25 February 2024
South Australian-produced hydrogen is poised to play a key role in the production of green steel and the decarbonisation of the Whyalla Steelworks, with the State Government and GFG Alliance reaching a landmark agreement to explore opportunities for hydrogen offtake from the Hydrogen Jobs Plan facility.
The Steelworks’ transition to green steel is taking place alongside the Government of South Australia's $593 million investment in the world-leading Hydrogen Jobs Plan – building 250 MWe electrolysers, a 200 MW hydrogen power station and hydrogen storage.
That relationship is further strengthened with the Government signing an agreement with GFG Alliance, paving the way for a commercial hydrogen offtake deal.
It comes as oil and gas giant Santos today signed its own MOU with GFG Alliance to enter discussions for gas supply and carbon capture and storage opportunities to reduce emissions from the Whyalla Steelworks.
Santos and GFG Alliance have a long partnership, with Santos supplying gas to the Whyalla steelworks for several years. Santos Managing Director and CEO Kevin Gallagher said the agreement could see GFG Alliance become the first domestic third-party customer for Santos’ flagship carbon capture and storage project at Moomba.
The State Government’s hydrogen facility, due to become operational in 2026, will use South Australia’s excess renewable energy - generated by large-scale wind and solar farms - to produce renewable hydrogen. Hydrogen will be stored and used to fuel the power station as well as being available for local industry offtake.
The agreement with GFG Alliance commits to exploring opportunities for renewable hydrogen offtake from the hydrogen facility. Commercial negotiations to secure the supply are now progressing.
GFG Alliance last year announced plans to phase out coal-based steelmaking and decarbonise its operations at Whyalla, signing a supply contract for a low carbon electric arc furnace, which will not only dramatically reduce carbon dioxide emissions but also lift steelmaking capacity from 1 million tonnes a year to more than 1.5m tonnes a year.
The company has also engaged global equipment suppliers for the installation of a 1.8 million tonne a year Direct Reduction Plant, which will process local magnetite ore to produce low-carbon iron for use in the electric arc furnace.
The Direct Reduction Plant would initially use a mix of natural gas and renewable hydrogen sourced from the Hydrogen Jobs Plan facility, before fully transitioning to renewable hydrogen.
Hydrogen offtake by high emitting industries is a key objective for the Hydrogen Jobs Plan, which is part of the State Prosperity Project, a plan to grow South Australia’s economy by providing the key ingredients needed for global decarbonisation.
More about hydrogen in South Australia
Find out more about the Hydrogen Jobs Plan and the development of the hydrogen industry in South Australia at the Office of Hydrogen Power South Australia website.
