Hunter Valley hydrogen hub gets $432 million kick-start

Orica’s Hunter Valley Hydrogen Hub is set to receive up to $432 million in grant funding as the second recipient of ARENA’s Hydrogen Headstart Program.

July 4, 2025 Ev Foley

Image: Orica

Victoria-headquartered mining major Orica’s Hunter Valley Hydrogen Hub (HVHH) is set to receive up to $432 million (USD 283 million) in grant funding as the second recipient of the Australian Renewable Energy Agency’s (ARENAs) Hydrogen Headstart Program.

The funds will provide partial revenue support in the form of production credits once the project is commercially operational and is an essential component to bridging the commercial gap for first mover renewable hydrogen projects in Australia.

Headstart funding complements support already announced by the New South Wales (NSW) and federal governments to establish the HVHH at the Kooragang Island Ammonia Manufacturing Facility (KIAMF), located 13 kilometres north of Newcastle.

The Hub will produce renewable hydrogen using a 50-MW electrolyser powered by renewable electricity, with the hydrogen set to replace methane gas in Orica’s ammonia production process, helping to reduce carbon emissions.

The first phase of the HVHH is expected to produce approximately 12 tonnes of renewable hydrogen per day, reducing Orica’s daily gas demand for chemical feedstock by around 7.5%, releasing gas back into the grid for domestic consumption.

The estimated annualised emissions benefit at phase one of full production is equivalent to taking approximately 26,500 cars off the road each year.

ARENA CEO Darren Miller said renewable hydrogen is an important decarbonisation lever for applications like ammonia production where hydrogen has traditionally been produced with fossil fuels.

“Projects like Orica’s are helping to decarbonise core industrial processes while preserving domestic manufacturing and unlocking new export opportunities.”

Clean Energy Council Advocacy and Investment General Manager Anna Freeman welcomed the government’s effort to get the sector off the ground.

“Green hydrogen stands to play a critical role in decarbonising hard-to-electrify energy needs and chemical processes that are currently dependent on fossil fuels,” Freemand said.

“We urgently need to drive down the cost of this renewable fuel to support Australia’s decarbonisation plans.”

The project represents a major step in decarbonising Orica’s existing Kooragang Island Ammonia Manufacturing Facility and producing low-carbon ammonia and ammonium nitrate for domestic use across mining, agriculture and industrial sectors.

As part of the funding process, Orica must now work with ARENA to satisfy a number of conditions and demonstrate its ability to meet a range of contractual milestones before the funding is released. Funding under this program is paid based on actual production volumes over a 10-year operating period.

Orica’s Managing Director and Chief Executive Officer Sanjeev Gandhi said the company was grateful for the crucial support to realise the HVHH and advance the decarbonisation of its Kooragang Island facility.

“We look forward to continuing our collaboration with ARENA and other federal and state government agencies to support the transition of Orica’s Kooragang Island manufacturing facility and help shape a cleaner, more resilient future for the Hunter region,” Gandhi said.

The first recipient of Hydrogen Headstart program was Copenhagen Infrastructure Partners’ (CIP) 1,500 MW Murchison Green Hydrogen Project in Western Australia, with $814 million allocated to it.

With both projects now announced, Hydrogen Headstart Round 1 is concluded.

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