Endless recharge with high power
Graphene Manufacturing Group (GMG) has a proprietary manufacturing process for producing high-quality graphene at scale from natural gas (methane). Innovative electrode technology licensed from the University of Queensland (UoQ) enables GMG to modify its pure graphene to make advanced graphene + aluminum (G+AL) batteries. G+AL batteries are not yet commercial, but as the remaining technical and scale-up challenges are resolved, G+AL could have a massive market opportunity given its core technical advantages over dominant lithium technologies. Lithium donates one electron whilst aluminum donates three. This theoretically enables G+AL batteries to store much more power. Also, multiple G+AL battery discharges and recharges should have much less effect on capacity; lithium batteries slowly deteriorate. G+AL batteries use cheaper, non-toxic and more widely available raw materials than lithium and cobalt. There is also no battery fire risk.
Currently, the G+AL power density, in prototypes, is in the range 290-310 Wh/kg which is comparable with the most advanced lithium batteries although G+AL delivers lower voltages. At the end of 2021, GMG built a new Battery Development Centre (BDC) to develop its technology; this opened in June 2022.
If G+AL becomes competitive with lithium, it could substitute for many mobile and transport applications, but lithium batteries are well-established with falling prices. A further G+AL application could be as renewable energy storage where cheaper materials, rapid recharging cycles, long battery life and robust, safe chemistry are big potential advantages.
GMG's unmodified high-quality graphene is also being commercially developed as a “paint” to improve heat transfer in, for example, air conditioning. GMG acquired Thermal-XR in September 2022 to market this globally. Graphene is also being developed as a lubricant additive to enhance the performance of internal combustion engines.
Graphene battery tech
GMG’s shares are on the TSX Venture Exchange in Canada. Net cash of A$4.1mln was raised over FY21 (to 30 June) and a further A$12.2mln was raised, net, in FY22. GMG is based in Australia.
In FY22, revenues were A$54.5k, down from A$246k in FY21 and the loss was A$11.8mln. However, the reported loss included A$4.4mln of non-cash fair value adjustments on warrants. The operating loss in FY22 was A$6.6mln, up from A$3.3mln in FY21. Cash on 30 June 2022 was A$12.3mln.
In Q1FY23, sales were A$86k plus a tax credit of A$143k. Cash on 30 September 2022 was A$8.4mln. Also In Q1FY23, GMG completed the acquisition of Themal-XR (which produces graphene coatings). This cost A$1mln in cash with A$1mln in shares. The acquisition is expected by management to add a growing revenue stream. However, this is also likely to demand investment into production and marketing.
Financials
Year end Dec 31 · 2021 · 2022
Revenue (A$-000's) · 246 · 55
Operating Profit (AUD$, 000's) · (3,349) · (6,568)
Cash(AUD$, 000's) · 3,400 · 12,300
Graphene is a form of pure carbon. It is one atom thick, Exhibit 1 — but can extend, in theory, infinitely in two dimensions. Three-dimensional carbon is graphite, as in pencils, or after high pressure, diamond. Carbon atoms in graphene each have a “spare” electron, so the material is an excellent conductor of electricity and heat. It is very strong but also impenetrable.
Exhibit 1 - Graphene
Source: Open source
In a battery, impenetrable layers block ion movement and lower battery power. GMG and the University of Queensland (UoQ) make graphene microporous to enhance performance.
GMG manufactures graphene by heating methane to very high temperatures (obviously, without oxygen). This dissociates methane molecules into a plasma to give pure carbon, deposited as graphene, and hydrogen gas which can be captured. If the methane is pure, high-quality graphene results. This is a valuable raw material. The graphene can then be further processed for use in batteries, Exhibit 2
High-quality graphene
Exhibit 2 - GMG graphene manufacturing and use
Source: GMG
Management’s core focus is on the commercialization of its G+AL coin cell and pouch cell batteries. Coin cell batteries are an excellent battery prototyping system. Pouch batteries are assembled into battery packs for phones and mobile devices. GMG signed a research agreement with the UoQ in 2021 to bring these batteries to market. The agreement gave GMG an exclusive license to use patent-pending battery graphene cathode technology. GMG is increasing its capacity to manufacture batteries using its own graphene to create a vertically integrated production line.
In order to be competitive, G+AL batteries need to match and exceed dominant and ubiquitous lithium-ion batteries on several important metrics including energy density (how much electricity a battery can deliver per hour), power density (how long a charge lasts), and, very important, cost. We also note many other patents on battery technologies and competition in the area.
Battery innovation and development
In-house development and manufacturing
The Battery Development Centre (BDC) produces both coin and pouch cells on a small research scale. The facility has been further upgraded and is now fully climate-controlled to provide optimum environmental conditions for manufacturing. Management hopes to make a final investment decision (FID) on a coin cell plant in 2023 and might start commercial production of coin cell batteries in 2024.
Scale will become important in managing the cost of G+AL batteries. The price of lithium has reached record highs in recent months, so the use of much cheaper aluminum will be an advantage. However, it will be some time before GMG can take advantage of scale effects to reduce manufacturing costs.
There are two battery types that GMG currently makes in prototype batches: coin batteries and pouch cells. Coin batteries are a good test system but not necessarily a major commercial application. Pouch cells (literally a battery in a foil pouch) are very versatile and used in mobile tech like laptops (inside the hard battery casing) and can be scaled and connected for energy-intensive applications or longer run times. GMG is working on the commissioning and production of the first working G+AL pouch cells in 2022. In-house development, manufacture, and testing of G+AL batteries in the BDG allows GMG to accelerate development, focus on commercialization opportunities and scale its graphene manufacture capacity.
Exhibit 3 - In-house battery development centre
Source: GMG investor presentation
Exhibit 4 - Prototype pouch cell batteries
Source: GMG investor presentation
How competitive are G+AL batteries?
In cooperation with the UoQ, GMG has conducted multiple performance tests which show not only improvements in energy density (watt-hour/kg) of graphene coin cell batteries since their last iterations, but also significantly higher power density (watt/kg) than other G+AL battery technologies in development by other university research teams.
A GMG & UoQ 2022 study showed an energy density for their coin cell G+AL battery of 290-310 Wh/kg, This outperformed alternative technology studies from Stanford University using a natural graphite flakes cathode and a graphitic foam cathode by around 230 Wh/kg and 260 Wh/kg respectively. It also outperformed an earlier study from the University of Queensland and GMG from 2021 using a previous iteration of their technology by approximately 150 Wh/kg.
Importantly, G+AL energy density is approaching that which is typical of higher-end lithium batteries — around 300+ Wh/kg. Still, operating at a voltage of 2V remains significantly below a typical 3.6V lithium battery. Aluminum has a lower redox potential than lithium, so this is inherent in the chemistry. However, batteries connected in series increase the voltage delivered, although not the current (Amps).
The higher mass and bulk of the aluminum and chloride ions used in G+AL means that the weight and volume could be an issue for mobile and transportation applications unless the power delivered is proportionately higher. While weight may be a mere inconvenience in the batteries of personal electronics if phones and laptops lasted much longer, heavier batteries could put serious limitations on G+AL's applicability in electric vehicles where extra weight would have to be ameliorated with significantly higher power output. Any G+AL battery packs will also have to fit into currently used configurations and specifications of car manufacturers. For these reasons, stationary applications where weight of batteries is not an issue such as large-scale, cheap storage for renewable energy sources could be a more feasible initial commercial opportunity. This is an approach proposed for a new aluminum sulfur battery from MIT announced in 2022.
Power physics of batteries
For those whose memory of school physics is hazy and who are not electronics engineers, below is a short guide to confusing terms and the significance of different metrics when considering the utility of different batteries.
Amps (A) is a measure of how many electrons can be drawn from a battery. If a battery is like a lake, a common analogy, Amps tells you how much “water” can flow out. The energy of the electrons flowing from the battery is measured in Volts (V), but neither tells you how much work you can get from the battery.
For that, we need Watts (W). Multiply Amps by Volts to get Watts or work. Work is based on time. So, battery output is measured in Watts per hour. Hence, a hypothetical 100A battery giving 2 Volts for one hour gives you 200 Watts or 200 Wh. Further, you must also consider how big your battery is. Rather than “big”, it is better to measure density: mass (weight) or volume. So, specific energy density is Wh/kg or Wh/l. Designers of phones need maximum power from as little volume (so the battery fits) and little weight.
Voltage is determined by the chemistry of the battery and how batteries are wired up. Aluminum gives a lower voltage (2V) than lithium which gives 3.6V. Wire two batteries (say 2V, each 100A) in sequence (one after the other) and you get double the voltage (4V) but the same number of Amps (100A). Wire in parallel each battery (separately connected) and you get more Amps (200A) — but the same voltage (2V). So, it depends on what is needed. Both give the same 400Wh power.
The power density is a more brutally simple figure: how much overall power can a battery hold. In itself, that is not helpful without knowing how fast it can release that power. Dividing power density by energy density gives a duration: so a 9,350 W, 1 kg battery putting out 300Wh lasts about 30 hours, but the exact figure depends on many factors and battery design.
Chemical considerations and the Queensland advantage
The aluminum ion (Al3+) in the G+AL battery from GMG is actually formed as a “salt”: AlCl4- (that is, the aluminum complexes with chlorine giving AlCl4- (or Al2Cl7-)). To get enough of this complex, the battery has an excess of neutral AlCl3. The charge in the G+AL battery when discharging is carried by AlCl4- and moves from the graphene cathode to the aluminum anode. There, metallic aluminum is deposited. To charge the battery, aluminum is re-ionised from the aluminum electrode and reforms AlCl4-. This AlCl4- moves across the cell and accumulates in the graphene. In normal graphene, this is an issue because AlCl4- is a hefty molecule and cannot easily get into (intercalate) the carbon electrode, so capacity is limited. In contrast, in a lithium battery, on discharge, tiny lithium ions (Li+) bound into the carbon anode (so the reverse of G+AL) are released, move across and react with cobalt in the cathode. Over successive cycles the entry and exit of even tiny ions into and out of the electrodes and the chemistry of the electrode reactions causes degradation and loss of power density.
As AlCl4- is big, the team at the University of Queensland found a way to create surface perforated graphene using mild temperatures (400oC). This allows the large AlCl4- ions to enter the graphene electrode pores as the battery charges and so store charge. This apparently gives 92.5% of the theoretical capacity. This was published in 2021 (Kong et al,2021). General comments on aluminum batteries can be found at Leisegang et al (2019). Kravchyk et al (2017) reviewed efficient aluminum graphite batteries and noted their potential for high-energy storage. Aluminum batteries also have fast charging times if high current is available, in the real world, not always the case
The advantages of this system are that there is little battery degradation over time. Aluminum plates on and off the aluminum electrode surface so this does not degrade so long as clean. The AlCl4- charge carriers move in and out of the graphene pores, so the graphene electrode remains intact. The theoretical charge capacity of the battery is much higher than lithium. The chemistry is more robust than finicky lithium, which needs careful handling and temperature control. Exhibit 5 shows that GMG has moved its G+AL battery to a point where it is better than standard lithium batteries, these are typically 200Wh/kg if using a cobalt electrode but maybe up to 300Wh/kg for advanced designs.
One drawback to any new battery technology is cost. Ziegler and Trancik (2021) show how lithium battery energy and power densities have risen whilst costs have fallen. This is a powerful scale and experience curve effect. The latest lithium-ion battery factories are multi-billion investments built around the recycling of older batteries (The Economist 26 October 2022). It may be that G+AL needs to find a disruptive niche application where its advantages are significant, for example, renewable energy.
Exhibit 5 - GMG & UoQ battery comparison
Source: GMG investor presentation
Corporate agreements
GMC has a non-binding term sheet agreement with Rio Tinto where both parties will explore the use of GMG’s energy saving products in Rio Tinto’s operations, and the potential use of GMG’s G+AI batteries for industrial and mining applications. The companies are also exploring the supply of aluminum to GMG for use in G+AI batteries. Other non-binding agreements have been signed with partners such as Bosch, the German appliance and tool manufacturer and a big battery user in its products, and Wood PLC (ca leading energy consulting and engineering company).
Thermal XR
GMG continues to look for other applications for its graphene and for other revenue streams. It acquired the rights and property of Thermal-XR in September 2022 from OzKem Pty Ltd, an Australian heat exchange technology company, for a payment of A$1mln and a subsequent issue of A$1mln in ordinary shares of GMG. The technology consists of a graphene coating which is applied to copper and aluminum coils on heating, ventilation, and air conditioning (HVAC) systems to improve the efficiency of corroded systems, as well as providing important water and air resistance to reduce future corrosion rates. This helps to improve energy efficiency as well as extend the life of older HVAC systems.
Thermal-XR has seen certified energy savings of around 46%. The greater thermal conductivity of graphene helps with energy efficiency, and the nature of the coating protects coils from corrosion of metal surfaces by preventing oxygen and water from coming into contact with them.
Exhibit 6 - Applying XR-Activate
Source: GMG, Youtube
Commercialsiation
Management anticipates that Thermal-XR will add revenues and contribute cash while core battery technology moves into scaled-up manufacturing. We note that most of FY21 sales were to OzKem plus some research use sales. GMG will now manufacture Thermal-XR products with GMG’s own graphene. GMG are exclusively buying the base coating for preparing cooling surfaces from OzKem, OzKem agreed to not develop graphene-based products for a period of 5 years.
Lubricants
Graphene-based lubricants in early development include G-Lubricant and G-Coolant, additives which reduce friction and improved thermal efficiency, respectively, in engines. However, these are still in the demonstration phase and a negligible part of revenues and capital expenditure.
Market and Geography
GMG is based in Australia and is exploring new market opportunities with corporate partners in East Asia and Pacific. In FY22, it established a sales operation in North America.
Financials
In FY22 (GMG year-end is 30 June) the company had revenues of around A$54.5k, down from around A$250k in FY21, primarily from the sale of graphene powder for the production of Thermal-XR products, and limited other graphene powder sales to other research projects which ceased in FY22 (hence the fall in revenue). While graphene powder is not at the core of GMG’s commercialization strategy as it focuses on the development and rollout of cell batteries, management expects revenues to grow with the acquisition of Thermal-XR (in September 2022)
GMG receives significant income in R&D tax incentives, A$1.5mln in FY22, of which A$736k was received as a refundable R&D tax offset (Table 2). Management expects to receive significant R&D income again from the Australian government subject to eligibility of expenditure. In Q1FY23, A$143k was received.
Table 3 shows cash at year-end FY22 was A$12.3mln dropping to A$8.4mln by 30 September 2022. GMG's FY22 profit and loss statement (Table 1) shows costs increased in a range of areas as it expanded its operations to commercialize its battery technology and scale its graphene manufacturing. From FY21 to FY22, employee costs rose A$2.6mln to A$4.4mln, commensurate with a marked increase in employee numbers; occupancy and utility expenses rose by A$50k to A$200k due to increased leasing costs of production facilities; share-based payment expenses increased seven-fold to A$864k; and factory costs increased by around A$130k to A$276k.
The Q1FY23 operating cash outflow was A$2.7mln. In addition to the A$1mln acquisition cash cost, there was A$315k invested in plant.
Chart 1 - GMG Income
GMG FY22 annual report figures
GMG expects to need further capital to expand its facilities and to support R&D. Major partnership deals with battery or tech producers would boost immediate revenues and give a route to market.
Table 1 - GMG profit and loss statement
Source: GMG FY22 annual report
Table 2 - GMG balance sheet
Source: GMG FY22 annual report
Table 3 - GMG cash flow
Source: GMG FY22 annual report