ASX BRIEFS

NH3 CLEAN ENERGY LTD (NH3) - CEO Stephen Hall Discusses Clean Ammonia's Game-Changing Role in Global Energy Markets

• Andrew Musgrave

Share episode

Send us a text

The global race for clean energy solutions is heating up, and NH3 Clean Energy is positioning itself as a frontrunner with its innovative approach to low-emission ammonia production. CEO Stephen Hall takes us deep into the company's flagship WAH2 project in Western Australia's Pilbara region, revealing how they've doubled their NPV to $493 million through strategic infrastructure partnerships and operational efficiencies.

What sets NH3 apart from competitors is their practical, cost-effective approach. While electrolysis-based projects struggle with production costs around $900-1000 per ton, NH3's gas reforming with carbon capture strategy delivers clean ammonia at just $600 per ton. This stark differential explains why many high-profile investors are walking away from alternative technologies that remain unproven at scale. Hall outlines how agreements with Chevron for gas supply, AGIG for CO2 transportation, and Water Corporation for water have streamlined the project's scope and approval process.

Andrew Musgrave Host

Welcome back to ASX Briefs, and joining me today is Stephen Hall, the CEO of NH3 Clean Energy, a company that's pioneering the development of low emission ammonia through its flagship WAH2 project. This initiative is set to play a crucial role in supplying clean ammonia to international markets, particularly in Japan and South Korea, where demand for decarbonised energy sources is accelerating. Stephen, thanks for joining me today and welcome to the ASX Briefs podcast. 

Stephen Hall Guest

Thank you very much for having me, Andrew. 

Andrew Musgrave Host

So, Stephen, for investors that may be unfamiliar with NH3 Clean Energy, can you just start by giving us a brief overview of the company? 

Stephen Hall Guest

Sure, we're an ASX listed company. We're focused on Asia Pacific's demand for sustainable energy, and by that we mean low emissions, or what we call clean ammonia, which is going to be a critical energy source for the region in the years to come. Particularly, we are focused on delivering our WAH2 flagship project. The project is located in northern WA, in the Pilbara, close to basically all the things we need, and it's looking to produce 650,000 tonnes a year of clean ammonia from 2029. Importantly, we've adopted a very clear strategy to de-risk project execution and, in a nutshell, that's about keeping it simple. It's about using proven technology, existing infrastructure wherever we can, using the best people for each job and a modular approach to fabrication to minimise the amount of work we actually do in the Pilbara, which is quite an expensive place to do these things. And all of this is being delivered through a world-class team that we've developed in terms of our executive and board and of the strategic partners that we're working with, and there's a lot of information about that on our website. 

Andrew Musgrave Host

Okay, and touching on the WAH2 project, your pre-feed study has indicated a significant improvement in the project's economics, with a doubling of the NPV to 493 million for phase one. So, what were the key drivers behind this increase? 

Stephen Hall Guest

In a nutshell, I guess it was capturing opportunities to use existing infrastructure and improving the efficiency of the plant, and what those have done in aggregate is for a very similar project, CAPEX, we've increased the production by almost 10% and required very little more feed gas. So, our operating costs and capital costs have come down on a unit basis. 

Andrew Musgrave Host

And you've secured an indication of gas supply with Chevron Australia and a MOU with AGIG for CO2 transportation. So how do these agreements strengthen the viability of the WAH2 project? 

 

 

Stephen Hall Guest

Gas is our fundamental feedstock. 18 months ago there were some that were questioning our ability to source gas. Now we understand the gas market. We think very well from the past of the team, but it's pleasing that the agreement with Chevron has really substantiated our view of the market. The gas is there at a price that makes sense for us and supports us developing or delivering a competitive product. In terms of the CO2 transport, that's very much around the right people for the job. So rather than us building a CO2 pipeline, AGIG is a specialist gas infrastructure and pipeline operator are best placed to build, own and operate that piece of infrastructure and to charge a competitive tariff. 

I would like to mention just one other thing here. The other agreement that we had was with the Water Corporation, and by securing a water supply from the Water Corporation, we've managed to delete a desalination plant and a whole load of infrastructure from our project scope. That saves us some money, but it also really simplifies our approvals. So, it's that sort of simplifying our scope, simplifying our approvals is really what's behind our philosophy here.

Andrew Musgrave Host

Okay, and the company has also signed an MOU with Pilbara Ports for ammonia exports. So, can you elaborate on how this agreement enhances the project's commercial prospects? 

Stephen Hall Guest

So, one of the reasons why we're located where we are is that the port of Dampier is very close to us, and we can have access to it. It's an established deep-water port, it already handles ammonia and it's got underutilized capacity, and so this MOU really just confirms the intent of Pilbara Ports and ourselves to export our volumes through the port, and it provides a pathway for us to get the definitive agreements in place. One thing I would also say about Pilbara Ports is we're not just talking to them about exporting our product through their facilities. We're also working very closely in terms of establishing Dampier as a clean fuel bunkering hub for the iron ore export trade, and that's a very exciting opportunity. 

Andrew Musgrave Host

Okay, and Japan and South Korea are expected to drive demand for clean ammonia, particularly for power generation and marine fuel. So how well positioned is the company to meet this growing demand? 

Stephen Hall Guest

I mean, I guess the short answer is we're well positioned and that's by design. And what I mean by that is we've sized our project so that it's large enough to capture some economies of scale in terms of our own manufacturing costs, but it's small enough that it can be absorbed in the emerging market. So, a single Japanese 1,000-megawatt power station, 20% co-firing will need half a million tons of ammonia a year, and there are a heck of a lot of power stations like that in Japan or Korea. 

If you look at the bunker inside, you would only need 16 iron ore carriers to bunker to use ammonia as a fuel and bunker in Pilbara, and that would require 500,000 tonnes as well. And just to give you a perspective on that, there are currently 300 of those bulk carriers exporting iron ore from Australia. So, we don't need to attract much of the market to fill our needs. The other aspect of our project is we are a phased project, so we will double our capacity with phase two and the timing of phase two is at our choice and we will make that choice depending on how the market grows. 

Andrew Musgrave Host

Now, with competition from green hydrogen and electrolysis-based ammonia, how does NH3's gas reforming with carbon capture strategy compare in terms of cost and scalability? 

Stephen Hall Guest

In terms of cost, it's quite a stark comparison. You've probably seen quite a lot of press about electrolysis-based projects losing momentum and people and quite high-profile investors walking away, and the fundamental reason is that if you're looking to produce clean ammonia from an electrolysis-based project, your cost of supply is somewhere in the 900 to 1,000 US dollars a ton range. Contrast that with the numbers that we have just published in our pre-feed results, which is we're looking to supply at 600 US dollars a ton. So, there's a very substantial difference between what we can offer and what an electrolysis-based project could. In terms of scalability, the size of plant that we have for our phase one is very much a standard-sized project and it lends itself to being replicated in similar trains. That is harder to achieve in a large electrolysis-based project and, of course, the electrolysis technology has not yet been proven at scale. 

Andrew Musgrave Host

Okay, and the company is engaging with strategic partners and financiers. So, what is the expected funding structure for the WAH2 project and how do you plan to attract investment? 

Stephen Hall Guest

We have a data room open at the moment where we're showing potential off-takers and strategic partners, allowing them to really have a close look at the project. Now that we have completed pre-feed, and we have the necessary commercial agreements in place. 

So, part of the plan is for strategic partners to come into the project. If we step back a little, if you think about the cost of developing the project as a whole, we're going to look to employ project finance, so 60, 60 something percent of the project would be financed by debt. The remaining would be equity. Now that equity would be split between the strategic partners coming into the project and ourselves, and of course we expect, at the time of this all being pulled together, which is in the lead up to FID, our market cap would be significantly greater than it is at the moment, and that's one thing that's interesting. If you look at our history, over the last year or so, we have substantially de-risked the project with the completion of pre-feed and the commercial agreements, but our share price has effectively stayed the same, and so there's a growing disconnect between the market cap of the company and the value of the WAH2 project, which is basically phase one, is just under 500 million MPV and our target for phase one plus phase two is about 1.1 billion. 

Andrew Musgrave Host

The company has identified government incentives as a potential value driver. So, what progress has the company made in securing support from Australian or international clean energy initiatives? 

 

Stephen Hall Guest

The first thing to say is that all of the values I just quoted and the numbers that we've published in our pre-feed work do not assume that any government incentives have been captured. We treat them as upside at the moment because they're certainly a possibility, but they're not yet in our base case. If we look first at Australia, we've been discussing financing options with NAIF and, as you know, their briefing includes concessional financing for projects like ours. We've engaged with the West Australian government around the Pilbara Hydrogen Hub funding and the potential for government funding of multi-use infrastructure. We've also engaged with the federal government around the hydrogen production tax incentive and the potential applicability of that, which is an ongoing discussion. Internationally, we are looking to participate in the Japanese and Korean procurement processes with Japanese and Korean partners, and it's that combination that provides access to incentives from those governments.

Andrew Musgrave Host

Okay, and now, just to wrap things up, looking ahead, what are some of the major milestones that the company is looking to achieve in the next 12 months? 

Stephen Hall Guest

There's really two big ones. The first is to enter feed, or front-end engineering and design, within the next four months and following that we're looking to complete feed and be ready to make a final investment decision on the project in mid-2026. 

Andrew Musgrave Host

Okay, Stephen. Well, it's been great to chat today, so thanks very much for your time and we look forward to the next updates from NH3 Clean Energy in the upcoming months. 

Stephen Hall Guest

Thank you, Andrew. It's a pleasure to talk to you. 

Andrew Musgrave Host

That concludes this episode of ASX Briefs. Don't forget to subscribe and we look forward to catching you on our next episode.