Monsters of Rock: Major coal port eyes green hydrogen and ammonia to wade through the energy transition

Dalrymple Bay Coal Terminal operator Dalrymple Bay Infrastructure tells shareholders studies on exporting green hydrogen and ammonia are progressing
The company is aiming to expand capacity at Australia’s top met coal export terminal
Materials market sinks as iron ore hits six month low

The operator of Australia’s largest met coal export terminal, currently progressing a project testing the feasibility of expanding its export capacity from 85 to 99.1Mt a year, says it could become a major green energy export hub with studies planned on the export of ammonia this year.

Dalrymple Bay Infrastructure (ASX:DBI) shareholders met in Brisbane for the $1.2 billion company’s AGM today, where managing director Anthony Timbrell outlined the company’s long term strategy to increase its coal trade in the near term AND hit scope 1 and 2 net zero status by 2050.

Located at Hay Point in Queensland, DBCT is the main pricing port for Australian premium hard coking coal, and DBI says long term demand forecasts for met coal suggest there will be material demand for its services beyond 2050 despite growing pressure on Australian coal miners to scale back in order to help meet national CO2 emissions targets.

At the same time it has, like many others, seen the need to plan for the future.

“In 2022, DBI and its three consortium parties jointly funded a market study which highlighted the rapid growth in demand expected for green hydrogen and its derivatives over the period to 2050 and funded further analysis of possible green energy carriers for use at DBT,” Timbrell told shareholders in his address today.

“The output of this work suggests that DBT may be suitable for the export of a number of new energy products, with ammonia being the most suited to the existing terminal infrastructure.

“Further engineering and feasibility assessments are planned for 2023.

“We will also examine external growth opportunities, via mergers or acquisitions, focused on assets that have stable and predictable cashflows and a credible transition plan under a range of potential future climate change scenarios.”

Dalrymple Bay is an export point for a host of Australia’s largest coal miners, including Anglo American, Stanmore (ASX:SMR), Glencore, Peabody and Pembroke Resources.

DBI, which saw its four resolutions pass comfortably, announced a Q1 distribution of 5.025c, taking its 22-23 yield to 7.7% on total payouts o 20.1c per share. It has forecast 21.5c per share of payouts in 2023-24, with the start of income tax payments to see these become franked for the first time.

Dalrymple Bay Infrastructure (ASX:DBI) share price today:

Iron ore hits 6 month low

Iron ore prices showed no signs of resistance after a tough couple of days despite word steel mill profits have stabilised in China.

The big overhang is weak property sales and investment in China, home to almost 60% of all steel production globally, which have seen demand for steel, and therefore iron ore, come off.

The 62% Fe futures contract on the Singapore exchange dropped 3.93% this morning to US$96.05/t, a level not seen since late November and well down on 2023 highs in excess of US$130/t.

BHP (ASX:BHP) shares fell 2.24%, with FMG (ASX:FMG) stock down 4.06%. Rio Tinto (ASX:RIO) was off 2.12%.

The bearish mood spread into battery metals stocks as well, with lithium miners falling through the afternoon session and the broader materials sector off 1.66%.

It was a good day for $785 million African lithium developer Leo Lithium (ASX:LLL), which rose more than 5% after announcing big spodumene intercepts from outside the resource at its 50% owned Goulamina mine in Mali.

Results included 92m at 2.01% Li2O from from 132m, with a 36m stretch at 3% Li2O, and 112.7m at 1.43% Li2O from 83.2m.

A new mineral resource for the ~500,000tpa mine, which should open by mid next year, is due in June.

“The latest results show excellent intercepts and grades outside the current pit shell. With the potential to grow the Mineral Resource outside the current project area, the opportunity to unlock further value from the outstanding Goulamina asset continues to be apparent,” Leo MD Simon Hay said.

“With drilling continuing, we remain on track to update the Mineral Resource Estimate for Goulamina in late June and release a reserve upgrade in August.

“Our project also remains on schedule for first spodumene concentrate product in late H12024, and early revenue materialising from the DSO in the second half of this year.”