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Graphene is less beautiful as an investment material



What does graphene do? That makes golf balls go further, concrete is stronger, and clothing and batteries last longer. It's a pity that only 1g of graphene goes very far.

Last week, Versarien, one of many graphene producers floating in the London junior market in the past six years, said "revenue from any amount of material has not been achieved" from the graphene manufacturing division. Group losses before nasties such as taxes and depreciation have widened to £ 1.1 million. It was released from the more mature side of Versarien which sells hard metal layers to the oil and gas industry. Currently the group sells 100 grams of graphene here and one kilo there to be tested by customers who may have signed several cooperation agreements.

Chief executive Neill Ricketts believes that one day the group will break even and hopes to increase the production capacity of graphene to 30 tons per year in time. Meanwhile, he sought to raise funds from the Beijing Graphene Technology Institute in exchange for 15 percent of the shares.

Graphene was discovered in 2004 by several Manchester University scientists. They realized that carbon sheets as thick as atoms were a million times thinner than human hair and had 200 times the strength of steel. Enthusiasts soon began to declare ultra-thin, mega-flexible and superconductive material that would do for Manchester what silicon did for a valley in California. Graphene will revolutionize electronics, computers, energy, biotechnology and transportation, they shouted.

But it took decades to turn graphene into good commercial use. Versarien is only one of many companies that are trying to find ways to make money from it.

Versarien exploded or "peeled off" graphite clumps – a relatively ubiquitous commodity – to convert it to graphene.

This has reached a tantalizing price for its products – as high as £ 125,000 per kg – which makes dollar signs appear in the eyes of investors on the grounds that 30 tons can be worth billions of revenue. But manufacturers will not replace cheaper ingredients that they know function with graphene at current prices. Prices must decrease if use and production will take off. Because of this, industrial sages consider the global market in graphene to be worth around $ 550 million by 2025.

Part of the problem is graphene is so superior that it is not easy to work with other materials. This "is really inert" said the scientists.

Mr Ricketts is optimistic. New uses and technology are found all the time, he said. Just this month, the Paragraph, which came from Cambridge University, won funding to develop the "first commercial scale method" to provide graphene that could be done in sufficient quantities for large-scale use in devices, such as transistors and sensors.

Changes don't happen fast enough for the rest of the prospective Aim graphene, though.

In February, Haydale Graphene, which used plasma reactors to convert graphene into ink and paint, tapped investors to get more cash to cover working capital needs by complaining that the "development cycle" had taken longer than expected. "Large multinational companies have not developed the project as expected," the Welsh company explained, points echoed by rival Teeside, Applied Graphene Materials, in April. Later this month, Haydale warned that revenue would be at the bottom of estimates. Its shares are a fraction of the price when floating five years ago.

Directa Plus, an Italian business that makes graphene-based flame retardants and implements graphene into golf balls and bicycle tires, is half of their Aim debut in 2016. They may be lower but with the support of Patrick Soon- Shiong, billionaire biotech is sometimes dubbed "America's richest doctor", which took 19 percent in the recent funding round.

At least say better about Graphene Nanochem based in Malaysia. It vanished from Aim last year after failing to submit its account, announced plans to turn into a building company and its appointed adviser stopped.

That is the weakness of supporting ideas that change the paradigm. As a joint venture, one in ten businesses succeed, while the rest languish or, worse, perish. Even if graphene is a flame retardant and makes golf balls go further, it does nothing to stretch the pound in the pockets of investors or stop their portfolios from rising to smoke.

kate.burgess@ft.com


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