I thought I’d go back to some numbers Hazer produced around 2...

I thought I’d go back to some numbers Hazer produced around 2 years ago (Feb and March 2018 releases) comparing hydrogen produced from a normal methane source at market rates of A$8/GJ with costs of SMR and electrolysis.
The costs were primarily based on input process costs, and excluded certain other elements including capex as far as I can tell. They quoted baseline SMR cost of A$1.40/kg (no CCS), and if we consider that the typically quoted full cycle costs for SMR including all those other costs is US$1.5, or ~$A2.14/kg, then we are left with around A$0.74 plant depreciation and operating costs (other costs).
Hazer plants seem to be relatively simple, so I’ll make the bold assumption that at scale the other costs are the same (A$0.74/kg). Both are probably less than electrolyser given most of the literature suggests getting plant costs down is a critical element in getting green hydrogen cost competitive. But for the purpose of this exercise I think we’ll assume those other costs are all the same, and accept the relative input costs for the basis of review as per the two releases in 2018.
So we end up with relative costs of SMR at A$1.40, Hazer (with credits of $500 per tonne of graphite) at either A$0.41/kg with 70% reduction in CO2, or A$0.75/kg using renewable power and near CO2 neutral. These costs compare with the modeled electrolyser costs of A$6.50/kg. Of course renewable energy costs are now lower that the A$100/GMWhr used, which will improve the last two numbers and electrolysers costs will reduce when mass production starts.
Nevertheless, the numbers are compelling. If we look at a hydrogen plant that can sell its graphite at $500 tonne, then carbon neutral hydrogen comes in around A$0.75 plus A$0.74, say A$1.50. In the near term you should be able to sell green hydrogen at A$3.00-$4.00/kg, and the medium-long term A$2.00-$3.00/kg.
Let’s just look at a simple 2,500 tonne hydrogen plant with a margin of A$1 (after graphite credit), and we get an operating profit of A$2.5M from a single plant. Very handy, and you can do your own extrapolations on P/E and number of plants.
What’s also interesting is looking at their sensitivity analysis, with gas steady at $8/kg, graphite only has to get around $300/tonne to be cost break-even with SMR or dirty hydrogen which will be increasingly shunned.
Kicking off with biomethane is great; gets free money from agencies, and strong society support, should be much cheaper input gas, and of course there are the carbon credits available, and limited transport costs to consumers. So margins should be even higher than above when scaled to a commercial sized plant, and Hazer are able to chart this course with significant independence.
Then I think we get back to the MIN relationship, and large-scale plants built around natural gas seem the likely direction, with the ability to drive demand given pricing.
So there are two clear directions, and for the latter, it would be great to get direction from MIN soon. Hopefully my numbers are more or less right, and Hazer’s numbers remain in line with those reports.