These billionaires believe green hydrogen will provide a carbon-free future for iron ore mining
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Andrew Forrest’s groundbreaking weekend speech heralding Fortescue Metals Group’s (ASX:FMG) move into the green hydrogen market for the production of steel grabbed headlines.
The FMG chairman outlined how Australia could slash CO2 emissions and develop a new nation-building sector by replacing fossil fuels like coal with hydrogen in zero-carbon steel production.
FMG plans to have Australia’s first green steel pilot plant up and running in WA’s Pilbara region in the next few years. It will be powered by green electricity, both wind and solar.
Fellow billionaire industrialist Sanjeev Gupta and his GFG Alliance group of companies plan to produce green steel in a modern facility at the Whyalla steelworks in South Australia that will initially run on natural gas, and later hydrogen.
“All of our energy projects will be part of an industrial transformation to carbon neutrality,” Gupta told The Australian newspaper.
A small ASX iron ore company, Iron Road (ASX:IRD), is also developing a green hydrogen project for iron ore pellet production in South Australia’s proposed Cape Hardy port.
The project could serve as a prototype for green hydrogen projects in Australia’s iron ore sector as it hopefully moves from the drawing board and into reality over the next few years.
Hydrogen Utility (H2U), a developer of green hydrogen projects in Australia, is a partner in the project, as is Japanese engineering and technology company Mitsubishi Heavy Industries.
The company’s chief executive Larry Ingle told Stockhead about the project and the reasons underlying Iron Road’s investment in green hydrogen.
Why has Iron Road decided to locate its green iron ore pellet plant in the Cape Hardy precinct? Why did it decide to go down the route of using hydrogen in its production process?
“Iron Road and H2U are cooperating to investigate the production and ultimate export of green hydrogen/green ammonia from the port to be built at Cape Hardy,” Ingle said.
“H2U has the intellectual property on the hydrogen generation technology and a respected Japanese partner in Mitsubishi Heavy Industries (MHI).”
“Iron Road acknowledges the potential for green hydrogen over time to revolutionise and assist in decarbonising the power and processing industries.”
“Iron Road and H2U have a cooperation agreement, where H2U and its partner will develop the hydrogen generation facility.”
“Iron Road will be exporting high grade iron concentrate (magnetite) from the port at Cape Hardy.”
“The opportunity to produce green pellets, in addition to exporting iron concentrate, is seen as a value adding step in the provision of iron making precursors.”
“The unique advantages offered by the proposed port at Cape Hardy is driving these value adding opportunities to be investigated,” said Ingle.
Can you explain the attraction of the Cape Hardy location for the company? Is it to do with the South Australian government’s policy to promote hydrogen-based industries? Is it a deep water port, or have any other infrastructure advantages?
“The Cape Hardy location was selected by Iron Road for the development of a bulk commodities port, through an intensive analysis of the available locations around the Eyre Peninsula,” Ingle said.
“The Cape Hardy location offers several advantages: being on the lee side of the Eyre Peninsula the site offers relatively calm coastal waters within the Spencer Gulf, naturally deep water close to shore with no requirement for dredging, good landside topography, and is unencumbered by marine coastal reserves or aquaculture.
“The geographical location is ideal to service the entire Eyre Peninsula.
“Government interest in Cape Hardy and the suitability of the port precinct for green hydrogen has come well after Iron Road acquired land at Cape Hardy, supporting the Company’s belief on the port’s optimal location and other highly desirable characteristics.
“The Eyre Peninsula has all the necessary attributes to produce green hydrogen.
“There is enormous wind and solar resources, and the export of hydrogen will require large ships from deep water ports free of urban encroachment.
“Iron Road has been in discussions with H2U for several years about the potential for hydrogen production at Cape Hardy and the possibility to add value to the magnetite product and the Central Eyre Iron Project (CEIP) is a strong motivator.
“A recent prospectus by the South Australia State Government identifies Cape Hardy as one of three locations ideal for green hydrogen development,” said Ingle.
Is iron ore pellet production cheaper using hydrogen compared with other fuels? Are there significant cost savings from using hydrogen? Are there other advantages to hydrogen such as low carbon emissions or other benefits?
“Possible production of hydrogen by H2U for export and the production of a high-quality iron ore concentrate by Iron Road, provides a unique set of circumstances where production of ‘green pellets’ could be advantageous,” Ingle said.
“The hydrogen will be used to generate power required for the production of pellets and also the fuel to indurate (cook, roast etc) the pellets.
“Conventionally, the power and cooking would be derived from carbon-based systems.
“With the advantages of the Eyre Peninsula for producing hydrogen and the CEIP producing a high-grade concentrate, the synergies require investigation.
“It is expected that ‘green pellets’ would attract a premium price.
“The cost of using hydrogen versus other fuels will be part of the master planning process to be undertaken by H2U and MHI at Cape Hardy.
“The location of a hydrogen electrolyser at Cape Hardy will bring together a number potential value adding opportunities.
“Hydrogen will provide fuel for cooking pellets and power for producing pellets. These add value and reduce carbon emissions,” said Ingle.
Which markets is Iron Road targeting for its green iron ore pellet production? When does the company’s Central Eyre Iron Project go into production and what will be its initial and long run capacities?
“Investment in green iron ore pellet production at Cape Hardy would likely involve end users from Japan, South Korea, and others in the region, where targets relating to the use of green hydrogen, other renewables and emissions are mandated by government,” Ingle said.
“Steel plants powered partially or wholly by green hydrogen and supplied with ‘green pellets’ will be capable of producing ‘green steel’ and meet or exceed CO2 emission requirements set by governments as part of a low carbon future.
“Iron Road is actively seeking investors in the CEIP, which will produce a premium and high-grade iron concentrate.
“Due to the large size of the magnetite orebody at Warramboo, the proposed mine will have a long mine life exceeding 30 years at whatever scale of mining adopted.
“A production rate of 12 million tonnes per year is envisaged, producing an iron concentrate with a grade of 67% Fe.
“The concentrate is sought after for steel-making due to its properties and low impurities. The production of ‘green pellets’ offers Iron Road the opportunity to diversify its product streams,” Ingle said.
South Australia appears to be on track to become Australia’s new province for iron ore production with a large number of projects planned for the region. Are there any market forces at work that are driving this growth?
“South Australia is the birthplace of iron ore mining in Australia and has large undeveloped iron ore resources (mainly magnetite),” Ingle said.
“Increasing seaborne demand, still primarily driven by China, is expected to continue at least in the short- to medium-term, resulting in continued strong prices.
“Magnetite ores, although costing more to process, produce a high-grade product, free of impurities that attract a price premium over the benchmark 62% Fe price.
“Steelmakers pay premiums for high grade concentrates and pellets for feedstock blending purposes or for direct use,” stated Ingle.