Renewable revolution: Rio Tinto inks new PPA for its Gladstone aluminium operations

Rio Tinto, the world's second-largest metals and mining corporation, has recently inked the biggest renewable power purchase agreement (PPA) ever recorded in Australia. The main aim of this PPA is to supply its Gladstone operations in Queensland with electricity sourced from Windlab's upcoming 1.4GW Bungaban wind energy venture.

About the new PPA

This agreement, following closely on the heels of last month's PPA announcement for the Upper Calliope solar farm in Queensland, signifies Rio Tinto's position as Australia's foremost industrial purchaser of renewable energy. It marks another significant stride in the company's efforts to repower its Gladstone production assets towards renewable sources, including the Boyne aluminium smelter, Yarwun alumina refinery, and Queensland Alumina refinery.

By the new PPA with Windlab, Rio Tinto will acquire 80 per cent of the total electricity generated by the Bungaban wind energy project for 25 years. The project, currently in its early development stages, is set to be constructed and managed by Windlab at a site in Queensland situated approximately 40 kilometres from the town of Wandoan and 290 kilometres southwest of Gladstone, pending necessary development and grid connection approvals.

The remaining 20 per cent of the electricity generated by the project will be channelled into Australia's National Electricity Market, thereby providing clean energy to households and businesses. Following the recent partnership with European Energy to advance the 1.1GW Upper Calliope solar farm, this PPA represents Rio Tinto's second renewable power arrangement for its Gladstone operations.

As per AL Circle's recently curated report on 'Global Aluminium Industry Outlook 2024,' the use of aluminium in the renewable energy sector is expected to grow in the coming years as the world transitions to cleaner energy sources. The International Aluminium Institute estimates that the demand for aluminium in the renewable energy sector will grow by 6 per cent annually between now and 2050.

Bungaban, a key transition opportunity 

Bungaban is a key transition opportunity that will create up to 600 new Queensland construction jobs and inject around $500 million into the regional economy through local employment, supply and contracting. The project can be responsibly developed, grid-connected and producing enough energy to power the equivalent of 740,000 Queensland homes by 2029 while eliminating about 4 million tonnes of carbon from the state's generation profile every year."

The Bungaban PPA signifies a significant advancement in bringing renewable energy into one of Australia's vital industrial centres, marking another stride towards Rio Tinto's climate objective of reducing its global Scope 1 & 2 carbon emissions by half within this decade. The Bungaban and Upper Calliope PPAs could serve as the foundation for revitalising Rio Tinto's three Gladstone production facilities when coupled with additional renewable power sources and appropriate firming, transmission, and industrial policies.

Following approval, construction of the Bungaban project is slated to commence in late 2025, with an anticipated electricity production start date 2029. During the construction phase, the project is expected to employ up to 600 individuals, and once operational, it could support approximately 30 permanent jobs.

Outlook after completion

Upon completion, the combined impact of the 2.2GW renewable PPAs with Windlab and European Energy could reduce carbon emissions by approximately 5 million tonnes annually. Furthermore, this output could satisfy 10 per cent of Queensland's present power requirements.

Rio Tinto Chief Executive Jakob Stausholm said, "This agreement with Windlab builds on our momentum in our work to repower our Gladstone operations and provide a sustainable future for heavy industry in Central Queensland. The task remains challenging, but we have a pathway to provide the competitive, firm power our Gladstone plants need, and we are continuing to work hard with all stakeholders, including the Queensland and Australian governments, to get there. Competitive capacity, firming, and transmission are critical to developing a modern energy system that can ensure more large-scale renewables development in Queensland and help guarantee the future of Australian industry."

Windlab CEO John Martin said, "Securing this PPA is a major milestone for the Bungaban project and a strong signal of the project's value from the market. Windlab is very proud to be partnering with Rio Tinto to support the long-term sustainable future of Rio Tinto's Gladstone operations. This agreement highlights the importance of large-scale renewable energy projects in shoring up Queensland's powerhouse traditional industries, particularly minerals and advanced processing, which employ thousands of people in regional communities across the state and have a key role to play in our nation's low-carbon future.