There has been a new discovery in Zimbabwe. A discovery that could become of great economic significance to the country if all goes well. Invictus Energy, an A-listed company from Australia has recently confirmed the presence of light oil, gas condensate, and helium at its Cabora Bassa project in Zimbabwe. The company has provided assurances that helium gas is present in commercially viable concentrations, comparable to helium-producing fields around the world.
Helium is an odourless, tasteless, colourless, inert, non-toxic monatomic gas that uses the lowest boiling and melting points. It is used in the manufacturing of semiconductors, liquid crystal display (LCD) panels and fibre optic wire used to design long-distance, high-performance data networking, and telecommunications.
More so, the global helium market consists of the sales of liquid helium and gaseous helium used for medicine, scientific research, refrigeration, gas for aircraft, and coolant for nuclear reactors. Thus, demand for helium gas is expected to be driven by multiple sectors such as the global healthcare, technology and telecommunications industries. The new discovery is also expected to be a big win for the impoverished Southern African country given the current global helium shortage and increasing demand.
Since the year 2000, the international market has experienced a series of shortages in helium gas production. The first major shortage called the Helium Shortage 1.0 spanned between 2006 and 2007, as new plants came online much slower and at lower capacity than anticipated. The second global helium shortage, Helium Shortage 2.0, occurred between 2011 and 2013. The third happened in 2019, however, the COVID-19 outbreak disrupted demand for helium gas until July 2021 when the current Helium Shortage 4.0 began.
With the latest discovery, Zimbabwe could become a significant supplier of helium gas on the international market. In its announcement, Invictus Energy noted that mud gas tests showed helium commercial concentrations of about 0.1 per cent. Meanwhile, commercial production typically requires helium concentrations between 0.04-0.35%.
Crawling under the United States’ economic sanctions
Nineteen years ago, the US Department of State Treasury (the Treasury) imposed targeted financial sanctions against certain individuals and entities in Zimbabwe found guilty of undermining democracy, human rights abuses, or public corruption. It was in the time of the former president, Robert Mugabe. Although the sanctions were not imposed on the country or the entire citizenry, the move is hurting Zimbabwe’s economy badly. The economic sanctions have stifled economic growth prospects and reduced living standards in the Southern African nation as its currency keeps depreciating.
According to Bloomberg, the Zimbabwean dollar has depreciated 91% against the United States dollar in the last two years to trade at Z$944/ $1 at the official rate and about Z$1,600/$1 in the parallel market. Thus, the US dollar has replaced the Zimbabwean dollar as the most-used currency in the southern African nation for a second time, almost four years after the re-introduction of the local unit. This situation is not particularly good for the Zimbabwean economy as the American dollar dominance continues to trigger hyperinflation, increase production costs and weakened economic growth.
To mitigate this problem, last month, the Reserve Bank of Zimbabwe (RBZ) announced plans to issue a gold-backed digital currency as a legal tender to enable people who have small amounts of the local currency to exchange them for digital tokens that can store value and protect against currency fluctuations. On Monday, Zimbabwe released a gold-backed digital currency. Zimbabweans can now use it as legal tender to store value alongside the Zimbabwean dollar and bond notes.