First SA helium plant could be worth R1.7 trillion

In a grassy plain in the Free State, prospectors have stumbled upon a new treasure: helium. You may find yourself asking: What do we need more helium for? There’s enough at every King Cake and Crazy Store to fill all our birthday balloons. Well, beyond this, helium’s unique properties play a significantly underrated role for its invaluable use in medical devices, semiconductors, rocket launching propellants, and the manufacture of fibre optic cables and TV sets. South Africa could soon become the world’s eighth country to produce the highly sought-after helium. Renergens Virginia Gas Project had planned to start producing liquid helium in July 2022 but due to challenges they were delayed. MyBroadband examines the helium project, estimated to be worth over $100 billion (roughly R1.7 trillion). This article was first published on MyBroadband – Asime Nyide

The R8 investment that could be worth R1.7 trillion — Big plans for South Africa’s first helium plant in 2023

By Hanno Labuschagne

South Africa could soon become the world’s eighth country to produce highly sought-after helium.

That is if plans for Renergen’s Virginia Gas Project, the country’s first and only on-shore petroleum production facility, can get back on track in the coming months.

The facility had a challenging year, in which Renergen’s plan to start producing liquid helium in July 2022 was delayed.

Helium is estimated to be the second-most abundant element in the universe, but it is much less common on Earth. The gas cannot be synthesised but must be extracted from natural gas wells.

Its properties — such as its low boiling point, low density, low solubility, and high thermal conductivity and inertness — make it useful for several applications more critical than making floating balloons.

That includes semiconductors and fibre optic cable manufacturing, treatment of respiratory conditions, and rocket launching operations.

In the latter case, helium is used to purge hydrogen systems, pressure ground and flight fluid systems, and as a cryogenic cooler, among several other uses.

Renergen believes that the world’s biggest helium reserve lies under a 187,000-hectare piece of land in the Free State.

The company’s directors — Stefano Marani and Nick Mitchell — initially set their sights on producing liquified natural gas (LNG) when they purchased the gas rights for the land in 2012 for a measly $1, worth around R8 at the time.

But in October 2021, Renergen announced they discovered an incredibly high concentration of helium on the site, with a reserve of the gas they estimated could be as large as 9.75 billion cubic metres.

That would make it bigger than all the known reserves in the United States, which is currently the world’s largest helium producer.

It would also mean their initial investment of R8 could be worth over $100 billion (roughly R1.7 trillion)

More conservative estimates put the reserve at around 920 million cubic metres, but that would still be a substantial find.

MyBroadband spoke to Renergen CEO Stefano Marani about the project’s progress in 2022 and what lay ahead in the new year.

Part of Phase 1 of the Virginia Gas Project in the Free State.

The first phase of the Virginia Gas Project was financed by the United States government and local investments from Mazi and Sanlam.

Construction at the site began in 2019 and it started producing LNG for commercial use in October 2022.

Production currently stands at 30 tonnes per day, which Renergen aims to increase to 50 daily tonnes in 2023.

Renergen’s main customers for LNG are Ardagh Glass Packaging (previously Consol) and Ceramic Industries, a division of Italtile.

It has also been talking to fleet owners about converting their heavy-duty trucks to partially run on the gas.

Tetra 4, Renergen’s subsidiary that runs the mine, already uses four such trucks.

Renergen’s diesel-LNG dual-fuelled trucks

Marani said in 2022, the war in Ukraine had created significant challenges across the entire value chain for most businesses.

But one particular obstacle that Renergen faced was the failure of a conduction oil system 10 hours before the plant would have produced its first liquid helium.

Renergen said the component was incorrectly installed, leading to inconsistent conduction oil heating.

To prevent damage, Tetra 4 management decided to turn the plant off and correct the installation.

“There was a significant amount of expectation, both internally and externally, and the failure by a system which wasn’t even part of the plant was truly unfortunate in that it delayed helium production,” Marani said.

“It wasn’t all bad however, and we have made significant progress on the finalisation of Phase 2 while also drilling and making some significant gas strikes which gives additional comfort that our understanding of the geological model is improving significantly.”

Stefano Marani, Renergen CEO

Marani said that liquid helium production was “close”, although he could not give specific dates.

The world’s largest industrial gas company, Linde Group, will initially be Renergen’s sole customer for helium.

Among Linde Group’s many subsidiaries are South African chemical industry company Afrox.

But Marani has explained that all of the roughly 300-350kg of helium they will initially produce daily every day be exported.

That is already around one and a half times South Africa’s total daily consumption.

Construction of more buildings at Virginia Gas Project Phase 1

Renergen’s most important goal for 2023 is the financial close and commencement of construction on Phase 2 of the Virginia Gas Project.

Marani said this part of the plan had the potential to catalyse economic development of the local region, providing a node of clean, sustainable energy in an area with an abundance of skilled labour and great road infrastructure.

“Essentially, the Welkom and Virginia region could easily become a replica of the Ekurhuleni area, bolstering South Africa’s manufacturing capabilities and providing a gateway to employment,” Marani said.

Marani said the funding prospects heading into 2023 were “very strong”.

Funders include the Department of Energy’s Central Energy Fund, which is taking up a 10% stake in Tetra 4 for R1 billion.

Renergen has also entered into a strategic partnership with Ivanhoe mines, with initial funding of $13 million for a 4.35% stake in Renergen.

Upon completion, Renergen aims for the plant to produce 5,000kg of helium per day, over 600,000 tonnes of LNG per day and to house a 60MW gas-to-power plant.

Below are more pictures of phase 1 of the Virginia Gas Project in the Free State.

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