Hazer Group Ltd (ASX:HZR, HZRO) is commercialising the Hazer Process, a process for 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. Carbon dioxide emissions are a significant by-product of traditional production techniques used in the $100+ billion global hydrogen market.
Hazer has partnered with the University of Sydney for process development, and has a research collaboration with the University of Western Australia (UWA).
Recent news has seen the company announce the successful commissioning of 2 new reactors through the collaboration with the University of Sydney.
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 a combination of building hydrogen and graphite production 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 quality and high purity allowing it to be used in a wide range of applications including the high value lithium-ion battery market.
The Hazer Process is a product of 8+ years of research and significant 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.
After listing, the company completed a development partnership arrangement with the University of Sydney for scale up development work. Since listing, a new collaboration agreement was also signed with UWA, to develop the 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 current principal methods of making hydrogen currently are based on fossil fuel reformation - steam methane reformation, partial oxidation and coal gasification.
All these processes produce very high levels of carbon dioxide in addition to the hydrogen product – typically more than 10t of CO2 for every tonne of hydrogen produced.
The majority of hydrogen is currently used in industrial chemical applications, in particular oil refining and the production of ammonia for explosives and fertilisers.
Currently less than 5% of global hydrogen production is used in energy markets, due to the cost and the significant CO2 emissions associated with traditional hydrogen production.
The growing demand for clean energy, and the successful commercial roll out of fuel cells, in particular in fuel cell vehicles (FCV’s) is expected to significantly increase the scale of the global hydrogen market.
The Hazer Process turns natural gas into hydrogen and graphite, using iron ore as a catalyst. The underlying chemistry of the process is well known, but previous attempts to commercialise the process have been uneconomical due to catalyst costs.
The use of iron ore as a catalyst, enables Hazer to operate at significantly lower costs.
Hydrogen is a key fuel of the clean energy system because burning hydrogen does not release carbon dioxide.
However, when the production of hydrogen generates carbon dioxide, the benefits of using hydrogen are negated. Currently, the only way to produce hydrogen without CO2 emissions is by electrolysis of water.
However this process is very expensive, and requires a substantial primary power source; for CO2 free hydrogen this energy must also be generated without emissions, and this requirement for clean electricity further increases the costs of electrolysis.
The Hazer Process does not require additional energy, as a portion of the hydrogen produced can be used for the process energy needs, and the surplus hydrogen is free of CO2 emissions.
Graphite instead 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. The Hazer Process can also be used to create a range of graphite products including carbon nanotubes or graphene.
The synthetic process enables control over quantity, purity and quality of the resultant graphite.
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, Mineral Resources Ltd and UWA.
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; this increasing usage of hydrogen in global energy markets (including the vehicle fuel market) is expected to see the demand for hydrogen significantly increase.
Furthermore, this will drive the need for “clean” hydrogen, produced without CO2 emissions.
The process provides a significant value add for Western Australia's largest exports, iron ore and natural gas.
Graphite demand is strong, driven by industrial uses and the increasing need for graphite in Li-ion batteries. High grade synthetic graphite can attract values in excess of US$10,000 per tonne.
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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