The mining industry: a driving force behind green ammonia

ANNUAL REVIEW 2019

Ammonia is too often assumed to be only a fertilizer. This assumption overlooks other important uses for the chemical, large and small, in every corner of our economy. Some of the recent green ammonia announcements suggest that these other industries might, in fact, present better economic fundamentals for green ammonia investments than the fertilizer industry. Alternatively, these companies might have set their sights on becoming first movers in developing the commodities of the future. Time will tell but, if the last 12 months is any guide, the mining industry could be a force for change in the ammonia industry.

Greening the Supply Chain

The first driving factor is a commitment to sustainability. The concept of sustainability has recently been embraced by the mining industry with vigor. The supply chain demands it: the output of mining companies ends up in consumer products, and sustainable brands need sustainable inputs. Apple needs cobalt; BMW needs copper; Tesla needs lithium. There are many challenges in this industry: child labor, gender equity, conflict minerals, indigenous rights, health and safety, pollution, ecosystem destruction. And climate change.

The carbon dioxide emissions from producing ammonia, which is used to make ammonium nitrate for explosives, are only a small part of the industry’s problems. But, unlike many of those other problems, switching to green ammonia creates a measurable, verifiable, priceable improvement. This is why ammonium nitrate producers Enaex, Incitec Pivot, and Queensland Nitrates have all announced green ammonia projects this year.

It helps, of course, that these first movers are active in regions that combine excellent renewable energy inputs with challenging supply chains for natural gas or ammonia delivery. Cheap renewable independence versus an expensive fossil supply chain.

Developing the Commodities of the Future

The second driving factor is the mining industry’s quest for new products. Recently, Australia – its federal and state governments, its enetrepreneurs, and its corporations – have focused on green ammonia as a way to export solar power, or “bottle sunshine.”

For Fortescue Metals Group (FMG), the fourth largest iron ore producer on the planet, this is a disruptive business opportunity. Less than a year ago, FMG announced a partnership to develop CSIRO’s metal membrane technology, which allows ammonia to be cracked and purified to PEM fuel cell quality hydrogen. As we reported when the investment was announced, FMG Chairman Andrew Forrest said that “We are at the beginning of an energy revolution and Fortescue intends to be at the forefront of this once in a generation opportunity. As a proud Australian company, we are excited to partner with CSIRO, our nation’s preeminent science and research body, to unlock the potential of hydrogen, the low emission fuel of the future.” CSIRO’s ammonia-to-hydrogen technology is just one of FMG’s clean energy investments: earlier this month, it announced a 60 MW solar PV, 35 MW battery investment, providing 100% daytime power for its operations in the Pilbara, in Western Australia.

For Iron Road Limited, another iron ore company, the green ammonia opportunity might be more synergistic. With a mine under development in South Australia, Iron Road needs to build a deep sea port in Cape Hardy so that it can export magnetite. To diversify port operations, the company had already come to an agreement with a farmers’ co-operative, the Eyre Peninsula Co-operative Bulk Handling Limited (EPCBH), which grows “an average of 2.5 million tonnes of grain each year, with over 90% of that grain exported.” Then, in August 2019, Iron Road announced an agreement with The Hydrogen Utility (H2U) to develop a green manufacturing precinct at the port.

We have previously reported that H2U is developing the green ammonia pilot in Port Lincoln, South Australia. Already, clearly, H2U is planning its expansion from pilot to export scale, and has identified Cape Hardy (and its deep sea port) as “the preferred location for future development of a larger green hydrogen production and export hub.”

According to the announcement by Regional Development Australia:

[Iron Road Managing Director, Mr Andrew Stocks, said] “The Cape Hardy deep water port proposal is a true multi-user, multi-commodity model, unlike anything else proposed in the country. This was a key driver of Infrastructure Australia’s positive business case evaluation and subsequent recognition of the port as a Priority Project for the nation. With EPCBH and H2U, we are catering for mineral, agricultural, and clean energy exports” …

H2U CEO, Dr Attilio Pigneri, said that the green manufacturing precinct will seek to satisfy the growing world demand for decarbonised industrial products and energy.

“The Hydrogen infrastructure to be built at Cape Hardy, integrated with the world-class renewable energy resource on the Eyre Peninsula, positions the region to grow exports as the markets for decarbonised energy and industrial chemicals in North Asia grow” …

EPCBH’s Chair Mr Bruce Heddle said … “We welcome the incorporation of the green manufacturing precinct at Cape Hardy and look forward to working with H2U to explore the potential distribution of locally produced ammonia.”
Regional Development Australia announcement, The Hydrogen Utility joins Iron Road in Cape Hardy Development, August 6, 2019

Regional Development Australia announcement, The Hydrogen Utility joins Iron Road in Cape Hardy Development, August 6, 2019

AMMONIA ENERGY REPORTING ON THIS TOPIC SINCE LAST YEAR

A YEAR IN REVIEW

This article is part of our Annual Review 2019. To mark the third anniversary of Ammonia Energy, we are highlighting ten “tip-of-the-iceberg” topics that we’ve written about over the last 12 months. In each case, we think we see something just peeking above the current flow of events that is developing into a major phenomenon below the surface.

Read all the stories in our Annual Review 2019.

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