DOMESTIC natural gas and helium producer Renergen has completed a forward sale agreement for 100 000 units of helium to Argonon Helium US, a helium trading company.
The agreement is for 19 years. Each unit represents a thousand cubic feet (mcf) of liquid helium.
Argonon will use the helium to issue tokens, which will in due course be listed on an exchange with the assistance of financial services provider Purple Group’s EasyCrypto platform, providing transparency in the price of helium for the first time.
Renergen’s share price surged 6.7 percent to R585.85 yesterday morning after the deal was announced. Purple group’s share price was up 1.51 percent to R2.02 at the same time.
The tokens will be fully redeemable for helium at the plant, giving investors the ability to participate in the difference between refinery price and the current spot price.
Helium is not presently traded in the spot market and a visible price per mcf is not available. The collaboration between Renergen and Argonon was designed to bring transparency of pricing into the helium market and highlight the growing global importance of helium.
The global helium market, currently under supplied, consumes around 6 000 000 units per annum, according to estimates by Edison Group and Hannam
and Partners, with an anticipated consumption of over 126 000 000 units by the time Renergen’s Virginia Gas Project’s licence expires, assuming no growth in demand.
At present, the helium market is constrained for reasons which include plant outages, disrupted shipping routes and reduced upstream production of helium.
Renergen chief executive Stefano Marani said helium was a rare element without substitutes and plays a vital role across several high-growth sectors, including medical resonance imagery, welding, fibre optics and electronics, which was leading to a growing global shortfall of helium supply, and rising prices.
Argonon chief executive Richard Charrington said in a statement that while 100 000 units was less than 0.1 percent of the global helium market, “we believe this transaction is a ground-breaking step in bringing helium to the financial markets and will pave the way for its inclusion into more mainstream commodities”.
As with other commodities, “it will start small and is likely to be traded by those who have researched it and understand the future potential with emerging technologies such as quantum computing, and, in time, may become much more mainstream in a similar way lithium did several years ago,” he said.
Purple Group chief exeutive Charles Savage said they saw a future where the use of blockchain to manage assets at low cost and in a transparent way became mainstream.
“This is what we do at EasyCrypto and it was a no-brainer when our longtime friends at Renergen asked us to get involved. Applying it to a resource base we believe is a very innovative approach and look forward to this journey,” he said.
Marani said that through their highgrade Virginia Gas Project, Renergen was in a strong position to supply the growing market and to create long-term value for stakeholders.
BUSINESS REPORT