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Chris Berry: Alabama Graphite Joins the Graphene Sweepstakes

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https://investorintel.com/graphite-graphene-intel/alabama-graphite-joins-the-graphene-sweepstakes/

Alabama Graphite Joins the Graphene Sweepstakes

Posted on March 13, 2015 by Chris Berry

I’ve always been skeptical of the impact that graphene can or will have in the future. I don’t doubt that it’s deserving of its moniker of “wonder material”, but given that it’s such a small industry ($9 million globally) and given that there are almost innumerable applications for graphene, my skepticism is rooted in figuring out where to start. Energy? Infrastructure? Healthcare? Each of these industries is gigantic in their own right and could benefit from graphene’s qualities inserted in their supply chains.

The size of this prize hasn’t been lost on the many research labs and junior mining enterprises who are now aiming for a piece of the pie. I can say that interest in graphene is perking up again as I’ve had two meetings this week alone (one with a private equity shop looking to learn more about the opportunity and another with a company currently utilizing graphene in the oil services business). The latest entrant to the graphene sweepstakes is Alabama Graphite Corp. (TSXV: ALP | OTCQX: ABGPF) who disseminated a press release yesterday claiming to have found “natural graphene” on its Coosa project in Alabama.

To be honest, before I spoke with the company, I had never heard of natural graphene. While the press release is bound to bring out the skeptics, I think it’s important to stop and think for a second about what the company is claiming. Through an “innovative and cost effective process” for obtaining graphene, ALP has been able to observe natural occurring graphene flakes in its Coosa deposit. This is without the traditionally expensive processes such as chemical vapor deposition – and that is an important point to remember.

At first blush, it’s not the graphene find that is really significant (we don’t yet know how prevalent it is in the deposit) – it’s the process used. As we learn more about this process, the real value creation won’t be in the in-situ value of graphene, but will be in the methodology used to find/produce the material and how the company plans to leverage this opportunity. The important thing to keep in mind now is that the company has choices – a luxury many of its graphite peers do not.

Students of graphene will know that the current processes for producing graphene are inefficient and expensive, basically preventing the material from being produced at scale. Graphene can vary in price, but I’ve seen it anywhere from $100 to $500 per gram and it can go higher depending upon a host of factors. As most industrial minerals and metals are priced by the tonne, you can see why graphene hasn’t yet become ubiquitous – it’s price prohibitive. The astronomical price is also a function of the cost to produce it. There is much to learn about ALP’s process for finding and producing graphene, but a lower production cost would allow them to consider multiple markets with a potentially wider margins.

The challenges for ALP now will be manifold but it appears that proving this process to the marketplace and also isolating the graphene flakes are among the most important and will serve as catalysts. Paradoxically, these may be “good” problems to have.

I have no doubt that this news will be received by the graphite and graphene industries and investors with both excitement and skepticism, but it is discoveries like these that can push the envelope and spur innovation and that’s a good thing and a reminder of why we focus on the discovery space.