Rio Tinto (RIO) & Sumitomo to Build Hydrogen Pilot Plant
Rio Tinto RIO and Sumitomo Corporation SSUMY have collaborated to build a first-of-a-kind hydrogen plant at the former’s Yarwun alumina refinery in Queensland, Australia. This pilot plant will test hydrogen’s viability as an option to replace natural gas in alumina refining. If successful, this can open up possibilities of the adoption of the technology at a much bigger scale across the mining sector and help build a carbon-neutral future.
Creating alumina, which is the main ingredient in aluminum, requires a lot of energy, which in turn creates greenhouse gas emissions. Also, part of the process of extracting alumina from bauxite involves burning the mineral at around 1000 degrees Celsius in huge heaters, known as calciners. This pilot will test whether hydrogen can be used effectively in the process as a calcination process.
This pilot project, called the Yarwun Hydrogen Calcination Pilot Demonstration Program, is a part of an AUD$111.1 million ($76.2 million) program aimed at lowering carbon emissions from the alumina refining process. The pilot project has received a funding of AUD$32.1 million ($22 million) from the federal government’s Australian Renewable Energy Agency.
The project entails the construction of a 2.5MW on-site electrolyzer to supply hydrogen to the Yarwun refinery. One of its four calciners will be retrofitted so that it can operate at times with a hydrogen burner. Construction will start in 2024 while the hydrogen plant and calciner are expected to start operation by 2025.
The trial is expected to produce around 6,000 tons of alumina annually while cutting down Yarwun’s carbon dioxide emissions by about 3,000 tons. Converting the entire plant to green hydrogen will likely result in a 500,000 tons reduction in emissions annually, which is the equivalent of taking 109,000 internal combustion engine cars off the road.
Sumitomo Corporation will own and operate the electrolyzer at the Yarwun site and supply the hydrogen to Rio Tinto directly. The electrolyzer is expected to produce more than 250 tons of hydrogen in a year.
Rio Tinto has set targets to reduce Scope 1 & 2 emissions by 50% by 2030 from 2018 levels. It is committed to achieve net zero emissions by 2050.
Price Performance
In the past year, shares of Rio Tinto have gained 22.4% compared with the industry’s 15% growth.
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Zacks Rank & Stocks to Consider
Rio Tinto currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Carpenter Technology Corporation CRS and Orla Mining Ltd. ORLA. These companies sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Carpenter Technology has an average trailing four-quarter earnings surprise of 30.9%. The Zacks Consensus Estimate for CRS’s fiscal 2023 earnings is pegged at $1.04 per share. The consensus estimate for 2023 earnings has been unchanged in the past 60 days. Its shares have surged 109% in the last year.
Orla Mining has an average trailing four-quarter earnings surprise of 85.4%. The Zacks Consensus Estimate for ORLA’s 2023 earnings is pegged at 15 cents per share. The consensus estimate for 2023 earnings has moved 87.5% north over the past 60 days. ORLA’s shares gained 91% in the last year.
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Rio Tinto PLC (RIO) : Free Stock Analysis Report
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