9th April Far East Capital commentary
ESG is the new driving imperative for graphene
The efficiencies that graphene brings to the table play intothe ESG agenda to which all industries are committed.Adding graphene to plastics and polymers makes themboth stronger and fire retardant, often to the extent thatthey are more effective than steel or aluminium, which arehigh carbon emitters. Rubbers can be made to last longerand recycling of products can be enhanced with verymodest additions of graphene, but the most immediatereduction in carbon emissions can come from introducinggraphene to concrete.We have all known that graphene makes stronger and lesspermeable concrete for at least two years, adding tinyamounts of less than 0.1% to the mixture, but the cementcompanies told us that … “There are many ways to makeconcrete stronger, so why all the fuss?” Well, that line ofreasoning has changed. These same companiesdesperately want to reduce their carbon emissions as thesector is responsible for 8% of global carbon emissionstoday. They are starting to appreciate that they can do soby 20% when they add graphene to the clinking stage ofthe process, with virtually no change in cost or engineering.The penny has dropped and they are lining up to takeadvantage of this great improvement.
Cement is a US$740bn p.a. global businessThe estimated value of the global cement business isUS$740bn p.a., or 14 billion m3. With the specific gravity ofconcrete being 3.1 to 3.3, that works out at 42 billiontonnes p.a. If you added < 0.01% (1,000 gms) graphene toeach tonne the industry would need more graphene thanthe world can produce, so let’s just assume a modest 1%market penetration in markets that are moreenvironmentally conscious. That would require tens ofthousands of tonnes of graphene product, which is manytimes the capacity of the world to produce today. No singlecompany could produce that amount in the foreseeablefuture so there will be a supply shortage that needs beovercome. There will be room for many suppliers but onecompany is leading the charge and is streets ahead of therest at this juncture, both in terms of quantity and quality;First Graphene.First Graphene is very advanced with cement productThis scenario is of particular interest to me as a largeshareholder and director of First Graphene. That companyhas developed its PG50AquaTM product as a convenient andeasy to use admix for the cement business. It is already incollaboration with more than 25 cement companies aroundthe globe that are evaluating the performance of graphenein their product mixtures, with very positive feedback.These companies alone would require much moregraphene than FGR can produce, so it would need toexpand its production capacity by an order of magnitude. Suddenly there could be a massive shortage of graphene.The numbers become daunting and the profits could behuge. There are no guarantees yet so this scenario shouldbe seen as speculative, but so far it looks very promising.We should start to see the evidence from Q3 this calendaryear.
A postulated thematic that will revive the sectorWhen the graphene community wakes up to the reality ofpotential earnings from selling graphene products into thecement industry, led by the the pioneer, First Graphene,there will be a rush to go down the same path. Everyonewill be singing the same tune and promoting this as theinflection point for the sector. There are literally hundreds ofother products that can benefit from graphene and thesewill be an important source of demand in the coming years,but nothing offers the short term volume potential likecement, right now. We can see that there are hundreds ofmillions of dollars to be made by companies that can scaleup their production rates, but we still have to consider thequality and the suitability of the graphene made by each ofthese companies for the intended application. This will takethe sector into its next chapter and enable companies to beprofitable for the first time.
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