$593m SA hydrogen facility in deal for steel

Brandon How

The South Australian government has signed an agreement with steelmaker GFG Alliance to begin commercial negotiations on supplying green hydrogen from its $593 million Whyalla project for steel production at the company’s nearby Whyalla Steelworks.

GFG Alliance expects to use the purchased hydrogen for a green iron and steel pilot production facility before transitioning completely to hydrogen. However, the state government is yet to confirm a price per unit of hydrogen, while GFG has also locked in long-term supply of natural gas for the facility.

The negotiations on testing green hydrogen could lead to the supply of between 15,000 and 30,000 tonnes of green hydrogen to Whyalla Steelworks.

Santos chief executive Kevin Gallagher, South Australian Premier Peter Malinauskas, and Liberty Steel Australia Sandip Biswas.

The state government’s 250MW electrolyser facility is already expected to supply hydrogen to its 200MW power station in Whyalla, but Premier Peter Malinauskas told reporter’s on Sunday that “if there is the opportunity to enter into a commercial offtake agreement, to realise the green iron and green steel opportunity, then we want to grab that too”.

Mr Malinauskas said that the “economics and the commerciality of the price of hydrogen relative” to the electricity that needs to be generated for the state energy market “is a delicate balancing act” that would precipitate the commercial negotiations”.

Liberty Primary Steel chief executive Sandip Biswas said there would “definitely be an offtake at a price which will be beneficial to both”.

Construction of the state government’s electrolysers, powerplant, and accompanying storage facilities is scheduled to begin later this year.

Development work is being undertaken by the Australian subsidiaries of Canadian energy infrastructure firm ATCO Australia and German gas firm BOC.

It is expected to commence operations in early 2026, pushed back from an initial estimated commencement date of December 2025 when the project was first proposed. The state government also announced on Sunday that the power plant would be fitted with General Electric Vernova’s hydrogen turbines.

GFG Alliance executive chairman Sanjeev Gupta said in a statement on Sunday it is a privilege for the company to be “a key offtaker of green hydrogen from the world’s largest electrolyser being built in Whyalla”, as it targets green steel production.

Last year, the firm announced it would phase out coal-based steelmaking while also installing a direct reduction plant, which uses a low-emissions electric arc furnace.

“Today’s agreement gives us and our stakeholders confidence to ramp up our efforts and commitment to the production of our four billion tonnes of high-quality magnetite [and] the establishment of a state-of-the-art green iron and green steel plant which will ultimately be powered by renewable energy and green hydrogen,” Mr Gupta said.

Earlier this year, Liberty Steel received a $63.2 million grant from the federal government’s Powering the Regions Fund to install an electric arc furnace at its Whyalla facility, replacing an more carbon intensive coke oven and blast furnace.

The facility also received a $50 million grant from the South Australian government to support decarbonisation activity at Whyalla Steelworks.

GFG Alliance also announced on Sunday that its subsidiary Liberty Primary Metals had signed a memorandum of understanding with Santos for the long-term supply for natural gas to Whyalla Steelworks.

This will include a joint pre-feasibility to abate some of the greenhouse gas emissions through the fossil fuel company’s Moomba carbon capture and storage project, which is expected to be operational this year.

In a statement, Mr Gupta said that natural gas was necessary for use at the Whyalla Steelworks in the transition to hydrogen.

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