How NH3 Clean Energy’s WAH2 Project Could Transform Shipping Fuel Markets

Project Overview and Market Position

NH3 Clean Energy (ASX, NH3) has provided a comprehensive update on its WAH2 Project, positioning it as Australia's most advanced commercial-scale clean ammonia initiative. The project aims to leverage Australia's strategic location and existing infrastructure to supply clean ammonia primarily for decarbonizing heavy shipping and power generation across the Asia-Pacific region.

Clean ammonia is emerging as a leading fuel alternative to reduce greenhouse gas emissions in maritime transport, with the International Maritime Organization (IMO) setting mandatory fuel intensity reduction targets. NH3 Clean Energy’s WAH2 Project is uniquely placed to capitalize on this shift, offering a competitive supply chain advantage and early market entry.

Strong Pre-FEED Results and Economic Outlook

The company’s recently completed Pre-Front End Engineering Design (Pre-FEED) studies have validated compelling project economics, suggesting a potential doubling of the WAH2 Project’s value compared to earlier assessments. The base case scenarios show robust net present values (NPV) and internal rates of return (IRR), with opportunities identified to further enhance returns through infrastructure optimization and financing strategies.

These results underscore the project's commercial viability despite the inherent uncertainties in emerging clean energy markets. NH3 Clean Energy is advancing towards FEED, with plans to commence detailed engineering and surveys by mid-2025.

Key Risks, Gas Supply and Financing

Despite the positive outlook, significant risks remain. The company has not yet secured a long-term gas supply agreement, a critical input for ammonia production. Without firm commitments aligning with projected volumes, timing, and pricing, the project faces potential downgrades or delays.

Financing is another major hurdle. NH3 Clean Energy estimates it will need to raise between A$405 million and A$567 million to fund Phase 1 of the project, assuming a farm-out of 65% to 75% equity. There is no certainty that such funding or farm-out arrangements will materialize on favourable terms, and any capital raising could dilute existing shareholders.

Progress on Partnerships and Government Engagement

NH3 Clean Energy is actively progressing multiple fronts to mitigate these risks. The company has established joint development agreements with Pilbara Ports and Oceania Marine Energy, advancing ammonia bunkering capabilities in the Dampier region. Memoranda of understanding (MOUs) are in place for gas supply, water, CO2 transport and sequestration, and ammonia shipment logistics.

Government engagement is ongoing to integrate the WAH2 Project into state frameworks that facilitate approvals and explore potential funding for multi-user infrastructure. These collaborations aim to streamline project delivery and enhance its strategic value.

Offtake and Market Demand

Offtake discussions are progressing with trading houses and strategic partners, including an Asian conglomerate interested in clean ammonia for domestic power generation. The company is targeting both power generation and marine bunkering markets, with the latter benefiting from the Pilbara’s status as a major iron ore export hub and a key shipping route to Asia.

While initial offtake agreements remain non-binding, advancing these contracts is critical to securing financing and reaching a final investment decision (FID) expected in the second half of 2029.