Tanzania could become top helium producer

Tanzania has the capacity to “alter the global supply” if it can manage its helium industry effectively.


Exploration data suggests that Tanzania’s Rukwa Basin could hold large reserves of helium, a natural resource whose price has risen considerably in recent decades. Tom Collins considers the significance of the finds.

Roaming across the Tanzanian plains on safari some six years ago, it dawned on two Australian geologists that Tanzania could hold world-class helium reserves.

Looking at local research conducted by a British geologist in the 1950s, an unusually high concentration of helium in the country’s naturally occurring gas seeps was a strong indication that large primary deposits lay under the ground.

While the global supply of helium had comfortably outweighed the demand, this revelation gathered dust in the Tanzanian archives in the absence of any commercial justification for further exploration.

Now global supply is under threat, with the commodity surging around 500% in the past fifteen years, Helium One – the company eventually created by the Australian geologists – announced from early analysis data that Tanzania could hold as much as 98.9 billion cubic feet (bcf): enough to make the East African nation one of the world’s top producers

Huge potential

Aside from the large quantity, Tanzania’s south western Rukwa basin – where the helium seeps are located – is also relatively unique in the concentration of helium it produces.

Professor Jon Gluyas, Director of Durham University’s Energy Institute, who conducted research on Tanzania in conjunction with Oxford University and Helium One, argues that the helium concentration in Tanzania is “getting on for a world record.”

While most helium is produced with very low percentages as a by-product of natural gas, helium in the Rukwa basin is found attached to the carrier-gas nitrogen and takes up a much greater share of that compound.

The percentage of helium found in Qatar – a heavyweight of helium production along with the US – stands at around 0.4% relative to methane, whereas concentration in Tanzania falls at around 10% relative to nitrogen.

Added to the 98.9 bcf potential – which towers over the yearly global supply of only 6 bcf – Josh Bluett, Helium One’s Technical Director, firmly believes that “this will be the largest primary helium project in the world.”

Helium One, in fact, are moving relatively quickly towards production after the pre-exploration phase was aided by extensive seismic data collected as a result of drilling by US oil company Amoco who came through the Rukwa basin in the 1980s looking for oil or gas. 

Bluett states that the company is now “drill ready” after raising $2m from Australian, Asian and African investors last year, and procuring three licenses from the government.

“The next stage is to conduct the drilling program and the expectation is to make one or more helium discoveries in these reservoirs,” he says. “All going to plan we will be in that phase next year and hopefully moving to production by 2021.”

Helium market

When Helium One comes online, provided of course the drilling stage confirms previous estimates, the production looks set to shock the global market.

Helium is a crucial component in a number of instruments including MRI scanners, telescopes and radiation monitors as well as spacecraft.

The supply has been dwindling slowly over the years with around 75% of helium produced from just three sites: two in the US and one in Qatar.

This set-up is currently taking a serious hit following the decline of two US oil and gas fields which produce helium as a by-product, and the blockade of Qatar by Saudi Arabia which continues to choke their supply. 

With the price of helium ballooning, buyers are nervous that the fragility of the supply chain may lead to further price volatility and eventuality put the ability to source helium into question all together.

“If any of these plants shut down for maintenance or anything happens, then that will really wipe out a significant amount of supply,” explains Bluett. “We see ourselves as playing an important part in rectifying the fragile and not very diverse supply chain. The message from all our buyers is – when are you going to be in production, we want to buy your helium.”

Indeed, contrary to media reports that helium gas is ‘running out’ the concern is more accurately centered around securing and diversifying the supply chain.

Places like Algeria and Russia have the potential to export helium but are hindered by governance issues.

As a result, leading scientists like Gluyas argue that it’s the accessibility of helium which is under threat not the resource itself.

“I don’t think there’s a global shortage of helium at the moment; there’s a global shortage of accessible free market helium,” he says.  

In this context Tanzania has the capacity to “alter the global supply” if it can effectively manage its helium industry and create an enabling environment for private sector input.

Making the most

While Tanzania is developing a reputation for spooking investors amid complaints of executive overreach into areas of the economy like mining – often with hefty fines slapped on twitchy multinationals accused of exporting profits without benefit to Tanzania  – Helium One is shaping up as a rare example of good news.

Bluett explains how Helium One is working closely with Tanzania’s Ministry of Minerals, and the government “stipulated quite clearly what the requirements for taxation were”.

He points out how the current administration is pursuing companies who are believed to have acted illicitly in the past, which has little to no bearing on companies looking to enter in the present.

“I suspect that most of what we are seeing is dealing with legacy issues; with companies who have been in production for a while,” he says. “We are in exploration so we don’t see the same risk profile.”

Elisante E. Mshiu, Department of Geology at University of Dar es Salaam, who also conducted research alongside Helium One, believes the period belongs to a government who are firming up shaky legislation which allowed for loopholes and therefore abuses in the past.

“The intention is not to scare away external investors but to attract them,” he says. “The government is now in a better position to control and get the appropriate percentage of tax back to the government.” 

With Helium One hoping to transport its helium to the port of Dar es Salaam and then ship it to the US, Asia and Europe by 2021 –  the partnership tells a different story of Tanzania under President John Magufuli and looks set to benefit both parties.

“For Tanzania this is another good opportunity for the economy,” comments Mshiu. “Like other resources which we have here in Tanzania, we are supporting the private sector to exploit it but also to make sure we have sufficient oversight of it.”


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