Australia's second-largest aluminium smelter - Rio Tinto's Boyne smelter in the central Queensland town of Gladstone - will be the beneficiary of the cash splash.
The investment will support 1000 jobs at the site and 2000 other roles around Gladstone, federal industry minister Tim Ayres said.
In return, Rio Tinto will pour $7.5 billion into new renewable energy generation and storage projects around Queensland.
The bill for the $2 billion funding boost will be split equally between the Queensland and federal governments, Senator Ayres said.
"With a considerable public investment, we are catalysing a fourfold private investment that will build out the renewable energy grid and keep thousands of good regional jobs in central Queensland," he said in a statement on Wednesday morning.
It was the "biggest industrial investment decision in Queensland's history".
The partnership between the smelter and the two governments would allow Boyne to continue operating until at least 2040 while building out Queensland's renewable energy grid, Rio Tinto aluminium and lithium chief executive Jérôme Pécresse said.
"As fossil fuels become increasingly expensive, this investment, combined with the power purchase agreements we have already signed, positions Boyne to be among the world's first aluminium smelters underpinned by solar and wind power," he said.
The partnership would ensure the smelter remained internationally competitive, strengthened Australia's aluminium sector and supported the decarbonisation of the Queensland energy system, Mr Pécresse said.
"It also ensures heavy manufacturing like aluminium smelting can continue in Gladstone for the long term and preserves one of the few fully integrated aluminium value chains in the world," he said.
That chain extended from bauxite mining and alumina refining to aluminium smelting all in Queensland as demand for aluminium continued to grow with the energy transition, Mr Pécresse said.
Queensland natural resources minister Dale Last said that at a time of global supply-chain disruptions, the investment was needed to build national resilience and international competitiveness.
"Only in Queensland can we mine, refine and smelt to produce one of the world's most versatile and ubiquitous metals, being aluminium, and we must protect that capability," he said.
Gladstone Mayor Matt Burnett said the deal provided job security for workers in the region.
"If we were to lose our aluminium industry, it would decimate our local economy," he told the ABC.
"A 10-year plan means they're not just throwing a sugar hit at it, they're investing over many years to make sure we have long-term secure jobs."
The smelter has been operating in Gladstone since 1982, refining raw alumina, produced from bauxite ore, into aluminium then casting the molten metal into products to export.
In 2025, the federal government helped bail out Glencore's copper smelter in Queensland, the Whyalla steelworks in South Australia and Nyrstar smelters in Hobart and Port Pirie.
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