The South Korean steelmaker Posco’s intention to invest $40 billion in the nation’s green hydrogen industry has received preliminary approval from the Australian government, which has referred to the Asian country as a crucial partner in the energy transition.
In order to generate low-emission hot briquetted iron (HBI), which is used to make steel, the firm aims to mix green hydrogen with iron ore. With Australian miner Hancock Prospecting, it has been undertaking HBI feasibility studies since April 2022. Posco has also announced intentions to sell hydrogen to South Korea from Australia.
Despite the fact that it is still early, Bill Paterson, director of the Australia-Korea Business Council, thinks Posco is “deadly serious” about following through on its $40 billion commitment. According to fDi Markets, this is Australia’s second-largest foreign direct investment (FDI) announcement on record.
The state government of Western Australia granted Posco property on January 6 in the north-western Pilbara region, which has been identified as one of the nation’s seven hydrogen industrial hotspots. The state’s leader, Mark McGowan, signed an agreement with South Korea’s government on February 1 to cooperate in growing industries such as renewable hydrogen and ammonia. The state had committed to speeding hydrogen project approvals the month before.
In addition to Posco’s announcement, fDi Markets reveals that 15 further green hydrogen projects worth an estimated $3 billion were announced by international investors in Australia between 2019 and 2022. According to James Bowen, a policy scholar at the Perth USAsia Centre, Australia needs “some sort of transformational investment” to realize its goals of becoming a clean hydrogen superpower.
A group led by Hanwha Impact, SK Gas, and Korea Zinc’s local affiliate Ark Energy came to an agreement last September to construct three gigawatts of renewable energy in order to produce and export one million tonnes of green ammonia annually to Korea beginning in 2032. In Townsville, Ark Energy is also building the SunHQ Hydrogen Hub, which will supply hydrogen fuel cell trucks used to carry zinc from its refinery to the port with power.
These initiatives show how Australia’s trade relations with South Korea, its third-largest export market, are moving away from their traditional foundation of iron ore, coal, and natural gas.