Lead Developer for Cape Hardy Green Hydrogen project selected
While our long-term Wise-Owl iron ore Investment Iron Road (ASX:IRD) awaits financing for its development-ready, large high-grade iron ore project, it has been steadily progressing its port and hydrogen projects in parallel.
Earlier today, IRD announced its selection of renewable energy group Amp Energy (Amp) as lead developer for its Cape Hardy Green Hydrogen project in South Australia.
Headquartered in Canada, Amp is developing some 20 GW of electrolyser capacity across projects in Japan, Spain, the USA and Australia. It is backed by global mega fund the Carlyle Group, which has over US$350B assets under management.
The parties have announced a Strategic Framework Agreement to develop the proposed 5GW project, with a nine-month exclusivity period.
Under the terms of the agreement, IRD has received an upfront ‘exclusivity fee’ payment of $1.5M. Another $1.5M payment is expected upon execution of detailed transaction documents, around the end of 2023.
IRD can receive up to a further $21m in staged payments to first green hydrogen / ammonia production, whereby a perpetual royalty stream would kick in.
IRD fully owns the 1,207 hectare greenfield site at Cape Hardy, with the hydrogen project expected to comprise approximately one-third of the site.
Aside from the hydrogen opportunity, Cape Hardy is slated as a multi-commodity, regional export port with strong government support, with the Federal Government tipping in $25m via a grant commitment to assist with development.
We primarily invested in IRD for its development-ready Central Eyre Iron Project (CEIP), which hosts Australia’s largest undeveloped magnetite deposit, capable of producing 589Mt of high-grade magnetite (66.7% Fe) over the life of the mine.
Cape Hardy remains the logical, logistical channel for CEIP, which would also benefit from the presence of a large-scale, renewable energy generation and transmission project such as the Green Hydrogen project.
The significance of today’s news is that if the hydrogen project is developed, IRD will have a substantial revenue stream for decades to come, whilst paving the way for cheaper energy and possible export channels for its iron ore project.
What’s next?
Amp will continue to negotiate with IRD during the exclusivity period to complete all Transaction Documents, and seek Australian Foreign Investment Review Board (FIRB) approval to enter into long-term land lease agreements with IRD. This is anticipated to be finalised by the end of the year.
Provided a successful outcome, this would kick off further conception design and Pre-FEED (front end engineering design) work.
