Modern Mining June 2023

COMMODITIES OUTLOOK

The hydrogen economy outlook By Afriforesight’s Deborah Chikukwa: Head of PGMs and Base Metals, and Kirthi Ramdhanee: Head of Battery Metals

A s the world continues moving towards sus tainability owing to climate impact concerns, low- and zero-carbon hydrogen is expected to contribute greatly by enabling green transi tions in the electricity and heat generation, transport and industrial manufacturing sectors; which account for about 96% of global carbon emissions combined. Currently, 80% of global hydrogen supply is produced using natural gas and coal feedstocks via a process called steam methane reforming. This method releases toxic carbon monoxide as a by-product, but in conjunction with carbon capture systems, should remain one of the main ways to pro duce hydrogen because of relatively low costs and the availability of comparatively mature manufactur ing technology. Looking into the future, other methods are expected to increasingly gain traction over time: ‘Green hydrogen’ is the most promising. It has the lowest carbon footprint since it is produced via electrolysis – separating water molecules into hydrogen and oxygen using electricity – powered by renewable or nuclear sources, or from electric ity generated from fossil fuels combined with carbon capture. In 2022, green hydrogen production capac ity increased by 44% to 109 ktpa from 2021 levels, but it currently accounts for only about 1% of global supply. Growth of this market depends heavily on government policy and incentives – which have stepped up significantly in the wake of Covid, as gov ernments stimulate economies by ramping up green spending and investment in new technologies. The EU and Asia (China, South Korea and Japan primarily) are expected to lead this investment drive. Approximately 40 countries have released or are developing hydrogen strategies. At least 680 large scale hydrogen projects have been announced globally, with about 30% proposed hydrogen invest ment targeted in Europe.

Afriforesight’s Deborah Chikukwa: Head of PGMs and Base Metals.

Kirthi Ramdhanee: Head of Battery Metals.

Africa is also expected to gain from growth in this sector, with several countries assessing their potential to produce Africa, Namibia and four other countries formed the African Green Hydrogen Alliance in May 2022 to help the continent become a major producer. hydrogen mainly for export. South

The global capacity to manufacture electrolys ers reached 8 GWpa by end-2022, and capacity is expected to rise to about 60 GW by 2030, led by strong growth from the EU as it seeks to cut depen dence on Russian natural gas. While green hydrogen is relatively costly to produce, the method is expected to become competitive against traditional fossil fuel hydrogen from 2030 as technologies mature and renewable energy costs continue falling. Africa is also expected to gain from growth in this sector, with several countries assessing their poten tial to produce hydrogen mainly for export. South Africa, Namibia and four other countries formed the African Green Hydrogen Alliance in May 2022 to help the continent become a major producer. The ini tiative should encourage development of hydrogen production in Africa to compete with other regions, such as Australia and South America, which also aim to produce hydrogen mostly for export. At the South Africa Green Hydrogen Summit in November 2022, President Ramaphosa stated that South Africa had the potential to produce 6-13 mtpa green hydrogen and derivatives by 2050. While these plans and expectations suggest strong growth in hydrogen supply, the demand for hydrogen is also expected to grow exponentially during the green transition for use in the transport

8  MODERN MINING  June 2023