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Itochu to buy green ammonia from HIVE's $5.9-B Coega facility

This story was originally published in BNN Bloomberg: https://www.bnnbloomberg.ca/itochu-5-9-billion-south-africa-ammonia-plant-near-supply-pact-1.2072622

A division of Hive Energy Ltd. announced that a consortium led by Japanese trading giant Itochu Corp. is on the verge of finalizing an agreement to purchase environmentally friendly ammonia from a project located in South Africa.

Expected to commence production in 2029, Hive Hydrogen South Africa anticipates generating green ammonia from its $5.9 billion facility situated in the southern port of Coega. This eco-friendly compound serves various purposes, including fueling heavy industry and power plants, as well as being a key component in fertilizer and cleaning products.

Although the agreement with the Itochu-led consortium has not been formalized, Colin Loubser, General Manager of Hive Hydrogen South Africa, confirms that discussions are advanced and the terms of the off-take arrangement are well understood. However, Loubser refrains from disclosing the other members of the consortium due to confidentiality reasons.

In parallel, an Itochu spokesperson confirms that negotiations for the off-take agreement are ongoing.

Securing such an off-take agreement, a rarity in the emerging green-hydrogen sector, significantly enhances project viability, making it more appealing to financiers and investors. This development positions the mega project ahead of numerous others in the region vying to produce green fuel, leveraging Southern Africa's ample renewable energy resources and supporting the green energy initiatives of Namibia and South Africa.

In neighboring Namibia, projects like the €10 billion Hyphen initiative backed by Enertrag SE and Compagnie Maritime Belge SA's ammonia facility represent similar endeavors.

Owned 75% by the UK’s Hive Energy, Hive Hydrogen intends to export its output to East Asia, with initial production slated for the second quarter of 2029. Green hydrogen, derived from renewable energy sources, holds promise for decarbonizing various sectors, including shipping, heavy industry, and power generation.

South Africa's ambitious plans encompass the development of ammonia plants, hydrogen infrastructure, and steel facilities powered by hydrogen or ammonia. Notably, a portion of a $9.3 billion climate finance package, the Just Energy Transition Partnership, is earmarked to support this industry's development.

Hive Hydrogen, with a 25% stake held by South Africa’s Built Africa Group, aims to eventually possess approximately 10% of the project. Itochu, having signed a memorandum of understanding for the plant's development last year, may acquire a 25% stake along with its partners. Additional investors, including oil majors and a significant fund, are also under consideration.

Community involvement is integral to the project, with plans to allocate a $420 million stake to local communities, of which $160 million has already been secured.

Upon completion, the first phase of Hive Hydrogen's operations is projected to yield around 900,000 tons of green ammonia annually, necessitating the installation of 3.5 gigawatts of renewable power capacity.

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