The Australian mining company Fortescue Metals Group Limited is planning to invest USD 8.4 billion into a green hydrogen production facility in the province of Río Negro in Argentina. The government said that the industrial scale production of green hydrogen could generate 15,000 direct jobs.
The announcement was made by President Alberto Fernández at the UN Climate Change Conference in Glasgow, underlining the strategic nature of the project to Argentina.
The Fortescue announcement came as a surprise to many, given Argentina’s current political and economic problems, but it is important to note that so far they have only committed to an evaluation project. “It is impossible to know if the project is viable, at this point,” explained a local energy analyst, “but it is obviously interesting enough that Fortescue are prepared to invest in the evaluation work.”
“It is impossible to know if the project is viable, at this point, but it is obviously interesting enough that Fortescue are prepared to invest in the evaluation work.”
Energy analyst, Argentina
This work would likely focus on the wind power potential of Río Negro, “The wind potential in Argentina is interesting for green hydrogen production,” confirmed an Argentinian chemical engineer, “Fortescue obviously thinks the business case has a chance, otherwise they wouldn’t even invest in the evaluation.”
The political and institutional risks also don’t seem to have deterred Fortescue, “Fortescue knows Argentina,” explained the chemical engineer, “it has been operating here since 2018 when it bought properties in the Province of San Juan with good copper and gold potential. Management will be fully aware of the economic and institutional problems of the country, obviously they think they can mitigate those risks.”
A former technical director at Argentina’s National Scientific and Technical Research Council (“CONICET”) was more sceptical, “It’s a nice idea, but today I would give this project a low probability of completion. There are so many unknowns that need to converge to make it happen, including: the macroeconomic, institutional, international, environmental, financial and technical issues.”
“I would give this project a low probability of completion. There are so many unknowns that need to converge to make it happen, including: the macroeconomic, institutional, international, environmental, financial and technical issues.“
Former technical director, CONICET
Successful tests would eventually lead to the construction of a pilot facility, valued at USD 1.2 billion, which would run from 2022 and 2024. Assuming the results from the pilot are positive, work would then commence on the full-scale operational plant.
Official details of the plan remain scarce although Fortescue is studying the acquisition of a former mining site in Sierra Grande, Río Negro. The company plans to build capacity of 2.2Mt per year by 2030, primarily to serve the export market. In addition, it would also need a 500MW solar plant in the provinces of Salta or Jujuy to compensate for wind intermittency in Río Grande. Matías Kulfas, Minister of Production of Argentina, said that Fortescue will install hundreds of wind turbines, an electrolysis plant and a port for exporting the green hydrogen.
IEASA, the state-owned energy company, has also expressed an interest in green hydrogen production. In October, it announced that it is considering a USD 200 million investment to build a 200 MW offshore wind farm to produce green hydrogen both for export and internal consumption.
Let’s hope the country can stabilise for long enough to let these projects happen!