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00:00Helium is a critical component in some medical services, but also the creation of semiconductors as a cooling agent.
00:07How much trouble are we in?
00:09Well, this was the black swan event that we were kind of concerned about.
00:1433% of the world's supply of helium is gone.
00:16And we've had shortages over the past 20 years with the demand of semiconductors going up for many applications.
00:24You know, everything from our national defense to your cell phones that are in your hands, right?
00:31And we don't have ramp-up capacity just to make helium.
00:36So, yeah, it's a pretty scary thing.
00:38Is there a replacement for it?
00:40Can you use argon?
00:41Can you use hydrogen?
00:42That doesn't always end well.
00:44No, you don't want to use hydrogen.
00:48The Hindenburg used hydrogen because the U.S. wouldn't sell it helium.
00:53But, no, you know, don't use it in party balloons.
00:55Please don't do that.
00:57But there's no substitute.
00:59You can't use nitrogen or oxygen or anything like that for MRIs.
01:03You can't use it in the process of the manufacturing of the semiconductors.
01:06Again, no substitute for it.
01:08So this is critical enough, Cliff, that you found yourself at the Pentagon yesterday.
01:12Are they asking you for help?
01:13Yeah, so they're obviously looking at it very closely.
01:16It's extremely critical to our national defense,
01:19everything from munitions manufacturing to the chips that go into the F-15s
01:23and the Patriot missile systems.
01:25If we don't have helium, we don't have that industry.
01:29When you were in D.C., did you have a bit of I told you so moment?
01:33Because the U.S. sold its helium reserve in 2024 to a foreign entity,
01:37and I understand you advised the government against doing that.
01:40Yeah, a lot of us in the industry advised the government against it,
01:42but there was a congressional mandate for it to sell,
01:45and so they had to sell it, and that strategic reserve,
01:50which we called cliffside in the industry, was kind of the flywheel for the U.S.
01:54So if ExxonMobil went down in Labarge for maintenance,
01:57you still had cliffside going to keep things pretty stable and smooth,
02:03but that is no longer the case.
02:05The U.S. doesn't have a strategic reserve anymore, but China and Russia do.
02:10The U.S. is the biggest producer in the world still, right?
02:13Yes.
02:13And there aren't many of us.
02:14It's the U.S., Qatar, we already mentioned, Algeria, and Russia.
02:17Why so few?
02:18It's expensive, and it's complex,
02:21and you've got to find the right resource deposit to make it happen.
02:25Most helium that's produced today is associated with natural gas,
02:29so I would say about 98% of all helium produced in the world is from LNG, right?
02:35Algeria, LNG, Poland, LNG, Qatar, LNG, Labarge, and Wyoming, LNG.
02:41Very few pure-play helium exploration and production folks are out there.
02:48So, yeah.
02:49From your vantage point, what supply disruptions are you already seeing?
02:52Because we talked about chips.
02:53How long do you think it's going to take these disruptions to really be felt by average consumers,
02:58not industrial consumers?
02:59We were reading a former Nintendo sales lead says that switch-to prices might spike because of helium prices.
03:05Yeah.
03:05Consumer electronics are going to suffer pretty quickly.
03:09You know, Europe's already feeling the shortages from this cutter issue.
03:14Asia is going to be out there trying to compete for those spot molecules.
03:18The U.S. is resource-rich, but we don't have additional ramp-up capacity.
03:24We actually have a concentration risk in the United States with our helium supply.
03:29Is that something you were pressing the government to address?
03:32Should there be a bigger capacity to ramp-up?
03:34Should there be bigger production capacity in the U.S.?
03:36Yes.
03:37A lot of us in the industry have been talking with the federal government for years, right,
03:41to put it back on the critical minerals list.
03:44You know, and for reasons, it's a long discussion, right, it was pulled off a few years back.
03:50But one line item in that, you know, a single critical point of failure, right?
03:54You know, it's one of the inclusions for making it a critical mineral.
03:57And if we have LaBarge go down, right, now we're 60% of the world's supply of helium is gone,
04:03and then we're in real trouble, right?
04:05So let's talk prices.
04:07We spend so much time looking at crude oil.
04:09Bring us into your world.
04:11If we've seen prices double already since Qatar shut things down, where could this go?
04:16If we have a straight that's closed for many more weeks,
04:19what's the equivalent of $200 for a barrel of oil when you're buying helium?
04:23Yeah, so you're talking $2 a foot?
04:25Yeah.
04:26Is that coming?
04:28Oh, that's definitely coming.
04:29You know, we just don't have any additional volumes to move around out there.
04:32So the allocations...
04:33The quantity is by feet?
04:35Yeah, you know, MCF, MMCF, right, we go by cubic feet.
04:39I learned something new today.
04:40All right, got it.
04:41I like cubic feet.
04:42It's an easier number to, you know, to handle, right?
04:45But, you know, if I went back to 1991, I would say the price of helium was $0.05 per
04:50cubic foot, right,
04:51per standard cubic foot.
04:54Coming out of the last shortage, you know, we were starting to sell around,
04:57settle down around $0.38 to $0.48 per standard cubic feet.
05:01And then at the height of the last shortage, we were up to $2.50 a foot.
05:06Wow.
05:06So it's pretty, that's pretty high.
05:08So you've seen these numbers before.
05:10Yes.
05:10And we're going back to the highs is what you expect.
05:11We're definitely going back to the highs.
05:12We already see the allocation letters that are out there.
05:15The force majeure has been declared by at least one, Ehrlich Heed.
05:18Yeah.
05:18Those, there's more to follow, I'm sure, right?
05:23So, yeah.
05:24So how did you leave this meeting at the Pentagon?
05:26Were there solutions on the table?
05:27They are definitely working on this, right?
05:29They're definitely taking a second look at this, and I think they're definitely listening
05:33to industry leaders about this.
05:35What do we need to do?
05:37Do we need to build more liquefier, you know, capacity?
05:39Do we need to look at helping junior explorers along that are out there, right, protecting
05:44them against, you know, the low prices that Russia may try to flood the market to disrupt
05:50our potential for building new production?
05:54So we've been talking a lot about Artemis and the space trip, and that requires helium.
06:00Apparently, that spaceship used a million and a half dollars worth of helium to launch.
06:04So this is not just about chips and capacity now.
06:07This is about the future of space exploration.
06:10Yeah.
06:11That's right.
06:12It used a million and a half dollars worth of helium.
06:14And when we think about all the launches that SpaceX is doing and Blue Origins and the European
06:19Space Agency, Russia, India, they need helium to launch rockets, right?
06:24We need helium to put the satellites in space, right, for your Starlink.
06:28Yeah.
06:29So if you're at risk with your helium supply, it's definitely going to disrupt your launch
06:33cadence, right?
06:34So if you're planning 200 launches for the year with this type of disruption, you know,
06:38you could most potentially be having that number.
06:40It's amazing what you can take for granted until there's a shortage.
06:43100%.
06:44All right.
06:44So it's complicated.
06:46It's hard to produce.
06:47Are there any short-term solutions to patch this gap as we try to remedy whatever's going
06:51on in the release?
06:52There's no short-term solutions, other than the producers or the explorers that are out
06:56there that are trying to get new production online.
06:59Yeah.
07:00That is probably our nearest to term.
07:02But you're talking anywhere from six to 16 months to get a new plant, like a regular gaseous
07:07plant for helium.
07:08You know, you could probably get put into place in about six months if you find the deposit
07:12to refine, right?
07:14But then to get to five nines helium, which is liquid helium in the cryogenic state of
07:19it, those liquefiers take 16 months to build, you know, $50 million.
07:23You just wonder where policymakers have been on all of this.
07:26We had a CHIPS Act that brought domestic manufacturing of semiconductors to the fore.
07:34And this is something we talk about in Washington every day, how we have to rely less on other
07:38nations.
07:39We talk about the NVIDIAs, the Broadcoms, the Taiwan semiconductors of the world.
07:43But none of that is possible without helium.
07:45Should there be a congressional answer to this?
07:47Do we need to revive the reserve?
07:49I think so.
07:51I really do.
07:51Why isn't it happening?
07:53Well, I think this administration is definitely taking more steps than the last one did.
07:56Yeah.
07:57And I'm just trying to be agnostic here.
07:58Sure.
07:58Fair enough.
07:59We appreciate that here at Bloomberg.
08:00The last administration was behind the CHIPS Act, too.
08:02You would think that that would have been a more urgent priority.
08:05Yeah, I'm confused how this has flown under the radar so long, because I feel like we've
08:08talked about critical minerals, we've talked about chips, we've talked about single-point
08:11failures.
08:12And this only now, in my mind, and we're pretty into the news, has really come into the conversation.
08:18I always like to say helium is the Lord of Rings reference, where it's one ring that
08:23rules them all, right?
08:24So even when we talk about the rare earth minerals, even to get those processed, and we
08:30have a problem with processing in this country, we don't have any, right?
08:33So even if we find the minerals, we don't have the processing capability, right?
08:37And in that process, when they're in the labs and they're testing to make sure those minerals
08:41get to the high curies that we need for production and for uses, you need helium for that, right?
08:48So if you don't have helium, you don't have our electronics.
08:51You don't have aerospace.
08:53You don't have your Nintendo Switches, right?
08:57I don't have a Nintendo Switch, but I know people will be very upset by that.
09:00But you've got a cell phone.
09:01I have multiple cell phones.
09:03I don't even want to get into that.
09:04All right, so what should countries do?
09:05I mean, should governments prioritize?
09:08Should there be rationing?
09:09Should they say, I mean, I'm assuming we're not getting party balloons any time in the
09:12near future, but what do you do when you have a limited amount and a lot of mouths to feed?
09:16Well, rationing would be a really touchy subject.
09:18I guess, you know, you have to enact the War Powers Act or something like that, because
09:23it's now all privatized, you know, but.
09:28What would you like to see governments do?
09:30I would like them to actually take it serious, you know, instead of just saying, well, we've got
09:34plenty of supply this year, but next year we have, you know, a shortage.
09:39Yeah.
09:39And then that just blunts our growth anyway.
09:42You know, when you look at semiconductor companies and all these folks that use helium in their
09:46manufacturing process, fiber optic cables, right?
09:49They can't, they can't, you know, project and look at growing their business if there's
09:54no stable supply of helium.
09:56You know, how are we going to have a stable AI growth if we don't have helium?
10:00Yeah.
10:00Right.
10:01And we have competitors out there.
10:02We have adversaries out there, Russia and China, that definitely recognize that it is
10:06critical.
10:07When you, you, you look at the Amur processing facility in Russia, which they just brought
10:12online, the Russians built the Vistachny Cosmodrome right next door to it, right?
10:17That's their new space program.
10:19That is, you know, they want helium right next to their space program.
10:23We don't really have that here.
10:24So we've identified the problem.
10:26If the strait were to reopen, there's an expectation, for instance, energy prices would plummet.
10:32Would the same happen to helium?
10:33Could you end up with a glut?
10:35No, because the plant was damaged.
10:37Got it.
10:38Right.
10:38And we don't have a cessation of hostilities.
10:40So reopening the strait is not it.
10:41You need to fix that plant and that could take years.
10:44Cutter Energy said it themselves, three to five years at least.
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