Tasmania's Rio Tinto-owned Bell Bay Aluminium smelter, one of the largest in the country, has been the subject of intense negotiations for several years.
But a $200 million joint support package from the Tasmanian and federal governments, announced on Thursday, has soothed concerns surrounding the future of the site.
The bailout was in the national interest as it would bolster industrial capacity, while the value of the jobs to the Tasmanian economy was "immense", Industry Minister Tim Ayres said.
The funding package covers the coming five years, half of the decade-long period of security the parties were trying to negotiate.
But the deal still came as a relief to workers whose jobs hung in the balance.
Bell Bay general manager Richard Curtis said the years of uncertainty over the site's future had been challenging.
"But the professionalism, the patience and the resilience of our people, the local community, and everybody in the supply chain here have helped support this positive outcome," he told reporters.
Tasmanian Premier Jeremy Rockliff said a three-way partnership between governments and Rio Tinto was the only way to keep the smelter open and bolster local employment.
The deal had hinged on the smelter's operators being able to lock in a favourable power deal for the energy-hungry operation.
The state previously cited a $60 million-a-year difference between owner Rio Tinto's position and the price Hydro Tasmania could commercially offer for power, prompting calls for the federal government to intervene.
"This is a good deal for Tasmania (and) a great deal, of course, for the workforce to secure their future," Mr Rockliff said, announcing the package alongside Prime Minister Anthony Albanese.
The package would allow for roughly $5 billion to be injected into the northern Tasmanian economy over the next five years, he said.
The deal would secure the immediate future of the facility, the positions of its 550 workers and the jobs of 1000 more workers indirectly supported by the site, according to a joint statement from the state and federal governments.
In addition to the investment, a five-year power deal was agreed by Rio Tinto and Hydro Tasmania.
The site is Australia's oldest aluminium smelter, beginning operations in 1955.
It produces about 190,000 tonnes of aluminium annually, the majority for export.
It uses more than 25 per cent of Tasmania's total electricity supply.
Workers were already on edge following the July closure of the nation's only commercial manganese alloy smelter at nearby Liberty Bell Bay, leading to the loss of 200 jobs.
Calls for federal government help ramped up in August after Australia's largest aluminium smelter, at Tomago in the NSW Hunter region, received a $2.5 billion bailout.
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