- Trafigura cancels its $750 million green hydrogen plant in South Australia after an unviable feasibility study.
- High costs and logistical challenges continue to hinder large-scale investments in the green hydrogen industry.
- Global uncertainty around green hydrogen prompts companies to delay or cancel projects, reflecting cautious market sentiment.
Trafigura has scrapped its $750 million green hydrogen plant plans for Port Pirie, South Australia. The decision follows a joint feasibility study by Trafigura and the South Australian government, which found the project unviable. The plant aimed to reduce emissions at the local lead smelter by producing green hydrogen via water electrolysis powered by renewable energy.
Though Trafigura did not provide specific reasons, it confirmed it would not proceed with the project. The South Australian government clarified that the project never aligned with its strategic plans.
The feasibility study was launched in 2021 to evaluate the project’s economic, technical, and commercial prospects. It revealed hurdles like high costs and logistical challenges, making the venture difficult to pursue. The study’s outcome signalled unfavourable market conditions for the required investment.
Trafigura’s decision reflects broader struggles within the green hydrogen industry. Several Australian companies have also cancelled or delayed similar projects. High infrastructure costs and weak commercial demand continue to limit large-scale investment in the sector. Despite support from the Australian federal government, many investors remain cautious about the short-term potential of green hydrogen.
Globally, energy companies have scaled back or postponed hydrogen projects. The green hydrogen industry faces delays and cancellations as firms weigh commercial risks. This global trend mirrors rising uncertainty over heavy industry adoption of green hydrogen.
Trafigura’s cancelled project had represented one of South Australia’s most anticipated private investments in the hydrogen sector. Its termination raises concerns about the economic dynamics surrounding green hydrogen. The decision highlights the need for thorough market evaluations before pursuing large-scale industrial ventures.
Although green hydrogen holds promise for the future, the industry still faces structural barriers. High production costs, limited infrastructure, and logistical challenges continue to slow progress. While investing in pilot projects, governments have not yet overcome the obstacles to making green hydrogen commercially viable.
By cancelling its project, Trafigura joins a growing list of companies exercising caution in the global hydrogen market. Many now delay investment decisions as they assess the risks and benefits of scaling up hydrogen production. This move underscores the industry’s challenges before achieving full commercial readiness.
As the green hydrogen sector evolves, Trafigura’s withdrawal raises critical questions about the timeline for mass adoption. The project’s termination stresses the importance of realistic expectations and a deeper understanding of the barriers to scaling green hydrogen technology.