Port of Rotterdam, Vopak in Race for $2.8 Billion Hydrogen Port in South Africa

(Bloomberg) -- Port of Rotterdam and Koninklijke Vopak NV have been asked to submit construction and funding plans for a 50 billion rand ($2.8 billion) port and associated rail links to ship commodities including hydrogen and its derivatives from northwest South Africa, people familiar with the talks said. 

The two Dutch companies are part of three consortiums that on Tuesday won the right to present proposals to South Africa’s state logistics company, Transnet SOC Ltd., to build the Boegoebaai Port and related infrastructure, the people said, asking not to be identified as the consortium members haven’t been identified. 

South Africa hopes to use the abundant wind and sun on its arid west coast to generate the renewable energy needed to produce so-called green hydrogen. That fuel can be used to make products for export such as green ammonia. Politicians from Germany and the Netherlands this year said that their countries would be interested in buying the clean-burning fuel from southern Africa as Europe seeks to reduce its reliance on natural gas and other fossil fuels.

Transnet National Ports Authority, a Transnet unit, on Tuesday said three groups, selected from eight consortiums of domestic and foreign companies that applied, were selected to make firm proposals. Those groups are known as the Boegoebaai Port & Rail Consortium, Boegoebaai Development Consortium and Project Elephant Consort. TNPA and Transnet didn’t respond to questions about the group’s participants. 

Vopak, which operates 78 terminals in 23 countries, and Port of Rotterdam, Europe’s biggest harbor and energy import gateway, were joined by a French bidder among those selected, the people said, without identifying the French company. DP World Ltd. withdrew, one of them said.

Port of Rotterdam and DP World didn’t respond to requests for comment. Vopak declined to comment.

The South African government and Transnet plan to select a transaction adviser in September and issue a final request for proposals to the three groups in February, with the deadline being a year later, according to documents seen by Bloomberg. The port is expected to begin operating in March 2030 and the rail links may be complete by May 2036.

Under a master-plan for the development of a green hydrogen industry in both South Africa and neighboring Namibia, Boegoebaai would be one of four regional ports exporting hydrogen. South Africa’s green hydrogen production could reach 10 million tons per year by 2050 with liquefied hydrogen, green ammonia and methanol being exported, alongside steel made using green hydrogen to smelt it.

Plans sent to Bloomberg by the Northern Cape Economic Development Agency, which oversees development in the province in which Boegoebaai is located, show the harbor would occupy 2,882 hectares (7,121 acres) and sit alongside a 1,500-hectare tank-storage area. Green hydrogen production facilities would be built adjacent to the port in a 33,772-hectare special economic zone. 

Sasol Ltd., South Africa’s biggest company by revenue, has expressed interest in developing green hydrogen production facilities near Boegoebaai.

The rail network would stretch about 800 kilometers (497 miles) inland. Metals such as manganese could also be exported from the port.

(Updates with Vopak declining to comment in sixth paragraph)

©2023 Bloomberg L.P.