Chemicals and explosive maker Orica will go it alone on a large-scale green hydrogen project in New South Wales after securing $432 million in backing from the Albanese government.
Energy and Climate Change minister Chris Bowen announced the Hunter Valley Hydrogen Hub as the second successful recipient of production credits under the government’s $4 billion Hydrogen Headstart program on Friday.
It comes just months after Orica’s partner on the project, Origin Energy, exited, citing a lack of demand for renewable hydrogen, and investment risks associated with “input cost and technology advancements to overcome”.
The project, located on Kooragang Island in Newcastle, will build a 50 MW electrolyser to produce renewable energy to replace natural gas in Orica’s production of ammonia and ammonium nitrate.
The first phase is expected to produce around 4,700 tonnes of renewable hydrogen each year, which Orica said is the equivalent of taking 25,600 cars off the road each year.
Orica, the world’s largest manufacturer of commercial explosives, will receive $432 million in production credits, which it said will serve as an “essential component to bridging the commercial gap for first mover renewable hydrogen projects”.
But the funding from the Australian Renewable Energy Agency (ARENA) is contingent on the project receiving final investment decisions and also requires other pre-conditions being met. It received approval from the NSW government in May 2024.
Separately, the project has also received $115 million in other state and federal government funding, including $70 million through the Regional Hydrogen Hubs Program.
Mr Bowen, who also opened a $2 billion second round of Hydrogen Headstart on Friday, said the proposed hub would secure the future of ammonia and explosives manufacturing on the island, while opening a new hydrogen export opportunity.
“The Hunter Valley Hydrogen Hub is securing long-term, high-quality jobs for the region, while decarbonising industries that are vital to our economy,” Mr Bowen said announcing the project in Kooragang.
“This investment shows we can secure existing industries such as ammonia and fertiliser production by transforming how they’re powered – creating new clean-tech jobs and future-proofing the Hunter’s economic base.”
Orica chief executive Sanjeev Gandhi said the company is committed to ensuring its Kooragang Island facility — and the wider Hunter Valley region — remains “sustainably competitive”.
“We see the possibilities for renewable hydrogen in our manufacturing operations, and the potential to support the future of Australia’s hydrogen industry as well as the growth of future jobs and economies in the region,” Mr Gandhi added.
Australian Hydrogen Council chief executive Fiona Simon welcomed the funding, describing the project as an “important project that supports Orica’s decarbonisation ambitions”, as well as the Hunter region’s transition from a coal-based economy.
The federal government has now announced $1.25 billion from Hydrogen Headstart, leaving another $750 million remaining in the first round of the program and $2 billion in the second round.
The first Hydrogen Headstart funding was awarded in March, with Danish renewable firm Copenhagen Infrastructure Partners receiving $814 million for its Murchison Green Hydrogen Project in Western Australia.
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