Graphene Manufacturing Group - Promising new battery technology - WATCHING
12-month reflections: I never bought into GMG however still keep an eye on its operations
Graphene Manufacturing Group
TSXV:GMG
Synopsis:
Graphene Manufacturing Group is a disruptive clean-technologies company that produces extremely high-quality Graphene through its patented Carbon manufacturing technology. The company is currently researching and developing a suite of products in which their Graphene can be applied including Graphene Aluminium-Ion Batteries, HVAC coatings and Lubricants.
Overview
Graphene Manufacturing Group (GMG) is a pre-revenue Australian technology company currently listed on the Toronto Stock Exchange. The company went public in 2020 but had been privately producing Graphene for over 6 years prior.
Led by former Shell Executives, GMG focuses on energy savings and energy storage solutions products. The company's core operations revolve around the production of high-quality, low-cost, scalable, tuneable and low/no contaminated graphene. This proprietary process is held as a trade secret with several patents held by GMG.
Having carried out extensive research and development programs, GMG is about to begin scaling up the manufacturing of its various graphene products, with samples currently being sent out to numerous interested companies. Full-scale commercial production could be in the near term with GMG making their final investment decision towards the back half of 2023 for their 2032 coin cell Graphene Aluminium-Ion Battery (G+AI Battery).
The commission of an expanded graphene manufacturing plant is expected during the first half of 2023 which will significantly boost their graphene production in a fully automated facility. The premises will also house GMG’s blending division where the company will be able to manufacture its Thermal-XR coating and begin distributing the product to the market.
What is Graphene?
Before diving into the specifics of GMG, it is important to understand what Graphene is.
Graphene is an extremely thin layer of Graphite, at only 1 atom thick with the atoms arranged in a honeycomb pattern. This structure allows each carbon atom to be bonded to 3 more atoms around it, making Graphene the strongest known material at 100x the strength of steel while being 3x lighter.
Graphene also delocalised the electrons, meaning the eletrons can move around more freely making Graphene extremely adept at conducting electricity and heat. The substance is the most conductive material that humans have ever encountered and is labelled as a super-material. Graphene has a high melting point of 3527oC+, is extremely lightweight with a weight aspect ratio of 300m2/gm of surface area, is corrosive resistant and is molecularly very strong when integrated into materials.
First discovered in the 1940s however not researched further until 2004 by two scientists that were eventually awarded the Nobel Prize in 2010 for their work, Graphene adoption in products is just beginning to take notable hold. The global graphene market capitalisation is projected to reach $2.5b by 2028 and is expected to grow at a CAGR of 19.5% for the next 6 years.
GMG’s Graphene Production
First and foremost, GMG’s core operation is the internal production of high-quality Graphene. Manufactured through their unique patented technology process, their material is distinctively different from Graphene produced from traditional methods. GMG’s process only requires low-cost natural gas as feedstock which is then converted through the electric plasma into Carbon (Graphene) and Hydrogen.
The company’s production process can be fully automated with production being instantaneous and continuous, requiring low-cost inputs and setup costs, an ability to quickly scale the production facilities, the end product can be definitely controlled to certain desired output metrics, consistently high-quality graphene and the overall process has a low environmental impact. The end product is some of the purest carbon ever created, free from contaminants such as oxygen and silicon.
Conventional production methods for the material require Graphite to be mined which is then chemically processed and refined numerous times into Graphene Oxide. There are numerous downfalls to this practice, which GMG has been able to mitigate, including the environmental impacts plus mining cost of extracting Graphite, the high Graphene production costs and setup due to needing to process the ore numerous times, difficulty in achieving mass-scale production, there are only various forms of definability, there are often impurities in the graphene oxide and the chemical processing of the Graphite creates a large environmental footprint.
An added benefit for the company is that GMG’s production methods also create the by-product of hydrogen which the company has stated that they will either use to power their manufacturing equipment or sell on the open market. GMG also has future ambitions to extract Carbon from Carbon Dioxide in the air however at the moment production through methane is most suitable given its cost and abundance.
Graphene Production Costs
The example below will provide an estimated cost structure of GMG’s Graphene production:
The price of 20 kgs of Natural Gas can cost anywhere between US$5-20, largely depending on where in the world the gas is obtained. In this example, we will use the upper end of the gas price spectrum being US$20. Out of the 20 kgs, roughly 15 kgs are carbon atoms of which GMG can extract 10% of the carbon atoms in their process.
GMG’s production process also uses electricity, which the company can renewably generate from Solar Panels in their warehouse facilities as well as convert the Hydrogen by-product into electricity.
GMG is currently preparing for the construction of its Phase 1 Graphene production expansion with the warehouse facilities expected to be complete in the first half of 2023. This warehouse will also provide dedicated space for the company’s blending division operations (more on this later).
The company intends to exclusively use their Graphene for their suite of productions rather than directly selling its Graphene sheets on the open market.
Graphene Manufacturing Groups Products
Graphene Aluminium-Ion Battery - US$108b Market
This is the most exciting application for GMG’s Graphene. The company reached an exclusive license agreement with the University of Queensland (UQ), the original developers of the battery storage technology, thanks to GMG’s ultra-high-quality and low-environmental footprint Graphene. The agreement was signed for an initial 20 years however there may be optionality to extend the arrangement which mostly depends on the life of the patents for which UQ has already globally filed.
UQ has developed a specific process that perforates and splits the layers of graphene creating expanded inter-layer spatial distance (holes) in the atoms. Their approach enables a greater amount of Aluminium-Ions to be stored in more kgs of carbon, resulting in a greater energy density for the Graphene Aluminium-Ion (G+AI) batteries.
So far, extensive testing of the battery has provided extremely positive data which exceeds Lithium-Ion battery capabilities. GMG in partnership with UQ professors continues to expand the capabilities of the battery technology and has announced numerous improvements. The results achieved by GMG have been independently verified and the company has already delivered samples of both the 2032 coin-cell battery and Battery Pouch Cell to interested parties.
The company has stated they have been inundated with inquiries from numerous Tier 1s, 2s and 3s across multiple industries who want to assess the battery capabilities themselves. Both the 2032 coin cell and pouch cell batteries have the potential to be applied in numerous applications Remotes/IOT Devices, personal electronics, household and grid storage as well as electric vehicles and aviation.
2032 Type G+AI Battery Coin Cell
Currently, the 2032 type G+AI Battery Coin cell is the most developed battery technology that GMG carries which can be used in a range of products including remote controls, games and toys, calculators, watches, weighing scales, cameras and computer motherboards.
GMG’s 2032 type coin cell prototypes are fully rechargeable in several seconds, retain the capacity for several thousand charges and discharge cycles, are non-flammable, are relatively non-toxic and are virtually fully recyclable. These features compare favourably against the typical 2032 type Lithium-Ion coin cells which take 3-6 hours to recharge, are highly toxic and in some cases deadly. when ingested, are difficult to recycle, are flammable under certain conditions, and degrade more rapidly in performance.
With most of the battery research complete, the company is in the advanced stages of determining the pricing structure, potential quantity of production per annum and layout design of a future production facility. GMG is expected to make their final investment decision for a battery production facility in the latter half of 2023 with hopes of full-scale production and sales in 2024.
G+AI Battery Pouch Cell
Currently, in the late stages of development, GMG’s Battery pouch cells are extremely versatile and could be used in a range of products from EVs, personal communication devices, internet of things (IoT) sensors, energy storage, high power industrial applications and electrical aviation. As seen in the picture below, the pouch cells are highly malleable in their shape design allowing customers to receive a battery with certain design specifications (shape, energy density etc).
GMG began hand manufacturing their first pouch cell batteries in September 2022 and has since sent numerous samples to interested parties. GMG works in a collaborative manner with their interested companies, firstly specifying the desired power density and energy density and then reaching a user specification agreement where GMG will send samples for the company to extensively study. Whilst the company has been inundated with sample requests, GMG’s board is assessing which product segment they want to first launch with and which client they want to serve.
G+AI Batteries vs. Lithium-Ion Batteries
Although the specifications for the G+AI batteries are currently impressive, given how state-of-the-art UQ’s technology is, there is the capacity for further optimisation.
As of June 2021, GMG had more than 80 global companies request samples to assess the potential applications of the battery in electric consumer vehicles, high-performance cars, heavy-duty vehicles, motorbikes, air transport, personal appliances such as laptop computers and phones, grid-connected storage, and others.
The following paragraphs compare the G+AI battery to Lithium-Ion batteries:
Energy & Power Density
Lithium-Ion batteries only use 1 lithium atom when the energy is discharged whereas G+AI batteries have 3 electrons for use meaning that for every single positive charge transported between the anode and cathode in a Lithium battery, GMG’s battery can charge 3 electrodes at the same time. This ability greatly increases the energy density of the G+AI battery. GMG’s battery is also labelled as a hybrid-supercapacitor meaning that it has very low internal resistance so practically every amount of power that is put into the battery will go into the capacity space.
Energy density equates to how much energy you can get out of a single charge. In the case of EVs, it is how many miles you can drive, for your phone it's hours of use. Currently, GMG’s energy density is below Lithium-Ion batteries however keep in mind that Lithium-Ion batteries have had 30+ years to mature, whereas GMG's batteries are still GEN 1. Aluminium has one of the highest theoretical energy densities, at 1060 Wh/kg, which is 2.6x greater than Lithium ion's theoretical max 406 Wh/kg limit. Most notably, GMG is currently only using just 1 of its 3 aluminium atom electrons. The company is currently working on the ability to use all 3 and the results so far are extremely encouraging. This would arguably increase the energy density of the battery by 3 times.
In terms of power density, the G+AI battery has extremely high charging abilities with rates up to 9,350 W/kG @30c. In comparison, a Lithium-Ion battery's power density is only 200W/kG @1c. The G+AI power density is so high that a standard phone can be fully charged in under 3 minutes. When you charge a lithium-ion battery beyond its power density capabilities, problems begin to arise. To combat this from occurring, there are numerous battery management systems in place to manage the charge current. This not only adds additional weight to battery packs but also costs more to implement.
Battery Life Cycle
Most batteries lose 15-20% of the atoms that come in and out of the electrode holes, an effect called roundtrip efficiency. Both Lithium-Ion and G+AI suffer from this effect however what differentiates the two is that after so many uses, lithium atoms begin to lodge themselves in the receiving electrode which builds up over time lessening the effect of the charging capacity. This is why we need to update our phones every 3-4 years, as the battery storage efficiency begins to decrease. GMG's G+AI battery doesn't suffer as harshly from this lessening efficiency effect over time. The battery has been shown to effectively operate over 3,000 cycles compared to Lithium-Ion’s 600-1,000 cycles. This is a very significant benefit!
Voltage
The battery has a discharge capacity of 360mAh/gram and a nominal voltage of 2.0V.
One of the biggest downfalls of the G+AI 2032 battery is that it can only reach 2.0V and not the desired 3.0V however the company is making good headway on increasing the battery's voltage. The company is currently developing ways to increase the voltage, mainly through increasing the electron usage from 1 to 3. Achieving specific voltage is not currently an issue as the company can just stack batteries on top of each other to achieve the desired voltage output though achieving 3.0V would be a massive derisking factor for the battery technology.
Temperature & Cooling System Management
As Graphene and Aluminium have fantastic thermal conductivity, larger battery packs could require no cooling system which would allow for a 95% cell-to-pack density ratio. In comparison, Tesla's battery packs have a cell-to-pack ratio density ratio of 63.5%. G+AI battery packs also wouldn’t carry the additional management system equipment required to cool down the batteries.
During the initial lay test in cold weather conditions, GMG’s battery showed no performance deterioration at 0 degrees. The company has recently acquired professional test kits that will test the battery performance in temperature ranges between 0 and 100 degrees. So far, testing has shown there is no difference in battery pack temperature when charging at extremely fast rates.
Cost & Supply Chain
The G+AI battery is made from 50% Graphene, which GMG can produce through their graphene production facility and 50% Aluminum which is thousands of times more abundant and more cost-effective than lithium. This will allow the G+AI battery to be extremely cost-competitive, in most cases far cheaper when compared to Lithium-Ion batteries. Recently highlighted by Lithium’s skyrocketing price, the cost of obtaining lithium feedstock for batteries will cause significant price increases for the consumer products which require lithium batteries. Not to mention, Lithium-Ion batteries also require copper, cobalt, magnesium and rare earth metals. Only requiring cheap natural gas as well as electricity for the conversion process, GMG’s supply chain is extremely uncomplicated and economical when compared to Lithium-Ion batteries.
Green & Recycling
GMG’s batteries are much greener than Lithium-Ion batteries due to the reduced mining practice needed to obtain the feedstock. G+AI Batteries can also be easily recycled after many years of use and currently, there are highly efficient facilities in place to recycle aluminium.
GMG also produces their batteries in a way that allows the Aluminium and Graphene atoms to be easily withdrawn. The Graphene materials can be used again and the Aluminium can be easily recycled. In contrast, it is not only difficult but extremely costly to recycle Lithium-Ion batteries.
Graphene Aluminium-Ion Limiting Factors
So far, all the metrics of Graphene Aluminium-Ion batteries have far out-weighted lithium-ion batteries yet there are still limiting factors hindering the technology.
The ultimate hindrance comes down to the quality of and ability to consistently produce the graphene used in Graphene Aluminium-Ion batteries. The atom structure of the graphene must be layered in such a way that the battery can effectively charge and discharge the aluminium-ion atoms. Poor-quality graphene will hinder this process.
GMG produces some of the highest quality graphenes in the market, and year after year they continue to improve their graphene output. Whilst there are many types of graphene, the state's company has formed the best graphene for battery technology and continues to optimize the metrics.
Graphene Aluminium-Ion Battery Production Costs
The process to manufacture GMG’s G+AI battery follows in extreme similarity to how Lithium-Ion batteries are currently produced. Lithium-Ion battery production requires 12 machines, which are well technologically developed with 40 companies worldwide supplying such machines. GMG has refined their manufacturing process around existing technologies, only requiring 9 of the 12 Lithium-Ion battery production machines to manufacture their battery.
The company’s CEO, Craig Nicol, expects that once their energy savings solutions, such as the use of solar panels or the Hydrogen Slag, are taken into account the company will one day be able to prove they are a carbon-negative business.
Potential for Licensing Agreements
GMG’s board has not yet decided as to whether they will adopt a licensing agreement model for the production of their batteries as they want to see how the battery and market mature. Licensing agreements would only appear once they have achieved a full-scale production line, as well as further, derisked the battery technology to show that the battery is commercially viable. For current Lithium-Ion battery production companies to transition to manufacturing GMG’s G+AI battery, they would only need to clean and scrub their facilities as the equipment used to produce the batteries are identical.
Thermal-XR - US$26b Market
Thermal-XR is a Graphene coating applied to the surface of Heating, ventilation, and air conditioning (HVAC) units. The coating generates energy savings, reduces emissions, adds Corrosion Protection, and increases the Thermal Efficiency of the HVAC units. Considering that approximately 10% of global energy usage is consumed in running HVAC units, there is a significant potential for global emission reductions through the use of Thermal-XR.
Research undertaken by GMG and independent 3rd parties has shown that after coating a range of HVAC units across the world, energy savings of between 8-52% were achieved. Insights regarding regional climate conditions, the type of HVAC units, and economic parameters continue to be derived and are being used to prioritize subsequent research efforts. Recent verification by the Univeristy of Queensland confirmed that GMG’s Thermal-XR can reduce surface temperature by approx. 15% when applied to aluminium with temperatures between 70C and 90C.
Thermal-XR’s patented technology was originally developed by OzKem, an Australian corrosive protection technology company, however, in August 2022, GMG acquired the intellectual property, branding rights and distribution of the product. The agreement still sees OzChem supplying the underlying coating however GMG will integrate their graphene into the product at their blending manufacturing facility. By acquiring this technology, GMG can optimize the coating blend as per clients' requests more effectively.
Currently, GMG is assessing the different routes to market for its Thermal-XR product. These include the coating being applied on existing aircon by HVAC installations, applying the coating to the HVAC distribution network, as well as integrating the coating into the equipment manufacturing line. Additional applications can be made towards oil and gas production, power generation, liquified natural gas production, mining, and mineral processing. GMG in conjunction with potential customers has begun applying Thermal-XR to the equipment manufacturing process which represents a potentially significant revenue opportunity.
GMG has established sales representatives across North America, South East Asia and Australia. The company has also been in consultation with a company in Dubai, which shows promising revenue potential.
Lubricant - US$14b Market
GMG’s manufactured Graphene can also be dispersed as an additive in oil-related lubricants such as automobile lubricants and heavy machinery coolants.
Numerous research papers have illustrated the benefits of including Graphene in oil lubricants, namely related to energy and emission savings, wear prevention and increasing asset longevity. GMG has begun conducting their research and found that when their Graphene is added, there are energy savings of up to 12%, there is a coefficient of friction reduction of up to 30% and reductions of wear of up to 20%.
The Graphene concentrate can be added to existing lubricants or GMG can tailor a specific concentrate for client requests. The Graphene material generally only consists of 1% of the weight within the oils.
Product engagement is currently occurring, with commercial potential largely based on customer acceptance of the data results. Several large lubricant blending companies and original equipment manufacturers are currently either testing or have expressed interest in testing GMG’s product. Craig Nicol, the Founder and CEO of GMG, previously worked for Shell in the Lubricant Oil business so can capitalize on his industry connections and knowledge
Company Partnerships
To ensure an effective route to commercialisation, the company has signed non-binding letters of intent with a ‘coalition of the willing’:
Wood
GMG has signed a non-binding letter of intent with Wood, a global consulting and engineering energy firm. Wood will support GMG in scaling up and automating its proprietary natural gas to the graphene manufacturing process.
Bosch
GMG has signed a non-binding letter of intent with Bosch, where once GMG achieves a successful commercial battery prototype, sales agreements and the final investment decision is made, Bosch will design, construct and operate a G+AI Battery manufacturing plant. The location of the plant is still being considered but is likely to reside in Australia.
Rio Tinto
GMG also has signed a non-binding letter of intent with Rio Tinto where both parties will explore the use of GMG's energy savings products in Rio's operations, explore working together to support GMG's development of their G+AI batteries as well as collaborate on mining and other industrial applications.
Everything on a mine site can be electrified and GMG could provide the necessary product offerings for Rio Tinto’s mining equipment suppliers. GMG is already in discussions with multiple mining equipment suppliers that can utilize GMG’s products on-site and provide evidence that they can work under high-performance and high-heat environments.
The non-binding letter also allows GMG to explore the optionality of acquiring Rio Tinto’s Aluminium materials for the production of their batteries.
GMG Facilities
In December 2021, GMG commissioned a battery pilot product and testing facility in Queensland, Australia.
This facility has allowed GMG to develop, manufacture and test their 2032 type G+AI coin cell and pouch pack batteries in-house, accelerate the commercial potential of their battery, work with future customers and further expand their staff members. GMG has ambitions, following a positive final investment decision in 2023 to construct an initial 2032 type G+AI coin cell battery manufacturing facility, followed by first production and sales in 2024.
The company has also boosted their organizational capabilities by attracting new staff experienced in coin cell and pouch cell research and manufacturing which will accelerate its battery performance optimisation programme.
Forward-looking activities
Production
Commissioning of Phase 1 graphene expansion facility in the first half of 2023 to allow for the rapid scaling of Graphene production
Commissioning of blending facilities plant in the first half of 2023
G+AI Battery
Continue testing the 2032 type G+AI Coin Cell battery for further optimisation
Sending of samples to interested parties
Reach a final investment decision (FID) towards the back half of 2023
If FID is approved, begin construction of the Coin cell manufacturing facility supported by Bosch for completion in 2024
Begin commercial production of 2032 type G+AI Coin cell battery and distribute to the market
Whilst determining the FID of the coin cell batteries, GMG’s scientists and engineers will continue to develop the G+AI Pouch Cell battery
The expectation of commercial production of G+AI Pouch cell batteries in 2025
Thermal-XR
Continue research into the benefits of using GMG’s Thermal-XR coating
Sending samples to interested parties
Assess the different routes to market for Thermal-XR
Develop sales channels across the globe
Commissioning of blending facility in the first half of 2023 to support the production of GMG’s energy-saving liquid graphene products
Lubricants
Continue research into the added benefits of including GMG’s Graphene in oil lubricants
Sending samples to interested parties
Commissioning of the manufacturing facility in the first half of 2023 to support the production of GMG’s energy-saving liquid graphene products
Corporate
Continue the expansion of the company’s personnel.
Currently, the team consists of 45 people with 10 in graphene manufacturing, 10 in battery production, 10 in marketing and sales and the remainder in general corporate roles.
Management Team
Craig Nicol
Founder, Managing Director & CEO
20+ years experience in delivering large-scale innovation including multi-billion-dollar gas and LNG value chains as well as managing sales and marketing teams across whilst working with Shell International
Lisa Roobottom
COO
Lisa has a career in the Oil & Gas and Manufacturing industries spanning approximately 30 years, working in a number of roles including Refinery Operations Manager and National Health, Safety & Environment Manager at various companies including Caltex, Ampol, Australian Laboratory Services and, most recently, Alpha HPA.
Guy Outen
Chair & Director
35+ years with Royal Shell PLC in various roles including EVP strategy & Portfolio where Guy worked with Shell’s CEO and board to create Shell’s new Energies focus on low emissions.
Robbert de Weijer
Director
25+ years in megaproject delivery and operations of oil and gas exploration and production companies. Led Shell’s North Sea Southern production assets, which consisted of more than 1,500 people and an annual operating expenditure of A$900m.
Emma Fitzgerald
Non-Executive Director
25+ years in the Water and Energy Sectors where most recently she was CEO of Puma Energy, focusing on delivering affordable and sustainable energy solutions to emerging markets in Africa, Central America and Asia. Emma also spent many years running Downstream Retail, Lubricants and LPG businesses for Shell PLC around the world. Emma was ranked #34 on Fortune's 2020 Most Powerful Women list.
Ashok Kumar Nanjundan
Chief Scientific Officer
20+ years of academic and commercial chemical and materials engineering experience focused on carbon nanomaterials (graphene) for energy storage and conversion applications. Recipient of several prestigious fellowships, including the Marie-Curie fellowship at the French Atomic Energy Commission, a Fellow at the Japanese Society for Promotion of Science and the UQ fellowship at the University of Queensland. He was also a fellow at Trinity College in Dublin, Ireland. Ashok has published over 100 journal articles in high-impact peer-reviewed journals and has been cited more than 5000 times
Bob Galyen
Technical Advisory Committee
A highly experienced executive in the battery energy storage world and science/engineering-based communities. Bob was previously the Chief Technology Officer of Contemporary Amperex Technology Company Limited (CATL). CATL is widely known as the largest lithium-ion battery manufacturer in the world supplying electric vehicles and high-efficiency storage systems.
Dr Dan Brett
Technical Advisory Committee
Professor of Electrochemical Engineering at the University College London (UCL), a top-ranked University, where he is a director of the Electrochemical Innovation Lab (EIL) and Advanced Propulsion Lab (APL).
Risks
Technical Derisking
Most of the Company’s products and solutions are currently in research and development, and the commercialization phase, at various stages of progression. There is a risk that the technology and the Company's products will not perform as expected in certain applications and therefore, GMG may encounter delays to commercialization or may run the risk that the technologies will never be successfully commercialized. This means that the Company may never receive revenues or return on its research and development activities.
Introduction of Competing Technologies/Products
Given that the energy savings and energy storage space are so wide, competitors are the companies that have graphene-enhanced products. Although GMG has stated they don’t see any meaningful competition currently in its target markets, the following companies could be seen as competitors:
Applied Graphene Materials: Focuses on composites, coatings, lubricants, thermal management solutions and batteries and energy storage devices.
First Graphene: Manufactures graphene using graphite, and has a product range that is focused on composites, elastomers, fire retardancy, construction materials, graphene-enhanced textiles and energy storage devices.
Global Graphene Group: Focuses on thermal coatings and paints, conductive coatings and inks, anti-corrosion primers, graphene-enabled silicon anodes, Li-Ion battery materials and non-inflammable electrolytes.
HydroGraph: A publicly traded nanotechnology company that produces graphene in the most scalable, low-cost, customizable manner.
Haydale: Doesn’t produce graphene but rather focuses on the integration of graphene in materials and products.
Versarien: Has numerous subsidiaries and is mainly focused on graphene integration into products.
Zen Graphene: Specializes in the production and integration of graphene powder.
Nanoxplore: Produces graphene power and graphene-based plastics for industrial applications
Note this list doesn’t include all the different battery type competitors in the space which there are many. There will be numerous other companies that will enter the space however given how broad the market is there is unlimited potential
Marketing Acceptance
Even when product development is successful, GMG’s ability to generate significant revenue and profits depends on the acceptance of its products by its customers and end users of the products. The market acceptance of any product depends on several factors, including but not limited to awareness of a product's availability and benefits, the price and cost-effectiveness of these products relative to competing products, and the effectiveness of marketing and distribution efforts.
Governmental Regulations
The Company’s operations including graphene manufacturing and provision of graphene-enhanced products and solutions will be subject to the laws and regulations of Australia and other jurisdictions governing various matters including environmental protection, management and use of toxic substances, management of natural resources, manufacturing, development and production, imports and exports, price controls, taxation, royalties, labor standards and occupational health and safety.
Intellectual Property
There is no assurance that any patent or other intellectual property applications will be approved in future. Even if they are approved, such patents, trademarks or other intellectual property registrations may be successfully challenged by others or invalidated. The Company’s success and ability to compete are substantially dependent on technologies and processes which it will need to protect through a combination of patent, copyright, trademark law or keep confidential as ‘trade secrets'.
Personal Remarks
Firstly, it’s important to remember that Graphene Manufacturing Group has 3 unique technology ventures.
The making of Graphene from natural gas
Adding Graphene into Fluids (Thermal XR & Lubricants)
Graphene Aluminium-Ion Batteries
Understandably, most investors are most interested in GMG’s battery technology venture however I would argue that the ultimate asset for GMG is its ability to produce graphene.
Simply put if it weren’t for the company’s ability to produce low-cost and extremely high-purity graphene they wouldn’t exist today. All of their products stem from their ability to manufacture graphene. Currently, other companies in the space aren’t even close to achieving the quality of graphene that GMG can, nor even at the commercial scale that the company is set to reach in early 2023.
While I am sure other graphene companies will enter the market, not all will likely target the same product segments. Due to the unique properties of this ‘wonder’ material, there are hundreds of ways in which graphene can be used and applied such as for biomedical devices, semiconductors, water filtration membranes, ultra-sensitive environmental sensors… the list goes on and on.
I truly admire that GMG has chosen to target the energy savings and energy storage solutions space, no easy market to break into. Yet so far the company has taken significant strides in not only developing its graphene and related technologies but also achieving consistent and reliable results indicating the significant advantages of the use of their graphene.
Let’s not forget that the company only started developing their graphene just 6 years ago and is on the brink of ramping up its production. 2023 is dawning to be the year where the company will begin to reap all the rewards that they have sown for the past few years. In a recent interview, GMG’s CEO, Craig Nicol, states that the company is still active in seeking improvements to their graphene… to achieve an even higher-quality material. Whilst the graphene grade is already significantly high, further enhancements will have substantial downstream effects across all their products. Even though GMG has already achieved so much, there still is room for improvement with multiple teams of scientists as well as the University of Queensland supporting operations to further develop their technologies.
When first assessing GMG, I was narrow-minded in only looking at it as a battery technology company which as I have now outlined, GMG is much more than that. There is no denying that the battery technology space is currently flooded with companies claiming to have found ‘the solution’. Yet a key factor that so many seem to neglect is that GMG can produce batteries at a low-cost and highly commercial nature. GMG’s battery technology also avoids the numerous downfalls of Lithium-ion batteries. While I have previously outlined the significant advantages that their battery has over Lithium-Ion batteries, a high-level summary is that GMG’s G+AI battery has:
Higher energy and power density
More lifecycle numbers
Better thermal conductivity leads to no requirement for a cooling management system
Simply supply chain for production requiring just Graphene and Aluminium
Significantly lower input material costs!
Reduced environmental damage
The battery can be easily recycled
I just want to reiterate the point of significantly lower cost of materials. As we have recently seen, lithium prices have skyrocketed. Higher lithium prices lead to higher battery costs which ultimately leads to higher prices for cars. With most car manufacturers committing to fully electric car production in the coming years, for their own business’ sake they won’t want to see reduced car sales with people being priced out. GMG’s G+AI Battery seems extremely cheap compared to the production of Lithium-Ion batteries, requiring just natural gas, electricity and aluminium. All cheap commodities.
While there are still areas for improvement, mainly in the realm of the battery voltage, GMG has acknowledged they are currently in active development of future prototypes.
Another important point to consider is that it is highly unlikely that there will be a one-battery to fit all types of situations. It is more probable that there will be multiple battery technologies on the market satisfying specific functions of their related tasks.
Yes, the G+AI battery could be seen as a blue-sky opportunity for the company, with a difficult venture to commerciality and the ability to capture market traction. Yet the flood of interest that GMG has received from numerous Tier 1, 2 and 3 companies around the world shows that people are indeed watching and are interested in what GMG is developing. The company currently has several NDA's which limit the amount of information it can disclose however there is an unmistakable sense that substantial partnerships are in development. GMG has already signed a letter of intent with several global companies Bosch, Rio Tinto and Wood which further supports the chance of commercial success and validates what the company is doing.
Yet even if the company is unable to capture a significant portion of the battery storage solutions space, GMG has two additional products which in their own right could significantly transform the company.
First off the ranks is GMG’s Thermal-XR coating which is currently the most developed product in the market in terms of the number of salespeople and distribution channels. With the industry desperately seeking to identify ways to improve their HVAC unit energy performance, it comes as no surprise that there has been considerable interest in GMG’s graphene coating. Already substantial real-world data is coming out as to the coating's energy savings impacts, with improvements shown to be between 8-52%.
The potential for Thermal-XR is massive and the HVAC industry has an estimated market capitalisation of USD$26B. If GMG’s energy savings coating were to become even slightly integrated into the production of Air-Conditioning, Refrigeration & Chiller Systems, and Air-Cooling units the revenue potential for the company could be massive. This revenue potential also excludes the fact that GMG can even distribute their coating to already existing units which could be significant in itself.
I expect GMG to begin boosting their sales revenue of Thermal-XR next year after their new Phase 1 graphene production facility comes online. The warehouse facility will also host the manufacturing line for GMG’s Thermal-XR coating product. Now that GMG has acquired the IP for the product, they can optimize how they will use it, where they use it, and where they sell it. Such procedures would have been hindered by needing to constantly liaise with OzKem, the original developers of the technology.
While still in active development, GMG’s graphene lubricant additive also presents a profitable opportunity for the company with a market capitalization potential of US$14b. With more data coming out indicating the benefits of including graphene in oil-based lubricants, I would expect so too would further interest from large lubricant blending companies. So far, GMG has noted that numerous companies have contacted them so the product is known within the industry. For the time being, I would expect more data needs to be collected before sales agreements are formed. It is highly encouraging to know that GMG’s management team has a wealth of knowledge/experience in this specific industry sector.
Looking forward to the future, the next 2-3 years will be the most critical for GMG. 2023 will see the final investment decision being made for the battery coin-cell production facilities, an improved and fully-automated graphene production facilities, establishment of significant sales growth in their Thermal-XR coating venture as well as the sending of battery pouch cell samples to clients. 2024 could see activities heat up with the battery coin cell production facilities coming online and expected to produce a few million per annum. 2025 could also see the commercial production of GMG’s battery pouch cells.
So with numerous catalysts in the near term and what I see as a fundamental disparity between the company’s market capitalisation and its suite of technology, I have been accumulating stock in excited anticipation. HOWEVER, it is important to continually remind myself of the risks outlined in the report above especially right now given that GMG is still a pre-revenue technology company.