Rio Tinto-owned Tomago, located north of Newcastle, is reportedly seeking billions of dollars in public funds to prevent collapse.

The producer uses about 10 per cent of NSW’s power supply and makes about 37 per cent of Australia’s primary aluminium.

Its collapse could lead to more than 1,000 people losing their jobs, while 5,000 indirect workers could suffer.

NSW Premier Chris Minns on Thursday stressed Tomago was a “big employer in NSW, it’s a dynamic part of the state, the Hunter and manufacturing is a big part of its future”.

“It’s difficult for me to speculate about what the next steps are,” Mr Minns told reporters.

“In order for us to have an effective intervention, we need to have commercial discussions with the owners and operators of (Tomago). That’s what we’re doing.”

Tomago executives have reportedly asked the NSW and federal governments for assistance amid crippling power prices and as cost-effective and consistent renewable alternatives remain largely unavailable.

Rio Tinto’s chief executive Jakob Stausholm earlier this year flagged concerns about the producer's electricity costs where he warned power price contracts beyond 2028 would render Tomago unviable.

The Premier acknowledged there remains “challenges when it comes to big industries in manufacturing like aluminium and steel”.

He cited the soaring energy costs which hurt Australian manufacturers, but also noted the Trump Administration’s decision to hit foreign-made steel and aluminium with a 50 per cent tariff.

“Part of it is energy costs, there’s no doubt about it, part of it is also rapid and dramatic changes to the global trading system, particularly when it comes to (the United States’) decision to slap initially a 50 per cent then 10 per cent hit on inbound steel and aluminium,” Mr Minns said.

“It may well be Australian aluminium and Australian steel is used domestically, or used in other markets across south-east Asia, South America and other places.

“The problem is that if Chinese steel and Chinese aluminium move to a third country and are dumped on another market, even if it’s not Australia, it affects our trading partners.

“It’s a complicated web, it’s probably not going to be solved overnight. But we recognise it’s an important employer, and we are having discussions with the owners.”

Tomago's struggle with power bills comes as the Albanese government has vowed to make the nation a “renewable energy superpower” with an energy mix of 82 per cent renewables by 2030 and green energy driving local manufacturing.

Labor is looking to boost this through production tax credits for leading Australian aluminium smelters, including Tomago, and give $2 billion back to help with the energy transition.

A federal government source told the AFR it was involved in discussions with Tomago over the details of the tax credit design as it looks to alleviate the impacts of soaring power costs.

The Centre for Independent Studies’ senior policy analyst Zoe Hilton said the government’s energy policy was crippling the aluminium sector.

“With power prices in Australia rising higher and higher, it simply doesn’t make financial sense to run a smelter here,” Ms Hilton told SkyNews.com.au.

“Tomago’s current predicament is a direct result of state and federal government plans to shift our grid to mostly intermittent energy sources.”