Minerals Council South Africa CEO Roger Baxter has said South Africa’s hydrogen sector has the potential to be 25 times larger than the country’s iron-ore industry.

Speaking at the 2022 PGMs Industry Day, in Johannesburg, on April 6, he said this would only be achievable if the country were to “get things right and exploit the opportunity as ‘South Africa Incorporated’ and focus on the business of making this a real business proposition for the country”.

According to the Minerals Council, South Africa’s iron-ore industry was worth about R86.5-billion in terms of total sales, comprised of exports and local sales, in 2020. This made the iron-ore industry the third-largest in the country, beating out the gold sector by about R129-million. Only the coal sector at about R130.5-billion and the platinum group metals sector at about R190.4-billion were larger.

Baxter’s comments were reflective of the findings presented to the Minerals Council by research consultancy Singular.

Baxter said Singular’s research revealed what the hydrogen economy could look like for South Africa, and highlighted what needed to be done to showcase the value proposition and then foster discussions on the way forward, with the Minerals Council to play a leadership role in driving the agenda.

“Our view is that collaborative partnerships of the willing are going to take us forward a lot faster than the current pace,” he said.

This coalition of the willing would be driven by the private sector, in particular, with Baxter saying he expected to start seeing this trend emerging as more large industrial players worked together.

BUILDING BLOCKS

He said the opportunity for hydrogen investment was ripe because South Africa had some “fantastic building blocks”.

“We already have significant scale. Grey hydrogen production is taking place. [Energy and chemicals company] Sasol accounts for about 2% of global total grey hydrogen production through its coal-to-liquids and gas-to-liquids processes,” he pointed out.

Further, the country already had a significant endowment of renewable energy resources, which was perhaps three times less expensive than in countries such as Japan and Germany, for example.

“We do have significant industrial capability and private sector capability, and we also have a significant private sector drive in terms of understanding what we need to do to get the hydrogen economy going,” he said.

MINERALS COUNCIL ROLE

Baxter said the Minerals Council was at the early stages of developing its key action points for its own hydrogen strategy, which he said would have a number of different components to it.

He added that an internal hydrogen “champion” had been appointed – Minerals Council modernisation and safety senior executive Sietse Van Der Woude – who would be tasked with leading progress on the issue.

Baxter also said the terms of reference were being approved by the Minerals Council board for the establishment of a hydrogen leadership forum.

“I'm pleased to say that, last week, we had our inaugural meeting of the African leadership forum within the Minerals Council, and we've also been linked up with the Energy Council of South Africa,” he said, adding that discussions had also been had with Sasol CEO Fleetwood Grobler about how to partner up and take the ideas for the hydrogen economy forward.

Baxter said discussions between the Minerals Council and Mineral Resources and Energy Minister Gwede Mantashe had highlighted that there needed to be ‘smart tape’ in place, not red tape, when dealing with the hydrogen economy.

“Government should work with us in partnership as our chief enabler – not our chief red-taper. It’s going to be a critical component of this entire process,” he concluded.