Proof that capitalism drives productivity. The market works, eventually
A single Iranian strike removed a third of the world's helium supply overnight. What happened next is a test case for how markets handle the unthinkable.
Australia had one helium production facility. It closed in 2023 when the feedstock ran out, and at the time nobody much cared. Global supply was stable, the price was manageable, and the economics of reopening did not stack up. Then Iranian missile strikes took out roughly a third of the world's supply in a single night, and suddenly the economics look very different.
Helium is irreplaceable, which is why the price signal matters so much
Helium is one of those materials that sits invisibly at the centre of a surprisingly large number of things. MRI machines cannot function without it. Semiconductors, mobile phones, submarine systems, fibre optics, all require helium at some stage of their manufacture or operation. It is the second-lightest element on earth, which means when it escapes into the atmosphere it is simply gone, unable to be recovered or synthesised. You cannot make more. You can only find it and capture it before it floats away.
Gold Hydrogen ran its proof-of-concept extraction at the Ramsay 1 site near Port Vincent on the Yorke Peninsula recently, successfully pulling helium from roughly 900 metres underground. The company is now assessing gas volume and extraction ease, with commercial availability targeted within 18 months. The tenement it holds covers 75,000 square kilometres, where natural hydrogen was first documented in the 1920s and 1930s. The geology was always there. The incentive was not.
The geology was always there. The incentive was not.
The market did not fail before Ras Laffan — it was pricing a world that no longer exists
That is the mechanism worth paying attention to here. The Darwin plant that closed in 2023 did so because Santos exhausted its feedstock, and no new production replaced it because the market did not require it to. There was no policy failure involved, no regulatory gap, no missed opportunity demanding government correction. The price of helium was not high enough to make a new Australian facility worth building. Then the Ras Laffan strike happened, some exporting nations moved to restrict their own supply, and the calculus changed overnight.
This is what price signals are designed to do. Not to produce the ideal outcome in real time, but to route investment and effort toward where it is genuinely needed over time. The lag feels uncomfortable when you are on the wrong side of a shortage, and there is a real cost to the period between the signal and the response. Hospitals managing helium rationing for MRI services are not abstract economic actors waiting patiently for market adjustment. But the alternative, a government maintaining strategic helium reserves or subsidising production in anticipation of a geopolitical event nobody predicted, carries its own costs and its own failure modes, as we have covered in the context of fuel pricing.
The co-product structure is the part that is hardest to plan for
The Yorke Peninsula project is also a useful reminder that resource economics do not respect neat categories. Gold Hydrogen's primary interest in this tenement is natural hydrogen, which it began reporting in 2023. The helium is, in a sense, a co-product, something the drilling infrastructure encounters on the way to its main target. The economics of one material improve the economics of extracting the other. A commercial hydrogen operation on this tenement would generate helium supply as a byproduct whether or not helium alone justified the capital outlay. That kind of structural alignment between incentives is genuinely hard to engineer from the outside, and genuinely common when markets are left to find it.
Neil McDonald, Gold Hydrogen's chief executive, puts the point plainly: helium is not a novelty gas for party supplies, it is embedded in critical supply chains that Australian industry and defence depend on. That dependency existed before March. What changed was that the price finally communicated what the dependency implied.
There is a reasonable question about whether 18 months is fast enough, and whether a single commercial operation on the Yorke Peninsula is sufficient to cover Australia's needs if the global shortage persists. Those are legitimate concerns about the pace and scale of the market response, and they may yet be addressed by other explorers working through similar incentives. The Ramsay tenement is not the only prospective geology in Australia. It is simply the one that got there first, which is also, it turns out, how markets are supposed to work.
Sources
ABC News — Helium produced in Australia for first time in three years amid global supply shortage
Frequently Asked Questions
Why did Australia stop producing helium?
Australia's only helium production facility, operated by Santos in Darwin, closed in 2023 after its gas feedstock was exhausted. No new production replaced it because global supply was adequate and the economics of a new Australian facility did not stack up at prevailing prices.
What happened to global helium supply after the Ras Laffan strikes?
Iranian missile strikes on Qatar's Ras Laffan gas processing hub removed roughly a third of global helium supply in a single night. Some exporting nations then moved to restrict their own supply, compounding the shortage and sending prices sharply higher.
How does the Gold Hydrogen project on the Yorke Peninsula work?
Gold Hydrogen holds a 75,000 square kilometre tenement on South Australia's Yorke Peninsula where natural hydrogen and helium deposits were first documented in the 1920s. The company's proof-of-concept extraction at the Ramsay 1 site pulled helium from around 900 metres underground, with commercial production targeted within 18 months. Helium is effectively a co-product of what is primarily a natural hydrogen operation.
Why can't helium be recycled or synthesised?
Helium is the second-lightest element on earth. When it escapes into the atmosphere it rises and disperses into space, making recovery impossible. Unlike most industrial gases, it cannot be manufactured — it can only be extracted from underground deposits where it has accumulated over geological time.
Should Australia have strategic helium reserves instead of relying on the market?
The case for strategic reserves rests on helium's role in MRI machines, semiconductors, defence systems, and fibre optics — supply disruptions have immediate consequences for hospitals and critical industry. The case against is that maintaining reserves to hedge against unpredictable geopolitical events is expensive and carries its own failure modes, and that the price signal has already begun attracting private investment without government intervention.