Up to $185bn of Aussie hydrogen, CCS and green ammonia projects already in the pipeline, say Fed forecasters
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Federal Government forecasters say there are $185 billion worth of major Australian projects in hydrogen, carbon capture and storage and ammonia in the pipeline.
On numbers contained in the 2021 Resources and Energy Major Projects Report by the Department of Industry, Science, Energy and Resources’ Office of the Chief Economist, the foundations of the green energy industry will be built with a level of investment 15% larger than oil and gas and double the investment in new coal mines and extensions.
That is part of $504 billion of 367 identified major projects across resources and energy sectors including oil and gas, gold, iron ore, lithium and base metals.
These could create 25,100 construction jobs and 8,300 ongoing jobs, mostly in regional Queensland and WA.
The first time the department has included green energy projects in its report, their analysts say Australia could become one of the world’s largest hydrogen exporters by 2030 if the projects come to fruition.
“21 major hydrogen projects have been included in the 2021 report, and over $133 billion worth of potential investment in hydrogen projects has been identified,” analysts from the department said.
“This is 15% larger than oil and gas investment and twice the size of investment in coal. The majority of the proposed projects are for renewable hydrogen, reflecting Australia’s abundant renewable energy sources available for hydrogen production.”
“The industry is in the early stages of development in Australia, but has huge potential. A majority of the projects are at the Publicly Announced phase, with a small number at the Feasible stage — showing the nascent nature of the commercial clean hydrogen industry in Australia.”
“The majority of projects will not commence commercial operations until after 2025, with a significant amount commencing after 2027. If momentum is sustained, and projects are completed according to anticipated timeframes, Australia could be one of the world’s largest hydrogen suppliers by 2030.”
However, when completed and committed projects are considered in isolation a very different picture emerges. LNG, oil and gas accounts for 42% of the committed development pipeline, even before Woodside’s $16 billion Scarborough development is taken into account.
Despite calls from the IEA that no new coal mines would need to be developed for the world to reach Paris Agreement global warming targets, committed coal projects increased 27% by value between 2020 and 2021 with eight projects expected to sum to more than 20 million tonnes annually.
While iron ore prices collapsed through the first half of FY22, resources and energy exports are expected to generate a record $379 billion in 2021-22 on soaring gas and coal prices.
That number is $31 billion higher than the estimate in the September Quarter, and $69 billion higher than the $310 billion figure from 2020-21.
The Department of Industry, Science, Energy and Resources’ Office of the Chief Economist says they will fall sharply to $311 billion in 2022-23 as energy prices fall with lower demand and increased supply.
Analysts view rising supply from Brazil and slowing demand for steel as challenges for iron ore earnings, which are expected to slide from $153 billion in 2020-21 to $118 billion in 2021-22 and $85 billion in 2022-23 despite volumes increasing from 867Mt to 920Mt over that period.
Prices are expected to average US$100/t in 2021-22 and US$74/t in 2022-23.
LNG prices however are expected to double on average from US$7.50/G in 2020-21 to US$14.40/GJ in 2021-22 and US$12.7/GJ in 2022-23, metallurgical coal prices are expected to increase from US$123/t to US$284/t in 2021-22 and US$183/t in 2022-23 and thermal coal from US$76/t to US$149/t in 2021-22 and US$105/t in 2022-23.
That will see LNG, met coal and thermal coal make a combined $152 billion contribution to exports this financial year, up from just $69b in 2020-21, before falling to $119b in 2022-23.
Australia’s gold miners meanwhile are expected to contribute a record $28.4 million in 2022-23 despite falling prices with a solid pipeline of new projects expected to increase mined output to 374t by 2022-23.
Labour and covid impacts remain an uncertainty.
“The risk to the outlook is the potential impacts of labour and skills shortages on Australian gold miners. Some parts of Australia are still implementing COVID-19 containment measures. In WA, unvaccinated workers have been banned from working in WA mines,” the report authors wrote.
The value of copper miners to Australia’s economy is set to rise sharply with high prices and recovering mined production.
Golden Cross Resources’ Copper Hill project, KGL Resources’ (ASX:KGL) Jervois project and Havilah Resources’ (ASX:HAV) Kalkaroo project are all expected to come online, with copper production in Australia expected to rise from 878,000t in 2020-21 to 904,000t in 2022-23.
Exports will increase from $11.45 billion in 2020-21 to $14.16b in 2021-22 and $14.73b in 2022-23, with expansions or restarts also expected at Cyrpium’s (ASX:CYM) Nifty copper mine in WA, BHP’s Olympic Dam and Oz Minerals’ (ASX:OZL) Prominent Hill.
Nickel exports are expected to increase in value from $3.8b in 2020-21 to $5.2b this financial year and $4.8b in 2022-23, due to higher production and strong prices.
Lithium meanwhile will be the biggest bolter, with exports forecast to triple this year from $1.1b to $3.3b thanks to a sharp rise in prices amid booming electric vehicle demand.
Australian spodumene concentrate exports are forecast to increase from 1.46Mt in 2019-20 and 1.71Mt in 2020-21 to 2.22Mt in 2021-22 and 2.52Mt in 2022-23, with lithium exports to be worth $4.17b in 2022-23, outstripping zinc exports for the first time.