Sanjeev Gupta says shipping hydrogen ‘won’t happen’, putting heavy industry with good energy supply in a strong position

GFG Alliance executive chairman says the company’s Whyalla operations are hitting records in steelmaking and mining, and says the city has a bright future in hydrogen.

GFG Alliance executive chairman Sanjeev Gupta at the Whyalla steelworks.

Future hydrogen users will need to be co-located with the source of the fuel, GFG Alliance executive chairman Sanjeev Gupta says, because shipping it is “too expensive, too dangerous and it just won’t happen”.

Mr Gupta, speaking with Whyalla Mayor Clare McLaughlin, said the Whyalla steelworks and iron ore mining operations were “very profitable” and hitting production records across both divisions.

GFG’s global operations had a near-death experience earlier this year when its financier Greensill collapsed, prompting a need to refinance more than $5bn in debt, including about $430m associated with its local arm, Liberty Primary Metals Australia.

A deal with Credit Suisse to refinance the local debt was announced early last month, with Mr Gupta saying at the time that it would provide a “stable platform” for the Australian assets, which also include the Tahmoor coal mine in NSW.

Mr Gupta, speaking to Ms McLaughlin, said the Whyalla operations were doing “incredibly well’’, with a tailwind from strong commodity prices, but also as a result of “hundreds” of improvement programs.

“When I first came to Whyalla ... it was quite a dark period. Nobody really believed that the steel operations were viable,’’ he said.

“Since then we have spent hundreds and hundreds of millions of dollars, but it’s not just about money, it’s about all the efforts we have put in and how much soul has gone into the operation”.

Mr Gupta said the steelworks were “profitable, very profitable’’.

“Of course we were helped by tailwinds as well in the steel markets and the mining markets.’’

But the company was also hitting production records in both steelmaking and mining.

“Even the port operations, we’re getting double the productivity there.’’

Mr Gupta said the steelworks was still “sub-scale” however and there further improvement plans, and building a new greenfields plant eventually, was “still absolutely my ambition’’.

On the hydrogen front, Mr Gupta said he remained firmly committed to his Greensteel vision which aims to produce carbon neutral steel.

He said he believed the shift to using hydrogen as a fuel was “at that pivoting point and I believe it will happen quicker than everyone expects’’.

“But you can’t ship hydrogen that easily, it’s virtually impossible to ship hydrogen in my opinion.

“It’s too expensive, too dangerous and it just won’t happen.

“There are some projects ... but I don’t believe in them.

“The real point is now that you will have to use hydrogen where you produce it.’’

This put Whyalla in a good position Mr Gupta said, considering it had existing heavy industry coupled with a vast local renewable energy resource.

“In terms of renewables there is no better place than Whyalla and South Australia”, he said.

The federal government has ambitions to be a global leader in the hydrogen sector, and has flagged the creation of seven hydrogen hubs nationally, with one to be located on the Eyre Peninsula, with Whyalla tipped to be the most likely location.

The South Australian state government is also currently considering seven bids to use land at the adjacent Port Bonython, with interested parties known to include H2U, which plans a $240m hydrogen project and has backing from Japanese giant Mitsubishi and a global trading deal with German company RWE.

Originally published as Sanjeev Gupta says shipping hydrogen ‘won’t happen’, putting heavy industry with good energy supply in a strong position