Australian Vanadium Ltd (ASX:AVL) (OTCMKTS:ATVVF) (FRA:JT71) has signed a memorandum of understanding (MOU) with ATCO Australia for the supply of green hydrogen for AVL’s planned processing plant near Geraldton.
The MOU provides a basis for negotiations to establish a binding offtake agreement, with the intention for ATCO to supply 10% of the total gas requirements with green hydrogen.
ATCO is one of seven proponents shortlisted by the Australian Renewable Energy Agency (ARENA) under the Renewable Hydrogen Deployment Round to develop a project for the commercial-scale production of hydrogen gas in Australia.
Reducing carbon footprint
Australian Vanadium managing director Vincent Algar said: “As we progress the Australian Vanadium Project towards production, our social and environmental approach becomes of increasing importance to stakeholders and investors.
“Working with a company of ATCO’s calibre will enable AVL to use green hydrogen in the natural gas supply, thereby reducing our carbon footprint.
“We are excited to be part of creating local industrial consumption markets for an emerging hydrogen industry in Western Australia.”
ATCO managing director, Australia, Pat Creaghan added: “Green hydrogen represents a great opportunity for Western Australia and certainly has a role to play in the future energy mix globally.
“We’re pleased to be working with AVL to assist them to decarbonise their business.”
10-year supply period
The MOU is for two years and is non-binding while the supply period is for an initial 10 years, with the option to renew for a further 10 years.
Any binding agreement will be subject to due diligence and conditional upon both ATCO’s development of its proposed hydrogen production facility and the project’s positive final investment decision.
The minimum quantity of green hydrogen will be agreed and will be contracted on a take-or-pay arrangement.
Pricing is to be confirmed, with pricing intended to be based on 2020 figures and with an annual escalation with reference to the consumer price index.
Under the terms of the MOU, either party may terminate the agreement by giving no less than 30 days written notice.
Explore other opportunities
ATCO and AVL also wish to explore other opportunities with mutual benefit within the parties’ expertise.
AVL plans to explore the use of green hydrogen for both vanadium processing and transportation, with the economic parameters a key driver in any decision making.
Australian Vanadium Project
AVL recently launched its green hydrogen strategy to reduce carbon emissions for the project.
The proposed project includes open-pit mining, crushing, milling and beneficiation at AVL’s site about 40 kilometres south-east of Meekatharra and 740 kilometres north-east of Perth and a processing plant for final conversion to high-quality vanadium pentoxide for use in steel, specialty alloys and battery markets, at Tenindewa, between Mullewa and Geraldton