Green hydrogen in mining is ‘a great but risky reward’ says dss+

21 May 2023 Consultancy.com.au 6 min. read
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Facing an attractive dual prospect of decarbonisation and commercial opportunity, mining companies are embracing the switch to green hydrogen as an alternative for dirty carbon fuels. This transition will however necessitate careful consideration of changing risk and safety profiles, according to leaders from dss+.

As the world works towards ambitious climate change goals, one technology considered to offer enormous potential is hydrogen. According to the International Renewable Energy Agency (IRENA), hydrogen could account for between 12% and 20% of global energy demand in 2050.

In particular green hydrogen is expected to generate substantial greenhouse gas reduction benefits and business opportunities, with Arthur D. Little estimating the size of the green market to balloon to $700 billion by 2050.

Simplified illustration of green hydrogen production and use at a mining operation

For the mining sector, green hydrogen will become an integral part of its shift to a renewable energy system. “Numerous mining companies are actively exploring and driving a range of initiatives to adopt green hydrogen in their energy mix as well as a new source of business,” said Andrew Wilson, Director for Australia and New Zealand at dss+.

“In mining operations, the adoption of green hydrogen can reduce emissions by replacing diesel fuel in hauling vehicles, which can contribute 30% to 80% of a mine’s emissions footprint. Other benefits include the removal of diesel particulates, the reduction of ventilation load requirements in underground mining, and lowering carbon emissions in downstream processing operations,” Wilson explained.

Examples abound. Australia’s Fortescue Metals Group (the fourth-largest iron ore producer in the world) is driving the development of green H2 production facilities across a number of locations, with the goal to decarbonise the company's mining and shipping fleet.

Similarly, UK-headquartered Anglo American and American miner Freeport-McMoRan are working to convert their diesel-powered haul trucks to green hydrogen-powered trucks across numerous operations.

Meanwhile, from an opportunity perspective, mining companies can tap into the green hydrogen boom to expand their business model beyond minerals and metals production into green energy generation. BHP for instance is partnering with steel manufacturers to investigate alternative hydrogen use in steelmaking

Navigating risks

While “green hydrogen certainly shows great promise in helping to deliver an environmentally and economically sustainable future for mining companies”, its adoption at the same time comes with a hefty – and risky – price tag.

“With great reward comes great risk,” said Wes Austerberry, Mining & Metals Leader for ANZ at dss+, pointing at a number of major green hydrogen business cases that have turned ugly across corners of the world, as well as examples from adjacent industries that highlight the significant and often unforseen challenges of an aggressive scale-up where new and exciting technologies are present.

Andrew Wilson, Wes Austerberry, dss+

To mitigate the risks that may come with scaling green hydrogen initiatives, Wilson and Austerberry said that mining companies should consider five operational aspects:

Change in risk profile
The introduction of large quantities of hydrogen may increase exposure to unwanted events such as fires, explosions and arc flash. A thorough review of operational risk management, asset integrity and reliability programmes is necessary. Risk reduction is dependent on effective design, material selection and engineering controls.

Technology readiness and innovation portfolio management
There has been a steep increase in the research and development of new hydrogen-related technologies in recent years. It is expected that these technologies will continue to evolve quickly, and there will be pressure to ramp up fast. The level of readiness, therefore, will be variable and pose uncertainties with the viability of the technology, cost, safety and efficiency in large applications at scale.

A rigorous technology development and deployment process can offset cost and performance uncertainties. Developing a portfolio of products and solutions can help achieving the transformation goals.

Capital projects
Green hydrogen is still very expensive to produce and reducing cost is critical to enable adoption at scale. Concurrently, large capital projects are exposed to a wide range of uncertainties and risks that project managers need to deal with to bring their ongoing and future projects within budget and time, while meeting increasingly stringent sustainability expectations.

Therefore, scaling hydrogen in mining must involve planning and executing a range of different projects under an overarching programme management umbrella. In this regard, depending on the type of projects and the level of project risk, the basket of projects should be managed with combining the “traditional waterfall” and “agile” approaches to achieve better outcomes throughout the journey.

Asset integrity and reliability
It takes a high level of operational discipline to safely produce and handle hydrogen across the entire asset lifecycle. The critical control management programmes commonly adopted in the mining industry are not sufficient to manage the change in operational risk profile.

Specific failure modes in equipment handling hydrogen call for a thorough enhancement of asset integrity and reliability strategies and programmes. More thorough process hazard analysis, specialist process safety in-design knowledge in the engineering and design phases, as well as quality assurance during fabrication and installation stages, are of critical importance for hydrogen technologies.

Partners and suppliers
Because the hydrogen value chain is still in its infancy, the process will necessitate a collaborative approach. The right partnerships are paramount and will create critical mass, cut costs and improve manpower.

‘Orchestrate the journey’

Wilson and Austerberry concluded: “The complexity of scaling hydrogen in mining should not be underestimated. Adopting a holistic view on risk factors and integrated approach is of paramount importance to the safe, reliable and effective adoption of new technologies and systems. Once companies appreciate the significant change in risk profile and potential new business opportunities, they are better prepared to activate their green hydrogen journey.”

“The orchestration of the journey will require a transformative approach with strong emphasis on building organisational capacity, new capabilities and a mature engagement and collaboration with partners and a broader set of players in the supply chain and business ecosystem.”