Bluescope enlists Shell for renewable hydrogen plans for Port Kembla steel

Plans to use renewable energy to make green steel at Bluescope’s Port Kembla facility in the New South Wales Illawarra region have gained significant new momentum, after signing up oil major Shell to help pilot a green hydrogen electrolyser.

BlueScope said on Tuesday that it had signed a Memorandum of Understanding (MoU) with Shell Energy Operations to collaborate on two projects that would that would establish a pathway to decarbonise the Port Kembla Steelworks.

The companies said the first priority of the joint project would be to investigate the design, construction and operation of a pilot-scale 10MW renewable hydrogen electrolyser, for use at the blast furnace at the steelworks.

Beyond that, the MoU would also provide the option to collaborate with other organisations to develop a broader “hydrogen hub” around the steelworks, including renewable energy supply and hydrogen and electricity infrastructure.

That part of the project would also examine the logistics infrastructure required for a commercially viable hydrogen supply chain in the Illawarra, the companies said.

“We are looking to the future; short, medium and long term and we are looking forward to seeing what a pilot hydrogen electrolyser can teach us about the production, storage and handling of hydrogen and, importantly, how hydrogen will behave in a blast furnace,” said BlueScope chief Mark Vassella on Tuesday.

“Any future potential hydrogen hub in the Illawarra will need broad support from governments, regulators, customers and suppliers,” Vassella added.

Already, Bluescope has signed up Rio Tinto to the cause, with a separate deal inked in October to explore the direct reduction of Rio Tinto’s Pilbara iron ores, using green hydrogen produced from renewable electricity at Port Kembla.

“The direct reduced iron (DRI) from this process will be melted in an electrical furnace, powered with renewable electricity, to produce iron suitable for the steelmaking process,” a joint statement said at the time.

In its agreement with Shell this week, Bluescope said the renewable hydrogen produced by the pilot electrolyser could also potentially be used for other purposes, such as to feed a pilot direct reduced iron (DRI) plant.

Shell Australia chairman Tony Nunan said collaborations such as these were fundamental to accelerating progress towards a net-zero emissions future.

“Hydrogen has the potential to play a key role in decarbonising hard-to-abate sectors, many of which are central to Australia’s economic and social development,” Nunan said.

“Shell looks forward to working with BlueScope and leveraging each other’s strengths and capabilities to explore the development of integrated hydrogen supply chains.”

The announcement of the BlueScope and Shell Port Kembla MoU follows last month’s call for expressions of interest from the NSW Perrottet government for a renewable hydrogen hub.

The $70 million hydrogen hub initiative – which followed the unveiling of the state’s green hydrogen strategy in October, with a promise of $3 billion in incentives – is seeking to increase electrolyser capacity to 700MW by 2030, focused primarily on hubs in the Illawarra and Hunter regions, as reported here.

The initiative will support the development and an accelerated scaling up of hydrogen infrastructure through two development avenues – grant funding for commercial-scale green hydrogen projects; and identifying consumers, and potential sources of demand across NSW.

Grant funding will only be available for the hydrogen projects stream – meaning that hydrogen customers will only gain access to such funding if they partner with a project and are part of a subsequently successful application for funding.

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