The announcement provides some hope for the 170 jobs at the facility as well as local fertiliser production.

The ammonia facility is scheduled for closure next year because of the escalating cost of gas but before it announced the shutdown, Incitec struck a deal with Andrew “Twiggy” Forrest’s Fortescue Future Industries to investigate the hydrogen switch at an estimated cost of about $400 million.

The announcement does not mention the commercial viability, which would be investigated in the next stage. A major issue for green hydrogen is its cost. It has been estimated to be about three times the cost of hydrogen produced using fossil fuels.

“Based on the preliminary studies conducted by each party, FFI have found the project is technically feasible and issued IPL with a notice to proceed to the next phase,” Incitec announced this morning.

“This allows the parties to negotiate an agreement to progress this exciting project to a front-end engineering and design (FEED) study. The study will refine cost, schedule permitting and commercial agreements, and inform a potential final investment decision.”

If the project proceeds, FFI would construct an on-site water electrolysis plant and develop and operate the hydrogen manufacturing facility, while Incitec would operate the ammonia manufacturing facility.

The new water electrolysis facility would produce up to 50,000 tonnes of renewable hydrogen a year and be a complete replacement of Gibson Island’s current gas feedstock. This renewable hydrogen would then be converted into more than 300,000 tonnes of green ammonia for Australian and export markets.

Incitec managing director Jeanne Johns said the company was committed to pursuing opportunities to help create a more sustainable world and the investigation of new and emerging technologies, such as green ammonia, was a key part of this.

“Last month we announced an end to manufacturing at Gibson Island in December 2022 after we were unable to secure an affordable long-term gas supply. While it was a difficult and reluctant decision, our partnership with FFI provides the potential for a renewable life for the plant,” Johns said.

“Our world class ammonia expertise is advancing progress of this exciting project and, working with FFI, we have found it is technically feasible to manufacture green ammonia at an industrial scale at Gibson Island. As an existing brownfield site, this offers many advantages.”

FFI chief executive Julie Shuttleworth said FFI’s collaboration with Incitec Pivot is an exciting opportunity to harness existing infrastructure at Gibson Island, fast tracking the production of green ammonia at an industrial scale.

“Pending further approvals, this project could be Australia’s first green ammonia production facility, demonstrating existing infrastructure can be retrofitted to utilise zero-emissions energy sources.” she said.

 Johns said the project provided the potential to transition Gibson Island to a renewable future, following IPL’s decision to cease manufacturing at the plant at the end of 2022.

Incitec said the partnership aligned with the strategies of both the Queensland and Federal governments to develop a clean, innovative, and competitive hydrogen industry delivering reliable domestic supply and new export opportunities.

“We are proud to play our part in developing a hydrogen industry in Australia and are looking forward to working more closely with the Queensland and Federal Governments as our study progresses,” Johns said.

“We are embedding our climate change agenda into our strategy so we can capitalise on commercial opportunities, as well as manage risks in a decarbonising world.”