This Company Has the Makings of a South African National Champion

To Investors,

In previous letters, while researching and writing about the significance of the recently imposed U.S. trade tariffs and various trade dynamics, I’ve also become increasingly aware of companies or projects which are deemed national champions. One example that I can’t get out of my mind is a rare earths producer and soon-to-be permanent magnet producer called MP Materials — a U.S. national champion. Another broader example is how China, through its top down economic and political structure, picks important industries and supports them through various means – which naturally breeds national capabilities such as minerals processing companies and companies that manufacturer finished goods – that's why generally speaking, minerals refining of almost any kind is largely done in China, and why China is the manufacturing hub of the world. But today I want to talk about Renergen, a company that has the makings of a South African national champion.

Now in my own words a national champion is a business that has all of the tailwinds that come about because of a supportive economic and regulatory landscape. Those tailwinds enable a company to produce goods that are of critical importance for domestic consumption at scale and/or for international exports – so much so that when you think of a particular product, the company that produces it at scale is the one that comes to mind first. I’ve mentioned MP Materials, but an example in the oil industry is Saudi Aramco; another example is Reliance Industries in telecoms; Huawei is an example in IoT; Airbus is an example in Aerospace, and there are many others.

In the South African context, the country is grappling with energy shortages, a coal-heavy energy grid, and South Africa needs more inspiration for innovation and rapid industrialisation. Renergen could be that game-changer. Renergen has the potential to create a value chain that powers transport, diversifies energy, supplies critical materials to high tech industries, and encourages further innovation in South Africa.

Quick Intro on Renergen

Renergen Limited, listed on the Johannesburg Stock Exchange (JSE: REN) and Australian Securities Exchange (ASX: RLT), is South Africa’s sole onshore producer of liquefied natural gas (LNG) and liquid helium. Operating through its flagship Virginia Gas Project in the Free State, Renergen taps into the Witwatersrand Supergroup – a geological minerals formation packed with high-purity methane (over 90%) and reportedly one of the world’s largest onshore helium reserves. This dual-resource play sets Renergen apart – making the company a key supplier of clean energy as well as a key supplier of a critical material that is in high global demand (liquid helium).

The Virginia Gas Project has also been deemed a Strategic Integrated Project under South Africa’s Infrastructure Development Act, which underscores its national importance and ensures regulatory tailwinds.

In Phase 1 of its operations, Renergen is supplying LNG to a few customers with revenues reaching R29 million in 2024.

Phase 2 of the company’s operations will see not just a ramp-up of LNG production, but also increased liquid helium production.

Phase 2, planned to go live in 2027, will reportedly add 350 new wells, 400 km of pipelines, and a beefier liquefaction facility, backed by a fleet of tankers and dispensing infrastructure.

Another aspect that makes Renergen special is their “wellhead-to-tank” supply strategy — a vertically integrated approach where the company not only extracts natural gas and helium from its wells but also processes (beneficiates) these gases and supplies the refined LNG and liquefied helium products directly to customers without the need for third parties. That takes care of the upstream and midstream processes in the respective LNG and liquid helium supply chains.

Further down the supply chain is where things could start t