In a blow to South Australia’s renewable energy goals, the state government has opted not to acquire essential equipment for its planned hydrogen plant, primarily due to uncertainties surrounding the adjacent Whyalla steelworks. The $600 million project, aimed at producing green hydrogen through renewable energy, is now facing significant challenges as the GFG Alliance-owned steelworks confronts financial difficulties.
Despite the government’s concerns, GFG Alliance remains optimistic, asserting it has secured new funding to help alleviate some of its debts. Nonetheless, the company’s strategy includes selling a coking coal mine in New South Wales, intending to use the proceeds to compensate Whyalla contractors and invest back into the steelworks. This has raised alarms among creditors who are sceptical about GFG chairman Sanjeev Gupta’s ability to fulfil his commitments, citing a history of unmet promises in the region.
With the hydrogen plant reliant on the steelworks as its main customer, the government worries about its feasibility without a dependable partner. Premier Peter Malinauskas emphasised the duty to safeguard taxpayer money by postponing the equipment purchase until a commercial offtake agreement is secured. This decision has drawn criticism from the opposition, with Liberal leader Vincent Tarzia labelling the hydrogen initiative a “vanity project.” With ongoing uncertainty surrounding Whyalla, the future of the hydrogen plant is left in jeopardy.