Hazer Group Limited (ASX:HZR) Managing Director and CEO Geoff Ward talks about the Hazer process for low emissions hydrogen gas and high purity graphite production from biogas, CAPEX approval to proceed with the company's commercial demonstration plant and offtake discussions.
Ortenzia Borre: Hello, I'm Ortenzia Borre for the Finance News Network. Joining me from Hazer Group is managing director and CEO, Geoff Ward. Geoff, welcome back.
Geoff Ward: Thank you, Ortenzia.
Ortenzia Borre: First up, could you remind us about the company and its focus?
Geoff Ward: All right. So Hazer is a clean technology development company, and we have [inaudible 00:00:19] the commercialization of the Hazer process, which is an ultra-low emission method of producing hydrogen with graphite as a byproduct. So we take methane feedstock and produce hydrogen and high-quality crystalline graphite without any associated CO2 emissions in the process.
Ortenzia Borre: Thanks, Geoff. Now hydrogen is not something we see a lot of in Australia outside of hybrid cars. Where else is it used?
Geoff Ward: Well, I wish we did see a few more hybrid cars in Australia. In fact, it's been great to see the first fleet come into the country in 2019. But hydrogen is incredibly versatile. It's actually used extensively in industry today, which gives us the whole backbone of skills and technology to draw upon. So hydrogen can be used as a feedstock in the manufacture of fertilizers, explosives, in the processing of crude oil, the desulfurization process.
But the emerging markets for hydrogen are as a low-emission transport fuel in heavy transport, so fleet, waste trucks, trains, long-distance lorries, as well as passenger vehicles, and also as a method of providing heat and power to cities, office blocks or commercial homes.
So hydrogen's got a huge role to play because as well as being a mechanism of producing clean energy, it's also a way of storing renewable energy and transporting it. So it's going to be a very big part of the next 50 years of renewable energy.
Ortenzia Borre: Now, could you tell us about your commercial demonstration plant project economic and funding?
Geoff Ward: All right. So our CDP, as we refer to it, is going to be a hundred ton per annum hydrogen production facility. It's going to be located south of the city of Perth at the Woodman Point wastewater treatment plant. We're collaborating with the water corporation, Western Australian Utility, that provides water to the city of Perth. Our Hazer CDP is the first large-scale demonstration of our process. We want to use it as a reference site with future customers. It will be about a $16.65 million project. The board approved the budget last month at the end of March and we're looking to have that in construction through the middle of this year for operation by mid next year.
Ortenzia Borre: Now, could you comment on the national hydrogen strategy and the WA renewable hydrogen strategy and what they mean for Hazer?
Geoff Ward: Well, hydrogen has received an awful lot of focus over the last two years. That's partly because we've seen the maturing of the renewable energy market, and we've now seen an abundance of low-cost wind and solar, which can be transformed into hydrogen and which hydrogen can react as a storage mechanism for. That's been coupled with a big amount of international interest from Japan, Korea, Singapore, who are all looking at their future hydrogen strategies and want to link with Australia. So hydrogen has certainly become very topical and, hence, leading to the national strategy.
As part of that national strategy, there's a big push to find domestic opportunities such as the Hazer project, such as transport opportunities in Australia, which will allow us to grow the industry and skills necessary to, in the future, be a hydrogen exporter.
Building off that, we've seen state hydrogen strategies, so Western Australia, as you mentioned, South Australia, Queensland, all have state-based renewable hydrogen strategies. We're working with the Western Australian state government and their renewable hydrogen fund to also study developing a hydrogen-refueling facility south of the city of Perth also, in Mandurah as part of their WA hydrogen strategy.
Ortenzia Borre: Now, to a question investors are asking every company, what impact is COVID-19 having?
Geoff Ward: Well, luckily for us to-date not a lot of impact. Yeah, we're a relatively new company, we're a relatively small company, so we don't have complex overheads or a large existing customer base. So we haven't had the kind of impacts that have hit much more developed companies.
We're also lucky to have been well-funded. We raised money the end of last year and so we have sufficient funding to continue our operations through this period.
As we were very intentionally focused on the design, procurement activities, permitting and planning activities with the CDP, we were able to manage them so far with only minimal disruption. We've seen some small delays, which we hope we'll mostly recoup over the next year. So luckily to-date, impact has been quite low and we hope that we can continue that way.
Ortenzia Borre: Could you provide a snapshot on financials?
Geoff Ward: As we mentioned before, we're still a technology startup company, but we're well-funded. Now we had $9.25 million in the bank as of the 31st of March, last quarterly.
We've been well-supported by both the federal and state governments in Western Australia, so we have a $9.4 million grant through ARENA, the Australian Renewable Energy Agency, to support the development of our commercial demonstration plan. That will be our main focus over the next year, will be to secure the final funding, final approvals to allow us to proceed into construction and operation of that project.
Ortenzia Borre: To our last question, Geoff, is there anything else you'd like to add?
Geoff Ward: No, essentially just to sort of reiterate that this year is going to be a really exciting time for the hydrogen industry. We've seen an enormous amount of focus, both domestically, internationally, on growing hydrogen opportunities. We're seeing fantastic developments in the kind of trucks, trains and other hydrogen vehicles that are available. In the wind and solar industries, we're seeing prices come down for hydrogen equipment, hydrogen vehicles. So I think it's a really exciting time to see how Australia can actually seize the opportunities presented by both our abundant renewable energy supplies and our good gas processing skills to bring really new opportunities for our economy, post the COVID pandemic.
Ortenzia Borre: Thanks for that, Geoff. We appreciate it.
Geoff Ward: Thank you very much.