First Graphene Ltd (ASX:FGR, OTCQB:FGPHF) has signed a Memorandum of Understanding with The Sixth Element (Changzhou) Material Technology Co Ltd to distribute its PureGRAPH® CEM additive into China, opening a pathway into the world’s largest cement and concrete market.
The MOU appoints Sixth Element as a key distributor for PureGRAPH® CEM in China, with exclusivity available, subject to achieving annual purchase targets.
The arrangement marks a significant commercial step for the company’s graphene-enhanced cement additive, which is designed for use in large-scale construction materials markets.
PureGRAPH® CEM is a graphene-infused additive that reduces cement’s CO₂ emissions and increases its strength by lowering required clinker content.
Manufacturing pathway built into deal
The MOU also includes a potential pathway to local manufacturing in China.
Under the terms, once 200 tonnes of First Graphene product have been sold, the parties will negotiate a joint venture or licensing agreement for a dedicated PureGRAPH® CEM manufacturing facility in China.
Once sales reach 500 tonnes, the joint venture or licensing agreement would commence, allowing PureGRAPH® CEM products manufactured in China to be distributed locally.
First Graphene has reported potential scope to expand the structure to authorise Sixth Element to sell PureGRAPH® CEM globally.
Carbon reduction angle
China’s cement and concrete market represents a major addressable opportunity for First Graphene, with the sector producing more than 2.3 billion metric tonnes of cement.
The company also highlighted the emissions-reduction opportunity, noting that cement production generates up to 15% of China’s national carbon emissions.
First Graphene’s advanced materials are positioned to help industries reduce carbon dioxide emissions, either directly through lower greenhouse gas output and energy use, or indirectly through improved performance and longer product life.
CEO highlights scale of opportunity
First Graphene managing director and CEO Michael Bell said the MOU represented the largest commercial growth opportunity in the company’s global strategy.
“The MOU with Sixth Element represents the largest commercial growth opportunity in FGR’s global strategy, as we prepare for entry to the world’s biggest cement and concrete industry in the world.
“The scale of China’s cement industry represents a valuable opportunity, with the sector producing roughly 21 times more cement than the United States and 175 times more than the UK.
“For our Company, the potential to establish a localised manufacturing facility in China also provides a significant stepping stone towards further strengthening our presence in this market.
“We look forward to working closely with Sixth Element to promote the benefits of our PureGRAPH® CEM products to this expansive new market for our Company.”
What’s ahead
The distribution arrangement remains conditional on the parties negotiating and entering into a formal, legally binding agreement consistent with the MOU.
First Graphene and Sixth Element will deal exclusively with each other for six months while they negotiate and execute the formal agreement, with both parties agreeing not to consider third-party proposals for a similar transaction during that period.
About First Graphene
First Graphene is focused on the development of advanced materials for industrial applications, with a commercial focus on cement and concrete, composites and plastics, coatings, adhesives, sealants and elastomers, and energy storage.
The company supplies graphitic materials and product formulations and has a manufacturing base in Henderson, near Perth, Western Australia, alongside R&D capability in the United Kingdom.
Last month, First Graphene Ltd (ASX:FGR, OTCQB:FGPHF) confirmed it had completed the acquisition of USA-based MITO® Material Solutions.