Big fertiliser and explosives business Incitec Pivot is seriously considering using solar energy to make hydrogen, which in turn would fuel ammonia production in Central Queensland.
The company's initial feasibility study into producing industrial scale hydrogen to reduce its carbon emissions is now being reviewed by the Australian Renewable Energy Agency, which helped fund the investigation.
If the hydrogen project is deemed worthwhile ARENA could also potentially provide funding support.
Incitec Pivot, which uses a lot of gas and energy in its manufacturing processes, wants to cut its annual greenhouse gas emissions by about 200,000 tonnes, from 2020 levels, by 2026.
That's a five per cent reduction in its considerable carbon footprint, equivalent to the amount emitted by about 43,000 cars every year.
The company is also a leading player in the newly founded Climate Leaders Coalition which aims to "create a low carbon future for Australia".
Chairman Brian Kruger said Incitec Pivot, which enjoyed a significant improvement in fertiliser revenue as better weather conditions lifted farming prospects in 2020, was "very conscious of the need for ambitions for a decarbonised future".
"Further work will occur in 2021. We are committed to ensuring our business is sustainable and competitive as we work towards decarbonisation solutions," he told Incitec's recent annual general meeting.
The Australian-based global business had already cut emissions by 10pc on its 2015 figures during the past five years.
The $2.7 million hydrogen feasibility study has centred on Incitec's Mooranbah ammonia plant in Central Queensland's Bowen Basin coal and gas field, where production currently relies on coal seam methane.
"While there is a lot more work to be done to make it a commercial reality, we will continue to investigate potential partnerships and pathways towards the development and use of renewable hydrogen," said managing director Jeanne Johns.
"We have longer-term aspirations to find decarbonisation solutions in our hard-to-abate industry.
"It's an exciting opportunity to use our core skills to help find solutions to combat climate change - one of the biggest challenges facing the world today."
A company spokesman noted any solar hydrogen development would need to be proven economically feasible to commence, which "could be some years away".
If the project went ahead it may take three or four years to implement.
Incitec Pivot, and particularly its Dyna Nobel explosives division, is also developing technology to help customers reduce their carbon output.
In November Ms Johns became a founding member of the Climate Leaders Coalition which she said would see company chief executives working together to progress their various business initiatives to reduce emissions.
"The coalition will help play a role towards a low emissions future while also ensuring long term economic sustainability," she said.
Despite the hurdles created by the coronavirus pandemic including temporary shutdowns, softening North American demand, historically low fertiliser prices and currency price fluctuations, the company had weathered falls in Dyna Nobel earnings in 2019-20 to post a "resilient" result.
After excluding material items, overall earnings before interest and tax lifted to $365m, with the fertiliser division returning to profit with pre-tax tax earnings of $26m after much improved rainfall conditions in many grainbelt areas during 2020.
Its share price has also responded, now back to its highest point since the coronavirus pandemic started destabilising fertiliser and mining sector markets in March.
"We are continuing to see favourable agricultural conditions and are focusing on value-add products and services to increase distribution margins," she said.
With fertiliser prices firming the company's Phosphate Hill manufacturing operation in North West Queensland was expected to benefit further after a record second half production performance last financial year.
"Our fertiliser business is well placed to benefit from any firming of the commodity cycle and growth of new precision agriculture value-add products and services," Ms Johns said.
The positive outlook for fertiliser demand has justified the company's decision in April not to sell its fertiliser business, which was under consideration earlier in 2019-20.
Helped by wider market uncertainty caused by coronavirus, Incitec Pivot's board decided retaining the company's foundation ties to fertiliser was "the best outcome for shareholders".
The division had a clear strategic agenda for the future focussed on driving growth from new value-added products and soil health services.
Despite the challenges of COVID-19, Ms Johns said the whole company had made good progress on its strategic agenda.
"Our markets are resilient and we are well positioned to benefit from recovery in commodity pricing from long term lows."
Although still about 30pc below their year-ago values, Incitec shares have been on a steady to rising trend for the past month, currently around the $2.45 mark.
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