Graphene to disrupt commodity demand

The opening address of the Sydney Resources Round-up set a tone of optimism for Australian miners and investors, looking towards the next upswing in the market cycle, and the next investment opportunity.

In his opening address, event organiser Stewart McDonald said he hoped for a quick return of the boom cycle, "especially for the older players" he quipped.

Far East Capital executive chairman Warick Grigor followed the theme, beginning the first presentation of the day with a focus on seeking value in the lead up to the inevitable market upswing, despite it's unpredictable time-frame.

"To kickstart the next cycle, we need optimists who can see opportunity," he said.

Grigor was critical of investors he said had confused the concept of relative value of companies in the mining sector, saying there were too many who had failed to take into account the bigger picture of the market.

"We're at the same place we've been many times before: we're at the bottom of the cycle, and the turning point is somewhat elongated as we seek to flush out the excesses of the previous bull market," he said.

"There are too many junior companies that serve no purpose, and need to fail, because they're distracting us from those that have a future."

Grigor said the current market climate was similar to that of the Dot.com boom of the early 'Noughties', and that today the best way for miners to enhance their stock value was to announce a technology deal.

The long term future of the market would lie with the disruptive potential of nanotechnology, particularly in the case of the nanomaterial graphene, he said.

"Graphene presents us with a generational change in techology, taking the field of nanoscience one step further.

"Nanoscience has given us the ability to identify and seperate the materials which can be combined with other materials for performance levels not otherwise thought possible."

With a barrage of examples of the uses and patented inventions made possible by graphene, Grigor explained that the supermaterial had the distruptive potential to affect demand for other mined commodities.

Graphene can be added to exisiting materials and products to enhance their function and performance, and reduce the quantites required in production; such as when graphene is added to copper it can increase conductivity and reduce the material need for the tradtional commodity by up to 80 per cent.

It can also be used in the manufacture of concrete, increasing it's strength and precluding the need for steel reinforcing altogether.

Grigor also explained that the material strength of graphene, 200 times that of steel by weight, meant it could be used to create vastly stronger steel which would reduce the amount of iron ore required, and also reduce transport costs on the final product.

"There has been an explosion in the number of patents being taken out, as industry has been preparing to take advantage of a new and deeply disruptive graphene age."

The ability for miners to take advantage of this new market was limited to contributing graphite to the front end of the supply chain, sending it to specialist producers for manufacturing into usable graphene, Grigor said.

However, he noted two exceptions to this problem, flagging Talga Resources as a potential leader in global graphene supply thanks to an "unusually high grade deposit of graphite in Sweden" and plans for a graphene production plant in Germany, as well as MRL Corporation in light of recent test work on their ultra-high grade deposit in Sri Lanka, and their potential for low-cost production of graphene.

"Both of these companies could bring product to the market and massively undercut the price of graphene; in doing so they will be important facilitators to the large-scale commercialisation of graphene," he said.

"Whether these companies become vertically integrated to benefit from multiple points in the value chain will depend on management and corporate objectives."

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