The smelter has been battling reduced aluminium prices, a high Australian dollar, the lack of a long-term power contract and a looming carbon tax.

The 26 white-collar and 23 blue-collar jobs represent nearly 10% of the smelter’s permanent workforce of 530.

Staff and union officials had feared the smelter’s Norwegian owner, Norsk Hydro, was no longer willing to underwrite losses at the plant, but chief executive Alberto Fabrini said this was not the case.

Mr Fabrini said the carbon tax was a long-term problem for the aluminium industry, one of the country’s biggest users of electricity.