Trafigura says South Australian renewable hydrogen project halted post-feasibility study

Trafigura Group decided not to proceed with its 20 mt/d renewable hydrogen project in South Australia following a feasibility study, a company spokesperson told Platts, part of S&P Global Commodity Insights, March 25, highlighting challenges clean energy projects face amid a global slowdown in energy transition.

The Port Pirie Green Hydrogen Project, a 100 mt/d full-scale renewable hydrogen project, was designed for renewable ammonia export and domestic sales and was to be integrated with the Nyrstar Port Pirie multi-metal processing facility.

"In 2023, Trafigura completed a A$5 million ($3 million) feasibility study into a green hydrogen project at Port Pirie," the spokesperson said, replying to a questionnaire. "Following completion of the study, the decision was taken not to proceed further [with the project]."

Trafigura announced in 2021 that the feasibility study fund included A$2.5 million from the South Australian government. The final investment decision for the A$750 million project was to be made by the end of 2022, with construction to commence in 2023.

The trading house had announced plans for an electrolyzer to be integrated into Nyrstar Australia's metals recovery smelter at Port Pirie, using existing infrastructure to accelerate renewable hydrogen production, rather than developing a project on a new greenfield site.

However, according to the Commonwealth Scientific and Industrial Research Organization's website, the Port Pirie Green Hydrogen Project was an archived project as of March 25.

Impact

Australia was one of the earliest adopters of renewable hydrogen development, but several projects now face delays or cancellations owing to a lack of offtake interest and investment.

"The rapid expansion of Australia's hydrogen project pipeline from 2020 to 2023 was expected to include several projects that would later be determined to be commercially unviable," said Logan Reese, Associate Director at Commodity Insights.

"A majority of cancellations are from projects announced in 2020 or 2021, but their exit is contributing to slower-than-expected industry development and will also delay the learnings that can be made from first movers," Reese added.

A spokesperson from the South Australian government did not comment on Platts' queries seeking details on the impact of the pause in the project's advancement.

"We are unable to comment on private sector project decisions," the spokesperson said.

Australia's new hydrogen strategy targets green hydrogen exports of 200,000 mt/year by 2030, with a stretch potential of 1.2 million mt/year. It targets producing at least 15 million mt/year of hydrogen by 2050, with a stretch potential of 30 million mt/year.

Platts assessed South Australia hydrogen produced via PEM electrolysis (including capex) at $3.05/kg on March 24, down 5.28% from a month earlier.

Platts assessed Japan hydrogen produced via PEM electrolysis (including capex) at $4.90/kg March 24, down 21.85% from a month earlier.