WE NOTE THAT THE FOLLOWING TRANSCRIPT WAS CREATED BY A ROBOT SO PLEASE FORGIVE ANY TYPOS.
[Tom] Hello, I'm Tom Zuber, the Managing Partner of Zuber Lawler and I am a member of the editorial board of Dead Cat Live Cat. I'm here with Stefano Marani, and he is the CEO of Renergen, which is an exceedingly exciting company based in South Africa, that is sitting on one of the world's most exciting supplies of helium. Stefano, welcome. It's a pleasure to speak with you.
[Stefano] Thank you very much for having me and howdy to everyone listening.
[Tom] Great. So, first, just for the sake of the audience. Tell us about Renergen, and how did you start the company?
So we're an emerging LNG and helium producer in South Africa. And it's this crazy story, basically, we're mining an asteroid for one of a better description, and it's now, as a result, got one of the richest concentrations of helium on the planet. It was it was literally just blind luck, my partner and I wandered along and ended up acquiring some gas rights for $1, because the company was underwater and no one knew what it had. Then about a year later discovered that we're sitting on the richest grade of helium on the planet when we were in fact looking for natural gas. Now Joe listed berth in Johannesburg and Australia, so it's just been a hell of a ride.
[Tom] So what does helium have to do with quantum computing this is a quantum computing blog, and for those who may not be familiar with the essential role that helium plays in this emerging industry, could you please inform us.
[Stefano] First and foremost, it's about temperature. So, if you if you look at the elements on the periodic table there's there is literally only one element which will not solidify except under pressure and that is helium so you can take it down to a millionth of a Kelvin of one degree Kelvin, and it will still remain liquid and that's important because you need it as a refrigerant, and you need it as a refrigerant in order to create the cubits. In order to get to the right temperature, so you've got some kind of a super fluid. In order to be able to entangle your elements and create the qubits which is critical to quantum computers, computing process. And more importantly there's a there's a new emerging form of quantum computing to which instead of creating qubits, out of subatomic particles. It actually entangles electrons on liquid helium, and this allows you to bring the temperature of the quantum computer up quite significantly. So this is all the quite a bit of promise, but either way, doesn't matter which way you kind of need helium because you needed to in liquid phase, within four degrees of absolute zero.
[Tom] Very good, thank you. And despite helium being the second most abundant element in the universe helium is quite rare on earth. Why is that?
[Stefano] It's rare because it's produced as a byproduct of radioactive decay. Now if you take uranium 238 It takes about 2 billion years for half of the amount of uranium that you have to convert from uranium 238 to lead, and then it releases a helium atom so it's a very slow gradual process. Now the problem is that there isn't that much uranium on earth I mean there's, there's a lot but, By contrast, there isn't that much. And so the point is that you need uranium to have been in situ sitting underneath a special cap in the presence of a hydrocarbon, with a trap, and for it to be a particularly old piece of Earth, and there aren't that many old pieces of Earth, most of the Earth as recycled through the mantel. Whereas, by contrast, we've got mountain ranges here in South Africa that range back to 4.6 billion years, so it's difficult to find good concentrations of helium in the world.
[Tom] Thank you, Stefan, and as of 2019, there were only 14 liquid helium production facilities in the entire world with around 75% of the worldwide consumed helium produced in Qatar, by an Exxon Mobil facility in Wyoming and facilities owned by the US Bureau of Land Management, how does Renergen capacity fit into this worldwide picture?
[Stefano] So I'll start by sharing anecdotally, it's all about the grade it's all about the concentration so there's there for instance if you're going to go into a gold mining operation, and you were to drill a hole and you came up you measure the concentration of gold in grams per ton five grams would be great, but obviously if someone comes along and they've got 20 grams per ton. It would be better. It's a lower cost of production. Qatar produces helium at around 0.01% helium concentration in their natural gas. Russia 0.1% And so it gradually increases up to the United States who are the global helium rock gods and the United States as an aggregate of 0.35%. We clock in at 3.4% with wells drilled, up to 12% making us the richest on the planet by very very large margin. So, in terms of the ability to be able to extract, two things happen one we were a very low cost producer, two we can extract an inordinately large amount of heat and whilst producing a very low carbon footprint because there's so much less LNG coming out of the ground at the same time. To put that in context, you want to launch Falcon nine one container load of Helium for Falcon nine is going to produce a carbon footprint of somewhere in the region of 489,000, tons of co2 whereas, by contrast, we produce about 1300 tons of co2 equivalent. So, concentration is everything and ours is unparalleled.
[Tom] That is truly incredible, some incredible statistics. What are the biggest challenges that you've had Stephano, in getting Renergen to this point, What are the biggest obstacles you've had to overcome?
[Stefano] Educating people about what is helium. I mean I'm pretty sure that if I had to ask the people listening into this. There are very few people would actually know what helium was useful, we didn't know what healing was useful when we discovered it in our field, it's obviously the first thing that springs to mind is, is party balloons in the Macy's Parade, but you know when you start coming past the back of the balloon market. You then realize that it's critical to MRIs, it's critical to the birth manufacturer and the use of MRIs, it's critical to space rockets is critical to nuclear power. It's also got a darker side nuclear weapons and defense and all these all these other things but, basically, helium is critical to our way of life I mean you can't make cell phones, you can't make televisions, you can't make laptops basically any form of electronics you can't make without helium. So all in all, it's an absolutely critical, critical gas and is running out and this is the biggest problem I mean it. The BLM shut down because they ran out and that story is even crazier than ours. I mean, you can't even make the BLM story up, and you know, going around and telling investors when we were doing the roadshow and listing that we've got this incredible resource and helium was a scarce commodity and they were thinking about the last time that they want their kids party balloons and they're thinking really what you smoking.
[Tom] So where is Renergen, given all that, and the great spot in which it sits, going as a company where do you see a two years from now and where do you see it 10 years from now?
[Stefano] So the exciting point is that we're turning on our first phase which is financed by the US government, through the DFC, and the developmental financial construction company that is going online, end of this year beginning of next, and they will be selling. It's a baby, baby pilot plot, cost is about 60 65 million us to build somewhere around there. And that is a proof of concept, producing about 350 kilograms of helium per day. And the equivalent of about 75,000 liters of diesel in energy it's LNG but just to think of it in in energy terms to about 75,000 liters of diesel equivalent. The bigger project. We're planning on bringing online into 23 beginning of 24, and that will be a very, very meaningful project that will be a particularly large LNG plant, but as far as he goes there we're targeting a five tons per day plant. Now five tons per day of helium is probably about eight to 9% of the entire global consumption. So it's going to be it's going to be one of the big plants globally.
[Tom] Very ambitious, Stefano. And Stefano how do you see your company Renergen fitting into the this industry this emerging industry, as quantum computers are increasingly commercialized?
[Stefano] So, the long and the short of it is that there are there. I mean, you cannot operate quantum computers without helium So chances are, if you're manufacturing or you're selling or you're buying quantum computers, you are essentially all that you really buying is a, is a tiny, tiny little piece of technology that's less miniscule in size, and you're buying a really large expensive helium liquefy that's pretty much all it's really doing the end all of these things need to be fueled by helium. Of course there are two main types of quantum technology. And there are pros and cons to each of them both of them need helium but, but one of them needs a much more special kind of here because not all helium is the same, and that more special kind of helium costs about 14 million US dollars per kilogram. And it's not found on Earth, so whilst that technology is promising. It's also just about as promising as long as it is impossible to run in the first place. So whilst we can produce that that special kind of helium and $14 million per kilogram. Believe me, I wish we could, you know, we'll be supplying helium to either of those because you, at the very base you need a lot you need a lot of helium to run these things. So, you know, I don't see us selling directly to end users we might be selling to the larger manufacturers like IBM and Google and all of the producers of these computers, and that's where we fit into the chain.
[Tom] And so let's talk about timeframe. When do you expect quantum computers to be commercialized? And I know that's a bit of speculation on everybody's part but I'm curious to know what your answer is.
[Stefano] So that really depends on how long it takes for them to manage to get a long enough stabilized chain of cubits. Without de-coherence decaying the amount of computing these things can do. The other big thing about quantum computing at the moment is that, you know, whilst they're incredibly fast and they're incredibly powerful. The types of calculations that they can do at this stage is still relatively limited. So it's kind of a cop out of an answer I think we've still got a way to go. I think there's more than enough people investing time and energy and money into this technology. And obviously there's Moore's law that, That you know technology doubles and doubles every 18 months. I think we're probably between a half a decade to a decade away before this, before this starts to become really commercially viable. Of course, at that point when that does become the case. I do worry about the rate at which cryptocurrency is going to get mined because if you can do it 100 million times faster then current mining operations and a very small capital outlay it's going to destroy the value of crypto.
[Tom] Indeed. And do you have any notion as to particular country or countries in which quantum computers will be first being commercialized, you think it's going to rise up in this part of the world as opposed to that part of the world?
[Stefano] It's really this thing, I mean it's right now it's a race between China and the US, that is really where the game is, I mean, you know Europe will dabble in and Europe will make progress, but the race for first commercially available quantum computers is either going to be China or it’s going to be the United States. And whilst you know Google has made fantastic strides. If you research what's been happening in China they've, you know, gone in a completely different tech, and they also started to see some good results. So, it's neck and neck.
[Tom] Very good. I agree with your assessment, obviously. And so, what do you think of the potential market size for quantum computers I'm talking commercial quantum computers. Going forward, how big a thing, are we looking at here?
[Stefano] It really depends. It's a function of the cost relative to computing power. Yeah, I mean, if these things really can process 100 million times faster, then you can afford to pay a significant premium, but then it's also going to be accurate and the problem is that the minute that de-coherence sets in, and you start breaking down the ability to determine, you know, even the spend more spatial, it really does lose its accuracy quite quickly. So I think it's going to take a while for them to stabilize. And then once they've managed to stabilize these quantum entangled particles. Yeah, it's really going to be a function of cost and you know, now we're talking about nanotechnology because you've got to talk about, you're trying to get a machine that can basically take a reading on the level of quantum behavior of a particle, where you're talking about trillions of atoms, in the tip of a pinhead, it's pretty impressive stuff.
[Tom] Indeed. So let's take it back to the helium now, Stefano, do you anticipate helium shortages, as quantum computers rise to a commercial level of participation in the economy?
[Stefano] I don't think that quantum computers per se will necessarily lead to a helium shortage. Just because I don't think that everyone is going to have a quantum computer in their backyard is just going to be too expensive. But do I predict that there will be helium shortages, I mean we're living now through helium prices 3.0 And we're going to have another one at the turn of this decade, the one at the turn of this decade is going to be particularly nasty, because with one of the climate change moves. There's a lot of restriction on exploration for new gas projects around the world and you cannot get helium from sources without getting me let me caveat that the majority of the world's helium comes from natural gas fields. There are some stranded little fields with a little bit of helium mixed in with nitrogen, but those are few and far between the reserves are tiny, and there's no indication that you're going to find any meaningful helium that's going to replace the large reserves like Qatar, like Russia, like La Barge, like all of these big fields that are producing a lot of healing and I'm running out. So I foresee that at the turn of this decade, especially with the level of rocketry and space exploration. The amount of helium that's getting consumed is insane and is the only commodity that is entirely incapable of being recycled. Once you use it, you lose it, and you never get it back.
[Tom] Very good. And so when will we get a quantum computer cooled by Renergen helium.
[Stefano] So it depends on in our first shipments our first shipments leave our factory, our plant in in January. So it all depends on where the company is buying its helium from but it's I mean it's entirely plausible that if one of our shipments are going to the United States it's entirely plausible that one of our containers might actually end up in one of these supercomputers, chances are that by 2024, you'd be hard pressed not to find one that has our helium in it, I mean if we're 8% of the global supply chain and, you know, the majority of that will be going to the United States. It'll probably be about 20% of the United States’ helium consumption. So, it's pretty realistic then we're going to get a supercomputer or more.
[Tom] So I'm a futurist I like thinking about things that don't exist yet, because it's fun. So I'm going to ask you to do the same. Our personal quantum computers anywhere in our future. And I think, going back to when we put a man on the moon. That was a room sized computer and personal computers were very far-fetched at the time, Steve Jobs, I guess probably had a big say in changing that with his, with his Apple Computer the initial version of that the Apple 2E. So what are we looking at in terms of quantum computers will we see a personal quantum computer?
[Stefano] We'd love to say a resounding yes and, and as optimistic as I am I think it would be amazing to see quantum computers that have. Unless we radically changed the technology though, there is definitely no ways that you can get him down to minus 269 degrees Celsius, without an inordinately large piece of technology and whilst tech doubles every 18 months or so. The problem is that in 50 years. The helium liquefier has not gotten any smaller or any less power hungry. So I think it'd be pretty challenging to see them at home unless, of course you're willing to just pay for inordinately new stores of liquid helium and you could only turn the computer on the team as they delivered another delivery of liquid helium jars, but even that's pretty difficult.
[Tom] So Stefano, let's take it back to energy and just your vision as a CEO for the company. What would you consider to be success, how would you define success for Renergen going forward?
[Stefano] It's not one event, it's just a series of continually kicking goals. And you know when we when we bought the field originally, and no one knew how much gas was in there and so the first set of goals that we set for ourselves was to determine how much gas there was and then sign up a PPA, or power purchase agreement. At the time we didn't know there was helium and then we discovered that there was helium and so, you know, if you're not a disrupter, then you are being disrupted and so naturally we thought well if we're going to produce power, and the mechanics and the physics behind it, then you can't take the helium, out of the gas if you're producing power. So it was a case of changing business streams very quickly to adapt to the changing circumstances. And so, we then became an LNG producer and a helium producer. And then from there we had the next milestones and that was obtaining funding for the project and then we teamed up with this other with the, with the United States government, Because helium is critical to the United States national security, and its success isn't one thing success is just the ability to continue to progress down the path. And we're necessarily having to change the path to surrounding circumstances so that you don't get disrupted. And for us, you know, We've been relatively on that metric we've been relatively successful up to now, when we bought the company for $1. Now we've got a market capitalization at this point of somewhere around 160 million US. And that's still only 10% of its valuation. So, there's a long way to go for us until we grow into the true valuation of the company, but I'd say we've been pretty successful up to date and, you know, we'll continue to grow and we'll continue to keep goals and we set milestones and, you know, we try and achieve those milestones on time, That's our definition I mean there's no one fixed endpoint at the end of it.
[Tom] How about your exit strategy then. Do you have one? Do you want to meet pass this off to your kids do you want to do what ride spaceships, like Jeff Bezos?
[Stefano] No I'm having too much fun. I will plan an exit strategy when I stop having fun.
[Tom] Yeah, okay, great answer. So I'm a geeky lawyer, so I'm going to ask a geeky lawyer question, too bad. How will all of this quantum computers, and the rise of commercialized quantum computing affect the law. In other words, what new laws, if any, do you think that we'll need to address the sheer power of quantum computers coupled with AI? So at some point we'll have quantum computers, design, coupled with AI designing the next generation of quantum computers coupled with AI and then we've got this big accelerating arc of returns, Allah Raman Kurzweil and his book, The Singularity is Near, so it seems to me that a lot of things are going to change how would a law change, what new laws would be needed?
[Stefano] Yeah, that is a that is an all-encompassing question and the challenge over there, obviously you can point to business, you know, the business side of it. But I think if you take a step back and you look at the macro, the big picture at a global level, what's going to happen. Whatever, inequality, the world has right now is going to be exacerbated through quantum computing. And that's because whoever can spend the most on these things will have the most computing power and be able to process the most data, will be able to make the best decisions, and will be able to advance their economies faster. Whether it's the private sector or the public sector. So from a legal perspective, whilst I can see that the law is really struggling to catch up with the internet, and now you're going to put it on steroids and you're going to speed computing up by 100 million times. Imagine, if you think back to, just as little as 15 years ago, Goldman Sachs was fine for you know running essentially a much faster computer than anyone else and closing out the arbitrage gaps on the footsie. You know that that wasn't that long ago and they weren't even using any anything particularly special they just happened to buy the property next door to the London Stock Exchange, which is why they got away with it. Now you're talking about a paradigm shift where only a handful of companies and governments will ever have access to this. I think the law is going to change in so many ways not only in a business perspective, but you're also going to have to have cognizance paid to what's going to happen at a macro level between governments. Malawi is never going to have a quantum computer, that's never going to happen, nor is Madagascar. Nor will a number of other countries in Asia, I mean, the list goes on. By contrast, you're going to have so many of these things running around in the US, in China, with multiple different types of technology on the quantum side. I think this is just going to accelerate the gap between the haves and the have nots, and that in and of itself has some far reaching legal consequences which lawmakers are going to need to think about.
[Tom] Indeed. Exciting times but also, also keep our eye on thing because it's going to introduce some new problems that will have to be addressed that will go all along with all the excitement. Now, have the most important question and what I've been waiting to ask, what is your favorite sci-fi movie and why?
[Stefano] That’s a great one. So I'm probably going to go with the fifth element. And, and as cheesy as a film as it is, I mean I could have gone with Star Wars I could have gone with. As cheesy as the fifth element was how wrong can you go with Mila Jovovich and Bruce Willis in the film together, I mean really?
[Tom] I can’t argue with that. Great, great answer and for me a very informative and entertaining interview. Thank you. Congratulations on all the success, and I look forward to seeing where Renergen takes the entire world, through quantum computing and everything else you do. Thank you.
[Stefano] Tom. Thank you. Thanks a lot. Cheers.
[Tom] Appreciate it. Bye.