Graphene could change the world… but will it make money?

Graphene has many special qualities, and huge potential. But who is going to make money from it? David Thornton looks at one small-cap British company aiming to do just that.

On a Friday afternoon in the physics labs of Manchester University, Andre Geim and Kostya Novoselov were playing around with a lump of graphite. They'd heard how their colleagues down the hall used Sellotape to clean graphite before putting it under the microscope, so they decided to use some to peel a layer from the surface. A thin graphite flake stuck to the tape, so they kept repeating the process on that small sample. The flake became thinner and thinner.

They stuck with the Sellotape method' - formally known as micromechanical cleavage and eventually got to a layer of carbon a single atom thick. It won a Nobel Prize for the two Russians. They had invented graphene.

Graphene has many special qualities it's been called a wonder material'. It's the world's thinnest material, so it's very light but also extremely strong. And it's an excellent conductor of electricity and heat. For example, its superconductivity could lead to ultra-fast graphene-based computer chips. Graphene is almost two-dimensional, which gives it a very large surface area. That adds to its potential uses too. So who is going to make money from it?

Britain invents, the world profits

But there is serious global competition. The world recognises graphene's potential. The EU has a billion euros of funding earmarked over the next ten years. And Korea will also spend heavily. But it is China that has published most research papers, and is also taking a lead in production.

Back in November we saw the IPO of Applied Graphene Materials (AGM). I wrote about it at the time. AGM is a spin out from Durham University, and aims to be a leading manufacturer of high purity, top quality graphene. It is potentially a UK graphene champion. The stock market is certainly excited: AGM is up 172% since launch. But is manufacturing the raw material, graphene itself, the best way to profit from it? After all, if graphene is going to be used widely its price can't be too high and volumes have to be plentiful.

A new company on Aim called Cientifica (CTFA) believes that the real value in graphene is likely to be found in the companies that use it, rather than those who make it. CEO Tim Harper has recently returned from visiting a number of Chinese companies who have capacity in the hundreds of millions of tonnes. This puts AGM's eight-million-tonne capacity plant in perspective.

What is more worrying is that Harper sees strong downward pressure on prices. Chinese manufacturers talk of prices that are "an order of magnitude" lower than you hear about in the West. Also, there are many different production methods, and at this early stage of the industry new processes will continue being devised. A further risk for the manufacturer is that the type of graphene it produces isn't the type that ends up being in demand for a particular application.

Cientifica plans to invest in early stage graphene users rather than in graphene manufacturers. It has identified several markets where graphene could prove to be a game changer.

The first is energy storage. Graphene could significantly improve the performance of supercapacitors devices which store power like a battery, but can be charged in milliseconds. Cientifica has an agreement with private company, London Graphene, which is developing applications in this field. At the moment they are jointly developing a business plan which might lead to Cientifica taking a stake in the business.

This is Cientifica's only formal relationship so far, but there are plenty of opportunities for it to look at. Filtration is another market Harper is focusing on. Graphene filtration membranes are a hundred times more efficient than current technology. The end uses for filtration technology would be clean water, oil separation, chemical and food manufacturing.

Graphene has a big surface area and conducts heat well, so it's perfect for infrared heating. Heating is another market where graphene has scope to make an impact.

Harper is also going to focus on the "personal wellness" market. What is that? Well, graphene based sensors can obtain biochemical information to monitor professional sportsmen.

In fact, there's no shortage of interesting projects - far more than Cientifica has the scope to invest in at the moment.

Cientifica doesn't have a huge war chest ready to deploy; investments will have to be financed on a deal by deal basis. This means Cientifica's only asset is Tim Harper's expertise as a science-based entrepreneur who is focused exclusively on graphene. It will be interesting to see what he comes up with.

Recommended

What would another lockdown mean for markets?
Stockmarkets

What would another lockdown mean for markets?

A nasty new strain of Covid-19 has already sent markets tumbling, with the threat of further lockdowns now in the air. John Stepek looks at what that …
26 Nov 2021
Backtracking on HS2: the state of high-speed rail in the UK
UK Economy

Backtracking on HS2: the state of high-speed rail in the UK

The government has found a reverse gear on the controversial high-speed rail project. But does backing out now make sense?
26 Nov 2021
Vivek Ramaswamy: beware of the "woke industrial complex"
Investment strategy

Vivek Ramaswamy: beware of the "woke industrial complex"

Merryn talks to author and investor Vivek Ramaswamy about how big fund managers are using ESG investing to undermine the foundations of democracy.
26 Nov 2021
What Europe’s fourth wave of Covid means for investors
Economy

What Europe’s fourth wave of Covid means for investors

A fourth wave of Covid infections is spreading across mainland Europe, with many countries re-introducing restrictions. Saloni Sardana looks at what i…
25 Nov 2021

Most Popular

Inflation forecasts mean interest rates should be on the rise – so why aren’t they?
Investment strategy

Inflation forecasts mean interest rates should be on the rise – so why aren’t they?

With inflation forecast to hit 5% next year, we might expect interest rates to be rising, says Merryn Somerset Webb. But central banks are holding off…
8 Nov 2021
Don’t worry about the global population explosion – it’s unlikely to happen
Investment strategy

Don’t worry about the global population explosion – it’s unlikely to happen

One of the many things we are taught to worry about is the fast-rising global population. But in fact, says Merryn Somerset Webb, the opposite is tru…
15 Nov 2021
Four of the best new investment trust listings
Investment trusts

Four of the best new investment trust listings

Diversify your portfolio and benefit from rising dividends with these four new investment trusts coming to the market soon.
15 Nov 2021