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Huge uplift for Eastern Cape on way from South Africa’s R105bn green ammonia project

Hive Hydrogen GM Colin Loubser interviewed by Mining Weekly’s Martin Creamer. Video: Darlene Creamer.

14th December 2023

By: Martin Creamer

Creamer Media Editor

     

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JOHANNESBURG (miningweekly.com) – The building of the R105-billion green ammonia project by Hive Hydrogen South Africa is poised to be a huge economic uplift for the Eastern Cape.

The large project is the first phase of a multi-phase venture that will be constructed over 16 years. (Also watch attached Creamer Media video.)

The front-end engineering design (FEED) process gets underway next month and tenders will invited shortly after the conclusion of that process in July.

Funding will be a combination of 70% debt and 30% equity. The final investment decision, which is expected by the end of next year, will be followed by construction and commissioning in 2028.

Targeted is the achievement of a lower price of green ammonia than virtually anywhere else in the world.

The building by Hive Hydrogen of 3.6 GW renewable energy capacity is scheduled to begin in early 2025. The solar power component will be built near the town of De Aar, in the Northern Cape, and wind component north and south of Beaufort West, in the Western Cape.

A large transmission grid strengthening programme will enable Hive Hydrogen’s 3.6 GW on to the grid and phases two, three and four of the project will each require additional renewable energy of a similar gigawattage. Interestingly, Hive Hydrogen’s initial 3.6 GW on to the grid will enable an additional 14.4 GW from other independent power producers.

The one-million tons of green ammonia a year that the Coega project will produce will provide clean energy for a variety of applications, with green hydrogen and ammonia being particularly well suited to the decarbonisation of heavy industries and transportation industries.

To get more insight into the project, Mining Weekly conducted this question-and-answer interview with Hive Hydrogen GM Colin Loubser.

Mining Weekly: Hive Hydrogen South Africa has signed a memorandum of co-operation with the Itochu Corporation of Japan. Why was this done and how and when do you expect South Africa’s proposed green ammonia project to benefit from this?

Loubser: The main reason why the memorandum of co-operation was signed is because Itochu is probably leading the world at the moment in the new clean fuel sector for green hydrogen and green ammonia. Itochu has a very large team working on green hydrogen and green ammonia in the Far East and globally. Itochu has also signed a memorandum of understanding with Sasol but memorandum of co-operation between us and Itochu has a different context. What we are hoping to achieve is to set up a roadmap to ensure the project, the phases, the strategic partners, are all aligned to ensure that we get the best cost of finance and to make sure we have the lowest priced green ammonia. We are seeing is an evolving situation where particularly our Coega site and all the dynamics around it, leads us to a lower price of green ammonia than virtually anyone anywhere else in the world. We see blue ammonia is as the major competitor to green, so we have to be the same price or lower than blue ammonia. We're working with Itochu to find out how to do that, and to make sure that the financing is the lowest possible and to achieve the lowest price for green ammonia. Not only the first phase of our project but its future three phases also need to be looked at and the memorandum of cooperation will cover the entire scope of the project and then how we deliver this lowest cost of green ammonia. There's a huge appetite for debt funding at low interest rates because of the value of the project to the world in terms of climate change, decarbonisation and the like.

What are the additional phases envisaged that will take Hive’s sun and wind energy requirement beyond the 12 GW mark?

A really good question and a bit of a crystal ball in part of the part of that but we are looking at doing some direct connections into the project, as well as more grid connection. Those in the industry will  know that one of the most important things that Eskom is doing and plans to be operational by around 2029, is to put in two 765 kV transmission lines with about 10 GW of capacity, from Gamma in the Northern Cape to Grassridge in the Eastern Cape. That will become the core feature for the latter phases of our project. We don't need that transmission line for phase one but we will need it for phases two, three and four, and we’ll be using some of that capacity, as well as some directly connected capacity. That will evolve further. Eskom’s transmission development plan is pretty good now. We’ll still have some off-grid wind and solar and we’ll be building some of our own transmission lines to the plant for the later phases. Each phase is going to need around 3 GW to 4 GW of power.

When will 20 000 people be employed by the project, what will be the main skills required and how will local people be upskilled to cope with the project’s requirements?

There will be a large number of construction jobs and because this is a multi-phase project, we're hoping to time the construction jobs so that we have a full 16-year period over which we can employ the people, so that it's not a construction job just for a short period. We were visited on-site yesterday by some our investors. The Coega Development Corporation was very forward thinking. They've put up a number of training facilities for upskilling. We already have access to the corporation’s database of 458 000 people with various skills, so we know what skills are available. We know how we'll have to upskill, and we know what resources we need for that. All of that is based in Nelson Mandela Bay and one of the critical components of the projects is that we have that resource here. Then there's a tertiary education capability at Nelson Mandela University, which is developing a curriculum particularly for green hydrogen and green ammonia. Coega is an ideal location with all the resources and with all the trainers in situ, and we have the database. Our focus is to employ as close to 100% South African as we can. We're really not looking at bringing in any foreign labour forces for this project at all. Employees will all be recruited here, upskilled here and delivered here with a few really specialist positions being brought in. There's a huge amount of work being done by the Department of Science and Innovation and by Nelson Mandela University to make sure we all align in getting those skills so we can attract electrolyser manufacturers and component manufacturers in the right factories as well because this isn't just about the Hive project. It's about what the Hive project can bring to South Africa, in addition to just the hydrogen ammonia plant. There are plenty more industrial investments that could result from the project.

How will a just energy transition be made possible in Gqeberha?

Ours is what we call a just energy transition-aligned project. We say it is aligned because we are ahead of where the just energy transition is, and we don't want to confuse what we're doing with the just energy transition funding. Our funding for the project doesn't come from just energy transition funding. That's why we say we're aligned. Right from the get-go, the project meets all the climate change criteria necessary and that's the main reason for it. Economically speaking, Gqeberha is one of these really difficult places at the moment. It has the lowest domestic product per capita, with a higher unemployment than any metropolitan region, so the just energy transition needs to take place in Gqeberha. From that point of view, we're very much aligned with it and we’ll meet all the pillars of the just energy transition that are required, and hopefully start the transformation and turnaround of this economy, which is really struggling.

What gives Hive Hydrogen confidence that the port, road, rail and power infrastructure will be appropriate to enable the export of one million tons of green ammonia a year as a start?

We have our own internal engineers. We have system owners’ engineers, who are probably the highest skilled in the country. We have third-party validation that we're all doing ourselves, and then the lenders and the investors do their own validation. There are four tiers of validation on the project to make sure that we deliver the million tons of green ammonia. A big part of this project is actually making sure that you can deliver and, I must say, we have seen in the last year and even the last months, a massive commitment to our project by the State-owned enterprises that we're working with. The Coega Development Corporation, which is leading that, have a great reputation and have done incredibly well. We've seen Transnet, which has become really strong with the reorganisation, putting some fantastic resources into the project. We've managed to move a few things around to expedite and take the pressure off them. What they're doing in Coega is remarkable. We’re very heavily invested in the region and we see how best they are in our project, so we're pleased about that. The commitment Eskom is showing for our operation at the moment is unbelievable. We’re getting huge cooperation. We were on site with them yesterday at Dedisa with a massive team. The same can be said of the municipality, which is also supporting the project at full steam. We are seeing where the changes are coming in South Africa. There's a lot of negative Press around some of the State-owned enterprises but in the background, the hard work that is being done by the Ministry of Electricity, and by the strategic integrated project (SIP) side of things in the government and in Public Works have started to show dividends. They’ve quietly geared up over the last year, and I think they're delivering some very good work. The calibre of the people we're dealing with is excellent. We've seen a real maturing of how the State-owned enterprises are interacting as well. Then there’s the interface with the Department of Science and Innovation, and the Nelson Mandela University to deliver the full package, so we're very confident.

Why does the world need green ammonia, what convinces Hive that it can supply it at a competitive price and is there any danger of over supply?

There's no danger of oversupply. We see another 50 projects of our scale being executed and that will probably not even be enough. If you look at COP 28 and the ambitions of what the world wants to see, the green ammonia and green hydrogen industries are now unstoppable. The reason is that the world has to switch to clean fuels. A lot of people are getting stuck on climate change and questioning climate change and all I would say is if you don't believe climate change is the result of carbon in the atmosphere, that's fine. You don't have to believe that. But that’s not the only damage that fossil fuels create. They create massive pollution, huge health problems. More than eight million people a year die from fossil fuel pollution. Overall, the benefits to the world of switching away from fossil fuels to the clean fuels of green ammonia and green hydrogen are enormous, not only for the economy, but for all those other areas as well. We don't see that demand changing and I think the Press have really got its teeth into the climate change side, but need to get their teeth into the other ill effects of fossil fuels as well. If you look at the Exxon Valdez and Gulf Coast oil spillage crises, these have had hugely negative effects on marine species, particularly as a result of heavy fuel and diesel getting put into the ocean. These issues are also massive problems. The only way to solve that and help reduce global warming by reducng the amount of carbon emissions is to go for clean fuels such as green hydrogen and green ammonia, which can be produced using renewable energy. The benefits definitely are there from clean fuels and the world has to go that way. It's unstoppable in our view.

What, on your view, should be the biggest takeaway from this interview?

The takeaway should be that it would be good for the Press to make the case for green ammonia and green hydrogen outside of only the climate change context. There is a much broader impact of fossil fuels on the globe. What we're doing besides building these projects is also something that needs greater publicity. For example, as Hive, we’re planting 18 000 trees a day at the moment for carbon sequestration. We want to double that quite soon. We have a host of projects. We've got a massive carbon sequestration project in Portugal, and we're looking at other parts of the world. The holistic approach to solving this global problem is really what needs more publicity.

Edited by Creamer Media Reporter

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