With well over a decade in the business, XG Sciences is considered one of the most established graphene producers in the world. It is behind one of graphene’s most high-profile applications in Callaway’s introduction of its so-called Chrome Soft golf ball that employs graphene supplied by XG Sciences to make the golf balls both softer and harder where they need to be.
XG Sciences recently became a corporate partner of the Graphene Council and we took that occasion to discuss with the company’s CEO, Philip Rose, the graphene market in general and how XG Science’s product line fits into that market.
We also were able to learn how graphene supply chains are developed and secured and how the introduction of graphene into many different products can be supported and promoted. Here’s our interview.
Q: XG Sciences produces graphene platelets. Could you explain where that places you in the graphene marketplace (as opposed to monosheets of graphene)? What sort of applications does that product open up for you?
A: The term “graphene” is often used to cover a variety of specific forms of the material, but we generally think about two broad classes of graphene materials – monolayer and nanoplatelet. One-atom thick films are commonly referred to as monolayer graphene and are manufactured from gases by assembling molecules to form relatively large, transparent sheets of material. We do not manufacture these films and do not participate in the markets for these films. In general, we believe that the markets for these films do not compete with those for graphene nanoplatelets.
XG Sciences offers an advanced material platform in the form of varying grades of xGnP® graphene nanoplatelets produced from two processes, each of which can be customized in many ways. Our proprietary manufacturing processes control the attributes of graphene nanoparticles. These attributes contribute to a range of properties that can be mapped to various end-market applications from automotive to sporting goods to packaging.
Because we have multiple production processes, and because we have invested in application know-how and development of value-added product formulations, we are able to address a range of needs in multiple market segments in a cost effective manner, providing breadth to our base capabilities and product portfolio. We believe these are all key differentiators in the market.
Based on the past 10 years of customer development activity, we understand that performance of graphene nanoplatelets in a specific application is primarily a function of the platelet’s diameter, thickness, planarity (or more broadly – morphology), and to some extent, the nature and concentration of any chemical groups on the platelets. There are other factors that may impact performance, such as optimized dispersion, product form delivered to the customer (powder vs. slurry), and so on. However, for the most part, performance in an application is related to the physical characteristics of the nanoplatelets. XG Sciences is skilled in the design and manufacture of graphene nanoplatelets, and our two proprietary manufacturing processes allow for the production of a broad product portfolio that can meet many needs across diverse end-use markets.
We sell bulk graphene nanoplatelets under the brand name xGnP®. These materials are produced in various grades, which are analogous to average particle thickness and average particle diameters. There are three commercial grades (Grades H, M and R), each of which is offered in three standard particle sizes and a fourth, C Grade, which is offered in three standard surface areas.
These bulk materials, which can be shipped in the form of a dry powder, are especially applicable for use as additives in polymeric or metallic composites, or in coatings or other formulations where particular electrical, thermal and/or barrier applications are desired. We also offer our materials in the form of dispersions of nanoplatelets in liquids such as water, alcohol and other organic solvents, or mixed into resins or polymers such as PET, polypropylene and urethanes.
As stated previously, we use two different commercial processes to produce these bulk materials. Grade H/M/R materials are produced through chemical intercalation of natural graphite followed by thermal exfoliation using a proprietary process developed by XG Sciences. Some of our process components are patented but we have chosen to keep others as trade secrets. The “grade” designates the thickness and surface characteristics of these materials, and each grade is available in various average particle diameters. Surface area, calculated by the Brunauer, Emmet, and Teller (BET) Method, is used as a convenient proxy for thickness. So, each grade of products produced through chemical intercalation is designated by its average surface area, which ranges from 50 to 150 m2/g of material.
We also use direct methods to measure layer thickness such as tunneling electron microscopy (TEM) and atomic force microscopy (AFM). We are able to extend the surface area higher than those listed here (and therefore, to fewer layer nanoplatelets) but are not yet producing these materials commercially. As the market need emerges for few-layer graphene, we will consider making these materials available commercially.
Grade C materials, and some related composite materials, are produced through a high-shear mechanical exfoliation using a proprietary and patented process with equipment that we invented, designed, and constructed. The Grade C materials are smaller particles than those grades produced through chemical exfoliation. Grade C materials are designated by their BET surface area, which ranges from 300 to 800 m2/g. We are able to produce surface areas as low as 150 m2/g and as high as 900 m2/g but are not yet making those commercially available. Should the market need them, we are ready to supply them.
We consider ourselves a “platform play” in advanced materials because our proprietary manufacturing processes allow us to produce varying grades of graphene nanoplatelets that can be mapped to a variety of applications in many market segments. However, we prioritize our efforts in specific areas that have the greatest technical, processing, environmental or economic challenges; places where customers are highly motivated to find solutions. At this time, we are focused on a few high-priority areas.
One such area is composites. Incorporation of our xGnP® graphene nanoplatelets into various thermoplastic, thermoset and elastomeric polymers have been shown to impart improvements in strength, electrical conductivity, thermal conductivity and/or barrier performance. We pursue several end-use applications that may benefit from one or more properties and believe that composites represent a potentially large opportunity for commercial sales.
For example, Callaway adopted xGnP® in their new Chrome Soft and Chrome Soft X golf balls. This new Callaway Golf® ball line incorporates XG Sciences’ high-performance graphene nanoplatelets into the outer core of the Chrome Soft balls, resulting in a new class of product that enables increased control, higher driving speeds and greater distance. We have other customers using our materials commercially in sporting goods equipment ranging from field hockey sticks to water sports equipment.
Automotive is another market segment adopting our materials. Ford Motor Company recently announced adoption of our materials in polyurethane based foam for use in fuel rail covers, pump covers and front engine covers. Incorporation of our high-performance materials results in a 17 percent reduction in noise, a 20 percent improvement in mechanical and a 30 percent improvement in heat endurance properties, compared with that of the foam used without graphene.
We are also getting commercial traction in packing applications with a large U.S.-based water bottling company who is shipping product that incorporates our graphene nanoplatelets into PET. Where use of xGnP® enables light weighting, improved modulus and shelf life as well providing energy savings during processing.
XG was founded back in 2006. Since that time, we have sold products to over 1,000 customers in over 47 countries and many are in various stages of testing our products for numerous applications. For most customers, the process of “designing-in” new materials is relatively complex and involves the use of relatively small amounts of the new material in laboratory and engineering development for an extended period of time. We believe following successful development, customers that incorporate our materials into their products will then order much larger quantities of material to support commercial production.
Although, our customers are under no obligation to report to us on the usage of our materials, some have indicated that they have introduced, or will soon introduce, commercial products that use our materials. Thus, while many of our customers are currently purchasing our materials in kilogram (one or two pound) quantities, some are now ordering at multiple ton quantities and we believe many will require tens of tons or even hundreds of tons of material as they commercialize products that incorporate our materials. We also believe that those customers already in production will increase their order volume as demand increases and others will begin to move into commercial volume production as they gain more experience in working with our materials.
In 2017, our customer shipments increased by over 600% to almost 18 metric tons (MT) of products from the 2.5 MT shipped in 2016. In the three months ending June 30, 2018, we shipped 15.4 MT of product (11.2 MT of graphene nanoplatelets in the form of dry powders and 4.2 MT of slurry, cakes or other integrated products containing graphene nanoplatelets), an increase of 716% over the three months ending June 30, 2017 (1.9 MT mostly in the form of dry powder) and an increase of 5% as compared to the three months ending March 31, 2018 (10.4 MT of dry powder and 4.4 MT of slurry, cakes or other integrated products containing graphene nanoplatelets). This demand profile is further evidence that we are transitioning into higher-volume production. It’s a really exciting time for XG Sciences as we see our customers move into commercial production in multiple applications and end-use markets.
Q: That leads to my next question, which is: are you moving up the value chain? For instance, you said you’ve invested and done a lot of work on energy storage and batteries, which is a very complicated business and physics and science to invest in. Are you looking to move up the value chain there? Creating perhaps a lithium-ion battery based on graphene, or are you still looking at yourselves as suppliers of the material for graphene and for battery producers?
A: It's a great question. We don’t see ourselves making water bottles or golf balls. However, we do make a range of advanced materials we have coined as “integrated products”. These are all products that contain graphene nanoplatelets.
For example, we have a platform of inks and coatings that incorporate proprietary grades of our xGnP® graphene nanoplatelets. These grades are specifically designed for a given application and may not be offered for sale as dry powder – we reserve their use only in an integrated product. We may add binders and surfactants and solvents depending on the final application. We have a concrete additive product available on Amazon that may fall into that category as well. We also make masterbatches of various thermoplastics (PP, HDPE, PET, etc.) where we vary the nature of the graphene nanoplatelet and the concentration to target various end-use applications.
In the next 3-5 years, we target 50% of our revenue coming from bulk materials (powders, slurries, cakes, etc.) and the other 50% from various forms of integrated products.
Q: I would just like to circle back to the iterative process and working with the end users you mentioned earlier, and turn to a question I sent to you previously and that is, what is the greatest challenge for you in working with someone who's new to graphene that you have to explain what it's capabilities are? You outlined that already, but if you could just pinpoint a particular issue that you find that raises itself over and over and over again I think that would be illustrative.
A: There really isn’t any one greatest challenge – there are many small challenges that vary from customer to customer. I think at a fundamental level, in order to be a viable supplier of any advanced material – and certainly graphene nanoplatelets are no different – suppliers must be able to demonstrate three key things: performance, cost and scale.
Until a supplier is able to demonstrate these characteristics, customers may only consider them as an academic curiosity – and that is not meant to cast any aspersions on our academic colleagues. That is to say that a customer will not risk putting a new material into their product unless they are certain that such material will perform, that its price allows for its adoption and that it can be supplied in sufficient volume to meet demand requirements over time.
Of course, there are other relevant requirements such as batch-to-batch consistency, IP, access to capital to enable growth, etc. So, the primary “challenge,” if we couch it in that context, is set by the broader customer base that requires demonstration of viability, capability and credibility as a supplier. We are able to meet, and in many instances exceed, these criteria so our primary task is now one of execution.
We have commercial traction and expect customers to continue to ramp their own production. We have many customers who are approaching commercialization and will add to our revenue growth over the next several quarters. In the meantime, we will continue to grow our organizational capability as well as our capacity to meet rising demand.
We recently announced completion of the first phase of the capacity expansion in our newest 64,000 square foot facility. The expansion has added 90 metric tons of graphene nanoplatelet production capacity, bringing the total capacity of the facility up to approximately 180 metric tons per year. Phase two of the expansion is expected to be complete by year-end and will result in up to 400 metric tons of total graphene nanoplatelet output capacity at the facility. Our total graphene nanoplatelet output capacity across both of our manufacturing facilities currently exceeds 200 metric tons per year and will more than double over the next three months, reaching up to an approximate 450 metric tons by year-end. The expansions support our mission to continue commercializing the use of graphene in customer products across diverse industries.
Q: I noticed in your background you worked at Sigma Aldrich, which is one of the big chemical companies. Did that give you a better understanding of what was ahead for you in order to get your product qualified by these companies? In other words, it appears as though smaller graphene producers are on a different time scale than a big chemical company. A big chemical company doesn't have any rush to do anything until they have the supply chain firmed up the way they want it, whereas, a smaller graphene producer, would like to start moving product as soon as possible. Does that give you any insight? What value did that provide you?
A: I think it absolutely does. I worked for Rohm and Haas prior to Sigma Aldrich and between the two, and now with XG Sciences, I have been in advanced materials for my entire career – which I am reticent to admit is now almost 30 years!
I have been involved in successfully introducing new materials to semiconductor manufacturers like Intel, IBM and TSMC, and to display manufacturers such as LGD, Samsung and AU Optronics as well as in a number of other electronic and industrial applications and markets. The process for new-material adoption is fairly end-market agnostic and the fundamental requirements of a supplier that I previously articulated are still relevant. The timing for adoption may vary from customer to customer and from market to market, but the process is the same.
Having successfully installed new materials with multiple customers and in multiple end-markets is very advantageous in helping to direct XG Sciences’ growth. Of course, it takes a team, and XG Sciences has very capable people in each of the functional areas required for success.
Q: You are a publicly traded company, right?
A: No. We have public reporting requirements by virtue of our self-underwritten public offering and S-1 registration statement, but we are not listed on any exchanges at this time. It is our intent to consider an up-listing event in the next 12 to 18 months.
Q: With your background in advanced materials and while you're looking more at electronics like semi-conductors and flat panel displays, but when you mentioned the barrier for bottles and those containers, I remember some years back maybe 15 years back, people were talking about nano clays so that you could have plastic beer bottles at ball parks. What are the benefits over some of those other nanomaterials for graphene platelets?
A: That's a good question. It really depends on what performance they wish to achieve and then to assess whether that is achievable using a given material. One of the clear advantages of graphene nanoplatelets over other nanomaterials is their ability to impart multi-functional performance. In the example I gave for PET-based water bottles, incorporation of our nanoplatelets improve physical strength, shelf life (barrier) and energy savings (thermal conductivity). A nanoclay, for example, would likely only impact barrier performance – and perhaps not to the extent one could achieve with graphene nanoplatelets.
We don’t typically see our materials competing with other nanomaterials for the same application. Graphene and graphene nanoplatelets are a relatively new material – they open up new performance and design options to engineers. That’s what makes these materials so exciting and why we are focused on building a company around their manufacture and supply. We are beginning to see their adoption at large volumes and in multiple applications, which bring about more curiosity and provide evidence of the power of graphene to a wider audience. I have touched on just a few applications in our discussion so far, but the full breadth of the impact graphene nanoplatelets can have is nearly limitless.