ASX-listed mining, infrastructure and manufacturing company Orica has been conditionally awarded A$432-million in funding from the Australian government to support the operation of the Hunter Valley Hydrogen Hub.

The funding, which will be provided by the Australian Renewable Energy Agency (Arena) under the first round of its Hydrogen Headstart programme, is subject to a financial decision on the hub and requisite pre-conditions being met.

The Hydrogen Headstart programme is supporting large-scale renewable hydrogen projects to accelerate the development of Australia’s hydrogen industry, while helping Australia to connect to new global hydrogen supply chains.

The funding for Orica aims to provide partial revenue support in the form of production credits once the project is commercially operational and is an essential component of bridging the commercial gap for first-mover renewable hydrogen projects in the country.

Orica’s Hunter Valley Hydrogen Hub also has the endorsement of the federal and New South Wales governments to establish the hub at Kooragang Island.

The company has received strong interest from a range of potential project partners in the last few months, including those with long-term investment horizons, a strategic focus on developing renewable-energy assets and an interest in developing markets for low-carbon ammonia.

“Orica will continue to assess those opportunities and work towards a final investment decision in due course,” the company confirms.

The hub will be a safe and reliable commercial-scale hydrogen supply chain in the Newcastle industrial and port precinct. Orica received development approval in May 2024 to produce hydrogen by electrolysis using recycled water and renewable electricity through a grid-connected 50 MW electrolyser.

The electrolyser is in the first phase of development.

Renewable hydrogen manufactured at the hub is poised to gradually replace natural gas feedstock in the production of low-carbon ammonia and ammonium nitrate. These products are essential for various industries in Australia, including mining, agriculture, health and food manufacturing.

The first phase of the hub is expected to produce 12 t of renewable hydrogen a day, reducing Orica’s daily natural gas demand for chemical feedstock by about 7.5%, which releases gas back into the grid for domestic consumption.

This equates to 4 700 t/y of renewable hydrogen production, which is enough to produce about 26 600 t/y of low-carbon ammonia.

Orica says the hub has significant merit with the differentiating benefits of a strategic location and established end markets in the mining and agriculture industries.

Orica’s Kooragang Island ammonia plant is also the only ammonia plant operating on Australia’s east coast with direct access to deep-water port facilities for international customers.

The company also plans for the hub to have strong social, environmental and economic benefits in the Hunter region, including through the expansion of the region’s manufacturing base and decarbonised industrialisation.

“We have been operating our Kooragang Island facility for more than 50 years and we are committed to ensuring both our manufacturing facility and the Hunter Valley region remain sustainable and competitive.

“Through the Hunter Valley Hydrogen Hub, we hope to further contribute to our domestic and international customers’ decarbonisation goals by offering low-carbon products,” says Orica MD and CEO Sanjeev Ghandi.

Arena CEO Darren Miller says hydrogen has an important role to play in decarbonising heavy industry, adding that renewable hydrogen is an important decarbonisation lever for applications such as ammonia production where hydrogen has traditionally been produced with fossil fuels.

“By replacing natural gas-derived hydrogen with renewable alternatives, projects such as Orica’s are helping to decarbonise core industrial processes while preserving domestic manufacturing and unlocking new export opportunities,” he explains.