Hydrogen and Mines: From Awareness to Adoption - Pod 1

MELODIE MICHEL, REPORTER, ENERGY AND MINES

The third annual Hydrogen and Mines conference, held virtually on September 8-9, 2021, was an opportunity to observe the momentum that is building around green hydrogen applications for mines, and to address the remaining bottlenecks. Attended by over 490 participants around the world, the event explored the various hydrogen initiatives and pilot projects happening in the sector, as well as general price trends and supply chain issues. Overall, it appears that green hydrogen is firmly planting itself as the right decarbonization solution for hard-to-abate parts of the mining process.

In the conference’s first content pod, tier one miners and financiers discussed nearterm viable applications, and reminded the audience that in a market as young and dynamic as green hydrogen, remaining flexible is key. In a panel chaired by Jo Garland, Partner at HFW, the main criteria for assessing potential hydrogen projects were laid out. “When we think about analyzing hydrogen options, every mine is different. What’s the proximity to renewable energy? Is it via PPA or remote generation? What’s the mine-life? What’s the horizon for emission reduction? What’s the type of mine activity? Is it easy to electrify? You need to look at the whole of energy problems and solutions,” said Mike McKensey, Division Director at Macquarie Capital. Among other choices, answering these questions will help miners determine whether to produce hydrogen on-site or get it delivered from a large-scale production hub.

Fortescue Metals Groups arguably has one of the most ambitious decarbonization and green hydrogen strategies in the mining sector: with a target of net-zero emissions by 2040, the company is already trialling full-scale hydrogen equipment, namely a haul truck and buses, with the goal of removing one billion litres of diesel annually from their operations by 2030. Rachelle Doyle, Hydrogen Technology Lead at Fortescue Future Industries, emphasized the flexibility with which the company approached the process. “There needs to be flexibility over time to get us to our target. Generation 1 that will get us to our 2030 target isn’t necessarily the same solution that will be implemented post 2030. We always have a plan A and a plan B to contend with the fast pace of technological development,” she explained.

According to Manuel Costeira da Rocha, Commercial Director, H2 Competence Centre at Smartenergy, local hydrogen production on mine sites with a renewable resource will probably be the most favourable business case, removing transportation costs. However, he advised miners to be mindful of the impact of integrating an electrolyzer into a remote power system, particularly on power quality and stability and balance between generation and demand. “To improve the performance of complex remote power systems, it’s important to combine energy technology and digitalization,” he added.

Lee Levkowitz, Manager Energy, Carbon and Technology Research at BHP noted that the company still sees some considerable cost challenges in using hydrogen for decarbonization. “We’re still a long way away from making enough green electricity to supply the inefficient process that is green hydrogen production. We think it’s unlikely that green hydrogen will achieve competitive cost anytime soon, certainly not for 2030. We can’t stand still and wait for green hydrogen to get cheaper. We need to act today with whatever technology is available,” she said in her presentation. However, Fitch Solutions analysts expect market parity between blue (natural gasbased) and green hydrogen by 2030 “given the right conditions and incentives,” including a carbon price. They noted that the green hydrogen project pipeline stood at 71 GW in February 2021, but has since grown to 121.2 GW in over 139 projects in planning and development, showing a rapid pace of growth even in the last few months. Meanwhile, blue hydrogen projects are highly limited.

There remains a lot of uncertainty around the price curve and supply chain development of green hydrogen. But the first large-scale hydrogen pilot projects will soon come online, and their operational results are expected to give more clarity to the industry, at least on the application side. For instance, Anglo American’s green hydrogen production, storage and refuelling station at the Mogalakwena mine in South Africa is under construction, with the hydrogen fuel cell truck validation trials expected to take place throughout 2022. “We want it to be equivalent to diesel total cost of ownership, able to operate in harsh environments with high utilization and reliability, with the same operational flexibility as we have today,” said Julian Soles, Head of Technology Development, Mining and Sustainability at Anglo American.