ASP Isotopes Inc. (ASPI:NASDAQ) recently agreed to acquire South African helium producer, Renergen Ltd., a development Canaccord Genuity Analyst George Gianarikas reported in a prior note. Given that news, the analyst described the current helium market in a subsequent (May 23) research report.
"The global helium supply is fragile and concentrated," Gianarikas described.
41% Return Potential
Canaccord has an US$11 per share target price on ASP Isotopes, trading at the time of his report at US$7.80 per share, noted Gianarikas. From this price, the return to target is 41%.
The U.S.-based isotope developer, producer and seller is rated Buy.
What to Know
Gianarikas described today's helium landscape using data from various sources. Helium is created in one of two ways, from the decay of radioactive elements in the earth's crust and via nuclear fusion reactions in stars. Thus, it can only be extracted in situ and not manmade. A finite amount of it exists (ACS).
Because helium only occurs naturally in certain geographies, the global supply chain is fractured. The largest producers of helium are the U.S., accounting for about 46% of supply, Qatar, 38%; and Algeria, 5% (BBC).
Helium levels in the atmosphere have been rising due to the extraction and burning of fossil fuels (Nature Geoscience). This, along with spotty global distribution, has led to short helium supply. In the last 20 years, the world has experienced four helium supply deficits. Consequently, the U.S., China, the European Union and other major economics have deemed helium a critical material (Crux Investor).
In 2023, the U.S. consumed 59 million cubic meters (59 Mcm) of helium. It pulled 19 Mcm from its reserves. The government sold the remaining reserves of 52 Mcm in 2024 (U.S. Geological Survey).
The price of helium has risen substantially in the last 20 or so years due to supply constraints and geopolitical events. The helium price increased more than sevenfold between 2006 and 2023, reaching $425 per thousand standard cubic feet ($425/Mcf) from $60/Mcf (Crux Investor).
Global demand for helium is expected to double by 2035 (Reuters).
Uses and Properties
The analyst highlighted what makes helium distinctive and highly desirable to industry. The gas is critical to numerous sectors, artificial intelligence and quantum computing, semiconductors, medicine, aerospace, welding, automotive, fusion and fission energy and more.
In most applications, there is no adequate substitute for helium due to its unique properties. It is chemically inert, nontoxic, low density and superfluid. With a low boiling point, it does not solidify at atmospheric pressure.
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