Why are ASX hydrogen shares in the spotlight on Monday?

Green hydrogen is getting the green light in Gladstone…

Mitchell Lawler

Mitchell stumbled upon the concept of investing when in high school, devotedly urging his parents to put some money into a handful of technology companies with increasingly popular products among his demographic – many of which have gone on to great success. It wouldn’t be until 2017, some five years later, that Mitchell became an investor of his own money. Having studied and worked as a mechanical engineer in the building services industry, Mitchell takes a methodical and analytical approach to evaluating businesses. Rather than relying purely on numbers, Mitchell drills beyond a company’s metaphorical mantle to unearth obscure patterns or competitive advantages that would go otherwise unnoticed. His expertise resides within areas such as software, consumer goods, and building services equipment. However, his quest to find quality companies that set the industry standard and flex some degree of an impenetrable position has no limits – small cap to mega cap, cosmetics to healthcare – if it’s an exceptional business it’s on his radar.

Published October 11, 2021 12:54 pm AEDT

While uranium and coal producers have been recent market focal points, ASX hydrogen shares are regaining interest today. Investors are once again eyeing off these ASX-listed energy companies following plans for a large-scale hydrogen equipment manufacturing facility in Queensland.

It seems the announcement has renewed optimism for what the hydrogen sector could be in the years to come. Additionally, it comes at a time when energy-generating resources are in high demand. Illustrating the depth of the current energy crisis, natural gas in Europe now costs 130% more than it did at the beginning of September.

A graphic of a tree and a green leafy capital letter H on a blue sky background, indicating a share price rise for ASX companies dealing in hydrogen energy — Image source: Getty Images

Green development for ASX hydrogen shares

In a reaffirming sign for the Australian hydrogen industry, a subsidiary of Fortescue Metals Group Limited (ASX: FMG) yesterday announced its intention to develop a green hydrogen manufacturing industry in Queensland.

The subsidiary is none other than Fortescue Future Industries (FFI). For the uninitiated, this is the iron ore giant's green energy offshoot. According to its website, the subsidiary is targeting 15 million tonnes of green hydrogen production by 2030.

As we covered in another article, the announcement outlines the plan to construct the world's largest electrolyser, renewable industry, and equipment manufacturing centre at Gladstone. Ambitiously, the planned 'Global Green Energy Manufacturing' centre is the first in what is expected to be a series of centres.

Furthermore, the proposal has gained the backing of the Queensland government with Premier Annastacia Palaszczuk noting an expected 300 local jobs will be created.

The announcement has highlighted the large potential opportunity ahead for ASX hydrogen shares. Companies back in the spotlight today include:

Hazer Group Ltd (ASX: HZR) up 5.03% to $1.045
Province Resources Ltd (ASX: PRL) up 1.72% to 14.75 cents
Pure Hydrogen Corporation Ltd (ASX: PH2) up 6.67% to 24 cents

Meanwhile, Fortescue Metals is enjoying a green day of its own on the back of the hydrogen news. At the time of writing, shares in the iron ore company are trading 3.33% higher to $14.725.

Reflecting on the sector

Unlike other recent trends, ASX-listed hydrogen shares have been quite sporadic over the past several months. For example, the Hazer Group share price peaked in February before trending downwards, gaining a second boost in April. Similarly, Province Resources surged throughout February to April but its share price has since declined and traded sideways.

However, many of these companies have substantially outperformed the S&P/ASX 200 Index (ASX: XJO) so far this year. Pure Hydrogen Corporation, for instance, is up an incredible 167% year-to-date. This is well in excess of the 9% delivered by the benchmark index.

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