The mining industry welcomed $2 billion in federal funding to incentivize power-intensive aluminum producers to switch to renewable energy by 2036, with Rio Tinto calling it "a critical link in helping the industry future-proof", although Peter Dutton will on Monday The statement called it a "scam" and a "cruel scam."

The Albanian government will provide tax production credits over 10 years for every tonne of clean aluminum produced by Australian smelters.

The Prime Minister told ABC radio the funding would ensure the smelters - which industry estimates directly employ at least 20,000 people - stay onshore and Australia is not left at the end of global supply chains.

"Aluminum is very important for many products and it's important that we don't just mine bauxite (the most common ore used to produce aluminum), export it somewhere else and then look at the jobs and value in another country increase,” Anthony Albanese said.

"It's important that we continue to have these smelters and that the aluminum supply chain can exist, supporting tens of thousands of Australian jobs."

Aluminum smelters are energy-intensive enterprises. Analysis in early 2023 showed that four smelters and two aluminum refineries used about 10% of the East Coast energy grid.

The aluminum industry has previously warned that government investment, including building renewable energy infrastructure transmission lines, is needed to support its efforts to go green within a decade.

Rio Tinto has called on the government to support the aluminum industry's transition to renewable energy to avoid the risk of smelters closing by 2030.

The new initiative puts Australia on the path to becoming a leader in green metals manufacturing, the company said on Monday.

But opposition leaders described the plan as a "fantasy" and said Australia needed a nuclear power industry rather than relying solely on renewable energy sources such as natural gas.

"In order for the Prime Minister's policy to work - and let's understand the practicality of this policy - he has to install 22,000 solar panels every day. He needs 40 wind turbines every month and needs 28,000 kilometers of poles and wire to implement this policy," Dutton said.

"This is a $2 billion scam that will drive up electricity prices and lead to blackouts and brownouts."

Dutton added that he could not name a single smelter in the world that was powered by wind, solar or batteries.

Many smelters in Australia are preparing to switch to 100% renewable energy within the next decade. Australia's largest aluminum smelter, Tomago Aluminum, announced in 2021 that it would be 100% renewable "for all intents and purposes" by 2029.

That same year, Australian power company Alinta Energy announced plans to build an offshore wind farm off Victoria to help green Alcoa's Portland aluminum smelter.

In an opinion piece in The Australian Financial Review on Sunday, Energy Minister Chris Bowen criticized the opposition's nuclear energy policy, which assumes that the Australian states of Victoria, Tasmania, Queensland and New South Wales Wales will need less electricity.

"Escape from falling industrial demand just means a country is doing less, producing less and selling less," Bowen said.

When Dutton announced his nuclear energy plans in November, he claimed electricity would be 44 per cent cheaper under the $331 billion proposal. But this scenario is based on Australia's projected electricity demand being 45% lower than Labor's forecast.

"The Coalition has painted itself into a corner," Bowen wrote. "Either it believes Australian industrial productivity is about to fall off a cliff, or it knows the cost savings claimed by its ill-conceived nuclear energy program are just talk. It can't be both. It’s both.”