Saudi government-affiliated energy developer Acwa Power has signed a memorandum of understanding with South Korean conglomerate Posco to jointly explore the development of green hydrogen and ammonia projects.

The partners plan to use hydrogen and its derivatives, including ammonia, to decarbonise Posco’s power generation and steel manufacturing processes and supply existing customers in the South Korean market.

Acwa is one of the developers behind a $5bn green hydrogen-to-ammonia complex in Saudi Arabia’s planned Neom new city, which recently awarded an engineering, procurement and construction contract to industrial gases firm and project partner Air Products. Acwa and Air Products have also signed an agreement with Omani national energy company OQ to develop a green hydrogen and ammonia plant in Salalah.

“With tangible project commitments in Saudi Arabia and Oman, Acwa Power is at the forefront of scaling up green hydrogen, whose output—ammonia—will lead to the outcome of decarbonising entire industries, including hard-to-abate industrial activities like steel manufacturing,” says Acwa Power CEO Paddy Padmanathan.

Decarbonising steel

Posco produced over 38.2mn t of steel last year and projects 2pc growth in the global steel market in 2022 in line with rising demand and a tightening of supply as investment in new, carbon-intensive capacity slows down. The company produces c.7,000t of grey hydrogen, of which half is used in steelmaking to control temperatures and prevent oxidation of the final product.

3.7mn t/yr – Posco’s green hydrogen demand by 2050

Posco estimates that its demand for green hydrogen could reach 3.7mn t/yr by 2050 as it seeks to decarbonise its steelmaking processes. The company aims to build up to 2mn t of green hydrogen production capacity by 2040.

Posco also aims to produce up to 500,000t of blue hydrogen by 2030, highlighting in its 2021 earnings report that it plans to sign an agreement to co-develop projects with “major oil producers” in Saudi Arabia by November this year. The company signed a memorandum of understanding with state-owned Saudi Aramco in January to explore potential collaboration on hydrogen and ammonia production and transportation.

---

Author: Polly Martin