Kwasi Kwarteng, the business secretary, has ordered a review of national security in relation to a Chinese academic's takeover of a small Welsh producer of graphene, the lightest and thinnest supermaterial.
Kwarteng directed the Competition and Markets Authority to review the plan to takeover Perpetuus Group from Taurus International, or any other companies associated with Dr Zhongfu Zhou.
Zhou is listed on Perpetuuss as the chief nanotechnology scientist and has spent many years researching this wonder material.
Perpetuus has three locations in South Wales. It makes graphene, carbon nanotubes and other materials. These materials are expected to be useful in a variety of industries, including electronics, defence, medicine, and the production of super-strength condoms. These materials can conduct electricity at extraordinary levels and are stronger than steel.
Researchers at the University of Manchester created graphene in 2004 by using Scotch tape to remove layers of carbon that were one atom thick. Their discovery earned them a Nobel prize. Carbon nanotubes look like a sheet of graphene folded up.
Perpetuus, a small company with 14 employees at its main subsidiary for graphene, has a turnover of just 479,000 in the 12 months to March 2020 according to company accounts. It was established in 2013.
Taurus International, the other potential buyer, was founded only in October 2020. Its office is listed in Lewisham, south east London, as a semi detached house. Although the company has one director, whose other businesses include property developments, there are not many details online.
Perpetuus supplies at least 25% of graphene plasma products and/or services in the United Kingdom, according to the business department. Graphite can also be used in high-temperature ions or spraying it with plasma.
Recent takeovers by companies that could have national security implications forced the UK government to respond. Boris Johnson, the Prime Minister of the United Kingdom, asked officials in July to reexamine the acquisition by a Chinese-owned firm of Newport Wafer Fab, a Welsh manufacturer. Also being examined are takeover offers for aerospace and defense manufacturers Meggitt, and Ultra Electronics.
Graphene production has not yet become a major industry. However, the UK government considers it to be strategic, according to Ron Mertens (editor of Graphene-Info), an industry publication.
Mertens said graphene is a promising material for industry, but it also has potential military uses. He cited body armour, tank armour, and cooling systems in aircrafts as possible uses. Mertens said that the UK government should be concerned about intellectual property being moved abroad in a new industry.
China is particularly interested in graphene. Mertens stated that there are 10 research areas in China that work on graphene, and more than 200 companies directly working on it.
After Xi Jinping, the president of China, visited Manchester's National Graphene Institute in 2015, Huawei, a Chinese telecoms company, invested in Manchesters National Graphene Institute in 2015. Both Huawei and Samsung in Korea have stated that graphene will be used in their mobile phones.
Perpetuuss website states that Zhou holds doctorates from China's University of Science & Technology Beijing as well as the University of Oxford. According to his social media accounts, Zhou was a researcher at Cardiff University before becoming a professor at Aberystwyth University.
According to social media, Zhou is also the managing Director of the Inner Mongolia Industrial Research Institute for Composite Materials. This company is located in northern China. Its website states that it is dedicated to developing downstream applications for carbon fiber and enhancing China's independence in innovation and development in the field.
The business department declined comment to discuss the reasons behind the takeover intervention. The CMA has seven days to complete its inquiry.
John Buckland is the owner of Perpetuus. He is also a businessman and is running a project to harness the tidal energy off of the Isle of Wight. The uncertainty caused by the coronavirus epidemic was threatening Perpetuus' ability to remain a viable business, but the company stated that its directors are still looking for revenue and investment opportunities.
Perpetuus was contacted for comment. Zhou did not reply to comments sent via email or social media.
