Korea Zinc says Australia critical to net zero future

The company is South Korea’s biggest investor in Australia, and plans to spend ‘billions of US dollars’ in the coming years.

Korea Zinc executive director Seung-hyun Kim (left) and vice president sustainability management division Kijun Kim (right), who says Australia will be the 'base' of the company's decarbonisation plans. Picture: Clare Armstrong

Australia is crucial to Korea Zinc’s strategy of reaching net zero carbon emissions by 2050 through the development of green hydrogen to power its refineries, according to sustainability chief at the world’s biggest producer of zinc, led, and silver, Kijune Kim.

Korea Zinc is the biggest South Korean investor in Australia, having spent $3.3bn since 1991, and plans to spend “billions of US dollars in the coming years,” according to Mr Kim. The money will be spent developing green hydrogen to power its Sun Metals zinc refinery in Townsville and further expanding its existing operations in renewable energy, mineral transport, and stevedoring.

Sun Metals is the best known of Korea Zinc’s three Australian units and had revenue of $898m last year, while clean energy unit Ark Energy had revenue of $22.8m.

Mr Kim said there is attractive government support and incentives available to develop green hydrogen in Australia, which it is tapping to build a facility to power its plant in Queensland, with surplus to be converted to ammonia and shipped to South Korea.

“There is a big opportunity for Korea Zinc and that’s the reason why we are really serious in pursuing our green metal project in Australia,” Mr Kim told journalists visiting Korea Zinc’s production base, a one million square-metre site in Ulsan, in the country’s southeast.

“Without Australia we cannot make our renewable energy target by 2050,” Mr Kim said. “In Australia we will make green hydrogen that will be transported to Korea.”

Zinc is mostly used as an anti-corrosive in galvanised steel. The refining process is highly energy intensive and Sun Metals locked in deal with the Queensland government for a 50 per cent discount on its energy bills for its first 10 years, before building a solar facility that now supplies a quarter of its energy needs.

Korea Zinc is among those that believe green hydrogen, which is created from renewables such as solar and wind, is key to a carbon neutral future because it does not emit carbon when burnt and can be used to power the likes of smelters and heavy machinery.

Australia is considered to be at the global forefront of being able to produce green hydrogen because of its solar and wind potential as countries seek to achieve net zero targets.

Iron ore billionaire Andrew “Twiggy” Forest has set aside $US1bn of unallocated capital at Fortescue Metals for its green hydrogen unit Fortescue Future Industries.

Meantime, Woodside appears to be focusing its clean energy efforts in the US, where it can tap into the Inflation Reduction Act and the lure of $US370bn of government incentives for climate and energy initiatives.

Hydrogen — in total, rather than just green — could account for 10 per cent of global energy consumption by 2050, according to the International Energy Agency.

Korea has said it wants a third of its energy to come from this source by 2050 and while it will start with a leaning on blue hydrogen — largely from gas where the CO2 is sequestered through carbon capture — it plans to move to 93 per cent green hydrogen by 2050.

Consulting firm Wood Mackenzie has said that global demand for green hydrogen may climb sixfold by 2050 to be worth as much as $US2 trillion.

The consulting firm predicts as much as 150 million tonnes could be shipped by tanker. However, while many countries and companies are talking about green hydrogen, it is clear the research and development has a long way to go.

In 2021 South Korea only sourced 9 per cent of its power from renewables — a negligible amount of this coming from clean hydrogen. And it is one of the biggest manufacturers of many fossil fuel dependent industries.

At the south eastern port city of Ulsan, the government-funded Hydrogen & Energy Technology Group director general Rhee Hanwoo said: “we call Ulsan the capital city of hydrogen.”

Mr Hanwoo said Ulsan is the only city to mass produce and supply hydrogen in South Korea, and does not yet have green or blue hydrogen in this mix.

One of the difficulties with hydrogen is that it is difficult to ship because it needs to be transported at extremely low temperatures — lower than LNG — and suffers high energy losses through “boil off” when it crosses the equator due to the closer proximity to the sun. The best method currently is to convert it to ammonia but this cracking process also causes energy losses.

Mr Hanwoo’s research lab is responsible for developing and testing hydrogen for uses such as powering houses — a quickly project scrapped — as well as boats, light rail, and heavy vehicles.

The Korean government has offered subsidies on hydrogen vehicle purchases of up to 50 per cent, according to Macquarie Bank, to try and increase their uptake.

A Hyundai representative said that hydrogen vehicles represented less than 1 per cent of its sales, compared to EVs at about 12 per cent, at its five million square metre plant in Ulsan.

The so-called Capital City of Hydrogen has 11 vehicle hydrogen charging stations.

The hydrogen lab hosts visitors from around the world but Mr Hanwoo said no Australian companies or government officials had attended his site, giving the impression that the country may be happy to just supply the green hydrogen rather than develop its uses.

Mr Hanwoo said 82 per cent of the nation’s green hydrogen will be imported — with Australia likely “play a critical role” as a supplier.

Certainly that appears the trend with Korea Zinc’s Australian green hydrogen aspirations, which are being done in a consortium with fellow Korean industrial giants Hanwha Impact and SK Gas, named Han-Ho H2.

The Han-Ho H2 group plans to export more than 1 million tonnes of green ammonia per year by 2032, powered by 3GW of renewable energy generation capacity.

At the time of the announced deal, the Queensland government hailed it as the start of a new green export trade between Australia and Korea.

Korea is already the third largest importer of ammonia in the world and the Korea Institute of Energy Research recently estimated Korea’s total ammonia demand will exceed 21 million tonnes a year beyond 2030.

The author travelled as part of the Walkleys South Korea 2023 fellowship.

Originally published as Korea Zinc says Australia critical to net zero future