Helium production - South Africa to become liquid helium producer
After recent helium discoveries in the Free State province, the once largest gold mining complex in South Africa, the country is set to become one of just eight worldwide liquid helium producers.
The Virginia Gas Project of domestic natural gas producer Renergen started construction in 2019 and is set to be commissioned by August 2022.
Large Helium deposits in the Free State province
According to Stefano Marani, CEO of Renergen, the company believes the helium deposits in the 187,000-hectare site could be the world's largest concentration of the gas.
Marani and COO Nick Mitchell bought the gas rights in the area in 2012 for just US$1. Originally, they only intended to extract liquefied natural gas (LNG), but their investigation revealed a huge helium potential, estimated to be worth more than US$100 billion.
LNG is methane gas that has been supercooled to -160 degrees Celsius, a state in which it has a very high energy density. The plant will now produce both products, which are in high demand due to the world's increasing demand for energy and the need for helium to make semiconductors and rocket fuel.
Wide range of application of LNG and Helium
LNG can replace fossil fuels such as petrol or diesel in various applications, including motor vehicles, reducing overall energy consumption, environmental impact and costs.
The unique properties of helium play a significantly underestimated role, as it is invaluable in medical devices, semiconductors, rocket launch fuels and the manufacture of fibre optic cables and televisions, among a wide range of other applications. Currently, there is no method to produce helium synthetically, which makes it very valuable and sought after.
Implementation of the project
The first phase of the Virginia Gas Project was funded by the United States government and local investments from Mazi and Sanlam. Marani explained that it serves as a proof of concept to show that the gases are readily available and that Renergen can separate them.
The initial output will be relatively small, with a nominal capacity of 50 tonnes of LNG per day.
Renergen already has two major customers, Ceramic Industries and Consol Glass, who will buy its LGN to help them move away from heavier fossil fuels. Ceramic Industries and Consol Glass will consume about 60% of the Phase 1 LNG, while the remaining 40% will be available for trucks in the logistics sector.
Renergen had spoken to many fleet owners and that the intention to secure the outstanding volume was "robust" among several potential customers. "We believe that the next off-take contract is imminent and that a single company is likely to secure all remaining volumes," Mitchell said. The LNG conversion kits cost R250 000 on a one-off basis but reduce the long-term operating costs of trucks. LNG could also be used as an alternative fuel for generators, which would allow a 70% reduction in carbon emissions at a much lower cost.
The amount of helium produced will be around 300-350 kg and will be fully exported. This quantity is approximately one and a half times South Africa's total helium consumption.
The second phase of the project is expected to be a much larger project on a "global scale".
The company plans to reach financial close for this phase by early 2023 and begin commercial operations in 2025.
The plant currently employs about 75 people and will employ 150 to 160 in Phase 2 to provide technical and operational support to wholesalers and clients.
The Free State region has a source of clean, sustainable energy, which means that from a strategic point of view it makes more sense to locate industrial and manufacturing operations in the province than in Johannesburg, for example.
Based on these reasons, Renergen believes that its plant could have a much longer legacy in the region than mining companies.