The rise of helium: a critical raw material and not just a party balloon filler

The helium market is on the rise and that’s not just hot air.

The global wholesale helium market size is expected to grow from an estimated US$5 billion in 2023 to more than US$8 billion in 2030 at a CAGR of 6.6%.

AKAP Energy, which provides strategy and financial consulting advice to energy companies, says in a recent report that the growth trajectory of helium is in line with other niche energy transition commodities such as lithium and cobalt.

The AKAP Energy report says: “These commodities have seen exponential price growth on the back of significant supply squeezes – similar to what is being seen in the helium space. What was interesting is that many industry analysts viewed these increases as unsustainable, however today these commodity prices remain high. In our view helium is in a similar situation with a squeezed supply and demand continuing to grow with new primary helium discoveries required to meet the expected increase in annual demand from 6Bcf to 8.5Bcf by 2030.”

Unlike other commodities, there is virtually no available storage for helium. Helium exploration is a nascent industry and is typically hard to mine. However, the price of the colourless, odourless, and tasteless element is surging with transition to market pricing, significant demand growth, and fragile supply.

The long-term bulk wholesale liquid helium price is US$450/Mscf – 50 times the price of LNG.

Helium constitutes about 23% of the mass of the universe and is second in abundance to hydrogen in the cosmos. Yet at present, more than 95% of the world’s helium is produced as a by-product of the processing of hydrocarbon-bearing gas.

Because it is very unreactive, helium is used to provide an inert protective atmosphere for making fibre optics and semiconductors and for arc welding. It is also used to detect leaks, such as in car air-conditioning systems and because it diffuses quickly it is used to inflate car airbags after impact.

Rising demand and constrained supply are fuelling growth prospects within the global marketplace, particularly for cleaner ‘green helium’ sourced from non-carbon environments.

Rising demand and constrained supply are fuelling growth prospects within the global marketplace

Helium is typically sold as raw product grading 50-80% and is then further processed into Grade A helium. It is often shipped as liquid to distribution centres and sold as bulk liquid helium or gasified and compressed into tanks or small cylinders for delivery to end users. Cargoes are usually sold at a 99.999% purity or Grade 5.

AKAP notes that strong helium pricing is encouraging global exploration, as well as being closer to the higher growth end-user markets in Asia. In 2023 the company sees the most significant new helium production and highest impact exploration coming from Africa.

Dual-listed Renergen (ASX:RLT) has recently started up its helium production facility in South Africa, while AIM-listed Helium One Global (AIM:HE1) has a large primary helium prospect in Tanzania.

The rise and rise of helium

One emerging player in Africa is Noble Helium (ASX:NHE), which has assets in Tanzania.

Speaking to on the sidelines of the 2023 Gold Coast Investment Showcase this week, Noble Helium (ASX:NHE) cofounder and CEO Justyn Wood says his company is answering the world’s growing need for a primary, ideally carbon-free, and geopolitically independent source of helium.

“It’s not just a party balloon filler. It’s actually a critical raw material with a really fragile supply chain”

“It’s not just a party balloon filler. It’s actually a critical raw material with a really fragile supply chain. That needs something like what we’re doing to help stabilise it. And it’s fundamental to the future technologies that we’re all looking forward to like AI, and it can’t happen without helium.”

Wood tells this news service that smartphones would not exist without helium.

“The chip in your phone that you’re currently recording on can’t be made without helium anymore. And the fibre optic cables that connect all of the continents can’t be made without helium.”

The CEO adds that about 20% of the world’s helium goes into making MRI machines function, however “the coming AI revolution” and the demand for semiconductor chips is fuelling the sector’s growth.

“NASA is a major consumer,” Wood adds.

Strategic assets

There are a growing number of early stage and advanced helium projects scattered across the world.

Located along Tanzania’s East African Rift System, Noble Helium’s 4 projects are being advanced according to the highest ESG benchmarks to serve the increasing supply chain fragility and supply-demand imbalance for this scarce, tech-critical and high-value industrial gas.

Its flagship North Rukwa Project has an independently certified, summed un-risked mean prospective helium resource of 176 billion cubic feet (equivalent to about 30 years’ supply). The project lies within the Rukwa Basin, which has the potential to be the world’s third largest helium reserve behind the US and Qatar.

Noble Helium’s Wood tells that the company remains on track to drill its first 2 wells at its North Rukwa Project in Tanzania in Q3 2023. The wells will target structures with a combined mean prospective helium resource of 16.5Bcf within the East African Rift System. Both wells are Basin Margin Fault Closure (BMFC) plays.

To date, BMFC plays have a proven 100% discovery rate from 14 oil and gas exploration wells in other basins of the East African Rift System in Uganda and Kenya. Additionally, it has commissioned the first ever Helium Atlas, with an exclusive 5-year agreement allowing the company to identify additional prospective areas to target for diversification.

On 14 June, Noble Helium received a major vote of confidence from the Tanzanian government with the renewal of 6 exploration permits at its North Rukwa Helium Project by the Tanzanian Mining Commission. The prospecting licenses were awarded an initial 4-year term in 2019 and were due to expire in July 2023. As per the mining code, the next term is for 3 years with the facility to extend to a third term of an additional 2 years.

The company has the right under the Tanzanian Mining Act to convert its prospecting licenses to mining licences following discovery.

Helium One is another player in the market and is currently the primary helium explorer in Tanzania. It recently completed an independent verification of the prospective resources at its Tai Prospect. The company says it has identified a globally unique, large-scale, high-grade, primary helium project in Tanzania with the potential to become a strategic asset in resolving a supply-constrained market.

Meanwhile, Blue Star Helium (ASX:BNL) is another independent helium exploration and production company, headquartered in Australia, with operations and exploration in North America.

In an 8 June company announcement, Blue Star Managing Director and CEO Trent Spry says the company is validating its commercialisation model.

“While our maiden Voyager development is the focus for our operations team targeting Q4 first helium, work continues in parallel on the exciting Galactica/Pegasus project where the company had 4 successful discoveries over the 2 prospects in 2022 and moved into development planning.

Galactica/Pegasus is a larger scale project, and we are pleased that 3 more well locations have been approved. With 4 wells already approved this will soon bring the development well inventory to 7 with an additional 4 already proceeding through the Oil and Gas Development Plan (OGDP) process and a further 20 wells in various degrees of permitting readiness.”

Spry says Galactica/Pegasus development planning is advancing with a range of commercialisation pathways under consideration, including an initial leased plant and third party operated option with expansion expected to include a potential CO2 by-product stream.

“The third-party owned Red Rocks helium project adjoining Galactica recently commenced selling helium into the market from 2 wells, via an IACX-operated helium recovery plant. Not only does this project demonstrate the expected viability of our Galactica project, it also validates the broader commercialisation model of Blue Star’s chosen development pathway at Voyager.”

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Written By Adam Orlando Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.