$2.5B taxpayer-funded deal secured to save Tomago Aluminium smelter

A $2.5 billion taxpayer-funded deal to save Tomago Aluminium has been touted as a lifeline for Hunter workers and Australia's aluminium industry, but its hefty price tag has left some questioning whether the deal is in taxpayers' best interests.

Prime Minister Anthony Albanese and NSW Premier Chris Minns visited the Hunter region today to announce the deal to the workforce.

Late last year, Tomago, Australia's largest aluminium smelter, announced it would have to close its doors at the end of its current energy supply contract in 2028.

At the time, it blamed the rising cost of coal-fired power and a lack of reliable renewable energy infrastructure to power the smelter's heavy 24/7 operations.

Dan Lines has worked as an electrical engineer at Tomago for 20 years and is also a senior delegate for the Electrical Trades Union.

"There's nearly 200 trades here made up of electricians, fitters, boilermakers and plant mechanics," he told ABC Newcastle Breakfast.

"We build some really great tradesmen."

The business, which employs about 1,000 workers, is renowned for its apprentice program, which offers training and development across a range of trades and is heavily competitive.

Under the agreement announced overnight, the state and federal governments will step in to offer the smelter cheaper power in a 50/50 split, which will keep the smelter running for at least another decade.

At the same time, smelter owners Rio Tinto will invest at least $1.1 billion, including $100 million to introduce further decarbonisation activities at the smelter.

Mr Lines said keeping Tomago open would secure a future pipeline of skilled manufacturers, at a time when the industry was struggling.

"We have a fairly young cohort coming through the business at the moment," he said.

"I can tell you they're all looking forward to long careers, and a long career at Tomago is a pretty rewarding one."

The federal opposition has criticised the government's support package, saying it is a signal its renewable energy policy has failed.

"Sadly Labor's net zero wrecking ball has caused this," Opposition Leader Angus Taylor said.

"This is a two and a half billion dollar admission of failure," he said.

Grattan Institute energy and climate change senior fellow Tony Wood said transitioning the smelter to renewable power was a good idea in theory, but uncertainty remained about aluminium's long-term viability.

"It makes sense to convert this through renewable energy but it's also got to be viable," he said.

"The big risk is that in 10 years' time it's still not commercially viable, and then you can see there's going to be a question to continue funding this."

The prime minister insists the deal is in the country's best interests and will provide more renewable energy for the state.

Once complete, it is expected the arrangement will result in an extra 3 gigawatts of renewable power spread throughout NSW.

The deal has also been criticised by the Greens, who have questioned whether it is fair for taxpayers to subsidise a profitable private company.

Mining giant Rio Tinto last year recorded a $10 billion profit after tax, according to its latest annual report.

The value of its total aluminium and lithium projects also increased by $1 billion, to $4.6 billion.

With billions of dollars being spent on the deal, the Greens have called for the federal government to own a stake in the smelter's operations.

"These companies that are making billions cry poor when energy prices go up and then they expect governments to bail them out with public money," Greens senator Penny Allman-Payne said.

"It's only fair that for that stake the community gets a share."