High Demand Noble Gas: Helium Creates Lucrative Investment Opportunities as a Critical Tech Resource

• The global helium market is expected to grow from US$3,760 million in 2023 to US$5,400 million by 2030, with a CAGR of 5.2%.
• Helium demand is driven by its critical applications in arc welding, cooling medium for nuclear reactors, healthcare (MRI machines), aerospace, electronics manufacturing, and scientific research
• There has been an increasing undersupply of helium over the last decade, leading to price increases and new exploration efforts opening market opportunities.
• The U.S. is selling its Federal Helium System, raising concerns about future supply stability. North America, particularly the United States, has been a dominant player in the helium market.
• New helium discoveries and production increases are occurring in countries like Canada, South Africa, and Tanzania to address the supply shortage. Pulsar Helium, Georgina Energy and Helix Exploration discussed focusing on helium offering exposure to both critical resources and cleaner energy trends.

Helium is a critical resource for various high-tech industries and scientific applications. As global demand continues to outpace supply, investors are increasingly turning their attention to this noble gas. This article explores the current state of the helium market, its growth prospects, and why it presents a compelling investment opportunity.

Market Overview and Growth Projections

The global helium market is on a strong growth trajectory. According to a recent market study by Profshare Market Research, the industry is expected to expand from USD 3,759.32 million in 2023 to USD 5,396.45 million by 2030, representing a compound annual growth rate (CAGR) of 5.2%. This growth is driven by increasing demand across various sectors, including healthcare, aerospace, electronics manufacturing, and scientific research.

In terms of volume, the global helium market stood at approximately 6 million tonnes in 2022 and is projected to reach nearly 11.8 million tonnes by 2032, growing at a CAGR of 4.35% during this forecast period. These figures underscore the robust demand and market expansion expected in the coming years.

Supply-Demand Dynamics

One of the most critical factors driving the helium market is the persistent supply-demand imbalance. Over the past decade, there has been an increasing undersupply of helium, leading to price increases and spurring new exploration efforts. This shortage has been exacerbated by the decline in conventional natural gas production, which has historically been the primary source of helium. As per Dean Nawata, manager of corporate development at Royal Helium Ltd., most of the new U.S. natural-gas production is from shale, which tends not to have helium. This shift in natural gas production methods has contributed to the helium supply crunch.

Critical Applications Driving Demand

Helium is a unique, inert gas with exceptional properties. Helium presents a compelling investment opportunity due to its unique market dynamics and critical importance across various industries. As a non-renewable resource primarily obtained as a byproduct of natural gas extraction, helium's global supply is inherently limited. This scarcity is juxtaposed against growing demand, driven by increasing use in high-tech industries, healthcare, and potential expansion in nuclear energy applications.

Helium's unique properties make it irreplaceable in many high-tech and scientific applications. Understanding these applications is crucial for investors to appreciate the inelastic demand for this resource.

• Arc Welding: Helium serves as an inert shielding gas, preventing oxidation and contamination in welding processes, especially for materials like aluminum and stainless steel.
• Cooling Medium for Nuclear Reactors: Due to its excellent heat transfer properties and chemical inertness, helium is ideal for cooling certain types of nuclear reactors, particularly high-temperature gas-cooled reactors (HTGRs).
• Healthcare: The medical and healthcare sector dominated helium usage in 2023, capturing 40% of the market share. This prominence stems from helium's diverse applications in the field, including MRI machines, endoscopy, laser technology, breathing mixtures, spectroscopy, and positron emission tomography (PET). Helium's extremely low boiling point makes it ideal for cooling the superconducting magnets in MRI machines, enabling high-resolution imaging crucial for medical diagnostics.

• Aerospace and Defense: Helium plays a vital role in the aerospace industry, used in rocket propulsion systems, as a lifting gas for airships and weather balloons, and in various other applications. The growing commercial space industry and increased defense spending are likely to drive further demand in this sector.
• Electronics and Semiconductor Manufacturing: The electronics industry, particularly semiconductor manufacturing, relies heavily on helium. It's used in the production process to create controlled atmospheres, in cooling applications, and for leak detection. With the global push towards digitalization and the increasing demand for electronic devices, this sector is expected to be a significant driver of helium demand.
• Scientific Research: Helium is indispensable in various scientific research applications, including particle accelerators, nuclear magnetic resonance (NMR) spectroscopy, and other areas requiring extremely low temperatures.

Helium's strategic importance cannot be overstated, as it plays a crucial role in scientific research, medical technology, and industrial processes, leading many countries to consider it a vital resource.  Beyond healthcare, helium plays a crucial role in surveillance and monitoring. Helium-filled aerostats, tethered balloons, and blimps serve as stable platforms for various payloads such as radar, cameras, and communication equipment. These applications are vital in border security, military operations, and disaster management, highlighting helium's importance across multiple critical sectors beyond just medicine.

Recent challenges in supply chains and resultant price fluctuations have created opportunities within the helium market, particularly in areas of extraction, purification, and distribution. Furthermore, ongoing technological advancements, especially in recycling and efficiency improvements, offer potential for innovative companies to capitalize on this evolving market.

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Market Challenges and Opportunities

While the helium market presents significant opportunities, investors should be aware of the challenges and unique characteristics of this market. Zac Phillips, an advisor to Oak Securities with a background in engineering, provided insight into this market dynamic in a previous discussion, Helium Scarcity Sparks Price Rise & New Investment Opportunity,

"Whether you're in a GDP positive or a GDP negative economy, the demand for helium is always going to exceed the available supply because of just the sheer nature of the gas itself, but also its application to a wide range of end uses."

Investors could consider the growth potential offered due to the increasing demand and limited supply but also the risks related to market volatility and alternative technologies. Companies involved in helium production, distribution, and efficiency technologies may present attractive investment opportunities in this strategic resource market.

U.S. Federal Helium Reserve Sale

A major development in the helium market is the ongoing sale of the U.S. Federal Helium System. The U.S. Department of Interior's Bureau of Land Management recently announced that it accepted bids for the purchase of the system by privately held industrial gas firm Messer LLC. This sale, mandated by the Helium Stewardship Act of 2013, has raised concerns about the future stability of helium supply, given that the U.S. has been a major global supplier.

Investment Landscape: Discoveries and Production Increases

For investors looking to gain exposure to the helium market, there are several avenues to consider, these include companies involved in helium exploration, production, and distribution. Some notable players in the market include Pulsar Helium, Georgina Energy and Helix Exploration.

In response to the supply shortage, there has been an increase in helium exploration and production efforts worldwide. Promising discoveries have been made in several countries:

• South Africa: Natural-gas and helium producer Renergen Ltd. has made significant discoveries.
• Tanzania: Noble Helium Ltd. and Helium One Global Ltd. are actively exploring and developing helium resources.
• Canada: Companies like North American Helium and Royal Helium are expanding production.
• United States: Pulsar Helium Inc. and Avanti Helium Corp. are among the companies exploring new helium resources.

Of particular note is Pulsar Helium's recent discovery in Minnesota's Iron Range, which the company's CEO, Thomas Abraham-James, described as potentially one of the most significant helium finds in the world with an initial discovery well containing 10.5% helium. PLSR recently completed a seismic survey revealing a large helium anomaly that is open-ended, indicating potential for further exploration: Pulsar Helium Aims to Help Alleviate Global Helium Shortage

Georgina Energy, an energy exploration and production company focused on helium, hydrogen and natural gas exploration in Australia's Centralian Superbasin, has identified 10 priority targets out of 168 potential wells for re-entry and flow testing. Their Hussar 1 well re-entry, planned for December 2024, aims to extend the original depth from 2040m to 3400m to test the helium-bearing Townsend Formation. The Mt Winter prospect is awaiting approval to re-enter and deepen an existing well.

Georgina's strategy of re-entering existing wells reduces exploration risks and capital expenditure. The company is fully financed for near-term drilling at Hussar, with results expected to act as a significant catalyst. Their focus on helium alongside hydrogen and natural gas provides exposure to both critical materials and cleaner energy trends: Georgina Energy Announces Additional Well Re-Entry Opportunities & Operational Progress

‍Helix Exploration is drilling two large-scale helium exploration projects in Montana, USA, with production targeted before the end of 2025: HEX Drilling Two Large-Scale Exploration Helium Projects in Montana by September

The company is twinning and deepening a historical well at the Ingomar project that previously discovered non-flammable gas but was never assayed for helium. Helix is well-funded following a $9.5 million IPO, with drilling results expected by September 2024. Helix Exploration's strategic location in Montana provides logistical advantages for distribution across the US. Helix estimates that a $19 million capital investment could yield an NPV over $300 million, assuming a 1.5% helium concentration.

Investment Considerations

Price Opacity and Market Structure

One of the challenges in the helium market is the lack of price transparency. Unlike commodities such as copper or gold, helium isn't traded globally on open markets. Instead, it's purchased through individually negotiated contracts often signed under non-disclosure agreements. This structure can make it difficult for investors to gauge market dynamics accurately.

Don Mosher, president and director at Desert Mountain Energy Corp., notes that this "nature of the market results in a lack of transparency." However, he also points out that shortages have driven prices higher by 800% since 2018, indicating the potential for significant returns in this market.

Transportation and Storage Challenges

Helium's properties make it challenging to transport and store. Christopher Ecclestone, mining strategist at Hallgarten & Co., describes helium as the "great escape artist" because it must be transported in a totally hermetically sealed environment. This characteristic "dictates which deposits will be commercially viable," potentially limiting the development of some helium resources but also creating barriers to entry that could benefit established producers.

Geographic Factor

Helium is found in recoverable quantities in only a few locations around the world, making it a geographically concentrated resource. The main helium-producing countries are the United States, Qatar, Algeria, Russia, Canada, and Poland. This concentration can lead to supply vulnerabilities but also presents opportunities for companies and countries with helium resources.

Investors may want to consider the geographic distribution of helium resources and production. North America, particularly the United States, has been a dominant player in the helium market. However, new discoveries and production increases in countries like Canada, South Africa, and Tanzania are changing the global helium landscape.

The Asia Pacific region, led by China, is emerging as a major consumer of helium, driven by its electronics manufacturing industry. This growing demand could present opportunities for companies able to secure supply agreements in this region.

Future Outlook

The future of the helium market looks promising, with several factors contributing to a positive outlook:

1. Sustained Demand Growth: The demand for helium is expected to continue growing, particularly in sectors like healthcare, electronics, and aerospace. Royal Helium's Nawata notes that demand is growing at a 6% compound annual growth rate overall, with sectors like semiconductors and rocket launches seeing growth rates exceeding 20%.
2. Supply Constraints: The ongoing supply shortage and the challenges in developing new helium resources suggest that prices could remain elevated in the near to medium term.
3. Technological Advancements: Improvements in helium extraction, purification, and storage technologies could open up new opportunities in the market.
4. Geopolitical Factors: As helium is increasingly recognized as a strategic resource, government policies and international relations could play a more significant role in shaping the market.
5. Emerging Applications: New uses for helium in emerging technologies, such as quantum computing or fusion energy research, could further drive demand in the future.

As with any investment, thorough due diligence is essential. Potential investors should carefully consider factors such as a company's resource base, production capabilities, technological expertise, and market position when evaluating helium-related investments. The global nature of the helium market also requires attention to geopolitical factors and international trade dynamics.

The helium market presents a unique investment opportunity characterized by strong demand growth, supply constraints, and critical applications across various high-tech industries. While challenges exist, including market opacity and transportation difficulties, the fundamental supply-demand imbalance and the irreplaceable nature of helium in many applications make it an attractive prospect for investors.

In conclusion, helium's critical role in advanced technologies and persistent supply challenges position it as a compelling investment opportunity in the commodities sector. As the world continues to advance technologically, the importance of helium is likely to grow, potentially rewarding well-positioned investors in this unique market.

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^References:

1. ^{Profshare Market Research (2023-2024) Helium Market by Product Type (Liquid Helium, Gas Helium) by Applications (Aerostatics, Healthcare, Electronics & Semiconductors, Industrial) by Industry Analysis, Volume, Share, Consumer Insight, Challenges, Trends, Strategies & Forecast. Public Summary retrieved from: https://www.profsharemarketresearch.com/helium-market/}
2. ^{Saefong, MP., Market Watch (2024) Helium is rallying off a decade-long shortage — and it’s time for investors to pay attention. Public Summary retrieved from: https://www.marketwatch.com/story/investors-see-opportunity-after-decadelong-helium-shortage-what-you-need-to-know-0d1dc0ce}
3. ^{U.S. Department of Interior, Bureau of Land Management. Public summary retrieved from: https://www.blm.gov/programs/energy-and-minerals/helium/about}
4. ^{ChemAnalyst Research (Dec 2023). Helium Market Analysis: Industry Market Size, Plant Capacity, Production, Operating Efficiency, Demand & Supply, Type, End-User Industries, Sales Channel, Regional Demand, Company Share, Manufacturing Process, 2015-2032. Public summary retreived from: https://www.chemanalyst.com/industry-report/helium-gas-market}