Helium is an important gas for the economy – particularly for healthcare, where it’s used in MRI scanners. Today, we’re going to cover helium-3. You might think that’s basically the same – but the economics of the two gases, and their uses, are as different as chalk and cheese. Let’s start off by explaining what the difference is between the two. “Normal” helium is helium-4. It’s got two protons and two neutrons in its nucleus, and two electrons whizzing round in orbit. Helium-3 is the same as “normal” helium-4, but with one less neutron in the nucleus. This missing neutron in helium-3 makes it behave very differently at very low temperatures, giving it an important role in cryogenics – but it has a range of other properties, too. It can be used to capture free-flying neutrons, originating from radioactive decay. One of the most important current uses of helium-3 is therefore in radiation detectors used to catch terrorists smuggling nuclear materials – such as plutonium. This might seem like an obscure use case – but the lack of helium-3 has put the kybosh on the whole US border security programme for detecting “dirty bombs”. These unsophisticated weapons rely on spreading radioactive material around, not on causing a nuclear blast. As a result, there’s now a move to using a different type of detector, which doesn’t rely on helium-3. There’s also a use case based around the fact you can “see” helium-3 in an MRI scanner. When you breathe in helium-3, it shows which bits of your lungs are working properly, and which aren’t ventilated. These are useful applications, and that leads to the current eye-watering price for helium-3. The total global market is measured in mere kilos per year – selling for thousands of dollars per litre. A large party balloon filled with helium-3 would set you back as much as a car. That’s all jolly interesting, but it’s a bit niche – and therefore not really the sort of thing we’d normally concentrate on in Exponential Investor. So why am I writing about it? One word: fusion. Fusion power, if we ever manage to get it cracked, has the potential to revolutionise energy generation. You may be used to the idea that there are many types of nuclear (fission) reactors around today – both experimental and commercial. These use various different fuels – commonly uranium, but also thorium and plutonium. Likewise there’s a similar range of fusion reactions that we could potentially use for power generation. The most conventional approach uses two types of hydrogen – deuterium and tritium (containing one and two neutrons, respectively). However, this is a problematic reaction to use for power generation at small scale – as it produces a stream of neutrons. This is directly dangerous, as neutron radiation is harmful. What’s more, it also has the capacity to turn shielding materials radioactive – meaning they have to be treated as radioactive waste. Another popular reaction type, deuterium-deuterium, also suffers from the same problem. Consequently, you have to build a large, heavily-shielded reactor core – not unlike the ones you might find at a conventional nuclear power station. There’s then a significant quantity of nuclear waste to get rid of. All of this means you’re swapping fission for fusion – but not getting rid of many of the inherent problems. It’s not quite the breakthrough we wanted. In addition to the radioactivity problem, the only practical way to recover the energy from these nuclear reactions is by capturing the heat given off. This means that you have to build a large, steam-cycle power station to deal with the energy-capture bit of the process. That’s expensive, and complicated – and introduces reliability issues. All in all, designing the extraneous parts of such fusion plants turns into a cumbersome nuisance – albeit a fairly familiar engineering endeavour. Many of the advantages of fusion then start to look like swapping one set of problems for a very similar set. And this is where helium-3 comes in. Crucially, it behaves totally differently in nuclear reactions, unlocking important new types of fusion power. We can swap fusion reactions which generate neutrons for ones which don’t. This means that the cost and complexity of a fusion power plant is vastly reduced. Accordingly, helium-3 fusion doesn’t require heavy shielding, or a steam power station. In principle, this means we could have very small fusion reactors – with Helion Energy claiming that small, truck-mounted installations will be possible. This clever idea has echoes of the “Mr. Fusion” device from “Back to the Future”. So where do we get this helium-3 from? There are, perhaps surprisingly, far larger natural supplies on the moon than on Earth. The current commercial market is tiny, as it’s based on selling by-product gases resulting from nuclear weapons maintenance. There are no naturally-occurring commercially viable sources of helium-3 on earth. It’s clear that this is a supply problem that’s yet to be solved. We therefore have just a few kilos of the stuff at present – far too little to use for power production at scale. However, if we ever get fusion cracked, helium-3 may be an important commodity in bulk. Mining the moon may eventually turn out to be practical. There are already Chinese plans to set up mining operations there, and a Russian firm (Energia) announced a decade ago that it hoped to get in on the act. The process is actually pretty simple – essentially you just scoop up some moon dust and heat it, catching the gas that comes off. The only problem is that you have to do it on the moon – as depicted in the film Moon. Helium-3 is seriously expensive stuff. Estimates of its economic value for fusion fuel are as high as $3bn/ton. If you’re interested in investing in this literal moonshot market, firms like Planetary Resources, Shackleton Energy and SpaceX could be well placed to profit from mining opportunities – although I’m not aware that any of these firms have specific plans as regards helium-3. Any future market for helium-3 is predicated on there being demand. So, would we even need to rely on helium-3 for a future powered by small, clean fusion reactors? That’s not entirely clear at present. A couple of firms are exploring fusion power based on these mini-reactors, but that doesn’t necessarily mean they’ll need to buy much helium-3 – if any. The firms involved in this research are pretty cagey, so getting decent information is tricky. Tri Alpha Energy currently appears to use a completely different nuclear reaction, not involving helium-3 – but there’s no telling whether this is the one they’d eventually commercialise. The firm we mentioned earlier, Helion Energy, uses a process that actually regenerates the helium-3 needed – so new supplies are only needed during setup. However, the firm may benefit from a boost to the global supply, if they had to set up a large number of reactors. In conclusion: this could be a market that transforms world energy systems – but it’s currently tricky to call, and to invest. One way to play it is to invest in some of the private fusion firms, as they’re the key to unlocking the whole process. They’re in a very difficult technology field – so you’d be taking a great leap of faith to invest. But if you get it right, the payoffs would be absolutely enormous. A second route into the market is the space firms. It’s an indirect approach, but remember: the nuclear energy firms are unlikely to be fetching their own helium-3, no matter how much they need it.
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