Can enough graphene be manufactured to meet demand?

Think of graphene as a single layer of carbon atoms, whereas graphite is a stack of layers of the same atom; i.e. both materials are made up of carbon, and the difference in performance is down to how the carbon atoms are connected.  Carbon is the fourth most common element in the universe so, in principle, we are unlikely to ever run out of it – particularly in these CO2-heavy times.

That said, making graphene is much more complicated than making graphite, which can be mined.  As mentioned earlier, plenty of new production methods are underway; however, the use of graphene will only be scaled up, once it can be produced in volume at a reasonable price.  According to American Scientist, at present, the best mass-market graphene comes from mined graphite which has been chemically exfoliated.  Companies involved in graphite mining are busy establishing themselves as a player in the graphene revolution.

As I hinted at earlier, plenty of techniques to manufacture graphene are emerging, some of which don’t even use graphite as a raw material, so to ask whether we have enough graphite to take full advantage of graphene’s potential is almost an irrelevant question to ask.  Having said that, there is plenty of graphite.  Assuming most battery manufacturers convert to the graphene technology once it has become commercially viable, various estimates (see for example here) suggest annual demand for graphite will quickly reach 250,000 metric tonnes.

As you can see in Exhibit 1 below, there is enough graphite in deposits around the world to meet such demand for many years to come; however, depending on which manufacturing technique that will prevail, graphite may not even be needed.  A more relevant question to ask might therefore be – could the manufacturing of graphene in volume and at a reasonable cost become the bottleneck that slows down the commercial rollout?

First and foremost, if the desire is to manufacture graphene in volume and at a reasonable cost, we should probably rule out some of the earlier manufacturing methods.  To begin with, graphene was collected with the use of adhesive tape!  While it is amusing to think of a room packed with scientists and engineers using adhesive tape to separate graphene from piles of pencils, it is simply not a viable technique.  Nor am I convinced that the CVD method currently being used is the way forward.

My search of the scientific literature on graphene has revealed a myriad of techniques that can be applied.  What they all have in common is complexity, high energy use and limited output.  To date, no technique has been developed that results in large quantities of high-quality graphene at a reasonable price, and this is where the focus should be.  For all the wonders of graphene to be realised, it must be produced cost-effectively in massive amounts.

What’s next?

One of the biggest opportunities in front of us is the use of graphene as an add-on material.  For example, by mixing one gram of graphene into 3kg of concrete (0.03%), the concrete becomes much stronger (see here).  Or think of the impact of adding a graphene layer onto a car’s windscreen.  As graphene is transparent, it would have no negative impact on visibility, but the windscreen would now naturally repel the water and increase driver safety in rainy conditions.

Alternatively, think of the impact of using graphene as a coating material on ships.  Because graphene is very hydrophobic, any surface coated in a layer of graphene would move through water with decreased friction.  A graphene layer on container ships would therefore reduce the cost, and increase the speed, of shipping.  

Many of these add-on techniques are not yet fully developed, and it is probably fair to say that graphene’s potential is only limited by the imagination and cunning of business leaders and their willingness to listen to the army of scientists and engineers who are already convinced of graphene’s potential.  A wide range of applications will develop over the next few years, once the potential is better understood.  Best of all, this will all be made possible by utilising one of the most abundant and most versatile of all elements in the universe.

Before moving on, allow me to share one final story on graphene.  In a NASA-sponsored research programme, scientists are trying to turn the CO2 breathed out by astronauts on the international space station into graphene.  Their breath is collected in order to capture the waste CO2.  The aim is not only to reduce the amount of CO2 in the atmosphere but also to turn CO2 into useful things, for example organic electronics.

Investment implications

Investing in an emerging industry is always challenging, as the commercial rollout often takes longer than planned (and/or promised).  That said, considering how young the graphene industry is, the list of players in the global graphene market is remarkably long.  That is probably a consequence of the massive upside which has been spotted by many.  So far, we have come across 23 companies, most of which are listed.

In addition, there is also a small group of listed ETFs that provide varying degrees of exposure to graphene.  Only one caveat – we haven’t been able to find any pure plays on graphene in the ETF segment.  The ETFs to follow are all exposed to graphene, but none of them focus exclusively on it.  In alphabetical order, the names we have come across include:

Global X Disruptive Materials ETF (DMAT)

Global X Lithium & Battery Tech ETF (LIT)

VanEck Green Metals ETF (GMET)

VanEck Rare Earth & Strategic Metals ETF (REMX

Ideally, I would like to start my graphene venture by investing in a graphene ETF, and there is a simple reason for that.  When a new industry emerges, you rarely know who the ultimate winner(s) will be.  It is simply impossible to predict with any reasonable degree of accuracy who will and who won’t continue to swim a few years down the road.  Therefore, the risk of betting on the wrong horse is significant.  By investing in an ETF, you reduce that risk significantly.

The problem I am facing in this case is that, in all four ETFs mentioned above, the allocation to graphene is limited.  Therefore, I would probably opt for a handful of the highest quality companies from the list we have identified – companies that are likely to survive even if the graphene ‘miracle’ never materialises.  In all fairness, that is very unlikely to happen, but some of the smaller companies from ‘our’ list could quite possibly go out of business before the commercial rollout in volume is a fact.

In no particular order, the highest quality companies appear to be AIXTRON, Cabot Corp and Entegris with Talga Group being a distant fourth.  In the interest of full transparency, my ‘analysis’ is very superficial and based on simple numbers like years in business, market capitalisation and the amount of equity capital available.

I have also noted that these names are amongst the graphene companies that have suffered the least in the graphene market rout that has happened in 2022-23, following the hyped conditions in 2020-21; i.e. my conclusions are not dramatically different from the market consensus.  As the graphene market matures, I will then spread my wings out, as some of the smaller companies we have identified will probably end up as the biggest winners.

Niels C. Jensen

7 June 2023