Peter Malinauskas defers plans for $593m Whyalla hydrogen plant

Fifty five jobs at the state’s hydrogen office are on the line as the Premier shifts its $593m funding to the Whyalla Steelworks.

Taxpayers forked out around $23m to run the state government’s hydrogen office last year but a cloud now hangs over its future as the much-spruiked hydrogen power plant is deferred in the wake of a move to force the Whyalla steelworks into administration.

Opposition leader Vincent Tarzia said the heralded hydrogen power plant site in Whyalla is virtually empty despite promises of a world-leading project meant to bring down power prices.

“The government has taken its eye off the ball, you can’t have green steel when you haven’t got steel at all and we have been calling out this hydrogen hoax for a long time,” he said.

“We know it has a chief executive officer paid over $600,000 a year and a bureaucracy that’s ballooned to 55 staff, spending tens of millions of dollars of taxpayers’ money.”

As revealed exclusively in The Advertiser, more than $2bn will be pumped into the crisis-ridden Whyalla steelworks and saving jobs in the steel city, after GFG Alliance was ousted by the state government.

Ahead of that official announcement Peter Malinauskas said on FIVEAA and ABC radio on Thursday morning that the hydrogen plan would be deferred.

SA Opposition Leader Vincent Tarzia at the near empty SA Hydrogen plant site in Whyalla this morning. Picture: supplied

Premier Peter Malinauskas in April 2023 announcing the Whyalla steel plant will be run on hydrogen fuel, making it the first green steel plant in the world. Picture: GFG ALLIANCE/Brenton Edwards

“Today when we announce this in excess of $2 billion package, I will be announcing that we are allocating all of the money that is already in the state budget, which is just under $600 million into the investment in conjunction with a new owner to set up the steelworks for the future,” he said.

Mr Malinauskas said the deferral away from the hydrogen plant meant they could spend money on the ground at Whyalla and save the steelworks.

The world's biggest hydrogen production facility, power plant and storage was planned for Whyalla but has now been deferred.

“What (GFG Alliance boss Sanjeev) Gupta’s vision was to do was to build an electric arc furnace and a direct reduction iron facility to make green steel .. to be able to do that (you need) hydrogen,” he said.

“And of course, he hasn’t delivered on that, so I’m not going to build a hydrogen plant with no one to sell the hydrogen to.

“All the money that has been allocated in the budget is being reallocated to be spent here on the ground in Whyalla to set the steelworks up for the future.”

Later, speaking in Whyalla for the announcement of the rescue package, Mr Malinauskas confirmed to reporters that the state government-funded Office of Hydrogen Power would not be shut down because “there is a future for that”.

However he said it would be “curtailed and wound back”.

“There’s no point in producing hydrogen if there’s not a customer for that,” Mr Malinauskas said.

Earlier this month, Mr Malinauskas said the goal to have green steel made in Whyalla through the nearly $600m hydrogen project remained, ground works continued and generators were still being built by General Electric in the US to produce electricity for the state’s network.

Despite the financial challenges with the Whyalla steelworks and GFG Alliance, Mr Malinauskas confirmed that money remained budgeted for the government’s $593m hydrogen project.

To be compatible with a green hydrogen power plant, the steelworks would need a significant upgrade.

“I want the people of Whyalla to know, that what is true above all else, is that this government is spending $600m, potentially more, on the ground in Whyalla investing in their economic future,” Mr Malinauskas told parliament on February 6.

Opposition leader Vincent Tarzia also raised concerns this month that there were no guarantees the hydrogen plant would ever be delivered.

The news of the state government stepping away from immediate plans regarding the hydrogen plant comes less than a month after Queensland leaders pulled funding from a $12.5bn hydrogen project in Gladstone.

MORE TO COME

Originally published as Peter Malinauskas defers plans for $593m Whyalla hydrogen plant