South Africa's $5.8 billion Project Aims to Produce Low-Cast Green Ammonia

A $5.8 billion project on South Africa's east coast seeks to use the country's infrastructure and cheap renewable power to make some of the world's cheapest green ammonia for clients in Europe and Asia, an executive said.

South Africa is vying with other African nations, including Egypt, Morocco and Namibia, to meet rising demand in the European Union and Asia for hydrogen and ammonia described as green because they are produced from renewable energy.

Ammonia is used in making fertiliser and by the chemical industry and it is also the means to deliver hydrogen, which is sought after to reduce carbon emissions but is very difficult to ship or pipe.

The project at the port of Coega, jointly developed by Britain's Hive Energy and South African partner BuiltAfrica, is expected to ship around one million metric tons a year of green ammonia to clients by late 2029, Hive Energy's Africa CEO Colin Loubser told Reuters.

"Our project, we believe, will provide the lowest cost green ammonia globally," he said on the sidelines of an energy conference in Cape Town.

"Hydrogen is a bridge to a new export industry for African countries," South African President Cyril Ramaphosa said on Wednesday at the energy conference.

The project, one of 52 similar large-scale hydrogen initiatives announced across the continent, can use existing port infrastructure and ample wind and solar energy supply.

A desalination plant on site, operated by South Africa's biggest salt-maker by volume Cerebos, for example, will also help to offset capital expenditure.

Benchmarking global indices, Loubser said green ammonia was priced at around $760 a ton free-on-board, but the Coega operations could produce the commodity for less.

"We can produce at $650 a ton and still give an investor a very attractive double-digit internal rate of return," he said, adding that the company was in talks with customers in Europe, Japan and Korea.

According to South Africa's Department of Trade, Industry and Competition, the country could approach $1 per kilogramme of green hydrogen by 2050.

The cost of electrolysers and electricity are both key to keeping production costs down for the likes of Hive, said a researcher.

Loubser said subsidy programmes in countries such as Australia and India may pose a threat to South Africa, but that it should remain competitive in the nascent sector.

Strategically situated along a major shipping route, Hive's project could eventually quadruple production to 4 million tpa, Loubser said.

(Reuters)