Alcoa's Portland's aluminium smelter has all but struck a generous new electricity supply deal with energy giant AGL, ensuring the troubled plant is likely to stay open.
At a marathon 12-hour meeting on Sunday chaired by state Treasurer Tim Pallas, Alcoa and AGL reached what was described as an "in principle" agreement on the price and terms covering the supply of electricity to the smelter.
The deal, which is not yet legally binding, is seen as a breakthrough needed to convince the US multinational to keep the 30-year-old smelter operating.
In December, federal Industry Minister Greg Hunt and his state counterpart, Wade Noonan, flew to New York to meet the company's global chief, Roy Harvey, to plead for the smelter's future.
So far, the company has refused to publicly commit to keeping the Portland smelter operating after a long-standing contract brokered by the Cain government supplying it with heavily subsidised power ended last year.
In March last year, Mr Pallas said the subsidy was costing taxpayers well in excess of $100 million some years, saying it had "well and truly run its course".
Under the latest inducement, the Andrews government is believed to have promised to chip in $200 million over four years, with the Turnbull government offering an interest free loan of $40 million.
In a joint statement released on Monday, Mr Hunt and Mr Pallas said "significant progress" had been made over the weekend "with great demonstrations of good faith from all parties working to find a solution for the future of the Portland smelter".
"All parties are committed to working towards finalising a positive outcome in the very near future," the statement said.
Premier Daniel Andrews last week interrupted his summer holidays to weigh into the high-stakes negotiations between the two parties.
Fairfax Media also revealed that Prime Minister Malcolm Turnbull's office weighed in to encourage a deal, amid growing concern about the economic, social, regional and political impact of a potential decision to close the smelter.
Closure would devastate the south west. The plant, generates about $500 million a year in exports and employs about 600 staff and 180 contractors, with an estimated 2000 indirect jobs.
Just days after the end of the electricity contract, the smelter was hit by a massive power outage in December that caused molten aluminium in more than 200 smelting pots to cool and solidify. That has left it operating at about one-third capacity, costing the company about $1 million a day since.
Any decision by Alcoa to keep its Portland smelter operating will come as a huge relief to the local community. But environment groups claim the era of cheap brown coal-fired power is coming to an end.
Australian Conservation Foundation climate change campaigner Suzanne Harter said if the public was going to pay for the smelter to stay open, the federal and state governments should make sure the power comes from clean, renewable energy.
"A deal to power Alcoa's smelter with dirty brown coal is an unstainable option that will tie Portland to dirty polluting fuels," she said.
