Helium Supply Reaches Bursting Point

⚡ Five Second Summary:

Helium is a critical part of the semiconductor (computer chip) supply-chain and cannot be substituted across most of its other industrial uses. 

Demand for helium is expected to increase as the world becomes more technologically advanced. 

At the same time, the helium market has one of the most fragile supply chains in the world making it susceptible to quickly increasing prices when there are supply shocks. 

📊 The Chart

🤔 What's Happening:

  • Helium is irreplaceable in some supply chains including the semiconductor manufacturing space. 

  • Demand for helium is expected to increase as semiconductor intensity in supply chains all over the world increases. 

  • At the moment most of the world’s supply comes from just three countries (US, Qatar and Algeria) and from less than 15 companies worldwide. 

  • Supply chain concentration makes helium prices susceptible to exponential rises when supply shocks eventuate. 

  • An example of this is when the helium price doubled from 2020 at US$7.57 per cubic meter to US$14 in 2023.

🔢 Numbers + Facts:

  • Helium concentrations generally need to be >0.3% for gas companies to produce and sell it as a by-product of gas production. 

  • Most countries around the world are net helium importers - including Canada, China, Brazil, Germany, France, Japan, Mexico, South Korea, and the UK.

  • The US and Qatar produce ~75% of the world’s helium, but US production is in decline whilst demand is increasing. 

  • Russia is set to become the world’s third largest producer of helium “as early as 2025” and is expected to account “for a quarter of the world’s supply within five years”. 

🔮 Looking Ahead:

  • Helium shortages are caused by the inability of producers to deliver it to customers in a timely manner - which is why a domestic supply of helium and proximity to end users is important. 

  • Demand is expected to rise as computing power in supply chains increases, driven in part by AI and the US build out of semiconductor manufacturing facilities. 

  • Given its importance to high tech industries, helium could become of strategic importance to countries. 

  • Most helium is produced as a secondary product to gas and at low grades (~0.3%). Now we are seeing companies look for projects where helium is the primary resource of production, with grades much higher than 0.3%. 

📈 The Company: Nobel Helium (ASX:NHE)

Market Cap: $32M | Share Price: $0.89 | Industry: Helium

Noble Helium (ASX: NHE) is a helium exploration company looking to define a world class primary helium resource in Tanzania. 

How does NHE fit into the story?

NHE has prospective resources totalling ~176 billion cubic feet of helium. 

If this resource is proven, NHE has the potential to be the world’s third largest helium reserve behind the nations USA and Qatar, and the largest ever reserve held by a single company.

NHE recently completed a two well drilling program at its first prospect and is now preparing for a flow test in 2024. 

The flow test will ultimately determine whether or not NHE can declare an official NEW primary helium discovery.

📰 Mainstream Media Coverage

Technology Review

“With rising demand for computing driven in part by AI, the US is investing heavily in building new fabs, which will likely drive more demand for helium. “There’s no question that chip manufacturing will be the biggest application within the coming years, if it isn’t already.”

NBC News

“Shutting down the U.S. helium reserve would force a situation where we would have to increase our reliance on foreign sources, like Qatar and Russia,” Saha said. “Given the ongoing geopolitical concerns and tensions in those regions and shipping delays, it would increase concerns around potential shortages on U.S. soil.”