The smelter, which employs 550 people and is a major employer in Northern Tasmania, had been at risk of closure if a new power deal was not reached before the end of the year. The state government previously disclosed that the gap between what Rio Tinto was willing to pay and what Hydro Tasmania wanted was $60 million a year.
While the government has not provided details of the new power agreement, it described the deal as "globally competitive" and offering the "lowest possible electricity price". The $200 million support package is separate from the power deal and is intended to "secure the future" of the smelter, the state government said.
Prime Minister Anthony Albanese said the funding would support local manufacturing. "We want Australia to make more things here and support good well-paid jobs for Tasmania," he said. "That's why we're backing Bell Bay Aluminium, supporting hundreds of workers, their families and the region while boosting Australia's national sovereignty."
The announcement comes amid broader pressure on Australia's aluminium industry. Smelters across the country are struggling against international competition, and Bell Bay recently saw the closure of the country's only commercial manganese alloy smelter, which resulted in the loss of more than 200 jobs. The state government has long been calling for Commonwealth support to keep the aluminium smelter operating.