What is graphene and could it threaten the future of ASX lithium shares?

History is dotted with examples of how new technologies have unseated industry leaders, and ASX lithium shares might be next to face- this risk.

The Graphene Manufacturing Group Ltd (CVE: GMG) claims its batteries are better than its lithium-ion competitors.

The Brisbane company, which is listed on the TSX Venture exchange in Canada, says its graphene aluminium-ion batteries can charge 70 times faster and are longer lasting, reported the Australian Financial Review.

Graphene vs. lithium batteries

The new batteries are also believed to be kinder to the environment than the lithium-based incumbents, which use rare earths. The mining and processing of rare earths has created controversy due to the amount of pollution generated.

Graphene Manufacturing Group’s founder and managing director Craig Nicol says that his battery is almost net zero. He also pointed out that his battery is less prone to fires compared to the lithium powered ones.

Are ASX lithium shares facing a graphene shock?

ASX lithium shares are market darlings due to surging demand for electric vehicles that are powered by lithium-ion batteries. But sentiment could turn against the sector if graphene aluminium-ion batteries prove to be a better substitute.

So far investors seem unperturbed. The Allkem Ltd (ASX: AKE) share price, Pilbara Minerals Ltd (ASX: PLS) share price and IGO Ltd (ASX: IGO) share price are sitting on 20% plus gains each over the past year.

In contrast, the S&P/ASX 200 Index (ASX: XJO) has slumped around 8% into the red. Lithium, nickel and copper are regarded as the metals of the future due to the global electrification trend.

The snubbed $8.3 billion bid for OZ Minerals Limited (ASX: OZL) by BHP Group Ltd (ASX: BHP) will further bolster sentiment towards battery metal miners, like ASX lithium shares.

What’s powering GMG’s batteries  

The Graphene Manufacturing Group (GMG) has an informal partnership with Rio Tinto Limited (ASX: RIO). GMG will integrate some of its energy-saving products into Rio Tinto’s operations, while the mining giant will supply GMG with aluminium needed to manufacture the batteries.

GMG developed a way to extract graphene from gas as opposed to the more costly way of extracting it from graphite. The company also has the exclusive licence from the University of Queensland for technology used in battery cathodes.

The technology uses nanotechnology to insert aluminium ions inside GMG’s graphene platelets, reported the AFR. This allows GMG to make a denser battery that holds more charge.

Time to sell your ASX lithium shares?

Graphene is a form of carbon consisting of a single layer of atoms arranged in a two-dimensional honeycomb lattice nanostructure.

While it’s too early to say if this material can displace lithium, which is ubiquitously used in almost all batteries, investors in ASX lithium shares should keep a close eye on this development.

The post What is graphene and could it threaten the future of ASX lithium shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brendon Lau has positions in Allkem Limited, BHP Billiton Limited, Independence Group NL, OZ Minerals Limited, and Rio Tinto Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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