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Renergen starts 2025 with helium hurdles and legal battles
7 Jan 2025
Renergen continues to grapple with operational and legal challenges as it heads into 2025. The quarterly update published on New Year's Eve shows that while the company makes strides in stabilising its production processes, a courtroom battle with Springbok Solar over land-use rights casts a shadow on its ambitious growth plans.
Helium production at Renergen's Virginia Gas Project has faced repeated disruptions.
The latest hurdle involved the unavailability of a helium iso-container for direct filling in South Africa.
In response, Renergen adapted an onsite static storage iso-container for filling, which introduced time-consuming technical adjustments.
While the company maintains that this modification will streamline operations moving forward, the situation raises warning flags around the logistical vulnerabilities in its supply chain.
The company is also still in a legal dispute with Motsepe-owned Springbok Solar, which is constructing a solar power plant in Virginia, Free State.
Solar dispute
Renergen claims the construction violates its gas production rights and has sought an interdict to halt the project.
It argues that Springbok Solar’s environmental authorisation and alleged helium rights are invalid.
In contrast, Springbok Solar maintains that its operations occupy only a negligible portion (0.17%) of Renergen's production area and contends that the gas company raised objections months after construction began.
Sola, the solar project developer, has defended its actions, stating it followed all legal processes and secured the necessary permits.
It is using the the project's economic impact, including over 400 jobs and significant local investment, to bolster the argument.
The case is set to be heard in February 2025, and its outcome could have far-reaching implications for Renergen’s plans and the coexistence of renewable energy and natural gas developments.
Liquidity pressures
Financially, Renergen continues to face liquidity challenges, with limited cash reserves of R23m at the end of November 2024.
The company is actively engaging lenders and investors to secure short-term funding, which it expects to finalise in the first quarter of 2025.
This funding is critical for completing Phase 1 and initiating Phase 2 of the Virginia Gas Project.
Despite these efforts, Renergen's share price has plummeted by 53% over the past year, reflecting investor concerns over its ability to navigate production setbacks and legal battles.
