Prime Minister Anthony Albanese and NSW Premier Chris Minns will announce a $2.5 billion bailout on Thursday that will secure Tomago Aluminium beyond 2028.
The deal between the plant's owner, Rio Tinto, and the state and federal governments will guarantee the jobs of 1000 smelter workers and thousands of indirect jobs in the broader Hunter economy.
The bailout, to be jointly funded between the state and federal governments, is the largest rescue package for an Australian smelter to date.
In addition to securing the future of one of the state's most important industrial assets, the joint investment will accelerate decarbonisation of more than 10 per cent of NSW's electricity grid.
"In December last year I stood in the rain at Tomago and told the workers 'we have your back'," Mr Albanese said.
"This site isn't just important for Newcastle and the Hunter, it's a critical asset for the country and our manufacturing future.
"I'm proud of the work we've done with the company, with the Minns Labor government, with local members and with the workers here on site to secure Tomago's future."
Tomago is Australia's largest single electricity user.
The joint investment will underpin nearly three gigawatts of new renewable generation and firming capacity, strengthening the state's electricity system and supporting long-term energy affordability and reliability for NSW.
"I want to thank the Prime Minister and the Commonwealth Government. We've worked closely together to get to this point and deliver an agreement to find a way through and secure the future of Tomago," Mr Minns said.
"The Hunter has powered NSW and helped build this country for generations. This agreement is about making sure it remains an industrial and manufacturing powerhouse for generations to come.
"This is part of our bigger plan for the Hunter, securing the good jobs and industries that are here today, while investing $12 billion to bring train manufacturing back to the Hunter and create good, secure jobs for decades to come."
Tomago has agreed to invest at least $1.1 billion in the facility as part of the deal.
This includes $100 million to drive further decarbonisation activities at the smelter and undertake an innovative demand-response program to support the NSW grid.
This demand-response program aims to position the Tomago smelter as the international leader in electricity demand response and flexibility services.
The deal is the result of at times fraught negotiations over the breakdown of the contributions between NSW and the Commonwealth.
As part of the agreement, the NSW Government's contribution is capped at $1.225 billion over 10 years from 2029.
Minister for Industry and Innovation and Minister for Science Tim Ayres said Australia's end-to-end aluminium industry - from bauxite to complex aluminium finished products - was critical for Australia's national resilience.
"Tomago is Australia's largest and youngest smelter and is crucial to Australia's industrial future," he said.
"Keeping this capability here in Australia matters. It makes our economy stronger, drives new electricity projects and maintains thousands of good quality blue-collar and engineering jobs right here in the Hunter."
Minister for the Hunter Yasmin Catley said she was delighted that Hunter workers and their families had certainty about the future of the smelter.
"Securing Tomago means securing jobs, skills and the future of our region," she said.
"We said these jobs are worth fighting for and today that fight has delivered.
"The Hunter builds things and it powers our state. We have the skills, the workers and the industrial muscle, and I am incredibly proud to be part of a government that is willing to back the Hunter and everything we have to offer."
Hunter Jobs Alliance coordinator Justin Page said the agreement ended years of uncertainty for thousands of workers across the region.
"Public money should never be a blank cheque to a multinational company. But this isn't a blank cheque," he said.
"The return on this investment is significant, 6,000 Hunter jobs, at least $1.1 billion of investment back into Tomago, nearly three gigawatts of new renewable generation and firming, and revenue returning to taxpayers when aluminium prices are high."
