Australia's Fortescue to make green hydrogen equipment in Queensland

The logo of Fortescue Metals Group adorns their headquarters in Perth, Australia, November 11, 2015. REUTERS/David Gray/File Photo

MELBOURNE, Oct 11 (Reuters) - Fortescue Metals Group Ltd's (FMG.AX) green energy unit said on Monday it plans to build the world's biggest electrolyser factory in Queensland, looking to jump start the green hydrogen industry in Australia.

Andrew Forrest, Fortescue's chairman and Australia's richest man, has thrown his weight behind the use of clean hydrogen, made from renewable electricity and water, to drive down greenhouse gas emissions. read more

The new facility will make specialist equipment like electrolysers, used in hydrogen production, as well as wind turbines, solar photovoltaic cells and long-range electric cabling for Fortescue Future Industries (FFI) and its customers.

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FFI said the first stage of the planned hub will be electrolyser factory in Gladstone, 480 km (300 miles) north of Brisbane, producing electrolysers with a capacity of 2 gigawatts a year, which it said was more than double current production globally.

The world's biggest electrolyser plant currently is run by ITM Power in Sheffield, England, with annual capacity of more 1 GW.

FFI said construction is planned to start in February 2022, with the first electrolysers, which convert water into hydrogen and oxygen, due in early 2023. Its initial investment would be $83 million, with investment of up to $650 million, subject to demand.

FFI said separately it is investigating the potential to convert chemicals maker Incitec Pivot's (IPL.AX) Brisbane ammonia plant to run on green hydrogen from natural gas through an on-site electrolysis plant that will produce up to 50,000 tonnes of hydrogen a year.

Overall, FFI said it plans to produce 15 million tonnes of green hydrogen annually by 2030, rising to 50 million tonnes in the following decade for domestic and export markets.

Broker RBC, however, said the manufacturing hub initiative could struggle to make an adequate return, given cheaper ammonia production from fossil fuels and a lack of incentives.

"A high carbon price, tiered pricing and government incentives are required to ensure green ammonia production will be economic over the medium term," it said.

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Reporting by Melanie Burton; Editing by Richard Pullin

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