Hazer Group Ltd (ASX:HZR) is commercialising a process capable of cleanly manufacturing hydrogen gas and high-purity graphite from natural gas and iron ore.
The Hazer Process is low cost and produces negligible carbon dioxide emissions, which is uncommon in the $100+ billion global hydrogen market.
Hazer is partnered with University of Western Australia (UWA) and the University of Sydney for research.
The company also has partnered with chemical engineering group Kemplant Pty Ltd to develop a demonstration plant to showcase the Hazer technology.
The company is well funded to undertake the core development activities necessary to further commercialise the Hazer Process.
The company intends to commercialise the process through building hydrogen and graphite producing plants and licensing the technology to other users.
Advantages of the Hazer Process
The key advantages of the Hazer Process over alternative technologies are:
- Lower costs for production of hydrogen and high purity graphite;
- Ability to produce hydrogen with negligible carbon dioxide emissions;
- The process can be used on a wide range of gas sources, including “stranded” gas assets; and
- The graphite produced is high purity allowing it to be used in lithium-ion batteries and for the production of the super material, graphene.
Background
The Hazer Process is a product of 8+ years of research and $6 million of expenditure at UWA.
After the process demonstrated initial success, Hazer Group was established in 2010 to commercialise the technology.
Hazer listed in November 2015 through an IPO.
Since listing, a new agreement was signed with UWA to develop Hazer technology for production of graphene.
A partnership with Kemplant will see a demonstration plant constructed and commissioned following the completion of development work currently underway at University of Sydney.
Hazer retains 100% of the intellectual property rights to the Hazer Process through its various agreements with UWA, University of Sydney and Kemplant.
Hydrogen market opportunity
The hydrogen generation market is estimated to be worth US$104 billion and is set to grow at between 5-6% per annum for the next 5 years.
The Hazer Process turns natural gas into hydrogen and graphite using iron ore as a catalyst.
Several similar alternative technologies have run into problems due to catalysts being too expensive.
The off spec iron ore catalyst is so inexpensive that Hazer can dispose of it after use.
Hydrogen is a key fuel of the clean energy system because burning hydrogen does not release carbon dioxide - but creating the hydrogen for the clean energy system currently does.
Graphite instead of carbon dioxide
The current method of making hydrogen, steam methane reformation, produces high levels of carbon dioxide.
The Hazer Process produces solid carbon (graphite) instead of gaseous carbon (carbon dioxide).
The graphite produced is high quality and able to be used in the transformational lithium-ion battery market and for the production of graphene.
Furthermore, because the graphite is synthetically produced (as opposed to mined from the ground) it has both cost and quality advantages.
The synthetic process enables control over quantity, purity and quality of the resultant graphite.
Corporate
The company had cash reserves of $5.15 million at the end of the March quarter.
Hazer completed a $0.895 million placement during March to a strategic investor.
The placement price of $0.28 per share represented a 40% premium to the company’s IPO price.
Major shareholders include managing director Geoff Pocock, chief technology officer Dr. Andrew Cornejo, Wesfarmers BioEnergy and UWA.
Analysis
Since Hazer's IPO in November 2015, the stock is up 160%, trading at around $0.57 per share.
Hazer's technology has the ability to disrupt the hydrogen and graphite markets, both exhibiting strong growth and generating annual sales of well in excess of US$100 billion.
Hydrogen is a clean energy source and currently accounts for less than 5% of global production.
Large growth opportunities exist in vehicle fuel and electricity generation, where demand is growing.
The process provides a significant value add for Western Australia's largest exports, iron ore and natural gas.
The plants required to make use of the process have been described as requiring relatively low capital investment.
High grade synthetic graphite attracts values in excess of US$10,000 per tonne.
Furthermore, Hazer see the opportunity to go carbon-negative, which would mean the process removes carbon dioxide from the atmosphere during the process to create the graphite.
News flow related to the commercialisation of the technology is expected regarding:
- Development activities at the University of Sydney
- Research into the production of graphene at UWA; and
- Updates on the scale up development and design of the initial demonstration plant.
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