A Toronto-listed Australian company using proprietary technology to produce graphene at a plant in Queensland can potentially capitalise on long-standing Chinese dominance of graphite-dependent supply chains for the “wonder material”.
That’s the view of Canadian investment firm Red Cloud Securities, which has initiated coverage of microcap, Graphene Manufacturing Group (GMG). The circa-C$65 million company formed in 2016 uses its proprietary process to manufacture graphene from natural gas rather than mined graphite.
Red Cloud analyst Alina Islam says most graphene today is produced by physically or chemically separating natural graphite into single layers of graphene. Graphite supply is controlled by China but GMG’s supply chain for its graphene powder relied heavily on inputs produced in-country, she observed. In other words, natural gas and electricity.
“Graphene is a wonder material with a large and growing number of applications, diverse forms and a market with blue-sky potential,” lslam says.
“[GMG] is focused on producing a few products, based on its core competencies, and should benefit from years of reduced competition within niche markets.
“We believe GMG offers investors the opportunity to invest in a company in the early stages of commercialising leading consumable products and further upside from a revolutionary product pipeline in the making.
“Cheaper manufacturing and improving technologies should only increase its potential applications.”
GMG is lifting graphene powder production capacity at a facility in the outer Brisbane suburb of Richlands from 500,000 tonnes per annum to 10 million tonnes per annum. It is also looking to expand supply of its revenue-generating Thermal-XR graphene coating in existing and new markets, including the US. The company has started producing G Lubricant, a 1% graphene concentrate internal combustion engine lubricant additive, and is said to be piloting Supa G battery slurry products.
“GMG graphene is said to be superior to competing graphene and graphene-like products,” Islam says. “This presumably superior product is also manufactured cheaply at about A$570/kg using natural gas.
“Blending technology is the foundation for three advanced products. Blending graphene in liquids is a technical challenge as it tends to fall out. GMG’s graphene powder is amenable to remaining homogenously dispersed in its products, especially with GMG’s high shear mixing and chemistry.
“This is the basis of its Thermal-XR coating.
“The Thermal-XR anti-corrosive and heat exchange coating is the most advanced [GMG product] and is already generating revenues from several markets in North America, Europe and Australasia.
“US EPA approval for products containing GMG’s graphene powder is expected by the end of 2025.
“We estimate a US$1 billion global market for coatings in heat exchangers and a $95 billion market for anti-corrosive coatings in general.”
IDTechEx also thinks the market for just graphene could grow to $1.6 billion by 2034 from the current circa-$150 million a year.
Islam says development of a new graphene and aluminium-ion battery, partly funded by mining major Rio Tinto, could be a game changer for GMG. Rio Tinto stated an interest in the battery for use in electric mine trucks.
“Unlike its more advanced products the G+Al battery does not rely on GMG’s graphene-liquid blending capabilities and opens up the possibility of a substantial new revenue stream, tapping into the $135 billion-a-year global battery market,” she says.
“While graphene and aluminium have long been thought to have the potential to be used in batteries the interstitial distance of graphene and size of AlCl4- molecules presented a barrier to its development. Devising a method to accommodate a critical number of AlCl4- ions within a graphene base, in collaboration with the University of Queensland, was a vital technological breakthrough in making this battery possible.
“The battery could have properties, such as fast charging, cheap and readily available inputs, which facilitates adoption for end-uses that currently do not employ batteries at all.
“It could readily substitute the 1000 tonnes of graphite annually being used in batteries.”
While it currently puts no value on GMG’s G+Al battery, Red Cloud has a C$1.30-a-share target price on the company, which is currently trading around 60c.
“Higher [graphene] production and development of other graphene-based products represent potential upside to our valuation,” Islam says.
“Despite early promise, 20 years after its first isolation, graphene adoption is still nascent.
“The industry has learned that commercial production and adoption of single layer graphene, which has the best properties, is challenging and unnecessary for most applications. It is possible to leverage cheaper, impure/multi-layer alternatives, like reduced graphene oxide, or few-and multi-layer graphene, with toned down properties, compared to pure monolayer graphene, for many applications and only use pure graphene for higher-value applications.
“GMG produces what is believed to be a technically superior version of the few and multi-layered graphene that has been gaining traction over the last two decades. We believe it is a company that can take advantage of niche markets with its product range.”
