Andrew Musgrave

Welcome again to ASX Briefs. And today we welcome back Glenn Corrie, the Managing Director of Hazer Group Limited, an Australian technology company driving global decarbonisation efforts through its proprietary Hazer Process, which produces low emissions hydrogen and high quality graphite from natural gas and iron ore. Glenn, great to have you with me again and welcome back to the ASX Briefs podcast.

Glenn Corrie

Great to be here, Andrew. Good to see you.

Andrew Musgrave

Now, Glenn, it's been a while since we last spoke, but for listeners that may be new to the Hazer story, can you give a brief overview of the company, the Hazer Process, and how it produces both low emissions hydrogen and high-quality graphite and the key markets you're targeting?

Glenn Corrie

Sure. Hopefully your listeners are starting to get our story after several engagements. But I think just to kind of just bring it back to grassroots, Hazer actually stands for hydrogen and zero emissions research. That was the vision of our company getting close to two decades ago. And that's sort of the reality of where we are today. So, a really exciting company that has got 20 or two decades of RD and commercialization behind it. So, and close to $150 million of invested capital in the tech. So proper tech. So, I like to think that we're developing big hard tech to solve some of the world's biggest and hardest decarbonization challenges. That's what our vision is for the for the company. We're a world-leading climate technology that's at the forefront of energy transition. We're at the forefront of clean and affordable hydrogen, and we're at the forefront of decarbonizing what I'd like to call hard to abate, difficult to electrify sectors like steel, like ammonia, like refining, like power, like data centre’s, and other sort of newer industries like Saffin’s and so forth. So, it's a really exciting technology. Very simplistically, we convert or transform gas, natural gas, LNG, any other methane-rich gas, which is a big part of the energy mix today in all of the economies around the world. I think it's around 30 or 35% of the world is hooked on gas. So that's one way of thinking about it. We convert that gas into, or we decarbonize gas and transform it into clean energy in the form of hydrogen as one of our product streams, and a critical mineral in the form of graphite as our other product stream with no process emissions. It's just using heat to decouple a molecule of gas. So, our X factor is the use of a catalyst, an iron ore catalyst. It's cheap and abundant, and it dramatically makes our process lower energy and therefore lower cost. And we've got that protected across it's close to, if not slightly over 100 patents these days in over 30 jurisdictions around the world. So, our competitive edge is that we're low on energy, we're low on cost, and we're low on emissions than any competitor in our space. And that's recognized. We're getting traction with some of the biggest players in the world. You'll see publicly, POSCO, we're in the mix in Whyalla. We're dealing with big Japanese utilities and big Japanese LNG importers, North America, Europe, and then the pipeline is growing beyond that with customers internationally and domestically.

Andrew Musgrave

Now, during the quarter, Hazer and KBR completed a comprehensive process design package for a 30,000 tpa hydrogen facility. What does this milestone mean for the commercial readiness of the Hazer process and how has it changed the conversations you're having with prospective customers?

Glenn Corrie

So, the design package for the non-engineers is basically getting a commercial design ready for customers to say, yep, I like that. I want to do some economics on it, and I want to see what the commercial viability of the technology is for my firm. That has been a very important milestone, as you've said, for the company. It's been nine months of work. If you sort of wind the clock back a little bit, we've joined forces with KBR close to the middle of last year. So, we've been working with them in earnest for 12 months on developing this design package to get in front of their customer base, our customer base, and anyone else that looks at our technology to ensure that they have a rigorous view of the engineering, the capex, the techno economics of what it would take to deploy Hazer. It's a really important milestone. KBR, for those not aware, is one of the world's largest engineering firms out there. $7 billion market capitalization listed in the US. They're working on some of the world's largest projects, some closer to home, at least in Australia, like Pluto and some of the big AUKUS projects that are currently underway. We set this alliance up, like I said, slightly over 12 months ago to accelerate the scale up and the go-to-market strategy of the of the technology. And we're getting real bites after nine months. It's a rigorous engineering piece of work that gives a customer a standardized design package that can be factored to bigger scales, which is what we're getting up to, that is being marketed and it's getting in front of customers so they can take a decision on do we want to take this forward. So, we're getting real interest now and hope to bring some of that to market in the in the very short term. But very importantly, we're moving from a technology developer now to a commercial business and deploying and executing our technology. So, it's an extremely exciting phase that we are moving into as a firm. So yeah, running and chewing gum at the same time, but very exciting periods for the company.

Andrew Musgrave

And just touching on that interest, you're seeing increasing commercial engagement across steel, ammonia, clean fuels, and industrial sectors in Australia, Asia, and the Middle East. So where is the demand strongest right now and what's driving it?

Glenn Corrie

Yeah, so you know, if I was to wind the clock back again to sort of the end of last year or the beginning of this year, where the conflict in the Middle East really started to take off, my initial thought was, oh, just this is going to affect the broader decarbonisation sector. In fact, it's intensified it slightly to my surprise. But what we're actually seeing now is very serious engagement from very serious players. Two years ago, three years ago, we had a massive pipeline, lots of interest, you know, companies wanting to get involved in sort of decarb in their business but couldn't figure it all out. Green hydrogen was hot. But now the world has shifted from green hydrogen is very difficult, very high cost, not commercially viable. All of those players and corporations and groups that have been looking at that as an option now go, that doesn't work. What we still want to decarbonize. What can we do? Well, we use gas for the most instances in big industrial processes. Hazer is looking like a very viable commercial solution. So, we're seeing very intensified interest from the likes of steel in particular. We're involved in discussions with most of the global steelmakers. In Australia, we're involved with, if not most of all of the big green steel projects, and Whyalla's the one that obviously we're public about. There's another one in Western Australia that is also very interesting for us. Power, ammonia, as you've said, all of these industries are massive with a massive problem. Carbon dioxide or emissions-intensive problem. And, with the situation in the Middle East, securing supply chains has also become a priority. It's maybe news to most people, but you don't get food on the table without fertilizer, and you don't create fertilizer, produce fertilizer without ammonia and urea. And guess what? Hydrogen is one of the major feedstocks for ammonia. So, the world is actually very dependent on hydrogen, not just for ammonia and fertilizer, but refining Petrochem’s, power to some extent in the future. So, it's a big industry with a big problem, and we're out there to solve it with some of the world's biggest players in those industries. SAF liquid fuels, that securitization of domestic supply is critical.

Andrew Musgrave

Now, on the international front, on the Fortis BC project in Canada, development is now focused on a 2,500 tpa commercial facility. Can you give us an update on progress towards a potential first of kind deployment in North America?

Glenn Corrie

Yep, so this one's getting real. And I know it's taking a little bit longer than I think we'd all have liked, but that should reflect for people the scale of what we're trying to do here. It's the first big commercial project for the company and Fortis is one of well, it's a massive utility. I like to explain them as three times the size of Origin Energy. That's the scale of the business. So, it's big, it's a multi tens of billions of dollars. It's a massive North American utility that is actually very committed to hydrogen and very committed to decarbonisation of their network of customers. So, it's a project that's advancing towards the next commercial execution milestone, which we're excited about. Kellogg Brown & Root, KBR, that I referred to earlier, our alliance partners now involved in this next phase, which is being finalized. And there's some serious progress on all aspects of the project in terms of site engineering, scale of facility, all the detailed work that effectively gets the project to the next execution milestone. So, we're excited about where this is heading. We've got a very strategic partner there. We've got the right people and the right firms involved in terms of getting us to the next phase, 2500, and not forgetting that this was our first commercial project, literally the day I arrived. That's almost three and a half years of working together with Fortis. Our tech has changed enormously since then. So, there's a wonderful opportunity for us to improve the economies of scale here and work with Fortis, who are very supportive of the next phase. So, I'm excited about where we're going with it. I'm also very excited about what we're going to bring out and sort of demonstrate how advanced this project is getting. So, I just ask shareholders to keep an eye out for what's next here.

Andrew Musgrave

Now, the company assigned a binding MOU with Hallett Group and successfully completed its graphite pelletisation program this quarter. So, how significant is graphite monetization to the overall economics of the Hazer process and what does the Hallett partnership open up in South Australia?

Glenn Corrie

There's a lot in there because graphite, as I explained at the very outset, is the co-product of the process. So, we get hydrogen, but you also get three times the graphite in tonnage volume. So, it's a really important product stream. And graphite is a critical mineral. It's a critical mineral because China controls the supply chain. 95% or at least 90% of the world's high purity graphite, spherical graphite, is produced from in China, and that is obviously a fairly substantial sovereign risk for anybody or any country that's using graphite, and that is used in defence, it's used in the production of EV batteries and other processes. So, it's a critical mineral for a reason. It's in the top five for most developed nations, and there is a definitely some running around trying to secure the supply chains at that and trying to reduce the risk of you know China, frankly, stepping on the hose of supply. So, we have a lot of interest in our graphite. We recently had Boral, the Boral group, qualify our graphite for use as an additive in concrete and asphalt and bitumen. So that's a big tick as a drop in application, straight out of the reactor, bang, into the production of bitumen for roads and concrete, structural concrete. So big win, and they're big markets, hundreds of millions of tons of market share available to us in that sector. Steelmaking is where it all comes together because steel, you don't make carbon steel without carbon, and that's where our graphite can effectively have built-in offtake. The deal that you mentioned with Hallett is related to the production of low emissions concrete, which they are doing great things in South Australia in decarbonising the concrete market, and they're using fly ash there, domestic fly ash now product can be a replacement for that as an SEM, so it's a really exciting partnership that I'm absolutely sure is going to lead to offtake in the future. And it also complements our position there that where we're working with M Resources and their bid for the Whyalla steel works. So, if stars align there, a lot of our graphite in Whyalla would go into the electric arc furnace, and then any residual graphite would be used in the Hallett partnership as an offtake. So, it's a really exciting partnership with Hallett. Graphite, just more broadly, is getting exciting and then the last thing to say on graphite is several weeks ago we announced that we have now very successfully with the Dorfner group in Germany, independent group, chemical group, that has now demonstrated the purification of our graphite to 99.99% purity. And that's the purity you need for electrical applications like anodes, like batteries. And so, we're now going into that electrical testing phase with very high purity graphite that I, you know, I'm very confident is going to have some very exciting results. So, it's getting a lot of attention, graphite side, and it's where we stand apart, Andrew. Now most of our peers, in fact, all of them, don't produce a graphite product, they produce a carbon black because their temperatures are so high. Where Hazers edge is yes, we're low energy, we're low temperatures, but we also have a very structured graphite co-product which sets us apart from the competition because it means we access all of these markets. Low near-term asphalt bitumen, medium-term thermal energy storage and steel and longer-term high high-value applications in the battery market.

Andrew Musgrave

Now, looking at clean fuels, the non-binding MOU with Continual Renewable Ventures marks Hazer's first step into the low carbon liquid fuels market, including sustainable aviation fuel and renewable diesel. What attracted Hazer to this sector, and how does the Western Australia's Kwinana industrial area fit into those plans?

Glenn Corrie

As a budding pilot, this is an area of great interest for me. Clean fuels is getting very exciting, as is replacement, diesel replacement, low emissions, liquid fuels, and so forth. And you see all this getting real traction because governments are backing the transition and then the airline industry just more broadly needs a big solution over time. So, we've teamed up with Continual Renewable Ventures. We're dipping a toe in this sector. It's probably news to most people that you don't produce aviation fuel and in particular SAF, sustainable aviation fuel without large volumes of hydrogen. It just doesn't happen. Depends on the technique or the process that you use, but power to power to liquids is very, very hydrogen intensive and others. So, it's an area that we're actively exploring. We've had a lot of inbounds in this space in Australia, but also in particular in the Middle East and more broadly the US and Europe. But there's a lot of government policy now wrapping around this to support the production of affordable SAF. And it does need to be affordable because that's the game changer here. What Hazers is able to do because of our low-cost supply, Andrew, is that we can remove the green premium. If you're a very hydrogen-intensive process, like green steel or like sustainable aviation fuel, and you can't access affordable hydrogen, you cannot remove the green premium. That's really where we differentiate against green hydrogen and other processes that we can effectively enable the switching for customers from an existing dirty product into a clean one without the cost. And that's the game that we're playing.

Andrew Musgrave

Moving now to IP, Hazer was recently granted a key patent by the Japanese patent office, expanding your IP protection in that market. How important is patent coverage to Hayes' competitive position, particularly given your active management with partners like Chubu Electric, Chiyoda Corporation, and Mitsui?

Glenn Corrie

Yeah, massive. I mean, IP, I've learned IP is more of an art than a science and that is just intellectual property. But a very important aspect for a technology developer like us. I mean, I think our current portfolio, as I said earlier, is about over a hundred patents, protecting four patent families that we have. The process, the catalyst, the graphite, and also some of the trademarks and so forth. So broadly four patents, 30 over 32 jurisdictions around the world. So very heavy patent protection. We've been at this forever. We have some of the world's best patent attorneys and lawyers across it and never had an issue there. So, but when you're at the forefront of all this, everyone wants to copy you. And that's why we treat this so seriously and we have such a secret, important secret source to protect. So, it's why we spend the time and ensuring that we've got it more broadly, well, more specifically, rather, to your point, Japan's a very strategic market. We've got Mitsui as a strategic partner on the graphite itself. We've got our partnership with Chubu Electric and Chiyoda Corp, and we've got other deals, near-term deals in the pipeline that are being worked. So, it's an important strategic market, a very gas-dependent market. So, it's a natural place for home, for Hazer technology, and big industry like steel and like ammonia and like power that needs a decarbonisation solution. So very exciting market, one that's worth getting first mover advantage in, like we have, and protecting that position. So, it's an area that we spend a lot of time on. But the best defence, frankly, is getting to market and getting your tech out there and capturing market share as we have been.

Andrew Musgrave

And touching on the financials, Hazer ended the quarter with a funding position of $13 million and continues to keep operating cash outflows low. How does the balance sheet's strength support your transition from technology development into commercial execution?

Glenn Corrie

Very good robust position at the moment. We're obviously always trying to continue to strengthen that. What's not included in that 13, and our cash burn is low right now because we're it's really just the team and we're a Capex light model. It's a licensing model, and that is obviously meaning that we rely on the customers to effectively build, own, and operate, and we license the technology. So, it's the right model for us at this stage. Having KBR work alongside us means that we are sharing the load in terms of the development of this, and they committed to also spend what's not what doesn't turn up on the balance sheet, of course, is that is the $5 million that they're contributing to the tech development here and the scale up. So that's a big offset for us and a big benefit. And that 13 million doesn't include the next round of RD rebates, which is coming this year, if not this quarter. More grant funds that we have that are still outstanding that we'll unlock in the not too distant future, and more revenues. We've just been through the first wave of revenues in two of our projects. We're now about to go into the next phase of revenue generation for the existing projects and hopefully new projects. So that's all going to shore up things as we go into the next phase. So robust corporate position today, low cash burn, lots of opportunity to strengthen that in the near term with R&D funding, which is non-dilutive, revenues coming from new and existing projects, but also government support as they have always supported us over the last few years. So, lots of opportunity in the near term to strengthen that position.

Andrew Musgrave

Now, finally, Glenn, with the PDP complete, a deepening partnership with KBR and a growing pipeline of serious customer interest. How would you describe Hazers priorities and growth profile moving into FY27?

Glenn Corrie

I think we're just getting to the most exciting part of this company. It's been a long time developing what we have as a technology. I don't like to call it a technology anymore. It's an advanced manufacturing process. But the stars feel like they're aligning, strong partnerships, strong customer base, exciting pipeline of opportunities. The PDP or the process design package is now getting in front of customers. It's getting bytes and the vision here is to have 10 projects or more in 10 years. What I look at the portfolio and what we've got, I think we're well on our way to unlock that. I know what shareholders are looking for in terms of commercial execution, it's what we're focused on. If I could, I'd love to be able to tell everybody what we're up to. A lot of that's confidential until it comes out. But hopefully shareholders and observers of Hazer can see what we have is extremely competitive. It's a wonderful time to get Hazer on the watch list because we are looking at attractive valuations at the moment, given what we've got ahead of us. It's a low-risk investment, as far as I'm concerned. The analysts are at 2x at least in the next 12 months. So that's not a bad return, but it's not good enough for me. So, we're just going to keep plugging away and unlocking the value in the company in the short to medium term.

Andrew Musgrave

Okay, Glenn. Well, it's been great to chat again. So, thanks for your time. Huge momentum with the company at the moment, and we look forward to further updates in the upcoming months.

Glenn Corrie

Thanks, Andrew. Lovely to chat.

Andrew Musgrave

That concludes this episode of ASX Briefs. Don't forget to subscribe, and we look forward to catching you on our next episode.