HunterNet Newsletter – January 2025

Happy New Year to you all and here is to a successful 2025.

Australian Elections

The North Asian investors are watching our federal elections closely. The unsolicited feedback is that they sincerely hope for a change in our federal government which fundamentally boils down to one fundamental issue – unpredictability over energy, especially coal and gas markets.

NSW – Time to focus on blue hydrogen/ammonia

NSW take note. WA has achieved the following:

Pilot Energy Limited has announced significant progress in the Mid-West Clean Energy Project (MWCEP) through its collaboration with a Korean Consortium led by Korea Southern Power Co., Ltd. (KOSPO). This consortium, which also includes Korea East-West Power, Samsung C&T, and Approtium, recently secured funding of 2 billion KRW (approximately A$2.2 million) from the Korea Export-Import Bank to conduct a comprehensive feasibility study on the project.

The MWCEP is a forward-looking initiative aiming to leverage existing infrastructure in Western Australia’s Arrowsmith region to produce approximately one million tonnes of clean ammonia annually.

In both Japan & Korea, the focus is on blue hydrogen/ammonia to get the industry commercially off the ground before green gets of sufficient scale to be bankable. NSW is focused on green only. It would be advisable to become colour neutral to raise the prospects of cementing clean energy opportunities out of North Asia. They don’t believe we will be able to roll out green electrons by the time needed.

Korea

It has been a busy January in Korea.

Last month, I mentioned that I would organize a visit to deep dive into the Korean nuclear industry supply chain with a senior delegation from Australia.

It was extremely encouraging to see the extent of the manufacturing capabilities which could easily accommodate our ‘potential’ demand for nuclear power plants. Furthermore, the main Korean EPC and equipment manufacturers are keen to establish networks with Australian businesses for local manufacturing and civil engineering opportunities.

We were privileged to visit reactor 2 of Saeul Nuclear Power Plant (NPP) near Ulsan. It is the APR-1400 type Australia may consider. Looking through the window above the control room, the capacity factor was 99.8%. KHNP (KEPCO’s nuclear subsidiary) said that they run these plants because of the efficiency and the lowest baseload cost of c.5c/kWh.

KEPCO has established KINGS (KEPCO International Nuclear Graduate School) inside the Saeul/Shin Kori NPP precinct. They provide free tuition to international students to support the industry from a strategic level. Further proof of the state craft that runs in Korea. The program has been so successful that Korea’s Ministry of Trade, Industry & Energy (MOTIE) has taken it under its wing from private funding via KEPCO. Not the Ministry of Education. Clearly MOTIE views this as confirmation of how important nuclear power is to its export ambitions.

Note the impeachment of President Yoon maybe used to weaponize arguments by the opposition (which may take power) to curtail the domestic nuclear expansion, export markets will be unaffected. These internal discussions were confirmed during our visit,

If there is a change of government in Australia, Korean corporates (especially in nuclear) will be making a b-line to Canberra to offer services to execute any specific program. They are very serious. The corporates which have built these plants over 50 years non-stop are top notch. Delivering on-time and on-budget projects.

During the two weeks in Korea, AI was a large thematic and the only power source being contemplated is nuclear. Australia won’t be able to become a competitor in this space without it.

I also took a leading Australian business council CEO to meet with multiple Korean CEOs and the feedback is one that circles back to three important factors:

  • Skilled labour – acknowledged that Australia possesses it but not enough of it to execute housing, energy and civil opportunities in realistic timeframes.
  • Energy prices and security – concern that our renewables only trajectory could undermine our future energy security if we get into diplomatic strife with a country that dominates the supply chain of wind/solar/batteries when it comes to replacement.
  • Importance to establish proper G2G – there is a wish to see better coordination between our two governments. This is nothing new. However, there is a real need to have hard agendas on how we can collaborate rather than friendly get togethers.

Finally, the Korean Chamber of Commerce & Industry (KCCI) has set up a website https://kcciglobalsquare.net which lists the policies and programs of global governments and bodies. It would be great to see HunterNet reports accessible.

Japan

This week I had the privilege of speaking to a mover and shaker within Japanese political and business circles. He said, “we need to region Japan’s confidence in Australia as a reliable source of vital mineral resources and energy, which has been undermined by wilful mismanagement by the current government.”

They maybe harsh words but it is important to recognize the frustrations that remain inside Japan Inc. Diplomatically, our governments talk about a bed of roses, but it also suggests that a change of government could ignite a repurposing of investment in Australia. Energy is the main issue.

Follow the money. Japan is increasing its LNG fleet, anticipating a global rise in LNG production. Mitsui O.S.K. Lines (MOL) will expand its fleet of LNG ships 40% to 140 by fiscal 2028, and 150 by fiscal 2030. Nippon Yusen (NYK) looks to grow its LNG carrier fleet as much as 30% to 120 vessels by fiscal 2028, while Kawasaki Kisen plans a 60% increase to 75 ships by fiscal 2030.

Interest in developing offshore wind projects is declining in Japan on concerns about profitability amid rising prices and labour shortages.

During the third round of bidding on offshore wind project in Japan, METI noted that at least 15 companies, including Mitsubishi Corp. and Cosmo Energy Holdings, did not participate despite having conducted preliminary EIS.

Japan is also in an interesting position with respect to the Trump Administration. PM Ishiba, holding onto minority government, was not granted priority status to meet Trump before the inauguration whereas former PM Abe’s wife Akie was granted an audience. Do not be surprised if Japan has another political change at the top.