While South African natural gas and helium producer Renergen has faced a series of challenges that have impacted on its operations and financial standing in recent months, CEO Stefano Marani and COO Nick Mitchell have reiterated the company’s commitment to delivering on its promises to shareholders.

While liquidity pressures, production setbacks and environmental concerns had complicated the company’s ability to meet its commitments, Renergen had been in ongoing communication with lenders and stakeholders, who Marani said were “fully supportive of the business’s continued growth”.

“From a liquidity perspective, we're in regular contact with all of our lenders and stakeholders, and everyone is working mutually towards a plan for taking the business forward,” Marani told Engineering News earlier this month during a site visit to the company’s Virginia gas project, in the Free State province.

He confirmed that Renergen had already secured debt financing for Phase 2 of the project, with the process advancing smoothly, as bidders were actively engaged. The company was also working to ensure the successful completion of Phase 1c, which was currently in the planning stages.

These steps were integral to Renergen’s strategy for achieving long-term business goals, he noted.

Renergen had faced technical setbacks in helium production, particularly with filling and cooling ISO containers, but Mitchell reported that the system was now stable and producing liquid helium, albeit at a reduced rate owing to limited gas input.

The company has been addressing the challenge of cooling ISO containers to the extreme temperature of -269 °C. Mitchell explains that achieving this temperature is difficult at the current production rate, as significant boil-off occurs during the cooling process from ambient to cryogenic temperatures.

However, as production ramps up, the company expects the time required to fill and cool the containers to decrease exponentially, and not linearly. Renergen is exploring various solutions to mitigate supply chain vulnerabilities owing to having to cool down ISO containers before filling them.

Another area of concern for investors and stakeholders has been Renergen’s commitment to supply helium to the market.

Marani clarified that while the seven-year timeline might be seen as a delay, the initial contract was altered to account for changes in the industry, including cost reductions in cryogenic separation technology.

Despite these setbacks, Renergen is committed to fulfilling its contractual obligations and expects to begin helium deliveries. Once the containers have been cooled down to the desired temperature, the company can begin building liquid level in the containers. The frequency for filling will also reduce significantly when the plant is ramped up to full capacity.

To further ensure stability and meet output expectations for both liquefied natural gas (LNG) and liquid helium, the company was focusing on plant stability and some operational optimisation to improve operating efficiency, Marani and Mitchell noted.

Renergen also completed a yearly maintenance cycle in September last year, which has contributed to a more stable system.

The current work at the Virginia gas project involved ramping up production by drilling additional wells and installing necessary infrastructure, such as compressors and pre-treatment skids, Mitchell highlighted, adding that the company was confident that, once this expansion was fully executed, it would achieve its design capacity and improve both LNG and helium output levels.

Following recent sharp declines in Renergen’s share price, the company would focus on “delivery, delivery, delivery” to meet its operational targets and overcome the technical challenges that had previously impacted on progress, Marani outlined.

He explained that, as production increased and technical issues were resolved, the company anticipated regaining investor trust through the delivery of consistent results and progress on key milestones, particularly in relation to helium production and the completion of Phase 2.

Phase 2 of Renergen’s development was considered critical to the company’s survival and profitability. Marani explained that while Phase 1 was now operational, it still needed to be ramped up to meet its initial objectives.

Phase 2, however, was expected to drive significant cash flow and growth, creating opportunities for additional phases of development to address substantial portions of the broader natural gas crisis. Despite the challenges and delays associated with Phase 1, the proven resource remained untapped underground, Marani confirms.

“This phase will use a larger portion of the company’s production rights, with continued discussions taking place with potential partners to expand the operation further,” he said, reiterating that Renergen remained focused on securing equity funding for Phase 2 and that the company had worked closely with its lenders to navigate any challenges.

Further, Renergen has also been responding to environmental concerns raised by the Centre for Environmental Rights, which objected to the Tetra4 project’s integrated water and waste management plan.

These objections, representing the interests of two local communities, resulted in the dismissal of five of the seven grounds of appeal, with two issues remaining under review.

These unresolved issues pertain to the expansion of the climate change impact assessment and the development of a broader geohydrological model for the region.

Renergen is currently working on these studies and plans to submit updated assessments to Forestry, Fisheries and the Environment Minister Dr Dion George for further review.

In addition to addressing regulatory requirements, Mitchell emphasised the company's ongoing efforts to engage with environmental stakeholders.

“Renergen has engaged with various environmental groups, including those involved in the dispute, and has made efforts to improve its processes based on feedback. The company aims to collaborate effectively with environmental bodies, ensuring that its activities are environmentally responsible while also meeting the needs of local communities,” he said.

GAS/RENEWABLES COEXISTENCE

Renergen operates in an energy sector where natural gas and renewable energy intersect, and Mitchell explains that the company views the coexistence of these two sectors as both feasible and essential for South Africa's energy transition.

While renewable energy is crucial to the country's energy future, Renergen believes that natural gas remains a vital transition fuel, providing a cleaner alternative to coal.

Marani emphasised this point, noting that methane produces significantly lower CO₂ emissions than coal, which positioned Renergen as a key player in the energy transition.

“Renergen is committed to addressing the country's natural gas shortfalls, especially as imports from Mozambique decline,” he stated.

SOCIAL COMMITMENT

Beyond its legal disputes and operational challenges, Renergen has, to date, created more than 74 direct and permanent jobs within the group.

This was expected to increase to about 250 during Phase 2 of the Virginia gas project, Mitchell told Engineering News, noting that during construction of Phase 1, 1 298 temporary jobs were created.

In Phase 2, upwards of 1 000 temporary construction jobs are anticipated.

Further, as part of the company’s ongoing commitment to youth development within its community, Renergen has, to date, awarded 16 internships, 14 learnerships, 17 high school bursaries and 13 tertiary education bursaries.

“We have further invested about R7.5-million, to date, around our social and labour plan (SLP) including local economic development projects and corporate social investment initiatives, with a further R2.5-million committed under the current approved plan,” Mitchell noted.

He added that Renergen was in the process of engaging with the authorities in relation to the company’s next SLP submission to ensure alignment between the relevant integrated development plan and the company’s planned initiatives.

“As we progress and move the project forward, our minimum spend increases for every five-year period. We believe over time we will contribute to strategic projects that provide long-term benefit and contribute towards sustainability,” Mitchell said.

Additionally, Renergen also works closely with colleagues in the mining sector to understand how the company’s contributions and investments can best be leveraged best to unlock greater benefits for the community.

“We have an excellent working relationship with existing mining operations in the area and we look forward to developing those synergies over time for the benefit of our host community,” Mitchell concluded.