Fortescue Future Industries (FFI), the green-energy arm of Australian mining giant Fortescue Metals, struck a deal with the Kenyan government on November 8 to produce green ammonia for fertilisers and create a green fertiliser supply chain, in a deal it wants to turn into a blueprint for other countries to follow.
“We believe that once other countries see what Kenya has done, they’ll follow suit,” Mark Hutchinson, who assumed the role of CEO of Fortescue Future Industries (FFI) in August, tells fDi.
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We believe that once other countries see what Kenya has done, they’ll follow suit.
FFI signed the agreement with the Kenyan government during the first week of COP27. Typically, ammonia and nitric acid are combined to create ammonia nitrate, which is then used as fertiliser.
The Ukraine war has exacerbated Africa’s food insecurity and limited African countries capacity to import fertilisers from Russia, the world’s largest exporter of fertilisers, to boost their crop yields.
Fertiliser first
Under the agreement, both parties will work together to build a 300 megawatt-capacity generation green ammonia and green fertiliser facility, scheduled for completion by 2030. It will use existing geothermal power to produce hydrogen via electrolysis.
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“It’s early days, but we’ve done enough work to understand that the deal is bankable. Kenya has excess geothermal power capacity, so we have the power already and the country will be the offtaker, allowing it to get off the fossil fuel band wagon and produce green hydrogen domestically,” he says.
Other investors in would-be African green hydrogen hubs have also made fertiliser commitments.
Last year, Egypt’s sovereign wealth fund signed an agreement with Norwegian Scatec and ammonia producer Fertiglobe to establish a green hydrogen facility to produce feedstock for ammonia production. At COP27, being held in Sharm El-Sheikh, Egypt, Fertiglobe commissioned the first phase of the facility, which is set to be the first integrated green hydrogen plant in Africa.
Speaking about the Kenya project, Mr Hutchinson is keen to stress that the financing and technology risks are reasonable for a project of this size. “Given the enormous value of this to Kenya and the commitment by the government, I think finding the finance won’t be an issue,” he says.
“It’s all known technology and we want to make this as simple as possible, so we’ll use one of the industrial parks near the geothermal sites.”
While phase one of the project is designed to cater to the needs of the domestic market, its second phase will be about creating a green hydrogen export industry.
FFI has signed numerous such agreements with governments and businesses around the world, from its native Australia and Papua New Guinea to India and the Democratic Republic of Congo. In 2021, it also signed agreements with Russia.
Former CEO of FFI, Julie Shuttleworth, told fDi last year that all these projects are not “necessarily going to progress”, but stressed that they were “realistic”.
Egypt and Africa
FFI is one of the biggest green hydrogen prospective investors in Egypt, according to fDi Markets and Rystad data. The country has emerged as an unlikely green hydrogen hub this year, attracting more than $100bn of announced green hydrogen commitments.
This is in line with a rising amount of announced green hydrogen investment in Africa. More than 90% of green hydrogen investment recorded by greenfield foreign direct investment monitor fDi Markets has gone into Africa — up from a mere 20% in 2021.
While the number of announced large-scale hydrogen projects grows globally, only around 10% have reached the final investment decision, according to The Hydrogen Council’s Hydrogen Insights 2022 report, published in September.
One element that has changed over the past year is the rise of the EU as an offtaker, according to Mr Hutchinson. “Particularly, the Europeans’ role as an offtaker has increased dramatically ... That’s really important for export,” he says.
The EU signed a memorandum of understanding on November 8 at COP27, establishing a strategic partnership with Namibia, which is slated to become a green hydrogen export hub. The European Investment Bank is set to provide the Namibian government with a loan of up to €500m for long-term renewable energy projects, including green hydrogen.
Ahead of next year’s COP28, Mr Hutchinson expects the hydrogen hype to turn into a more tangible reality by 2023. “When we’re back in a year, we’ll be able to demonstrate to others that it’s real, that we’re actually making this stuff and it’s now replacing fossil fuels. I think next year there’ll be tangible evidence that this is a market,” he says.
At present, FFI has no green hydrogen production, but has targeted 15 million tonnes of green hydrogen annually by 2030.