Sweetman signs $15m joint venture to create new hydrogen hub

Emerging renewables player Sweetman has signed a joint venture agreement with Singaporean renewable fuel technology company CAC-H₂ to establish a hydrogen production centre of excellence in the Hunter Valley, NSW.

The $15 million deal aims to establish Australia’s first wood-fed hydrogen production plant, and the country’s largest green bio-hydrogen production eco-hub.

The JV involves investment from CAC-H₂ will, in return for 80% ownership of the new enterprise, help establish the first two production lines on a 30-acre site adjacent to the Sweetman’s Millfield timber mill.

CAC-H₂ brings proven gasification technology that converts woodchip into 99.999% pure hydrogen via a proven proprietary process – along with off-take agreements for 100% of Sweetman hydrogen and biochar production.

And Sweetman will provide the biomass feedstock, EPC engineering services and land access in return for 20% equity in the JV as well as 30,000 tonnes of wood biomass per annum.

The initial deal is expected to produce around AU$170 million in revenues over 15 years, based on a conservative wholesale price estimate of AU$6 per kilogram.

Hunter Valley’s first hydrogen hub

The Hunter region of NSW is set to become the home of one of the state’s first green hydrogen hubs with the NSW Government committing at least $70 million to their development.

Essentially, the hubs will provide groups of hydrogen users common infrastructure for the local production, use and distribution of hydrogen.

“We have heard the call from both State and Federal government to make the Hunter Valley a Centre of Excellence for the production of hydrogen,” Sweetman Renewables director Garry Millar said.

“The new plant will not only act as a showcase for the proven technology, it will create new jobs in construction, production, transportation, materials handling and service and maintenance, all of which will be sourced from within the Newcastle area.”

Planning applications have been approved with construction expected to commence shortly.

Scaling up and hubs in every state

“Over the next two years our JV will establish new hydrogen hubs in every state in Australia,” CAC-H₂ CEO Glenn Davies said.

“Sweetman has already obtained expressions of interest to establish another hydrogen hub at Newcastle Port and in additional hubs in Queensland and Victoria.”

And the companies are already planning to scale up operations to meet increasing demand – with the International Energy Agency (IEA) forecasting that market size for hydrogen in 2022 is projected to be $154.74 billion.

And driven by growing global demand for zero-carbon emissions, by 2050 the hydrogen market is expected to be valued at $12 trillion.

“We initially planned to start with just two production lines but due to large demand from both Japan and Korea, we envisage to quickly scale up the Sweetman operation to multiple lines producing hydrogen and biochar for export markets via a new facility at the Newcastle Port,” CAC-H₂ director Arman Massoumi said.

Pre-IPO capital raise underway

Sweetman is currently conducting a pre-IPO capital raise ahead of its planned debut on the ASX in Q4 2021.

And the company has already signed an offtake agreement for US$90 million with Japan’s Sinanen Holdings to supply 60,000 tonnes of biomass annually for the next 20 years – and is confident of securing further contracts from Japanese customers in the future.

Sweetman also has plans to develop green hydrogen assets through an agreement with Aussie company Patriot Hydrogen.

The Patriot to Hydrogen reactor uses biomass as a feedstock to produce renewable energy directly to a generator or filtered to produce pure green hydrogen for storage and export.

This article was developed in collaboration with Sweetman Renewables, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.