What could helium do for the South African economy?

By Eamonn Ryan, based on an interview first published in Moneyweb

In an interview with Simon Brown in Moneyweb, Stefano Marani explained Renergen’s progress from a ‘greenfield’ extraction business of helium (as byproduct of gas extraction) to expected final production in 2023. Helium is not just used for balloons and squeaky high-pitched speaking – it’s vital for medical purposes.

Stefano Marani is the CEO of Renergen. Phase 1 was the ‘proof of concept’ phase of the mining start-up, funded by a loan from the Overseas Private Investment Corporation, now called the Developmental Finance Corporation, DFC. Even though it’s the proof of concept stage, it’s still an R800 million investment.

Marani explained that Phase 1 produces 350kg of helium per day. Helium gas is firstly incredibly expensive, and secondly extremely rare. The 350kg is about 1.5 times South Africa’s entire consumption. So it’s meaningful.

“That goes into operation this financial year for us. We are talking about getting gas into the plant during the fourth quarter and then putting gas in trucks and moving it around to customers shortly after that. That is the equivalent, just to put it in the form of energy that people can think about, Phase 1 will be producing somewhere about 75 000 litres of diesel equivalent of energy per day.

Marani then related the global story of helium: Helium’s got quite a wild story. You couldn’t get a team of fiction writers in a room, even if you took the team from Game of Thrones, able to make up a more fantastical story than helium. It started off just before World War I. The US Secretary of Defense borrowed money from the Federal Reserve Bank (the Fed) to build the strategic reserve in Amarillo in Texas, and the idea was to make aircraft for logistics and for bombing. That was pretty much the only use for helium – in lifting.

And then Robert Oppenheimer (director of the Los Alamos Laboratory during the development of the atomic bomb) during World War II, found he couldn’t actually build anything without the helium. And so the Secretary of Defense borrowed a lot more money and built up a large reserve of helium.

Then during the Cold War, an inordinate amount of helium was required for the nuclear weapons being stockpiled. It got to the point where the Fed wanted its money back, and it drafted a law called the Helium Stewardship Act, which forced the Fed to auction off helium commercially.

During the time the act was being drafted, MRI scans were invented – and MRIs (Magnetic Resonance Imaging) use an inordinate amount of helium, both in their manufacture and their operation. You cannot do an MRI or a CAT scan without helium. That led to the point where helium consumption vastly exceeded fresh supplies of helium coming out of the ground, with the result that it ended up depleting this reserve. Then in 2018 the US government declared helium the second-most critical element to its national security. It’s a real problem. For instance, today there are senators and congressmen looking to have the Macy’s helium balloon parade banned in the US?to save the helium.

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