Helium: Canada’s Opportunity
BLUF: The United States imports only a small fraction of its helium consumption, but a rise in U.S. imports has created an opportunity for Canada, one that for now appears immune to the broader U.S.-Canada trade friction.
Analysis: As recently as 2020, shortly before selling off the federal helium production and storage, the United States produced more helium annually than the next six producers combined. Even after the Bureau of Land Management (BLM) privatized the federal helium assets (a process finally completed in 2024), the United States relies on imports for only a small fraction of its total helium consumption, and in fact remains a net exporter of helium.
While the U.S statistics are somewhat misleading (production of refined helium from imported crude helium is counted in U.S. production numbers), according to the U.S. Geological Survey (USGS) Canada supplied 47% of U.S. helium imports between 2021-24, which, back-of-the-envelope, suggests that Canada provides the equivalent of around 10% of total U.S. consumption after exports. By contrast, Canadian government and industry information suggest Canada exports 85%-95% of its helium production to the United States, creating a significant imbalance in helium trade dependency. This is further exacerbated by the current reality that Canadian helium exports are usually only refined to 98% purity (crude helium), with final purification taking place at U.S. facilities to bring it up to high or ultra-high purity standards necessary for use in the semiconductor industry and other key medical and industrial applications.
Despite the helium dependency imbalance, Ottawa has effectively buffered the industry from the broader trade disputes with Washington, even after the USGS removed helium from the List of Critical Minerals in 2022. This de-listing was due to technical reasons not related to helium’s importance. In many cases Washington continues to view helium as a strategic mineral, one that was initially covered under the 2020 Canada–U.S. Joint Action Plan on Critical Minerals Collaboration. The U.S. tariffs on Canadian aluminum, still on the USGS Critical Mineral list, do suggest that just being important is no guarantee of protection, but the overall structure of U.S. helium production and consumption, coupled with the increasing supply chain integration, connecting Canadian helium to U.S. refining to the semiconductor and medical industries, will likely continue to buffer Canadian helium producers, at least until they strengthen their own production and purification capabilities.
Canada’s sudden emergence in the helium supply chain is a case study in the integration of geopolitical factors:
Geographically, Canada is close to the United States, and the bulk of its helium production uses U.S. based purification and liquefaction facilities to process crude helium for U.S. markets or international deliveries. Several companies are expanding into Montana, creating potential links between the production industries, and there are plans for the construction of helium liquefaction facilities in Saskatchewan, near the heart of Canadian production.
Politically, despite current frictions, Canada has been a close partner of the United States, and Ottawa signed on to the U.S. Energy Resource Governance Initiative in 2019 in recognition of the need to collaborate on strategic commodities (the Canada–U.S. Joint Action Plan on Critical Minerals Collaboration emerged in part from this initiative). Both Canada and Washington saw vulnerabilities to Chinese domination in critical mineral supply chains, and while helium is not at risk of Chinese disruption as the United States is by far the largest producer, other critical minerals are.
Economically, the NAFTA/USMCA framework and the close proximity meant that Canadian supplies could reach the United States quickly and relatively cheaply, particularly compared to Ukrainian supplies or the emerging Qatari production. The geographic and economic proximity also facilitated integrated supply arrangements. Canada also boosted its emerging helium industry by providing government incentives to spur on production and integrated supply chains, all in anticipation of the Congressionally mandated privatization of the U.S. strategic helium reserves, which many saw as signalling a small decline in U.S. production and a potential rise in prices.
Strategically, as a key ally of the United States, both bilaterally and within the NATO context, Ottawa saw the importance of close coordination with Washington on security critical mineral supply chains for aerospace and defense purposes, as well as for other industrial purposes. Helium is critical in several areas of modern military capabilities, from the semiconductor supply chain to aerospace manufacturing, nearly guaranteeing expanded consumption as the United States and its strategic partners recapitalized their militaries to better match changing global security dynamics.
Technologically, Canadian producers exploited ways to extract helium from captured nitrogen, rather than from natural gas. While most global helium production comes as a byproduct of natural gas extraction, in western Canada helium reserves are contained within trapped subsurface nitrogen, at concentrations of 0.5%-2% levels, high enough to justify direct helium extraction. This variation means that Canadian helium production volumes are not vulnerable to fluctuating natural gas prices which can see associated gases impacted even if trace gas demand remains the same or higher.
The combination of these factors has allowed Canada to rapidly expand its helium production even at a time when it was seeing a similar Helium expansion from Qatar. According to Canada Energy Regulator (CER-REC), by 2022 Canada accounted for about 1% of global helium production, with the goal of reaching at least 10% by 2030. While this may be ambitious, integrated supply chains are already being built in the United States around Canadian production, adding a stickiness to the bilateral trade that will be reinforced by slight declines in U.S. production after the privatization of the federal helium reserves and by the geopolitical disruptions to both Ukrainian and now Qatari supplies.
Short-term political disruptions can slow this integration (the timeline for reshaping the USMCA, for example, or concern that Canadian leaders are shifting to China for economic opportunity), but longer-term structural dynamics suggest that so long as Canada is expanding its helium production, it will remain a key (albeit small) part of the U.S. helium supply chain. And should relations with the United States further deteriorate, once Canada invests in its own purification and liquefaction facilities, it may be able to look to Northeast Asia, capitalizing on its proximity and minimal chance for disruption of supplies compared to Ukraine or Qatar. In the future, if there is a resurgence of ESG considerations in North America or elsewhere, Canadian helium may even earn a premium, given it is produced from nitrogen, and thus not connected to the natural gas industry. But for now, Canadian producers and investors will focus on the next step in Canada’s supply chain - purification and liquefaction facilities in Canada itself, while keeping connections to facilities in the U.S. as a political buffer and to ensure a long-term consumption base.