The company has been given a $30 million lifeline from the federal government, a contribution believed to be at least $200 million from the state government and it has secured a new deal with energy company AGL.

Alcoa’s plant manager Peter Chellis said he couldn’t think of a better way to start 2017.

“It’s a great outcome for all of us here,” he said.

“It’s fair to say to arrive at today’s announcement has been a journey and we could not have done that alone.

“Today the new agreements will enable us to restart the smelter and maintain some 2000 direct and indirect jobs associated with the facility and also help make the smelter more resilient to market fluctuations.”

Mr Chellis said the smelter injected more than $120 million into the district economy each year.

“The recent displays of support have been absolutely outstanding and on behalf of the Alcoa team my sincere thanks goes to everyone who made this possible.”

He thanked staff for their professionalism since a power outage disrupted operations. He said efficiencies implemented since 2011 had cut operating costs by more than $130 million.

Premier Daniel Andrews joked he heard a groan when it was announced the clean up of damaged pot lines would begin after his speech.

However, the company revealed it would be six months before the smelter returned to full operating capacity.

The federal government assistance is subject to conditions, including the need to continue operating until June 30, 2021. Production must also return to levels prior to the outage at the start of December.

If the smelter shuts prior to the specified date, the loan must be repaid with interest.

Alcoa chief executive officer Roy Harvey said the four-year agreements were critical to keeping jobs.

“The Victorian state and Australian federal governments are strong proponents of the Portland Aluminium smelter, our employees, their families and the broader Portland community and we thank them for their unwavering support,” he said.

Australian Workers’ Union state secretary Ben Davis said workers had agreed to a wage freeze and took leave when the power outage damaged pot lines.

“This is a victory for common sense and co-operation,” Mr Davis said.

“The prospects for Portland and the region were bleak indeed if Alcoa closed.”

South West Coast MP Roma Britnell said: "This is the best news we could have."

"To have the prime minister here where we can show him first-hand what a wonderful place this is and what great opportunities there are. Alcoa sets us up as a region to be able to take the world on.”