1

THE HYDROGEN AND FUEL CELL THE HYDROGEN AND FUEL CELL THE HYDROGEN AND FUEL CELL THE HYDROGEN AND FUEL CELL

TECHNOLOGIES STRATEGYTECHNOLOGIES STRATEGYTECHNOLOGIES STRATEGYTECHNOLOGIES STRATEGY

Dr Boni MehlomakuluDr Boni MehlomakuluDr Boni MehlomakuluDr Boni Mehlomakulu

Deputy Director General: RDIDeputy Director General: RDIDeputy Director General: RDIDeputy Director General: RDI

Department of Science & TechnologyDepartment of Science & TechnologyDepartment of Science & TechnologyDepartment of Science & Technology

09/11/2007

Presentation Outline

�Why is South Africa talking Hydrogen?

�Strategy in brief

�Implementation plan

�Competence Centres

�Planned outputs

�Value chain management

2

Global Drivers

0

30

60

90

120

1996 2006 2016 2026

Natural Gas Liquids & Non Conventional Oil

World Crude Oil Supplyexcluding OPEC Middle East

Total Oil Demand

mill

ion

barr

els

per

day

OPEC Middle East Crude oil supply

IEA

todaytoday tomorrowtomorrow

Optimization of Combustion EnginesOptimization of Combustion Engines

Hybrid VehiclesHybrid Vehicles

Fuel Cell VehiclesFuel Cell Vehicles

Improvement of Conventional FuelsImprovement of Conventional Fuels

COCO22--neutral Bio Fuelsneutral Bio Fuels

Global Drivers

3

The Hydrogen VisionThe Hydrogen VisionThe Hydrogen VisionThe Hydrogen Vision

USAUSAUSAUSA

2 prong strategy$1.7 billion over 5 year

Bridge Technologies ($0.5 billion)

Hydrogen Energy and Fuel Cells ($1.2 billion)

Hybrid Cars

H2 Freedom Car

�Security of supply a major driver �Focus is transportation: A Hydrogen fueling station

opened in Nov 2004

4

US Timeline US Timeline US Timeline US Timeline

Questions to answer

Pt role in the future H2 Economy

�How much platinum is there?�What are the current markets?�How much platinum will fuel cells need? �Can the mines supply this platinum?

5

History of Pt production

0

500

1,000

1,500

2,000

2,500

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

South Africa Russia Canada Others

Pt tonnes produced per decade since 1735

(1900 figure is cumulative from 1735)

Pt markets since 1970

0

100

200

1970 1980 1990 2000

Industrial Jewellery Autocatalyst

Pt tonnes sold per year

6

Additional Pt resources likely

�Old data was based on 1.2km max depth�Northam Platinum already mine at 2+km�Bushveld drilled down to 3.3km�Gold Mines in SA operate at ~4km already �Seismic data suggests reefs at 6km�Some estimates* say 64000 tonnes Pt in SA

TIAX Study D0034 “Pt Availability & Economics for PEMFC Commercialisation” December 2003

Why is South Africa talking H2

World platinum resources: Cawthorn, 1999

Zimbabwe

Finland

Russia

North America

South Africa

� Fuel cells catalytic properties, substitutions investigated, platinum still shows superior properties

� Current investment in various applications R&D � US$1b annually (outside of SA)

7

Pt in a car today vs. fuel cell car

Car today : 2 – 5g Pt Fuel cell car : 60g Pt

0

5

10

15

20

Year 0 Year 2 Year 4 Year 6 Year 8 Year 10

portable stationary cars other transport

tonnes

Pt demand for Fuel cell

applications(Data from Johnson (Data from Johnson (Data from Johnson (Data from Johnson MattheyMattheyMattheyMatthey, 1995, 1995, 1995, 1995----2005)2005)2005)2005)

8

What is a Fuel Cells?What is a Fuel Cells?What is a Fuel Cells?What is a Fuel Cells?

� A fuel cell is a device that uses hydrogen (or hydrogen-rich fuel) and oxygen to generate electricity by an electrochemical process

� Fuel Cells resemble batteries - electrical output is due to an electrochemical process

� Unlike batteries, fuel cells � operate off a continuous

stream of O2 & H2 fuel � the active elements are not

consumed by the chemical reaction

The Mining and MineralsThe Mining and MineralsThe Mining and MineralsThe Mining and Minerals Sector Sector Sector Sector Downstream Dimension Downstream Dimension Downstream Dimension Downstream Dimension

“We have always been a supplier of minerals to the world, what we are now finding is that the world economy is

changing rapidly and is expecting an economy such as ours to be able to produce higher-value manufactured products.

(Min. Alec Erwin)

• SA holds a significant share of the worlds minerals resources and production

• However, we have not been able to use this endowment to attain a satisfactory economic and social performance

9

�Economists believe there is a causal relationship between natural resource endowment and economic development

�The Natural Resource endowment tends to channel economic policies towards capturing the primary products market and less emphasis is put on manufacturing

The Natural Resource Curse

�IT and services are helping India log 6% year-on-year increases in GDP

�China's vast manufacturing base is raising its GDP by around 9% a year

�What technology missions will put us on the map?

�Value addition contains more learning effects that impulses the rest of the economy into a steeper productivity curve

Beneficiation for economic growth Beneficiation for economic growth Beneficiation for economic growth Beneficiation for economic growth

10

Our Hydrogen Vision

“ to create knowledge and human resource capacity that will develop high value commercial activities in hydrogen and fuel cell technologies utilising local

resources and existing know-how”

Strategic Goals�Develop PGM-based catalysts in South Africa:

supply 25% of catalysts demand for the global fuel cell industry industry by 2020

�Develop local cost competitive hydrogen infrastructure solutions (based on natural resources)

�Promote beneficiation, develop downstream industries & create sustainable jobs linked to our minerals wealth

11

Basic Applied Tech Develop Transfer and Proliferation

DOE/NRF NRF/DST DST/FTI/PBF PBF/DTI

COEs

Competency Centres

Publications/new knowledge Patents/new knowledge products

KnowledgeProduction

Development

Production &Commercialisation

FTI

12

New fundamentalknowledge

New AppliedKnowledge

Pro-ServicesProducts

Processes

Products

CoC’s Product Profile

Proximity to Market

DST Objectives re CoC

� Competence centres would be complementary to Centres of Excellence

� Deliberately target industry participation and development

� Competence Centres are far more than networks: they involve contractual relationships between the parties, clear short medium and long-term innovation objectives, the establishment of specialized infrastructure, shared staffing between partners, proactive attention to intellectual property issues

13

DST Objectives re CoC

� They may be on University Campuses, but do not operate directly under academic supervision

� Competence Centre programmes will be placed in the envisaged Technological Innovation Agency

� H&FC CoC will have the flexibility of an emerging R&D area

� Adopt best practices of other systems rather than sticking to fixed guidelines

�Centres of Excellence for Innovation�Multidisciplinary Teams �Industry partnerships are key�Long term funding commitment (with

appropriate M&E)�Initially, we need to recruit aggressively from

abroad (NRF, DST Bilaterals etc.)� Focus on expertise development initially (for a

specified product pipeline)

DST Objectives re CoC

14

Hub & Spokes Model : Hub & Spokes Model : Hub & Spokes Model : Hub & Spokes Model : CatalysisCatalysisCatalysisCatalysis

Theme 6

Theme 5

Theme 4

Theme 3

Theme 2

Theme 1

(Hub)UCT & Mintek

Future Platinum industry in SA

Bio-

medical

Jet engHigh Temp Appli.

Crude refining

Auto-Catalysts

Chemical

s

Fuel Cells

Pt Future Industry

Common set of skills needed for future Pt industries

15

Planned outputs

2007 2012 2017 2022

The Strategic Problem

TEC

H D

ESIG

N IN

NO

VA

TIO

N IN

DEX

MANUFACTURING INNOVATION INDEX

MI1MI1MI1MI1 MI2MI2MI2MI2 MI3MI3MI3MI3 MI4MI4MI4MI4 MI5MI5MI5MI5

TI1

TI1

TI1

TI1

TI2

TI2

TI2

TI2

TI3

TI3

TI3

TI3

TI4

TI4

TI4

TI4

TI5

TI5

TI5

TI5

Manufacturing Capability

Des

ign

Cap

abili

ty

16

Defining Strategy

TEC

H D

ESIG

N IN

NO

VA

TIO

N IN

DEX

MANUFACTURING INNOVATION INDEX

MI1MI1MI1MI1 MI2MI2MI2MI2 MI3MI3MI3MI3 MI4MI4MI4MI4 MI5MI5MI5MI5

TI1

TI1

TI1

TI1

TI2

TI2

TI2

TI2

TI3

TI3

TI3

TI3

TI4

TI4

TI4

TI4

TI5

TI5

TI5

TI5

Manufacturing Capability

Des

ign

Cap

abili

ty

Material Inputs

Components

Assembly

Technology Design Scale

Turnkey assembly: Ability to assemble turnkey solution.TI1TI1TI1TI1

Component Integration - IP licensed: Ability to integrate licensed components into a

system. TI2TI2TI2TI2

Global IP leader. Systems level: Capability to develop comprehensive innovations

within a field at a systems level that provides a

sustained global competitive advantage in product

development at systems level

TI5TI5TI5TI5

Customisation of Licensed IP: Capability to customise existing design for national

conditions. TI3TI3TI3TI3

Global IP leader – component level: Capability to develop comprehensive innovations

within a field at a component level that provides

a sustained global competitive advantage in

product development at systems level

TI4TI4TI4TI4

Technology T

ransferN

ational Innovation

17

MARKET

SHARE

STAGE

SALES

GROWT

H

PROFITS

KEYKEY

START-UP EARLY EXPANSION MATURITY DECLINE

Small

Small to

Moderat

e

Moderat

eLarge

Moderat

e

Low to

HighHigh High Low Negative

-ve -ve to 0+ve &

small

+ve @

peak

+ve &

falling

SEED

Unknow

n

N/A

-ve

SA

LES

THE CHASMTHE CHASMTHE CHASMTHE CHASM

TECHNOLOGICAL

DISCONTINUITY

(SA RESEARCH

INSTITUTES)

TE

CH

NO

LOG

ICA

L R

IVA

LRY

PR

OC

ES

S

INN

OV

AT

ION

INCREMENTAL& ARCHITECTURAL

INNOVATION(SA PRIVATE SECTOR)

EXPORTSEXPORTSEXPORTSEXPORTS

IMPORTSIMPORTSIMPORTSIMPORTS

OUTR

IGHT LO

SS

OUTR

IGHT LO

SS

OUTR

IGHT LO

SS

OUTR

IGHT LO

SS

The cause The cause The cause The cause –––– the Dutch Diseasethe Dutch Diseasethe Dutch Diseasethe Dutch Disease

•Primary production focusPrimary production focusPrimary production focusPrimary production focus

•Risk capital deficienciesRisk capital deficienciesRisk capital deficienciesRisk capital deficiencies

•Commercialization theory, thought & experienceCommercialization theory, thought & experienceCommercialization theory, thought & experienceCommercialization theory, thought & experience

•Entrepreneurial deficienciesEntrepreneurial deficienciesEntrepreneurial deficienciesEntrepreneurial deficiencies

•Lack of belief, vision & boldnessLack of belief, vision & boldnessLack of belief, vision & boldnessLack of belief, vision & boldness

8

MARKET

SHARE

STAGE

SALES

GROWT

H

PROFITS

KEYKEY

START-UP EARLY EXPANSION MATURITY DECLINE

Small

Small to

Moderat

e

Moderat

eLarge

Moderat

e

Low to

HighHigh High Low Negative

-ve -ve to 0+ve &

small

+ve @

peak

+ve &

falling

SEED

Unknow

n

N/A

-ve

MANAGED VALUE CHAINMANAGED VALUE CHAINMANAGED VALUE CHAINMANAGED VALUE CHAIN

INVESTMENTINVESTMENTINVESTMENTINVESTMENT

IN IPIN IPIN IPIN IP

RETURNSRETURNSRETURNSRETURNS

NORMALNORMALNORMALNORMAL

PROFITPROFITPROFITPROFIT

11

18

Selected Countries PhD production rates Profile

23

114

157

10

188

7

53

140

221

43

0.00

50.00

100.00

150.00

200.00

250.00

SouthAfrica

China India Japan SouthKorea

Taiwan UK USA Australia Brazil

PhD

's/y

ear/

mill

ion

of p

opul

atio

n

1999

2000

2001

2002

2003

Benchmarking

Thank You

For more information on the South African Hydrogen Activities

Boni.Mehlomakulu@dst.gov.za

Hydrogen@dst.gov.za