Shares in Hazer Group Ltd (ASX: HZR) piled on more than 25% in early trade on Friday after the company's technology was attached to a bid to take over the Whyalla steelworks in South Australia.
Control of the steelworks was wrested from the control of controversial British steel magnate Sanjeev Gupta in February this year, with the South Australian Government forcing the steelworks into administration.
The steelworks is now being propped up by the state and federal governments while administrator KordaMentha seeks bids from potential new owners, with names such as BlueScope Steel Ltd (ASX: BSL) in the mix.
Another company that has put its name in the ring is global steelmaking raw materials and mining services company M Resources, which, according to its website, turns over about US$1 billion a year, trading more than 20 million tonnes of commodities.
Hydrogen solution the key
Hazer said on Friday that its technology had been selected by M Resources to be part of its bid, as a "low-cost, decarbonisation solution".
The company said it had signed a memorandum of understanding to be part of the M Resources bid to operate Whyalla.
The company added:
Under the partnership, Hazer's proprietary methane pyrolysis technology, in conjunction with KBR, has been incorporated on an exclusive basis into M Resources' proposal for Whyalla, significantly strengthening the envisioned development of a revitalised, low carbon emissions steelmaking hub in South Australia.
Hazer said the M Resources bid to operate the steelworks "prioritises an economically viable long-term industrial renewal with a strong emphasis on carbon abatement''.
Hazer's technology, producing clean hydrogen and high-value graphite from methane, is well positioned to play an enabling role in the establishment of a low-carbon emissions steel manufacturing precinct at Whyalla.
Hazer technology adaptable
Under the memorandum of understanding, the companies have agreed to collaborate on how to integrate Hazer's technology into the direct reduction process – a key part of the proposed revitalisation of the steelworks in which hydrogen will replace natural gas in the process used to make iron ore pellets.
In addition, Hazer Graphite will be used in the Electric Arc Furnace (EAF) to produce steel. The planned Hazer facility is expected to target large-scale commercial hydrogen production capacity with additional synergies coming from the use of an iron-ore catalyst in the Hazer process.
Hazer Managing Director Glenn Corrie said the partnership with M Resources was "a clear demonstration of the Hazer Process's ability to integrate into steelmaking, particularly through the use of low-cost clean hydrogen for direct iron reduction and the application of Hazer graphite in electric arc furnaces''.
Hazer shares traded as high as 52.5 cents on the news, up 28%, before settling back to be 20.7% higher at 49.5 cents.
The company was valued at $108.8 million at the close of trade on Thursday.
