SunHQ Hydrogen Hub

October 4th, 2022

SunHQ Hydrogen Hub

The initial phase of renewable hydrogen production at a zinc refinery near Townsville would be used mainly for heavy vehicle diesel fuel displacement.

Main proponents:

Ark Energy Corporation Pty Ltd

Main end-use classification:

Hydrogen mobility

Status:

Under construction – Phase 1 operations anticipated for the first half of 2023

Estimated cost:

AUD$12.97 million project capital cost (Phase 1)

Other involvement:

 

Production details:

Hydrogen production -approximately 140 tonnes annual capacity available (based on the first phase 1 MW electrolyser plant). Hydrogen production demand of the five procured Hyzon trucks is at around 91 tonnes per annum, allowing scale-up to meet third-party demand.

Location:

Queensland, Australia

Announced funding:

AUD$5 million – Queensland Government Hydrogen Industry Development Fund

AUD$3 million – Australian Renewable Energy Agency (ARENA)

AUD$12.5 million – Clean Energy Finance Corporation (CEFC – debt finance facility)

Project description

Ark Energy Corporation Pty Ltd (Ark Energy) is an Australian subsidiary of Korea Zinc Company Ltd (Korea Zinc), the world’s largest zinc, lead and silver producer. Ark Energy was established to decarbonise the energy supply of the Korea Zinc group globally. The first project on this pathway – the SunHQ Hydrogen Hub – is planned to take place in North Queensland.  Ultimately, after stimulating demand in the domestic market, a longer term ambition of Ark Energy is to export green hydrogen to Korea.

Sun Metals Corporation Pty Ltd (SMC), an Australian subsidiary of Korea Zinc, owns and operates a zinc refinery 15 kilometres south of the city of Townsville in North Queensland. The refinery currently produces 220,000 tonnes of zinc metal per annum.

The Sun Metals refinery is the second largest single site electricity user in Queensland, which has driven the company to develop alternative energy strategies. In 2018, SMC completed development of a 121 megawatt (MW) solar power plant which provides approximately 25 per cent of the energy requirements of the zinc processing facility.

The initial phase (Phase 1) of the SunHQ Hydrogen Hub project involves the installation of a 1 megawatt (MW) PEM electrolyser co-located at the Townsville refinery.  The electrolyser would be powered through a behind the meter connection to the existing 121 MW solar farm.  The electrolyser would have the capacity to produce approximately 140 tonnes of hydrogen per annum (though the hydrogen demand of the five procured Hyzon trucks is approximately 91 tonnes per annum, allowing scale-up to meet third-party demand).

The produced hydrogen would be used mainly in diesel fuel displacement. Ark Energy would procure five new hydrogen fuel cell heavy haulage trucks (each 140 tonnes capacity) and lease them to its sister company, Townsville Logistics Pty Ltd, for its short haul fleet operating between the Port of Townsville and the Sun Metals refinery, a 25 kilometre round-trip. There is also potential for renewable-based hydrogen use in powering up to 15 forklifts (in the 3-5 tonne range) at the Sun Metals refinery.

In July 2021, Ark Energy signed a Heads of Agreement with Hyzon Motors for the supply of the five ultra-heavy fuel-cell powered trucks (with Hyzon announcing in September 2021 that it had received a definitive order for the five trucks from Ark Energy) which will replace their diesel equivalents and avoid 1,270 tonnes of CO2 emissions per annum.

The potential to supply non-refinery customers with short haul fleets running back to the SunHQ base would exist from the date of operations.

Further phases of the project would build to expand on the domestic market and develop export opportunities for green hydrogen into Korea. In this vein, in September 2021, it was announced that Ark Energy and the Port of Townsville had signed a Memorandum of Understanding to undertake a feasibility study that would investigate the development of a renewable hydrogen facility focused on the transport industry at the Sun Metals’ zinc refinery in Townsville, along with hydrogen export facilities at the Port of Townsville.

Funding and concessional financing in support of the project has been received from:

  • June 2020: The Queensland Government announced an offer of funding of AUD$5 million to Sun Metals in support of the SunHQ Hydrogen Hub project.
  • November 2021: ARENA announced conditional approval of just over AUD$3 million to support project deployment.
  • November 2021, The CEFC announced a commitment of up to AUD$12.5 million in concessional financing to support project deployment.

 

Updated: October 2022