Chile’s leading steel producer, CAP, is developing a green hydrogen pilot plant to decarbonize steel production at its unit in the city of Talcahuano, located about 500 km south of the capital Santiago.
The company’s steel division aims to replace the coal used in its coke ovens with less polluting fuels, including hydrogen, a clean gas and fuel often called the “fuel of the future”.
The current tests are supported by the Chilean green hydrogen acceleration initiative (H2V), which seeks to help develop the country’s industry.
CAP’s H2V project is scheduled to produce 1,550 tons of green hydrogen and help consolidate a green steel line by 2030.
The pilot phase will run until 2025, with a production of 25,000 tons per year of sponge iron or hot briquetted iron, which are key materials for steel mills.
CAP’s infrastructure manager, Patricia López, said the company would evaluate the current business model until 2029.
She added that the plan was to assess how much current and future customers are willing to pay for green steel.
Chile, the world’s top copper producer, has set the goal of generating the world’s cheapest green hydrogen by 2030. It also wants to become one of the top three exporters of this alternative fuel by 2040.
According to a 2020 McKinsey study, the South American nation is in a unique position, as “unmatched renewable resources in Atacama and Patagonia make it the cheapest place in the world to produce green hydrogen.”
The consulting firm estimated that by 2050, Chile could produce one kilogram of hydrogen, which contains about the same energy as a gallon of gasoline, for as little as 80 cents to $1.10.
The International Renewable Energy Agency estimates that hydrogen will account for up to 12% of global energy consumption by 2050 and has identified Chile, Morocco and Namibia as countries that could become the first exporters.
In December 2022, the Chilean government inaugurated Haru Oni, the world’s first integrated, commercial-scale hydrogen plant to produce climate-neutral synthetic fuels.
The pilot complex was assembled by a series of local and international companies, including energy and mining companies, engineering firms and even a car manufacturer.
By the end of 2022, Haru Oni became the first successful project to turn the relentless winds of Patagonia into synthetic gas, but its current main focus is green hydrogen.