SYDNEY, Jan 20, 2025 (BSS/AFP) - Australia will reward power-guzzling aluminium smelters that use renewable electricity instead of coal, Prime Minister Anthony Albanese said Monday as he unveiled a US$1.2 billion green metals plan.

Australia is the world's sixth largest producer of the in-demand metal, according to officials, which is used in everything from aeroplane parts to soft-drink cans. 

Aluminium ore is refined in hulking smelters that suck up almost 10 percent of Australia's electricity, analysts say, a process that has long relied on polluting coal-fired power. 

Production credits worth US$1.2 billion (Aus$2 billion) have been earmarked for companies that instead produce "green" aluminium using renewable electricity, Albanese said. 

"Increasingly the world is looking to import clean, reliable metals like Australian-made aluminium," he said. 

"Which represents a massive opportunity for growth in a decarbonising global economy."

Companies will be able to claim a to-be-determined amount for every tonne of "clean" aluminium they produce over the next 10 years.

With almost all of Australia's coal plants slated to close over the next decade, a number of smelters have already begun switching to renewable energy. 

Aluminium is the world's second-biggest metals industry behind steel, according to the World Economic Forum, and demand is expected to surge 40 percent by 2030. 

Globally the aluminium industry accounts for some two percent of greenhouse gas emissions, the forum said in September. 

Mining giant Rio Tinto, which has a substantial stake in Australian production, said the plan would help the country become a "leader in green metals". 

"As traditional energy sources for heavy industry become increasingly uncompetitive, today's announcement is a critical piece in helping future-proof the industry," Australian executive Kellie Parker said. 

Australia sits on bulging deposits of coal, gas, metals and minerals, with mining and fossil fuels stoking decades of near-unbroken economic growth. 

It has also begun to suffer from more intense bushfires and increasingly severe droughts, which scientists have linked to climate change.

In recent years it has stepped up efforts to roll out renewables -- pledging to cut national emissions 43 percent by 2030, and to reach net zero by 2050. 

More than 30 percent of Australia's total electricity generation in 2022 came from solar and wind.