commit to an equal carve out until it has a final cost figure.
Despite promises from the federal government committing to the bail out, there were no funds for Tomago outlined in Tuesday’s budget.
It is understood that funding will be readily available, however, should a deal be reached in the coming days and weeks.
Industry and Innovation Minister Tim Ayres on Friday said there was no need to worry about the absence of Tomago in the budget.
“We’re developing an opportunity that will drive investment in new electricity generation in the Hunter Valley and in NSW and put downward pressure on electricity prices for businesses,” he told Sky News.
“It’s a lot of work.”
The 43-year-old aluminium smelter would have been forced to close its doors at the end of 2028, leaving more than 1000 people without work, without government support.
Closure of the smelter would have an enormous impact on the surrounding Hunter communities with an estimated 10,000 people in the area involved in its supply chain.
The smelter, which consumes 12 per cent of the state’s power, has been unable to secure affordable power in order to continue a viable operation.
Access to affordable power for the smelter is expected to worsen as more coal-fired power stations shut down.
Prime Minister Anthony Albanese announced in December his government intended to bail out the smelter and negotiate a permanent and more affordable form of energy.
Yet there have been frustrations between the two governments over the final cost figure, with sources close to the negotiations saying that while figures had been put on the table the parties had yet to agree on a final amount.
For comparison, a joint bailout package of the struggling Boyne aluminium smelter in Queensland will cost taxpayers more than $2 billion.
A NSW government spokesperson said the government would “play its part” in saving Tomago.
“The Commonwealth has made a clear commitment to Tomago and its workers. We expect that commitment to be honoured,” the spokesperson said.
“NSW will also deliver on its commitments, while ensuring value for workers and taxpayers.”
Revelations the NSW will be funding part of the bail out in the upcoming budget will come as a relief to incumbent MPs in the Hunter region preparing to fend off a One Nation onslaught over the issue.
After a resounding win in last weekend’s Farrer by-election and consistently strong polling, One Nation deputy leader Barnaby Joyce told the Saturday Telegraph that the party will “be running hard” around the Hunter, targeting workers such as those connected to Tomago who have seen heavy industry in the area take a major hit.
“One of our strongest areas, even before the rise of One Nation to where it is now, is in the Hunter Valley,” he said.
“Tomago is the example par excellence of how our attachment to not just futile but dangerous policies around climate change has brought devastating economic outcomes to Australia.
“The political agenda has been on a path that brought about the destruction of Tomago, not only that, ERG up in Queensland, our coal-fired power stations, our urea industry, our plastics industry, our glass industry, our steel industry is on its knees.”
The latest polling by DemosAU published last month, found that One Nation is expected to surge ahead in the two-candidate preferred for the Federal Hunter electorate at 54 per cent over Labor’s 46 per cent. It is also expected to do well in the neighbouring electorate of Paterson, polling at 49 per cent two-candidate preferred to Labor’s 51 per cent.
With the federal election at least two years away, it is NSW MPs in the region that are concerned Tomago’s energy struggles will become a flashpoint, increasing One Nation’s popularity in the region.
Cessnock Labor MP Clayton Barr said his electorate would be heavily impacted by a collapse of Tomago and knows he will face a fight for his political life against One Nation in the March election.
“When I talk to people who are in coalmining and other heavy industries like that, they do feel that governments of all political persuasions are moving away from them in a direction they’re not happy with,” he said.
“If you want to convince anyone about the ability to change our future electricity supply, you cannot let industries be falling over as the cost of that.”
Nationals Upper Hunter MP Dave Layzell, whose electorate abuts Cessnock is also very concerned about a One Nation onslaught. He said frustrations around the renewable energy transition and its impact on local manufacturing could push his area and neighbouring electorates further towards One Nation.
“The whole energy system is changing at the moment but if we sacrifice all these industries at the same time, while we’re talking about increasing our manufacturing then we’re absolutely mad,” he said.
“There is absolutely no doubt (One Nation) will be tough competition.”
Mr Ayres was contacted for comment.