Can miners ignite Australia’s green hydrogen boom?

A new IEEFA report finds miners consume about half of Australia’s ammonia through explosives; they could shift to green explosives for a minimal increase in operating costs, with the right incentives.

Ammonia infographic IEEFA
Image: IEEFA

A new report by the Institute for Energy Economics and Financial Analysis (IEEFA) identifies the importance of hydrogen as a cornerstone for decarbonization initiatives, with ammonia production as a strategic sector primed for early adoption of green hydrogen integration.

Given that hydrogen already serves as an intermediary product in the production of ammonia, Australia's existing ammonia plants, strategically situated in regions abundant with renewable resources, are ideally positioned to lead this transition.

The regions highlighted in the report – including the Hunter, Pilbara, Kwinana, and Gladstone – have been identified as potential hydrogen hubs under Australia's National Hydrogen Strategy.

The report outlines the potential influence of mining companies, major consumers of ammonia for explosives production, in driving demand and providing the necessary impetus for industry-wide transformation.

According to IEEFA’s analysis, shifting to green explosives would be affordable for miners: switching to 20% green ammonia by 2025 would increase their operating costs by less than 0.1%; while a complete switch to 100% green ammonia by 2030 would increase costs by a maximum of 0.4%.

A planned expansion of CSBP’s ammonia plant in Kwinana, Western Australia, presents a powerful opportunity to demonstrate the large-scale integration of renewables and green hydrogen in the domestic ammonia supply chain. Under current proposals, the expanded plant would be fuelled by gas. However, if the expansion was based on green hydrogen instead, it could create demand for about 53,000 tonnes of green hydrogen.

“The expansion of CSBP’s ammonia plant provides a timely and pivotal moment for miners to catalyse change and drive the adoption of green ammonia in Australian mining and the emergence of a green hydrogen industry,” said IEEFA Australia’s CEO, Amandine Denis-Ryan.

“The convergence of miner influence, market-driven incentives and government support forms a compelling case for accelerating the transition to green ammonia. By embracing this opportunity, government and industry could kickstart the emergence of a green hydrogen industry for Australia.”

Despite the promising prospects, the report details that the transition to green hydrogen will encounter challenges. Realising the full potential of hydrogen hinges on overcoming existing barriers through concerted policy action, market incentives, and collaborative efforts between industry stakeholders and policymakers.

Read the report: How Mining Can Ignite Australia’s Green Hydrogen Boom

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