Interview with ABC Newcastle Breakfast

PAUL CULLIVER HOST: Hydrogen has long been touted as a big answer to potentially decarbonising a lot of heavy industries, even, of course, used in heavy freight and transport, potentially even by 2050 in some of our commercial airlines. That is the idea, if we can make it economical. 

Until now, well, a lot have tried and failed getting to this place of Final Investment Decision, and many projects across the country saying, "Nup, even with some of the subsidies and incentives on the table, we don't want to do this". 

Well, Orica yesterday said, "We will". They make ammonium.  They use a lot of natural gas to do it, but with the help of about $500 million from the Federal Government and another $45 million or so from the State Government, they've said they're going to do it. They're going to displace 7.5 per cent of their natural gas use with hydrogen. Is it worth it? 

Well, let's put that question to the Minister for Industry, Tim Ayres, who's on the line. Good morning to you, Minister. 

SENATOR TIM AYRES MINISTER FOR INDUSTRY AND INNOVATION AND MINISTER FOR SCIENCE: G'day Paul, good to be on the show. 

HOST: Orica's receiving around half a billion dollars to make this feasible. Is it worth it? 

AYRES: It's absolutely worth it. This is the Albanese Government delivering an industrial future for the Hunter Valley. This is a core part of the Hunter's mining-industrial complex. It's 250 jobs at Kooragang Island producing ammonium nitrate for the mining industry, and securing the future of this facility and investing in hydrogen industrial capability delivers to the just for this facility, but it builds that big ecosystem around hydrogen that's vital for our industrial future. 

HOST: Just to give us some understanding of this though, half a million dollars is a lot of money. It's a new technology, I can understand that, but is this something that's going to have to be spent every time any industry, any particular plant wants to decarbonise, or is there some kind of work being done here that is going to see more economies of scale and lower price points? 

AYRES: Well, hydrogen technology is vital for the future of production of ammonium. Right around the world, serious industrial countries are investing in hydrogen capability for ammonium nitrate production, and the Albanese Government wants to make sure that Australia is the frontier of those technological developments but backing in our industry here in Australia. 

Now, of course, early stage developments like this, with a firm like Orica that's engaged in hydrogen production processes, building a new 50 megawatt electrolyser facility will, of course, benefit this facility that employs around 250 people, but it means that our hydrogen technology is being built here in Australia, and built in the Hunter Valley. And that brings with it all sorts of industrial capability, and means that we're not being left behind in industrial terms, but Australia's leading, and that's how you build an industrial future for the economy. 

HOST: Does this lead to more sustainability for ammonium production in the Hunter into the future? Is that what this is guaranteeing? 

AYRES: Well, what it does is it delivers a future ammonium production facility for the Hunter, that's true, integrated into mining supply chains. But it also brings all of the technology that exists around hydrogen production, and it does it in a way that's at scale and real. 

Orica will be investing hundreds of millions of dollars in this project too. The capability that they bring to this in terms of their production processes means that all of that capability, all of those skilled staff, all of the engineering work that's engaged around Kooragang Island will persist and grow and has a strong future for generations to come. 

That's what's being won here. It's a vote of confidence from the Albanese Government in the industrial capability of the Hunter. It's Orica itself investing, and of course there are skilled staff there who will be contributing every day to bring this project, now final investment decision reached. Construction starts with 160 new jobs in construction, and what will be built here is a state‑of‑the‑art facility that will employee generations of Hunter Valley skilled trades people for years to come. 

HOST: Obviously, for Orica, this has all stayed within their own supply chain, but is there a price point? Has Orica got the number of how many dollars per kilogram they're producing this hydrogen at? 

AYRES: Well, I'll let Orica talk to their commercial model here. This is hydrogen production that, yes, it delivers a more sustainable future for that facility, and that's important, that's the equivalent of taking 26 or 27,000 cars off the road every year, so it's a material impact. It's making a big contribution in new electricity generation and clean technology production terms, but most importantly it's new investment in Hunter Valley engineering and industrial capability that locks in strong industrial future for the region. 

HOST: I suppose what I'm trying to understand though, more broadly, is where to next for hydrogen production, because as we've talked about, this is only effectively replacing 7.5 per cent of the natural gas use of just Orica's plant? 

Now that's not nothing, that's a significant reduction in carbon emissions, but we're not even displacing all of the natural gas use of one plant, let alone looking at hydrogen being able to decarbonise so many other parts of our heavy industries. So, the question is, does this form a plank towards some kind of future progress in other parts of our economy now? 

AYRES: Yeah. It's another brick in the wall of hydrogen production at scale, and there's a lot of politics around hydrogen that's, you know, really trying to talk down hydrogen production capability in Australia. 

I mean, our political opponents, if a hydrogen project like this were to fail, they'd be absolutely delighted, they act like it's Christmas. When a project succeeds like this one, it's like somebody ran over the family cat. You know, they are completely obsessed with the politics of this rather than the practical engineering and technology achievements that are required here. 

Is it the answer to everything? Of course it's not. But this is an early technology that's being developed at scale in Australia, and in this case in the Hunter Valley. It's making a material difference, and when firms like Orica invest hundreds of millions of dollars of their own money supported by the Commonwealth Government, that locks in future rounds of investment and future employment security in the region in a material way. 

This is a Hunter Valley achievement. I'm really proud of the commitment that the Albanese Government's made here. It's not the only thing we're engaged in in the Hunter, of course. We're going to look for every opportunity to back Hunter industry. You know, this is the industrial engine room of Australia here in the Hunter Valley, and we're determined as part of our Future Made in Australia vision for on‑shoring industrial production here in Australia, The Hunter's a core part of that vision. 

HOST: But would you agree, Minister, we haven't really reached the tipping point, we haven't proven that hydrogen is the future of decarbonisation in Australia until we start to see places that can produce hydrogen and actually sell it commercially? 

AYRES: Well, as I say, it's a brick in the wall. It's not the only answer, it's not the only answer, and it's an early technology, so it will continue to develop. And what you don't do is vest all of your hope in just one answer here in industrial terms; that's not a realistic industrial or energy or technological proposition. 

Here in this circumstance, hydrogen works. Right around the world, whether it's ammonium for fertiliser for fuel, or in this case, for mining or defence industry explosives, hydrogen's an important part of the technology process. We are determined to make sure that Australia is at the technological frontier here, because otherwise we just, you know – what our opponents and naysayers here want Australia to do is to sit on our hands and let this investment happen somewhere else and just hope that we can surf along. 

That's not where the Albanese Government is. We have the biggest pro‑manufacturing package in our history, and it's about securing current jobs, but also the technological frontier to make sure that Australia is leading the pack, and that means future investments will come here instead of going somewhere else. 

HOST: Minister Tim Ayres, good to be talking to you this morning. The only other thing that I really can't let you go without asking about, which is the future of Tomago Aluminium. We've heard from the unions that they are wanting to bring motions to Labor conferences, to effectively call on some kind of deal to be made so that the workers of Tomago Aluminium have some certainty. Is there any progress on that realm? 

AYRES: Well, we're working closely with the Minns Government in New South Wales. We've been very clear about the importance of this facility for the Hunter Valley and for Australia. Tomago is Australia's youngest and largest aluminium production facility. 

We've just secured the future of the Boyne Island aluminium smelter, smaller and a little bit older, with a billion dollars from the Commonwealth Government and a billion dollars from the Crisafulli Queensland Government. That's underpinned $7.5 billion investment from Rio Tinto in new generation capacity in Queensland, that secured thousands and thousands of jobs. 

The power purchasing agreements that have been delivered there go for 25 years. It's delivered industrial investment as far as the eye can see in Central Queensland, thousands of jobs, thousands of future apprenticeships, lowering the cost over time of electricity in Queensland for households and for business. It's an economic slam dunk in productivity and growth terms for Queensland. 

We can deliver the same outcome here in the Hunter Valley for one of Australia's most important industrial facilities, and I'm confident we will. We're working through complex commercial and technological questions with New South Wales. We'll keep at the table. It's a vital Australian asset. 

HOST: Minister, I do appreciate your time today. Thank you so much. 

AYRES: Thanks, Paul.