Why Hazer’s Methane Pyrolysis Bet on Whyalla Steelworks Faces Key Risks

A Strategic Partnership for Clean Steel

Hazer Group Limited (ASX – HZR) has taken a significant step towards reshaping Australia’s steel industry by entering into a binding Memorandum of Understanding with M Resources. This agreement is central to M Resources’ bid to acquire the Whyalla steelworks, a historic and vital asset in South Australia’s industrial landscape. The partnership focuses on deploying Hazer’s proprietary methane pyrolysis technology to produce clean hydrogen and synthetic graphite, essential inputs for low-carbon steel production.

The Whyalla steelworks, currently up for sale, has long been a cornerstone of Australia’s iron ore and steel sector. M Resources’ proposal emphasises a sustainable industrial renewal, with decarbonisation at its core. By integrating Hazer’s technology, the bid aims to replace traditional fossil fuels with clean hydrogen in the Direct Reduction Process (DRP) and utilise Hazer graphite in Electric Arc Furnaces (EAF), dramatically cutting carbon emissions.

Technology and Collaboration

Hazer’s methane pyrolysis process converts natural gas or biogas into hydrogen and high-purity graphite using an iron-ore catalyst. This dual output is particularly suited to the steelmaking industry’s evolving needs, where hydrogen is increasingly preferred over natural gas or coal to reduce iron ore pellets, and graphite serves as a carburiser in steel production.

The collaboration is further strengthened by Hazer’s strategic alliance with KBR, a global engineering firm with a strong South Australian presence. KBR’s involvement brings significant engineering expertise and credibility, especially given its recent role in the Australian Government’s nuclear submarine construction project under the AUKUS partnership.

Aligning with Government and Global Trends

The partnership aligns closely with both State and Federal Government ambitions to transform Whyalla into a clean, advanced steelmaking hub. It also taps into the broader global trend of increasing hydrogen demand in manufacturing, particularly steel production, which is expected to grow more than tenfold by 2060. The use of clean hydrogen and graphite from methane pyrolysis positions the Whyalla project at the forefront of this transition.

Beyond Australia, the parties have agreed to explore opportunities to deploy Hazer’s technology in other regions, including the Middle East and the United States, signalling ambitions for international expansion of this low-carbon steelmaking approach.

Looking Ahead

While the MOU is exclusive to the Whyalla bid and subject to the success of M Resources’ acquisition, it marks a pivotal moment for Hazer Group and the Australian steel industry. Both companies will bear their own costs for now, with more detailed agreements expected as the bid process progresses. The collaboration promises to deliver not only economic benefits but also significant environmental gains, supporting Australia’s clean industry goals.