FAQs

The H2P2 Project is approximately halfway through the Front-End Engineering and Design (FEED) process. The Project has made significant progress over the last 6 months and has recently issued tenders for procurement of major equipment, including the electrolysers and ammonia plant.

Over the next 5-6 months, leading up to Final Investment Decision (FID), a significant amount of work will be done to pull together all aspects of the project for the Trafigura Board to review. This will include confirming:

• Power supply

• Property arrangements

• Capital costs

• Financing structure

• ARENA funding

• SA Government support

• Revenue firming

The H2P2 Project is a proposed commercial-scale green hydrogen manufacturing facility, that will produce green hydrogen and green ammonia for both the domestic and export markets.

The Project will be developed in a phased manner, initially producing 50tpd of green hydrogen for export in the form of ammonia and ultimately producing 100tpd of green hydrogen to meet both export and domestic needs. Once operational, the Project will contribute to lowering Australia’s and the world’s emissions through the large-scale production of zero-carbon energy.

The Project will also be integrated into Nyrstar Australia’s metals recovery smelter in Port Pirie. By utilising existing infrastructure and integrating aspects of the Project with Nyrstar’s current operations, H2P2 will be able to accelerate the production of green hydrogen compared to developing a greenfield project.

In addition, by providing renewable energy and oxygen to the existing Nyrstar facility, H2P2 would play an important role in establishing a pathway for ‘future-proofing’ the smelter from a decarbonisation perspective. In the future, this can allow Nyrstar Australia to produce low-carbon metals more competitively for the world.

The Project will form the cornerstone of a new green hydrogen precinct in Port Pirie that will benefit local businesses and support the decarbonisation of transport and industry.

A significant amount of work remains to be conducted in order to provide the Trafigura Board with the level of information it needs to make an informed decision as to whether it should or should not proceed with the H2P2 Project. The Project Team is continuing to gather information across the following items:

• Power supply

• Property arrangements

• Capital costs

• Financing structure

• ARENA funding

• SA government support

• Revenue firming

H2P2 will need to have clarity of these items in order for the Trafigura Board to approve the Project. The H2P2 Project Team are working very hard to obtain this clarity as soon as possible.

The key to having a positive outcome at the FID stage will ultimately come down to all stakeholders, including Trafigura, ARENA, Nyrstar, State Government and financing institutions, working together to achieve the outcome.

In an emerging and challenging industry, this project, if approved, will be one of the first large-scale green hydrogen projects in the state.

Green hydrogen is made by splitting water into hydrogen and oxygen using renewable electricity. This process is called electrolysis.

Grey hydrogen is produced using fossil fuels whilst blue hydrogen is produced from natural gas with CO2 capture and storage. In order to meet the challenges that climate change poses, the world will need to rapidly decarbonise. This process will require a number of different low carbon technologies to be deployed and will likely favour technologies that are ‘green’ or zero-carbon.

In our view, green hydrogen will play an important role in helping bring the world to net-zero emissions as it can uniquely be used to decarbonise hard-to-abate sectors such as heavy industry, heavy transport and the chemical industry.

The Project will work to secure a combination of wind and solar power. This will be an important focus of the FEED study. It is important to note that already approximately 65% of power in the SA electricity grid, on average, is provided from renewable energy sources. It is expected that by 2025, this could increase to 75-85% renewable energy sources.

During the construction phase of the project, it is estimated that between 150-300 jobs will be directly created. It is anticipated that an additional 600-1,200 indirect jobs will also be created during this time.

Once operational, the facility will employ between 10-25 people.

Importantly, by lowering the carbon footprint of Nyrstar Australia and improving its competitiveness in the global market, the Project is helping to secure Nyrstar’s future. Nyrstar Port Pirie currently directly employs around 1,100 people today [employees and contractors].

Electrolysis facilities and ammonia production plants operate globally (including in other regions of Australia) using technologies that have existed for over 60 years.

The main challenges for this Project are:

• to build electrolysis units at scale (200 MW compared to 20 MW)

• to build ammonia plants that can be operated under variable loads

• to ensure the facility can operate efficiently and cost-effectively with a variable power supply (from wind and solar sources)

Hydrogen can be stored in a number of different ways, both above and below ground. Usually, it is stored very safely under medium pressure, as a gas, in steel vessels. Regulation exists to ensure that hydrogen storage is appropriately separated from other infrastructure and electrical equipment.

The Project Team is investigating a number of options to store the hydrogen and will ensure all separation requirements are met.

In Q4 of 2020, Trafigura added a new trading division to its business called Power and Renewables. This growth of the business builds on Trafigura’s existing capabilities and understanding of other energy markets. Trafigura’s green hydrogen and green ammonia interests sits within this new division.

The company is building its presence and position in the renewables sector through a number of strategic engagements in trading and investments in renewable companies and technologies, including hydrogen.

Trafigura is particularly committed to reducing greenhouse gas emissions in shipping and sees green hydrogen/ammonia as a real option to achieve this. It runs one of the largest Liquefied Petroleum Gas (LPG)/ammonia trading desks in the world and employs one of the largest LPG/ammonia fleets in the world.

We expect Nyrstar to move to 100% renewable electricity as part of sourcing energy for the Port Pirie Green Hydrogen project. Nyrstar will look to utilise hydrogen where practical in mobile equipment and other site services.

H2P2 will allow Nyrstar to make significant and rapid progress towards decarbonising its operations through the transition to renewable electricity onsite.

Nyrstar will also commence investigating opportunities to displace the consumption of natural gas, diesel, coke, coal and other raw materials that are consumed in the furnaces and across the plant’s operations. These are significant contributors to Nyrstar’s emissions and cannot be immediately addressed by Substituting directly with green hydrogen.

Nyrstar will be investigating all options to decarbonise its Port Pirie facility and its broader business in Australia.

The Nyrstar site uses seawater for its existing operations and has an existing seawater intake point on site. The Project plans to use this seawater intake and run a small thermal desalination plant with underutilised waste heat that is currently produced through Nyrstar’s operations.

The desalination plant will provide fresh water for the electrolysis process as well as a small amount of additional fresh water that can be utilised by Nyrstar. This will result in the site’s consumption of water from the SA Water mains to be significantly reduced.