HunterNet – February 2025

A positive spin on Hydrogen amidst the negativity

While the consistent news flow of mostly (green) hydrogen projects in Queensland, Tasmania and Victoria falling through, this was predictable three years ago. None had bankable economics.

The consistent message that was given to investors since 2021 was that the only bankable projects will come from areas which have the best existing infrastructure. That is to say that investors would benefit from not what they had to spend but what they didn’t.

The Port of Newcastle continues to have the best infrastructure of any site in Australia. We should view many of the failures in the news flow as a welcome return to sanity.

What the media is missing is that Japan and Korea are very much committed to the hydrogen economy. As mentioned in previous months, the narrative is that blue is the sensible pathway forward.

In my meetings with NSW Government ministers, I have suggested that the government meet their counterparts in Tokyo and Seoul and discuss mixed-use power to get projects up and running. We simply do not have enough renewables in the grid to make green hydrogen commercial. If we started with a blended 80% coal 20% renewable stepped out to 50/50 by 2035, 70/30 by 2040 and 100/0 by 2045 with mutually agreed milestones, the industry could make this happen with government. If we wait for green electrons to enter the grid, the projects won’t start, and Japan/Korea will look elsewhere.

To make hydrogen a production reality in Australia, we have to create the narrative. Existing methodology will not cut it. Our current strategies are out of step. It takes G2G at the highest level to align interests, especially as Japanese and Korean corporates dance to the tune of METI & MOTIE, their economic development agencies.

As Hyundai Heavy’s founder said, “if there is no path, find one. If you cannot find a path, make one.”

I remain positive in a multi-state and multi-national collaboration can happen. It is good that many projects that were never going to make it have fallen over.

Hydrogen & Critical Minerals Production Tax Incentives (HPTI, CMPTI)

While we have seen a lot of praise about these initiatives, the problem is the lack of focus on how to get production started. For critical minerals companies, most are listed on the ASX.  Share prices are so depressed that the institutional investment community can’t participate because daily traded liquidity is too small. Normally, institutional equity investors require at least $3 million daily traded average turnover. Now, our critical minerals companies will be lucky to do $10,000 per day.

Even on the passing of the legislation in the Senate, the share prices of critical minerals companies did not react which is the market’s way of issuing a vote of no confidence.

The simplest way to succeed here is to make the Commonwealth/NSW Government the off taker. This will galvanise support from investors. While the projects are in the build-up phase, natural off takers will take their place. It is a bit like the government insuring deposits during a financial crisis. Inevitably the government isn’t ever required to be out of pocket.

Japan

Japan’s economy grew an annualized 2.8% in the October-December period vs previous corresponding period, marking the third consecutive quarter of expansion. The latest real GDP growth rate exceeded a median forecast of a 1%.

Nippon Steel is probably a great benchmark to analyse how US tariffs might play out. The Japanese steel giant – which produces 40mtpa – will now invest in US Steel after having its quest to acquire it rejected. It was curious to see PM Ishiba smiling when meeting President Trump, but it is quite clear from the body language that Japan has probably got some exemptions via this arrangement.

Toyota Motor Australia’s hydrogen team visited the Port of Newcastle. TMCA’s main aim in Australia is to do Hi-Ace sized commercial vehicles with a back-to-base business case.

Japanese Consul General Yamanaka has finally made it to the

Japan will send one of its Mogami-class warships on a trip to Australia, Japanese Defense Minister Gen. Nakatani said Wednesday, as Tokyo markets its finalist among the candidates for Canberra’s next-generation frigate. The Noshiro visits Australia from Feb. 17 to April 3.

Korea

Much attention with Korea is centred around the impeachment of President Yoon. If the verdict is official, Korea must hold a new election 60 days later. The Constitutional Court has yet to rule but it is likely that the left leaning opposition Democratic Party will take over from Yoon’s People Power Party. A recent poll showed that opposition leader Rep. Lee Jae-myung, who narrowly lost to Yoon in the 2022 presidential election, has maintained his lead in the projection for a potential snap presidential election.

If we get a reversion back to the Democratic Party, it is likely that the focus will go back to renewables and hydrogen in earnest. Higher support mechanisms to get the industry going. Less emphasis on domestic nuclear.

On nuclear, the Polish government has expressed its intention to review the nuclear power plant contract with South Korea, which is estimated to be worth at least 40 trillion won, from scratch.

According to the nuclear power industry on February 16th, the Polish government is expected to re-examine the nuclear power plant contract with South Korea. An industry official said, “After signing a Letter of Intent (LOI) in October 2022, we have been discussing the feasibility study with the client and dispatching personnel to the site, but we understand that the new Polish government, established in December 2023, has expressed its position to review the project.”

Hypothetically, if there is a Coalition victory in the coming election, the Koreans will likely make more concerted efforts to sell their nuclear (and other) wares in Australia. Expect a huge wave of delegations to Australia from the senior HQ executives of Hyundai, Samsung, Daewoo, KEPCO, KHNP and Hyosung Heavy. Education will also be a high priority for the Koreans in the nuclear space. Note that KINGS (KEPCO International Nuclear Graduate School) was so successful, MOTIE took it under its wing to provide free education to students in this field. https://www.kings.ac.kr