Two Foolish Ways to Invest Your Money in Graphene

Stock picking makes little sense, and commodity investments make even less

Since graphene’s discovery in 2004, there has been an explosion in research and development to uncover the material’s potential. By 2011, a European Union (EU) report estimated, Europe had invested more than €150 million (US $200 million) in graphene research, and the EU recently pledged €1 billion ($1.3 billion) over 10 years in the hopes of uncovering the material’s secrets.

But what to do with a material 200 times as strong as steel and possessing the strongest electrical conductivity of any material known? There have been plenty of suggestions, but a breakthrough application has remained oddly elusive. Investors are getting anxious waiting around for scientists and engineers to figure it out; they want to know how they can start making money from the “wonder material” today.

One avenue some are pursuing is the stock market, but investments there are predictably problematic. For one, of the more than 30 small companies involved in making graphene, not one is publicly traded. Also, most people in the know don’t expect graphene-based products to hit the market until about 2020. What’s more, with big, diversified industrial companies most likely to reap the benefits of improved graphene-based products, the material’s impact would likely make up only the smallest fraction of their business once those products arrive.

At least two companies are providing an alternative to graphene-induced stock picking, and it’s just as problematic. Viscount Resources and Graphene Trade, both based in the United Kingdom, are offering the opportunity to make a commodity investment in graphene. They will sell you units of graphene today, warehouse them for up to three years, and then sell those units for you in the future, when they expect the price to have gone up.

A call placed to Graphene Trade was not returned, but Joe Santiago, senior consultant with Viscount Resources, explained that investors can purchase packages from the company that consist of various grades and quantities of graphene. One of its unit investments was quoted at approximately £5200 (US $8377 on 14 October). The firm estimates that the investment will increase at 15 percent per year, so that in three years your initial $8377 will have grown to more than $12 740.

Santiago presented the investment as basically a supply-and-demand commodity investment. An investor would expect demand to continually outpace supply, as with gold or diamonds or some other mined mineral.

There are a couple of glaring problems with that scenario. For one, graphene is a man-made material, and its price isn’t really tied to the graphite from which it is sometimes (but not always) made. Also, perhaps more important, there’s every indication that the supply of graphene in nearly all its forms is going to grow enormously over the next three years, resulting in a rapidly falling price.

“The utilization rates for graphene production are probably around 25 percent at this point, with about 60 tons of graphene…sold this past year,” says Anthony Vicari, a research associate with the advanced materials team at Lux Research.

With low utilization rates and a supply glut, prices usually head dramatically down. We’ve witnessed this exact scenario with multiwalled carbon nanotubes (MWNTs). The price for MWNTs plummeted from $700 per kilogram in 2006 to less than $100/kg in 2009—with some estimates putting the price at $50/kg as of 2012.

If graphene has that same production ramp-up—the goal of nearly every graphene manufacturer—and drops in price as MWNTs did in the three-year period from 2006 to 2009, the value of your $8377 investment would decline by more than 85 percent, leaving you with less than $1200.

Such a price plummet is exactly what graphene manufacturers predict. “We fully believe that the price of graphene will go down dramatically in the near future,” says Bruce Willner, chief science officer for Philadelphia-based Graphene Frontiers, which just received a National Science Foundation grant to develop roll-to-roll production of graphene. “We expect that the price will go down from $800 for use on a 4-inch wafer to just pennies per square inch.”

Edward Conrad, one of the founders of Graphene Works, in Atlanta, which produces and sells graphene grown on silicon carbide for research, believes he could ramp up his production overnight. He says the price for his product could drop from $550 per square centimeter to between $100 and $200/cm2 if there were demand. “In 10 years you could see that price drop to $10/cm2,” adds Conrad.

When presented with the prospect that manufacturers of graphene expect the price of their product to go down rather than up, Santiago says, “Every investment has some degree of risk.”

About the Author

Dexter Johnson, based in Madrid, has been writing the Nanoclast blog for IEEE Spectrum since 2009.

Advertisement
Advertisement