Key points
- Fortescue Future Industries is buying into a joint venture project to develop green hydrogen
- If successful, this method of making hydrogen wouldn't need renewable energy or electrolysers
- The Fortescue share price is up around 3% in morning trading
The Fortescue Metals Group Limited (ASX: FMG) share price is up this morning. Fortescue Future Industries (FFI) is going to buy a stake in Sparc Hydrogen alongside Sparc Technologies Ltd (ASX: SPN) and the University of Adelaide.
Green hydrogen joint venture
Sparc announced to the ASX today that binding agreements have been executed between Sparc Technologies, Future Fortescue Industries and the University of Adelaide, forming the Sparc Hydrogen Joint Venture.
FFI will subscribe for shares in Sparc Hydrogen under a subscription agreement. Sparc Technologies intends to issue and complete the share issue imminently.
A shareholders agreement has been executed and includes provisions for things like governance and funding provisions.
FFI is going to pay $1.8 million to earn a 20% stake after the stage 1 funding close. It will pay an additional $1.475 million to buy an additional 16% stake. That will leave it with ownership of 36% of the joint venture. Sparc will also end up with 36% after the two stages, whilst the University of Adelaide will own 28%.
What is the green hydrogen project?
As reported by my colleague Brooke Cooper this week, the Sparc Hydrogen joint venture is aiming to create "ultra-green" hydrogen by utilising solar power.
It will seek to further develop a process known as thermo-photocatalysis which will turn water into hydrogen and oxygen.
Adopting this process to produce green hydrogen means that renewable energy from wind farms and/or solar panels and electrolysers are not needed. Due to that, capital and operating expenditure is expected to be significantly lower than electrolysis and other forms of hydrogen production currently in use. Fortescue Future Industries is currently working on projects involving renewable energy and electrolysers.
This thermo-photocatalysis technology can potentially be adopted remotely and for onsite use, therefore reducing the reliance on long distance hydrogen transportation and/or electricity transmission.
Stage one of the project, in the first 2.5 years, will include steps like optimising thermo-photocatalytic reactor conditions, constructing a new reactor for full solar simulation, testing it (including the longevity and durability) and designed a prototype scale reactor for on-sun operation.
Stage two, over the following two years, will involve the installation and commissioning of the prototype reactor. It will also include the pre-commercial pilot scale system design, procurement, installation, commissioning and operation of a thermo-photocatalytic reactor.
Comments from management
The Fortescue Future Industries CEO Julie Shuttleworth said:
There is irrefutable scientific evidence that the planet is warming. Green hydrogen is a practical, implementable solution to decarbonise hard to abate sectors, including heavy industry. The research being undertaken by Sparc Hydrogen is important for FFI's growing technology portfolio as we develop technologies to lower emissions globally. We are excited to enter into this agreement and to support this critical research into green hydrogen.
Fortescue share price snapshot
The Fortescue share price is up around 3% in early trading today, with the S&P/ASX 200 Index (ASX: XJO) up by 0.8%.
