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Rio Tinto says it is contemplating ceasing operations at its New South Wales-based Tomago aluminium smelter at the end of its current electricity supply contract.

The Tomago aluminium smelter, Australia’s largest, had been struggling with high power prices. It had started a consultation process with employees on the potential future of its operations, but was yet to reach a decision and is weighing a possible closure.

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The smelter’s existing electricity supply contract with AGL Energy expires in December 2028, with Tomago yet to identify a pathway that supports commercially sustainable operations beyond the period “despite extensive engagement and market approaches”, according to the miner’s statement.

“Unfortunately, all market proposals received so far show future energy prices are not commercially viable, and there is significant uncertainty about when renewable projects will be available at the scale we need,” Tomago Aluminium’s CEO, Jérôme Dozol, said.

A number of smelters in Australia are preparing to switch to 100% renewable energy in the coming decade. Tomago Aluminium, located north-west of Newcastle, had announced in 2021 it would “for all intents and purposes” be 100% renewable by 2029.

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NextEra has agreed to reopen a nuclear power station in Iowa that will primarily provide power to Google as the tech giant races to secure clean energy to drive its artificial intelligence data centres.

The largest renewable energy company in the US will lead the redevelopment of Duane Arnold Energy Center after Google signed a 25-year agreement to buy electricity from the power station. After being shut down for five years, it is expected to cost more than $1.6bn to restart.

Duane Arnold, a 615-megawatt plant, is expected to start delivering power by 2029, according to NextEra. It is the third US nuclear plant to begin the process of restarting operations.

“This partnership serves as a model for the investments needed across the country to build energy capacity and deliver reliable, clean power, while protecting affordability and creating jobs that will drive the AI-driven economy,” said Ruth Porat, president and chief investment officer of Alphabet and Google.

Google said it also agreed to explore opportunities with NextEra to deploy new nuclear generation capacity in the US amid soaring demand for electricity linked to the rollout of AI.

Nuclear power has been enjoying a renaissance in recent years following a move away from the fuel source due to increased competition from low-cost shale gas and the 2011 Fukushima accident in Japan.

The ability of nuclear energy to provide round-the-clock carbon-free power has pushed it back into the spotlight as the world aims to slash emissions while feeding a rapidly growing need for electricity.

Google’s power supply deal with NextEra follows a similar agreement between Microsoft and Constellation Energy last year, which is expected to enable the Three Mile Island nuclear plant in Pennsylvania to reopen in 2028.

The Palisades nuclear power plant in Michigan is scheduled to be the first fully decommissioned US nuclear power plant to reopen later this year.

It is much more cost effective and faster to reopen a mothballed power plant than build a new facility from scratch, according to nuclear experts.   

Critics of nuclear energy have warned that any effort to reopen retired power plants must not be rushed and should adhere to strict regulatory standards.  

Edwin Lyman, a physicist at the Union of Concerned Scientists, said restarting Duane Arnold should proceed with extreme caution, particularly because of damage it sustained in a type of storm known as a derecho.

“The ageing reactor, which is the same design as the reactors that melted down at Fukushima, Japan in 2011, was shut down after it was struck by a derecho in August 2020 and suffered serious damage, including the destruction of its cooling towers,” Lyman said.

“Until NextEra presents a realistic estimate of the cost to rebuild the plant and restore it to a safe condition is developed, no one will really know if this reactor will be able to generate affordable electricity.”  

However, industry regulation is expected to grow and evolve as there are additional efforts to reopen shuttered reactors, according to Adam Stein, director of the nuclear energy innovation programme at The Breakthrough Institute.

“Thanks to the Palisades restart, there is a regulatory process and a clear understanding of what inspections need to be completed.”

The board of Wing Tai Holdings Limited (SGX:W05) has announced that it will pay a dividend of SGD0.03 per share on the 17th of November. Including this payment, the dividend yield on the stock will be 2.0%, which is a modest boost for shareholders’ returns.

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The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Even in the absence of profits, Wing Tai Holdings is paying a dividend. The company is also yet to generate cash flow, so the dividend sustainability is definitely questionable.

Looking forward, earnings per share could 47.4% over the next year if the trend of the last few years can’t be broken. This means the company will be unprofitable and managers could face the tough choice between continuing to pay the dividend or taking pressure off the balance sheet.

View our latest analysis for Wing Tai Holdings

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The last annual payment of SGD0.03 was flat on the annual payment from10 years ago. It’s encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.

With a relatively unstable dividend, it’s even more important to see if earnings per share is growing. Over the past five years, it looks as though Wing Tai Holdings’ EPS has declined at around 47% a year. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.

Overall, this isn’t a great candidate as an income investment, even though the dividend was stable this year. The company seems to be stretching itself a bit to make such big payments, but it doesn’t appear they can be consistent over time. We don’t think that this is a great candidate to be an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we’ve picked out 1 warning sign for Wing Tai Holdings that investors should take into consideration. Is Wing Tai Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.