Whyalla Steelworks Strikes Hydrogen Deal with South Australian Government

The South Australian government has finalized an agreement to supply hydrogen to a firm that owns the Whyalla steelworks located in the Upper Spencer Gulf region of the state.

This development coincides with the state government's forthcoming construction of a 250-megawatt (MW) hydrogen power plant and storage facility near Whyalla, as part of a Hydrogen Jobs Plan valued at A$593 million. This initiative aims to fortify the state's electricity provision.

Under the agreement with GFG Alliance, the prospect of selling hydrogen arises as the company transitions towards sustainable practices, particularly in the realm of green iron and steel production. The establishment of the hydrogen facility alongside the greening of operations at the Whyalla steelworks is envisioned to position the region at the forefront of global decarbonization efforts. Should an opportunity arise to engage in a `commercial offtake agreement, facilitating the realization of green iron and steel, the government expresses its intent to capitalize on it.

However, certain specifics of the plan, including the potential returns to taxpayers from the sale of hydrogen, are currently under discussion. The delicate balance between the economics and commercial viability of hydrogen pricing, in relation to the electricity generation requirements within the state energy market, necessitates careful negotiation in commercial ventures. Nonetheless, both parties are committed to securing an offtake agreement at a mutually beneficial price point.

Anticipating a surge in workforce demand due to the impending hydrogen power station slated for operation in 2026, preparations are underway to accommodate additional workers. To this end, the South Australian government has unveiled plans to construct 32 cabins at the Discovery Parks' Whyalla Foreshore Caravan and Holiday Park, along with an additional 50 cabins at a greenfield site near Whyalla Airport, in collaboration with local business Bentley's Cabin Parks. These cabins represent the initial phase of housing provision, with discussions underway with the local council to establish a dedicated workers' camp.

Construction activities for the Hydrogen Jobs Plan are scheduled to commence later this year, with an anticipated workforce demand peaking at 1,000 workers during the project's zenith. Additionally, the state government has announced the selection of energy behemoth General Electric (GE) as the preferred supplier for hydrogen-run turbines essential for the operation of the hydrogen plant.

The Whyalla Steelworks operates as a fully-integrated facility, encompassing the entire production process from raw material extraction to the distribution of refined steel products.

Annually, the steelworks generates approximately 1.2 million tonnes of raw steel, a significant portion of which, approximately 65%, is transported by rail to the Market Mills in billet form for further processing. The remaining steel undergoes conversion into finished products at the Whyalla Rolling Mill. These finished products cater to the needs of the construction and rail transport sectors.