Graphene is less wonderful as an investment material

Is there no end to what graphene can do? It makes golf balls go further, concrete stronger, and clothing and batteries last longer. It is a pity that just 1g of graphene goes a very long way.

Last week, Versarien, one of the many graphene producers floated on London’s junior market in the past six years, said “revenues of any material amount have yet to be achieved” from its graphene-making division. Group losses before nasties such as tax and depreciation had widened to £1.1m. That is in spite of Versarien’s more mature side which sells hard metallic coatings to the oil and gas industry. Currently the group sells 100 grammes of graphene here and a kilo there to be tested by possible customers with whom it has signed umpteen collaborative agreements.

Chief executive Neill Ricketts is confident that one day the group will break even and hopeful it can increase graphene production capacity to 30 tonnes a year in time. Meanwhile, he is trying to raise funds from the Beijing Institute of Graphene Technology in return for a 15 per cent stake.

Graphene was discovered in 2004 by a couple of Manchester University scientists. They realised that this one atom-thick sheet of carbon was a million times thinner than a human hair and has 200 times the strength of steel. Enthusiasts soon began declaring the ultra-thin, mega-flexible and superconductive material would do for Manchester what silicon did to a valley in California. Graphene would revolutionise electronics, computers, energy, biotechnology and transport, they cried.

But it is taking decades to turn graphene to good, commercial use. Versarien is just one of very many companies trying to work out how to make money from it.

Versarien explodes or “exfoliates” lumps of graphite — a relatively ubiquitous commodity — to turn it into graphene.

It has achieved eye-watering prices for its product — as high as £125,000 per kg — which makes dollar signs appear in investors’ eyes on the basis that 30 tonnes could be worth billions in revenues. But manufacturers will not substitute cheaper materials they know work with graphene at current prices. Prices must fall if usage and production is to take off. As it is, industry sages reckon the global market in graphene will be worth about $550m by 2025.

Part of the problem is that graphene is so superior it does not work easily with other materials. It is “totally inert” say scientists.

Mr Ricketts is optimistic. New uses and technologies are being found all the time, he says. Just this month, Paragraf, a spin out from Cambridge University, won funding to develop its “first ever commercial-scale method” to deliver workable graphene in sufficient amounts for large-scale use in devices, such as transistors and sensors.  

Change is not happening fast enough for the rest of Aim’s graphene hopefuls, though.

In February Haydale Graphene, which uses a plasma reactor to turn graphene into ink and paint, tapped investors for more cash to cover working capital needs complaining that “the development cycle” has taken longer than thought. “Large multinationals have not progressed projects as expected,” the Welsh company explained, a point echoed by its Teeside rival, Applied Graphene Materials, in April. Then this month, Haydale warned revenues would be at the lower end of forecasts. Its shares are a fraction of their price at float five years ago.

Shares in Directa Plus, an Italian business that makes a graphene based flame retardant and infuses graphene into golf balls and bicycle tyres, are half what they were on their Aim debut in 2016. They would probably be lower but for the backing of Patrick Soon-Shiong, the biotech billionaire sometimes dubbed “America’s richest doctor”, who took 19 per cent in a recent funding round.

The least said the better about Graphene Nanochem. It vanished from Aim last year after it failed to lodge its accounts, announced plans to reverse into a building company and its nominated adviser quit.

That is the downside of backing paradigm-shifting ideas. As a rule of thumb, one in ten ventures 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 investors’ pockets or stop their portfolios going up in smoke.

kate.burgess@ft.com