Graphene sees growing investor opportunities
Financial Times, 10 May 2013

Graphite, in its natural form, is a mineral so fragile that it crumbles away from the tip of a pencil when etched on paper. But hidden inside its soft grey flakes is a substance stronger than diamond that looks set to change the world.
Known as graphene, the material comprises just a single layer of atoms bonded together in a honeycomb lattice, and possesses near miraculous properties. Almost weightless, it is tougher than steel, more flexible than rubber and more conductive than copper.

grapheneSince its discovery early this century, ideas for future applications have abounded, ranging from ultra-thin bendable screens to solar panels and synthetic blood. Funding has poured into research projects across the globe from governments and major corporations. In recent months, its potential impact on the UK economy has also become tangible, with opportunities for individual investors growing, as publicly listed companies have begun specialising in graphene.

Its initial discovery was sparked by an unusually low-tech experiment at the University of Manchester in 2004. “The work on graphene wasn’t a mainstream activity, it was a Friday evening experiment,” says Kostya Novoselov, whose pioneering work on the substance with Andre Geim won the pair the 2010 Nobel Prize in Physics.
They realised that by peeling Sellotape away from a block of graphite, they could separate single layers of the nanomaterial, only visible under a microscope.

“Graphene is unique in that it combines all of these properties into one: strength, weight and conductivity. It means we can start to explore things that were unavailable to us before . . . God knows where it’s going to lead,” he says.

Chung Ping Lai, chief executive of Bluestone Global Tech, a New York company that specialises in producing large sheets of the material, has seen the industry emerge and grow in the years since. “There is a lot of competition in the market now [with] probably 50 companies claiming they can produce graphene,” he says. “Our challenge is scaling it up to an acceptable industrial level.”

He highlights the “patent gold rush” as a key issue facing the industry. More than 7,000 patents have been issued worldwide, predominantly in China, the US and South Korea, as businesses try to protect and capitalise on their own research. Despite the innovation originating from the UK, British companies hold just 54 patents, and there are fears that the country is falling behind.

Mr Lai points out that the volume of patents is not necessarily a barometer of commercial success, though. “A patent does not imply that a company has done the research, or that the research can be converted into a product,” he says.

It is a view echoed by Quentin Tannock, chairman of CambridgeIP, an intellectual property consultancy. “UK inventors have a well-deserved reputation for being particularly innovative and the UK has enormous potential to secure future value in the graphene patent landscape,” he says.

Chancellor George Osborne has acted quickly to try and retain Britain’s initial advantage, and exploit the pioneering work carried out at Manchester University. In the wake of the discovery, several attempts were made to lure Mr Novoselov and Mr Geim to the US or Singapore, but the chancellor’s pledge of government funding has seen their work continue in the UK.

In 2011, Mr Osborne announced £50m for research into the material, and confirmed a further £10m late last year for collaborative projects between universities and new commercial partners. His aim is to take the technology “from the British laboratory to the British factory floor”, and will see companies such as Dyson, BAE Systems, Nokia, Sharp and Phillips Research partner with research teams at UK universities to develop its potential, not just for private companies, but also for the UK economy.

At present, the market remains small, with limited opportunities for private investors. “There are very few publicly traded pure-play graphene companies,” says Peter Blake, managing director of Graphene Industries, a smaller business directly linked to Manchester University that is already commercially producing graphene.

Individuals hoping to invest in graphene through the stock market originally had been limited to buying into large companies like Samsung, whose research into the new material makes up a tiny part of its activity. Now, however, opportunities for investors are growing, through companies such as Graphene Nanochem, which is based in Kuala Lumpur and trades on the London Alternative Investment Market, and Lomiko Metals, a Canadian company, that trades on the Toronto Stock Exchange.

But despite wild claims about its uses, with some suggesting it might “change the world as we know it”, Ross Kozarsky, a senior analyst of Lux Research, the emerging technology research company, predicts growth will be slower. “The actual market size is not going to be that big until the end of the decade,” he says. Even so, his firm still forecasts industry growth of 40 per cent each year, from $9m today to $126m by 2020. “In the short term there are a lot of challenges in the way, especially for the sexier applications,” he says.

Longer term, however, few doubt graphene’s ability to bring about dramatic change to our everyday lives. A. Paul Gill, chief executive of Lomiko Metals, thinks that the only way to comprehend its future potential is to cast our minds way back into the past. “It’s like being involved in oil at the turn of the century,” he says, “nobody understood it at the time, but it changed everything for over 100 years.”