20. July 2020 | 05:50 CET
Ballard Power, Plug Power, Royal Helium - why is helium becoming so important now?
There are niches in which a lot of money is earned because the companies produce something that either many customers need and it is protected by corresponding patents or it is a product that is particularly rare and therefore valuable. An important element of our modern society is for example helium. This inert gas is needed for magnetic resonance imaging (MRI) and semiconductors, among other things. It is also of decisive importance for the development and operation of rocket technology and space research. With the increasing electrification of everyday life and the opening up of the universe, interest in helium will increase - investors are beginning to position themselves.
time to read:
ISIN: CA0585861085 , US72919P2020 , CA78029U2056
"[...] We expect the first three wells to be drilled, cased, completed and tested by the second week of March [...]" Andrew Davidson, CEO, Royal Helium Limited
Specifics of helium
There is no way to produce helium artificially and for this reason the available helium must be obtained from a small number of natural gas and inert gas reservoirs. The recent commissioning of natural gas liquefaction plants has helped to increase the amount of helium that can potentially be extracted.
Purified helium is usually liquefied by a cryogenic process prior to transport. The transport costs for liquid helium are therefore generally lower because the volume is significantly smaller than that of the gaseous state. Qatar is one of the world's largest exporters of helium, followed by Algeria and Russia.
Market of the inert gas
The main applications of helium include magnetic resonance imaging (MRI), welding, transport and laboratory applications. The MRI sector accounts for around 20% of the demand for the inert gas. About 14% of the helium is needed for welding. The largest single customer for helium is the US space agency NASA, which requires helium for pressure regulation in the fuel supply for space shuttles. With the increase in space activities and the associated rocket launches and space shuttle missions, the demand for helium is expected to continue to rise.
Also, budgets for space travel will certainly not be linked to the price development of helium. In other words, the price will not play a role for some customers, because overriding priorities are paramount. Other market participants will then be left behind.
Owner of large properties
Royal Helium from Canada is looking for additional reservoirs for helium production in the province of Saskatchewan. With more than 400,000 hectares of helium potential, the company is one of the largest holders of such properties in North America. The company also aims to become a leading producer of this high-quality resource. Due to the limited sources of the inert gas, prices are expected to rise further in the future. The company has already identified 12 targets for helium on its properties.
Focus on Saskatchewan
"Royals southeast Saskatchewan lands, which comprise roughly 50% of the total land holding, all show robust helium occurrences. With the strategy of full-cycle inert gas capture, refining and liquefaction, it is crucial to develop a large number of de-risked drill targets throughout the Company's significant land package. (...) The effectiveness of Royals exploration methodology, which has been demonstrated at Climax, will increase the speed with which we can de-risk these target areas," stated Andrew Davidson, CEO of Royal Helium.
Start of performance
While the two hydrogen companies Ballard Power and Plug Power have already gained significantly in company value, interested investors are increasingly looking for alternatives that still have price potential. Royal Helium is still at the beginning of its value development phase and currently has a market value of CAD 7.4 million. Ballard Power, on the other hand, has now reached a market capitalization of CAD 6.5 billion and Plug Power a market value of USD 2.9 billion.