Korean giants’ $20b hydrogen plan for Qld’s coal heartland

Angela Macdonald-SmithSenior resources writer

Sep 21, 2022 – 11.00am

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Giant Korean conglomerates Hanwha and SK Group have joined Korea Zinc in a proposed $20 billion-plus green hydrogen project in Queensland, paving the way for a new green energy export trade between Australia and Korea by 2032.

The Hanguk-Hoju consortium, meaning Korea-Australia, aims to establish a supply chain between the two countries using the partners’ expertise to set up a corridor for deliveries of green ammonia, used in power generation and industries such as fertiliser production.

Ark Energy CEO Daniel Kim says the consortium aims to set up a green energy export “corridor” between Australia and South Korea.

Renewable energy generated from the operations of Korea Zinc’s Australian subsidiary Ark Energy in Queensland’s coal heartland in the Bowen Basin will be used to produce carbon-free hydrogen that will be converted to ammonia for shipping.

The venture aims to export more than 1 million tonnes of green ammonia a year to Korea by the 2032 target date.

“We want to kind of own the corridor, we want to transform at trade relationship from resources and fossil fuels to green hydrogen, green ammonia,” Daniel Kim, the chief executive of Korea Zinc’s Australian subsidiary Ark Energy, told The Australian Financial Review. A memorandum of understanding for the Han-Ho H2 consortium and their project plans was signed at Queensland government headquarters in Brisbane on Wednesday morning, witnessed by Queensland Premier Annastacia Palaszczuk.

Ms Palaszczuk said the consortium would “accelerate progress in our renewable hydrogen industry and advance green energy exports to Korea”.

Korea Zinc, the world’s biggest producer of zinc, lead and silver, snapped up renewable energy developer Epuron late last year in a deal specifically aimed towards exporting green hydrogen from Australia to South Korea. The deal gives Ark access to a potential 9 gigawatts of wind and solar generation.

Historic visit

The developments follow the historic visit to Australia last December of South Korean President Moon Jae-in and the agreement for the two nations to strengthen co-operation in energy and resources, notably critical minerals.

Korea Zinc is one of several major Korean players examining the potential for hydrogen supplies here, with steel giant Posco last year naming Australia a regional strategic base to help achieve its clean energy aspirations in the race to tackle climate change.

The news of the proposed project adds further momentum to Australia’s emerging green hydrogen industry, which took a leap forward last Friday with the go-ahead given by France’s Engie and Japan’s Mitsui on the first industrial-scale plant for the carbon-free fuel, in Western Australia’s Pilbara region.

Green hydrogen, mostly expected to be shipped initially at least as green ammonia, is being seized on by Australia’s traditional customers of coal and gas in Asia as a solution to help the decarbonisation of power generation and industry to help reach net zero emissions goals. Germany is also keen to source green hydrogen from Australia, as early as 2025.

Korea is already the world’s third-largest importer of ammonia, which the Korean government has committed to use as a carbon-free fuel alongside traditional fuels in the country’s coal and gas-fired power stations.

Total ammonia demand in Korea is estimated by the Korea Institute of Energy Research to top 21 million tonnes a year after 2030.

Ark Energy, which will lead the Han-Ho H2 consortium, will use its Collinsville Green Energy Hub southwest of Bowen as the source of renewable energy generation for hydrogen production. Mr Kim said the hub has a potential generation capacity of up to 3000 megawatts.

He said the selection of Hanwha Impact and SK Gas as the consortium partners was important given they are major players in Korea’s hydrogen economy, paving the way to realise the huge export project. Together with Korea Zinc, the partners expect to need more than 2 million tonnes a year of green ammonia starting from 2030.

Korea Zinc vice chairman Yun B. Choi said Australia would continue to be a key strategic market for the group as it develops renewable energy and green hydrogen projects for the long term.

Hanwha Impact, part of the huge Hanwha Group conglomerate, will purchase green ammonia from the consortium and will be involved in the ammonia conversion process, as well as in converting gas turbines to run on hydrogen.

SK Gas will also purchase green ammonia from the venture and will be involved in the infrastructure for the export terminal, shipping and import terminal as well as in developing the end-use market for the fuel.

The partners aim to formalise their consortium through a heads of agreement by the end of December. Mr Kim said the timing for a final investment decision to build the project was still uncertain but would need to be in 2027 to meet the schedule for exports in 2032.