The Graphene Promise – Disruptor or Disrupted


What’s the “next big thing” to hit the market?  This question has tantalized rabid investors in search of the big payoff since forever.

Next big thing candidates typically are involved in business operations that have the potential to make a significant impact on the way things get done in the world.  Many are technology firms.  As far back as 2012 an article appearing on the website of Canadian metals dealer Kitco heralded graphite as the “new black gold.”  Active investors at that time know Kitco was not alone in touting graphite, in large part for its application potential in yet another big thing, the coming boom in Electric Vehicles (EVs).

Many investors focused on the robust demand projections for graphite.  The following graph presents more recent data.

Yet that optimistic picture has not saved the fortunes of Australia’s largest graphite producer, Syrah Resources (SYR) from a volatile share price and third place on the ASX Top Thirty Short List.

As is typical of suddenly “hot” commodities like graphite, producers rush in to capitalise on rising demand, only to see commodity prices drop due to oversupply concerns.  Demand is only half of the equation with which investors need to be concerned.

Buried in the graphite hype back then was a material made from graphite, hailed at the time as having applications so revolutionary the disruptive effect was compared to the advent of electricity—graphene.  This “wonder” material also earned the accolade of  “new black gold”.

For many investors, what the business world could do with graphene was more important than its composition or how it is made. And the list of applications read like something out of science fiction.

From the website of global emerging technology research and media firm gigaom.com, here is a definition of graphene:

Graphene is made of a single layer of carbon atoms that are bonded together in a repeating pattern of hexagons. Graphene is one million times thinner than paper; so thin that it is considered two dimensional.

Graphene was poised to resurrect another “next big thing” disruptor falling out of favor – 3D Printing, suffering from the availability of high strength input materials. Other graphene applications had investors drooling, most notably the potential to replace silicon in chip manufacturing, as well as potential use in Lithium-Ion batteries.  In 2010, the scientists who created graphene won the Nobel Prize in Physics, and the race was on, with patents for potential graphene related applications exploding.

To gauge the potential of any “next big thing” candidate investors need to look not only at those tantalising applications, but also at how the product or service is made, as well as supply.

Graphene fell out of favor partly due to the long development cycle, but mostly due to the excessive production costs.  The lesson learned for investors should be that revolutionary applications are of limited value if the costs of commercial-scale production are prohibitive.

However, the promise of graphene could be nothing more than delayed, as opposed to being consigned to the ash heap of failed “next big things”.

Consultants at global consulting firm McKinsey & Company published a report entitled Graphene: The next S-curve for semiconductors? In which they predict graphene could replace silicon in as little as 10 years and as long as 25 years, depending on additional research and capital funding.  By 2030 the market value potential for graphene semiconductors would approach $70 billion, according to McKinsey.  The company christened graphene as a “quite disruptive technology” once it can be mass-produced cost effectively.

A 10 April article appearing on financial website Bloomberg.com entitled Climate Changed: Once-Hot Material Graphene Could Be Next Battery Breakthrough had more good news for wary investors.  Graphene-based energy storage was one of those “revolutionary” applications adding to the luster of graphene, but large-scale production remained elusive due to costs.

However, the dramatic benefits are justifying billions of dollars of investment from global battery makers and electronics manufacturers, with South Korea’s Samsung leading the way.

Researchers at the Samsung Advanced Institute of Technology have developed a “graphene ball,” increasing the capacity of Li-Ion batteries by 45% while charging five times faster, reducing charging time to 12 minutes. This development is significant for both consumer electronics and the automotive sectors.

Graphene batteries developed by Spanish company Grabat Energy would enable Electric Vehicles (EVs) to travel 500 miles on a single charge while reducing recharging time to “a matter of minutes.”

Investors grabbing on for a quick ride may have been disappointed, but on a long-term basis, the potential for graphene breakthroughs is on the horizon, with enhancements in battery technology leading the way.

There are three stocks on the ASX working on the production of graphene. One – Talga Resources (TGR) — was an early-on favorite when graphene for 3D Printing was all the rage. 

There are ASX graphite miners producing high quality flake graphite needed to make graphene, like Hexagon Resources (HXG), but Talga is already producing graphite, with research and development facilities as well as collaboration agreements in place.  

The company is diversified, with multiple graphite mining operations and a cobalt mine in place, but it states its principal focus is producing graphene and graphite-enhanced products for the battery, construction, coatings, and polymer markets.

Talga boasts it has the highest-grade flake graphite in the world at its Nunasvaara deposit in the Vittangi graphite mine in Sweden.  The company has three other graphite operations in Sweden, and research and product development facilities in Germany and the UK.  

The company’s business model calls for direct product development with customers and relies on its own high-quality graphite sources and proven bulk production methods for cost-effective production.

As an example of Talga’s business model at work, the company recently entered into a joint development agreement with UK-based polymer and technology company Biomer Technology LTD to develop graphene enhanced thermoplastics for the healthcare and industrial coatings sectors.

Talga has plans to develop graphene-enhanced products in coatings, composites and resins, battery and fuel cell energy storage, and construction.  Graphene bests copper as a conductor of electricity and the company has plans to develop graphene-enhanced concrete that would conduct electricity for de-icing and even charging EVs on the roadways.  

The company is recognised as having high-grade flake graphite and a single step, cost-effective production process.

In October of 2017 First Graphite, a miner with vein graphite mines in Sri Lanka, officially changed its name to reflect its long-term goal.  First Graphene (FGR) claims its vein graphite is a superior input product for processing into graphene for commercial and industrial applications and the company set out to build a production facility.

On 27 February of this year the company launched full scale commercial production at its graphene facility, following a shipment of a test batch for use in cement products by a US-based construction company in late 2017. Investors were thrilled.

First Graphene reports it has a two-year supply of graphite stored at the facility, with plans to ramp up the facility in anticipation of new products.  The company claims affiliation with three Australian Universities.  In October of 2017 First Graphite announced it was working in collaboration with the University of Adelaide on a product called FireStop, a graphene enhanced fire-retardant coating for the building construction sector.  The company has three graphene powder products for use in commercial applications all under the name PureGraph, and recently signed a deal to supply graphene to Canberra based coolant maker FlexeGRAPH for use in its nanofluid coolant technology.

First Graphene has samples spread across Australia, Europe, and North America, but is still very much in late stage start-up status.

Archer Exploration (AXE) is a diversified miner focusing on natural resources needed by modern technologies, like graphite, magnesite, cobalt, manganese, and copper.  Archer has two graphite projects under development in South Australia.

The company was involved in the creation of the ARC (Australian Research Council) Graphene Hub at the University of Adelaide, an ongoing relationship.  Archer is moving into graphene and other advanced carbon materials, working with the University of Adelaide for human health applications.  Working together, Archer and the University recently announced the development of a graphene-based ink used to print electronic circuits with an inkjet printer. The company intends to pursue intellectual property rights for use of the graphene printing components in biosensor applications in human health.

In addition, the company acquired an online graphite and graphene market place, Carbon Alltropes. Archer’s intent is to use the site for distribution purposes once its graphite mines begin producing.  Carbon Alltropes also offers project innovation and scientific services.  

It should be noted that none of the three companies have yet to produce a profit and Talga is the only one generating minor revenues from operations.  

For investors with patience, graphene may yet prove to be a “big thing.”  The Australian Graphene Industry Association (AGIA) recently hosted a conference in Melbourne with speakers from around the world. The conference title was: Graphene+ The Foundation of the Fourth Industrial Revolution



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